COS News – Week ending 25 January 2013
Issue No. 244

 

DTRIPP RECEIVES UP TO $19.9M IN APGCI FUNDING

Through the Asia-Pacific Gateway and Corridor Initiative (APGCI), the Government of Canada is contributing $19.9M towards Port Metro Vancouver’s $45M Deltaport Terminal, Road and Rail Improvement Project that will increase Deltaport’s container capacity by 600,000 TEUs.  The project is expected to be complete by 2015.
 

CANADIAN ECA FURTHER DELAYED

Following various reports on this issue we have once again spoken directly with Transport Canada, Ottawa on the question of the Emissions Control Area taking legal effect in Canada. The latest best estimate for the regulations to be approved by cabinet is mid-February with implementation in early March. As we have previously advised, there would then be a short period of lead time enforcement leniency to allow bunkering programs for vessels destined to Canada to be adjusted. With respect to the issue of innocent passage to Canadian ports, we have this week received the below update through our friends at the Pacific Merchant Shipping Association (PMSA):

• From EPA’s perspective there is no such thing as innocent passage through the ECA. 
• EPA’s position is that all vessels are required to use compliant fuels when transiting  through an ECA and any vessel that doesn’t is in violation. In short, Canada’s ECA is in force it is just not being enforced by Transport Canada. 
• U.S. Coast Guard will not be stopping vessels to check for ECA compliance.  However, if the USCG does board a vessel for any other reason they are highly likely to inspect for ECA compliance and cite non-compliant vessels.
• Vessels that call at a Canadian Port and subsequently call at a U.S. port are subject to being cited for a previous transit through the U.S. ECA even if they did not call at a U.S. port.   
   

USMX AND ILA RESUME NEGOTIATIONS

The New York Shipping Association (NYSA) and the International Longshoremen’s Association resumed negotiations this week on specific disputed New York - New Jersey port issues. Meanwhile, a federal mediator has indicated that some progress was made last week during three days of negotiations between the union and United States Maritime Alliance on the extended coast wide master contract which is now scheduled to expire on February 6. In New York-New Jersey, the NYSA is insistent on scrapping of what are being described as “unsustainable working practices”.
 

ONTARIO TEACHERS PENSION PLAN BUYS MAJOR CONTAINER LEASING COMPANY

Ontario Teachers’ Pension Plan (OTPP), owner of Global Container Terminals which includes TSI,  is further extending its presence in the container supply by acquiring SeaCube Container Leasing, one of the world’s largest container leasing companies, for an estimated $467m. The company’s owned or managed container fleet is estimated to be around 920,000 TEU. OTPP which has  a $117.1 billion investment portfolio, plans to operate SeaCube as a standalone business operation with the current management
team remaining in place.
 

WCMRC CHRISTENS THE MJ GREEN

 

Western Canada Marine Response Corporation christened the M.J. Green this week in Vancouver Harbour.  The vessel is named after Martyn J. Green, the first president and general manager of WCMRC / Burrard Clean Operations. 

The vessel constructed by Rozema Boatworks is a high speed skimming vessel that will be based in Port Metro Vancouver and serve the coast of British Columbia.  The M.J. Green is capable of a variety of response tasks, however ,its primary function will be to recover oil using its integrated skimming system.   The vessel’s sea keeping ability and speed will be a valuable tool to WCMRC as they continue to improve response capabilities along the coast.

Specifications
Gross Tonnage             30.63 Tons
Length                           13.69 m
Breadth                           4.88 m
Depth                              1.98 m

Speed                              25 Knots
Skimming Capacity        32.8 Tonnes/hr (De-rated)
Product Capacity              10 Tonnes
Boom                                2 Canflex Sweep Booms

LINDA THOMPSON RETIRES TODAY

After 40 years in the marine industry, Linda Thompson retires from Colley West Shipping Ltd. today.  We wish her well in her retirement!

 

Government News

FAIRVIEW TERMINAL PHASE II COMPLETES ENVIRONMENTAL ASSESSMENT

Canada's Environment Minister, the Honourable Peter Kent, announced that the proposed Fairview Terminal Phase II Expansion Project is not likely to cause significant adverse environmental effects with the implementation of the mitigation measures described in the Comprehensive Study Report.
 

WESTERN CANADA’S SHIPBUILDING ACTION PLAN DELIVERS

Earlier this week the Honourable Lynne Yelich, Minister of State for Western Economic Diversification, announced $2.56 million in federal funding to strengthen skills training in British Columbia through support for the Marine, Aerospace, and Resource Industry Centre for Training and Technology Support (MARCenTTS) at Camosun College’s new Trades Education & Innovation facility.

Federal funding will support the purchase and installation of marine, aerospace and trades training equipment, and electrical service for new trades.  Funding will also expand and upgrade the college’s Technology Access Centre, which helps industries adopt and commercialize technologies. Project partners include Wärtsilä and Seaspan.   To complement WD’s announcement, Camosun’s industry partner, Wärtsilä Canada, also donated a 19-ton ship’s engine to the college for teaching purposes.

The event marked the official grand opening of the Industrial Marine Training and Applied Research Centre (IMTARC), which will work cooperatively with institutions like Camosun College in supporting trades training.   IMTARC will ensure the sustainability of BC’s shipbuilding and repair industry by offering entry-level training, working with post-secondary institutions and apprenticeship programs, and helping businesses adopt new technologies and processes.  Partners such as Seaspan, BC Ferries, Babcock Canada, Thales Canada, and Lockheed Martin Canada have also providing funding for IMTARC, while the Province of British Columbia provided a $550,000 investment for training program development.
 

BEYOND THE BORDER – REQUESTS FOR PROPOSALS

Public Works and Government Services Canada, on behalf of the Canada Border Services Agency, issued a Request for Proposals for the informatics professional services required to support a wide range of initiatives identified in the Beyond the Border Action Plan. These services, covering seven different streams, include business process re-engineering, application development and project management services.  The technical services provided by the successful contractors will be essential to delivering functionalities that will improve commercial and traveller crossings, including efforts to align internal financial systems, enabling the capacity to accept payments and to more quickly facilitate border crossing and trade.

International News

MIXED FORTUNES PREDICTED FOR DRY BULK IN 2013

In a just released analysis of the dry bulk sector, a Norwegian Bank’s investment arm, Pareto Securities, envisages that charter rates will at last show a pulse towards the end of the year with demand growth forecast to drive improved utilization and market fundamentals in both 2014 and 2015.  Pareto expects dry bulk vessel demand in deadweight terms to grow by 7.7% this year compared to a predicted 6.7% increase on the supply side. Dry bulk fleet utilization bottomed out in 2012 at 86.2%, but is forecast to improve to 87% in 2013 and if all goes to plan will then reach almost 92% in 2015, close to the 10 year high. 

The analysis argues that China accounts for 40% of world dry bulk imports with volumes forecast to increase by 500 million tons between 2013 and 2016. Iron ore and steam coal imports are both expected to account for a third of this growth.

 

TANKER SECTOR BLUES LOOK SET TO GET WORSE

By common consent, a bad market for tankers looks set to get a whole lot worse this year. The Clarkson’s graph below vividly demonstrates the rates pain across the entire sector with five year time charter rates for VLCCs having halved since 2008 whilst Suezmax and Aframax rates have experienced a 40% decline – let alone the disaster on the voyage spot market. A high profile bankruptcy occurred in November 2012 when Overseas Shipholding Group Inc. (OSG), the largest U.S. tanker operator, formed in 1969, filed for Chapter 11 protection after failing to secure a federal loan guarantee. The company owns or operates 111 vessels that move oil, refined products and natural gas worldwide. However, this is considered the tip of the iceberg as there are a whole lot of other long established tanker companies hanging on by finger tips just, as we mentioned last week, China is ramping up a major new building program in this sector to support its shipyards.

Last week’s terrorist attack on the Amenas gas plant in Algeria has also unsettled the energy sector. The plant is jointly operated by Algeria’s national oil company Sonatrach, BP and Statoil. For its part, BP has pulled out non-essential personnel, a serious blow to a country that has courted foreign investment in its oil and gas sectors over many years.  Algeria exports around 750,000 barrels of crude oil per day and is the world’s seventh-largest exporter of LNG, primarily to European markets. The latest head count indicates that 37 foreign nationals were killed in the attack.
 

CHINA DEMAND TIGHTENS OIL SUPPLY

The International Energy Association (IEA) has forecast that global demand for oil will increase to around 91 million barrels/day this year, largely on account of continued increases in demand from China. This signifies a steady daily increase in global demand of around 1 million barrels/day. The IEA is anticipating Chinese consumption of around 10 million barrels/day in 2013 (the equivalent of 5 VLCCs every day) compared to U.S. demand of around 19 million barrels/day. OPEC production is running at around 30.6 million barrels/day compared to non OPEC production of around 54.2 million barrels/day.  Production in Saudi Arabia, the world’s largest oil producer, has recently declined from 30 year highs, to around 9.4 million barrels/day. On the bunker front, HFO 380 has been trading this week at around $630/ton.
 

