The voice of Asian shipping

Published from Singapore

9 April 2010 Issue 01

Grounded page 2 China IPOs page 5 Human crunch page 8

STX Pan Ocean readies war chest

Heavylifters and OSVs in the offing

S
TX Pan Ocean will shortly order a empire. “I feel the heavylift
series of heavylift ships, a new sector sector is undertonnaged,”
for the Korean line. he said.
STX Pan Ocean became the first Korean Last year the dual
line to enter the heavylift sector with the Singapore and Seoul listed
launch this year of the 16,715 dwt STX company entered the LNG
Rose 1, a semi-submersible carrier, which sector for the first time with a
has since entered an agreement with China’s Hanjin Heavy built vessel. A
Zhenhua Logistics to support engineering and second ship is due to start
infrastructure projects carried out by Zhenhua’s operations this summer.
parent company, China Communications Up next in Lee’s bold Jong-Chul Lee
Construction Co. move to widen the company’s
The company will order two more heavy lift horizons is into the still booming offshore “We depend too much on dry bulk,
ships soon, Jong-Chul Lee, the company’s support vessel market, with a plan to order diversification is key,” said Lee.
ceo told Seatrade Asia Week. Lee wants to four of these ships soon, likely for deployment While revenues slumped 61% and the
build up his semi-submersible/MPP fleet to as in the Middle East and Brazil. company slipped from a 2008 $494m net
many as 20 ships in the future. This diversification of business is part of profit to a loss of $62m last year, Korea’s
There are plenty of big construction projects aims to make 30% of revenues non-dry bulk largest shipping line has already sown the
in the Middle East that excite Lee, some of related. Last year the amount of non-dry bulk seeds of recovery as evidenced in its credible
which involve other parts of the diverse STX revenues, as a percentage, doubled to 20%. $33m net profit for the final quarter of 2009.

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In China since 1869, Australia 1872, India 1874, Hong Kong 1876, Singapore 1878,
Japan 1885 and Korea 1918.

