Saturday, May 04, 2024

As Russia's "Syrian Express" Takes the Long Way Home, NATO is Watching

In April, the Portuguese Navy tracked Sparta IV off Algarve; U.S. forces have taken up the job in the Med

On the night of May 1, a U.S Air Force drone took off from the U.S base of Sigonella, Italy, ostensibly to investigate the activities of the Russian cargo ship Sparta IV (IMO: 9743033). As previously reported by Maritime Executive, and later shared by Italian media, Sparta IV made a U-turn and did not enter into the Black Sea, as she has done for years on a regular rotation; instead, the ship took a long voyage around Europe to Kaliningrad, a weeks-long detour.

The vessel is known, along with others, as part of the ‘ghost fleet’ as reported by NATO Defense College - a fleet of civilian cargo ships allegedly transporting military materiel from the Russian bases in Syria to the Ukraine frontline (also called ‘The Syrian express’). In the past, they may have breached the Montreux Convention.

After reaching Baltiysk (in Russia's Kaliningrad exclave), where Sparta IV remained more than 20 days, the ship left on April 16 for the Russian military base in Tartus, Syria, where she is expected to arrive in the first week of May.

Courtesy Giangiuseppe Pili / Alessio Armenzoni

After passing through the Sicilian Channel, a U.S Navy Northrop Grumman MQ-4C reconnaissance drone took off from Sigonella Air Base in Sicily on an overnight mission, following a route possibly parallel to that of the Sparta IV. When in proximity to the vessel, the drone entered a holding pattern, possibly monitoring the further movements of the ship.

The U.S drone then returned to the U.S base in Sicily, and Sparta IV continued her journey to Syria, where she could arrive by May 4.

Giangiuseppe Pili (Ph. D.) is an Assistant Professor in the Intelligence Analysis Program at James Madison University. He is an Associate Fellow at Open Source Intelligence and Analysis at the Royal United Services Institute.

Alessio Armenzoni is a geospatial intelligence analyst working on projects related to maritime security. He studied at the Centre for Higher Defense Studies from the Italian MoD.

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

With Nord Stream Shut, Gazprom Posts its Biggest Lost in Two Decades

Welders complete the final pipe joint to connect the Nord Stream 2 pipeline, September 2021. It was never activated because of the invasion of Ukraine, and was sabotaged within 12 months of completion (Gazprom)

State natural gas company Gazprom was once a major source of income for the Russian government, earning tens of billions of dollars in profit every year. Gas accounted for about a fifth of Moscow's earnings from petroleum exports, according to The Economist. But those days have passed: on Thursday, Gazprom announced its first annual loss in more than two decades.

Gazprom made more than $22 billion in net profit in 2021, the last year before the war. That dropped to $13 billion in 2022, the year that Russia invaded Ukraine and then throttled down its pipeline gas exports to Western European customers. Despite the disruption, Russian energy analysts had expected the gas giant to post a profit in 2023 - a smaller profit, but still about $5 billion. Instead, Gazprom swung to a net loss of nearly $7 billion, driven down by plummeting sales of pipeline gas to Europe.

After Gazprom self-imposed a pipeline gas embargo on its European customers in the early months of the war, its onshore pipeline sales dropped sharply, and have not recovered. (Gazprom's subsea Nord Stream export pipelines to Germany were also shut down shortly after the invasion began, and later destroyed in a suspected sabotage attack.) Reuters estimates that Russian gas exports to Europe are down by 55 percent this year, though some countries continue to buy.

"The remaining flows are more difficult to phase down due to the combination of geography, contractual commitments, and - in some cases - political expediency," Akos Losz of Columbia University's Center on Global Energy Policy told RFE.

Gazprom may have a hard time recovering from the loss of its relationship with European buyers. It lacks capacity to export its gas as LNG, and its first liquefaction terminal project in the Baltic region - Baltic LNG - has been sanctioned by the United States. In the long term, the company would like to develop its market share in Turkey and in China, but it is unclear if this strategy will offset the loss of its decades-long sales relationships with European customers.

"Gazprom is unlikely to rebuild its position on the European market in the coming years due to infrastructural and political obstacles. These include the damage to both lines of Nord Stream 1 and one line of Nord Stream 2, as well as the unclear status of future shipments through Ukraine," wrote Poland's Centre for Eastern Studies (OSW) in a recent analysis. "Officials from Gazprom and the Russian government seem to be aware of these challenges, as evidenced by their push to redirect supplies to the east."

