THE INTERNATIONAL SHIPPING WEEKLY August 21, 2003 - Published weekly since 1883 - Price £7.00 China’s oresome appetite

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SP/HA/2003 The International Shipping Weekly Contents Head Office: Lombard House, 3 Princess Way, Redhill, Surrey, RH1 1UP United Kingdom LOOK OUT ______3-6 Tel: +44 1737 379000 Fax: +44 1737 379001 Web: www.fairplay.co.uk Publisher: John Prime NEWS ______7-14 Editorial: Tel: +44 1737 379140 Fax: +44 1737 379007 Email: [email protected] Managing Editor: G Paul Gunton COVER STORY ____ 15-17 Editor: Patrick Neylan-Francis Senior Editor: Richard Clayton Editors: David Hooper, Rob Willmington Joanna Mortimer, Richard Meade, NEWS FO CUS_____ 18-25 Iain Kingsley, Catherine Rowley, Chris Tomlinson, Damien Carr EMSA delayed by politics______18 Law: Ann Moore Let the bidding begin ______19 Asia Editor: Ramadas Rao Email: [email protected] China-India distort copper market __ 20 Far East Sales Manager: Mark Windle Email: [email protected] Kembla copper bottomed out______21 Tel: +65 6 292 7430 Fax: +65 6 292 7431 Handling hike fallout hits St Pete ___ 22 Asia Office: 7500 A Beach Road, 13-323 The Plaza, Singapore 199591, The worst time to start a business? __ 23 Republic of Singapore Tel: +65 6 292 7951 Fax: +65 6 296 2335 UK ready for 10M TEU expansion __ 24 Americas Editor: Michelle Wiese Bockmann High hopes for new Djibouti port ___ 25 Email:[email protected] Americas Office: Fairplay Publications Inc Front Cover: The bulk trades are 5201 Blue Lagoon Drive, Suite 530, Miami, FL 33126, United States struggling to keep up as China Tel: +1 305 262 4070 FEATURE ______26-33 Fax: +1 305 262 2006 devours all the raw materials it Email: [email protected] Black Sea ______Middle East Editor: Tom Hussain can swallow (photo: FotoFlite) Email: [email protected] Correspondents: International correspondents can be contacted via the editorial office ìThere is so little fairplay in the world. If our own Head of Production: Louisa Swaden MARKETS______34-43 efforts succeed, we shall have taken the fi rst steps Email: [email protected] towards promoting the habit of calling things by Advertising Sales: Tel: +44 1737 379700 their right name and of looking at them Fax: +44 1737 379001 through uncoloured spectacles.î Email: [email protected] SHOES & SHIPS ______44 FAIRPLAY, MAY 18, 1883 Subscriptions: Tel: +44 1737 379705 Printed by Holbrooks Printers Ltd, Hilsea, Portsmouth, Hampshire, England Company Index Aker Group 30 Emeraude Lines 13 Maersk Sealand 3, 14, 41 Romanian Shipbuildersí Association 30 Astillero del Caribe (Asticar) 9 Emirates National Oil Corp 25 Malta Drydocks 13 Santierul Naval Constanta 30 BAM 13 European Community Shipownersí Association 7 Maritime Strategies International 17 Severstaltrans 22, 28 Bank Line 13 European Maritime Safety Agency 18 Medfin 33 Shell 24 Batumi Merchant Sea Port 27 First Container Terminal St Petersburg 14, 22 National Container Co (Russia) 14, 22 Shipping Corp of India 12 BHP Billiton 8, 20 Frontline 41 Navi Chartering 23 Shiprepair yard 30 Bockstiegel Reederei 35 Frontline 37 New Century Cruise 11 SKS 10 Braemar-Seascope 37 Grindrod 19 Novorossiysk Sea Trade Port 32 Smit Pentow 3 Bremer Vulkan 14 Hamilton Port Authority 25 Novorossiysk Shipping Co 28 Sovcomflot 28 Centre for Global Energy Studies 43 Hanjin Shipping 10 NYK Star Reefers 22 Stolt-Nielsen Transportation Group 8 China Navigation 13 Hutchison Ports 24 Oil Companies International Marine Forum 7 Tangguh LNG 39 China Shipbuilding Industry Corp 35 Hyundai Merchant Marine 39 P&O Nedlloyd 13 TBWA \ BASELine 13 China Shipping Container Lines 41 Indian National Shipowners Association 12 P&O Ports 24 TMM 8 China State Shipbuilding Corp 35 Indian Register of Shipping 12 Pacific International Lines 25 Tongfang Weishi 11 Chokwang Yo Turn 10 International Chamber of Shipping 7, 18 Pakistan National Shipping Corp 7, 37 Tordenskjˆld 14 Constantza, port of 27, 31 International Maritime Bureau 10 Panama Canal Authority 9 Tsakos 37 Crescent Tankship 30 International Tanker Owners Pollution Federation 7 Panama Maritime Authority 21 Tsavliris 7 CRU Group 15 Intertanko 7 PDV Marina 9 Turkish Shipbuildersí Association 30 CSL Australia 11 Jiangdong Changjiang 35 Phoenix Management Services Group 21 Turkon Line 32 CSX World Terminals 19 Karachi Port Trust 7 Polembros 7 Ukrferry 27 Damen Galati 30 Kotug 6 Port Kembla Copper 20, 21 US Coast Guard 8 Doraleh, port of 25 Koyo Kaiun 37 Posco 35, 39 US Customs and Border Protection 9 Drewry Shipping Consultants 41 Kumgang Korea Chemical 10 PSA Corp 11 Varna Shipyard 30 Dubai Ports International 25 LibÊk, O-J 37 Raw Materials Group 15 Viking River Cruises 11 Durban Container Terminal 19 Macquarie Research Metals & Mining 15 Rickmers Linie 5 World Vision 7

Volume 348 - Issue 6239, August 21, 2003 Web: www.fairplay.co.uk 1

FRPED030821035.indd 1 19/8/03, 16:50:25 FRPed030821p2.qxd 19-08-03 3:21 PM Page 2 Look Out The jokeís over Piracy must be a priority

TíS ìa dazzling and entertaining comic adventureî and ìthe from the secure, dense foliage of the Sumatran forests to prey most fun youíll have at a movie this summerî. Those are just on small ships steaming through the Malacca Straits. Itwo quotes from the official website of this summerís ëmust- seeí movie, Pirates of the Caribbean, produced by Walt Disney Until now, the incidents consisted mainly of hit-and-run and released to coincide with the Northern Hemisphereís long incidents, boarding vessels at night and making away with school summer holidays. valuables and equipment. There were extreme cases of murder of crew members and hijacking of ships, but mercifully these Pirates are entertainment; children make their own skull-and- were rare. crossbones hats, put on their eye patches and clash swords in the garden. It is unlikely that many of those children or their Now, however, things are getting serious. In just two months parents who take them to see the film have any concept of the there have been more than half a dozen cases of vessels being reality of piracy or know that it is a current and growing menace. chased by armed gangs using bursts of fire from automatic rifl es But until they do, and until that concern becomes a global issue, to stop ships. In back-to-back incidents on successive days, a seafarersí lives will remain in danger. shipís captain has been injured while another was stopped, three hostages taken and released only after the payment of ransom The International Maritime Bureau reported earlier this year that money said to be about $50,000 (see page 10). pirate attacks had tripled in a decade; in the fi rst three months of this year alone, 145 seafarers were reported killed, assaulted, All but the latest kidnapping incident aboard the Malaysian ves- kidnapped or had gone missing; hardly the ìhumour, action and sel Penrider took place in the relatively less heavily patrolled thrillsî of the big screen. Militant groups, perhaps even terrorists, northern portion of strife-torn Indonesian province of Aceh. seem to have infiltrated scattered pirate gangs operating mostly But the fact that piracy has resurfaced in the guarded southern portion striking close to Malaysian waters is worrying observ- ers such as IMB Piracy Reporting Centreís regional manager Everyoneís doing it Noel Choong.

While the Tasman Spirit disgraces itself off Karachi and ships The organised nature of the attacks, the use of automatic weap- collide in the Schelde, the Southern Hemisphere is getting ons and the smooth planning of the raids point to the hand in on the act. First the small box ship Spirit of Enterprise damaged its rudder near Auckland. Then on Tuesday this week, the Sealand Express dragged its anchor in bad weather at Dolphin Beach Cape Town. Two harbour tugs and a salvage tug went to give assistance but by the time they arrived 20 minutes later the vessel’s bows were aground onto sand. One of the tugs managed to secure a cable but this broke, and the US-flagged ship then swung to and grounded firmly onto sand where a heavy swell began pounding the vessel beam-on. As Fairplay went to press, Salvor Smit Pentow had gone on board the vessel to secure the safety of the crew and to attempt salvage.

August 21, 2003 www.fairplay.co.uk Email: [email protected] 3

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of professional groups. Suspicions are centred on rebel Aceh militants, who are well versed in armed attacks using sophisti- A bull in Chinaís shops cated weapons. If the Aceh groups have terrorist links, limited Chinese ambition chases more orders perhaps even to just procuring weapons, the motive becomes clear. Small commercial ships are sitting ducks with the ransom CHINAíS ambition to have the worldís largest shipyard would taking care of the cost of the weapons to be used for the larger have been treated with some scepticism just a few years ago. goal of independence from Indonesian rule. Now, it should ring alarm bells in Japan and South Korea. In much the same way as those countriesí ambitious plans of the It now transpires that owners have been paying ransoms, pre- 1970s and 1980s reduced European shipbuilding to todayís ferring, understandably from the crew-safety point of view, to struggling rump, China has established itself as the one country keep these under wraps. The pirates appear to know what they with the ambition to compete on equal terms. can get away with, as the amounts are not too huge. It is even being whispered, though no evidence has been offered to sup- But we knew that. What is new is that it now has the ability to go port the suspicion, that some crew members could have had a with that ambition. Backed by consultants and cash from around hand in their own kidnapping. Is it possible that terrorist-linked the world, Chinaís yards, designers and workforce have gained groups are beginning to infiltrate shipsí crews? Terrorists come valuable experience over the past ten years or so that has put in multiple guises and anything appears plausible in these un- them on a par with their rivals. In the market sectors in which certain times. Chinese yards compete, their customers are pleased with their products and accept the higher level of supervision required. More intense patrolling seems to be the obvious answer. But who will take responsibility for it? The Malacca Straits fall within Chinaís rivals argue that its political system does not encourage the territorial waters of Indonesia, Malaysia and Singapore and, the entrepreneurial drive needed to establish successful busi- though there has been much talk of co-operation and initiating nesses or inspire its labour pool to put in the hard work needed multi-national patrols in known vulnerable spots, not much has to pull itself up by its bootstraps. Certainly no visitor to South been achieved to overcome the sovereignty barrier. Korea can fail to be impressed by the extraordinary work ethic that has created a strong economy in little more than 30 years. Given that the great powers are unwilling to exercise their right to take unilateral action in international waters, where no They may be right but, just as the fabled tortoise won the race agreement is necessary, we are probably a long way from seeing against the complacent hare, China is not playing by the same action in territorial waters. rules. It can throw money at its state-owned yards, providing

If piracy is to be contained, it needs to attract the same in- ternational opprobrium that aircraft hijacking has achieved Steel intensity and a similar level of international action and co-operation to defeat it. Regrettably, this hope could best be described by China’s dramatic entry onto the international bulk shipping another review from the Pirates website: ìBrilliant, hilarious, stage has left many participants bemused, wondering what will wildly imaginative.î come next. China itself may not know. Analysts tell Fairplay that the massive surge in iron ore imports, at the heart of the current bulker boom, took the domestic steel industry by surprise, just as much as it did world suppliers of the commodity. In recent weeks those suppliers have now responded in a radical acceleration of their development plans, so much so that broker Howe Robinson’s expectations for the bulker market in 2004 have been revised sharply upward.

Ore imports could now touch 200M tonnes next year, implying a greater leap in imports than the market has seen this year! This is a startling thought, although being sure about China is still pretty difficult, which should be a little nerve-wracking for bulker owners now that so much of their business is wrapped up in the fate of one market. But the normal rules do not apply, there being no discernible relationship between industrial production or GDP and steel consumption in China’s case, while placing the country on any standard scale of development remains highly problematic. So the future is highly unpredictable, though less worrying for owners because even if it’s half as good, it is still very good (see Cover Story, page 15).

4 www.fairplay.co.uk Email: [email protected] August 21, 2003

FRPED030821033.indd 4 19/8/03, 17:11:41 Look Out Short holiday

Before taking up its east-about round- the-world service at Hamburg on August 20, the seventh in a series of heavy-lift multi-purpose carriers built in China for Rickmers carried out a voyage from China to Europe on charter to CMA CGM. The Rickmers New Orleans is seen here arriving in its ‘homeland’, passing the Kugelbake at Cuxhaven, in the early evening of August 19. The basket chairs, rented by tourists to protect them from the sun, were all empty by the time the ship passed. Rickmers Linie will take delivery of the remaining two 30,000-DWT vessels for its Pearl String service in September and December (photo: Ralf Witthohn).

land and regrouping them without upset- ting any shareholders. author of this information-rich missive? The US Government And it can offer keen prices because of its low-wage economy; Accounting Offi ce. this weekís temporary closure of Hanjin Heavy Industriesí Ul- san plant because of a pay dispute can only encourage Chinaís So hereís a government thatís asking its ports, terminals and planners as they develop their scheme. They have set a realistic ship owners to spend $7Bn over the next decade or so to make timetable for the worldís biggest yard ñ 2015; five years after shipping safer, publicly advertising exactly why it needs to Shanghai hosts the World Expo in 2010. That will be an impor- be done. But itís all there at the Government Accounting tant showcase for China to demonstrate its abilities; Japanese and Officeís report to Congressional Requesters in the appropri- South Korean shipbuilders will be paying especial attention. ately titled document Transportation Security: Federal Action Needed to Address Security Challenges. The website is http: //www.gao.gov/new.items/d03843.pdf. Feeling vulnerable? US points at its open windows Shipping accused of original sin PSSSST! Potential terrorists wanting to learn more about the Weíre all criminals, arenít we? US transportation system: look no further. All you ever wanted to know about the US transportation system ñ and more ñ is WHEN the Prestige went down last year, one of the more now available in a special 93-page report, available at a website memorable sound-bites came from that well-known maritime near you. commentator French President Jacques Chirac. In his own in- imitable style he called for ìexemplary punishmentî for all of Complete with detailed maps, photos and analysis, this handy those responsible. As far as he was concerned, that included guide also provides specific information about security short- shipsí officers, charterers, owners, classification agencies and comings. For example, terrorists who want to launch shoulder- insurers. Pretty much everyone he could think of in fact. fired missiles at airports will be interested to know that resources for perimeter fencing patrols are stretched. Now compare that with the draft Penal Sanctions Directive, which is now due for consideration by the European Parlia- This report also lists which federal agency polices which threat ment. It targets any person (including the master, the owner, the and comes complete with a divisional departmental breakdown operator, the charterer of a ship and the classifi cation society), and organisational chart where practical of responsibilities. The who has been found to have caused or contributed to illegal

August 21, 2003 www.fairplay.co.uk Email: [email protected] 5

FRPED030821033.indd 5 19/8/03, 17:13:54 Look Out Vehicles on tow

Car carriers are having a bad time of it at the moment. At the same time as the Grande Napoli hit the Nada V on the Scheldt, another Grimaldi vessel suffered a turbocharger explosion after having left Bremerhaven in the middle of last week. The 48,622-GT Repubblica di Venezia was left first at the outer Weser anchorage for possible repair there, but then had to be towed back to port by two Kotug tugs on August 16. The ‘dead’ vessel is seen here arriving at Bremerhaven to enter Kaiserhafen for repair with the help of two additional tugs (photo: Ralf Witthohn).

pollution intentionally or by means of gross negligence. Itís as such a ship could hardly be built profitably in the UK any more, if Chirac wrote it himself. even using the French definition of profi tability.

Luckily not everyone in Brussels is entirely taken by Chiracís Cunard confi rmed to Fairplay that the Queen had been invited to crowd-pleasing approach to criminal sanctions. Following a name the ship over a year ago, ìbut we are anxious because the meeting with Intertanko, the Dutch Parliamentary Rapporteur she does not usually undertake public engagements in January. Peter Pex, who is currently assessing the proposals, has indi- We are waiting to hear but Buckingham Palace has its proce- cated that he is ìsympathetic to the industryís concernsî. While dures and the Queenís list of winter engagements will not be this is clearly not the end of the story, it is heartening to know announced until the autumn.î Whether the launching of such a that at least some of the Brussels pack are willing to listen. significant ship at a French shipyard on what may well be a cold and grey January day is enough to encourage Her Majesty to While the industry is clearly not against the principle of appro- break into her traditional Christmas break only time will tell. priate punishments for polluters, deliberate or otherwise, this problem needs a balanced approach and not a witch-hunt every As to who was second in line, the spokesman declined to say: ìIt time an accident occurs. Apart from the complex legal problems would not be appropriate to comment until we have heard from that the proposed directive would create in regard to the existing the Palace.î Are there any Queen Marys free on January 10? international regime, there is no clear evidence that taking this approach would help in the long run. Actually, the links with the British are rather tenuous ñ Her Majestyís ancestors stopped styling themselves Kings of France As Intertanko pointed out to Pex, there is a potential dilemma several centuries ago. While Cunard is very much a traditional between pursuing the line of criminalisation and that of fostering British shipping company, it is now owned by Carnival of the a culture of transparency and of learning from mistakes. Refer- US. Here the Cunard spokesman was quick off the mark adding ring to recent experiences, Intertanko notes that it is a sad state of that ìSamuel Cunard, who founded the Cunard shipping line, affairs when marine safety officials are met by ship offi cers and was in fact Canadian.î crew members who are only prepared to communicate through lawyers in the aftermath of a maritime incident. If people risk criminal sanctions every time something goes wrong, this is a QUOTES step backwards not forwards. ìThe acid test will be whether EMSA will want A majestic mystery a finger in every pie on the tableî Will she, wonít she? Chris Horrocks, secretary general, International Chamber of Shipping (page 18) Will she or wonít she? This is the question Cunardís top brass are anxiously asking themselves: will HM The Queen will agree to name the Queen Mary 2 in France on January 10. A ìBusiness finds a way through, irrespective UK newspaper article last weekend suggested that she would of politicsî not, possibly because the worldís largest liner is being built in Ronald Navarette, director, Navi Chartering France. Perhaps the reporter should be excused for his lack of (page 23) knowledge, which otherwise would have suggested to him that

6 www.fairplay.co.uk Email: [email protected] August 21, 2003

FRPED030821033.indd 6 19/8/03, 17:12:27 Headline News

remain fearful of further spills from the stern section, which is being tossed Backlash follows Tasman spill around by monsoon swells, secured only by ropes attached to tugs. THE Polembros tanker Tasman Spirit split in two at Karachi on August 15, spilling thousands of tonnes of crude oil and raising the spectre of Pakistan banning old tonnage. Prime Minister Zafarullah Jamali or- An estimated 12,500 tonnes of Iranian light crude spilled out of the 1979-built Panamax, dered an immediate inquiry into the grounded at the eastern lip of the portís navigation channel since July 27, polluting incident, but this was simultaneously hamstrung by concerns of confl ict of the neighbouring Clifton and Defence beaches. Respiratory and eye infections caused interest. The communications ministry by benzene fumes from beached crude have prompted many residents to flee seafront secretary appointed Tauqeer Hussain communities. The polluted area is being treated with chemical dispersants sprayed from Naqvi to lead the inquiry in his capacity an aircraft provided by the International Tanker Owners Pollution Federation. as acting director-general of ports and shipping, but Naqvi is also chairman of The crisis shot to the top of the national told Fairplay. Karachi Port Trust (KPT) the Tasman Spiritís charterer Pakistan political agenda over last weekendís chairman Vice Adm Ahmed Hayat has National Shipping Corp and a KPT Independence Day holidays, sparking handed Polembros a Rs10M ($172,400) trustee. Minister Ahmed Ali solved the a strong reaction from communications fine, the maximum currently allowed for dilemma by appointing veteran master minister Ahmed Ali. He represents the pollution violations. However, there was mariner Capt Anwar Shah to the vacant Muttahida Qaumi Movement, an ethnic some confusion about the fate of the Tas- post with effect from August 18. party that dominates politics in Karachi, man Spiritís Greek officers and Filipino in the upper house of Pakistanís parlia- crew. KPT and PNSC sources confi rmed ment. ìWe have learnt our lesson from they were being prevented from leaving EU sympathetic to this accident and I personally feel that we the country, but Hayat denied they had should discourage old tonnage, including been arrested. single-hulled tankers, in our waters,î Ali industry concerns On August 17 Tsavliris began removing TANKER industry representatives are Workers mobilise tractors to scrape oil off Clifton the 20,000 tonnes of oil contained in the confident that a forthcoming European beach after the Tasman Spirit broke in two grounded bow section of the Tasman Parliamentary assessment of the pro- (photo: Zahid Hussein/Reuters) Spirit. However, local tanker masters posed EU ship-source pollution direc- tive will reflect industry concerns about criminal sanctions.