Learn more about our global network – go to www.lr.org/marine

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NEWS
Stranded on the Great Barrier Reef
Political outrage in Australia over Chinese bulker grounding
S
hipping has again found itself in the
dock this week with the Chinese
bulker Shen Neng 1 running aground
on the Great Barrier Reef in Australia.
The 69,110 dwt Shen Neng 1 bulker,
owned by Cosco subsidiary Shenzhen
Energy Shipping, was 9nm off course on
April 3 when it ploughed into the reef at full
speed, rupturing one of its bunker tanks and
spilling two tonnes of fuel into waters.
As the vessel remains stranded on the reef
and salvors Switzer perform delicate
operations to remove all 975 tonnes of
bunkers, the political outrage in Australia has
been unsurprising.
Drydocks World-SEA sees strong start to 2010
D
rydocks World – Southeast Asia
sees an improving market as it
bagged $200m in new deals in the
first quarter of the year.
Although the Southeast Asian arm of
Dubai-based Drydocks World says the
newbuilding and conversion markets
continue to be challenging for both shipping
and offshore sectors the first quarter has
shown some signs of recovery.
“The market has been through a very
tough 12 months, but the last quarter has
seen signs of an upturn in both newbuilding
Queensland Premier Ann Bligh was quick
to come out threatening legal action against
both the owners and the master, and that
“the book should be thrown at the company”.
Australian Prime Minister Kevin Rudd
described the accident as “outrageous” and
threatened increased safety measures.
“Here you have this massive boat, this
massive ship, 12 kilometres off course,
broad daylight, in the middle of the Great
Barrier Reef," he said.
“If we need to also look at other measures
for the future including a wider use of
pilotage and the wider use of the vessel
tracking system that applies in the northern
and conversion inquiries and I am pleased
to say this is reflected in the orders we have
received,” said Denis Welch, ceo of
Drydocks World-SEA.
In the first quarter the company clinched
contracts for the upgrade of a crane barge
to an accommodation barge for Leighton
Offshore and the $60m conversion of a
containership to a livestock carrier for
Saudi Arabia’s Hmood Al Ali Al Khalaf
Trading and Transporting.
Newbuilding contracts include an ultra
heavy lift construction support vessel and
The voice of Asian shipping
parts of the reef, then we will.”
Reports have suggested either that the
ship was taking a short cut or that the Shen
Neng 1’s watchkeeper was asleep at the
time of the accident.
The Australian Federal Police is now
considering a criminal investigation into
the incident.
Meanwhile for almost an entire week the
owners of the vessel remained silent only
finally issuing a statement on Friday.
“Shenzhen Energy Transport recognises
the importance of the Great Barrier Reef and
is deeply concerned to avoid endangering
lives or damaging the environment,'' said Hu
Wei, the chief of shipping at Shenzhen
Energy Transport, in a statement.
``We are fully committed to co-operating
with and assisting authorities to minimise
any environmental damage and to ensure
the matter is resolved safely and quickly,”
he added.
The company said that the Shen Neng
1’s planned route had been an entirely
legal course.
“The vessel did not alter course to the east
to go through the passage as planned, and
as a consequence the vessel ran aground,''
Wei said.
The company gave no reason as to why
the vessel failed to alter course as planned.
a jack-up barge for repeat customer
Coastline Maritime and Jack-Up Barge.
The yard group also got orders for two
barges for PT Kumala Barito Utara and a
ro-pax catamaran for Australia’s Transport
Holdings.
Work on the newbuildings will start later
this year and they are all due for delivery in
2011 - 2012. “The diversity of the business
won reflects the efforts that we are putting
in to cast the net wide in searching for
orders,” Welch said.
The Voice of Asian Shipping Page 2
NEWS
No safe route to avoid pirates
The hijacking of VLCC Samho Dream 900nm from Gulf of Aden highlights concerns
T “A question we get a
he number of Somali piracy incidents
is growing literally daily as pirate
groups extend out farther than ever
before and inside the 12nm coastal limit of
neighbouring countries. This leaves a
question difficult for shipowners: is there any
safe route?
The hijacking of the South Korean-owned,
316,360 dwt very large crude carrier Samho
Dream some 900nm southeast of the Gulf of
Aden on April 4 clearly illustrated the
problem. Based on comments made by
officials from Samho to the Korean press it
would seem the company did not consider
piracy to be a threat in the area it was sailing.
The VLCC was past what is seen as an
invisible line of 60 degrees east where piracy
is not generally considered to be a threat.
This was despite the Turkish-owned, 35,000
dwt bulker Frigia being hijacked 1,000 nm
east of the northeast coast of Somalia on
March 23.
Noel Choong, head of the International
Maritime Bureau’s Piracy Reporting Centre
in Kuala Lumpur, warns the situation is
becoming worse with attacks taking place
further and further from the coast, and at the
same time in the territorial waters of other
countries, such as Yemen and Tanzania.
“It is a big problem. That is why the VLCC
did not even expect to be attacked,” he said.
At the same time another recent attack was
just 10nm off the coast of Yemen, inside the
country’s territorial waters.
With the potential rewards of hijackings so
high, and the risks relatively low, Capt
Choong believes the current trend of
attacks will continue unabated for the next
two months until the monsoon season
comes again.
“A question we get a lot from shipping
lines and owners is: ‘What is the safest
route?’” he said. It is a question Capt
Choong cannot answer, and one no-one
else seems to know the answer to either.
Yuichi Sonoda, secretary-general of the
Asian Shipowners Forum, said with attacks
taking place so far from the coastline it
means there is no safe route. He said Asian
lot from shipping
lines and owners is:
‘What is the safest
route?’” Noel
Choong, International
Maritime Bureau
shipowners just had to rely on best practice
management and patrols by the navies in
the area.
Gunnar Knudsen, security officer of
Intertanko, similarly said there was not a
good answer to the question and that
vessels sailing the North – South route have
no choice but to pass the area.
The IMB is now warning ships to keep
strict anti-piracy watches, and steer clear of
all small craft even in the middle of the Indian
Ocean. Capt Choong sees avoiding even
the possibility of attack as key especially
when so far out at sea.
Naval forces retake hijacked boxship
N
aval forces could be stepping up
their action off Somalia with EU
Navfor forces retaking a hijacked
merchant vessel for the first time on April 5.
The 12,612 dwt, German owned boxship
was 500nm east of the Somali coast on April
5 sailing to Mombasa from Djibouti when
pirates attacked and took control of the ship.
The crew retreated to a strong room, and
