Lloyd's List Newsroom Blog headlines from www.lloydslist.com

A fresh start

Janet Porter — Fri, 4 Jul 2008 00:00:00 GMT

MORE than 130 years after the Calcutta Steam Traffic Conference was set up by shipping lines in an effort to stabilise freight rates in the Europe-India trades, these price-fixing associations are about to vanish, at least in Europe.

The Trans-Atlantic Conference Agreement has just held its final meeting, and the Far Eastern Freight Conference will close in October on the eve of the Brussels deadline. Many others have already quietly closed.

European shippers, who have waged a long campaign against conferences, convinced they artificially inflated freight rates, have won a famous victory.

Container lines will no longer set prices together, or manage capacity. Most accept that conferences are past their sell-by date. They made good sense when individual shipowners were too small to operate longhaul scheduled services on their own. These days, global carriers are large enough to operate independently, or can share space through consortia without any price collaboration.

But after decades of working together, this transition will not be easy for the lines, and innocent mistakes may happen. Neither will shippers find it as straightforward as they seem to imagine. How long will it be before some start asking ocean carriers for a common bunker or currency surcharge because of the complexity of dealing with so many different figures?

Both sides will need to show some understanding and flexibility as they move into the uncharted territory of a world without conferences. Wouldn�t it be nice to think that the antipathy and suspicion of the past two decades will finally evaporate?]]>

Slow steaming is the most effective way of saving fuel and cutting emissions

Lloyds List Poll — Fri, 4 Jul 2008 00:00:00 GMT

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Cheque mates

Tony Gray — Thu, 3 Jul 2008 00:00:00 GMT

What is it about shipping and blank cheque companies?

The industry shows an uncommon zeal for launching these investment vehicles, officially known as special purpose acquisition companies, or SPACS, and which are akin to empty vessels awaiting a cargo.

A blank cheque company has no operations of its own and is formed specifically to raise money to acquire someone else�s business or assets.

The trailblazer in shipping was Angeliki Frangou�s International Shipping Enterprises which in 2005 completed the acquisition of the sophisticated dry bulk shipping operator Navios Maritime for more than $600m.

Since then there have been numerous blank cheque initial public offerings (IPOs), the latest being another stab at success by Ms Frangou through Navios Maritime Acquisition Corp.

Shipping did not invent the SPAC but in the past few years it has been a leading advocate of these public vehicles, which take a leaf out of private equity�s book.

Figures compiled by investment bank Jefferies show that the shipping industry has accounted for 15% - $1.15bn - of SPAC offerings closed since 2005.

Shipping�s sponsorship of new blank cheque companies compares with 13% and 8% for industrials and healthcare, respectively, and is a much higher proportion of this activity than its share of overall stock market capitalisation.

Why this should be the case is not clear. But it lends support to the view that shipping has come in from the cold and can now be considered a mainstream investment opportunity.

And its management can be trusted with a blank cheque. ]]>

Batten down the hatches

Julian Bray — Wed, 2 Jul 2008 00:00:00 GMT

DAY by day the storm clouds over the global economy are getting darker. Yet much of the industry continues to party as it rides the unprecedented commodities boom.

Inflation has spiked upwards at a speed and intensity many had arrogantly thought was no longer possible.

Energy prices have surged to levels which not even the most hawkish commentators predicted. And yet, so far, many shipping markets appear insulated from these shocks.

There is good reason for this. Many of the factors which have driven shipping markets onwards and upwards over the past five years are the same as those now threatening a new era of economic instability; surging demand for material and goods, coupled with a stretched supply chain.

But it is clear now that shipping will not be insulated from pain in the real economy for much longer. Already the oil price has pushed up bunker prices to crippling levels.

And wage inflation is threatening to turn the seafarer supply shortage into a crisis.

Don�t forget that the most potent factor to bring down the soaring cost of oil (apart from shutting down those pesky hedge funds) would be a short, sharp global recession. It is easy for all those involved at the coal face of shipping to lose sight of the fundamental fact that shipping is a service operation to industrial, manufacturing and trading markets.

