THE International Maritime Organization will resume the divisive debate over how to reduce greenhouse gas emissions from the maritime sector on Monday. But the polarised array of submissions from governments and industry suggest that little progress has been made in bridging the divisions that existed four months ago, when the last major meeting closed with no clear agreements on even provisional decarbonisation targets.
The IMO is committed to adopting an initial GHG emissions reduction strategy covering the period between 2018 and 2023, before adopting a final long-term strategy in 2023.
The initial plan will effectively define the goals, evaluate and decide the appropriate measures and examine how to support member states in hitting the targets. All this is due to be signed off at a meeting in April 2018, making the so-called intersessional working group that opens on Monday a crucial opportunity to find consensus.
However, the submissions to the meeting, seen by Lloyd's List, reveal a worrying divergence between those governments debating detail over the specifics of targets and those still arguing fundamental points of principle. It also appears that quarrels over whether reduction targets should be binding or aspirational, absolute in terms of a fixed number or relative to another factor like vessel efficiency, remain.
Japan, one of the most vocal and influential IMO members, is proposing a combination of efficiency-based and absolute goals, both of which it argues should be aspirational and not legally binding.
By 2030 shipping should improve its CO2 emissions per tonne-mile by 40% compared to 2008 and then reduce its net CO2 emissions by 50% in 2060 compared to 2008. Japan stresses that these should only be aspirational targets that could be amended depending on available technologies and fuels.
Japan's submission differs from a proposal by the International Chamber of Shipping, BIMCO, Intertanko and Intercargo that calls for a minimum 50% reduction of average CO2 emissions per tonne-kilometre by 2050 and a percentage reduction of total annual CO2 emissions by 2050 compared to 2008, to be agreed later on.
Japan's cautious approach will be met by opposition both from environmentalist groups that are adamant an absolute and binding emissions cap be set, but there are also those who are resistant to the introduction of any numbers altogether.
A group of countries, including Angola, Argentina, Brazil, Ecuador, India and Peru suggested that because any estimation of international shipping emissions is uncertain, an even provisional quantitative level of ambition in the initial strategy is "unrealistic and contradicts the spirit of the road map".
These member states instead want a qualitative and aspirational vision, that puts shipping on course to transitioning to low-GHG emissions during the 21st century, without any more details on the timing.
What this essentially means, is that no firm decisions on targets will be taken until 2023, after the IMO conducts its fourth greenhouse gas study and analyses data from its fuel consumption scheme that begins in 2019.
Japan rejected the idea of a qualitative target without a quantitative one, warning that would leave a negative mark on the IMO's reputation as global climate change contributor.
The aversion to any quantitative, let alone absolute or binding targets, stems from their insistence that measures and targets reflect the varying capabilities of IMO member states. Developing countries have been known to be concerned about the effects of shipping decarbonisation measures on their economic development.
Both Japan and the group of developing countries want to see levels of ambition based on efficiency indicators, citing shipping's inability to control global trade and economy.
In addition to the big picture debate, Monday's meeting will also have to consider a few more immediate suggestions. The UK has proposed that there be short-term measures covering the period between 2018 and 2023, a stance that will be welcomed by environmental groups that are arguing for tangible action during the initial strategy.
The UK argues that agreeing quickly to some feasible measures would allow short-term emissions reductions while the IMO works on the medium-term measures, for 2023 to 2030, and the long-term measures post-2030.
AFTER three months of slow movement, the share price of Shanghai International Port Group surged 10% on Friday, hitting the daily fluctuation ceiling on the Shanghai Stock Exchange.
The industry had not been caught with an unexpected optimism, nor did the company surprise the market with significant extraordinary gains. The jump in equity value came following policy guidance unveiled during the ongoing 19th congress of China's Communist Party.
At a provincial-level session of the congress on Thursday, Han Zheng, party secretary of Shanghai, told reporters that the metropolis was planning to build a free port.
Such an initiative had been outlined by President Xi Jinping in his opening speech for the congress the day before. "[We will] give the free trade [pilot] zones more discretion to implement reforms, explore the establishment of free-trade port," he said.
China has already established several FTZs in port cities such as Shanghai, Shenzhen and Tianjin. But for the country to find a nearby reference to a generally defined free port, where imports and exports enjoy zero tariffs, Hong Kong will probably come to the policymakers' minds.
In line with the free port concept, the special administrative region - formerly a British colony - is also an international shipping centre and transhipment hub, where there is little control over foreign business and capital flows, and where carriers are not subject to China's cabotage law.
It is not yet certain whether the setting of the "Shanghai free port" will fit into the general concept, but the idea is to make foreign trade easier by having further liberalisation from the current FTZ regime, said a person close to SIPG.
SOUTH Korea's Daewoo Shipbuilding & Marine Engineering cannot compete with Chinese price undercutting, and will instead seek to outperform Chinese yards on technical expertise, a senior DSME official said.
