The Chamber of Shipping's Annual General Meeting will be held on Thursday, February 26th from 10:00 am at the Vancouver Convention Centre -West. We are pleased to have David Keane, President of the newly formed BC LNG Alliance, as our guest speaker immediately following the AGM formalities.
The Province of BC has appointed the President and CEO of the British Columbia Maritime Employers Association, Andy Smith, as the new trucking commissioner. Mr. Smith will hold the positions concurrently. The appointment stems from a commitment made by the Province in the March 2014 Joint Action Plan. The new role includes:
Assuming responsibility for all Truck Licencing System licences in place following the licence reform undertaken by Port Metro Vancouver
Establishing, and then consulting with an Industry Advisory Committee on issues relevant to the sector
Setting any future rates moving forward based on consultations with industry and the Industry Advisory Committee
Having oversight of the Whistle-blower line, investigations and enhanced auditing and enforcement.
BC Ferries has announced the award of a 10 year contract to FortisBC to supply LNG to fuel the three new intermediate class vessels that are currently on order in Poland. The first ship is scheduled to enter service in late 2016, the second by early 2017 and the third by mid-2017. FortisBC has LNG plants at Tilbury in Delta and Mt. Hayes near Nanaimo and will supply LNG to the vessels using trucks during non-operational periods.
As a consequence of a 20% reduction in the company’s investments in LNG, Chevron is significantly slowing spending on their $36 billion Kitimat LNG project. Chevron is partnered with Australian company Woodside Petroleum who last year purchased a 50% share in the project from Apache Corp. On the bright side, front end engineering and design is to continue and Chevron will continue with efforts to secure marketing agreements with LNG buyers. The decision by Chevron, the second-largest US energy producer, followed the company’s weakest quarterly profit report since the 2008/09 global financial crisis. Net income in the final three months of 2014 dropped 30% to a “mere” $3.47 billion from $4.93 billion in 2013. The collapse in oil prices has cost North American investors an estimated $390 billion since June 2014 when the slide began.
Capt. Stephen Brown, President of the Chamber of Shipping of British Columbia, speaks to Sean Leslie of CKNW at AM980 about his letter to Ben West of Tanker Free BC and the importance of gathering facts on the local shipping activity and the need to understand the facts in the debate on ship safety. Listen to the radio interview here.
Western Canada Response Corporation has published in the Canada Gazette, Part I - February 7, 2015, a new Trans Mountain Expansion Project bulk oil cargo fee of $2.039 per tonne which will be applied on crude oil shipment by vessel to international destinations and destinations north of 600 north latitude - jet fuel shipment from the Westridge facility will be exempt. The fee will take effect from March 8, 2015.
The notice published in the Canada Gazette did not reference any change to the annual membership fees for ships and oil handling facilities. These will remain at $620 per year.
The new CEO of the Port of Long Beach Mr. Jon Slangerup made his first “State of the Port” address last week to an audience of around 900 as his port struggles with some of the worst congestion ever experienced. In his speech he spoke of plans for congestion beating smart systems for cargo movement and an all-out push to achieve energy resilience for port operations with wind turbines, solar cells and other clean technologies. Mr. Slangerup noted that bigger ships, bigger alliances, chassis shortages, loading procedures, rail car shortages and labor negotiations have all came together in a “perfect storm” that has slowed down cargo movement. He also floated the idea of an “Energy Island” program to explore sustainable solutions to meet the port’s energy needs as it expands into greater reliance on zero-emission equipment.
On Wednesday this week, the PMA made what was termed an "all-in offer” to the ILWU in a bid to end stalled negotiations. The offer represents 3% wage increases along with fully paid health care costs, jurisdiction over maintenance and repair of truck chassis and a pension of up to $88,800 a year as part of the proposed five-year contract. However, the PMA advised that are six open contract issues that must be resolved, including details of the employers’ offers on wages and pensions that the ILWU must sign off on. One of the issues that employers find especially troubling is a new demand by the ILWU that arbitrators can be unilaterally fired by either the ILWU or the PMA – something which is clearly impractical.
Meanwhile, as night shifts remain suspended, there are now around 22 container ships anchored off Los Angeles & Long Beach as truckers announce plans to legally challenge what they believe has been agreed by PMA &ILWU on jurisdiction over chassis before the ink is even dry and which truckers have declared unacceptable under federal law. West Coast ports handle 40% of containerized cargo accounting for about 12.5% of US GDP.
Container carriers are continuing a legal fight to remove a “cargo facility charge” at the Port of New York and New Jersey which generates about $30 million per year. A bill to repeal the charge cleared the New York Legislature this week when it won approval by Senate Corporations, Authorities and Commissions Committee, however it now requires Finance Committee approval before action by the full Senate. New Jersey already has approved a bill to repeal the charge, but the legislation requires approval by both states before it can take effect.
Despite ambitious port funding targets signed into legislation in 2014, overall port funding requests in President Obama’s actual fiscal 2016 budget are much more conservative with most ports likely to receive less than proposed for this year. The exceptions are Charleston and Savannah, both of which are aiming for a large slice of the container cake when an expanded Panama Canal opens for business in 2016. Overall, ports would receive $915 million for maintenance dredging and other work, roughly $1 billion less than they are set to receive in fiscal 2015, which ends on September 30. The budget request also includes $18 billion over the next six years for a dedicated regional freight infrastructure investment program to support multimodal, corridor-based projects designed to eliminate existing freight transportation bottlenecks.
