It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Saturday, May 13, 2023
BC
Prince Rupert Cruise Port Celebrates the Start of 2023 Cruise Season
Prince Rupert Cruise Port GM Kevin D’Costa attends a plaque exchange ceremony onboard Carnival Miracle on May 3, 2023, to mark the ship’s inaugural call and the start of the 2023 cruise season.
Prince Rupert Cruise Port (PRCP), operated by Global Ports Holding, the world’s largest cruise port operator, celebrated the start of its 2023 cruise season with Carnival Miracle, as part of its 14-day Alaskan itinerary. Carnival Miracle, with 2,018 passengers onboard, and Prince Rupert Cruise Port marked the occasion of the inaugural call with a plaque exchange ceremony onboard the ship.
Kevin D’Costa, Prince Rupert Cruise Port GM presented the plaque to Captain Roberto Costi, together with Hereditary Chief Alex Campbell, Councillor Reid Skelton-Morven, Paul Vendittelli – Director, Economic Development & Transportation, Carl Simpson – COO Lax Kw’Alaams Business Development, John Farrell – Board Member, Prince Rupert Port Authority, Jeff Stromdahl – Manager, Trade Development, Prince Rupert Port Authority and Erika Tache – VP of Business Development, Shorex & Landside, GPH.
As the only municipality in The Great Bear Rainforest, with a population of 13,000, Prince Rupert offers visitors breathtaking panoramic vistas and views of the mountains of British Columbia, coupled with rich culture and history, all supported by a warm local community.
This year, Prince Rupert has added to its shore excursion offerings for passengers visiting this scenic area, including a Trolley tour experience, which travels around the entire city offering information on local Ts’msyen culture and a historical overview of the city. PRCP has also added a new feature with The ShoreX Hub, which allows shorex teams from cruise lines to facilitate last-minute tours for cruise passengers.
Kevin D’Costa, General Manager of Prince Rupert Cruise Port, shared his excitement for the start of the season saying “The response from the community has been overwhelming, and it has been so exciting to gear up for the 2023 cruise season. GPH, PRCP, our partners, stakeholders and the community have been looking forward to the first call and we have been delighted to have had the opportunity to share with the cruise passengers what Prince Rupert has to offer.” He continued, “Everything has been about supporting and promoting this amazing destination. The Great Bear Rainforest is an incredibly special corner of the world, and Prince Rupert is at the heart of it all.”
Hereditary Chief Alex Campbell commented “I remember meeting the first ship that ever came here, when the ships first started to visit Prince Rupert. Visiting the ship yesterday was good, the captain and crew were very nice, friendly people. The area of Prince Rupert is a tribal area, and 9 tribes agreed to cruise tourism. We are looking forward to continuing and having different people coming to experience Prince Rupert and talking to them and teaching them about the area.”
“Today’s arrival of the Carnival Miracle signifies a number of exciting milestones for the Prince Rupert Port Authority. The vessel’s call marks the first day of the Port of Prince Rupert’s 2023 cruise season and the first vessel to call under the cruise terminal’s new management, Global Ports Holding, after signing a terminal operating agreement last year,” said Shaun Stevenson, President and CEO of the Prince Rupert Port Authority. “Global Ports Holding is well positioned to elevate cruise tourism in the area to meet Prince Rupert’s vision of growing a thriving cruise sector as a world-class destination, with significant economic benefits for the local community and surrounding region. Hats off to GPH and all of the community partners and businesses for the steps they’ve taken toward achieving that vision by growing the cruise visitor experience in Prince Rupert through new offerings. We look forward to continuing to work with all stakeholders involved to ensure another successful cruise season.”
Prince Rupert Cruise Port is keenly focused on strengthening and expanding the shore excursion capabilities of the destination, while supporting the development of related opportunities for local entrepreneurs. Prince Rupert Cruise Port looks forward to a successful cruise season and promoting the history and culture of the city of Prince Rupert and The Great Bear Rainforest. Global Ports Holding currently manages 27 ports in 14 countries.
While there have been significant advancements in developing lifesaving equipment, the Container Ship Safety Forum says there are far too many injuries to crewmembers aboard cargo ships while launching lifeboats. The industry association, which has a goal to improve safety performance in the container shipping industry, says the time has come for the lifeboat to be reinvented to improve crew safety.