It is within those markets, and the economic fundamentals which drive them, where the fate and fortunes of shipping are decided. Those who allow their attention to be diverted from those underlying factors do so at their peril.]]>

Strait talking required

Richard Meade — Tue, 1 Jul 2008 00:00:00 GMT

THE market is a notoriously jittery character at the best of times, but in the current economic climate its nerves are on show. No surprise then that the distant sound of sabres being rattled around the Strait of Hormuz has sent the price of oil back on its upwards spiral this week.

The strategic importance of this waterway cannot be overstated. Oil flows through the Strait account for around 40% of all globally traded oil supply, and then there are the oil products and LNG, notably from the world�s largest exporter Qatar, to consider.

Put into that context it is perhaps understandable that talk of Iran�s Revolutionary Guards mining the strait in the event of Israel stepping up threatened hostilities has been enough to grab the attention of the market.

The US has been quick to send a clear message that it will not be allowed to hamper oil shipments, but OPEC�s second largest crude producer is not without leverage on the international stage and should not be written off as powerless in any scenario.

This of course is not the first time that such threats have been publicly aired and will not be the last, but anyone who remembers the �tanker war� of the 1980s will have some idea of the potential mayhem that a conflict in that region could cause.

Shipping in the Gulf plunged by 25% as a result of that exchange forcing intervention from the US to secure the shipping lanes. A similar disruption to oil supplies in the current climate is an unthinkable scenario to consider. ]]>

Leave politics out

David Osler — Mon, 30 Jun 2008 00:00:00 GMT

TURKEY is deemed European enough to have its soccer team participate in Euro 2008, its army play a key role in the North Atlantic Treaty Organisation and - this has to be the clincher - its pop singers enter the Eurovision Song Contest.

Yet somehow, the country is not quite a full member of the European club, as evidenced by the entrenched reluctance to allow it to join the European Union despite more than four decades spent pleading with Brussels.

Now it has emerged that it has been denied its desire to become a co-operating member of the Paris Memorandum of Understanding, the influential port state control grouping. As is often the case with political decisions, the justification being advanced - that Turkey needs to pull its socks up as a flag state - is not the real reason that the request is being turned down.

The truth is that Turkey has introduced politics into port state control, in a manner that is unacceptable to everybody else involved. In support of the unloved little satrapy that goes about its business as the Turkish Republic of Northern Cyprus, without the recognition of any government other than the one sitting in Ankara, it has slapped a ban on Cypriot-flag vessels calling in Turkish ports.

Port state control is purely a technical matter, and letting Turkey into the Paris MoU is just the kind of carrot that will encourage it onto the democratic path.

In principle, it would be right to allow Turkey to sign up, but only after it gets off its high horse and patches things up with Cypriot flag shipping. ]]>

Keeping the faith

Neville Smith — Fri, 27 Jun 2008 00:00:00 GMT

ONE would have to be a resident of a deeply religious country � or a stern adherent to its faith � to take at face value the remarks by the company official citing an act of God for the loss of Princess of the Seas.

This is not to lessen the sympathy the world must feel for yet another huge loss of life in terrible weather conditions.

These days, advocates of reason over religion need only suggest an alternative view to that of the faithful to be accused of intolerance or insensitivity. But for the representative of the shipowner concerned to suggest that a protest �against the wind and the waves� was the correct response to the deaths of 800 passengers is hard to stomach even for those of a religious persuasion.

The process of determining the responsibility for the decision to sail into the teeth of a hurricane has begun, but so far it promises to be more about blame than remedy.

Those looking to establish a pattern might not stop in the Philippines, or in the wider Asian region. This loss of life, just the latest in a seemingly unending pattern of ferry disasters, despite of subsequent recommendations and regulations, screams for stronger international reaction.

If this were a criminal trial, it would be forbidden to reveal the protagonists� track record, which in this case is a matter of record. To a believer, the implication is that the ferry owners� God is not just wrathful but vengeful too.]]>

Brand loyalty

Janet Porter — Thu, 26 Jun 2008 00:00:00 GMT

DO brands have a value in cargo shipping? This is an issue that fires up debate in the liner trades. Certainly in regional markets, corporate identity is seen as important.

That is undoubtedly why CMA CGM has kept names such as Delmas, ANL or CNC Line, all with strong local identities. For the same reason, Maersk has retained the Safmarine trademark that has such a loyal following in the southern Africa trades.

