SEPTEMBER 2019

Contents

SOCIALS

103° Anniv. CENNAVE Pg. 1 25th Anniv. API Ensenada Pg. 2 NEWSLETTER Nº 17 Arrival CMA-CGM WHITE SHARK to TEC II /ICAVE Pg. 3 AMANAC - Course Pg. 3

103rd ANNIVERSARY APAM-new regulation of the Centro de Navegación Urguay (CENNAVE) General Customs Law Pg. 4 Creation IFC - Peru Pg. 5 On Monday July 29th, the Centro de Navegación de Uruguay (CENNAVE) Peru – cabotage law Pg. 6 commemorated its 103rd anniversary with a lunch at the Radisson Victoria Plaza Hotel in Montevideo. It was attended by national authorities, representatives of the NEWS institutions and agencies of our maritime port community in Uruguay. 2018 PSC detention report Pg. 7 LSCI in South America Pg. 9 Port Veracruz lead use of Blockchain in L.America Pg. 10 TT Club review of 2018 global cargo theft Pg. 11 Port Congestion: A Threat to the Industry? Pg. 12 MSC GÜLSÜN sets new container load record Pg. 14 Container terminal utilisation rates Pg. 15 10 measures to regulate container traffic Pg. 17 Shipping confid. survey Pg. 18 Allianz: Total shipping losses for 2018 Pg. 20 Why do ships use ‘port’ and ‘starboard’ Pg. 23 The President of the Centro de Navegación, Mr. Alejandro González, focused his speech on continuing to work in defense of the interests of the maritime, port and logistics sector, which reflects the general interests of the Country. CIANAM www.cianam.org

Later the candidates for President with parliamentary representation; Dr. Luis Secretary: Lacalle Pou, Ing. Daniel Martínez, Dr. Pablo Mieres and on behalf of Ec. Ernesto Centro de Navegación Talvi, the candidate for Vice President Prof. Robert Silva sent their message to the community based on the government plan of each party. Finally, the President of the TE: (54 11) 4394-0520 Centro de Navigación presented a plaque of gratitude to each candidate. [email protected]

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Port Administration Integral Ensenada – - celebrated its 25th Anniversary

On June 28, Port Administration Integral Ensenada celebrated its 25th anniversary. The event took place in the garden of Cuatro Vientos Hall in this city with assistance of Héctor López Gutiérrez, General Coordinator of and Merchant Marine and Francisco Javier Fernández Perroni, General Director of Merchant Marine, among others.

The event was also attended by former API Ensenada directors, Pablo Medina and Carlos Jauregui.

Héctor López highlighted in his speech that Marina Mercante is focusing on promoting better development conditions for seaports and consequently the opportunity for greater economic growth.

Later Miguel Angel Andrade, Director of the Asociación Mexicana de Agentes Navieros, spoke of the significant growth of the port of Ensenada in recent years, which is largely due to the valuable work that API has done.

Miguel Ángel Andrade gave a recognition to the Port Administration Integral Ensenada, which was received by its director, Luz Alicia Iturbe de Garay.

The General Director of API sent a message to the workers who have been an important part of the port over the years and awarded with a service recognition to those employees with more than 20 years of work.

CIANAM www.cianam.org

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Arrival CMA-CGM WHITE SHARK to TEC II – ICAVE Port

The first operation of Hutchison Ports Internacional de Contenedores Asociados de Veracruz (ICAVE) within the modernization of the Port of Veracruz was undertaken with the visit by White Shark of the Shipping Line CMA – CGM on July 1st.

The total area of the extension for the new port of Vera Cruz that includes ICAVE-TEC and the four specialised terminals is 1,113 hectares of which 626 ha are located on land and 487 ha in water, doubling the size of the current port consisting of 554 ha land-sea.

The vessel arrived to the terminal in the morning hours and unloaded the first of millions of containers that are expected to arrive at the new ICAVE Terminal.

AMANAC - Course "Introduction to the Maritime Transport of Goods"

As international trade, as well as the maritime and port industries, are developed in Mexico and in the world, there is a great need for the new entrants in this industry to know terms, concepts, activities, services and functions that are required on a daily basis.

There is a great need for those new entrants who are starting to work in international trade, as well as the maritime and port industries are developed in Mexico and in the world, the great need of those who start in the middle to know terms, concepts, activities, services and functions has been detected, which They are required on a daily basis.

Currently, there is great unawareness of this activity, despite the importance of cargo and logistics management and its contribution to economic development.

Trying to cover a deep knowledge of the industry and maritime trade in a single course would not be possible, so it is important to note that this course was not intended to be exhaustive.

A wide variety of concepts were treated during the course, and all of them require further analysis.

Basic facts and concepts were given and commented; this knowledge serves as an introduction to maritime commerce.

AMANAC develops a high range of training programs adapted to the needs of the personnel of companies in the maritime and port sector.

CIANAM www.cianam.org

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APAM states: "the new regulation of the General Customs Law will get into the way of foreign trade"

One of them is the excessive requirements to develop activities as a Foreign Trade Operator.

Recently, the Congresswoman Ana Maria Choquehuanca, president of the working group to boost the Competitiveness of the Foreign Trade Commission of the Peruvian Parliament, invited various business associations, including the Peruvian Association of Maritime Agents (APAM) to make their observations to the draft regulation of the General Customs Law.

