Thursday, 29 January 2009

Industry Snapshots

Indian Coast Guard rescues hundreds of refugees belonging to Myanmar and Bangladesh after they were set adrift on the high seas by Thai officials. The Rohingya boat people are mainly from Myanmar and believed to be economic migrants fleeing to other Asian countries like Malaysia, Indonesia and Thailand. Hundreds are now believed to be missing at sea. Some of the survivors claim that the Thai navy rescued them and took them to camps in Similan Island, detained them and later abandoned them at sea. Most of the Rohingyas are Muslim, and Human Rights activists claim that Thailand has set adrift about a thousand of them after beating them up. There have been fears expressed in Bangkok that the refugees would join Muslim insurgents in South Thailand. Thailand denies these reports, and says it will conduct its own investigation into the allegations. Meanwhile, a dozen bodies have been found washed up in remote Indian islands of the Andamans and Nicobar chain and hundreds have been rescued, according to Indian Coast Guard officials quoted in the Voice of America.

Nigerian militants blow up tanker’s engine, kidnap crewmember. In a dramatic escalation in violence in the Niger Delta region, the MT Meredith, carrying 4000 tonnes of diesel oil, was attacked by militants believed to belong to an affiliate of the Movement for the Emancipation of the Niger Delta (MEND). The ship’s engine was blown up with dynamite and a Romanian crewmember kidnapped. The ship was within a military protection zone at the time off the Rivers State coast. At the time of writing this report, the ship, on a passage from Lagos to Port Harcourt, was still at sea and ‘seriously damaged’, according to news reports. Another tanker operated by Royal Dutch Shell was attacked last week and ransacked. Attacks of piracy are becoming increasingly common in the region, although the attack on the Meredith represents a dramatic escalation in militant tactics. Foreign oil workers have been kidnapped earlier and service boats plundered. MEND claims to be fighting for a greater share of Nigerian oil wealth being distributed to Nigerians and not to foreign oil companies. Critics allege that many groups are just plain criminals with powerful patrons in Nigeria. The BBC reports that oil production has been cut by a fifth in the last three years because of the violence. Meanwhile, the Romanian hostage was released soon after MEND sent an email to journalists saying that they were “in touch” with the Meredith attackers and would ensure that the Romanian crewmember ‘was released soon’.

Alang gets 60 ships for scrapping in 45 days, thanks to the downturn in global shipping. As asset prices fall and ships are laid up, many owners have opted to send their vessels to the ship breakers instead of laying them up. Reports in The Hindu suggest that 60 of these have been sent to Alang between December 1 and January 15, and around a 100 in the last two months. The President of the Alang Shipbreakers Association, Vishnu Gupta, is quoted as saying that more than 600 vessels are in the market worldwide for scrapping, and that business in 2009 at Alang may well set a record. The Gujarat Maritime Board has confirmed these figures, saying that 57 ships were beached during the period, a third of them of more than 10,000 tonnes. The number of ‘plots’ operational in Alang have almost tripled in the last three months, with around 80 operating at present. This is good news for the GMB as it charges a tax of hundred rupees per light displacement tonnage for ship breaking. Among the vessels are general cargo, bulk vessels and small tankers. Sources say that vessels are being sold at around 250 USD per tonne. Local scrap sells for Rs 18000 per tonne. The newspaper reports that the recent boom around Alang has benefited steel mills, oxygen and acetylene suppliers and refillers and a plethora of smaller associated businesses. Steel plates and other raw material are also being sent to Northern Indian steel mills.

Chinese crew to get USD 10,000 each for fighting off pirates off Somalia. The Shanghai Daily reports that the 30 crew of the Zhenua 4 would receive the reward for bravery from the owners, Zhenua Port Machinery Corporation. The ship arrived recently at the Changxing Island shipyard to a heroes’ welcome. Pirates attacked the Zhenua 4 on December 17 off the Somali coast when nine men armed with rocket propelled grenade launchers and machine guns boarded the ship. Showing great presence of mind, planning and courage, the crew barricaded themselves in the accommodation and fought back with fire hoses and firebombs. The battle continued for four hours, according to the China Maritime Search and Rescue Centre, when a helicopter from the Malaysian navy arrived on the scene, causing the pirates to flee. Captain Peng Weiyuan of the attacked ship said, "This is an experience that I will remember all my life." Chief Officer Zhen Yutong is even more taciturn. "We only did what sailors always should do, to be afraid of nothing on the sea," he says.



Two fishermen claim they spent 25 days in icebox at sea

Some experts say story ‘fishy’

Sydney, Australia, January 22: Two men claiming to be Burmese fishermen have been rescued floating in a freezer, according to Ms. Tracey Jiggins of AMSA, the Australian Maritime Safety Authority. The two, Ko Ko Oo and Haung Htaik, are in their mid twenties and say they survived stormy seas, dehydration and hunger for 25 days by eating small pieces of raw fish regurgitated by two birds by and drinking rainwater. Their remarkable rescue took place in the Torres Strait last Sunday.

