Which carrier wouldn't allow a marine surveyor on board their ship?

Today I had a client with a crane being loaded and shipped with one of the worlds largest RoRo shipping lines ex Brisbane. The client and his underwriters requested that a marine surveyor conduct a survey on the cargo and most importantly the lashing and securing of the cargo once on board the vessel. A fair and reasonable request and one that goes to the heart of the cargo's safe delivery, integrity and also to maritime safety in general.

To everyone's surprise and frustration, the shipping line refused to allow a marine surveyor on board their ship to conduct the survey. This is an unbelievable, arrogant and potentially risky stance adopted by the carrier and one that has caused my client to tell me to never ship cargo with them again. 

Marine Surveyors are highly qualified to inspect cargo, vessels and equipment on behalf of shippers, shipping lines and underwriters. On the waterfront they are highly respected as many of them are retired ships captains with tremendous experience who understand from first hand experience the power of the sea and it's effects on ships and cargo alike. Furthermore their ethics are considered by all as being beyond reproach and in my experience they have always conducted themselves in a neutral and highly professional manner. 

They play an essential role in shipping and one that is key to maintaining safe and high standards in maritime operations for all stakeholders and the environment. Many times they have raised concerns prior to or during loading of a ship that has potentially avoided dangerous incidents.

Any carrier who denies a marine surveyor on board their vessels in my view is short sighted, unreasonable and perhaps should not be entrusted with my clients cargo. Marine surveyors should be allowed to go anywhere and draw attention to any concerns they see. It is in EVERYONES interest to have such experienced people present to conduct a survey!

Many ships have capsized or sunk in heavy seas as the lashings on the cargo have not been correctly done or weren't secure enough to stop the cargo moving and slamming into the hull of the ship or other cargo. Several years ago a wheel loader broke it's lashings at sea during heavy weather. Every time the vessel pitched and rolled the bucket and it's teeth rammed into the hull. The machine was stowed below the waterline and eventually the teeth poked a sizable hole in the hull which lead to the entire vessel sinking.

Would anybody like to take a guess at which carrier denied my client a survey of his cargo? You can leave a comment in the field at the footer of this post.

All for now,

+Brad Skelton 

Cargo transhipment re-invented - lower handling costs and better for the environment.

+Jenny Ruffell Smith from my team recently attended a seminar hosted by the Nautical Institute.

Sea Transport spoke about a new concept for transhipment of cargo.

Costs of moving materials, such as iron ore, can be significantly increased if transport infrastructure and/or deep-water ports, are not located close to mine sties and easily accessible  Usually mining companies are faced with transporting materials long distances either by road or rail and frequently building an expensive terminal and jetty facility.

Transhipment allows smaller vessels with shallower drafts to transfer materials from a small harbour close to the mine site and then transfer to a oceangoing export vessel stationed offshore.

The latest innovation is the Floating Harbour Transhipper (FHT - pictured). A self-propelled feeder vessel berths in the FHT's aft well dock where the FHT unloads the feeder vessel and transfers materials to onboard stockpiles or straight to an ocean going vessel. 

The FHT can withstand 4m wave height, which reduces down-time, demurage and feeder damage. Also, due to the feeder and FHT both being enclosed, this ensures a dust free transshipment and dry cargo. Due to the shallow draft of the feeder, vessels can be used from very small ports eliminating the need for dredging sensitive areas, constructing large jetties and reducing port charges. It also eliminates the need for large sheds ashore for stockpiling. 

This method of transhipment also has potential to handle containers as well in remote ports.

This innovation new vessel would be very beneficial in Australia where millions of tons of raw materials are exported every year and much of it in an environmentally sensitive area and transported long distances by rail and road.

Great to see such innovative ideas gradually becoming reality.

All for now,

+Brad Skelton 

I'm proud that this humble blog has been recognised as a key global shipping industry website!

I'd like to thank Logistics Degree for rating my blog as one of the 95 key websites for global shipping & freight. You can click on the badge below to see the full list.

Thanks to my blog readers who by subscribing and following have helped this be achieved.

Now the pressure is on more than ever to keep the entertaining, informative and thought provoking posts coming.

Stay tuned!

+Brad Skelton 

The Ocean Economy beyond shipping, fishing and tourism.

The Organisation for Economic Co-operation and Development is running a project to explore the prospects of developing an ocean based economy with particularly emphasis on emerging ocean-based industries.

The project divides the ocean economy into established marine activities and emerging activities. 

Established marine activities encompass shipping and shipbuilding, capture fisheries, traditional maritime and coastal tourism, and port facilities and handling. 

Emerging ocean-based industries include: Off-shore wind, tidal and wave energy, oil and gas extraction in deep-sea and other extreme locations; marine aquaculture; marine biotechnology; sea-bed mining for metals and minerals; ocean-related tourism and leisure activities; and ocean monitoring, control and surveillance.