CP Ships� decision to continue using the names of the numerous niche lines it acquired over the years, such as Canada Maritime and Lykes, proved less successful, but perhaps for different reasons.

The more anonymous intercontinental trades may be different. Do global shippers really care about the name on the side of the ship or container? Well, possibly. When Asia�s Neptune Orient Lines bought American President Lines in 1987, it clearly felt there was a benefit in retaining the APL identity in the US market.

Presumably, NOL also thinks Hapag-Lloyd is a name that is associated with quality service. So word that parent company Tui wants to keep the trademark when it sells?the Hapag-Lloyd container business is unlikely to please any potential buyers.

Tui presumably wants to protect the brand of its cruise business and airline, and assumes that any future owner of Hapag-Lloyd would be more interested in gaining ship capacity and customer accounts than a name. But brands command loyalty not just among customers, but staff as well. And whoever buys Hapag-Lloyd Container Line will surely want to keep both on side.]]>

Wages: the final frontier

Julian Bray — Wed, 25 Jun 2008 00:00:00 GMT

AS THE chattering classes start talking about a �summer of discontent� in the UK as the clamour for pay rises to match the sharp jump in inflation, it is clear that shipping markets are going to have to pay more to hire and retain the brightest and best staff.

Not a moment too soon. For years, shipping has lagged many comparable sectors. Its engineering recruits earned less than their land-based associates, shipping firm managers were paid more poorly than those in more dynamic sectors, while shipbrokers were always paid in line with the assumption they were only in the job because they had failed to make it in stock-broking.

All that has changed. The first revolution was through the steady professionalisation of the industry over the past decade and a half. No longer are the family shipping company�s accounts written on the back of an envelope, and the reserves kept in a metaphorical sock under the bed.

No longer are shipbrokers easily ridiculed as the nice-but-dim types from second-rate public schools. They may not be quite as stellar as many of them believe, but they are offering a key service to a booming market.

But are all these players in this new world of shipping being paid a fair salary? Increasingly you hear not. That discontent is in part because of the impact of factors from the real world, where food and fuel prices appear to escalate by the day.

Clearly there is a disconnect between rates of $250,000 per day to charter a capesize, and paying crew on those vessels so poorly that only the under-educated are interested.

If shipping is going to move forward and solve the crisis of recruitment faced everywhere, it will have to take a final stride into the real, modern world and accept that to attract and retain the best you have to pay serious money.]]>

Resistance is futile

Richard Meade — Tue, 24 Jun 2008 00:00:00 GMT

WHEN Efthimios Mitropoulos told the IMO�s greenhouse gas working group this week that failure was not an option, it was not just rhetoric.

The green debate is over. It is no longer a question of choice. Whether you believe in global warming or not, how you see your position as a custodian of the environment, your commitment to sustainable business, they are all, frankly, a question of semantics and posturing.

The enforcement of green values in all its myriad forms will come whether you agree with it or not.

The development of more efficient and flexible tonnage is a matter of urgent economic necessity, rather than a soft optional extra to look good on the annual report.

If the IMO fails to address greenhouse gas emissions adequately, others will.

This is the reality. Pitching this as a debate is to miss the point entirely � it is now a question of straight business.

With the cost of bunkers now more than $600 per tonne, the fuel savings offered by new designs can mean a huge difference in daily operating costs as well as the ubiquitous emissions. And if you think that regulators will not seize upon this fact, you are wrong. The speed at which single-hull tankers became obsolete may have worried some, but that was only a taster of things to come in the brave new world of green economics.

Anybody looking at ordering vessels that presumably will be trading for another 30 years and not considering the direction of green regulatory reform and the price of oil should seriously reconsider their chosen career path.]]>

Ready for power?

Neville Smith — Mon, 23 Jun 2008 00:00:00 GMT

LEGITIMACY, like greatness, is a condition one can either be born with, or have thrust upon one.

Though estimates of the size and value of the freight derivatives market vary according to one�s position, it can no longer be denied that freight trading has come of age. And if legitimacy is the first step, then is preparation for power the next?

