Tuesday March 31, 2020 Daily Briefing Leading maritime commerce since 1734

LEAD STORY: Saudis join floating storage surge Saudis join floating storage as oil surplus strains land-based capacity surge as oil surplus strains WHAT TO WATCH: land-based capacity Coronavirus: More ship seafarers test positive

Lockdown brings Indian subcontinent ship scrapping to a halt

Capital dispute with AISSOT traced to sanctions fear

Coronavirus: Singapore allows crew changes under special circumstances

OPINION: Lifting Trump’s tariffs on China could boost the medical supply chain

ANALYSIS: Coronavirus: No let-up in boxship blank sailings

Coronavirus: Støhle says ‘buoyant’ SAUDI ARABIAN OIL trader Aramco Trading Co has reportedly spot LNG charter market is chartered three very large crude carriers for floating storage, joining unexpected companies including Shell, Vitol and Trafigura that have hired tankers MARKETS: to profit from an oversupply of crude and refined products amid China Merchants orders four plunging prices. multipurpose ships and sells three small tankers The Kingdom’s storage play suggests that ATC is running out of land- China Merchants Port warns on based capacity as the coronavirus lockdown slashes oil demand by 20% weakening economic outlook over March and April. ATC leases or owns land-based storage tanks off Fujairah, Yanbu, Ain Sukhna and Malaysia, according to its annual Coronavirus: Trucker shortage report. delaying cargo at Indian ports

IN OTHER NEWS: One of the three ATC-chartered VLCCs was listed as Cosgrand Lake, Coronavirus: Call for seafarers to be owned by Chinese shipowner Cosco, according to shipbroker reports. regarded as ‘key personnel’

Asahi to build first battery-powered The other two were also said to be Cosco-owned tonnage. All VLCCs tankers were taken at a daily rate of $100,000 for a six-month period.

ICTSI warns on lockdowns impact at They are among some 21 VLCCs reported chartered for periods of Manila between six and 12 months in the past two weeks, with nine fixtures Moscow raises the stakes over US specifically listing the tankers were designated for floating storage. sanctions on oil firm Oil companies and traders are turning to storing oil at sea as prices hit 18-year lows.

The 20% drop in crude demand equates to some 600m barrels of surplus oil in a month — unprecedented volumes that will strain existing land-based tank capacity.

Lloyd’s List | Daily Briefing Tuesday 31st March Page 1 Shell has amassed at least five VLCCs for six-month pandemic now gripping Europe and the US, periods over the fortnight, paying as much as paralysing air and land transport. $120,000 per day for its last tanker charter, shipbroker reports show, almost double levels seen The oil price rout and marketing contango allows for similar deals at the beginning of March. Oil floating storage to be profitable for VLCCs that are trader Trafigura has taken at least three VLCCs, and fixed for six-month period charters at levels of Vitol was reported to be taking two. $139,000 daily or lower, according to figures from Norwegian investment bank, Cleaves Securities. The flurry of floating storage fixtures has reignited a rally in crude tanker spot rates, with at least two Smaller tanker sizes are also being chartered for charters provisionally agreed at rates equating to floating storage of refined products, particularly jet more than $260,000 daily over Friday and Monday. fuel, for which demand has crashed to just 10% of normal levels. Until then, rates had quickly deflated since mid- March, when Saudi Arabia’s oil price war with Newbuilding VLCCs leaving Asian shipyards could Russia to keep market share triggered a surge in also be deployed to store jet fuel. crude tanker rates to the highest since the tanker wars of the early 1980s. Floating storage is near record levels, with 127.4m barrels stored on 84 tankers for the week ending Saudi Arabian shipping company Bahri paid a March 26, according to Lloyd’s List Intelligence data. record-breaking $350,000 daily to charter a VLCC, which was one of 20 hired over a 10-day period to That is down from the record 131.2m barrels seen in load additional crude cargoes. the prior week. Figures are inflated by sanctioned tankers, with Iran’s National Iranian Tanker Saudi Arabia’s pledge to flood the market with Company accounting for 38 of the 53 VLCCs additional crude coincided with the coronavirus currently used for floating storage.