The ocean economy’s long-term outlook and future contribution to global growth and jobs while managing the ocean in responsible and sustainable ways are key issues.

This project is taking a long term view to the year 2030 and will be funded by voluntary contributions by OECD members.

In a world where free trade agreements and trading blocks are now common place I am curious how the OECD will somehow view or divide the asset that is the worlds oceans beyond a country's territorial waters. Do all countries potentially share in the benefits and risks or only OECD members?

To read more on The Ocean Economy Project you can go to the OECD website.

All for now,

+Brad Skelton 

What's next for The Shipping Bloke?

Sadly, in January Skelton Sherborne’s creditors voted to liquidate and wind up the company and this process is now well advanced.

I made the liquidators, S.V.Partners, aware that I had lodged a complaint(#306016 dated 23 November, 2012) with the Government Financial Ombudsmen Service about HSBC's harsh treatment of Skelton Sherborne. Without representation, and at my own expense, I am vigorously pursuing compensation for the company and I am currently awaiting the Ombudsmen's advice as to when the matter will be mediated. 

I tabled all the evidence I have about HSBC's actions to the liquidators and they have authorised me to pursue this action on behalf of the company and it's creditors. They have instructed me to keep them abreast of the progress of the complaint. Should any financial compensation be awarded by the Financial Ombudsmen then this goes to liquidators for distribution to the creditors and not myself. While I sincerely appreciate the Financial Ombudsmen advancing this matter, the pace of it's progress was not quick enough to save Skelton Sherborne from liquidation and the associated fallout for innocent people.

As I indicated in my previous post I am absolutely determined to bounce back from this setback. It is early days but I am rebounding now thanks to some great personal and professional support I have received from many people who believe in me.

So here is the venture I have been developing the past few months and I am pleased to formally announce the launch of....

While I will always be very involved in shipping and international heavy logistics, I have launched some exciting new ventures under the Depth Industries umbrella in different fields. So this will be the final post from "The Shipping Bloke" as I have a fresh new blog and updated personal website in line with these new pursuits.

In the future I will be expressing my thoughts not just about shipping but all kinds of business related ideas and issues according to the new rules of this now truly globalised economy.

Click on this link to check the new blog out, subscribe and go deeper into Depth Industries.

I have been humbled by the following The Shipping Blokes Blog has enjoyed and I hope you will follow me over to the new blog and that Depth Industries can be of service to you soon. We would be very grateful for any opportunity to help you.

Thank you and see you there!

+Brad Skelton

The Shipping Bloke

The adversity paradox

The Christmas break has given me time for some introspection and to reflect on 2012 and it's highs and lows and the lessons learned. This year's adversity has tested me on all levels like no other year has before. I have survived and am more life and business savvy than ever.

The adversity I am facing right now, while very painful and something preferable to avoid, I am certain will actually be my making. I feel more equipped and battle-hardened than ever to accomplish extraordinary things personally and professionally. Therein lies the adversity paradox.

The concept of an "adversity paradox" was something that I learned while at MIT University undertaking the Birthing of Giants(BOG) programme. BOG was founded by my friend and mentor Verne Harnish and has been responsible for developing some amazing self-made entrepreneurs over the years. I graduated in 2004 and still regularly review my notes when I am developing ideas. I also frequently bounce things off my classmates to gain greater global perspectives. The lecturer that spoke to our class about the adversity paradox was J. Barry Griswell. He is a man that has overcome tremendous adversity and wrote and talked about the power of it in putting many of mankind's greatest achievers on incredible success trajectories in all fields of endeavour. These people consciously chose not to be a victim but instead to use the adversity as a source of strength to fuel their pursuit of greater goals. 

So how has adversity changed me and set me up for what's next? 

For starters I will continue to do my best for the people that have been hurt by what happened to Skelton Sherborne. I acknowledge adversity I have suffered has caused adversity for others which I am sincerely sorry for.

Apart from that responsibility the slate has basically been wiped clean and I have the opportunity to rebuild my life and future business model exactly the way it needs to be. I have much more clarity how to do this, what's most important, and who I want with me and who I don't. No victims, princesses or people wanting a free lunch allowed! I know who my friends REALLY are now by who stood by me and who didn't. I will be using the word "No" much more in all aspects of my life to preserve my energy for my main priorities.

The perspective I have gained will be invaluable. When you have endured the adversity and pain I have there isn't anything or anybody who can deliver you more of it than you already have experienced. As a result I am more resilient, resourceful, fearless(not reckless) and tenacious than ever. All I see now is opportunity and upside. The entrepreneurial passion and spirit is starting to flow freely again for the first time in about 3 years. The hunger is back and I am relishing the challenge.

