2020 Annual Review

The coronavirus pandemic dominated every facet of the shipping industry, sending markets in a tailspin, providing logistical headaches and upending every single business plan. Shipping’s most acute logistical challenge of the past 50 years – the crew change crisis brought about by Covid-19 travel restrictions – affected around 800,000 seafarers - half unable to leave ship and half waiting ashore, penniless. The pandemic sent oil prices plunging and ensured the introduction of the global sulphur cap on January 1 was this year’s biggest non-event. New fuels worked while the price differential between high and low sulphur fuel oil was negligible putting the scrubber debate to bed. The plight of SS Teo-led Pacific International Lines (PIL) was the source of much conjecture throughout the year. The global liner shaved off around 30% of its fleet in 2020 in a desperate bid to pay bills, while Singapore’s sovereign wealth fund vowed to come to its rescue. Singapore experienced one of its largest corporate collapses with Hin Leong Trading, which controls Ocean Tankers as well as Ocean Bunkering Services, revealing debts of $3.85bn as well as hidden futures losses of around $800m. The subsequent fleet sell-off has kept S&P brokers very busy. Soren Toft recently started as CEO at the world’s second largest containerline, Geneva-based Mediterranean Shipping Company (MSC), nearly 13 months after he quit as chief operating officer at Maersk. MSC has been piling on secondhand tonnage of late and could surpass Maersk at the top of the liner leaderboard soon. The line was crippled by a malware attack earlier in the year, as was CMA CGM. Monaco’s Scorpio Bulkers changed directions, moving into the offshore wind sector and selling off its entire dry bulk fleet. In June Qatar Petroleum signed the largest commercial shipbuilding agreement in history, entering into agreements worth $19.2bn with three major South Korean yards to reserve slots for the construction of more than 100 LNG carriers. In April, the Qataris also reserved slots at China’s Hudong Zhonghua Shipbuilding for the construction of another sixteen 174,000 cu m LNG carriers. Elsewhwhere it was slim pickings for most yards, with orders down 45% year-on-year. Terminal operator DP World now controls the largest feeder company in the world. The Dubai outfit – via its European shipping line, Unifeeder – bought out India’s Shreyas Shipping and Logistics and Transworld Feeders to add to recent Singapore acquisition Feedertech . In related news, Abu Dhabi Ports teamed up with Bengal Tiger Line (BTL) in June to create Safeen Feeders. Regulatory bodies vied with one another to enforce more strict emissions regulations. The European Parliament voted in favour of including greenhouse gas emissions from shipping in the European Union’s carbon trading market from 2022. The US, under president-elect Joe Biden may follow suit, while some of the biggest names in chartering signed the Sea Cargo Charter vowing to make the details of their shipping carbon footprint public. The International Maritime Organization rubber stamped plans last month for short-term measures to cut carbon emissions across the entire merchant fleet. MARPOL legislation will see two new measures added: the technical requirement to reduce carbon intensity and operational carbon intensity reduction requirements. Ships ordered increasingly are shunning traditional bunker fuel. More than a quarter of all tonnage under construction as of the end of last month will use alternative fuels. Clarkson data shows that alternative fuels are now in use on 3.5% of the current fleet and 27% of the orderbook by tonnage. By some considerable distance, LNG is the most popular alternative fuel at the moment, followed by LPG. On August 4, a gigantic explosion decimated Beirut port. The source of the inferno was 2,750 tonnes of ammonia nitrate that had originally entered Beirut on a decrepit vessel that was abandoned in Lebanon seven years ago. The final death toll from the accident topped 200. In terms of ship casualties the fate of the Japanese-owned Wakashio newcastlemax was the most high profile accident. It grounded on a reef off Mauritius on July 25, gaining global infamy after it leaked 1,000 tonnes of bunker fuel and split in two. Elsewhere, the sinking of the Gulf Livestock 1 off southern Japan was the deadliest casualty in 2020 with the loss of 41 crew and more than 5,800 cattle. After pandemic-linked delays the Yara Birkeland was finally handed to its Norwegian owners late last month, becoming this year’s most important ship delivery. The zero emissions autonomous container vessel is now undergoing trials.

2020 Annual Review

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