were able to stop the engines and disable
The voice of Asian shipping
He noted even once the location of the
attack - such as that on the Samho Dream -
is known it is so far out into the ocean it
takes hours for a military aircraft to reach the
vessel. by which time either the ship will
have been able to evade pirates or it will
simply be too late.
Despite the difficulties in ships defending
themselves against pirates in such a huge
area the ASF remains firmly against the use
of armed private security forces onboard
vessels. Firefights could lead to injuries and
even fatalities for crews. It is a line that has
been adopted by other international industry
associations as well.
Intertanko’s Knudsen noted some have
already turned to private security forces but
their own stance has not changed. “It would
seem they already have a role - there are
people that use them. It has not changed the
official industry view, we have not waivered
on that,” he said.
“The best management practices are key
here and appropriate risk assessment
being done.”
the vessel. They then alerted EU Navfor,
which sent the naval vessel Tromp to their
aid. Initial attempts to negotiate with the
pirates proved unsuccessful and the ship
was retaken by marines who boarded the
vessel and retook control.
The crew of 13, two German, three
Russian and eight Sri Lankan nationals
were released unharmed, while 10 pirates
were taken into custody.
The Voice of Asian Shipping Page 3
NEWS
Air traffic control expected for shipping Anchored vessels
S
hipping is likely to see the
introduction of air traffic
control type systems in
key areas, according to a senior
executive with Inmarsat.
“We are likely to see a
replication of air traffic control for
shipping, especially in areas of
Piers Cunningham
piracy,” Piers Cunningham,
maritime business director for Inmarsat told
Seatrade Asia Week. As technology
advances, he said vessel
management systems could become long
range allowing for greater shoreside
management of vessels at sea.
With the increased use of broadband
communications and data transfers from ship
to shore and vice versa, Cunningham also
Malaysian Merchant’s financial woes deepen
T
he woes of struggling shipowner
Malaysian Merchant Marine are
deepening as creditors take legal
action against the company.
Prima Uno Bhd and Malaysian Trustees
Bhd have issued a writ and statement of claim
in the Kuala Lumpur High Court for RM40.4m
owed as of 25 March, with an annual rate of
interest of 9.88%.
The two financiers effectively pushed MMM
into insolvency last month when they
demanded payment of the loan facility within
14 days. The loan had been earmarked for
the purchase of a 19,980 dwt double-
hulled chemical tanker for $38m from
Singapore’s Uniships.
The deal failed after MMM’s existing debt
was downgraded by Malaysian Rating Corp
causing the new credit facilities for the
The voice of Asian shipping
in South Vietnam
sees the potential re-emergence
of the radio operator to handle the
volume of communications, and
a piracy target
A
to deal with IT issues. nchorages in South Vietnam are
Inmarsat is seeing an becoming the target of pirates
increasing take up in shipboard looking to rob ships.
broadband, particularly among Regional anti-piracy group ReCAAP’s
larger shipowners. The company Information Sharing Centre has had four
is currently installing around 20 of reports of attacks on ships at anchor or berth
its new Fleet broadband systems daily. off Vietnam this year.
However, while on land consumers In the latest incident on 3 April at 0230hrs
traffic increasingly opt for long-term deals on their three pirates boarded the Indonesian
connections the same is not happening at registered chemical tanker Tirta Samudera
sea. Cunningham said owners and XVII berthed at a palm oil jetty in Hiep Phouc.
managers prefer either to have short The pirates, armed with knives, took the
contracts for a few months or simply pay as second officer hostage saw them stealing
they go. He said this was due to the potential stores and raised the alarm.
that the ship would be sold. The second officer was released after five
minutes but sustained injuries after he was
hit in the mouth. The pirates escaped with
three tins of paint and a walkie talkie. The
purchase of the chemical tanker to be second officer received treatment at a local
withdrawn. hospital and was later discharged.
In addition to its financiers MMM’s own It was the fourth incident this year with
deputy chairman, Dato’ Ramesh Rajaratnam, previous attacks having taken place in the
is claiming RM1.1m in monies he advanced anchorages off Vung Tau. ReCAAP said ship
to the company to meet crew, staff and masters and crew were advised to maintain
other expenses. vigilance at all times and adopt measures as
MMM said it did not have the cashflow to listed in the counter boarding plan.
pay either claim and would not be able to Legend
Location of Incident
continue to operate under its present capital
Tirta Samudra XVII
and debt structure in the foreseeable future. Hiep
Phuoc
3 April 2010
0230 hrs
The Bursa Malaysia-listed company laid off
all its staff in the middle of March.
MMM’s difficulties stretch back to early Hanoi
2007 when its top management quit en Vientiane
MSC Kiwi
12 January 2010
Vung Tau
0205 hrs
masse, as the result of fallout from new Bangkok
Phnom Penh
chemical tanker regulations which left its fleet Iolcos Celebrity
Intrepid 24 February 2010
unable to carry vegetable oils and the 8 March 2010
0230 hrs
0240 hrs
Kuala Lumpur
company with huge impairment losses.
The Voice of Asian Shipping Page 4
NEWS
China’s stock market march
Shipping IPOs are back in vogue
T
he world’s most important shipping
nation, China, feels like the downturn
is over. That, at least, is the view of
the myriad of firms now queuing up to go
down the initial public offering (IPO) route.
The most recent name to the list is
Zhejiang Ocean Shipping Co, which is
eyeing the Shanghai Stock Exchange.
The firm, also known as Zosco, is the
largest shipping company in Zhejiang
province. It plans to issue up to 100m shares
and raise up to 2bn yuan through the public
offering. The float is expected to provide funds
for the company's new fleet of 10 capesize
bulk carriers scheduled for delivery in 2012.
Incorporated in 1980 in Hangzhou, the
company is a holding unit of state-owned
Zhejiang Communications Investment
Group. Zosco reported revenues of 800m
yuan last year.
Ningbo Port Group, another Zhejiang
shipping giant, is also gearing up for a
Shanghai listing in the second quarter this
Iron ore boycott dismissed
China’s mills begrudgingly accept huge price hikes for key commodity
E
ven seasoned iron ore observers
winced at the ferocity of this year’s
price negotiations between China
and the big three miners. Jail sentences for
the ‘Rio Four’, the end of the 40-year-old
annual contract system, soaring prices and
most recently a call for a boycott; it has been
a painful few months.
However, the China Iron and Steel
Association’s (CISA) April 6 call for a boycott
year. The port previously announced plans for
