APM2012: Asia’s Maritime Industry Rides the Wave

27/02/2012Filed under:Asia Pacific Maritime / Maritime / Special Report / feature / independent / offshore / singapore

Perhaps more than most sectors, the fortunes of the marine and shipping industry are tied to that of the global economy. As the world economy continues to recover, and ahead of the Asia Pacific Maritime 2012 conference and exhibition in Singapore, Sarah Pursey speaks to the event organiser and two leading keynote speakers to gain insight into the latest and anticipated industry trends, and where the bright spots still exist, as maritime activity continues to gravitate towards Asia.

Featuring 14 national pavilions this year – including Taiwan and Australia, for the first time – and shipping giants such as China, Germany, Japan, Norway, the UK and South Korea strongly represented on the exhibition floor, Asia Pacific Maritime 2012 will be a key event for the global maritime industry, as interest increasingly gravitates towards the brighter market prospects and activity in Asia. “With 900 leading international maritime exhibitors across 50 countries converging with an expected 13,000 visitors (a 30 per cent rise on visitor numbers in 2010), we expect to see robust activity on the market floor,” informs Ms Michelle Lim, MD of Reed Exhibitions – organisers of Singapore’s flagship maritime event later this month.

“And while areas like shipping face a solemn outlook, there are several bright spots amid the gloom, such as offshore, green shipping and technologies,” continues Ms Lim. In terms of local developments, such highlights include the upcoming S$1.7 billion LNG terminal at Jurong Island – slated to open in Q2 2013, it will boost Singapore’s plan to become a regional, if not global, LNG trading hub. In the area of green shipping, meanwhile, Singapore’s Maritime Singapore Green Initiative, launched last April, will see the MPA invest up to US$100 million over the next five years, to encourage businesses to employ environmentally-friendly shipping practices above and beyond what is IMO-mandated.

Asia takes centre stage

Beyond these local boosts to the sector, and despite the slowdown – growth for the region in 2012 has been revised down to 7.3 per cent – no one is in much doubt that it is Asia that will continue to lead the global economy. With China, India and Indonesia at the helm, the region will remain ‘the economic powerhouse of the world’, said Haruhiko Kuroda, head of the Asian Development Bank (ADB), speaking at the World Economic Forum in Davos, earlier this year.

Asia’s rising prominence on the world stage means that Asia Pacific Maritime 2012 will be a key event for the global maritime industry, with interest increasingly shifting towards the brighter maritime market prospects and activity in the region. Yet, given the unpredictable climate and challenges facing the volatile global maritime landscape, one of the most anticipated conference talks is likely to be ‘Asian Shipping: Coping with Turbulent Waters’. This keynote session will be co-chaired by industry heavyweights Mr Noboru Ueda, Chairman and President of ClassNK, and Vice-Chair of the International Association of Classification Societies Ltd (IACS) Council, and Mr Simon Bennett, External Relations Director of the International Chamber of Shipping (ICS). Euroasia Industry caught up with both gentlemen for exclusive interviews on what challenges and opportunities lie ahead.

MR SIMON BENNETT – EXTERNAL RELATIONS DIRECTOR, INTERNATIONAL CHAMBER OF SHIPPING (ICS)

What is your outlook for the financial health of the global maritime industry this year?

While trade picked up a little following the collapse in 2009, the latest World Trade Organization projections for 2012 are not very positive – and global trade is probably not much improved on the levels that existed before 2008. Shipping, of course, is the servant of world trade and, just as it benefited from the boom years of the mid 2000s, its fortunes are now also inextricably linked to the recent fall in the demand for its services.

To a large extent, many shipowners have been shielded from the full severity of the current economic crisis by the seemingly inexorable growth of China, with its apparently insatiable demand for raw materials and relentless expansion of its manufacturing capability. But even this beacon of light cannot be guaranteed.

If, as seems likely, the Eurozone goes into a full recession – or, even worse, implodes – the implications will almost certainly be global, and may well reduce demand for shipping services from China, and the other BRIC nations too. Leaving aside the impact of what may or may not happen in Europe, the continuation of China’s policy of massive infrastructure expansion cannot be taken for granted should it decide to place more emphasis on meeting the demand from its people for more domestic consumption.

