|.: 1-Sep-2015 :.
|Tankers Go into Forced Storage|
Tanker giant Frontline is seeing what it describes as "forced storage" as unsold cargoes are loaded onto vessels while awaiting a buyer. Speaking about the current state of the tanker market Frontline ceo Robert Macleod said the high supply of oil was leading to unsold cargoes. "What we are seeing now is vessels awaiting orders in various ports and places around the world simply due to the high supply of oil leading to unsold cargoes - on ships. And let's call that forced storage and we expect that to remain a factor going forward," he said. Frontline also expects to complete its merger with Frontline 2012 in the further quarter.
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|Tragic Migrant Find|
Bodies of around 50 people have been found in the hold of a vessel carrying migrants and refugees from Libya to Europe, according to Italian Coast Guard. Close to 430 people have been rescued from the said vessel by the Swedish navy ship Poseidon, part of European Union's Frontex border management program.
A spokesperson for the Italian Coast Guard said that emergency calls have been received from ten different boats located in an area some 30 miles off the coast of Libya today. This brings the total number of all migrants and refugees who died attempting to reach Europe by sea in 2015 to 2,423.
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|Seafarers Denied Human Rights|
A foreign crew in Mackay, Australia, has been denied basic rights such as access to food and has been forced to work without pay. One crew member on board the Korean bulk carrier, the C. Summit, was found to have malnutrition and a further four have since left the ship claiming they feared for their lives. The accusations have been substantiated by the International Transport Workers' Federation (ITF), following an inspection of the vessel last week. The Australian Maritime Safety Authority has also joined the ITF in inspecting the vessel.
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|Report Details Plunge in Cost of Renewable Energy|
The cost of producing electricity from renewable sources like wind and solar has been falling for several years. Now, a new report provides, in detail, the contrasting costs for different power generation technologies around the world and shows that renewable sources can produce electricity at close to or even below the cost of new fossil fuel-based power stations.
The report, Projected Costs of Generating Electricity: 2015 Edition, a joint project by the International Energy Agency and the Nuclear Energy Agency, calculates the cost of producing electricity from different types of new power plants including offshore wind.
Compared with the previous edition published five years ago, the report details a significant drop in the price of solar and wind generation costs, especially for solar photovoltaic (PV) installations, as a result of sustained technological progress. That drop, as well as a plateauing in the price of new nuclear energy plants, helped arrest cost inflation in electricity generation over the past five years.
No single technology proves the cheapest form of electricity generation under all circumstances: many factors determine the final cost of any investment, principally local influences such as market structure, policy environment and resource endowments.
Projected Costs of Generating Electricity: 2015 Edition looks at generation costs at more than 180 plants - from large nuclear and fossil-fuel facilities to wind farms to residential-sized solar PV installations - in 22 countries, including Brazil, China and South Africa. The data were used to project, country by country and for the different technologies, what it would cost to generate electricity over the lifetime of a plant built to enter service in 2020. The report's standardized form of analysis, levelized cost of electricity (LCOE), displays the cost range of generation in each country for each technology, based on three discount rates.
While the costs of renewable technologies in some higher priced markets can be well above that of coal- or gas-fired plants, the report details how utility-scale solar PV and especially onshore wind power are comparable and often lower in countries featuring plentiful resources and appropriate market and regulatory frameworks.
Further, while more significant regional variations remain than for baseload technologies, variable renewable technology costs continue to converge towards international benchmarks at the lower end of their cost range.
Projected Costs of Generating Electricity: 2015 Edition looks into the future by examining the potential cost of emerging technologies like ocean energy and fuel cells. The report also discusses the value and cost of generation from the perspective of the power system as a whole, examining other relevant cost metrics that may be more appropriate for a world where the concept of baseload power is of declining relevance.
More immediately, the report analyses pressing issues in projecting costs of electricity generation:
• how to price in the impact of renewable variability -changes in generation when the sun does not shine or the wind does not blow,
• the effects of liberalization of prices on LCOE and investment return, and
• various technologies' sensitivities to a carbon price.
