Large floating drydock arrives at San Diego

ca-drydockThe largest floating drydock in California recently arrived at the San Diego shipyard of BAE Systems. It is 950 feet long. The company has planned a $100 million investment to develop the yard ahead of the anticipated development of the US Navy along the West Coast of the US.

The yard was towed in by the Polish tug Terasea Eagle. A team from BAE will take two months completing the final assembly and testing of the dock, after which it will be certified as ready for use. It is hoped to be fully operational by early in 2017, and already the first ship, USS New Orleans, is booked in for servicing.

The heavy lift vessel Blue Marlin passes through Astoria, Ore., on its way to Portland, Aug. 24, 2014. Coast Guard and Coast Guard Auxiliary personnel, working with local law enforcement, provided an escort for the ship to ensure the safety of boaters along the Columbia River. (U.S. Coast Guard photo by Petty Officer 3rd Class Jonathan Klingenberg)

Whilst this is big, the largest floating drydock in the United States is the Vigorous, at 960 feet long. This is based at Vigor Industrial’s shipyard at Portland, Oregon, and has an 80,000-ton capacity. It was designed to meet the requirements of the US Navy’s military standards as well as the American Bureau of Shipping. The drydock was delivered aboard the heavy lift vessel Blue Marlin in 2014.

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Carnival reports
strong Q4 for 2016

dsc00679-fill-600x450Carnival Corporation reported on 20th December that the fourth quarter income for 2016 had increased from $270 million to $609 million, year on year. Ticket sales, onboard spending and bookings for shore excursions all rose significantly. Overall the corporation posted a record $2.8 billion profit for the full fiscal year 2016.

Arnold Donald, President and CEO for Carnival, stated that capacity would increase a further 2.6% next year. The CFO, David Bernstein, reported that bookings for 2017 were well ahead of 2016. The fourth quarter saw the introduction of Carnival’s Carnival Vista, Holland America’s Konigsdam and Seabourn’s luxury Seabourn Encore. Also in the quarter three new cruise ships were ordered from Meyer Werft, to be powered by LNG, two for Carnival Cruise and one for P&O.

156925Expenses were up on last year, with increases in payroll, fuel costs, food and overall operating costs affecting final profits. Donald reported: “We are anticipating another solid year in 2017… the underlying strength in out fundamental business leaves us well positioned to achieve sustained double digit return on invested capital”. It was agreed that China was a developing market, with a number of charters and sub-charters to be completed. Carnival was also actively looking to include Cuba in its programme, and had applied for authorisations for at least one of the Carnival brands to be approved by June 2017.

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Maersk announces new strategy to split business

maersk-triple-e-containershipThe CEO of Moller-Maersk, Soren Skou, announced on 12th December that the new strategy for the company would be to separate its energy activities from the transport and logistics operations. His plan is to develop the transport area for containerships. At first glance this seems odd, given the recent rally in oil prices and forthcoming deals with OPEC to control global output.

The container business has seen a serious deterioration in earnings this year, with the slump expected to continue for some time yet. Maersk has introduced a number of cost-cutting measures this year, which have helped reduce its losses significantly, but for the new strategy to work effectively, much more will need to be done. Freight rates have risen slightly recently, which will help, but there’s no guarantee that rates will improve further in the near future.

The purchase of Hamburg-Süd reported here recently should help, too, but it is uncertain how quickly this will show in the books. The principal problem facing all companies in the containership market is that there is excess capacity available, with several new ships on order or nearing completion. Scrapping or mothballing many of the less-efficient vessels would help reduce this, but it seems uncertain which company will blink first and accept their losses are too much. Maersk themselves believe that it will be 2022 before capacity will exceed supply.

Although Skou is slashing capital expenditure it is not clear that this will help long-term. He is expecting the average return on capital to increase from 7% up to 8.5%, but over an extended time scale. This may yet not be enough to reassure investors.

Moller-Maersk’s credit rating was put under review last September by Moody’s, and on 20th December was downgraded from BAA1 to BAA2, with a negative outlook. Last month Standard & Poor downgraded the company’s credit rating to BBB, with a negative outlook. Maersk acknowledged that its debt to operating profit ratio had climbed to 2.5 over the 12 months to the end of September. The company plans to reduce its capital expenditure from $6 billion in 2016 to $4 billion by 2018, and is looking at reducing the annual dividend again.

maersk-responsible-ship-recycling-india-1As part of the company’s planned savings, it is to scrap eight panamax ships in yards at both Alang and in China. Several are already being demolished, with the others to follow by mid-March 2017. They plan to reduce their fleet still further, as ships reach the end of their economic life. However, Maersk is committed to only using yards that meet or exceed the Hong Kong Convention on standards and safety.