HONG KONG INCHING TOWARDS ASIA’S FIRST ECA

                      image of new Kai Tak cruise terminal

Reacting to criticism of the current voluntary scheme for ships to burn low sulphur fuel within its waters, Hong Kong’s Chief Executive has pointed to having a law in place next year to require mandatory use of low sulphur fuel while in port. The government is also looking to provide cold ironing for cruise ships berthing at the new Kai Tak Cruise Terminal in the longer term. By common consent ship-based emissions in Hong Kong and across the Pearl River Delta are a contributor to the poor air quality in the region.

On a brighter note, Maersk Line announced this week that it has reached its 2020 emissions reduction target nearly eight years early with CO2 output reduced by 25% from its 2007 level.

 

 

PANAMA CANAL AUTHORITY (ACP) HINTS AT MAJOR FEE REVIEW

The Panama Canal Authority has let it be known that it is looking at a major fee review to ensure that it receives a larger slice of the cake following completion of expansion plans in 2015. The Authority is considering charging fees based on the cargo capacity of LNG carriers and tankers in preference to the current tariff which does not reflect the cargo carrying capacity of these vessels. Carrying capacity has been the basis for the tariff applicable to container vessels since 2005. Further efforts by the Authority to squeeze money out of international shipping are sure to be controversial given the objective of paying expansion related debts off by 2028.
 

PHILLIPINES SEEKS COMPENSATION FROM U.S. FOR WARSHIP DAMAGE TO REEF

    

The Philippines Government is to seek compensation from the U.S. for damage to the Tubbataha Reef’s south atoll, approximately 80 miles east-southeast of Palawan Island in the Sulu Sea, after the U.S. Navy minesweeper USS Guardian ran fully aground last week.  With the ship’s crew having been disembarked and despite there being U.S. Navy contractors on scene, the Philippines Coast Guard is insisting that it will be the body to coordinate both the salvage attempts and the investigation of cause. Whilst not leaking fuel, the vessel is reported to be taking on water due to heavy bottom damage. The U.S. National Geospatial-Intelligence Agency has already provided the U.S. Navy with preliminary findings of a review on Digital Nautical Charts for the area suggesting that inaccurate navigational data may have been a factor in the grounding. The site is a World Heritage listed coral reef.

Still with The Philippines but unrelated to the above, the government this week announced that “having exhausted diplomatic avenues” it will challenge Chinese territorial claims in the South China Sea at a UN arbitration tribunal under the United Nations Convention on the Law of the Sea (UNCLOS), which both countries have signed. UNCLOS which came into force in 1994, has 164 signatories and:

• Aims to create stability, promote better management of ocean resources and address territorial disputes
• Sets territorial maritime limits to 12 nautical miles (22km/14 miles) and gives states exclusive exploitation rights over all natural resources within 200 nautical miles of shore
• Obliges all states to protect and preserve the marine environment
• States are obliged to accept outcome of arbitration rulings except where issues of sovereignty are at stake

The Philippines has said that it expects legal proceedings to take between three and four years, based on previous cases.
 

Market Update
With Chinese New Year rapidly approaching, we have a couple of lucky number eights in the index  which closed slightly weaker on Thursday on 808 points compared to 820 points last week and 751 points the week previously.

                                                Cape Size     Panamax       Supramax

Index                                          1541              723                712
December 20 2012                      1573              743                735
Spot time charter                    $8,200/day     $5,700/day      $7,500/day
One week ago                        $8,400/day     $5,900/day      $7,700/day

Containers: Several carriers have announced their decision to omit voyages for two weeks from the Chinese new year holidays. Alphaliner estimates a capacity reduction in the Asia-Europe trade by up to 47%. The below chart is indicative of the impact.

 

Tankers:  Daily VLCC earnings on the benchmark Saudi Arabia-to-Japan voyage fell back dramatically this week to virtually nothing. Ships looking for cargoes out of the Arabian Gulf currently exceed cargoes looking for ships by around 20%.

 

 

Upcoming Events

MARINERS’ WORKSHOP

Feb 6/7 – The Shipping Federation of Canada in conjunction with the Chamber of Shipping and other local groups are hosting a Mariners’ Workshop at the Terminal City Club in Vancouver.  A block of rooms has been set aside for the workshop at the Terminal City Club at rates starting from $153/night.  For more information and to view the draft agenda see attached registration form.

CHAMBER OF SHIPPING ANNUAL GENERAL MEETING

Mar 1 – Save the date for our Annual General Meeting and lunch at the Vancouver Convention Centre.  Our guest speaker is Christian Waldegrave, Market Analyst.

Jan 30              PACMAR / NANS Meeting @ 10:30
Jan 31              VMAA Special Meeting @ 12:00
Feb 6-7             Mariners Workshop
Feb 11              BC Statutory Holiday – Family Day – Office Closed
Feb 12              COS Ship & Port Operations Committee Meeting @ 12:00
Feb 14              COS Board of Directors Meeting @ 11:30
Feb 20              COS Liner Committee Meeting @ 10:00
Feb 21              COS Navigation & Pilotage Committee Meeting @ 10:00
Feb 26              Green Marine Workshop (tbc) @ 09:00
Feb 27              PACMAR / NANS Meeting @ 10:30
Mar 1                COS Annual General Meeting @ 10:30
May 9               Next Business of Shipping Full Day Course

 

Ship of the Week

           Viking Grace – world’s first large LNG powered cruise-ferry

Built to provide luxurious service between Turku in Finland and Stockholm, Sweden, Viking Grace is a revolutionary vessel, being the first to primarily rely on LNG as her source of main engine fuel. She is described by her owners as “the world's most environmentally-friendly and most energy efficient passenger ship of her size."

Built by STX Turku, Finland
Owned by Viking Line of Finland
Commenced construction September 2011
Maiden voyage January 13 2013
LOA 218 m
Beam 31.8m
GRT 57,000 tons
Cargo lanes 1275 metres and 1000 metres for cars
Cost EUR 240 million (EUR 28 million Finnish Government subsidy)
Passenger capacity 2880 in 880 cabins
Speed 22 knots
A Super ice-class
Classification: Lloyds Register

   

                             note location of LNG fuel tanks on the stern (centre) and the company’s first ship SS Viking (right)

This impressive vessel has been specifically designed to cruise in the challenging shallow waters of the Finnish and Swedish archipelagos with a hydro-dynamically optimized hull form to induce the lowest possible swells. Equipped with Wärtsilä's dual-fuel technology, Viking Grace can operate with three fuel alternatives namely traditional heavy fuel oil, diesel oil or LNG. Operating on LNG, vessel emissions will be significantly below IMO permitted levels, even within Emission Control Areas. Comfort is also assured by modern sound proofing technology keeping noise levels to a minimum.

Viking Grace is powered by four gas-fuelled Wärtsilä 8L50DF main engines coupled to twin shafts and fixed pitch propellers. Side thrusters include transverse bow and stern tunnel thrusters. Maiden voyage tickets were sold out many months in advance.

Viking Line's history goes back to 1959, when a group of investors from the Åland Islands purchased a second hand steam-powered car-ferry and named her SS Viking (picture above). Competing interests in the growing ferry industry eventually resulted in recognition of the need for cooperation and in 1966 Viking Line was established.

COS News – Week ending 18 January 2013
Issue No. 243

MARINERS WORKSHOP
The annual Mariners Workshop with focus on developments in electronic navigation is scheduled for February 6 and 7. This Shipping Federation of Canada annual event is this year being held in Vancouver at the Terminal City Club in collaboration with the Chamber of Shipping of British Columbia. Please see registration details and agenda attached.

 

PROTESTORS GATE CRASH ENBRIDGE JRP HEARINGS

The Enbridge Northern Gateway Joint Review Panel hearings being held in Vancouver this week were marked by a number of First Nations demonstrations and at one stage were also gate crashed by protestors. Five climate change protestors were charged with trespassing. Around 330 people have registered to speak to the panel in Vancouver as part of a series of hearings throughout the Province. The Joint Review Panel for the Project is an independent body, mandated by the Minister of the Environment and the National Energy Board. The Panel will assess the environmental effects of the proposed project and review the application under both the Canadian Environmental Assessment Act, 2012 and the National Energy Board Act. The panel will release its recommendation report by 31 December 2013.