AMSA says that the two were spotted by a routine aircraft patrol off the Northern coast of Australia and a helicopter was sent to rescue them. Photographs taken by the aircraft show the two standing in a large icebox commonly used by fishermen.
They were taken to Thursday Island off Queensland for treatment and later released to immigration officials, who are now checking their identities. The Myanmar Embassy in Australia has refused to comment so far.

The two claim to be the crew of a Thai fishing boat that sank two days before last Christmas off the Australian coast. According to them, 18 other crew abandoned the 12 metre boat without lifejackets when it sank. No rescue efforts are being mounted by AMSA to find the missing sailors, as it is believed that they could not have survived for almost a month. AMSA officials say no distress message was received, though they admit that many fishing boats often stray into Australian waters in the Torres Strait, an area between Australia and Papua New Guinea infested by sharks.

Some survival experts have questioned the story, saying that the two men were in remarkably healthy condition considering they claimed to have survived by eating small fish regurgitated by two birds that landed on the icebox, and by drinking rainwater. Some weathermen have pointed out that a Category 1 storm Charlotte raged in those waters about a week ago, insisting that an icebox was not a survival craft. Royal Navy reserve commander Dr. Paul Luckin, a survival expert, has publicly expressed scepticism over the story. Others say that Charlotte was well south of the rescue location and that the story may well be true.

Either way, as Ms. Jiggins said, “Those are two lucky people. For them to have even been spotted in a huge body of water is amazing. They had no safety equipment, no beacons, no means of communication and they'd been drifting in a desk sized box for 25 days."


Sunday, 25 January 2009

Zero Freight for Asian containers

Mumbai, January 14 The sigh of relief heard in the industry at the Baldry’s recent revival of sorts may well be premature, if plummeting container freight rates are any indication. Reports confirm that, for the first time in recorded history, brokers in Singapore are now spot booking boxes from South China at ‘zero freight’, charging minimally for just bunker costs. Rates from North Asia are already below operating cost.

Although some ship owners are putting a brave face on the gloomy news, saying that these are spot rates on a few bookings and that it is better to recover bunker costs and surcharges rather than keeping slots empty, the latest development is unprecedented and reflects the near collapse of trade as the global economic turmoil deepens. Lloyd’s List reported yesterday that some lines are charging customers for ‘bunker adjustment’ costs and, sometimes, ‘terminal handling charges’, with the basic freight rate quoted as “Zero dollars” from South China. The rates of 200 dollars from North Asia are widely regarded as below operating costs, anyway. An industry observer is quoted as saying, “"I've never heard of freight rates going to zero; this is a whole new ball game”.

The UK based newspaper, The Telegraph, quotes Hong Kong based broker Charles de Trenck, “We have seen trade activity fall off a cliff. Asia/ Europe is an unmit­igated disaster." Analysts fear that the market for finished goods has been particularly hard hit. Numbers coming in from other Asian economies are no better, with Taiwan and Japan reporting a 42% and 27% fall in exports respectively, and Korea 30 per cent. Ports across the globe continue to report drastically lower volumes on a year on year basis. ING reported a few days ago that US West Coast port activity is already down around 18%. Chinese shipments are down, too. "This is no regular cycle slowdown, but a complete collapse in foreign demand," said Lindsay Coburn, ING's trade consultant. In December, the World Bank painted a grim picture of the global economy in 2009, essentially saying that trade would contract to levels not seen in a quarter of a century.

Adding to industry woes, Keppel and Cosco in Singapore are believed to facing cancellations of orders for ships and offshore platforms. A report carried by Bloomberg quotes Serene Lim, a Singapore based analyst at DMG & Partners Securities, “Singapore yards, including Keppel, may continue to face potential cancellations from highly geared rig owners”. Keppel and Cosco shares fell sharply on the news. Amongst the owner’s cancelling orders is India’s Great Eastern, which has apparently terminated orders for two vessels with Cosco. Meanwhile, the Telegraph says, “Idle ships are now stretched in rows outside Singapore's harbour, creating an eerie silhouette like a vast naval fleet at anchor”.

It also quotes an analyst supposing “Offering slots for free is akin to an airline giving away spare seats for nothing in the hope of making something from meals and fees.”


