ISSUE THREE 2015 www.maritime-ceo.

com

Sabrina
Chao The
future of
Hong Kong
shipping
 Manifest

3 At The Prow 32 Arkas

33 Sea World
Economy 34 Michele Bottiglieri
35 Giuseppe Bottiglieri
5 US
6 EU
7 China
Recreation
8 India 36 Wine
9 Brazil 37 Gadgets
38 Books
Markets 39 Travel
40 Golf
11 Dry Bulk 41 Yachting
13 Tankers
14 Containers
15 Offshore
Opinion
17 Finance 42 The Secret Ship Inspector
43 The Contrarian
44 MarPoll
Executive Debate
18 The connectivity argument

Profiles
22 Cover Story
Wah Kwong
25 Euroseas
26 Vroon
27 Scorpio
29 Fujian Shipping
30 LT Ugland
31 GMS
31 Milaha 22

Issue Three 2015 1

Across the World

www.damicoship.com
 At the prow

An ASM publication

Editorial Director:
Of smashed rice
bowls and egos
Sam Chambers
[email protected]

Associate Editors:
Jason Jiang
[email protected]

Katherine Si

W
[email protected]
hat to make of the largest
Correspondents:
Athens: Ionnis Nikolaou shake-up in Chinese
Bogota: Richard McColl shipping seen for a gener-
Cairo: Camelia Ewiss
Cape Town: Joe Cunliffe ation? Take a look at the infographic
Dubai: Yousra Shaikh
Genoa: Nicola Capuzzo we commissioned from VesselsValue.
Hong Kong: Alfred Romann
London: Holly Birkett
com on just how big Cosco and China
Mumbai: Shirish Nadkarni Shipping would be together.
New York: Suzanne Smith
Oslo: Hans Thaulow But is a merger realistic? Has
San Francisco: Donal Scully
Shanghai: Colin Quek Beijing learnt nothing from the
Singapore: Grant Rowles insanely tricky and ugly merger
Sydney: Ross White-Chinnery
Taipei: David Green between two other state-owned lines,
Tokyo: Masanori Kikuchi
Sinotrans and Changjiang Shipping,
Contributors: Nick Berriff, Andrew Craig-
Bennett, Paul French, Chris Garman, Lars Jensen,
something that five years down the
Jeffrey Landsberg, Dagfinn Lunde, Mike Meade, track is still not fully settled.
Peter Sand, Neville Smith, Eytan Uliel
My guess the best bet is not to
Editorial material should be sent to simply bring the two together, but to
[email protected] or mailed to
Office 701, 9 Renmin Lu, Zhongshan District, splinter and combine each sector into
Dalian, China 116001 individual companies. Thus there’d one reason only, which was to get
Commercial Director: be one giant company looking after round the restrictions imposed on
Grant Rowles
[email protected]
dry bulk, one for tankers and so on. Cosco’s ability to vary its tariff at
Sales Director:
The container angle is obviously the less than 30 days notice under the
Helen Ong most vexing issue – how would Cosco US-controlled carrier restrictions by
[email protected]
and/or China Shipping disentangle creating a competitor for Cosco.
Maritime ceo advertising agents are also based
in Japan, Korea, Scandinavia and Greece — to
themselves from their respective Li Kelin built up China Shipping
contact a local agent email container alliances. at such a rate of knots. He and Wei
[email protected] for details
Sources at both China Shipping were both alpha males, full of energy
MEDIA KITS ARE AVAILABLE TO
DOWNLOAD AT: www.asiashippingmedia.com
and Cosco tell me that this idea of and bluster, loving the limelight –
dividing the companies into sector and allegedly despising each other.
All commercial material should be sent to
[email protected] or mailed to
specific units is unlikely and a genu- Since the downturn, however,
30 Cecil Street, #19-08 Prudential Tower ine merger of the two groups is what most of the senior staff have moved
Singapore 049712
is planned. between the two at some point in
Design: Tigersoft Design The move is such a slap in the their careers. Everybody knows
Printers: Allion Printing, Hong Kong
face for the two behemoths of the pair everybody.
Subscriptions: A $120 subscription is charged who led them for much of the last 20 Beijing has attacked both groups
for 2015’s four issues of Maritime ceo magazine.
Email [email protected] for years – Li Kelin at China Shipping for their poor financial performance
subscription enquiries. and Wei Jiafu at Cosco. as well as gross corruption.
Copyright © Asia Shipping Media (ASM) 2015 China Shipping was formed from With the merger scheduled to be
www.asiashippingmedia.com
the three coastal shipping bureaus completed by as early as 2017, some
Although every effort has been made to ensure that were outside Cosco (because rice bowls will now be broken, one
that the information contained in this review is
correct, the publishers accept no liability for any they were coastal shipping compa- source tells me.
inaccuracies or omissions that may occur. All nies) which were knocked together What’s next? Perhaps the two
rights reserved. No part of the publication may
be reproduced, stored in retrieval systems or and given a deepsea shipping remit giant state-run shipbuilding groups,
transmitted in any form or by any means without under Li Kelin who was the head of which split apart in the late 1990s,
prior written permission of the copyright owner.
For reprints of specific articles contact grant@ Cosco Container Lines and who got will come back together. ●
asiashippingmedia.com on badly with Chen Zhongbao who
Twitter: @Maritime_CEO was then head of Cosco, just before
LinkedIn: Maritime CEO Forum Wei Jiafu took the top posting at
Facebook: Splash Maritime & Offshore News
Cosco.
China Shipping was formed for

Issue Three 2015 3

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 ECONOMY
REGULAR
US

Fragile but at work

There’s plenty of challenges to face through to the end of the year

F
ragile is the most common epi-
thet being used to describe the
American economy’s recovery
at the moment. July’s employment
rolls looked good and the econ-
omy is still continuing to add jobs
helping the retail sales recovery as
those now getting wages spend and
consumer activity continues to pick
up. America’s unemployment rate
remained at a seven-year low of 5.3%,
while wages inched upwards by 0.2%
in July, resulting in a gain of 2.1% over
the past year.
However, low inflation remains a
problem and wages growth needs to
continue to pick up for a full recovery
to bed in. Usually, one would expect
rising interest rates to be accompa-
nied by rising inflation. The fact that
this is not happening is a potential America’s major job growth areas to global recovery. Central banks
cause for concern and could be Q1 2015 – It’s a bar business can employ a variety of policies to
a symptom of porous economic improve growth, and they must
Sector Job gains (‘000)
fundamentals. balance short-term improvements in
There’s little doubt that the Restaurants & bars 660 the economy with longer-term mar-
devaluation of the renminbi will Business services 450 ket expectations. If the central bank
adversely affect the US economy, Healthcare 355 tapers its activities too quickly, it
sooner rather than later. Exports to Energy 22
may send the economy into a reces-
the United States fell by 1.3% in July. sion. If it does not taper its activities,
Source: US Bureau of Labor Statistics
The devaluation in Beijing obviously it may lead to high inflation. For the
strengthens the US dollar making Federal Reserve, who does the taper-
it harder for American exporters. food and cars were the highest on ing, getting the monetary policy mix
As much of the recent job growth record in June this year. A combi- right in the second half of 2015 will
has come from manufacturing this nation of the dollar’s strength and be crucial to maintaining America’s
could be threatened if new orders sluggish global demand trimmed fragile recovery. ●
don’t come through the pipeline. Gas exports though, which slipped 0.1%
prices will also fluctuate – some ana- to $188.6bn in June. Imports from
lysts predict as much as $2 a gallon. the EU reached a record high while “I will devote
Does all this, as some analysts exports to the Eurozone countries significant efforts
suggest, mean that the US economy fell off by 2.3% over the quarter. to minimise the human
will lose momentum in the second With China devaluing and other error, which is responsible
half of the year? The US Commerce major economies in slower growth –
for 90% of the causes of
Department has reported that India, Russia, etc – tapering is a term
the trade deficit increased 7.1% to many are talking about. Tapering, marine accidents”
$43.8bn, which reflected a second a gradual winding down of central — Lim Ki-tack, the next
straight monthly drop in exports. bank activities, used to improve the secretary-general of the
International Maritime Organization
May’s trade gap was revised to conditions for economic growth,
$40.9bn from the previously reported is now being touted as central to
$41.9bn. This means imports of American recovery and by extension

Issue Three 2015 5

ECONOMY
REGULAR
EUROPE

Beyond Greece
Aside from Athens unravelling, the Eurozone looks surprisingly strong

T
he Eurozone has continued
to be immersed in the Greek
crisis, which has consumed
most of the efforts of finance minis-
ters across the continent. The EU’s
analysts expect the Greek economy
to recede into a deep depression in
2016, shrinking an estimated 2.3%
in 2015 and a further 1.3% in 2016.
They believe that if their bail out
and restructuring plan works then
Greece could return to growth as
early as 2017 or 2018 – but that is
highly debatable and subject to a
myriad of political and economic
qualifiers in the next few years.
But what of the European
Union ex-Greece? Growth elsewhere
appears stronger – even in countries
tipped to perhaps follow Greece into
a spiral down and possible exit from is falling faster than in any other and exporting nations. France may
the euro. Ireland has rebounded with major European economy. Growth in take a while to recover but in July,
GDP up 6.5% on a year ago in the Portugal is less strong, but it should the purchasing managers’ survey
first quarter of this year. The Spanish grow by 1.5-2% this year. The larger of Italian manufacturers showed
economy is projected to grow by economies also appear relatively the best results for more than four
3-3.5% this year and unemployment healthy - the UK (obviously not in the years. Exports are more of a problem
Eurozone) economy is performing continent-wide. Exports to China are
How important is Russia to well, with GDP up 2.6% on a year ago down 2.5% and exports to Russia are
Germany? Germany’s major in the second quarter. The UK should still suffering due to sanctions over
trading partners, 2014 be the best performing G7 economy the Ukraine issue. The China slow-
this year. German growth prospects down has particularly hit Germany
Destination Exports (€bn)
are also positive at 1.7% growth. and this slowdown could turn into
France 100.32 However, all this shows the new eco- stagnation, as the renminbi devalua-
USA 88.37 nomic realities of Europe – growth of tion will make it more expensive for
over 2% is considered pretty remark- Chinese industry to import high-end
UK 75.64
able in Western Europe. German machinery and technology.
Netherlands 70.94 Things are brighter still in Additionally, Germany is suffering
China 67.02 Eastern Europe. GDP has risen by more than other European coun-
Austria 56.17 4.1% in Romania, 4% in the Czech tries from the sanctions imposed on
Italy 53.32 Republic, 3.7% in Poland, 3.3% in Russia. With orders from China in
Hungary, 3.1% in Slovakia and 3% in the doldrums right now, most major
Switzerland 47.32
Slovenia – all above initial analyst European manufacturing nations
Poland 42.35 expectations. are looking to the United States - the
Belgium 42.25 The underperformers are France current weakness of the single cur-
Russia 36.1 and Italy – important as they are rency against the dollar reduces the
Source: German Federal Statistics Of fice major members of the Eurozone cost of European products for foreign
and both major manufacturing buyers. ●