There is no shortage of challenges to overcome. The business environment has changed and will keep changing faster constantly. The swing back to the East from the West is well underway even though some people in the West prefer to be in denial about it. In a truly global economy the West can no longer compete with it's high labor costs and high debt compared to the East. The internet combined with fast and modern shipping methods have enabled global competition. It's no longer a concept it's a reality and this is what is really driving change in the global economy.

The power in a sales transaction has shifted too. It now rests with the buyer, not the seller as it previously did. This is the new landscape and there is no doubt in my mind that it is here to stay and we are going to see many great companies' business models, particularly in the West, being challenged and many of them will fall by the wayside and whole industries will disappear.

I was talking to one of my Canadian BOG classmates about a week ago who pointed out to me that most people who are not business owners themselves view business like they do a game of football that you either win or lose. He said that it isn't like that at all because in a game of football there is a full time siren. In business it is never full time as the game goes on and on with no real end or respite. You have to constantly make the best of every situation, adapt, re-invent and keep your work rate higher than the competition to stay ahead of them. He is finding his business model being challenged by the new global economy and when he looks back over the last 15 years he says 13 of them were great and only 2 have been bad so the scoreboard is okay and he has received tremendous personal satisfaction in creating opportunity and prosperity for his people and all other stakeholders in his business for the risks he has taken. It's not about the money to him either.

As we head into 2013 I can't help thinking that the number 13 is considered unlucky by some people. It's not unlucky from where I am sitting right now and I think it will be a great year of re-invention, opportunity and proving J.Barry Griswell's adversity paradox theory.

All for now,

Brad Skelton

First solar powered boat to circumnavigate the world

Back in September 2009 I posted a blog about NYK working on designing a Super Eco cargo ship to have it in service by 2030 using a combination of renewable energies. Well perhaps this is now a step closer thanks to what has been learned by the PlanetSolar team.

The "Turanor" PlanetSolar catamaran completed the first solar powered circumnavigation of the world in May this year. Take a look at this video to see this amazing vessel.

The round the world trip it has undertaken has made it the symbol of energy efficiency and sustainable energy.  The "Turanor" is 95Tonnes in weight, 35m long, 23m wide and 6.1m high and has 537m2 of solar modules. The boat can propel itself at speeds up to 15knots without adding pollution of any kind as it is completely silent. It cost £10million to build and set many records as it circumnavigated the globe.

Commercialisation of solar powered ships surely is just around the corner. Who would have thought a Toyota Prius' would be commercialised into taxis as fast as they have.

By the way, is it just me or does everyone else seem to end up with a Prius every time you call a taxi these days?!

All for now,

Brad Skelton

The Shipping Bloke

Shipping Line Fuel Surcharges... Blatant Ripoff?

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Fuel for ships is known as "bunker fuel" and since the global financial crisis(GFC) bunkers have fluctuated dramatically with a sharp drop post GFC followed by a dramatic increase.

I am amazed at how different carriers apply or choose not to apply bunker surcharges of one description or another even when they operate in the same markets and source their fuel from the same place. Of course the carrier charging it claims they are bleeding and simply can't afford not too. I always enjoy the the look of terror on the sales reps face when I ask how come their competitor isn't charging it and has nearly identical cost structures. I am yet to ever get a plausible explanation.

The carriers that do apply a surcharge most commonly call it B.A.F. This stands for Bunker Adjustment Factor. Another one used by one RoRo carrier is E.F.A.F which stands for Emergency Fuel Adjustment Factor. The word "Emergency" always puzzles me too. Where is the emergency when bunker prices are falling? It's really just marketing spin to help justify a charge that perhaps isn't fair in the first place both in it's conception and it's application.

Another puzzling aspect is why does the application of BAF or EFAF not follow oil price increases and decreases exactly?

When a carrier prices a shipment the rate is made up of a few components. Vessel cost (whether it be charter fees or repayments to banks), part of the port fees, fuel and administration costs. Why then do carriers apply their BAF of say 55% to the components other than fuel? This is another thing any shipping line sales rep is yet to be able to explain to my customers and I.

By the way, how can you possibly charge 55% anyway? That's enormous and surely far outweighs the actual fuel cost itself.

Where there is confusion in terms, or emergencies, there is scope to squeeze more money out of the shipper in the end. I think it's about time some shipping lines came clean and stop the games and rip off. The market can't afford it any more.

My clients and I would rather see all carriers drop this charge altogether and build their fuel costs into their freight rates like most other transportation operators do whether via road, rail and air.

What could be more transparent than that?

All for now,

Brad Skelton

The Shipping Bloke

No doubt about the Canadians..a FTA with the EU.