  

WESTSHORE REPAIRS MAKE GOOD PROGRESS

In a release issued yesterday, Westshore Terminals Investment Corporation reported that good progress is being made in the repair efforts to the damaged trestle at Berth 1.  Most of the clean-up work is complete and construction of a new trestle is underway. Based on current plans, the repair work required to bring Berth 1 back into operations is anticipated to be complete by approximately mid-February 2013, with further work to rebuild a permanent road way on the trestle to be completed by the end of April. This time frame, which is ahead of prior expectations, may still be impacted somewhat by weather and the timely delivery and installation of the replacement trestle components. There have been no environmental issues arising from any of the clean-up or repair efforts.
 

CN AND INDIANA RAIL ROAD TO LAUNCH ALL-RAIL SERVICE
CN and the Indiana Rail Road Company (INRD) announced today an agreement on the construction of an intermodal terminal in Indianapolis and their plan to offer Indiana importers and exporters an all-rail option for containerized products moving to/from Asia.

The new Indianapolis terminal is under construction and will be located at INRD's existing Senate Avenue Terminal. It will be complemented by a container yard and will start receiving empty containers June 15, 2013; an on-site agricultural products containerized export loading facility will be in service about the same time. The first import train will arrive in late June.  CN estimates containerized import goods will flow in as little as 18-20 days from port loading in Shanghai and Qingdao, China, and Busan, Korea, to the INRD Senate Avenue Terminal, when using first port of call service.
 

SHOOTING INVOLVING ILWU MEMBERS IN RICHMOND

Four men were shot Wednesday night when a lone gunman opened fire after an altercation broke out at a function held by members of the International Longshore & Warehouse Union at the Riverside Banquet Hall.  Union president Mark Gordienko said the private function was jointly organized by union members and non-members to welcome 10 newly-annointed members of the union from a Vancouver union meeting that ended around the same time as the shooting.  It has been reported that three of the four injured are ILWU members.  A 26-year old man has been charged with three accounts of attempted murder, one count of aggravated assault and one count of dangerous driving.   The four men are reported to be in stable condition.
 

PMV NOTICE OF WORK
Port Metro Vancouver is beginning site preparation and preliminary work in and around Roberts Bank to help facilitate future construction of the Deltaport Terminal, Road and Rail Improvement Project. Between January 21, 2013 and the end of February 2013, Port Metro Vancouver will work with BC Hydro to relocate a portion of the transmission line located on the Roberts Bank causeway.

Work by BC Hydro crews will only occur during daylight hours. Noise impacts from construction activities are anticipated to be minimal. For more information, please read the Transmission Line Relocation Notice of Work.  To learn more about the Deltaport Terminal, Road and Rail Improvement Project please click here.

Government News

ASIAN GYPSY MOTH – HIGH RISK PERIOD STARTS MARCH 1^ST
Please be reminded that the high risk period for Asian Gypsy Moth in Canada will commence once again on March 1^st.  While we are in discussions with the Canadian Food Inspection Agency on changes to the program, the current policy noted under D-95-03 Asian Gypsy Moth Plant Protection Policy dated March 20, 2012 remains in effect.

International News

GREEK GOVERNMENT TARGETS SHIPPING FOR NEW REVENUES
In a controversial move, the Greek government has decided to apply a tonnage tax to merchant ships managed by companies based in Greece but sailing under a foreign flag. Around 3,800 ships are owned or controlled by Greek owners and flagged in other countries with Greece overall controlling around 16% of the world merchant fleet. The government estimates that revenues of around $100 million a year will be generated by the new measures (good luck with that one). The government has also announced a four-year tax on the revenues of shipbrokers, marine insurance brokers and average adjusters.

 

SOMALI PIRATES RELEASE SYRIANS AFTER TWO YEARS

    

Late last week, Somali pirates released three Syrian hostages held in captivity since December 2010, apparently without payment of a further ransom. The three unfortunates were the remnants of the crew of the Panama flagged, United Arab Emirates owned, bulk carrier Orna captured in December 2010 off the Seychelles. One Syrian crew member was shot dead by his captors in August last year in frustration at the slow pace of negotiations. The ship itself was eventually released in October 2012 on payment of a ransom of $600,000, but six crew members were held back as leverage for more money.

  

UAE LAUNCHES NEW CLASSIFICATION SOCIETY
The United Arab Emirates has announced the launch of a new classification society in response to the perceived needs of a growing maritime cluster in the Middle East. The society to be called Tasneef, will join the International Association of Classification Societies within three years. The Italian international classification society, RINA Group, has been selected to support the development of the new society. It was only in December that two of the world’s largest classification societies namely Det Norske Veritas and Germanischer Lloyd, announced a merger.

  

    QE2 (left) laid up in Dubai, new Queen Elizabeth (right)

Still with the Emirates, it has been announced that the QE2 has been sold by Dubai World for relocation as a floating hotel somewhere in Asia. She will undergo routine dry docking before making the voyage.

 

ICS/ISF PUBLISHES ANNUAL FLAG STATE ASSESSMENT
Liberia, the Marshall Islands, Denmark, France, Germany, Greece, Japan, the Netherlands, Norway, Sweden and the UK all scored 100% against the annual International Chamber of Shipping / International Shipping Federation assessment of flag state performance. Likewise, the Red Ensign family registers of the Cayman Islands and the Isle of Man which brought the final tally of star performers to 13. In the named and shamed category, the high flyers were Moldova, Sierra Leone, Bolivia, Cambodia and Mongolia. The annual assessment is based on 18 benchmarks, ranging from Paris and Tokyo MoU white list status, US Coast Guard Qualship 21 standing, ratification of key maritime conventions, age profile of flagged vessels, meeting reporting requirements and attendance at IMO meetings.

 

KINDER MORGAN TO INVEST IN NEW U.S. OIL EXPORT DOCK
Kinder Morgan Energy Partners, LP has announced an expansion project and acquisition in the Houston Ship Canal to handle steadily increasing demand for liquids storage and terminal capacity on the Gulf Coast. The combined investment is approximately $170 million which includes the purchase of 42 acres of land, construction of a new deep sea ship dock and the construction of 1.2 million barrels of liquids storage tanks. Kinder Morgan Energy Partners, LP is a leading pipeline transportation and energy storage company and one of the largest publicly traded pipeline limited partnerships in America. It owns an interest in or operates approximately 46,000 miles of pipelines and 180 terminals.

  

UNIPEC NOW THE WORLD’S LARGEST TANKER CHARTERER

 

        Chinese tanker Shengchi in Dalian

China International United Petroleum & Chemical Co. (UNIPEC), a wholly-owned subsidiary of China Petroleum & Chemical Corporation (Sinopec) was last year’s largest charterer of tankers, when it outstripped the traditional title holder Royal Dutch Shell. The company chartered over 700 tankers to carry some 159 million tons of crude oil according to numbers compiled by Poten Partners. Shell chartered 701 tankers to haul 73 million tons and oil trader Vitol Group was third with 463 charters to carry 48 million tons. The chartering blitz by UNIPEC accounted for 7.2% of all single voyages tanker charters. Headquartered in Beijing, UNIPEC has a number of branches outside of mainland China including in Hong Kong, Singapore, New York, the UK, and Vietnam. Despite the current excess of tanker capacity, China has embarked on construction of up to 50 VLCCs in line with the government’s directive to carry at least 50% of the vessel’s energy needs in Chinese controlled tonnage, also to protect order starved national shipyards from bankruptcy.
 

P&O SUSPENDS ARGENTINA CALLS
P&O cruises have suspended calls in Argentina as a consequence of continued harassment of vessels that have been or are scheduled to make calls in the Falkland Islands. Argentina invaded the Falklands in 1982 following which a British military task force recaptured them, however Argentina continues to claim sovereignty over what they call the Malvinas. Whilst en route from Argentina to the Antarctic, the pocket cruise ship Silver Explorer was hit earlier this week by a heavy wave off the island of South Georgia. The wave reached the height of the bridge deck, smashing a window and slightly injuring four crew members.
 

CRUISE SHIPS SUFFER SUBSTANTIAL P&I RATE INCREASE

 

Still with cruise ships, in the aftermath of losses sustained due to Costa Concordia, the International Group of P&I clubs has renewed its excess of loss reinsurance contract with increases of 125% for the 2012-2013 renewal. Passenger carrying vessels previously paid $1.3992 per GRT but the new rate is $3.1493 per GRT. The cost of salvaging the Costa Concordia is now estimated at $425m, bunker removal $25m; passenger liability $124m; crew liabilities $27m; third-party liabilities $27m and other professional costs (lawyers) $25m. The estimated time for completing the operation is September this year.

 

CONTAINER CARRIER CAPACITY CHANGES 2012/13

  

          Seaspan signing ceremony with HHI this week

The world’s container fleet is expected to increase by a net 9% in 2013 on account of 1.75 million TEU of new capacity being added – a new record. This is against forecast of very modest growth in demand. Looking ahead, it was confirmed this week that Seaspan has ordered up to ten (5 firm and 5 optional) 14,000-teu containerships with Hyundai Heavy Industries for delivery in 2015. The vessels are for charter to Yang Ming for 10 years with an option for a further 2 years.
 