Saturday, 24 January 2009

Industry Snapshots

Indonesian ferry sinks with up to 300 on board. In the latest in a string of ferry disasters in Asia, the “Teratai Prima” sank last Sunday off Sulawesi Island in heavy seas. Thirty five survivors have been found. Observers say that the ferry was carrying considerably more than the 267 people manifested, and that the death toll may be closer to 300. There have been rising concerns about ferry accidents in Asia, particularly in the Philippines and Indonesia. The Teratai Prima ferry was on a passage between Pare Pare in South Sulawesi and Samarinda in East Kalimantan when it sank at night, when most passengers were asleep. Survivors have claimed that the boat capsized in rough seas. "I felt that the ferry was listing to the left, then suddenly it turned upside down," said Yulianus Mangande, who was picked up by fishermen. “I had to swim in the dark in heavy seas until the morning." The ship’s Captain has been severely criticised for his decision to sail despite a storm warning being in force. In 2007, up to 50 people may have perished when a fire broke out on a ferry plying between Jakarta to Bangka. This was preceded by more than 500 deaths in a December 2006 casualty when another Indonesian ferry carrying 600 people sank on a voyage between Java and Borneo. Just a few months ago, in June 2008, more than 850 people lost their lives in the “Princess of Stars” capsize in a Philippines storm.

After COSCO, Armada (Singapore) Pte faces the fallout of excessive speculation in shipping derivatives, with losses estimated at $375 million. The figures are “projected losses if the market stays the way it is now,” Singapore based Managing Director Tommy Jensen Rathleff told Bloomberg. They represent a “conservative estimate,” he said. Armada is now under Singapore court protection. Freight Forward Agreements, essentially hedging tools, have been used in the last few years by many operators to speculate wildly in rising markets, according to analysts. The chickens are now coming home to roost. Armada operates around 50 vessels and its clients include biggies ArcelorMittal and BHP Billiton. It has lost most of the money, a cool $240 million, gambling on Panamax FFA’s. The company has now filed a “Chapter 15 petition” in New York, Bloomberg reports, seeking protection from US creditors. Amongst the big names that have filed similar petitions are Ukraine’s Industrial Carriers, Britannia Bulk Holdings and Atlas Shipping of Copenhagen. Armada, now bankrupt, had posted a profit of $131 million last year.

32 Seafarers die in Pirate attacks in 2008, according to the annual piracy report of the International Maritime Bureau. The IMB says the 2008 figures for hijackings and deaths surpass all figures recorded by the Piracy Reporting Centre since it began its worldwide reporting function in 1992. The increase is mainly because of the rampant attacks off the Somali coast, with September being the worst month. Alarmingly, the IMB says that the pirates are now better armed and more prepared to attack the crew than ever before. Fortunately, other areas of the world have witnessed a decline in such attacks. The IMB’s Capt. Mukundan praised Indonesian efforts in this connection, saying that the country “should be applauded for its sustained efforts in curbing piracy and armed robbery in its waters.” The Malacca Strait witnessed just two attacks last year; however, robberies in the anchorages of Bangladesh and in Tanzanian ports, particularly Dar es Salaam, continue to be a concern.

Netherlands to bring five Somali pirates home for trial Radio Netherlands reports that prosecutors aim to use an Article in the Netherlands’ criminal code “which has never before been used”. The announcement comes even as coalition and other warships struggle to decide what to do with captured pirates, as legal systems worldwide are known to be limited in cases of pirate prosecution. The Netherlands Article 381 of the criminal code, which addresses piracy, is likely to be used for the first time. According to this Article, the captain of a pirate ship can be sentenced to up to 12 years, while crewmembers can receive up to nine years imprisonment. It is felt that Netherlands has jurisdiction in this case, as the pirates were caught when they attacked a ship flying the Netherlands Antilles flag. Meanwhile, around six pirates of the many fleeing the VLCC “Sirius Star” with a 3 million dollar ransom faced instant justice recently. They drowned when their boat capsized in heavy seas. One pirate body was washed up ashore with $153,000 stuffed in his pockets. “Money for nothing”, said a seafarer wag in Mumbai.



Friday, 23 January 2009

India welcomes bail for “Hebei Two”

Mumbai, January 16: Capt. Jasprit Chawla and Chief Officer Syam Chetan of the Hebei Spirit have finally walked out of prison on bail in South Korea yesterday. The Government of India hailed their release. "The Government of India welcomes this decision," External Affairs Ministry representative Vishnu Prakash said in a statement in New Delhi yesterday. The GOI now hopes for an expeditious hearing on the Hebei Two’s appeal against their conviction, even as it “continues to pursue the matter with the Government of the Republic of Korea in the backdrop of close and cordial relations that exist between the two countries."

Reports from the Korea Times newspapers and Lloyd’s List confirm that Chawla and Chetan, sentenced and imprisoned last month, have posted bail of Won10,000 ($7,500) each. According to the terms of the court, the two must stay in Seoul and cannot leave Korea without the Supreme Court’s permission. Captain Chawla told Lloyd’s List he was “very pleased” and thanked everybody for their help, but declined to comment further.

The grant of bail for the two officers comes after a concerted industrywide global campaign against the treatment of the two officers in the Hebei Spirit case. The International Transport Workers’ Federation (ITF) had earlier announced that a rally would be held in London on 23 January in support of the Capt. Chawla and Mr. Chetan. The protest, which was to bring together organisations such as shipowners’ and managers’ associations Intertanko and Intercargo, the International Maritime Employers’ Committee (IMEC) and Indian trade unions, has now been reportedly called off. A statement from the organisers says “a postponement of the planned action will create a better environment for a successful resolution to this long running saga”.