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It has barely been reported in the media around the world but one of the worlds biggest mining and resource nations, Canada, is hurriedly trying to secure a Free Trade Agreement (FTA) with the European Union. A truly brilliant move in my book.

Mines in Europe are generally all but depleted so the primary resources need to be shipped in from somewhere so Canada is setting about ensuring it becomes the most competitive supplier possible by removing import duty and taxes on it's resources. No mining or carbon taxes being applied there unlike with the Canuk's biggest competitor, Australia.

Canada needs the business as the resources landscape in Canada is changing. Traditionally Canada has been a big energy supplier to it's southern cousin, the USA. However this is changing as the USA is increasingly using fracking technology to get natural gas out of places once thought impossible so the need for Canadian energy is diminishing.

Another reason is that with uncertain global economic conditions and generally slowing GDP growth in most regions of the world, it is only prudent to try and create conditions that lock in one the worlds biggest consumers as a customer, the EU.

On the otherside of the Atlantic with an FTA in place, a debt ridden Europe will no doubt love selling and shipping more BMW's, Gucci and Louis into Canada without import duties as well.

As a proud Aussie I am frustrated that my country isn't doing all it can to beat the Canadians to the punch with the EU. In fact we seem to be doing the opposite which will ultimately be at our peril. I think we have too much reliance on the Chinese buying our natural resources.

By the way, the cost of shipping from Canada to China is not that different from Australia so I think we better watch our backs as the Canadians are proving to be leaner, meaner and more agile and I'm sure are working hard on winning over our biggest customer.

Australia needs to take a leaf out of the Canadian's book with the EU and quickly get FTA's with our biggest trading partners and remove taxes that make us a less competitive supplier.

By the way, a little bit of intervention by the Aussie Reserve Bank to get our dollar down from 1.05 against the USD would help our exporters out a hell of a lot too!

What part of "exports bring money into the country to deal with debt and help us prosper" don't our regulators get?!

All for now,

Brad Skelton
The Shipping Bloke

Australian shipping revitalisation...It's desirable but unachievable.

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The Australian Government wants to revitalise the shipping industry to help with what the transport minister describes as an immense freight task with the resources boom. Currently there are five bills making their way through the parliamentary process. These bills include substantial changes to existing coastal shipping legislation and tax incentives for Australian ship owners and operators.

As an island continent I would personally love to see Australia's shipping industry revitalised however I believe the governments efforts are focused on the wrong things and with the shipping industry struggling financially, they are completely mistimed. 

As a consequence of the governments reforms, on Friday night Hoegh Autoliners announced to the market they are suspending their Australian coastal service. They are not the first carrier to do so however Hoegh were one of the largest RoRo operators providing this extremely important service. To my clients, who ship heavy and wide mining and construction machinery, which is difficult and extremely expensive to move via road and impossible to rail, this is a real blow and I suggest creates another cost impost on the mining industry. For the road using public, this means that suddenly much more wide, heavy and slow moving freight will be hitting our highways creating even more pressure on the road network.

In essence the government is wanting to create a broad range of incentives to companies willing to invest in rebuilding the shipping industry. They are also making it more costly and difficult for foreign owned carriers like Hoegh, to participate in coastal trade. So to any Australian company brave enough, in competitive terms and in theory, you should have a pretty good chance of building a viable business with government legislative support.

That is of course if as a ship owner you can overcome a few other obstacles to operating in Australia such as:
-Financing the purchase of suitable multi-purpose ships. Currently shipping financiers globally are simply not lending much. This is because global charter rates are very low and the value of ships in general terms has dropped about 30% thus weakening any financiers security position.
-Stevedoring in Australia is still currently far less efficient than other countries and in itself creates a significant cost burden on any operator. Recently MISC, the Malaysian owned shipping line, withdrew services from Australia citing inefficient waterfront practices as one the main reasons for making their Australian service unviable.
-Very high salaries and wages for Australian seamen compared with labour from other countries.
-The market being able to accept what will need to be very high ocean freight rates as coastal traders will not have the benefit of revenue from international cargo like foreign operators do which effectively subsidises coast freight rates.

We seem to have a short memory. Australian National Line (ANL) used to be our national carrier and in it's day, owned and operated good multi-purpose vessels internationally and coast-ally but some years ago it was sold by the government to the French owned CMA CGM. It was sold because financially it couldn't deal with these very factors. Apart from some intended tax and depreciation relief the legislation contemplates, I can't see that anything has really changed or changed enough to allow an Australian shipping industry to take root successfully again.

From my perspective to achieve the governments goal of shipping helping Australia with it's freight task they should be making it easier, not harder, for foreign operators. Australians need to face the reality that our labour costs here are prohibitive and will remain so to the shipping industry. Further waterfront labour reform is needed to help make our stevedores deliver worlds best efficiency thus making servicing this country more attractive.