The South Korean yard, which is now majority owned by the country's state-run bank KDB, could secure orders from European owners that valued its technical expertise at a 5%-10% price premium to Chinese yards, but recent moves by the Chinese government to financially support its own shipyards had undermined that price differential.
"We have some difficulty to compete with China Shipping," DSME vice-president and head of corporate strategy & innovation, Kyung-Yoon Kim, told Lloyd's List.
He said that French group CMA CGM had recently ordered in China with financing supported by Beijing. If European shipowners choose Chinese yards again, he said, that kind of activity would be repeated in the future.
The South Korean yard could also seek to compete on overall price for the operation of vessels, said Suk-Won Lee, DSME general manager for strategy & innovation. "There is a price for the ship; and there is a price for the operations on the ship. Our aim is to reduce the whole price of the operation of the ship, for example with liquefied natural gas fuel," he said.
A SIGNIFICANT portion of students in Japan are sceptical about the future of the country's shipbuilding industry, a recently released poll showed.
In a poll conducted by Japan's Ministry of Land, Infrastructure, Transport and Tourism among 1.3m students in high schools and universities across the country, 58.1% of male respondents said they did not wish to work for the shipbuilding industry, while 73.6% of female respondents said they either did not want to work for such industry, or never considered it.
As for reasons, a majority of respondents replied that working in the shipping industry was dangerous, unhygienic and tough, while some said it was an "outdated" industry.
Japan is not alone in facing a shortage of young qualified workers owing to Japan's rapidly ageing population - the number of people working in Korea's shipbuilding industry fell to 166,277 last year from 203,513 in 2015, marking the largest decline in 20 years.
CROATIA's prime minister Andrej Plenkovic welcomed delegates to last week's Interferry conference in Split with an observation that goes deep into the psyche of passenger shipping. As tourism is one-fifth of our nation's income, he said, "we attach great importance to the way tourists are transported to the islands along our coast".
He might have simply meant "safely". However, the tone of the event focused on environmental sustainability, so no doubt keeping the air and waters clean was in his speech as well.
Like cruise guests, ferry passengers talk back. Kevin George, chief executive at UK operator Red Funnel, explained an initiative that involves asking his staff to "think like a customer". The results have been phenomenal, according to customer feedback. WÑrtsilÑ chief digital officer Marco Ryan went even further, revealing: "When you understand their [customers'] needs, you can think about how to create value."
Phenomenal, perhaps. However, it might explain the push for renewable fuels on board ferries. "Air pollution from international shipping accounts for 50,000 deaths per year in Europe," asserted Soren Danig, from Plan B Energy Storage, who was unapologetically marketing renewable electricity.
Not every delegate was convinced. Sokrates Tolgos, from head of passengership sales at engine manufacturer MAN, argued that the heavy fuel oil-plus-scrubber solution "met regulatory requirements and was in line with industry forecasts that 80% of marine operations would be HFO-fuelled in 2030". Electricity has zero emissions, he pointed out, if you don't ask how the electricity is generated.
Reading between the lines, the ferry sector hasn't yet settled on whether to focus on doing the minimum to comply with regulators' aspirations or to listen to customers' wishes and go for zero emissions. Advocates of LNG, hydrogen, heavy fuel with scrubber, hybrid diesel-electric, or fully electric energy seem to be spending their time listening to themselves, not to customers. They should indeed start thinking like their customers.
THE Mediterranean tanker markets are bracing for potential disruptions after oil flows from northern Iraq to Ceyhan, Turkey reportedly dwindled amid military conflicts between Baghdad and the Kurdistan Regional Government, according to market participants.
While it could take weeks before the trade picture becomes clear as Turkey and Russia are intervening in the geopolitical crisis, earnings of aframaxes, which are used to carry over half of crude exports from the Botas terminal in Ceyhan, might be hit in the regional trade if the disruptions continue.
However, European refineries, which are the biggest buyers of Kurdish grades, may seek replacement barrels from other Middle Eastern producers and boost demand for larger-sized tankers in the Gulf, McQuilling Services said in a note.
"These [replacement] volumes would likely be transported on very large crude carriers and suezmaxes out of the [Middle East] Gulf to the Mediterranean through the Suez Canal or by discharging at the Sumed pipeline, where it is then transported to Sidi Kerir to load onto tankers," the note said.
Flows in the Iraq-Turkey pipeline have fallen to around 200,000 barrels per day from the usual 600,000 bpd since earlier this week, according to media reports, after Iraq's army seized control of the disputed oil-rich region of Kirkuk from Kurds and work has to be done on technicalities to resume normal oil logistic operations.
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CAPESIZE earnings keep on climbing, outperforming all other dry bulk vessel types. The reason appears to be healthy iron ore and coal demand.
China is still showing strong appetite for raw materials, with iron ore volumes up 7.1% in the first nine months of the year to 817m tonnes versus a year earlier. Coal and lignite imports, meanwhile, have risen 13.8% to 205.1m tonnes over the same period, while Brazil's iron ore exports increased 1.4% to 281.4m tonnes in the January to September period, with more than half being sent to China. And shipments from Australia reached 401.3m tonnes in the first six months of the year, an increase of 2.9% versus the same period in 2016.
