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While tensions between the US and Iran have lessened in recent days the events in the Middle East have made their mark in the insurance industry in particular.
Ships are navigating longer routes to avoid dangerous areas, Ships’ crew wages will rise owing to the heightened risks of attacks to Vessels in the Strait of Hormuz, adding costs to end consumers for commodities transported globally, hampering trade.
The recent tensions are leading to insurers and reinsurers imposing new conditions in policies, significantly increasing the costs of insurance. Industry experts forecast significant increases of about 10% over the coming months.
Similarly as ships need to steam further the owners will need to recover their operating costs in this region of the world.
The attacks on two Saudi Arabian tankers, a Norwegian and a UAE flagged vessel have led to the Joint War Committee, made up of representatives from the Lloyd’s and company markets, adding the Gulf to its list of high-risk waters.
Navy vessels of various nations are now escorting merchant ships through high risk waters to reduce the risks to shipping as part of Combined Military Force. Australia has deployed HMAS Toowoomba, a frigate, to region as part of this effort.
Other participating nations include Canada, Denmark, France, Germany, Italy, Republic of Korea, Netherlands, New Zealand, Pakistan, Portugal, Singapore, Spain, Turkey, the United Kingdom and the United States
If you would like any advice on your situation on shipping through this region please contact me.
All for now,
Brad Skelton
The International Chamber of Commerce has made changes to Incoterms to bring them more into line with modern world trade and shipping.
Incoterms are essential for international shippers and consignees to understand and agree responsibilities for shipping arrangements, costs and liability.
The main changes flowing through into Incoterms 2020 are as follows:
- Incoterms® 2020 provides for demonstrated market need in relation to bills of lading (BL) with an on-board notation and the Free Carrier (FCA) Incoterms® rule.
- Incoterms® 2020 aligns different levels of insurance coverage in Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP).
- Incoterms® 2020 includes arrangements for carriage with own means of transport in FCA, Delivered at Place (DAP), Delivered at Place Unloaded (DPU), and Delivered Duty Paid (DDP).
- There is a change in the three-letter name for Delivered at Terminal (DAT) to DPU.
- Incoterms® 2020 includes security-related requirements within carriage obligations and costs.
If you would like more information please contact myself or my team at Depth Logistics.
All for now,
Brad Skelton
Effective from January 1st, the new IMO (International Maritime Organization) 2020 Low Sulphur Regulation will come into force, requiring all sea-going vessels to comply and reduce sulphur emissions by 85%.
In order to sufficiently comply with the Regulation, sulphur in fuel oil must be reduced from 3.50% to 0.50% in addition to the 0.10% sulphur limit already enforced in Emission Control Areas (ECA).
The objective of this regulation is to reduce the amount of sulphur oxide emissions which is expected to deliver major health and environmental benefits, including improvement of air quality and reducing risks of acidification in the oceans.
Ship owners are responding to this and seeking their compliance with some or all of the following solutions:
- Using liquid natural gas-powered (LNG) vessels
- Installing IMO approved exhaust gas cleaning systems(scrubbers)
- Using compliant fuels with 0.50% or 0.10% sulphur as the main solution
The new IMO 2020 Low Sulphur Regulation is impacting the shipping industry globally, with shipping costs set to increase worldwide. The cost of the Very Low Sulphur Fuel Oil (VLSFO) is expected to be significantly higher than the present High Sulphur Fuel Oil (HSFO).
Projections are that the VLSFO price will be at about US $531/mt in Rotterdam as compared to US $309/mt for HSFO. This equates to a 72% increase in fuel costs.
As a consequence carriers are introducing various sulphur surcharges to recover their higher operational costs. Most are using the BAF (Bunker Adjustment Factor) as the primary mechanism to pass these costs onto shippers.
For RoRo carriers we are seeing Sulphur Recovery Charges from USD 0.23 to USD 35.00 per revenue tonne plus BAF between USD 5.50 to USD 13.00 per revenue tonne.
Container carriers have surcharges per TEU (Twenty foot Equivalent Unit) ranging from USD 60.00 to USD 260.00 depending on the trade lanes concerned and the vessels serving them.