Over the years, many seafarers have been injured – some of them fatally – while launching the lifeboat during evacuations or evacuation drills. Not because the lifeboats have not been compliant with safety standards, but simply because the launch of a lifeboat is a dangerous task to perform.
They point to a 2017 report from the UK Chamber of Shipping as recognition of the problem. The UK article identified 60 fatalities during the testing of lifeboats over a 10-year period. The article suggested that the use of simulation training could improve safety. Last year, Canada's Transportation Safety Board released a report on a serious lifeboat-drill accident, illustrating the continuing hazards of this routine SOLAS safety exercise.
A similar report for the UK P&I Club a decade ago pointed to the range of incidents. A lot of them were related to the launching of the boats during drills with the report saying that a sixth of all seafarers killed were injured in incidents directly related to lifeboats and their launching systems. A lot of the problems they related to the launch mechanism although they also cited instances of poor maintenance leading to failures.
“Everyone knows we have a problem,” says Aslak Ross, Chairman of the CSSF. “Seafarers are scared to launch lifeboats; however, no one has offered a plausible path towards a solution to the problem for cargo vessels. A change is needed to provide a safe environment for seafarers and to regain trust in lifesaving equipment.”
The group says that there is too much focus on compliance and training and not enough focus on the root cause of the problem, which is that the design of the equipment is too complicated and in the case of containerships lags behind other segments of shipping which have focused on improving safety systems.
“Simulation and use of new technology is one way to conduct drills in a safer environment, and we support the intent to reduce the risk of accidents, however, it does not solve the core of the problem,” says Ross. “Launching a lifeboat is too dangerous. And even though simulation has its advantages, it should only be used as a supplement to well-conducted onboard abandon ship drills where crews are familiarized with the ship specific equipment.”
The CSSF points to alternative designs that are already available for offshore installations and for passenger evacuation on passenger and cruise ships through Marine Evacuation Systems (MES).
“Such systems should also be made available to cargo vessels without delay. It is long overdue to change the current environment and innovate to eliminate the risk of lifeboat accidents. We need approved systems that can be fitted to newbuildings – we need to safeguard our seafarers,” said Ross.
The CSSF is encouraging the industry, classification societies, flag states, and suppliers to launch innovation to replace current lifeboats with a safer technology.
Disabled Boxship Being Towed to Sheltered Bay After Repeated Problems
Disabled containership Shiling is being towed back to New Zealand during her fourth failure in a year (Carl Babe photo courtesy Nelson Marlborough Rescue Helicopter)
A disabled Singapore register containership, Shiling, is under tow heading back to New Zealand after earlier in the day issuing a Mayday distress call. Maritime New Zealand is reporting that the situation is under control and they have released the rescue teams that had been on standby as well as ending the Mayday, but the investigation into the ongoing problems with the Shiling is just beginning.
The 66,500 dwt containership (5,028 TEU) had just been released from a 24-day detention in Wellington, New Zealand after its previous power failure. The ship has a history of failures over the past year which have raised concerns among both the maritime services and elected officials that the vessel’s problems could lead to a larger incident causing harm to the crew or an environmental disaster in New Zealand. After last month’s problem, the Wellington Harbourmaster called into question the ship’s reliability.
The Harbourmaster lifted the detention order on Wednesday, May 10 after testing and with the understanding that the containership would proceed to Singapore for additional repairs. This came after the Shiling blacked out and lost steering in Wellington harbor on April 15 causing it to draft across a sandbar and dangerously close to grounding. It also had a brief engine stoppage in February in Wellington Harbor and a power failure in July 2022.
After departing Wellington, the ship reported rough seas near the Cook Strait and as it was heading into the Tasman Sea. Waves were reported up to 26 feet with the news media saying the Shiling was taking shelter to wait out the weather. However, early Friday morning the ship contacted the government agency Maritime New Zealand and an hour and a half later issued the Mayday call. The master told Maritime New Zealand that the vessel had again blacked out and lost steering, drifting, and rolling in the seas. Reports said the vessel was listing with the crew preparing to abandon ship.
