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Tuesday, 13 November 2012

Monday, 5 November 2012

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






Sunday, 4 November 2012

40' container rates between Shanghai and Rotterdam spike up $788 last week!

Most container lines in the world are still struggling with over-capacity in ships for the current world cargo transportation task and little or no growth is forecast in cargo volumes in the coming year.

A break even result is the best many of these shipping lines can hope for with the prevailing market conditions. Despite over-capacity in ships which usually leads to lower freight rates, last week a huge and key market segment from China to Europe saw a massive increase in rates of $788 per 40' container/FEU(Forty foot Equivalent Unit). That is a 38% increase in a single week taking the average cost to ship a 40' container to US$2865.00.

(source-World Container Index)

As you can see by the rate history over the last year, rates at some stages have tripled and between January and July, effectively quadrupled.

What is causing this upward volatility when the usual rules of supply and demand suggest rates should be going lower?

Carriers are endeavouring to remove tonnage from some trade lanes to address the vessel over-capacity but the delivery of a profitable bottom line for them is the real driver after the terrible losses many of them have suffered the past couple of years. Ship owners are being forced to increase rates to ensure they stay profitable and are here in the long run. Slow steaming is still commonplace to keep fuel and operating costs to a minimum.

In my opinion we are going to see tremendous rationalisation and consolidation with shipping lines in 2013 and continued rate volatility. It just has to happen as charter rates are still low and they just can't keep carrying on with the financial performance of the last two years.

I would suggest that not only for the shipping industry but many other industries, "Volatility" is the new normal business environment that everyone has to get used too. Being lean, debt free, commercially agile and nimble will give operators the best prospects of survival.

All for now,

Brad Skelton

The Shipping Bloke




Friday, 21 September 2012

Shipping Line Fuel Surcharges... Blatant Ripoff?


(You are getting this note because you subscribed to The Shipping Blokes Blog by Brad Skelton)

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

Monday, 20 August 2012

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

Wednesday, 15 August 2012

How many containers REALLY get lost at sea?

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Frequently in the media I hear statistics quoted that up to 10,000 containers are lost overboard  at sea each year.  In these modern times, why does it happen at all?

A number of factors ranging from severe weather and rough seas to catastrophes like the ships themselves getting lost at sea just like the "Rena" (pictured off the coast of New Zealand) contribute to the losses. Safe stowage can also be compromised by shippers overloading containers although progressively most countries are following the International Maritime Organisations agenda to have the weight of all containers properly verified before loading.




As for the reliability of the data....there is isn't central source keeping track of this nor do the marine underwriters compile or publish any accurate statistics. The World Shipping Council has surveyed it's member shipping lines to try and find out how many containers are actually lost. It was radically different to what media outlets sensationally suggest. 

Not counting catastrophic events the survey revealed a figure of only 350 containers being lost each year. If you include catastrophic losses like the "Rena" then the number only rose to 675. A far cry from 10,000! Considering the millions shipped each year that's not too bad.

So the yachties of the world are safer than they think, my clients can probably sleep tonight and so can their underwriters. I still recommend you get insurance though!!

All for now,
Brad Skelton
The Shipping Bloke

Sunday, 3 June 2012

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

(You are getting this note because you subscribed to The Shipping Blokes Blog by Brad Skelton)

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