6 maritime ceo
 ECONOMY
CHINA

Don’t be swayed by the

stock market rollercoaster

Devaluation will boost exports … eventually

I
t’s a lot easier to be a bear than a growth, given the PRC’s very big base. RMB equivalent of $8.5trn, which is
bull these past months in China, Secondly it’s important to greater than the combined GDPs of
thanks almost entirely to the remember that China’s job market Russia, Brazil, India and Italy.
rollercoaster antics of the Shanghai remains largely stable. This means Of course RMB devaluation - a
Stock Exchange. But there are workers are earning wages, which fall out from the stock market dip - is
calmer heads around who’ve seen is borne out in real (inflation-ad- good for exporters. Chinese busi-
the Shanghai bourse act erratically justed) retail sales rising 10.6% nesses have been complaining for a
before and those in China for the long year-on-year in June, the fastest pace while now of the double whammy of
haul, while having to wait a while, in four months. Online retail sales rising labour costs and an expensive
largely expect a return to normality are particularly robust, rising 39% currency. Exports had dipped, but
eventually. The stock crash may have year-on-year during the first half of now being cheaper, should rise again
been well deserved (the ChiNext this year. as orders are placed (and most are
index was trading at over 140 times), Third, let’s not forget amid the priced internationally in dollars). It
but the fact seems to be that it is hav- stories of small investors getting is true that the Beijing government’s
ing very little effect on the broader wiped out, that Chinese household devaluation of the RMB is a ‘limited
economy. debt remains very low and savings devaluation’ and there will be a time
For those operating in China it rates are stubbornly high still. lag between devaluation and a boost
is important to note that the stock Household bank deposits are the to export orders – but it should come.
market is not the entire economy. The other side of that coin, of
Given the legion of small, mom-and- course, is that imports will become
China’s exports month-on month
pop investors in the market it may more expensive. Many industrial
- First half, 2015
not be even remotely representative analysts believe that China should be
of what is happening across the coun- Month Exports ($100m) investing in upgrading its produc-
try in factories, production centres Jan 2002.58 tion facilities at present to remain
and export processing zones. Better Feb 1691.91 competitive in an increasingly hi-tech
perhaps to look at the underlying world and with competition at the
March 1445.69
fundamentals of the economy. low end from lower wage countries
First, China’s GDP growth rate is April 1763.31 in Southeast Asia. That retooling
slowing, and most analysts expect it May 1900.58 may be a problem if import prices are
to continue to decelerate gradually for June 1920.11 high. As ever it’s a balance and Beijing
many years with general predictions July 1950.97
must seek the right balance between
of cooled growth to down to 5% or a cheap and an expensive currency
Source: China General Administration of Customs
6% by 2020. But that is still very fast over the second half of the year. ●

Issue Three 2015 7

Economy
India

Currency wars
The depreciation of neighbouring China’s renminbi will hit Indian exports

T
hough Prime Minister Modi’s
much heralded, and long
awaited, economic reforms
may be mired in the political morass
of New Delhi parliamentary bureau-
cracy, the economy appears to be in
strong shape. Retail inflation cooled
to a record low in July and annual
growth in industrial production hit a
four-month high in June. Consumer
prices have risen a few percent, but at
a slower growth rate than previously
while output at factories, utilities
and mines expanded an annual 3.8%
in June.
However, there are clouds on
the horizon, apart from the ongoing
political stalemate. First to note is and the renminbi’s devaluation won’t have contracted by close to 6% in the
that there are as yet no firm details help that to turn around anytime first quarter of this financial year.
on the long required tax system soon. On a real trade-weighted Added to this is the government’s
overhaul while, secondly, the deval- basis the rupee has appreciated by decision to raise basic customs duty
uation of the renminbi in China will 10% since the middle of last year. on base metals such as iron, steel,
undoubtedly make winning export A flood of cheap Chinese imports copper, nickel and aluminium by
orders, particularly at the lower end and a worsening in the Sino-India 2.5%, which hasn’t helped that sector
of the value chain, harder. trade balance seem inevitable in the compete against China.
Indian exports have fallen for second half of the year. In contrast to Some help for Indian manu-
seven straight months now this year China though India’s stock markets facturers has come from America
appear comparatively robust and which, this August, renewed its gen-
buoyant depressing gold sales. eralised system of preferences (GSP),
India’s top export categories, 2014
Still, it is exports that remain a programme under which Indian
Category % of total the major industrial and manu- exports gets concessional duty treat-
Petrochemicals 20 facturing concern. Producers fear ment in America. The US accounts
Gems and Jewellery 13
Chinese dumping of goods into India for approximately 13% of Indian
to take advantage of the situation exports, mainly in the textiles, gems
Agricultural products 10
if the rupee remains comparatively and jewellery and chemicals sectors.
Transport parts 7 high against the Chinese currency. Some Indian manufacturers
Fabrics and textiles 7 Engineering exporters’ body EEPC have also criticised prime minister
Machinery 5 India chairman Anupam Shah Modi’s so-called ‘port-led’ export
told the Delhi media that a steep drive, which they believe advantages
Pharma 5
devaluation of the renminbi will deal port and coastal regions against the
Metal products 3
a further blow to the Indian exports hinterlands. Plans to double con-
Electronics 3 which are battling a slowdown in tainer traffic through India’s ports
Plastics 2 most markets of the world, as the are welcomed by many, such as man-
Others 25 shipments from India further lose ufacturers in Mumbai, but distinctly
competitiveness against the Chinese less so by inland manufacturers
Total 100
goods. Shah’s statistics show that who claim they feel increasingly
Source: GATT
Indian exports of engineering goods stranded. ●

8 maritime ceo
 Economy
Brazil

‘An unprecedented
seven-year stretch of zero
or negative growth’
There’s no glimmer of light for the South American giant yet

I
t’s getting harder and harder approval ratings of just 7.7%. The export markets with the Chinese
to remember the last time the massive and long rumbling corrup- and their newly devalued renminbi.
economic news out of Brazil tion scandal unfolding at national Conversely Brazil can also expect a
was good. This month the Central oil company Petrobras and rippling flood of cheaper imports from China
Bank told the media that analysts across other top companies and into undermining its domestic lower end,
expected Brazil’s economy to political circles is doing nothing to as well as technology, companies.
contract by 1.8% this year, with the increase confidence in the senior Brazil’s trade minister Armando
inflation rate hitting 9.25%. So far policy makers in the government. Monteiro recently predicted that
this summer the Central Bank’s fore- Brazil is now effectively on the China’s decision to devalue their
casts have become more and more brink of recession yet the Rousseff currency could hurt the country’s
pessimistic with each weekly release government’s commitment to aus- manufacturing exports.
of the Boletin Focus, a weekly Central terity measures appears unshaken. However, there are bright spots.
Bank survey of analysts from a hun- Current economic sluggishness Brazil’s exports of poultry hit a
dred private financial institutions on combined with austerity could mean new record high in July and look
the state of the national economy. an unprecedented seven-year stretch set to grow (Brazil is the only major
For those 100 analysts the major of zero or negative growth. emerging market not to ever expe-
points of concern are firstly the con- As with the other BRIC coun- rience any sort of bird flu outbreak)
tinuing drop in the value of the real tries, such as India, Brazil is now while ethanol exports to the US
against the US dollar and, secondly, faced with greater competition in have doubled in the last six months
the recent increase in the cost of pub- to July. However, on the downside,
lic services, such as water, electricity Where’s the value added? Brazil’s exports of metals and metal products
and transportation. It is also gener- key export categories, 2014 from Brazil are down significantly
ally believed that the government’s % of total year-on-year.
Category
plan to slash the national budget by exports Perhaps the biggest sign of a lack
RLS8.6bn ($2.66bn), is a move that Iron ore 17 of confidence in Brazil’s economy
will further slow economic activity and government was the decision in
Petroleum 13
and deepen the ongoing contraction. August by Moody’s Investors Service
Brazil’s economy grew by just Soybeans 5 to downgrade Brazil’s government
0.10% in 2014 and predictions that Steel 3 bond rating to Baa3 from Baa2.
things will be worse this year are Copper & base metals 2 The rating agency also changed the
doing nothing to secure political Gold & precious metals 1
outlook on the rating to stable from
calm - President Dilma Rousseff negative. The end of this recession is
Source: Boletin Focus
has been weakened by government far from in sight in Brazil. ●

Issue Three 2015 9

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 Markets
REGULAR
Dry Bulk

Lowest number of capesize

deliveries since 2008
As well as the much reported scrapping in the big
bulker sector Jeffrey Landsberg from Commodore
Research points to limited newbuilds joining the fleet

C
apesize scrapping has received of this year. On an annualized basis,
a great deal of attention this this works out to an annualized total of
year, with scrapping volume 92 capesize deliveries. However, there
having seen a dramatic shift in recent is a real chance that 2015 will end with
months. While the first four months of having seen even less than 92 capes deliveries are a good deal lower than
this year saw an average of 13 capesize delivered. what was anticipated by the market
vessels scrapped each month (with Historically, capesize newbuild- at the start of this year. Changes in
April seeing an amazing 23 capesize ing delivery volume (and all dry bulk scrapping have been getting most, if
vessels scrapped), May saw “only” eight newbuilding delivery volume) is largest not all, of the attention. However, we
capesize vessels scrapped, June “only” during the first half of each year. Each believe very strongly that there is a solid
six capesize vessels scrapped, and July year this decade has seen a larger chance that even the low range of our
only two capesize vessels scrapped. amount of capesize newbuildings 105 – 125 estimate for capesize new-
However, what has still gone rather delivered during the first half of the building deliveries will not be seen this
quietly under the radar is that capesize year than during the second half of that year. There is also a real chance that
newbuilding delivery volume has been year. 2014 saw approximately 59% of this year‘s total will come in at 92 or
lower than the market anticipated the year’s capesize newbuildings deliv- fewer capesize deliveries, which would
when this year began. Before the year ered in the first half of the year. 2013 mark the fewest amount of capesize
began, we saw predictions stating that saw approximately 60% of the year’s newbuildings delivered seen since 2008.
as many as 150 capesize newbuildings capesize newbuildings delivered during Relatively low capesize newbuild-
would be delivered this year. That the first half of the year. 2012 saw ing delivery volume, combined with
number appeared high to us, and at approximately 69% of the year’s cape- this year’s robust capesize scrapping
the beginning of this year we published size newbuildings delivered in the first activity (we count 70 capes as having
our prediction that 105 to 125 capesize half of the year. 2011 saw approximately been scrapped so far this year), and
newbuildings would be delivered. 53% of the year’s capesize newbuildings the expected second half of the year
As this year has seen, however, delivered in the first half of the year. surge in Brazilian and Australian iron
only approximately 46 capesize new- Overall, it is not being mentioned ore exports all point to capesize rates
buildings were delivered in the first half much that capesize newbuilding seeing even more support in the second
half of this year – particularly in Q4.
Capesize Vessel Scrapping Volume (July 2014 - July 2015) We continue to expect that iron ore
25 exports from Brazil and Australia’s Big
Three (Rio Tinto, BHP, and FMG) will
jump in the second half of this year by
20
at least 78m tons from H1 2015’s total
(2014 saw an H2 versus H1 jump of
15 71.2m tons).
We remain bullish for Q4 capesize
10 rate prospects as a result of this year’s
smaller than expected newbuilding
5 delivery volume, robust scrapping,
and the anticipated seasonal strength
in Australian and Brazilian iron ore
0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul shipments. ●

Issue Three 2015 11

 Markets
REGULAR
Tankers

The top 10 crude trade flows

into Asia through to July
West Africa is rising fast, writes Poten’s Erik Broekhuizen

T
hrough its extensive spot fixture despite all these caveats, we feel that
database, Poten has a feel for this ranking and especially how it
changes in spot crude oil move- develops over time gives a good indi-
ments from one period to the other. cation of how crude oil tradeflows
We thought it would be interesting to are changing worldwide (or not).
use this data to rank the busiest dirty The chart shows the top 10 dirty
(crude and fuel oil) tanker routes into tanker trades into Asia for the period
Asia. For this analysis we are looking January to July 2015. It will not come
at reported spot fixture data for the as a surprise to anybody that the long-
first seven months of 2015 and it is haul crude trade from the Arabian Gulf
important to keep in mind that the (AG) to the Far East (which includes