In this regard, according to internationally accepted standards and practices, in addition to the comparative analysis with what has been implemented in general by other countries in the region or internationally, APAM made the following comments: a) The international principles included, among others, in the International Convention for the Simplification and Harmonization of Customs Regimes of the World Customs Organization and the Maritime Transport Facilitation Agreement (FAL Convention) of the International Maritime Organization and its complementary standards, International Organizations of which Peru is a signatory, encourage the facilitation of trade and the uniqueness of customs practices, among them it would be possible to take into account the declarations and inscriptions for the purposes that individuals see their efforts simplified and avoid repetitions that could be reached by a single system. The activity of the maritime agent is indivisible, so there is no benefit or advantage in repeating registrations and also asking for additional or dissimilar requirements for its action between different levels of the State. b) The guarantees of action should not be repeated - we understand that there are other precautions in favor of the State - nor constitute an insurmountable obstacle that limits the normal performance of individuals engaged in commerce in general and in this case of maritime agents in particular. Additionally, under the understanding that the maritime agents are the representatives of the maritime carriers whose ships operate in the Peruvian ports, they don’t have economic interest on the cargoes. For this reason, it would seem - without forgetting that it is a repetition of precautions - that excessive amounts are being stipulated for the protection of the customs declarations of the agents. c) Maritime agents can be considered as merchants and private companies. We understand that establishing a system of public scoring or information of a commercial nature clearly affects the free interaction between competing companies and would establish distortions in a market that is already volatile and subject to an important struggle by the client. We clearly see that proposal as an issue that exceeds normal customs matters. d) Customs regulations should not generate contradictory requirements with activity in general or pre- existing requirements by the State. We see the destination of exclusive personnel for the attention of customs issues as excessive and contrary to the usual practice. We insist again on the indivisibility of the activity of the maritime agent. e) With respect to the operational issues related to the presentation of the Cargo Manifest Declaration, it is possible to consider that this documentation is the natural link of the ship with the customs authorities of the port. In accordance with the general rules of transport (Ex. Rules of the Hague or The Hague Visby), the list of the cargo operating on that ship is declared in this document. The agent in this case, as the ship's representative, proceeds to transmit to the authorities the information received on the relation of loading, unloading, permanence and other destinations.

CIANAM www.cianam.org

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f) The accumulation of operations, changing logistical needs, and other unforeseen events, make it necessary to correct or amend the documentation of reference. Therefore, given that shipping agents need to do this operation, it is not justifiable that sanctions or fines are imposed for rectifying cargo manifests due to causes beyond their control or management. g) Additionally, we see as unusual and clearly incompatible with the rules of world maritime trade, that the activity of the agent is qualified towards the community according to normal situations and that make his activity a representative of a third party, in this case the vessel. h) Besides, we must point out that the use of advance cargo manifests is a usual practice in container traffic, but not in bulk, in which case it is customary to perform at the time of unloading or with a very short notice. i) Finally, highlighting that our activity must support the authorities that must carry out their responsibilities, we consider it very important that the opinion of the shipping agents must be taken into account in order to find a fair balance between control and facilitation, in order not to affect maritime logistics and achieve appropriate procedures regarding its possibility of compliance in matters related to the management of a ship, without affecting the exercise of the functions of the State agencies.

12 August, 2019

The Directive Resolution N° RD 504-2019 MGP/DGCG of August 1, 2019, published on 08/11/2019 in the edition of legal norms, established the creation of the Maritime Information Fusion Center - Peru for Latin America (IFC - Peru), whose purpose will be the collection and analysis of information on illegal acts and relevant maritime issues in the region, in order to produce accurate, reliable, impartial and usable information on maritime safety and security.

Besides a Pilot Project for the implementation of IFC-Peru was established in order to determine the information integration capabilities and that can show the situational panorama of the regional maritime environment.

It is required that the captains of national and foreign flag ships report voluntarily the occurrence of robberies, assaults and any other crime that develops at sea to the following email: [email protected].

CIANAM www.cianam.org

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Standard includes floating LNG units and sea freight and passenger transport

August 6th 2019

On Tuesday, August 6th, the Government of Peru approved the regulation of the maritime cabotage law, with the aim of promoting and facilitating a competitive alternative of passenger and cargo transportation on the Peruvian coast, Andina reported.

By means of Supreme Decree Nº 029-2019-MTC, published in the Official Gazette El Peruano, the aforementioned regulation was approved, consisting of two titles, four chapters, 26 articles and three transitory complementary provisions.

The regulation of reference concerns all natural or legal persons, under public or private law and public administration entities related to the maritime transport of passengers and cargo on the Peruvian coast.

In addition, it includes the operations of floating storage units in Peruvian seaports, intended for the reception and regasification of liquefied natural gas (LNG) and subsequent delivery to users.

However, the bulk transport of liquid bulk, other than liquefied natural gas, is excluded from the effects of the regulation.

Dissemination of regulations

The regulation also provides its publication on the websites of the Peruvian State, the Ministry of Transportation and Communications, the Ministry of Economy and Finance, the Ministry of Energy and Mines, the Ministry of Defense and the Ministry of Foreign Trade and Tourism.

It should be recalled that on September 13, 2018, the Executive Power issued Legislative Decree No. 1413 (Cabotage Law) to promote and facilitate the maritime cabotage of transport of passenger and cargo on the Peruvian coast, and would become effective once the regulations were published.

In that sense, the law indicates that maritime cabotage of passengers and cargo is carried out by a natural person or legal entity incorporated in Peru, with social capital of national or foreign origin and that has obtained the corresponding operating permit from the General Directorate of Water Transportation of the Ministry of Transportation and Communications (MTC).

To carry out maritime cabotage, the ships must have the class certification granted by a classifier, member of the International Association of Classification Societies (IACS), and have protection and indemnity coverage or civil liability.

In accordance with national regulations and international conventions, the ships and the provision of the service comply with the provisions for safety, protection and conservation of the aquatic environment.