The controversial directive, adopted by the European Commission on March 5, has drawn criticism from shipping indus- try bodies concerned that the proposed laws would create legal uncertainty. However, the Dutch Parliamentary Rapporteur Peter Pex, who is currently assessing the proposals, has indicated that he is ìsympathetic to the industryís concernsî. Speaking to Fairplay, Inter- tanko deputy MD Svein Ringbakken ex- plained that after meeting Pex recently, he was confident that the industryís posi- tion would be fairly represented during discussions at the Parliamentís plenary session in November. Liberian aid ship ëhit sandbankí Intertanko, the International Chamber of Shipping, the European Community THE aid ship that sank en route to Monro- In a statement on Tuesday, World Vision Shipownersí Association and the Oil via last weekend ìran into a sandbank in a confirmed that the 140-DWT ship was Companies International Marine Forum heavy storm and waves reaching eight to ten carrying $86,000 worth of blankets, soap, have submitted a joint position paper to metres,î its charterer, US-based aid organi- buckets, water cans, sleeping mats, gen- the Parliament, highlighting potential sation World Vision, reports a crew member erators and fuel for distribution to 21,000 problems with the proposals. The paper as saying. The ship was among those carry- Monrovia residents. ìThis is clearly a set- explains that some of the criminal sanc- ing relief supplies into Monrovia after the back, but weíll have more relief goods tions proposed would undercut the inter- Liberian port passed from the control of here before the end of the week,î said nationally agreed standard, and would rebel forces, who had held it since July 19, World Visionís global positioning unit also be in direct conflict with the Marpol to a West African peace force. director Rich Moseanko. and Unclos Conventions.

August 21, 2003 www.fairplay.co.uk 7

FRPED030821030.indd 7 19/8/03, 15:43:50 Americas News Stolt replaces suspended exec BHP to build offshore STOLT-NIELSEN Transportation Group has replaced veteran executive Richard Wingfield, LNG in California who was suspended following his arrest last month in connection with a price-fixing investigation. The company announced the appointment of Hans Feringa as MD of AUSTRALIA’S BHP Billiton is seeking Tanker Chartering late last week. permission from the US Coast Guard and Maritime Administration to build a $600M Wingfield was suspended from his position LNG terminal off the coast of California. in Stolt-Nielsen in early July after being The floating terminal will be built in deep implicated in an international anti-trust water about 20 miles from the coastal city inquiry being conducted by European and of Oxnard, and will supply 800M ft³ per day US authorities. The Justice Department of LNG to California, about 15 per cent of gave the company conditional immunity the state’s gas demand. BHP said its planned in February in return for its co-operation. Cabrillo Port would move the gas by under- The immunity was not, however extended water pipelines and will be located outside to Wingfield, who was later charged for shipping lanes and whales’ migratory paths. his role in the alleged price-fi xing abuses. His successor, Feringa, has been with the “We’re basically seeking to grow our company since 1996 and steps into the LNG business and the key to LNG busi- role having served as MD of Stolthaven ness is securing access to markets,” a BHP Terminals since July 2000. spokesman said at the end of last week, while the US and Canada experienced Feringa succeeds the suspended Wingfield their worst power outage in history. “The at Stoltís Tanker Chartering US is becoming short of gas, and the US authorities are calling for more and more LNG imports to supply that shortfall.” BHP US, Australia to stage sea raids hopes to complete the project in 2008. THE US and Australian navies will stage UK, Australia, France, Germany, Italy, an exercise next month to practise the Japan, the Netherlands, Poland, Portugal uninvited boarding of ships suspected of and Spain, will meet again in September Seized cargo carrying missiles, nuclear components or to fi nalise plans. illegal drugs. The exercise, which will take ëclearly nuclearí place in the Coral Sea off north-east Aus- US officials told the paper that such op- tralia, is designed to alert North Korea that erations would meet international legal A CONTAINER filled with aluminium US authorities are ready to take tougher requirements only if the UN imposes tubes seized on April 12 by German and action to stop its exports of weapons, the sanctions on the targeted countries, which French authorities in Egypt was destined New York Times reported on Monday. The could include Iran as well as North Korea. for a North Korean uranium-enrichment exercises were originally discussed in May A second round of multilateral talks to set- project, US and European intelligence of- at a meeting of 11 countries belonging to tle the US dispute with North Korea over ficials have told the Washington Post. the Proliferation Security Initiative. Mem- its nuclear weapons programme is sched- bers of the initiative, which include the US, uled to begin on August 27 in Beijing. The Post’s report on August 15 concluded a two-part series on North Korean shipping practices. It said that the 2,000 pipes seized in Court throws TMM a lifeline Alexandria on CMA-CGM’s Ville de Virgo STRUGGLING Mexican maritime and TFM, a controlling stake in which was were purchased by a North Korean agent logistics group TMM has cautiously wel- sold by TMM to its US rail partner Kan- from a German export company called comed a federal court ruling in its favour sas City (KC) Southern last April, to help Optronic, and had been falsely labelled on that effectively grants six years’ back taxes TMM avoid debt default. TMM also sold the ship’s manifest as destined for a Chinese to group rail subsidiary TFM. The federal its majority stake in its ports and terminals aircraft company. “The intentions were tribunal of fiscal and administrative justice division to partner Stevedoring Services of clearly nuclear,” one official told the Post. has bowed to a dissenting court judgement America to raise cash. It is not clear how “The result could have been several bombs’ that the tribunal was wrong to refuse much direct fi nancial benefi t TMM could worth of weapons-grade uranium in a year.” TFM’s request for a tax refund. gain from the tribunal’s ruling, which ap- On August 14, the Post disclosed a 1999 in- plies directly to TFM, Mexico’s prime rail cident at the Indian port of Kandla, where TMM went to court in 1997 arguing that cargo operator to and from the US. customs officials searching a North Korean TFM was owed $180M in Value Added cargo ship discovered 15 Scud missiles and Tax paid to the Treasury, but the tribunal Mexico’s foreign investment commission enough tools to create an “arms assembly steadfastly rejected the argument until its has set August 28 as the date by which it line” hidden in the ship’s cargo hold. India August 13 back-down. Accrued interest will approve KC Southern’s take-over bid turned over much of the material, which was would quintuple the refund amount to for TFM and re-name it Nafta Railway. bound for Libya, to the US government.

8 www.fairplay.co.uk August 21, 2003

FRPED030821027.indd 8 19/8/03, 12:39:45 Americas News Salazar promises US Customs warns of ëagro-terrorismí US inspectors at ports and borders will soon be trained to watch out for ìagro- Canal referendum terrorismî, or the smuggling of pests or diseases that could be harmful to US agriculture, a US official said last week. PANAMANIANS will decide, by refer- endum, whether the Panama Canal should Robert Bonner, the Commissioner of the US UK cattle herd. The training will increase build a third set of bigger locks, Panama’s Customs and Border Protection division of expertise in such matters from the 2,000 Minister for Canal Affairs Jerry Salazar the Department of Homeland Security inspectors once employed by the Depart- has said. The Panama Canal Authority (DHS), told a conference of agriculture of- ment of Agriculture to the 16,000 inspectors (ACP) is expected to submit its recom- ficials in Washington State that the training from other agencies now integrated into the mendations on the canal expansion to the will begin in October. Bonner said his agen- DHS. Bonner said some inspections would Panamanian government by mid-2004. cy was particularly concerned that terrorists take place in foreign ports that have agreed might try to import diseases like BSE (mad to allow US agents to inspect containers on “This is something that has to be done, cow disease), which recently devastated the vessels bound for US ports. but the Panamanian people need to know about it,” Salazar said during a meeting of Panama’s British Business Association last week. A 20-year master plan includes widening the narrowest part of the water- way and deepening the canal channel as well as its entrances on both the Atlantic and Pacific sides to allow larger vessels to enter Panamanian ports. Cuba gets PDV repair work CUBA is being tested as a major dry dock destination by state-owned Venezuelan tanker company PDV Marina and is ìperforming wellî according to PDVís quality control manager Thomas Allsop.

The 55,919-DWT Moruy arrived at Astil- lero del Caribe (Asticar)’s Havana facil- ity on August 9 for general dry-docking that should have been carried out in late 2002, according to Captain Allsop, who blames pre-strike PDV management for the delay. The company has been restruc- tured since a two-month strike that ended in February.

Allsop said that the Moruy’s service may take less than the scheduled 26 days because the Cubans are keen to prove themselves and win more PDV Marina business.

Hanseatic Shipmanagement, the Cyprus- based company with the management contract for PDV’s eight Aframaxes, has sent technicians and offi cers to Venezuela to help the company’s recovery and re- structuring programme. “They’re provid- ing us with the professionalism that has been missing from this company for the past ten years,” Allsop said.

August 21, 2003 www.fairplay.co.uk 9

FRPED030821019.indd 9 18/8/03, 16:24:28 Asia Pacific News Pirates free crew members Shippers saddened THREE crew members, including the master, of the Malaysian tanker Penrider, by IADA ëno showí have been released by pirates after the payment of a ransom amount said to be ASIAN shippers were ìextremely disap- M$200,000 ($52,000). Malaysian Marine Police Commander Muhamad Bin Muda pointedî that Intra Asia Discussion Agree- confirmed the release in the early hours of August 16 to Fairplay, but did not say ment (IADA) chairman Ken Kuroya did what the ransom amount was. not address their representatives who had gathered in Hong Kong last week. The tanker, which was en route to Penang Selangor Criminal Investigation Depart- from Singapore, was attacked by pirates in ment chief, senior assistant commissioner Kuroya, who works for K-Line, had the Malacca Straits off Port Klang. A gang Abu Bakar Mustafa, said that preliminary been expected to explain the meas- of ten pirates chased the tanker loaded investigations revealed that the pirates, ures shipping companies were taking with 1,000 tonnes of fuel oil, and sprayed identified as Indonesians, were not in to make the terminal handling charge bullets from automatic rifles. Forcing the army uniforms as reported earlier. It (THC) transparent. Instead, representa- ship to stop, they took the hostages, all of appeared that the pirates were assisted tives of nine Asian shippersí councils whom are Indonesians, and allowed the by four other gangs. ìDuring their fi ve- at the meeting heard that he had been ship with the rest of the ten-member crew day captivity, the hostages were kept in compelled to step down from his post to leave for Penang. fishing boats to avoid detection,î Abu earlier this month by IADA member Bakar said. lines opposed to his policy of open The hostages were released at the Indone- dialogue with Asian shippers. sian island of Tanjung Balai near Medan The ICC International Maritime Bureau after the owner placed the ransom at an (IMB) expressed concern that the inci- Japan Shippersí Council MD ëTedí Teruo undisclosed location. Master of the vessel, dent occurred in an area that had been Kawamura said: ìThis shows that most Djunaidi Nawai, 48, the chief engineer incident-free in recent months. ìSimilar IADA carriers are not paying respect to us known only as Hamdi and greaser Man- attacks had taken place further north,î nor they do not treat us as customers.î gatur Siahaan reached Kuala Lumpur the noted Noel Choong, regional manager of next day and flew to Penang where the the IMBís Kuala Lumpur Piracy Report- Hosted by the Hong Kong Shippersí Penrider was docked. ing Centre. Council, the meeting was attended by representatives from Japan, South Ko- rea, China, Singapore, the Philippines, Concern over NZ groundings Thailand, Macau and the Federation of ASEAN Shippersí Councils. A FIFTH ship in two years grounded in New Zealand waters on August 16. The 5,841- DWT box ship Spirit of Enterprise damaged its rudder while crossing the Manukau Bar, on New Zealandís West coast, near Auckland. Hanjin to get

The incident came just days after resi- environmental disaster. So far this year, ëodour-freeí boxes dents near Whangerei, on the East coast, two heavily-laden tankers have scraped had demanded a minimum clearance to the seabed close by while entering the LINER operator Hanjin Shipping has be set for tankers entering that harbour harbour when one-metre-plus swells developed odourless container paint, the en route to the Marsden Point Oil were running. company announced on August 14. Refinery. Members of the Whangarei Heads Residents Association suggested Eastern Honor, a single-hulled tanker, The innovation has been achieved in con- a minimum clearance of 3 m under a hit the bottom on July 27 and Capella junction with three Korean paint manufac- tankerís keel because of their fears of an Voyager, a double-hulled ship laden turers, Kumgang Korea Chemical, SKS with 108,000 tonnes and Chokwang Yo Turn. of crude oil, split its hull after scraping the Jeon Byeong Jin, the head of Hanjin Ship- seabed on April 16. pingís equipment team, added that the Both cases are cur- new ìenvironment-friendlyî paint would rently under inves- reduce eye irritation and enable boxes to tigation by the New be shipped almost immediately after coat- Zealand Maritime ing has been completed. At present, boxes Safety Authority. have to wait two to three days to be free of the paint smell.

The coastal container ship The new paint will be applied to the batch Spirit of Enterprise during of 10,000 20-ft containers Hanjin is due an earlier voyage to receive this year.

10 www.fairplay.co.uk August 21, 2003

FRPED030821015.indd 10 18/8/03, 15:08:14 Asia Pacific News Bridge will not affect PSA volumes Oz union battle A PROPOSED bridge on the Malaysian side of the causeway connecting Johor to Singapore with CSL continues will not affect traffic volumes at Singapore, the island stateís Transport Minister Yeo Cheow Tong told Parliament last week. The minister was responding to queries on the AUSTRALIAN maritime unions and the impact of the proposed bridge, which Malaysian Prime Minister Mahathir Mohamad has CSL group have both drawn confidence said will enable more cargo to be moved under the new bridge between Johorís Pasir from a decision handed down on August Gudang port and Tanjung Pelepas. 14 by the Australian Industrial Relations Commission (AIRC). Yeo noted that the cargo between the two gapore do so because of PSAís excellent Johor ports would be shipped by small connectivity. ìAbout 200 shipping lines AIRC Commissioner Frank Raffaelli barges and would take longer to reach PTP connect PSA to 600 ports in 120 countries. concluded that he should not dismiss than PSA Corpís Singapore terminals. He PSA will maintain and expand this superior or refrain from further dealing with also stressed that shipping lines carrying connectivity to ensure the continued com- applications by the unions that CSLís containers from Pasir Gudang through Sin- petitiveness of our port,î Yeo said. bulk ships CSL Pacifi c and Stadacona be included in the Australian maritime industry seagoing ìawardî (MISA), Box scanners swapped for palm oil which dictates local pay and conditions. CHINESE high-tech goods manufacturer estimated to be worth CNY17M ($2M). However, Raffaelli found some diffi culty Tongfang Weishi will swap container- The quantity of palm oil is said to be with the unionsí attempt to encompass scanning machines for Malaysian palm oil around 15M tonnes. CSLís Australian shipping operations in a first-of-a-kind barter contract. Tong- under the award provisions. fang will sell two surveillance machines Tongfang Weishi officials said the barter ñ which are to be installed at Malaysian deal opens up exciting new possibilities It appears the issue of whether foreign ports ñ in exchange for palm oil bought for export of Chinaís high-tech machinery. crews working in the Australian coastal at the price prevailing on the day the con- Scanners such as the Tongfang machines trade should receive the same pay and tract was signed. Weishi officials did not are being deployed in Chinese ports as conditions as Australian seafarers will disclose the price of the machines, but a part of Customs action to crack down on continue to be heard within the AIRC fo- similar machine installed in Shanghai is smuggling and human traffi cking. rum, with CSL being allowed to argue that it is not covered by the maritime award. Alternatively, some sort of ìfall-backî Viking clinches China cruise deal position, involving a different form of VIKING River Cruises of Switzerland has keting the cruises in Europe and North award, might be agreed. tied up with Chinaís New Century Cruise to America. The co-operation is said to be operate the picturesque 600-km sailing from the first in China whereby a foreign cruise CSL Australiaís MD Chris Sorensen upstream Chongqing in south-west China to company will have a finger in Chinaís told Fairplay that the commission had Wuhan near the Three Gorges reservoir. promising river-cruise pie. accepted that ìthe terms and condi- tions in our CSL/ITF agreement were Under a one-year contract agreement Wang Yu, director of Chongqing Travel acceptable to Australian community signed this month, the catering section Bureau, said that Viking would open new standardsî. He added: ìWeíre pleased of the luxury vessel New Century will be markets for the proposed cruises on the with the outcome: certainly we didnít managed by Viking from January 2004. Yangtze River. New Century Cruise plans think our foreign crews should be roped Viking will also be responsible for mar- to offer sailings from next month. into the MISA award.î

August 21, 2003 www.fairplay.co.uk 11

FRPED030821021.indd 11 18/8/03, 16:25:24 Middle East / South Asia News Marlo ready to seize Gulf tankers Iraqi oil COALITION authorities in Iraq are in the process of establishing legal procedures for the detention exports falter and possible confiscation of ships involved in smuggling oil out of the war-torn state. EFFORTS to revive Iraqís oil industry The US Maritime Liaison Office documentary evidence that the cargo have suffered a blow, with alleged sabo- (Marlo) in Bahrain said that grounds was purchased in good faith. Marlo tage and technical problems shutting down for legal action are being prepared, cautioned commercial shipping that the recently re-opened pipeline linking following the August 8 arrest of the only oil legally purchased from the Kirkuk to the Turkish port of Ceyhan. The UAE-flagged, 12,000-DWT Navstar Iraqi governmentís State Oil Market- setbacks, culminating in an explosion and 1, which was carrying 1,100 tonnes of ing Organization (SOMO) is authorised fire at a section in Baiji, north of Tikrit bunkers at the time. for export. That currently only includes over the weekend, came just three days crude oil loaded at the offshore Mina after Iraq began pumping crude from its Maritime lawyers based in regional Al Bakr oil terminal or refi ned products northern oil fi elds for the fi rst time since transhipment hub Dubai had voiced loaded at Khor al-Zubayr. ìAny oil that the war ended in March. doubts about the legality of the inter- does not fall within the above two cat- ception, following the lifting of UN egories is stolen government property Thamir Ghadban, the US-appointed sanctions against Iraq, although they and therefore not authorised for sale or oil minister, told a news conference in said the ship owner needed to provide transport,î it warned. Baghdad that it would be several days before pumping could be resumed. Iraq was expected to pump between 300,000 and 400,000 barrels a day to Ceyhan. No tankers are currently booked for Ceyhan, and oil was expected to fill storage tanks for about ten days before any vessels would be sent for loading. There are currently 500,000 barrels in storage at Ceyhan. The pipeline from Kirkuk is two parallel lines, one of which has not been used for years. India to penalise The US Coast Guard Cutter Adak holds position alongside a cargo dhow as its boarding team checks for illegal cargo and weapons (photo: John Gaffney/USCG) PSC failures INDIAíS maritime authority is to impose stiffer penalties on Indian ship owners India issues new tanker guidelines and restrict their ship trading licence to coastal movement if Indian-fl ag vessels REVISED guidelines for chartering oil and product tankers have been issued by Indiaís are detained abroad for Port State Con- Directorate General of Shipping. The revised circular has simplified an earlier notification trol deficiencies. In the current year 14 and now applies the rules to Indian as well as foreign tankers. According to the revised Indian ships have been detained abroad, mainly due to maintenance defi ciencies. notification, all crude carriers and product tankers with segregated ballast tanks in Alarmed at the spurt in detentions, the Di- protected locations should be below 25 years of age and must be classed either with the rector General of Shipping, GS Sahni, has International Association of Classification Societies (IACS) or Indian Register of Shipping decreed that such ships must undergo Flag (IRS). In addition, all tankers above 20 years must have at least CAP-2 rating for hull, State Implementation inspection on arrival machinery and cargo equipment. in India. ìIf any deficiencies are found, heavy penalties will be imposed,î says Any tanker not complying with the foreign-flag vessels. However, opinion a statement from DG (Shipping). ìThe guidelines will be prohibited from en- has been divided among the members of existing Rs40,000 ($870) penalty will be tering ports or offshore installations, or the Indian National Shipowners Associa- revised upwards as a deterrent measure. anchoring in areas under the jurisdiction tion (INSA) about extending the rules to And, if the ship is detained abroad more of ports. The guidelines will come into Indian-fl ag vessels. While Great Eastern than once in any year for serious and major force with effect from April 2004 instead Shipping and Essar Shipping will not be deficiencies, the ship trading licence may of from September as notifi ed earlier. The affected by the age restrictions, as they have to be restricted to coastal movement earlier decision to impose age restrictions have modern fleets, Shipping Corp of only.î Sahni has also asked Indian own- on chemical and gas tankers has been re- India and some smaller shipping com- ers to remedy deficiencies and improve moved. The new rules for domestic ships panies operate some old tankers and are their ships, which otherwise give India a will remove the discrimination against understood to oppose the extension. bad name.

