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Shipping bodies call on Jeff Bezos to take a stand for stranded seafarers at industry round table

The leaders of the major shipping bodies met virtually to discuss the most pressing issues facing the industry as we move into 2021. The Round Table chairs reiterated the that the industry is fully committed to finding solutions to the crew change and climate crises. Top of the agenda was the continued lack of international recognition for seafarers as key workers. Despite 90 percent of global trade relying on shipping in some part. The upshot was a joint open letter to Amazon CEO Jeff Bezos from, BIMCO, INTERCARGO, International Chamber of Shipping (ICS), and INTERTANKO. The letter calls for Bezos to use his influence and profile as the world’s leading retail entrepreneur, who business relies upon global shipping, to take a stand for the 400,000 seafarers stranded at sea and exert pressure on the incoming Biden administration in the US and other world leaders to recognise seafarers key workers. The roll-out of COVID-19 vaccinations was also a hot topic at the Round Table. With several vaccines having made headlines around the world for their high levels of efficacy, the issue of ensuring that seafarers who should be treated as key workers receive vaccinations quickly and efficiently was raised. Headlines have been made around the world throughout 2020 concerning the hundreds of thousands of sailors who are trapped on board their vessels, unable to disembark due to crew change facilities being made unavailable in the pandemic. The charterers’ change of attitude to actively support crew change is needed if they are to live up to their corporate, social and governance responsibilities. Members of the Round Table felt that there was now a risk that sailors could be forgotten again, if there was not a specific programme put in place to vaccinate seafarers as a priority. The third key topic of discussion was the continued importance of the shipping industry controlling its GHG emissions and wider impact on the environment. Recent progress at the UN’s International Maritime Organization’s (IMO) MEPC 75 meeting was welcomed, but the immediate need for a large-scale injection of research and political will was obvious for real progress towards a zero-carbon industry by 2050 be made. Addressing the climate challenge and reducing emissions is a key priority for the industry and the Round Table pledged to urgently work towards a sustainable and equitable future for all.

Demolition activity at a standstill

Ships’ recycling activity took a nosedive over the past few days, as Diwali celebrations hindered the flow of sales. It is said that with Diwali celebrations continuing into the early part of this week, it meant that the week got off to a sluggish start and frustratingly never really recovered from this, with no new sales reported. This is due to many Owners still hanging onto their tonnage to reap the rewards of the freight market or still manage to find secondhand Buyers for their vintage units even when they are more inclined towards the recycling sector. Primarily, the firm freight markets, particularly the resurgent Container sector over recent weeks, where rates have almost doubled over the past couple of weeks, are ensuring tonnage supply for recycling remains minimal. This therefore leaves this market starved once again and means Buyers will have to wait a little longer before they are yet to see the inevitable wave of tonnage that many anticipate to be consumed in the New Year, especially from the tanker segment. According to the shipbroker, analysts seem to be agreeing that the overall winter market does not look promising as Tanker spot earnings remain in the doldrums, and thus may force Owners to reconsider their objectives as 2021 arrives. Domestically in the Indian Sub. Continent, price levels are continuing to improve with demand, particularly in India, rocketing as recyclers start to become ravenous for tonnage. This is the only positive at present and well-respected recyclers feel these firm prices should last until the spring, which is extremely rare for them to predict such forward optimism. The Cartel in Bangladesh has remained in place for another week, making it one of the longest running alliances from this destination as many are often dispersed of after only a few days. Is this a change in tactics from the breakers locally or is it that their resolve has not really been tested enough due to the shortage of tonnage.