National Union of Seafarers of India general secretary Abdulgani Serang had earlier announced that there would be a call for a boycott of ships calling at South Korean ports commencing February 1 if the two mariners were not released on bail. Serang had said at the time that the boycott would cover both Indian and foreign flag vessels and would be coordinated by a coalition of Indian Unions, including the Maritime Union of India and Merchant Naval Officers’ Associations. A call had also been made for a public boycott of South Korean products in India, particularly products made by Samsung, the owners of the out of control barge that collided with the ‘Spirit’ at anchor, causing the worst pollution in South Korean history. Mr. Serang had said that the union “respected South Korea’s judicial system” but felt there was no other alternative to such action. Protests against the imprisonment of the two officers, widely regarded as innocent, have intensified in India in recent weeks, with demonstrations held across the country demanding their release on bail pending judicial process in South Korea.

Welcoming the Korean Supreme Court decision, the International Chamber of Shipping and the International Shipping Federation said yesterday that the legal process in Korea had fuelled the shipping industry’s deep concern about the criminalisation of seafarers. Other international industry bodies and V.Ships, the managers of the Hebei Spirit, have also welcomed the latest developments.

The ITF had called the imprisonment economically and politically motivated. In recent days, at least one prominent Korean newspaper has covered the story, giving space to criticism of the South Korean position, quoting experts as saying that the two men and their tankers were ‘passive victims', noting that their ship was sitting at anchor and that it leaked oil only after being rammed by a barge owned by Samsung Heavy Industries. The ITF’s criticisms were quoted in The Korea Times as well. The ITF, a group of 654 unions representing 4.5 million maritime and transport workers in 148 countries, had publicly criticised the verdict, saying `This is not justice. It is not even something close. What we have seen is scapegoating, criminalisation and a refusal to consider the wider body of evidence that calls into question the propriety of the court.''
The shipping industry has expressed support for the Hebei Two ever since December 2007, when a Samsung crane that had broken its tow ropes hit the Spirit and ruptured some tanks. The fact that the First Court had found Capt. Chawla and Mr. Chetan innocent was welcomed in the summer of 2008. However, the refusal of the Korean authorities to allow them to come home pending the appeals process, and the fact that a higher court found the two ‘guilty’ and sentenced them to jail terms, has enraged the international community anew. The ITF saw their conviction and imprisonment “as being everything to do with assuaging Korean public opinion (the men were paraded outside the court in handcuffs), and with helping the owner of the crane barge, Samsung, to reduce its exposure to paying for clean up”.

The release of the two officers from the Cheongju Detention Center should come as a huge relief to them and their families. Experts warn, however, that the Hebei Two are not out of the woods yet, as their status in South Korea is now that of convicted and bailed criminals awaiting appeal who cannot leave the country. This process may take until June. Nevertheless, the signs that South Korea is finally reacting to international disapproval are heartening. At last, there may be some light at the end of the tunnel for Capt. Chawla and Mr. Chetan.


Tuesday, 20 January 2009

US to lead new anti-piracy force

even as Somalia slips into greater chaos

Mumbai, January 8 Amidst reports of greater instability in Somalia and decreased ship hijackings last month, the US navy has announced that a new international task force to combat piracy will begin operations later in January. This new group will be headed by US Navy Rear Admiral Terence McKnight and called Combined Task Force 151 (CTF-151), according to a release by the US Fifth Fleet in Bahrain. The new task force will operate in the Gulf of Aden, Arabian Sea, Red Sea and Indian Ocean.

A representative for the force, Commander Jane Campbell, said that France, the Netherlands, the UK, Pakistan, Canada and Denmark would be amongst a group of 20 countries that would participate in this new initiative. She said that a flotilla of about sixty warships would be required to patrol the area effectively; the task force has a much smaller number at its disposal at present.

The move comes soon after the European Union began operations with its own task force in the pirate infested zone in December, in an area that is larger than the Mediterranean. Analysts say that the CTF151 will not have any wider mandate to hit pirates at sea or on land than what already exists, questioning the new force’s effectiveness. Commander Campbell admitted as much, saying, “This task force does not does have any greater rules of engagement. It does, however, bring a greater focus to counter piracy operations under one command." She said that the task force would be better equipped to gain information on pirate operations and attack them at sea.

More than a dozen ships with around 200 crewmembers are hostage in Somalia, according to the International Maritime Bureau. Amongst the ships are the Saudi fully laden VLCC “Sirius Star” and the “Faina”, a Ukrainian ship carrying heavy weapons and tanks. There have been only two successful hijackings in December, even though many ships continue to be attacked. The presence of warships and crews that are more vigilant are two reasons said to have contributed to the recent successes against hijackings.