By Mundo Maritimo

CIANAM www.cianam.org

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Vina del Mar published its annual PSC report for 2018. Namely, a total of 5,365 deficiencies were found, of which 3,551 were rectified. This marks a level of compliance of 66.19%. In addition, the main problems considered auxiliary engines with 5.21% and freeboard marks with 4.09%. 15/05/19

Number of deficiencies According to the report, Argentina achieved the rectification of most of the deficiencies in its PSC controls, with 1,204, of which 881 were rectified, a percentage of 73.17%. Colombia comes second with 965 deficiencies and 691 rectifications (71.61%). and Brazil come to complete the top 4. Namely, Chile found 725 deficiencies, with 497 rectifications (68.55%), with Brazil reporting 1655 deficiencies and 1095 rectifications (66.16%). Main deficiencies reported Regarding the types of deficiencies found, Vina del Mar notes that the top one has to do with auxiliary engine, with 5.21%. After that comes freeboard marks with 4.09%, and garbage with 3.86%. The top-10 deficiencies found, are the following:

1. Auxiliary engine - 5.21%; 2. Freeboard marks - 4.09%; 3. Garbage - 3.86%; 4. Nautical publications - 2.24%; 5. On board training and instructions - 2.14%; 6. Gauges, thermometers, etc - 2.01%; 7. Propulsion main engine - 1.91%; 8. Generador de Emergencia - Emergency source of power - Emergency generator - 1.66%; 9. Garbage management plan - 1.45%; 10. SOPEP - 1.43%. Inspections by most relevant types of ships

CIANAM www.cianam.org

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Regarding specific types of vessels, the report indicates that bulk carriers had the most inspections with 4,407, with 2,379 deficiencies found. What is more, 14 detentions took place, marking a percentage of 0.18%. Container ships experienced 1,204 inspections, with 482 deficiencies found, which led to a total of 4 detentions (0.05%). 707 inspections took place on cargo ships, recording 536 deficiencies and 11 detentions (0.14%), while 951 inspections occurred on chemical/product tankers. 387 deficiencies were found, leading to 2 detentions (0.03%). Inspections by ship age As far as ships' age is concerned 2,814 inspections took place on vessels of 6-10 years of age, with 14 detentions being reported (0.50%). Ships between 0-5 years experienced 2,398 inspections, which led to 6 detentions (0.25%). The top three closes with vessels of 11-15 years, on which 1,402 inspections occurred, and 7 detentions were reported (0.50%).

Measures adopted In order to mitigate the deficiencies found, the following recommendations were the most common:

 Master instructed to rectify deficiencies before departure - 2,423;  Rectify deficiencies within 14 days - 1,582;  Rectify deficiencies at next port - 424.

Credit: Vina Del Mar

CIANAM www.cianam.org

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By Emiliano Galli 25 july, 2019

The west coast of South America improved its liner shipping connectivity index (LSCI) for 2019, according to Unctad surveys, while the east coast worsened their positions in maritime transport networks.

“A country’s position in the global container shipping network – its connectivity – is an important determinant of its trade costs and competitiveness,” said UNCTAD’s chief of trade logistics, Jan Hoffmann.

According to the recent survey, Colombia is the country with the best connectivity in the region (position 34/178), followed by Peru (38) and Chile (44).

Undoubtedly, the Pacific Alliance and the number of trade agreements that proliferate in the West Coast countries are reflected in this level of growth. Meanwhile, the east coast has to wait that the agreement between Mercosur and the European Union - with the increase in associated trade - will also be reflected in more and better maritime services.

The two coasts

The three countries of the South American west coast outperform the three main economies with the river-maritime coastline of the east coast, where Brazil leads (48), followed by Argentina (54) and Uruguay (59). Finally, Paraguay is ranked 176, mainly affected by its Mediterranean nature.

Over the last 10 years, a trend for the South American economies is noticed: only the countries on the Pacific coast have improved their level of connection by sea with the rest of the world, while those of the Atlantic receded.

Thus, between 2009 and 2019 Peru has improved the most, advancing 14 positions, from 52 ° to 38 °; Ecuador climbed 11 positions (63 to 52); Chile improved 9 positions (53 to 44); and Colombia advanced two positions (36 to 34).

Brazil had the worst setback of all the Atlantic coast: it fell 22 places (26 to 48). The data is not less, if one considers that Brazil was, 10 years ago, the best connected country in South America.

Argentina went down 14 steps (40 to 54), Uruguay 12 (47 to 59) and Paraguay 7 (169 to 176).

Measured in percentages of improvement based on 2006 (100), Colombia improved its level of regular direct connection by sea by 18%; Ecuador 17.8%; Chile 17.7%, and Peru 10.8%.

On the other hand, on the east coast, Uruguay improved by 8.2%; Argentina 4% and Brazil worsened (-2%).

Costs and volumes

“Counting on a direct regular shipping connection has empirically been shown to help reduce trade costs and increase trade volumes,” Hoffmann noted.

CIANAM www.cianam.org

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Unctad research shows that the absence of a direct connection is associated with a 42% lower value of bilateral exports, according to UNCTAD.

The Unctad index shows that China has maintained its leadership as the best country connected with others by sea and pointed out that China’s LSCI has increased by 51% since 2006.

The components of the connectivity index are the number of companies that provide shipping services, the number of services, the number of ships that call per month, the total deployed container-carrying capacity (measured in TEU), and the size of the largest vessel.

Five of the top 10 best connected economies in 2019 are in Asia, with Singapore, Korea, and , which complete the list of the top five, according to index metrics.

Five of the top 10 best connected economies in 2019 are in Asia, with Singapore, Korea, Hong Kong and Malaysia rounding out the top-five list, each with a score of more than 100, according to the index’s metrics.

Posted by LatinSea Editorial | 10, Aug 2019

In order to test the implementation of blockchain technology in the Port of Veracruz, the CICE Group and Hutchinson Ports Mexico have forged an alliance with Tecnológico de Monterrey, through the Business School and EGADE Business School, with the objective of increasing transparency, connectivity, security and efficiency in their operational, administrative and logistical processes, according to Criptotendencias.

In this regard, the project leader and director of the Master of Finance of EGADE Business School, Igor Rivera explained that “Tecnológico de Monterrey has a national initiative of digital transformation, where it seeks to involve industry and academia in the design of solutions to the challenges of the new digital economy and thus transmit value to society through its teachers, students and graduates.