WHAT TO WATCH Coronavirus: More cargoship seafarers test positive CASES of coronavirus infections on board cargo treatment for those infected and to protect the vessels are increasing, following the cases reported remaining crew,” said the company. on a Maersk boxship last week. One infected crew member was said to have safely Two of the 17 crew members — the chief officer and transferred to a hospital on March 28 and is third officer — on a Pacific Basin dry bulker tested recovering well. Arrangements to hospitalise the positive at Valparaiso anchorage, Chile on March 27, other two sick seafarers start on March 30. while the second officer was suffering from a fever, according to an internal company circular seen by All the remaining crew were evaluated on March 29 Lloyd’s List. and are being monitored to test their temperature and other symptoms, Pacific Basin added. The The vessel was said to have been requested by local families of the crew members have been informed authorities to “remain at the anchorage for latest 14 and are being kept updated on the situation. days for quarantine or drift off port limits without calling another port”. “The owner is currently taking extra precautions to minimise the impact of coronavirus and protect the In an email response, the Hong Kong-listed dry crew’s health. The health and wellness of all the bulker owner confirmed the infections on the 37,528 crew is a primary concern at this time,” the dwt Isabela Island. statement said.

“The owner has been working with the local The circular said the vessel had not been to China authorities to obtain the best possible medical and the entire crew joined before January 23. The

Lloyd’s List | Daily Briefing Tuesday 31st March Page 2 company is checking whether local Chilean officers List that the information was inaccurate. The person will be available to replace the crew on board. said the dead crew member was not the master of the ship and that coronavirus was excluded from the Lloyd’s List Intelligence data shows that the Hong causes of death by local medical experts after Kong-flagged vessel remained at Valparaiso diagnosis. anchorage as of today. It left Guayaquil, Ecuador on March 18 and the previous port it called at was “The real cause of his death is still pending autopsy Salvaverry in Peru. results, but it is not coronavirus. And the vessel has resumed its journey after the rest of the crew tested Meanwhile, a master on Cosco Shipping dry bulker, negative for the virus.” Feng De Hai, was said to have died from the illness at Bosphorus anchorage, Turkey, according to the According to vessel tracking data from Lloyd’s List local Tribeca, which cited the local Intelligence, the Hong Kong-flagged 63,356 dwt dry sanitary office. bulker left Turkey’s Istanbul anchorage on March 28. It was due to arrive in Dneprobugsky in Ukraine “The vessel was immediately quarantined by the on May 29. sanitary office and the body of the deceased landed ashore for further delivery to his family,” Tribeca These incidents come after several seafarers were said in an email to customers. found to have contracted the virus on a Maersk containership at the port of Ningbo-Zhoushan last However, a spokesperson for the owner told Lloyd’s week. Lockdown brings Indian subcontinent ship scrapping to a halt THE demolition market on the Indian subcontinent Meanwhile, Pakistan announced last week that all has come to a standstill as countries takes beaching and boarding of vessels at Gadani ship aggressive measures to try to slow the spread of recycling yards would be suspended for a minimum coronavirus. period of four weeks and thereafter pending a further order. Cash buyers are bearing the brunt of this lockdown, although the pall of gloom and uncertainty also Shortly, after the declarations of closures in pervades in all the subcontinent recycling locations Pakistan and India, Bangladesh issued similar — India, Pakistan and Bangladesh. orders for a 14 -day lockdown and almost all locations are likely to extend these emergency In India, Prime Minister Narendra Modi has measures further, if no significant signs of tackling ordered the country’s entire population of the the virus are realised. country into a three-week home quarantine. GMS said in a note: “Notwithstanding, given that All domestic and international flights out of India the number of virus cases have only just started to have also been suspended and non-essential take off in the subcontinent, it may still be a while industries such as ship recycling have been ordered before we see this market open up again on any to shut, resulting in all ships that are due to enter non-essential industries and the period of Alang being denied entry for the time being, quarantine will likely extend even further in the according to cash buyer GMS. weeks ahead.”

In India, all ships that are scheduled to arrive but In relation to market conditions, it is no surprise yet to beach have been ordered to halt before that there is a lack of activity. However, there entering port limits. remains interest from some buyers to acquire tonnage, shipbroker Clarkson Platou Hellas noted. Moreover, No Objection Certificates to enter Indian ports have not been issued by the port authorities, It said: “The market is not flush of cash buyers, especially as ship recycling is not considered an several are reportedly facing difficulties with cash essential industry to keep operational during the flow positions, and there is certainly more strain on lockdown. those cash buyers active in the current climate.”