Please feel free to contact me if you would like some specific advice about your own circumstances and shipping contracts.
All for now,
Brad Skelton
Over 400,000 Filipino sailors serve on bulk carriers, container ships, oil, gas, chemical and other product tankers, general cargo ships, pure car carriers, cruise ships and tugboats around the world. They are renowned seamen and the preferred crew of the majority of ship owners internationally.
A fairly staggering statistic is the amount of money they send back home to family. They wired home a total of 6.14 billion U.S. dollars through via banks during 2018 which was a 4.5 percent increase from 5.87 billion U.S. dollars in 2017.
In January this year Filipino sailors sent home a total of 533 million U.S. dollars which was up 12.7 percent from 473 million U.S. dollars in January 2018.
The Philippines Government is supportive with training and certification standards for sailors so the job prospects of locally educated ship officers should remains strong.
Depth Offshore and Depth Logistics have wonderful Filipino people in our teams in both our Australian and Clark, Philippines offices. We understand why they are in demand.
All for now,
Brad Skelton
Ocean conservationists from watchdog group Oceana have started tracking illegal activity of commercial fishing vessels through satellite data.
This data comes from a public tracking system called the Automatic Identification System (AIS), which was originally designed as a safety mechanism for vessels to avoid collisions at sea. Over time, it can also be used to monitor and track vessel movements.
Using Global Fishing Watch, which provides a never-before-seen view of commercial fishing activity worldwide, the following events that occurred in illegal fishing hotspots where a ship’s AIS device was possibly turned off have been identified:
A Panamanian commercial fishing vessel went dark for 15 days on the west side of the Galápagos Marine Reserve before it began transmitting signals again on the east side.
An Australian commercial fishing vessel appeared to disable its AIS near the Heard Island and McDonald Islands Marine Reserve on 10 separate occasions over one year.
A Spanish commercial fishing vessel appeared to repeatedly go dark for at least 21 times when leaving the port of Dakar in Senegal and approaching the Gambia’s national waters over a one-and-a-half-year period.
Another Spanish commercial fishing vessel appeared to turn off its AIS signal consistently over a seven-month period while operating in the national waters of at least five African countries and on the high seas.
Though it’s hard to identify between intentional disabling of the AIS, equipment malfunction, or satellite coverage issues, this question is now being raised: Is going dark from public tracking systems illegal?
The quick answer to that question is NO. Oceana noted that going dark is not necessarily illegal, but this behaviour may indicate that the ships are doing something suspicious. To answer that question with another question: Why would a vessel hide its tracks if its operations are in good faith?
A ship’s crew may turn off its AIS broadcast for legitimate reasons such as evading detection by pirates, but this may also indicate that a vessel is hiding its illegal activities like fishing in no-take protected areas or entering another country’s waters without authorisation.
Oceana is now urging governments around the world to require all commercial fishing vessels to be equipped with and continually transmit tamper-resistant AIS technology. Increased transparency can help deter illegal fishing, prevent unauthorised fishing in a nation’s waters and improve monitoring of fishing around the world. It can also improve maritime safety, help combat illegal fishing and increase compliance of laws and regulations.
All for now,
Brad Skelton
Further digitalization in the logistics industry is happening with "Smart Containers" being introduced that enable 24/7 end to end visibility and supply chain optimisation on land and at sea for more transparency, safety and cost-efficiency.
Smart containers make it possible to generate near real-time data and monitor the movement and condition of your cargo at any given point in time, anywhere through this permanent, electronic high-tech device.
There is no doubt that this cutting-edge connective technology will rapidly becoming the new shipping standard to improve shippers experiences. It's user-friendly hub allows efficient analytics, easy set-up of alerts and personalised notifications.
Its tracking capabilities include:
At this stage only a few carriers have these available and they are charging about USD90 to USD120 per container per trip.
This level of visibility has long been sought after by my clients, particularly for high value cargo, and will definitely be a game changer in the logistics industry and no doubt highlight where efficiencies can obtained.
Please contact me to learn more.
All for now,
Brad Skelton
