P&I Picks its Way Through Challenges on Ukraine's Danube River Routes

The Danube River port of Izmail has become a lifeline for Ukrainian grain exports (Yuriy Kvach / CC BY SA 4.0)

PUBLISHED AUG 30, 2023 2:30 PM BY NORTHSTANDARD

 

Drone attacks on the Danube estuary ports in late August broadened Russian attempts to prevent Ukraine from exporting grain, but other rising risks to regional maritime safety are also calling for special attention from P&I, according to Nick Taylor, Head of Coastal & Inland, NorthStandard.

Traffic has been growing fast along the Danube in 2023, and collisions, sinkings and groundings have also become increasingly frequent. The resulting claims have been complicated by owner unfamiliarity with regional conditions and cultures, and a local code of silence following ‘hit and run’ incidents.  

Even before Russia quit the U.N.-brokered deal allowing Kyiv to ship its grain via the Black Sea, traffic passing through Ukraine Danube ports was accounting for around a quarter of the nation’s grain exports, says Nick Taylor, Head of Coastal & Inland, NorthStandard.

“Ukraine transhipped 8.1 million tonnes of grain through the port of Constanta in the first seven months of 2023 - over 40% of all grains handled by a port which already deals with exports from Romania itself, Hungary and Serbia,” says Taylor. “In May alone, grain volumes through Danube ports hit 2.2 million tonnes, overtaking exports made via the Black Sea corridor.”

With the Danube route now the principle exit option for Ukrainian grain, Russian firepower will doubtless have a say in the handling capabilities at the Ukraine ports of Reni and Izmail - close to the Romanian border. However, recent Government projections still foresee Danube exports reaching at least 20 million tonnes in 2023 - three times pre-war volumes.

The routing switch and the consequent redeployment by North European owners of inland and coastal vessels to handle the new trade have created new challenges for operational safety along the Danube, according to Taylor.

Congestion challenge

“Where risk is concerned the conflict itself dominates day to day reporting, but the course of events has also caused major vessel congestion. The vessels coming into the market are maintained to the highest standards, but their crews may have little or no experience of working on these waters. In one example, a vessel in convoy came out of the bend in heavy weather on the wrong side of the river, causing a collision.

“With the port infrastructure under strain, there can also be disconnects between international operators and local authorities when incidents or accidents occur. Part of that is about lack of previous contact and different cultures when it comes to getting things done, but there have also been incidents where vessels have been hit, yet nobody seems to have seen anything.”

Taylor adds that, in one instance, NorthStandard set up a meeting between one of its Members and the Maritime Anti-Corruption Network to take forward an investigation into a hit and run incident that led a moored barge to sink. Inquiries reached a dead end.    

Nevertheless, NorthStandard has been invited to intervene in incidents on several occasions this year, including to support refloating operations. “We’ve used our experience to coordinate and project manage, with our local correspondents helping to resolve issues where the infrastructure hasn’t been in place, whether that’s been through organizing crane lifts or refloats using balloons.”

C&I considerations

Taylor was appointed to head up NorthStandard’s Coastal & Inland team earlier this year following the merger of North P&I and the Standard Club and says he has been given ambitious targets to grow C&I as a consolidated area of special expertise. A 14-year veteran from the legacy Standard Club side of the business with a broad range of previous senior postings, he oversees Coastal & Inland teams in London and Singapore.

Despite the greater frequency of Danube claims, the Head of Sector stresses that Coastal & Inland premiums are defined by NorthStandard’s overall mutual combined ratio performance, which at the last annual renewal stood at a healthy 95%.

“Clearly there are risks of war, and crew cover needs to reflect the exposure faced, but this is a market which takes its lead from the volume of business we do to support operations all along Europe’s coastline and inland waterways, as well as niche areas for growth identified elsewhere in the world.”

Asked outright whether insurers will respond to the rising frequency in Danube claims with regional premium rises, he added: “We are not the only ones going through this. I cannot speak for others, although it’s possible insurers may become more risk averse in the Danube, with inevitable knock-on effect for charterers, and ultimately receivers.

“In the immediate term, however, where trade needs to be supported on heavily congested routes, Members operating in unfamiliar waters, different shipping cultures apply and crews feel understandable edginess, there are plenty of opportunities to showcase P&I services at their best.”