Market Update
With a little more interest in capsizes, the BDI closed modestly up on Thursday on 820 points compared to 751 points last week and 700 points the week previously

                                                 Cape Size       Panamax       Supramax

Index                                           1573                 743               735
December 20 2012                        1367                 754               743
Spot time charter                    $8,400/day     $5,900/day      $7,700/day
One week ago                        $6,100/day     $6,000/day      $7,800/day

Containers:  Bragging rights from the annual tussle for top spot in the world of container handling are now available for 2012. Shanghai volumes improved by a modest 2.5% to 32.5 million TEU, Singapore was up 5.9% to 31.6 million TEU whilst Hong Kong was down 5.3% to 23.1 million TEU thanks to strong completion from its close neighbors, Yantian, Shekou, and Shenzhen.
 

Upcoming Events

MARINERS’ WORKSHOP
Feb 6/7 – The Shipping Federation of Canada in conjunction with the Chamber of Shipping and other local groups are hosting a Mariners’ Workshop at the Terminal City Club in Vancouver.  A block of rooms has been set aside for the workshop at the Terminal City Club at rates starting from $153/night.  For more information and to view the draft agenda see attached registration form.
 

CHAMBER OF SHIPPING ANNUAL GENERAL MEETING

Mar 1 – Save the date for our Annual General Meeting and lunch at the Vancouver Convention Centre.  Our guest speaker is Christian Waldegrave, Market Analyst.

Jan 22              TMEP Marine Hazard Workshop @ 09:00
Jan 23              COS Liner Committee Meeting
Jan 23              VMAA Lunch Seminar on Terms of Sale @ 12:00
Jan 23              COS Island Committee Meeting @ 13:00
Jan 25              COS / CMC Annual Lunch @ 12:00
Jan 30              PACMAR / NANS Meeting @ 10:30
Jan 31              VMAA Special Meeting @ 12:00
Feb 6-7             Mariners Workshop
Feb 11              BC Statutory Holiday – Family Day – Office Closed
Feb 12              COS Ship & Port Operations Committee Meeting @ 12:00
Feb 14              COS Board of Directors Meeting @ 11:30
Feb 20              COS Liner Committee Meeting @ 10:00
Feb 21              COS Navigation & Pilotage Committee Meeting @ 10:00
Feb 26              Green Marine Workshop (tbc) @ 09:00
Feb 27              PACMAR / NANS Meeting @ 10:30
Mar 1                COS Annual General Meeting @ 10:30

Ship of the Week

                        Ronja Carrier off the coast of Scotland

The Canadian built live fish carrier Ronja Carrier was returned to the Canadian flag in 2010 after an absence of three years. She was built by Verreault Navigation in Les Méchins, Quebec in 2002 as Sterling Carrier. This small but no less interesting vessel was specifically designed to transport live fish from farms to processing plants for her first owners, Persistence Shipping Co of Vancouver. However, the economics did not come together and she was sold in 2007 to trade successfully internationally for Norwegian owners Froyfish under the name Froytind.

Built in 2002 by Verreault Chantiers Navals, Les Mechins, Canada
LOA 41m
Beam 10m
Owned and Managed by Solvtrans Management A/S, Aalesund, Norway
Registered in Halifax, Nova Scotia

  

Froyfish was later acquired by another Norwegian company, Solvtrans of Alesund who renamed the vessel Ronja Carrier and employed her to Norway and Scotland on the spot market but in 2010 Solvtrans chartered her to Cooke Aquaculture of Black's Harbour, New Brunswick.  Cooke Aquaculture itself was established in 1985 as Kelly Cove Salmon by Gifford, Michael and Glenn Cooke . The company’s origins were humble, beginning with a single marine cage site containing 5,000 salmon. Four years later the family embarked on an aggressive plan for growth that continues to this day with acquisitions and a strategic search for development opportunities. Over the years the company expanded its facilities, product lines and distribution networks to become a fully integrated corporation with operations in New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland, Maine, Chile and Spain as well as sales people in major centers in the United States and Canada. Through its wholly-owned subsidiaries, Cooke Aquaculture processes and sells more than 160 million pounds of Atlantic salmon, five million pounds of trout and 20 million pounds of sea bass and sea bream each year.

In July 2012, the company issued a statement in response to critics of aquaculture part of which reads:

“Atlantic Canadians and our family-owned salmon farming companies deserve a respectful conversation about the realities of fish farming, both the challenges and the benefits. There is no such thing as open pen salmon farming. Our ocean farms, where our salmon spend the latter half of their lives in their natural habitat, are not open. Farms are securely moored on the ocean floor with systems that are designed and built to withstand local conditions by experts right here in Atlantic Canada. A multiple system of durable nets keep the salmon on the farm and the predators out, and our track record of containing our fish has been exemplary”

In 2012, the company was named to the Platinum Club of Canada’s 50 best managed companies after making the list for six consecutive years.

COS News – Week ending 11 January 2013
Issue No. 243  

 

PMV SOUTH SHORE TRAFFIC & CONSTRUCTON UPDATES
Due to a combination of circumstances resulting in the perfect storm, there was considerable south shore traffic congestion on both Monday and Tuesday this week. PMV has in place a traffic and construction web page that includes detailed weekly construction updates, traffic alerts and progress tracking. It also includes a subscription feature for interested port users and public: http://southshorecorridorproject.com/

TRANSMOUNTAIN PIPELINE PROJECT CAPACITY INCREASE
Kinder Morgan has announced that having secured additional shipper commitments, the capacity of the proposed project to twin the Transmountain Pipeline will be increased from 750,000 to 890,000 bpd.
 

NYSA – ILA NEGOTIATIONS BREAK DOWN
Putting renewed pressure on the February 6 extended deadline for a coastal contract agreement, the International Longshoremen’s Association (ILA) broke off talks with the New York Shipping Association (NYSA) this week on the terms of the local contract covering work rules and staffing at the Port of New York and New Jersey. The ILA walked out of the negotiations over what they described as “revolutionary changes in work practices and overstaffing.”  The ILA and USMX, umbrella agreement negotiations which are stuck on the vexed issue of container royalties, are set to resume next week.  Employers are seeking to amend payments that carriers have been making to longshoremen on containerized cargo since the 1960s.
 

TRANSCANADA TO BUILD PIPELINE FOR PETRONAS

Transcanada Corp. has been contracted to build the $5 billion pipeline into Prince Rupert to service the Petronas – Progress Energy LNG project which it is proposed to build on Lelu Island. In December 2012, the government approved the sale of Progress to it’s project partner Petronas. Transcanada was previously selected by the Shell led consortium to build the $4 billion GasLink pipeline to service their Kitimat project.
 

XANATOS MARINE EXTENDS RANGE OF AIS & ARPA
Xanatos Marine of North Vancouver has announced that they have successfully completed an AIS and ARPA trial on sixteen Indonesia Maritime Police vessels transmitting positional data over a range of over 2,000 km to headquarters in Jakarta.   Xanatos has provided a cost efficient and secure solution somewhat rugged and lengthy coastline of Indonesia.   Next steps are to work with local agents in Jakarata to expand the network with strategically selected ground stations equipped with AIS, Radar and CCTV allowing complete maritime domain awareness.

MDA AWARDED $706M CONRACT FOR THREE NEW SATELLITES
MacDonald, Dettwiler and Associates Ltd. of Richmond, BC announced the signing of a $706 million contract with the Canadian Space Agency to build, launch and provide initial operations for the RADARSAT Constellation Mission (RCM). The contract is expected to extend over a period of seven years and brings MDA’s current backlog to approximately $2.9 billion.

RCM is a constellation of three satellites providing around-the-clock coverage. Information obtained from RCM can include repeat imaging of the same area at different times of day, dramatically improving the frequency of monitoring coastal zones, northern territories, Arctic waterways and other areas of strategic and defence interest. RCM will also incorporate automated identification system technology, which when combined with the powerful radar images, supports the immediate detection and identification of ships worldwide.
 

CN OPENS NEW LOGISTICS PARK COMMENCE OPERATIONS
The opening of CN’s state-of-the-art intermodal terminal for containerized goods at the company's new Calgary Logistics Park will enable the company to provide seamless transportation solutions to rail customers moving products and commodities into and out of Calgary.  The 680-acre logistic park is strategically located  in Rocky View County.