an initial public offering in Shanghai and Hong
Kong in 2008 but these were put on hold due
to the onset of the global financial crisis.
The proceeds from the yuan-denominated
A-shares will be used for expansion plans at
the port and for mergers and acquisitions. The
port was previously reported to be hoping to
raise 10bn yuan from the share sale.
No port in China has successfully
completed a dual listing as yet. However,
Dalian Port, already listed in Hong Kong, is
likely to announce its intention to dual list in
Shanghai shortly.
As well as shipping lines and ports, even
the depressed shipbuilding sector has a
stock market champion. Jiangsu Rongsheng
Heavy Industries, the nation’s largest private
yard, will look to raise between $2bn-$3bn
when it lists in Hong Kong some time in the
third quarter this year.
Rongsheng, which boasts Goldman Sachs
and D E Shaw among its investors, saw
of the iron ore produced by BHP Billiton, Rio
Tinto and Vale has been widely dismissed.
CISA has asked Chinese steel mills to
concentrate on running down the stockpile of
75m tonnes of iron ore sitting in the nation’s
ports rather than buying from the big miners
as a protest at the likely 90% hike in prices
this year.
"CISA sounds like a lobby representing
Chinese steel mills. However, it does not run
the business, and hence it
has no idea of the real
needs of the steel mills,"
one sales manager from a
steelmaker in China’s
Hebei province told the
China Daily newspaper on
condition of anonymity.
Meanwhile, Australian
The voice of Asian shipping
operating income soar more than 60% last year
to RMB10bn as orders continued to flood in.
On the timing of these launches, analyst
Charles De Trenck, from Hong Kong
consultancy Transport Trackers, commented,
“It is time for companies with a vision of what
they are doing to consider raising money for
specific projects.” He noted too that China
commodities-related IPOs remain strong.
China’s expected slew of IPOs follows the
first New York shipping listings since
Lehman Brothers crashed with Baltic
Trading and Crude Carriers placing issues
of $228m and $256m, respectively last
month followed by Scorpio Tankers netting
$163m at its launch.
trade minister Simon Crean has said the
boycott is "doomed to fail."
“What they have to understand is this is the
market at work,'' he told reporters in
Canberra on Tuesday.
As we went to press there was no sign of
a boycott, with steel mills publicly accepting
the rate increases and brokers reporting no
sign of a let up in iron ore demand. “It has
been a more spicy negotiating phase than
normal,” commented one Hong Kong
capesize broker. “But it will still be another
bumper year for Chinese ore imports.”
Last year, China imported a record 628m
tonnes of iron ore. In the first two months of
this year, however, figures were down by
13% according to Commodore Research as
the People’s Republic ramped domestic
mine productivity.
The Voice of Asian Shipping Page 5
AWARDS
Seatrade Asia Awards 2010 shortlist
The top maritime companies in Asia to be honoured at awards dinner in Singapore
T
he achievement of the top maritime Maritime Week with a full-house gathering
companies in Asia will be celebrated of key shipping executives from Singapore
at a glittering gala dinner in and around the world.
Singapore on April 26. The 3rd Seatrade The very best in Asia’s maritime industries
Asia Awards will be held at Singapore’s will be honoured across 17 specific
Shangri-La Hotel at the start of Singapore catergories with the winners decided by a
judging panel comprising top
industry executives. With the
industry having gone through
one of the toughest years in living
memory, these awards
celebrate those companies that
have proved able to innovate
even in hard times. This year has
also seen an unprecedented
number of entries giving our
THE ENVIRONMENT PROTECTION AWARD THE PORT AUTHORITY AWARD
· Chemoil · Hong Kong Marine Department
· Hull Surface Treatment · Krishnapatnam Port Co
· Jenjosh Marine Services · Maritime and Port Authority of Singapore
· Maersk Line THE REPAIR YARD AWARD
· MAN Diesel · Jurong Shipyard
THE EDUCATION AND TRAINING AWARD · Keppel Shipyard
· Castrol Marine · Sembawang Shipyard
· Magsaysay Maritime Corporation THE OFFSHORE YARD AWARD
· Malaysian Maritime Academy · Cosco Shipyard Group Co Ltd
· Singapore Maritime Academy · Drydocks World SE Asia
· Wallem Shipmanagement · Jurong Shipyard
THE TECHNICAL INNOVATION AWARD · Keppel FELS
· ABS Nautical · PPL Shipyard
· Ascenz THE SHIP MANAGER AWARD
· MAN Diesel · BW Fleet Management
· NYK Shipmanagement · Fleet Management Ltd
· SingTel · NYK Shipmanagement
· Stratos Global Corporation · Thome Ship Management
THE SAFETY AWARD THE LINER OWNER/OPERATOR AWARD
· Jurong Port · APL
· Keppel Shipyard · Emirates Shipping Line
· MKN Asia · Maersk Line
· Mobilarm Ltd · Orient Overseas Container Line Ltd
· Wilhelmsen Ships Service · United Arab Shipping Co (UASC)
THE SHIPBUILDING YARD AWARD THE BULK OPERATOR AWARD
· Drydocks World SE Asia · Pacific Basin Shipping Ltd
· Incat Tasmania Pty Ltd · Pacific Carriers Ltd
· Jiangsu Rongsheng Heavy Industries · Precious Shipping Public Co
· Strategic Marine · Sical Logistics Ltd
The voice of Asian shipping
judges a particularly difficult task.
Also awarded on the night Deal of the Year,
Personality of the Year, Young Person of the
will Year and the Lifetime Achievement awards.
The Deal of the Year Award is decided by the
readers of Seatrade Asia Online.
The following companies listed in
alphabetical order in each category are in the
running for the 2010 Awards honours.
THE TERMINAL OPERATOR AWARD
· Gateway Terminals India
· Port of Tanjung Pelepas
· PSA International
THE TANKER OPERATOR AWARD
· BW Fleet Management
· Varun Shipping Co
THE SHIP FINANCE AWARD
· DnB NOR Markets
· DVB Bank
· Standard Chartered Bank
· The Hongkong and Shanghai Banking
Corporation
· Watson, Farley & Williams LLP (“WFW”)
THE CLASSIFICATION SOCIETY AWARD
· ABS
· China Classification Society
· ClassNK
· DNV
· Lloyd’s Register
THE MARITIME LAW AWARD
· Allen & Gledhill
· Ince & Co
· Stephenson Harwood
· Watson, Farley & Williams LLP (“WFW”)
THE SHIP AGENT AWARD
· GAC (Gulf Agency Company)
· Jardine Shipping Services
· The Liberty Marine Syndicate
· Wilhelmsen Ships Service
The Voice of Asian Shipping Page 6
NEWS
Capacity calamity
Boxlines play hardball in run up to May 1 rate renewals
I
f “lay-up” was the most common word
in the container shipping lexicon last
year, then “rolled” is an early contender
in 2010.
“Shipping lines are keeping capacity
tighter than a Simon Cowell t-shirt on the
transpacific in the run up to the key May 1
annual negotiations,” commented one China
container observer.
This has led to full vessels and many irate
shippers seeing their cargoes sitting on
Chinese docks. Containerlines are trying to
push through $1,000 increases per feu on
the tradelane, up from the current
Round the region
Marco Polo coal contract
Marco Polo Marine has
bagged a $20m coal
transhipment contract as it
continues to grow its Indonesian business.
Marco Polo’s Indonesian subsidiary MP