“
actual cargo movements are most likely China, Japan and South Korea) is by far
significantly higher. the biggest. Second on the list is the Countries that rely for a
It should also be noted that the AG to South Asia (India). In third spot significant portion of their
use of private cargoes and charterer is the first tanker route that does not
controlled tonnage is more prevalent originate in the Arabian Gulf. As coun- energy supply on imports
on certain routes than on others. tries the Atlantic Basin (in particular want to diversify their

”
For example, crude oil movements the United States) produce more light
from the Caribbean (in particu- sweet crudes, demand for West African supply
lar Venezuela) to Asia have been grades has declined and producers in
growing rapidly over the last several Nigeria and Angola have directed more like China gets an increasing share of
years as both Chinese and Indian of their exports to the growing Asian their crude oil from sources outside
refiners have concluded long-term market. The West Africa to Far East the Middle East. The reason is not only
supply contracts with Venezuelan trade, which is in third spot so far in related to the quality, availability and
state oil company PDVSA. However, 2015, was in fourth spot last year. It price of the West African crudes, but
only a fraction of these voyages leapfrogged the AG – SEA (Southeast has also a strategic background: coun-
are reported in the market, so the Asia, including Singapore, Philippines, tries that rely for a significant portion
number of spot fixtures on these Thailand, etc.) trade. of their energy supply on imports want
trade routes is not representative of The West Africa to South Asia to diversify their supply sources, so as
the volume of oil moving. However, (India) trade is fifth on the list. India, to not to become overly dependent on
one country or region.
Intra-regional trades, primarily
Million MT Top 10 Dirty Tanker Trades into Asia originating from Indonesia, Malaysia
140 and Kozmino in eastern Russia take
the sixth, seventh and eighth spot in
120
the ranking. These relatively short-haul
100
trades are followed by two very long-
80 haul trades, i.e. from the Caribbean
60 to Southeast Asia and from the UK
40 Continent to Southeast Asia. While
these routes represent less volume than
20
the other trades, they are more impor-
0 tant for the tanker market because
AG - FE AG - WAF - AG - WAF - FE - FE SEA - SEA - CAR - UKC - the long distances generate significant
SOUTH FE SEA SOUTH FE SEA SEA SEA
ASIA ASIA ton-mile demand. ●

Issue Three 2015 13

 Markets
Containers

Storm rising
SeaIntel’s Lars Jensen on the growing volatility plaguing the liner trades

I
t is by now not news to anyone in present date, the weekly rate erosion
the container shipping industry has constantly increased to the
that rates are extremely volatile. point where a weekly rate decline
Nor is it news that they appear to be of a staggering 25% is no longer
collapsing quite frequently. uncommon.
However, looking more closely For other trades such as the
at the developments in the past five transpacific, Asia to Australia and
years, it is very clear that 2014-2015 Asia to East Coast South America
has seen a very sharp – and worsen- the same trend is seen.
ing – trend in essentially all major A key question is whether this
deepsea trades out of Asia. trend will continue, and looking at
Using the spot rates from the just a few key numbers the answer
Shanghai Container Freight Index, it unfortunately appears to be a clear
is possible to look at trends in weekly ‘yes’.
rate changes. Instead of looking According to Container Trade
at actual freight rate changes, it is
more relevant to look at rate changes
in percentage terms, as this is a
Statistics, global demand for con-
tainer transportation has grown a
paltry 1.2% in the first five months of
“ A weekly rate decline
of a staggering 25% is no
much clearer indication of the rela-
tive importance of a rate change in
any given trade.
As an illustration, the attached
2015. In the same period the global
fleet has grown 3.6%.
According to Alphaliner, global
fleet growth is predicted at 8.8%
longer uncommon
”
pivotal Asia-Europe trade has actu-
figure shows the weekly rate changes in 2015 overall. If global demand ally declined by more than 3% in the
in the trade from Asia to North growth is to match this devel- period until May.
Europe for weeks wherein rates have opment, it would require a 14% Adding insult to injury, fuel
declined. The development seen is year-on-year demand growth glob- prices have begun to decline again.
very clear. From 2010 to 2013, weekly ally for the period June to December In the wake of the fuel price declines
rate declines tended to be less than 2015. That is a growth rate which in late 2014, carriers expressed a
5%. In 2013 to mid-2014, this doubled appears entirely unrealistic – espe- desire to retain part of the fuel price
to 10%. Then from mid-2014 to the cially when considering that the savings. The freight rate devel-
opments seen thus far appear to
indicate that such ambitions were
Asia-North Europe:
far from successful. According to
Weekly rate change in weeks of rate declines Bunkerworld, bunker fuel prices
0% have declined almost 25% since
-5% mid-May, and this decline will now
begin to materialise in the shape of
-10%
reduced BAF levels on key trades.
-15% Hence the combination of
-20% continued excessive capacity growth
-25% when compared to actual demand
developments, and a fuel price which
-30%
is once more rapidly declining, leads
-35% to the inevitable outlook that the
storm the industry has been in lately
1

5
0

11

13

14

5
0

-1

l-1

-1

l-1

l-1
-1

-1

-1
-1

n-

n-

n-
l

l
n

n
l

Ju

Ju

Ju

Ju

Ju
Ju
Ja

Ja

Ja

Ja

Ja

Ja

is not abating, it is intensifying. ●

14 maritime ceo
 Markets
REGULAR
Offshore

Hatches battened down

Utilisation rates and the price of oil continue to plummet. Redundancies
are happening in their thousands, writes Mike Meade from M3 Marine

T
he offshore marine space The lifting of international
continues to be operating in sanctions on Iran should reinvig-
high stress mode with even orate the offshore support vessel
the most noble and well run compa- market in the Middle East. However,
nies struggling to generate profits, or increasing export volumes would
even positive cash flows. have a dampening effect on oil
Outside of the marine space prices. The increased oil production
the global oil and gas industry faces from Iran will not be immediate as
poor earnings visibility as capex and sanctions will not be lifted until the
operating costs are being slashed. International Atomic Energy Agency
The market continues to be challeng- (IAEA) reports Iran’s compliance
ing for the entire industry; including with cuts to its nuclear-related
oil companies, vessel owners, service commitments. We will also have to
providers and shipyards. see an extensive amount of devel-
Utilisation dropped on average opment/maintenance to make the several oil majors and contractors
40% across the sectors with some extra production effective. Experts -- including Shell, Chevron, Technip
areas effected more than others estimate implementation of the deal and Saipem -- have started laying off
(North Sea/US Gulf of Mexico). to take four to 12 months from a their people in the thousands.
Charter rates are down, again at start at the end of Q3 this year, real- For survival, it is crucial that
levels around 40%. This has put istically making the earliest lifting of new and niche market opportunities
extreme pressure on vessel prices sanctions to Q1 2016. are recognised in this challenging
with the oversupply of vessels (exist- At the end of the last quarter my period, in order for contractors
ing fleet plus newbuildings galore) take on the Brent oil price estimate to remain sustainable. In most of
worsening the situation. for balance of 2015 and 2016 was the offshore sectors, the focus has
The market is out of balance $60+ pert barrel and $70 respec- moved from deepwater to shallow
when it comes to supply and tively. Since the recent re-correction, water projects, focusing on short
demand; where even in the unlikely I don’t have the same level of confi- term production. Deepwater projects
event of the entire rig fleet working, dence. A recent survey conducted are nevertheless still ongoing, where
there would be still be a surplus of by Carnegie Energy found that half selected deepwater fields continue to
offshore support vessels. of investors believed the oil price in be developed. Deepwater has a solid
After many years of relatively one year would be between $60 and future, and in the long term is far
healthy vessel values in the second $70, with the rest divided equally on more economic and sustainable than
hand/resale space, these values have slightly higher and lower levels. shale. The subsea projects remain-
now fallen steeply since the down- Industry players are preparing ing in favour are subsea tiebacks to
turn began, by as much as 20-30% to tide over this storm by imple- existing production hubs, due to the
and considerably more for older menting drastic measures, such lower capex needed.
vessels. as severe cost cutting and layoffs, Another market to be on the
This quarter, oil prices have to prepare their organisations for lookout for is the offshore accom-
tumbled to below $50 per month a different and more challenging modation market, as the demand
on the back of market events from business climate, with a shift in the for accommodation units will likely
China and Greece, Iran’s nuclear way the industry is priced when we average almost 42,000 personnel
agreement, the continual threat of come through the downturn. Cost onboard per year over the 2015 to
shale oil and the continued asset cutting measures unfortunately 2020 period, despite declining capex
oversupply situation. have resulted in huge job losses as across the offshore industry. ●

Issue Three 2015 15

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RecRUItIng at
the tOP

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 Markets
REGULAR
Finance

RBS quitting leaves huge hole

in London’s shipping claims
Dagfinn Lunde on the demise of what was once
the world’s most important ship finance centre

B
ack in the late 1970s and the lenders left in London. Sure, there’s a
early ’80s as CFO at Klaveness number of branches of foreign banks
I was a very, very regular – the likes of DNB and Deutsche
visitor to London. Back then, the UK Bank spring readily to mind.
capital could claim to be perhaps London’s cluster as a whole
the most important ship finance is not what it was. Yes, there’s still
centre in the world. How times have plenty of maritime lawyers, insur-
changed. ance people and brokers still around,
With London International but not as many as during the hey- worldwide income and pay an annual
Shipping Week upon us, the pro- days of the London Greek owners. fee of £30,000 to £90,000 depending
ponents of the city as a leading Nowadays, there are very few on how many years they have been
international maritime centre have owners who call London home UK residents.
been dealt a hammer blow with especially after the recent decision The Baltic Exchange has repeat-
Royal Bank of Scotland’s (RBS) of the UK government to change the edly warned that these changes in
decision to pull out of ship finance. regime for ‘non dom’ residents from the legal system will destroy the
The association of RBS with mari- April 2017 onwards, a ruling that shipowning part of the city.
time finance goes back to the 18th affects business people living in the The demise of RBS clearly drops
century. The cluster has lost a lost a UK for the last 15 years. Also the London down the rankings. In terms
key part of its attraction. law will change for property owned of the capital market, New York, Oslo
The fact is that London is com- by offshore companies. Inheritance and latterly Singapore are all more
pletely disappearing from traditional tax will have to be paid, something important than the British capital
ship finance. Basic financing over the that will hit Russian and Chinese these days.
past seven years has been in export residents in particular. They can keep In terms of traditional bank
finance on newbuildings, with far their properties by limiting the num- lending I’d place London in fifth spot
less need to offer S&P finance. ber of days they are in the UK. They in the global rankings these days.
Lloyds Bank is also exiting the today pay taxes on income earned in Oslo, home to DNB, Nordea et al, is
scene, joining a long list including the UK, but not for business carried out in front, followed by New York
RBS, Bank of Scotland, HSBC and out outside the country. From now then Singapore and Hamburg.
its predecessor Midland. There are on, if someone resides in the UK London does however remain
now very few indigenous traditional they will have to pay taxes for their strong for private equity firms and
hedge funds although shipping for
them is a small activity in the big
picture.
On a related note, RBS’s decision
to quit ship finance will be felt most
keenly in Greece where the bank has
a $5bn exposure. However, there are
many banks that will be willing to
step in and fill the gap. This gap, how-
ever, will not be fully filled leaving
other avenues such as credit export
financings, private equity and a few
marginal players to come into the
Greek market more. ●

Issue Three 2015 17

EXECUTIVE
In profile
Debate

Divided industry
A survey of 150 owners and managers on satellite communications held in
association with Inmarsat throws up divergent viewpoints