Top image: The Danube River port of Izmail (Yuriy Kvach / CC BY SA 4.0)

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.

 

NTSB: Master's Decision to Navigate Near Uncharted Rock Caused Grounding

Crew of the Challenger recover their seine net from the stricken vessel (Alward Fisheries)

PUBLISHED AUG 30, 2023 7:38 PM BY THE MARITIME EXECUTIVE

 

The National Transportation Safety Board has determined that a master's decision to navigate in an area with uncharted rocks, close in to shore, resulted in the grounding and capsizing of a commercial fishing vessel off Kodiak last year. 

On the morning of August 7, 2022, the purse seine vessel Challenger was operating off the coast of Kodiak Island. The captain, who had 15 years of experience in the area, chose to stay closer to shore in the lee of a cape in order to reduce the effects of weather. This was also a promising area for fishing, he believed, and he planned to set nets when he found a good spot. He was aware of a large uncharted rock in the area, having seen it at low tide before, but he did not think that it was nearby. 

At about 0700, the captain was at the helm when Challenger struck a submerged rock. The captain checked for flooding and found water rising in the forepeak. One of the deckhands grabbed a portable dewatering pump and began pumping out the space. The captain made a call to another nearby fishing vessel to notify the skipper that the boat was in distress. 

Seeing that the waves were moving the Challenger back and forth on the rock, the captain decided to back down and attempt to pull free in order to minimize the damage. As soon as he did, the rate of flooding in the forepeak increased significantly. The captain went belowdecks and started up both of the vessel's bilge pumps, but he quickly realized that they could not keep up with the rate of water ingress.

Four minutes after the grounding, the captain ordered the crew to abandon ship into the vessel's seine skiff, which was easily accessible and seaworthy. Two other nearby seiners launched their skiffs to assist, and they helped Challenger's crew to recover the valuable seine net off their stricken vessel. About six minutes later, Challenger capsized, though it remained afloat. 

One of the responding good samaritan vessels, Sea Tsar, affixed a line to the capsized Challenger and began towing it to nearby Larsen Bay. Another vessel, Sea Ern, took over and completed the tow that evening. 

Challenger was declared a total loss at a cost of about $600,000. 

After the casualty, investigators attempted to find the uncharted rock, without success. The location that local fishermen reported corresponded to an area that was last charted before World War II - a degree of recency that is common for the remote waters of Southeast Alaska. 

The Coast Pilot for the area recommended giving the shore a berth of at least one nautical mile, but the Challenger was operating within about 220 yards when it went aground. NTSB concluded that the probable cause of the casualty was the master's decision to navigate closer in to the beach, in an area where he knew there was an uncharted rock.

NTSB also noted that the forepeak had a non-watertight hatch into a void below it. Water entering through the hole in the forepeak flooded the void, reducing stability. If the hatch had been watertight, it would likely have prevented progressive flooding and capsizing, NTSB concluded. Watertight collision bulkheads are not required on vessels of Challenger's size.

Captain Fined in Gibraltar Oil Spill as Environmentalists Question Outcome

Oil spill seen spreading in the water from the Gas Venus (Gibraltar Port Authority)

PUBLISHED AUG 31, 2023 5:30 PM BY THE MARITIME EXECUTIVE

 

A magistrate in Gibraltar ordered the captain of the gas tanker Gas Venus, which was involved in an oil spill in the harbor at the beginning of the month, to pay a fine. This came after the captain of the vessel agreed to plead guilty during his hearing on the charges of causing pollution. Environmentalists in the British colony however are questioning how the case was handled and the broader history of oil pollution in the busy bunker port.

The tanker Gas Venus was bunkering in Gibraltar with a fuel vessel alongside on August 1 when the spill occurred. Officials speaking in the court estimated that 2,000 to 3,000 liters were released into the water with some of it washing up onto two beaches. The port was temporarily closed and the clean-up of the beaches lasted for several days.

The court was told during the hearing on August 29, that the spill was due to an overflow of the fuel tank on the Gas Venus. According to the report, they determined that the Chief Officer, who was to electronically observe the fueling operation of the vessel, failed to observe the increase in the gauges indicating the fuel level. In addition, an alarm that should have sounded when the tank reached 85 percent capacity failed to sound, despite working correctly before the fueling and in a test afterward.