The vast majority of the technologies included in this study are low- or zero-carbon sources, suggesting a clear shift in the interest of participating countries away from fossil-based technologies, at least as compared to the 2010 study.
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|Wanted: An Unbiased Ports Regulator|
The need for a permanent economic regulator at the nation's seaport is important for the consolidation of the nation's port reforms carried out in 2006.
Before the reforms, Nigerian ports were bedeviled by a high level of inefficiency including unnecessary delays in the turnaround time for ships and high cargo dwell time. Most of us remember how vessels had to wait for almost 40 days before they were able to berth at the port. The dearth of cargo handling equipment made operations at the various ports hellish. But with the concession of 2006, the story has changed.
Vessels now sail straight to berth without delays. The stronghold of the 'mafia' that held the port by the jugular has since been broken. The various congestion surcharges imposed on the ports by shipping lines have since been removed.
One cannot forget the congestion surcharge slammed on the ports by a liner conference known as the Europe-West Africa Trade Agreement (EWATA). That surcharge varied from USD1,000 to as much as USD2,500 per TEU or FEU as the case may be. The private terminal operators or concessionaries were able to eliminate this surcharge less than six months after they took over operations at the port thereby saving the economy over N100 billion annually.
Despite the success of the port reform, the need to appoint a permanent port economic regulator remains paramount.
It must be noted that the concession agreement recognizes the Nigerian Ports Authority, which is the lessor, as interim regulator of the port "until there is a change in the law by the National Assembly".
Some stakeholders in the maritime industry have therefore expressed concerns over the suitability of Nigerian Shippers' Council as the economic regulator in the shipping industry.
This anxiety stems from the fact that the traditional role of the Council has placed a moral burden on the agency to act as an impartial and unbiased umpire in the process of dispute resolution between the service providers and the consumers of their service.
In February 2014 and after much horse- trading, the former presidency of Goodluck Ebele Jonathan, through a presidential fiat, directed the Nigerian Shippers’ Council to assume the interim role of commercial regulator in the port industry.
The new status confers on the Council the responsibility of regulating the commercial activities of shipping service providers and the consumers.
However, prior to this ad-hoc arrangement, the Nigerian Shippers' Council was primarily established to protect the interests of the consumers of the shipping services provided by terminal operators and shipping companies.
These consumers include shippers, importers and exporters.
The formation of Shippers' Council worldwide, especially in the developing countries, followed the general agitation against shipping service providers whose activities the shippers often complained about.
However, the agitations crystalized into what later became known as a new World Maritime Order in 1965 which encapsulated in the UN Liner Code for Liner Conferences document that strongly recommended the formation of National Shippers’ Councils in developing countries also referred to as Group of 77.
UNCTAD confirmed this new order by endorsing the formation of Shippers' Councils in its 1968 meeting in New Delhi, India. Thereafter, Shippers’ Councils sprang up in various parts of the world, including the developed countries. The first Shippers’ Council in Africa was set up in 1968 in Cote d’Ivoire while the Nigerian Shippers’ Council was established in 1978.
Therefore, to all intents and purposes, the formation of national shippers' organisations in the developing countries was to act as a countervailing force against the operational activities of ship owners and other service providers.
It is however instructive to note that the traditional functions of Shippers' Council all over the world remains the protection of the cargo interests - importers and exporters.
One is not aware of any other part of the world where the Shippers' Council combines this role of siding with the consumers of shipping services with the responsibility of regulating the commercial activities of service providers.
Some discerning critics therefore noted that the development in Nigeria is akin to standing logic on its head.
How could government ensure the neutrality and impartiality of Nigerian Shippers' Council in a dispute arising from a transaction between a shipper whose interest the Council was statutorily created to protect and a service provider, of which it is likely to have a biased mind towards?
Simply put: the Shippers' Council is an interested party at the port. What the port need is an unbiased umpire.
As a result of this perception (and reality), service providers have already expressed a lack of confidence in the ability of the NSC to act as unbiased umpire at the ports because it will naturally always side with one party - the shippers. And this is clearly seen in the alliance between the NSC and the Shippers Association of Lagos State, who operate more as Siamese twins.