GAO: U.S. Navy Could Learn From Commercial Shipbuilders' Standards

Major commercial shipbuilders do their design work on set timetables, based on detailed 3D digital models, using a library of past successful designs (Illustration example courtesy HHI)

The U.S. Navy is struggling to get its next generation of surface combatants and submarines built on time and on budget, and several major programs are years behind. Delays and changes in ship design are part of the problem, the Navy acknowledges, and the service is taking steps to speed up engineering work, like co-locating contractors and Navy ship designers in one place to collaborate. The Government Accountability Office (GAO) has a lot of additional recommendations, based on the current standard for commercial shipbuilders.

Even the most complex and expensive commercial vessels - cruise ships, which are often built by European defense shipbuilders - go from detail design to first-in-class delivery on a timeline up to four times faster than U.S. Navy surface combatants. The difference comes down to a few factors. First, the Navy has a long requirements process, which drags out the timeline before the start of detail design. Cost and schedule estimates are prepared before the design is stable, leading to changes and budget uncertainty down the road. Vendor selection for ships' systems is also slow, which further delays the completion of detail design.

GAO also found that the Navy does not have the structured design timelines and milestones for design maturity that commercial owners use to make shipbuilding choices. The service does not have a defined, time-limited process for reaching decisions, and lots of stakeholders have overlapping authority. This slows down the process of getting to a decision on detail design elements.

While the Navy has multiple departments with decisionmaking authority, it recognizes that it has less strong in-house design capabilities, and it is working on ways to become a more technically proficient shipbuilding customer. Adopting modern computer aided design tools would help with this process, according to GAO.

The GAO is recommending that Congress require that all essential design work be completed with 3D modeling before any work begins on construction, and that every block should have a complete detail design before it is built (as opposed to the government shipbuilding practice of "concurrent design and construction.") This requirement would include finishing the design of all major distributive systems before laying the keel.

It has also advised the Secretary of the Navy to make basic internal changes, like requiring that the functional design process be done before awarding a detail design contract, and setting up efficient timetables and standards for design review. It also suggests that the people who will use the ships - current or recent surface warfare officers - be embedded in the design review teams to provide user feedback on practicality.

Iran Says Crew of MSC Aries is Freed if Captain Goes with Crew

MSC containership — Iran purports the crew of the MSC-chartered vessel is freed if the captain goes with them and they leave the ship (file photo)

Following through on its earlier promise this week, Iran’s Foreign Ministry is reporting the 24 crewmembers aboard the seized containership MSC Aries are free to leave. However, they added that they could depart if the captain “cooperated,” with other reports saying they were requiring the captain to also leave and abandon his ship.

Iran’s Foreign Minister Hossein Amir Abdollahian told his counterpart in Estonia that the crew had been freed during a call that took place on Thursday, May 2. International leaders have been calling for Iran to release the crew. Iran previously made similar promises to the Pakistanis who have citizens aboard the ship and to the Portuguese which is the flag state for the ship.

So far, Iran has only let one person leave the ship and travel home. That was the sole female in the crew, a deck cadet from India. She was released days after the ship was seized on April 13. Since then, Iran has said it would hand the crewmembers over to their respective ambassadors while stating the crew was not under arrest.

Last week, Iran provided consular access to the crew. Iran’s Ports and Maritime Organization at the beginning of this week also reported the crew is “in perfect health.” They said there was no concern regarding “their health, hygiene, welfare, and safety.”

In the same statements Iran however has reiterated its claims that the ship violated international maritime law. The Foreign Ministry is now citing the vessel as turning off its AIS signal while traveling in Iranian territorial waters. They contend the vessel was endangering the safety of navigation when it was seized as it neared the Strait of Hormuz.

MSC, which was the charterer and operator of the vessel, has not responded to the requests for confirmation of the release of the crew. Previously, MSC said it was working with the authorities and also trying to gain the release of the cargo.

The MSC Aries (158,000 dwt), which was built in 2020, is owned by affiliates of Zodiac Maritime the company in which Israeli shipping magnate Eyal Ofer is the lead investor. Iran seems intent on holding the vessel indefinitely.

Iran’s “humanitarian” effort came as leaders of the military again this week reiterated their threats to target other tankers in the Persian Gulf. They previously said Iran would continue to seize tankers in retaliation for any moves by the United States to seize Iranian oil.

Houthis Escalate Threats Against Shipping Launching “Fourth Stage”

warship escort — French destroyer on escort duty in the Bab al-Mandeb (EUNAVFOR Aspides)

The leader of the Houthi movement called for a further escalation of the attacks on shipping citing the potential attack on the city of Rafah and as Western pressure grows on Hamas to accept the terms of a proposed ceasefire. The statements came during their weekly demonstrations in Sanaa staged on Fridays and after a week of increased assaults targeting commercial vessels and U.S. warships.