12 www.fairplay.co.uk August 21, 2003

FRPED030821023.indd 12 18/8/03, 17:03:36 European News Senegal replaces Le Joola Tribunal slates SENEGAL is close to replacing the tonnage lost when the passenger ferry Le Joola sank off Malta Drydocks the Gambia last September, with 1,863 fatalities. According to French newspaper Le Marin, AN industrial tribunal in Malta last week Senegalís Transport Ministry has signed an agreement with St Malo ferry operator Emeraude ruled in favour of the General Workers Un- Lines to time-charter the fast ferries Solidor 4 and Hanse Jet for 18 months. ion (GWU) in its two-month dispute with Malta Drydocks (MDD) for stalling the ap- The vessels can each carry 350 passengers larly shallow draughts. Senegal has tried pointments of 15 workers. It further said the and will reportedly be positioned in Sen- numerous vessels including SNCMís Maltese yard was running on an antiquated egal early in September. The news early sophisticated fast ferry NGV Asco, but no system handed down from the old Admiralty this week came as a surprise as Senegal deal has yet been clinched. The new Dakar- (pre-1959) years, and needed updating. The had said it had found the right ferry in Ziguinchor service will be run by a new, yet tribunal said MDDís June decision to freeze Norway and was ìabout to start purchase to be established, private operator. the promotions of the acting charge-hands negotiationsî. Meanwhile, Senegal has was wrong, and that the unionís stance on the decided to purchase a newbuilding for Meanwhile, Senegalís consumer associa- issue was justified. It rejected MDDís argu- delivery at the end of the Emeraude Lines tion ASCOSEN and 300 families related ment that vacancies should not be fi lled be- time charter. The shipyard is not yet an- to the 1,863 victims of the disaster last cause of the continuing re-structuring plan, nounced, but the order could go to France week rejected the attorney-generalís rul- pointing out that MDD had advertised the or Germany, as the latter is participating ing discontinuing further penal proceed- jobs well after the restructuring details had financially in the re-launch of the Dakar- ings because the sunken ferryís master been announced. Ziguinchor ferry service. died in the accident. ìThe shipís captain is certainly to blame [for the ferryís sinking] MDD chairman John Cassar-White told The configuration of Ziguinchor port but he cannot be the only one to blame,î reporters that the ruling would make run- demands compact ferries with particu- said ASCOSEN in Dakar. ning the shipyards much more diffi cult and would adversely affect the yard at a stage Senegal may replace when major reforms had only just begun. the lost Le Joola with GWU general secretary Tony Zarb called the smaller fast ferries the ruling a victory safeguarding the con- cept of the collective labour agreement. Solidor 4 (pictured) and Hanse Jet, but will it be able to stop over-loading? (photo: Eric Houri) Bank Line sold to China Navigation ANDREW Weir Shipping of the UK has agreed to sell Bank Line to the Swire Groupís China Navigation Co. Bank Line has been trading on Europe-South Pacifi c routes since its foundation in 1905. The sale includes the Tradco and GTS agencies in the Solomon Islands, according to the compa- nyís August 15 press release. Bank Lineís 676-TEU box ships Speybank, Arunbank, Teignbank and Foylebank will continue to Dutch government ever green be owned and managed by Andrew Weir and will be time-chartered to CNCo for use THE Dutch ministries for transport, for a potential niche market ñ the yard would in the South Pacifi c service. AWS chairman environmental affairs and for economic recycle about 14 vessels a year ñ and the Michael Parker said: ìIn many ways this is affairs are to grant a Ä85,000 ($96,000) keen interest of authorities, trade and in- the final piece in a jigsaw that started with subsidy for a feasibility study on the dis- dustry and environmental organisations our selling the MacAndrews and Ellerman mantling and recycling of seagoing ves- in helping to set up such a yard. trades.î A review last year had concluded sels and production platforms at a ëgreen that AWS should shed its liner operations to scrapyardí. The site would be located at BGP Engineers, which specialises in concentrate on ship ownership, management Eemshaven in the northern Netherlands. environmental reports, will draw up and related services. The company sold its The subsidy goes to a special foundation the survey on environmentally-friendly West European and Baltic short-sea opera- set up with P&O Nedlloyd, TBWA\ scrapping and its economic potential, tions to CMA CGM, and deep-sea services BASELine and BAM as participants. The and whether the Netherlands can promote to the Med, MidEast, Indian sub-continent parties involved have already investigated the green scrapping concept in developing and East Africa to GermanyísHamburg-S¸d viability of the venture, having identifi ed countries. and Stinnes Linien.

August 21, 2003 www.fairplay.co.uk 13

FRPED030821020.indd 13 18/8/03, 16:23:37 European News US investor in Bremer Vulkan revival St Petersburg spat A NEW industry group backed by financing from the Bremen state government plans to over box fee hike revive the Bremer Vulkan brand. Frankfurt-based investment manager Werner Brech MAERSK Sealand has publicly attacked told Radio Bremen TV that he plans to pay off Bremer Vulkan creditors who are said still Russia’s National Container Co (NCC) to be owed a total of Ä5M ($5.6M) from the shipyard company, bankrupt since 1996. for the 20-30 per cent increase in box handling charges NCC introduced at the According to Brech, parties interested in for the State’s financial engagement in First Container Terminal in St Petersburg his proposal include a US logistics group, the new company. He described Bremer on July 1 (see page 22). which is considering using the Bremen Vulkan as an exemplary company, still and Bremerhaven port infrastructure generating local pride. Maersk Sealand’s commercial director, Soren integrated sea, inland waterway and road Jensen, said in a letter to Russian maritime projects. Brech had a first talk on August The shipyard group mis-used about industry website Sea News that statements by 12 with Bremen state investment com- DM850M (then $590M) in state subsidies Alexander Svetlichny, commercial director pany BIG to sound out the possibilities before it was declared bankrupt in 1996. of the First Container Terminal were either false or misleading. Svetlichny had claimed that “the dynamics of cargo flow called for Tordenskjöld back from the brink terminal efficiency upgrading”. Physical AN EGM on August 14 of troubled Nor- The board was forced to file for bank- expansion of the site is impossible, and the wegian shipping company Tordenskjöld ruptcy earlier this month after attempts new procedures would help “intensive” de- reported that the company’s assets are to restructure its debt failed. However, velopment, he said. Svetlichny also claimed worth more than its liabilities, giving its in a hearing at the Bergen City Court on the new charges and rules were introduced directors a tool in their struggle to avoid August 12, the company argued that it to eliminate fl y-by-night operators who, he bankruptcy. The company’s chief fi nan- could not be ruled bankrupt because it is said, have been overloading the terminal. cial officer said that Tordenskjöld’s assets not insolvent. The court called for further “Our objective is to speed up the turnover are worth NK235.8M ($33.2M) while its documentation on Tordenskjold’s fi nances or the terminal capacity by reducing the liabilities amount to NK209.5M. and set a new hearing for August 28. container transit period,” Svetlichny said.

River Plate / Tanker Markets September 4 UK Shipping September 11 Maritime Cyprus / Dutch Caribbean September 18 Germany / Taiwan September 25 October 2

14 www.fairplay.co.uk August 21, 2003

FRPED030821016.indd 14 18/8/03, 15:09:05 Cover Story The Middle Kingdom moves centre stage Bulk market surges as China devours resources NOT only is the dry bulk market enjoying its greatest boom in living memory but many analyst told Fairplay, that China is a huge country with an enormous population and industry watchers believe there is more to come. In a radical turnaround that got underway that while a general economic plan is laid in August/September last year, the dry bulk market defied a depressed world economy down at the top, how it is implemented and freight rates have climbed steadily since to reach a plateau at three or four times can be left very much to the local level. last yearís depressed lows. To this extent it can get pretty chaotic and there are potential risks that the market One country ñ China ñ is at the heart tonnes. China is not far off tripling its could be stoked up only for a massive of this tremendous lift to rates; if, as iron ore imports in just six years with correction ñ at some stage. expected, the rest of the world economy most of the growth in just the last three. begins to recover towards the end of But in the short term at least, it seems that this year, and against a background of But where did this growth come from? the key to the future of the bulk shipping limited supply growth, the implications For many in the industry the answer is market lies in Chinaís desire for steel for demand and freight rates in 2004 simply Chinaís surging economic growth and, on the face of it, the country will are profoundly bullish. A glance at the in general. But for others the reasons need more and more. As the graph on accompanying table provides reason for such a great leap forward remain page 16 shows, compared with the other enough for the boom in bulk. curiously nebulous. Asian economic powerhouses, domestic per capita usage remains very low. Albeit selective, Chinaís non-iron ore They point to an impending supply crunch trades are on track to increase by around in iron ore as symptom in itself that the If China conforms to the generalised 60M tonnes since 1996 to hit 100M whole industry has been taken aback, and ëS-curveí pattern of rising consumption tonnes this year. The sudden increase in not least Chinaís major steel producers in line with rising incomes, there are Chinese imports, mostly since 2000, is who are now finding themselves scouring still many years of growth before this now having tremendous reverberations the world markets for any ore they can consumption flattens out. Indeed, for world industry as a whole. For many find. It is important to remember, one extrapolations based on regional industrial commodities supplies are tightening sharply, with prices rising and Bulking Up – Selected Chinese Imports (’000 tonnes) some markets are now facing a crunch in 1997 1998 1999 2000 2001 2002 2003* their ability to feed this massive appetite, Iron ores 54,970 51,846 55,384 69,971 92,393 111,423 146,458 according to Macquarie Research Metals & Mining (MRMM). Ferrous scrap 1,829 1,999 3,339 5,099 9,776 7,853 7,335 DRI 22 0 0 116 652 1,133 1,389 Chronic shortages of nickel are expected Steel and iron 306 643 1,982 4,641 8,138 4,578 3,419 over the next 12-18 months, lack of semis investment in alumina means that smelters face shortages, while the lack of scrap has Iron and steel 14,781 14,327 19,802 25,452 35,527 37,467 47,768 restricted the growth of secondary metals, Coal 1,999 1,582 1,671 2,117 2,493 10,811 11,280 forcing consumers to switch from recycled Potassic 5,274 5,652 5,393 6,182 5,425 6,951 7,878 to primary metal production, not only in Bagged 7,491 8,109 7,865 5,681 5,642 7,940 5,351 the aluminium market, but also in copper. fertilisers While China does not have a high profi le in raw materials imports in all cases, China Sulphur 357 937 1,979 2,733 3,370 4,092 4,819 is at the centre of international demand for Nitrogenous 3,719 161 94 28 21 1,924 713 many finished metals/products and many Manganese 1,317 1,206 1,057 1,202 1,712 2,080 2,751 international suppliers fi nd themselves ores working flat out to fulfil the demand. Copper ores 938 1,183 1,250 1,813 2,255 2,065 2,595 But much of Chinaís import growth has Chromium 894 712 8,162 1,113 1,090 1,143 1,599 been driven by a phenomenal increase ores in steel production, which has a direct Lead ores 118 231 170 311 397 389 441 impact not only on ore imports but also on a number of other minor bulks. Zinc ores 167 57 44 78 653 785 295 Cement 169 180 500 1,426 2,801 2,372 2,541 In 2000 iron ore imports grew by around Wood (rough 5,795 6,490 12,859 17,248 20,903 29,729 31,436 14.5M tonnes and by 20/22M tonnes & sawn)** subsequently. But this year alone could Note: * annualised on May data ** cubic metres see a massive further leap of 35M Source: Global Trade Atlas

August 21, 2003 www.fairplay.co.uk 15

FRPED030821010.indd 15 15/8/03, 17:01:41 Cover Story

precedents suggests that Chinaís steel Tomlinson, perhaps in the banking Clearly the ëbase caseí of most analysts story has only just started. sector. The main danger may in the is for steel consumption to continue end be political, centred on the internal to grow rapidly and, continues There are many reasons to believe that cohesion of an enormous country, but Tomlinson, ìfor steel production to Chinaís steel consumption will continue whether this will happen, never mind keep pace, although this is likely to to grow, at least for the next few years. when, remains a great imponderable. provoke two major crises in the major Phil Tomlinson, director of the Steel bulk trades ñ one in coke, and the other Unit of analysts CRU Group, says ìWe Magnus Ericsson, managing director of in iron ore.î see Chinese economic growth being Sweden-based Raw Materials Group, is sustainable for the next ten years,î a little more circumspect about Chinaís China currently produces lots of coke, in part because Chinese resources of prospects. ìReal personal consumption but this is mostly of the semi-soft iron ore are so limited and of such low [of steel] may have ëplateauedí, say variety. What is more, the countryís quality. Equally, he points out that what some, and demand is mostly based on coke batteries are getting old and the recoverable reserves there are are largely the cities, and it canít remain at double- country is getting rich enough to care inland, with most of the steel plants digit levels for ever, but at least for this about the environment. ìWe anticipate located either along the coast or on the year growth will be sustained,î he says. in the medium/long term that the supply Yangtze River. ìIt makes better sense to The explanation is higher demand, shortages will be rectiÞed, but there import,î he says. mostly for infrastructure, and supported will be short-term problems.î Australia by preparations for the Olympics in and Canada, as the large international But, as an economy, the China model 2008. ìBut car and fridge production, for suppliers of quality coke, will be best is viable to maintain the pace of current example, is escalating sharply, a signal placed to meet this growing demand, steel production, says Tomlinson, in of better prospects for the longer term.î but in the short term Chinaís escalating part because growth will increasingly be requirement means that supplies will be internally driven. In future, he maintains, Besides the outlook for steel production short and prices strong. there will be less reliance on exports: and consumption, there may be some ìRemember, China has an internal savings danger that domestic sources of ore will Shipping in short supply rate of between 20-30 per cent, a typically have some impact on import growth. If some commodities are in short supply, high Asian investment rate.î Although ìDomestic production of iron ore the same could be said of shipping. The ìnot necessarily efÞcientî, this means has increased rapidly this year,î says impact of Chinaís massive demand that investment capital to keep economic Ericsson, ìalthough it is important to for bulk commodities and iron ore in growth on track should not be too hard understand the nature of much of this particular has been all too obvious as to come by. Furthermore, at the macro- production. Beside the major industrial- rates soar. Brokers conÞrm that doubts economic level China should also be able scale extraction of iron ore are numerous are increasing that Brazil, following to last the distance because its trade surplus small-scale operations,î which have been Australia, will not be able to cope with is falling as imports gather momentum. under-estimated in the past. While longer the rush and it seems a running certainty term there is little doubt that China will that more ore will have to be sourced Of course, the music could stop struggle to maintain current output levels, from the likes of South Africa, India and with some internal crisis, continues no crash in domestic production is likely. even Sweden.

In the meantime the Atlantic/ PaciÞc rate differential is likely to widen further. Route 3 (Tubarao-Baoshan/Beilun) of the Baltic Capesize Index (BCI) had reached $19.41/ tonne as Fairplay went to press, which translates to something like $46-47,000/ day, say brokers. $50,000/day is now heaving into view. As one broker observed, ìthere is a growing feeling that soon owners will be able to ask their own price.î

These are quite unusual days for the bulk markets, not least because this is the Þ rst time for many years that the freight increases have been so uniform across all sizes in the bulk trades. Arguably, in the past when there was a spike in

16 www.fairplay.co.uk August 21, 2003

FRPED030821010.indd 16 15/8/03, 17:01:57 Cover Sto ry

one of the markets, the reaction in other not locked into COAs at yesterday’s Another commodity struggling with sectors was fairly limited. This was rates. Indeed, owners/operators who the current freight rates is the log trade particularly so of Handysizes compared took contracts at last year’s levels, could where buyers are notoriously slow to with the other sectors, whose rates be taking a real pounding, although adjust to increased rates. Word has remained relatively stable. Aided by the charterers are in for a shock when they reached Fairplay of an exporter of small number of newbuildings on order come to renew at current levels. logs from South Africa (Port Elizabeth perhaps, rates here have moved from a and Richards Bay) that has just fi xed typical level of $6,000/day to $9,000/ Elsewhere in the market, one major two late 1970s-built tweendeckers to day, with owners now very bullish over Australian scrap exporter noted that the carry a total of approximately 20,000 longer-term prospects. market peaked at $180/tonne delivered cubic metres of logs to the UAE. This Asia back in May, then dipped to $150/ quantity would have gone in a single The Sydney offices of North European tonne causing some buyers to cancel shipment on a fully fitted logger but major operators are abuzz with the contracts/fail to open letters of credit in the freight was too steep, so the cargo prospects and optimism, with no end in June, but is now back up to $170/tonne has been split into two lots to take sight. For modern 25-28,000 DWT vessels and rising. China is calling the shots advantage of the relatively cheap freight coming free South-East Asia owners are and paying up to $5/tonne premium to rates still obtainable from traditional bowled over in the rush and can almost secure cargoes (compared to Korean, tweendeckers discharging in East and name their price and certainly afford to be Indonesian, Malaysian and Thai steel West Africa and looking for cargo to fussy about cargoes and charterers. mills). However, with voyage costs position them to the Arabian Gulf or for 25-30,000tonne shipments from West Coast of India. But it is the nature of this extreme boom Australia to Asia having increased close that this general tandem move in rates to $200,000, buyers will probably have It seems that China is casting a warm may not last. There is little doubt that to pay more in the near term. glow into all corners of the dry market. Cape rates have attracted most of the headlines as they have led the ascent. But the Cape market is premised on the Taking China out of the equation iron ore trades, and the ore trades are notoriously hard to split, say brokers. THERE can be little doubt that what happens to Chinese steel production in The current Richards Bay rate of $12.30/ particular will have a direct, and escalating impact, on the bulk shipping markets tonne, for example, probably will not go in the future. And when China’s other bulk imports are taken into account, the too much higher because here Panamaxes relationship between bulk shipping prospects and China’s development might even can be brought in to split the load. But, be characterised as dependence. with the exception of the ore trades out of Australia perhaps, any further growth To illustrate what China now means to the market, London-based Maritime in iron ore trade will mostly benefi t Strategies International (MSI) prepared the following forecast based on their latest the Cape market, suggesting that Cape report Chinese Deceleration vs Economic Recovery. In summary, China will account rates could leave the rest of the market for 22 per cent of bulker shipping demand by 2010 compared with just 15 per cent behind. And as a further sign of the in 2002, and up to frenzied market, brokers now confi rm Required Demand (Million DWT), 2005 & 2010 third of world iron that over recent weeks at least four ore-based shipping Capesize vessels have been taken from China World China World demand by the end of China straight back to Brazil directly, Iron Ore 23.0 78.8 29.4 89.1 the end of the decade. in contrast to the usual return leg via Grain Wheat/coarse 0.6 31.5 0.6 35.4 Australia and Europe. If, on the other Soya 5.7 17.7 7.8 20.1 hand, imports were Bulk operators close to the frantic action Iron and Steel 3.4 17.9 4.9 19.8 constrained to 2002’s in Australia confirm that the outlook is Metallic Ores 0.8 3.0 1.1 3.3 levels, the impact on exceptionally bullish. The Sydney offi ce Non-Metallic Ores 1.0 5.7 1.6 6.7 freight rates would be of a major Japanese bulk owner is of the severe; average time firm view that whilst China is the driving Fertilisers 1.6 6.1 1.9 7.1 charter earnings would force the reason this bull run is going Semi-Processed 1.6 6.7 2.5 7.5 be cut by around a from strength to strength is that both Agricultural 0.1 6.9 0.2 7.3 third in 2005 and up to Europe and North America are showing half by 2010. Timber 2.1 13.4 3.3 16.0 positive signs. With China providing such a solid base any additional demand Total Minor Bulks 10.6 59.7 15.3 67.7 This scenario is purely could quickly push the market higher. As Total Demand 50.6 278.0 68.5 313.5 hypothetical, of course, for China, the end of the 2008 Olympics with no China Growth 38.0 265.4 38.0 283.0 but it does serve to will not mark an end to China’s progress illustrate the scale of and demands on the world’s resources. Capesize: resultant -30% -54% growth than can be fall in earnings expected, as well as At this point, most operators must be Handysize resultant -27% -51% the consequences if wishing that they controlled a larger fall in earnings China trips up in its fleet, so long as they have enough vessels great leap forward.

