4 September 2003 Volume 349 Issue 6241

p10 Tanker ban delayed p12 Majeure lacks force p25 Have your say Coming clean in

Karachi?p14 Shifting the blame for Tasman Spirit

O’Neil’s successor

sets out his stall p18p14

SPECIAL REPORT JAM FREE TANKER RIVER PLATE: Mingzhu MARKETS Argentina & interchange eases KGs get Uruguay clean up congestion heavy p26 p8 p20

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305152 McCann Erickson 08/06/03 M02EM049#154 Propeller OPINION LOOKOUTLOOKOUT Coming clean in Karachi

Tasman Spirit leaves a fine mess

WHEN something goes wrong, the natural human instinct is to avoid blame. As a disaster unfolds, people act with half an eye on where the blame will fall if they take this or that action. But surely the Prestige demonstrated the utter folly of this mentality? Surely we are capable of learning from such an obvious and recent example? The 27 July grounding at Karachi of the Tasman Spirit suggests that human nature is sometimes beyond learning lessons.

ith Prestige fresh in mind, we packed could answer the question ‘you and whose army?’ Wour correspondent off to Karachi, So this was clearly a serious story worth pursuing, relying on our strong working relationship and the results are in this week’s cover story. But with the Port Trust (KPT). But the media was on top of the undisputed facts, we have heard subjected to a news blackout, as officials sought allegations by many industry sources that we could to throw a blanket over the whole episode. not prove for certain. For example, we were not able It wasn’t long before our correspondent to check what seemed to us KPT’s surprising claim This was, after found himself standing tall before a brigadier that, within an hour of the tanker Forena entering in uniform. First, we were told not to be “over port, tugs were available to carry out an immediate all, a man who smart”, just because our organisation is ‘gora’ (a refloating attempt on the Tasman Spirit. derogatory, racist term used for Caucasians), and In fact, it was not until another senior maritime could answer the then informed we had been declared persona non official intervened that we got to see the KPT grata on KPT premises. Considering the political chairman, Vice Admiral Ahmed Hayat, who question ‘you and dominance exerted by Pakistan’s military, it was was suddenly and graciously declaring our hardly surprising that our correspondent felt whose army?’ threatened. The brigadier was, after all, a man who LOOKOUT continues on page 2

www.fairplay.co.uk 4 September 2003 Fairplay 1

FRPED030904027.indd 1 2/9/03, 20:25:29 OPINION

correspondent to be “friend and brother”. Fairplay pointed out the obvious conflict of interest This attitude certainly reflects on the working to the minister, Ahmed Ali, that the situation was atmosphere at KPT, which is choked with remedied. But even then, people in positions of Head Office anxiety and infested with nepotism. That, in power sought to have their own relatives or political Lombard House, 3 Princess Way, Redhill, Surrey, RH1 1UP, United Kingdom turn, prompts questions about its statements allies appointed to the post of director-general of Tel: +44 1737 379000 Fax: +44 1737 379001

throughout the crisis. the ports and shipping wing. www.fairplay.co.uk

It would have been reassuring to be able to say The minister iced the cake by declaring Publisher that the Ministry of Communications, which that human error, but not any error by KPT John Prime

oversees KPT, had adopted a more sensible functionaries, was to blame, before the new inquiry Editorial approach. But that has not been the case. First, the chief had even been given his terms of reference. Tel: +44 1737 379140 Email: [email protected] secretary to the ministry appointed the chairman of A ranking PNSC insider is quoted at the end of Managing Editor Pakistan National Shipping Corp, charterer of the our cover story as concluding that it is unlikely that G Paul Gunton Tasman Spirit, to head the inquiry. It was not until the truth will ever come to light. We agree. Editor Patrick Neylan-Francis

Daily News Editor Fairplay Richard Clayton A new look for Markets Editor Chris Tomlinson

N its 120 years of the news. It will get under the to you. Reporters publication, Fairplay has skin of the stories that really So the new Fairplay will retain David Hooper, Richard Meade, Damien Carr, Joanna Mortimer, Iain Kingsley, Chris Ichanged its appearance matter to our business. It the strengths of the old Fairplay Partridge, Rob Wilmington several times. But this week will make sense of the but getting even closer to the Sub-editor marks a radical departure. Gone shipping industry in a way that heart of the stories. We will be Catherine Rowley

are the News and News Focus no one else can, and it will be also be talking in detail to the Law Ann Moore sections, to be replaced by a exciting, entertaining reading, people who matter, to bring you section known as Newswatch. cover to cover. the latest trends in the industry Asia Editor Ramadas Rao As well as our famous in-depth How can we do this? We and the current thinking. What’s Email: [email protected] features and award-winning can do it because Fairplay more, there will also be a weekly Asia Office cover stories, our unrivalled has an unrivalled network of Letters page to reflect industry 7500 A Beach Road, 13-323 The Plaza, Singapore 199891, Republic of Singapore Markets section is also being professional journalists and opinion from all levels. For Tel: +65 6 292 7951 Fax: +65 6 296 2335

expanded. industry insiders in virtually lovers of the arcane, we are still Far East Sales Manager: Mark Windle Why are we doing this? Since every maritime country of the running Shoes & Ships – now in Email: [email protected] 1996, Fairplay has led the world world, scouring the industry for its 40th year – as well as a new Americas Editor Michelle Wiese Bockmann with its now essential Daily news and delivering the most round-up of the curious and Email:[email protected] News – sent by e-mail every exciting and incisive stories humorous, known as Captain’s Americas Office working day and updated on from the amazing industry we Log. Fairplay Publications Inc, 5201 Blue Lagoon Drive, Suite 530, Miami, FL 33126, US the Internet. What you have work in. As the new Editor of Fairplay, Tel: +1 305 262 4070 Fax: +1 305 262 2006 told us is that you value this At a time when most maritime I hope you will enjoy the Email: [email protected] service and need more detail publishers are cutting back, cleaner, easier look and the Middle East Editor Tom Hussain and analysis in your weekly wondering how to justify a clearer layouts, as well as the Email: [email protected] magazine. While other maritime continued presence in maritime new editorial features. Please Correspondents publications are content to publishing, Fairplay is investing take some time to explore International correspondents can be contacted via the editorial office rework the stories broken by heavily in a product we believe the new Fairplay, and use our Advertising Sales Fairplay Daily News (sometimes in, with more full-time staff new Letters page to tell us Tel: +44 1737 379700 Fax: +44 1737 379001 they don’t even rework them), working to deliver the stories what you think. Write to me at Email: [email protected] Fairplay magazine readers want that matter. And because we [email protected]. I look Subscriptions Tel: +44 1737 379705 and deserve more. So the new are truly independent, we only forward to hearing from you. Printed by Holbrooks Printers Ltd, Hilsea, magazine will take you behind have to justify it to ourselves and Patrick Neylan-Francis Portsmouth, Hampshire, England

2 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904028.indd 2 2/9/03, 19:14:59 Volume 349 Issue Nº 6241 4 September 2003 Contents LEFT: Karachi residents are unlikely to celebrate the sight of their oil- befouled beaches (see cover story) PROFILES NEWSWATCH: It’s strike the THIMIO THE GREAT? Star; insert LauritzenCool The heir apparent at IMO in NYK’s new reefer pooling talks about stepping into shake-up p5

Bill O’Neil’s shoes...... 18 SPECIAL REPORTS BACK ON AN EVEN KEEL Oil tanker markets respond to US consumption and Iraq’s

resumption ...... 20 CHAOS OVER, BUT WHAT WILL REPLACE IT? The River Plate maritime industry digs itself out of economic PROFILE: There are hidden depths to Efthimios meltdown ...... 26 Mitropoulos p18 ON THE COVER NEWSWATCH COMPANIES & COMING CLEAN IN KARACHI KEY STORIES THIS WEEK MARKETS The circumstances surrounding a Reefer divorce: NYK and Star split; New this week ...... 37 tanker casualty and subsequent oil LauritzenCool moves in...... 5 Companies...... 38 spill at Karachi have degenerated Bitter battle: Endgame among Newbuildings...... 40 into a buck-passing and finger- Dutch shipyards...... 6 Sale & purchase ...... 42 pointing fiasco...... 14 Red tape: New legal hurdle in Fixtures/commodities...... 44

Dry markets/indices ...... 46 Chinese port race ...... 9

Tanker markets/indices...... 48 Who said…? Second thoughts: India postpones

its knee-jerk tanker rules...... 10 It’s amazing that Softly, softly: Crew standards harder REGULARS

any society could to raise than ship standards ...... 11 RIVER PLATE: Different Look Out...... 1 maritime sectors try have classed the ship Navel gazing: Philippines maritime Letters...... 25 different survival industry examines its faults...... 12 in its condition Shoes & Ships and Déjà vu...... 36 techniques in a

Law: When force majeur lacks the Company index...... 51 changing economy p26 see p14 necessary force...... 12 Captain’s Log...... 52 wefd we

www.fairplay.co.uk 4 September 2003 Fairplay 3

FRPED030904022.indd 2 2/9/03, 16:17:21 NEWSWATCH Passion cools as NY SOURCE HE reefer scene experienced its largest The Japanese company will also acquire a 50 FAIRPLAY DAILY NEWS, 28 AUGUST , 2003 shake-up for two years last week per cent stake in LauritzenCool Logistics, a young T as NYK Reefers dumped its partner company that focuses on developing land of only two years, Star Reefers, in favour of transport and IT systems. LauritzenCool. The new pair have announced Earlier this summer, NYK Reefers and Star they will enter a vessel sharing agreement from Reefers decided to exercise a break-up clause January, involving up to 75 vessels. in their two- year-old pooling contract that had vice r e S ture ic P ws Ne er ijv euters R

V , v e y der az an vk v a a K tr ei e x P Ale Photo: Photo:

4 Fairplay 6 February 2003 www.fairplay.co.uk

FRPED030904021.indd 2 2/9/03, 16:28:51 NEWSWATCH YK splits with Star

established NYK Star Reefers, an operation with he said. about 45 vessels in the new arrangement, and some 70 reefer vessels. While diplomatically So what has LauritzenCool got that Star NYK Reefer about 30. complimenting Star, Fumiya Aoki, CEO of NYK hasn’t? “Partnership with LauritzenCool Aoki dismisses the suggestion that Reefers, admitted to Fairplay last week that enables us to provide a more efficient and NYK would be a junior partner in the new there had been differences of outlook: “Star is flexible service to customers including a reefer arrangement: “Partner situation is equal. basically a traditional/conventional shipowner, logistics service developed by LCL,” Aoki said. However, being professional reefer operators while NYK is focusing on service to customers,” LauritzenCool will provide with a similar service-orientated business philosophy, I do not see any problem for decision-making.” Snubbed NYK has attempted to get Star Reefers to join LauritzenCool as well, revealed Aoki, adding: “Our door is still open for them.” partner Star But Aage Thoen, the Norwegian CEO of Star Reefers, says the company plans to head has spurned another way: “We are not enthusiastic about following that avenue for the time being,” he told Fairplay. He stressed that Star Reefers the idea of a prefers an arrangement in which risks are equally shared between owners and pool operators. “Alignments need to be the same,” threesome Thoen said. “If they are not, efficiency will suffer.” Ignore safety at your peril

NE SEAFARER died when a 2,500-tonne cargo of crude on the Tyumen Oil Co tanker Victoria (pictured left) caught fire on the Volga river on Saturday morning. The Leninneft-type tanker is owned by Anship, a small operator with just six vessels. The incident occurred at the OOctyabryskaya terminal, near the city of Samara in Russia. Fairplayunderstands that crude oil loading is not allowed at the terminal, and that the fire appears to have been caused by a violation of safety measures. The fire was first spotted and reported by a passing Volgotanker vessel. Volgotanker’s strategy director Andrei Kleymenov told Fairplay: “The incident reveals the danger of small shipping companies ignoring safety standards, and lacking the infrastructure to safeguard oil shipments.” Volgotanker, Russia’s largest oil shipper, has been working with state authorities to prevent oil spills and other hazards resulting from the accident G

www.fairplay.co.uk 6 February 2003 Fairplay 5

FRPED030904021.indd 3 2/9/03, 16:29:23 NEWSWATCH Dutch yards reach a b

SOURCE: up. “The current market for them FAIRPLAY DAILY NEWS, AUGUST 27, 2003 can be considered absolutely non- LAST week’s accusations by Jan existent because of the problems Houweling (see right) show just in Singapore in obtaining sand how bitter the fight for survival from Indonesia,” pointed out one has become among Dutch yards. industry insider to Fairplay. And Van der Giessen’s parent, IHC many orders for large ferries are Caland, cited its empty orderbook going to Asian yards. as the prime reason for its decision The tiff illuminates just how to close its subsidiary. Houweling shaky Dutch shipyards are. Ruud has his own views on why his Schouten, MD of the shipbuilders’ orderbook was empty, yet his association VNSI, expects rival, Damen, was facing a similar other yards to follow van der problem. With an uncertain future Giessen unless the government from the naval sector, Damen introduces financial instruments needed the work as well when a – such as a guarantee fund or tax- ro-ro ferry order was up for grabs. lease schemes – that he says are What made it galling for van VAN DER Giessen-de Noord’s it supported by building large available in most EU countries. der Giessen was that ferries, along covered building berth dwarfs dredgers as a subcontractor for He argues that the Dutch with offshore vessels, formed one this ferry newbuilding during IHC Holland, another IHC Caland government has been dragging of its main specialisms, which its busiest period in 1999 subsidiary. But this work also dried its feet on this issue since 2000. However, whether their availability would have helped TIMELINE Landmarks for IHC Caland and van der Giessen van der Giessen is doubtful: it is ! 1965 Four dredger builders merge and form IHC Holland, which ! 1997 Van der Giessen-de Noord is taken over. This yard enables IHC the smaller yards that are most subsequently cedes its offshore activities to Rijn-Schelde- Holland to build the largest dredgers being ordered at the time. in need of financial facilities, one Verolme (RSV), following strong government pressure. As an independent yard with only one slipway, van der Giessen observer suggested to Fairplay. ! 1985 After the bankruptcy of RSV, IHC Holland buys back offshore found it difficult to keep its workforce occupied continuously. Some have already closed, specialist Gusto Engineering. ! 1998 Delta taken over, enabling IHC to offer tugs and work boats. although those were mainly ! 1988 After some difficult years for IHC Holland, a financial ! 1999 With more orders than it can cope with, van der Giessen buys building sections and lost work restructuring follows whereby its foreign subsidiary IHC Inter nearby YVC Ysselwerf after its bankruptcy. when groups such as Damen and becomes the holding company IHC Caland. ! 2000 Van der Giessen accepted a number of orders that many believe Volharding switched their hull ! 1993 IHC Caland buys Merwede Shipyard, a competitor in the market put it under pressure and led to some optimistic pricing. subcontracting, if not complete for dredgers, enabling IHC to enter bid for other vessel types. ! 2001 Van der Giessen received its last order, a ferry for French account. vessels, to East European yards.

27 AUGUST 27 AUGUST 27 AUGUST THE LAST Sealand salvage Tasman salvor PTP parent denies master pessimistic brings in new tanker Singapore talks THE salvage master SEVEN GREEK salvor Tsavliris THE parent company of MORE responsible for efforts has called in 6,375-DWT Port of Tanjung Pelepas to refloat the stranded tanker Sea Angel to assist has denied media reports Sealand Express does not in lightering the stranded about negotiations for co- expect the next attempt Tasman Spirit. operation or merger of PTP DAYS will be successful. with rival PSA Corp.

6 Fairplay 4 September 2003www.fairplay.co.uk

FRPED030904011.indd 2 1/9/03, 13:53:39 NEWSWATCH

Dutch yard accusations fly THE usual amicable co-operation between Dutch shipbuilders appears to have been blown apart by an Giessen-de Noord bitter end accusation laid by Merwede and van der MD Jan Houweling that Damen Shipyards contributed to van der Giessen’s closure. Houweling alleged that van o-ro ferry order der Giessen trimmed the price for a r Seconds out, round two from Dutch operator TESO from €43M to below €40M s Vlissingen-based ($46.7M-$43.5M). However, Damen’ with a basement-level HIS is not first time that van der Giessen-de Noord’s parent subsidiary Schelde secured the order eady IHC Caland has been involved in a spat with a rival over a low €36M. However, Schelde MD Renee Berkvens had alr T ncern bid. In December last year, it lodged a complaint with the European warned that his yard’s orderbook was becoming a co completion in Commission (EC) against Izar of Spain, which had quoted a with the final two frigates scheduled for substantially lower price for three complex chemical tankers. 2005. Observers in the Netherlands told Fairplay that the ne any further naval Meanwhile, the EC is querying Spain regarding its heavy support current political climate would postpo for Izar’s naval shipbuilding during the past two years, which orders, with the possible exception of a transport vessel. egarded as an, it believes may have been used to cross-subsidise commercial Building for the commercial market is now r shipbuilding. Spain, of course, vehemently denies this suggestion, albeit partial, stopgap. arguing that the EC should not investigate subsidies for naval orders.

www.fairplay.co.uk 4 September 2003 Fairplay 7

FRPED030904011.indd 3 1/9/03, 14:01:43 NEWSWATCH Yantian’s problems of plenty

IF, as expected, Yantian Inter- national Container Terminals (YICT) in Chinaís south- ern Shenzhen port achieves throughput of 5M TEU this year, it will become only the second terminal in the world to handle an average of a million TEU per berth. That mark was fi rst reached in 2001 by Container Terminal 3, the one-berth facility operated by CSX World Terminals at Hong Kong. But can YICT cope?

Of the 5.5M TEU handled at Shenzhen’s four main terminals in the first seven months, around half passed through YICT. At this But there are also concerns over season gets under way. “Yantian are a bit worried.” rate, Shenzhen’s throughput for the looming congestion at YICT is already chock-a-block,” said Jim Alan Lee, MD of CSX World the whole year would top 10M and other Shenzhen terminals Poon, chairman of the Hong Kong Terminals, shares those concerns: TEU and Yantian half that. as the peak Christmas shipment Liner Shipping Association. “We “Congestion at Yantian will be worse this year because manufacturing capacity in South China is growing very Is YICT’s level of growth sustainable? fast,” he said. “Although they GROWING volumes have made YICT a Handling charges at YICT average Hutchison Port Holdings, parent of have cleaned up the container very profitable operation. Although $1,000 per TEU, lower than $1,400 at YICT, doubts that Shenzhen’s growth yard and expanded it, the road Kenneth Tse, YICT managing director, Hong Kong, but higher than the $600 rate will persist as it is already “at a very infrastructure outside YICT would not be drawn on the subject, and $500 charged at the smaller Shekou high level”. He said the US economy remains inadequate.” shipping analysts say operating Container Terminals and Chiwan was the key to the port industry in the But YICT MD Kenneth Tse margins at YICT are in the region of 50 Container Terminals, both located in second half of the year as it affected assured Fairplay that adequate per cent, about the same as affiliate western Shenzhen. market demand and, in turn, flow of measures had been taken to Hongkong International Terminals. But John Meredith, group MD of containerised cargo ! ease congestion at the terminal.

27 AUGUST 28 AUGUST 29 AUGUST 29 AUGUST THE LAST 1,300 passengers Korea to build super Malta defends FMA boss sacked stranded at sea container ports Tasman condition A Court of Appeals in SEVEN DETAILS have emerged SOUTH Korea is to MALTESE flag state Helsinki has ordered MORE in Jeddah of an Egyptian initiate a huge project officials investigating the the head of the Finnish ship that drifted in the to design ports able to grounding of the Tasman Maritime Administration Red Sea for more than four accommodate 12,000-TEU Spirit defended the vessel to be dismissed from his days last week with 1,300 ships, which are expected itself as being “in very good job in connection with a DAYS passengers on board. to emerge from 2010. condition”. bribe case.