Marine has inked a four-year contract for coal
transhipment worth around $20m. It is the
second such deal Marco Polo has won this
year, having won a $10m Indonesian coal
transhipment contract in February.
TTA takes Petrolift stake
Thoresen Thai Agencies is
acquiring a 39% stake in
Philippines coastal and
regional tanker operator Petrolift. TTA is
investing $27.9m for a 39% stake in Petrolift
and will potentially invest a further $7.8m by
the end of 2011 as part of the acquisition of
four additional liquefied petroleum gas
tankers by the Philippines company.
At present Petrolift’s fleet comprises nine
petroleum tanker/barges and one LPG
carrier. About 90% of its existing capacity is
on medium to long term charter to oil majors.
For daily news updates visit www.seatradeasia-online.com
approximate $2,100, and are prepared to roll
containers this month to force the issue.
Seatrade Asia Week contacted ports up
and down the Chinese seaboard and the
general pattern observed was
containers were piling up more in the north
of the country.
All leading indicators point to a gathering
resurgence in the US economy, with
container volumes from Asia to North
America expected to grow this year in
double digit territory.
Box lines are acutely aware, however, of
the risks of adding too much capacity to the
Great Eastern returns to VLCCs Cosco confirms $310m order
Great Eastern Shipping has
modified a double suezmax
order at Hyundai Heavy
Industries into a trio of VLCCs.
The private Indian firm ordered
suezmaxes at the height of the price scale
back in June 2008 but has now successfully
renegotiated for a series of 318,000 dwt ships
to be delivered by April 2012.
The order marks a return to VLCC
ownership for Great Eastern, which sold its
last single hulled supertanker two years ago.
PSA profits down
PSA International
revenues decline by 12.7%
to S$3.83bn in 2009, on
container volumes down 9.9% to 56.9m teu.
Net profit fell by only 6.1% to S$976m,
however, a comparatively smaller decline
that the company attributed to "prudent
control of capital expenditure and effective
cost-cutting measures implemented since
the end of 2008."
PSA's flagship Singapore terminal saw a
13.1% decrease to 25.1m teu but remained
the world's busiest container port. Throughput
at the group's 27 other port projects in 15
countries was down 7.1% to 31.8m teu.
The voice of Asian shipping
that
trade. The China Containerized Freight
Index, a leading indicator on the health of
the industry operated by the Shanghai
Shipping Exchange, has plunged since
Chinese New Year, largely thanks to falling
rates on the Asia-Europe trade, a route
where more ships have been reintroduced
in the past four months.
COSCO Shipping has
confirmed an order of ten
27,000 dwt multi-purpose
vessels at CSSC Guangzhou Huangpu
the Shipbuilding and Taizhou Kouan Shipbuilding
costing a total of around $310m. The
Guangzhou specialist vessel affiliate of
China’s largest shipping firm said the deal is
its largest order ever. The ships will start
delivering from June 2011.
MOL opens R&D centre
Mitsui O.S.K. Lines has
announced the completion of
saw its new technology research
center in the Kurigi District of Kawasaki
Micom City.
It also has a laboratory that can
accommodate two 40-foot reefer containers
and a test engine room with sound insulation
and vibration-proof devices.
The new MOL Technology Research Center
will serve as a hub of research and
development on ways to improve safety,
reduce costs, and adopt environment-friendly
technologies. Kurigi district is being
developed by Kawasaki City as a cluster of
creativity and innovation targeting industrial
R&D institutes.
The Voice of Asian Shipping Page 7
ANALYSIS
Tougher action on piracy the only option
P
iracy off Somalia has reached a
scale that has gone well beyond
most people’s worst nightmares.
Less than two years ago the concept of a
bunch of gunmen hijacking a loaded very
large crude carrier was the stuff of the worst
case scenario terrorist planning. Today it is
all too much a reality.
The hijacking of the South Korean owned
316,360dwt VLCC Samho Dream 900nm
from the Somali coast was so far out into
the Indian Ocean it was actually closer to
India than Africa, taking the whole piracy
issue to a completely new level. While not
the first VLCC hijacking the sheer distances
involved in this, and other attacks recently,
show how just how wide the operating
theatre of the pirates has now become.
At the same time the pirates are now so
bold as to actually venture into the territorial
limits of neighbouring countries to attack
Human crunch
Despite the financial crisis there are still far too few
officers for the world’s growing fleet of merchant
ships. Marcus Hand in Manila investigates
T
he global economic crisis has not
done as much as might have been
hoped to reduce the ever growing
shortage of qualified officer level seafarers.
At the heart of the crewing industry, in the
world’s top supplier of seafarers, Luneta Park
in Manila remains cluttered with information
stands from manning agencies, and
seafarers moving from one to the next to see
where they can get the best deal.
merchant vessels. Clearly piracy has
become a very attractive career option in
Somalia, given the number of attacks and
the area involved, the number of pirate
gangs must be on the increase. Afterall,
what other lucrative career options does
war torn Somalia offer?
The sense of frustration and hopelessness
from the industry is palpable. Yes, best
management practices help reduce the
chance of a successful attack, as does
joining naval convoys in the Gulf of Aden.
But, even these measures do not always
work and are limited in scope.
The simple fact is there is not enough in
the way of deterrent to operating as a
pirate. Time and again, even when pirates
have been caught they have been released
again. Once a ship is hijacked cases of
action against the pirates have been
extremely rare, and essentially they are
“Luneta Park is still the same, that is the
barometer,” says Marlon Rono, president of
Magsaysay Maritime Corp, the world’s
largest manning agent. And Rono should
know, his office is just over the road from
Luneta Park on T M Kalaw St.
Clarifying the situation Rono says there
has been some easing of the situation
dependent on the type of vessel. “The
pressure is there, but it has eased up a little
bit for certain types of ships,” he explains. For
dry bulk shipping the shortage has eased
somewhat, however for tankers and chemical
carriers he says the demand remains.
“Yes, some of the pressure has gone off,
but the crisis has not produced more
qualified seafarers,” says Stein Eriksen,
managing director of Norwegian Training
Centre – Manila. The NTC-M, in its 20th year,
trains over 400 cadets annually, and offers
The voice of Asian shipping
home free to collect a multi-million dollar
ransom a few months down the line.
The fact that EU Navfor combined naval
forces retook the hijacked German-owned
containership Taipan on April 5 is indeed
welcome news. Hopefully it is the start of
stronger action by the various naval forces
in the area to secure the safety of merchant