If these things are done then shipping will be able to greatly help the Australian freight task but if not, then this humble shipping bloke really can't see anything changing except for there being alot more heavy traffic taking to our roadways.

All for now,

Brad Skelton

The Shipping Bloke

The new protectionism - EPA

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I met with a client today who is a major shipper of earthmoving, mining and construction machinery. Apart from the usual conversation about freight rates, shipping lines and quarantine compliance, our conversation turned to the EPA(Environmental Protection Authority) rules around diesel engines that powers equipment.

While I think we agree that reducing emissions is desirable and important, the hypocrisy and lack of fairness starts when you have different EPA agencies around the world producing their own rules on what engines will comply for their country. This has resulted in manufacturers building multiple engine types depending on what rules apply in the country the machine is destined for. There are differing "tiers" of engines for various countries.

Most manufacturers have realised that in the name of saving the environment, they can conveniently use this EPA legislation to protect their markets from imported machinery which may be fitted with engines that do not comply. They are building machines so that once exported, they can never come back or be sold into other markets with different EPA compliance requirements.

When I studied as a customs broker and freight forwarder there was a world trade agreement called GATT. The General Agreement on Tariffs and Trade. GATT existed as the World Trade Organisation tried to moderate and control protectionism to keep trade relatively fair. 

Protectionist policy is essentially countries using import duties and tariffs to protect their local manufacturers and markets from cheaper imports. As globalisation and free trade agreements between countries gained momentum GATT was abandoned and protectionism has fallen out of favor and is now considered archaic and politically incorrect. As an aside, try telling that to workers in the western world who are losing their jobs in manufacturing to Asian competitors right now though! This might be a somewhat wild idea but protectionism, in this current tough global economy, might even make a come back as countries try and save whole industries and jobs. It would also raise government revenue to pay down sovereign debt. Anyway perhaps there is a future blog in that topic for another day!  

During the conversation with my client today I said to him that clever manufacturers are leveraging EPA rules as effectively "protectionism" under a different name. He agreed. Therefore EPA rules are already impacting "fair trade" and will gradually and ultimately lead to less global trade of heavy machinery unless something changes. In the old days of GATT, someone would have been shouting "not fair" and the WTO would be stepping in but who would dare do this now and then be seen to not be environmentally responsible? 

So what would be environmentally responsible then? To me there should only be one standard of engine produced. That being the one with the lowest emissions. Why bother even building anything else? Forget the rest. That's what environmental responsibility looks like to me. Now I am just a humble shipping bloke, not an engineer or mechanic, and I suspect differing fuel quality in some places may present a challenge to this idea. I don't know but the whole planet breathes the same air ultimately so this situation seems ridiculous and irresponsible to me.

This reminds me of another absurd situation in the name of protecting the environment in my own country, Australia. Here the Department of Environment and Heritage is wanting to ensure that air conditioning gas in machinery is of a type that is non-ozone depleting. Fair enough but this caused the department to institute an import permit regime on all imported machinery and vehicles that have air conditioners. As yet most countries don't even have any rules on this so consequently many machines air conditioners are still filled with ozone depleting gases. 

To avoid having to apply for import permits nearly all of our clients elect to get their supplier to evacuate the gas overseas before the machine is loaded on the ship to Australia. This takes me back too a point already made in this blog that the whole planet is sharing the same air ultimately so this is stupid. 

My company has pointed out to the department that effectively the import permit system is actually counter-productive not only for Australia, but the ozone layer no matter what country you live in. The response:- "That's okay, here in Australia we are doing the right thing and the rest of the world needs to catch up". Meantime somewhere in the world more ozone depleting gases are getting released into the same atmosphere we all share.

The sooner the whole world converges on truly uniform standards on EPA rules the better off global trade and the environment we live in will be.

All for now,

Brad Skelton

The Shipping Bloke

Who you gonna call?

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I have noticed a significant shift in the market recently with many large, high volume shippers who have previously had direct deals with shipping lines gravitating back toward freight forwarders.

Shipping lines have been fighting to stay profitable and as a result are frequently changing ships, retrenching staff, dropping port calls or still have some fleet laid up resulting in lack of capacity and short shipments. The reality is that many shipping lines service levels have been faltering. I think I can say without exception every client is fed up with dealing with so called "Customer Service" centres on 1800 numbers.

So who you gonna call? Freight forwarders!

Shrewd shippers are using forwarders to help overcome these things. The forwarders are generally better positioned and resourced in meeting the needs of shippers right now and will offer a broader range of options rather than just one carrier. The range of services is usually broader too and in the volatile freight market we have had for quite a while, the forwarders are more attuned to where the deals are.

