High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
Congratulations, you’ve (almost) made it to 2017! As 2016 comes to end, we’re taking a look back at some of the top maritime stories making headlines throughout the year, as chosen by our editors and presented in no particular order. Also if you’re interested, we have already taken a look back at the Top 10 Most Viewed Posts and Best Maritime Videos of 2016, so be sure to check those out.
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The investigation into the sinking of the American cargo ship El Faro with the loss 33 crew was in full-swing throughout the year. Highlights included when search crews located and later retrieved the ship’s Voyage Data Recorder, leading to the release of the tough-to-read bridge audio transcript earlier this month.
Archive: El Faro Investigation
You don’t need me to tell you… the prolonged slump in oil and gas prices that began in mid-2014 continued as expected in 2016, impacting virtually every energy-related business and sector out there. Lower rig activity across the globe has really hit the offshore service vessel market. In Singapore, the collapse of Swiber Holdings setting off tremors in Singapore’s banking and energy industries. Worst part is we’re likely to see a similar environment continue through next year.
After two years of delays, the Panama Canal expansion opened to longer and wider ships on June 26, 2016 amid controversy over the design and safety of the new locks. Since their inauguration, more than 500 Neopanamax ships have successfully transited the larger locks, including the first LNG carriers to ever use waterway.
The LNG carrier Asia Vision departed Cheniere Energy’s Sabine Pass LNG terminal in February carrying the first cargo of shale gas to be exported from the United States. LNG exports from the U.S. represent a major shift in global energy markets and set the United States up to become a net exporter of LNG for the first time in decades.
On August 31, 2016, South Korea’s Hanjin Shipping, at the time the world’s seventh largest container shipping company, filed for bankruptcy, leaving dozens of vessels and billions of dollars worth of cargo stranded at sea. The bankruptcy was the first among the major carriers, and may prove to be the tip of the iceberg for the container shipping market.
In September, Danish business conglomerate Maersk Group, owner of the world’s biggest container shipping company, announced that it would be splitting into two separate divisions; Transport & Logistics and Energy. The new strategy will focus more on the company’s core transportation and logistics services and away from its oil and oil related businesses, although some question whether the new strategy will lead to more success.
The Baltic Dry Index, tracking rates for ships carrying dry bulk commodities, hit an all-time low of 290 points on February 10, 2016, representative of just how far the dry bulk market has fallen since its peak in 2008. While the BDI has recovered slightly since then (it closed this year at 961 points), the market continues to be under pressure from too many ships chasing too few cargoes.
In June, the U.S. Coast Guard finally published its long-awaited Subchapter M Final Rule, which establishes new requirements for the design, construction, onboard equipment, and operation of towing vessels in the United States.
The car carrier Modern Express made global headlines in late January after it lost power and stability in the stormy Bay of Biscay. The vessel spent about six days drifting dangerously close to the French coast before salvage crews were able to coral the vessel and tow it into port. Although it was not the biggest salvage job of the year, it was for sure the most exciting to follow.
Whether mergers, takeovers or shipping alliances, consolidation continued to be the name of the game in the container shipping market as carriers struggle to survive the prolonged industry downturn. The biggest deals of the year included CMA CGM’s takeover of NOL, Maersk’s acquisition of rival Hamburg Süd, and the planned merger of Hapag-Lloyd and UASC. Although the market is believed to have bottomed out, experts warn that consolidation is likely to continue in 2017 amid a slight recovery.
The development of unmanned and autonomous ships continued to raise eyebrows in 2016, with a number of new developments too many to list here. But if there’s one thing for certain at this point, it’s that drone ships are actually happening… it’s really just a matter of when and how.
Archive: Drone Ships
Allseas’ giant installation/decommissioning and pipelay vessel, Pioneering Spirit, was finally put to the test removing the Yme platform from the North Sea. At 382 meters long and 124 meters wide, the Pioneering Spirit is one of the largest ships ever constructed, and sets a number of records for its lifting and pipelaying capacity.
The International Maritime Organization in October set global regulations to cut sulfur emissions from vessels and said they would enter into force from 2020, not 2025. The regulations will see sulfur emissions fall from the current maximum of 3.5 percent of fuel content to 0.5 percent, but many fear the new rules will add costs and cause uncertainty.
Archives: Shipping’s War on Emissions
Shipyards across Asia struggled in 2016 amid a low demand for new ships and offshore oil rigs. South Korea’s Big Three – Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding and Marine Engineering – have been hit very hard by the slump with delivery delays, cancelled orders, 20,000 job cuts, and losses amounting to billions of dollars.
If there was one market that was not struggling this past year, it was international cruise ships. The world’s largest cruise lines continued to introduce and order bigger and better ships. In fact, there are 97 new cruise ships on order right now, representing an estimated investment of $53 billion through 2026 – including 26 new ships to debut in 2017 alone.
Another bright spot has been in offshore wind. Just this month the first offshore wind farm in the United States opened off Rhode Island as more projects are planned for development. Across the Atlantic, Dong Energy is planning what it has described as the North Sea’s offshore wind hub in Grimsby, England. Whether by choice or necessity, more and more offshore companies seem to be turning to wind to find work.
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