This is a good thing for shipping � allowing owners to manage their exposure and increasing their understanding of complex financial products. But it also carries risks: owners do not understand that, as the paper market overtakes the physical, so the need to understand it rises.

And if it is owners rather than pure speculators that are driving this growth, they should be aware that when the market turns, the downside could be as vertiginous as the upside.

If, as is regularly signposted, banks and hedge funds are ready to drop huge sums on the market, then the owners might also like to consider that they might quickly look more like bait than catch.

Threats also come in the shape of development path, with all save the brokers favouring a screen-based system with straight-through clearing. This is the biggest risk of all. The brokers, who helped bring market to this point, see their future earnings dented by commision-sharing. Principals say they have lost money because of poor price discovery.

A robust compromise must be found if this hard-won legitimacy is not to be lost as quickly as it was gained. ]]>

A game of two halves

Neville Smith — Fri, 20 Jun 2008 00:00:00 GMT

SOCCER swept the New York shipping community last week, with an influx of European talent taking their game to the big boys of US ship finance at the Marine Money conference.

The score? A draw after extra time because on the evidence of a week in New York, the shipping industry and its bankers are on a win-win.

Time and again, teams of Norwegians, Danes, Greeks, Italians, Germans and Frenchmen stepped up against their US hosts to face off on the business of ship finance - only to find a mood of consensus.

The deals might take longer to do, and will probably cost 50 or so extra basis points, but the relationships that ship finance thrives on are still in place.

Two awards lunches and countless conversations on the sidelines reinforced the proposition that as long as no-one looks to the downside, it might be said not to exist at all.

Even the question of the orderbook and its effect on rates took a shoe shine. If not all the ships are built and delivered, then the market wins. If the ships are built and re-sold by speculators to owners with charters ready, then no problem.

Couple this with new ways to access capital: though leasing, investment trusts and a resurgent junk bond market and this is a blue sky-only scenario.

Some old hands pointed out that lenders had no collective memory of the bad times and that banks never learn from their mistakes. But who was paying attention to these doom-merchants? ]]>

Time to get real

Janet Porter — Thu, 19 Jun 2008 00:00:00 GMT

NO-ONE should begrudge US dockworkers decent health insurance or retirement plans. The scandal is the number of people in the world�s richest nation who do not have medical cover or who face a financially perilous old age.

Members of the International Longshore and Warehouse Union are the lucky ones, enjoying some of the most generous welfare benefits in the country. Quite rightly, they want to protect what they have for themselves and their families.

So news this week that the ILWU and the Pacific Maritime Authority, which represents US west coast employers, had reached a tentative agreement on healthcare is a very positive step towards a new labour contract for the union�s 26,000 members.

Nevertheless, to the rest of the world, this collective bargaining seems bizarre and archaic. US west coast ports are notoriously inefficient compared with those in Asia or Europe, with outdated work practices and old-fashioned IT systems in one of the most technologically sophisticated regions on the planet.

The fact that each terminal does not have a regular workforce, but in effect takes labour from an ILWU pool, not only adds to inefficiencies but also must be a safety issue as well.

Considerable advances have been made in recent years to improve performance, with initiatives such as PierPass successful in promoting more off-peak cargo collections and deliveries. But will shipowners, stevedores and and terminal operators ever have the nerve to really confront the situation and convince dockworkers who earn up to $200,000 a year that they must bring their work habits into the 21st century?]]>

Now for the hard work

Julian Bray — Wed, 18 Jun 2008 00:00:00 GMT

SO THE ribbon�s finally been cut and the International Maritime Organization can resume its work in its freshly refurbished home on the south bank of the Thames.

And very nice it looks too, which it should for �62m ($121m). Lots of modish sandy hues, some electric colours and art in the remodelled conference rooms, smart technology everywhere and a fantastic terrace for dining. The worst complaint anyone made to us was that the cafeteria was carpeted.

Yet a building is only as good as the work that gets done there, and that is what world should now be focusing attention on.

Later this month, the IMO faces a key gathering with the first intersessional meeting of its working group on greenhouse gas emissions from ships in Oslo. Speaking at IMO headquarters in the presence of UN Secretary-General Ban Ki-moon, UK Transport Secretary Ruth Kelly added to the debate on reducing greenhouse gas emissions from shipping by urging examination of the opportunities that may be provided by a carbon trading scheme. But this is just one of a number of key substantive issues which faces IMO member governments and its executive.