8 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904014.indd 2 1/9/03, 17:41:02 NEWSWATCH

“We are gearing up for the peak season but we are Investment stumbles over stressed” Kenneth Tse, YICT example, the Phase II expansion managing director Chinese by-laws of Xugou, part of the port of Lianyungang, already enjoys a majority foreign stake. On the LEFT: New developments other hand, the massive $887M at Yantian, including a new Qianwan container terminal flyover, should ease the project at the port of Qingdao, congestion that last year saw which aims to create an annual hauliers held in jams for up to capacity of 6.5M TEU, is still 14 hours at a time and ships limited to a foreign component waiting up to 24 hours of just 49 per cent. Local authorities are not “We are gearing up for the peak alone: the central government season. We are managing,” said is currently framing suitable Tse, although admitting that by-laws to help implement the they are stressed. He said that new law. This “bureaucratic the terminal would be happy to FOREIGN investors eyeing Shanghai is hungry for roundabout”, as one observer handle 800,000TEU per berth up a piece of China’s port pie foreign capital to fund its called it, “may be typical this year, but it can’t predict the are going to have to restrain ambitious expansion of economies that, though traffic flow. It handled 400,000TEU themselves just a little bit longer. impatient for growth, find it “very smoothly” in June, the Although a new law sanctioning Island (Fairplay, August 28). somewhat difficult to break free number for the peak period last majority foreign ownership Although finance for the first of established conventions.” year, he said. That was achieved was passed in June, and is due phase has been tied up, further Despite the delays, much by installing more equipment, to take effect from January work would necessitate quite a progress has been made in increasing on-dock storage space 2004, many ports fall under large chunk of foreign capital. China and there is no dearth to 150,000TEU and renting six off- provincial jurisdiction and local Guidelines issued last April of foreign players eager to dock warehouses. governments need specific by- recommended removing do business. And most are A new flyover leads directly laws before they can implement all equity restrictions on said to prefer working with a into the terminal, reducing the the new dispensation. So, despite investments from foreign local partner. So government time truck drivers had to spend a green light from the People’s companies, which had been officials are optimistic about negotiating the road in front Congress, foreign investors limited to taking only a 49 per foreign investment flowing into of the terminal. Work on the must still bide their time. cent share in a project. But port development projects. Mingzhu interchange leading “All ports in China are there had been some confusion “Chinese ports are opening up into the terminal and a highway waiting for the authorised by- over whether port investments to foreign investors completely,” is progressing well, ready for the laws,” Li Bin, an official of the were covered. The new port law said Wang Jinwen, director opening of the first berth of phase Administrative Bureau of the emphasises their investment of port administration in three in November. Shanghai Port, told reporters. status alongside a wide the Waterways Transport During the peak season last Her bureau is currently making range of other topics, such as Department of the Ministry of year, ships had to wait for up “suitable adjustments” to technical requirements for port Communications. to 24 hours before berthing comply with the new law and construction, spurring local But he warned that the and truckers had to queue for has a big incentive to do so: administrators to implement the government would also about 14 hours to get into the Shanghai has chalked out a earlier guidelines. promulgate regulations terminal. “Hopefully, that will multi-billion dollar container That is proving to be a “relevant to foreign investment not happen this year,” Tse said. terminal project in Yangshan slow and patchy process. For in ports” to ensure safety. Those The terminal took delivery of six eager to reap the benefits of RTGs last month, the first batch The Administrative Bureau of the Shanghai Port is currently China’s economic boom would of equipment for phase three, making “suitable adjustments” to comply with the new law do well to brace themselves for which will have four berths ! tight monitoring !

www.fairplay.co.uk 4 September 2003 Fairplay 9

FRPED030904014.indd 3 1/9/03, 17:41:30 NEWSWATCH Age concern afflictsChina eldt f f

INDIA’S ban on ageing, foreign-ß agged tankers from entering A its waters should have come into force on Monday of this week

(1 September). But it will now be April 1 next year before Joachim

modiÞ ed rules takes effect. Photo:

It was just two months after allowed to enter Indian waters. Chhatrapati Shivaji is one issuing his controversial order The Tasman Spirit episode only of six ageing SCI crude on 11 June that India’s Director reinforced his resolve. oil tankers that are being Freight General of Shipping (DGS), While drafting the guidelines, scrapped at Alang Gajendra Singh Sahni, had to eat Sahni received overwhelming humble pie. support from charterers and will be difficult to implement and rate fears On 14 August, Sahni modified shipping lines on the need to will entail huge liabilities for oil the order to include Indian-flag protect India’s coast. But a ship’s importers. But Sahni’s order can ALTHOUGH Indian shipping industry vessels. His about-turn also saw age is not the only criterion be circumvented by changing the executives agree with the intent of chemical and gas tankers that on which to judge safety, they terms from FOB to CIF, with the the Director General of Shipping’s could be chartered by Indian pointed out. “A well maintained seller arranging shipping. “How decision, many feel that it could operators and oil terminal vessel is virtually free from safety will the guidelines be enforced in restrict the availability of vessels, operators being removed from risks. In fact, some single-hull oil such an event?” asked one analyst. forcing freight rates to soar. Of the guidelines, ostensibly at tankers are better maintained The government can at best direct the domestic shipping lines, only the behest of a few Indian lines than double-hull tankers,” a senior all major ports under its control Shipping Corp of India will be hit, as specialising in the field. This move official at the Indian National Ship not to allow in ships that defy the others have modern fleets. “We are ensured that the norms became Owners’ Association (INSA) said. guidelines. But even this will entail certainly affected by the decision,” only applicable to crude oil and The official crude tanker fixture huge liabilities for charterers. said an SCI official. This would leave product tankers, regardless of statistics for 2002 reveal that “And what about tankers SCI with no option but to go for a flag, and it is these rules that will nearly 45% of the 370 oil tankers calling at non-major ports owned CAP rating of its ageing tankers to come into force next April. He chartered in by oil companies and by state-governments and ensure eligibility to haul cargo for also made the CAP 2 (Condition shipowners were 20 years old or private entities,” asked the analyst. Indian entities until single-hull Assessment Programme) rating more. And of those, 106 were of “Who will give directions and tankers are phased out by 2015, as mandatory for 20-25-year old double-hull construction. check whether these have CAP 2 per IMO regulations. crude and product tankers Analysts say the guidelines ratings or not?” !

30 AUGUST 1 SEPTEMBER THE LAST Arnold Maersk Italians offer maritime delivered to AP Møller rebate SEVEN AP Møller took delivery of the ITALIAN transport minister Pietro Arnold Mærsk from Odense Steel Lunardi is to reward road hauliers END Shipyard. As usual, the company who opt for rail or sea transport refused to confirm its container instead of using motorways. capacity, though Fairplay estimates DAYS it at 7,500 TEU.

10 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904013.indd 2 1/9/03, 17:35:08 NEWSWATCH

Many Indian entities feel that [Sahni’s decision] could restrict the Standards on the up in Oz..? availability of THE standard of ships fatigue, which in turn leads to chairman Dr Ken Moss said vessels, forcing calling at Australian ports accidents, such as groundings Australia was recognised for freight rates to soar] has improved markedly. Who due to navigational errors. its uncompromising approach says? None other than the ìThere is no question that on port state control and Australian Maritime Safety things are improving as far as substandard ships. He pointed to Major crude importer Authority (AMSA). Its greatest the hardware is concerned, but a 15 per cent fall in deficiencies Indian Oil Corp (IOC) has challenge now lies in raising the tackling the human ësoftwareí on ships trading to the bulk backed director general competency of shipís crews. side of things is a lot more commodity region of Western Sahni, saying that it would Chief executive Clive challenging,î he declared. Australia in the past two years. not be affected by the ban on Davidson told Fairplay ìThere may be something AMSA marine surveyors had ageing tankers. “We move all added that investigations like 100,000 ships worldwide focused particularly on bulk our crude cargoes in VLCCs, into accidents in Australian and these can be identified, carriers, which tended to be which are mostly young, not in waters by the Transport Safety but trying to identify the many older and less well maintained Aframax and Suezmax carriers,” an Bureau (ATSB) indicate millions of people that crew than other classes of ships. IOC spokesman said. that human error has been a ships is not so easy.î This is borne out by a high loss However, other state-owned constant feature. Pressure on In an address to a maritime rate experienced in the early refiners such as BPCL and HPCL say crew sizes often contributes to industry workshop, AMSA 1990s, with seven sinking off they would be unable to absorb the Western Australian coast higher freight rates for chartering AMSA will in 1990 and 1991. Dr Moss said younger tankers. “Considering the AMSA was continuing to look wafer-thin refining margins, we continue for new ways to identify and would have to pass on the higher investigating weed out substandard ships. freight costs,” a BPCL official said. The port state control body is The government’s chartering wing, new ways to examining options to strengthen Transchart, which makes shipping identify and co-operation with the shipping arrangements for cargoes belonging industry, particularly cargo to state-owned entities, would also weed out and charter interests. It wants be hit. “Sahni’s decision would cost substandard to emphasise the need for oil importers dear. The guidelines those interests to avoid being will lead to restricted availability shipping associated with unsafe and of vessels, increasing oil importers’ Clive Davidson, potentially polluting ships. shipping costs, and consumers will ìThere is no room for end up paying more,” an official said. CEO, AMSA complacency. AMSA will “Indian charterers cannot charter continue investigating new tankers older than 20 years if they do ways to identify and weed out not have CAP 2 ratings,” he noted ! substandard shipping,î warned Dr Moss !

36 SEPTEMBER 4 SEPTEMBER 34 SEPTEMBER THE NEXT Another effort in Tricolor salvage Breaking the ice Cape Town The team leading the The Northern Maritime SEVEN A fresh attempt is expected salvage of the stricken Corridor group meets to to be made to refloat the Tricolor expects to start discuss developing trade END containership Sealand making the fifth cut on in the northern North Sea Express this week after the wreck, this week. and Arctic further dredging and cargo The fourth is awaiting DAYS removal. removal

www.fairplay.co.uk 4 September 2003 Fairplay 11

FRPED030904013.indd 3 1/9/03, 17:35:41 NEWSWATCH Primer to rescue Ph

WHATíS wrong with the Philippines shipping industry? The shipping industry. It includes countryís Maritime Industry Cluster (MIC) thinks it knows programmes for the short- and long-term future and the vital role and has published a briefing about it. This recommends that the government will play. strategies to get it back on track, and itís free! The MIC has traced the ills of the industry: from antiquated shipping ON THE FACE of it, the Philippines 1970s, more aggressive neighbours laws to lack of financial incentives has everything it needs to be a have edged the Philippines out and confusing regulatory policies. great maritime country. It has a as the country failed to come to The thicket of laws implemented rare combination of a flag register terms with globalisation and trade since the Americans kick-started (510 ships of 300gt and over), liberalisation. the sector after World War II are management expertise and a huge MIC’s book, The Next Wave, was enumerated and explained, pool of seafarers. Yet, since the born from a series of workshops while graphs are used to compare that started in 2001. From these the situation of local shipping “The local shipping industry emerged the Maritime Industry investors to those of other maritime Development Action Strategy countries. The Next Wave concludes eldt

has much ground to make (Midas) for 2003. It is probably the f f up to achieve the world- most thorough and clear-headed RIGHT: Seafarers are one of the A document for anyone who requires Philippines’ greatest assets, class service provided by a comprehensive insight into the but the rest of its shipping Joachim

counterparts elsewhere...” present state of the Philippines’ industry is falling behind Photo: Court dismisses force majeure excuse

A MACEDONIAN oil refinery’s breach of a to supply it with crude. The contract was valid the Former Yugoslav Republic of Macedonia ten-year contract with a Greek oil company until March 2003. Okta admitted the breach (FYROM) requesting Okta not to perform was not due to force majeure in compliance in1999 but claimed it was due to pressures the contract amounted to force majeure, or with governmental requests, the London beyond its control – force majeure – in obeying whether Okta had itself instigated the letters, Court of Appeal has ruled. government requests. A Commercial Court under (presumed) pressure from Hellenic, The Court dismissed an appeal by Skopje- judge rejected this, holding the refinery had after the November 1999 injunction and the based Okta Crude Oil Refinery and ordered decided to discontinue the arrangement breach of the agreement. it to pay damages of $9.4M to Mamidoil-Jetoil “for purely commercial reasons”. Okta had Following that injunction, FYROM’s Greek Petroleum for breach of contract. encouraged the Macedonian government to minister of trade wrote that it was against Solicitor Angus Johnson, of Stephenson write the letters, which urged the refinery to the republic’s economic interests for Okta Harwood, says the decision “underlines the deal with a different company. The requests to pay Jetoil’s price for handling oil at a importance of parties acting independently were therefore not made “independently”, “substantially higher” price than that offered if they wish to rely upon force majeure and and were not ‘governmental authority’ under by “another company” – a statement later the risks involved in dealing… with foreign the contract’s force majeure clause. proved untrue. governments in emerging markets.” The central issue was whether letters from Jetoil accused Okta of complicity, which Jetoil sued Okta for breaking a 1993 agreement giving it the exclusive right of Okta said its breach of contract was due to pressures beyond its control – force manipulation of non-heated crude oil, which majeure – in obeying government requests not to perform the contract. But the Okta had bought for its own account at its Skopje refinery, with a right of ‘first refusal’ agreement was breached before any requests were made

12 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904010.indd 2 1/9/03, 13:15:07 NEWSWATCH hilippine shipping What’s in it for you? The 100-page primer contains: ! list of government agencies ! history of the shipping sector regulating the industry ! la ws that governed the sector ! comparative freight rates in the ! history of cabotage domestic trade, intra-Asia and ! statistics on domestic and global trade overseas shipping, seafaring, ! port charges and other service shipbuilding and ship repairs fees

that the local industry has much Industry Cluster Secretariat, ground to make up to achieve the Ground Floor, Stanford Tower world-class service provided by Condominium 1870 MH del Pilar counterparts elsewhere. Str, Malate, Manila, Philippines. Tel: The Next Wave (A Primer for the +632 4041260 or +632 5214231; Maritime Industry Development Fax: +632 4041261; E-mail: Action Strategy 2003) by Maritime [email protected]. Price: free !

Family feud fuelled dispute it strongly denied, insisting the ministerial THE background to this case was “a long-standing quarrel between The Greek state oil company, Hellenic Petroleum, acquired control instructions amounted to force majeure. two branches of a Greek family”, said the appeal judge. Jetoil was of Okta through a joint venture company called Elpet. However, the judge ruled the breach was set up in 1969 by Kyriakos Mamidakis following a quarrel with Worried by the threat from its rival, Jetoil obtained an not due to ìcompliance with the request of a his uncle, George Mamidakis, who had had an installation at injunction preventing Okta from parting with any assets unless governmental authorityî, but resulted from Thessaloniki since 1956. In1972 Jetoil built its own facility there. the transferee would honour its1993 contract. By July 1999 Okta Oktaís decision to contract with Hellenic Both firms contracted with Okta and its predecessors for the had chosen to deal with Hellenic and abandon the Jetoil contract. instead of Jetoil. This led to the November receipt, storage and delivery of crude oil at Skopje. Jetoil got another injunction, ordering Okta to comply with the injunction, which presented Okta with In 1999 Okta, originally owned by the Yugoslav government, agreement, but when Okta was clearly not going to do so, Jetoil ìsevere short- and long-term difficultiesî. The was privatised by the Former Yugoslav Republic of Macedonia. sued for breach of contract. Okta pleaded force majeure ! FYROM letters were not ìrequests beyond Oktaís controlî, having been initiated by Elpet and their English solicitors agreed that consideration to the issue at allî amounted Okta when it was in financial difficulties. The if FYROM did not produce ìforce majeure to a ruling that the request was not ìbeyond aim was commercial support rather than lettersî, Okta would be ìunable to resist a Oktaís controlî. The appeal was dismissed public interest. claim for substantial damages by Jetoilî. and permission to appeal to the House of Lord Justice Longmore, giving the appeal The appeal judges upheld the decision Lords refused ! judgement, decided the critical question that the letters were not a ìrequest by a was not when the breach had occurred but governmental authorityî, and the failure Okta Crude Oil Refinery AD V whether Okta had instigated the requests, to perform was not ìattributable to that Mamidoil-Jetoil Greek Petroleum Co SA; as Jetoil alleged. He accepted the judgeís requestî. The judgeís view that there was no Moil-Coal Trading Co Ltd. factual finding that in November 1999 Okta, evidence that FYROM ìgave any independent CA, July 17, 2003

www.fairplay.co.uk 4 September 2003 Fairplay 13

FRPED030904010.indd 3 1/9/03, 13:15:27 COVER STORY How to mess it up It began as a minor story: an Aframax tanker had touched bottom in a sandy channel entrance in Pakistan. But as all the parties involved rushed to cover themselves rather than deal with the developing crisis, a minor incident became an object lesson in how not to handle a maritime

crisis. Amid the choruses to bring in a tanker laden with 67,532 TURKMENISTAN tonnes of Iranian light crude. Between of denials and blame- high and low tide at 1614 hours, a 1.3m AFGHANISTAN differential in the channel’s 12.1m depth

shifting, investigations by was due, exclusive of monsoon swells, PAKISTAN according to charts obtained by Fairplay. IRAN Maqbool Malik and Tom The fact that another tanker, Forena, had INDIA

been brought in immediately beforehand Karachi Island Hussain suggest that the only served to highlight the risks being Manora Piers taken by Karachi Port Trust (KPT) KPT Oil disaster could easily have functionaries that blustery day. As Tasman Spirit crept around the been averted Manora Island breakwater it was met by ebbing tides. With a southwestern squall Tasman Spirit grounded thrusting the vessel from behind, it was unable to make the northwestern turn “Both engines and, according to sources close to his By Thomas Hussain and ended up bow-first in mudbanks. family, is receiving counselling. Middle East/South Asia Editor The situation might still have been were weak and it None of the KPT officials involved retrievable, had tidal conditions been is amazing that have a tankering background, but that suitable for re-floating the tanker, but cannot be said of the Greek master, who they were not until 2122 hours. any society could could have waited for the next high By Maqbool Maliq However, KPT was in a hurry and sent have classed tide. But he didn’t, instead proceeding Foreign Correspondent six tugs (four of its own, two borrowed at the pilot’s tentative speed, which from the Pakistan Navy) to drag the ship the ship in its was between seven and nine knots and back into the channel. A second attempt condition” not enough to manoeuvre around the at high tide and third the next morning Senior KPT Manora bend in the conditions. VERY 14 August, thousands of also proved futile. The KPT chairman believes the revellers gather on Karachi’s official weather was the major factor in the EClifton and Defence beaches to WRONG SHIP AT THE WRONG TIME grounding, saying the pilot and master celebrate Pakistan’s Independence Day. Karachi-based tanker masters were alike were caught off balance by a Not this year, though, as paramilitary highly critical of the actions of all sudden deterioration in conditions. “The forces and police sealed off the area, involved in what should have been weather pattern that day was generally warning of the health hazards posed by a routine trip up the channel. They bad, but for 15-20 minutes, there was a thousands of tonnes of crude oil that was contended that KPT deputy conservator sudden thrust of very, very strong winds. spilling from a crack in the Polembros Capt Iftikhar Ahmed should not have Had the ship’s master or the pilot known Aframax tanker Tasman Spirit. ordered the pilot, Capt Javed Nasir, to in advance that the weather was going The first clue to what had gone wrong bring the vessel in. In any case, they say to deteriorate so suddenly, they would came from the timing of the grounding: the pilot should have recognised the not have entered the channel,” Admiral 1257 hours on 27 July was well after dangerous nature of the situation and Hayat told Fairplay. high tide at 1033 and not the ideal time refused. He has been ordered off duty KPT management does not agree that

