AP Møller-Maersk puts the brakes on Maersk Line

The world’s biggest container ship operator, AP Møller-Maersk, has sent a shockwave through shipping by saying that it will significantly change strategy and shift investment away from the container segment of the industry to more lucrative areas. CEO Nils Andersen told the Financial Times that his company would no longer invest ‘large’ amounts in Maersk Line; the money is better invested in other maritime sectors like ports, drilling rigs and oil, Anderson feels.

“We will move away from the shipping side of things and go towards the higher profit generators and more stable businesses. We are not going to invest significant amounts in Maersk Line (over the next five years). We have sufficient capacity to grow in line with the market,” Andersen said. 

Some industry watchers say that Maersk’s move- the company controls almost a sixth of the global container market- may be aimed at rebalancing its portfolio of businesses because of the volatility in the container freight markets. Others are more pessimistic, claiming that Maersk’s decision underscores the overall circumspection that has hit shipping in the present gloomy scenario. As FT writes, ‘The Company and what it says about trends in global trade are seen as a barometer for the container shipping industry’. Analyst Dan Togo Jensen is quoted as saying, “It makes sense to put the brakes on the container side.”

“When we have taken that shift, probably more than 50 per cent of our capital will be tied up

 in these three other businesses. Maersk Line will then account for 25-30 per cent of capital. We will have four businesses of almost equal size,” said Maersk CEO Anderson, talking about his company’s strategy shift.

At last, UN Security Council debate on piracy’s threat to global security

The U.N. Security Council (UNSC) held its first debate recently on piracy and its threat to world peace and security. The debate was instigated by India- 43 of whose mariners are being held hostage by pirates in Somalia, according to Ambassador Hardeep Singh Puri, who holds the Presidency of the UNSC at the moment.

U.N. Deputy Secretary-General Jan Eliasson is reported to have called for an international agreement governing the use of private armed guards aboard ships, besides more robust intelligence sharing and better coordination amongst the world’s navies fighting the scourge. He also said that incidents of piracy could rise quickly unless steps were taken by countries across the world.

More diplomats are now acknowledging the obvious, as evidenced by U.S. Ambassador Susan Rice telling the UNSC that no ship carrying armed guards had been successfully attacked by pirates. Some, like French Ambassador Gerard Araud, would like to see government posted guards instead. He also pointed out that as many as four fifths of captured pirates were released without prosecution. Many are simply freed on the Somali coast.

The recent decline in Somali piracy may make the UNSC debate appear dated; however, concern about West African piracy appears to be mounting, as well as worries about the economic cost of piracy. UN reports say that $170 million was paid to Somali pirates in 2011, quoting One Earth Future Foundation’s figures of a staggering $6.6 and $6.9 billion as the total cost of piracy that year; eighty per cent of this is absorbed by shipping companies. 

As Eliasson said, summing up what many expressed at the debate: "We need to strengthen the capacity of states to prosecute individuals suspected of piracy and to imprison convicted pirates. That effort must include deterring and suppressing the financing of piracy and the laundering of ransom money."

Relaxation at Vallarpadam opens floodgates

The Hindu Business Line reports that more ports are asking the Central Government to relax the cabotage policy that effectively bars foreign vessels from operating in the costal trade between domestic ports in the country, except under a licence from the Directorate General of Shipping (DGS). The move comes two months after the Union Cabinet decided to relax cabotage for a period of three years for the Dubai Ports World (DPW) operated Vallarpadam International Container Transhipment Terminal (ICTT) at Kochi.

 The newspaper quotes Shipping Ministry sources as saying that the Vallarpadam decision has prompted other ports like Visakhapatnam and JN Port to seek relaxation in cabotage for their container terminals. Interestingly, sources say that the relaxation of cabotage at Vallarpadam is yet to be notified; insiders say that there is still stiff resistance from domestic tonnage against granting DPW a three year cabotage free operation. The Company has always maintained that the freedom granted to foreign feeder vessels to operate- without cabotage- would go a long way in making the ICTT at Vallarpadam fit to compete with established players like Colombo in the region. 

Unsurprisingly, Indian shipowners had been up in arms even before the Cabinet decision to relax cabotage for DPW. Anil Devli, CEO of the Indian National Shipowners’ Association (INSA), told the Business Line that INSA had ‘expressed fears’ to the Ministry when it relaxed cabotage at Vallarpadam. 