 

CANADIAN CUSTOMS LAW

Daniel Kiselbach from one of our member companies, Miller Thomas, has co-authored and just released the first edition of Canadian Customs Law.  The book provides a current overview of the laws, cases and policies that govern customs in Canada. It features an overview of the fundamental Canadian requirements relating to the importation and exportation of goods.  Extensive references to legislation, cases and policies are set out in footnotes, checklists and appendices. Strategies and precedents for dealing with practical matters such as investigations, audits, verifications, voluntary disclosures and appeals are also discussed.  To obtain your own copy visit the Carswell Store on-line bookstore.

 

 

Government News

NEW CCG INSHORE RESCUE BOAT IN INNER HARBOUR
Randy Kamp, Parliamentary Secretary of Fisheries and Oceans announced that a new Canadian Coast Guard inshore rescue boat station will be established at the Royal Canadian Navy facility HMCS Discovery in downtown Vancouver.  The station will provide search and rescue (SAR) services in the Vancouver Harbour and surrounding area, supplementing the robust SAR presence already present.   As it is the case for all Inshore Rescue Boat Stations in British Columbia, operations will extend during the peak season from the May long weekend until after Labour Day.

The Royal Canadian Marine Search and Rescue, an important part of the maritime search and rescue network, at the request of the Coast Guard and as part of its funding arrangement has relocated one of its rescue units to enhance search and rescue services to mariners in Vancouver.   The Canadian Coast Guard will have 7 large vessels, 6 small vessels, 2 hovercraft, 13 search and rescue lifeboats, and 6 helicopters available for deployment in British Columbia.

 

CANADA EXTENDS ITS PRESENCES IN THE ARABIAN SEA REGION
Her Majesty's Canadian Ship (HMCS) Toronto will deploy early this year until the fall of 2013 with a crew rotation during the deployment contributing to the multinational coalition fleet conducting maritime security operations in the Arabian Sea region.  HMCS Toronto has been undergoing extensive training in preparation for this deployment as part of Combined Task Force 150 (CTF-150) and will replace HMCS Regina which has been in the region since August. HMCS Regina deployed to the Arabian Sea region with CTF- 150 in order to conduct maritime security operations in the Gulf of Aden, the Gulf of Oman, the Arabian Sea and in the Indian Ocean. 

CANADA HARMONIZES LOW-VALUE SHIPMENT THRESHOLDS WITH US
The Canada Border Services Agency (CBSA) and US Customs and Border Protection (CBP) announced today that Canada and the United States have increased and harmonized the value thresholds for expedited customs clearance to CDN$2,500 and USD$2,500 respectively. This is an increase from the current levels of CDN$1,600 for Canada and USD$2,000 for the United States.  In addition, Canada has increased the low-value shipment threshold to CDN$2,500 for exemption from North American Free Trade Agreement (NAFTA) Certificate of Origin requirements, aligning it with the current threshold of the US. 

 

CANADA EXPANDS CAPACITY TO EXPORT BEEF TO CHINA
China has approved four additional Canadian beef facilities that will now be able to export beef to China.  The newly approved establishments will increase the Canadian export capacity for beef in a market estimated by the industry to be worth approximately $20 million annually.

The following establishments can now export to China: Les Viandes Laroche Inc (Asbestos, Quebec), Ryding Regency Meat Packers Ltd. (Toronto, Ontario), St. Helen's Meat Packers Limited (Toronto, Ontario), and Canadian Premium Meats Inc. (Lacombe, Alberta).

 

International News

IMO LAUNCHES WORLD MARITIME DAY THEME

The International Maritime Organization (IMO) Secretary-General Koji Sekimizu has launched the theme for the 2013 World Maritime Day - Thursday September 26. The theme is: "Sustainable development: IMO’s contribution beyond Rio+20", and it has called on governments and the shipping industry to join together and provide a positive contribution towards formulating sustainable maritime development goals. Speaking at a reception, Mr. Sekimizu said that “as the United Nations’ international regulatory body for shipping, IMO has been, and continues to be, the focal point for, and the driving force behind, efforts to ensure that the industry becomes greener and cleaner and with shipping being so essential to the continued development and future growth of the world economy, IMO must continue to take the lead in supporting the shipping industry with the appropriate global standards and by helping to promote, through technical co-operation, the necessary national maritime transportation policy and institutional frameworks for a sustainable maritime transportation sector”.
 

TANKER MAKES CONTACT WITH SAN FRANCISCO BAY BRIDGE

   

  Overseas Reymar at anchor with dents and scrapes after the incident (left), the affected tower (centre) and fender damage (right)

The Overseas Shipholding Group Panamax tanker Overseas Reymar sustained damage on Monday morning this week after making contact with San Francisco Bay Bridge in restricted visibility. The vessel is reported to have contacted the eastern most tower on the western span of the bridge as she was proceeding outbound in ballast condition under the con of a San Francisco bar pilot. The vessel sustained scrapes and dents on her starboard quarter above the waterline, however there were no injuries, no pollution and no disruption to bridge traffic. The National Transportation Safety Board is investigating, however, there is no indication of vessel malfunction. OSG Shipholding is currently under creditor protection.

  

HIGH SPEED FERRY ACCIDENT IN NEW YORK

    

                                                                                 damaged starboard bow

The high-speed commuter ferry Seastreak Wall Street sailing from New Jersey to lower Manhattan, and loaded with hundreds of passengers, hit a dock on Wednesday resulting in a number of injuries, eleven being categorized as serious. The vessel which had recently undergone a major overhaul including new engines also suffered extensive damage to her aluminum hull. The ferry company, Seastreak LLC, is working with investigators to determine the cause of the accident.
 

JP MORGAN ENTERS RACE TO BUY PORT OF VIRGINIA
JP Morgan is the latest candidate to have an appetite for port infrastructure assets. The group has launched a $3.1 billion bid for the deep water Port of Virginia in partnership with Maher Terminals. Other known bidders include incumbent, Virginia International Terminals, APM Terminals and Deutsche Bank. The four Port of Virginia container terminals handle around 2 million TEU, but there is considerable latent capacity and the complex is seen as an attractive option for 2015 and onwards when much larger container ships are expected to transit the enlarged Panama Canal enroute to the U.S. east coast. A decision by the Commonwealth of Virginia as to next steps is expected by January 22.

 

BLEAK PROSPECTS FOR SHIPYARDS DESPITE ROCK BOTTOM PRICES
Clarksons data indicates a total of 1,095 ships were added to ship yard order books worldwide last year, down 35.5% from the 1,698 recorded for 2011 and 2,113 in 2010. Over the last four years the world fleet has grown by a disastrous 35% leaving us with a current 20% surplus of capacity over demand. In the bulk trades, vessels averaged earnings of only around $6,500 per day in 2012 and tankers around $15,000 per day, well below breakeven levels in both cases. The year ended with a bit of a bang on account of an order for a reported 14 Capesizes to be built in China by Mr. John Fredriksen’s Frontline Group, traditionally a pure tanker company. The new build price is reported to be only around $46 million per vessel. For the first time in a decade, even South Korean vessel exports fell in value terms to $39.7bn in 2012, a 30% year on year decrease.

Still with ship building, the government of Finland has responded to the political fallout from the failure of the STX Turku yard to secure the latest Royal Caribbean Oasis Class vessel order by asking the European Commission to look into French state subsidies given to the STX France St. Nazaire yard that may have helped the yard win the $1.3 billion contract.

 

SHELL DRILL RIG KULLUK TOWED TO SAFETY

  

The Shell oil rig Kulluk which drifted ashore on New Year's Eve in Sitkalidak Island, Alaska, has been towed to safety in nearby Kiliuda Bay for underwater inspection after a towing operation of 12 hours (see map below). The rig was returning from the Beaufort Sea to Seattle when her towing vessel lost power and its line to the rig. It was her original tow vessel the Aiviq that performed the recovery operation.

Shell has pointed out that the design of the Kulluk with fuel tanks isolated in the centre of the vessel and encased in heavy steel made the possibility of there being pollution highly unlikely and in this were proved correct. A US House committee has asked the US Coast Guard and the Department of the Interior to investigate the incident.

 

PRESTIGE MASTER BACK IN COURT

Spanish court proceedings are now well underway following the return of the former Master of the oil tanker Prestige to La Coruña, in October. Captain, Apostolos Mangouras, now 77 years old, his Chief Engineer and the former head of Spain's merchant marine department are being held responsible for the loss of 60,000 tons of crude oil into the Atlantic off Cape Finisterre in 2002. Believe it or not, prosecutors for the Spanish government are seeking a 12 year prison sentence for Captain Mangouras. The Prestige split in half and sank six days after it ran into trouble during a heavy storm in the Bay of Biscay. Authorities in Spain, France and Portugal all declined to provide the vessel with a Port of Refuge port and ordered here away from the coast where she eventually broke up. The damage caused by the spill is estimated at £3.1 billion according to court documents and the Spanish state is seeking more than €2bn in compensation via the vessel's insurers. French authorities are also claiming damages. The judges are said to have 280,000 pages of evidence to consider with 130 witnesses called to a special courthouse. Captain Mangouras is overwhelmingly supported by the marine industry on the grounds that that he not only saved his crew but stayed with his ship and has behaved in an exemplary manner throughout his long ordeal.