While the head of Innovation at Hutchison Ports Mexico, Jorge Lecona, said that “blockchain technology promises to create a new era in logistics, where systems provide a single source of truth and where participants in logistics chains can have absolute certainty in shared information, promoting trust between the parties and facilitating international trade.

Along the same lines, Genaro Méndez, CICE Group’s Director of Technologies, stated that “this new era of digital transformation takes us to a much more collaborative environment; blockchain technology allows us to trace all the operation and load transfer activities, since all the events and transactions are recorded in one place and are visible to everyone. The punctual follow-up in real time will translate into efficiency and mainly into an increase in the level of service that the client will perceive”. Intelligent Port

It should be emphasized that the union of private sector companies with an educational institution is part of the commitment of the port community with society to promote efficiency and transparency of their operations. Thus, this project is carried out with a view to evolving into an ‘Intelligent Port’, through digital sustainability solutions applied to national supply chains that provide port users with a better logistics service with added value.

Tecnológico de Monterrey joins the initiative to explore the blockchain technology of the port community of Veracruz by providing the experience of professors and expert consultants with a multidisciplinary vision, which facilitates the execution of the project and, with it, operations become more efficient and the digital transparency of the port is motivated.

Thus, through the initiative with the Port of Veracruz, Tecnológico de Monterrey seeks to rely on the largest port reference in Mexico to develop cutting-edge technology to streamline and promote domestic foreign trade, meeting the continuing needs of competition in the international market.

CIANAM www.cianam.org

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TT Club and BSI Supply Chain Services & Solutions have teamed again to produce a full year analysis of cargo theft, together with some further loss prevention commentary to assist those considering how to combat this on-going threat.

Trend analysis The perils of cargo theft continue to plague stakeholders throughout the global supply chain. There are many resultant facets of this phenomenon; in addition to the direct financial cost there are hidden and often more significant consequences connected to loss of market and brand reputation, which leave no stakeholder unaffected. There are additionally incalculable societal costs when considering that the proceeds of cargo theft will frequently finance other illicit trades.

This second study highlights prevailing trends on both a regional and global basis. In terms of the commodities being targeted – whilst no cargo is without risk – overall, food and beverages, alcohol and tobacco and consumer products account for 49% of all cargo stolen globally. Electronics and clothing account for another 12% respectively and together make up the top 5 targeted commodities.

As noted in the previous report, the modus operandi of the criminal fraternity by region is well-established, with some intra-regional spikes in activity.

Regional variations In Europe, over 75% of cargo theft occurs whilst in transit; with ‘slash and grab’ tactics accounting for 50% of all reported losses. This reflects a combination of the very low number of secure parking locations and the lack of enforcement resource to target this type of crime across Europe. Given the high number of unsecured vehicles parked across the region there is little need for criminals to take greater risk in targeting warehouse facilities. The United Kingdom accounts for an overwhelming 86% of reported incidents with thefts performed predominantly on a Tuesdays, Wednesdays and Thursdays.

Across Asia, China and India are the countries where cargo theft is most frequently recorded. The most commonly targeted commodities in the region are food and beverages, metals and electronics, most likely influenced by local market conditions. Whilst theft of cargo in transit is prevalent, the insider threat is more pronounced, as is the risk of theft from warehouse facilities.

The Middle East and Africa region continues to be blighted by less sophisticated but more violent hijackings. Cargo in transit is heavily targeted with tactics such as the impersonation of enforcement personnel often being selected as an effective means of compelling drivers to stop at the road side. Corruption in the region also plays a significant role in cargo theft incidents. Food and beverage cargoes are the most commonly targeted across the region.

In North America there are two distinct intra-regional trends. The first, concerning the United States and Canada, evidencing similar experience to Europe, with the perpetrators focusing on unattended and unsecured vehicles. The second trend is the much more aggressive and violent tactics employed by criminals in Mexico and the Central American countries. Food and beverages and consumer products top the list of commodities targeted in North America. No other region suffers from a higher rate of truck hijackings than South America. Hijacking incidents have been recorded in almost every country in the region in 2018, while Brazil accounts for 68% of all recorded incidents. Theft in transit accounts for over 75% of all incidents, with Tuesdays, Wednesdays and

CIANAM www.cianam.org

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Thursdays being the most frequently targeted. Similar to elsewhere globally, the favourite commodities for criminals are food and beverages and consumer products.

Insider risk One vulnerability identified by BSI and TT Club through data analysis was the seemingly growing risk presented by the “insider”. People prove to be an organisation’s greatest asset, but also, on occasion, a substantial vulnerability risk. As organisations implement increasingly sophisticated physical and procedural measures to protect their assets from external threats, the recruitment of insiders becomes a more attractive proposition for those attempting to gain access.

The report considers this risk exposure in detail, and provides a series of practical considerations and mitigation strategies. The report highlights the importance of due diligence through recruitment and maintaining sound management controls. It is recommended that organisations implement layers of defence, starting with physical aspects, followed by clear management level procedures and policies. Consideration should be given to operating on a least privileged principle, where information and access are limited to a ‘need to know’ basis.

Having a sound communication policy both internally and externally, supported by frequent awareness briefings and training programmes for employees, are considered key strategies to protect businesses. Conducting comprehensive risk assessments to determine the threat landscape and understand the potential exposures will allow businesses the opportunity to prioritise and implement risk treatment options as necessary.

It's a connected world It is clear from the report that the perpetrators of cargo theft are sophisticated and determined. Whilst numerous organisations are making good progress in fighting this type of crime, the criminals are able to adapt and implement new tactics to realise their goals. By sharing the knowledge and advice in this report it is hoped that direct stakeholders in the supply chain will be better positioned to protect their assets, mitigating the potential risks associated with cargo theft. Furthermore, it becomes recommended reading for the broader enforcement community to recognise the connections to other crimes, such as trafficking, counterfeiting and terrorism.