“The Government cannot favour one terminal operator,” he says.  “A monthly capacity of 42,900 twenty feet equivalent unit (TEU) is being provided by Indian flag vessels calling on Vallarpadam Terminal, the August data shows. This entire capacity is available for transhipment boxes for Western Coast ports, which include the port of Cochin. The total transhipment cargo carried provided by Vallarpadam Terminal to these Indian carriers is about 2,500 TEUs a month, which is a dismal six per cent of the capacity deployed,” he added, pointing out that cabotage was very much alive and kicking even in developed countries like the US. “Even the US relaxed cabotage rules only for 15 days in the aftermath of hurricane Sandy,” he said.

To reinforce INSA’s point, Devli told the newspaper, “It would be important to note that on the East Coast of India, Indian ships are carrying transhipment volumes of about 5,000 TEU a month. This data shows that cabotage has nothing to do with transhipment. This needs to be considered before any decision is made in haste or on the basis of incorrect information.” 

Indian shipowners allege that there are other issues why the DPW project has run into headwinds, including high terminal costs, dredging difficulties and other logistical problems. In addition, they fear that foreign vessels- that enjoy easy taxation regimes compared to their Indian counterparts- make the playing field even more unfavourable for them, as Indian bottoms cannot compete with the lower freight rates that foreign ships can offer on the back of lower taxes. 

Those in favour of a relaxation in cabotage have a different view, of course; they cite the sorry state of Indian shipping- not enough tonnage, substandard ships and what they see as high freight demanded by Indian shipowners who seek captive cargo, thanks to cabotage-as arguments in favour of cabotage relaxation. With other ports now seeking an exit to the policy, the debate is sure to hot up even more.

‘Chairway to heaven’ balloonist to attempt Atlantic crossing in unique lifeboat.

Thirty eight year old cluster balloonist Jonathan Trappe has plans to ‘fly’ 2,500 miles across the Atlantic in the middle of the next year; he will attempt the crossing in a seven-foot lifeboat carried by 365 helium balloons. The gondola-flight will take off from Maine, USA, and head for France- although Jonathan could eventually land anywhere ‘between Norway to North Africa,’ depending on winds.

Unlike traditional hot air balloonists, cluster balloonists use a series of helium inflated rubber balloons attached to a harness to stay aloft. Altitude is controlled by deflating individual balloons or jettisoning ‘ballast’- which may include bottled water, or sandbags- even food.

FAA licenced pilot Jonathan became the first cluster-balloonist to fly across the English Channel in 2010, departing from Challock, England and landing safely in a farmer's cabbage patch not far from Dunkirk, France. Two years earlier, Jonathan had climbed to an altitude of almost fifteen thousand feet in an ordinary office chair attached to a cluster of balloons. The four hour and fifty mile flight, dubbed ‘Chairway to Heaven,’ reignited his passion for ballooning. He says he wants to make the Atlantic crossing- that, according to UK’s Telegraph, has seen five men die attempting- because "One day we can look back and say: 'Humankind were able to pull this off. They did it.'"

A North Carolina, USA resident, Jonathan’s unique gondola will have an open roof covered with a canopy to protect him from frostbite and winds; it will also be equipped with oxygen that Jonathan will need at higher altitudes. In case he has to ditch into the ocean, Jonathan will change out of his UV protection suit and wear an immersion suit instead, ‘deballast’ sand or deflate balloons and land in the ocean, where the lifeboat will keep him afloat. “I'll be equipped with more food and water than I need so I can discard them too," he says.

Jonathan is taking lessons in lifeboat sailing to cover the eventuality that he will have to ditch at sea. He is also trying to raise $300,000 online- besides putting in $170,000 of his own money- to make his adventure a success. He may ascend to as high as 25,000ft during the transit, which would beat his previous world altitude record of 21,600ft. He will also have to fly ten times the distance of another of his world records to succeed in the Atlantic crossing.

Jonathan, who already holds records for crossing the Alps and flying the most cluster balloons, says, "I didn't wake up one day and think: 'I'm going to fly across the Atlantic. Every attempt before this was geared towards this flight. I've been training for a long time."

The Haldia-HBT controversy: Singur redux?

The violence and lawlessness that has led to ABG’s pullout from Haldia port will only reinforce West Bengal’s reputation as being business unfriendly, observers say, pointing out that the situation has similarities with the Singur mess that resulted in the Tata’s exit from the State. To add to the confusion, the Kolkata Port Trust told the High Court on Nov 5 that it wanted to recall a plea made earlier to withdraw a petition last month- that asked ABG Haldia Bulk Terminals (HBT) to continue operations at the port.