Lloyd’s List | Daily Briefing Tuesday 31st March Page 3 However, “with many ports adopting new restrictions, Brokers are almost unanimous that although a more owners will seek the ‘as is’ deal to avoid the last stream of demo candidates appear to be moving voyage to the recycling destinations — therefore it will towards their final resting place, lack of confidence be on the shoulders of the cash buyer to carry the from the cash buyers may restrict numbers placed burden of how they would dispose of the unit at a later on the negotiating tables. stage and whether further limitations come into effect”, the shipbroker concluded. Capital dispute with AISSOT traced to sanctions fear A CLASH between the Greece-based Capital Although this held good for a couple of months while Maritime group and Middle Eastern charterer tanker rates remained decent, AISSOT abruptly Al-Iraqia Shipping Services & Oil Trading that has redelivered the vessels on February 22, dumping scuppered a relationship spanning six them in “dire market conditions”. very large crude carriers, can be traced to concerns over running foul of sanctions against Iran. In an ironic twist, this decision was enacted barely two weeks before a wholly unpredictable oil-price It emerged in recent days that AISSOT has war between Saudi Arabia and Russia flooded the redelivered the tankers to Evangelos Marinakis’ market with cheap crude and sent tanker rates Capital with years of their long-term bareboat soaring to their highest in many years. charters still to run. Several of Capital’s returned VLCCs were able to join The Greek owning and management group was the party while it lasted, including the 2019-built stung into making the rift public after AISSOT Andronikos, which was arrested by AISSOT on caused the arrest of one of the tankers in Singapore. March 16 before Capital secured its release three days later with the help of its P&I club, the West of Capital’s disclosure said that last December it took England. the dispute to arbitration and it alluded to an alleged failure by the charterer to comply with “certain The vessel is understood to have made its laycan for protective clauses” in the charter parties. a voyage from the Middle East Gulf to US for Shell, fixed at a rate of about $140,000 per day. This referred to providing and implementing a clear sanctions policy, Lloyd’s List has been told. However, the arrest is said to have shocked the Greek owner, which believes it, not the charterer, Capital had been pressing for the charterer to take has the genuine compensation claim. action “for months and months” last year without success, said senior Capital executive Jerry According to Capital Ship Management, the group’s Kalogiratos. tanker and bulker management arm, the charterer’s security application in Singapore was misleading At least two websites that specialise in hawkish and “a clear effort to disrupt owners’ business”. criticism of the Iranian regime have alleged AISSOT has breached sanctions but without offering In obtaining the arrest order, “informal email evidence for this. correspondence” with a Fearnleys broker was advanced as a formal bareboat charter valuation However, none of the VLCCs had lifted cargo from without the Norway-based house’s Iran, Mr Kalogiratos said. knowledge, said Capital.

In taking the matter to London arbitration, the On top of that, VLCC charter estimates mentioned in owner had called for redelivery of the tankers while AISSOT’s security application were said to be AISSOT continued to employ them pending the misleading as they were for a vessel with exhaust gas outcome of the arbitration, which is expected in the cleaning system installed, whereas the Andronikos second half of this year. is only scrubber-ready.

Lloyd’s List | Daily Briefing Tuesday 31st March Page 4 Another strand to Capital’s complaint appears to be It has VLCC chartering relationships with a that the chartering deal provided for AISSOT to small number of other owners, mostly based in fund 80% of the cost of scrubbers on board some of Greece. the tankers, but scrubbers have not been installed. Capital’s mixed fleet has 10 VLCCs in all, including Capital’s claim for compensation is said to be not far the six that were chartered to AISSOT. below $100m. It is not known what claims have been made by AISSOT. The Dubai-based operator has not Shipbrokers and media recently reported that one of yet replied to requests for comment. these, the 2014-built Miltiadis Junior, has been sold to an undisclosed buyer. AISSOT was formed back in 2017 as a ship operating, marine services and oil trading joint venture between But Capital has told Lloyd’s List that the reports are Iraqi Oil Tankers and Arab Maritime Petroleum unfounded and the vessel remains in the company’s Transport, a pan-Arab company in which several fleet. Middle East oil-producing countries hold shares. Coronavirus: Singapore allows crew changes under special circumstances SINGAPORE has made certain concessions to its address the needs and welfare of both local and policy of banning crew changes at the key Southeast foreign seafarers,” it added. Asian hub port, allowing the rotations under special circumstances. Meanwhile in Australia, the Maritime Union of Australia has written to major businesses in the Citing the heightened risk of imported coronavirus maritime supply chain seeking the urgent cases, Singapore had introduced a slate of measures implementation of a consistent, industry-wide on short-term visitors entering or transiting in the framework aimed at preventing viral transmission country and temporarily suspended crew changes. on worksites.