There are also key issues of process, one of which is the long overdue opening up to public access of IMO documents, particularly submissions to major meetings. These are only officially available to delegates. However, there is an ever present black market for those in the know.

Despite complaints about the IMO�s website having insufficient bandwidth to cope with downloading the documents, opening up this access would perhaps be the greatest step to easing the perception of �democratic deficit� between the Albert Embankment and the real world of shipping.]]>

Think of Kant

David Osler — Tue, 17 Jun 2008 00:00:00 GMT

THE epistemological basis of Kantian moral deontology is that one should act only according to a maxim that one can simultaneously wish should become a universal law.

From this standpoint, Algeria�s decision to ban vessels entered with Hanseatic P&I, in the wake of a dispute over a grounding outside Skikda, can only be seen as misguided.

To say this is not to pronounce on the rights or wrongs of the issue at hand. Algeria is a sovereign littoral state. If it gets upset about marine casualties off its coast, especially an accident in which one of its nationals dies, it is hardly alone.

One remembers the intemperate reaction of the French authorities after the Erika disaster of 1999, with all the attendant bluster against the voyous des mer and threats to implement unilateral bans on single-hulled vessels, in complete contravention of the laws of the sea.

The pressures of public opinion make such responses understandable. But, even so, it is necessary to tackle these matters in a cool-headed fashion.

The dispute between Algeria and Hanseatic hinges on whether or not the vessel involved was properly covered. Whatever the truth turns out to be, it would be wrong to retaliate by punishing parties with no involvement in the matter.

Kant�s point is that one must always consider what would happen if one�s own actions are generalised. If everyone acted as Algeria has done world trade would be considerably disrupted, with merchant ships perpetually unsure at which ports they can call. Let us hope that calmer counsel prevails. ]]>

Let the bad times roll

Richard Meade — Mon, 16 Jun 2008 00:00:00 GMT

WORKING out the difference between good and bad times is a notoriously tricky call to make without the benefit of hindsight.

You don�t have to look too far through the pages of Lloyd�s List to find someone feeling the pinch of the credit crunch and market volatility. Postponed IPOs, elusive shipyard refund guarantees, even moves to raise additional capital are now able to unsettle nervous investors in a way that would have seemed unthinkable only months ago.

Then again it is heartening to note the calming words of DnB NOR�s new man, Harald Serck-Hanssen, who, in between the obligatory caveats and disclaimers, has rather sensibly reminded us that shipping is one of the industries that is actually doing rather well in today�s �bad� climate.

We know that shipping companies, along with everyone else, will increasingly face tougher conditions for financing, but it is the start-ups that are more likely to struggle with raising funds than companies which have established relations with banks.

As times get tougher it is the well-run, well-disciplined and properly-governanced companies that will thrive. The question is whether anyone has really been tested to that extent yet? What makes a bad company bad? In the current climate, even bad companies have performed pretty well from a lenders� perspective.

We have very short memories in this business, and someone who was bad and is now good may well very easily turn bad again.]]>

Capesize day rates have peaked and are unlikely to go much higher in the long-term.

Lloyds List Poll — Mon, 16 Jun 2008 00:00:00 GMT

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Cultural differences

Neville Smith — Fri, 13 Jun 2008 00:00:00 GMT

�HOPING that logic will overtake emotion� is not a fully-hedged position when the cause you have pinned your hope to is US security. This was not the only contradictory statement to emerge from the World Customs Organisation�s assessment of readiness of the world�s ports for 100% scanning of all US-bound containers.

The WCO found a divergent trend between Asia and the US, with the former already investing in scanning technology and the latter �sticking its head in the sand�.

It was less surprising to learn that there are 15 scanners in operation in the Philippines than that trials in Southampton have found the process slow and costly.

The WCO is committed to opposing the US plans and the report left no-one in any doubt of the challenges that the programme presents. But despite being unable to convince the US Congress that 100% scanning would not by itself improve supply chain security, it also admits it could make it more efficient.

EU ports have a dwindling share of US-bound movements so the incentive to spend is limited, but that will not divert the US from its security agenda. If they are unprepared, European ports could lose out further.