HBT is a joint venture between Mumbai-based ABG and French company LDA. After weeks of rising lawlessness at the port, and after police protection was provided to the company at high cost, it finally decided to pull out of Haldia when three of its top officials- and a wife and child- were abducted at gunpoint by fifty or so workers belonging to the ruling Trinamul Congress. They were later released. In response to the outcry, the West Bengal Chief Minister Mamata Banerjee said these reports were “a mere exaggeration of the actual fact,” and were “created by the media”.

HBT announced a few days ago that it was retrenching all is 348 employees and winding up operations at Haldia, and that it was, in the present lawless climate, no longer bound to honour its 2010 contract to operate the terminal for ten years. After port authorities threatened to retain HBT’s equipment, HBT CEO Gurpreet Malhi responded, “These assets are owned by the company. Any attempt to prevent us from moving them will be illegal and tantamount to theft." HBT has invested about Rs 150 crore at Haldia, and says it increased productivity threefold, even as it has accumulated losses to the tune of 60 crore rupees.

Even earlier, on October 19, the Calcutta High Court had ordered the WB government to provide HBT a safe environment to operate at the Haldia Dock Complex. HBT paid around Rs.17.5 lakhs towards the deployment of police personnel for this privilege.

Trade union leaders in West Bengal- backed by workers of the ruling Trinamul Congress- say that tensions were raised following the retrenchment of 275 staff at the port in the middle of September. Malhi had said earlier that vested interests were behind the violence, and had threatened to pull out of Haldia even before its personnel were abducted.

Pointing to the abduction of its officials and a family, Malhi said, "We cannot work in an environment where the authorities responsible for law and order and success of the project have openly renounced and abandoned their responsibilities."

“Not the way to behave with employees”- Shipping Minister warns shipowners in Chennai.

In the aftermath of the ‘Pratibha Cauvery incident,’ the spotlight seems to be focused- even if temporarily- on substandard ships and shipowners. Shipping Minister GK Vasan has now threatened action against those that do not pay wages to their crew on time. Disclosing that the central government would take steps- through the Directorate General of Shipping- in this regard, Vasan told reporters in Chennai that it was ‘unfortunate’ that seafarers were not paid salaries for months.

When reporters asked the Minister pointedly about the non-payment of salaries to the crew of Pratibha Cauvery and Pratibha Warna detained in Chennai, Vasan said, "See, there are thousands of ships in the country. We are taking up the cases which are coming to us. We are very strict in that. This is not the way (companies) should behave with their employees."

The Minister was on an official trip to Chennai, during which he took stock of the Cauvery salvage operation and also took time to visit the Indian Maritime University (IMU) on the fourth university day celebrations. Addressing trainees at that institution, he said, “Over the last six years, our maritime professionals have developed great capabilities for handling technologically advanced or technologically difficult ships. This has led to a very high demand for our marine engineers though we train and educate more than 3,000 marine engineers every year.”

Vasan compared the situation in the maritime sector with that in IT. “It has been proved that only those countries which invest well in research and development move ahead of others. The research in the maritime sector, which is at its nascent stage, will be developed by the university in various disciplines with the aim of marching ahead in this sector. Indian IT industry underwent a major revolution in the supply of manpower for global needs. Similar opportunities and possibilities exist now for India in the maritime sector. This trend will not only enhance the social and economic status in the maritime States but also greatly contribute to the country’s economy,” he told the assembly.

Earlier, Vasan had revealed to reporters that he had formally asked IMO Secretary-General Koji Sekimizu to explore the possibility of setting up a regional branch of Malmo based World Maritime University (WMU) in India, and for the need for closer cooperation between IMU, WMU and the International Maritime Legal Institute, Malta. "Despite the recession, there has been a growth of maritime trade in India and institutes like IMU can bridge the gap between supply and demand of sailors and merchant engineers," Vasan said.

The Minister presented a cheque of 50,000 rupees each to five fishermen who had risked their lives in saving some of the Cauvery crew after she grounded. Of the many unanswered questions that were raised after that incident, Vasan said that the DG Shipping inquiry was underway and would be completed in a month. "Whatever action required to be taken by the Ministry, it will be taken," he said. There have been reports that the seaworthiness certificate of the vessel had expired on October 1; Vasan said that the DGS was looking into it.

"Whenever a complaint is received to the ministry, I am taking it up very seriously to the concerned company through the Director General Shipping and we see to it that there is no injustice to seafarers," he said.