SHIP OPERATING COSTS STABILISE AS MARKET RECOVERY LIFTS PRESSURE
The cost of operating cargo ships rose marginally in 2017 following two consecutive years of falls, but shipowners should prepare for higher costs led by a spike in insurance premiums, according to the latest Ship Operating Costs Annual Review and Forecast 2017/18 report published by global shipping consultancy Drewry.
After two years of marked decline, average vessel operating costs stabilized in 2017 as pressure on owners was lifted by a nascent recovery across most cargo shipping markets. Trends in ship operating costs are heavily linked to developments in the wider shipping market, external cost pressures notwithstanding. But the recovery has not been uniform across all sectors, and risks remain. Despite a brighter economic outlook, the industry is still weighed down by excess capacity, poor profitability and high levels of debt and many owners are struggling to survive. Poor financial returns have kept the pressure on costs and we expect this to remain the case for the foreseeable future.
Drewry estimates that the average daily operating cost across the 44 different ship types and sizes covered in the report rose 0.9 percent in 2017, following a 7.5 percent fall over the previous two years. Costs rose for most cargo sectors, with the exception of container shipping which achieved a third consecutive year of cost reductions.
IOC TO EXPORT JET FUEL TO MYANMAR, EXPLORE LPG MARKETING DEAL
Indian Oil Corporation (IOC) will start exporting aviation turbine fuel (ATF) to Myanmar from next month. The State-owned oil major is also exploring the prospects of LPG exports and will open an office in Yangon.
According to IOC sources, the company will export 12,000-14,000 tones of ATF and an equivalent amount of diesel to Myanmar for the next three months from Paradip Refinery on the Odisha coast to a joint venture of State-owned Myanmar Petroleum Enterprise (MPE) and Puma Energy. Diesel is added to the consignment to ensure critical volume and optimize shipping costs.
Myanmar is interested in a long-term contract to meet its 15,000 tonnes a month ATF requirement. A team from the joint venture will visit the IOC facilities in India soon to discuss the long-term business prospects. Meanwhile, the Myanmar government approved a proposal from IOC to open office in Yangon.
SCI VESSEL SINKS, CREW RESCUED
A Shipping Corporation of India (SCI) vessel sank off the coast of Mumbai last Tuesday. All 15 crew members were rescued by a ship sailing close by. According to sources, SCI Ratan, an offshore support vessel, was commissioned in 2011. Around 5.30 pm Tuesday, flooding was reported in the main engine room, and by 7.30 pm the ship sunk in Bombay High, around 175 km from Mumbai.
The crews were rescued by another SCI ship, which was pressed immediately after a distress call was made (by SCI Ratan). It was a ship-to-ship rescue operation. The Indian Coast Guard, which is monitoring the situation, said it would assess the situation. For the maritime security agency, there are two main concerns — if there has been an oil leak and if the ship was carrying any cargo that was hazardous in nature.
S&P GLOBAL PLATTS CONTAINER INDEX FALLS
The S&P Global Platts Container Index fell $17.50 in the week ending November 17 to $913.83 as fundamentals seemed to have won the battle from the previous week as the most head-haul routes dropped $50 last week, the North Asia to Mediterranean and North Asia to UK and North Continent routes in particular, ending the week at $950/FEU and $1,150/FEU, respectively. Both these routes had quotes lower than these assessments so they could fall further this week.
There are some supply-chain issues that are causing spot rates to diverge for specific cases on the North Asia to UK and North Continent route. This is at a time when securing annual contract renewals is key, especially when box rates are being quoted between $1,300/FEU and $1,400/FEU.
IRAN PUSHES TO RETAIN ASIA OIL BUYERS
Iran is pushing to retain customers for its oil in Asia, hoping that price reductions will boost the appeal of its crude compared with other Middle Eastern supply even as the potential threat of further US sanctions on the country looms.
The National Iranian Oil Company has in the last few weeks offered spot cargoes, ranging from light to heavy grades, to its term buyers in Asia, after setting December prices at the lowest in years against comparable Saudi grades. The sources declined to be identified as they were not authorized to speak with media, while NIOC was not immediately available for comment.
That comes as US Congress has until mid-December to decide whether to reimpose sanctions on Iran that were lifted in exchange for it limiting its nuclear activity, with President Donald Trump disavowing Tehran’s compliance with the terms of that deal.
HISTORIC COAL VESSEL QUEUE AT AUSTRALIA’S DALRYMPLE BAY COAL TERMINAL
The number of coal vessels queuing at the Dalrymple Bay Coal Terminal in Australia’s Queensland state is at the highest level seen since early 2010, shipping data and historical records from terminal operator DBCT Management showed.
On Wednesday, there were 44 ships at anchor off the terminal and two loading coal, according to shipping data. Monthly daily average queue lengths for the terminal have not breached 40 ships since 2010, according to DBCT Management data dating from April 2009 to June 2017.
Figures were not readily available for July-October of this year. In 2010, the average daily queue in May grew as long as 61.7 ships, according to the data. But from 2011 to June 2017, the monthly daily average queue has exceeded 30 ships only twice. In November last year it was as low as nine ships. The most recently available monthly daily average is for June when there were 27.6 vessels.