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agency will be based. Lisbon is currently rumoured as the favourite city to host the new agency, although Piraeus, Genoa, Nantes, Cork and the Prestige-hit region EMSA delayed by politics of Galicia are also in the bidding.

THE fledging European Maritime Safety Agency (EMSA) is set for a rapid expansion, The Þnal location has been caught despite the fact it is still not yet fully operational and caught up in the mire of political up in a furious process of ministerial horse-trading. horse-trading along with ten other newly created agencies covering areas In a bid to enforce the continuously as diverse as food, space and air. Until It is homeless and understaffed, yet expanding behemoth of European a Þnal home is chosen many of the there are high-hopes for Europe’s maritime safety and security legislation, potential candidates willing to join maritime safety ‘super-agency’ the European Commission has proposed EMSA are unwilling to commit while widening EMSA’s remit to include the agency remains in limbo. ship pollution, maritime security and “It has been clear from the outset that seafarer training. Proposals adopted once EMSA was established it would Furthermore, there are those who are by the Commission on August 8 will become an organisation to be reckoned concerned that once EMSA does get off see the agency equipped with a ß eet of with,” said Chris Horrocks, secretary the ground it will become an extension specialised pollution response vessels general of the International Chamber of to the Commission’s unilateral approach and an extra €20M, in addition to the Shipping. Although many are fearful that towards maritime policy. “The acid test existing budget of €12.6M, to carry EMSA could take over some functions will be whether EMSA can conÞ ne out its new functions. But with no from existing national regimes, its itself to issues which call for a regional permanent ofÞces and only a handful of primary function is in ensuring that approach or will want a Þnger in every key staff recruited, it seems that in spite legislation is applied properly across the pie on the table,” commented Horrocks. of the grand schemes being pushed by EU. “It has some urgent tasks, such as its political masters, red tape is slowing co-ordinating the European response to In spite of all this, the limited EMSA down its progress. the demand for an effective regime on staff insist that once the agency has places of refuge,” Horrocks continued. established itself, it will operate The creation of EMSA was originally independently of the Commission and proposed over three years ago in the Most EU refuge plans, however, have still to a degree be free from the bureaucracy aftermath of the Erika sinking, but not been submitted to the Commission that it currently faces. And when it was not ofÞcially established until even though the deadline set by the EU Þnally does become fully operational June 27, 2002. It then had to wait until council of ministers expired last month, many are expecting great things from January 29 this year for the ex-European and EMSA is currently operating on a the new agency. “Who knows, if it can Commission head of maritime safety, skeleton staff. Despite the faith placed concentrate on the essentials it may even Willem de Ruiter, to be appointed as in the new agency, it seems that delays help to restore a belief in professionalism its Þrst executive director and begin the in its establishment could potentially rather than political opportunism,” agency’s work. slow its operations. In the notes from mused Horrocks. its last published board While EU legislation has been tightened meeting members noted in the aftermath of the Prestige, the progress made so far Commission insiders admit that uniform “but expressed concern enforcement is the key to preventing about the length of the further disasters and is currently the necessary administrative weak chain in the link. Ten EU member procedures”. states are facing legal action launched against them at the European Courts of A further 40 staff are Justice for their failure to transpose the expected to join EMSA ‘Erika I package’ of safety rules into before the end of the year; national law. however EMSA insiders admit that further delays Under the new proposals EMSA will could still occur because be able to charter or lease specialised none of the candidates pollution response vessels and position currently know where the them strategically around Europe’s coastlines. Loyola De Palacio has also proposed that the objectives of the agency should be widened to include enforcement of maritime security measures and assist Despite an extra €20M, de with the Commission’s recently enlarged Ruiter’s hands are currently tied competence in the Þeld of seafarer by political in fighting training requirements.

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other concessions all of which are in our sights,î declared Sithembiso Mthethwa, Dudulaís CEO. Referring to the opening Let the bidding begin of a CSXWT branch office in Durban, Mthethwa said that the move would AMERICAN terminal specialist CSX World Terminals (CSXWT) says that it is opening a create a solid platform for combining permanent office in Durban in anticipation of the reduction of tariff barriers and the Dudulaís local specialist knowledge and establishment of a free-trade agreement between South Africa and the United States. expertise with CSXís global experience. ìAlthough we have been successful, Pointing out that this issue was given advantage of the expected concessioning Dudula is still a relatively small company pride of place at recent talks between of port terminals in South Africa. A which needs to develop more critical Presidents Bush and Mbeki, CSXWT spokesman for the joint venture said mass,î he admitted. says it expects a signifi cant increase at the weekend that both CSXWT and in both the export of South African Dudula Shipping believed they had CSX/Dudulaís announcement came a manufactured goods across the Atlantic the necessary credentials to bid for week after another Durban-based group, and direct foreign investment into South both container, bulk and neo-bulk (i.e. Grindrod, signalled its interest in the Africa from the US. unitised bulk) concessions. terminal concessioning by announcing the formation of a joint venture with Three years ago CSX created a joint ìTop of the agenda is the Durban a BEE partner (see Fairplay, August venture involving Durban-based Container Terminal, followed by various 7). The list of companies waiting for Dudula Shipping, the bidding to commence is South Africaís growing rapidly larger. Bidvest most successful Group, owner of Rennies Cargo Black Economic Terminals, SA Stevedores, Empowerment SA Bulk Terminals, South (BEE) maritime African Container Depots as company, and have well as extensive interests in since positioned the Manica group throughout themselves to take Central Africa, put its hat in the circle when it too took on a BEE partner on July 9. This was after government made it clear that any successful concessionaire would need a CSX World Terminals significant BEE involvement. has opened an office at Durban in anticipation International companies that of new port concessions have revealed an intention to bid for the Durban container terminal include Hutchison Port Holdings, Singaporeís PSA, AP M¯ller and International Container Fast route to obsolescence Terminal Services Inc. All this comes amid a war of words SIR, I read with interest the article on the Euro-class vessels decided to show between the government and trade Seatrain Lines in your July 24 issue his good friend the pilot just what this unions. The SA Transport and Allied (page 44), because as a shipís agent with ship could do. Having accelerated Workers Union (Satawu) has slammed Denholm based in Greenock, Scotland to 25 knots by the time they got to Jeff Radebe, minister of public I used to board these vessels regularly Gourock, the resultant wash broke all enterprises, for saying that he intends and be told some fascinating (but surely the mooring ropes on the Gourock- issuing invitations for bidding within apocryphal) tales such as: Dunoon ferry. a matter of weeks despite, at the time of writing, the government not having (a) The vessels had to slow down if I have very fond memories of the Euro- even tabled the new port concession they were in danger of overtaking the Class ships but making the journey from laws before parliament. Satawu called Queen Elizabeth 2, as Cunard didnít New York to Bremen in five days and government promises of negotiations like fielding complaints from their having to wait for five days for a berth, about the concession process a ìa passengers, who thought THEIR ship itís no wonder they were obsolete. bad-faith shamî. Unions would prefer was the fastest. a public-public ownership along the Yours etc, model of several US ports where the city (b) There was never a speed limit on Ian Hendrie, or local government holds a share of the the Clyde until one of the captains of London port with national government.

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cuts at its South American copper mines this year. Some traders are also hoping that PKCís shutdown might release China-India distort copper market concentrates for other smelters that are in dire need. While the concentrate AUSTRALIAN smelter Port Kembla such smelters could afford to operate shortage has prompted many Asian Copper (PKC) is due to close at the end with such low processing fees except smelters to cut output despite tight of this month (see right), the latest victim for Chinese and Indian operators, the supplies in the refined metals market, of a global shortage of scarce and costly sources said. there is no evidence yet that China copper concentrates caused by growing and India have slowed their expansion demand from China and India. While Chinese smelters get a rebate plans. on the 13 per cent VAT for imports of Asian industry sources said more copper concentrate, Indian operators Offi cials figures show that Chinaís smelters face closure as they struggle pay import duties of only five per cent imports of copper concentrate surged to compete for concentrates with the on concentrate, while refi ned copper about 40 per cent to 1.23M tonnes in two Asian nations, both of which benefi t attracts 25 per cent import tariffs. the first half of this year, enabling it from generous tax breaks to help them to produce 848,000 tonnes of refi ned expand production capacities. They ìThe concentrate shortage is becoming copper, up 10.5 per cent from the same are also reported to be sucking in a structural issue as China and India are period last year. And in the second large quantities of copper scrap as an paying such high prices,î an industry quarter, Indian copper output rose 14 per alternative raw material. executive said. ìWe canít expect things cent to over 89,000 tonnes from 78,400 to get better unless some smelters are tonnes in the corresponding period last The loss-making PKC, operated by closed to change the [supply] balance.î year. In related news, Japanís Nippon Japanese copper smelter and machinery Mining & Metals, Mitsubishi Materials maker Furukawa, attributed the decision The shortage of concentrates could even Corp and Mitsubishi Corp plan to start to halt production mainly to low worsen if workers at Chileís Escondida copper ore development operations in treatment and refining charges, which copper mine stage a full-blown strike Chile with BHP Billiton and Rio Tinto. remained at historic lows of about $12 over wages and benefits. BHP Billiton About a quarter of the ore produced will per tonne and 1.2 cents per 450 grammes of Australia, which owns the Escondida be purchased by Japanese companies, respectively at a recent tender. No mine is expected to reverse production including Nippon Mining.

Copper stacked up at the port of Antofagasta in Chile. The shortage of concentrates could worsen if workers at Chileís Escondida copper mine stage a full-blown strike

20 www.fairplay.co.uk July 24, 2003

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They will develop copper ore deposits The investment in the project will Security located to the north of the Escondida total about •50Bn ($420M) and mine and aim to begin production will be borne by Minera Escondida in 2005, with refining facilities that Limitada. BHP Billiton has a 57.5 per Phoenix rises over will have an annual output capacity cent stake in Minera Escondida, Rio of 1.05M tonnes. Production at the Tinto 30 per cent and a joint venture Panamaís ISPS Code main Escondida site began at the end of the three Japanese companies owns of 1990. ten per cent. THE Panama Maritime Authority (AMP) has selected Phoenix Management Services Group as the sole recognised Kembla copper bottomed out security organisation to assess ship security plans in accordance with the PORT Kembla, the bulk port to Sydneyís ìWeíve lost our major customer,î the International Ship and Port Facility south, received unwelcome news at the stevedoreís MD, Geoff Rex, admitted. Security (ISPS) Code. end of last month when the Japanese Both Port Kembla Gateway and the owners of the local copper smelter Port Kembla Port Corp, which operates The Fort Lauderdale-based group announced they were closing the loss- the bulk liquids berth, will be actively comprising several maritime and making plant. A consortium led by marketing the spare capacity. It is aviation security companies will assist Furukawa decided to mothball the Port understood that about 100,000 tonnes of Panama in reviewing ship security plans Kembla Copper smelter from the end of acid is used by Incitec, a local fertiliser for more than 6,600 vessels registered August, losing the port annual imports manufacturer, and that an opportunity under the Panamanian flag during the of 250,000 tonnes of copper concentrate now exists for this product to be imported next 11 months. According to AMP and exports of about 200,000 tonnes of to the New South Wales port. administrator Bertilda Garcia, once each sulphuric acid. vessel security plan is approved, it will Commodity analysts have suggested that be followed by in-situ inspections made The closure is an especially bad blow the Port Kembla plant has been badly by the relevant authorities and then AMP for Port Kembla Gateway, the private hit by the strengthening global price for will issue the five-year ISPS certifi cate. bulk stevedore, because the import of copper concentrate with China and India concentrates represented 35 per cent of sucking in the product and driving up the Phoenix, through its Panamanian its business in volume terms. Most of the price. Meanwhile copper metal has been subsidiary Phoenix Vessel Services (PVS), product arrived in Australia in parcels of decreasing in price resulting in imports has strong, established links with the 5,000 to 20,000 tonnes from Ok Tedi in competing strongly with the Kembla countryís major port operators including Papua New Guinea and Indonesia. production. Petroterminales de Panama (PTP). It also provides security for several shipping lines, including Maersk Sealand, NYK Line, P&O Nedlloyd, the banana distribution company Dole as well as Del Monte and DHL Latin American operations. The company, which has offices in Costa Rica and Panama and some 250 employees, has worked closely with Manzanillo International Terminal (MIT) since it began operations. ìIt is a world standard Rising concentrate prices have forced company and their attitude is much like Port Kembla Copper out of the game ours,î says MIT president, David Michou. ìIt was a good choice because Phoenix can put together a professional plan.î

PVS will charge each vessel $1,500- $3,000, MD Jerry Peterson told Fairplay. Beginning this week, additional staff comprising 100 veteran maritime and security professionals, mostly IMO- contracted and MITAGS instructors, former US Coast Guard and Marine Security officers and international terrorism experts will review and assess plans. The reviews will be processed electronically and the company will design and host the database of approval, modifi cations, recommendations and certifi cation records to prove registry compliance.

August 21, 2003 www.fairplay.co.uk 21

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is also an option for the container lines,” she hinted. Handling hike fallout hits St Pete So why has such a substantial increase in charges been levied? NCC and PKT have A SWINGEING increase of up to 30 temporary, as NCC hopes, or a more declined to explain the rationale behind per cent in container handling charges durable reorientation towards the non- it. Fairplay believes that someone within in St Petersburg from the beginning of Russian Baltic ports. “Traditional clients those organisations is guessing that July could see liner operators shift their of CMA-CGM are not hurrying to re- they can capitalise on increasing trade business to other Baltic ports. Whether arrange their containers to other ports. volume on the basis that the facility it is mere coincidence or a consequence Besides that, there are other container provided is irreplaceable. The market of the rise in charges, July’s throughput terminals in St Petersburg port. And this will undoubtedly decide. saw a dramatic 15 per cent decline in container trafÞc, compared to liftings in Box throughput at PKT is starting to slip following a massive hike in charges July 2002.

According to First Container Terminal (PKT) of St Petersburg – a subsidiary of Severstaltrans and the National Container Company (NCC) – monthly volume peaked in May, at 37,733 TEU, dropping to 36,764 TEU in June, and 31,244 TEU in July. But despite the sudden decline last month, PKT declared in its report on the Þrst half of the year that volume was up almost eight per cent per cent, year on year. Indeed, NCC told Fairplay that the fall-off in box volume was “expected by the company”.

Speaking to Fairplay last month, Natalya Kondyreva, marketing and logistics manager of the CMA-CGM ofÞ ce in Moscow, complained that NCC’s new tariff and terms at the First Container Markets Terminal were “very high, especially those related to storage of containers.” Would NYK like to swing on a star? She warned that the higher charges would cause shippers to divert containers WITH negotiations still going on behind of the exports told Fairplay that Global to Riga (Latvia), or the Finnish ports, closed doors to preserve the partnership Harvest was the third of seven NYK where she said that storage terms are between NYK and Star Reefers beyond Star Reefer vessels to be employed more favourable – 14 free storage days the end of the year, the 422,000 ft³ NYK to lift this season’s estimated 22,000 in Finland; Þve free days and
3 per Star Reefers’Global Harvest is seen here TEU per day thereafter at Riga. The departing Sydney on July 17. It made a First Container Terminal at St Petersburg short pit stop to take on bunkers whilst is now charging $30 per TEU for storage en route from Adelaide to San Diego over seven days, she grumbled. with a load of oranges.

According to NCC spokesman Anna The advent of direct calls in Adelaide by Vostrukhova, “This decrease is a the container vessels of the US PaciÞ c temporary reaction.” NCC expects Coast/Oceania Vessel Sharing Agreement PKT box handling levels to stabilise (VSA) in May this year appears to have by September-October, she declared, posed no threat to the ongoing carriage adding that PKT is still expecting to of Australia’s annual citrus exports to the handle over 500,000 TEU in 2003. US by conventional reefer vessels. Temporary though it may be, the higher charges in St Petersburg have enabled Steve Allen, MD of Riversun Export, Helsinki to move ahead of St Petersburg who is responsible for the co-ordination for box trade volume in July. Will NYK and Star Reefers be harvesting fruit Kondyreva told Fairplay last week it cargoes in partnership after the end of the year? is too early to tell whether the shift is (photo: Pat Dickins)

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aluminum. No-oneís ever chased it like we intend to, so itís like a virgin market,î he says. The company has already been incorporated in The worst time to start a business? Bauxilumís panel and will be inserted into PDVSAís and steelmaker Sidorís FOUNDING a new business in the ìWe believe the dry cargo sector has system as well as those of other fi rst- midst of a countryís worst economic enormous potential and has been too class charterers. crisis would scare many, but overshadowed by oil,î says Vivas, Venezuelaís newest brokerage, Navi who started the business on July 15 Vivas says their inclusion is based on all Chartering, is euphoric about its, and with fellow founder and Sonar defector the staffís recognised worldwide market the countryís, prospects. Ronald Navarrete. Taking two other experience in shipping, specifi cally Sonar specialists with them, Vivas and tankers and dry cargo. ìThere are high The Caracas company, comprising a Navarrete say the market, both local and costs to start with and things could go handful of ënext generationí brokers, bad at any time here, but business is recently splintered from the countryís ìBusiness finds a way through business irrespective of politics and our biggest broker Sonar Charters. ìThere customers are our friends whoíve shown were no hard feelings,î insists co- irrespective of politicsî loyalty. If youíre honest with them and founding director Antonio Vivas. Ronald Navarrete give them good service and information, ìIt was amicable, we wanted to own theyíll stick by you.î something for our children rather than international, ìhas told us weíve come just be employees.î along at the right time.î Well-connected Navarette brushes aside concerns Navarrete, whose father served as about Venezuelaís political situation. Venezuela is in the midst of an historic ambassador in Iran and Iraq and was a ìBusiness finds a way through recession, fuelled by opposition from director of state oil company PDVSA, irrespective of politics. Itís just like the big business and organised labour to says the government wants to increase US who, supposedly, is concerned about President Hugo Ch·vez, whose policies, Venezuelaís ownership and exploitation whatís going on in Venezuela. In reality, they say, are taking the country down a of dry cargo. as long as theyíre getting their oil from similar path to Cuba. Notwithstanding us, thatís all they really care about.î this claim, foreign energy companies ìWeíre intending to grow in coal, Venezuela is normally one of the USís are keen to invest and Navi Chartering cement, steel, iron-ore, bauxite and four main suppliers of oil. believes Ch·vezís nationalistic policies offer new opportunities. Ronald Navarrete (left) and founding director Antonio Vivas say Ch·vezís nationalistic policies offer new opportunities such as the ìenormous potentialî of dry bulk (photo: Neil Weise)

tonnes of oranges. Allen fears that the use of a large volume of containers would lead to congestion at Long Beach. He favours the conventional operation as offering a more reliable means for the dispersal and distribution of the fruit.