14 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904005.indd 2 1/9/03, 8:58:39 The Tasman Spirit saga

flawed judgement by its operations team was to blame. “Both engines were weak and it is amazing that any society could have classed the ship in its condition,” a senior KPT official confided on condition of anonymity. ClassNK classes Tasman Spirit. Tanker agents estimate the tanker’s speed at seven knots, while Pakistan National Shipping Corp (PNSC) chairman Tauqeer Hussain Naqvi, himself a retired vice admiral, said: “As far as I can recollect, it was travelling at eight or nine knots.” He was backed up by his executive director, retired commodore Rashid Ullah, who maintained the grounding was due to loss of steerage arising from rough seas and possible master error, and had nothing to do with the ship’s engineering. Tanker agents said the tanker should have been travelling at 14 knots, but Naqvi dismissed this, saying: “You can’t go faster than ten knots. Tasman Spirit went a little slower.” WRONG SHIP AT ANY TIME? Certainly, any engineering flaws should have been identified during the port state control inspection at Kharg Island on 22 July. Polembros operations manager Nikos Karagiannis reacted stoically to the KPT allegations: “There is nothing wrong with the ship,” he told Fairplay on 11 August, three days before the tanker split at its centre. Just as contentious was what happened next. During KPT’s attempts to refloat the vessel on 28 July, an unhealthy quantity of crude found its way into waters at the mouth of the harbour. Fairplay was tipped off about this by reports issued on 29 July by the official Associated Press of Pakistan (APP) and Reuters, both of which quoted unnamed KPT officials as saying one of the vessel’s tanks had been drained in to lighten it and facilitate a refloat. With the chairmen of KPT and PNSC directing operations in person, the anonymous official was implying that the port authority and the charterer had

As some of Karachi’s premier beaches are fouled, the hunt is on for a scapegoat

www.fairplay.co.uk

FRPED030904005.indd 3 1/9/03, 8:58:56 COVER STORY

agreed to deliberately create an illegal spoken of. However, Admiral Hayat spill for a “higher purpose”. said booms belonging to both KPT Fairplay contacted Commodore and MSA had been deployed, and Baber Bilal, director-general of nearly all the spilt oil gathered with operations at the Maritime Security skimmers and loaded on to a barge. The Agency (MSA), whose assistance booms had presumably been removed had not been requested by KPT up to before Fairplay toured the area. But that point. He confirmed the APP and masters gathered at the offices of the Reuters reports, estimating that about Fishermen’s Cooperative Society said 2,000 tonnes of crude oil had been they had seen oil leaking unchecked evacuated. “They took advantage of over the three days following the the heavy weather and drained this grounding. In fact, booms were first comparatively small volume of oil, fishing boat Al-Khyber and undertook Above: how the deployed later that night when the knowing it would be dispersed by the a perilous trip around the grounded local press saw it... Tsavliris team arrived on 5 August. monsoon,” he commented. Tasman Spirit. While a two-metre The Dawn’s cartoon KPT deputy conservator Capt Iftikhar slick was observed heading eastwards FROM 250 TO 1,500 TONNES Ahmed vehemently denied these away from the channel, there was It was not until 8 August that the deputy allegations. “Our people are on the spot no sign of the booms Capt Ahmed had conservator came up with a realistic round the clock, and we have placed booms and skimmers to contain the leakage,” he said on 30 July. The next day, however, he allegedly denied ever Mounting costs for owners and insurers... speaking to Fairplay when leant on by the ACCORDING to KPT chairman Vice Admiral Ahmed Hayat, the Rs10M ($172,400) fine laid at Polembros’ door (see below) is only the start. KPT general manager of administration, However with Pakistan not yet signed up to any international compensation regime, the legal position of Polembros and its P&I club is unclear. Brigadier Iftikhar Rashid, who later “The shipowner and P&I club are currently acting as though the [Civil Liability (CLC) and International Oil Pollution Compensation Funds contradicted Fairplay Daily News reports (IOPC)] conventions did apply. The legal position, however, is unclear at this point in time,” explained Dr Tosh Moller, technical manager for the as “figments of thought, considered International Tanker Owners’ Pollution Federation, speaking to Fairplay. baseless, hence strongly refuted”. Apart from the cost of using local tugs and equipment, substantial bills are already mounting from the salvage operation. There are also the By this stage, the veracity of the inevitable third-party claims. “It is still very early to start talking about compensation. As far as I understand, our P&I club is spending more deputy conservator’s statements came than they are obliged to. This is likely to continue,” Nikos Karagiannis, Polembros’ operations manager told Fairplay. The American Club insists under further scrutiny by a Fairplay that it is still too early to predict the size of the claims. “We are not certain at the moment about the legal position or how claims will emerge. correspondent, who boarded the local We will just have to wait and see how that dimension pans out,” explained Joe Hughes, chief executive of the club’s manager.

Polembros forced on the defensive

WHILE Polembros has steadfastly Only last August, the Polembros denied that there was anything Aframax Golden Gate was involved in wrong with the Tasman Spirit, a collision when approaching a berth its defence has not prevented at a Karachi oil pier. This ship was Karachi Port Trust from imposing previously the notorious Neptune a Rs10M ($172,400) fine. Yet Dorado, which was detained by the operations manager Nikos US Coast Guard for two months in Karagiannis is unfazed. 2000 because of serious safety and “Yes, KPT has imposed a fine, environmental violations. It was but this does not mean that they only freed after Polembros agreed blame Polembros. This is the usual to pay a fine of $2M and undertook reaction to an incident like this,” to comply with stringent safety Karagiannis told Fairplay. “Nobody Tasman Spirit: an feet of the master.” measures. The Tasman Spirit itself has yet come to any conclusions object lesson in This is not the first time that the was involved in a grounding and spill about who is to blame. It is certainly turning an accident company’s operations have been in Borneo in 2000. not possible to lay the blame at the into a disaster called into question in Pakistan. Karagiannis, however stands

16 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904005.indd 4 1/9/03, 9:46:29 The Tasman Spirit saga

Grounding to break-up: the Tasman Sprit In three lightering trips from 8-13 August, using the 8,000dwt Fair The Accused G 22 JULY Tasman Spirit leaves Kharg Island with 67,532 tonnes of Iranian Jolly, about 20,000 tonnes of oil light crude after undergoing a port state control inspection was evacuated and transferred to the Name: Karachi Port Trust G 27 JULY Tasman Spirit grounds at eastern lip of Karachi port navigation Polembros tanker Endeavor-II, which ACCUSATION: Poor procedures leading to channel during monsoon squall at 1257 hours had initially been brought from Fujairah accident, attempted to hide errors, G 28 JULY Three attempts by Karachi Port Authority to refloat the vessel fail. At least 250 tonnes of crude oil leak from ruptured tanks. for lightering purposes, despite KPT lied about efforts to refloat the tanker G 31 JULY Polembros lightering vessel, the 96,000dwt Endeavor-II, arrives concerns about its 96,000dwt size. PAST FORM: KPT bosses have always sought to from Fujairah. KPT vetoes lightering operation, fearing blockage ìWe informed the owners that further their political and military careers rather of navigation channel Endeavor-II may be good as a mother than run the port efficiently and safely G 1 AUG Polembros declines further assistance offered by KPT, signs ship to store the lightered oil in, but DEFENCE: “Don’t try and be clever” Lloyd’s Open Form-90 agreement with Greek salvor Tsavliris would not be able to go to the starboard G 4 AUG Tsavliris tug Umka detained on arrival against claim filed by (seaward) side of the vessel. The sea Name: PNSC Singapore litigant would have bashed the two ships ACCUSATION: Charters oldest, cheapest ships G 812 AUG Polembros-chartered Fair Jolly begins lightering operations, 12 together, and there was a very real available with little or no regard for safety days after grounding. About 20,000 tonnes of crude evacuated in three lightering trips, despite further spills danger that instead of one, we would PAST FORM: Value for money is a priority G 13 AUG Tasman Spirit cracks at low tide. About 12,500 tonnes of spilt end up with two wrecks. I could DEFENCE: No money to do anything else crude oil pollutes tourist beaches to east of port not submit to anything that would endanger the port,î the KPT chairman Name: Polembros estimate for the amount of crude spilt “Sudden weather maintained. Endeavor-II was eventually ACCUSATION: Runs a low-quality, under- after the grounding. By that time, those berthed at oil pier 1 and used as a manned fleet unfit for today’s stricter standards 250 tonnes had become 1,500 tonnes, deterioration was storage vessel because of the lack of FORM: Two groundings (disputed) in recent following inadvertent spills during initial partly to blame” storage capacity at Pakistan Refinery, years, and operator of the infamous Neptune Dorado, which has also traded to Karachi recently lighterage operations the previous day. Admiral Hayat the consignee of Tasman Spiritís cargo. With Polembros declining further help DEFENCE: Ships are all classed, insured and from KPT once the Tsavliris team had FROM 1,500 TO 12,500 TONNES registered by respectable organisations arrived, the boot was now on the other Meanwhile, the monsoon was battering foot. KPT made a point of serving three against Tasman Spiritís 24-year-old single Name: Tsavliris separate notices to Tsavliris to ìtake hull, which had already been involved in ACCUSATION: Lightered the midships first and extra care while lightering the grounded a grounding and spill off Borneo in 2000. left the fore and aft fully laden, putting too much vesselî, according to general manager By 13 August, the pressure exerted on the strain on the structure for operations Rear Admiral Nishat Rafi. shipís centre by its floating stern section, FORM: One of the most respected salvors in the which was being tossed around by tide business, expert in difficult operations variations of up to six metres amid peak DEFENCE: “There are always risks involved in monsoon conditions, became too much this type of operation and sometimes you have to bear. Cracks opened, and through them to take risks to prevent further, more serious, by the company’s safety record leaked 12,500 tonnes of crude oil, ruining consequences” (Nikkos Pappas, technical manager) and argues that it has no bearing the Independence Day beach picnics on the Tasman Spirit grounding. planned by thousands of Karachi residents, “There is no similarity between and prompting others to flee seafront minister declared the grounding to be the two incidents. [The Golden communities for fear of respiratory and the ìresult of human errorî, backing the Gate] was not a grounding: there eye infections caused by benzene fumes. contentions of local tanker masters. But was a wreck near the berth which Prime Minister Zafarullah Jamali he also cleared KPT officials of blame, ruptured one of the tanks,” he has ordered an official inquiry and implying that the master was to blame. explained. “I cannot see how the communications minister Ahmed Ali It is unlikely that the newly appointed two incidents are related. So, yes I announced his intention to tighten director-general of the ministryís ports stand by our track record.” shipping regulation. ìWe have learnt and shipping wing, Capt Anwar Shah, So does Karagiannis have lessons from this accident and I would disagree with that, since he was any doubts about KPT’s role in personally feel we should not allow old resurrected by the minister in what is the incident? “It is not for me tonnage, including single-hull tankers, being widely viewed as a semi-political to respond to such questions. I in our waters,î he said. appointment. As a ranking PNSC insider suggest that you ask them.” Although the inquiry had barely confided, ìIt is unlikely that the truth got off the ground by 20 August, the will ever be known.î !

www.fairplay.co.uk 4 September 2003 Fairplay 17

FRPED030904005.indd 5 1/9/03, 9:48:04 PROFILE

With centuries of maritime history in his blood and an impressive legacy left by his predecessor, Efthimios ‘Thimio’ Mitropoulos has Thimio a lot to prove when he takes over as secretary general of the IMO on 1 January next year. Fairplay found him determined to look to the future, but still the Great? keeping a jealous eye on the past

UCKED away in an unassuming RIGHT: Efthimios day he complained that his father By Richard Meade office on the 6th floor of the Staff Reporter Mitropoulos was doing it all and he would be left TIMO’s London headquarters, succeeds Bill O’Neil with nothing to do.” He pauses once Efthimios Mitropoulos is rifling next year: “I felt again to laugh at the comparison and through a stack of papers and pulling like Alexander the insists that he is not comparing himself out a selection of heavy texts. The become the next executive head, he Great when he was to Alexander the Great. “I have no shelves behind his largely uncluttered noted that a new era was dawning hearing of his father problem talking about William the desk are stacked with the recognisable for the IMO. The threat of regional Philip of Macedonia’s Great though,” he adds quickly. paraphernalia of IMO rulebooks and interference and several key internal achievements. One conventions, but the books he has issues now added to its already day he complained OPA’90: NEVER AGAIN pulled out are Greek historical tomes, overcrowded strategic plan mean that that his father was Both O’Neil and Mitropoulos as his brightly illustrated with paintings of tall Mitropoulos has taken the helm at a doing it all and he deputy have been working hard to ships. crucial time of reform. would be left with maintain the IMO as the only forum “Before we start, I wanted to He will not be alone, however, and nothing to do” for international shipping standards. show you a few things to help you takes comfort in the fact that he enjoys In his candidacy speech, Mitropoulos understand what I am about,” he the near-unanimous backing of the promised the Council: “I will consider says, studiously turning the pages IMO’s ruling council and the messages it my duty to work as hard as necessary of the largest book. He stops on one of support and promises of co- to avert any danger of unilateral or slightly faded picture of an elegant operation sent to him from all quarters regional initiatives impacting on the sailing ship weighing anchor at the of the industry. Most encouraging industry and the organisation.” port of Galaxidi, his family home. of all though, was his current boss, Following a partially successful “This one belonged to my ancestors the departing secretary general Bill session of the Maritime Environment on my father’s side,” he says proudly, O’Neil, who leaves the seat warm Protection Committee in July, at pointing to a caption dated 1896. with an impressive track record and a least part of that threat may have been His family’s maritime roots go reputation for getting things done. He temporarily averted. Mitropoulos is back several centuries, Mitropoulos will be a hard act to follow. hopeful that the EU member states explains between the brief historical “Over the years, seeing Bill that submitted a proposal for a anecdotes about Greek shipping that O’Neil going from strength to number of changes to be made to the accompany each new picture in his strength, succeeding in the various Marpol convention will be prepared to book. “It’s something I take particular achievements that history will credit wait until December, when a second pride in,” he smiles. him with,” he pauses and lowers his meeting has been scheduled to decide While Mitropoulos seems at ease voice to a conspiratorial whisper. upon their requests. with his own history, he admits his “Well you can understand, I was But the proposals, which include greatest challenge is in taking on a bit jealous,” he admits. “I felt an accelerated phase-out of single- the past and the future of the IMO. like Alexander the Great when he hull tankers, mandatory carriage Addressing the Council after he was hearing of his father Philip of of heavy fuel oil in double hulls and convincingly beat off his rivals to Macedonia’s achievements. One the designation of several European

18 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904006a.indd 18 29/8/03, 20:47:11 Shipping Faces

He gave his right arm... almost literally! HE next secretary general of the IMO wrote the book on maritime safety and regulation – seven books to be precise. In his spare time while T working at the Hellenic Coast Guard, Mitropoulos displayed a near- obsessive drive to write books on shipping economics, policy, safety and any maritime topics he could think of. His impressive library of prize-winning books was made all the more extraordinary by the fact that he wrote them without a computer, and nearly lost his right arm in the process. Working all night writing his books by hand took its toll on the muscles in his arms, and he was ordered to cease immediately. “My doctor told me if I wrote one more page I would not be able to write again,” he recalls. He plans to return to life as an author when he eventually retires. If so, rather than chipping in for a gold watch, his IMO colleagues might consider stretching to a word processor.

coastlines as Particularly Sensitive Sea PAYING THE PIPER Areas, have effectively been adopted Mitropoulos will have to tread by the EU states already. Mitropoulos, carefully over what is likely to be a however, believes that the EU is now painful and historically sensitive shift waiting to see what the MEPC can in power for the organisation. come up with before it implements the Great efforts have been made under measures on a regional basis. “It is my Bill O’Neil to speed up, streamline duty to make sure there is no repeat of and generally make the IMO a more OPA’90,” he says bluntly. efficient body. But the issue of funding has often surfaced as a slightly murky WHERE DO WE GO FROM HERE? territory. Based on the principle External issues apart, internal that those countries with the largest housekeeping in an organisation tonnage pay the most, Mitropoulos like the IMO can be equally tough. describes the current system as “the NAME: Efthimios Mitropoulos. BORN: 30 May 1939. Where the IMO is going and the role one that the members have to date it should be playing is the subject of found the most appropriate”. FAMILY: Mitropoulos’ ‘maritime roots’ stretch back to the tall ships era in Greece. much official and some rumoured However, recently the IMO’s agenda His father was a merchant navy chief engineer and his mother was the daughter of a talk within the IMO’s walls. The has been filled to capacity, so wealthier shipmaster and owner of brigantines and schooners. His Dutch wife luckily also shares his much-publicised Model Audit countries have funded extra sessions, passion for the maritime world. He also has a son and daughter. Scheme (MAS), which foresees a creating the impression that these role for the IMO monitoring a flag countries will dominate the agenda. EDUCATION: Mitropoulos graduated from secondary school in Piraeus top of his state’s performance, is top of the list. “It could be seen, yes,” agrees class before entering the Aspropyrgos Merchant Marine Academy at the age of 18. In 1959 Mitropoulos is confident that as an Mitropoulos. “BUT, and this is a big he joined the Hellenic Coast Guard Academy, graduating in 1964 with honours. In 1965 organisation the IMO will eventually ‘but’, just because a government offers he won a scholarship to study shipping economics in Italy and in 1970 he studied marine have more teeth. To further this aim to contribute money, so that a meeting technology in the UK. he has promised to do his best to takes place, it should not be seen that make sure the MAS is a success. the country in question will have its CAREER: Also high on the agenda is the way in the decision-making process.” 1964 Enters Hellenic Coast Guard as officer, first in Corfu then Piraeus. 1966–1977 IMO’s future role in setting ‘goal- Mitropoulos is well aware that the Joins Greek IMO delegation, first as a member and then as its head. 1972–76 Regular based standards’ for classification IMO not only needs to be changing maritime lecturer at Greek maritime academies. 1977–1979 Harbour master of Corfu. societies. Much to the dismay of class things for the better, but it needs to 1979 Mitropoulos joins the IMO Maritime Safety Division. 1989 Promoted to senior representatives, the June sitting of the be seen to doing this. If he can do this deputy director for navigation. 1992: Appointed director of Maritime Safety Division. Maritime Safety Committee voted in while keeping all sides of the industry 2000 Appointed assistant secretary general. 2004: Mitropoulos takes over from Bill favour of a proposal by Greece and the and governments on board, he may O’Neil as IMO secretary general Bahamas suggesting the IMO should well find that he earns his own place in expand its role in this area. Greek maritime history G

www.fairplay.co.uk 4 September 2003 Fairplay 19

FRPED030904006a.indd 19 29/8/03, 20:47:28 SPECIAL REPORT

A WEAK tanker market over the summer is not unusual, given that demand is generally lower when the Northern Hemisphere is supposed to be enjoying some sunshine and warmth. But when the world’s largest consumer is importing at close to record levels and gasoline

consumption is even higher his oil.” And the Iraq theory held up well when, in September last year, Iraq than last year, one might decided to drop an illicit levy that had stiß ed its exports for more than a year. expect better things. Shipments quickly rose to 1.25M bpd through Iraq’s MidEast Gulf outlet, Mina al Bakr, and VLCC rates began to By Chris Tomlinson Markets Editor rise rapidly. While one could argue that other factors came into play, such as ccording to US tanker brokers, excess production by other Gulf states, two countries seem to be having the fact that Iraq was producing enough Aa very large impact on the oil crude for a VLCC every other day market: the US and Iraq. The latter’s made quite a difference to the tonnage BackBack oo impact on tanker markets has not gone available to charterers. Despite low US Energy showed that Iraq was still the unnoticed in the past. Clarkson research Iraq’s exports were also exclusively stocks, petroleum sixth largest supplier of crude to the head Martin Stopford has highlighted to the West, which meant more tonne- imports have been US in the Þ rst Þ ve months of this year, that VLCC rates have risen and fallen in mile demand. This kept ships employed running at record with an average of 593,000bpd, or Þ ve line with Iraqi crude exports ever since and away from the Gulf longer, helping levels over recent per cent of US import requirements. Saddam Hussein was kicked out of to make a much tighter market. When months, and there It is likely that the last of the crude Kuwait in 1992. the war began in the middle of March, remains scope for shipped from Mina al Bakr before the The US was heavily reliant on its Kuwait and Saudi Arabia Þ lled the a further boost to war would have reached a US terminal biggest enemy since the end of the void, but the size of the VLCC ß eet tonne-mile demand by the end of April at the latest. Cold War for crude supplies – a fact had expanded, and while the Gulf because Caribbean that was not lost on a broker from New states continued to produce beyond storage capacity is IRAQ’S HOLD OVER VLCCS York-based Poten, who commented: Opec quotas, the extra cargoes from readily available But the theory about Iraq’s apparent “While Saddam Hussein was a thorn Iraq were badly needed to absorb the control over the VLCC market seems in the side of both Bush and Clinton, growth of the ß eet. to be proving true again. Exports are we were only too happy to consume Figures from the US Department of slowly increasing, but only from Mina

