SITC profits rise 27.3% in 1H15

Hong Kong-listed box carrier SITC International Holdings’ profits rose 27.3% year on year (y/y) to USD71.3 million in the first six months of 2015, mainly because of a cut in fuel costs.
Revenues dropped 1.0% y/y to USD651.2 million during the same period, as a result of a decrease in container

Reducing Salvage Tender Costs

By MarEx 2015-08-24 03:13:46

A small number of highly visible cases have thrust wreck removal into the public consciousness, and it is now provides more income to salvors than emergency response.

“One thinks, of course, of MSC Napoli; Costa Concordia and the Rena,” said Leendert Muller, president of the International Salvage Union (ISU). “It is even being called the “Costa effect” – the idea that anything is possible.”

Muller was speaking at the 2015 LOC Asian Marine Casualty Forum held in Singapore earlier this year, and he said that, as a result, the tendering process for major wreck removals can be prohibitively expensive.

When an invitation to tender for a wreck removal is issued, interested contractors want to deploy teams to the site to conduct their own analysis of the condition of the vessel and the nature of the ground where it is lying. It can require the services of divers, salvage masters, surveyors, naval architects and environmental specialists. Salvage vessels, work boats and helicopters may need to be chartered and bathymetric surveys carried out.

“One ISU member bidding for Costa Concordia job stated publicly they had spent €500,000 ($570,000) preparing their unsuccessful bid,” said Muller. “These costs will not be defrayed for the firms which do not secure the work, and contractors may decide it is uneconomic to mount a bid.”

In other cases would-be contractors have little opportunity to carry out a full wreck survey because of time pressure or access difficulties. “Even if they do, it is unlikely to be comprehensive and the wreck may subsequently reveal unpleasant surprises. It is in this context that “no cure, no pay” arrangements are unpopular with contractors for large wreck removals, and it may affect the authorities’ consideration of proposed methodologies.”

It is surely in everyone’s interest that there should be a body of competent, well-capitalized contractors available globally to conduct wreck removal operations, said Muller. “There should be competition. ISU has suggested one simple way to encourage bids and that is for the relevant Club to provide common survey data to all shortlisted bidders. Indeed there are some examples of this already having being done. We would like to see more of it, and it is something that we will continue to press for.”

Once contractors formulate their bid, the type of contract used will be an important consideration. The revised BIMCO wreck contracts – with an element of “carrot and stick” are popular and sensible. However, ISU feels there is still too much liability and risk for the salvor.

“We would certainly like to see the insurers take more of that risk. It would lower costs as salvors would not build that element into their price. There is also the question of the contractor’s own liability “C” insurance and where the cost for that should lie. In short, we seek more leadership from the Clubs in showing flexibility and partnering in the risk of the job. We think it will lower tender prices.”

Muller said that more of a joint effort in the tendering phase could reduce costs as there would be more transparency between the parties. “We recognize that it takes time to build trust and that our members must play their part. I do not believe that, generally, ISU members set out to milk a project, and ISU would certainly disapprove of this kind of behavior. It is in our long term interests that we should be trusted partners, and we recognize the potential for suspicion.”

A joint effort would also enable a more united front if it is necessary to challenge the requirements of the authorities. “We are all agreed that the role of the authorities is central in driving up the costs of wreck removal.” In the spirit of cooperation, Muller said that salvors need to recognize that officials and politicians are the servants of the wider public. And there is no doubt that society’s attitude to the environment has fundamentally shifted in the past 30 years.

“Rather than fighting against it, we should embrace it and present ourselves as partners able to solve a state’s problem. But the quid pro quo is that they should respect our judgement of what is a sensible and proportionate approach that will also be clean. We have a great body of evidence to show what can be done.

“I suggest we have the twin, and dangerous combination, of the authorities having too much knowledge and too little knowledge. On the one hand they have had visibility of hugely complex and successful wreck removals. On the other hand they do not have deep technical knowledge.

“It means that unrealistic expectations may be raised and unnecessary demands made. Just because something can be done does not mean it should be done. And I come back to the importance of presenting a united front in the proposition of the best removal method and requirements.”