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although the timing of the public inquiry is still awaited. Local sources suggest that an inquiry will last at least three months and is likely to be held early UK ready for 10M TEU expansion next year.

LAST week the public inquiry into the London Gateway container/ro-ro terminal ended, Meanwhile down at Dibden Bay ñ marking another step forward in the race between four schemes to fill the anticipated Southamptonís six-berth, £600M, 2.3M- shortfall in UK container capacity. The question is what will the government decide? TEU capacity terminal ñ the inquiry has already finished and the Inspector Alistair Baillie, CEO of P&O Ports, project is estimated to generate would is expected to finish his report on this told Fairplay that the company was be very welcome. London Gateway is green-field site by the end of the year. pleased with the way the inquiry had at its maximum a 3.5M-TEU-capacity, gone and that they were hopeful of the £650M ($1Bn), nine-berth scheme. Together, these schemes offer a total Inspector finishing his report by the end capacity of 9.4M TEU that, if all the of the year. However, other sources Felixstoweís £55M extension to the projects are allowed, will be phased in familiar with the workings of public Trinity Terminal will be completed between 2007 and probably 2020. This inquiries suggest this is very optimistic early next year, providing an additional would allow the facilities to be developed ñ as a rule one should count 3-4 days berth and 415,000 TEU extra capacity, as demand grows. Government policy is for every day of the inquiry before the that any decision should be market-led, report is produced. Government policy is that any which means that in theory it is possible decision should be market-led, that all four schemes could be approved. In its favour, P&O Ports and Shell, which means that in theory it is But only in theory. London Gateway, which is sharing the promotion of the for example, shares the advantage of associated logistics and business park, possible that all four schemes could Felixstowe of being a brown-fi eld site have reached agreements on all the key be approved ñ but only in theory that revamps existing facilities: a defi nite environmental issues and road traffi c plus in the environmental stakes. matters through arrangements with followed by the £250M plus, 1.5M- the Highways Agency and Thurrock TEU Felixstowe South development Then there is the issue of transferring Council. Another potential bonus is its announced earlier this year involving a freight from road to rail, a key element location in the Thames Gateway region, re-development of the current Landguard of the governmentís ports policy one of three major growth areas in the Terminal. Hutchison Ports, the owner of outlined in its 2000 White Paper, Modern UK and an area earmarked for massive both Harwich and Felixstowe, will be Ports: A UK policy. It was revealed house building; the 14,500 jobs that the putting in a planning application for at a Parliamentary Transport Select this in the next two months but it is Committee last month that because Shell Haven, the site for P&O Portsí London unclear whether a public inquiry will be of a lack of funds, the Strategic Rail Gateway port: the 3.5M-TEU port could generate necessary. As to the £300M, 1.7M-TEU Authority (SRA) had put on hold the 14,500 jobs, but it has some equally tough capacity, four-berth project at Bathside re-gauging of track on one of the two competition (photo: David Robinson) Bay in Harwich, the application is in, rail routes out of Felixstowe that would accommodate high-cube containers. This, it was suggested, would lead to reduced train capacity and increased congestion on the remaining North London route, especially if the current 20 per cent of existing hi-cube users doubles in the coming years, as expected. Meanwhile, the SRA has made no commitment at all for improving the tracks out of Southampton. David Jameison, the minister for ports, maintained there was still money to take these freight proposals forwards: ìThe SRA have assured me that they will continue having dialogue with all ports,î he said.

These are the kinds of issues that the Select Committee, led by the feisty MP Gwyneth Dunwoody, will be looking at when it issues its report, most probably in October. It will not be until then that the government will be able to give its decision on one of the UKís most important port drives in decades.

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DPIís executive chairman Sultan Ahmed bin Sulayem also announced that DPI had commissioned Rotterdamís Haskoning Nederland, which had High hopes for new Djibouti port completed the design work for the oil jetty, to design a $300M mega container terminal incorporating a 2,000-m long quay capable of handling the latest generation container ships.

The Doraleh container terminal project is intended as a transhipment terminal while continuing to serve local and Ethiopian transit cargo, with the industrial free zone providing the economic engine. The existing port at Djibouti is connected to Ethiopia by Pacific International Lines has started using Djibouti as road and rail and currently handles its transhipment centre, a sign of increasing traffic on the about 60,000 import and 20,000 export containers annually from its landlocked Horn of Africa. The new port of Doraleh hopes to cash in neighbour. But the arrival this year of on this (photo: Russell Priest) Pacific International Linesí fi rst vessel to use Djibouti as its transhipment centre THE construction, early next month, is being constructed by DPI. Other has signalled a review of opportunities. of a $30M-oil terminal and jetty at the projects include a dry bulk terminal with The port is now providing a 24-hour, new port of Doraleh is one of a number a capacity of 80,000 tonnes to handle 365 days a year operation and faces a of projects that will help Djibouti meet mainly grain and fertiliser. busier future. its growing cargo requirements over the next 20 years while providing value- added services shippers and carriers serving East Africa. Lost and found The jetty, which is scheduled for SIR, In reading your July 24 issue I now tonnes of cargo ñ Iíd think this would completion in September 2004, will know why I havenít been approached by rate a mention somewhere. form part of the new bulk liquid storage Fairplayís people. You canít fi nd us! terminal called ëNew Horizoní and Yours etc, will handle oil products, LPG, edible Your map on page 27 doesnít even show Bob Matthews, oils and bitumen. The jetty design will Hamilton. Weíre a City of about half manager, marketing accommodate ships of up to 120,000 a million people halfway between the & trade development, DWT and a 14-m draught alongside. Welland Canal and Toronto. The Port of Hamilton Port Authority, Hamilton is the second busiest port on Hamilton, ENOC (Emirates National Oil Corp) and the Great Lakes after Duluth. Ontario. Dubai Ports International (DPI), which took the concession three years ago I guess you have to be number one to get Sorry, we thought Hamilton was the to operate Djibouti port ñ about 8-km noticed! Last year we handled over 12M capital of the Bahamas ñ Ed. from Doraleh ñ for 20 years, are jointly financing the nine-hectare oil terminal. This will have a storage and handling capacity of 100,000 m3 of petroleum products, 6,000 m3 of chemicals and vegetable oils and 1,200 tonnes of LPG plus blending, homogenising, heating and additive capabilities. A LPG plant set up by ENOC at the old port of Djibouti in a quick turnaround of six months will be relocated to Doraleh during phase two.

New Horizon Terminals is the fi rst stage in the development of the new port facing the Gulf of Aden and is the fi rst independent project to be commissioned at the portís industrial free zone, which

August 21, 2003 www.fairplay.co.uk 25

FRPED030821007.indd 25 15/8/03, 16:08:21 Black Sea Open the door! South-east gateway looks to EU

responsibilities. Though the authorities have continued their policy of cleaning up their national shipping register, these positive developments have yielded un- acceptable detention rates. According to 2001, statistics the percentage of Roma- nian flag vessels detained has increased again to 23.5 per cent despite improving considerably from 29.6 per cent in 1999 to 19.1 per cent in 2000. With the Romanian fleet rated as a very high risk in the latest Bulk carrier Georgi Grigorov of Navibulgar Paris MOU report, the report says that the flying the Maltese flag: national fleets have situation remains worrying with regard gone, and standards in some quarters are to implementation of the EUís maritime lower, but good progress is being made safety acquis communautaire. towards EU accession (photo: Despina Bara) Bulgaria has meanwhile fulfilled an EUROPEíS natural south-eastern borders are the waters of the Black Sea, and the coun- impressive 22 of the 31 chapters of the tries on its western coast consider accession as their main political aim. But their location acquis communautaire. In particular, the will also establish new gateways and economic links connections to Asia. report now offi cially classifies Bulgaria as a fully functioning market economy. Yet in While Turkey still needs to demonstrate the area of rail and road transport policy both countries annual GDP per capita is its respect for human rights before its to meet the political criteria adopted by only around a quarter of the EU average. EU accession negotiations may begin, the European Council at the summit in as stated recently in Strasbourg by G¸n- Copenhagen, Romania does not yet meet During the past year Bulgaria has made ter Verheugen, EU Commissioner, both the economic criteria, according to the further progress in particular in the fi elds Romania and Bulgaria have received latest EC report. of road and railway transport. As regards praise from the EC and now look more Trans-European Transport Networks, and more likely to join the Union within A framework law on Maritime and In- a number of infrastructure projects are fi ve years. land Waterway Transport was adopted being implemented on corridors IV, VII in June 2002, which will create the legal and X, such as the modernisation of the Romaniaís economy grew by 4.9 per basis for alignment with a number of EU E-79 road, the second Danube bridge, the cent in 2002, far beyond expectations, requirements regarding maritime issues. electrification of major railway lines and while foreign trade surged by 35 per cent Several bodies have been merged to form the construction of a new terminal at Sofi a to $31.7Bn. While further progress has the Romanian Naval Authority, which airport. But the safety record of the Bul- been made in harmonising legislation in should avoid duplication and dilution of garian fleet remains a cause of concern. The detention rate was 15.7 per cent in LOW water levels in 2001, double that of 2000. the Danube look set to continue until the end of the year, severely affect- Doubts and expectations ing inland navigation in in Bulgaria Bulgaria and activity in Key leaders of the shipping industry in its river yards. The Ro- Bulgaria have mixed feelings about the manian yard Severnav EU. Both Bulgaria and Romania will fi nd also faces the challenge themselves on the boundary of two very of not being able to trans- different political-economical areas, with port its newbuilding for different laws and different standards of the German Hartmann living, points out Captain N Kitinski, of company, the LPG car- Inflot 1, Bulgariaís oldest shipping agen- rier Gaschem Baltic, cy. New customs, trade and visa restric- scheduled this month tions, together with increasing port dues, for its completion at will probably lead to a sharp decrease in SNC yard in Constanta, cargo turnover. Some worry that they will marketing director Liviu lose the large but poor Russian market, Capet told Fairplay while others look forward to getting into (photo: Despina Bara). the richer EU market.

26 www.fairplay.co.uk August 21, 2003

FRPED030821008.indd 26 15/8/03, 16:12:13 Black Sea

transfer cargo via the terminal will depend on putting the new container terminal Linking lost empires into operation in September. But there is nothing he can do to solve a key problem: CENTURIES of animosity between empires have prevented the Black Sea from being Constanza operates a different track gauge seen as a unified whole. Outsiders do not expect the old Russian and Turkish empires to Georgia and Turkey. ñ or their splinter states ñ to co-operate. But they do; so much so that a third ferry has just been put on the Ukraine-Georgia run back in June. Roin Nakashadze, commercial director of Batumi Merchant Sea Port, says that the The Greifswald (under the Georgian fl ag) under consideration, using converted EU grant will help his company introduce was put into operation on the rail-ferry Volgodon-type river-sea vessels. a system in the ferry terminal based on line between Ilyichevsk (Ukraine) and European standards. That will link Batumi Poti/Batumi (Georgia) in June. It joins Gheorghe Moldoveanu, general manager to Constantza and also the Turkish port the Geroi Shipki and Geroi Plevny, op- of maritime administration at the port of Samsun, where a new rail-ferry terminal erated by Ukrainian shipping company Constantza, thinks that the growth of is being put into operation. Ukrferry. Its two cargo decks can accom- modate 50 universal rail wagons, up to 60 heavyweight trucks and several dozen containers. There is a passenger complex for 120 persons.

Alexander Kurlyand, the president of Ukrferry, explains that cargo has been growing at 30-35 per cent a year on rail- ferry crossings between Ukraine, Geor- gia and Turkey (Derince). In 2002 cargo turnover amounted to 1.13M tonnes.

Ukraine’s rail-ferry terminal, built 25 years ago in Ilyichevsk, has been upgraded with the support of the EU within the framework of development of the international transport corridor TRACECA. According to the specialists’ calculations, the use of rail-ferry cross- ings between Varna, Ilyichevsk, Poti and Batumi could increase tonnage handling by 15 times more than traditional cargo handling. It could thus reduce the need for berths and ships by around eight times, with a five-fold reduction in la- bour. It provides an argument that ferry transport is good not only for distances up to 300 km, but for distances of up to 1,000 km and even further. That is why the Ministry of Transport of the Russian Federation is looking to develop ferry transport, with the port of Caucasus on the Kerch straight to be its key port in the Black Sea.

Ukraine and Russia are hoping to revive the rail-ferry crossing via the Kerch straight between the ports of Caucasus and the Crimea. The Moscow govern- ment is so keen that it is ready to cover the cost up to $24M. Meanwhile Russia and Armenia have agreed to set up a ferry line from Caucasus to Poti in Georgia, requiring the building of shorefront facilities and buying two ships to be converted into rail-ferries. A rail-ferry link from Caucasus to Varna is also

August 21, 2003 www.fairplay.co.uk 27

FRPED030821003.indd 27 15/8/03, 14:08:11 Black Sea

also try to keep our finger on the pulse of Sheskharis oil terminal in Novorossiysk Russiaís revival squeezes capacity port, and have spot business there.” FTER a decade of decline, Russia’s While the government is actively pushing Black Sea business is on the rebound. its policy of Russian cargoes for Russian In fact Sovcomflot has made eight calls to ABut ports, stevedores and ship opera- ports, he acknowledged that “it is obvi- the CPC terminal this year, while liftings tors all agree that political and logistical ous that there will be enough work for all from Sheskharis amounted to 1.8M tonnes constraints at the Bosphorus Straits and in ports, both Russian and Ukrainian.” and 13 calls. “We do not have long-term the rail and road lines servicing Russia’s contracts with oil companies for transport Black Sea ports remain the biggest obsta- For Novorossiysk Shipping Co (Novoship) from Sheskharis primarily because the cles to development and profi tability. home cargoes amounted to nearly a quarter market is rather low,” explains Skarga. of fleet operations last year, according to “This is why now we prefer to do spot “At the moment the cargo base in the spokesman Valery Paliy. “This year a fi ve business from Novorossiysk. We make region is increasing,” reports the head of to six per cent growth of this share is ex- some calls to the Ukrainian and Georgian the port department of Severstaltrans, Al- pected. There are positive tendencies in the ports as well, but rarely. Although there is exander Ignatenko. “The leading Russian region, and we expect growth.” a stable [oil] cargo flow there, the size of ports – Novorossiysk and Tuapse – even shipments is usually rather small.” have excessive cargo volumes. Some cargo For Sovcomflot, Black Sea traffic owners are transferring to smaller ports, for amounts to no more than three per cent In the Soviet period, shipping movements example, ports of the Azov basin.” of the company’s business. Nonetheless, in the Black Sea were also the most profi t- CEO Dmitri Skarga told Fairplay that the able of the regional maritime operations. While shares of different cargo types will growth of oil production and exports, and Cargo fl ows from Central Russia, which change, Ignatenko told Fairplay, aggregate the possibility of liquefied gas exports, always had an orientation towards the volume will rise. “There are interesting in- make the Black Sea a key region for fu- Black Sea, went there, and then on to the vestment projects in the region, aimed at ture development. “Although we have a Mediterranean and South-East Asia. expansion of capacities and expansion of the long-term contract with Chevron-Texaco types of cargoes transported; for example, to transport oil from Caspian Pipeline At the break-up of the USSR in 1991, says higher-tariff cargoes, including containers. Consortium oil terminal [near Novoros- Ignatenko, “the main port capacities in In Novorossiysk, both container and grain sisk],” he says, “this is not the only busi- the region were on the territory of the terminal capacities are being built.” ness that we have on the Black Sea. We Ukraine, and they had been the benefi -

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ciaries of a decade of Soviet investment fleet, it is possible to charter vessels or The Turkish side is trying to find a solu- into port infrastructure. In 1993, when order newbuilds.î Novoship prefers Geor- tion, and we expect that the situation will cargo fl ows started to increase, the ports gian to Ukrainian ports, says Paliy. ìThe improve after the new system supplied by gradually recovered. The routes remained most expensive ports on the Black Sea Lockheed-Martin for safety of shipping in the same, and both Russian and Ukrainian are the Ukrainian ports. It costs twice as the straits is fully operational.î ports were used, but Russia faced a seri- much to make calls to Odessa, compared ous deficit of port capacities.î with Novorossiysk. However, we do go to However, World Scale includes compen- Odessa, if the end result is positive.î sation for only 24 hours of waiting. ìThis So Moscow began investing to bring Black was enough in the 1990s. But since the Sea cargo to Russian ports. Naturally, the Skarga of Sovcomflot also highlights ban on movement of vessels during night- Ukrainian ports are feeling the pinch, po- Turkeyís policy of limiting Bosphorus time, this is no longer enough.î Accord- litically and commercially. Ignatenko told traffic. He told Fairplay: ìShip owners ing to Skarga, Sovcomfl ot lost 65 vessel Fairplay: ìThe Ukrainian ports now proc- now lose time and money because of the days in waiting-time at an average cost of ess about nine per cent of Russian foreign need to wait for vessels to pass through. $30,000 per tanker per day. trade cargoes. Certainly, their share in the transport of Russian cargoes has decreased, but having a high technological level, qual- ity services and a reasonable tariff policy, the Ukrainian ports carry out serious work in attracting cargoes. For example, in 2002 it was the Ukrainian ports that were fully ready to transport grain, which enabled Russian cargo owners to export when large crops and high demand triggered an unanticipated boom.î

For Novoship, Paliy told Fairplay, there Sovcomflotís new Suezmax SCF Khibiny is escorted through the Bosphorus in are ìno problems handling potential September last year, bound for Fos. The company cites restrictions on transits growth of cargoes in the Black Sea region. as the major limiting factor on Russian cargo growth (photo: Martin Wright) If we couldnít ship cargoes with our own

