Shipping news

[Belg]

Hi buddies,

There is a question on my mind which I have problem understanding.

Singapore is the 2nd or 3rd busy port in the world, so the goods are definitely not for Singapore alone.

What would a ship call Singapore a port, and then let the goods load to another ship to go to asean countries, why not go straight to the nearest port of destination? Like go straight to Thailand, Malaysia or what you have?

Is Shenzhen really competing with Shanghai? Will goods mean for delivery at guangzhou area be send to Shanghai? Doesn't make sense isn't it? So they are competing for goods for other areas, but don't other areas have their own ports too??

How did Singapore manage its port status with such a small domestic market??

i use to have similar thinking until i find out it's cheaper for a ship from Indonesia to ship to Singapore then to China or anywhere else in the world, then shipping directly. There must be many reasons why this is so. Why?

We all need to draw back to the numerous Free Trade Agreements we had with numerous countries to thank for. In this FTA, it is basically cheaper to ship tru us as a transshipment node then others.

Think of those numerous trucks out from China, awaiting ships out from HK. Bar those big taxes, companies have to pay if they go tru the nearest china port. So thus, HK port makes the logical choice.

[Ben]

Hi buddies,

There is a question on my mind which I have problem understanding.

Singapore is the 2nd or 3rd busy port in the world, so the goods are definitely not for Singapore alone.

What would a ship call Singapore a port, and then let the goods load to another ship to go to asean countries, why not go straight to the nearest port of destination? Like go straight to Thailand, Malaysia or what you have?

Is Shenzhen really competing with Shanghai? Will goods mean for delivery at guangzhou area be send to Shanghai? Doesn't make sense isn't it? So they are competing for goods for other areas, but don't other areas have their own ports too??

How did Singapore manage its port status with such a small domestic market??

Sharing the little I know, I believe the strength of our ports vs other ports lies on its connectivity. While Singapore is the second busiest port in the world in term of shipping tonnage, it is the world’s busiest transhipment port, in which it tranships a fifth of the world’s shipping containers and half of the world’s annual supply of crude oil. Singapore’s port has connection to over 600 ports in 123 countries and spread over six continents. This is really amazing. How PSA did that? Apart of the geographical advantage, its port handling efficiency plus superior hardware and software has edged out competitors that offer lower cost. Many shippers/shipping lines call on Singapore, transferred their cargoes onto another vessels, or temporary storage at the bonded warehouses, before shipping them out to the final destination. Shipping in this manner (country A -> Singapore -> country B) may not be the shortest route, but usually offers a shorter time and more reliability. (An analog using travelling by MRT vs buses in Singapore. Sometimes it is faster to take train and make a transfer along the way than to take bus because trains are timely, faster and not prone to road traffics condition)

Many years back when I started working, I had a two years stint in a freight forwarding/transportation company. A vessel that calls on PSA are given very limited time to offload all the cargoes, and we have to plan our operations well in advance. We need to make sure our prime movers and trucks are ready to receive the cargoes once the ship berth. It becomes even more critical if it is class cargo (goods that are classified as dangerous). Certain class cargoes can only be transported in the night, with safety vehicles and escort from the traffic police, not unlike receiving VIPs. I guess such strict requirements laid down by PSA has ensure our success as a transhipment hub. And our success as a transhipment hub has also benefitted the freight forwarding, transport, logistic and shipping supplies companies.

[Greenrookie]

Hmm.. Thank you all for your input, is does add a lot of dimensions in thinking about competitive edge if port business. So the competition among ports is competition to be transshipment hub, while the size I domestic market help, others like efficiency, free trade status, regulation, connectivity etc matters too.

So in that case, shanghai does compete with Shenzhen..

[orangetea]

Shipping still very slack due to less inventories and over supply of ships.
Can be easily observed at East Coast beach.
So many ships laid up.

Bulk shipping slack also.
The jurong port is quite empty except for its cement operations.

Lets see when 2015 comes and the single hull ships are banned from international trade routes, if the oversupply becomes more controlled.

Maybe freight rates then will see more profit margin.

[mrEngineer]

One additional point for Singapore port, the exceptional draft (height to seabed). We can park superstar cruise Virgo at harbour front. Not many ports can take such large drafts. Why Indonesia port at Tanjung prior is jam packed? It is the only port along whole northern part of West Java that can take large cargo ships.

But nonetheless we must credit all our success to Sir Stamford Raffles.

[mrEngineer]

i use to have similar thinking until i find out it's cheaper for a ship from Indonesia to ship to Singapore then to China or anywhere else in the world, then shipping directly. There must be many reasons why this is so. Why?

Market demand determines the cost of shipping. Also, it depends whether there is back hauling of ships. For e.g. dry bulk ship bringing coal indo to china may have to come back to indo empty. Cargo ships at busy ports like singapore can cluster and optimise cargoes to certain ports more efficiently then waiting for ports at indo to organize and confirm full shipment to china and in china full shipment back to indo

[greengiraffe]

Worst than my typical view on shipping cycle -this prediction only projects 2 quick bull and 8 grinding bears...