The Maritime and Port Authority of Singapore said The framework has been drawn up based on current in a circular that crew changes would be allowed if health advice, along with industry developments the crew has served their maximum time on board internationally, with the aim of ensuring best- and no further extension of the employment practice measures are in place to protect the health contract is granted by the flag state. Exemptions will and safety of maritime workers. also cover compassionate grounds such as the death of a family member or a scenario in which the crew “While workers are acutely aware of the significant member is no longer medically fit to work on board role they play in Australia’s response to the the vessel. coronavirus pandemic, some had taken an unfortunate and unsustainable approach, going it The MPA said it recognises the critical role that alone rather than embracing a consistent industry- seafarers play in global seaborne trade. “We have wide solution,” said the union’s national secretary worked closely with international organisations, and International Transport Workers’ Federation shipping associations and unions over the years to president Paddy Crumlin.

OPINION Lifting Trump’s tariffs on China could boost the medical supply chain LEADING US ports and other stakeholders in the But they may have nothing to move if Washington supply chain have vowed to fast-track medical does not act quickly. supplies coming into the country as the coronavirus pandemic continues to spread throughout the nation “We want to make sure that we are not only moving at alarming rates, writes Eric Watkins. the essential goods and medical supplies, but that

Lloyd’s List | Daily Briefing Tuesday 31st March Page 5 other commodities don’t clog up the system,” Port of news agency, none have arrived at US ports this Los Angeles executive director Gene Seroka said late month. last week. AP last week reported that imports of critical Mr Seroka said the port had been in touch with medical supplies were plummeting due to factory supply chain partners that need medical supplies closures in China, where manufacturers had been and large companies that provide the materials. He required to sell all or part of their goods internally said the port was able to identify containers with rather than export to other countries. medical supplies and could speed them through the network. But the same is happening elsewhere, too, as the pandemic sweeps through the world, shuttering APM Terminals, which operates Pier 400, the largest potential backup factories from one country to the facility at the port, said its facilities in North next. America were likewise “ready to meet the urgent needs to deliver critical freight” due to the growing Many manufacturers have been ordered to shut impact of the coronavirus and its “unprecedented down or limit production throughout Southeast Asia effects” on the world’s population. and Latin America, including in India and Mexico.

APMT said that “following our colleagues at the In Malaysia, where 75% of the world’s medical gloves Virginia Port Authority” it was also offering a are made, AP found factories were shut down and solution to expedite any coronavirus ‘critical cargo’ only allowed to reopen with half the number of staff, arriving at its facilities in Port Elizabeth, South who are now locked in hostels at their workplaces. Florida Container Terminal, Mobile, Los Angeles and Lazaro Cardenas, Mexico. Shipments of medical gloves are down 23% so far this month compared with 2019, and medical gown Last week, the Virginia Port Authority fast-tracked a imports are down 64% for the same period, AP container full of medical supplies that had been reported. loaded in Rotterdam and arrived on board the 8,500 teu Cosco Philippines on the line’s transatlantic According to Global Trade Alert, which monitors service. policies that affect trade, as of March 21, a total of 54 governments had implemented “some type” of Port officials said the container held kits to test for export curb on medical supplies and medicines the disease and were bound for a pharmaceutical associated with the coronavirus pandemic. company in Indianapolis, Indiana. Given decreases in exports from select countries and Three more containers with much-needed medical increases in demand due to the outbreak, supplies, such as personal protective equipment, manufacturers of select types of personal protective were to receive “priority treatment” and “expedited equipment are reporting increased volume of orders delivery”, said port executive director John and challenges in meeting order demands. Reinhart. One of the greatest challenges at the moment are “This cargo is vital and getting it to the people that protectionist policies, a point underlined by the need it most as quickly and efficiently as possible is a Hinrich Foundation, which analyses global trade priority for the Port of Virginia team,” Mr Reinhart practices and policies. said in a statement. “Bans tend to beget more bans, potentially wreaking A spokesman said the port — like Los Angeles — has havoc on pharmaceutical and medical product advance knowledge of key containers, enabling supply chains, making it more difficult for longshore workers to remove them speedily and load healthcare workers to stem the spread of the virus,” them on trucks for a quick departure. Truck gates the Hinrich Foundation said in a recent report. may even be held open late at night if a ship arrives carrying medical supplies or equipment. The foundation could just as easily have said that bans also make it more difficult for everyone up and But it is safe to say that none of the containers held down the supply chain to help stem the spread of the any medical-grade N95 masks, made almost entirely virus. If there are no supplies, then there is nothing in China since, according to the Associated Press to move, nothing to expedite.

