No Energy for Fuel Efficiency

By Wendy Laursen 2015-07-29 23:44:19

Ambition levels for setting energy saving targets in the shipping industry are low. That’s one of the conclusions reached in DNV GL’s 2015 Energy Management Study.

The study, based on the input of 80 shipping companies, including ship managers, owners and operators in 24 countries, set out to answer one of the key questions facing the maritime industry today: To actually increase energy efficiency in ship operation, what really matters?

The study found that nearly 30 percent of participants do not have a quantitative saving target. Nearly one third of respondents fully, or at least largely, achieved targets made for 2014. One fourth did not achieve energy related targets at all or only to a small degree. Little less than half achieved their targets to within 25 to 75 percent.

This is a worrying result, says DNV GL: “low ambitions not even met.”

However, most respondents agreed that energy efficiency is important to them. Fuel costs were cited as the key driver for energy efficiency, followed by the market need to disclose environmental footprint.

Ship Energy Efficiency Management Plan (SEEMP) and energy management seem to be purely compliance driven initiatives for about at least 40 percent of participants.

Energy saving measures have been addressed, and partially implemented, by over 50 percent of the responding shipping companies. However, DNV GL says there is a clear indication that many shipping companies struggle with implementation.

The responsibility for energy management appears unclear in many shipping companies. Not even a third of all companies have a dedicated energy manager or team. Most companies have assigned the task to “everybody”, which often actually means “nobody”, states the report.

Superintendents are said to regularly review energy related data in about half of the shipping companies. Others distribute the reports in the company or use data for root cause analyses. The most successful companies implemented both; an IT-based performance management system and a performance management culture.

Although nine common energy efficiency measures have been addressed in more than half of all shipping companies, many of them still do not realize the expected savings. Of the nine, slow steaming was the largest contributor to energy savings realized.

For an owner or a manager there are hardly any better ways to differentiate than by superior energy efficiency, says DNV GL. “People make the difference” is the golden thread through this year’s study.

Many companies struggle with implementation, says DNV GL, which is a human aspect. The combination of carrot and stick – awareness, capabilities and motivation on the one hand, and performance management on the other – seems to be the key success factor.

The report is available here.


Mitsubishi Pull-Out Favors Asia

By Wendy Laursen 2015-07-29 23:08:22

The Japanese car maker Mitsubishi Motors has decided to end production and sell its U.S. car plant in favor of Asian production.

It’s a move that current low shipping rates may have influenced and one that makes Mitsubishi the first major Japanese car manufacturer to end production in both the U.S. and Europe.

Annual production at the U.S. plant, which makes the Outlander SUV, has fallen to 64,000 vehicles from more than 200,000 in 2002. The company only sold 82,000 vehicles in the U.S. last year – less than one percent of the total market, reports local Japanese media.

Mitsubishi has built a plant in Thailand, bought one from Ford in the Philippines and is building one in Indonesia.

“Nowadays, car producers prefer to move production closest to their main or best developing markets,” says Dirk Visser, Senior Shipping Consultant at consultants Dynamar B.V. of the Netherlands. “Economically, the U.S. has been doing very well with Europe seemingly emerging from a rather deep economic crisis. However, recently confidence has started slipping in both areas. Contrarily, South East Asia is the current bright spot of growth, and hopefully they will not become infected by China’s apparent downturn.”

South East Asia is now the place to produce or assemble cars, says Visser. “Many vehicle carriers operate the Far East-Europe and Far East-North America routes, so that shipping factory-new cars at reasonable rates to these Western markets will not represent any problem.”

Mitsubishi is seemingly concentrating production in South East Asia. Shipping costs are down or at least bearable and not likely to hinder sales from cars ready from Asia, says analyst Theodor Strauss, a past guest lecturer in Rotterdam and South Korea and former Managing Director of K Line (Nederland).

“With the post-Panamax PCTC vessels coming out of the yards, shipping costs will perhaps further show a downward trend, which will allow shipments from Indonesia, the Philippines and Thailand most efficiently into the U.S.,” says Strauss.

Earlier this year Mitsubishi Motors Chief Executive Osamu Masuko cited Indonesia as a fast-growing market along with other South East Asian prospects such as Myanmar, Cambodia and Laos. South East Asia, which now accounts for around 20 percent of the company’s sales.