Two good years, then a threat for bulk shipping: Industry boss
Published on Apr 9, 2014

Mr Jacques de Chateauvieux, chief executive of maritime group Jaccar Holdings, said that there is a good balance between growth in demand and supply until next year. -- PHOTO: LIM YAOHUI FOR THE STRAITS TIMES

THE market for shipping raw materials is expected to improve over the next two years before hitting possible headwinds in 2016, an industry boss said yesterday.

Mr Jacques de Chateauvieux, chairman and chief executive of maritime group Jaccar Holdings, said the so-called "dry bulk" shipping sector will have a good equilibrium between growth in demand and supply until next year.

"The utilisation is going up, the day rates are also going up. It started last year and we think that this will keep on going this year - the increase in the cargo to be carried is creating more favourable terms between supply and demand," he told The Straits Times.

Dry bulk carriers move raw materials such as grains, iron ore and coal. The sector is one of the three major components of global shipping, each with its own specific dynamics.

The other two are tankers used to ferry liquids, and container vessels, which move finished goods like shoes and phones.

The strength in bulk will be driven by China and, to a lesser extent, India. Mr de Chateauvieux noted that economic growth in China is expected to still exceed 7 per cent this year and the country imports raw materials to add to its stockpiles when commodity prices are low.

"People expect better terms for the bulk trade in these two years, in 2014 and 2015," he said.

"But more vessels have been ordered last year so the fear is, by 2016, we might enter an oversupply situation, depending on how the overall economy is doing. There's a big worry for 2016."

The Baltic Dry Index, a measure of the rates for shipping commodities, peaked in 2008 before plunging over 90 per cent during the global financial crisis. The volatile index has recovered slightly since then but is still far from the heights in 2008.

Mr de Chateauvieux says his company handles being in such a see-saw industry by being contrarian. It took deliveries of vessels in 2012 and last year but has none under order now - unlike many companies, which are waiting to receive their ships.

Jaccar is also the largest shareholder of offshore services provider Bourbon. Mr de Chateauvieux said that most of the sub-segments in this area - involved in the exploration and drilling of oil and gas - are well-balanced.

Mr de Chateauvieux, who divides his time between Asia and Europe, is in town to deliver today's Singapore Maritime Lecture, organised as part of Singapore Maritime Week.

JONATHAN KWOK

[greengiraffe]

Innovation and size 'don't help shipping firms'
Industry boss urges them to focus on keeping costs low and trading vessels
Published on Apr 10, 2014
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By Jonathan Kwok

FORGET innovation and expansion. The key to making money in shipping is simple: keep costs low, and trade vessels.

That was the sombre assessment of Mr Jacques de Chateauvieux, chairman and chief executive of maritime group Jaccar Holdings, as he delivered this year's Singapore Maritime Lecture yesterday afternoon.

Mr de Chateauvieux argued that the main kinds of freight ships all operate in an environment where innovation does not help for long and where firms do not have much of an advantage by growing bigger. This applies to bulk carriers, oil and gas tankers, container ships and roll-on/ roll-off (Ro-ro) vessels, he said.

Bulk carriers cart commodities, tankers carry liquids and gases, Ro-ro ships move vehicles and container carriers ferry finished products such as furniture and instant noodles. They should aim to make money by keeping operational costs low - minimising wages, being efficient with fuel and keeping overheads lean.

Another way to make a dollar is to keep a lid on capital expenditure by ordering ships from reputable yards in low-cost countries.

"If you can buy the asset at a low price, you'll make money not only from the operations of the vessel, you will also make money from the trading of the vessel when the cycle is right," said Mr de Chateauvieux, who was speaking to more than 300 industry professionals at the Fullerton Hotel.

He noted that companies in shipping need to have a permanent reserve of cash.

"You should not think that your bright idea of innovation is going to protect you from being a commodity product," he said.

Commodity products refer to goods and services that have very little differences no matter who supplies them, and so compete largely on price.

Whenever a firm innovates with a new design for a ship, rivals manage to copy it within two to three years, he said, adding: "Innovation gives a hedge that does not last."

The one type of freight carrier with a slightly better outlook is the low-volume commodity ship that serves smaller ports.

There is still no value from differentiating from other companies, but firms here can benefit from being larger, as the market is geographically segmented.

Firms operate within specific regions and margins will be higher for leaders rather than followers, he said. Larger firms can invest in a standardised and modern fleet.

The various segments of the offshore oil and gas sector also operate in environments where they will benefit from differentiation or size, or both, said Mr de Chateauvieux. Differentiation can be via innovative business models or more advanced vessels.