“The Yemeni armed forces announce the beginning of the implementation of the fourth stage of escalation,” Houthi spokesperson Yahya Saree announced in a televised speech and in posting on social media. He said it was effective immediately from “the moment of this statement.”

The statement said they were targeting all ships “violating the ban on Israeli navigation,” and heading to Israeli ports in the Mediterranean. They vowed attacks in “any reachable area,” within their range, which some media outlets are interpreting as a threat against ships in the Eastern Mediterranean. That would require a range of nearly 1,200 miles Bloomberg highlights but comes days after a Houthi drone appeared to have struck the MSC Orion in a range of 300 to 400 nautical miles south of Yemen in the Indian Ocean.

The Houthi also threatened to expand their attacks to “all ships and companies that are related to supplying and entering [Israeli ports] of any nationality if a military operation is launched against Rafah” in southern Gaza. The United States and other Western allies have been pressuring Israel not to attack Rafah while the Israeli government and military continue to accuse the leaders of Hamas of hiding among the civilian population of Rafah.

Before announcing the new threats, the leader of the Houthis celebrated on Thursday what he called the success of their efforts since they began in November 2023. He claimed their forces had attacked 107 ships. He said they have launched 606 ballistic missiles and drones. Last week alone he claimed they conducted 33 launches.

U.S. Central Command and the EUNAVFOR Aspides operation have both confirmed a resumption of the attacks. CENTCOM has reported downing attacks this week including three aerial drones on May 2 and a surface drone on April 30. Aspides reported the Italian frigate Fasan, which recently assumed the role of flagship relieving another Italian vessel, downed multiple attacks on a merchant ship on April 29.

Speaking on the situation in the Red Sea, yesterday Maersk CEO Vincent Clerc told investors he expected the security issues and diversions to continue for months. He said Maersk has no intentions of returning to the Red Sea area speculating the diversions could even continue into 2025.

Cape of Good Hope Diversions Threaten CII Grades - and Show Value of Data

Bulker with smoke from stack viewed from above — iStock / gece33

The shipping industry has been enveloped by a sustained period of intense geopolitical volatility. Previous challenges - like the emergence of the Russian ‘dark fleet’ and the reduction in traffic through the Panama Canal - have now been superseded by the mass re-routing of vessels via the Cape of Good Hope, in order to avoid the Red Sea.

Among the myriad of consequences that transiting around the Cape of Good Hope will have on the shipping industry – one that has gone largely unreported – is the significant impact that rerouting can have on a vessel’s IMO carbon intensity indicator (CII) grade. Our data shows that rerouting around the Cape has traditionally changed a vessel’s behavior. Consequently, recent data reveals an average 10% increase in speed when sailing around the Cape, compared to using the Suez Canal.

Given that speed’s relationship with fuel consumption is not linear, this increase can have profound consequences on fuel consumption and the carbon intensity measured to develop a CII ‘letter rating’. To provide an example, for a 100,000-DWT gas tanker, a 10% speed increase for a transit around the Cape from Europe to Southeast Asia will add approximately ten days to its transit time. This translates into a fuel consumption rise of 291 tonnes, which is equal to an additional conservative estimated bunker fuel spend of $175,000, while adding 920 tonnes of CO2 to the atmosphere.

Critically, the hidden impact of this change in behavior is that the same vessel would see a 17% increase in carbon intensity under the CII framework. A vessel’s CII grade is effectively an annual rating, and therefore this would signify a significant risk of a negative change in its letter rating the following year. The consequence of this is that the user of the vessel is effectively blind to how that vessel is operating – and how it will be rated – until the end of the year.

In other words, the stark reality is that the vessel charterer has no knowledge or influence on how a journey might affect an overall annual CII letter rating. This could be hugely disadvantageous for cargo owners committing to a “B” rated vessel, for example, only to discover – mid-time charter – that the ship has been re-rated to a “C” or “D”.

Another example of a need to rethink is in emissions reporting for IMO Data Collection System (DCS) and EU MRV. The Energy LEAP alliance’s VERS (Vessels Emission Report Standard) initiative is running a trial that allows DCS and MRV-relevant emissions data from vessels – each producing dozens of pieces of data per day, which are shared and accessed by regulators, ports, charterers, and shipowners – to be safely stored and accessed through a single repository.

The case of VERS and the CII / Cape scenario establish a compelling rationale for a more modern, ubiquitous, and transparent standardization of marine data intelligence. Global data storage is projected to exceed 200 trillion gigabytes next year, yet shipping continues to rely on legacy processes, or holds data in silos, creating huge inefficiencies and barriers to industry progress. In many ways this personifies the antithesis of what marine assurance is meant to provide.