Other car makers have already made the move to Asia. Suzuki Motor Corporation largely withdrew from the U.S. market in 2012 to focus on countries such as India, and Daihatsu Motor Company abandoned the U.S. two decades ago to focus on countries such as Indonesia.

Mitsubishi will continue selling cars in the U.S. by importing them from Thailand and Japan.


Has MH370 Been Found?

By Wendy Laursen 2015-07-29 18:50:58

A piece of plane debris has washed up on the Indian Ocean island of La Reunion, but officials are saying that it’s too early to say whether or not it has come from Malaysia Airlines flight MH370.

French air transport officials are investigating the two-meter object thought to be part of a large aircraft’s wing flap.

Rather than MH370, the debris could be from the 2006 crash of an aircraft near La Reunion or from an A310 which crashed off the Comoros in 2009.

La Reunion is over 6,000km (3,700 miles) further west of the plane’s last known position before it vanished.

One commentator has stated that the location of the debris is consistent with where the anticlockwise current of the Indian Ocean would carry parts of the plane.

The Australian Transport Safety Bureau and Boeing are now involved in the attempt to identify the debris. The investigators are looking for serial numbers that could confirm its source.

The plight of MH370 is one of the biggest mysteries in aviation history. The plane vanished from radar screens shortly after taking off from Kuala Lumpur on March 8, 2014, bound for Beijing. Investigators believe the plane was flown thousands of miles off course before eventually crashing somewhere off Australia.

The search area was expanded in April beyond an original 60,000 square kilometer search area to enable up to 120,000 square kilometers to be searched if required. More than 50,000 square kilometers of the seafloor have been searched so far.


How The West Was Won

By MarEx 2015-07-29 16:51:42

While the offshore oil and gas industry reels from depressed crude oil prices, one Chinese shipbuilder sees investment opportunities in the Gulf of Mexico. The Chinese State Shipbuilding Corporation (CSSC) is a state-authorized investment firm with 60 proprietorship enterprises and shareholding companies in its portfolio has been expanding.

The conglomerate has been a fixture in the Chinese shipbuilding industry since 1982 and reorganized in 1998 under a state plan to globalize the company. In 2013, it established its foothold in the Western Hemisphere with the expansion of operations in Houston and the unveiling of China’s first and only deepwater rig.

CSSC doubled its revenue in 2014 with a record-high $22.9 billion and its offshore ventures were mostly responsible for the growth. Known as a shipbuilder, CSSC has quickly become renowned for drilling, construction, production, transportation, logistics and support. And expansion into Houston contributed to this because while rig counts in the United States have fallen due to declining oil prices, CSSC has continued to invest.

In the past 12 months, the total crude oil and natural gas rig counts in the U.S. fell by 54 percent and 31 percent respectively. Currently, only 78 percent of rigs in the GOM are contracted and analysts don’t anticipate a recovery soon. According to the International Energy Agency (IEA), crude oil prices fell to their lowest in three months in July and it is expected that demand will remain slow through 2016.

Meanwhile, OPEC production has hit a three-year high in June and the lifting of sanctions against Iran, who has the third-largest oil and gas reserve, will only increase the surplus.

Despite market conditions, CSSC envisions an investment opportunity as companies are forced to become more cost-effective in offshore operation and equipment.

Chinese offshore industries offer lower manufacturing cost. Shanghai Waigaopia Shipbuilding Co, Ltd (SWS), a CSSC offshore equipment design and manufacturing subsidiary, is reporting increased inquiries and orders from overseas.

SWS is a designer and manufacturing in the offshore market and builder of FPSO. Today, CSSC reports ten new orders have already been placed for FPSO platforms.

CSSC has no plans to slow production and does acknowledge the risk, but its ability to adjust to the market conditions has allowed it to maximize profits. CSSC asserts it sees growth potential in the offshore markets.


Kenyan Vessel Capsizes, Sinks

By MarEx 2015-07-29 16:38:04

The Kenyan-flagged M/V Al-Shami capsized and sank east of Mombasa, killing two crew members. Three other crew members were rescued and taken to a nearby hospital. According to reports, the vessel was carrying several sacks of khat, a psychoactive evergreen shrub native to East Africa and Southern Arabia, from Mokowe to Kiunga.

Reasons for the ship’s sinking are currently unknown, but there is speculation that the vessel did not meet IMO standards.