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Cruise Association “industry is seeing steady growth”

The worlds largest cruise ship, the 361 metres long, Harmony of the Seas, arrives in port for her mayden voyage, in Southampton, Britain May 17, 2016. REUTERS/Peter NichollsIn their 2017 report into the state of the industry, Cruise Lines International Association claimed a steady increase in interest in travel cruising and also significant level of investment within the industry. They stated that they expect further increases next year, and predicted around 25.3 million passengers could be texted to cruise during 2017.

More new ships are due to be added to the fleet in the coming 12 months, with 26 new ships for river cruises, ocean cruises and the growing market for specialty and adventure cruising.  It was further claimed that 97 new cruise ships in all areas would be added over the next 10 years. The President and CEO of the Association, Cindy d’Aoust, reported: “The cruise industry is responding to global demand … resulting in study growth and strong economic impact..”

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Panama Canal announces series of milestones

unity-in-panamaOn 19th October the Panama Canal Authority announced that opening of the new neopanamax locks had helped it to record the third-highest annual tonnage passing through the Canal in over 100 years. In the fiscal year which had just ended, over 330.7 million Panama Canal tons had transited safely, on a total of 12,114 vessels. Neopanamax vessels accounted for around 18.2 million tons, once the expansion project opened in June after 9 years’ construction.

lng-carrier-panamaAround 36% of the total passing through were container ships, followed by bulk carriers and tankers. LNG carriers are now also able to use the Canal, and the lifting of a 40-year old ban on crude oil has allowed Panama to export oil for the first time in decades.

A new toll structure was introduced in April, based on the specific type and amount of cargo being carried. The Authority also introduced a Loyalty Reward programme to encourage container ship operators .

 

 

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Rickmers misses interest payment and scraps ship

pic3bignewOn 15th November Reuters reported that Singapore-based Rickmers Maritime, which operates a fleet of 16 container ships, had been unable to pay interest of $3 million on a $71 million bond. A statement from the company said it faces the risk of going out of business unless it could restructure the debt with bond holders and senior lenders. This followed the company posting a loss of £74 million in the third quarter of this year.

Rickmers also admitted it was in discussions with lenders in an attempt to get waivers on existing senior loans, and that it had requested an immediate suspension of trading in its units and notes. Trading was in fact suspended on the Singapore Stock Exchange on 16th November.

Then, ten days later, Rickmers denied it had recently sold India Rickmers (ex-Hanjin Newport, a seven-year old panamax container ship for scrapping. This  would have been a record for the youngest box ship scrapping to date. It did, however, admit it was considering the sale of the vessel as part of a potential debt settlement agreement.

Finally, on 12th December, Rickmers confirmed that it had in fact sold the containership for scrap, and that the proceeds would be used to partially repay senior loan facilities extended by Commerzbank. We wait to see if there will be more disposals…

deutsche-welle_goenna-ketels-3Meanwhile, also on 12th December, came the sad news that a worker at a shipbreakers in Chittagong, Bangladesh was killed while working to scrap another container ship, the German Viktoria Wulff. The 10-year-old vessel had been sold for scrap when the owners went bankrupt in August.

It was reported that since 2008 nearly 600 ships have been sold following bankruptcies and financial problems, and that most of these ended up at the breakers yards in India and South Asia. This year alone 83 vessels have been sold to Asian scrappers.

In a late update to this story, on 21st December it was reported that investors had rejected a debt restructuring plan that had been put forward. The manager of the trust that operates Rickmers stated it was continuing to work towards maintaining liquidity and will pursue restructuring plans.

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A New York harbour
pilot’s all-weather job

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pilot-boatFor over 300 years members of the Sandy Hook Pilots Association have been helping ships’ captains to navigate their way through the tricky layout of the Hudson River and New York harbour. A spokesman for the Maritime Association of the Port of New York and New Jersey, which represents local commercial shipping companies, revealed that the natural depth in the harbour runs to a maximum of 26 feet.

pilot-approaches-qm2Over the years, as ships have got bigger and deeper, channels have had to be dredged and cut, and it is the local pilots who know and understand these channels. And it is not only the liners who come through, more and more container ships, tankers and other large vessels pass. Additionally the waterway is crowded with ferries, pleasure craft, yachts, canoes and all manner of small vessels.