Article by Container xChange, Author: Shaini

Port congestion creates pressure on cargo owners, shipping lines and in turn on Port Management. The Port Management needs to increase efficiency in handling the ships, expand the infrastructure of the ports and hire more workers. These factors collectively force the shipping companies to increase operational costs, as they might lose their credibility to transport goods at the promised time. Congestion also means the cargo can miss their connecting ships or trucks to different destinations and scheduling problems.

An increasingly dangerous threat that Maritime Logistics is facing right now is Port Congestion. It is when ships arriving at the port cannot load or unload, as the port capacity is already full. The only choice for the ships it to queue up and wait for their turn to get a spot at the port. The average waiting time at the ports have gone up, for instance at the German Port of Bremerhaven it has increased from 45 to 55 hours. There is a chain of problems that lead up to Port Congestion, which is then followed by its own set of bad consequences.

In this article, we aim to discuss the reasons behind Port Congestion and what can be done to resolve this situation.

How are shipping companies affected because of Congestion? Ports are an integral part of international trade. According to UNCTAD, Maritime Logistics represents 90% percent of the entire world supply chain. But what is blocking the efficient

CIANAM www.cianam.org

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execution of activities between ships and ports is congestion. And this means shipping companies are losing time and consequentially money. Some major costs apart from time would be, fuel consumption, and at times accidents. Every other cost that could arise from this is directly proportional to the time that the ship spends on the port waiting. In 2012, the National Bureau of Economic Research stated that when the ships don’t unload and are in transit, they pay 0.6% to 2% of the value of the goods every day.

Another impact of port congestion, increased anchorage wait time. Ships usually wait at the anchorage before they can enter the port. Anchorages are locations where the ships can halt and protect themselves from bad weather.

Penalties Demurrage is deeply intertwined with Port Congestion. Demurrage is charged to the owner of the cargo on the failure to release the ship back to the shipping line within the agreed time. Usually, a period of 3-5 free days is given to unload and return the ship. Any extra time beyond the agreed time is called ‘Laytime’ and a penalty is charged. Our blog on Demurrage and Detention explains in detail on how these charges are levied.

While demurrage is a penalty for holding the ships longer, the cargo owner also needs to pay Port Congestion Surcharge to the shipping lines. There is no one way to calculate the Surcharge. It usually involves the cost of running the ship while waiting, such as fuel expenses. Ships usually try to travel faster in the sea to make up for the delay in ports. The Surcharge may be charged as a percentage of the cargo or a percentage of one TEU.

According to the House Committee on Transportation and the Metro Manila Development Authority, Philippines lost 2.5 billion (42 million euros) Philippine pesos a day in the year 2014 due to Port Congestion. The Chittagong Port Authority (CPA) in India, reports that shipping businesses could lose 80 crore Rupees (10 million euros) a month because of congestion.

Where does Port Congestion begin? Globalization has been a major contributor to the increase in World Logistics. The development in technology, increase in global production has multiplied immensely, leading to the distribution of these goods across the globe. The competition in the markets makes sellers increase their competitive ability and they try and send their products to customers in markets far beyond their reach which is enabled by Technology and carried out by Logistics. This increase in demand has skyrocketed the level of goods being transported in all directions contributing to Port Congestion eventually.

To meet this global demand, the world’s biggest shipping line Maersk has been constantly increasing its fleet size. As of July 2019, Maersk has the capacity for 4 million TEUs, out of which 2.3 million is owned capacity and 1.8 million is chartered capacity. 31 of Maersk’s ships has a capacity of 18000 TEUs each. Maersk owns 18.5% of the total world merchant container fleet.

While businesses around the world have expanded business capabilities and the shipping lines have expanded their fleets, the ports haven’t gone through any transition to managing the incoming demand. The infrastructure and workforce haven’t seen significant growth.

CIANAM www.cianam.org

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Apart from the root cause identified here, we have major port-related blockades that cause Congestion,

 Uncertainty in the income of goods: Even though port management do their best to assess the level of goods that arrive at port, the calculation could differ when the ships arrive at the port. The issue now is that the port does not have enough space to hold these ships. Which brings us to the next reason  Lack of Labour: The port might not enough workers to help with towing, pilotage, and clearing the ships of the port. Low wages and mistreatment are some of the reasons workers are known to leave the industry. Workers also go on strikes demanding better pay, which is work not done on the ships.  Loading and Unloading Equipment: Due to the overwhelming ships at the port, there might not be enough loading/unloading equipment to help all the ships.  Locks: There might be a set of locks a vessel has to go through before it can dock, and chances are congestion happens here as many vessels waiting to go through the locks.  Customs Clearance: Customs is another reason for congestion, as sometimes the procedures are very strict, goods might not be cleared for many reasons. When there are threats of terrorism in place or drug control measures, it might affect the flow of goods.  Weather: Weather, which is also an unpredictable phenomenon can cause congestion. For instance, ice formations in winter.

How can we tackle Port Congestion? Congestion is a complicated phenomenon that shipping companies and Governments are trying to solve. Despite the complexity, some attempts have been made to try and ease it;

 One tested method in the is the ‘free-flow’ container delivery system. Usually, truck drivers come to pick up specific containers assigned to them and on an average, a minimum of 3 containers need to be moved to get the assigned container. But instead, if the first container is assigned to the next available driver and so on then it has proved to cut the time into half.  Ports in the US have also been facing heavy congestion. Ports in Oakland have introduced night shifts since 2018 to compensate for the delay and to expedite the clearing of ships from the ports.  Port Expansion and developing the infrastructure in a way to deal with increasing demand will ease things for many elements that use the port. For instance, chassis availability, building the skills of the port workers, retaining the workers with proper remuneration.  Many ports in the world haven’t taken advantage of digitalization. The digitalization of port operations can help in crunching port data and can help anticipate any shortcomings.  An alternative solution would be to use SOC Containers instead of COCContainers because they don’t need to be returned to the port but instead to the depot of the owner of the container. This might not eliminate the problem of port congestion; it helps avoid demurrage and detention charges for the cargo owner.