M
aritime communications Despite cost conscious times, price/ and more internet access to seafar-
spent a long time being total cost of ownership was not the ers. He worries too about the effect
of little interest to most single most important aspect owners of increased access to social media
people. Beyond safety requirements, and managers sought when select- on vessels, which potentially allow
it took the dotcom boom to generate ing their communications systems seafarers to discover upsetting news
a significant uptick in activity, as onboard. Global coverage stood out as from families and friends while at sea
software entrepreneurs discovered the most vital selling point. while leaving them powerless to take
this ‘untapped’ market. Rob Grool, a director at Belgium any action.
That ended with the dotcoms owner Vroon, says, “Communications “It really is a double-edged
going belly up, but the Rubicon had are a totally fungible commodity like sword,” says Huxley. “Whilst connec-
been crossed. There was now a clear H&M insurance: you go for the most tivity and being in touch with loved
realisation that connectivity held the cost-efficient solution for your fleet.” ones and friends sounds a great thing,
key to better productivity and perhaps Respondents were split on the if you do have a family problem and
even a more efficient supply chain. importance of access to movies, TV you learn about it while you’re at sea
Once again, the market was and sport to crew welfare, recruit- there is not a lot you can do about it
overtaken by events – namely the best ment and retention. aside from worry”.
earnings many had ever seen – and “We find that most seafarers No single question posed in our
suddenly no-one cared about saving really want the connection to home survey elicited more response yet
fuel or improving efficiency, because and they want news,” says Vroon’s was so one sided as our wondering
rates were through the roof. Grool. if MLC2006 should be updated to
Another crash followed and A leading Asian tanker player include mandatory internet access
suddenly we are back to the future. disagreed, however, saying: “This is for all onboard. Fully 91% of the 150
This time, the recession looks longer, something that needs to be regulated companies surveyed thought this was
deeper and likely to claim more – you cannot have this tap on all the an unnecessary extra piece of legisla-
scalps. The answer? Better connec- time as it is distracting and unneces- tion for an industry already mired in
tivity for increased efficiency and sarily expensive.” reams of red tape.
improved crew retention. A majority of respondents did One Asian tanker owner
There is a definite increase in however agree that access to social comments: “I think a strong recom-
activity and the adoption criteria media was important in today’s mendation is enough at the moment.
is expanding. Prices are cheaper, modern age in terms of crew welfare, Still the prices are high and service
applications are becoming more recruitment and retention. providers are few, hence probably this
sophisticated and the number “It’s how the world communi- can be considered mandatory in the
of vessels as good candidates for cates nowadays, so to deny this at coming years.”
IT upgrades is increasing. With sea is to sever ties with loved ones,” “It is not necessary to amend the
increased demolition of older ships an American containerline executive regulatory framework,” maintains
the newer, better-wired ones are look- says. Gaurav Bansal, CEO of SE Shipping
ing for efficiencies. “It is their emotional lifeline to Lines. “It is a part of being competitive
For this magazine we interviewed their family,” says a leading European to attract the best talent onboard,” he
150 top owners and managers for their shipmanager. reckons.
views on maritime communications. There were some who dissented Christopher Kirton, managing
from this viewpoint. director at Norstar Ship Management,

“
Tim Huxley, CEO of Wah Kwong was one of the few who felt MLC2006
Support is what actually Maritime Transport, reckons that should be updated.
creates added value
” social isolation on vessels could be on
the rise as shipowners provide more
“It would stop the arguments of
owners who don’t want to provide,” is

18 maritime ceo
 EXECUTIVE
In profile
Debate

“ ”
“Internal communication should
Social media onboard is a double-edged sword be verbal or by email. With shore staff
we can use existing applications,” says
his own argument why it is necessary. points out. one Japanese bulker player.
We also asked how owners and Quite so, agrees Arnold Lipinski, Quite right, agreed a spokes-
managers would like to see maritime a senior director at German contain- person from a leading Asia-based
safety services delivered in the future. erline, Hapag Lloyd. containerline. “With the current com-
More than half replied over the web. “Safety services like tele medi- munication technology and maritime
Email, podcasts, webinars were some cine, technical support, navigation safety services available to us, we find
of the alternative suggestions. advice via internet or satellite will be it quite sufficient for the needs of our
Peter Schellenberger, a procure- essential in the future,” Lipinski says. modern fleet today,” says the boxline
ment director at shipmanagement The industry seemed divided on source.
giant V.Ships, suggests via VPN or an the need to develop applications to “What we need to work on is a
app. improve communication between the general willingness to communicate
One Asian dry bulk owner says engine room, control room, bridge between everyone onboard,” argues
that in the future broadband internet and shore staff, according to our poll. Vroon’s Grool, “and get rid of the still
will become automatically a neces- Nevertheless, shipping is entering a existing deck/engine division.”
sity onboard. For example, he says, future where a bewildering number Kevin Grant Leach-Smith, vice
once ECDIS is on all vessels globally, of applications are on the market president at Singapore’s Masterbulk,
these ships will require large data for or under development. Maritime agrees with Grool’s sentiment.
corrections and updates. “Other safety has been moving from a capacity “We already have the equip-
data, weather updates, safety train- constrained market to one of rich ment and the software,” he says.
ing, trouble shooting by video, etc applications driven by user demand. “It is important to encourage more
can only be available once unlimited Many felt though that these apps communication face-to-face or on the
broadband is available onboard,” he are missing the point. telephone, not via applications.” ●

Issue THree 2015 19

In profile

Coco Vroon
p.26

Lars Ugland
p.30

Roberto
Corvetta
p.33

Emanuele
Lauro
p.27

Mariella
Bottiglieri
p.35

In profile this issue

Maritime CEO’s 17 correspondents around
the world have been in touch with many of the
world’s top shipowners. Highlights are carried
over the next 13 pages

20 maritime ceo
 In profile

Michele
Bottiglieri
p.34

Aristides Pittas
p.25

Lucien Arkas Yang Jinchang

p.32 p.29

Sabrina Chao
p.22

Khalifa
Al-Hetmi
p.31

Anil Sharma
p.31

Issue THree 2015 21

In profile

‘We’ve stuck
to what we
know’
As Sabrina Chao from Wah Kwong readies
to take charge of the Hong Kong Shipowners
Association she tells Maritime CEO how to get
through a downturn

S
abrina Chao, chairman of one opportunity, not just when there is company since 2010 when her father,
of Hong Kong’s most venerable cheap money available.” George, was taken ill.
names in shipping, Wah Kwong, The company has maintained its The Wah Kwong fleet is made
is expected to become the new approach of having period charters up of 14 bulkers, three crude tankers
head of the Hong Kong Shipowners with significant charterers, so it and 10 LPG carriers.
Association (HKSOA) later this year. has not been caught short with any On dry bulk, Chao is circum-
The association is one of the most unfixed newbuildings. spect of analyst predictions.
vocal shipping bodies in the world, “It’s been about having the right “This time last year,” she says,
and for Chao her elevation to the post assets and the right customers, but “everyone was gearing up for the last
– the first woman to do so – marks most importantly, it’s about having quarter upturn, and it never came, so
another rung on her rapid ascent in the right people and focusing on the we all know it’s risky trying to make
shipowning. detail at every level of the organisa- a call on markets. I do, however,
Chao, 41, is the third genera- tion,” Chao says. think that we probably passed the
tion at the helm of the conservative Chao officially became chair- worst in around April, but as we
bulker and tanker owner. man of Wah Kwong in 2013, though have seen in the past few weeks, any
Wah Kwong has navigated the she has technically been leading the recovery is fragile.”
downturn well, a lesson for many
others.
“We’ve stuck to what we know,”
Chao says. “We have ambitions,
but we grow when we see the right
“We grow when we see the right opportunity, not just
when there is cheap money available
”
22 maritime ceo
 cover
In profile
story

market before you can really justify

that investment.”
Come November Chao will likely
assume the chairmanship of the
HKSOA. She is adamant that Hong
Kong still has a strong voice in inter-
national shipping, and is determined
to shout this from the rooftops.
“We have so many strengths
as a shipping centre, but they are
often not properly recognised or
promoted,” she says, adding: “We
need to make sure that Hong Kong
is top of the list when companies are
looking to expand their presence in
the region, so we need to talk up our
advantages.”
Nevertheless, Chao is not a fan
of the incentive-led way of attract-
ing business that has worked so
well for other shipping centres like
Singapore.
“I’m not a believer in giving
financial incentives to companies to
relocate as these are usually short
term, but government certainly has
a role to play in ensuring a city like
Hong Kong remains an attractive
place to run a business from and
to live in as well as having a well
educated, globally focused work-
force,” Chao says. A starting point,
The backlog of bulkers still to “reasonable run”. she suggests, would be to negotiate
deliver, however, combined with the “It’s encouraging that there more double taxation agreements
slowdown in China leads Chao to seems to be a bit more enquiry for with key trading partners. Expect her
believe that the market is some time longer term charters, so perhaps the to promote Hong Kong better than
away from reaching balance. end users are thinking this has got most during her two-year tenure at
Tankers though are a source of some legs in it,” Chao notes of the the association. ●
optimism for Chao. current tanker markets.
“It seems people are accepting In terms of what makes a
that a low oil price is here to stay,” good investment today, Chao, the
Chao says. “Demand appears to be daughter of one of shipping’s most Spot on
holding up strongly and Asian con- assiduous investors, is aware of Wah Kwong
sumers are sourcing their oil from how secondhand bulk carriers are
Founded in 1952, Wah Kwong
further afield, so the outlook on the attracting a lot of interest lately. “The
can trace its roots to Shanghai. It is
face of it is reasonably positive.” She prices for the good ones are cer- one of the founding members of the
describes the orderbook as “fairly tainly on the rise,” she says, “but we Hong Kong Shipowners Association.
disciplined” lending credence to are going to need a bit of sustained Currently owns either wholly or in
the feeling that tankers are in for a encouragement from the chartering partnership 27 ships, a mixture of
bulkers, tankers and LPG
carriers.