Best of all...you don't sit on hold in a phone queue waiting for ages to talk to someone and then being told "Go to www." to do that!

All for now,

Brad Skelton

The Shipping Bloke.

Far East shipping industry recovery is well underway!

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I have been travelling the last week or so in the Middle East and Far East visiting clients and shipping lines and some of my agents in these places. Recovery from the global economic downturn, particularly with shipping lines in the Far East, is now well underway with some carriers forecasting things should be back to normal by the end of the year.

An example is Singapore owned, Neptune Orient Lines(NOL). NOL is the fifth largest container carrier in the world. After reporting a US$741m loss last year NOL expects to deliver a US$70m profit for the full year this year. Furthermore all vessels that NOL laid up to ride out the downturn are now back in service and they intend to start acquiring more. Similarly an even more spectacular turnaround is being delivered by Orient Overseas International who posted a US$1.28b profit for the first half compared with a loss for the same period last year of US$232m.

Maersk Lines, the worlds largest container carrier, has forecast they expect to return to profit this year after seven terrible consecutive loss making quarters.

Most carriers I have spoken to are hoping to be able to gradually increase rates later this year by 10-15% as space contracts on their ships again.

I am really getting the sense now that the pulse of global industry is shifting to Asia with more companies focusing on this region and the extraordinary opportunities and growth that exists here. Some are even shifting their head offices from Europe and the US to the Far East. Obtaining finance from banks and doing business in general, is easier than alot of other places in the world and the economies are less credit driven.

For my industry something that punctuates this for me is that there is a challenger to the Baltic Shipping Index coming out of China that is getting more prominent. It is called the China Containerised Freight Index and provides a benchmark index for container freight rates. At the end of June it had risen to 1171 points compared with 763 a year ago.

All in all things are looking very positive again and I think we'll be back to battling for space on ships again very soon....in fact in a few tradelanes we already are.

All for now,

Brad Skelton

The Shipping Bloke

The Japanese car carriers are back..cars sales must be down.

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You can always tell car sales globally are down when the Japanese car carriers start chasing business for high and heavy cargo, like earth moving machinery, that usually holds little or no interest for them. You have to try and fill those ships somehow in a downturn.

From my perspective the GFC has had both positive and negative impacts on the RoRo (roll on/roll off) shipping market.

One of positives includes rates coming back to earth. Probably too low to be brutally honest as we are still seeing rates in the market at levels I haven't seen since the 1980's. The carriers cannot sustain these levels for much longer so I firmly believe increases are just around the corner.

Carriers have been scrapping older ships which are less fuel efficient, and operationally constrained with their lower ramp capacities and speeds. This is a double edge sword though. While it is actually good to move the older girls on, with fewer vessels working it has meant that sailing frequency has dropped in many trade lanes and this combined with slower steaming speeds, to save fuel, means that you may have to wait longer than usual for your cargo to arrive.

In an effort to fill their vessels RoRo carriers have been calling at more out ports. In other words, calling at ports that are normally not scheduled and going where the spot packages of cargo are. Prior to the financial crisis it was simply not possible for carriers to even consider a deviation from the main ports. With demand strong, they were under too much pressure from their big customers to get that cargo to market. NOW!

Out of adversity there is always opportunity for enterprising people. We have seen some new carriers enter the market such as Partner Shipping's NAPA service which has brought real competition to the market between North America and Australia. We have also seen other carriers, like Wallenius Wilhelmsen, enhance their USWC transhipment services via Manzanillo. both of these things are a win for shippers.

So, what's next?

I think it depends a fair bit on what is happening economically in Europe right now however assuming cargo volumes continue improving, then freight rate restoration will soon be inevitable. As global demand for cars comes back, then if they run true to past form, we'll be saying "sayonara" to the Japanese car carriers again until the next downturn.

All for now,

Brad Skelton

The Shipping Bloke

Volatile freight rates as shipping recovers from the GFC.

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HSBC, the worlds largest bank, hosted a shipping conference on the 29th of March and I thought I'd share some of the information and ideas raised there by ship operators, ship yards, ship brokers and financiers that might be pertinent to followers of this blog. Freight Forwarders, like yours truly, seemed to be absent. The source of this information is HSBC's Shipping Day report.

Overall there was consensus that a slow recovery is underway however many operators are still delivering substantial losses and freight rates, particularly in the container sector, are likely to be very volatile in some trade lanes. I have personally seen this volatility and you have to be right on your game!

The volatility is being caused by carriers who have been hiking rates in order to try and get back into profitability and fluctuations in shipping capacity. Rate hikes the past 6 to 8 months has been due to carriers cutting their capacity as they have laid up vessels to ride out the downturn. The rules of "supply and demand" have kicked in.