Rescue teams were dispatched with an air force plane to monitor the situation and a helicopter from the Nelson Marlborough Rescue Helicopter squad. One of DOF’s offshore anchor handlers also happened to be nearby in port as it is working on a contract for the oil and gas industry. They were able to secure its services to head to the containership.
The master later reported that the situation had stabilized and the crew was comfortable to stay aboard the disabled ship. Media reports said the seas had calmed with waves now at 16 feet and expected to fall to 6 to 7 feet by Saturday morning. Winds however were still at 15 mph.
The DOF vessel Skandi Emerald reached the Shiling at approximately 4:30 p.m. local time on Friday about five and a half hours after the Mayday call. They were able to reposition the Shiling into the wind and secure the tow line. Her AIS signal shows that she is proceeding at approximately 2.7 knots bound for Tasman Bay on the north coast of New Zealand’s South Island.
“The Skandi Emerald will tow the Shiling to a safe location, where it can anchor and be assessed for repairs,” Maritime New Zealand said in its update. They will continue to monitor the situation and begin a further investigation into the situation while reporting that rescue response teams had been released.
Elected officials had called into question the situation last month after the vessel broke down in the sheltered harbor and its previous history with two other power failures in the past year in New Zealand waters. They are now saying that they were lucky that the Skandi Emerald happened to be in New Zealand on assignment while calling for efforts to expand rescue resources and closely enforce maritime security.
Rescuers Responding to New Mayday Call from Problem Plagued Boxship
Rescue teams are heading toward the stricken vessel which is reportedly listing
Maritime New Zealand is responding to a Mayday call issued midday Friday, May 12 from a problem plagued containership that has been the center of a controversy at the Port of Wellington. They are reporting that the ship has once again lost power and steering and is drifting, but that while it is listing there is no immediate danger. Conditions improved after they issued the Mayday call and an ocean-going tug has been dispatched. A police launch is also standing-by as a precaution while reports indicate that an Air Force Hercules and a rescue helicopter have also been dispatched to the scene.
The Singapore-registered containership Shiling (66,500 dwt) is no stranger to problems in New Zealand. Built in 2005, the 18-year-old vessel had only been released on Wednesday after a 24-day detention. During her previous power failure, she was maneuvering in the main channel in Wellington shortly after leaving her berth. She drifted across the harbor coming dangerously close to grounding.
After the vessel was brought back to the dock, the Regional Harbourmaster for Wellington restricted the ship’s movements until engine repairs and tests had been undertaken and then maneuver tests were completed to the satisfaction of the pilot. In addition, the vessel was restricted to calm weather and required to be escorted to sea by a tug when she was finally permitted to sail.
Local elected officials however had questioned the safety of the vessel, highlighting that the Shiling had also had a brief engine stoppage on February 11 in Wellington Harbor. She also suffered an engine failure on July 4, 2022. After the April incident, they speculated if there was a risk of a more serious accident.
During her time at the pier, Shiling which has a capacity of 5,028 TEU was offloaded. The Harbourmaster permitted her to depart on May 9, with the understanding that she would be proceeding directly to Singapore for further repairs.
Hours after the Shiling headed out to sea, it was reported she was sheltering after encountering rough seas. Waves are reported to be running up to 26 feet north of Marlborough Sounds where the vessel had reached after her departure. Current reports place her approximately 22 nautical miles North-Northwest of Farewell Spit at the northern tip of New Zealand’s South Island.
Maritime New Zealand reports they were advised at 0827 this morning that the vessel was encountering problems and two and a half hours later the Shiling issued an official Mayday call. The captain said they were preparing to abandon ship. New Zealand’s Transport Accident Investigation Commission confirms that it has received reports that the vessel is listing and that they were monitoring events. However, about an hour later, Maritime NZ said the master advised conditions had improved and that at this time they were not abandoning ship.
“Due to where the vessel is, there is no risk of it running aground prior to the arrival of the ocean-going tug,” Maritime New Zealand said in its advisory. They are reporting that there are 24 crew aboard.
