July 2021 Review

Maritime is having to contend with the splintering of environmental regulations following this month’s proposal by the European Commission of a cap and trade system for shipping emissions. The European proposal calls for 50% of the carbon emissions on a voyage to or from a port in the EU, rising to 100% for intra-EU voyages, to be offset by purchasing carbon credits on European emission trading systems (ETS). Shipping’s inclusion in the ETS will start in 2023 and be phased in over three years according to the proposal, which will need the approval of the European Parliament and the EU Council before becoming an EU law. China, the US, the UK and Canada are among a host of other countries contemplating mirroring the EU move. American authorities started to track in earnest the operations of the world’s container carriers amid extraordinary supply chain chaos that has wracked exporters and retailers all year. The White House and Congress moved to give the country’s maritime regulator, the Federal Maritime Commission, greater powers to investigate liner operations and charges in a year where container shipping companies are on track to post their highest ever profits, likely triple the previous all-time highs. The port congestion pandemic stretched around the globe with ever greater numbers of containerships idling, waiting for berth spaces to open up across five continents. As of last week there were 328 ships idling in front of ports around the world with 116 ports reporting challenges, such as congestion. As much as 10% of the world’s container shipping capacity has been taken out due to port congestion issues. Charter hire rates for multipurpose and heavylift vessels surpassed the highs registered in 2008 to create new all-time records, rising in tandem with the record-breaking container sector. Capacity constraints in the competing sectors due to container equipment shortages, port congestion and the release of pent-up demand post the global pandemic, have combined to provide a perfect storm for the multipurpose fleet. Shipping dodged another bullet from the taxman. A total of 130 countries, representing more than 90% of global GDP, backed cross-border taxation plans this month for multinationals, ensuring they will have to pay a global minimum corporate income tax of at least 15%. The new minimum tax rate would apply to companies with turnover above a EUR750m ($889m) threshold, with only the shipping industry exempted. The Ever Given, this year’s most famous ship, will need repairs. The Evergreen-operated vessel came to worldwide attention in March when it grounded and blocked the Suez Canal for six days. After a protracted legal fight over compensation between the ship’s owner, Shoei Kisen, and the Suez Canal Authority, the ship was able to leave the canal on July 7. It then spent five days at Port Said undergoing a class survey carried out by the American Bureau of Shipping before leaving for Rotterdam, scheduled to arrive tomorrow. Stena, the parent of Stockholm-listed Concordia Maritime, was forced to come up with a rescue package for its hard-hit product tanker subsidiary. Shareholders will vote on August 12 whether to push through with the plan that will see Stena Bulk take Concordia’s 10 P-Max product tankers on five-year time charters at $15,500 per day per ship, with Stena Sessan, Concordia’s majority shareholder, also putting up a guarantee of up to $10m to keep banks at bay. Japan’s largest shipowner by fleet size, Mitsui OSK Lines (MOL), bought into the world’s most advanced methanol shipper. MOL is paying $145m to take a 40% stake in Waterfront Shipping, the tanker subsidiary of methanol producer Methanex. American shipping could see dramatic consolidation with the owners of TOTE Maritime lodging a bid to take over tanker giant Overseas Shipholding Group (OSG). Saltchuk Holdings, the owner of TOTE and Foss Maritime, has lodged a $3 per share bid to take over the tanker operator. OSG’s board is reviewing the proposal. Subsea 7 will combine its renewables business unit with the Norwegian heavylift and offshore wind installation vessel player OHT to create a pure-play renewables company, focused on fixed offshore wind. The combined company will be renamed Seaway 7 and based in Oslo. Maersk has finally revealed details of the construction of its first methanol-fuelled boxship. The Danish container shipping giant has signed with South Korea’s Hyundai Mipo Dockyard to build a dual-fuelled 2,100 teu ship that will trade in northern Europe. The Danish carrier is understood to be close to finalising a contract for a series of 15,000 teu methanol-fuelled newbuilds. Shipowner George Procopiou topped the bids lodged for Greece’s largest shipyard and will take over Hellenic Shipyards. The Dynacom boss beat another local owner, Theofilos Priovolos, in an auction for the yard, which has been under state administration for the last three years. Nobu Su, the disgraced Taiwanese shipping tycoon, was served with another two years in jail on July 7 for contempt of court. The shipowner, who spent 13 months behind bars through to April last year, was found guilty of lying in court and hiding assets once again in a long-running legal battle he has been involved in the UK with Cypriot owner Polys Haji-Ioannou.

July 2021 Review

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