Some legal experts have explained that the import of the declaration of the service providers suggest that one of the parties in the process has already passed a vote of no confidence on the umpire.
Just like in a law court in the process of dispute resolution, if one of the parties in the dispute raises a doubt, no matter how remote, on the impartiality of the umpire, it is incumbent on such person or body to disqualify himself or be disqualified.
In the case of the NSC, the terminal operators and shipping companies have raised serious concerns over what they regarded as unwarranted and unguided statements of the NSC, which tend to undermine the successes and achievements recorded under the port concession programme of the Federal Government.
According to them, the statements, which often most of the time painted the services at the ports in bad light, are capable of scaring away genuine investors, thus greatly hampering the sure-footed stride towards efficiency at the port.
The operators also believe that the way and manner the Council has chosen to act as a commercial regulator has clearly compromised the discharge of such onerous duty.
The service providers have strongly shown their disapproval to the ways and manners at which the Council was carrying out this new role through law court.
I believe that the traditional role of the NSC, which was set up “to protect the interests of shippers” has established an intrinsic link between the shippers and the Council.
The service providers are therefore justified and have reasonable grounds on which they predicated their doubt about the impartiality and unbiased stance of the Shippers' Council as a commercial regulator.
This lack of trust and cordiality between the NSC and the terminal operators may not only hamper the capacity of the agency to discharge the role of a regulator, but it is capable of giving the consumers of shipping services the short end of the stick.
This will not create the mutual trust needed in the discharge of such vital role as being commercial regulator which is meant to get the confidence and respect of all the parties involved in the resolution of any dispute that may eventually arise.
The port needs an umpire that will not only check operators but also have temerity to curtail the excesses of port users and government agencies.
One is therefore wont to side with the call by some stakeholders that government should strip the NSC of the economic regulator toga while a completely neutral agency should be set up - with no affiliation to any of the interests - to regulate the port.
The NSC should therefore concentrate on advocating for cargo interests.
So while the Nigerian Ports Authority fulfills the concession agreement by acting as interim port regulator, it is imperative for the National Assembly to expedite action on the passage of the National Transport Commission (NTC) bill which will create the legal body specifically charged with carrying out the functions of a commercial port regulator.
President Mohammed Buhari has promised to reverse all the actions and inactions of the previous administration that are likely to hamper the development of the economy. The designation of the NSC as the economic regulator in the port should be seen as one of such actions created through presidential fiat but which has since put the maritime industry on the boil.
Source: This Day Live
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|JSC "Rigas kugu buvetava" informs about active working|
An increased competition in the segment of ship repair services and construction of new vessels has made the shipyard refocus on a new, promising area: the production of large-size metal structures (tunnels, bridges), said Janis Skvarnovics, Chairman of the Board of Directors of "Rigas kugu buvetava" JSC (Riga Shipyard) in an interview to the Dienas Business newspaper. He admits that currently orders of large-size metal structures, including tunnels, in the area of construction services come from Europe rather than from Latvia; however, he assumes that in the perspective, once construction of Rail Baltica is started, local orders may start coming in as well.
How is the Riga Shipyard doing right now?
The economic performance of the company during the first six months of this year is almost the same as for the whole Year 2014. Look for yourselves: the net turnover throughout the last year amounted to just EUR 17 M, while it has already reached EUR 10.24 M during the first six months of this year. We finished last year with a loss, while the first six months of this year already show a small profit of EUR 0.33 M (compare this to the loss of EUR 0.95 M over the first six months of the last year). During this year we have already provided repair services for 44 vessels, 38 of which underwent maintenance at the docks, while the Riga Shipyard provided repair services to 51 ships over the entire last year. Year 2015 is not over yet, of course, and it would not be wise to make any forecasts in the current situation. All the more so considering the fact that it is important in the business of ship repair services whether the winter is cold or warm; notably, whether November and December passes without severe frost.