The average weighted time charter on the Baltic Exchange surged almost 11% from a week ago to $22,145 per day at the close on Friday. It reached $22,420 per day on Thursday, the highest level since November 2014. The Capesize Index meanwhile gathered 274 points in the week to 3,145 points.
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SINGAPORE-based Keppel Offshore & Marine says confidence over a recovery in the offshore oil and gas industry appears to be growing.
The view comes as mergers and acquisitions gather momentum in the sector while transactions in the secondary rig market are also picking up, the shipbuilder said in its earnings report.
But it also warned that it will be some time before ordering activity for newbuilding jack-ups picks up as utilisation remains low and a supply overhang persists.
The unit of conglomerate Keppel Corporation said its operating profit of S$39m ($28.7m) for the first nine months of 2017 was supported by contributions from associates and was just enough to cover financing expenses for working capital, allowing it to break even.
Revenue in the division fell by S$742m to $1.3bn year-on-year on lower volumes of work.
Headcount after a few rounds of layoffs currently stands at 16,000, compared with over 36,000 at the beginning of 2015.
To date, the shipbuilder has won more than S$1bn in new contracts this year. Its net orderbook as of September 30 stood at S$3.9bn versus S$3.4bn at the end of the second quarter, excluding projects for Sete Brasil.
MORE needs to be done to expedite the repatriation of all abandoned seafarers in the maritime industry, said charity Human Rights at Sea in a statement. It noted that port and flag states should be held accountable when crews are left stranded in order to address these violations of human rights at the state level, and that there had to be a greater focus on uncovering owners guilty of such offences as well.
FOUR very large crude carriers can be wiped off the current world order book of more than 100 VLCCs as the quartet contracted by Greek shipowner George Economou earlier this year will not go ahead.
A source close to the owner confirmed that the newbuilding project, placed with Hanjin Heavy Industries & Construction in the Philippines, has fallen through. TMS, the shipowner's private shipping group, walked away from the project because the yard was unable to meet the deadline for issuing refund guarantees.
MAERSK is forecast to deliver an increased third-quarter post-tax operating profit, driven by higher freight rates boosting performance at Maersk Line.
Jefferies analyst David Kerstens expects operating profit at the group to rise 29% from the previous quarter to $443m, due to operating profit at Maersk Line rising by $502m to $382m. This includes the expected $200m-$300m impact of the NotPetya cyber attack. Volumes would be down 3%, representing the 70,000 teu of bookings Maersk lost due to the attack, offset by a 20% higher freight rate during the quarter.
Maersk's results are due November 7.
LLOYD'S insurer Neon has launched an underwriting operation in Italy, with participation from local marine broker Cambiaso Risso as minority shareholder. Based out of Genoa, Neon Italy will offer risk capacity to clients, initially targeting hull and cargo business placed locally.
Neon Italy will be led by Sergio Revello, who has experience in the international marine sector across both broking and underwriting roles, including on behalf of Lloyd's syndicates.
SHIPOWNER Victor Restis has bought a significant stake in Greece-based compatriot Globus Maritime, the owner of dry bulk carriers. In a private placement by Globus that closed on October 19, an investment company headed by Mr Restis agreed to purchase 2.5m shares in Globus at a price of $1 per share. The deal also provides for warrants to purchase another 12.5m shares at $1.60 per share.
Exercise of all the warrants would lift the investment by Mr Restis' vehicle, United Capital Investments, to $22.5m and give it a stake in Globus of about 35%.
ALPHA Bank has successfully completed a shipping securitisation with Citi that has raised $250m for the Greek bank. The deal is the second transaction of this type in which the two banks have partnered each other. The first one, back in 2014, was for $500m. Alpha's Greek shipping portfolio stood at more than $2bn at the start of this year. The issuance of securities on the back of shipping loans gives Alpha a liquidity boost.
REVENUES at New York-listed Global Ship Lease dipped in the third quarter relative to last year as a result of amended charter rates on two of its vessels on hire to CMA CGM.
Reporting its unaudited results for the period, GSL said revenues from fixed-rate time charters of $41.2m in the third quarter were the same as in the corresponding period last year.
NORWAY-listed Navios Maritime Containers will acquire two panamax boxships for a total of $19.75m as it continues to grow its fleet size.
Scheduled for delivery in early November, the 2009-built, 4,250 teu vessels will be financed by Navios' container-focused growth vehicle through cash on its balance sheet and bank debt on terms similar to its current credit facilities.
When the transaction is completed, Navios Containers will operate 16 vessels, at a total of 65,600 teu and an average fleet age of 9.7 years.
CONTINUED weakness in the tankers industry led to Navios Midstream Partners posting a net income of $3.9m for the three months ended September 30, 2017 compared with a $5.4m net income in the year-ago period.