The fueling was happening unattended at the time of the spill, a point the environmentalists are highlighting. The court was told that the oiler aboard the Gas Venus who was assigned to the duty was attending to another alarm for a different system when the spill occurred. Environmentalists are questioning why it happened unobserved and why the crew aboard the supply vessel bore no responsibility.

Based on data supplied to the court that the fuel spilled at the rate of 60 liters a second, the spill lasted between 30 seconds and one minute at maximum. It however left a large oil stain as it ran down the side of the tanker and a trail of oil was seen coming from the vessel near the South Mole.

The master of the Gas Venus, a Korean national, Sangsob Kim, age 56, was detained by Gibraltar after the spill. He was later charged with one count for the discharge or release of the oil into the water and a second count for damaging the “resting place of a wild animal of a European protected species.” The court recognized his early guilty plea and as a result, reduced the fine by a third from £30,000 to £20,000 (approximately $25,000). The fine must be paid by September 30 or Kim would be required to serve 12 months in jail.

The shipping company, KSS Line, told the court it would cover any financial penalty. In addition to paying Kim’s fine, they also agreed to cover the costs of the cleanup posting a bond to release the ship. Reports are the company has agreed to pay £1.5 million ($1.9 million) for the cleanup. The Gas Venus was released 10 days after the spill and the court ordered the return of the captain’s travel documents this week.

A representative of the environmental group The Nautilus Project told a reporter from GBC News that the group was investigating Gibraltar’s history of oil spills. They questioned the limited consequences of the recent spill noting only the captain and none of the crew or the supply vessel had experienced any consequences from this spill. The group is calling for the money from the fines to be used for new equipment, additional personnel training, and a wider array of response measures as they seek to eliminate or reduce future spills.
 

 

Report: Ammonia-Powered Vessels Could be Economical as Early as 2026

NoGaps concept design (Breeze Ship Design / Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping)

PUBLISHED AUG 31, 2023 6:45 PM BY THE MARITIME EXECUTIVE

 

Using an ambitious but feasible set of actions, a new report concludes that ammonia-powered vessels will not only be commercially viable but with an aggressive path and broad use of subsidies could be possible as early as 2026. The new analysis from the Global Maritime Forum is the second phase of a project focusing on a first-of-its-kind ammonia-powered gas carrier and reiterates the research’s strong support for ammonia saying they believe the cost gap between operating ships on zero-emission ammonia and conventional fuel could be closed before 2030.

The technology for the use of ammonia as a marine fuel is rapidly advancing with multiple projects reporting strong progress. Research by engine manufacturers including MAN and Wartsila, as well as projects in Japan and with major shipbuilders have achieved the first combustion tests. They are developing fuel supply systems and the approaches for bunkering ammonia are emerging, but the main concern remains the cost of the ships and the operations using ammonia.

The new report concedes, “Without intervention, an ammonia-powered gas carrier is expected to be between 50-130 percent more expensive than an equivalent gas carrier over the coming years. This creates significant commercial risks for both shipowners and lenders.” 

As part of the Nordic Green Ammonia Powered Ships (NoGAPS) project, co-funded by Nordic Innovation, the new study from the Global Maritime Forum explores options for addressing those cost concerns. It is the second phase in the project which in 2020 and 2021 developed proof of concept for the prototype ammonia-powered gas carrier and has now been carried out including examining detailed design requirements. The vessel design has gained Approval in Principle from DNV. The new project looked at the pathways for commercializing early ammonia-powered vessels saying that reducing the elevated costs and commercial risks was the primary barrier to finding suitable, competitive financing to introduce the new ships.

“The most effective way to reduce the cost gap between ammonia and conventional fuel is to pull on numerous cost-reduction levers simultaneously,” they write in the report. They identified several methods for responding to the challenges. These include dual-fuel vessel design (i.e., the ability for a vessel to run on conventional fuels as well as ammonia), competitive debt financing arrangements, operational efficiencies, fuel subsidies, and governmental regulation.