Lloyd’s List | Daily Briefing Tuesday 31st March Page 6 Clearly, the bans must come down around the globe “testing their equipment for interoperability when if supplies are to be produced and delivered to where they should be concentrating on getting supplies to they are needed — and that includes the US, where those in need”. medical professionals are at risk for the want of medical-grade N95 masks, the ones made almost China, in turn, has diverted its sales to other exclusively in China, the ones no longer arriving at markets than the US. US shores. With tariffs, the US government is clearly making it Yes, the bans should come down and the US could harder for its own first responders to procure masks, set a smart example in that regard by ending the sterile gloves, goggles, hospital gowns, surgical tariffs it has imposed on medical supplies from drapes, thermometers and breathing masks — to say China – a ban if ever there was one. nothing of ventilators.

Former World Bank president Robert Zoellick made That need became embarrassingly clear last week the point recently, saying that after President when California’s governor Gavin Newsom said that Donald Trump hit Chinese medical suppliers with a 170 ventilators shipped by the Trump administration 25% tariff in 2018, China’s exports to the US to help his state respond to the outbreak of the dropped by 16%. coronavirus were “not working” when they arrived.

As a result, he said, US medical distributors were The supply chain stands ready to move the goods. Is now busy “hunting for alternative producers” and Mr Trump ready to remove the tariffs?

ANALYSIS Coronavirus: No let-up in boxship blank sailings BLANK sailings have been a dominant feature of With most of Europe on lockdown and the US container shipping’s response to the demand undertaking similar measures to reduce the spread shortfall during the coronavirus outbreak, in a trend of the coronavirus, demand for containerised goods that looks set to continue amid a raft of fresh service is expected to fall sharply in the western world. And announcements to align capacity. with inventory levels high, as reported by Lloyd’s List last week, there is little expectation of an early New analysis by SeaIntelligence shows that in the return to so-called “normal volumes”. space of a week the number of blank sailings on the major deepsea trades announced from mid-March The latest forecast from London-based Clarksons, (week 12) through to the end of May (week 24) had off the back of substantially lower revisions of global jumped from just two to as many as 45. The analysis domestic product growth and expectations for was correct as of noon Central European Time on widespread recession, is a fall in global box trade of March 29. 4.9% in 2020 against last year.

This development tallied with SeaIntelligence’s This would represent the container industry’s first expectations from last week off the back of annual contraction in volumes since 2009 after the conversations with both beneficial cargo owners and global financial crisis. logistics providers, who revealed that purchasing orders were being cancelled at a rapid pace. As such, In addition to the respective 23 and nine blank sailings further blank sailings should be expected as carriers on the Asia-Europe and transpacific trades announced turn to the practice to support freight rates. thus far through to the end of May, SeaIntelligence also noted a further one Asia-South America East The majority of the latest round of blank sailings Coast, two North Atlantic and five Mediterranean-US were announced towards the end of last week, and East Coast blank sailings, presently. A handful of other predominantly on the transpacific and Asia-Europe void sailings have been confirmed on shorter trades, networks. including India-Middle East.

Lloyd’s List | Daily Briefing Tuesday 31st March Page 7 In terms of alliances, 2M, comprising European are also expected to announce significant numbers giants Maersk Line and Mediterranean Shipping Co, of blank sailings through the second quarter. have led the way on blank sailings so far, including the seasonal withdrawal of its AE2 and AE20 loops Additionally, SeaIntelligence said that it expects through to the end of the second quarter. similar levels of blank sailings or service cancellations to impact the transpacific trade as the This follows news last week, that Maersk Line was Asia-Europe trade in the near future. “actively preparing” to match its network with a reduced demand level due to an impending global Since the post-Chinese New Year period extensive economic slowdown. blank sailing programmes implemented by carriers have ensured that spot rates have remained This unprecedented scaling back of capacity sees 2M resilient, falling in line with the traditional new reduce weekly capacity on the Asia-Europe trade by year slump. as much as 21%. On Friday, the Shanghai Containerised Freight “This is a very substantial capacity reduction and Index showed freight rates on the Asia-north Europe provides an insight into the level of demand decline trade and Asia-Mediterranean, both using Shanghai these carriers are expecting in the coming weeks,” as a base origin port, up 17.4% and 21.4%, said SeaIntelligence. respectively, on their year ago value.

