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An EU ETS for shipping would undermine a global GHG solution

Yesterday the World Shipping Council published a paper highlighting serious concerns for maritime trade and global efforts to reduce greenhouse gas emissions if the EU expands its Emissions Trading System (ETS) to include international shipping. The WSC paper focuses on a critical threshold issue for application of the EU ETS to shipping: geographic scope. The most-discussed geographic application of the EU ETS to shipping is to mirror the scope of existing EU legislation on Monitoring, Reporting and Verification (MRV) of carbon emissions.

The EU ETS has been described as a “regional” system, but bringing international shipping into that system using the MRV scope would regulate the operation of ships on several of the world’s seas and oceans, including on the high seas and in waters adjacent to non-EU nations.

Pakistan leading demolition market price-wise

Ship owners looking to scrap their older vessels, are more likely to find a good deal in the Pakistani scrapyard market. Shipbroker said that “it has been a week emphasizing how this market is ever changing and volatile, ensuring it always difficult to know a vessels true market value. This has come about following a change in sentiment this week with some conservatism on rates coming into force again. It has been reported that the domestic steel markets are quivering at the prices being seen in the international market and fears remaining in the Sub. Continent regions, particularly India, regarding the continuing rise of Covid-19 cases and the handling of the virus and importantly, how they intend to deal with the upcoming Winter. Some hesitancy has also encroached Bangladesh where local recyclers remain cautious at present which is mainly attributed to the large Cape and VLOC’s acquired earlier in the year and yards still digesting this large LDT tonnage”. According to the shipbroker, “Pakistan still remains the most eager destination for vessels, and the strongest in terms of price levels, of all three Sub-Continent markets, however, some question marks have been raised concerning recent ‘high priced’ acquisitions which is reportedly leading to a ‘standoff’ between the cash buyers with tonnage in hand and the recyclers.

IMO 2020: A review of the transition to VLSFOS

In 2019, there were numerous discussions in the marine industry over how the transition to 0.5% fuels would pan out, with concerns about a wide variety of issues. Which predictions were right? To address this question, Gard held a series of webinars in July 2020 for our members and clients where we discussed the technical, compliance related, and legal challenges which owners, crew, and charterers faced when using very low sulphur fuel oil in the first six months of 2020. A video of the webinar presentation and the materials are available to view and download here. A number of important and pertinent questions were posed by the attendees during and after the webinars, touching upon technical, contractual, insurance and enforcement related areas. In this Insight, we will briefly summarize our experience with the transition based on the claims and inquiries received from our members and clients.

 

Dry bulk market: positive trend appears to end by the start of 2021

The dry bulk market upward prospects from 2021 onwards seem to have a “ceiling”. While futures indicate that an improvement could be on the cards until the end of 2020, the same can’t be said for the start of the next year moving forward. Shipbroker said that “with summer holidays just past, the debate now remains as to what we can expect for the remaining part of the year. Traditionally final quarter has been in favor of stronger markets (remember the 4th quarter of 2019 in Capesize). On top of this, both the upward momentum in freights in the summer period and the considerable recovery in sentiment during the same time frame, has left adequate space for some to hold a relatively bullish outlook for the upcoming months. However, operating under a tailrisk regime, how “safe” is that approach?”

Covid-19: shipping data hints to some recovery in global trade

The coronavirus pandemic dealt a severe blow to global merchandise trade. Data from weekly port calls by container ships show early but uneven signs of recovery. The number of ships pulling into ports to unload and load containers rebounded in many parts of the world in the third quarter of 2020, according to new UNCTAD calculations. This offers a hopeful sign for world merchandise trade, which suffered a historic year-on-year fall of 27 percent in the second quarter. Maritime shipping saw a dramatic slowdown earlier this year as government measures used to curb the COVID-19 pandemic restricted economic activities and travel. By mid-June, the average number of container vessels arriving weekly at ports worldwide had sunk to 8,722, an 8.5% year-on-year drop. But new data show that, globally, the average weekly calls have started to recover, rising to 9,265 by early August, just 3% below the levels of one year earlier. “Most of the manufactured goods that we produce and consume are shipped in containers,” says Shamika N. Sirimanne, director of UNCTAD’s technology and logistics division. “The latest containership port call patterns therefore offer a ray of hope for economic recovery from the pandemic.”

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How to spend it – recent trends in shipping M&A

The shipping industry is not known for being a particularly active sector in Mergers and Acquisitions (M&A). However, the biggest players in the sector are more acquisitive than you might expect. The COVID-19 pandemic has had a major impact on the shipping industry. It has disrupted global trade patterns, fuel prices and the life of seafarers. As a result of the economic slowdown, many corporate transactions have been postponed, re-entered virtual renegotiations or been aborted. Many market participants focus on organic growth and vessel sale and purchase (S&P), rather than corporate acquisitions of trading businesses. Corporate transactions do not receive as much attention when compared to S&P. Our research focused on corporate acquisitions and excluded vessel S&P transactions.

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