“With the completion of this latest project phase, we not only have a detailed ship design that could be used for a shipyard tender but also a feasible commercialization pathways. We hope this boosts confidence amongst charter parties and investors to take steps towards the realization of M/S NoGAPS and other ammonia-powered vessels,” says Jesse Fahnestock, Project Director of the Global Maritime Forum.

A key portion of their model for closing the cost differential however is dependent on subsidies. They point to the opportunities in the US Inflation Reduction Act, which they conclude could reduce operating costs by 20 percent, and the EU’s Fit for 55 Package, which would contribute an additional 10 percent cost reduction. The aggressive model also calls for solely bunkering with US ammonia and optimizing operations. 

The report concludes that the cost gap could be closed as early as 2026 and the vessel could also approach cost parity by 2030.

The NoGAPS project brought together leading players from the shipping and energy value chain, including Yara Clean Ammonia, BW Epic Kosan, MAN Energy Solutions, Wärtsilä, DNV, Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, and the Global Maritime Forum. They were also supported by the Danish Maritime Authority as the flag representative and Breeze Ship Design as the ship designer.

The full report is available online at the Global Maritime Forum site.

RIP

 Last Royal Navy Veteran of Dunkirk Evacuation Passes at 102

Lawrence Churcher at the Normandy memorial in France, 2020 (Royal Navy)

PUBLISHED AUG 31, 2023 9:55 PM BY THE MARITIME EXECUTIVE

 

The last Royal Navy veteran from the Dunkirk evacuation, Lawrence Churcher, has been laid to rest at 102. 

According to the veterans' charity Project 71, Churcher passed away just a few days before his 103rd birthday at a retirement home in Fareham, UK. He received full military honors, with Royal Navy pallbearers and honor guard at a private funeral service in Portchester. 

Churcher was a crewmember aboard HMS Eagle when the second World War broke out. He was transferred to shoreside duty in May 1940 in Dunkirk, France, helping transport munitions to the front lines for the fight against the advancing German Army. The resistance was not successful, and as Nazi forces closed in on the British Expeditionary Force at Dunkirk, Churcher - joined by his two brothers and 338,000 other Allied servicemembers - evacuated across the English Channel by ship. He is believed to have been the last surviving Royal Navy servicemember present on the beach that day. 

“When my brothers found me, I just felt relief. There were so many soldiers there and continuous aircraft dropping bombs and strafing us. I had so many things on my mind until I got onboard of our ship," Churcher had recalled of his time at Dunkirk, the charity said. 

Dunkirk was a difficult day, but Churcher would return to France on D-Day, June 6, 1944, at the turn of the tide. He went on to serve the Royal Navy in the Mediterranean and the Middle East. After his military service, he became a football referee, according to Project 71. 

Like many surviving Normandy veterans, Churcher was recently awarded France's Legion d'Honneur for his service during Operation Overlord and the liberation of France. 

"A truly remarkable man, loved and respected by all who knew him. Stand down Lawrence, your duty is done. It has been an honor to have known you," said Project 71 in a brief obituary.  

 

Merchant Ships Including Maersk and Hapag Caught in Gabon’s Coup

New Owendo International Port near Libreville, Gabon is where most of the merchant ships are currently (Bollore)

PUBLISHED AUG 30, 2023 2:50 PM BY THE MARITIME EXECUTIVE

 

Multiple merchant ships, including containerships operating for Maersk and Hapag-Lloyd, are reportedly caught in the unfolding coup in the central African country of Gabon. Military leaders declared that the borders and all government institutions were closed as they announced the “retirement” of the country’s long-serving President Alli Bongo Ondimba and were reported to be meeting to decide the future leadership of the country.

The situation remains confused with the coup that began to unfold this morning, August 30, just hours after Bongo was declared the winner of a broadly contested national election, his third as president. He and his father before him have ruled Gabon since 1967, just seven years after the country became independent from France.

Reports are showing military vehicles in the streets of the capital city of Libreville and the smaller southern city of Port Gentil. Security consultants Ambrey reported that they could confirm that Libreville port operations have been stopped.

The opposition had been contending that there were irregularities in the recent national elections. After a delay, the committee overseeing the election announced this morning that it had not found any irregularities. It reported that Bongo had won a third term with just over 64 percent of the vote.