There are more than a dozen warships guarding Somalia's waters. Countries including the U.S., Britain, China, France, Germany, Iran, Russia and India have naval forces off the Somali coast or on patrol in the ‘maritime safety corridor” established in the Gulf of Aden to protect one of the busiest shipping lanes in the world.

Reports from Somali, meanwhile, speak of a country that is now increasingly unstable. President Abdullahi Yusuf resigned recently, admitting he had failed to live up to his promises when he took office. This has thrown the country into greater chaos, with US backed Ethiopian troops fighting hardline Islamist elements in large parts of the country. There is alTop of Form
so infighting between moderate and hardline Islamic groups as they jockey for power. One of these groups, Al Shabaab, is linked by the US to Al Qaeda. Soldiers loyal to Yusuf are deserting the army. Parts of Mogadishu have been attacked by rebel forces, and people are fleeing the city.

Somalia may well be heading for a period of greater anarchy, according to many analysts. The fear is that the power vacuum in the country may yet embolden the pirates in the northern Puntland region even further.


Thursday, 15 January 2009

Is the pressure on South Korea beginning to tell?

11 January 2009 Amidst mounting criticism of intransigence over the Hebei Spirit affair, the South Korean Maritime Tribunal is scheduled to explain its position during the 35th session of the International Maritime Organisation’s Facilitation Committee in London tomorrow, Monday. Christopher Mayer, writing for Lloyd’s List, says that although the fate of Capt. Jasprit Chawla and Chief Officer Syam Chetan was not on the committee’s agenda, such a presentation is not without precedent at IMO sessions.

There are other signs that the Koreans are beginning to take the international criticism of the criminalisation of the Hebei Two seriously. The Korea Times reported earlier this week that the sentencing of the two officers to jail terms last month was drawing ‘scrutiny overseas’ and that “one international union of maritime workers called the ruling ‘incomprehensibly vindictive.’'' The influential Seoul based daily drew its reader’s attention to threats of boycott of Korean products in India and the threat to relations between the two countries.

Meanwhile, protests continue in India demanding the immediate release of the Capt. Chawla and Mr. Chetan on bail, pending the Korean Supreme Court verdict. On Thursday, demonstrations were held in New Delhi. “The protestors were seeking justice and release of the two jailed Indian marine officers by contending they were not primarily guilty for the collision of the tanker with a barge of Samsung in Korea.”, ANI reports. The demonstrators included mariners, families of the two officers as well as ‘commoners’ all of whom pledged to boycott South Korean products, the agency reported. South Korea is said to be concerned about the effects of a widespread boycott of South Korean ports by mariners, as it is hugely dependent on shipping to supply most of its energy needs.

The two officers of the tanker, involved in the biggest oil spill in South Korean history in December 2007 were convicted of criminal negligence and violating anti pollution laws by the Daejeon District Court, which overturned a lower court’s ‘not guilty’ ruling. The sentence has been widely condemned across the world; the Hebei Spirit was at anchor when she was struck repeatedly by a barge that broke loose while being towed by Samsung Heavy Industries tugs and the crew of the VLCC did everything they could to reduce the oil spill when her tanks were ruptured. Samsung has come under criticism for allegedly using its massive clout to influence events, as well as for trying to entice some the other crew’s testimony with ‘gifts’.

At the IMO, the Korean tribunal is expected to submit new technical information on Monday on the Hebei Spirit casualty without commenting on the legalities, as the matter is still sub judice in Korea. The move is being seen as underhand by some industry watchers, who claim that the introduction of the ‘new information’ at a forum where the Hebei Two cannot defend themselves is borderline dishonest, and may be an attempt to unfairly influence the global maritime community.

Others are more sanguine, and see the latest developments as positive. South Korea has been stung by the global condemnation of its judicial system in this case, and is finally responding at the IMO, they say. They also point out that the January 7 Korea Times article was headed “Taean Ruling Mars Korea India Ties,” and was replete with quotes of international criticism of the South Korean position; an indication that the universal criticism is finally having some affect.



Industry snapshots

Shipping industry unhappy at Ministry of Shipping’s year end review. Many industry players were hopeful of bolder government initiatives to tackle the ongoing downturn. It is felt, however, that the MoS has produced no new ideas in the review, which seems to be a simple compilation of measures already announced. These include previously announced plans to promote new shipyards, seafarer protection initiatives, the establishment of an Indian Maritime University, a National Maritime complex and other shipping policies, including the elevation of SCI to ‘Navratna’ status. The maritime industry was expecting much more from the MoS in the present vicious market conditions. Major companies have slowed down their expansion plans as plummeting freight and asset prices continue to plague the market. Ports are reporting lower volumes and shipyards are facing the possibility of increased cancellation of orders. The malaise has now spread to other sections of the industry, and many analysts feel that much more needs to be done to ensure that the Indian shipping industry comes out of this recession without being severely hit. It was just a few months ago that Indian ship owners were on a fleet acquistion spree. The Economic Times reports that Indian tonnage ended close to flat for the year, at around 9 million GT. The paper also quotes an anonymous shipping company executive as saying that “Simply enumerating the initiatives would not help the industry to tide over the present crisis it is engulfed in.”