Tanker shipping: worst not yet over as industry pays for strong second quarter

This year, tanker shipping will not benefit from the usual strong winter seasonal effect. Though the new lockdowns were being introduced in many countries are less strict than in the spring, the effect on tanker shipping will be worse, given the oil supply glut of Q2. The news of an effective vaccine offers some hope of a global oil demand recovery but, however it comes about, it will be slow and drawn out, and it will be at least 2022 before global oil demand returns to pre-pandemic levels. The arrival of winter usually gives a seasonal boost to tanker demand and, although much has changed in 2020, many were still counting on an improvement – even a slight one – to the sector. However, the new lockdowns and travel restrictions imposed as a result of rising COVID-19 infection cases, coupled with stock drawdowns, have dashed these hopes. Oil product tanker earnings have certainly got the memo that the winter boost has been cancelled this year, with the high earnings of April now long gone. An average LR2 could expect to earn only USD 7,416 per day and an LR1 USD 6,147 per day in the spot market; a Handysize is looking at average earnings of USD 1,730 per day, after having fallen to just USD 411 per day in October. Bear in mind, for oil product tankers to be profitable, these daily rates must cover both operational and financing costs, which they are a long way from doing at current levels.

Ship owners turn to second hand bulkers, instead of newbuildings

Ship owners have reverted to their year-old habit of opting for second hand dry bulk carriers, instead of newbuildings. It is said that it was a week with limited interest in the dry bulk newbuilding market, with just one fresh transaction taking place, a trend that is likely to hold as we are reach closer to the year’s close. This came as a continuation to the subdued action that we had noted in the year so far. Compared to the number of new contracts that were reported last year, interest seems to have been minimal this year, mainly due to the overall uncertainty that prevailed in 2020. The volatility seen in freight earnings and the uninspiring demand-supply balance noted during most of the year, have all helped in trimming investment appetite. We expect interest to slowly start to revive, in line with the global economy during 2021. On the tankers side of things, despite the discouraging environment that has been shaped as of late, last week we noted a series of fresh new orders across different size segments taking place. In the last few weeks, we saw some signs of a rebound in interest from buyers, but we do not expect any significant shift in the overall trend to take shape any time soon, as fundamentals for the time being remain far from attractive. However, given that demand–supply balance is anticipated to improve over the coming months, it may well fuel some investment interest.

Everest Venture Capital China placed a Newbuilding order for 7 x 300,000 dwt VLCC units at Hyundai Heavy (South Korea) for dely from 2nd half 2022 until August 2023; furthermore, they placed orders for 3 x 300,000 dwt units at Samho Heavy (South Korea) for dely from 2nd half 2022 until August 2023 at a level of $85 million per unit: all vessels will be scrubber fitted and built to high specifications. Latsco Shipping ordered 2 x 300,000 dwt VLCC scrubber fitted units at Hyundai Heavy for dely 6- 9/2022 at $89.3 million per unit. Centrofin Greece placed an order at Samsung for 3 + 2 157,000 dwt Suezmax units (scrubber fitted) for dely within 4Q 2022 and 1Q 2023 at level of $58.2 million per unit.

Greek owners responsible for 36pc of S&P deals in the dry bulk segment

Greek ship owners have been rather active in the dry bulk S&P Market this year, with the second half of the year, proving to be a much more active period for deals. The Shipbroker said that as we are moving towards the end of the year, the overall deal landscape of the dry bulk sector corresponding to the second half of 2020 (up to date), offers a further analysis when it comes to comparison with the first. Specifically, the table below illustrates that the S&P activity during the second half of 2020 has been significantly increased by 38percent as to the first, with almost one and a half months remaining for further developments. According to source approximately 35 percent of the SnP deals during this period took place within October, whilst July and September accounted for an equal and approximate 20 percent of the overall deal realm. As anticipated, the lowest activity levels have been detected during August with only 12 percent of the reported deals being occurred at that time. However, November comes with a downturn in the S&P activity which constituted 9percent of the reported transactions up to date while we expect – under normal circumstances this proportion not to exceed the volume of October but it will be in similar levels to July and September. It is also added that Handysize and Supramax vessels remain best sellers totalling 56 percent of the reported sales. The already significant amount of Handysize sales increased by 10 percent compared to the first half while Supramax sales increased by 37 percent. It is worth mentioning that the sales corresponding to all the other segments have increased by excessive rates, with the exception of Panamax vessels whose S&P activity has dropped by 15 percent. Finally, 53 percent of all confirmed sales are related to Greek and Chinese buyers; 36percent and 17percent respectively.

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