Unlike good wine, wrecks do not improve with age, said Muller. Often the quicker an operation can be undertaken the less expensive it will be. All efforts must be made to expedite the survey, tendering and engineering phases, and the authorities must understand this and play their part.


Santos Profits Plunge, CEO Steps Down

By MarEx 2015-08-24 00:08:35

Australian oil and gas major Santos has announced that, after seven years in the role, Managing Director and CEO, David Knox, will step down.

The company’s board has decided to conduct a full strategic review of the company’s assets and opportunities, after announcing a half-year net profit of A$37 million ($26.7 million) after tax, 82 percent lower than the previous first half.

The results reflect significantly lower oil prices and higher exploration expenses, said the company on announcing the result.

Strong operational performance, particularly from PNG LNG and Darwin LNG, saw Santos record production growth of 13 percent compared to last year. However, the lower realized oil prices resulted in sales revenue declining by 15 percent.

Knox said that the company had responded both effectively and quickly to the lower oil price environment, delivering significant reductions in costs across the business and improving its productivity.

“Capital expenditure for the first half was 55 percent below 2014 levels, and we cut the production costs per barrel by 11 percent to A$13.70 ($9.90) per barrel of oil equivalent.

“We have been and continue to take appropriate steps to reduce costs further. We are also working closely with our suppliers and contractors towards that end. I am pleased to say we are on track to deliver our 2015 target of A$180 million ($130 million) in gross supply chain savings.”

The 2015 exploration program was weighted to the first half and resulted in exploration and evaluation expense of A$194 million ($140 million) . The campaign of drilling in PNG and Malaysia produced the successful Bestari-1 oil discovery offshore Malaysia but did not result in other commercial finds.

Santos also reported that it had brought gas into its LNG Train 1 at GLNG in Australia, demonstrating the significant progress made on the project during the first half. Other GLNG milestones achieved include bringing all major upstream processing facilities on line, completing commissioning of all LNG facility power generation and other utilities, unloading of the propane and ethylene refrigerant into storage and commissioning all six LNG Train 1 refrigeration compressors.

Knox confirmed that the GLNG project remained on track to deliver first LNG around the end of the third quarter.

Santos Chairman, Peter Coates, will assume the role of Executive Chairman and lead the strategic review with the assistance of Deutsche Bank and Lazard as advisers.


Drowning: Princess Told to Improve Safety

By MarEx 2015-08-23 17:51:45

The U.K. Marine Accident Investigation Branch (MAIB) has released its report into a passenger drowning on Sapphire Princes, calling for the cruise company to take action to improve pool safety.

The death of a female passenger occurred in the vessel’s Neptune Pool when it was travelling the East China Sea on August 7, 2014.

In the absence of a dedicated pool attendant, the initial alert was raised by passengers using the swimming pool. Nearby passengers and crew responded, and the onboard emergency services were summoned by telephone.

However, there was a short delay in the emergency team response due to language difficulties between crew members. The working language of the vessel was English. However, the initial emergency call from a Serbian catering assistant working in the deck 14 food area to an Asian assistant in the purser’s office was not understood due to language difficulties. Fortunately another assistant was able to understand the caller, otherwise the medical team’s response might have been further delayed.

Until the emergency team arrived, limited attempts to perform CPR were carried out by passengers. CPR was only briefly carried out and had ceased by the time the medical team arrived at the pool.

MAIB concluded that risks relating to the use of swimming pools by unsupervised passengers had not been formally assessed.

With no dedicated pool attendants it was left to pool users and bystanders to recognize an emergency and raise an alarm. The crew members (catering staff) in the vicinity of Neptune Pool had not received instruction from the company in medical first aid.

There was no documented formal risk assessment available for ship’s staff reference when assessing swimming pool operational safety.


Princess Cruise Lines has been recommended to: complete a formal documented risk assessment on the use of ships’ swimming pools throughout its fleet and ensure its hotel staff (including stewards, shop staff, hairdressers and entertainers) receive sufficient training and information to take immediate action upon encountering an accident or other medical emergency before seeking further medical assistance on board.

