Collision Report: Lookouts Weren’t Looking

By MarEx 2015-07-30 00:03:32

The Australian Transport Safety Bureau has released its report into the collision between the container ship Kota Wajar and the yacht July last year, stating that neither vessel was maintaining a proper lookout at the time.

At about 0419 on July 6, 2014, in clear visibility, the container ship collided with the yacht Blazing Keel in Moreton Bay, Queensland, Australia. The ship was southbound in the shipping channel while the yacht was crossing the channel in a southwest direction.

The yacht suffered extensive collision damage but its watertight integrity was maintained. The two people on board were not injured and the yacht safely returned to its marina.

The ATSB found that no one on board either Kota Wajar or Blazing Keel saw or otherwise detected the other vessel before the collision. Neither vessel had maintained a proper lookout in accordance with COLREGS.

The investigation found that Kota Wajar’s safety management system procedures requiring a dedicated lookout were not effectively implemented and a lookout was not posted. In addition, radar was not appropriately used. The high workload of the ship’s bridge team and local conditions, such as background lights ashore, were factors in not detecting the yacht.

The investigation identified that the visual lookout kept by Blazing Keel’s crew was ineffective. Furthermore, the yacht’s night passage was undertaken without radar (which had been inoperable for 18 months).

It was also found that Brisbane Marine Pilots’ standard passage plan and master-pilot exchange does not ensure that the ship’s bridge team is provided adequate information with respect to local traffic and areas where attention should be paid to small craft.

Kota Wajar’s managers, Pacific International Lines, Singapore, have advised the ATSB that action to better implement safety procedures with regard to posting a lookout was being taken.

Brisbane Marine Pilots has advised the ATSB that its standard passage plan has been amended to clarify responsibility for maintaining a good lookout by sight and radar. Bridge team engagement and communicating small craft interaction will be emphasized through the master-pilot-bridge team exchange. The pilotage company has also decided to review and amend its pre-arrival information for masters to emphasize the small vessel interaction risk.

In response to the continuing safety issue around maintaining an effective and proper lookout when navigating in Australian waters, the ATSB has issued a safety advisory notice to the masters, owners, operators and skippers of all vessels.

Over the past 26 years, investigations into 41 collisions between trading ships and small vessels on the Australian coast have identified that maintaining a proper lookout, using all available means in accordance with the COLREGS, is paramount to preventing collisions.

The report is available here.


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.


Sembcorp -“Show Me the Money”

By MarEx 2015-07-29 16:25:08

Sembcorp Marine still has not gotten paid by Sete Brasil for the drillship ordered in 2012 to be delivered between 2015 and 2019 at the Brazilian Estaleiro Jurong Aracruz Ltd. shipyard. The seven ultra-deepwater drill ships, which are capable of drilling to 40,000 feet, are going to be chartered to Petrobras for 15 years.

Sembcorp said it has been in discussions with Sete Brazil over the lack of payments made on the drillships, which are each valued at about $800 million. Sembcorp President Wong Weng Sun said that Sete Brasil currently owes about $59 million. He also said the Brazilian orders accounted for more than half of the company’s order book. Sembcorp is now saying that the company will eventually slow the projects if the situation persists.

Sembcorp also announced that its second quarter profits fell 17 percent compared to last year citing rising oil prices and cuts in production and global exploration. In a statement, Sembcorp said many of their customers are seeking to defer payments of their ordered rigs because of a lack of charter contracts.

And because Petrobras is currently entangled in a corruption scandal that involves charges of money laundering and organized crime, Sete Brasil has been forced to consider different avenues to obtain financing. In February, Sete Brasil said it was seeking conclude a long-term credit line with the Brazilian Developmental Bank in addition to obtaining new lines of short-term financing to satisfy its debt to Sembcorp.


Korean Shipyards Empty

By MarEx 2015-07-29 16:17:15

The three largest ships yards in the world are in Korean and they are struggling for work and losing lots of money.