 

MAERSK URGES LEVEL PLAYING FIELD IN HKG

   

Maersk Line has appealed directly to the Hong Kong government to implement a level playing field for shipping lines serving the port. The company has expressed concern that the current voluntary use of low sulphur fuel by 17 container lines is not having the intended effect given that government’s incentive scheme covers less than half of the additional costs. Some 200,000 vessels a year call at Hong Kong including around 30,000 deep sea vessels and it is estimated that primary emissions would drop by 80% were all vessels to switch to low sulphur fuel. The government is under intense public pressure to act since Hong Kong has never met its air quality targets since they were first adopted in 1987 and the poor air quality has started to significantly impact the quality of life in the region.

 

GRAHAM WESTGARTH JOINS GASLOG

    

           Capt. Graham Westgarth and GasLog Singapore

Amongst leadership changes at the GasLog Group, former Teekay Executive Vice President for Innovation, Technology and Projects, Captain Graham Wesgarth has been recruited as Executive Vice President, Operations and Strategy effective January 14. Captain Westgarth will also continue to wear the hat of Chairman of Intertanko. The GasLog Group which is owned by Mr. Peter G. Livanos owns ten LNG carriers and through GasLog LNG Services operates a further eleven vessels owned or operated by the BG Group. The company also has eight LNG new builds plus options on order at Samsung. Another former Teekay man, Mr. Paul Wogan has been appointed Chief Executive officer of GasLog.

 

WATER LEVELS IN MISSISSIPPI AT CRITICALLY LOW LEVEL

   

               emergency dredging underway

As a consequence of the sustained inland drought of 2012, the US Army Corps of Engineers has been taking emergency measures to remove underwater rock pinnacles in the Mississippi River and thereby avoid a shutdown of barge traffic in the upper reaches. The American Waterways Operators and the Waterways Council have jointly appealed again to President Obama to release water from Missouri River reservoirs to keep the Mississippi open to barges. A shutdown of traffic by January 15 with significant impact on trade and jobs has become a real fear if action is not taken.

 

Market Update
The BDI continues to be in intensive care, closing on Thursday on 751 points compared to 700 points last week and 708 points just before Christmas.

                                                Cape Size       Panamax      Supramax

Index                                         1367                 754                743
December 20 2012                      1254                 675                739
Spot time charter                    $6,100/day       $6,000/day      $7,800/day
One week ago                        $5,000/day       $5,800/day      $7,700/day

Containers:  Drewry is forecasting that international container lines will end 2013 with profits of around $5 billion based on demand growth of 4.6% and continued discipline in the market. Full year results for 2012 will be revealed over the coming weeks. Tempted by some of the lowest new build prices that we are ever likely to see, several container lines are looking beyond the current glut of capacity to the next round of mega ship orders. Yang Ming is reportedly close to a contract with Seaspan for a series of 14,000 TEU vessels whilst K-Line and United Arab Shipping Co are both reportedly close finalizing orders for new and larger ships.

 

Upcoming Events

MARINERS’ WORKSHOP
Feb 6/7 – The Shipping Federation of Canada in conjunction with the Chamber of Shipping and other local groups are hosting a Mariners’ Workshop at the Terminal City Club in Vancouver.  A block of rooms has been set aside for the workshop at the Terminal City Club at rates starting from $153/night.  For more information and to view the draft agenda see attached registration form.
 

CHAMBER OF SHIPPING ANNUAL GENERAL MEETING
Mar 1 – Save the date for our Annual General Meeting and lunch at the Vancouver Convention Centre.  Our guest speaker is Christian Waldegrave, Market Analyst.

 

Jan 15              ISSC Board of Directors Meeting @ 12:00
Jan 15              ICS Canada Board of Directors Meeting @ 12:00
Jan 18              COS Navigation & Pilotage Committee Meeting @ 10:30
Jan 22              TMEP Marine Hazard Workshop @ 09:00
Jan 23              COS Liner Committee Meeting
Jan 23              VMAA Lunch Seminar on Terms of Sale @ 12:00
Jan 23              COS Island Committee Meeting @ 13:00
Jan 25              COS / CMC Annual Lunch @ 12:00
Jan 30              PACMAR / NANS Meeting @ 10:30
Jan 31              VMAA Special Meeting @ 12:00
Feb 6-7             Mariners Workshop
Feb 11              BC Statutory Holiday – Family Day – Office Closed
Feb 12              COS Ship & Port Operations Committee Meeting @ 12:00
Feb 14              COS Board of Directors Meeting @ 11:30
Feb 20              COS Liner Committee Meeting @ 10:00
Feb 21              COS Navigation & Pilotage Committee Meeting @ 10:00
Feb 26              Green Marine Workshop (tbc) @ 09:00
Feb 27              PACMAR / NANS Meeting @ 10:30
Mar 1                COS Annual General Meeting @ 10:30

 

Ship of the Week

   

new state of the art heavy lift ship – Dockwise Vanguard

Following her launch on October 7, the latest creation of the Dutch heavy lift specialist operator Dockwise was christened on November 30 2012 in Ulsan, South Korea. Builder Hyundai Heavy Industries is currently conducting sea trials on this highly innovatively designed semi-submersible heavy-lift vessel. The unique bowless design will allow entire intact superstructures to be shipped using the vessel’s entire deck length.

LOA 270 meters
Beam 70 meters
Draft in operation 11.0 meters (submerged 31.5 meters)
DWT 117,000 tons (approx)
Speed 14.5 knots

   

                                        artistic impressions of what Baltic Vanguard will be capable of in service

The innovations in naval architecture behind Dockwise Vanguard are intended to enable oil and gas companies to design and move ever larger offshore units, which were previously impractical. The specialized training required to operate the vessel has been taking place in The Netherlands and with Wartsila in Italy. See the link to an impressive video presentation on this vessel: http://www.offshorekinematics.com/vanguard/page/home.html

The Dutch dredging company Royal Boskalis Westminster NV, owner of Smit Tugs, is in the process of trying to gain control of Dockwise. Following initial rejection, Boskalis raised its bid in December placing a value on the company of around $945 million. Ironically, Dockwise bought Fairstar Heavy Transport NV in 2012 in a fairly acrimonious takeover transaction.

COS News – Week ending 4 January 2013
Issue No. 241

WISHING A HAPPY AND PROSPEROUS NEW YEAR TO ALL OUR READERS

 

USMX AND ILA EXTEND FOR ONE MONTH

The International Longshoremen’s Association and US Maritime Alliance (USMX) agreed at the 11th hour to extend their collective agreement by one month to avert a strike on east and Gulf coast container terminals as of December 29. The extension was brokered by the Director of the Federal Mediation and Conciliation Service after talks effectively stalled on December 18. The primary issue of contention remains that of payment of hugely expensive container royalties to ILA members.

Meanwhile the Pacific North West Grain Terminal dispute rumbles along with the three of the original four terminal groups which are party to the dispute implementing the terms of their last and final offer. This is in spite of an overwhelming ILWU vote rejecting that offer and the employers having replacement labour and tugs readily available in case of a strike. The terminals imposing the new contract terms are Marubeni Corp, Mitsui & Co. and Louis Dreyfus. The Cargill owned Temco terminals in Tacoma and Portland have broken ranks and made their own deal with the union.

KITIMAT LNG UNDER NEW OWNERSHIP STRUCTURE

Under a new ownership structure for Kitimat LNG, Encana Corp. and EOG Resources Canada Inc. have both agreed to sell their combined 50% share in the project to Chevron Canada who will pursue the project in partnership with Apache Corp. Chevron Canada will also operate the plant and the related Pacific Trail Pipeline that will bring gas from northeastern B.C. Under the deal, Chevron will also purchase 644,000 acres of petroleum and natural gas rights in the Horn River and Liard Basins in B.C. leaving Apache to manage the upstream assets. The project is currently in the front-end engineering and design phase to export 1.4 billion cubic feet per day, or five million tons of LNG per year and which could eventually double.

In October 2011, the National Energy Board granted Kitimat LNG a 20 year export license. Other proposed LNG projects such as the BG Gas, Petronas and Shell projects have yet to reach the regulatory approvals stage. A much smaller project known as BC LNG is owned by the Haisla First Nation and Houston-based LNG Partners. Chevron on the other hand is also operator and part owner of the huge $54 billion Gorgon LNG development in Western Australia — the world’s largest new LNG project. Australian and Mozambique export LNG projects are expected to hit the market starting in 2018 underlining the need for BC’s projects to move forward expeditiously.