The HSE guidance on managing health and safety in swimming pools ashore strongly indicates that constant poolside supervision provides the best assurance of pool users’ safety. However, it also recognizes that a risk assessment may determine circumstances where the balance of cost and risk makes it possible to provide a safe swimming environment without constant poolside supervision. Many factors need to be considered. The guidance specifically recommends constant poolside supervision if the water is deeper than 1.5m and if food and drink are available to pool users, both of which applied to Neptune Pool.

The full report is available here.


New Panama Canal Leaks

By MarEx 2015-08-23 16:27:44

A crack has appeared in the New Panama Canal’s Cocoli Locks. The locks are located on the Pacific side.

Filling of the locks commenced on June 22. The filling process, expected to take 90 days, marks the start of compliance and operational testing for the canal expansion.

However, Twitter and maritime media reports indicate that the crack, in one of the sills of the lock, could impact the project’s schedule.

Experts from the construction contractor Grupo Unidos por el Canal (GUPC) and the Panama Canal Authority (ACP) met on Saturday to evaluate the problem.

The filling process makes use of powerful electric and diesel pumps designed specifically for the job. The electric pumps provide 30,000 gallons of water per minute each, while an added network of 13 diesel pumps pump 7,000 gallons of water per minute each, filling the lower chamber at a rate of nine inches per hour.

The canal is currently scheduled for completion in April 2016.


Six Pirate Attacks off Singapore

By MarEx 2015-08-23 05:47:56

On August 21 and 22, six vessels while underway in the eastbound lane of the Traffic Separation Scheme in the Straits of Malacca and Singapore were subject to pirate attack.

The vessels reported the incidents, five boardings and one attempt, to the Singapore Vessel Traffic Information System.

August 21, 2015

1. At about 0230 hrs, Advantage Summer was underway when five pirates attempted to board the vessel at the stern from a speedboat. The crew was alerted, the pirates aborted the attempt and fled.

2. Slightly more than an hour later, at about 0340 hrs, Navig8 Stealth SV was underway when four pirates armed with knives were sighted in the engine room. The master raised the alarm and the pirates fled. There was no loss of property and the crew was safe.

3. Less than an hour later, at about 0430 hrs, Maersk Lebu was underway when four pirates were again sighted in the engine room. The master raised the alarm and the pirates escaped in a waiting small boat. There was no loss of property and the crew was safe.

4. At about 2329 hrs, Peace Bright was underway when four pirates were sighted on board the vessel. The alarm was raised and the pirates escaped in a waiting boat. There was no loss of property and the crew was safe.

August 22, 2015

5. At about 0525 hrs, Atout was underway when the crew sighted four pirates without weapons onboard the vessel. The alarm was raised and they escaped. There was no loss of property and the crew was safe.

6. About an hour later, Elbtank Denmark was underway when the crew sighted four pirates armed with knives onboard the vessel. The pirates stole the crew’s personal effects and escaped in a small boat. The crew was safe.

Considering the close interval of time and proximity of these incidents, the pirates could be from the same group. Of concern, says ReCAAP ISC is their persistence in ‘hovering’ in the vicinity seeking out their next target.

The ReCAAP ISC strongly recommends all vessels operating in this area to exercise enhanced vigilance and take extra precautionary measures while underway.

Name and Type of Ship:

Advantage Summer / Tanker

Navig8 Stealth SV / Tanker

Maersk Lebu / Container ship

Peace Bright /Bulk carrier

Atout /Container ship

Elbtank Denmark / Tanker

Date/Local time of Incident:

August 21 at 0230 hrs

August 21 at 0340 hrs

August 21 at 0430 hrs

August 21 at 2329 hrs

August 22 at 0525 hrs

August 22 at 0535 hrs

Location of incident:

01° 10.60’ N, 103° 26.70’ E

01° 07.20’ N, 103° 29.80’ E

01° 10.08’ N, 103° 30.17’ E

01° 04.07’ N, 103° 41.58’ E

01° 07.27’ N, 103° 31.68’ E

01° 10.40’ N, 103° 49.80’ E


Keel Laid for Second Ford-Class Aircraft Carrier

By MarEx 2015-08-23 04:53:09

Newport News Shipbuilding, a division of Huntington Ingalls Industries celebrated the keel laying of the aircraft carrier John F. Kennedy (CVN 79) on Sunday.