Dubai Maritime City on track. The 2.2 million sq/m purpose built maritime centre is reported to be on schedule to be completed in 2012. Well over three quarters of the work is complete. When finished, the centre will boast of industrial and academic clusters besides harbour offices and residences. The Maritime City aims to become the Middle Eastern maritime hub, and says that it is talking to global industry participants to ensure broad based shipping service availability in Dubai in the next few years. Director Khaled Meftah is upbeat, saying, “We are pleased to announce that despite the challenges, the progress of Dubai Maritime City is well on track. Real estate developers are starting to mobilise on some plots, which is a significant development, and takes us one step closer to creating a regional maritime hub that will complement Dubai’s expected emergence as one of the world’s most competitive maritime clusters.”

More than 200 container ships without cargo, says US Journal of Commerce Online,
quoting Paris based AXS Alphaliner. These include six ships between 7,500 and 10,000 TEUs
and 19 from 5,000 to 7,500 TEUs. As freight and hire rates tumble and trade shrinks, things could get worse, analysts say. Falling demand in the US is reportedly a large factor. Some major players in the container trade are already looking at vessel sharing arrangements seriously in an attempt to handle the crisis. Within India, too, JNPT and ICD’s, particularly in Delhi, have apparently registered drastically lower volumes.

Meanwhile, Indian exporters are alarmed at the present situation with buyers cancelling orders. “The year 2009 is going to be the worst year in the history,” says Mr. A. Sakthivel, president of the Federation of Indian Export Organisations. Exporters don’t have orders beyond January and if the present trend continues, there will be approximately 10 million job losses.” This alarming figure represents about a fifteenth of the workforce employed by exporters in India. Many of these are casual employees on daily wages. Gulf News reports that the Indian economy is expected to grow at the slowest pace in six years in the present financial year. “The slowdown phase will continue for some months,” it quotes N.R. Bhanumurthy, an economist at the Institute for Economic Growth in New Delhi, as saying.

A half dozen pirates drown as Sirius Star released by pirates. Vela international has confirmed that the Saudi supertanker has been released by Somali pirates. The ship was hijacked in November with 2 million barrels of crude and a crew of 25, all of whom have been reported safe by Vela. The original ransom demand of 25 million dollars was whittled down to 3 million, unconfirmed reports suggest. Meanwhile, AFP and Reuters independently report that up to a half dozen pirates may have drowned fleeing the VLCC when their overloaded boat capsized in rough weather. Pirates' associates told the news agencies that there was a dispute about spilitting the ransom before the incident. Part of the ransom had also reportedly been lost in the capsize.


Friday, 9 January 2009


New maritime security command rolled out in wake of Mumbai terror attacks. The Government has announced the formation of a Maritime Security Advisory Board (MSAB) headed by a Maritime Security Adviser (MSA), probably a serving Vice Admiral in the Indian Navy. Additional naval personnel will work with the MSA to propose policy, coordinate with security agencies, the Coast Guard and other ministries. Officers will be deputed from some of these agencies to complement the MSAB. The proposal, put forward by the Ministry of Defence, envisages regulatory control by the MSAB, which may issue directives as required to maritime interests including in the offshore sector. A slew of counter terrorist measures have been proposed for the offshore industry. These include no fly zones, fishing and other exclusion zones, shipping and aircraft tracking/reporting systems, Immediate Support vessels and rapid response teams. The plan will cost almost 7000 crores, and will include nine additional Coast Guard stations, almost a hundred fast attack craft and mandatory registration and AIS systems aboard fishing vessels and additional radar installations. The marine police infrastructure will be strengthened to ensure additional security within 12 miles from the coast. Although the Coast Guard will remain the authority for coastal security between 12 and 200 miles, the MSA will especially address the issues that have been thrown up in light of the maritime security breakdown that led to the Mumbai attacks. Overall responsibility for coordinating maritime security has now been explicitly given to the Indian Navy. It is believed that a centralised agency will help in coordinating urgent issues with State governments as well, since many aspects of coastal security fall under their domain.

Indian Maritime University inaugurated by Chief Minister Karunanidhi in Chennai. Located at Uthandi on the East Coast Road, the country’s first such
University will begin training shipping professionals in the summer of 2009. Shipping Minister Baalu reveals tie ups with two maritime universities in China and the Antwerp University for MBA degrees, and additional collaboration with institutions in Malta and the Netherlands for degrees in law and dredging. The inauguration comes after the recent act passed by Parliament authorising the IMU, and is expected to give a much needed boost to maritime education and training in the country. The IMU will be located in Chennai; existing facilities in Mumbai, Kolkata and Visakhapatnam will be merged with it.