The International Chamber of Shipping (ICS) issued a bulletin this week urging the shipping and bunker refining industries to work towards the possibility that the global 0.5% sulphur in fuel cap is more likely to be implemented worldwide from 2020, rather than 2025 as provided for under Annex VI of the IMO MARPOL Convention. Previous estimates of the cost to shipping of this measure are as much as US$50 billion a year. Unfortunately, the IMO has so far been reluctant to advance the fuel availability study scheduled for 2018 that is intended to identify whether there will be an adequate global supply of low sulphur fuel for the 2020 implementation date. The EU has already unilaterally decided that irrespective of any decision by IMO to postpone the global cap, that a 0.5% sulphur limit will apply to international shipping within 200 nautical miles of the coast of all EU Member States in 2020.
Just 12 hours after it was reported missing last week with 11 crew members onboard, the Malaysian government located the missing tanker Sun Birdie (above left) and captured nine pirates. The vessel was carrying 700 tons of marine fuel oil when it was hijacked about one nautical mile south of Tanjung Ayam, Malaysia. Governments in the region have been under considerable pressure to step up their anti-piracy capability and get serious about dealing with the resurgence of illegal activity in some of the world’s busiest sea lanes.
On Wednesday this week, pirates boarded the Greek-owned VLCC Kalamos (above right) while anchored and waiting to load off the coast of Nigeria, killing the ship’s Chief Officer and taking three crew members hostage. The remaining 19 crew members are believed to be safe. At the same time, the deeply corrupt and ineffective Nigerian Federal Government has made it clear it will not hesitate to detain any vessel entering the country's territorial and coastal waters with security escorts on board, whether armed or unarmed. The Nigerian Maritime Administration and Safety Agency, NIMASA, gave this warning after the agency recently detained three vessels, Lilac Victoria, UACC Eagle and Morgane, because they arrived in Nigeria with individuals linked to overseas private security firms offering training on the use of weapons.
As more and more container carriers switch capacity to serving the Asia to North American trade via Suez in order to avoid the USWC melt-down, the Suez Canal Authority has announced that transit tolls are to be frozen in 2015 with the exception of a reduction in the discount offered to LNG carriers which will be reduced from 35% last year to 25% this year. In August 2014, the Authority announced the “New Suez Canal” project which involves cutting a new 72 km canal parallel to the current one, thereby facilitating two-way traffic along the entire length of the canal. The existing canal handles around 8,500 ships/year and generates around $5 billion in foreign currency earnings for Egypt.
The 30 year low in the Baltic Dry Index is starting to take its toll on exposed ship owners. This week, privately owned shipping Copenship which had been operating around 50 handysize and handymax bulk carriers filed for bankruptcy in Copenhagen on account of significant losses. They are far from alone in struggling to stay afloat right now and it seems inevitable that other will follow in the near future when rates are not even close to covering daily operating costs. The Index closed yesterday on the ridiculously low level of 564 points compared to 632 points last week and 751 points the week previously.
Spot time charter
One week ago
Containers: Port congestion on the U.S. west coast has boosted the containership charter market to fill scheduling gaps with only around 1% of the fleet currently laid up compared to 3% at this time last year. So far as rates are concerned, the Transpacific Stablization Agreement has reiterated support for at least two, and possibly three, rate rises in the coming weeks with recommended increases of $600 per FEU on February 9, $600 per FEU on March 9 and a so far undetermined increase an April.
Tankers: With older large tankers still disappearing off the market for use as storage, it is expected that as much as 7-8% of capacity (equivalent to around 50 VLCCs) will be consumed for this purpose by the summer. Those experts who make a living by studying these things are estimating that this will lift VLCC spot earning by around $12,000 per day to an average of $40-45,000 per day. We shall see.
The next full day Business of Shipping course will be held in Prince Rupert, BC on April 15th at the North Coast Meeting and Convention Centre located at 240 West 1st Avenue. This session which is largely sponsored by the Prince Rupert Port Authority, is comprised of six modules, including an overview of world shipping, vessel types, port governance, maritime law and insurance , vessel chartering and pilotage. For more information or to register view: Business of Shipping - April 15, 2015 Program and Registration Form.
In 2005, Teekay Shipping announced today that it had been awarded contracts to charter two 155,000 cubic meter LNG carriers to the Tangguh LNG project in Indonesia. The contractual relationship for the 20-year charters was with The Tangguh Production Sharing Contractors, a consortium led by BP Berau, a subsidiary of BP plc. As a consequence, Teekay placed a contract with Hyundai Heavy Industries to build two LNG carriers with an Indonesian partner on a 70/30 shared ownership, Teekay holding the majority share.
Built by Hyundai Heavy Industries, Ulsan, South Korea in 2008 Owned and operated by Teekay Shipping, Glasgowm UK LOA 288m Beam 44m GRT 101,957 tons DWT 84,467 MT Capacity 145,700 CBM Port of Registry: Bahamas Sister Ships: Tangguh Sago
Tangguh LNG plant
Tangguh LNG is a major multinational project involving the development of six gas fields discovered in the mid-1990s by Atlantic Richfield Co. (ARCO). Tangguh is operated by BP Berau Ltd. (100% owned by BP) with two other wholly-owned BP subsidiaries and seven minority partners. Tangguh started production in 2009, just four years after receiving approval from the Government of Indonesia, and is operating at design capacity with work now ongoing to expand the plant through the addition of a third train.
We are very appreciative to Teekay Shipping for the indefinite loan of a superb model of this vessel and which is now the centerpiece in the Chamber’s boardroom.