Daewoo Shipbuilding and Marine Engineering, Samsung Heavy Industries and Hyundai Heavy Industries (HHI) say it is due to plummeting oil prices and delayed offshore projects. The giant yards are reporting significant losses in 2015’s second quarter– Daewoo leads the way reporting a 3.03 billion KRW ($2.62 billion) operating loss. Samsung reports1.55 trillion KRW loss while Hyundai says it lost 171 billion won. The combined losses is the 4.75 trillion KRW or $4.1 billion.

Daewoo cites delays in the construction of gas oil rigs as well as lower freight rates in the cargo markets. Korean yards invested heavily in oil and gas rigs around 2010 in an effort to circumvent competition with the Chinese yards. Oil prices were sitting at about $100 per barrel at the time and the industry was booming.

The maritime sector on whole has been sluggish due to the global recession and economic slowdown. China has been the world’s workbench for the last decade or so. It shipyards have been some of the busiest in the world, but oil prices have plummeted by 60 percent and demand for drilling rigs and ships has slowed.

The 2nd quarter losses for the three Korean giants were Daewoo’s 2015 Q2 revenue fell 63.1 percent, Samsung’s revenues fell 44.8 percent, and Hyundai posted a 240 KRW loss down from last year’s loss during the same period of 489 KRW.


Nigeria LNG Receiving Four Vessels

By Reuters 2015-07-29 15:20:11

Nigeria Liquefied Natural Gas Company (NLNG) expects to take delivery of four LNG carrier ships before year-end and another two next year, its chief executive said, positioning the state-backed gas exporter to expand its share of the growing market.

NLNG signed agreements with South Korea’s Samsung Heavy Industries and Hyundai Heavy Industries in 2013 to acquire six LNG carrier ships, costing more than $1.2 billion, to boost its fleet of 23.

It had tapped South Korea Export and Import Bank and other lenders to fund the construction, CEO Babs Omotowa said.

Omotowa said the global market for LNG – natural gas that has been cooled to a liquid form, which shrinks the volume and makes it easier to store and ship – was forecast to grow to 430 million tonnes per year by 2030 from 230 million now.

Nigeria, with the world’s fourth-biggest LNG plant, wants to capture some of that by expanding its market share to more than 10 percent – a spot it held in 2008 – from 7 percent now, Omotowa said, without giving a time frame.

“With our growth projects train 7 and train 8, we hope to expand our capacity by 40 percent and take us back to over 10 percent,” he said in an interview in Lagos, referring to NLNG’S gas liquefaction production lines. NLNG, located on the Atlantic basin, has the capacity for 12 trains.

NLNG, owned by Nigerian state oil firm NNPC, Royal Dutch Shell, France’s Total and Italy’s Eni , has the capacity to produce 22 million tonnes of LNG a year. The company, set up 15 years ago to produce the gas for export, did not give current capacity figures.

It has long-term supply contracts with Spain’s Repsol, Italy’s Enel, Britain’s BG Group, France’s GDF Suez and Portugal’s Galp. It also sells on the spot market.

Nigeria, one of the world’s top-10 gas rich countries, has estimated reserves of 180 trillion cubit feet, Omotowa said, but it converts only about 1.5 trillion cubic feet per year to LNG.

NLNG, which generates more than $10 billion in annual revenue, is also sponsoring the construction of the first major ship yard in Nigeria at a cost of $1.5 billion, in order to develop capacity for maintaining large vessels at home.

Omotowa said LNG exports had not impacted domestic supply. The domestic gas market had been held back by a lack of infrastructure including a functional rail system to ferry gas around the country and government funding challenges, he said.

Gas demand in Africa’s most populous nation is expected to rise to 3 billion standard cubic feet (scuf) per day by 2017 as gas-fired power plants ramp up generation, industry officials say. Demand has risen to 1.2 billion scuf per day, from 300 million six years ago.