Maritime NZ’s Rescue Coordination Centre NZ has placed assets from NZ Police, Coastguard, and St John Airdesk on standby and will be tasking the assets as required. The police launch Lady Elizabeth IV is standing by to provide assistance. They are currently expecting the ocean-going tug Skandi Emerald to arrive from Taranaki by approximately 1700 to 1800 local time. The AIS signal for the offshore anchor handler, owned by DOF, shows she is sailing at near maximum speed of 13.6 knots to reach the containership.
Maritime New Zealand reports this continues to be a developing situation and that further updates will be provided as events develop.
Study: Cost to Plug Old Gulf of Mexico Offshore Wells Could be $30B
In a new study published in the prominent journal Nature Energy, a team of researchers from UC San Diego and Louisiana State University put together a cost estimate for what it would take to plug and abandon the huge inventory of non-producing wells in the U.S. Gulf of Mexico. The expense comes to an estimated $30 billion, with a surprising distribution between near-shore and offshore infrastructure.
According to the authors, there are an estimated 14,000 non-producing, unplugged oil and gas wells along and off the Gulf Coast (including the inland waterway and wetland wellheads commonly found in Louisiana's bayous.) The good news for ease of access is that 90 percent of these wells are in shallow, inshore waters. The bad news is that the small-scale operators of many of these wells have gone out of business, leaving no one to pay except for the taxpayer.
These wells are also the most hazardous for coastal communities: since they are closer in, any leakage is likelier to find its way back to shore. Hurricane Ida illustrated this problem in 2021: in the wake of the storm, multiple oil slicks were spotted off the coast of Port Fourchon, and NOAA recorded 55 different spill reports. Satellite imagery analyzed by the Times showed slicks emanating from 10 different near-shore platforms and other infrastructure off the coast.
The Biden administration's mammoth 2021 infrastructure bill includes about $5 billion for remediating wells, which will go some distance towards addressing the problem.
The remaining 10 percent of the wells are located offshore in federal waters, where operators are required by federal law to pay for well abandonment. The overwhelming majority of these wells were drilled by well-funded supermajors, which are flush with profits from supercharged oil and gas prices. This may be a good thing, since 75 percent of the $30 billion total expense would be for plugging non-producing wells that are located in federal waters, and most of this fraction expens should be (in theory) recoverable from solvent oil companies.
Pipelines and platforms are an additional pollution hazard. About half of all pipeline segments are abandoned or inactive, along with three quarters of all platforms (the majority in shallow water). Pipelines can be legally abandoned, and about 18,000 miles of aging, disused pipeline sits below the waters of the U.S. Gulf. Environmental officials note that these unremediated lines can be breached by a hurricane or a dragging anchor.
Audit Finds Fault With Tender Process for Australia's Frigate Program
The Australian National Audit Office (ANAO) has released a much-anticipated report on flaws in the country’s ambitious program to invest US$30.8 billion in a fleet of new frigates, which will be at the center of its future naval capabilities.
In an audit report of the Hunter-class frigate procurement processes, ANAO contends that Australia might not get value for money due to failure by the Department of Defence (DoD) to conduct an effective tender process for the frigate’s design.
The audit also found that the program has not been effective in delivering on project milestones. The first-in-class vessel is currently running 18 months behind and has been incurring additional costs, due in large part to design immaturity.
“DoD did not conduct an effective limited tender process for the ship design. The value for money of the three competing designs was not assessed by officials, as the Tender Evaluation Plan (TEP) proposed that the government would do so,” found the auditors.
The audit brings to light the challenges that Australia is encountering in its quest to build new frigates for its navy, which currently depends on eight Anzac class warships that are nearing the end of their lifespan. The first-in-class ship, HMAS Anzac, was commissioned in 1996.
Under the new shipbuilding plan, the Australian government is investing US$30.8 billion in a fleet of nine new future frigates, which will be larger than the Anzac class vessels. The Hunter-class frigates will be designed and equipped with a strong emphasis on antisubmarine warfare, including active towed-array sonar.
The government contends that the new warships offer a maritime combat capability that will underpin the country’s security for decades to come. The ships will be designed by BAE Systems and built by ASC Shipbuilding, part of the government's goal to support the domestic shipbuilding industry and create local jobs.
The Hunter class are projected to begin entering service in the late 2020s, replacing the Anzac frigates. Delivery of the final ship is planned in 2044 but is subject to BAE Systems recovering the schedule delay over the life of the project.