The world’s first MGX-24 ship, the brand new MSC GÜLSÜN, last week set a new record for the biggest container load ever carried on a single vessel. Upon departure from Tanjung Pelepas, Malaysia, the ship carried a total of 19.574 teu.

The new breed of Megamax-24 container ships is one row of boxes wider than the common Megamax- 23 ships of 20,000+ teu. Thus, depending on their type, they can carry some 1,500 teu more.

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The MSC GÜLSÜN is formally rated at 22,960 teu, though this is believed to be a conservative box count. With 13 tiers assumed on deck, the ship might well carry in excess of 23,500 teu.

Source Alphalinner

London, UK, 31st July 2019

The outlook for global container port demand is modest growth and numerous uncertainties, but in the face of this, capacity expansion plans are also muted. This means that most world regions will see an increase in average terminal utilisation, according to the Global Container Terminal Operators Annual Review and Forecast 2019 by global shipping consultancy Drewry. Drewry’s container port demand forecast for the next five years is for global growth of 4.4% per annum on average, lifting world container port throughput from 784 million teu in 2018 to 973 million teu by 2023, an absolute increase of almost 190 million teu. The latest five-year forecast is a far cry from the heady days of the 2000s when forecasts were around 9% growth per annum until the global financial crisis of 2007-08 brought this to a shuddering halt. The detailed modelling results in varying forecast growth rates at the regional level (see figure below). Several locations are expected to outperform markedly the global average, most notably Middle East/South Asia and Southeast Asia/Far East.

Global container port capacity is projected to increase at a CAGR of around 2%, based on confirmed additions only. This is well below the projected demand growth and reflects the continued easing off from greenfield projects by investors over the last few years. As a consequence, average utilisation at the global level is forecast to increase significantly from 70% in 2018 to 79% by 2023. This though remains a comfortable level for both operators and customer alike. At the regional level, almost all locations are projected to see their average utilisation levels increase. The sharpest upward swings are expected in Greater China and Southeast Asia (with the former hitting 100% by 2023). Referring to China, Neil Davidson, author of the report and Drewry’s senior analyst for ports and terminals said “The previous very rapid pace of capacity expansion is on hold, with the focus instead being on consolidation of port and terminal ownership into large groups. This, plus the uncertainty about China’s international trade growth in the face of tariff wars and protectionism, suggests that the government is taking a cautious approach.” Drilling down to the performance of the individual global/international terminal operators, the top seven players are shown in the table below, with throughput

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adjusted for equity stakes. PSA and Hutchison occupy first and second places respectively, with PSA’s pre- eminence due to its 20% stake in Hutchison Ports. Fortunes varied – PSA volume was up 7% and topped 60 million teu while Hutchison was largely unchanged at just under 47 million. Cosco moved up to third place in 2018 (from fifth in 2017) by achieving over 30% growth, boosted by the OOCL acquisition. This meant that DP World and APMT each dropped one place to fourth and fifth respectively. The latter registered nearly 8% growth, helped by the closer relationship with Maersk Line resulting in more of the carrier traffic directed to APMT facilities. China Merchants (35 million teu) and TiL (26.5 million teu) remained in sixth and seventh places respectively despite both recording double-digit growth in equity-adjusted volume. “A premier league of seven big operators has emerged, after which the next largest player is a third of the size. Between them they accounted for nearly 40% of global throughput in 2018. Within this elite group, Cosco has moved sharply up the table in this year’s analysis,” added Davidson.

Top 7 global/international terminal operators, equity-adjusted throughput, 2018

Projected regional container handling (mteu) and average annual growth (%), 2018-2023

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Surfrider Foundation Europe published a report discussing container loss and its impact in the marine environment. In the meantime, the Association recommends ten measures to regulate a proportion of container traffic, thereby cutting the number of annual container losses.

Specifically, Surfrider Association, is not-for-profit association, under the French 1901 law, whose mission is 'defending, saving, promoting and sustainably managing the ocean, coastline, waves, and the people who enjoy them.'

According to the report, container traffic holds the 80% of the flow of goods transported by sea. Loss of containers is a phenomenon that has fatal impact not only to the shipping industry and its stakeholders, but also to the marine environment. The loss of containers from ships can arise from incidents at sea, accidents or from major safety failures. Meanwhile and in light of the above, the World Shipping Council informed that the most usual factors that cause a vessel to sink, are: 1. Packing issues; 2. Overweight containers; 3. Inadequate planning; 4. Poor lashing performance; 5. Fully automatic twistlocks (FATs); 6. Voyage planning/navigation. Up to now, it is still impossible to accurately measure the scale of these losses. Countries have no common international method to monitor container losses, which constitutes an obstacle to the inter-operability of fragmented databases worldwide. This applies to measurements (TEU and container numbers) as well as data- gathering procedures. In the meantime, container losses are thought of as important as oil discharges or other pollution incidents, but still they represent a highly diverse source of pollution that doesn't fit into any adequate regulatory framework. Yet, container losses have a serious impact on the environment; For example, when the 'Maersk Shanghai' container vessel sank in 2018, many containers were sank and lost at sea. A year later, BBC highlighted that Nike training shoes are being washed up on beaches, from Bermuda and the Bahamas to Ireland and Orkney.

According to the report, amongst the products lost are most commonly:

 food products and their packaging  toys  footwear  medical supplies (drips, bottles)  vehicles  inflammable and hazardous substances (sulphuric and nitric acid)  explosive or radioactive substances  billions of plastic pellets. Despite these cases, pollution from container losses is still difficult to measure. To date, we can estimate the effects of container losses in terms of pollution, but given the lack of data on losses and loads, it is difficult to conduct impact studies on their contents. Overall European and international standards must be urgently adopted to prevent and report losses

The Association proposes ten measures to regulate a proportion of container traffic, thereby cutting the number of annual container losses.