The vessel is the second ship of the Gerald R. Ford class. Caroline Kennedy, the daughter of the ship’s namesake, the 35th President of the United States, is the ship’s sponsor.

“The aircraft carrier came of age in a time of conflict,” Caroline said. “It was untested, and the capabilities it brought were questioned. Since those early days, the carrier has come to be recognized as a symbol of peace, strength and freedom.”

During the ceremony, Caroline’s initials were welded onto a steel plate by Leon Walston, a Newport News welder from Massachusetts. The plate will be permanently affixed to the ship, signifying the sponsor’s enduring relationship with the shipbuilders and crew.

In his remarks, Assistant Secretary of the Navy Sean Stackley expressed the significance of aircraft carriers, calling upon shipbuilders to recognize the importance of what they build. “They are our nation’s great instruments of security and … of goodwill,” he said. “In times of crisis, they are the first to respond, and when called upon, they will deliver the final word in the bidding of our nation.”

John F. Kennedy will be the second U.S. Navy ship to bear the name of the 35th President. Crew members who served on the first John F. Kennedy attended and were recognized during the ceremony.

Like its forerunner CVN 78, Kennedy is a truly electric aircraft carrier, with many of the systems powered by steam on Nimitz-class carriers now powered by electricity. The ship is designed to save the Navy $4 billion in total ownership cost over the ship’s 50-year lifespan, with fewer overall components, extended drydocking interval, improved ship-wide air conditioning and more.

The new class is also designed to generate 25 percent more sorties (flight missions) per day on its five-acre flight deck. Weighing nearly 100,000 tons, John F. Kennedy will be capable of reaching speeds in excess of 35 knots.

3-D modeling

For the Ford-class, Newport News Shipbuilding utilized the latest and most advanced computer tool capabilities and functionalities for visual integration in design, engineering, planning and construction.

Every piece part is created in a 3-D model at full scale which includes structure, various equipment, piping systems, machinery, electrical, wireways, gauges, pumps, berths, medical and galleys. On any given day, hundreds of designers, engineers, planners and construction representatives were in the model designing, creating and planning every feature of the ship.

Part of the design build process is to validate requirements and ensure ship specifications are met, including access, passage, repair, take-downs, removals of components and safe working areas. For the Ford-class, Newport News Shipbuilding considered sailors with heights in the 95th percentile male to the 5th percentile female, ensuring all operations can be performed without restriction of human size.

Consideration of emergency crew wearing various apparatus and the capability of routing injured personnel through the ship also was considered. All these design challenges along with working to maintain the shortest and optimal routes for distributive systems tested the capabilities of the 3-D visualization tools.

American Aircraft Carriers

In 1933, Newport News Shipbuilding marked its place in history by launching Ranger (CV 4), the first American ship designed and built as an aircraft carrier from the keel up. Ranger weighed just 14,500 tons.

The three carriers launched just a couple of years after Ranger helped turn the tide of World War II in the battles of Coral Sea and Midway. While Yorktown (CV 5) and Hornet (CV 8) were lost during the war, Enterprise (CV 6) would become the most combat-decorated ship in the history of the Navy.

The Yorktown and Hornet names would be reborn in the next aircraft carriers built at the yard, the Essex-class. The shipyard would deliver nine of the 24 carriers to the Navy. That meant that every three months or so, the shipyard was launching a 33,000-ton carrier.

The shipyard would design its third class of aircraft carriers – the battle carrier – and build two of them. The 45,000-ton ships were the world’s largest carrier at the time. Midway (CV 41) and Coral Sea (CV 43) wouldn’t serve until the war was over, but marked the first of the post-war large carriers.