Australia's Department of Defence has admitted that the program is running into problems with cost growth.
“As of March 2023, while DoD had advised portfolio ministers that the program is under extreme cost pressure, it had not advised the government of its revised acquisition cost estimate, on the basis that it is still refining and validating the estimate,” the report said.
A case in point is a decision by the Australian government in June 2021 to grant DoD and BAE Systems more time to improve design maturity and develop a contractable offer for the first batch of ships, which increased the contract price by US$286 million.
“Design immaturity has affected DoD’s planning for the construction phase, led to an extension of the design and productionization phase at additional cost to DoD, and diverted approved government funding for long lead time items to pay for the extension and other remediation activities,” stated the report.
DoD has also come under criticism for making milestone payments without all exit criteria being met and extending milestone due dates in response to project delays.
Marine Mammal Bycatch Could Cost Ecuador Access to U.S. Seafood Market
Dolphins off the Galapagos, Ecuador (Gregory Smith / CC BY SA 2.0)
A group of conservation NGOs has called on the Ecuadorian government to prevent whale and dolphin bycatch in its fisheries, warning that it could risk losing the legal right to export to the U.S. seafood market if it does not improve regulation and monitoring. Seafood exports to the U.S. account for about one percent of the small nation's GDP.
A U.S. law enacted in 2016 gives foreign nations until January 1, 2024 to implement the same marine mammal protection standards required of U.S. fishermen. If they do not, the National Marine Fisheries Service is to required to ban their products.
“Ecuador had more than six years to get its fisheries and marine mammal programs up and running in time to show results, but it failed to do so. U.S. fishermen and consumers shouldn’t suffer from that failure; Ecuador's non-compliant seafood should be banned," said Zak Smith, the biodiversity conservation director at NRDC.
Ecuador enacted a fisheries reform law in 2020, but it has no stipulations for marine mammal bycatch, according to NRDC and the Center for Biological Diversity. Ecuador's waters are home to 30 different species of marine mammals, and bycatch is known to affect several dolphin populations - but the extent is not fully known, because the Ecuadorian government keeps no data on this question. Gillnet entanglement and bycatch from artisanal fishing also regularly affect coastal populations of humpback and sperm whales.
"Ecuador’s government needs to build on its new fishing law by tracking and limiting bycatch to save marine mammals and their export fishing industry," said Sarah Uhlemann, international program director for the Center for Biological Diversity. "We’re also worried for Ecuador’s hardworking fishers. If they can’t sell their fish products in the lucrative U.S. seafood market, it will be a huge economic blow."
In the meantime, the NGOs believe that some Ecuadorian fishermen are putting their whale and dolphin bycatch to use, cutting it up and using it for bait in fish aggregating devices (FADs). This is an emerging threat to dolphins, and at least six different species are used for this application. This practice should be halted, the groups said.
“The Ecuadorian government must do all it can to ensure that dolphins, whales and sea lions are not used as bait in any of its fisheries, including FAD fisheries,” said Kate O’Connell, marine wildlife consultant with the Animal Welfare Institute.
The Ecuadorian government has also come in for criticism on its mixed approach to shark fishing, which is technically banned in the country's waters. Ecuador takes a stringent approach to foreign fishing vessels with sharks found aboard; however, sharks caught by Ecuadorian fishermen are treated as allowable bycatch, and they are a lucrative part of a mixed-species commercial fishery. This is a common enough practice that Ecuador has become the largest shark-fishing nation in the region.
Inflation Alert
High energy and transportation costs will continue to drive domestic inflation.
(Article originally published in Mar/Apr 2023 edition.)
Inflation is an insidious economic cancer. It diminishes asset values, erodes wages and forces people to assume higher risks in managing their financial lives.
It impacts the value of the U.S. dollar, the world’s reserve currency. It can mean higher commodity prices, higher financing costs and fewer government revenues for social welfare support. A higher-valued U.S. dollar saps the strength of foreign economies, exacerbating hunger and wellness and leaving more people in poverty.
