WORLDWIDE SHIPPING INDUSTRY
Baltic index gains on stronger vessel demand
The Baltic Exchange’s main sea freight index, which tracks rates for ships ferrying dry bulk commodities, inched up on Wednesday, helped by stronger demand across all vessel segments. The Baltic index, which tracks rates for capesize, panamax and supramax vessels, rose 14 points, or nearly 1percent, to 1,440 points, after registering its biggest one-day percentage gain in four-and-a-half months on Tuesday.
The capesize index jumped 30 points, or 1 percent, to 2,983. Average daily earnings for capesizes, which typically transport 170,000-180,000 tonne cargoes such as iron ore and coal, rose $193 to $22,465. The panamax index inched up by 10 points to 1,121. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, rose $79 to $9,002. The supramax index rose 13 points to 796.
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Ship owners snap up more bulkers
Ship owners have turned their attention to the second hand market for dry bulk carriers. In its latest weekly report, shipbroker said that it was a pretty busy week in the dry bulk sector. Starting with larger units, BULK HARVEST around 176,000 dwt blt 2012, Jinhai is rumoured committed at levels in the mid/high $19 million. Nissen Kaiun in Japan sold the KM TOKYO around 83,500dwt blt 2010 Sanoyas for high $15 million to Greek buyers. whilst a resale Ultramax ex Imabari HULL NR 515 around 63,000 dwt dely Jan 2020 is sold to Japanese owners for price of $28 million and 12 months TC back to sellers.
In the busy Handysize segment, Canfornav sold the SHELDUCK around 35,000 dwt blt 2012 SPP for a price of $9.5 million to Chinese buyers. The Seahorse 35 design GRAIG CARDIFF around 35,000 dwt blt 2012 Jiangdong is reported sold for $8.7 million to German interests. Another similar vessel blt 2011 Samjin, China, ORIENT TRIBUTE is reported sold to Oceanfleet for a price of $8.6 million. A modern Japanese Imabari 28 type PRINSESA MAGANDA 28,000 dwt blt 2012 was recently negotiating and now is reported sold to undisclosed buyers for a price ranging between high $7 to mid $8 million. In the tanker sector a few interesting sales for Suezmax and Aframax size; Gesco sold the 2000 blt Samsung mv JAG LAKSHITA abt 147,000 dwt for region $16 million and Capital disposed 2 Aframax sisters ARISTODIMOS and AMORE MIO around 113,500 dwt blt 2006 Samsung for $20.5 million each, Buyers are PT BULL of Indonesia.
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IMO 2020 enforcement: magic pipe cases all-over again?
The shipping industry is well aware of the fines and penalties imposed by US authorities against vessel owners, operators and officers for alleged bypasses of a vessel’s oily-water-separator (OWS), which is required pollution control equipment under Annex I of MARPOL—the international treaty governing environmental compliance and pollution control on the high seas. In these so-called “magic pipe” cases, the US Department of Justice brought a number of successful criminal prosecutions, with several convictions that included fines in excess of $10 million.
Now the US government is poised to use the same legal regime to prosecute violations of the upcoming sulfur emission reduction mandate under Annex VI of MARPOL, otherwise known as IMO 2020. By now, almost everyone knows that on January 1, 2020, ocean-going vessels will need to utilize bunker fuel with a sulfur content of less than 5,000 ppm or otherwise use emission control technology (i.e., scrubbers) or alternative fuel (i.e., LNG) that achieves the same emission reductions. The rate of 10–20 percent non-compliance is all the more staggering when considering that this is the percentage of purposeful, willing non-compliance rather than inadvertent non-compliance—which will likely be significant given the creation of new fuel blends to meet the new sulfur specification. Currently, there is significant uncertainty around whether individual fuel blends created by various bunker fuel suppliers will be compatible with one another. For example, fuel bunkered in Singapore may react with fuel bunkered in Houston to result in fuel that does not comply with the sulfur standard or causes damage to the engine. Moreover, blends of fuel containing fuel oil and distillate may undergo phase separation, and the vessel could burn off the compliant distillate fuel first, leaving non-complaint fuel oil to be discovered by port state enforcement authorities. Finally, insufficiently cleaned bunker fuel tanks may still have non-compliant sediment in the tank that could be knocked loose when distillate is introduced into the tank, causing the fuel to come into non-compliance.
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India increases spending on port expansion
The government of India has spent INR 13308.41 crore on infrastructure development and capacity augmentation of major ports in the country. A number of projects have been awarded in the last three years on upgradation of the major ports, Minister of State for Shipping quoted as saying last week.
The upgradation of ports is an ongoing process involving construction of new berths and terminals, mechanization of existing berths and terminals, capital dredging for deepening of drafts for attracting large vessels, development of road and rail connectivity, he said. As a result, the cargo handling capacity of the Major Ports as on 31st March, 2019 is 1514.09 Million Tonnes Per Annum (MTPA) which is adequate to handle the EXIM and Coastal cargo. The traffic handled by Major Ports during 2018-19 was 699.10 Million Tonnes (MT).
The projects, once awarded, are executed as per the relevant contractual timelines. These projects are monitored regularly at various levels in the concerned ports as well as in the Ministry to ensure timely completion. Major Ports submit monthly status report on projects to be awarded and projects to be completed to the Ministry, which is reviewed regularly.