“ It’s risky trying to make a call on markets

”
Issue THree 2015 23
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14mafa0165_adv_corporate_174x130_fc.indd 1 10-11-14 17:34

 In profile

Patriotism versus practicality

The head of Euroseas, Aristides Pittas, discusses the difficulties of staying
in Athens

A
ristides Pittas does not as much as we can to the country,
want to leave Greece, and but if that goes beyond a certain
says so emphatically. But level – and the threshold is different
like many of his colleagues in the for different companies – people
Greek shipping community, Pittas will start leaving and we will reverse
and his company Euroseas, of which what has been achieved over the past
he is chairman and CEO, are caught years. Greece has become the biggest
in a conflict of patriotism versus shipping entity in the world.”
practicality. Pittas has a little more optimism
The Greek economic crisis has about the dry bulk market cycle than
pressured the country’s shipping some of his peers, and says it’s a good
community to contribute further to time to be planning for the future.
Greece’s economy through increased “Unfortunately I am old enough
taxation. Meanwhile, govern- to have seen an even worse dry bulk
ment-imposed capital controls have market, which was in the mid-1980s,”
complicated cash flows and an he says. “This is the worst dry bulk
atmosphere of uncertainty prevails. market since the mid-1980s, for sure.
Many Greek shipping companies are “It came about because of
considering relocating to places such the overordering of ships and the
as Cyprus and maritime centres in slowdown of the economy that was
Asia. Does Euroseas have a plan? not expected, especially in China. which has worked out to be quite
“Ideally, we would like to Consequently, charter rates are convenient for Euroseas, which
move nothing out of Greece,” he very low and vessel prices are very expects a stronger dry market in
tells Maritime CEO. Between the low, and in a cyclical business like 2016.
NASDAQ-listed shipowning com- shipping it really makes sense to be The weak chartering market
pany Euroseas and its ship operator buying when you are at the bottom has impacted Euroseas’ revenues,
affiliate Eurobulk and related ven- [of the cycle] because the market will and the company felt the need to
tures, the group today manages correct itself eventually. When that strengthen its balance sheet, Pittas
around 30 ships from its base in will be is very difficult to call, but says. In July, Euroseas announced a
Maroussi, Athens. these current secondhand prices are rights issue through which it hopes
“Already we are paying much so low that they are unsustainable.” to raise up to $20m to fund its new-
more by being in Greece than we Secondhand vessels would be building programme.
would if we were somewhere else,” the way to go, should Euroseas wish “We believe it is the right time to
Pittas continues. “We appreciate to further increase the size of its be putting money to work in shipping
that we have to pay and contribute fleet, Pittas says: “We usually go by because we are at a very low point,”
the saying ‘When it’s cheap, buy it Pittas claims.
and the market will correct’.” Pittas believes Euroseas is in
Spot on For now, the owner is awaiting a good position to benefit from
delivery of two kamsarmax and two an upturn in dry cargo shipping
Euroseas ultramax bulk carriers, which were markets: “The fact that we do not
NASDAQ-listed Euroseas can ordered from Chinese shipyards in have long-term employments on
trace its roots back to the 1870s. The 2014. Euroseas considered selling our ships, we have been covering
15-strong fleet is a mix of bulkers and the newbuildings at one point, Pittas ourselves mostly on a short-term
boxships. Euroseas also owns about 15% says, but decided to keep them in basis – shorter charters both in the
of Euromar, a jv with private equity
order to grow the company. container sector and the dry bulk
firms Rhone Capital and Eton Park,
The two ultramaxes have been sector – gives us a lot of room to
which owns another 11 feeder
container ships. delayed slightly by the shipyard, but improve together with the improving
the kamsarmaxes are on schedule, market environment.” ●

Issue THree 2015 25

In profile

Niche consolidation sought

Coco Vroon sees tanker investments as a smart play in today’s tricky
environment

C
oco Vroon, who heads up one
of Europe’s most diversified
shipping companies, is on the
hunt for consolidation opportunities
in niche markets. The managing
director of Vroon, a company with
some 165 vessels to its name, tells
Maritime CEO: “We are always
looking for niche markets where you
can make a difference, where you can
hope to add value that people would
be prepared to pay for.”
Vroon says the company is
particularly focused on sectors that,
he reckons, need consolidation, such
as tankers. Vroon thinks that bigger
owners are able to offer more flexible
services, and by extension comman-
deer higher margins.
On tankers, Vroon admits he has
been surprised by how much the sec-
tor has picked up, but he questions
how long the bullrun can last. On the
markets as a whole, he is not at all
positive for this year.
“Demand for maritime transport
is okay,” he says, “but tonnage supply
is so overwhelming. There are too hit its bottom line of late.
many ships that we are a long way “Oil majors and charterers are ask- “We welcome the
away from balance.” ing to reduce rates while profit margins developments at
The Vroon fleet is made up live- for the shipping companies are already Frontline and Gener8’s
stock carriers, bulkers, boxships, car thin. With the actual market condition
carriers, offshore support vessels as we need to review the cost structure of
recent IPO on the NYSE as
well as a wide range of tankers. every ship investment and we must sit this will further consolidate
Its heavy offshore exposure has at the negotiating table with charter- the sector and install
ers and other related parties in order underlying discipline within
to find savings and cost reductions,” large tanker owners”
Spot on Vroon relates. ●
— Paddy Rodgers, CEO,
Vroon Euronav
The Dutch firm is one of Europe’s
most diversified shipping companies with
165 ships on its books.

“ We are always looking

for niche markets where you can make a difference,
where you can hope to add value that people would be
prepared to pay for
”
26 maritime ceo
 In profile

‘We have to face the music’

Emanuele Lauro is in contrite mood when Maritime CEO comes calling
in Monaco

E
manuele Lauro cuts a very Lauro says his team realised the
different figure to when he was market was not going to perform as
last interviewed by Maritime he had hoped by the end of last sum-
CEO a little over a year ago. The mer, at which point an emergency
dry bulk bet that led to the world’s fleet offload plan was first conceived.
largest orderbook for bulkers has put “We did not know just how bad
serious salt on his wounds. He is in the market was going to turn, it’s
an extremely contrite mood when a tragic scenario. The market has
Maritime CEO comes calling, willing reached levels we did not expect,” he
to take the blame for a gamble that says.
has backfired on the bulk side,
though is paying off on the tanker
front.
“We have to face the music,” he “ We should not blame
analysts; we should
says. Said funereal tone has seen be blamed. We made
Scorpio Bulkers selling off much of
its orderbook and converting others mistakes; we read the
to tankers where possible.
“Dry cargo was definitely a big
bet,” Lauro concedes. “Analysis at the
time was supporting our ideas,” he
market wrong
”
The rout might not be over
says, before cautioning: “We should either, with Lauro noting that each
not blame analysts, we should be bulker resale has been lower than
blamed. We made mistakes; we read the last.
the market wrong. We acquired Lauro is unsure if the dry bulk
assets that are worth less than the market has bottomed out. “I wish I
acquisition price.” knew the answer,” he says wistfully.
When Scorpio began its bulk “It’s difficult to see a fast at Samsung Heavy Industries with a
binge it was buying at what were recovery in the market. Our wounds partner. More orders could follow.
then historically low prices – ultra- are still fresh and it would not be “We look at the future in the
maxes, for instance, were being prudent from our side to make a case container market with excitement,”
snapped up for an average of $28m to say that the market has bottomed he says.
each. “They were great prices to come out and a recovery is in place,” he Overall, however, Lauro says
in – these ships were worth $70m says. the coming 12 months is all about
during the peak,” laments Lauro. The mood brightens as Lauro consolidation at Scorpio as the fleet
turns to tankers. 90% of the Scorpio nears 90 vessels.
Tankers fleet is now on the water at The company’s history dates
Spot on good rates. back to the 1950s and pioneering
“We are still experiencing entrepreneur Glauco Lolli-Ghetti’s
Scorpio counter seasonal strong rates in the rise in the Italian shipping concern
Founded in 1973 by Glauco Lolli- product trades,” he says. Navigazione Alta Italia. Lolli-Ghetti
Ghetti. Now run by his grandson, Scorpio just recently raised founded Scorpio Ship Management
Emanuele Lauro. Has listed spin offs equity to get resales of four LR2s for in 1973. The legendary shipowner
Scorpio Tankers and Scorpio Bulkers delivery from June to September. then wheeled and dealed his way
and has among the largest order-
The other sector that gives Lauro through many a cycle, before slash-
book in the world.
confidence is containers, where ing his shipping portfolio in the later
the company has three-plus-three 1990s. He selected his grandson,
20,000 teu containerships on order Lauro, to take over from him. ●

Issue THree 2015 27

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 In profile

Fujian first
The merger last year of three Chinese provincial lines has fostered a
regional powerhouse

F
ujian, on the southeast coast
of China, has always been an
important shipping gateway
for the country. The famous Chinese
voyager Zheng He started his first
voyage from Quanzhou in Fujian in
1405, opening a new chapter for the
ocean shipping history of China.
As part of the plan to enhance the
overall maritime power of the province,
Fujian Provincial Communication
Transportation Group merged the
major shipping assets in the province
late last year and established Fujian
Shipping Group.
The new Fujian Shipping Group was handled by shipping companies than the news this August that Cosco
has integrated the three largest ship- outside of Fujian, but now the situa- and China Shipping would be coming
ping companies in Fujian province, tion will be changed gradually with together.
including Fujian Shipping Company, the establishment of Fujian Shipping In April, the Fujian Free Trade
Xiamen Shipping Company and Group,” Yang says. Zone (FTZ) officially started oper-
Orient Shipping Company and more According to Yang, the group has ations, following in the footsteps of
than 40 medium and small sized made clear business divisions for the Shanghai, Tianjin and Guangzhou.
companies with total assets valued at three major shipping companies after The Fujian FTZ has been divided
close to $1bn . the merger. Fujian Shipping Company into three parts in Fuzhou, Xiamen
The group has become the top now mainly focuses on bulk shipping, and Pingtan with a total area of 118
shipping group and crew manage- Orient Shipping looks after container sq km. One of the Fujian FTZ’s top
ment group in the coastal province shipping, while Xiamen Shipping has priorities is to boost trade rela-
with a fleet of 45 vessels. dedicated its business to passenger tions between mainland China and
Yang Jinchang, formerly the transport after transferring its bulker Taiwan.
general manager of Fujian Shipping assets to Fujian Shipping Company. Yang reckons thea group is
Company, has become the general “The integration of the ship- expected to benefit from the Fujian
manger of the new group. ping assets in Fujian has optimised FTZ, and it is also planning to
“The total annual cargo through- the fleet assets in the province and increase service offerings between
put in Fujian is more than 300m enhanced our shipping capabil- China and Taiwan with its inte-
tons, previously 90% of that figure ity,” Yang says, adding that Fujian grated container fleet. The group has
Shipping Group has set a good exam- been approved by the Ministry of
ple for the promotion of mergers and Transport to operate direct container
Spot on alliances in the local shipping indus- services to Taiwan.
Fujian Shipping try to cope with the current market Yang says a number of steel and
Group recession. Beijing has been pushing power projects will start operations
for far greater maritime mergers since in Fujian soon, which will increase
Established at the end of 2014, Fujian
the downturn kicked in, none bigger shipping demand substantially. ●
Shipping Group is an integration of three
major shipping companies in Fujian and

“
more than 40 shipping related compa-
nies. The group currently operates a
The integration of the shipping assets in Fujian
fleet of 45 vessels. has optimised the fleet assets in the province and
enhanced our shipping capability
”
Issue THree 2015 29
In profile

At home on the Isle of Man

Lars T Ugland on what makes this rocky outcrop a great place to be a
shipowner

O “
ne of the most famous names in
shipping reckons he has found There are deals to be
the perfect home to conduct his made in a poor market. It

”
business. On the Isle of Man, just off the
UK mainland, Lars T Ugland runs his is all about timing
eponymous LT Ugland Shipping, which
now has a fleet of seven supramax “We are always looking at oppor-
bulkers. Ugland, a Norwegian, comes tunities,” he says, adding: “There are
from a long line of shipowners, builders, deals to be made in a poor market. It is
charterers and managers. He founded all about timing. We will stay with bulk
the company in 2007, the year he moved carriers because this is where we have
from London to the Isle of Man where our expertise.”
has been living ever since. On the markets, Ugland reckons
“I believe the Isle of Man has the dry bulk will bottom out this year and
best ship register in the world,” he says, rates should gradually improve next
adding he’s worked with eight other year. “Market balance would come
registers in the past. service, understanding of the cus- sooner if China became more active,”
“The Isle of Man does not charge tomer’s needs and flexibility that has he admits. The bulker veteran does not
tonnage tax so as for VLCCs, capesizes impressed me most,” Ugland says, add- however see a need for consolidation in
and larger vessels this register has a ing: “The Isle of Man has proven to be a dry bulk unlike other sectors. ●
great advantage. However, it is the great place to run a shipping company
from. I am surprised that we don’t see
more shipping companies relocate to
“One of the reasons
Spot on this great island.” why Norway is
LT Ugland LT Ugland Shipping’s fleet is an innovative country,
Shipping made up exclusively of Tess 58s from why we have a very high
A 2007 established bulker vehicle run
Tsuneishi, a shipbuilder Ugland, 66, has productivity, is because
by Lars Ugland on the Isle of Man now a very close affinity with. labour costs are high”
with seven supramaxes. The Ugland family made its first
order with Tsuneishi in 1978, becoming — Norway’s prime minister,
Erna Solberg
the first foreign owner to place and
order with Tsuneishi.
Ugland is keeping his eyes open at
expanding the fleet, he reveals.