The current results suggest, however, that 2014 was the most critical year in the history of the Riga Shipyard. This was mainly due not only to an increased competition in ship repair services but also due to a drop in the demand for the construction of new vessels: this resulted in a fiercer competition and a greater choice for the customers. Of course, this situation was also affected by geopolitical events and was heated up even more by disputes among the company shareholders which have been brought before a court. This made it possible for shipping companies, ship owners and a part of the partners of the Riga Shipyard as well as individual counterparties to revise the agreements and models of agreements. A number of companies even tried to file for the bankruptcy of the Riga Shipyard. This stage has now ended.
What is the cause of the increased competition in the segment of ship repairs?
The main reasons are the economic downturn and changes to regulatory requirements. Similar to roadworthiness inspection for motor vehicles, vessels too have a deadline by which they have to undergo seaworthiness inspection. Of course, unlike cars vessels do not have to undergo the inspection every year. In was decided in Latvia a few years ago that motorcycles would have to undergo technical inspection once in every two years rather than every year, and a similar thing happened to the international regulations too, where the deadline for vessels for undergoing conditional seaworthiness inspection was extended. As a result ship owners are trying to save their money and postpone repairs which do not pose a threat to the safety of navigation. This situation will continue for another two years, and then the situation with repairs (seaworthiness inspection) will return to normal.
The second factor - economic downturn - has forced ship owners to become thriftier, especially in the absence of very positive future prospects for the segment of the freight market in the Baltic Sea in connection with the reciprocal sanctions imposed by Russia and the EU and due to the fall in the value of the Russian national currency. The Riga Shipyard is competing with companies from Tallinn, Klaipeda and Gdansk (also Gdynia) in this segment currently. Customers are aware of the situation and want ship repairs to be finished within the shortest period of time as possible, with additional bonuses offered by the repairers. At the Riga Shipyard we place an emphasis on efficiency which enables carrying out ship repairs as quickly as possible. Of course, compared to our competitors the Riga Shipyard is unable to service large-sized orders, which is something that our competitors working as part of a group of companies are capable of. However, the results in ship repairs during this year show, the Riga Shipyard is working in the right direction, as shown by the results achieved. Of course, one must not stop at what has been achieved. Ship repairs provide a cash flow; one cannot speak of huge profits, though. The Riga Shipyard is currently working on establishing a network of agents which would help increase not only the number of ships repaired by the company but would also help procure new shipbuilding orders.
What is the situation as far as procuring new shipbuilding orders is concerned?
It is a different area of activity; still, it is affected by both the economic downturn and political decisions. The Riga Shipyard has to put four ships into service this year. The major works in this field are still to be completed in the second six months of this year. There are also tasks which need to be completed early next year. These are all fishing vessels for Norwegian, Danish, and Finnish fishermen. Fishermen in these wealthy countries, if we look from the Latvian perspective, have problems with obtaining credit for the renewal of the fishing fleet, too. It seems as if it is not even worth dreaming about getting orders for fishing vessels from Latvia or any other country of the Baltic States despite the fact that many vessels have been scrapped. First of all, there is a period of silence in the fishing industry because the industry is facing a downtime following the decision of the Russian Food and Sanitary Service to suspend sprat exports to this country, in addition to the fall in the value of the Russian rouble. In addition to the economical impact there is also the political impact. In particular, it was decided in Europe to reduce the fishing quotas for certain fish species in the Baltic Sea. The Riga Shipyard once built patrol vessels for the Latvian marine border guards, and similar vessels were also built for the Swedish Coast Guard, but no new tenders have even been announced in this segment in this part of Europe for the time being.
Another sector of production - production of offshore oil and gas platforms - which was once considered to be very promising is sort of stranded for the time being. The conflict in Eastern Ukraine and the weakness of the Russian rouble in economic terms, and the political background has in fact eliminated the need for such products in Ukraine and Russia. Trying to get orders to build mid-class ships (up to 130 m in length) for Asian countries is not very feasible economically because there are very strong shipyards in this region. Besides, once built, an empty vessel has to be driven nearly around the world and the costs of shipping are not low at all. Ship building is lucrative but the demand is minimal. By contrast, there are huge fluctuations from the viewpoint of cash flows because the construction of a ship takes 12 to 18 months, and the largest part of the payment is received when the ship has been built and transferred to the customer. However, all costs related to the process of shipbuilding - wages, taxes, power bills, etc. - must be paid by the ship builder in advance.