For the last 18 months, the world’s central bankers have struggled to control rampant inflation. Some inflation was caused by Russia’s invasion of Ukraine. Global energy markets were also disrupted, sending prices sky-high. Soaring European natural gas prices and global crude oil prices boosted the cost of living and operating businesses. Companies could raise prices, but workers could only strike for more pay.
Consumers responded by buying less.
Bankers’ inflation playbooks call for reducing liquidity and raising interest rates. Businesses and consumers suffer, reducing economic activity. As painful as this exercise is, it’s the only way to restore price stability. The game plan caused people to lose their jobs as companies needed fewer workers to meet reduced consumer demand. The plan works, but it’s been less effective in the current environment. Why? The pandemic.
COVID Drove Inflation Higher
In 2020, when COVID burst on the scene, governments felt the only way to stop the deadly virus was to lock down economies. This meant governments had to provide financial support to people who lost their incomes. Issuing checks to families to replace their lost income due to lockdowns kept economies afloat but added to inflationary pressures.
People confined to their homes, students attending school via Zoom and workers operating remotely via the Internet all needed additional stuff. Demand for electronics – computers, iPhones, monitors and servers – soared. People needed new furniture to work from home. These goods had to be shipped, which led to congestion at our ports as transportation and distribution networks were stressed unloading and delivering goods to consumers.
Costs soared.
Transportation costs continue to be high as diesel fuel prices remain elevated. Higher diesel prices came with the upturn in crude oil demand following the end of the pandemic. Oil prices were propelled higher by the Ukrainian war. Last December, G7 member countries banned Russian crude oil purchases and now its refined products. The restriction and a price cap on what buyers can pay cut Russia’s petroleum income, undercutting the country’s ability to fund its war with Ukraine.
However, with access to Russian diesel lost, new trade routes were needed. To overcome the disruption ? primarily in unfinished oil – the U.S. turned to other OPEC suppliers and especially to India, where Russian oil is being refined.
While struggling to keep the economy functioning during and following the pandemic, the Biden Administration embarked on an aggressive effort to transition the country to a net-zero carbon emissions power system. The American Rescue Plan Act and the Inflation Reduction Act assured clean energy developers substantial tax credits to encourage new renewable energy projects.
One outcome of these laws has been an uptick in plans for increasing renewable fuel output targeting the air and truck transport sectors that cannot easily be electrified. Biodiesel and renewable diesel for truckers and sustainable aviation fuel (SAF) for planes are mandated by California clean energy rules being adopted by other states.
Government subsidies of $1.00 a gallon for biodiesel and renewable diesel and $1.50 a gallon for SAF are driving the conversion of refineries and the construction of new ones. Importantly, these new fuels require different raw material inputs than a typical oil refinery although their fuel outputs are interchangeable and mixable. These new, clean fuel refineries utilize soybean oil and agricultural wastes, including used cooking oil, as feedstocks to produce their products.
Getting these new feedstocks to the refineries has created new transportation routes, primarily satisfied by inland marine vessels. This has added new demand for the inland marine transportation and Jones Act tanker markets, ensuring a healthy outlook for their businesses.
Jones Act Fleet Struggles to Meet Demand
A recent webinar had three U.S. shipping company CEOs discussing the changing nature and challenges facing the domestic marine industry that will lead to higher transportation costs in the future, embedding higher prices in the economy. The Jones Act was enacted in 1920 to support the domestic shipping industry following World War I and requires any cargo traveling by sea between two U.S. ports to sail on an American-owned ship, built in the U.S. and with a majority of its crew being U.S. citizens.
This legislation is controversial as it’s perceived to be a protectionist trade practice outlawed by international trade rules. It’s also accused of being inflationary since international vessels are cheaper to build and operate. But the Jones Act is the law of the land, and its benefits – in terms of national security and supporting the domestic maritime industry – far outweigh its costs.
Meanwhile, the domestic petroleum industry has been shrinking refining capacity, necessitating increasing volumes of finished products being shipped around the country. Additionally, the U.S. has shifted from being primarily an oil-importing to an oil-exporting country, and that has created new shipping routes.
Journeys have lengthened as a result. For example, more Gulf Coast refined products are being delivered to California, necessitating the dedication of three to four tankers as roundtrips last for 30 to 40 days. This ties up capacity and crews, boosting fleet utilization but adding to costs.