shipping.
In Southeast Asia determined military
action against piracy bases in the past has
proved highly effective. It is strong action
that is needed, as it is unfortunately the
only language heavily armed criminals
understand. Fail to act and the situation
can only get worse.
As the pirates move ever further out they
could start to endanger civilian targets such
as tourist resorts. Let us hope this is not
what it takes to finally get the required
action taken.
over 80 training courses for seafarers.
Eriksen believes the crisis has simply
acted as a safety valve, but the fact remains
an equivalent to at least 30% of the current
global fleet is on order and laid-up vessels
such as boxships and car carriers are
starting to come back into service. “It is going
to be a challenge when these vessels start
to sail actively. I fear we are going to see a
more difficult time when the upturn comes,”
he says.
In addition to some easing of the shortage
Rono notes that wages have stabilised, having
shot up sharply in recent years.
Exactly how big the shortage of qualified
officers actually is remains open to debate,
but there is agreement on the fact there
definitely is a shortage. “If the figure is 50,000
The Voice of Asian Shipping Page 8
ANALYSIS
or 60,000 it doesn’t matter – it is a serious
crisis,” comments Eriksen. The shortage he
believes could be exacerbated in the future
by new regulations actually increasing the
minimum number of crew required to man
a vessel.
The global economic crisis has had some
impact on the number of cadetships NTC-M
is able to offer, which have reduced from a
high of 500 in 2008, to an expected slightly
less than 400 this year. NTC-M cadetship
programme combines three years on land
based training and one year at sea, with a
full scholarship for students.
“This year we are aiming for 400 cadets, it
might be slightly less due to lower demand,”
says Eriksen. He warns that if owners do cut
back on cadetships in the long run the
shortage could be worse than that seen from
2005 to 2008. On a positive note owners with
money are continuing to invest in training.
Rono says cadetships have not really
been affected by the crisis and good owners
continue to take cadets onboard.
Meanwhile, the great threat of Chinese
seafarers to the Philippines’ crewing industry
has failed to materialise, meaning that
demand for Filipinos remains as strong, if not
stronger, than ever. Rono notes that some
Chinese companies have now in fact started
to source their seafarers from the Philippines.
He cites two factors for this: English
language ability and also wage pressure.
As to why there is a greater shortage of
officers for certain types of ships, Rono says
this was in part due to the Philippines not
being prepared for training crew for particular
types of ships. In the past vessels such as
tankers and chemical carriers rarely had all
Filipino crew with senior officers most likely
from European countries. To meet this new
demand he says the Philippines manning
industry is aggressively expanding.
Rono does believe, however, the
Philippine manning industry is now much
better placed to meet the challenges
presented by the industry. “The Philippines
maritime education has really improved so
much and that was driven by the private
sector,” he says.
However, while Rono says the system in
the Philippines may have improved and is
now better matched to the demands of the
“If the figure is 50,000
or 60,000 it doesn’t
matter – it is a serious
crisis.” Stein Eriksen,
Norwegian Training
Centre - Manila
global industry, there is still a huge issue in
terms of the number and quality of graduates
Philippine schools produce.
The irony of the situation is that the
Philippines’ private maritime school system
churns out far more potential cadets on an
annual basis than the entire global industry
needs. It is estimated 40,000 to 50,000
students enter three-year courses to become
deck or engine officers annually at 91 private
schools. Of these some 30,000 graduate
each year.
By contrast the entire international
shipping industry is estimated to need just
5,000 to 7,000 qualified new officers a year.
However, due to the poor quality of training
at many Philippine schools, that also fail to
make provision for cadetships, the vast
majority of graduates fail to gain enough time
at sea to become officers.
Eriksen says only 2,000 to 3,000
graduates annually actually end up onboard
a ship and some of them will end up
becoming ratings. Only around 5% of
graduates from Philippine schools actually
achieve their aim of becoming an officer. “If
the Philippines alone could provide 5,000 to
7,000 qualified seafarers a year it could
solve the problem in 10 years,” he says.
For the Philippines to achieve such an aim
Eriksen believes a greater involvement of the
government in funding and overseeing the
industry is required. With the exception of
200 cadet places all the training is done
privately and he does not see this as enough
for a profession, which is one of the country’s
top foreign currency earners.
“There are so many talented youngsters
here who, if given the right opportunities,
could take the country to the next level. You
cannot leave that to the private sector alone,
there should be a responsible government
body,” he says. At present responsibility for
The voice of Asian shipping
the crewing industry spans a bewildering 18
government bodies.
Upcoming presidential elections in May
are unlikely to help the situation as a new
government will also mean a whole new
set of officials to deal with and educate on
the industry.
Despite the potential trials and tribulations
Eriksen believes the Philippines has great
potential to remain the world’s top provider
of crew to shipping.
“The gap between sea salaries and shore
salaries is just increasing and increasing,” he
notes. “There are going to be more people
here with less opportunities, that is a shame
for the Filipino people, I believe it will
become more attractive to be a seafarer and
work abroad.”
The voice of Asian shipping
Publisher Chris Hayman
Editor-in-chief Bob Jaques
Editor Marcus Hand
East Asia Sam Chambers
SE Asia Jacintha Stephens
China Katherine Si
Production Mixa Liu
Seatrade Communications
Singapore Pte Ltd
7500A Beach Road #13-324
The Plaza, Singapore 199591
Tel: +65 6294 2280
Fax: +65 6294 2780
Editorial Marcus Hand
marcushand@seatrade-asia.com
Commercial Manager Grant Rowles
grantrowles@seatrade-asia.com
General Manager Winnie Low
winnielow@seatrade-asia.com
Marketing Manager Joyce Teng
jteng@seatrade-asia.com
Subscriptions Jennifer Khoo
jkhoo@seatrade-asia.com
Copyright © Seatrade Communications Ltd,
2010.Although every effort has been made to
ensure that the information contained in this
review is correct, the publishers accept no liability
for any inaccuracies or omissions hat may
occur.All rights reserved. No part of the publication
may be reproduced,stored in retrieval system or
transmitted in any form or by any means without
prior written permission of the copyright owner.
The Voice of Asian Shipping Page 9
MARKETS
The voice of Asian shipping