August 21, 2003 www.fairplay.co.uk 29

FRPED030821009.indd 29 15/8/03, 16:52:59 Black Sea

The 1,115-TEU Y¸ksel G¸ler, owned by Asil Gida in Istanbul, was built by Celiktekne in Private affairs Tuzla in 1999 (photo: Despina Bara) WITH the privatisation of Santierul Naval Constanta (SNC), Romaniaís shipbuilding sector is almost 90 per cent privatised. Yards in Galati, Tulcea, Mangalia and Braila have gradually been acquired and Daewoo Mangalia about 30M by foreign shipyards, helping Romanian companies survive, while their construction of cheap hulls ROL. ìRegardless of EC Regulation has returned the favour to some European shipbuilders as they struggle with Asian competitors. 1540/98, the stateís involvement is essential for countries in a transition Tulcea, acquired by the Aker Group, Galati, investments have amounted to stage, as happened in Portugalís, built a hull for a 16,000-DWT chemical $25M since 1999. The new technology Spainís and Greeceís case,î Catri- tanker, Julia V, which was fi nished in has made it possible to improve quality nescu complained to Fairplay. Germany. Then, Severnav, the last state- and the yard is building increasingly so- owned yard, delivered its fi rst passenger phisticated vessels, with its order book Varna builders late vessel, Aranui 3, at the turn of the year now up to 29 newbuildings. While yet to achieve its full poten- for a Polynesian owner. tial in newbuildings, Bulgaria is very But effi ciency still remains a fraction of active in the repair market. Odessos Before 1989, over 80 per cent of Roma- that in EU countries, with their 3,658,000 Shiprepair yard has achieved posi- nian newbuildings were destined for the GT delivered in 2001 by a 76,000 work- tive results in the past three years and national fleet and about 85 per cent of the force, while the corresponding numbers last year worked on 60 vessels of all exports was destined to the ex-Mutual for Romanian yards are 254,000 GT and types for European and US owners. Economic Aid Council countries. Now 19,000 employees. At state-owned Varna Shipyard, a over 98 per cent of deliveries are for ex- bidding process for 75 per cent of port; three-quarters of them to EU. This Orders slipping the companyís shares was opened has driven a strong investment in technol- But Romanian yardsí order books shrank in February, with potential buyers ogy and equipment to adapt to the require- to $276,8M at the end of last year, down supposed to invest $40M in each of ments of the market economy. At Damen from $423,4M in 2001. According to the three subsequent years. Varna, Gheorghe Catrinescu, which has one of Europeís largest the general executive yard sites and previously built ves- manager of the Roma- sels up to 100,000 DWT, has lately nian Shipbuildersí As- concentrated on repair work. However, sociation, it is the stateís Rousse Shipyard on the Danube cur- obligation to help raise rently has ten vessels under construction Hull hungry: the heavy-lift ship Beluga Seduction the level of competi- or on order, including four general cargo tiveness of Romanian built at Daewoo Mangalia is to be completed at vessels for German owners, two asphalt yards to match Western tankers for a Panamanian owner and Eemshaven (photo: Despina Bara) Europe, prior to the two oil tankers for Crescent Tankship in countryís EU accession. Southampton, UK. He is discouraged that the stateís investments New types needed have decreased and Turkish yards are exporting more new- have been concentrated buildings than ever. According to the on three yards: Damen Turkish Shipbuildersí Association, 21 Galati received 86Bn vessels with a total of 49,655 DWT were ROL ($2.6M), Aker completed on foreign accounts last year, Tulcea 59.6Bn ROL compared with only 14 and seven units in

30 www.fairplay.co.uk August 21, 2003

FRPED030821022.indd 30 18/8/03, 16:53:26 Black Sea Constanta gateway widens

Three ship-to-shore gantry cranes with outreach of 45 m were supplied by Mitsubishi for the new container terminal. The equipment was delivered during May and June (photo: Despina Bara)

MANAGEMENT at Constantza port is considering creating new facilities to attract more traffic, especially from the ex-Soviet countries but also Central Europe or even the Far East. A new container terminal, with a design capacity of around 325,000 TEU a year and a quay of 620 m with a water depth of 14.5 m, is under construction and is due to start operating by the beginning of October, the portís manager Gheorghe Molodoveanu told Fairplay. Only a final customs decision is still cereal terminal. Safety measures accord- awaited before Constantza becomes a ing to international standards have also free port and this is expected to increase been taken and public private partnership 2001 and 2000 respectively. At the same transit and shipping business. While the regarding the investment in this sector has time, domestic owners took delivery of container terminal is the biggest project been initiated. 17 vessels of 87,575 DWT, down from at present under way in Constantza port, 25 ships in 2001. there are a number of other investment ini- Most of the global deep-sea container tiatives which should strengthen the portís carriers serve the region, and Romanian The export fi gures include five yachts and position as a regional trade gateway, such container traffic jumped by a quarter last two safety boats. Sea-going merchant ves- as a major programme of maintenance year and by almost 12 per cent the fi rst sels comprised eight tankers, of which six dredging, a new barge terminal and a new semester of this year. were chemical carriers. Domestic owners took three chemical tankers with a total at Madenci in 2000 and of 9,600 DWT, three container vessels 2001, have failed to gen- (36 500 DWT), four general cargo ves- erate repeat orders. The sels (40,500 DWT), three tugs and four latest newbuildings for the smaller units. British-Dutch joint venture are currently under con- The figures show that Turkeyís builders struction at Damen Galati (which rank number 14 in Europe in the in Romania. June edition of Fairplay Solutions) are most competitive in specialised tankers A 2,500-TEU hull built for of a medium and small size. Container vessels, which are usually based on for- SSW of Germany at Daewoo eign designs, are mostly built for Turk- Mangalia Shipyard: the big ish owners. More sophisticated types, yards have cornered most of the like the heavy-lift vessels Jumbo Vision governmentís investment (photo: and Fairlane, built for Kahn Scheepvart Despina Bara)

August 21, 2003 www.fairplay.co.uk 31

FRPED030821022.indd 31 18/8/03, 16:53:40 Black Sea The state marches back in

ALMOST simultaneously, two state bodies have emerged in Russia The reformed port marine administrations, stripped of their and Ukraine with similar names: Ukrmorport and Rosmorport. Both commercial functions, will focus on statutory services, such as shipping safety and enforcing legal compliance by are intended to increase the efficiency of using state-owned property stevedoring and transport companies renting state property. in seaports. However, there is one basic difference: all Ukrainian It seems a logical division of responsibility, but many port ports are state-owned, and the transport ministry has rejected any managers are unhappy. Novorossiysk Sea Trade Portís direc- talks of privatisation, now or ever. In Russia, only small ports such tor general, Vladimir Kovbasyuk, complains, ìRosmorport as Makhachkala and Olya have escaped the great sell-off. is a paper-schemed organisation, concerned with the gov- ernmentís yearning to influence port activities. But if the State property that is legally excluded from pri- government wants influence, why did they to sell large pieces vatisation had earlier been handed over to the of the ports? At our port the state owned 49 per cent; now it state port administrations. However, this prop- remains with 20 per cent.î erty (worth about $2Bn) has now been passed to the new federal state enterprise Rosmorport. The Ukraineís parallel organisation, Ukrmorport, was set up fol- Collecting both rent payments and port dues lowing last yearís appointment of Ukrainian Railways director worth about $150-160M, Rosmorport will fi - general Georgiy Kirpa as Minister of Transport. He immediately nance development of state-owned objects in set about curbing what he saw as the excessive freedom enjoyed ports, including waterworks, communications by port managers. and shipping safety. The head office of Ros- morport is still being set up, along with its fi ve Ukrmorport, embracing all 20 of the countryís sea trade ports, regional branches in the Far East, Northern, has been headed by the former director of Yalta port, Andrey Baltic, Caspian and Azov-Black Sea basins. Manucharov, who answers directly to the transport ministry. The portsí contributions have formed both the associationís Andrey Manucharov has been appointed to help his minister curb the ëexcessiveí freedoms enjoyed by Ukrainian port managers (photo: Konstantin Ilnitsky) Young Turks break ou

Mukaddes Kalkavan, built by Sedef Gemi in 1997, has been employed by Turkon Line in a liner service from Turkey to Northern Europe (photo: Despina Bara)

NUMBER of bold young Turkish companies have estab- lished Atlantic and European container services lately. ATurkon Line now employs three 1,145-TEU vessels in its weekly service to North European main ports, offering transit times of nine days between Hamburg and Istanbul. ìFrom the beginning we did not want to buy the market, but to attract a share of the land transports to and from Turkey,î the sales manager of Turkon Deutschland, Christian Mˆller, told Fairplay. According to Mˆller, the number of trucks on the land bridge is up to 25,000 every month.

But Turkeyís only container carrier on the route is now fac- ing new competition, after Hapag-Lloyd and Evergreen set

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FRPED030821018.indd 32 18/8/03, 16:09:06 Black Sea

50M UAH ($9.4M) charter fund and its In the new tariffs introduced by the Min- development fund, which is over twice as istry of Transport in April, all discounts What happened to large. Manucharov says the reorganisation for handling cargoes have been removed, is needed to combat ineffi ciency. Despite and now only the Ministry is allowed to growing cargo turnover (reaching 106M grant discounts down to 50 per cent, and the Romanian fleet? tonnes in 2002), income has fallen. In only for transit cargoes. “Ukrmorport will ONCE upon a time, the Romanian merchant the first half of this year, cargo through have to look thoroughly at how forward- fleet numbered about 320 vessels. But that Ukrainian ports grew by eight per cent, to ing and agent services in the ports are was in 1989. Now there are only 43. Many 55.84M tonnes; more than in the whole of organised,” warned Manucharov. “The were old and unfit to trade, but there might 1996. Ukrmorport wants to intensify the idea of having a single general forwarder have been darker forces at work. According co-ordination of enterprise activity and seems rather attractive. But this general to local sources, the National Anti-corrup- develop the ports’ technical expertise. forwarder has to give incentives to attract tion Prosecutor’s Office is currently inves- shippers.” Not surprisingly, the associa- tigating 111 individuals, including three Equipment and facilities are certainly in a tions of Ukrainian agents and freight former ministers of transport, accused of poor state. The degree of wear on berthing forwarders have expressed their disquiet having sold the fleet for nothing and in their fronts is calculated at 70 per cent, while at Ukrmorport’s plans to centralise for- own personal interests after the communist for gantry cranes it is 88 per cent. The warding and agency business. regime fell in 1989. service fleet comprises 604 vessels with an average age of 28. The average age Ukrmorport has already disrupted op- Still, the most important factors are related of the 37 floating cranes is 32. Sixty-six erations in the biggest Ukrainian port, to technical problems: many vessels did not new cranes will be needed by 2010. On Odessa, where all cargo handling is meet international standards. Other factors the Azov Sea, only the port of Mariupol controlled by the port authority together are related to the failure of the ex-state- has an icebreaker, but it is 50 years old. with private companies. Now the Min- owned giant shipping company to adapt As a result, the last severe winter almost istry of Transport and Ukrmorport have after the state withdrew from supporting paralysed traffic to Ukrainian Azov ports. unilaterally changed the terms of that maritime interests, without lifting the Manucharov has also complained about collaboration to favour the port author- heavy hand of bureaucracy. In 1990, the competition between state-owned ports. ity, triggering understandable protests. government stopped financing vessels un- An interesting trick in the establishment der construction in the country’s shipyards, of both Rosmorport and Ukrmorport has and no bank took over the newbuilding pro- given both bodies control of the wallets gramme. No Romanian bank has specialised out of the Med of their respective transport ministries. in shipping or shipbuilding fi nancing within The common trend is clearly towards the past 12 years, while all domestic credits reinforcement of the state’s position in have been offered by banks that know little both Russian and Ukrainian ports. about the shipping sector and its needs. Banks still shy of Turkish shipping MOSTLY consisting of dry cargo vessels averaging 17 years old, the Turkish fleet totals 10M DWT controlled by about 250 shipping entities. Despite the recent increase in the number of smaller (up to 10,000 DWT) product and chemical tankers built at Turkish yards, the local tanker fleet is still very old and unable to meet the tonnage requirements for the transport of crude oil imports from the Gulf and North Africa. Realising the importance of more modern countries, one of the biggest problems for vessels able to meet the requirements of Turkish shipping remains the funding for the international trade, the new genera- new acquisitions. Their small-sized, fam- tion of Turkish ship owners has started ily-based traditional companies and lack to look abroad. In 1999, for the fi rst time of capital or acceptable securities make up a joint service to the eastern Medi- ever, they placed orders at Japanese and them an unattractive proposition. terranean. Möller is confident about Korean shipyards for Suezmax, Aframax withstanding this challenge, pointing and smaller tankers, as well as super- According to Yirmi Besoglu, managing out the high degree of utilisation on Handymax bulkers, while two notable director of Medfin, the Istanbul-based the Turkon vessels and the appeal of a newbuilding programmes were ordered subsidiary of the Eurofin group and inde- direct service. in Germany. pendent financial advisor, the major ship financing banks are expected to penetrate The Turkish operator is employing four By offering corporate and income tax ex- the Turkish market in the near future, similar container vessels in its line to emptions both on profits from activities especially as Turkey’s chances of joining New York, Norfolk and Charleston, and capital gains, the creation of the Turk- the EU improve. This will help the local while another service connects all ma- ish International Ship Registry has helped owners to have better access to alternative jor Turkish ports with Ashdod, Haifa the industry to attract outsiders to invest capital sources, and Turkey may offer more and Alexandria. in shipping. As with the other Black Sea opportunities than risks at present.

August 21, 2003 www.fairplay.co.uk 33

FRPED030821018.indd 33 18/8/03, 16:09:19 Newbuildings Newbuilding orders reported week ending August 15, 2003 Shipbuilder No Price Owner/Operator Delivery Type Capacity

Asenav 1 AP Møller 2004 Offshore Support Vessel 3,000 GT Santierul Naval Constantza 2 Histria Shipmanagement 2005 Products Tanker 35,000 DWT Dae Sun Shipbuilding 1 Nam Sung Shipping 2006 Container Ship 1,000 TEU Hanjin HI 2 Oskar Wehr 2006 Container Ship 5,100 TEU Hyundai HI 1 AP Møller 2005 Container Ship 51,100 DWT Hyundai HI 1 AP Møller 2005 Container Ship 4,300 TEU Jiangdong Changjiang 2 Bockstiegel Reederei 2005 Container Ship 1,250 TEU Nok-Bong Ship Building 1 Sambu Shipping 2004 Chemical Tanker 4,000 DWT Samho Shipbuilding 1 Lotus Shipping 2004 Chemical/Oil Tanker 12,800 DWT Samsung HI 1 $40.00M CP Ships 2005 Container Ship 4,250 TEU Samsung HI 6 $40.00M CP Ships 2006 Container Ship 4,250 TEU Samsung HI 2 $40.00M CP Ships 2007 Container Ship 4,250 TEU Turkter - Tersane ve Deniz 1 Lauranne Shipping 2004 Chemical Tanker 8,500 DWT

Contracts Pending week ending August 15, 2003 Shipbuilder No Price Owner/Operator Delivery Type Capacity

Dae Sun Shipbuilding 1 Qatar National Navigation 2005 Container Ship 10,000 DWT Hyundai HI 1 Hyundai Merchant Marine 2005 Container Ship 6,500 TEU Jingjiang Traffic Shipyard 1 Dohle Schiffahrts, Peter 2005 Multi-Purpose Ship 1,000 TEU Murakami Hide Zosen 1 Taiwanese Interests 2004 General Cargo Ship 10,000 DWT Onomichi Dockyard 1 Stargas SpA 2005 Products Tanker 47,000 DWT

Deliveries recorded week ending August 15, 2003 Vessel Shipbuilder Owner/Operator Type Delivery Capacity

Bulk Saturn Tsuneishi HI Cebu Temm Maritime Bulk Carrier Ore Jul 03 52,300 DWT

Cordelia Hyundai Mipo Ahrenkiel Shipmngt Container Ship Aug 03 2,600 TEU

Far Swift Aker Brevik Farstad Shipping Supply Vessel Aug 03 2,215 GT

Gron Falk STX Shipbuilding Cogema Chemical/Oil Tanker Aug 03 45,800 DWT

Josco Nanjing Nantong Cosco KHI Jiangsu Ocean Shipping Bulk Carrier Ore Aug 03 49,400 DWT

Kakusho I Murakami Hide Zosen Singapore Interests Asphalt Tanker Jul 03 3,650 DWT

Nordpacific Aker MTW Werft Klaus Oldendorff Container Ship Jul 03 2,478 TEU

Petrozavodsk Tsuneishi Corp Sovcomflot Crude Oil Tanker Aug 03 106,000 DWT

PS-818 Yaroslavskiy INOK General Cargo Ship Jul 03 218 DWT

August 21, 2003 34 www.fairplay.co.uk

FRPED030821012.p65 18/08/2003, 14:1734 Newbuildings

Meriom Jade The Swiss-owned, 38,000-DWT product carrier is the first of three China takes over currently on order from Chinese yard Guangzhou International. Delivery of the Meriom Pride second, , is scheduled for the end of this year with owners Overseas Meriom Star the world Maritime Carriers expecting the third, , next April. China plans to become the world’s biggest shipbuilder by 2015 (photo: Dietmar Hasenpusch)

S if to emphasise its growth and free of charge, CSSC’s GM Chen Xiaojin dicts that by 2005 China will be in a posi- position in the market, China said. CSSC will also move two of its larger tion to seriously compete with Korea in State Shipbuilding Corp plans to yards, Jiangnan and Hudong-Zhonghua, the construction of 8,000-TEU container buildA the world’s largest shipyard on from suburban Shanghai to Changxing to ships. Chinese yards are currently focus- Changxing Island in the Yangtze River, make way for the city to host the World ing on bulk carriers and small and medium the China Daily has reported. The $3Bn Expo 2010. Total shipbuilding capacity at general cargo ships, but they are making project is aimed at turning CSSC, which Changxing will be 15M DWT by 2015, rapid strides in design and building tech- controls several yards, into the world’s accounting for 60 per cent of China’s to- nology and by 2005 massive newbuilding largest ship builder by 2015. tal. “This will make China the world’s larg- facilities will be ready, the institute says. est [shipbuilder],” predicted Chen. The However, it attributes the current stream The Shanghai government will give 8,000 country is currently the world’s third larg- of newbuilding orders in China to the lack metres of the island’s coastline to CSSC est, behind South Korea and Japan. of available slots in either South Korea or Japan. Posco is the main supplier of steel Certainly, China’s ambitions are being to Korean yards and its forecast is disputed taken seriously in South Korea, judging by by the Korean builders’ own forecasts. FromIN Fairplay BRIEF Newbuildings a report prepared by Korean steel giant They do not see any major threat to their Daily E-mail News Posco. The Posco Research Institute pre- domination at least until 2010. SHIPBUILDERS are looking towards the Kuwait Oil Tanker Co for a major newbuilding order of Chinese growth continues about nine tankers. Sources indicate that the order could consist of two VLGCs, two VLCCs, CHINESE shipbuilding continues to grow and is looking to break all records this year in one Aframax, two Panamaxes and at least two collecting new orders and building more ships. As a result, all the key shipyards in China other product carriers; all scheduled for delivery by 2008. The order is part of a plan to replace its have full order books for the next three years. ageing fleet of 20 years old or more, with the China Shipbuilding Industry Corp has of last year, and it has a current order book VLGCs as the first priority. made great progress in the first seven of 9.59M DWT. It is estimated that the CANADIAN ship owner Seaspan has increased its months, with 1.19M DWT of completed CSSC will have completed ships of 2M previously rumoured additional four 4,250-TEU ships, only 0.19M DWT less than for the DWT by the end of this year and plans to container ships to nine with a charter agreement whole of 2002. It has secured new orders hit 3M next year. from CP Ships. Delivery of the nine-vessel order of 3.66M DWT, which is three times the is scheduled to start in late 2005 and continue total for the same period last year. Li German owner Bockstiegel Reederei has through until early 2007 and brings the total on Changyin, general manager of CSIC, said shown faith in its Chinese yard by con- order at South Korean shipbuilder Samsung to that the corporation would see a record high verting its two 13,750-DWT box ship op- 14. The charter agreement is for up to ten years in the tonnage delivered this year. Mean- tions at Jiangdong Changjiang. The lat- and brokers indicate a cost of about $40M each. while Chen Xiaojin, general manager of est two 1,250-TEU vessels will be num- China State Shipbuilding Corp, says that bers five and six in the current series with COCHIN Shipyard has secured a Rs2Bn ($43.5M) the 1.18M DWT completed in the first order from a European owner, the yard’s chairman delivery scheduled for 2005 and brokers MK Murthy said last week. The order is for a seven months of this year is 87 per cent indicating a price of about $15M each. container vessel, and had been won against more than last year. CSSC has secured new Delivery of the first three has already been competition from Sri Lanka, China, South Korea orders totaling 5.92M DWT, which is three made with the fourth vessel scheduled for and Japan. No other details were released. times more than in the first seven months completion in October this year.