20 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904009.indd 22 1/9/03, 10:03:50 Tanker Markets Photo: Juk ka oonn anan eveneven keelkeel Huotari al Bakr so far. Indications from US and most inefÞ cient energy consumer sources suggest that shipments are at prepares for the heating oil season? between 425,000 and 450,000bpd. Petroleum (crude and products) imports There had been hopes that by the in July were 12.45Mbpd compared with middle of August shipments from 11.62Mbpd in July of last year. This Mina al Bakr would have been at July’s import Þ gure represented nearly around 800,000bpd, but the progress 63% of all petroleum deliveries to the has been slow. There is a full VLCC US market in that month compared cargo every Þ ve days and around two with under 58% last year. US crude oil Þ xtures a week out of Mina al Bakr imports in July were 10.05Mbpd, up being reported, with all of them having 9.4% from July last year. According US Gulf discharge options, with a few to industry sources, nearly 21% of including a US West Coast option. July’s imports were sourced from Gulf Exports of Iraqi Kirkuk crude countries compared with less than 18% through the Turkish port of Ceyhan a year earlier, and closer to 18% in the should have resumed at around Þ rst four months of this year. 200,000bpd by mid-August. But no sooner had the Iraqis begun pumping AMERICA KEEPS DRINKING oil than a section of the pipeline was “The US has never been so dependent blown up. Now it is unlikely that on oil imports as it is now,” said exports will resume from Ceyhan a broker from a Houston-based much before the end of September. Þ rm. “Despite the extra tonne-mile And Ceyhan could make a huge demand… the market has still been difference to the depressed Suezmax fairly weak over the summer months,” market in the Mediterranean. he added. The reason, according to So what of US inventories and how the broker, was that in the Þ rst quarter they are affecting the market, especially the VLCC ß eet grew by around 2M in this crucial and sensitive time of dwt from the end of last year. Then year when international oil markets scrapping rose rapidly and by the end become jittery as the world’s largest of June, the ß eet was about the same

www.fairplay.co.uk 4 September Fairplay 21

FRPED030904009.indd 23 1/9/03, 10:04:12 SPECIAL REPORT

size as it was at the end of last year. The US has never been seen in the Þ rst half of last year on However, Venezuela is still struggling But new deliveries were threatening to unleaded gasoline did not materialise, to get back to pre-strike levels, which is upset the balance. so dependent on oil much to the disappointment of clean one of the reasons why the Caribbean “Now the market seems to be on a imports as it is now,” products tanker owners. Now, with the upcoast Aframax market has been more even keel and, with the move season virtually over, there has been so disappointing. “Unless Venezuela towards the fourth quarter, a steady said a broker from a an increase in westbound gasoline becomes more consistent, there is going increase in demand should help the Houston-based firm. cargoes, largely because price rises to be a greater reliance on imports from tanker market overall, especially with in the US have made European the Persian Gulf, Europe and West Iraq coming back into the fold,” he “Despite the extra cargoes much more competitive. “It’s Africa, which is where Iraq Þ ts into the said. “But with heating oil stocks tonne-mile demand, somewhat ironic this has happened. overall picture,” the analyst said. so low after a very cold winter, it The Labor Day [1 September] weekend is possible the US could surpass with long voyages represents the last major holiday WINTER WARMER the crude import record of May, required to meet a weekend in the driving season. After So the tanker market already seems despite bottlenecks in the country’s that, gasoline demand tails off until poised for some better times, conÞ rmed reÞ ning system, caused by the lack of large proportion of November/December and plummets in by Dr Leo Drollas of the Centre construction of new reÞ neries in the these imports, the January until Easter,” said a New for Global Energy Studies: “The US for more than ten years,” he added. York-based petroleum analyst. market is beginning to rise,” he says. Over the summer, the reÞ neries market has still been This is also giving reÞ ners an “Opec 10 production is quite high at have been concentrating on meeting fairly weak over the opportunity to concentrate on producing 26Mbpd, which is not too bad, and rising domestic gasoline demand enough middle distillates necessary for should be sustained to the end of the in the summer driving season. summer months”... heating oil blends. This favours heavier year.” Drollas maintains that while ReÞ neries have done a much better crude oils, some of which come Iraqi exports will under-shoot their job than last year, and the massive from the MidEast Gulf. It also target, exports will be progressively westbound trans-Atlantic arbitrage particularly favours Venezuela. reintroduced, “rising from the current Under orders for tanker rebound EMAND is looking more Prestige regulations on 22 July, it seems that there is enough support supply? Taking into account vessels predictable, but the markets though translation difficulties have to pass the recommendation that that have been scrapped over recent D are not wholly back on delayed the official rubber stamp. Category-1 tankers should be weeks, figures prepared by SSY track. The supply side is raising not According to the Commission, phased out by 2005. However, Research suggest that the many only questions but a lot of cash for this should now take place about accelerated phase-out dates for all vessels will find themselves unable fresh investment. Confidence has now with the regulation then being other types of tankers, which the EU to trade in EU waters. Owners remained un-dented as the markets published in the Official Journal and wants to set at 2010 in line with the might seek trading opportunities have tumbled, with scarcely any coming into effect 20 days after that. US OPA’90 rules, may present more elsewhere, but it is inevitable that weakening in ship values – for The rules will also take effect for the of a problem. scrapping will increase. It also double hulls at least. Many have ten Accession countries when they A few optimists have suggested seems likely that tanker supply will gambled that the world post-Erika become full members in May 2004. that the EU might be delaying matters tighten considerably in the next and Prestige would be a very Meanwhile, EU members’ to see what happens in the December few years. There is little doubt that different place. They could be right. proposals put forward during the MEPC meeting. This is wishful these calculations have formed the mid-July meeting of the IMO’s thinking. Although the regulations basis of many recent investment OCTOBER DEADLINE NEARS Maritime Environment Protection were initially due to come into effect decisions and it is probable that Despite rumours to the contrary, Committee (MEPC) received on 1 September, sources close to the the latest EU move will stimulate a it appears likely that EU rules better than expected support. The Commission suggest that the delays further round of investment. accelerating the phase-out of final outcome, however, will not be were purely administrative. Nothing single-hull tankers will be in place decided until an extra session of the is likely to stop the rules coming into PUTTING THE KG IN TANKERS by October. The European Council committee scheduled for December. effect by October. Will this orderbook haunt the of Ministers finally adopted the While many still oppose the plans, So what does this mean for tanker market in the coming years? Some

22 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904009.indd 24 1/9/03, 10:38:22 Tanker Markets

level of around 400,000bpd to around With heating oil beginning of this year with a massive Venezuelan supplies into the US were 900,000bpd by December, mostly stockbuild. It was also one reason why partly replaced by West African and through Mina al Bakr, with a little stocks so low after the market came off so sharply as this Middle East supplies and Drollas’ more from Cehyan.” a very cold winter, stockbuild stopped. But the market is calculation of tanker demand was Even though US import terminals probably only just coming to the end of effectively increased by 16 per cent! are very busy, throughputs at apparent it is possible the an adjustment phase after the multiple And while Venezuela has returned to near-maximum mask the fact that US could surpass shocks at the turn of the year, although, the market, 0.5Mbpd of imports still long-distance barrels can be drawn opines Drollas, Opec did not produce have to be sourced elsewhere, although into regional storage. “There is still the crude import enough oil in 2002. A tightening the positive impact on tonne-miles storage capacity in the Caribbean, on the record of May market was then hit by the Venezuela continues to be undermined by low doorstep of the US market,” says Drollas. crisis, Nigerian strikes, a cold winter, relative Iraqi exports. World demand As for the medium term, there Japanese nuclear shutdowns and the growth next year looks minimal at appears little doubt that overall demand China stockbuild. The market is only 8-900,000bpd, or one per cent, and growth will centre on China. The now recovering from a tremendous slightly below the historical average. country will account for 20/25% of squeeze, fi rst affecting stocks and, once But the strength of US demand is incremental growth in 2004, crude this ‘buffer’ had been exhausted, then evidenced by the US sucking in large imports increasing by 210,000bpd at pulverising prices. Average US crude imports of clean products. Once more an annual rate, and along with other forward cover ranges from 21.8 to 20.5 the market is pretty tight, says Drollas, non-OECD Asian countries (excluding days, points out Drollas. From 22.5 and if we have a cold US/Europe Japan and Korea), China is expected to days in February last year this cover winter then we will have a re-run of be the mainstay of demand growth in had fallen to just 18.5 days in March, 2000 and 2002 prices. At bottom, the the coming years. which was extremely low. tanker market really needs an upturn in China was one reason why the In effect, the market was thrown demand, but, observes Drollas, it also tanker market surged so sharply at the completely by these multiple hits. needs an Opec willing to supply.

have already come to their own tonnage going. Prices for five-year and investors have been keen to from a further layer of support, not conclusions and backed them with old VLCCs currently equate to take vessels now instead waiting least because KG investors have good money. around 90% of newbuilding costs for delivery of a newbuilding. All entered the market with some pretty Oblivious to the depressed state (see graph, p24). Sellers of modern this speaks of confidence: the great hefty premiums for very young of the freight market, investors have second-hand or older double-hull market mover. vessels or those with early delivery. queued up for any second-hand tonnage have been relatively few, But prices have also benefited Christian-Oscar Gyer, general

www.fairplay.co.uk 4 September Fairplay 23

FRPED030904009.indd 25 1/9/03, 10:03:10 SPECIAL REPORT Tanker Markets

partner with Dr Peters, a leader in the long term,” says Gyer, citing model works nicely, which is term charters. this field, admits that KG-backed his 12-year deal with Frontline. But attracting imitators,” says Gyer, But Gyer readily admits that the tanker acquisition is a “trendy there are relatively few Frontlines but some recent deals he considers fleet profile and the phase-out of market”. Players are taking greater or BPs – the KG tanker market “very dangerous”. Investors will be single-skin tankers provides a very risks, but further deals can still be will be limited by the number of taking too big a risk, he maintains, good basis for investments. “I don’t expected, not least from Dr Peters charterers willing to make such in deals backed only by charters think there is enough on order, and itself. long-term commitments. for five years and the assumption there won’t be enough ships for “To make it more secure for our That said, there are other deals, of a rising charter market, or even the next three to four years,” he investors we only make deals for and other players: “Our business pooling deals instead of firm, long- predicts ! There is little doubt that these calculations have formed the basis of many recent investment decisions and it is probable that the latest EU move will stimulate a Regulating for better times further round of investment ! 19 November, 2002: Prestige sinks off coast of Galicia in Spain. Fairplay % 5yr VLCC 5yr Suezmax 5yr Aframax ! 3 December, 2002: European Commission (EC) publishes a blacklist of ships and speeds up the creation of its new safety 100 agency EMSA.

95 ! 13 December, 2002: Spain bans all single-hull tankers, regardless of flag, carrying certain types of heavy fuel oil. 90 France and Italy follow and Portugal is reviewing the situation. All four have asserted their right to order vessels older than 15 85 years to keep at least 200 n-miles from their coasts.

80 ! 20 December, 2002: EC proposes new ‘post-Prestige’ regulations speeding up the timetable for phase-out of single- 75 hull tankers and banning transport of heavy fuel oil in single hulls. Category-1 tankers to be phased out by 2005 (previously 70 2007) with an age limit of 23 years. Category-2 vessels (in-line J02 F02 M02 A02 M02 J02 J02 A02 S02 O02 N02 D02 J03 F03 M03 A03 M03 J03 J03 with OPA’90 requirements) to be phased out by 2010 with an age limit of 28 years. Category-3 to not exceed 28 years. As Fairplay Vessel EU IMO from 2005 all Category 2 and 3 tankers over 15 years must pass No. 500 Condition Assessment Schemes (CAS). 450 ! 5 March, 2003: EC proposes new tanker discharge rules and a 400 beefed-up set of criminal sanctions against ship polluters.

350 ! 18 July, 2003: IMO considers EU proposals to introduce an 300 accelerated phase-out of single-hull vessels and ban on single- 250 hull vessels carrying heavy fuel oil. Decision deferred until Dec. 200

150 ! 22 July, 2003: European Council of Ministers adopts post-

100 Prestige package (accelerated phase-out, etc), but fails to

50 rubber stamp final implementation date. Now expected to come into force early in October. 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

24 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904009.indd 26 1/9/03, 10:04:58 LETTERS [email protected]

The 1950-built Independence were there is no embassy or is one of the latest golden consulate of the state of which oldies purchased by NCL they are citizens that has some responsibility for repatriating port state? I very much doubt its citizens. that under international law Yours etc, Struan any country could unilaterally Robertson, Partner, pass legislation making Stephenson Harwood another country responsible London, UK for commercially operated assets that were registered in that other country. One US faces crew could imagine that extending dilemma to pollution control, wreck SIR, Re your article (July 31) removal etc. concerning compliance with Peaceful No embassy, no entry One must also recall that the US Marine Transportation SIR, Recalling the various vessels are frequently only Security Act, the US Coast former fleets of the USSR that temporarily flagged under the Guard may eventually face a Constitution collapsed like the USSR itself, laws of a state by virtue of a dilemma as well. The preamble SIR, I refer to the article entitled NCLs leaving seafarers stranded in bareboat charter and that only to part “A” of the ISPS Code oldies but goodies? (July 31, page 27). ports around the world, there a few countries require the asserts the fundamental right Having sailed from 1991 to 1999 in senior is a strong temptation to point asset flying their flag of the state of seafarers to shore leave, officer positions on board both the United the finger at the flag state as concerned have to be owned by citing the Convention on the States and Constitution, I wish to alert you the sole party of substance an entity resident in that state. Facilitation of Marine Traffic, to the following. that local harbour authorities Finally one has to recognise 1965. Yet the US has never On that page, the article states that can turn to for payment of that the crew themselves complied with the provisions the Constitution was purchased when it repatriation expenses (see have often no connection of this measure governing crew should have said Independence. The SS Fairplay, 28 August, p16-18). at all with the flag state, visas (only recently further Constitution is at peace under several Individual states have which brings one to perhaps tightening transit requirements miles of ocean approximately 700 historically distanced the only viable solution: it for foreign crew members) and nautical miles northeast of the Hawaiian themselves from the should be for the embassies in the aftermath of 9/11 many Islands. commercial activities of the of the states of which the facilities continue to restrict – Yours etc, ships flying their flag. Against abandoned crew are citizens or deny outright – crew access John A Becker that, there is the fact that every who should be responsible for to shore. Master Mariner, USCG, Hawaii country that lets a vessel fly their repatriation. Indeed, I As an amendment to its flag receives some form of think the legislation of some Solas, the USCG is bound payment for that privilege. states makes the embassies to enforce all provisions If the flag state found it had of that state responsible of ISPS. Whether foreign responsibility for repatriation for repatriation of citizens crews are therefore accepted it would soon initiate a who have no other means of as partners in maritime bonding scheme to lay off the repatriation. security in accordance with costs associated with that Of course there may well ISPS guidelines, or remain responsibility. be no embassy for some of terrorist suspects, as US Does it require a full the states whose crew are policy and practice assume, international agreement to involved in abandonment. may ultimately determine the render a flag state responsible That is very difficult to cover! effectiveness of ISPS in this for crew repatriation or can Perhaps the solution may lie country. the matter be addressed by in having some restriction on Yours etc, domestic legislation of the crew entering any jurisdiction George Weeks

www.fairplay.co.uk 4 September 2003 Fairplay 25

FRPED030904004.indd 25 29/8/03, 18:15:04 SPECIAL REPORT River Plate: An Executive Summary

ARGENTINA is very slowly recovering from Chaos over, but what will replace it?...... 26 its worst-ever financial crisis, with a new Government re-visits concessions...... 27 president, rising exports thanks to a devalued Toll tussle drags on ...... 28 Chaos peso and greater stability. But what does the Yards yearn for protection ...... 30 improved political and economic landscape Montevideo auction leads to acrimony ...... 31 mean for the River Plate maritime sector? Grain export powerhouse building steam...... 33 Hard labour in Rosario...... 32 Port chief faces the critics...... 34 over but

Having been stung by the global economy, and barely escaped total collapse in the case of what Argentina, the way back to prosperity will be a long one for the River Plate region. Unfortunately,

port costs up to three times higher than will some countries seem in neighbouring transhipment port to have set off in the Montevideo. Strong grain prices and high charter rates wrong direction sheltered the bulk sector from the impact this year. But container and ro-ro operators have balked at extra dredging tolls of up to replace By Michelle Wiese Bockmann $28,000 per ship visit, to the detriment of Americas Editor newly-opened private terminals upstream in the Zarate and Campana region. For example, Terminal Zarateís container throughput from September 2002 to O meat has yet been added July 2003 was 31,000TEU. Its handling it...? to the bones of the ports and capacity is 120,000TEU. N waterways policy of Argentinaís President Kirchner is a three-term new president Nestor Kirchner. But governor of the remote, southern oil-rich “Is this justice?” laws. Andres Robinson, part-owner of its jingoistic flavour, highlighting province of Santa Cruz, and many of his ask Montevideo Lineas Feeder, expects an agreement national ownership and government- cronies are turning up in key political street protesters, with the International Monetary Fund backed employment, suggests a ëback posts, including maritime administration. shown last month to be completed this month, but expects to the futureí approach at odds with These include under-secretary for ports calling the banks negotiations for the 152 government- international deregulatory forces. and waterways Juan Jose Chiappino and and big business issued bonds now in default to be very International shipowners and General Ports Administration trustee Luis to account. River difficult. ìWe still have hard times operators, private upstream terminals and Angel Diez. So far, Chiappino has updated Plate neighbours ahead,î he admits. ìWe have a banking maritime agents have already discovered paperwork to release Inter-American Uruguay and system that is technically brokeÖ we that short-term domestic interests are Development Bank funds to pay for a Argentina are know that a lot of people are willing blunting growth and competitiveness badly-needed breakwater extension at both struggling to invest in Argentina, but everybody at the expense of their bottom lines. Quequen, and dredging approach channels to survive is holding on until they see a clear Shipping activities on Argentinaís River for the port of Buenos Aires. devastating future. But Argentina has tremendous Plate trade arteries and in its government- But prolonged uncertainty is stalling economic and potential.î managed ports remain heavily taxed, growth. For example, local owner banking crises The shrinking pool of local shipowners with no relief in sight: a 20 per cent grain Lineas Feeder would like to charter lacks policy direction ñ and credit to export tax, a 45 per cent hike in River a ship for a new coastal service, but rebuild fleets. Tanker operator Antares Plate dredging tolls and government awaits clarification on fleet and crewing Navieras received a new tanker this year, 26 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904008.indd 1 1/9/03, 10:15:19 River Plate Photo: Dimitri Messinis/AP

but from its Chilean parent company. Rival tanker outfit Ultrapetrol gained Throughout the Plate region, newbuilding tax exemptions to sign letters maritime businesses are finding of intent to order two Panamax tankers themselves obstructed by at a local yard (see page 30). How either officialdom as public finances yard or owner will access credit was not struggle to recover. Revenue, disclosed. After surviving the devastating rather than improved service, peso collapse of January 2001, the appears to top the agenda resulting economic paralysis and social upheaval, the last thing the River Plate maritime sector needs is another dose of political shortsightedness as the region begins the long climb out of insolvency. GOVERNMENT REVISITS CONCESSIONS Crucial container terminal and dredging concessions are included in a federal government review and www.fairplay.co.uk 4 September 2003 Fairplay 27