Military officers took to the national TV declaring that the election was voided and that they were meeting to form a new government. They urged calm as the situation was resolved saying that they would be closing the borders at this time. Bongo released a taped video saying he was under house arrest while a military leader told the French press Bongo was a Gabonese citizen with all the same rights. Some media reports are now saying that the military however quickly arrested Bongo’s son and six associates on accusations of “high treason.” 

Gabon is home to mineral and oil exports with multiple bulkers and tankers showing as anchored offshore. French mining company Eramet, which operates a large manganese facility, reported that it had immediately suspended its operations. Australia’s Fortescue Metals Group is reportedly also developing an iron ore mining operation in the country. However, Ambrey is reporting that Assala Energy which operates an offshore terminal has so far been able to continue operations. TotalEnergies and Perenco have oil operations in the country which is reported to produce 200,000 barrels of oil a day.

Hapag-Lloyd confirmed to Reuters that it has a vessel at Libreville. The Dallas Express (67,145 dwt), a Liberian registered containership, shows on its AIS that it is in the anchorage, with a spokesperson telling Reuters that the vessel was unable to depart due to the borders having been closed. In addition, the Maersk Valparaiso (23,359 dwt) a Singapore-registered feeder ship working on the African coast is also in the anchorage. 

Bollore reported in October 2017 that it had opened the modernized New Owendo International Port near Libreville after an investment of $300 million. The capacity of Owendo’s multipurpose terminal was expanded along with lengthening the dock, dredging, and new cranes able to handle containerships with a capacity of up to 6,000 TEU. 

AIS signals show that a Chinese-owned bulker, Lin Hai 6 (52,500 dwt) registered in Panama is on dock at Owendo. In addition, a chemical tanker registered in Denmark, Caroline Theresa (78,800 dwt) owned by Christiania Shipping is also on dock at the terminal.

Gabon is a dangerous place for seafarers even without a coup. In May, three crewmembers from Eagle Bulk’s Grebe Bulker were kidnapped while the vessel was at anchor. They were released after about three weeks.

Bongo is calling on his supporters to rise up. He was able to stop a previous coup attempt in 2019 and the elections in 2016 were also disputed. Today’s attempted coup follows the overthrow of the government in Niger. Reuters is saying that this is the ninth coup in France’s former African colonies, including Mali, Guinea, Burkina Faso, Chad, Tunisia, Niger, and now Gabon, in the past three years.

WW 3.0

S. China Sea Becomes Part of China on Beijing's New "Standard Map"

China's nine dashes surround most of the South China Sea, including the Spratly and Paracel Islands (China Ministry of Natural Resources)

PUBLISHED SEP 1, 2023 3:17 AM BY THE MARITIME EXECUTIVE

 

China's Ministry of Natural Resources has released its updated "China Standard Map," and its new contours are creating a stir among neighbors in the South China Sea. 

Under its "nine-dash line" policy, China claims virtually all of the South China Sea as its own, including large swathes of the EEZs of Vietnam, the Philippines, Malaysia, Brunei and Indonesia. This historically-based claim is unique to China, and in 2016, the Permanent Court of Arbitration in the Hague ruled that it is not consistent with international law. China has ignored the ruling. 

The "nine-dash line" has always been ambiguous, with large undefined gaps between the broad dashes. Some political observers in the Philippines have dismissed the updated 2023 edition as another propaganda device or a mere annoyance. But this year's map is different, according to retired Philippine Supreme Court Justice Antonio Carpio. He told Philippine media that China is now describing these dashes as an "international border" in the South China Sea.

“Claiming the high seas, and exclusive economic zones of other coastal states, in the South China Sea as China's national territory is not routine,” he told CNN Philippines.

The Philippines has lodged a formal complaint about the unilateral map with the Chinese embassy in Manila. 

The 2023 China Standard Map, with nine-dash line and new tenth dash off Taiwan (Ministry of Natural Resources)

Original chart of the nine-dash line concept, created by the pre-PRC Republic of China in 1947 (ROC)

The Malaysian government has also formally protested the new 2023 map, as the dashes overlap Malaysia's EEZ off the west coast of Borneo. The Chinese dashes come closer to the Malaysian state of Sarawak than to any other mainland shore. “Malaysia does not recognize China’s claims in the South China Sea as outlined in the ‘2023 edition of the standard map of China’ which extends into Malaysian maritime area,” Malaysia's foreign ministry said in a statement Thursday. “The map has no binding effect on Malaysia.”

