In the continuing fall out over the loss of 304 people on the ferry Sewol, the South Korean government this week announced the formation of a new government agency designed to handle emergency rescue and safety management. The subject of much criticism, the Korean coast guard is being broken up and its search and rescue duties are being moved to the new “Ministry of Public Safety and Security” that will have more than 10,000 staff and incorporate national fire and emergency response teams.
Stung by criticism of the country’s poor record in confronting regional piracy, the Indonesian government also announced this week that it is to form a new coastguard. This was a key undertaking of the new Indonesian President Mr. Joko Widodo during his campaign.
Owners and charterers that have received bunkers from OW Bunker, its affiliates or subsidiaries are being advised to stay vigilant as legal action initiated by the company’s creditors is rapidly escalating. Adding to the global uncertainty is that bankruptcies of OW’s separate legal entities in different jurisdictions will be handled under local law and while bankruptcy proceedings would put a stop on legal action against that entity in a particular jurisdiction, they do not necessarily mean its contractual positions were terminated or in breach. OW Bunker and related offices around the world are believed to number around 40, operating under various trading names. The company’s debts were this week listed as $730 million.
After only kicking off LNG imports in 2006, latest predictions are that LNG import terminals in China will more than double in the next 10 years from the current 11 LNG terminals. As the country seeks to switch to cleaner fuel without displacing millions from employment, the country is targeting a 15% year on year increase in LNG imports with both state owned and private companies heavily involved in terminal infrastructure development. China is currently the third largest importer of LNG in the Pacific region in October taking 3.3m cbm (21 ships), behind South Korea 6.2m cbm (42 ships) and Japan a whopping 15.9m cbm (117 ships). So what are we waiting for?
Paris MOU vessel detentions under the new Maritime Labour Convention (MLC) have made up 17.4% of the total during its first year in operation with 113 detentions Almost 40% of detainable deficiencies related to payment of wages, 43% accident prevention, 28.6% health and safety and 25.4% were related to accommodation, food and catering standards.
Just a year after falling foul of the Russian authorities, Greenpeace is in trouble again – this time with Spain. The notorious Arctic Sunrise this time pushed its luck with the Repsol drillship Rowan Resistance (above) resulting in a fairly violent confrontation off the Canary Islands. The Spanish government has launched an investigation against the Captain of the Arctic Sunrise, for an alleged “infringement against marine traffic rules punishable with a fine of up to 300,000 Euros. While the crew has been released, the Arctic Sunrise is being held until a 50,000 Euro bond. See the short clip: https://www.youtube.com/watch?v=oCoh7rRLRec.
Clarkson Plc, the world’s largest shipbroker, is negotiating to buy Norway’s RS Platou ASA, a slightly smaller company. Between them, the two companies’ sales last year amounted to $500 million. Platou gets about 70% of its sales from investment banking and services to the offshore oil industry. Established in London in 1852, Clarkson has 42 offices around the world and more than 1,000 employees. Platou, set up in Norway in 1936, has operations in 18 countries and 370 employees.
Still with broking mergers, ICAP has confirmed that it is in talks with Howe Robinson to combine it with its ship broking arm ICAP Shipping to be up and running in the second quarter of 2015. Howe Robinson has a 150 staff in six offices worldwide, while ICAP Shipping has 196 employees in 10 offices. Howe Robinson specialises in the dry cargo and containership sectors, and ICAP Shipping is active in the wet and dry cargo sectors, offshore and FFAs. ICAP moved into ship broking in 2007 with the purchase of JE Hyde.
We have our own Cycling for Seafarers but UK brewer Fuller, Smith & Turner PLC (Fullers) has gone one better by raising funds for Seafarers UK through the sale of beer. This year’s donation of £38,676, raised through sales of its thirst quenching Seafarers Ale, was presented recently at the opening of The Admiralty, Fuller’s new pub on London’s Trafalgar Square, where Seafarers UK’s Director General, Mr. Barry Bryant, met with guest of honor, The Admiral Lord West of Spithead, himself a long term supporter of the charity.
Closer to home, thanks go to Brian O’Connell (ISL Ship and Port Agency / Customs Brokers) for his donation of two Grey Cup tickets for auction (raised $600) at last week’s Plimsoll Club banquet and to the Institute of Chartered Shipbrokers ($1,000) for both of their donations to Vancouver's Mission to Seafarers.
The signing of a Free Trade Agreement between China and Australia after 10 years of negotiations promises to be good news for global shipping if not necessarily for Canada. In addition to an immediate scrapping of the 3% tax on coking coal imports, and a phasing out of the 6% tax on thermal coal imports over the next two years, the agreement is expected to boost Australian agriculture and allow for more Chinese investment in Australia. China is already Australia’s top trading partner, with two-way trade of around A$150 billion ($130 billion) in 2013 and once the agreement is fully implemented 99.9% of Australia’s current resource, energy and manufacturing exports will enjoy duty free entry into China.
Transport Canada has issued a call for nominations for the Pacific Regional Advisory Council (PRAC) on oil spill preparedness and response. Existing membership on PRAC will expire at the end of December 2014. Transport Canada is seeking expressions of interest to fill these positions and to establish an eligibility list for future vacancies. View TC's PRAC Call for New Members.