FRPED030904008.indd 2 1/9/03, 10:15:41 SPECIAL REPORT River Plate

renegotiation of 64 public service legal action was first launched. ìWeíre contracts signed during the presidency unofficially told that this is a political of Carlos Menem. Under the terms of The River Plate bulk sector decision,î says a maritime business presidential decree 311, a specially- ! Eighty per cent of grain exports leave from privately owned grain source familiar with the issue. created unit for renegotiation and terminals in the Rosario region, about 300km north of Buenos Aires The increased tolls have added up to contract analysis will review the terms ! The guaranteed draught for channels from the River Plate entrance to the $28,000 in additional Hidrovia tolls for ro- and performance of privately contracted port of Santa Fe is 9.75m. ro ships wishing to travel upstream to the companies providing public services ! The grain sector represents 60 per cent of Argentina’s export income, Campana area, where many new private to Argentina. The port and maritime earning $9Bn. terminals have been established. ìPeople industry has expressed surprise at the ! Ar gentina’s grain and cereals crop in 2003 reached 71M tonnes, with 53 are no longer coming to the River Plate inclusion of contracts such as terminal per cent exported. region because of [these toll increases],î operation and dredging. Many believed ! Thirty-five per cent of bulk ships calling in the Rosario region are Handymax, says Alejandra Robinson from Agencia the review was intended to scrutinise 35 per cent Panamax, 15 per cent are tankers and ten per cent handysize, Maritima Robinson. Container and ro-ro public service contracts such as those according to 1999 statistics from Rosario Stock Exchange. Sixty per cent of these ships have been those most affected; the signed with private gas and electricity vessels are on time charter and 40 per cent voyage charter. expense to bulk carriers is limited. The companies. Included in the review are ! Ar gentina is the world’s third-largest soy exporter (9.3M tonnes in 2002/ toll, previously equating to $0.68-$0.70 a container terminals operated by P&O 03) after Brazil and the US, with 18.9M tonnes of soymeal, and 4.44M tonne, now amounts to almost $1 a tonne, Ports, Hutchison Port Holdings and APM tonnes of soy oil. according to the Chamber of Private Terminals, all signed in the mid-1990s. Commercial Ports. The billion-dollar contract to maintain compensate for the withdrawal by its “The [Argentine] The Hidrovia concession maintains and dredge the key River Plate Channel, predecessor, in December 2001, of the key channel through the shallow held by joint-venture consortium $40M in annual subsidies to Hidrovia. government doesn’t River Plate estuary, through which 80 per Hidrovia, is also under review. In return, Hidrovia must reportedly seem to have an cent of Argentinaís waterborne exports dredge and guarantee a draught of economic plan... There leave the country. Maritime interests JUDICIARY DELAYS TOLL CASE 10.3m by December 2004 upstream to believe the Hidrovia partners (Belgiumís Judicial delays have stymied legal the port of San Martin, and abstain from are a lot of question Jan de Nul and local transport concern steps by international shipowners and legal moves to collect the $60M the marks over how Emepa) enjoy special privileges not Argentine maritime lobby group Centro government owes it. [President Kirchner] extended to other concession-holders in de NavegaciÛn aiming to overturn a Argentinaís administrative court Argentina, and that toll increases threaten 45 per cent increase in dredging tolls, ruled in February this year that the is going to settle the competitiveness and economic recovery. imposed in December 2002. The toll lawsuit against the toll increase should serious economic The Hidrovia concession is included in is levied by private concessionaire be heard by another court. A second the government-established concession Hidrovia, contracted until 2013 to court made a similar finding. It has problems...” review and key shipping minister maintain and dredge the 1,000km now gone to a higher court for a judge Andres Robinson, Juan Jose Chiappino has also pledged channel from Santa Fe to the sea. The to decide where the case should be to establish the missing government former Duhalde government passed heard. Meanwhile, it remains without a Agencia Maritima controlling office to oversee the Hidrovia a decree permitting the increase, to defined jurisdiction eight months after Robinson, Buenos Aires contract !

28 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904008.indd 3 1/9/03, 10:16:32 FRPED030904P29_Auto.qxd 1_9_03 9:27 am Page 3 SPECIAL REPORT Yards yearn for protection Despite subsidies and a desperate need to modernise, Argentina’s biggest shipyard still builds ships on a slipway, and only one at atime

HILE the International Monetary Fund prescribes W free market reforms for the Argentine economy, the countryís shipbuilders advocate continuing subsidies and tax breaks to revive their flagging sector. Argentinaís largest shipbuilder, Astillero Rio Santiago (ARS), is owned by the state of Buenos Aires. For years the yard received $20M in subsidies, until last yearís collapse ABOVE: Rio when the previous owner did not take Alvarez says he has swept the place clean of the peso reduced this amount by Santiago wants delivery. So why choose this yard over of cronyism, eliminating 200 political two-thirds. The yard was established continued Eastern Europe or Asia? ìThe Calanda appointees and replacing them with skilled at Ensenada, south of Buenos Aires, in subsidies, but it was available promptly, the inspection workers. He set up a joint venture for the 1939. It built hundreds of military and can still attract was satisfactory and ARS and the buyers Alpina project with Wilhelm Finance to commercial ships until political decay set international found a fair price,î said spokesman Uwe circumvent finance problems. The joint in during the military dictatorship, and customers Nuesse. ìHowever, patience is required venture bought tax-free materials to build the reputation sticks today. as the build time is long, too long the ship, while the contract with the yard ARS recently delivered the 26,798- compared to international standards.î was for labour costs only. DWT bulk carrier Alpina. Its German Despite this, Alpina has ordered another Alvarez is lobbying for government owner, Alpina Reederei, also purchased three ships for a reported $14M each. concessions, chiefly elimination of the a sister vessel, Calanda, in May 2000, General manager Miguel Angel 25 per cent tax on Argentine owners who

30 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904008.indd 5 1/9/03, 9:35:28 River Plate

build locally. The government agreed to drop taxes so that ARS could build two 75,000-DWT tankers for charter to YPF Repsol via Chilean-backed but Argentine-based owner Ultrapetrol. The contracts are currently under negotiation. More broadly, ARS wants to mirror Brazilian shipbuilding policy. Alvarez called for cargo reservation, stronger cabotage laws and a shipbuilding fund created via a tax on waterborne imports. But he is coy about the need for foreign investment to modernise. ARS general manager He acknowledges that the yard needs new equipment, and near-insolvent Miguel Angel Alvarez says Buenos Aires province is unlikely to he has swept the place bankroll this. Any revival at this point seems to hinge on the government, not clean of cronyism in the the private sector. Alvarez is pushing for past two years, eliminating naval projects to underpin commercial work at his yard. The philosophy may 200 politically-appointed appeal to Argentina’s unemployed, but employees’ jobs and surely would sit uncomfortably with the international realities of shipbuilding in replacing them with skilled the new century ! personnel Montevideo: auction terms led to acrimony

Box terminal operators WO container terminal operators are at loggerheads with in Montevideo, Uruguay, have the port authority over a T separately taken legal action concession that did not against the National Port Authority deliver its promises, while (ANP) over its botched concession at the port authority tries the port. The new concession holder and to offer a multipurpose former monopoly operator have both terminal instead complained over the concession auction

FRPED030904008.indd 6 1/9/03, 9:36:05 SPECIAL REPORT

conditions. and general cargo. Providing a gantry its quay wall by 200m, and dredging Katoen Natie of Belgium paid $17M crane, coincidentally, is a key tender to cater for the larger container vessels more than a year ago to take up a majority condition. Montecon says it has heard being delivered in 2005 and beyond. stake in Terminal Cuenca del Plata that Spanish and Greek consortia Diplomatically unresponsive when (TCP), and agreed to invest $35M in are interested, but the tender, which asked how soon before TCP will turn a infrastructure improvements within closes in November, demands a $30M profit, all general manager Joris Thys six years. But things quickly soured for investment. will say is that he’s confident that it will TCP and for local rival Montecon. “The Montecon is considering participation be “soon”. idea was that a new operator would with potential foreign partners, but only About his competitors, Thys introduce new volumes and clients,” says if there are changes. “The investment comments: “Montecon is playing Montecon general manager Eduardo ...the investment is very high considering the port the victim and saying it is going to Zabalza. “It was not the idea that TCP schedule doesn’t throughput, and the investment schedule disappear, but nothing is less true. We would grow at our expense.” match reasonable doesn’t match reasonable growth will see one company operating 75 per Montecon now pays $2.5M to use expectations,” says Zabalza. cent of the port and some niche players. the public piers, and has lost more growth expectations For its part, TCP estimates While we will focus on big equipment, than half its business, including Eduardo Zabalza, throughput at 120,000 TEU moves in they’ll be offering less service, but key client Maersk Sealand. It has Montecon’s general 2003, up from 48,000 TEU last year. they’ll be cheaper. Montecon has launched legal action against TCP, its But it has to make some big pay-outs nothing to fear. There’s a place for holding company Nelsury and the port manager very soon, including $35M to expand them.” ! authority ANP. It won a small victory at the end Hard labour in Rosario of 2002 when a court granted an injunction to prevent TCP using the T the River Plate port of Rosario public berths, restricting TCP business (shown right), a new Spanish to its own concessioned piers, pending Aleaseholder hopes to succeed Photo: resolution of the dispute. Zabalza says where others have failed, and create Chris TCP recently broke this injunction. a transhipment hub for the inland S

Meanwhile, ANP, which has a 20 Mercosur trading region. Rosario is lane

per cent stake in TCP via the holding best known as the port that defeated y company Nelsury, has not put up all Philippines’ container terminal giant the cash it promised for TCP. Under the ICTSI, which lost tens of millions there. terms of the auction, ANP promised ICTSI walked away from Rosario to invest $4.8M in equipment, for acrimoniously in 2000 after protracted which it set the value. It provided labour disputes. Now Spain’s Port of machinery independently surveyed and Tarragona has stepped in where others new private grain bulk terminals built EU-bound exports. The operator has valued at $300,000. The ANP says this feared to tread. Terminal Puerto Rosario further upstream in the early 1990s. also acquired a concession in Japan for represents compliance with the terms; paid $6M and re-opened the port in Terminal Puerto Rosario must invest a Asia-bound exports. Barges carrying the issue is in arbitration. Katoen October 2002. Company president further $18M as part of its concession goods from upstream connect in Rosario Natie is reportedly trying to stop the Guillermo Salazar Boero described the port terms. Industrial relations are very with internationally trading ships, as government holding on to its 20 per as being in bad condition. Nonetheless good, says Salazar Boero – but probably well as with road and rail lines, linking all cent stake. he is optimistic, with throughput going because the terminal pays a monthly the Mercosur bloc countries, says Salazar One of the reasons Montecon lost from zero to 1.3M tonnes in the first salary to more stevedores than it really Boero. Although the project is a long customers was because it lacks a mobile eight months, and three million tonnes needs. Its payroll lists 300 stevedores, way from profitability, and economic gantry crane. TCP, with ANP support, projected for 2004. Salazar Boero also while about 50 ships have called in the conditions are clearly not the best, he appears to have the monopoly on this forecasts that container throughput will past ten months. On top of this, Terminal remains diplomatically upbeat. sought-after piece of port equipment. triple to 30,000 TEU. Puerto Rosario must pay $150,000 The terminal operator is now Montecon asked permission to Rosario lost most of its business to the a month in rent to government port analysing a failed concession less than introduce a mobile crane on the public administrator Enapro. Port of Tarragona, ten kilometres away in the port of Santa berths so it could compete. The port is in bad condition which bought out its undisclosed Fe, but no decision has emerged yet. ANP, however, sidestepped the local partners’ 20 per cent interest Time will tell whether private, union issue, calling instead for expressions Company president last October, says Rosario’s appeal is and government port interests in the of interest in another area of the port, Guillermo Salazar Boero its potential as a logistics platform for province can profit from the venture ! a multi-purpose terminal for container

32 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904008.indd 7 1/9/03, 9:36:35 River Plate

Grain export powerhouse This government needs to do a lot of serious builds steam work, but to do that it needs political support. RGENTINA set new export Rapid soy production growth The political arena in records with this yearís grain continues; farmers are developing new Argentina is in a terrible Acrop, but needs more investment fields in the northwest, with 36M tonnes in its farming and transport sector expected to be harvested next year. Ten mess. Political parties have so that internationally trading bulk years ago Argentina produced only 10M ships can load more grain, and travel tonnes. The country has good private imploded; for example, further upstream to do so. Production terminal and storage capabilities to export topped 70M tonnes this season, and cereals and grains, but many believe there the Peronists have local analysis shows it can reach 200M should be further dredging to deepen the splintered into four to five tonnes by 2011 ñ but only if local and River Plate channels. ìThe most evident international conditions are favourable. problem is that everything is centralised parties. It’s crazy.... This year grain growers held on to around Rosario,î says Ferres ìWe hope their grain, extending the season beyond the river will be deepened; itís very Pablo Ferres (above right), to improve draught from its official traditional months and changing the important for soy products, and even executive director, depth of 9.75m to 10.3m. That way, trading picture. ìIn the past, farmers more important for cereals.î Panamax vessels can load more grain, harvested today and delivered tomorrow. All grain exports from Rosario are Terminal 6 and president donít need to travel to Brazil or southern Now theyíre considering their needs transported from Argentina via a channel Argentine coastal ports to ëtop offí and and requirements and storing grain,î dredged and maintained by privately of the Chamber of Private can reach new growing areas upstream. says Pablo Ferres, executive director of operated Hidrovia, which extracts a Commercial Ports, Rosario He describes the Hidrovia concession, Argentinaís largest private terminal and toll calculated on ship draught and which began guaranteeing draughts in grain elevator, Terminal 6. gross tonnage. Ferres supports moves the Parana river from the mid-1990s,

www.fairplay.co.uk 4 September 2003 Fairplay 33

FRPED030904008.indd 8 1/9/03, 10:18:38 SPECIAL REPORT Fairplay million tonnes One of the priorities is to get Argentina (Chamber of Private Commercial Ports), Argentina

10 9.27 Source: Camara de Puertos Privados Comerciales 9 back on the world map as an 8 exporting country... Politically, my 7 6.43 6 personal view is that we are seeing 5 4.46 a change of attitude in government, 4 2.92 3 but what we don’t see yet is a clear 2 0.99 1 0.53 definition of real economic and 0 Corn Wheat Soy Other Oils Oil political strategies grains/ sub-products/ Patrick Campbell, president, Centro de oil seeds derivatives Navegación, Buenos Aires

ABOVE: Up-river loadings (Rosario region): grains, meal, oils/derivatives, January-June 2003

as one of the most helpful policies ever in boosting Argentina’s standing as a key world grain exporter. “Production is Port chief must benefiting by $5-$6 a tonne because of better loading and freight cost reduction,” he says. Still, there are problems with road and rail infrastructure. International grain houses like Cargill, Bunge and Dreyfus now have an interest in nearly face the critics all terminals, elevators and factories that produce grain derivatives such as soy To have a THE latest published annual report The port is the last in Argentina pellets and oil. The crisis has seen them put from the federally managed port of managed by the federal port authority, a hold on nearly $100M in investments, bureaucratic Buenos Aires is dated 2000. The port Administracion General de Puertos. Ferres estimates. At Terminal 6, not only government collects $40M a year in taxes and tariffs Successive governments have flouted a did Bunge buy a 40 per cent interest in the from four concessioned terminals 1992 port law that decrees that all ports, Urquia family holding, but the company administration and from shipowners, but, according including Buenos Aires, be managed by postponed a $23M storage expansion in charge of to one prominent maritime source, an autonomous committee of private and plan, and since 2000 has made only “nobody knows what they are doing provincial government interests. All of limited improvements to its oil mill ! professionally with it”. Certainly the money has this should add up to a challenging term concessioned not been spent dredging the entrance for the latest political appointee, Luis channel or on other badly needed port Angel Diez, who took up the top job as terminals has infrastructure. “To have a bureaucratic intervendor (trustee) in July. Crop & export been a very big government administration in charge of Diaz knows about the port’s professionally concessioned terminals pressing issues, including expansion to forecasts 2003-4 mistake... has been a very big mistake,” says local accommodate larger container ships, agent Patrick Campbell. Campbell but most of the issues are too sensitive ! Wheat exports expected to reach 7-8M tonnes Patrick Campbell, is also president of the lobby group for this newcomer. For example, ! Soybean crop expected to exceed by 2M tonnes local agent 2002/03 crop, reaching 37M tonnes, with 9.9M Centro de Navegación, representing when directly asked how the port tonnes of beans for export, 20M tonnes of around 80 local maritime businesses. administration has spent the $40M in soybean meal, 4M tonnes soybean oil He says it costs a container line revenues it collects each year, Diez ! Largest world soy importers expected to be $40,000 to call at Buenos Aires because instead showed Fairplay a map in his China (18.5M tonnes) and the EU (18.3M of extra tolls, tariffs and pilotage, office and pointed out where $10M tonnes) compared with $15,000 in Montevideo worth of dredging work will be carried in neighbouring Uruguay. out over the next four months. He Sources: Agencia Maritima Silversea, Bolsa de Comercio de Rosario

34 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904008.indd 9 1/9/03, 9:37:31 River Plate

dismisses questions about the broken when it is a government authority, and promise ñ and legal requirement ñ to why it continues to charge owners a hand the port management over to an dredging fee for a part of the channel autonomous committee, saying there for which it is no longer responsible. Snapshot: Buenos Aires are other more urgent priorities. These These are tougher questions, which Diez include the governmentís dredging work cannot answer after just four weeks on Port, Jan-Jun 2003 and another international bid to sell off a the job. failed container terminal, Buenos Airesí Diez comes from the same southern Four years ago, annual TEU throughput almost passed the former Terminal 6. Diez says a special province as new president NÈstor one million TEU mark. Today terminals are struggling to committee is to review port user tariffs, Kirchner, and when asked what he did achieve just over half that. and emphasises a government review in his previous job, he responds: ìcareer into the four terminal concessions signed politicianî. He will be hoping his new ! Tonnage reached 2.95M tonnes, a 23.8% increase on nearly ten years ago. Agents ask why the international maritime constituency the same period in 2002 AGP adds value-added tax to its invoices doesnít vote with its feet ! ! 1.95M tonnes was exported, 1M tonnes was imported. Exports increased by 19.9% and imports by 32.2% on the same period last year

! Twice as many containers were exported than imported

! Ship calls: 906 ships, average stay 24 hours (890 ships, average stay 19 hours, in first-half 2002)

Terminal throughput Terminals 1&2

Terminales Rio de la Plata (TRP) (P&O Ports)...... 144,900 TEU Terminal 3

Terminales Portuarias Argentinas merged with TRP...... 31,200 TEU Terminal 4

APM Terminals...... 27,800 TEU Terminal 5

Bactassa (Hutchison Port Holdings)...... 68,400 TEU

Total ...... 272,300 TEU Source: Gerencia Comercial, Administracion General de Puertos

LEFT: Luis Angel Diez faces a lot of tough issues as the government’s new trustee at Buenos Aires

www.fairplay.co.uk 4 September 2003 Fairplay 35

FRPED030904008.indd 10 1/9/03, 9:37:51 SHOES & SHIPS Navigating with the neighbours

ERE’S a good excuse to get out of Cadets still grapple with doors, adjust your eyes to the dark, sextants and sight reduction Hlook up to the heavens and ponder how tables, but only because this is not-so ancient mariners plied the trade routes. required by vetting inspectors The planet Mars is closer to Earth today than with the oil majors and some at any time since astronomers began keeping shipping companies. “They do it records. During the last week of August, the Red because they have to, but many Planet’s orbit was 55.5M km from Earth, about of them can’t imagine actually one-third of the distance between us and the sun. navigating with a sextant and Mechnical navaids in the captain’s cabin Before the 20th-Century advent of a chart,” says Betts. As long as the GPS on a replica 18th-Century merchantman. electronic navigation aids, seafarers out system doesn’t crash, the batteries don’t They’d have known how to get to Mars of sight of land had only the stars to help run down or the receiver fall overboard, determine their position. Armed with a technology has taken over. Capt Betts neighbours. HG Wells’ 1898 novel War of sextant, nautical almanac and chronometer, a notes that good celestial navigational skills the Worlds describes a terrifying Martian good navigator could determine his position still survive among yachtsmen, and that invasion of Earth, and a 1938 US broadcast to within a few nautical miles. By measuring finding familiar stars in the night sky is still based on the book sparked a mass panic. More the angles between heavenly bodies and fascinating. recently, in the movie Total Recall, Californian known positions on earth, map makers On 28 August, Mars reached “opposition”, political hopeful Arnold Schwarzenegger filled in huge blanks in our knowledge of the moment when it, the Earth and the sun plays a character who buys the ‘memory’ of a geography. Captain James Cook is said to align in space, with Earth and Mars on the holiday trip to Mars. In popular culture at least, have used this method to map the outline of same side of the sun. At this time, Mars no one pays too much attention to Saturn, Australia and New Zealand. Apart from the rises at sunset, reached its highest point in Jupiter, Mercury and the rest, though Pluto has sun, moon and 57 distant stars, the Nautical the sky at midnight and set at sunrise – no managed to eke out a living as a minor cartoon Almanac lists tables necessary to calculate matter where on our planet you view it from. character. latitude and longitude from sights of Mars, To find its exact location in the sky from The show isn’t over yet. Mars will continue Venus, Jupiter and Saturn. your position on earth, an online nautical to shine at its absolute brightest magnitude Captain Fraser Betts, principal of the almanac with easy-to-use star finder can be until 2 September. It will still be as bright as Hanseatic Marine Training School in Limassol, used; see http://www.tecepe.com.br/cgi-win/ Sirius, the brightest star in the sky, until 8 agrees that celestial navigation is a lost art. cgiasvis.exe/VISSTAR October. So go out tonight and navigate your “And it is an art,” he says; “not just something Mars stirs the imagination of earthlings way to seeing it for yourself ! you can pick up and do; you have to practise it.” more than any other of our celestial Christopher Slaney Déjà vu – 1903