Vietnam also disagrees with China's mapping of Vietnamese waters. In a statement, Ministry of Foreign Affairs spokesperson Pham Thu Hang said that Vietnam "resolutely rejects any claims in the East Sea by China that are based on the dashed line."

China has also added a tenth dash to surround the east side of Taiwan, expanding the "nine-dash line" northwards to embrace the island. The government in Taipei disagrees.

"No matter how the Chinese government twists its position on Taiwan's sovereignty, it cannot change the objective fact of our country's existence," Taiwan Foreign Ministry spokesman Jeff Liu said Thursday. 

India is also displeased with China's "standard map." The new map incorporates parts of the Indian state of Arunachal Pradesh within the official borders of China. "“We have today lodged a strong protest through diplomatic channels with the Chinese side on the so-called 2023 ‘standard map’ of China that lays claim to India’s territory," said a spokesperson for the Indian Foreign Ministry. "We reject these claims as they have no basis."

 

Vietnamese Fisherman Suffers Broken Arm in Run-in With China Coast Guard

Huynh Van Hoanh / social media

PUBLISHED AUG 31, 2023 6:25 PM BY THE MARITIME EXECUTIVE

 

A China Coast Guard cutter crew injured several Vietnamese fishermen with a water cannon this week in the South China Sea, including one man who sustained a broken arm, according to Vietnamese media. 

Face-offs between CCG vessels and fishermen from nearby coastal states are common in the waters of the South China Sea. China claims the vast majority of the sea as its own under its "nine-dash line" policy, which is based on historical usage patterns rather than international law. The Permanent Court of Arbitration in the Hague invalidated China's extralegal maritime claims in 2016, but Beijing has ignored the ruling. The Chinese claim overlaps with coastal states' EEZs, leading to frequent conflict over access rights and natural resources. 

The run-in on Monday occurred near the Chinese-occupied Paracel Islands, which are also claimed by Vietnam. A Vietnamese fishing boat home-ported at Quang Ngai reported that it encountered the China Coast Guard vessel CCG 4201 at a position between the mainland and Woody Island, China's primary administrative center for its South China Sea claims. (China Coast Guard vessels have pennant numbers only, not names). As the fishermen filmed with their phones, the cutter's crew attempted to drive the boat off with a water cannon. The boat's owner, Huynh Van Hoanh, told local media that the crew attempted to take shelter from the water cannon in the boat's cabin, and that the vessel sustained damage.

Huynh said that he sustained a broken arm when he was knocked to the deck by the water cannon. "My eyes and nose were dark and I couldn't see anything. When I stood up, my whole body and hands were injured. Must be broken," he told local media. The boat's skipper also suffered a head injury. 

In the Philippines, the China Coast Guard engages in regular confrontations with fishermen and with the Philippine Coast Guard. The regular PCG resupply mission to the Philippine base at Second Thomas Shoal is a frequent flash point, and China Coast Guard crews have used aggressive maneuvering, illuminating lasers and water cannon to drive off Philippine supply vessels on this run. 

In response, the U.S. government is tightening up its alliances with regional partners, including Japan, South Korea, Vietnam and the Philippines, in order to deter Chinese expansionism. In a recent interview with Reuters, U.S. 7th Fleet Commander Adm. Karl Thomas said that it was necessary to push back against China's “aggressive behavior” on the water. “You have to challenge people I would say operating in a gray zone,” he said. “When they're taking a little bit more and more and pushing you, you've got to push back, you have to sail and operate.”

 

ILWU Members Approve Long-Awaited Labor Contract for West Coast Ports

Port of Los Angeles (APMT file image)

PUBLISHED AUG 31, 2023 9:15 PM BY THE MARITIME EXECUTIVE

 

The rank-and-file members of the International Longshore and Warehouse Union (ILWU) have voted to approve the tentative labor agreement negotiated by union leadership with the Pacific Maritime Association (PMA) in June. The vote marks the end of a year-long period of uncertainty for shippers and West Coast ports, particularly the primary gateway ports of Los Angeles and Long Beach. 