ime-ceo.com
www.marit

2015
ISSUE TWO
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 In profile

Scrap merchant
Best known as a cash buyer for recycled ships, GMS also buys the odd
vintage vessel

A
s well as its leading position record high.
in the world of ship recycling The charge has been led by cape-
GMS owns a number of ships. sizes. Some 65 capesizes have gone to
The company is best known as the scrap so far this year, with Pakistan
world’s largest cash buyer of ships for the biggest beneficiary of this bulk
scrapping. However, it also operates clearout.
a VLCC, two dry bulk vessels, and 11 GMS internal research suggests
containerships. that the number might exceed 100
“We acquired several vessels at vessels by the end of the year, an all
close to recent bottoms and hence, time record.
have seen some appreciation in both Looking at the various countries
charter rates and asset values since associated with recycling, Sharma
the time of purchase,” says GMS’s says profitability for recyclers
founder and ceo, Dr Anil Sharma. remains tricky. Sharp fluctuations in
Although GMS has ventured currencies as well as in commodity
into newbuildings, it generally tends prices, including that of finished prices are falling. Since recycled steel
to focus on vintage tonnage where steel, and cheap imported finished is competing with freshly produced
there is more “opportunistic buying”, steel have weakened profit margins steel, a drop in the price of the final
says Sharma, due to the absence of of recyclers. In less than a year, scrap product due to both, falling import
leading shipowners and lack of both prices have dropped by more than prices from China as well as lower
debt and equity players. 25%, Sharma recounts. input costs due to sinking iron
As for recycling, 2015 has been “The biggest challenge facing the ore – it has virtually halved since
hectic, the annual figure likely to be industry,” he reckons, “is the fright- January 2014 – and oil prices, eats up
the highest since 2012, which was a ening pace at which commodity recyclers’ margins.” ●

Diversity counters adversity container feeders, ports, LNG, LPG

and OSVs among others.
The company is currently
The extremely diverse set-up bidding for the management and
at Qatari maritime conglomerate operation of Qatar’s new Hamad
Milaha is seeing it get through the oil Port, which Al-Hetmi reckons will
price drop. The president and ceo of reshape the maritime industry in the
the company, Khalifa Ali Al-Hetmi country and the region. Moreover,
says, “The diversity of Milaha’s port- Milaha has expanded its offering
folio has allowed us to mitigate the in the container business with a
impact of the changes in the energy new direct service to India, and it is
market than many of our peers.” He looking at a number of other oppor-
explains that while the decline in the tunities as well.
oil market may have some negative “At the end of the day, being flex- “We are also actively looking at
impact on the company’s marine off- ible and customer-focused is what various ways to grow our offshore
shore services business in the short determines your ability to weather business, both organically and inor-
term, Milaha’s gas and petrochem downturns such as the one we are ganically,” Al-Hetmi concludes.
unit saw its net profit significantly seeing now in the energy market,” After 31 years at the com-
grow on the back of high VLGC and Al-Hetmi says. pany, Al-Hetmi will step down in
tanker rates. Milaha has investments in September this year. ●

Issue THree 2015 31

In profile

Mediterranean shipping
under great pressure
One of Turkey’s largest shipowners explains how cascading tonnage is hitting the regional
box trades

L
ucien Arkas is one of the most to Clarkson. Arkas Line and EMES
important shipowners in Feedering as of July 2015 operated
Turkey and also an expert of 39 containerships, of which 30 are
container short-sea transport in the group-owned and nine are managed.
Mediterranean arena. The Turkish company’s strategy
Arkas’s eponymous family-run on the S&P market has been quite
company has been in existence aggressive in the near past as con-
since 1902 and nowadays the group firmed directly by Arkas.
operates in many different fields, “We have completed our pro-
including logistics services that gramme for 2015 with the purchase
integrate sea, land, rail and air of nine ships and in view of the
transportation, agency services, general situation are adopting a wait
ship operations, port operations, and see policy,” he says.
bunkering, automotive, insurance The fleet also includes five
services, information systems and bunker barges operated by the fully
cruise tourism. The Izmir-based firm owned Arkas Bunkering founded in
currently has 57 offices and employs 2006 and active in refuelling services
6,500 people in Turkey and abroad in for vessels in many ports around the
62 different companies. He is directly involved in the world, including the Mediterranean
Talking about the biggest head- containerline business since Arkas and Black Seas.
ache the shipping industry faces at Group in 1996 founded EMES Besides all that, the group is
the moment, Arkas thinks that “over- Shipping and Transport, first as a also active in the container terminal
tonnaging has been and remains feeder operator and later as a liner business. In 2001 Arkas founded
the most serious problem facing service provider. In 2010, the name Marport, the first private container
the industry in recent times”. He was changed to Arkas Container port in Turkey with an annual
adds that “the orderbook, especially Transport and since then continues throughput capacity of 2m teu, and
for mega vessels, will not change to provide services under the brand in 2008 it opened Autoport, the first
foreseeably”. name Arkas Line providing sched- and only dedicated car terminal
uled services in the Mediterranean, in Izmir with an annual handling
Black Sea and West Africa market. capacity of 350,000 vehicles. ●
Spot on Looking at the present market
Arkas condition in southern Europe, Arkas
underlines that “the Mediterranean “Many more ships
One of Turkey’s largest and region is under great pressure.
most diversified maritime are begging to be
Shrinking volumes coupled with
conglomerates with interests in cascading and overtonnaging point
built”
boxships, bunker barges, ports to difficult times ahead.” — Basil Karatzas, CEO,
and other modes of transport. Today the Turkish shipping Karatzas Marine Advisors
company’s fleet owns 42 vessels and
is ranked 21st in the world con-
tainer fleet ownership according

32 maritime ceo
 In profile

A dip into a pool likely

As it pushes through a sizeable expansion of its product tanker fleet Sea World Manage-
ment is looking at farming out some of its ships

I
n 2015 Monaco-based Sea World
Management is emerging as one
of the shipping operators most
active on the S&P liquid bulk market.
The company, founded in 1990
by Roberto and Luca Corvetta, from
January this year has purchased
four MR tankers: Montenero from
D’A lesio Group, Lisca Bianca from
Augusta Due, and Cape Bruni and
Cape Bille from Konig & Cie.
“We are going to manage a fleet
of seven similar MR oil and chemical
tankers employed on time charter
with profit share clauses and carry-
ing refined products and edible oil for
first class charterers. We don’t have a
precise plan with an exact number of
ships to buy, we will just see what the
sale and purchase market will offer
in the near future and we are ready
“ Prices of secondhand medium range tankers are
slightly but constantly going up
”
to snatch any opportunity,” Roberto
Corvetta tells Maritime CEO. for the transport of refined products name I can’t reveal, to employ some
With a compact management and then switched them to the edible of our ships on the spot market,”
team of experienced shipping profes- oil shipping segment. Corvetta reveals. “With a fleet locked
sionals, Sea World Management in “As for the medium range tanker into period charters, Sea World is
the last 25 years has been managing market we are quite confident for well poised to meet the immediate
many kinds of vessels, mainly oil and the future, the freight rates trend for and long term challenges that the
chemical tankers sized from 30,000 the rest of 2015 and next year should tanker market has to offer.” ●
to 40,000 dwt but also obos and bulk maintain the present path mainly
carriers. The company used to oper- because the orderbook for 40,000
ate tankers until the age of 15 years dwt tankers appears to be very slim,” “We anticipate
explains Corvetta, who is the ceo of strength in tanker
the company. “Looking at the asset
earnings to be maintained
Spot on values, prices of secondhand medium
in the near-term given
range tankers are slightly but con-
Sea World stantly going up and that is one of improved oil consumption
Management the reasons why we decided to speed due to lower prices and
Founded in 1990 by Roberto and up at catching some opportunities.” continued inventory filling”
Luca Corvetta, the Monaco-based In addition to the new invest-
— James Palmer, partner,
firm is in the midst of building up ment plan, Sea World Management is
Simpson Spence Young
a sizeable product tanker fleet. also working on another project.
“We are considering a strategic
alliance with a pool manager, whose

Issue THree 2015 33

In profile

‘We can only ask money

from the banks, which have
disappeared’
Michele Bottiglieri on the problems of being a small Italian shipowner

S
o far Bottiglieri’s shipping
company has been performing
quite well, even in the low dry
bulk market experienced in the last
“Some major changes
have occurred in the ship
few years, but the Italian shipowner’s
thinking today is focused on how a
small operator might survive in the
finance market
”
sentiment on bulk carriers sea rates
is negative, I think we have to wait at
near future.
“The work of the shipowner is least one year to see a stable recovery
still the same,” he says. “Nothing of the market. China is still the main
has changed in the way of operating driver in the dry bulk segment and
ships. However, some major changes the country’s imports of coal have
have occurred in the ship finance slowed down in the recent past. This
market with the funds entering the factor, together with the tonnage
market and the banks moving away, oversupply, resulted in the perfect
especially the Italian lenders.” storm.” In the Italian owner’s opinion
Bottiglieri wonders how a small the only way to come out from this
shipping company might obtain situation is linked to three factors:
financial support for further invest- “A maritime transport demand
ments in the coming years. “Since we upswing, no more orders for new-
are too small for listing, we can only buildings and scrapping as many
ask money from the banks, which bulk carriers as possible”. ●
have disappeared from the shipping
market. That’s why my view for the a way for getting money to invest and
future is quite pessimistic: I can’t see increase my fleet.”
Nevertheless, the Italian ship- “The shipping
owner is interested at diversifying industry is known to
his fleet, entering the liquid bulk
Spot on market.
be very conservative, and
Michele Bottiglieri “I had the desire of investing it is hence not an easy task
Armatore in tankers, but the ship values are to bring a new, radically
higher and higher. To tell the truth, different fuel saving
Founded by Michele Bottiglieri,
part of a famous line of Italian own-
in the short term I don’t think we technology to the market”
will invest in other ships even if mar-
ers, in 2008. Fleet today is made — Toumas Riski, CEO,
ket prices for some sizes of vessels
up of five bulk carriers. Norsepower
appear to be still cheap.”
Trying to give some forecasts
on the dry bulk market trend for
the future, Bottiglieri says: “My

34 maritime ceo
 In profile

Keeping it in the family?