PROTEST at the new Merchant Shipping Bill rumbled on during September ’03. ferry between North and South Shields. Meanwhile, four companies were At issue was not only the idea of English language tests for foreign seamen, amalgamating to form Tyne-Tees Steam Shipping Co. but also the proposals that all vessels carry a certificated cook and that seamen That much bigger amalgamation, the Morgan Combine, was again the subject should have the right to appeal against a master’s refusal of a favourable of wild rumours in the press, mostly with regard to the position of the White discharge. Fairplay saw it all as an unholy alliance between its two bêtes noires Star Line. Fairplay’s Look-Out Man not only dismissed these, but also revealed – the Board of Trade and the trades unions. that he had recently spent some time in New York, where he had looked at the Not to be outdone by Boulogne, Dover was planning facilities for trans-Atlantic history and present position of the Combine. He thought it was in fear of being liners and “hoped to meet the requirements of the Hamburg-American brought under the operation of the Sherman Anti-Trust law and being branded service next July”. The Tyne Commissioners, who had blocked proposals for a monopoly ! a transporter bridge, were criticised for their tardiness in improving the Rick Hogben

www.fairplay.com 4 September 2003 Fairplay 36

FRPED030904007.indd 36 1/9/03, 8:43:46 COMPANIES & MARKETS Supplying demanding

TODAY’S freight rate is the solution at the end of a very long figures equation. Arguably fleet supply is the more LEFT: China Steel we hope to tap the demand predictable element to Developer off Hay Point fundamentals that drive our this calculation. But our business. Not all our charts and new-look Fairplay aims insight into demand for iron ore! tables will appear every week to provide a fresh insight But will the massive surge in steel as we shift the focus to follow into demand. production be sustained? We the latest developments. But, On page 50 we offer summary information on combined with our commodities introduce a new market world steel production as issued coverage, we hope to give the indicators page, packed by the International Iron and Steel proper context in which weekly with information on what Institute. This offers a leading developments can be placed. Photo: is shaping demand in indication of how the demand for This should go some way to

both Wet and Dry markets. Chris raw materials is shaping up, and making decisions much easier ! The page will offer the how shipping will fare in its wake. latest information on a Mack US oil stocks are extremely

rolling basis on a variety e low and signs of a rebuild could IN THIS WEEK’S y of production, trade indicate a turnaround in tanker COMPANIES & and consumption areas. It will implications for trade patterns as fortunes. We will be bringing you be a concentrated source of the major producers get back on an insight into the latest trends MARKETS PAGES information on the latest trends track after the recent droughts. in US stocks, consumption and shaping shipping’s profit – or loss. Will China put the cat among imports, based on data from the COMPANIES As we move from the Latin the pigeons again by accelerating US Department of Energy. But NOL raises its sights American grain season, how its coal exports? We will be Asia is likely to drive most of the after last year’s tailspin...... 38 is the US grain export season watching the volume of these growth in consumption and is shaping up? Direct from the US exports and providing the fundamentally reliant on imports NEWBUILDINGS Department of Agriculture, we latest export data as it becomes from elsewhere. We hope to keep will keep you in touch with how available. China has taken a you in touch with where demand Korea keeps up pressure...... 40 exportable tonnages are building greater share of the Asian coal is growing and, just as important, up, what has been earmarked for market, the market crucial to where supply is changing. The SHIP SALES export through what seaboard, trade growth in the coming years. Opec vs non-Opec share in Bulker price dreams and how many vessels are lining We hope to place these exports production goes to the heart of become reality...... 42 up for the business. in context by tracking the export where trade is sourced, and the The latest International Grains performance of other major impact on shipping demand. We COMMODITIES Council forecasts will keep world suppliers. will bring the latest information readers in touch with the broader At present, a regular update as and when they are updated. China: black hole for bulk commodities...... 44 prospects for wheat and coarse on Chinese steel production By offering this one-stop-shop grains across the world, with would offer the only necessary of some of these key indicators DRY MARKETS At a glance: Week-on week changes in the major market sectors A dip, but confidence going forward...... 46 -49 -79 Baltic Baltic Baltic -72 Baltic TANKER MARKETS Dry Capesize Panamax Crude Index Index Index Oil +39 Still scraping the bottom...... 48

www.fairplay.co.uk 4 September 2003 Fairplay 37

FRPED030904018.indd 1 1/9/03, 18:15:30 COMPANIES Shock absorbers for hi

NEPTUNE Orient Lines can now indulge in its magnificent obsession with liner trades and logistics. Both have been profitable, playing key parts in the company’s dramatic turnaround. The Singapore-listed liner giant has reaped a net profit of $88.7M for the first half of 2003 exceeding even the high expectations of down-to-earth analysts. Losses for the same period in 2002 had plunged even below the same analysts’ worst fears, to $155.7M. With improvements across the board, turnover has risen 19% to $2.6Bn.

Lim’s prescription December 31, 2002. This has now chief executive David Lim said, is to squeeze the come down to $2.5Bn with the net emphasising that this would serve bottom line gearing reduced to 3.77 from 4.46. the group well into the future. As container freight rates rise The emphasis on the future is from the depths (see table), liner timely as NOL, while thriving in operators are loath to look beyond good times, has fared badly when boxes. CEO Ron Widdows of NOL’s the going has been tough. From liner arm APL, which contributed strong profitability in 2000 when 70% of the turnover, noted that rates and volumes were running F THE FIRST half of 2003 was chartering division – propelled in the while freight rates for first-half 2003 high, NOL suffered successive good for NOL, the rest of the year main by AET – chipped in again with averaged $2,358 per FEU (17% up losses in 2001 and 2002 as freight Iis expected to be even better. As a 68% rise in turnover at $263M and on the comparable 2002 period), rates deteriorated. The nadir was group chief financial officer Lim How a gross profit of $71M. Giving up AET average rates in the second quarter reached when losses mounted to a Teck pointed out, traditionally the was rather like Manchester United shot up by 26% to $2,517 per FEU. staggering $330M last year, forcing peak season for liner and logistics relinquishing David Beckham, There is room for an even further the exit of CEO Flemming Jacobs begins from July or August. Already although Beckham’s performances rise because, as Widdows observed, this January. in July, liner arm APL’s average freight on the football pitch have tailed off rates on the trans-Pacific and Asia- David Lim’s prescription for rate rose by three per cent from more than AET’s. Europe trades have still to reach this fallibility is to “squeeze the the previous month to $2,664 per No one can point such fingers at levels seen in the past. bottom line” by being lean in terms FEU. Continued rate recovery in the the Eagle, which has been sold to of cost, and maximising what he Asia-Europe trade and peak season Malaysia International Shipping Widdows: “Pressure on space is calls the “top line” by ensuring that surcharges in the trans-Pacific trade Corp (MISC) for no less than $445M forecast to continue beyond this year” customers get excellent value: “This has been credited for the rise in the in cash with additional value set will help us smooth the cycles and average freight rate. to flow. “And while we receive With strong demand driving occasional shocks experienced Then there are the goodies that income for only one month of AET’s growth, space is again becoming in world trade, and sustain will flow from the sale of American operation in the second half of an issue, as Widdows put it. Though profitability.” Eagle Tankers (AET). Chairman the year… there is provision for an the world container fleet has It is just as well that, even as it Cheng Wai Keung indicated that increase in the equity price should expanded, this has been matched rides the crest of a wave, with the NOL’s product tanker fleet under AET achieve certain performance by a 20% growth in the trans-Pacific stock hitting a three-year high Neptune Associated Shipping too milestones over the next two years,” eastbound and Asia-Europe of S$2.03 ($1.16) per share even would be disposed of, probably by Lim said. While not exactly soaring, westbound trade. “Pressure on space before the buoyant half-year results the end of the year, to focus on the AET was set to fly high with its is forecast to continue beyond this were announced, NOL executives “core” liner and logistics operations. young, double-hull fleet of Aframax year,” Widdows said. are putting shock absorbers in Some had questioned the wisdom tankers backed by two new VLCCs. The dramatic results have also place. Liner division APL achieved of disposing of AET, which was a Still, the sale of AET has lightened been largely helped by a “disciplined cost savings of $36M in the second profitable concern even during the burden of NOL, which was focus” on cost containment and quarter, bringing total savings this tough times. In fact, as always, the carrying heavy debt of $2.8Bn by maximising yield, new group year to $70M !

38 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904012.indd 38 1/9/03, 15:37:04 Company Shorts 29 AUGUST Golar LNG seeks consolidation: Golar LNG, the Anglo- high-flying NOL Norwegian LNG carrier group, wants at least one corporate transaction in the next year to consolidate the business, a director has revealed.

29 AUGUST Star shuns LauritzenCool offer: Star Reefers is “not enthusiastic” about joining forces with LauritzenCool, chief executive Aage Thoen told Fairplay today.

28 AUGUST Paul Martin completes CSL transfer: Paul Martin has completed the transfer of control over Canada Steamship Lines to remove any conflict of interest in his race to become prime minister. APL Trade imbalance : Full backhaul for every 10FEU full headhaul 28 AUGUST Younger ferries burden operators: Greek ferry operators Superfast Ferries and Blue Star Ferries suffered first-half losses, which were attributed to servicing the cost of loans on new tonnage.

28 AUGUST LauritzenCool links with NYK Reefer: Reefer operator LauritzenCool is to launch a vessel-sharing partnership with NYK Reefers in January. APL: Average freight rates (FEU) 27 AUGUST New head for Malaysian ship fund: Global Maritime Ventures, the Malaysian venture capital fund, has appointed a new chairman to succeed Sufian Ahmed, who resigned earlier this month.

27 AUGUST PTP parent denies Singapore talks: The parent company of Port of Tanjung Pelepas has denied media reports about negotiations for co-operation or a merger with rival PSA Corp of Singapore.

27 AUGUST James Fisher plans for growth: James Fisher, the UK APL Cost/FEU: Trend analysis for cost (indexed) shipping and marine services group, has announced an accelerated fleet-renewal programme. The Highs and Lows of NOL: Turnover and Net Profit (Net Loss) from 2000 to 1H2003 1H 2003 2002 2001 2000 27 AUGUST Export demand boosts Singamas: Hong Kong-listed Turnover (in $Bn) 2.6 4.6 4.7 4.6 container manufacturer Singamas has reported Net Profit (Net Loss) in $M 88.7 (330) (56) 178 a strong increase in first-half profit on the back of Figures for 2002, 2001 and 2000 are for the full year higher demand for boxes to cover Asian exports.

www.fairplay.co.uk 4 September 2003 Fairplay 39

FRPED030904012.indd 39 1/9/03, 15:38:12 COMPANIES & MARKETS

independent marketing and design capability European roller coaster going down within three to four years. To this end, it has agreed to enhance co-operation in marketing, EUROPEAN shipbuilding continues its roller Amsterdam stock exchange (see page 6). production and design, and undertaken to coaster ride. Good news is hard to fi nd – Better news comes from comes from transfer shipbuilding technology employing certainly not enough to balance the bad news Romania, with Daewoo Mangalia announcing skilled workers from Koje Island to Romania. from IHC Caland, the Dutch off shore, dredging plans to build larger ships of up to 70,000dwt Last year Mangalia recorded $10M in operating and shipyard group, which has confi rmed the from 2007. Mangalia’s Korean parent has profi t and $97M in turnover – satisfying for its closure of Rotterdam-based van der Giessen- promised that the yard would have its own Korean backers but not exactly the good news de Noord yard. Its remaining two yards, IHC Holland and Merwede, are to be split off as a separate company, to be quoted on the

Cape Bon was the first of six 35,000dwt

tankers ordered by German owner Schoeller Photo: Holdings in the last quarter of 2001 from Dietmar Hyundai Mipo. Two more, Cape Bird and Cape Bille, are scheduled for delivery later this year Hasenpusch with the Cape Bruny due early next. The final two are still to be named but are scheduled for delivery in March and May next year

Newbuilding orders reported week ending August 29, 2003

Shipbuilder No Price Owner/Operator Delivery Type Capacity China Shipbuilding 1 Yang Ming 2005 Container Ship 1,500 TEU Dok & Perkapalan Surabaya 1 Pertamina 2005 Products Tanker 6,500 DWT Hyundai HI 3 MISC 2006 Container Ship 7,700 TEU Hyundai HI 2 MSC 2006 Container Ship 7,700 TEU Hyundai-Samho 2 Kristian Gerhard Jebsen 2006 Crude Oil Tanker 159,000 * Lingshan Shipyard 2 Tom Woerden 2005 Multi-Purpose Ship 350 TEU Nanindah Mutiara 2 $8.60M Pertamina 2005 Products Tanker 3,500 DWT Onomichi Dockyard 1 $31.00M Dynacom Tankers 2005 Chemical/Oil Tanker 71,000 DWT Onomichi Dockyard 1 $31.00M Dynacom Tankers 2006 Chemical/Oil Tanker 71,000 DWT Oshima Shipbuilding 1 Star Shipping 2006 Bulk Carrier Ore 55,000 DWT PAL Indonesia (Persero) 1 Pertamina 2005 Products Tanker 30,000 DWT Shina Shipbuilding 1 Morfini 2006 Chemical/Oil Tanker 40,000 DWT STX Shipbuilding 3 Parakou Shipping 2005 Products Tanker 74,700 DWT STX Shipbuilding 1 Parakou Shipping 2006 Products Tanker 74,700 DWT STX Shipbuilding 2 Bernhard Schulte 2006 Container Ship 2,600 TEU Universal Shipbuilding 1 Kyoei Tanker 2005 Crude Oil Tanker 300,000 * Astilleros Zamacona 2 Esvagt 2004 Supply Vessel 320 GT

40 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904015.indd 40 1/9/03, 18:06:11 NEWBUILDINGS

Europeans had been hoping for. multi-purpose vessels from German owner August is not really the time for major Erwin Strahlmann. They will be built to the Shipping shorts shipbuilding news, and in Europe one must yard’s Ryn design, with a 4,600m³ hold and be go far inland to fi nd it: this time its Slovakian able to carry 176 TEU. The main engine will PERTAMINA is reported to have builder Slovenske Lodenice Komarno, which be a MaK 8M20 and delivery is scheduled for ordered four product carriers at three has won an order for eight 3,600dwt dry cargo between May 2004 and September 2005. different Indonesian yards. A pair of tankers has gone to Nanindah Mutiara with delivery scheduled for February and April 2005 and brokers indicating Korean tankers dominate a cost of about $8.6M each. Also in Indonesia, PT Pal has won an order for a SOUTH Korean yards have been collecting the Chinhae-based shipbuilder capturing an 30,000dwt tanker with delivery in 2005. the tanker orders again, and leading the order for four 74,700dwt product carriers from Finally Dok & Perkapalan in Surabaya way has been world leader Hyundai Heavy Parakou Shipping in Hong Kong and confi rming has picked up an order for a 6,500dwt Industries (HHI), which has picked up an a third 45,800dwt product carrier for Belgian tanker, also due for delivery in 2005. order from Swiss owner Western Petroleum owner Transpetrol Service. for a trio of 116,000dwt product carriers. A Finally Shina Shipbuilding has linked up CHINESE yard Dalian New shipbuilding source told Fairplay that they are with two Italian owners for orders of three Shipbuilding (DNS) has launched the scheduled for delivery during the second half product carriers. Fullship has ordered a pair of Iran Darestan just 140 days after its keel of 2006. However, no price was given and a 47,000dwt tankers and Morfi ni has converted was laid ñ the yardís record for a VLCC. spokesman for HHI declined to comment. one of its options on a 40,000dwt tanker, The 299,500dwt tanker is the fourth HHI’s subsidiary Hyundai-Samho has also bringing its total to four. The Fullship pair in a series of five for National Iranian been busy, winning an order for a pair of will be ice-classed and brokers report a cost Tanker Co and is scheduled for delivery Suezmax tankers from Norwegian owner of about $30M each with delivery scheduled in October this year, with the final vessel Kristian Gerhard Jebsen. The 159,000dwt for the end of 2006 and early 2007. Morfi ni’s scheduled for April next year. product tankers will be sister ships to the pair option conversion is also scheduled for ordered in 2001 and delivered earlier this delivery by the end of 2006. These are the year. Delivery for these latest newbuildings kind of orders that used to be meat and drink is scheduled for the second half of 2006 and for Italy’s shipbuilders, which only serves to brokers indicate a cost of about $47-49M. emphasise the gloom that is descending on STX also claimed its share of the action, with Western European industry.