CANPOTEX AND SINOFERT REACH NEW AGREEMENT

Canpotex Limited (Canpotex) announces that it has reached agreement with Sinochem Fertilizer Macao Commercial Offshore Limited, a subsidiary of Sinofert Holdings Limited (Sinofert), to supply 1,000,000 tonnes of potash in the first half (January - June) of calendar year 2013 at price levels which reflect a US$70.00 per tonne reduction from the last contract price established in March 2012.

SEASPAN POISED TO SEAL DEAL WITH YANG MING

Taiwan’s Yang Ming is expected to sign a long-term charter agreement for a series of 14,100 teu ships with Seaspan, which will place the order with Hyundai Heavy Industries. Details of the contract are being finalized with Yang Ming hoping to secure some very attractive charter rates as newbuilding prices continue to decline. Seaspan will place the newbuilding order with South Korea’s HHI for deliveries from late 2015.

Mr. Wang recently confirmed his decision to stay on as chief executive of Seaspan after originally intending to step down on January 1 while remaining co-chairman. He is ranked number 25 in Lloyd’s List’s latest top 100 most influential people in shipping.

Seaspan’s managed fleet of owned and third-party vessels comprises 76 containerships of 475,000 teu , including seven on order. The largest until now were six 13,100 teu vessels on charter to Cosco

Container Lines for 12 years. The deal with Yang Ming expands Seaspan’s client base, which already includes lines such as China Shipping,Hapag-Lloyd, Hyundai Merchant Marine, K Line and Mediterranean Shipping Co as well as Cosco.

CN AND IBEW REACH TENTATIVE LABOUR AGREEMENT

CN announced has reached a tentative agreement with the International Brotherhood of Electrical Workers (IBEW) System Council 11 to renew the labour contract for approximately 700 CN signals and communications employees in Canada. Details of the agreement - negotiated prior to the expiry of the current contract on Dec. 31, 2012 -- are being withheld pending ratification by the union's membership. CN expects to hear the results of the union's ratification vote before the end of January 2013.

AECO HIGHLY CRITICAL OF CANADIAN REGULATIONS

The Association of Arctic Expedition Cruise Operators (AECO), an international organization representing the expedition cruise industry in the Arctic, has met with a number of Canadian authorities to identify requirements for tour operations in Arctic Canada. The 29 international members operate approximately 26 vessels in the Arctic. According to a press release, AECO has found that the challenges expedition cruise operators face in Arctic Canada are significant and as a consequence, the number of expedition cruise operations in the Canadian Arctic is declining. The complex licensing and permitting system is given as the main reason. It noted: “the list of bodies that expedition cruise operators need to contact in order to operate in Canada is extensive and includes approximately 10 different permitting authorities and the filling in of approximately 20 different application forms. “Many of the application forms have nothing to do with tourism, but are concerned with for example physical alteration of the terrain, building runways, mining, exploration and much more.”

CHANGES AT EMPIRE SHIPPING

President and CEO of Empire Shipping Agency, Bruce Rothdram, wishes to announce that Chairman, Claus Hendriksen, retired last week following 36 years with Empire. Claus will remain a director and we wish him well in his retirement. Furthermore, John Yeung joined Empire this week as the new Marketing Manager.

Government News

CBSA ADVICE ON EAST COAST CARGO DIVERSIONS

CBSA has provided guidance to vessels that choose to divert cargo to Halifax, Saint John and Montreal in view of the prolonged longshore negotiations encompassing the US east and Gulf coasts.

For those vessels that are ACI-capable it is required that amended pre-arrival/pre-load information be submitted to CBSA as soon as it is known. The following information is required:

1. Name of Vessel
2. FPOA
3. ETA of Vessel

For vessels that do not have the ability to communicate with the CBSA via EDI, the appropriate documentation (carrier, vessel, cargo, and container information – such as would be contained in a ship’s manifest) must be scanned and sent to CBSA as soon as known

No persons or cargo are to be offloaded from the vessel prior to CBSA risk assessment having been conducted, for that reason offloading is not to occur until one hour has elapsed from CBSA confirmation of receipt of ship’s manifest submission. If further customs processing is required of the vessel, cargo, or crew the carrier will be notified within that one hour time period.

The information is sent to the following email addresses:

For diversions to Halifax:

CBSA-ASFC_NTC-CNC_MARINE-MARITIME This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; This e-mail address is being protected from spambots. You need JavaScript enabled to view it

For Diversions to Saint John:

CBSA-ASFC_NTC-CNC_MARINE-MARITIME This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; This e-mail address is being protected from spambots. You need JavaScript enabled to view it

For Diversions to Montreal:

CBSA-ASFC_NTC-CNC_MARINE-MARITIME This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; and This e-mail address is being protected from spambots. You need JavaScript enabled to view it

The US Department of Homeland Security has also provided similar guidance in their advisory entitled, US Customs and Border Protection Procedures for Vessel and Cargo Entry Processing During Trade Disruptions - Potential Trade Disruption – East and Gulf Coast Vessel Ports.

JOINT REVIEW PANEL IN VICTORIA, VANCOUVER AND KELOWNA

The Joint Review Panel conducting the review of the proposed Enbridge Northern Gateway Project will hear oral statements in Victoria, Vancouver and Kelowna beginning on 4 January 2013. The Panel will be in Victoria from 4-11 January, Vancouver from 14-18 January and 30 January – 1 February, and Kelowna on 28 January. Please see the Panel’s website for the locations and specific start times for each day.

UPDATE WOOD PACKAGING BETWEEN CANADA AND US

Canada and the United States have agreed upon the implementation of the International Standard for Phytosanitary Measures (ISPM) 15: Regulations for wood packaging material in international trade for wood packaging produced and moving between Canada and the US. The specific date of full implementation of the requirements has not been established however the US has indicated that its Final Rule on the implementation of ISPM 15 between both countries is not expected to be published before 2013. Once publication of the Final Rule is complete, an implementation date will be jointly confirmed by the Canadian Food Inspection Agency (CFIA) and the United States Department of Agriculture (USDA). Based on the anticipated timing of the publication of the Final Rule, full implementation of ISPM 15 for Canadian or U.S. origin wood packaging will not occur prior to January 2015. The US and Canada have agreed to provide industry with a minimum of a 12 month phase-in period of “informed compliance” (i.e. notification of the requirements) prior to full implementation.

REGULATIONS TO IMPROVE ENERGY EFFICIENCY ENTER INTO FORCE

New regulations aimed at improving the energy efficiency of international shipping entered into force on January 1^st. The amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL) were adopted in July 2011. They add a new chapter 4 Regulations on energy efficiency for ships to MARPOL Annex VI, to make mandatory the Energy Efficiency Design Index (EEDI), for new ships, and the Ship Energy Efficiency Management Plan (SEEMP) for all ships. Other amendments to Annex VI add new definitions and the requirements for survey and certification, including the format for the International Energy Efficiency Certificate. The regulations apply to all ships of 400 gross tonnage and above. However, under regulation 19, the Administration may waive the requirements for new ships up to a maximum of 4 years.

International News

ROYAL CARIBBEAN ORDERS THIRD “OASIS CLASS” CRUISE SHIP

Royal Caribbean has confirmed an order for a third Oasis-class cruise ship with STX France, St. Nazaire yard, for delivery in 2016. The order comes with an option for a further vessel for delivery in 2018. The order had been expected to go to STX Europe’s Turku yard in Finland where the two existing Oasis class ships were built and where the Finnish government was offering state aid to a yard which badly needs new orders and where hundreds of job losses now seem inevitable. At 225,000 GRT, the Oasis Class vessels are the world’s largest cruise ships and have thus far operated exclusively in the Caribbean and even with the enlarged Panama Canal due to open in 2015 will still be about 7 meters too wide to transit. The new order is believed to be worth around $1.3 billion.

On a less positive note, the rumors are hot and heavy that the QE2, berthed in Dubai for the past four years, is to be scrapped in China for around $20 million.

FEARS FOR BUNKER COSTS IN 2013

On the back of expanding world trade and despite extensive slow steaming, it is predicted that the demand for bunkers will increase to a record 3.37 million barrels a day in 2013 with average prices at around $690 a metric ton. The IMF is estimating that world trade will grew by 3.2% in 2012 and will grow a further 4.5% in 2013 despite continuing recession in the Euro zone and Japan. To take some of the pain out of the oversupply of ships, Clarksons estimates that around 60 million deadweight tons were scrapped in 2012 and a further 46 million tons will make razor blades this year.