What do you feel are the major challenges in the drive towards sustainable shipping? How is ICS supporting its members in this drive?

This is a big question. Our priority is to discourage protectionism and maintain the level playing field that shipping needs to operate efficiently. While supporting the International Maritime Organization, our national member shipowner associations seek to maintain global rules for our global industry, since the alternative of a patchwork of regional or national rules would be chaos – the same rules must apply at both ends of a voyage.

However, the biggest challenge to sustainability is something over which we have little control. Current markets would appear to be demonstrating just how seriously damaging the oversupply of ships has been to shipowners’ revenues, with many now struggling to meet operating costs. In the current climate of massive uncertainty, rates are as volatile as ever. Rates for bulk carriers, for example, are a fraction of what they were a few months ago.

However, whatever the insatiable appetite of individual owners, the biggest danger perhaps is the overcapacity that exists in the shipyards, with an almost obsessive commitment to market share being displayed by the three major shipbuilding nations – China, Korea and Japan, where 90 per cent of world tonnage is built. Even if some shipyards go bankrupt, it is almost certain that their governments will step in to support them so that they can continue to produce ships which few people want – other than speculators who may be foolishly tempted by knock down prices.  

What do you believe are the most pressing issues with regards to safety in the maritime industry?

The Costa Concordia cruise ship tragedy will certainly influence the immediate regulatory agenda of IMO, and the industry must contribute constructively to the discussions.  More topical in Asia, ICS is very concerned about the recent loss of several ships carrying nickel ore/iron ore fines loaded in India, the Philippines and Indonesia, apparently due to cargo liquefaction causing cargo to shift dramatically. ICS members were especially disturbed by the recent tragic loss of 22 crew on the Vinalines Queens after loading a nickel ore cargo in Indonesia. The issues are complex, but the root of the problem would seem to be the refusal of some shippers to allow the appointment of independent surveyors to conduct cargo testing in accordance with IMO requirements – plus the commercial pressure placed on masters to accept potentially unsafe cargoes at what are often remote locations.

More generally, many accidents that still occur are all too frequently due to a failure to follow established rules and procedures, an absence of regulations is rarely the problem. Much progress has been made in recent years through developments such as the ISM Code, but more can be done to inculcate a genuine safety culture both at sea and ashore.

According to the recent Oceans Beyond Piracy report, the impact of piracy on the global economy was nearly US$7 billion last year. What measures do you feel must be taken to curb this threat?

The industry’s main concern is humanitarian rather than economic and the current situation remains totally unacceptable, with about 200 seafarers still being held hostage in the most appalling conditions, with thousands more still having to transit the danger area in constant fear of their lives. The capability of Somali pirates is actually higher than it has ever been, but ICS national associations have agreed to work to ensure that the problem of piracy retains sufficient political and public attention so that the crisis might be properly and decisively addressed during the year ahead. The ICS Board has therefore identified three specific immediate objectives: we need to persuade governments to task the military to take the attack directly to the pirates, while at the same time continuing to defend merchant ships in the best way possible. Second, every apprehended pirate should be arrested, taken to a court of law and, if found guilty, imprisoned. Thirdly, governments must break the financial chain through legal action against criminal financiers investing in piracy wherever in the world they are identified.

Finally, how important will Asia be to the future of the global maritime industry?

The centre of gravity of the shipping industry is inexorably moving towards Asia. However, for sound historical reasons, the principal maritime regulatory institutions will remain in London. It is therefore important that the Asian industry participates in discussions at these international bodies and presents its opinions articulately and with confidence. For shipowners, the best means of achieving this is through Asia’s national shipowners’ associations, which, as well as briefing their national maritime administrations, can contribute to the development of global industry positions on the challenges that affect us through bodies such as ICS.

MR NOBORU UEDA – CHAIRMAN & PRESIDENT OF ClassNK, and VICE-CHAIRMAN OF THE INTERNATIONAL ASSOCIATION OF CLASSIFICATION SOCIETIES LTD. (IACS) COUNCIL

What is your outlook for the financial health of the global maritime industry this year?

