- Baltic Wine Society: Spanish Tasting
On Wednesday 5 September the Baltic Exchange Wine Society welcomes back wine expert David Hughes to host a celebration of the emerging wine regions of Spain.
Guests will be welcomed with a glass of Reserva Cava followed by a further six wines of varied styles of grape, accompanied by a selection of tapas.
The event is priced at £15 for members, £20 for non-members (prices exclude VAT) which includes all seven wines and tapas.
Seats are limited so those interested in attending should register their interest in good time by emailing firstname.lastname@example.org
To view the flyer, click here.
- Scrubbing up on sulphur
The 2018 TradeWinds Shipowners Forum, held at Posidonia in Athens in early June, asked shipowners to look to the future — one that comes with substantial emissions regulation. While the International Maritime Organisation (IMO) has recently adopted a strategy that envisages decreasing total annual greenhouse gas emissions by at least half by 2050 (compared with 2008), shipowners are facing a much more imminent prospect in the form of the body’s decision to limit sulphur in fuel oil that is used on ships to 0.50% mass by mass. The restriction, which comes into force on January 1, 2020, has been described by the marine branch of gas and oil corporation ExxonMobil as “arguably one of the industry’s most defining moments since the shift away from coal”. The IMO claims that the move “will significantly reduce the amount of sulphur oxide emanating from ships and should have major health and environmental benefits for the world, particularly for populations living close to ports and coasts”.
When it comes to compliance with the regulation, shipowners have different options at their disposal. They can opt to burn compliant fuels — marine gas oil (MGO) or ultra-low-sulphur fuel oil — or choose to burn liquefied natural gas, or alternatively, they can decide to use abatement technology — exhaust gas cleaning systems, or scrubbers. The latter option was a hotly-discussed topic at the TradeWinds Shipowners Forum this year, with mixed opinions on the suitability of scrubbers with regards to ensuring adherence to the incoming sulphur cap. In a panel at the event, Alexander Saverys, chief executive at Hunter Maritime and Compagnie Maritime Belge, was of the opinion that scrubbers were not a good thing for the shipping sector.
“I don’t think the public will appreciate that we’re taking the sulphur from the air and just putting it into the ocean,” he commented on the technology, later saying that although a business case for scrubbers exists, he feared that again, by not being proactive, this industry will be blamed for poor choices regarding the environment.
Ismini Panayiotides, founder and chief executive of Pavimar Shipping, agreed that what the industry is doing with scrubbers will not help the oceans. Ballast water treatments are being used to clear the water coming out of vessels to preserve the environment — yet, she explained, “with scrubbers, we’re doing the exact opposite thing”. Ms Panayiotides claimed that slow steaming — running cargo vessels at substantially lower than their maximum speed — might be the sulphur cap compliance solution, arguing that “it will definitely benefit our industry, increasing tonne-mile demand”.
I don’t think the public opinion will appreciate that we’re taking the sulphur from the air and just putting it into the ocean
Responding, Milena Pappas, Star Bulk commercial director, cited a study measuring sulphur volumes. “If you put all the sulphur in the sea on top of the sea, it would be about a metre and a half,” she explained. “If you add what the ships will add into the sea, it’s not even paper-thin. That’s one thing. The second thing is that sulphur in the sea is not harmful, whereas in the air, it kills about 600,000 people per year — that’s the estimate. So putting it in the sea is not damaging it — it already exists.”
However, Mr Saverys felt that the general public would view scrubbers as “polluting”.
“We are already perceived as being a polluting industry, and now what are we doing?” he asked. “We’re just taking the sulphur from the air and putting it in the ocean, and that’s the way people are going to pitch it.”
SwissMarine Bermuda director Peter Weernink believed that right now, a lot more scrubbers are being fitted than are being publicly reported.
“Today, all the major trading houses will pay premiums for vessels with scrubbers and they’re all looking to find scrubber-fitted vessels full-period,” he said. “That’s where the industry is going.”