Rather than hope, or ignore the prevailing conditions, it would be better to take this opportunity to re-tool the supply chain for the demands of the 21st century. This could include beefing up security, improving transparency and increasing intermodalism.

Perhaps the WCO should ask the world�s biggest economy to contribute to those links of the chain it feels are in greatest need of improvement.]]>

Champion wanted

Janet Porter — Thu, 12 Jun 2008 00:00:00 GMT

SHIPPING has been attracting plenty of attention in the mainstream press recently. Industry leaders have been profiled, and discovered that it�s good to talk. The business world has learned a bit more about an industry on which most of us rely, but which has usually felt uncomfortable in the spotlight.

That reclusiveness is changing, and some of those who have built up huge shipping empires in a single generation are now willing to speak about their achievements.

And, of course, the prospect of another mega-merger in the container shipping industry is generating masses of media coverage.

All this is good news for an industry that is always complaining about not being fully appreciated, while at the same time shying away from too much close scrutiny. The recently-launched Container Shipping Information Service also has projects in the pipeline designed to raise awareness in the outside world.

The more media-savvy younger generation that will soon be taking over from a number of industry veterans who are approaching retirement age will surely be more comfortable in the public eye.

But the industry � or industries, as this is not one cohesive business � still needs a champion prepared to face the cameras in bad times as well as good. Someone who will defend shipping against pollution charges, respond to the food-miles argument, and, most important, answer questions when things go wrong.

Managing difficult news is never easy, but neither is it impossible, and that is what shipping must learn to do if it is to win over the politicians and regulators, sway public opinion, and ensure its message is heard at the highest level.]]>

Accurate reporting

Richard Meade — Wed, 11 Jun 2008 00:00:00 GMT

THE International Maritime Organization may have its detractors, but few can disagree that when governments do manage to effectively enforce internationally agreed measures it can only be a good thing for the industry.

Addressing precisely this issue last week, IMO secretary-general Efthimios Mitropoulos issued a not so subtle reminder to member governments on the importance of their casualty investigation duties.

With the MSC Napoli investigation back on the regulatory agenda and still in the media spotlight, it is perhaps understandable to see why some administrations might shy away from such intense scrutiny.

They are, of course, wrong. The value of these probes and their reports cannot be overemphasised. If conducted properly, such investigations offer a vital protection against future disasters and must be pursued with that goal in mind.

It is heartening that reports of the quality exhibited by the UK�s Marine Accident Investigation Branch do find an eager audience at the IMO, but it is worrying that such reports are often the exception rather than the norm.

Reports have been slowly improving according to those assessing such things, but too often they do not include vital pieces of information needed to make accurate assessments.

The IMO�s new Casualty Investigation Code is a welcome addition to the plethora of sensible rules and regulations, but ultimately it is down to individual governments.]]>

Braced for a fight

Neville Smith — Tue, 10 Jun 2008 00:00:00 GMT

JOHN Fredriksen did not get where he is today by walking away from a fight, and there is no indication that he is yet prepared to abandon attempts to split Hapag-Lloyd from Tui and unseat J�rgen Krumnow from its supervisory board.

Losing is about the only thing he is not good at, a point implicitly proven by the Hamburg Solution group, which is scrambling to put Hapag-Lloyd beyond his grasp with support from the state government.

Other solutions have also been mooted � a sale to Deutsche Bahn, closer ties with its other shareholders � but looking to politicians for support must be the most invidious. Protectionism is not just a political throwback, it is irrelevant in today�s globalised economy.

Promote your know-how, your ports, supply chain and market position by all means. Do not attempt to ring fence publicly-held assets from sale abroad in case there are some extra votes in it.

If Hapag-Lloyd had been performing as well as its peers, it might not have attracted Mr Fredriksen�s attention. If one agrees that it has not been performing as it should, why should a state government help perpetuate its problems?