As with many other Italian owners, running a family shipping line is getting harder and
harder for Mariella Bottiglieri

T
o be a family business or
not in shipping? That’s the
question Giuseppe Bottiglieri
Shipping Company and some other
Italian companies are dealing with in
the present market cycle.
Mariella Bottiglieri, managing
director of the Naples-based com-
pany founded more than 150 years
ago by Captain Giovanni Bottiglieri,
thinks that some important changes
are taking place in the shipping
industry, mainly due to the entry of
the private equity and hedge funds in
the sector.
“We see that some private equity
investors are trying to exit the mar-
ket now,” says Bottiglieri, adding that
financial investors and traditional model might need some sort of for a stop in new ordering.
shipowners have different business renovation, according to Bottiglieri’s “The main problem today is the
approaches. “The latter looks at long- thinking. “Times are changing also oversupply of maritime transport
term investment returns with an in shipping and companies like ours capacity driven by financial inves-
industrial vision and the final aim is must modernise. In my opinion a tors. In the last few months and
to hand over the firm in good health partnership between a shipping com- weeks the companies that are still
to the following generations. On the pany, as a major shareholder, with investing in new ships are backed by
contrary, private equity funds aim a financial investor, as a minority funds and I cannot understand why
at short-term financial gains and shareholder, might fit for the future. they don’t buy secondhand vessels
don’t care about the company’s long- Selling more than 50% of Giuseppe instead of ordering new ships. Prices
term strategies. That’s why I cannot Bottiglieri Shipping Company’s from the shipyards are low but these
imagine a happy marriage between shares is definitely something not of companies will put in the market
financial investors and traditional interest for us but, in the next two to low priced ships operating in a very
shipowners.” three years there might be the possi- poor business. There is no economic
Anyway there might be some bility that our company will consider return even for them,” she says.
exceptions since the family business a partnership also with a financial Looking at the liquid bulk,
investor as a minority shareholder.” Bottiglieri’s sentiment on the future
Mariella is joined by her two sis- trend of the market is much more
Spot on ters, Alessandra and Manuela, at the promising. “The tanker market
helm of the famous name in Italian is going well fortunately, there
Giuseppe shipping. are niche segments such as clean
Bottiglieri Giuseppe Bottiglieri Shipping products cargo, West Africa region,
Company today controls a fleet of 15 vegetable oils and palm oil that are
Venerable name in Italian ship-
ships: four chemical tankers (40,000 performing well. In this business
owning. Based in Naples with four
dwt), 10 post-panamax bulk carri- segment we are experiencing some
tankers and 11 bulkers.
ers (95,000 dwt) and one capesize structural changes in the tradi-
(186,000 dwt). tional routes due to geopolitical and
Talking about the crisis of in dry economical reasons that helped sea
bulk, Bottiglieri underlines the need freight to soar,” she concludes. ●

Issue THree 2015 35

 WINE

English sparklers put in

a stellar performance
England’s south coast is giving France a run for its money, writes Neville Smith

E
nglish wine has come a long facing slopes, it has the conditions Thus, if the summer is less kind
way but it has taken a long to grow Champagne’s holy trinity than predicted, the risk is reduced of
time. Wine has been made in of Pinot Noir, Pinot Meunier and ending up with a wine that is under-
this country for centuries but only Chardonnay. ripe. The result is a product that at
in recent years has interest been The phenomenon is not its best can match many growers’
renewed to a point where it can hold restricted to the southeast, but the Champagnes and can easily outbat
its head up in polite company. spiritual home of English sparkling the often very average generic bottles
The reason for that is a com- wine stretches from Kent, through that line supermarket shelves.
bination of geography and a taste Sussex, into Hampshire and beyond. Grand Crus they may not be,
for beating the French at their own Granted, the UK lacks a conti- but they are very smart; pioneer
game. The same chalk ridge that nental climate but for sparklers this Nyetimber is poured at Buckingham
rises in Champagne curves under matters less thanks to a winemaking Palace, particularly when the French
the English Channel to break ground process, which involves secondary are visiting.
in the south of England, where the fermentation and a final ‘dosage’. This trailblazer has been quickly
climate is similarly benign. In different ways, both are useful followed by a host of others, so much
Given that this part of England in allowing winemakers to balance so in fact that the region is experi-
has plenty of well-drained, south acidity and sugar levels. encing something of a boom, with
hot money planting new vineyards
and seeking some reflected cache.

Two to try It was a hard choice between

Wiston Estate Cuvee Brut from
The glitch if there is one, is that,
just as in Champagne, wine of this
Sussex (£24.95 www.corneyandbar- quality does not come cheap. It is
Barrister Wendy row.com) and Hambledon Classic possible to buy sparkling wine from
Outhwaite has another Cuvee from Hampshire France, Italy and Spain that is less
string to her bow; making (£29.95 www.bbr.com) – expensive, but do so and see how you
Ambriel Classic Cuvee both are aged on the lees feel about a second glass, or a third.
(£29.50 www.privatecellar. for complexity with the This shipping market may not
co.uk) – an idiosyncratic ‘biscuity/bready’ black feel like a Champagne moment,
take on English fizz that grape notes adding weight unless you are in big tankers, but
puts the emphasis on and structure. In the I would urge you to try the out-
structure and evolves end I would plump for put of Nyetimber, Wiston Estate,
into a complex, layered, Hampshire over Sussex, Hambledon or Ambriel, as well
satisfying mouthful. but it’s a close run thing. ● as looking further west to Camel
Valley. ●

36 maritime ceo
 gadgets

On land and sea

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Not quite James Bond, but close enough.

Gibbs Quadski
gibbssports.com
$49,000

Blue lightening
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Ferrari 488 Spider

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Nimble shot
If you get a Quadski, you’ll probably want to take some selfies or some good
footage of the fun. GoPro’s new HERO4 is definitely the answer – small (4
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Go Pro HERO4
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$400

Issue THree 2015 37

REGULAR
Books

The key to PR
Paul French looks at how to manage disasters

D
espite all the precautions cor- director of Global China Practice and make PR the strategic function it
porations take sometimes dis- for Allison+Partners. His new book, was always meant to be, a function that
aster strikes. The last year has Public Relations in China: Building and guides corporate behaviour and not just
seen many and various events it would Defending your Brand in the PRC is the corporate communications. His hand-
have been hard, if not impossible, to latest title in the useful Palgrave Pocket book to successful PR in China is a good
plan for. Think of the Malaysian Airways Consultants series. Wolf argues that starting place.
tragedies or the recent Tianjin factory China presents a massive market with Digital now plays a crucial role in
zone explosion. Similarly newspapers intense competition and little brand loy- any disaster or PR crisis. Mark Sheehan
have pounced on public relations issues alty, and that effective public relations and Deirdre Quinn-Allan’s edited
across the region from tainted food are essential for any company seeking collection Crisis Communication in a
products to mistreatment of employees. success. Yet, Wolf contends, few com- Digital World examines the challenges
Handling such events, protecting com- panies have found the right formula, PR professionals face in a world where
pany integrity and brand loyalty as well but those who have done so have been social media is a key source of commu-
as legal challenges is an essential part of rewarded with thriving franchises in nication. The book includes a host of
business planning. Several new instruc- the world’s largest market. However, examples of media meltdowns, natural
tive books look at the issue of public looking at recent corporate scandals disasters and celebrity crises through
relations from the perspective of Asia. and disasters in China Wolf argues that examining how to manage new phe-
David Wolf is a seasoned vet- the time has come for public relations nomena such as global media cycles
eran of many a corporate problem. in China to turn away from its tradi- and social media activism.
Based in Beijing he is managing tional role as corporate propagandists In many cases seeming PR disasters
can be turned around if corporations
can get their message out coherently

“Handling negative events, protecting company and quick enough. However, not every-
one has deep enough pockets to hire
integrity and brand loyalty as well as legal challenges a large PR company. Alex Singleton’s
is an essential part of business planning
”
The PR Masterclass: How to Develop a
Public Relations Strategy That Works
comes highly recommended for those
who might need to craft a response
on a budget. In an easy-to-read format
Singleton shows how to put in place a
practical, reliable and successful media
strategy, regardless of your budget.
Perfect for small- and medium-sized
companies.
Disasters do occur – corporations
make mistakes but sometimes the
media, or governments, decide to target
companies or products. As the Boy
Scouts say, “Be Prepared” and the fall-
out can be a lot less than if you are not
in control of the situation. These books
perhaps help companies to start craft-
ing practises that should be a stand-
ard part of doing business in Asia, and
indeed the rest of the world, now. ●

38 maritime ceo
 Travel

Quirky jewel of the Pacific

Northwest
Lonely Planet author Joshua Samuel Brown writes about Portland

Q uirky, individualistic, weird.

These adjectives and more
have been applied to Portland.
But is Oregon’s largest city truly
and shipping) – can be explored in
the city’s Old Town neighbourhood.
Portland Walking Tours runs daily
tours.
fides, including electric car charging
stations and solar powered trash
receptacles. The waterfront, once
an unsavoury stretch of docks (and
unique? With its shipping and kidnapping later, a highway) is now home to the
Portland earned its name in heyday long behind it, Portland has 37-acre Tom McCall Waterfront
a coin-toss between nineteenth since reinvented itself as a model of Park, a beautiful urban green space
century pioneers Asa Lovejoy and pedestrian friendly urban planning with a view of Portland’s bridges, the
Francis Pettygrove, both of whom and sustainable development. Filled Willamette river, and (on a clear day),
agreed that the name Stumptown with publicly funded art ranging the snowy peak of Mt Hood.
was unworthy of the shipping from historical (tiles depicting Mt Hood is one of many scenic
metropolis they envisioned springing scenes from Portland’s past) to the beauty spots located within an
up on the Willamette’s western bank. quirky (a sculpture that plays music hour’s drive of the city. Others
Pettygrove (of Maine) won, and thus and predicts the weather), Pioneer include Multnomah Falls and the
Portland, Oregon (and not Boston, Courthouse Square is in the city Columbia Gorge. But you don’t have
Oregon, which Lovejoy wanted) was centre and a great place to start your to actually leave the city to leave the
born. The Portland Penny is now on explorations. Just a block east (past city. Forest Park cradles the city’s
display along with other historical Pioneer Courthouse, completed northwest quarter and encompasses
artifacts at the Oregon Historical in 1875) Pioneer Place Mall and over 5,000 acres of trails, ravines and
Society. Portland’s Apple Store allow you to old growth trees.
Shipping is in Portland’s DNA take advantage of Oregon’s absence Portland is also well known
(despite the city being 82 miles of sales tax. Three blocks north sits for its street food culture, thanks
from the ocean). This is thanks to the Art-Deco Portland Building, to the prevalence of food trucks,
Portland’s position halfway between whose iconic colour scheme would which, like whales, congregate in
the mighty Columbia (which heads be considered clashing in most other pods. The largest of these pods, a
to the Pacific) and Oregon City, cities. Make sure you take a moment veritable culinary UN, takes up a full
terminus of the once-important to appreciate Portlandia - not the city block on 10th avenue (on Alder,
Oregon Trail. Like most cities built show, but the hammered copper just a few blocks south of Powell’s
on shipping, Portland’s early days statue gracing the Portland Building. City of Books). Smaller pods (and
were filled with colourful characters, (Take photos, but be advised that even individual trucks) abound. If
many of whom earned both coin using her image for commercial it’s just a snack you’re after, why not
and reputation helping unemployed purposes will invite a lawsuit from stop by Voodoo Donuts for a bacon
transients find jobs in nautical the statue’s creator, Raymond maple bar? There’s often a line, but
professions. Trickery, alcohol and Kaskey). if you’re lucky you just might catch
violence were sometimes involved. From here, head east towards an impromptu street performance
Remnants of the city’s seedy past - the river, passing by Portland’s by Portland native The Unipiper, a
including a visit into what remains famed Thompson Elk Statue unicycle-riding musician whose attire
of Portland’s so-called ‘Shanghai (the sculptor’s unfamiliarity with includes a kilt, a Darth Vader helmet
tunnels’ (which, though reputed to alcine anatomy becomes clearer the and a set of bagpipes that shoots fire.
have been a conduit for kidnapping, closer you get) and various facets And if that’s not unique enough
were actually used for flood control of Portland’s environmental bona for you, we don’t know what is. ●

Issue THree 2015 39

REGULAR
GOLF

Play safe or be the hero

Budding golfer Johan Gustavsson from Transas takes readers to a
treacherous watery hole in Singapore