Capacity is now growing again though. Some carriers have started reactivating some of the ships they have laid up while at the same time there are new container ships being delivered from the ship yards that were ordered years ago(pre GFC) which are increasing capacity. HSBC report that most of these vessels are destined for Europe/Asia tradelanes. Rates have already dropped by about 10% as a result. Good news for shippers and freight forwarders. Overall it is concerning that there is still massive over-capacity in shipping globally.

We are also seeing the RoRo carriers contemplating bringing more vessels out of "lay up" so I suggest we will see similar volatility in freight rates in this sector soon which is likely to continue until demand and capacity stabilises.

Recovery in the bulker and tanker trades seems be happening faster and in fact the ship yards reported a preference to work in these sectors. The ship yards received almost no orders in 2009 and suffered from substantial deferments of orders as well.

So, all in all, still interesting times for shipping but I am heartened that recovery seems to be slowly underway even if there are still some rough seas ahead for a while.

All for now,

Brad Skelton

The Shipping Bloke.

This will put hair on your chest.

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Seeing it is new year and depending on what part of the world you are in, you are probably either partying hard or nursing a hangover right now.
Have you ever tried a Scandanavian drink called "Aquavit" or otherwise known as "Linie Aquavit"? I remember fondly quite a few nights on board Wallenius vessels in Brisbane docked at Hamilton Wharf with the ships Captain and their local agents serving up shot after shot of this flavoured rocket fuel. Aquavit is distilled from potatoes or grain mash and packs about 45% alcoholic volume punch. In the distilling process different flavours are produced by adding orange peel, lemon, cardamom, cumin seed and various other ingredients.
Every drop makes an interesting journey by sea before it is ultimately sold.

All Aquavit is shipped from Norway across the Equator (hence "Linie") to Australia and back. This tradition started in the 1800's when the owner of a distillery, Jorgen Lysholm, shipped a consignment to Asia that for some reason wasn't accepted and was returned. Upon inspection of the barrels back in Norway he noticed that his Aquavit had developed a richer flavour for it's travels through warmer climates. Hence the tradition was established and continues to this day as a critical part of the process of producing Aquavit. More on Aquavit including a map of it's journey.

So next time you feel like a shot, try some Aquavit. Always a good idea at the time!

Happy new year!

Brad Skelton

The Shipping Bloke

A public "Thank you" to my team.

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Last Thursday night I attended the equivalent of the Academy Awards for the shipping industry in Australia. The Lloyds List Australian Shipping and Transport awards. The aim of the awards is to recognise the achievements of the industry's finest practitioners.

Thanks to the innovative thinking, safe practices and hard work of my team, Skelton Sherborne, was nominated as finalists in two of the fourteen categories. Namley; Freight Forwarder of the Year and the Safe Transport category.

I am very proud we made the final as the competition is fierce and stacked with huge multi-national players and public companies.

While sadly we didn't win either category we did get runner up in the Freight Forwarder of the Year which we are still very pleased about.

So, to my team. Thank you! Your commitment to our customers, the company and I during what has been a challenging year in shipping has been and remains inspiring to me.

We'll hopefully bring it home next year!

All for now,
Brad Skelton
The Shipping Bloke

Some shipping trivia on plimsoll lines?

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Firstly what is the plimsoll line? It is the horizontal line and marks that you may have seen painted around the hull of the ship near the waterline. It dates back as far as 2500BC in Crete!

Why is it there? It is effectively the safe load line calculated for the ship. As more cargo is loaded on board the weight forces the hull of the vessel deeper underwater. The plimsoll line is therefore effectively the maximum point a vessel may be loaded too to ensure a safe level of buoyancy is maintained for it's voyage. If the plimsoll line can't be seen as it is underwater...then you have an overloaded ship.

There are more than one mark on ships as the depth a hull will float in water will vary depending on a range of factors such as salinity and water temperature.

The letters on the Load line marks have the following meanings:
TF – Tropical Fresh Water
F – Fresh Water
T – Tropical Seawater
S – Summer Temperate Seawater
W – Winter Temperate Seawater
WNA – Winter North Atlantic

The plimsoll line tells the master of the vessel and the vessel underwriters make sure that the ship is operating within safe working limits for seas it will sail through. In fact it is not allowed to sail if the plimsoll line is not visible.

This is why it is so important to have the most accurate cargo weights possible so that the ships planners can keep the vessel inside it's safe working limits and also trim the vessel so it floats evenly in the water.

More on the plimsoll line.

If there is any other shipping trivia or questions you have, then drop me a note in the comments field and I'll come back to you. Thanks!

All for now,

Brad Skelton

The Shipping Bloke

Dial 1800WESUCK at customer service!