August 21, 2003 www.fairplay.co.uk 35

FRPED030821013.p65 18/08/2003, 14:1635 Ship $ales Container and PACQUEEN: sold by Trans-Pacific Shipping, Liberia Miscellaneous Container and to Greek interests, $5.60M. 1986. 26,666 DWT, 15,502 Miscellaneous GT. Built Imabari, B&W, 6,755bhp/14kt. Multi-purpose EL BARTLETT (Passenger/Vehicle Ferry): sold TAMAR ex-Annou: sold by Pacific Basin Bulk by State of Alaska Marine, US to undisclosed JUTHA RAJPRUEK JUTHA RAJPRUEK (Multi-Purpose) ex-Surin Shipping, Hong Kong to undisclosed interests, interests, $0.39M. 1969. 500 DWT, 933 GT. Built Navee: sold by Jutha Maritime, Thailand to Middle $6.00M. Last sale: $7.15M, 2000. 1986. 28,468 DWT, Jeffboat, Fairbanks-Morse, 3,956bhp/12kt. Eastern interests, $0.85M. 1978. 9,366 DWT, 6,388 18,003 GT, 501 TEU. Built IHI, Sulzer, 6,900bhp/14kt. GT, 260 TEU. Built Osaka, B&W, 5,300bhp/15kt. Scrapped TOR BALTICA Tankers (Ro-Ro) ex-Elk: sold by DFDS, Tankers EFXINOS Denmark to undisclosed interests, price unknown EFXINOS (Products Tanker) ex-Mare Princess: sold but including three year time charter back at DECATHLON (Crude Oil Tanker): sold by Tsakos by Aegean Marine Petroleum, Greece to Indian unknown rate. 1977. 9,700 DWT, 14,374 GT, 562 Shipping & Trading, Greece to Salamon, Germany, breakers, $2.86M ($254 per LDT). 1978, 57,372 TEU. Built Hyundai, Semt-Pielstick, 15,400bhp/19kt. $55.00M. 2002. 149,999 DWT, 84,586 GT. Built Samho DWT, 30,636 GT. Built Cammell Laird. Vessel will remain operated by DFDS Tor Line, UK. Shipyard, MAN B&W, 25,329bhp/15kt. Vessel will remain operated by Tsakos Shipping & Trading, Greece. ENCHANTED ISLE (Cruise): sold by Silja, Finland to Indian breakers, $2.08M ($135 per LDT). 1958, Bulkers GRAN ESPERANZA Bulkers (Crude Oil Tanker): sold by 8,706 DWT, 23,875 GT. Built Northrop Grumman Meiji Shipping, Japan to Marmaras Navigation, Ship Systems, General Electric, 25,500bhp/23kt. ALL ROUND ALL ROUND Tbn-Khaled Junior: sold by Legendary Greece, $16.25M. 1993. 120,880 DWT, 62,390 GT. FUJIHOSHI Shipping, Singapore to undisclosed interests, Built Mitsui, B&W, 19,017bhp/15kt. (Chemical Tanker): sold by Glory Ship $0.75M. 1975. 8,294 DWT, 5,239 GT. Built Kagoshima, Management, Singapore to Indian breakers, $1.13M HUDSON, JAMES and TRINITY Mitsubishi, 4,500bhp/14kt. (Products ($265 per LDT). 1976, 14,660 DWT, 8,458 GT. Built Tanker): sold en-bloc for $22.5M by Transpetro- Taihei Kogyo. GOLDEN LAKER: sold by Osaka Fleet, Japan to Volga JSC, Russia to undisclosed interests. HUDSON KAPADOKYA undisclosed interests, $12.80M. 1996. 30,838 DWT, : ex-Sfat 1: 1999. 7,970 DWT, 5,137 GT. (Crude Oil Tanker) ex-Hellespont 17,997 GT. Built Naikai, B&W, 9,493bhp/14kt. Built Krasnoye Sormovo, Wartsila, 3,589bhp. Orpheum: sold by Fenner Deniz Tasimaciligi, JAMES ex-Sfat 2: 2000. 7,970 DWT, 5,137 GT. Built Turkey to Indian breakers, $9.56M ($233 per GREEN ISLAND TRINITY : sold by Shikishima, Japan to Krasnoye Sormovo, Wartsila, 2,719bhp. LDT). 1975, 315,695 DWT, 150,960 GT. Built Turkish interests, $11.50M. 1995. 28,381 DWT, ex-Sfat 3: 2000. 7,970 DWT, 5,137 GT. Built Krasnoye Odense. 16,761 GT. Built Imabari, B&W, 7,806bhp/14kt. Sormovo, Wartsila, 2,719bhp. MICAELA DELLA GATTA (Products Tanker) ex- MARE ORIENS IRISHGATE and NORTHGATE (Ore/Bulk/Oil Carrier) ex-Maersk (Products Four Capes: sold by Deiulemar, Italy to Indian Zaragoza: sold by Fratelli D’Amico Armatori, Italy Tanker): sold en-bloc for $2.50M by James Fisher, breakers, $2.92M ($260 per LDT). 1984, 52,089 IRISHGATE to Chinese interests, $4.60M. Last sale: $28.40M, UK to undisclosed interests. : 1981. DWT, 29,491 GT. Built Italcantieri. 1991. 1983. 82,513 DWT, 48,010 GT. Built Mitsubishi, 3,290 DWT, 2,072 GT. Built Kanrei, MaK, 2,250bhp/ NORTHGATE MICHEL Sulzer, 11,410bhp/14kt. 12kt. : 1981. 3,290 DWT, 2,071 GT. (Bulker) ex-Michel Delmas: sold by Built Kanrei, MaK, 2,250bhp/12kt. undisclosed interests, unknown to Chinese breakers, NEW CHAMPION (Ore Strengthened): sold by $1.73M ($220 per LDT). 1976, 26,463 DWT, 17,085 SHOYO MARU NYK Line, Japan to F Laeisz Schiffahrts, Germany, (Tanker): sold by Showa Yusosen, GT. Built Usuki Tekkosho. $16.40M. 1996. 70,296 DWT, 36,559 GT. Built Japan to Middle Eastern interests, $2.40M. 1989. SEA STAR Sanoyas Hishino Meisho, Sulzer, 10,200bhp/14kt. 5,445 DWT, 3,217 GT. Built Usuki Tekkosho, Hanshin, (Multi-Purpose) ex-Darnitsa: sold by To be operated by Reederei F Laeisz 2,000bhp/13.7kt. Sudoservice, Ukraine to Indian breakers, $1.13M ($258 per LDT). 1977, 7,700 DWT, 6,601 GT. Built Vyborg. OBOs are a dying breed, there being just the one on order, but the combi carrier Mare SEAWIND CROWN (Cruise): sold by International Oriens has found a buyer in China, and just as Shipping Partners (Miami), US to Indian breakers, Frontline has shifted several of its Suezamax $1.93M ($136 per LDT). 1961, 6,139 DWT, 23,145 OBOs into a booming bulk market driven by GT. Built Cockerill. China (photo: Russell Priest) ST ANGELO (Vehicle Carrier) ex-Po: sold by Valiant Shipping, Greece to Indian breakers, $1.37M ($255 per LDT). 1974, 4,960 DWT, 15,066 GT. Built Nuovi Cantieri Apuania. UNITED RELIANCE (Crude Oil Tanker) ex-Dondo: sold by Marine Management Services, Greece to Indian breakers, $4.64M ($250 per LDT). 1980, 97,115 DWT, 59,041 GT. Built Sasebo. All details given in good faith but without guarantee August 21, 2003 36 www.fairplay.co.uk

FRPED030821017.p65 18/08/2003, 15:4236 Sale & Purchase

products trades, it is perhaps not surpris- ing that fresh tanker sales candidates are More room for price upside starting to come onto the market. After last weekís reported sale of the twin-screw IT has been a week of both greater activity and stronger price indications. Although bunkering tanker Shoyo Maru (5,445 bulker deals remained thin on the ground prices found more support, while the tanker DWT, 1989) for $2.4M to Middle Eastern sector saw good volumes of business and boosted values. interests, Koyo Kaiun has released for sale Koyo Maru (5,576 DWT, 1993) a coastal The single-skin Aframax Gran Esperanza suggest that the new owners are aiming products carrier which would be ideally is reported by Braemar-Seascope (BS), to have the vessels placed in one of the suited to bunkering. The double-hull ship among others, to have sold for $16.5M major tanker pools. is expected to attract considerable interest, to Marmaras Navigation, exceeding by perhaps even from European buyers. a ìsubstantial margin most participantsí Further support from the KG market and observersí expectations,î while other emerged this week with Frontlineís an- Bulker sales have all but dried up as trad- broking sources confirm the surprisingly nouncement that it has agreed to sell and ing conditions banish thoughts of selling good levels of interest. lease back the 2000-built Front Tina and from most ownersí minds. As period rates Front Commodore. The VLCCs are to firm, ideas on pricing are getting tougher Tsakos has acquired the Ehm Maersk bought by Dr Peters for $75M each, ap- and the re-sale market seems to be hot- (299,700 DWT), a 1993-built double- parently marking a massive mark-up on ting up too. hull VLCC, from Maersk, linked to a current newbuilding prices of an average five-year time charter to HMM. EA Gib- $67M, according to Clarkson data. Front- O-J LibÊk reports the rumoured disposal son puts a price of $43M on the deal, ìin line is to charter the vessels back for 12.5 by Cosco of four Handymaxes due for line with modern units sold earlier in the years although at what rate is unknown at delivery in 2004 for around $20.5M each yearî, more than balanced by the reported this stage. In Frontlineís announcement to Target Marine. Handymax newbuilding $55M achieved on the sale by Tsakos of of the deal it does, however, note that the prices have continued to shift up a gear the Decathlon, one of two 2002-built Su- companyís daily cash break even rate is over recent years and this price does not ezmaxes that BS reports Tsakos to have expected to increase to $21,200/day. appear to mark a premium on current sold to KG interests T Konig. contract price at least. BS also notes Mitsui is inviting inspections for later continued interest in bulker re-sales, Os- Konig is also the reported taker of the this month on the Atlantic Ruby (260,000 himaís Hull No 388 achieved $21/21.5M Suezmaxes Sea Eagle and Matisse, DWT, 1993), brokers anticipating offers to Middle East interests. The vessel is due built this year, for $53M each although in excess of $27M. for delivery in January 2004. this time without the support of a time charter deal. As SSY notes, the lack of With Japanís electricity producers this Second-hand prices remain solid and are an attached charter is unusual, although week reporting a 12.5 per cent drop in likely to find room for further growth in the vessels could be fi xed out separately electricity consumption in July compared the weeks ahead. for five years at unknown rates. In the ab- to the same month last year, and the sub- sence of a supporting time charter, others sequent cooling of the countryís oil and

Sold at a ìhealthyî $11.5M, bulker prices could again be moving from high to higher (photo: Marc Piche)

August 21, 2003 www.fairplay.co.uk 37

FRPED030821032.indd 37 19/8/03, 16:24:37 Fixtures Dry Fixtures Cargo Vessel/Year Load Discharge Volume Laycan Rate Charterer Terms Iron Ore Tianshunhai, 00 Tubarao Dekheila 150000-10% Aug264Sep 12.00 ANSDK FIO;ScLd30000t Iron Ore Hassbat Qatar, 82 Tubarao Beilun & Baoshan 130000-10% Aug 2531 17.60 BM Mineral FIO;ScLd30000t Iron Ore Aquadonna, 95 Pt Hedland Redcar & Immingham 150000-10% Sep 414 13.75 BHP-Billit FIO;80000t45000t Iron Ore Aquafaith, 97 Pt Dampier Beilun & Baoshan 150000-10% Sep 515 8.75 Baotrans FIO;ScLd30000t Coal Cape Maxim, 84 Richards Bay Taranto 105000-10% Sep 515 14.25 Ilva PtC;FIO;ScLd30000tShinc Coal Taunton, 86 Dalrymple Bay Rotterdam 150000-10% Sep 515 17.15 T.K.S. FIO;50000tShinc25000tShinc Coking Coal Belpareil, 03 New So Wales Vizagapatnam op Haldia 50000-10% Aug313Sep 18.50 S.A.I.L. FIO;20000tShinc5000tShincOp4000t Hvy Grain Steamer, (Sanko) US Gulf Japan 54000-5% Sep 110 36.00 M.S.K. FIO;11Days Sugar Steamer Durban Japan 24000-5% Aug 1530 34.50 SASA FIO;10000t2000t Time Charter Consumption Vessel/Year Load Discharge DWT Laycan Rate Charterer Terms 12kt29t South Glory, 82 Del Continent Redel Turkey 38095 DWT Aug 2122 12000 Day CNR 1921000GrnBl;Trip out 14kt33t Red Fern, 97 Del Qingdao Redel Japan 73317 DWT Aug 1520 18000 Day Hanjin QinhuangdaoRd 13kt26t Springwood, 84 Del Le Havre Redel So Africa 37694 DWT Aug 1617 11900 Day E.M.R. 1680000GrnBl;Trip out 14kt31t New Navigation, 03 Del Vizagapatnam RedlFEast&ChinaViaIndia 52026 DWT Aug 1722 14100 Day NobleChart Trip out 14kt54t Tian Fu Hai, 98 Del Rotterdam Redel SkawCapePassero 149135 DWT Aug 2021 33500 Day CNR TransAtlRd 14kt34t Rodon Amarandon, 01 Del Singapore Redel PMuscatViaMEGulf 74090 DWT Aug 1925 17600 Day CNR TripOutViaSWAus 14kt29t Ernst Salamon, 99 Del Surabaya Redel SingaporeJapan 74002 DWT Aug 2030 19000 Day BHP-Billit EAusRd 14kt32\t Fu Da, 97 Del Mailiao Redel SingaporeJapan 71330 DWT Aug 1520 18000 Day NobleChart PtHedlandRd 14kt33t Nordmax, 95 Del Taiwan Redel Japan 72516 DWT Aug 2024 17500 Day Shinwa EAusRd 13kt42t Good News, 82 Del Qingdao Redel China 138490 DWT Aug 1720 21500 Day Transfield 5523000GrnBl;AusRd 13kt45\t China Fortune, 92 Del Baoshan Redel Japan 152011 DWT Aug 2628 29500 Day MOL-Navix 5809268GrnBl;SaldanhaBayRd 14kt35t Great Jade, 97 Del Aughinish Redel Far East Via Cont 73192 DWT Aug 1819 20300 Day CNR Trip out 14kt33t Hainan, 96 Del Dunkirk Redel FarEastViaUS Gulf 75300 DWT Aug 2022 20000 Day Hanjin Trip out 14kt34t Primrose, 01 Del Cape Passero Redel SingaporeJapan 62800 DWT Aug 1415 19000 Day Bunge TripOutViaUS GulfECSoAm 14kt24t Star Elfin, 97 Del E Med Redel SE AsiaViaTunisia 28395 DWT Aug 1618 12250 Day P.C.L. Trip out Wet Fixtures Cargo Vessel/Year Load Discharge Volume Laycan Rate Charterer Terms Oil Dirty Hawaiian Star, 87 EC Mexico US Gulf 70000 Aug 25 W130 Koch Part cargo Oil Dirty Sks Trinity, 99 Caribbeans US Atlantic US Gulf 70000 Aug 29 W130 Stusco Part cargo Oil Dirty Cotopaxi, 99 Esmeraldas Los Angeles 50000 Aug 28 W216 Stusco Oil Dirty Nord Millenium, 00 North Sea US Gulf 275000 Sep 11 W52\ Shell Oil Dirty Ionian Spirit, 02 Primorsk UKContinent 103000 Aug 23 W95 Europet Oil Dirty Kuzbass, 77 Novorossiysk Mediterranean 135000 Aug 25 W97\ Taurus Oil Dirty Jag Lata, 03 Libya Spain 80000 Aug 22 W82\ Repsol Part cargo Oil Dirty Inago, 93 Arzew US Gulf 130000 Aug 23 W95 Valero Oil Dirty Baltic Sea, 93 Skikda Italy 55000 Aug 15 W125 ENEL Part cargo Oil Dirty Virgo Voyager, 92 W Africa Philadelphia 130000 Sep 9 W75 Sun Oil Dirty Astro Centaurus,Orsub W Africa US Gulf 260000 Sep 6 W60 Chevtex Oil Dirty Front Highness, 91 W Africa China 260000 Sep 22 W47\ Kangqi Oil Dirty Safwa, 02 Al Bakr US Gulf op WC US 275000 Sep 8 W40 op W45 BP Oil Dirty Vl Chios, 86 Ras Tanura Jamnagar 237000 Sep 2 W42\ Reliance Oil Dirty Katori, 95 ME Gulf Japan 252000 Sep 6 W41 Idemitsu Oil Dirty Ratna Shalini, 87 Dubai Far East 80000 Sep 7 W129\ Stasco Oil Dirty Genmar Pericles, 92 Indonesia Yosu 80000 Aug 28 W132\ Caltex Oil Dirty World Kindred, 03 Indonesia E Australia 80000 Aug 29 W125 Shell Part cargo Oil Clean Torm Gertrude, 02 Caribbeans US Atlantic 40000 Aug 21 W210 Citgo Oil Clean Ioannis, 99 UKContinent US Atlantic 37000 Aug 14 W225 CSSA Oil Clean Siboti, 92 Baltic US Atlantic 72000 Aug 16 W135 BP Oil Clean Seabass, 01 Baltic UKContinent 30000 Aug 10 W220 Mabanaft Oil Clean Eagle Tucson, 03 Baltic UKContinent 80000 Aug 24 W125 Mabanaft Part cargo Oil Clean Maersk Rhode Island Tuapse UKContinent 30000 Aug 14 W250 Rocoil Oil Clean Cape Banks, 97 Black Sea Mediterranean 28500 Aug 21 W252 BP Oil Clean Ottawa, 03 ME Gulf UKContinent 65000 Sep 4 2100000 CNR Oil Clean Northsea Dowel, 89 ME Gulf Japan 55000 Sep 15 W260 MCC Part cargo Oil Clean Hastula, 93 Singapore Japan 30000 Aug 20 W305 ExxonMobil Part cargo Oil Clean Pacific Honor, 03 No China Singapore 30000 Aug 25 300000 Petco PtC;Lump Sum Source: Maritime Research Inc

August 21, 2003 38 www.fairplay.co.uk

FRPED030821024.p65 19/08/2003, 10:1838 Commodity Focus Private users choose Tangguh gas Agri-bulks pay price THE Tangguh LNG project in Indonesia may have found buyers for over half its intended for hot summer capacity with the announcement that Korean steel and power interests have nominated the project as the preferred supplier for 1.35M tpa, beginning in 2005 for a 20-year term. WORLD wheat trade prospects in 2003/04 Tangguh has already secured a 2.6M tpa supply contract for the Fujian LNG project in have been reduced to potentially their China, although this does not start until 2007. lowest level since 1995/96, according to the latest forecast prepared by the USDA. As part of the energy liberalisation proc- BP told Fairplay. As such, the shipping At 96.1M tonnes this will be ten per cent ess in Korea, the bidding process was the arrangements have yet to be decided ñ for lower than 2002/03. first undertaken by Koreaís private sector, this business, BP will be just as much a specifically Posco, the worldís second larg- competitor as any other operator, he said. Extremely high temperatures have cast a est steel maker, and SK Power, owned by But BPís own ships, like todayís market, shadow over Europeís agricultural sec- South Koreaís largest oil refiner. The are flexible, said the spokesman, being tor and even winter planting could be former is building a regasifi cation plant able to trade between most terminals affected. For the moment, the EU will at Gwangyang to feed 845 MW of power in the world. BPís LNG vessel British account for nearly half of the projected generating capacity for steel mills at both Trader, for example, is currently deployed 11M tonnes decline in world wheat Gwangyang and Pohang. Gwangyang is on the trade out of Trinidad to Bilbao in production, to 549M tonnes, and the also the location of a 1,080-MW power Spain, but has been able to respond to gas Canadian and Eastern European pro- station that SK power intends to build. price movements by discharging in the US duction outlook has also been dimmed as necessary. Given the liberalisation of (although Canadian production is still The supply deal itself has yet to be fi nal- energy markets around the world, more on course for some relative recovery ised, although this should be completed short-term ñ if not spot ñ trades are likely over last year). by the end of the year, a spokesman from in the future. According to the USDA, the EU will face extremely tight supplies of feed grains, and imports of non-grain feed substitutes ñ oilseeds or corn gluten, for example ñ could increase to help balance the loss as there are limits to how much grain can be imported as a result of EU restrictions.