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1. Ensure and police "ship planning" vessel compliance; 2. Ensure proper transparency on container losses; 3. Clarify the legal status of lost containers and related liabilities; 4. Facilitate container traceability and visibility to boost their recovery; Make several safety measures mandatory:

 The phasing out of sub-standard cargos  Give consideration to limiting deck-loaded cargo transport  Introduce a tolerance limit on container weight declarations  Adopting high standards for container quality and stowage systems  Promote unannounced inspections and checks on proper stowage measures and container condition.

JUNE 2019 CONCERN OVER TRADE WARS IMPACTS CONFIDENCE In May 2019, the average confidence level expressed by respondents was 6.1 out of a possible maximum of 10.0. This is slightly down on the figure of 6.2 recorded in February 2019. Confidence was up in Asia, from 5.8 to 6.0, and in North America, from 5.6 to 6.4. In Europe, meanwhile, there was a drop in overall confidence levels from 6.3 to 6.1. The chartering sector continues to be the most volatile in terms of respondent confidence, with ratings varying between 4.7 and 7.7 during the past two years. This time, the confidence level was up to 6.2 from 6.0 three months ago. The ratings for owners and managers, meanwhile, were unchanged at 6.3 and 5.8 respectively, while the rating for brokers was down from 5.9 to 5.7. The survey was launched in May 2008 with an overall rating for all respondents of 6.8 out of 10.0.

IMO 2020 is the main area of concern, along with the state of the world economy and the ongoing trade war between the US and China.

There are many positive underlying trends, indicating that we are past cycle bottoms in most markets, while the lack of boom markets has discouraged over-ordering.

SURVEY ANALYSIS The likelihood of respondents making a major investment or significant development over the coming year was up from 5.3 to 5.4 out of 10.0. Owners’ confidence in this regard was up from 5.4 to 6.3, while the rating for charterers was 5.6 compared to the survey high of 7.3 recorded last time. The confidence of managers and brokers in this category was also down, from 5.6 to 4.8 and from 4.9 to 3.9 respectively. Expectations were up in Asia, from 5.2 to 5.5, and in Europe, from 5.3 to 5.4. The number of respondents who expected finance costs to increase over the coming year was unchanged at 48%. The figures for owners and brokers were down, but up in the case of charterers and managers.

Business performance factors Demand trends overtook competition as the factor expected to influence performance most significantly over the next 12 months, then followed by finance costs.

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FREIGHT MARKETS The number of respondents expecting higher freight rates over the next 12 months in the tanker market was up by 4 percentage points on the previous survey to 55%, with charterers (75%) leading the way. In the dry bulk sector, expectations of rate increases were down overall from 52% to 48%, with charterers the only category recording an increase in expectation levels. The numbers expecting higher container ship rates, meanwhile, rose by 9 percentage point to 35%. Net rate sentiment was positive in all three tonnage categories categories and noticeably improved on the last quarter for container ships.

Baltic dry index

When asked to estimate the level they expected the Baltic Dry Index (BDI) to reach in 12 months’ time, 50% of respondents (compared to 36% 12 months ago) anticipated a figure of between 1000 and 1499, while 22% (42% last time) put the likely level at between 1500 and 1999. “One could be more bullish about the BDI if there was less global tension around,” said one respondent.

Conclusion A small dip in confidence is not surprising given the recent volatility generated by the US-China trade wars, the heightened tension in the Arabian Gulf, the failure to conclude Brexit negotiations, and general political instability in many parts of the world. Markets love volatility, but it can have an adverse effect on confidence.

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Trade wars certainly formed the over-arching theme for this quarter, but they are not the only recurring topic. The cost and technical implications of complying with existing and incipient regulation was referenced on a number of occasions, typified by the respondent who noted that the high level of regulation “makes it extremely difficult to make a profit”. Despite the challenges the industry is facing, there are a number of positive indicators. New technology is making shipping more attractive to investors, and will moreover act as a trigger to accelerate the pace and extent of recycling. Higher freight rates should logically follow, and those who hold their nerve will ultimately benefit. Source BDO

In 2018, the maritime industry saw the number of total shipping losses of vessels over 100GT falling significantly to 46, representing the lowest total this century, said Allianz in its new Shipping and Safety review 2019. To put it into context, there were 207 total losses reported in 2000. Cargo vessels were the ship type involved in a third of losses (15) during 2018.

Key points  Shipping losses declined by a record level of more than 50% year-on-year from 98 in 2017, driven by a significant fall in hotspots around the world and weather-related losses halving after a quieter year of hurricane and typhoon activity.

 The 2018 loss year is exceptional compared with the rolling 10-year loss average of 104 (down by 55%).

 Meanwhile, since 2009, (132), shipping losses have declined by 65%.

 The South China, Indochina, and Philippines maritime region remains the major loss location over the past decade, accounting for 26% of all losses over the past year globally (12). However, this represents a significant fall year-on-year (29 in 2017) and is the first time the region has seen losses decline in four years.

 The East Mediterranean and Black Sea region (6) is the second most frequent loss location.

 Cargo vessels (15) were involved in a third of losses during 2018, driven by activity in the top loss hotspots globally.

 Sinking has been the cause of over half of all vessel losses (53%) over the past decade and was the primary cause of 65% of losses (30) in 2018.

 Ship sinking/ collision incidents are the most expensive cause of loss for insurers, accounting for 16% of the value of all claims – equivalent to more than $1.5bn.

 While the number of losses has fallen significantly over the past year in particular, the number of shipping casualties or incidents (2,698) remains challenging, declining by less than 1%.

 The East Mediterranean and Black Sea is the top incident hotspot, accounting for one in five incidents globally.

 Activity is up in this region year-on-year, driven by machinery damage/failure incidents, which is also the top cause of shipping incidents globally, accounting for 40% (1,079).