A
s with so many other people Imagine a humid, sunny early You end up every time taking the
who have taken the Martime Sunday morning in Singapore. No hero route. Nobody will remember a
CEO golf challenge in nam- traffic when driving to Sentosa. coward.
ing their favourite hole mine centers Arriving at the Serrapong golf course Tee-off is challenging over water
on one where brain plays out against to have breakfast with your friends and you need to carry 200 m in
brawn, boldness faces the dark reality before teeing off. This challenging order to be safe. You know directly
of a lost ball in the water – it’s a hole PGA golf course with 18 holes just when you tee off if you will make it
where fortune does not always favour along the coastline of the island of or not. But still you keep jumping up
the brave, but the cunning course Sentosa faces the port of Singapore. and down; like that would actually
designers are tempting your bravado. It is one of two courses at Sentosa help the ball to fly longer. A regular
Golf Club, the other being Tanjong. disappointment hits as rings on the
Both have welcomed the world’s best water form. The next question comes
golfers along for big international – shall I do it again, or play safe. I
tournaments. have donated many, many balls to
The expectations before the first the bottom of the water when playing
tee-off are enormous. Playing the first here, but the feeling if you make the
three holes your mind is racing ahead shot and the level of self-esteem you
to what lies ahead on the course’s have is incredible.
biggest challenge, the fourth. I always This is the hole on the golf course
have the same thoughts going on that will set the mood for the coming
in my head: play safe or be the hero. 14 holes. ●

“ Nobody will remember a coward

”
40 maritime ceo
 Yachting
REGULAR

Across the Ionian

Pierre Chateau from Lloyd’s Register takes readers through azure Greek waters

I
n the west of Greece, south of the
Adriatic, the Ionian Sea begins.
Less famous than its east coast
counterpart, the Aegean Sea – with
its Cycladic Islands attracting char-
ter flights and passenger ships – the
Ionian is unspoiled by mass tourism
and offers one of the best waters I
have ever had the chance to sail on.
The islands there are Corfu,
Lefkas, Ithaca or Kefalonia, and they
create a protected archipelago that
stretches north to south for more
than 150 miles.
We sailed there on our modern
classic 45 footer cutter yacht Avocet
of Ryme at the beginning of our
20-month journey that later took us
across the Atlantic, but we have very
fond memories of these Greek islands
from the beginning of our trip.
Our journey there started
like many others, on the island of
Lefkada. Linked to the continent by a
floating bridge, it is that the heart of
the Ionian, separating the south and
the north islands by a narrow canal. responsibilities. Here, it is all about
The little town of Lefkas has
seen the recent development of a
modern marina but it has kept its
“ The Ionian is unspoiled
by mass tourism and
stepping back, watching the sunset
on a terrace with a glass of Ouzo and
enjoying the moment.
authentic charm with many small offers one of the best Epicure was Greek; I don’t know
streets to explore and get lost in. if he was from the Ionian, but when
Sailing south, it is a vast archipelago
waters I have ever had loitering there, one doesn’t need to
fantastic for sailing.
After exiting the canal, we left
the aptly named tranquil bay and
the chance to sail on
”
immerse yourself in the beauty of
read his essays to understand what
his philosophy was all about.
What to say of the northern
Scorpio Island (private property of this remote place. islands? The smaller Paxos and
the Onassis family), on starboard to And this is only one of the so Antipaxos, the ancient Corfu, so
sail to one of the multiple unspoiled many places that offer themselves much filled with history. The day sail
bays of Meganisi. There, the deep blue to sailors cruising these waters. to their shores in open waters will
of the sea contrasts with the colours Sivota or Fiscardo are other places probably be in company of dolphins
of the hills, covered in pine, cypress worth mentioning. There, anchored playing at the bow as they are very
and colourful fields of flowers. in natural harbours, with a mooring common in these waters, and it is
Continuing to the south, 15 line tying the stern to the quays, guaranteed that the arrival in the old
miles of flat seas sailing will bring crews can enjoy the special atmos- town of Corfu by sea will not leave
you to the island of Ithaca, home to phere that Greek villages have to you unmoved. Its imposing city walls
the mythical Odysseus and Penelope. offer. It is like entering a place where and fortress which have been stand-
There, the sheltered anchorage of time flows at a different pace, slower, ing for many centuries are treasures
Vathi will encourage you to go and without the spin of our modern lives, asking to be explored. ●
explore the island deeper by land to filled with deadlines, targets and

Issue Three 2015 41

The Secret Ship
REGULAR
Inspector

‘Seen it, heard it, he can

spot a fib from afar’
A look at what it takes to be a scrutiniser of the world’s fleet

D
escribing your modern day
ship inspector should begin
by a series of not-propo-
sitions. He is not exactly like his
regulatory peers in stockbroking,
banking, pensions and the like. He
may not exactly correspond with that
Freudian personality type known as
the anal-retentive. But, he certainly
knows the rules and practices of
navigation, learnt during a time when
GPS was still something in the imag-
inations of people so far as sailing
across the ocean blue was concerned.
And seen in his office he might have
his pencils lined up at right angles ticking the boxes briskly. Working qualifications and provisos are the
to the lower edge of his desk below a for the more cerebral P&I clubs, the order of the day. Poor prose writers
ruler perfectly parallel to the upper ship inspector is a man of the world, need not apply.
edge. Certainly the term rectilinear designing foible traps, helping his You can do worse than spend an
comes to mind if you have an eye for association to ensure the right sort of hour or two with a few ship inspec-
external details. people and their ships are members tors. They have an endless trove of
Moreover, the ship inspector of the club. There are dangers here. A anecdotes. They use a range of world-
to the naked eye is of a certain age. righteous ship inspector must guard weary phrases: That’s just the way
He has that self-contained quality, a himself from trying to filter an ideal it is. There is just not enough time.
knowledge of customs and history, a world into the ledger of the entered Good sense doesn’t cost much money.
liking for navy blue blazers: he sees tonnage and always remember that I warned them but they wouldn’t
himself as a force for good, helping to his findings should inform the under- listen.
hold the ring for the better qualities writers in the club, a body of people Back in the late 1980s, the
of the maritime world and the civili- otherwise liable to be tempted into fashion for ship inspection exploded.
sation of international trade. And his the have-a-go-suck-it-and-see school Masters of highly variegated tonnage
eyes resemble those of an experi- of risk management. and type found all sorts of characters
enced copper. Seen it, heard it, he can There is a different order of walking up their ladders instructed
spot a fib from afar. hazard magnitude for the ship to do inspections for charterers, class,
Modern ship inspection is inspectors whose decisions inform club, cargo or port state.
something like modern association the operations of tanker charterers, Nowadays good thinking holds
football. Invented by the Brits during classification societies and leading that it is not sufficient to scrutinise
their prime, it has found its way all consultants. Get the thing wrong all that steel. The fault in ships and
over the planet into the offices and and good old litigation surely follows shipping often lies deeper in the souls
procedures of all the usual indus- which will last a decade. Extreme of its people and the values of the
try players. No superhero he, the circumspection and highly honed companies which employ them. ●
ship inspector has to fit in with the
relevant regime in place. Working for
hull insurers, he is a maid of all work,
poorly funded, wiping a dirty rag
over the bits that catch the eye and
“He has that self-contained quality, a knowledge of
customs and history, a liking for navy blue blazers
”
42 maritime ceo
 The REGULAR
Contrarian

Life in a silo and its

consequences
Andrew Craig-Bennett takes aim at those who have contributed to the
many dead seafarers from transporting nickel ore

T
here is a management-speak concentrated the ore and shipped it loaded, to make sure that they were
jargon phrase about people as fines in handysize bulk carriers. safe.
working in ‘silos’ such that And China bought the cargoes, and So the charterers wrote a clause
they are unaware of what their col- everybody was happy. Until ships into their charter parties for the
leagues are doing. sometimes did not turn up. carriage of nickel ore in bulk.
Asian companies, where the When a ship is lost at sea, it often Did it say: “Cargo to be
culture emphasises deference to happens that she is insured, and so loaded under survey of a capable
authority rather than inquisitiveness, is her cargo. The people concerned surveyor...?”
are more than usually prone to the with insurance noticed that ships No. It said: “Vessel not to be
‘silo mentality’, and very often they with cargoes of nickel ore loaded at insured by the West of England P&I
neither know nor care what people unknown and unheard of ports in Club.”
elsewhere in their own offices are Southeast Asia sometimes sank. And And shipowners’ chartering
doing. they asked why this might be. They departments read this, and told their
This is a story about how very asked experts. And the experts told insurance departments not to insure
little people know or care about the them that small mines in tropical ships with the West of England P&I
industry – merchant shipping – that climates were not in a good position Club.
they work in. to control the moisture content of the And because the chartering
It came to pass, not terribly long nickel ore fines that they stockpiled department is mightier than the
ago, that ships which loaded nickel in order to load onto ships, because insurance department, a significant
ore concentrate sometimes failed to sometimes, it rains in Southeast Asia. number of blithering idiots actually
arrive. And the experts said that the said okay, and drowned seamen and
This was a fairly new cargo. cargoes were slurry liquefying sank ships.
Nickel as a cargo was not new, but for because they were above the trans- This is a true story of people in
very many years nickel was smelted portable moisture limit, which is a offices in shipping companies in Asia
and carried in the less bulky, more number set up by the IMO as being within the past five years, being too
readily portable form of ingots, nota- the wettest that a given ore cargo can lazy to read up a problem, incredi-
bly from places like Noumea in New be before it becomes unsafe to carry bly stupid, unbelievably stupid, and
Caledonia. in bulk by sea, as if it is any wetter it scared of their bosses, and greedy.
As Chinese industrial produc- may suddenly behave like a liquid. The problem is now less acute
tion grew there was an increase in Now, the insurance people in because the Indonesian government
the demand for nickel, and other general, and the P&I Clubs in particu- decided that it suited Indonesia bet-
sources of supply were found. Nickel lar, decided to do something, because ter to export ingots, not fines.
ore could be mined in Indonesia and ships sinking and seamen drowning This is not something that
in the Philippines. New mines were are messy, and also expensive. happened long ago. This is something
established, and, as often happens, And it came to pass that the that happened a couple of years ago.
the mines were not very well capital- West of England P&I Club issued The people who did this have not
ised and their facilities for shipping a circular requiring its member been fired. They are still drawing
out their product were rather simple. shipowners to ensure that cargoes of their salaries today.
Rather than smelt the ore, nickel ore fines should be checked by I think they should have been
and ship ingots, these mines capable surveyors before they were fired. Don’t you? ●

Issue Three 2015 43

MARPOLL
REGULAR

Your opinions
643 of you filled in our latest survey on diverse, topical maritime topics. Results and feisty
comments below

Does the VLCC run have legs? Which is a greater threat to shipping?

“ The down cycle will come

faster due to the massive “ These threats are
definitely flying under the
switch from dry bulk/
offshore
Yes 51% over ordered slots
No 49%
converting to tankers to over
industry’s radar
”
Yes 51%
No 49%
tonnage the wet market
” Cyber security
Terrorism
34%
20%
Piracy 46%

Is shipping less of a ‘gut feel’ business in the Which area do vessels currently face the
21st century and more analysis-driven? greatest risk?

“ Many are still doing

very simple analysis based “ As the west learns to cut
off the oil supply of ISIS, they

”
on gut and old salt may turn to piracy in the
Yes 67%
No 33%
southern Med
”
Yes 67% West Africa 31%
No 33% Southeast Asia 34%
Mediterranean 9%
East Africa 26%

Are classification societies as reliable today Would a China-wide emissions control area
as 10 years ago? change shipping forever?

“ Class needs to make a

decision. Do they want to sell “ Assuming of course
someone in China is able to
products, or consult? They enforce the ECA
”
can’t do both.
”
Yes 36% Yes 55%
No 64% No 45%

44 maritime ceo