SLOW STEAMING IMPROVES CONTAINER SCHEDULING

Whilst not everyone appreciates the need for slow steaming to conserve fuel, reduce emissions and help the bottom line, several prominent cargo interests have kicked off the new year by pointing out the improvements in scheduling reliability that slow steaming has brought about. A speed reduction from say 22-23 knots to 19-20 knots can save as much as 150 tons per day in fuel consumption. The impact has been seen internationally with steadily improved reliability not least here in Vancouver where the lines have collectively pushed reliability to 71% in December with several lines maintaining a 100% record. In a bid to further induce reliability, PMV has introduced a wharfage based incentive scheme as of January 1 whereby vessels exceeding an 85% threshold over the course of the year will qualify for a 10% wharfage discount. This is viewed as a further element in overall supply chain performance.

GERMAN GOVERNMENT NERVOUS OF BANKS’ EXPOSURE TO SHIPPING

The German financial watchdog has been ordered to pay particular attention to banks’ ship lending portfolios when conducting 2012 audits. Shipping lines worldwide have little choice but to write down fleet values during the current crisis during which many banks have closed the door to shipping loans not least to the German KG shipping funds market which has completely collapsed after many years of success. In 2012, it was reported that the group of 12 large, internationally active German banks had a portfolio of shipping loans amounting to €97.8 billion ($128.7 billion).

ICEBERG 1 RELEASED AFTER NEARLY THREE YEARS

Iceberg 1 (left), Somali police on the march (centre) and Italian marines return to Italy (right)

We have piracy related stories from Somali, Nigeria and Indonesia this week. The 24 crew members of the UAE ro-ro vessel Iceberg 1 were freed by South African trained Somali police just prior to Christmas after being held captive for 2 years and 8 months. A number of skirmishes between police and pirates occurred resulting in deaths of both sides before rescue of the ship’s crew was completed. The operation was reportedly paid for by the owner of the cargo trapped on the vessel after the vessel’s owner abandoned both the vessel and her crew. By the time of the rescue, the vessel was reportedly out of food, water and medicine and the crew requiring urgent medical care. They were reportedly composed of nine Yemenis, six Indians, four from Ghana, two Sudanese, two Pakistanis and one Filipino. The cargo owner is said to have paid up to $1.5 million dollars to the Somali President’s son to secure government cooperation after negotiations with the pirates long ago failed. Two captured pirates were jailed for 10 years, another for 3 years.

Staying with Somali piracy, two Italian marines arrested by India last March for allegedly shooting two fishermen in error, arrived back in Italy just before Christmas after India gave them special leave. The two marines, were part of a military security team protecting the tanker Enrica Lexie at the time of the incident. The Italian government has undertaken to ensure they return to India by Jan. 10 to stand trial.

On to Nigerian piracy and four seamen were kidnapped just before Christmas after their vessel was attacked some 40 miles off the coast of Nigeria. The vessel attacked was the Italian operated offshore supply vessel Asso Ventuno and three of the four captives are reported to be Italian. Earlier in December, five Indian crew members were abducted in the same area after gunmen attacked an oil tanker capturing six employees of Hyundai.

Finally to Indonesia where eight Indonesian men have been charged following an attack on the bunker tanker Merlion Dua in waters off the coast of Malaysia in early December. If found guilty they face a maximum jail term of 20 years, together with a whipping (now there’s a deterrent).

STEVE JOBS’ YACHT IMPOUNDED

The personal luxury yacht of the late Steve Jobs, Venus, was impounded in Amsterdam just before Christmas. Mr. Jobs was the founder and CEO of Apple took a strong personal interest in the design and construction of the vessel until the time of his death. The dispute is between the French designer who claims that Mr. Jobs' heirs still owe him 3m euros of a 9m euro fee for the project. Whilst not in the mega yacht league, Venus has an LOA of 80 metres and reportedly cost $138m to build in The Netherlands. The vessel is described as minimalist in style and is named after the Roman goddess of love. Mr. Jobs died of pancreatic cancer in 2011 and never had the opportunity to sail in his creation.

CALIFORNIA AGREEMENT TO PROTECT ENDANGERED WHALES

The IMO has approved new vessel traffic lanes in the approaches to San Francisco and in the Santa Barbara Channel into Los Angeles & Long Beach. Protection of endangered migrating blue, fin and humpback whales has been stepped up after five whales died in ship related accidents in 2010. The U.S, National Oceanic and Atmospheric Administration (NOAA) was instrumental in crafting the new lanes.

MISSION TO SEAFARERS CHRISTMAS GIFTS

The annual Mission to Seafarers distribution of gift boxes to seafarers at Christmas hit the headlines just before Christmas. In case you missed it, the Vancouver Sun may be found online.

GIANT RUBBER DUCK HIGHLIGHTS SYDNEY FESTIVAL

In a country which is never short of good ideas to promote a party, organizers of the annual Sydney Festival which opens tomorrow have floated a giant duck through Sydney harbor. The 50 foot duck which was designed by a Dutch artist is made of PVC and will remain moored in Darling Harbour for the duration of the festival which ends on January 23. Sydney has held its popular summer festival of music, theatre, dance and visual arts for the past 36 years.

Market Update

To place matters in context, 2012 was the worst for a quarter of a century for dry bulk carrier earnings with the Baltic Dry Index averaging only 920 points. Not since 1998 has this occurred when the average for the year was 945 points. However, to underline just how bad things currently are, the BDI closed on Thursday on 700 points compared to 708 points on Thursday two weeks ago, just before Christmas.

Cape Size Panamax Supramax

Index 1254 675 739
December 20 2012 1226 734 735
Spot time charter $5,000/day $5,800/day $7,700/day
One week ago $4,900/day $5,300/day $7,700/day

Upcoming Events

MARINERS’ WORKSHOP

Feb 6/7 – The Shipping Federation of Canada in conjunction with the Chamber of Shipping and other local groups are hosting a Mariners’ Workshop at the Terminal City Club in Vancouver. A block of rooms has been set aside for the workshop at the Terminal City Club at rates starting from $153/night. For more information and to view the draft agenda see attached registration form.

CHAMBER OF SHIPPING ANNUAL GENERAL MEETING

Mar 1 – Save the date for our Annual General Meeting and lunch at the Vancouver Convention Centre.

 

Ship of the Week

Celebrity Solstice berthed at Circular Quay, Sydney last month

Celebrity Cruise Line made thunder down under last month with the arrival of the company’s flagship, the luxurious 4.5 stars, Celebrity Solstice. Parent company “Royal Caribbean International Australia” announced the ship’s arrival more than 18 months ago, declaring that Celebrity Solstice would be the “highest-rating” ship to be based in Australia. The vessel was repositioned from a summer in the Mediterranean, sailing through the Suez canal to Dubai and Singapore before making a big splash with the locals on her arrival in Sydney on December 9.

Celebrity Solstice will reposition to the west coast via Hawaii for a series of Alaska cruises out of Seattle this year. Unfortunately the company had to settle for Seattle when the height of the vessel was about 2 meters too much to squeeze under the Lions Gate Bridge so if you want to see her, Victoria will be an option.

Built by Meyer Werft, Papenburg, Germany 2008

Owned and operated by Celebrity Cruise Lines, Miami
LOA 314.9 metres
Beam 36.9 metres, maximum width 46m
GRT 121, 878 tons
Propulsion 2 x 20.5 MW Azipods
Service speed 21 knots, maximum speed 24 knots
Capacity 2,850 passengers & 1500 crew
Cost $750 million
Sister ships: Celebrity Equinox, Eclipse, Silhouette, Reflection (4)

the iconic Sydney Harbor Bridge (left), alongside in Brisbane (centre) and alongside in Melbourne (right)

Celebrity Cruises was founded in April 1988 as a subsidiary of Greece’s Chandris Group to operate premium standard cruise ships to Bermuda, a condition of Bermuda Government contracts. However, the origins of the company go back to 1959 when Anthony Chandris, son of the Greek freight shipping company owner John Chandris, decided to establish a new passenger line to carry migrants from Europe to Australia. The family did so by purchasing second hand tonnage from mainly UK companies and even managed to secure the contract to carry mail from Greece to Australia. Subsequently the aging fleet traded for many years in the Caribbean with well maintained, but some of the oldest passenger vessels afloat. The formation of Celebrity Cruises was a giant leap to correct that situation and the company was awarded the exclusive contract for two ships to trade to Bermuda for a five year period beginning in 1990. Eventually, during a period of cruise industry consolidation, the Chandris family sold off their interests in Celebrity Cruises to Royal Caribbean International in 1997.

a sampling of the original Chandris fleet Britanis built 1932 (left), Australis built 1939 (centre) and The Victoria built in 1936 (right)

At various times, the original Chandris fleet of second hand vessels were troop ships, subsidized emigrant ships and latterly cruise ships trying to make $$ for the family. Tradition is maintained today with Celebrity Cruises being perhaps the only cruise line to maintain the tradition of Greek officers on all of their vessels.