In a separate BIMCO Power Panel debate at Posidonia, opinion on scrubbers was similarly divided. According to Peninsula Petroleum market analyst Valentina Vignoli, at the time the 2020 sulphur cap legislation was passed, there was an expectation that exhaust cleaning systems would be the main solution, but this hasn’t happened. Yet, N.S. Lemos analyst James Leake believed that creative methods exist for financing scrubbers and noted that in certain cases, there are very apparent reasons to invest in them, with payback in eight to 12 months.
“I think it’s a no-brainer, but it is a very narrow opportunity,” he said. “I expect that half of the very large crude carrier fleet will have scrubbers fitted. But unless you jump on the bandwagon now, that opportunity will disappear.”
Mr Leake also noted disadvantages of exhaust gas cleaning systems, however.
“When it comes to 2021–2022, it’s in a refiner’s interest to produce more low sulphur,” he said. “Yes, a scrubber makes sense in the short term, but unless you have paid that back within two years, you have wasted your time.”
On the Tradewinds’ panel, American Bureau of Shipping chairman, president and chief executive Christopher Wiernicki argued that one size does not fit all and that a lot of factors go into creating “the right effective fuel strategy”.
“You’ve got vessel age, you’ve got vessel operating profile, you’ve got whether it’s new construction or existing vessel, you’ve got fuel availability, you have charter requirements,” he explained, noting that a period of instability, with much concern about fuel quality, safety and availability, will come with 2020 and the period immediately afterwards.
Mr Weernink predicted that the average bunker price for the marginal ship will be greater in 2020 and that the fleet will slow down, while Ms Pappas raised the estimate that “even if everyone tried to install the scrubbers by 2020, only 20% of the fleet would be able because of the availability and the yard capacity”.
“So, by definition, MGO, marine diesel oil, will be more expensive because that will be more compatible, so by definition that will bring speeds down because every one knot is about 5% to 7% of the supply of tonnage,” she said. “So, we will have to speed down and that’s good, anyway, for us.”
With speakers on both panels arguing that shipping is being made to think greener and that the shipowning industry must be prepared for the transition away from fossil fuels, environmental debates such as these will continue long past the 2020 deadline.
- Book signing at the Baltic Exchange
Baltic member Jian Jun Wang is looking to raise funds for the Sailors Society through the sale of his book “Ship Market Trends.” The book looks at the dry bulk, tanker and container markets.
Currently director of shipping management and advisory at Commonwealth Bank of Australia, Mr Wang is supporting the Sailor’s Society which this year celebrates its 200th anniversary.
A book signing session takes place at the Baltic on 28 June from 6 pm until 8 pm, Baltic Exchange members are invited to attend a drinks reception.
If you would like to attend, please email email@example.com.
Copies of the book can be ordered online via www.amazon.com/gp/offer-listing/9881445078
If you would like to keep updated on Mr Wang’s fundraising efforts, or, if you would like to donate separately to the purchase of the book, visit: https://www.justgiving.com/fundraising/shipmarkettrend
- Member update: 27 June
The following individual has applied for Retired Membership:
Mr A S Barnard
Any comments should be passed to Karen Karanicholas by 4 July 2018.
- Freightos Baltic Global Container Index now available
The Freightos Baltic Global Container Index (FBX) is now available to all members and subscribers. Published weekly on Sundays, FBX represents ocean freight prices, including all ocean surcharges (BAF, CAF, SCS, PCS, PSS, WRS).
Prices used in the index are rolling short term Freight All Kind (FAK) spot tariffs between carriers, freight forwarders and high-volume shippers.
Index values are calculated by taking the median price for all prices on active lanes with weighting by carrier. 50 to 70 million price points are collected every month.
FBX is based on aggregated and anonymised real-time data from global carriers, forwarders and shippers that offer services on Freightos.com or use the Freightos AcceleRate freight rate management platform and have consented to this usage.