Contracts Pending week ending August 29, 2003

Shipbuilder No Price Owner/Operator Delivery Type Capacity Hyundai HI 1 Swiss Interests 2006 Products Tanker 116,000 * Jiangsu Yangzijiang 1 $7.00M Peter Döhle 2006 Bulker 7,580 DWT Jiangsu Yangzijiang 1 Peter Döhle 2006 Container Ship 1,600 TEU Namura Shipbuilding 1 $36.00M Valles Steamship 2005 Products Tanker 105,000 * Samsung HI 1 BG Group 2006 LNG Carrier DWT Shina Shipbuilding 1 $30.00M Fullship 2006 Products Tanker 47,000 * Slovenske Lodenice-Bratislava 1 Erwin Strahlmann 2004 Multi-Purpose Ship 176 TEU

Deliveries recorded week ending August 29, 2003

Vessel Shipbuilder Owner/Operator Type Delivery Capacity Cape Egmont Samho Shipbuilding Samho Shipping Products Tanker Aug 03 12,000 DWT Gas Oriental Hyundai HI MOL LPG Carrier Aug 03 22,800 DWT Mandarin Glory Nantong Cosco KHI Da Sin Shipping Bulk Carrier Ore Aug 03 49,400 DWT North Star Nassco Totem Ocean Trailer Express Ro-Ro Aug 03 27,835 DWT The Princess Rodriquez Cantieri Arab Bridge Marine Pass/Vehicle Ferry Jul 03 3,352 GT

www.fairplay.co.uk 4 September 2003 Fairplay 41

FRPED030904015.indd 41 1/9/03, 18:06:40 COMPANIES & MARKETS Price dreams become reality IF, as reported by Gibson among others, the it will, although Gibson points out that the been sold on for $17M, possibly, says broker sale by Metrofi n of a 171,995dwt Capesize vessel has been acquired against a 10-year Braemar-Seascope, with a two-year charter back resale proves correct at a reported $44/45M, coal contract for Israel. attached. it not only marks a “very tidy profi t”, as Gibson The surge in bulker prices is underlined by But there are plenty of indications that would have it, but a tremendous fi llip to the sale of the smaller, 135,364dwt Capesize bulker prices could fi nd yet more upside, Capesize prices. Ariston. The 1992, Fincantieri-built ship was particularly as confi dence builds that 2004 Clarkson data suggests that the average acquired last year at sub-$12M, and has now will be just as good, if not better, than 2003. price for a similarly sized newbuild is a mere $39M. Such a hefty premium is also being paid for a vessel not due for delivery before March, 2004, indicating the tremendous confi dence this sector now enjoys. As it is, Metrofi n acquired the vessel from Transman only in April of this year for $38M, indicating that Metrofi n not only sold high but also bought very astutely as the price then off ered no premium at all over newbuilding costs. Clearly some thought the bulker boom would not last as long as the new buyers must think Photo: “Cashing in” on high bulker prices, Clipper

has taken profits on the new/resale John F

Clipper Galaxy and Clipper Gemini, sold ole

for $21M apiece y

undisclosed interests, $8.00M. 1998. 9,088dwt, STAR PHOENIX: sold by Intermodal Shipping, Container and 6,875gt, 588TEU. Built Shin Kochi Juko, MAN Philippines to Gourdomichalis, Greece, $14.10M. Multi-purpose B&W, 6,840bhp/15.6kt. 1995. 46,641dwt, 27,011gt. Built Mitsui, B&W, 11,651bhp/14.8kt. ACX BIZEN (Container) ex-Sinar Timur: sold by Asahi Marine, Panama to Hong Kong interests, Bulkers $1.20M. 1981. 8,238dwt, 5,60gt, 450TEU. Built Tankers Kochi, Mitsubishi, 7,000bhp/14.7kt. AGIOS ANDREAS: sold by Levant, Greece to Marine Managers, Greece, $20.40M. 2000. ATHINA (Products): sold by Thenamaris, Greece ADY (Container) ex-Bell Ady: sold by Unitas, 52,068dwt, 29,499gt. Built Sanoyas Hishino to undisclosed interests, $4.00M. Last sale: Germany to undisclosed interests, price Meisho, Sulzer, 10,100bhp/14.5kt. $11.75M, 1993. 1981. 68,820dwt, 38,613gt. Built unknown. 1995. 3,950dwt, 2,899gt, 340TEU. NKK, Sulzer, 14,400bhp/14.8kt. Built Elbewerft Boizenburg, MaK, 3,997bhp/ ALLIANCE TRADER ex-Atlantic Bulker: sold by 14.5kt. Eastmark, US to undisclosed interests, $2.90M. CORAL (Chemical) ex-San Nicolas: sold by 1980. 38,323dwt, 22,773gt. Built Kasado, MaK, Aksay, Turkey to undisclosed interests, $4.30M. CHIPPEWA BELLE (Multi-Purpose): sold by 6,800bhp/16.6kt. 1985. 10,400dwt, 6,471gt. Built Hyundai, B&W, Intermodal Shipping, Philippines to Chinese 4,273bhp/13kt. interests, $4.00M. 1983. 23,300dwt, 14,956gt, CLIPPER GALAXY and CLIPPER GEMINI (Ore 822TEU. Built China, Mitsubishi, 9,300bhp/14.8kt. Strengthened): sold en-bloc by Clipper, GOLDEN TOMO (Chemical/Oil): sold by Dorval, Denmark to Harren, Germany, for $42.00M Japan to Wessels, Germany, $21.00M including SLOMAN RIDER and SLOMAN ROVER: including two/three year time charterback at five-year time charter to Chemship at $11,500/ sold en-bloc by Sloman Neptun, Germany to $9,300/day. 2002/3. 51,000dwt, 30,928gt. day. 2000. 17,427dwt, 9,797gt. Built Fukuoka, Electra Maritime, Greece for $3.60M. Built New Century, MAN B&W, Mitsubishi, 7,200bhp/14.4kt. SLOMAN RIDER (Ro-Lo) ex-Rider: 1979. 12,888bhp/14.7kt. Vessels will remain 2,570dwt, 3,887gt, 319TEU. Built HDW, Deutz, operated by Clipper 2,880bhp/12kt. SLOMAN ROVER (Ro-Ro): 1979. Miscellaneous 3,530dwt, 4,298gt, 269TEU. Built HDW, MAN, KATENDRECHT and KIELDRECHT (Ore 3,240bhp/12kt. Strengthened): sold en-bloc $16.2M by SONG OF FLOWER (Cruise): sold by Radisson Van Ommeren, Netherlands to undisclosed Seven Seas Cruises, US to Iles du Ponant, TOKYO GLORY (Container) ex-Heung-A hon: interests. 1989. 33,050dwt, 21,399gt, 575TEU. France, $16.30M. 1974. 3,433dwt, 8,282gt. Built sold by Pacific Ship Management, Japan to Built Szczecinska, Sulzer, 10,200bhp/15kt. Kristiansands, Wichmann, 7,480bhp/17kt.

42 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904017.indd 42 1/9/03, 18:25:07 SHIP SALES/SALES & PURCHASE

What may have appeared as a ‘price too far’ is reported sold for $15.7M to Pacifi c Carriers, Prices are in part being driven higher by now becoming workable, say some broking but a deal denied by managing director Keith sellers’ unwillingness to part with ships when sources. As Clarkson report, the Panamax Denholm, who pointed out that Pacifi c Carriers it is diffi cult to get replacement tonnage Achilles was originally placed on the market has a substantial newbuilding programme. with short delivery time. Many vessels are of in May of last year. Ideas at the time were However, he told Fairplay that the company course sourced from Japan, where a number $10.00M for the 1989-built, 68,772dwt bulker, would take second-hand opportunities if and of owners are also operators themselves. This but over a year later it is now reported sold for when they arose, and reported some interest involves quite a commitment in staff , which $200,000 more. in its own new generation of 87,000dwt, would be underutilised if vessels were sold As Fairplay went to press, word was fi ltering shallow-draught post-Panamax bulkers, built according to the ‘traditional’ step by step out that the 42,000dwt Handymax Otello to Pacifi c Carriers’ own design. approach when, at the same time, few vessels Manship may have been sold for $7.2M, Elsewhere, a good price of $17.2M has been are available to join the fl eet. described by one broker as “spectacular”. The paid for Marubeni’s Royal Chance, the 1999-built Despite the reversal of the freight market adjective is not over the top considering the ‘Future 48’ Handymax. The vessel is equipped over last week, there is little belief that this vessel was built in 1985. with 25-tonne cranes, compared with a more will be anything but temporary. In coming A new benchmark has also been set with standard 30 tonnes on modern vessels, but this weeks, therefore, price ideas once considered the sale of the 1997-built Handymax Sea Orion, has proved no obstacle in the current market. extreme will increasingly become the ‘norm’.

Scrapped

COMMENCEMENT (Bulker) ex-Poli II: sold by Primera, Greece to Indian breakers, $1.36M ($240/ldt). 1976, 22,669dwt, 13,743gt. Built IHI.

DELMAS SYCAMORE (Multi-Purpose) ex-Ext: sold by Primera, Greece to Indian breakers, $2.6M ($263/ldt). 1977, 16,011dwt, 17,146gt, 773TEU. Built Mitsubishi.

EAGLE (Crude Oil Tanker): sold by Dynacom, Greece to Indian breakers, $5.92M ($252/ldt). 1978, 152,395dwt, 75,603gt. Built Valmet, Helsinki. Phot o: Hannu HEREFORD (Ro-Ro) ex-Humber Bridge: sold L by Vlasco, Monaco to Indian breakers, $3.0M aakso ($258/ldt). 1977, 17,730dwt, 22,116gt, 634TEU. Built Gdanska. SeaRiver, US to unknown breakers, $4.07M ABOVE: At $20.4M the Handymax Agios LINCE (Ro-Ro) ex-Alice: sold by Grimaldi Naples, ($165/ldt). 1979, 173,620dwt, 88,562gt. Built Andreas has sold for more than today’s Italy to Indian breakers, $3.11M ($262/ldt). 1982, Litton Avondale. newbuilding cost for the type, despite 17,773dwt, 22,211gt, 634TEU. Built Gdanska coming up for its third anniversary Stocznia. TUAPSE (Products Tanker): sold by Novoship Novorossiysk, Russia to Indian breakers, $1.81M NEW JANE (Crude Oil Tanker): sold by Vance, ($255/ldt). 1979, 23,900dwt, 14,550gt. Built Liberia to Indian breakers, $5.52M ($258/ldt). Brodosplit. 1976, 141,754dwt, 70,982gt. Built NKK. S/R BENICIA (Crude Oil Tanker): sold by IMPORTANT NOTICE: ALL DETAILS GIVEN IN GOOD FAITH BUT WITHOUT GUARANTEE

www.fairplay.co.uk 4 September 2003 Fairplay 43

FRPED030904017.indd 43 1/9/03, 18:25:31 COMPANIES & MARKETS Hot Indian steel on a roll CHINA is not only absorbing increasing volumes More work for of Indian iron ore, but is proving a significant Handies: Indian market for Indian steel semi- and finished exports of steel are products. From just 32,000 tonnes in 2000, last booming, for the year Indian exports to China topped 500,000 most part driven tonnes. Data to May suggests that these exports by China, with could now reach 2.6M tonnes for the whole year. good business for This picture is underlined by the latest data Handies as a result on trade value. Indian steel ministry data notes that in 1H03 exports to China shot up 137% to analysts believe there is $621M. Total earnings have also taken a boost more to come as China from the relatively high prices available. continues to develop Though steel exporters have found new its infrastructure, markets, China continues as one of the major generating massive demand and keeping prices Indian steel producers are not without worries, markets and the most preferred. SARS and the firm. Chinese consumption and demand growth is however, for the most part centred on the possibility resulting economic slow-down in China have hit thought to be sustainable at between 15 and 18% of a slow-down once preparations for the 2008 Indian steel exports only marginally. And local per annum. Olympic Games are complete in 2006. And markets

Dry Fixtures

COMM VESSEL FROM TO TONS DATE RATE CHART. TERMS Iron Ore Cape Europe, 93 TubaraoOrPDMadra Qingdao 150000-10% Sep 2030 19.20 NobleChart FIO;ScLd25000t Iron Ore STEAMER, (Panocean) Saldanha Bay Kwangyang 150000-10% Sep2510Oc 12.98 Equiv Posco LS FIO;ScLd55000t Iron Ore STEAMER, (Panocean) Pt Hedland Kwangyang 170000-10% Sep204Oct 7.26 Posco FIO;ScLd55000t Coal Papa, 84 Prto Bolivar Dunkirk 140000-10% Sep 1530 11.50 Kleimar FIO;55000tShinc35000tShinc Coal Star Zulu, 86 Richards Bay Rotterdam 150000-10% Sep 1530 12.00 Cargill FIO;ScLd25000tShinc Coal Lowlands Rose, 96 Hay Point Rotterdam 150000-10% Sep 2030 16.30 BHP-Billit FIO;50000tShinc25000tShinc Wheat Estable Duckling, 83 St Lawrence Bari 50000-5% Aug2910Se 16.00 Castillo FIO;8000t5000t Grains Braztrans 1, 80 River Plate Spain 30000-5% Sep 110 26.00 Cargill FIO;8000t6000t Meals Polydefkis P, 82 River Plate Algeria 18500-5% Aug 2531 34.25 Conagra FIO;4000t2500t Fertilizers Giannis D, Unvfd Tampa India 52000-5% Sep 1823 29.00 Cargill FIO;10000t5000t

Time Charter

COMM VESSEL FROM TO TONS DATE RATE CHART. TERMS 14kt33t Yong Ler, 01 Del Qinhuangdao Redel Taiwan 74500 DWT Sep 15 16500 Day Cosbulk Trip out 14kt29t Glykofiloussa, 95 Del Lagos Redel US GulfViaECSoAm 41712 DWT Sep 15 9000 Day CNR Trip out 13\kt28t Avalon, 96 Del Indonesia Redel Japan 73080 DWT Sep 810 16000 Day NYK TripOut+$100000Bonus 14kt33t Red Fern, 97 Del No Pacific Redel Taiwan 73326 DWT Sep 1220 15000 Day Dreyfus TripOut+$240000Bonus 13kt33t Tamu, 94 Del El Ferrol Redel SingaporeJapan 69149 DWT Aug313Sep 17750 Day NobleChart 2LadenLegTrips 14\kt58t Maria A Angelicoussi Del Sines Redel FarEastViaECSoAm 169163 DWT Sep 1015 40000 Day Transfield Trip out Unrptd Cape Mor, 85 Del Cape Passero Redel FarEastViaBrazil 194468 DWT Sep 1520 40750 Day Transfield Trip out 14kt36t Anassa, 83 Del Canakkale RedelFarEastViaBlackSea 63686 DWT Aug 2930 18000 Day Fayette 2642000GrnBl;Trip out 15kt58t Aquacharm, 03 Del Sasebo Redel Cont Via HayPoint 171009 DWT Sep 515 27000 Day NYK Trip out

44 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904016.indd 44 1/9/03, 18:48:40 FIXTURES/COMMODITIES

Photo: elsewhere are subject to the more usual trade wrangles, Indian producers complaining

Mar China eyes Vietnamese bauxite that exports overall have been negatively tin

W affected by trade action in the US, Canada and CHINA’S escalating demand for aluminium although prices have risen relatively modestly. r igh Thailand. and its raw materials has prompted it to turn to But it is clear that the prospective increase in t US trade authorities maintain, for example, Vietnam to secure further supplies of bauxite. aluminium outstrips that of alumina, something that Indian exports to the US surpassed Aluminiun Corp of China (Chalco), the world’s confirmed by Chalco’s chairman – “we anticipate agreed limits last year, while local producers second largest producer of the intermediate growth in domestic demand to continue to say that their exports remained below the material alumina, has begun to explore the outstrip supply,” he said. three per cent threshold, and that value- possibility of tapping its neighbour’s bauxite Domestic demand for alumina in the first half added export items still have plenty of scope reserves, according to chairman Guo Shengkun. of this year was 5.3M tonnes, according to Chalco, before they reach the barrier. “A bauxite exploration project in Vietnam is being compared with domestic output of 2.9M tonnes. But India can also look forward to far discussed by the two governments,” he confirmed, Chalco is currently selling alumina at CNY2,950 greater domestic steel consumption, “Chalco will take a leading role in the project.” ($356)/tonne on average, up 48% on last year. which could eventually cut into Chalco is in the process of nearly doubling Guo said that the price would be adjusted soon, export performance. The Indian steel aluminium production to 1.5M tpa by 2005, while but would nonetheless remain above CNY2,600. industry is growing not only on the back of it hopes to increase alumina output from 5.7M “The domestic alumina price is expected to improved export demand, but also on rising tonnes to 7.3M tonnes over the same period. stay relatively high, while the average price domestic demand from the automotive and Demand for aluminium is increasing sharply, of aluminium is likely to remain stable,” Guo construction industries. up by a quarter in the first quarter of the year, predicted.

Wet Fixtures

COMM VESSEL FROM TO TONS DATE RATE CHART. TERMS Oil Dirty Aegean Freedom, 03 EC Mexico US Gulf 70000 Sep 7 W132\ Chevron Part cargo Oil Dirty Shetland Spirit, 94 Covenas US Gulf 70000 Sep 10 W140 ATMI Part cargo Oil Dirty Sks Sinni, 03 North Sea US Gulf op US Atlantic 135000 Sep 16 W80 op W82\ Shell Oil Dirty Astro Carina, 03 North Sea US Gulf 275000 Sep 19 W52\ Stasco Oil Dirty Bering Sea, 96 Ventspils US Gulf 80000 Sep 15 W100 CSSA Oil Dirty Ragnhild Knutsen, 87 Butinge UKContinent 100000 Sep 11 W82\ Lukoil Oil Dirty Apanemo, 03 Novorossiysk Mediterranean 80000 Sep 8 W90 Rinex Oil Dirty Kuzbass, 77 Novorossiysk Mediterranean 140000 Sep 14 W80 BP Oil Dirty Mayon Spirit, 92 Libya Mediterranean 80000 Sep 10 W84\ Tamoil Oil Dirty Pentathlon, 02 W Africa US Gulf 130000 Sep 19 W75 Vitol Oil Dirty Front Duke, 92 W Africa US Gulf 260000 Sep 26 W50 Stasco Oil Dirty Eastern Jewel, 89 Yenbo Bataan 258000 Sep 17 W60 Petron Oil Dirty Venture Spirit, 03 Ras Tanura US Gulf op WC US 280000 Sep 26 W55 op W69 BP Oil Dirty Commo Jc Jimenez, 79 Ras Tanura Mangalore 86000 Sep 14 W105 MRPL Oil Dirty Genmar Trust, 92 Kuwait Singapore 80000 Sep 25 W132\ KPC Oil Dirty El Junior, 95 Ras Tanura Onsan 260000 Sep 28 W70 Ssangyong Oil Dirty Tinos, 88 ME Gulf Japan 260000 Sep 15 W60 ExxonMobil Oil Dirty Astro Cassiopeia, 03 ME Gulf Far East 135000 Sep 20 W92\ CNR Oil Dirty Pacific Courage, 92 ME Gulf Far East 260000 Sep 22 W70 Shell Oil Dirty Iblea, 03 Indonesia US Gulf 80000 Aug 27 1200000 Shell PtC;Lump Sum Oil Dirty Kition, 94 Karimun Singapore 80000 Aug 27 190000 Sietco Lump Sum Oil Dirty Hawaiian Leader, 86 Indonesia Yosu 80000 Sep 6 W127\ Caltex Oil Clean Trogir, 95 Caribbeans US Atlantic 38000 Sep 8 W215 Citgo Oil Clean Cape Bon, 03 Pembroke US Atlantic 33000 Sep 4 W255 CNR Oil Clean Poul Spirit, 95 Ventspils US Atlantic op UKCont 90000 Sep 4 W110opW130 Mabanaft Oil Clean Purple Star, 74 Black Sea Mediterranean 30000 Sep 3 W235 Rocoil Part cargo Naphtha Horizon A, 82 Libya UKContinent op Med 24000 Aug 28 W240opW230 Poseidon Oil Clean Gulf Grace, 00 ME Gulf Japan 55000 Sep 8 W250 Sitme Oil Clean Raffles Park, 92 Singapore Hong Kong 30000 Sep 3 350000 CNR PtC;Lump Sum Oil Clean Eagle Sagitta, 96 So Korea Hong Kong 30000 Sep 18 265000 Unipec PtC;Lump Sum Source: Maritime Research Inc

www.fairplay.co.uk 4 September 2003 Fairplay 45

FRPED030904016.indd 45 1/9/03, 18:22:17 COMPANIES & MARKETS

to re-adjust his ideas very aggressively. It really Bulker boom set for a marathon is scary stuff,” reports one source. Many cargo interests are completely bemused by the IF shipbrokers are still essential to the business vessel. The owner wants $12,500/day, described startling acceleration in rates. Granted, China of fixing ships, the dry bulk freight market as “silly” by one broking source. Nevertheless, has a central role to play in regional demand, hiccup may have happened because most the owner is still in receipt of a charterer’s offer particularly in steel; elsewhere the demand London brokers appeared to be on holiday of $11,500/day. That is still a good hike in rates. picture is pretty flat. last week. But most are now returning to a Elsewhere, the Handysize market is also In these circumstances, the fantastic spurt market still hectic, with no sign of a let-up as the looking red-hot. to Handysize rates may be coming to an end, traditionally busier fourth quarter looms. In the Pacific/Australia market, sources say particularly as Handymax rates will be coming The Cape and Panamax markets appear to that the 20-30,000dwt range has seen rates under pressure from Panamax weakness. have taken the brunt of what is still a marginal gallop up by $500/day in a week. At the end of Besides, at freight rates 20% higher, charterers slide compared with the year as a whole, last week, Precious Shipping was reported to be could avail themselves of vessels double the size, with the Handymax market remaining firm. wanting rates in the mid-$12,000s/day for one one London broker told Fairplay. This will surely But brokers tell Fairplay that the Handysize of its 1994-built, 23,700dwt loggers coming free stop rates moving very much higher – unless the market is ploughing on with a fresh round of in Bangkok by mid-September; that was just Handymax market finds scope for another rally. It rate increases: “This sector is going a bit crazy about the top rate for a bigger, modern 28,500- is worth pointing out that Handymax rates have at the moment,” said one. Take, for example, tonner the week before. Local interests describe so far continued to firm even as Panamax and an owner’s requirement for a trip from Vitoria this as “just amazing and simply unheard of” Cape markets have pulled back. to the Continent for a 1985-built, 25,000dwt for this size. “Anyone trading cargoes is having And “pulled back” must be the most relative

Baltic Dry Index Baltic Handymax Index

Daily summary of the Baltic Time Charter Averages...... $/day A steel-inspired lift to rates saw Handymaxes buck the otherwise weaker trend in dry bulk on a week- Baltic Capesize Index 4 T/C Routes...... 34,437 to-week basis, but rates were easing as last week drew to a close. Nevertheless, broker Galbraith’s Baltic Panamax Index 4 T/C Routes...... 15,728 highlights very strong period rates; confidence is in plentiful supply, and another rebound likely. Fairplay 16000 Fairplay 2400

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46 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904026.indd 46 2/9/03, 17:02:07 y e Mack

DRY INDICES/MARKETS Chris Photo: of terms. Many are now convinced that the market will remain extremely strong for the rest of this year and next. Even if it stays at $30,000- $40,000/day in the Cape market, that is “not bad”, remarked a phlegmatic Cape broker. As the BCI and BPI have fallen back, this is a softening in a market that still remains rock hard. Baosteel has reportedly fixed the Berge Phoenix for $280,000/10%, Tubarao/Beilun at $17.50/tonne, while Noble fixed the more conventionally sized Cape Europe for $150,000/10%, Tubarao/Qingdao at $19.20/ tonne. Transfield fixed the 169,000dwt Maria A Angelicoussi at $40,000/day, delivery Sines for a trip to China via Brazil, and small 20-year-old Capes are securing $21,000/day for Australia- China round voyages. Coming or going: conviction is growing able to cope. If they cannot, this restraint may Hardly a bust, and the boom is set to last. One that next year will be good either way for cap the freight market next year, just as supply London broker describes the current market as bulkers, but sudden supply shifts as more constraints capped the Australian trades this year. a learning curve for brokers: “In the past, even at ore is brought on stream could make for a But the market could also be pretty volatile, the top of the wildest boom, we knew it would volatile market warns one broker. The reinvigorated output come down,” he says. “Either there would be acceleration plans of both Australian and some economic shock or the orderbook would current boom depends on China, not only in Brazilian exporters mean that timing of these undo the market.” But now there is a lot of terms of its demand (primarily for iron ore), but projects is all-important. A sudden increase in encouragement in the fact that, economically, also in terms of Australia and Brazil’s ability to the availability of Australian ore, for example, the world outside China can only get better, and supply. “This year we are looking at an extra could mean a sudden shift to shorter haul “there is no wall of newbuildings”. This is putting 40M tonnes, and possibly the same next year,” supplies, with a sharp impact on rates. the end of the boom out of sight. remarked one broker, and this further begs Full steam ahead it may be, but it’s certainly Of course, much of the sustainability of the the question of whether Chinese ports will be not plain sailing.