Bulker rates imbalance

Panamaxes being chartered at a 20% premium to capesizes
“And like the womb of a mother, I shall
return to the comfort of the sea…” – Anon.
If only the same amount of comfort could
be derived from the dry bulk market.
Freight rates for bulkers find themselves at
an imbalance this week, as panamax
vessels are now being chartered at a
premium of about 20% compared to much
larger capesize vessels.
In addition, charter rates for supramax
vessels, although roughly a quarter of the
size of capesize vessels, are basically on
par with rates for the dry bulk behemoths.
There are two main reasons for extremely
low capesize rates in relation to rates of the
rest of the vessel classes: A large amount of
capesize newbuildings have finally been
delivered; and panic is ensuing over the
possibility of a two-month Chinese iron ore
boycott. A surge in capesize
deliveries was inevitable, and
although somewhat delayed in 2009,
a large amount of capes (roughly 45)
have been delivered this year.
Dry bulk cargo demand (and
specifically ore demand) has
remained firm, however, despite
Chinese threats of an ore boycott.
Chinese steel mills are resisting a change to market.
to ore contracts being priced on a quarterly Sentiment, therefore, has been largely
basis (previously contracts were priced on responsible for the sharp decline in capesize
an annual basis) and have threatened to rates this week. But growing vessel supply
boycott Australian and Brazilian ore. and a possible decrease in cargo fixtures
SS Teo
Capesize rates fell sharply Monday when next week might continue to put pressure
a boycott was announced and continued to on rates.
fall through the week – but a healthy amount Please visit www.commodore-research.com
of Brazilian and Australian ore fixtures for full market reports and to receive information
destined to take ore to China have still come on report subscriptions and consulting.