The Singapore Maritime Lecture was organised as part of Singapore Maritime Week.

jonkwok@sph.com.sg

[greengiraffe]

Large PSV market 'in danger due to oversupply'

Published April 10, 2014
SINGAPORE MARITIME WEEK
Large PSV market 'in danger due to oversupply'
Other two markets in offshore sector better balanced: Jaccar CEO
By
Malminderjit Singh
msingh@sph.com.sg
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Jacquesdecha1004

Jacques de Chateauvieux, chairman and chief executive of the European-based maritime group Jaccar Holdings - PHOTO: SPH

The subsea market has no oversupply problem; it is still a growing market and, with the high barrier to entry, the threat of overcapacity will be minimised.
- Mr de Chateauvieux

THE market for large platform supply vessels (PSVs) operating in the deep-sea segment may be running into trouble due to oversupply - a situation that could tamp down utilisation and charter rates in the near to mid-term.

Jacques de Chateauvieux, chairman and chief executive of the European-based maritime group Jaccar Holdings, said large PSVs were the only segment in the offshore market in danger because of a demand-supply disequilibrium.

The other two markets in the offshore sector - those for shallow-water and subsea vessels - are in better balance, he said.

Speaking to reporters on the sidelines of the Singapore Maritime Lecture, which he delivered yesterday, Mr de Chateauvieux added: "For the deep-sea market, the anchor-handling tug supply (AHTS) vessels side of it is well-balanced. But definitely, there is a situation for the large PSVs, where the order book is 37 per cent of the existing fleet. That might take some time to get rid of."

He said the resulting low utilisation rate and, hence, softer day rates would be in force "for maybe 18 months or two years".

Mr de Chateauvieux suggested that in the shallow-water segment, the demand-and-supply situation for PSVs and anchor handlers was generally well-balanced; less than 7 per cent of these vessels are on the order book, compared to the existing fleet.

The subsea market has no oversupply problem; it is still a growing market and, with the high barrier to entry, the threat of overcapacity will be minimised.

"It is a market where the unit investment is more than US$100 million. Therefore, it is less of a market where people will come on a speculation basis. So it is more professionally managed," he said.

Jaccar Holdings, the largest shareholder of offshore services provider Bourbon, is already using dual-fuel carriers, which means these vessels use liquefied natural gas (LNG) as a fuel where applicable.

Mr de Chateauvieux added that while using these carriers made sense, especially if they operated in Emissions Control Areas (ECAs), he was open to consider using dual-fuel technology for his offshore-support vessels (OSVs), but not on bunker vessels.

"Others in Norway have also done so, so we are learning as well," he said.

The Singapore Maritime Lecture is the anchor event of the ongoing Singapore Maritime Week, led by the Maritime and Port Authority of Singapore.

[greengiraffe]

SINGAPORE MARITIME WEEK
Downside of private equity in shipping highlighted

BYMALMINDERJIT SINGH
msingh@sph.com.sg
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The recovery of certain segments of shipping this year has brought with it an infusion of private-equity capital - PHOTO: ST

[SINGAPORE] The recovery of certain segments of shipping this year has brought with it an infusion of private-equity capital.
Although some of these funds give the much-needed spark to ship-financing in the absence of traditional bank lending, some industry professionals are asking whether the challenges that come with this may be counter-productive.
Among the panellists at the Moore Stephens Singapore Shipping Forum 2014 yesterday was Stavros Tsolakis, a visiting professor of maritime economics and shipping finance at the Singapore Management University and vice-president at the DST Shipping Group, who, referring to these private-equity players' being drawn by strong investment returns, said: "Last year, the prices were really low . . . but the numbers didn't seem to work. This year, especially in dry bulk, the numbers seem to work. So, you see a lot more (private equity) people come in this year."
Mick Aw, a senior partner at Moore Stephens, noted that the average earnings on vessels had been on an uptick since the middle of last year. Then, as the European banks rushed to exit from the sector on the back of regulatory and financial pressures, private-equity investors swooped in to pick up distressed shipping loans at bargain prices.
"Far-sighted and judicious investors who seized the opportunity in 2012 are already looking at good returns," he said.
He observed that private-equity investors have been partnering shipowners and shipmanagement companies to buy and run shipping fleets directly; Oaktree Capital and Blackstone are examples.
With an estimated US$300 billion in unallocated assets, Mr Aw said, the scale of private-equity investment is becoming significant, as is the hunger for investments.
Private equity has been acting as a much-needed bridge between the lower levels of financing banks are willing to provide post-global financial crisis, and the equity that ship-owners can contribute, he said.
Prof Tsolakis was among those who were more circumspect. He said that, since private equity investors typically nurse five-year time frames, a problem will crop up five years hence, when they all look to exit; this is why it is important for them to look beyond the numbers and also invest in the vision of the company and the sector.
George Kypraios, the senior director for Asia at Icon Capital Singapore, also said private-equity investors are likely to exit as soon as a good deal is offered, and that they do not fill the void left by banks.
So it appears that, regardless of their long-term use to shipping, private- equity investors can - for now at least - prop up the sector's recovery.