 Of the 26,000+ reported shipping incidents over the past decade, more than a third (8,862) have been caused by machinery damage or failure – over twice as many as the next highest cause. Such incidents have increased by a third over the past decade and costs are rising as well. Improved ship design and technology, stepped-up regulation and advances in risk management and safety are driving the sector’s longterm loss improvement. More robust safety management systems and procedures on vessels is also a factor in preventing breakdowns, accidents and other mistakes from escalating into total losses.

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Did you know? Wednesday is the most frequent day for shipping losses over the past decade (169) and Saturday (130) the safest day at sea ! 12 of 2018’s 46 losses occurred on a Wednesday. Risks in the spotlight Larger vessels bring bigger losses: Insurers have been warning for years that the increasing size of vessels is leading to a higher accumulation of risk. These fears are now being realized as evidenced by the growing number, and cost, of incidents such as fires on large container vessels; major losses on car carriers, which average two a year; engine failure; and even the loss of cargo overboard, all of which are potentially offsetting safety and risk management improvements.

Cargo and fire risks mount: Fires and explosions on board continue to generate large losses with an incident occurring every 60 days on average. Fire activity increased in 2018 with 174 reported incidents – a trend which continued through early 2019. Misdeclared cargo, including incorrect labelling and packaging of dangerous goods, is believed to be a root cause of a number of fires and is a problem exacerbated by larger vessels, which can make issues more difficult to detect, locate and combat. However, a growing number of ship owners are taking innovative steps to address the issue of misdeclared cargo.

Emissions cap challenges shippers: 2020 sulphur cap is likely to be a game-changer for the shipping industry with wide-ranging implications for cost, compliance and crew. Insurers are concerned about a potential increase in the frequency and cost of machinery breakdown claims following the introduction of low-sulphur fuels if the transition is not well-managed. There are also worries that the increased cost of such fuels may lead to cost savings in other areas, such as crew training or maintenance. There is also potential for disruption and delays to voyages if there is a lack of compliant, compatible fuel at a bunker port

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Unpredictable climate brings new loss scenarios: The changing climate is opening up potential new shipping routes in previously hard-to-access areas such as the Arctic, which brings concerns about the rescue and salvage challenges an incident involving a large vessel in a remote location would bring, as well as the potential environmental impact. There were 46 reported shipping incidents in Arctic Circle waters during 2018.

Trusting technology: The growing use of connected technology in the maritime sector is a positive for safety and claims. Electronic navigation tools, ship-to-shore communications and the greater use of sensors have the potential to improve navigation and help avoid incidents. Sensors can also reduce machinery claims through performance monitoring and early intervention and help mitigate cargo losses. Yet, at the same time, accidents continue to happen due to overreliance on technology – even down to crew members being on their phones when a loss event occurs.

Automation, crewless ships and the bottom line: Progress continues to be made in the area of autonomous shipping, particularly in coastal waters and with smaller vessels and it is anticipated that such developments will improve shipping safety. While there will be incidences where technology and automation will remove crew from hazard, innovation should not be driven primarily by efficiency and accounting. As ongoing issues with large container ships and fires and misdeclared cargo show – innovation and technology is not a panacea if the root cause of incidents and losses is not addressed.

Identifying cyber exposures: Technological advances also means cyber losses will be an increasing feature of marine claims going forward. Companies are responding with an uptick in cyber security assessments while some insurers are looking to clarify so-called “silent” exposures. More contingency planning and stress testing of systems needs to be done to combat a growing number of loss scenarios, such as extortion.

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Security threats evolve and challenge: Political risk remains heightened around the globe and increasingly poses a threat to shipping, trade and supply chains through conflicts, territorial disputes, cyberattacks, sanctions and, of course, piracy. Piracy incidents increased over the past year, with Nigeria replacing Indonesia as the top global hotspot. Nigeria, specifically Lagos, is also the location of the highest reported number of stowaway incidents – a long running problem for ship owners, which is now also challenging commercial vessels, driven by the ongoing migrant crisis. Stowaways and migrant rescues at sea can have serious consequences for ship owners, causing delays and diversions and putting crew members under pressure, while repatriation is a complex procedure.

Source Allianz 04/06/19

As port and starboard never change, they are unambiguous references that are independent of a mariner’s orientation, and, as a result, mariners use these nautical terms instead of left and right to avoid confusion. 18/08/19

Have you ever wondered why sailors use the terms 'port' and 'starboard', instead of left and right side on ships?

In the past, ships used to have rudders on their centre line and they were controlled using a steering oar. As it is the case today, back then as well the majority of the people were right handed.

Thus, as most of the sailors were right handed, the steering oar used to control the ship was located over or through the right side of the stern.

For this reason, most of the seafarers were calling the right side as the 'steering side', which later was known as 'starboard'.

The word 'starboard' is the combination of two old words: stéor (meaning 'steer') and bord (meaning 'the side of a boat').

The left side is called 'port' because ships with steerboards or star boards would dock at ports on the opposite side of the steerboard or star.

As the right side was the steerboard side or star board side, the left side was the port side. This was decide so that the dock would not interfere with operating the steerboard or star.

Another reason why the left side is 'port' is because it sounds different from 'starboard'. Originally, sailors were calling the left side 'larboard', which was easily confused with 'starboard', especially when challenging conditions at sea made it difficult to hear. The switch was done to lead to a distinctive alternate name.

Namely, the old English name for the port side sounded like 'backboard'. On big vessels, the sailor using the steering would have his back facing the ship's left side.

As a result, 'backboard'was named 'laddebord', which is the loading side of the ship. Later, 'laddebord' became 'larboard', causing the confusion that led to change to port.

This is why ships are using the terms 'port' and 'starboard', as they are unambiguous references that are independent of a mariner’s orientation.

With these terms, seafarers remove ambiguity, and they prefer them over using the terms left and right. Article courtesy of NOAA's National Ocean Service

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