While the current economic climate and depressed charter rates are posing many challenges for operators and owners around the world, one of the most important trends is the rapidly increasing price of ship fuel. This is completely changing the way owners think about the price of ships. When fuel oil is cheap, a vessel’s fuel efficiency is less important than the overall price of the ship. This meant that previously it made better economic sense for owners to buy cheaper, less efficient vessels. Today however, with the price of heavy fuel oil around US$750 per ton or more, we have the opposite situation: more efficient ships, even if of higher price, are of much better value over the course of their lives than their cheaper, less efficient counterparts.

With new environmental regulations limiting sulfur and other emissions coming into effect in the near future, the price of fuel will continue to rise – making the shift towards more efficient vessels all the more imperative. This will be a tremendous challenge for the maritime industry as a whole, but I think it will help usher in a new era of green shipping.

What recent developments within IACS have supported sustainable shipping practices?

One of the biggest developments in the maritime industry is the adoption of the IMO’s new Energy Efficiency Design Index (EEDI), which will enter into effect at the start of 2013. The EEDI effectively mandates greater vessel efficiency with stricter requirements being phased in over the next few decades. At ClassNK, we’ve been a huge supporter of the EEDI, both as a member of Japan’s delegation to the IMO and as the largest classification society within IACS.

More than just implementing new regulations however, we think it is of the utmost importance to support the research and development of new green technologies. That’s why we have dedicated more than US$28 million to a Japanese national project aimed at developing new technologies capable of reducing maritime GHG emissions by as much as 30 per cent compared to existing vessels.

What are the major trends and challenges in safety, and what have been the latest measures / actions employed by IACS to support safer shipping?

While IACS is constantly working to improve the safety of ships and better protect life at sea, one of our important tasks over the past year or so has been ensuring that the IMO’s EEDI scheme can be safely implemented. For example, because it is possible to improve a vessel’s EEDI score by reducing its overall speed (and thus improving fuel efficiency), shipyards could build underpowered vessels to meet the new regulations. In order to prevent this from happening, IACS has worked with owners and shipyards to include lower limits for speed reduction, among other measures to ensure that improved efficiency doesn’t come at the cost of safety.

Are there any technologies or services offered by either IACS or ClassNK that you would like to highlight?

One of the most important technologies that ClassNK has been working on is a new air lubrication system, developed as part of the Japanese national GHG reduction project. This system uses a blower system to produce air bubbles along the bottom of the hull, reducing friction, improving efficiency, and reducing emissions by as much as 10 per cent. It has already been installed on two module carriers owned by NYK-Hinode Line, and is slated to be installed on three new bulk carriers being built by Oshima Shipbuilding with the assistance of?Mitsubishi Heavy Industries for grain major ADM. This is an exciting technology that we hope we will enter wide use in the years to come.

Finally, how important will Asia be to the future of the global maritime industry?

China, Korea, and Japan have long been the world’s leading shipbuilding nations, and they are also home to a large and growing number of shipowners, manufacturers and other related industries. At the same time, Singapore has grown to become a maritime centre that is unparalleled around in the world in terms of its concentration of shipowners, operators, and financial institutions. With the growing importance of South Asian countries like the Philippines, Vietnam, Indonesia, Malaysia, India, Bangladesh and Sri Lanka – not only to manning, but also shipbuilding, ship owning, and offshore energy development – Asia is truly the engine of the maritime world.

Read our Post-Event Report on APM2012 in the next issue of Euroasia Industry

ASIA PACIFIC MARITIME 2012

Date: 14-16 March 2012

Location: Sands Expo & Convention Centre, Singapore

Exhibitors: 900 leading international maritime companies

Visitors: 13,000

Keynotes and conferences
– The Future of Green Ships – Ship Financing in Asia – Ballast Water Treatment – The 4th Offshore Support Vessels Summit – Environmental Issues Affecting Bunker Supply & Quality: the Asian Perspective – High-Risk Activities in Marine Industry workshop 

Visit:www.apmaritime.com to register