National pride is not extinct but it must reflect wider realities. Some of the same German MPs who support keeping Hapag-Lloyd under German control also want to widen rules on flagging in to the country's tonnage tax system because they have failed to attract enough business. Taken in isolation, the signs for Germany�s maritime industry are not good.]]>

Fuelling fortunes

David Osler — Mon, 9 Jun 2008 00:00:00 GMT

LEGENDARY Texas oil man T Boone Pickens is quick to dismiss suggestions that the current surge in crude prices has anything to do with speculation, internal politics at the Organisation of the Petroleum Exporting Countries or any of the other fashionable takes on the subject.

�I am a simple guy, Neil, an old geologist from Oklahoma State. I am not a financial guy,� he recently told one television interviewer in the US. Given the Forbes-listed billionaire�s recent stint as chairman of a leading hedge fund, one rather suspects false modesty here.

�I understand about oil markets, though. And when you have 85m barrels of supply globally, and 86.4m demand, that does not have anything to do with manipulation or anything else.�

Yes, it�s all down to good old supply and demand, just like they teach you in economics 101. And with ever-increasing numbers of Chinese and Indians using larger amounts of electricity and buying more and more motor vehicles, demand is essentially underpinned for decades to come.

Arguments advanced by the speakers at the Asia Oil & Gas conference in Kuala Lumpur are, if anything, based on conservative estimates.

Mostly this is positive news for global shipping. Certainly for tanker owners, the big picture looks good for years ahead. Concomitant economic prosperity in the BRIC nations should also keep ships full for operators of other types of tonnage.

More costly bunkers is the most obvious downside, but that expense can ultimately be passed on to customers. Oil at $150 � or even $200 � a barrel is a worrying proposition for many economic actors. But shipowners probably are not among them.]]>

The joke's on you

Neville Smith — Fri, 6 Jun 2008 00:00:00 GMT

THE European Commission is wrong if it thinks waiting for the IMO to move on CO2 is like a Samuel Beckett play. There are fewer jokes for one thing and the process is a whole lot less entertaining.

The commission is misinformed if it thinks the IMO does not have the political will to push through CO2 emissions regulations.

Efthimios Mitropoulos who has identified himself with the issue, will chivvy up the Oslo intercessional meeting of the working group and has demonstrated that he is prepared to intervene against developing nations that want to keep kicking the issue down the road.

Indeed, there is a clear timeline with an emissions baseline and work on carbon indexing to be ready by MEPC 58 this October. Regulations should be in place by mid-2009. Compare this with the years it took for the industry to cook up Marpol Annex VI and the IMO is looking more like a one-act play than a three-act drama.

More importantly all the opinions sought at Posidonia last week have been against emissions trading on the basis that pushing the problem around is not the same as reducing or removing it. True, the market-based mechanisms have yet to be fully developed and there is a risk that this will be ballast water all over again, but there is the will and soon there will be the way.

Neither should this issue and the efforts to solve it be complicated by turf wars among EU directorates or the desire of the commission to threaten a European solution because it wants to flex its muscle.

Rather, if the commission and the directorates put as much energy into leading the IMO process as they do from sitting in the stalls and heckling, then the final curtain would be nearer, with the chance of an encore too.]]>

What if?

Janet Porter — Thu, 5 Jun 2008 00:00:00 GMT

MASSIVE investment in a new generation of containerships has been driven by an extraordinary shift in trading patterns over the past five years. As China embarked on what one pundit has described as the biggest wealth creation programme of all time, so manufacturers in North America and Europe rushed to set up factories on the other side of the world.

Rockbottom production costs, and equally low freight rates enabled goods to be made in China, shipped thousands of miles, and still be sold at ever decreasing prices that have kept a lid on inflation.

But can this formula work for much longer, given soaring fuel prices that are playing havoc with business plans of industrialists and shipowners alike?

Vast sums of money have been pumped into fleet expansions on the premise that globalisation was here to stay, and that ships of ever-increasing size would been needed for the foreseeable future to cater for the insatiable demands of western shoppers.

But what if the cost of transporting merchandise over these vast distances ceases to make sense as consumer spending slows and Asia loses its cost competitiveness? Could manufacturing be shifted back closer to the marketplace, rendering many of these leviathans redundant?

That is not likely to happen overnight, but neither should such a possibility be ruled out. The global economy is entering uncharted territory on several fronts, whether it is rocketing energy prices, stiffer environmental standards, a slump in high street spending, or that post powertful of forces � a shift in sentment.]]>