“The negotiations for this contract were protracted and challenging,” said ILWU International President Willie Adams in a statement. “I am grateful to our rank and file for their strength, to our negotiating committee for their vision and tenacity, and to those that supported giving the ILWU and PMA the space that we needed to get to this result.”

The on-again, off-again talks proceeded slowly and continued long after the expiration of the previous labor contract. The deliberations were marked by several local ILWU labor actions in LA and Seattle, raising concerns that a broader strike could occur. In June, PMA and ILWU finally hammered out a deal with the assistance of acting U.S. Secretary of Labor Julie Su, who stayed with both sides in LA for three days as they talked through the final details.

ILWU did not release the details, but said that the new deal would provide good-paying jobs while improving wages and pensions. According to Reuters, the improvements include a 32 percent pay increase for ILWU members over the course of the next six years. PMA reports that the average earnings for full-time ILWU longshoremen are currently about $200,000 per year, so the raises would bring average dockworker wages to about $260,000 per year by 2029 (not including union clerks and foremen, who earn more.) Employer-paid benefits packages add another $100,000 per year, including 401k, guaranteed-benefit pensions and health insurance coverage. 

After reaching this tentative deal with PMA, the ILWU leadership took it back to their 20,000 members for ratification. Each of the union's 29 locals up and down the West Coast considered the contract and took a vote. On August 31, the ILWU's balloting committee said that 75 percent of the union voted in favor of the new labor agreement. 

The last major dispute between the ILWU and the PMA occurred in 2014-2015, and it resulted in protracted slowdowns and heavy congestion at LA and Long Beach. This time, to hedge against the risk of another long labor action, cargo owners and shipping lines began diverting increasing volumes to ports on the East Coast and Gulf Coast - improving the numbers for ports like Savannah and Houston, but cutting into the market share for LA/Long Beach. 

Now that a new labor agreement is in place, the twin San Pedro Bay ports plan to work hard to bring volume back to the West Coast. 

"We've got to go back out there now and bring some strategy and value to the marketplace, because about 15 percent of our cargo has moved away from us," Port of LA chief Gene Seroka told Bloomberg in June. "We've got to recalibrate this and have an all-out industry push to bring this cargo back." 

The Market Thinks There Will Be A Sanctions-Easing Deal With Iran

MARKETS ARE NEVER WRONG

By Alex Kimani - 

Prospects of reviving the Iran nuclear deal have swung dramatically, from near certain in March 2022 to almost nil by the end of the year and somewhere in the middle currently. Although prospects of a deal being signed any time soon appear dim, relations between Washington and Tehran have warmed up considerably, with the Biden administration unblocking frozen assets and possibly even allowing Iran’s enrichment of uranium. 

The U.S. administration might not admit it openly, but it has looked the other way and allowed Iran oil sales to hit record highs--obviously happy to keep the markets flooded in a bid to keep oil prices low.

Iranian crude exports exceeded 1.5 mb/d in May, the highest level since 2018 despite the country still being under U.S. sanctions. Tehran says it has boosted crude output to above 3 million bpd, again the highest since 2018. All that oil from Iran is certainly playing a part in keeping the markets looser than what Saudi Arabia and OPEC might hope for.

Earlier, reports emerged that the U.S. and Iran are making progress after resuming talks on a nuclear deal, a move that could ease sanctions on Iran's oil exports. Israel's Haaretz newspaper reported that the talks are moving forward more rapidly than expected, with the possibility of a deal being struck in a matter of weeks. Deal terms are likely to include Iran ceasing its 60% and higher uranium enrichment activities in return for permission to export as much as 1M bbl/day of oil.

A successful nuclear deal could change the oil markets, with former Iran oil minister Bijan Namdar Zanganeh saying that his biggest dream has always been to increase Iran’s oil output to six million barrels per day; earn $2 trillion through oil exports over the next two decades and use the income to invest in the country’s development. 

Iran’s current production is considerably lower than the 2018 peak at 3.7 mb/d. Boosting production from the current level to anywhere close to 6mb/d could, however, take several years at the very least due to years of underinvestment.

By Alex Kimani for Oilprice.com