For some years now the Army Corps of Engineers, under contract from the Port Authority, have been cutting a new 50-foot deep channel to accommodate the larger vessels expected now the Panama Canal has been expanded. This work has also required the difficult task of raising the Bayonne Bridge to give the vessels sufficient clearance.

The skill of the harbour pilot is knowing where each ferry is going to turn, which sandbars have shifted, and where the tidal currents are strongest. Radar and GPS help but nothing beats local knowledge! And he does this in all weathers, every day of the year.

 

P&O ferry crew fail
random drug tests

pride-of-canterburyIn a report released on 13th December, it was confirmed that over 10% of the crew aboard the P&O Ferries Pride of Canterbury had failed a random drugs test. The company had conducted the test on all crew during a regular scheduled service from Dover to Calais, when it was found that 13 members failed the urine tests. The results have been sent off for further analysis, and depending on the outcome, the crew members face disciplinary action.

P&O Ferries confirmed in a statement that they had zero tolerance to drugs, and that individuals were likely to be dismissed. They had also notified the Kent Police based at Dover. At present there is no word on what drugs were involved, or whether they had been consumed while at work or were residual traces in their system. No drugs were found aboard the ferry.

Bulk carrier abandoned
off Cape Town

antaiosA bulk carrier, mv Antaios, was abandoned by the crew in the Atlantic Ocean, off the coast of South Africa, after a serious fire in the engine room. The crew of 19 were later rescued from their lifeboats by the Japanese ore carrier Nsu Inspire, which had diverted to the scene when it picked up the distress calls. They were later taken to Cape Town.

antaios-down-at-sternIt was confirmed on 7th December that the Smit salvage tug, Smit Amandla, had managed to get a line aboard the stricken vessel, and was attempting to get it under tow. A distress call had been put out by the captain after the fire broke out and the engine room flooded, leaving the vessel helpless.

The vessel had loaded with grain, soya flour and corn in Argentina and was heading for Saudi Arabia when the fire broke out. The captain ordered the crew to abandon the ship when the flooding became uncontrollable.

However, the South African Maritime Safety Authority, which was monitoring the salvage, issued a notice prohibiting it from coming within 30 miles of the South African coast until all fuel oil aboard had been removed, for fear of a spillage. An extra tug, Peridot, was sent out with a specialist team to assist with the transfer of the fuel, and to help with pumping out the flooded areas. SAMSA was continuing to monitor operations.

$40 million dumping fine
for Princess Cruises

1280px-caribbean_princess_at_st-_thomas_usvi_lucidAfter pleading guilty to illegally dumping oil at sea, and then trying to cover it up, Carnival’s Princess Cruises was recently fined $40 million. This latest incident involved Caribbean Princess, following information gathered by the UK’s Maritime and Coastguard Agency (MCA) from an unhappy engineer aboard the vessel when it arrived at Southampton in August 2016.

The MCA shared the information with the US Coast Guard, who inspected Caribbean Princess when it arrived at New York in September 2016. The Chief Engineer and Senior First Engineer had hidden the apparatus used, and made the other engineers agree to lie about the methods. However the Coast Guard established that the dumping had been going on since 2005, initially using an unauthorised valve to dump waste, and later using a “magic pipe”. One of the worst incidents was the dumping of over 4,000 gallons of oil whilst only 23 miles off the English coast.

Similar practices were found on four other Princess ships, and included routinely clearing oily bilge water and bilge waste whilst near land.

ocean_hopeThis court action followed a similar case in October, when two German shipping companies, part of Bockstiegel Reederei, pleaded guilty in the US federal court to illegally dumping waste and were fined $750,000. And in September two Greek shipping companies, Oceanic and Oceanfleet, were convicted of illegal dumping oily waste in the Pacific. In March 2016 two other German companies, part of Briese Schiffahrts, were similarly fined $1.25 million plus a $250,000 community service charge for using a “magic pipe” to discharge oily waste.

The US Environmental Protection Agency is continuously checking all vessels in US waters in attempt to improve water quality and the environment.