The latest raft of void sailings is though expected to Meanwhile, Shanghai-US west coast spot rates were increase substantially in the coming days. The down 6.8% on its 2019 level, while those on the Alliance and the Ocean Alliance, the two other Shanghai-US east coast were tracking 4.7% higher, major liner consortia plying the major trade lanes, according to the latest SCFI. Coronavirus: Støhle says ‘buoyant’ spot LNG charter market is unexpected LOW liquefied natural gas cargo prices and vessel Part of the reason is that LNG cargo prices have delays at ports due to coronavirus are boosting dropped significantly over the past few months, due demand for LNG carriers, Höegh LNG chief to the aforementioned factors, a situation that has executive Sveinung Støhle has said. been exacerbated by the coronavirus fallout.

The Oslo-listed firm, which operates LNG carriers It is unclear how long this buoyant period will last and has the largest floating regasification and storage and how sharp a drop could be imminent as major unit fleet with 10 FSRUs, had warned at the end of economies slow down due to lockdown measures; February that the outbreak had depleted global India, an important LNG importer, is in a three- energy and commodity markets and apparently week lockdown. European countries that are “temporarily reduced” LNG imports into China. significant LNG importers, such as Spain, France and Italy, are also under lockdowns. “Coupled with higher winter temperatures in Asia, and low LNG prices closing the inter-basin arbitrage, In the absence of other interested buyers, thus far this has put downward pressure on the LNG carrier Thailand has been seen picking up cheap LNG spot market rates,” the company said at the time. cargoes, according to Lloyd’s List Intelligence data.

LNG spot rates fell at the end of February, but have Another reason for the current respite for short-term since recovered, according to data on 160,000 cu m LNG carrier contracts, however, is the delays LNG LNG carriers from the . carriers face while calling at ports. Most port authorities are imposing entry restrictions on ships But Mr Støhle told Lloyd’s List that he was surprised or require a number of days to pass before allowing at the upbeat state of the short-term LNG carrier an incoming vessel to call at the port, to prevent the market, which he described as “quite buoyant”. spread of the coronavirus.

“I would have thought that the market would have These port delays means a whole LNG carrier less business, but at the moment it does not look like round trip takes longer, which can result in further that at all,” he said. delays at the loading ports, which means exporters

Lloyd’s List | Daily Briefing Tuesday 31st March Page 8 have to charter in more vessels to cover for the lost long crew are permitted to stay on board and assist time. with getting their working certificates extended.

“There is a repercussion for the whole supply chain, “So far, that is working, but obviously if this is so suddenly the tonne-mile [demand] went up something that will be prolonged for a very long because everybody has to wait,” he said. time, there will be problems with it,” he said.

Despite these two factors propping up demand for The vessels are stocked with food supplies and LNG carriers, Mr Støhle acknowledged that rates getting more food on board is easy because it does remain competitive. not require direct human contact, Mr Støhle observed. Getting small spare parts on board also Two of its 170,000 cu m FSRUs, Höegh Gannet and does not require contact. Höegh Gallant, are coming out of long-term charters in March and April this year. A major breakdown on board, however, would require special engineers to step in. With the current Mr Støhle said the firm is in negotiations to deploy prohibitions in place, it would fall on the crew and the ships in long-term FSRU charters beginning in captain to fix the problem, Mr Støhle said, which is late 2021 or early 2022. something they can sometimes do. However, they may need support from specialists in certain cases. In the meantime, it is focusing on using them as LNG carriers on short-term deals. “So these are the types of scenarios that can happen — and, I am sure, over time, will happen. It is all It announced last week that it had signed an really a matter of time,” he said. approximate seven-month charter deal with an Asian-based trading house beginning in mid-2020. Höegh LNG has made plans as to how it can carry The company will charter out either Höegh Gannet out crew changes in countries that still allow crew or Höegh Gallant for this contract. swapovers. There is a hope that the company might be able to gradually do this in piecemeal fashion Mr Støhle told Lloyd’s List he was “100% confident” rather than blanket fashion, Mr Støhle said. it would get a similar charter contract for the other vessel. Even with countries in lockdown, they will need food and energy supplies to function, he argued. Flexibility on crew changes National authorities should be allowing the relevant Höegh LNG announced last week that it is types of vessels into their ports, albeit with the prohibiting crew changes and visitors on its vessels necessary measures to prevent the spread of the until further notice. virus, he said.