India asks Panama to act against NKK in the Rezzak case, ten months after the ship disappeared in the Black Sea with 25 Indian crew aboard. Livemint reports that NKK had declared the vessel seaworthy even after 10 known deficiencies, “some of them crucial”. Authorities learnt later that the ship had been allowed to sail from Novorossiysk in Russia to Bartin in Turkey only after it promised to conduct the required repairs at Bartin. It went missing on that passage. Questions had been raised at the time on major deficiencies aboard the vessel, its earlier detention of two weeks for non compliance and the status of critical shipboard safety equipment like the EPIRB. Livemint quotes Deepak Kapoor, Deputy Director, DG India, as having written to the Panamanian authorities on NKK’s omission in requesting authorisation from the Flag State before certifying the Rezzak seaworthy: a clear breach of Panamanian procedures. The letter also asks for action to be taken against NKK and Mascosnar Corp. (MC), a company authorised by Panama to issue DOCs and SMCs on its behalf. Meanwhile, criticism that Panama is dragging its feet in publishing its final report on the investigation into the missing ship has resurfaced.

A half dozen piracy attacks in the first few days of 2009 make a mockery of earlier reports suggesting that Somali piracy had decreased in the last month. The International Maritime Bureau in Malaysia has confirmed these attacks, and at least one hijack of an Egyptian vessel with 28 crew, since Jan 1. "There have been a lot of attacks in the past few days, but many of these attacks have not been successful," said Noel Choong, head of the (IMB) piracy reporting centre. Alarmingly, instances of pirates firing on vessels have escalated as the criminals try to board the vessels quickly before naval warships arrive on the scene. On New Year ’s Day, a Malaysian warship repulsed an attack on an Indian tanker; the Egyptian vessel was hijacked an hour later. A Greek bulk carrier was attacked later in the day although it managed to evade the pirates. Subsequent attacks included an assault on a German tanker that was fired upon and a similar attempt on another Greek tanker that was assisted by coalition aircraft and managed to escape. Unconfirmed reports suggest there have been other attacks in addition. Choong said that pirates are becoming ‘more desperate’. Perhaps they are back with greater desperation after a Christmas break.


Thursday, 1 January 2009

Industry update

Captain Jaspreet Chawla and Chief Officer Shyam Chetan move the South Korean Supreme Court as they appeal against their conviction. A bench of three Supreme Court judges will now hear their appeal. The two Indian seafarers were found guilty of negligence earlier this month after a district court overturned an earlier ruling of a lower court that had found them innocent. To add to their problems, reports suggest that Supreme Court hearings of appeal take up to a year to be resolved in South Korea. Meanwhile, appeals by international maritime organisations and the Indian government to South Korea for ‘humane treatment’ have evoked limited response from authorities in Seoul.
"It was a very serious case and huge damage was caused to the environment and lives of people living in the coastal area. There is nothing the Korean government can do in a criminal case except await the verdict of the Supreme Court," sources in the Korean government have told Times of India. The Ministry of External Affairs in New Delhi had earlier said that it was in talks with the Korean authorities, who had promised better treatment to the two mariners, and that “due sensitivity would be shown to their personal requirements”. Meanwhile, protests by industry, unions and seafarers in India have gathered some steam, with irate participants demanding a boycott or destruction of South Korean goods, particularly targetting Samsung. They also want the Hebei Two to be granted immediate bail. Samsung Heavy Industries, a huge Korean conglomerate, has been accused by many international industry bodies of unduly influencing the legal process. Reports have appeared in the media of Samsung officials visiting crewmembers’ homes to try to bribe them in return for favourable statements. Seafarers are already angry that the sentences of the two Samsung tug Masters directly responsible for the incident were reduced at the same time as the Hebei Two were found guilty of criminal negligence and sentenced to prison terms; the news of a possible lengthy legal battle ahead will undoubtedly add to their ire. The Indian Government has come under fire and has been accused of double standards by many, who believe that not enough is being done to put pressure on the Koreans. “Can anybody give me a reason why the two cannot be granted bail pending appeal?” one angry seafarer asked Marex.

Meanwhile, Samsung Heavy Industries is seeking to limit its liability in the case of the Hebei Spirit oil spill to Won5bn ($38m). The total damages are reported to be in the region of Won600bn, but Samsung is attempting to reduce its liability in line with the insurance limits of the tug ‘Samsung No. 1’ directly responsible for the spill. The Seoul district court has confirmed that Samsung has filed a motion after 7500 fishermen lodged a claim at the court claiming damages. Lloyd’s list quotes documents submitted by Samsung as saying, “Though a Samsung Heavy barge and the Hebei Spirit oil tanker were both at fault for the collision, it was the oil tanker that caused the most damage, which could have ended with a small scale oil leak, but grew to become the worst oil spill in the nation’s history.” Maybe somebody should point out to the court, again, that the oil tanker would not have caused any damage at all if the Samsung barge had not collided with it while it was at anchor.