Another factor has been the growth of the domestic petrochemical industry. While much of this expansion has been along the Gulf Coast, more petrochemical plants are now scattered around the country, primarily situated on rivers that facilitate the delivery of raw materials and the shipping of final products. That has further added to the demand for Jones Act vessels.
Rate Hikes Needed to Support Fleet Expansion
With new fuel markets, increased refined volumes being shipped to markets lacking sufficient refining capacity, and a growing domestic petrochemical industry, Jones Act fleets are highly utilized. Given projections for these trends to continue, one expects shipping companies to be building new vessels. However, none are being built according to the CEOs. Why? Because vessel charter rates aren’t high enough to generate acceptable financial returns for building 30- and 40-year life assets.
When asked why no one was building new barges, tankers and ATBs, Kirby Marine CEO Christian O’Neil rattled off the cost of components needed and how much they have increased in price in the past couple of years. To build a 30,000-barrel tank barge, the 200 percent increase in the price of plate steel has nearly doubled the barge’s cost from a few years ago. O’Neil pointed out that paint costs have increased by 25 percent, oil filters are up 125 percent, wire for electronics is 30-40 percent higher and communication radios cost 130 percent more.
Moreover, if Kirby were to build a new inland towboat, it would need to install Tier 4 engines that are more fuel and emissions-friendly but would add $1 million more to the unit’s cost than by using Tier 3 engines. O’Neil suggested that inland barge rates must increase by 30-40 percent to trigger the ordering of new marine equipment.
Even so, new units wouldn’t arrive for 9-12 months. Given the construction time and inflation’s uncertainty, would barge owners demand even higher rates as a hedge against future cost increases or would they demand longer contract times for financial protection?
Coastal tankers face other cost pressures. New tankers will be subject to International Maritime Organization rules on carbon intensity in fuels. There are no propulsion systems currently available that meet these new IMO rules. With tankers having 40-year lives, building one with an engine that may be ruled out for failing to meet the new fuel rules means risking rapid obsolescence with serious financial risks.
That risk is in addition to the uncertainty about their demand. These tankers haul gasoline, diesel and aviation fuel supplies that have an uncertain demand outlook given the net-zero emissions mantra – another potential obsolescence risk. Both conditions will add to inflationary pressures.
Operators are also concerned about inflation’s impact on operating costs. Future changes in regulations for equipment and the operation of vessels could lift costs. What new rules will govern regulatory-mandated drydockings, further adding to operating expenses?
Shrinking Supply of Mariners
And what about the need to attract American mariners to crew the new vessels and replace retiring crew members? This has become a significant challenge. One CEO suggested the maritime industry needs to reach down to sixth graders with an educational program about careers in the industry. No one has started such an effort, but if the Jones Act fleet grows it will need more crew and maritime officers. A primary inducement would be higher wages.
High inflation rates will eventually abate as central bank policies take effect. But until something changes, the U.S. is looking at higher energy and transportation costs boosting future inflation.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.
Unions Protest AUKUS Nuclear Sub Base Plans at Port Kembla
Courtesy Mich-Elle Meyers / Maritime Union of Australia
Last weekend, thousands of activists rallied in Port Kembla, Australia to protest the establishment of a nuclear submarine base for the joint U.S.-UK-Australian sub project, better known as the AUKUS agreement.
The $250 billion program will see Australia acquire nuclear subs and related technology from the United States and Britain over the span of the next three decades. Port Kembla has been identified as a top candidate for basing these new subs on Australia's eastern seaboard. In 2027, long before the Royal Australian Navy's first nuclear subs are delivered, the UK Royal Navy and the U.S. Navy will begin rotating their own subs through Australian naval bases as part of a newly-created "Submarine Rotational Force West." The partners have been at pains to emphasize that the persistent presence of foreign subs at Australian naval bases is not a foreign basing agreement, a taboo concept in Australian defense policy.
Local opposition is centered on fears that a base for nuclear-powered submarines could deter investment in new renewable-energy industries in Port Kembla. The area is traditionally focused on coal mining and steelmaking, two particularly carbon-intensive activities. But green entrepreneurs and regulators have hopes that it could be turned into a hub for renewable industry - for example, hydrogen-fueled blast furnace operation - if enough investors can be attracted. Arthur Rorris, head of the South Coast Labour Council and a member of the governing Labor Party, told The Guardian that nuclear-powered subs would get in the way.