Following 18 months of environmental studies and public consultation, TransCanada has now formally filed with the National Energy Board a project application for the US$12 billion Energy East Pipeline. The project involves 3,000 kms of existing LNG pipeline to be reversed to carry bitumen and the construction of 1,600 kms of new pipeline to carry product as far east as St. John NB where TransCanada and Irving Oil have formed a joint venture to build, own and operate a new deep water marine export terminal. Pipeline capacity will be 1.1 million barrels/day. Despite being already largely built, the project is starting to generate opposition, especially from within Ontario and Quebec.
Proponents for the Campbell River LNG project, Texas based Quicksilver Resources has deferred further spending on its shale-gas assets amid negotiations for an LNG project partner. Current planning calls for the proposed LNG export terminal to be operated by a downstream partnership between Quicksilver and a third-party company as yet unnamed. The feed-gas for Discovery LNG would come from the Horn River Basin in northeast BC, one of Canada's prolific shale-gas areas and already earmarked to supply resources for several other LNG export plants. The company has filed an application with the NEB to export up to 20 million tons/year with a start up date of 2021.
The U.S. containership operator Horizon Lines has been purchased by competitors Matson and Pasha. Matson has secured Horizon’s Alaska operations for $456.1m deal while Pasha has acquired Horizon’s Hawaii business for $141.5m. All three companies operate in U.S. Jones Act protected trades. The demise of Horizon is not a major surprise given the company’s aged fleet, high operating costs and heavy debt burden. Horizon also announced that it will shut down its Puerto Rico domestic liner service.
After being an oasis of calm last week, Oakland became embroiled in the deteriorating west coast labor situation this week when the ILWU shut down the SSA Marine terminal – the port’s major container handling facility after SSA sent one ILWU unfilled gang home. Longshoremen in the other gangs then walked off claiming that SSA had not followed correct procedures for labor ordering
Meanwhile, U.S. senators from the western states along with Port Directors from Seattle, Tacoma, Portland and Oakland have written to both the PMA and saying the inability of both sides to reach a contract is causing economic hardship to retailers and to port-dependent workers at transportation companies across the country. In addition, a coalition of about 100 groups representing cargo interests, intermediaries and other organizations that do business at west coast ports has been pleading with the PMA and ILWU since spring to reach a speedy conclusion to the contract negotiations.
As if things were not already complicated enough, the Mayor of Los Angeles has been meeting with the Teamsters Union to try and avoid picketing of container terminals in LA & Long Beach which would be sure to shut down those ports – at least temporarily. There were 12 large container ships fishing off the ports of Los Angeles and Long Beach earlier this week despite some modest improvement in productivity at the terminals before the Teamsters action.
Arguably the most talked about new cruise ship of 2014, Royal Caribbean's Quantum of the Seas, arrived in New York this week, the ship’s home port for the winter before repositioning to home port in Shanghai next summer. With a GRT of 168,666 tons and capacity for 5,000 passengers, Quantum is the third largest cruise ship ever built and has incorporated many technologically groundbreaking design features. The unique deck-top ride into the sky, North Star, was fully extended more than 300 feet above the water after Quantum cleared the Verranzano-Narrows Bridge and approached the Statue of Liberty. She was to be officially christened today (November 14) while docked at Cape Liberty with actress Kristin Chenoweth serving as godmother. She then begins regular sailings from Cape Liberty to the Bahamas and the Caribbean on November 18. A sister ship, Anthem of the Seas, will debut in April 2015 and sail Mediterranean itineraries from the port of Southampton UK.
A South Korean court has found the 68 year old Captain (above left) of the South Korean ferry Sewol, which capsized and sank in April, guilty of gross negligence and sentenced him to 36 years in prison. The ferry’s Chief Engineer was found guilty of murder and jailed for 30 years while 13 other crew members were given jail sentences of up to 20 years on charges including abandonment and violating maritime law. The Sewol was carrying 476 people when it went down with the loss of 304 lives, most of them high school students. Prosecutors had called for the death penalty for the Captain but judges acquitted him on that charge. Following the disaster, the South Korean coast guard is due to be disbanded and replaced with a new agency after accusations that it did not act swiftly or aggressively enough to save lives. Eight of the crew members have filed an appeal against their conviction while the International Transport Workers’ Federation has condemned the sentences as “excessive and unjust”.
We reported last week that the Danish marine fuel supplier OW Bunker A/S (Denmark's third largest company by revenue) had filed for restructuring but less than 48 hours later, it was realized that there would be no choice but to file for full bankruptcy following an alleged $125 million bunker fraud scandal involving its Singapore-based subsidiary Dynamic Oil Trading (DOT). This unexpected turn of events comes only eight months after the company’s initial public offering on the Copenhagen Stock Exchange that valued the company at almost $1 billion. With Brent crude oil futures down 30% in value since June to levels last seen in 2010 there is speculation that the company may have been long on their hedges with inevitable results. OW Bunker had been supplying 100-200,000 tons of bunker fuel per month, worth up to US$118 million in current market terms.
Turkish nationalist protesters this week abused and assaulted three U.S. seamen in Istanbul including trying to put hoods over their heads and chanting "Yankees go home". Fortunately, the seamen were able to break free and sprint back to their ship, the guided missile destroyer USS Ross. Police arrested 12 members of the nationalist Turkish Youth Union but later released them. The Turkish foreign ministry condemned the attack, calling it "in no way tolerable". The U.S. navy cancelled all shore leave in Turkey until further notice.