How is the production of other floating vehicles doing?
The Riga Shipyard once built, upon order by the Finnish company Vello, a floating power plant producing electricity from sea swell. Currently negotiations about the production of such a floating vessel - generator of power from sea swell - are under way but further progress of the negotiations depends on the availability of the EU Structural Funds for 2014 - 2020. Namely, the Finns wish to build the station using the EU co-financing. They have not started the implementation of the project yet in the absence of such European aid. However, the Riga Shipyard is currently working actively to acquire the market niche hitherto unfamiliar to the company.
What is this new niche, and what does the shipyard plan to produce?
We are talking about large-scale metal structures: bridges, viaducts, and tunnels. This market is available in Europe, and we are currently doing a lot of work to be able to submit our tender proposals to customers from Europe placing orders for such structures. Of course, just a few proposals out of many can turn into a real contract. But if we do nothing, we will never get to the implementation of such orders. There is no demand for large-scale metal structures of this type in Latvia currently; however, a tunnel is planned to be built as part of Rail Baltica which I mentioned earlier and if the Riga Shipyard will have previous experience of producing such products, why should anyone want to place an order for this structure with a manufacturer abroad? This would be beneficial not only for the Riga Shipyard but also for the state as the customer because this would help reduce the costs of transport of such a structure, it would help create new jobs and generate taxes for the state and municipal budgets.
Are you facing any competition from Russian companies?
No, we are not. The Russian industry of shipbuilding and ship repairs is tended towards the military sector, and it seems that despite its size the industry has no capacity available to enable it to further intensify the competition in the sector of both ship repairs and vessel construction. In turn, Russian fishermen will hardly want to commission vessels outside Russia both for economic reasons - the costs are lower there and a vessel will cost less there - and for political reasons, especially if the funding for the renewal of the fishing fleet is coming from the Russian state budget. Of course, ships carrying Russian names are undergoing repairs in Riga too; however, they are all owned by shipping companies registered in countries of the so-called flags of convenience. Additionally, all payments here are made in euros.
Janis Skvarnovics, Chairman of the Board of Directors of the Riga Shipyard: 'We are trying to start the production of large-scale metal structures used in the construction of tunnels and bridges because we have professional staff at our disposal, face an intensified competition in the sector of ship repairs, and there is free capacity for the construction of new vessels.'
Source: Rigas kugu buvetava JSC
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|Tanker and Bulk Carrier Collide off Bosphorus|
A product tanker laden with fuel oil collided with a dry bulk carrier carrying wheat around 11:30 pm local time last night in the Black Sea, some eight nautical miles off the northern entrance to the Bosphorus Strait, Turkey's General Directorate of Coastal Safety reports.
The 17,060 dwt, 1988-built product tanker Paros Wind was carrying fuel oil from Tuapse to a location yet to be disclosed when it collided with the 38,101 dwt, 2013-built bulk carrier CS Jaden, reportedly carrying wheat to Port Said.
No injuries to both crews and no pollution have been reported thus far. The authorities sent ten tugboats to aid the vessels and tow them to Kumkoy road where they lay at anchor. The extent of the damage to the ships is unknown.
The 151-meter Paros Wind flies the flag of Panama and is operated by Leader Ship Management of Ukraine. The 180-meter CS Jaden is operated by Nassau-based Campbell Shipping Company Limited, and it sails under the flag of the Bahamas.
World Maritime News Staff; Image: Gerolf Drebes/Shipspotting
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|Port of Melbourne privatisation: Costly deals clogging up Melbourne's docks|
The Andrews government is blocking a project at the Swanson Dock terminals that promises huge returns for a modest investment, to prioritise the privatisation of the Port of Melbourne.
Between 2007 and 2009 Victoria's Bracks-Brumby government spent $350 million on a road and rail project to remove a level crossing along Footscray Road. The delay of 15 minutes to and from the western suburbs was a major irritant to motorists caught by the handful of country passenger trains using the line to get to and from the city.