"That is why we are asking the federal government: rule it out, take it off the table and say that it will never be a nuclear base. Until that happens, economically and industrially, we have a major and unacceptable problem," he said. "We’re at the point where we’re able to get the fruits of all that work, now they want to turn this place into ground zero."
The pushback from within its own rank and file has led the Labor government of Anthony Albanese to pause the selection of a final site for an east coast base for now, though the plan to build one at some location along the coast remains intact.
Port Kembla's quaysides have seen anti-war protests before, and this history is well-remembered by local unions. In the late 1930s, longshoremen at Port Kembla refused to load iron cargoes intended for Imperial Japan's steel mills, which were feeding the ongoing invasion of China and powering Japan's military buildup. The dockers were years ahead of the Australian government, which reached a similar decision and declared war on Japan in 1941.
“They have picked the wrong town to try to base their nuclear subs. Port Kembla is a union town with a long history of anti-war struggle," said New South Wales Green Party Senator David Shoebridge, speaking to a leftist Australian news outlet. "They are trying to kill off an amazing future for Port Kembla as a green and renewables' hub."
Tokyo MOU Reports Previously-Undisclosed Cyberattack in 2022
The Tokyo MOU, the international body that coordinates port state control across the Pacific region, reports that it likely sustained a damaging cyberattack in July 2022, two months before it launched a concentrated inspection campaign.
In its annual report, the Tokyo MOU said that its inspection database, APCIS, sustained an "extremely unfortunate" and prolonged outage beginning in July. The likely reason was a cyberattack, according to the agency, and it took down access to the full system for several weeks. Restoration of data was achieved, but it took several more months.
The disruption caused serious difficulties for national port state control agencies, as well as commercial users of the database. The data maintained by the Tokyo MOU is used by port officials to select ships for inspection, and non-government users can also access it to check up on ships' backgrounds.
It is extremely unfortunate that the Tokyo MOU PSC database, APCIS, suffered an outage in July 2022 due to the unforeseen reason, likely a cyber-attack.
"Taking the lesson from this incident, the Tokyo MOU will pay higher attention to the matter of cyber-risks and take all possible measures to enhance cyber security to prevent [a] recurrence," the agency said in a statement.
Though it was just disclosed this month, the attack on the Tokyo MOU database actually came before a string of well-publicized cyber incidents affecting maritime organizations.
On Christmas Day, the Port of Lisbon sustained a major cyberattack, which took down the port's website and its internal computer systems. Hacking gang LockBit claimed responsibility for the incident and demanded a $1.5 million ransom. The group claimed to have stolen the port's financial reports, audits, contracts, cargo manifests, crewmember information and other sensitive data.
On January 7, class society DNV was forced to take its ShipManager vessel operations software offline due to a cyberattack, shutting down access for an estimated 300 customers and 7,000 ships around the world. The desktop version of this software (the version used aboard vessels) remained functional, but all online cloud computing features were shut down.
Last month, the ports of Halifax, Montreal, and Quebec sustained a major “denial of service” attack, which took their external websites offline. A pro-Russian hacking group claimed responsibility for the attack, which did not affect the ports' internal data or day-to-day operations.
Quebecor reports $120.9M Q1 profit, down from $121.4M a year ago
The Canadian Press
Quebecor Inc. reported its first-quarter profit attributable to shareholders fell to $120.9 million compared with $121.4 million in the same quarter a year ago.
Revenue for the quarter totalled $1.12 billion, up from $1.09 billion in the same quarter last year.
On an adjusted basis, Quebecor says its income from continuing operations amounted to 59 cents per share, up from 54 cents per share in the first three months of 2022.
The result matched the average analyst estimate for the company's adjusted profit, while the average estimate for revenue was $1.10 billion, according to estimates compiled by financial markets data firm Refinitiv.
Quebecor's Videotron subsidiary completed its acquisition of Freedom Mobile in April for a total purchase price of $2.85 billion.
This report by The Canadian Press was first published May 11, 2023.