FIS bulk FFA prices 8 April

Capesize Average 4 Timecharter Routes 172,000mt dwt
Dry FFA market direction unclear

F
Apr-10 30,000
FA traders returned from their Easter break refreshed but apparently
May-10 33,250
Q2 10 32,000 no clearer on which direction the market would take. The smaller sizes
Q3 10 30,350 continue to attract interest and liquidity with the larger more vulnerable
Cal 11 26,000 to a correction.
Supramax trading saw interest centred on the Q2 contract which came back
Panamax Average 4 Timecharter Routes 74,000mt dwt strongly from the long week-end, proving robust though mostly in spread
Apr-10 31,500
trading to the panamax contract. Q2 broke $26,000/day, a level it hung at for
May-10 30,500
Q2 10 30,500 most of the week. Support too for May, Q3 and Q4 rose suggesting confidence
Q3 10 25,250 in the back end of the curve.
Cal 11 19,625 Panamax rates continue to exhibit their usual volatility. The week began
quietly and relatively unchanged from pre-holiday close, trading in small
Supramax Average 5 Timecharter Routes 52,000mt dwt volumes and little liquidity. Through the week, Q2 traded down to $29,500
Apr-10 27,000
and back to $30,250 while Cal 11 pushed to $19,750. By the end of the week,
May-10 26,000
Q2 10 26,000
we saw active liquidity and volume and a Q4 high of $24,000 followed by
Q3 10 22,000 inevitable selling.
Cal 11 16,750 The capesize paper market seems to be suffering most from poor physical
sentiment. The market began the week drifting but fairly resilient despite the
Handysize Average 5 Timecharter Routes 52,000mt dwt indices slipping further than many had predicted.
Apr-10 19,250
Pressure in the Atlantic bore on nearby FFA levels and though Q2
May-10 18,250
remains at premium to spot this should correct if physical fails to find some
Q2 10 18,250
Q3 10 15,625 swift support. The end of the week saw another sell-off with the front end
Cal 11 13,000 under pressure, though with continued support on the Q2 contract at just
* All prices are basis midprice between best bid and offer 1300 above $31,000.
London Time
** All prices are indications of current market level
Commentary courtesy of FIS: www.freightinvestor.com
*** Contract routes are as per the current Baltic route definitions

The Voice of Asian Shipping Page 10

ASIAN WHISPERS
Getting the news early
A number of exhibitors at a recent
exhibition in Singapore got the chance to
enjoy a preview of Seatrade Asia Week.
Specially printed out copies of a sample
edition were distributed to give industry
executives a sneak preview of Asia’s first
weekly maritime news publication.
Pictured below looking through the new
publication are representaives from Rolls
Royce Marine.
Coal spill?
The grounding of the Chinese bulker
Shen Neng 1 on the Great Barrier Reef has
once again let the general press loose on
the shipping industry. It was of course
inevitable that with bunker fuel oil spilled
some would leap to the conclusion it was
tanker, despite it having a 65,000 tonne coal
cargo onboard, and just 945 tonnes of
bunker fuel.
A Singapore rag took the opportunity to
sidebar other major oil spills including the
Amoco Cadiz in 1978, a spill some 100,000
times larger than the two tonnes of bunker
fuel spilled from the Shen Neng 1.
However, special mention has to go to the
Brisbane Times for its article headlined:
Seatrade Asia Week Supporters:
DNV Petroleum Services
“Next prospective environmental disaster:
coal spill”. The article largely concluded the
effects of dumping 65,000 tonnes of coal
into the sea were not known.
Maersk relief shipments
Maersk Line is helping in the relief effort
following the Haiti earthquake shipping 147
containers of rice for free from Thailand.
The 3,525 tonnes of rice were donated by
the government of Thailand to Haiti through
the World Food Programme. Maersk will
be providing free shipping for the food aid
split across four sailings from the Port of
Laem Chabang.
The first sailing was on March 15,
onboard the Maersk Kendal and will be
shipped to Caucedo in the Dominican
Republic before being trucked to Haiti.
“Maersk Line has a long history of
providing disaster relief aid and is pleased
to be able to continue in our efforts and
support the World Food Programme.
Shipping transportation plays an important
role in getting aid to Haiti, being an island
country,” said Thomas Sorensen, managing
director of Maersk Line Thailand.
The voice of Asian shipping
Events
Sea Japan
21 – 23 April
Tokyo Big Sight Exhibition Centre,Japan
Contact: UBM
Website: www.seajapan.ne.jp/eng/
2nd Annual Offshore Support Vessels Asia-
Pacific
26 April
Grand Copthorne Waterfront Hotel, Singapore
Contact: IBC Maritime
Website: www.ibc-asia.com
Seatrade Asia Awards
26 April
Shangri-La Hotel,Singapore
Contact: Seatrade Communications
Website:www.seatradeasia-
online.com/awards/
ICS/ISF International Shipping Seminar
27 April
STI Auditorium, Capital Tower,Singapore
Contact: Singapore Shipping Association
Website: www.ssa.org.sg
Seatrade Tanker Industry Conference 2010
28 April
The Tanglin Club, Singapore
Contact: Seatrade Communications
Website:www.seatradeasia-online.com/stic/
The 3rd Asian Maritime Law Conference
6 – 7 May
Swissotel Merchant Court, Singapore
Contact: Seatrade Communications
Website: www.amlc.com.sg