U.S. Coast Guard announces start date for LRIT. The US ‘long range identification and tracking’ system will begin operations on Dec 31, according to a press release issued by the USCG. The LRIT system is meant to augment maritime security, and is in line with a 2006 IMO resolution calling for tracking mainly commercial shipping. The USCG will also begin operations at the National Data Centre in Virginia on the same date. This centre will collect and database all LRIT data from US vessels as well as seek data from other such centers for foreign flagged vessels. The initial purpose of this exercise, according to the USCG statement, is to “to determine the status of compliance."

Hostage seafarers have bleak Christmas: Assistant director of the International Maritime Bureau Michael Howlett has released figures confirming that 268 crewmembers on board 14 hijacked ships spent Christmas under the shadow of the pirates’ guns. Actual figures are reportedly higher, as considerable confusion reigns about the status of small fishing vessels and other coastal ships that may have been hijacked. Underreporting of attacks is also commonplace. Mr. Howlett admitted that two Yemeni fishing boats held hostage were not part of his tally. There have been more than a hundred attacks on commercial shipping off Somalia this year, out of which around forty have been successful. Attacks continue regularly despite international condemnation and naval operations by an increasing number of countries in the region. The UN Security council recently passed a resolution for the first time authorising the use of force against pirates on land in Somalia. Filipino’s form the largest number of seafarers held hostage. In India, mariners are angry that the authorities and the media have ignored the 25 Indian crew held hostage on board the Chemical Tanker ‘Biscaglia’. Ironically, the Biscaglia was taken after three British private security personnel employed on board jumped into that water to escape a pirate attack, and were picked up by a coalition warship. Industry watchers say that although the ‘Stolt Valor’ incident grabbed headlines in India, the Biscaglia, with its larger complement of Indian sailors, has not been so lucky. Meanwhile, pirates have made an estimated $30 million hijacking ships for ransom this year.


Is government support for ship finance and coastal shipping finally here?

Mumbai, December 23 Beleaguered Indian ship owners, seriously impacted by the credit crisis that threatens to stymie their expansion plans, have asked the government for a 10,000 crore fund to be set up to provide them low cost credit for new vessel acquisition. The proposal is now believed to be with the Finance Ministry. In separate developments, unconfirmed reports indicate that the Ministry of Shipping has mooted a 500 crore package to develop coastal shipping.

The special ship acquisition fund proposal comes in the wake of the drying up of global credit to ship-owners. As international banks become shy of giving credit to an industry in a downturn, the proposed fund is slated to help local ship owners tide over the crippling liquidity crisis. Sources say that the government may make the loans conditional on support to domestic shipbuilding, and should price the credit at 2% above LIBOR. Marex has learnt that the government is examining the industry proposals very seriously; domestic bank support will be essential, though, and it remains to be seen if they can be pressurised to step in when their foreign colleagues are clearly timid in doing so.

INSA President and SCI boss S Hajara said that the corpus should provide soft loans to Indian shipping companies to acquire ships to take advantage of falling prices of assets because of the global financial meltdown. Analysts say that SCI is in a stronger financial position than many domestic companies are; the impact of the liquidity crunch is being felt more by smaller owners who do not have similar balance sheet strength to attract softer loans for acquisitions.

Indian companies raised loans at around 3.5 to 4 % abroad until recently. Many still want to take advantage of falling asset prices and push their expansion projects. The fund should boost to these plans; before the present downturn, Indian owners had planned an outlay of USD 20 billion in the next four years for buying ships. The special fund, said Hajara, “is a drop in the ocean, but at least it is a start.”

Industry experts fear, however, that the government’s stipulation on supporting Indian shipyards may be a problem as they may not be able to accommodate new orders. Many Indian shipyards are booked for the next few years, and have suffered few cancellations compared to their Korean and Chinese counterparts.

Meanwhile, the shipping ministry is supposed to have mooted a Rs500 crore plan that develops coastal shipping and increases its market share in cargo movement. A special development fund to support coastal shipbuilding is being fleshed out. Coastal shipping operators are also hoping for subsidies and tax breaks in support of their cause.

Analysts have long pointed out that, at less than 0.15% of cargo moved, the share of inland waterway shipping in Indian cargo movement is abysmal. Coastal shipping does slightly better, at around 8%, compared to almost 40% in developed economies. Coastal ship owners have long complained of poor governmental support, bottlenecks and step brotherly treatment. An inland vessel building subsidy programme ended in 2007; ship owners are still hoping for its reintroduction. The country requires increasing its inland transport vessels to about 2500 from the present 440, as per estimates.

Industry players say that with proper support, the development of shipping along the 7500 kilometer coastline and the 14000 km of inland waterways in India could provide a major boost to the economy, besides creating thousands of direct and ancillary jobs. However, major investment in infrastructure, navigational aids, surveying and dredging is required. More importantly, analysts say, bureaucratic mindsets must change. They point out, however, that this will be money well spent, and that the advantages of a cheaper, more efficient and ecologically friendly mode of cargo movement make for a compelling argument.