Mr Støhle said the company was working with “If people don’t get gas or they don’t get LNG, the maritime regulators, the International Maritime power plants won’t run and the electricity won’t be Organization, classification societies and other there. Everybody will be much worse off, of course,” stakeholders to secure flexibility in terms of how he said.

MARKETS China Merchants orders four multipurpose ships and sells three small tankers CHINA Merchants Energy Shipping has agreed to Ming Wah Shipping, will order the 62,000 dwt place nearly $120m worth of orders at an affiliated quartet priced at a maximum of $29.7m each, yard for four multipurpose vessels. including commissions.

The Shanghai-listed dry bulker and tanker unit of CSC Jinling Shipyard, a subsidiary of China state conglomerate China Merchants Group said in Merchants Heavy Industry, is scheduled to deliver an exchange filing that its subsidiary, Hong Kong the vessels in 2022.

Lloyd’s List | Daily Briefing Tuesday 31st March Page 9 CMES said the newbuildnigs meet its demand for state oil giant Sinopec, which also has a 5% stake in fleet renewal and will enhance the competitiveness CMES. of its dry bulker fleet after delivery. CMES said the disposal was part its plan to offload Meanwhile, the company has also decided to sell non-core assets and focus on its main businesses. three 2013-built 6,300 dwt liquid tankers — Amazona, Armonia and Kappa Sea — for a total of The state-owned shipping firm runs a fleet of more $15m. than 200 vessels, including about 50 very large crude carriers and nearly 30 very large ore The buyers are two bunker companies, controlled by carriers. China Merchants Port warns on weakening economic outlook CHINA Merchants Port has warned of multiple volume contract amid the fallout from the Sino-US challenges threatening economic prospects this year trade war. as it posted decade-low throughput growth for 2019. The company recorded a 15.4% increase in net profit “Looking into 2020, the growth of the global to HK$8.4bn ($1.1bn), although a gain of HK$3.3bn economy is expected to slow down due to the was contributed by the disposal of some port assets heightening trade barriers, rising geopolitical in Shenzhen to its state conglomerate parent China uncertainties, slow productivity growth, structural Merchants Group. problems caused by the ageing population, as well as the impact of the spread of the novel coronavirus Revenue declined 12.4% to HK$8.9bn, partly due to pneumonia epidemic worldwide,” said the Hong losses of business in relation to the asset sale. Kong-listed port operator in an exchange filing. Nevertheless, CM Port remained confident about It said the International Monetary Fund was China’s outlook and the overall container shipping expected to cut its earlier forecast of the world’s markets. economic and trade growth having seen the virus turn into a pandemic this month. “It is worth noting that, although the outbreak of the novel coronavirus pneumonia epidemic will bring The Washington-based organisation publishes its short-term impact to the Chinese economy, it shall World Economic Outlook Reports every three not be overlooked that many production and month. The latest version, in January, projected the consumption [operations] may be shifted to other global economy will expand by 3.3% in 2020 and quarters, and that will usually result in a retaliatory 3.4% for 2021. rebound of the economy.

However, IMF managing director Kristalina “As such, the impact from the epidemic will be Georgieva told reporters last week that “it is now limited on the Chinese economy in the mid to long clear that we have entered a recession as bad or term,” the company said. worse than in 2009”. It added box shipping should benefit from Trade growth has already slowed last year, which disciplined capacity growth, despite the virus-led has been reflected in CM Port’s handling results. decline on the demand side.

Its total container throughput stood at 111.7m teu It also expected the de-escalation of the US-China last year, up 2.4% from 2018 — the softest annual trade friction to provide some relief to the market. growth since 2009. Meanwhile, bulk cargo throughput slid 10.5% to 449m tonnes. The company continues to extend its global reach, having signed a deal to acquire 10 terminals from Several major port and terminal companies in its CMA CGM via Terminal Link, a 51-49 joint venture portfolio, including the Modern Terminals in Hong between the French carrier and the Chinese port Kong, Dalian Port Co and Terminal Link SAS, saw giant. The sale of eight terminals completed last week.