Then came the age of the “Supercarrier.” The 1950s and 1960s brought contracts for the Forrestal (CV 59), Ranger (CV 61), America (CV 66) and John F. Kennedy (CV 67) – designed to launch jet aircraft. Forrestal topped 1,000 feet in length and took on the familiar angled flight deck of today’s carriers. But the 1950s also brought nuclear power to the carrier fleet with the construction of Enterprise (CVN 65), launched in 1960. Named after CV 6, the second “Big E” would change the yard and the future of Navy aircraft carriers forever.

In 1972, Newport News Shipbuilding launched the Nimitz (CVN 68), the first of the Nimitz-class, ending the reign of boiler-powered ships and filling the shipyard’s dock for the next 30 years. All 10 ships in the class were designed, built and refueled in Newport.

Now, the next era of aircraft carriers is underway. The shipyard is building the first two ships of the follow-on class to Nimitz, the Ford-class. The first ship, Gerald R. Ford (CVN 78), was launched in 2013. Construction on the second ship, John F. Kennedy (CVN 79), began in 2011.

A video of the ceremony, along with additional information on John F. Kennedy (CVN 79), Caroline Kennedy and the Ford class of aircraft carriers, can be found here.


Slave Ship Trading in Australian Waters

By MarEx 2015-08-21 19:04:51

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 crewmember 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 on Thursday. The Australian Maritime Safety Authority has also joined the ITF in inspecting the vessel.

ITF Assistant National Coordinator Matt Purcell said the crew, a mix of Cambodians and Burmese, had been subject to the worst kind of bullying he had encountered.

“We have discovered two contracts, one contract was the one the workers signed prior to boarding and the other, which doesn’t meet even the most basic international standards, was signed shortly after the crew joined the ship,” Purcell said.

“The crew claim they have received no wages for several months and are forced to do jobs outside of their requirements. They have been locked in hatches, and have survived on what I can only describe as a starvation diet.”

The vessel, owned by Korea-based Chang Myung Shipping Co, is a repeat offender in that deficiencies have been noted by a number of different port state control areas. The ship was found to be breaching labor standards in Denmark as recently as November last year.

The ship visits Australia, mainly Hay Point and Newcastle ports, a couple of times a year.

ITF President Paddy Crumlin said although this ship was an extreme example of crew abuses, many ships calling into Australian ports had dodgy records when it came to safety, pollution and crew welfare.

“The sea is a largely unregulated environment whereby greedy shipowners and operators are allowed to get away with egregious breaches of human rights, and the Australian Government is regularly turning a blind eye to the breaches happening in our waters,” Crumlin said.

“Further to that, Deputy Prime Minister Warren Truss seems to want these awful breaches to increase by wiping out the Australian merchant navy fleet through complete deregulation.

“Mr Truss has to understand that opening up Australia’s shipping industry so it can “compete” with the lowest common denominator is consenting to these kind of human rights violations.”

The Abbott Government is attempting to dismantle the Coastal Trading Act, which dictates that ships trading between Australian ports must be crewed by Australian workers or paid Australian award wages.

The amendment to the Act was inserted into May’s Budget papers but is yet to be debated in Parliament after it was sent to a Senate Inquiry.


Fires and Toxicity Over Tianjin

By MarEx 2015-08-21 16:30:19

Four new fires have erupted within the three kilometer disaster zone where warehouse explosions killed more than 116 people in China’s Tianjin port. Firefighters, soldiers and police offers have been dispatched to put out the flames.

According to reports, the fires were seen in a logistics park as well as three other locations in the central blast zone. There were at least 3,000 cars in the logistics park, which had been torched in the August 12 eruption. Authorities suspect that the fires were caused by combustible material in the cars’ fuel tanks.

Technicians have detected levels of cyanide up to 356 times the safe level within the evacuated blast zone.

Officials confirmed that more than 700 tons of sodium cyanide were stored at the Tianjin warehouse that blew up. Inspections of facilities handling dangerous chemicals and explosives were ordered by China’s State Council after the blasts.

The Tianjin explosions exposed several safety issues regarding the storage of hazard chemicals.

MarEx recently reported on it in an article you can read here.