This is one reason why EU soybean im- port prospects have been raised, from Another client has been lined 17.6M tonnes in 2002/03 to 18.6M up for Tangguh LNG, but shipping tonnes, lifting US export prospects to arrangements are likely to be made at the region and raising total exports from a much later stage in the contract negotiations Brazil and Argentina to 22.3M and 10M than is normal in traditional LNG projects tonnes respectively.

At the same time, uncertainty still hangs India a hub to car trade over Chinese soybean imports. The trade has already slowed in the face of stiffer THE first consignment of 1,500 Hyundai director JI Kim said that exports to Mexico phytosanitary inspections, associated cars destined for Europe and exported and North America will start next year. He regulatory hurdles as well as the recent through Chennai port, India, was shipped said that Hyundai India, which has its plant sell-off of stocks. out by Hyundai Merchant Marineís Topaz near Chennai, plans to export 30,000 cars Ray last week. The shipment comprised this year and double it to 65,000 next year This has mostly affected the trade out of 710 cars for Italy, 690 for Spain and 100 and 80,000 by 2006.Ulimately, one-third Argentina and Brazil, with the US harvest for the Netherlands. of the companyís car production will be not yet underway, but combined with the exported. Half will be aimed at Western fresh requirement that Chinese crushers Hyundai Motors India is the global export Europe, the largest market for its Santro make contracts only on an FOB basis hub for compact cars for the group and has model, renamed Atos Prime for Europe. (more risky than CIF), the crushers have announced aggressive plans to emerge as shied away from deliveries for near-term Indiaís leading exporter of passenger cars. Ford India, which also has its manufac- delivery, says the USDA. The situation Western Europe is the worldís largest turing plant at Chennai, exports cars as threatens to overshadow the US new crop market for small/compact cars, although CKDs (completely knocked down kits) to exports, and Chinaís overall soybean im- Hyundai has also started exports to North China, South Africa, Mexico and Brazil port prospects for 2003/04 have been left Africa and Asian destinations. Managing through Chennai. unchanged at 18.5M tonnes.

August 21, 2003 www.fairplay.co.uk 39

FRPED030821028.indd 39 19/8/03, 14:12:06 Dry Indices Baltic Dry Index Baltic Handymax Index Daily Summary of the Baltic Time Charter Averages: $/Day After the sharp rise during the Spring, the Handymax market has hovered at its present exalted level, and shows no imminent sign of Baltic Capesize Index 4 T/C Routes 35,839 falling. Clarksons reports that Australian minerals and Atlantic scrap Baltic Panamax Index 4 T/C Routes 17,110 are keeping daily rates just below $14,000.

Baltic Panamax Index Baltic Capesize Index

Summer has finally caught with the Pacific Panamax market, now As this weekís cover story shows, Chinaís insatiable hunger for raw caught in the hiatus between two grain seasons, though rates are still materials is sucking in tonnage like a black hole, and all routes are higher than for most of the year. Overall, Panamaxes are keeping the reporting strong increases as charterers compete for ships and supply $2,000/day differential over Handies, which they have sustained since sources. Clarksons highlights the FOB competitiveness of Asian coal, the autumn. providing prospects for long-haul business into the Atlantic

40 www.lrfairplay.com August 21, 2003

FRPED030821029.indd 40 19/8/03, 14:49:38 Dry Markets Dry markets at the limit Demand coping with FOR some, Frontline’s transfer of several of its Suezmax OBOs from oil to dry trading may container supply say more about the state of the tanker market than it does dry. After all, proportional DESPITE the introduction of an ad- to newbuilding costs, it is a pretty sure-fire bet that the return on a Suezmax compared ditional 400,000 TEU of annualised with a Capesize bulker has been consistently better over the years. container ship capacity into the Northern Europe/Asia trades between January and But the boot is now Þrmly on the other reveals that during the current bulker the end of this year, load factors in this foot. Frontline has announced that Þ ve of surge this occurred in February, then trade lane are expected to remain healthy its eight OBOs have been Þxed in the dry in June, but just for a couple of weeks. for most of 2003. market for between 30 days and up to six But is also happening now and has been months at time charter rates of between going on for around three weeks with The introduction of so many extra slots, $30-$40,000/day, with more to follow. the differential increasing sharply and representing a growth of around ten per Rates are thought to be about double the to new highs. cent in the Þrst half of this year alone, is current level of the tanker market. expected to be accommodated comfort- It remains to be seen whether this will ably due to the major growth in demand It remains to be seen whether this kind be sustained, but the signs are it could for Asian imports. According to John of move will have much impact on the last for some time. With Australia still Fossey of Drewry Shipping Consult- supply side of the dry bulk equation. maxed out it is still the Brazilian iron ore ants, ìWhen you compare the demand But as Cape rates escalate further the trades to China that are attracting all the increase in the Þrst six months of 2003 market will be trying to Þnd ways to attention and forcing the markets higher. of 20 per cent westbound and 10-12 per increase supply, or at least make it more This is a long-distance haul, which would cent on the eastbound leg, the increase efÞcient. There have been instances of reduce the chances for Panamaxes to is not far from outstripping demand, Capesize lots being split into Panamaxes, compete effectively. therefore we are seeing very high net although it is also pretty clear that iron utilisation factors.î ore is one of the more difÞ cult cargoes The market might also rationalise itself in to penetrate. other ways in time, say brokers, perhaps Vessel upgrades by the major liner group- by feeding more ore on the shortest route ings have been the main contributor to slot As a rule of thumb, one broker told Fair- between supplier and market ñ i.e. Aus- increases so far this year while the addition play, lots will be split when the Baltic tralia to the Far East, and Brazil to Europe. of new service strings has also been a been Panamax average time charter rate falls However, the strength of this bulker boom a signiÞcant supplier of extra capacity. For to less than half the Capesize average for is likely to test fully the marketís ability example, the Grand Alliance has replaced any length of time. A quick calculation to adapt. Panamax ships with new 8,000-TEU ton- nage recently, while Maersk Sealand has Forget the Capes and Panamaxes; Handysize rates also blisteringly hot. Modern 27-28,000-DWT ships commissioned further ëS-classí ships. In are now getting in excess of $10,000/day for Australian rounds, often with 12-14 day ballast in from addition, new service strings have been the Far East. Perhaps a month ago these vessels might achieve $8,500/day. Panoceanís Pan Leader introduced by CMA CGM and China is pictured here arriving in ballast at Brisbane ex Jiangshan to load mineral sands for Zhenjiang in Shipping Container Lines. China. Where else? (photo: Chris Mackey) According to Fossey, slot utilisation levels are currently averaging 93.4 per cent westbound. This Þgure is expected to rise to 94.4 per cent by the end of the third-quarter peak season. In the weaker eastbound trade, carriers are enjoying a relatively high 75 per cent.

With further shifts in production to China, Chinese exports to Europe are understood to have grown by 40 per cent so far this year, which is where much of the addition- al slot capacity is being positioned. ìWhat weíre seeing is a lot more emphasis on China with carriers engaging many more direct port calls at Chinese ports, simply because this is where all the growth is coming from,î stated Fossey. Meanwhile, declining exports from Japan have seen port calls being cut for mainline services to Europe.

August 21, 2003 www.fairplay.co.uk 41

FRPED030821034.indd 41 19/8/03, 16:44:32 Tanker Indices

REGION 380 cSt 180 cSt MDO MGO Bunker Prices Middle East cont’d REGION 380 cSt 180 cSt MDO MGO d Jeddah (pp) 171.00 177.00 n/a 287.75 d Suez 160.00 165.00 n/a 321.50 North West Europe d Ras Tanura/Dammam (pp) n/a 174.25 n/a 247.00 d St Petersburg 140.50 150.00 212.50 257.50 Asia d Great Belt 172.00 181.00 242.50 270.00 d Tokyo Bay 182.00 186.00 267.50 n/a d Hamburg 165.50 173.50 220.00 250.00 d Sydney 219.00 219.00 n/a 307.50 d Rotterdam 158.50 165.50 220.00 245.00 d Colombo (pp) n/a 235.00 n/a 290.50 d Antwerp 159.00 163.00 230.50 242.00 d Singapore 167.50 170.00 234.50 239.00 d Le Havre 174.00 184.00 n/a 268.50 d Falmouth 169.00 178.00 281.50 331.50 d Hong Kong 185.00 187.00 243.50 254.50 d Keelung (pp) 185.00 187.00 270.00 278.00 Mediterranean d Pusan 171.00 176.00 267.50 277.50 d Istanbul 172.00 180.50 262.50 267.50 d Piraeus 168.00 175.00 n/a 258.00 Americas 179.00 188.00 317.50 n/a d Valletta 166.00 174.00 n/a 270.00 w New York 177.00 179.00 255.50 n/a d Augusta 171.50 179.50 n/a 270.50 w Houston/NOLA 171.00 178.50 267.50 n/a d Fos 175.50 196.50 n/a 267.00 w Cristobal w Venezuela 172.00 182.00 265.00 270.00 d Gibraltar 165.50 171.50 266.50 273.00 d Rio de Janeiro 167.00 171.00 n/a 317.00 Africa d Buenos Aires 178.00 178.00 265.50 297.50 d Mombasa n/a 199.00 290.00 300.00 d La Libertad 180.00 191.00 n/a 370.00 d Durban n/a 168.00 257.50 267.50 w Los Angeles 157.00 167.00 282.50 n/a d Lagos (offshore) 220.00 230.00 n/a 327.50 w Seattle 175.50 181.50 302.50 n/a d Dakar 209.00 219.00 n/a 289.50 w Vancouver 179.00 184.00 325.00 337.50 d Las Palmas 172.00 178.00 266.00 270.00 Middle East Latest mid-range prices listed in $ as at Monday, August 18, 2003 (d - delivered, w - ex wharf, pp - posted price. Ports listed regionally, clockwise from the North East) d Kor Fakkan (offshore) 167.00 172.50 242.50 245.00 Information supplied by Cockett Marine Oil. Tel: +44 1689 883400 d Aden 175.00 180.00 n/a 280.00 Baltic International Tanker Routes Spot Rates - Crude Oil Clean Products Owners are starting to show a bit of backbone, though charterers are No one expects a bonanza in August anyway, though the calamitous still holding the whip-hand. Clarkson has observed additional pressure power failure on the US East Coast could provide a stimulus to trans- on VLCCs for West discharge, and this weakness has spread to the Atlantic business, according to Clarksons. The broker is also optimistic entire Suezmax market. Optimism that Iraqi deliveries to Ceyhan would that a lack of quality tonnage in the Med could help rates. Asia, in the eventually lift the Med market was punctured when the pipeline was main, is rather torpid, with little activity to push the market either way. bombed. Even the strong activity in the Aframax market failed to lift rates, though the Caribbean looked fi rmer.

42 www.lrfairplay.com August 21, 2003

FRPED030821026.indd 42 19/8/03, 12:38:28 Tanker Markets

to support the VL/ULCC market, which is indicative of the very wary attitude of the Rates catch summer chill receivers and this underlying expectation ñ albeit dimmed ñ that prices must fall in IF the tanker markets could fall any further, they did last week. Overall the Baltic’s the not too distant future. In some cases, Dirty Index shed another 30 points or so, and the outlook at the beginning of this week Suezmax rates were recently above VLCC was pretty depressing for most owners. At the same time the Centre for Global Energy rates, the operator maintained. Studies (CGES) has pointed out that US imports are running at just about their maximum At the start of this week there was some – the US could not import much more even if it wanted to because of the limits on its hope for the VLCC market, reported bro- infrastructure. If the US, accounting for around 25 per cent of world energy consumption, kers, with rates moving up from WS41 is importing – and refining – as much oil as this, and if stocks remain at their historical to 45, but this equates to only the mid to lows, why are the tanker markets so lifeless? low teens in terms of daily dollar earn- ings. What is more, brokers approached The broader picture provides some con- Þdence is fading fast that Iraq will be able by Fairplay remained pessimistic that text ñ the third quarter is well underway to perform to its potential any time soon, any more upside will be found any time and this is the traditional low of the yearly although in Al Bakrís case this comes as in the near future. A contrast might have tanker cycle. Brokers all have expectations a particular disappointment to the VLCC been found in the Aframax market, with of a much better fourth quarter, naturally, sector. Ceyhanís situation could be poten- activity levels turning up at the start of but how much better remains unclear. In tially more devastating, this time primarily last week. Despite this enquiry falling the meantime, all segments are struggling for the Suezmax market. And where there off almost as quickly as it began, Clark- with a lack of enquiry, amid a continuing is hope ñ high levels of VLCC activity out son at least reported a hardening of at- draw-down of stocks, primarily linked to of West Africa ñ it is the Suezmax market titude among owners, which might carry high current oil prices and the continued that is coming under pressure from the through this week. expectation of price falls in the future. The competition. Brokers tell Fairplay that CGES expects little relief in prices, not West Africa-USG rates are now down to In the meantime, the tanker market is thus least because Opec will be able to keep a as little as WS60, which must be pushing at having to sit out the current trough and tight rein on supply, particularly now that the break-even costs for many owners. For will have its Þngers crossed for a chilly the return of Iraqi production has failed to each VLCC Þxed, two Suezmax loadings winter to make up for the dryness in the materialise in any strength. are lost, of course. long summer months. Arguably, given both the seasonal demand increase, a Expectations for a substantial return of But the VLCCs are not having it easy. more generalised recovery in world eco- exports from the Iraqi ports of Al Bakr One operator tells Fairplay that the lot nomic growth and the tight stocks in both have now been deßated with the recent sizes available out of the Arabian Gulf the USA and Europe, when it comes the power-related interruptions to trade. Con- are not big enough or numerous enough turnaround could be dramatic.

A third-quarter dip in fortunes is part of what to expect from the tanker markets, and no real turnaround is anticipated until the season turns in a month or two (photo: Chris Mackey)

August 21, 2003 www.fairplay.co.uk 43

FRPED030821031.indd 43 19/8/03, 16:22:45 Shoes & Ships

Cunardís new super liner, designated Job No 534. Gloom descended, however, when Sons of the Clyde construction was suspended less than a year later because of the deepening fi nancial cri- sis, and it was not until the first signs of national re-armament that confi dence began to return. Job No 534 resumed in 1934 and the ship, launched as Queen Mary, was soon followed by the slightly larger Queen Elizabeth. Wartime work was plentiful at Clydebank, and in the subsequent peace, Queen Mary laid up on the slipway at John Brownís during as shipping companies ordered to replace the Great Depression (photo: Peter Newall Collection) lost tonnage. Notable post-war newbuild- ings included Cunardís ëGreen Goddessí SCOTLANDíS river Clyde has been called the cradle of British shipbuilding, and perhaps Caronia, and the Royal Yacht Britannia. the best known of its many famous yards was John Brownís. Last year, the last equipment was shipped out of John Brownís former Clydebank yard, where Cunardís first three By the early 1960s, shipbuilders overseas ëQueensí were built, while the keel was laid for the Queen Mary 2 ñ in France. had become more competitive, and UK yards started feeling the pinch. John The yard owed its existence not to the around the yard with housing and ameni- Brown had to take work at a loss just to eponymous Brown, but to the Glasgow ties for its workers, but the company was keep going. The governmentís Geddes brothers James and George Thomson. financially stretched, and in 1899 it was Committee Inquiry recommended form- They had both worked as marine engine acquired by John Brown & Co. ing a number of shipbuilding groups. builders for Robert Napier, and in 1847 formed their own company, J&G Thom- Yorkshireman John Brown formed John Upper Clyde Shipbuilders (UCS) was son & Co. They expanded into shipbuild- Brown & Co in 1864, but left the company formed in 1966 by the amalgamation ing, and launched their first vessel from in 1871. The enterprise, however, pros- of John Brownís, Connells, Fairfi eldís, Clyde Bank Iron Shipyard at Govan in pered, and in 1899 John Brown & Co also Stephenís, and as an associate, Yarrowís. 1851. A strong link was forged with owned several collieries, later adding an The contract to build Cunardís Queen Cunard, where a third brother, Robert, ordnance works. These acquisitions meant Elizabeth 2 flattered to deceive, and the worked as superintendent engineer. it could supply most of the raw materials outlook remained bleak. Despite massive and finished articles for Clydebankís ship publicity when workers demonstrated for The founders were succeeded by Georgeís building output. Impending war meant the right to work, UCS went into liquida- sons, also named James and George, who that the yard started receiving govern- tion in 1971. The site was acquired for oil in 1874 moved the shipyard to a new ment orders as the country re-armed, rig construction, first by Marathon and later green-field site down river. This allowed while mercantile orders continued apace. by KvÊrner and UiE, but by 1999 work a dramatic production increase, and large Among early 1900s production were the had ceased and shipbuilding at Clydebank numbers of cargo, passenger and warships Cunard liners Lusitania and Aquitania, was gone. At its peak, shipbuilding on the were built for customers world-wide. A the battleship Barham and the battle Clyde employed over 100,000 men, but new town, named Clydebank, grew up cruisers Repulse and Hood. only a few jobs remain. The Clydebank site is being redeveloped for commercial The depression of the 1930s and leisure use and, although the name of Cheeky Clydeside chappie saw men laid off and several John Brown is unlikely to be forgotten, it is Clyde shipyards failing. That really those of James and George Thomson PHOTOGRAPHED last year at the small Clydeside harbour of John Brownís survived was that should be remembered. Girvan is a very small ro-ro, the Gallus Grafter. Fairplayís due, at least in part, to winning photographer surmised that it is used to carry blocks of granite the prestigious 1930 order for ~ NICK HALL ~ from Ailsa Craig to Girvan for processing into stones for the game of curling. ëGallusí is a Scots word meaning brash or cheeky, and a John Brownís skyline grafter is of course a hard worker. (photo: RCAHMS)

~ JIM PRENTICE ~

44 www.fairplay.co.uk August 21, 2003

FRPED030821025.indd 44 19/8/03, 11:39:18 FRPed030821p1003.qxd 15_8_03 4:38 pm Page 1003 New Edition…New Edition…New Edition…New Edition…New Edition…New Edition…New Edition…NewNew Edition…NewEdition Edition…New Edition…New Edition…New Edition…New Edi New Edition…New Edition…New Edition…New Edition…New Edition…New Edition…New Edition…New Edition…New Edition…New Edition…New Edition…New Edition…New Edi World Shipping Directory 2003-2004 Your all-inclusive guide to the shipping industry

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