Lloyd’s List | Daily Briefing Tuesday 31st March Page 10 Coronavirus: Trucker shortage delaying cargo at Indian ports A SEVERE shortage of truck drivers in India is evacuate containers from our terminal due to a forcing ocean carriers and freight forwarders to shortage of manpower and resources,” PSA said in delay the pick-up of import and export cargoes from the statement. key ports, including Jawaharlal Nehru Port Trust. “To assist the trade and end-users, BMCT is According to industry participants, the vast majority extending the free storage period of all import of truck drivers have not been reporting for work in containers, laden and empty, for an additional three recent days due to government restrictions on the days until March 31. We are doing our utmost to movement of people as part of the country’s 21-day keep the trade moving in these difficult and lockdown to combat its coronavirus outbreak. unprecedented times.”

This is severely cramping import clearance and BMCT typically extends five free days for imports export intake. It is also resulting in a yard space destined for inland container depots and two days shortage and long cargo dwell times, especially in for local cargo. major container ports. PSA is likely to announce a similar step shortly at Adding to the supply chain issue is the closing of its container terminal in VO Chidambaranar Port interstate borders, which has also delayed the Trust, formerly Tuticorin Port Trust, in Tamil movement of trucks within the country, an India- Nadu. based port agent said. Meanwhile, due to the mounting pressure on Singapore-headquartered container terminal supply chains and port operations, major ports operator PSA International’s Bharat Mumbai in India are also planning to declare force Container Terminals, one of five container terminals majeure. operating at JNPT, warned customers of import movement delays in an advisory. The Federation of Association of Stevedores has requested all port management to permit only “With the coronavirus situation, many users are mechanical handling of cargo, thereby making the currently facing difficulties in arranging transport to deployment of labour minimal.

IN OTHER NEWS

Coronavirus: Call for seafarers to be they are unable to disembark kind with zero emissions, the regarded as ‘key personnel’ from vessels at their designated company said in a statement. THE UK government has been destination upon completion of They will operate as marine fuel warned to recognise seafarers as their contracts,” he writes in a supply vessels in the Tokyo Bay key workers or face “catastrophic letter sent to Lloyd’s List and area. global consequences”. other media. “Most have no choice but to continue working The vessels are being designed Graham Westgarth, chief for extended periods of weeks or by e5 Laboratories and will be executive of V.Group, has drawn months.” completed in 2022 to 2023. attention to an aspect of the coronavirus outbreak that seems Asahi to build first battery-powered ICTSI warns on lockdowns impact to have been largely overlooked tankers at Manila by governments, the press, and ASAHI Tanker, a Japanese THE anti-coronavirus lockdown public: the role of the maritime chemical and product tanker in Manila — home to the industry in general and seafarers company, has decided to build Philippines’ main international in particular. two battery-powered vessels. container port — has started to make its effects felt, with the “Sadly, the wellbeing of hundreds The vessels, which will have port’s main terminal operator of thousands of seafarers is large-capacity lithium-ion International Container Terminal currently compromised because batteries, will be the first of their Services Inc warning that a

Lloyd’s List | Daily Briefing Tuesday 31st March Page 11 growing backlog of containers all parties to withdraw their “Today, Rosneft entered into an could soon affect port reefers in particular, as well as agreement with a company 100% operations. other cleared cargoes, as soon as owned by the government of the possible. Russian Federation on the sale of ICTSI was reported in the shares and termination of its Philippines’ media as saying Moscow raises the stakes over US participation in all projects in that in the period March 1 to 26 sanctions on oil firm Venezuela,” Rosneft said in a there were 8,201 containers that MOSCOW has taken a bold statement on Saturday. had cleared customs but had countermove against not been picked up. Many of Washington’s imposition of It said the sale included “shares these contained food and sanctions on Russia’s state- in the production enterprises of more than 850 teu comprised controlled Rosneft oil firm by Petromonagas, Petroperija, reefers. selling its Venezuelan oil assets Boqueron, Petromiranda and to an unnamed entity owned by Petrovictoria, in oil-service Executive vice-president the government of the Russian enterprises and trading Christian Gonzalez appealed to Federation. operations”.

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