These officials appear to be obsessed with making multibillion-dollar financial deals such as the Wonthaggi desalination plant.
But this wasn't the main justification for the bridge; it was necessary to open up the Port of Melbourne's Swanson Dock terminals to a direct rail link to three proposed inland ports (container terminals) in industrial areas at Somerton in the north, Altona in the west, and Lyndhurst to the south-east of Melbourne.
By using a rail link to the three inland ports, 3500 trucks each day can be taken off Melbourne's roads (out of the present total of 5700). This is dependent on upgrading Swanson Dock rail terminals so containers can be lifted directly off container vessels and onto trains.
But not one metropolitan freight train has passed under the bridge, because the rail upgrade at the port has not been undertaken and only one of the inland ports has been connected, although all are developed.
The $58 million in costs associated with the rail extension ($38 million from the Commonwealth and $20 million from the state) have been allocated in the budget but, amazingly, not implemented.
It is difficult to see an infrastructure project in Victoria with greater financial, economic and social returns for the modest investment involved. Yet the project is being deliberately blocked by the Andrews government in order to prioritise the privatisation of the Port of Melbourne.
Worse, the government is spending $1.6 billion on refurbishing Webb Dock, which will be uncompetitive because it will rely on trucks, since previous state governments sold the rail easements along Lorimer Street giving access to Webb Dock, as part of the Fishermans Bend redevelopment.
Loading containers directly onto rail at Swanson Dock allows the use of "off-port" container storage at the inland ports. This means the container dwell time - the average time a container remains stacked at the terminal - at Port of Melbourne is reduced; the port capacity will increase by an estimated 65 per cent, in terms of standard-sized container equivalents. This is more than the capacity of the new Webb Dock facility.
For the expenditure of $58 million (never mind the $350 million Footscray project) the Port of Melbourne gets more additional capacity than Webb Dock, estimated to cost the taxpayer $1.6 billion.
And by cutting out the present truck journey between Port of Melbourne and the inland ports, the cost of delivery off-port is expected to fall by 20 per cent, or about $100 per container.
The cost of the Webb Dock upgrade is being borne by the Port of Melbourne. This means the government could abort the development without paying compensation, such as the cost of breaking the East West Link road contract and side agreement.
Recent developments suggest the Philippines port company ICTSI, which has signed up to operate Webb Dock, may be pleased to get out of the contact. Webb Dock has significant competitive disadvantages by comparison to Swanson Dock - the lack of a direct rail link and, with no other port facilities in Australia, shippers are reluctant to deal separately with different operators at each port.
The Andrews government has a simple solution available - authorise and fund the rail terminal upgrade to Swanson Dock linked to inland ports and cancel the Webb Dock development - but the politicians seems to be in thrall to senior Treasury and Finance department officials.
These officials appear to be obsessed with making multibillion-dollar financial deals such as the Wonthaggi desalination plant, which will never produce water but will cost taxpayers $640 million a year for the next two decades; an estimated $600 million-plus to pay out a completely unnecessary side agreement for breaking the East West Link contract; and more recently a failed attempt to fatten the sale price for the Port of Melbourne by a massive 700 per cent increase in wharf rental fees.
Worse, Victoria's importers and exporters are being shut out of the inland port'' rail transport development loop, a policy of successive state governments, in favour of an inferior road option by a group of financial engineers led by Transurban, who are pushing for the West Gate Distributor ($1.1 billion) and Western Distributor ($5.5 billion) road projects. These are massively more expensive than the $58 million completion of the inland ports option, and will attract more traffic, more congestion and more pollution, according to an excellent evaluation by Habitat Trust NGO.
Politically, the real disadvantage of the inland ports proposal is its low cost, which doesn't generate billions for well-connected rent seekers. Sensible development leaves no scope for financial engineering in the form of public-private partnerships financed by tolls, taxes or charges.
Last year Port of Melbourne's largest exporter, Visy, switched its Tumut mill paper exports to Port Botany, where its containers can be transferred directly by rail to container ship. More Port of Melbourne customers are talking about making the shift.
Source: The Age
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