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The exasperation of my freight team in dealing with MEGA shipping companies and their so called "customer service" through centralised 1800 numbers and websites is getting overwhelming. It is to the point where we are actually avoiding doing business with them because it's near impossible anyway and it affects our ability to deliver the standard of service our customers are used to from us.

Here's an example from one carrier on a recent import shipment to Australia.

- We receive a computer generated email telling us the freight charges are available online at their website. What the??? If the computer can generate an email to us telling us the charges are available online then why can't the computer just email them to us in the first place? Stupid!

-So we go the website we are directed too from the email. But of course for security reasons you need to register as a user. Fair enough.

-The registration process is completed but the access doesn't come through within a few minutes as promised.

-So we call their 1800 number and say "We received an email directing us to your website but then we had to register and we still don't have access". Then we are told that they have no IT people working in Australia anymore (apparently this is run from overseas now because labor is cheaper) and we are given an email address to send a message to their IT dept to get them to complete the registration process that they should have done by now anyway. Before sending this message we ask the customer service operator on the phone if they have the charges and if they could just give them to us over the phone or email them to us directly. The operator says she does have them but she can't do this anymore and we have to use their website. Arggh!

-So we email IT trying to get the registration to their website through. That was in the morning and by late afternoon we have no reply and still no access to help our client get their cargo tomorrow.

-So back to the "Dial 1800ZEROCAREFACTOR customer service team". We explain that we have done everthing they ask and we still don't have the charges and access to the website and the ship is in tomorrow. We need them now so we can pay them and they can then release the cargo when our truck goes to the wharf.

-That customer service person finds all this too hard and transfers us to another operator who ask's "What port this is for?". "Pt Kembla" we say. "Oh that's not me that someone else...I'll put you through" Arggh!! &^%*%!!!

-We speak to the next person who says "No worries, I'll email them to you now". Simple as that. What the? Why could that person do it and nobody else could or would? Stupid!

-We are still waiting on the IT dept to come back to give us access to the website but the cargo picked up on time. Unbelievable!!

This is a real example and I fail to see how these businesses function at all or have any customers. I am really tempted to name them however then I'll probably hear from their legal dept. Then again, it has probably been sent offshore too and maybe I don't have to worry?

This reminds of an experience a good mate of mine, Troy Hazard, had with a bank in America recently. Troy has recently moved to the States and is on the corporate speaking circuit there. Here is his rant to me by email...

"Troy – I’m here to find out why I have been charged $175 overdraft fee when I don’t have an overdraft?
Bank – Yes?
Troy – I’d like you to refund that please.
Bank – Well, I can’t do that here sir you’ll have to call customer service.
Troy – Call customer service? But I am standing here… In the outlet… At the bank… In person… Talking to you…In your office…With my statements in hand… The branch where I opened the accounts.
Bank – Yes I know Mr Hazard but I don’t have that authority here.
Troy – So you’re saying that someone I don’t know, that’s never spoken to me, and has no idea about my account other than what comes up on their screen has more authority to deal with me than you do, my local banker, at my local branch?
Bank – Yes sir.
Troy – You’re kidding right?
Bank – No sir, I do not have the authority to talk to you about that. (as my card is handed back)
Troy – So I need to go and call this number then.
Bank – Yes sir, that’s what you will have to do.

(Not even, let me call them for you now and tell them what you are seeking to sort out, OR, let me dial the number for you and put it through to that courtesy phone over there so you can talk to them while you are here, OR, let me talk to them first and give you a reference number so you wont have to go through all of the explanation when you do call, OR let me find someone at customer service that can help you so you wont have to waste time on the phone….. nope… here’s your card, go call them, good luck, don’t let the door hit you on the backside on the way out)"

So I sympathise with Troy as we are basically in the same boat with some of the larger shipping lines. Pardon the pun!

All for now,
Brad Skelton
The Shipping Bloke

Greener shipping.

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NYK is one carrier that is really looking well ahead into the future with it's concept of the NYK Super Eco Ship. This project they hope will be delivered by 2030 and will radically improve carbon emissions by about 69% compared to a cargo ships as we currently know them. The vessel is planned to be able to carry about 8000 TEU's (twenty foot equivalent units).

This bold project and leap into the future will potentially see ships powered by a combination of LNG-based fuel cells, solar cells, and wind power. The main power unit is planned to be a 40,000kw LNG fuel cell.

The hull design also comes in for a major overhaul with reducing friction through the water being the goal followed by weight reduction. The design of hull means it is longer and wider but it has a shallower draft than most vessels currently operating now. This draft will also assist the Eco Ships with getting into ports with draft restrictions.

I'm not sure what happens to those sails when the containers are being loaded and discharged. I know some wharfies would see them as a prime target for the gantry crane.

Full marks to NYK for their investment, innovation and effort to drive change in the industry.

All for now,

Brad Skelton

The Shipping Bloke