Baltic Panamax Index Baltic Capesize Index

The US Gulf grain season has not started yet, but readily available tonnage diluted rates; one reason The sharpest weekly fall since the start of July, but the downward pressure was already easing as last for an overall fall in the BPI of 3%. There were signs of a return to firmness as the week ended, however, week ended, and broker O-J Libæk reports still strong interest in long-period deals by charterers, and brokers still report sound fundamentals in both Atlantic and Pacific. suggesting longer-term convictions of sustainable high rates. South America-Far East trips still at $40,000/day or more. Fairplay Fairplay

2400 3500

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www.fairplay.co.uk 4 September 2003 Fairplay 47

FRPED030904026.indd 47 2/9/03, 17:02:38 COMPANIES & MARKETS VLCCs: as good as it gets, for now Showing a clean VLCC availability in the Gulf tightened last week, increase in tonne-miles and vessel demand. giving a boost to rates for voyages both east Last week Suezmax activity remained pair of heels and west of Suez. But that could be it for now relatively muted, with enquiry described by as brokers report that many major charterers brokers as slow. Nevertheless, some sources THE clean products market has eased of late, have now covered their requirements for most indicate that on the West Africa-US Gulf route but 2003 is proving to be a good year overall. of September. These rates could represent the rates increased by almost $3,000/day, or 20%, Winter demand in the fourth quarter promises peak until late September. although the supporting tightness was more that it will end on a further high. As it was, VLCC rates typically gained eight positional than a genuine upturn in demand. Stelmar, which has 30 tankers at sea and 11 to ten Worldscale points to reach W63 for Gulf- Any improvement in VLCC rates is likely to prove more on order, has been pleasantly surprised. Europe and W70 for Gulf-Far East, equivalent beneficial for Suezmaxes as well, as increases in Chief executive officer Peter Goodfellow says to about $32,000/day and $34-35,000/day. In demand from the Gulf will pull tonnage away the company had told its shareholders not to contrast, rates from West Africa appear to have from West Africa. The increase in VLCC fixtures expect too much in 2003 and 2004 because of stabilised at below W50, equivalent to only $18- from the MidEast Gulf to the Sumed pipeline, expected over-capacity. But far from this year 19,000/day. combined with increasing Russian Black Sea presenting difficulties, 2003 has been “pretty The encouraging thing for owners is that exports, suggests that Med rates will pick up good, and 3Q demand has been particularly market fundamentals suggest only a short- from their currently weak levels of W77.5-80. strong,” he told Fairplay. lived rate reduction. The latest IEA Oil Market The recent weakness in Suezmax cross- According to Goodfellow, the year has been Report suggests global demand averaging Med rates was not echoed in the Aframax better both because of scrapping rates and the 80.1M bpd in the fourth quarter: a record, sector, where rates increased by nearly 40% to demand for younger capacity post-Prestige. although the requirement for Opec oil is $13,000/day, thanks to a marked shortage of On the demand side, very low US inventories forecast to average 26.2M bpd, little different quality modern tonnage for early dates. of crude and products, combined with refinery from current output levels. Also, any short- The longer-term outlook for Aframax throughput in top gear, has meant further term upturn in Iraqi exports is likely to be via tonnage largely depends on developments opportunity for product imports. the Gulf and not the Med while production and in Russia. A new tanker terminal near Odessa Last week, the only really bright spot in the export facilities are repaired. in the Black Sea will soon start exporting, clean product market was in the Caribbean- Prospects in Venezuela and Nigeria remain increasing overall export capacity and USAC route, where rates strengthened by uncertain, with strikes, sabotage and political providing a port less susceptible to the weather some $2,500/day, or over 15%. Recent US unrest calling future output into question. If so, disruptions that beset many established product stock data shows another drawdown, and if Opec decides to raise quotas, demand for Black Sea ports, giving additional Aframax a consequence of a refinery shutdown VLCCs in the Gulf will rise, with a consequent employment. affecting gasoline production and the

REGION 380CST 180 CST MDO MGO Bunker prices MIDDLE EAST Latest mid-range prices listed in $ as at Monday 03 February 2003. d Khor Fakkan 163.00 168.50 249.00 251.50 d = delivered, w = ex-wharf, pp = posted price. Ports listed regionally clockwise from NE d Aden 175.00 180.00 N/a 280.00 d Jeddah 165.25 171.25 N/a 286.25 REGION 380CST 180 CST MDO MGO d Suez 163.00 168.00 N/a 324.50 NORTH WEST EUROPE d Dammam N/a 169.75 N/a 251.00 D ST PETERSBURG 137.00 145.00 216.00 265.00 ASIA d Great Belt 171.00 178.50 241.50 270.00 d Hamburg 161.00 168.00 223.00 260.00 d Tokyo 179.00 183.00 272.50 N/a d Rotterdam 156.00 163.00 221.00 246.00 d Sydney 212.00 212.00 N/a 297.50 d Antwerp 158.00 164.00 231.00 248.00 d Colombo N/a 235.00 N/a 292.50 d Le Havre 174.00 184.00 N/a 277.00 d Singapore 165.00 167.00 247.50 253.50 d Falmouth 167.00 176.00 289.50 289.50 d Hong Kong 177.00 179.00 252.50 267.50 MEDITERRANEAN d Keelung 182.00 184.00 270.00 278.00 d Istanbul 166.50 175.00 260.00 261.50 d South Korea 171.00 176.00 270.00 280.00 d Piraeus 164.00 172.00 N/a 255.00 AMERICAS d Valletta 165.00 173.00 N/a 266.50 w New York 173.00 184.00 315.00 N/a d Augusta 171.50 178.50 N/a 269.50 w Houston 166.00 169.00 257.50 N/a d Fos+lavera 175.50 195.00 N/a 274.00 w Cristobal 171.00 177.00 262.50 N/a d Gibraltar 166.50 172.50 276.00 282.50 w Venezuelan Por 173.00 182.00 264.00 268.00 AFRICA d Rio De Janeiro 163.00 167.00 N/a 322.00 d Mombasa N/a 198.00 300.00 310.00 d Buenos Aires 177.00 177.00 279.00 296.00 d Durban N/a 166.00 267.50 277.50 d La Libertad 180.00 190.00 N/a 363.00 d Lagos 217.50 227.50 N/a 320.50 w Los Angeles 174.50 186.00 287.50 N/a d Dakar 209.00 219.00 N/a 290.00 w Seattle 166.50 179.00 302.50 N/a d Las Palmas 172.00 178.00 275.00 279.00 w Vancouver Bc 172.00 178.00 362.50 360.00 48 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904024.indd 47 2/9/03, 16:35:36 TANKER INDICES/MARKETS

expected surge in gasoline demand over the middle distillates and fuel oil, with heating oil Stelmar is enjoying a surprisingly good year Labor Day weekend, which generally marks stocks some 10M barrels lower than a year ago. the end of the driving season. Despite these Current high oil prices will act as a bottom of the range for the past five years. factors, gasoline imports have started to disincentive for much stock-building, and This suggests that refined product trades will decline, but the focus of interest is switching to OECD product stock levels are close to the continue at a high level throughout the winter.

Baltic Spot Rates – Crude Oil Baltic Clean rates

Very tight VLCC tonnage availability in the Gulf saw rates improve, particularly to the East, despite US demand was the highlight for owners last week, but limited to upcoast movements as what brokers describe as very low demand. Lack of demand characteristed West Africa too, with trans-Atlantic rates fell back hard. Clarkson reported some relief in the UKC, but in general the very few, if any, actual fi xtures. But the VLCC rates revival was enough to lift the Dirty Index by 5% performance elsewhere was disappointing and overall the Clean Index suff ered a mild reverse, to post-800 levels, despite an untried Suezmax market described as no more than stable, and an ending 18 points lower at 1,049. Brokers report a softer tone in the Far East, aff ecting primarily the LR market, but with negative results in the MR sectors perhaps more apparent this week. Aframax market with just enough in it to support last done. Fairplay Fairplay 2300 1600 1500 2100 2003 2003 1400 1900 1300 1700 1200 1500 1100 1300 1000 1100 900

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www.fairplay.co.uk 4 September 2003 Fairplay 49

FRPED030904024.indd 48 2/9/03, 16:36:01 COMPANIES & MARKETS NEW MARKET INDICATORS

Coal Trade Latest (M tonnes) Total (M tonnes) 25 25 SOUTH AFRICA AUSTRALIA AUSTRALIA CHINA CHINA INDONESIA COLOMBIA INDONESIA TOTAL COLOMBIA

20 20

15 15

10 10

5 5

0 0 8/00 12/00 3/01 6/01 9/01 12/01 3/02 6/02 9/02 12/02 3/03 6/03

Big 5Wheat/Coarse Grain Exports Outlook (M tonnes) World Total (M tonnes) 200 215 180 World Total 210 160 140 205 120 USA 100 200 80 EU (15) 195 60 Canada 40 Australia 190 20 Argentina 0 185 98/99 99/00 00/01 01/02 02/03e 03/04f

Australia/Brazil Iron Ore Exports (M tonnes) Crude Production(M bbl/day) World Total (M bbl/day) 35 43 71 33 41 Non-Opec 70 31 39 World 69 29 37 2003 68 27 2002 35 25 33 67 23 31 66 21 29 2001 65 19 27 Opec 64 17 25 15 23 63 J F M A M J J A S O N D 1/00 4/00 7/00 10/00 1/01 4/01 7/01 10/01 1/02 4/02 7/02 10/02 1/03 4/03

50 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904029.indd 2 2/9/03, 19:25:06 COMPANIES & MARKETS

Company index

Administracion General Hellenic Coast Guard 19 Lineas Feeder 26 Star Reefers 5 de Puertos (Argentina) 26, 34 Hidrovia 28, 33, Maersk Sealand 32 Stelmar 48 Agencia Maritima Robinson 28 Hong Kong Liner Shipping Malaysia International Stephenson Harwood 12 Agencia Maritima Silversea 34 Association 9 Shipping Corp 38 STX 40 Alpina Reederei 30 Hongkong International Maritime Industry Cluster Tarragona, port of 32 (Philippines) 12 Aluminium Corp of China (Chalco) 45 Terminals 9 Terminal 6 (Rosario, Argentina) 33, 34 Marubeni 42 American Eagle Tankers 38 Hutchison Port Holdings 9, 28, 35 Terminal Cuenca del Plata 32 Merwede 6 American P&I club 17 Hyundai Heavy Industries 40 Terminal Puerto Rosario 32 Metrofin 42 Antares Navieras 26 Hyundai-Samho 40 Terminales Rio de la Plata 35 Montecon (Uruguay) 32 APL 38, 39 ICTSI 32 Tsavliris 15 Morfini 40 APM Terminals 28, 35 IHC Caland 6 Tyumen Oil Co 5 National Port Authority Astillero Rio Santiago 30 IMO 18 Ultrapetrol 27, 31 (Uruguay; ANP) 31, 32 Australian Customs Indian National Ship Owners’ US Department of Agriculture 37 Neptune Associated Shipping 38 and Fisheries 52 Association 10 US Department of Energy 20 Neptune Orient Lines 38, 52 Australian Maritime Indian National Ship Owners’ Van der Giessen-de Noord 6 Safety Authority 11 Association 10 NYK Reefers 5 Volgotanker 5 Bolsa de Comercio de Rosario 34 Indian Oil Corp 11 Okta Crude Oil Refinery 12 Yantian International P&O Nedlloyd 52 Bunge 34 International Chamber Container Terminals 8 Cargill 34 of Shipping 52 P&O Ports 28, 35 Centre for Global Energy Studies 22 International Grains Council 37 Pacific Carriers 42 Centro de Navegación International Iron and Pakistan National Shipping Corp 17 (Argentina) 28, 34 Steel Institute 37 Philippines Maritime Chamber of Private International Tanker Owners’ Industry Cluster 12 Commercial Ports (Argentina) 28 Pollution Federation 17, 52 Polembros 14 Chiwan Container Terminals 9 Izar 7 Poten 20 There is so little fairplay in the Clarkson Research 20 Jan de Nul 28 Precious Shipping 46 world. If our own efforts succeed, Clipper 42 Jetoil Greek Petroleum 12 Qingdao, port of 8 we shall have taken the first steps CSX World Terminals 8 JR Williams agency 35 Shekou Container Terminals 9 towards promoting the habit of Daewoo Mangalia 40 Karachi Port Trust 14 Shina Shipbuilding 40 calling things by their right name Delfino maritime agency 35 Katoen Natie 32 Shipowners Claims Bureau 17 and looking at them through Dr Peters 20 LauritzenCool 5 Shipping Corp of India 11 uncoloured spectacles Dreyfus 34 LauritzenCool Logistics 5 Slovenske Lodenice Komarno 40 Frontline 24 Liangyungang, port of 8 SSY Research 20 Fairplay, May 18, 1883 Forthcoming Special Reports

18 SEPTEMBER 25 SEPTEMBER 2 OCTOBER 9 OCTOBER Maritime Cyprus Germany Paints & Coatings Russia Netherlands Antilles Taiwan South Africa Shipmanagement & Aruba

For further details on advertising, please contact: Sales Department NEWBUILDINGS Tel: +44 1737 379700 · Fax: +44 1737 379001 · Email: [email protected] · Web: www.fairplay.co.uk 2 OCTOBER

www.fairplay.co.uk 4 September 2003 Fairplay 51

FRPED030904023.indd 1 2/9/03, 16:32:43 CAPTAIN’S LOG

Lim on a limb It’s been a GOOD week for...

LL eyes at the Neptune Orient Lines 57,000 Western Australian sheep, who gained a press conference in Singapore to release reprieve when Saudi Arabian quarantine A the morale-boosting half-year results authorities refused to accept them. (see page 38) were on new chief executive David Lim, and the ensemble of reporters was LauritzenCool whose final bill for the Exxon Valdez spill making silent comparisons with ousted CEO and NYK could shrink from $5Bn to $25M; Spanish Flemming Jacobs. The media had loved the Reefers, ferry operators Balearia and Grupo dapper Dane, known to ooze considerable following their announcement to set up a Matutes, who have joined forces to take charm and ever ready with a flashing smile and tonnage sharing agreement; ExxonMobil, on Trasmediterránea. an obliging quote. But the buck stopped with him, and when NOL hit trouble he had to go. It’s been a BAD week for... “I don’t recognise many of these faces,” Lim could be heard saying almost under Star Reefers, left out in sell non-core assets in its banana his breath en route to the podium. For the the cold after seeing its recapitalisation plan; The producers, who former cabinet minister and a corporate partner NYK Reefers crew of bulker Captain want compensation executive, however, media briefings were link up with its major Aysuna, criticised for for losses from a nothing new. competitor; French ferry painting over evidence of a port workers’ strike at Fort “Could somebody please get my jacket,” operator SNCM, which must shipboard fire; Martinique’s de France. he instructed his staff, “although I may not need it during question time when the heat will be on.” The real question, when it came, did not find him stuck out on a limb. Hot pursuit in the cold sea “What about rumours about NOL Your last chance to taste the Patagonian entering into a terminal joint-venture with PSA?” Smiling, Lim said that he would not Toothfi sh, thanks to The Times prefer to comment on rumours. It’s obvious AUSTRALIA is rapidly earning last Thursday, that it will be raised at his next quarterly itself the reputation as the making it the briefing, when no doubt the other rumour “hard man” of the Southern longest maritime – NOL and P&O Nedlloyd lining up a Hemisphere as far as maritime pursuit on merger – will also get an airing. policing is concerned. After record. Despite And what of Jacobs’s ladder? Flemming showing the world how to handle heavy seas and has found a rung on a ladder closer to a stand-off over the Tampa, icebergs, they home, joining the advisory board of the last week it set its sights on… a were well on their way home to can fetch high prices on the Gothenburg-based Stena group. Stena’s Uruguayan fishing vessel. Montevideo by the time they black market. Reports said activities range from ro-ros and ferries to The story evolved into a were stopped. Had they made it, that $2M-worth was on board VLCCs, product tankers and bulk. Add in ripping yarn torn from the pages they would not have had a warm the runaway. The UK’s The its ship management and industrial interests, of a boys’ adventure comic as the reception; Uruguay’s ambassador Times newspaper was one of which range from engineering to recycling, Australian Customs and Fisheries to Australia had disassociated many that followed the chase, and its annual turnover of SK21Bn starts vessel Southern Supporter pursued himself from the ship’s antics but rather spoiled the impact to make sense. In dollars, that is $2.7Bn. If the puny Viarsa and its 40 crew and said that the boat could be of the fish’s near extinction by that seems familiar, it is as near as makes no into the Antarctic Ocean. The inspected if it made it home. including a tasty recipe. (http: difference identical to the $2.6Bn turnover three-week, 7,000-km chase, The ship’s crime was to //www.timesonline.co.uk/ declared by NOL. NOL’s figure is on the which was joined by South have been poaching the rare printFriendly/0,,1-3- way back up, setting a benchmark for Jacobs African and UK ships, ended Patagonian Toothfish, which 794989,00.html). and his colleagues to follow.

52 Fairplay 4 September 2003 www.fairplay.co.uk

FRPED030904025.indd 1 2/9/03, 17:26:18 FRPed030904p1003.qxd 1_9_03 12:12 pm Page 1004 GuideLight

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