As the VERS trials illustrate, the solution to these antiquated processes is already established and proven. There are systems already that allow stakeholders in the shipping industry to seamlessly share and access accurate, real-time data, which will then provide charterers, ship operators, traders, and port and terminal operators access to the required data quickly, securely, and reliably. With real-time visibility into cargo movements, stakeholders can proactively address any issues, anticipate delays, and ensure timely delivery - thereby creating better risk management, which would in turn reduce losses and damages.

Technology is not the barrier; legacy and human nature is

A common, paperless, data exchange would dramatically streamline compliance and regulatory processes – with a focus on limiting human intervention – and would save millions of human hours per annum. This is not to disregard the need for due process, risk management, and keeping safety as paramount, but rather introduce a means of conducting the same tasks significantly more effectively and efficiently.

However, there remains an industry reticence towards a move to data standardization, centered – understandably – on trust and security. The irony of this legacy attitude towards peer-to-peer standardization is that despite the initial hesitance, the industry is steadily moving towards a greater level of data sharing between parties anyway, with regulations already in place to facilitate the sharing of data. Regulations such as the EU MRV, and EU ETS – which build on the reporting requirements of MRV – as well as increasing provision for data sharing clauses within charterparty agreements, and the Sea Cargo Charter, all establish frameworks for accessing a disclosing data between parties.

The processes are already in place, and trust in a new, modern way of working for shipping is quickly building. All that is now required to truly revolutionize the industry is a systemization of these processes to create a more transparent, intuitive, efficient, and secure industry-wide data exchange framework.

Dominic McKnight Hardy is the managing director at MIS Marine.

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

BALTIMORE

Salvors Remove Sections of Bridge from Dali Preparing for Bigger Lifts

Dali bow wreckage — Image from April 22 shows the challenges the team faces in this phase to remove debris from the bow of the Dali (USCG photo)

In its latest update, the Unified Command highlights that the salvors are preparing for the removal of the piece of the bridge lying on top of the Dali as the recovery efforts proceed in Baltimore. Pictures released by the various teams on site show the cutting operation underway and the lifting of smaller sections off the Dali as efforts also continue to clear the waterway.

A piece of span 17 was lifted from atop the bow of the Dali on May 2. This came after teams strategically removed 182 containers from the vessel to facilitate access for the removal of the pieces of the steel structure referred to in the salvage plan as “section four.”

The command previously reported that after the containers were removed, they were building staging and positioning equipment to begin the precise cutting operation and rigging of the sections for removal from the ship. Once the sections are removed, they expect the Dali will be refloated with the plan calling for the vessel to be moved to a pier in Baltimore.

Steel pieces being removed from the Dali on May 2 (USCG photo)

"The complexities of this next phase of operations require thorough preparation, strategic planning, and specialized expertise," said Capt. David O’Connell, Federal On-Scene Coordinator, Key Bridge Unified Command. "We have the right team making this work happen in the safest and most efficient way possible.”

The command highlights that the operation requires careful handling of roadbed material, crushed containers, and bridge fragments currently resting on the Dali’s bow. The salvage teams are meticulously preparing for the refloat of the Dali, ensuring all aspects of the wreckage impacts are thoroughly evaluated and addressed.

(U.S. Army Corps of Engineers, Baltimore District photo)

Another one of the pictures released shows salvors using a heavy lift sheerleg crane ship, the Chesapeake 1000 and the HSWC500-1000 heavy-duty hydraulic salvage grab removing wreckage adjacent to the vessel.

At the same time, specialized equipment has been employed to closely monitor the position and movement of the Dali as the work proceeds. They are also monitoring for any potential impact on the pieces of steel structure and bridge wreckage that is in contact with the vessel.

Maersk advised customers yesterday, May 2, that while this phase of the operation is underway its largest vessels cannot enter Baltimore harbor. The company said for the time being, it continues to operate limited barge services through the temporary 20-foot deep channel.

Cutting on April 30 as the prepare to free the sections from the Dali (USCG photo)

More details also continue to come out on the potential cost to the global insurance sector. Two UK-based insurance companies updated investors yesterday during their quarterly reporting confirming what they were saying would be manageable exposure.

International specialist insurer Hiscox called the Dali a “complex claim,” noting in addition to the tragic loss of life and wreckage removal claims the industry is likely to face potential business interruption claims. There will also be claims for the cost of building the replacement bridge.

Hiscox said it expects the net loss to be “moderate,” but that it would be mitigated due to the reinsurance arrangements in place. The company noted that no associated reserves were booked in the first quarter. “Hiscox has no direct exposure to the business interruption policy of the port or the property policy covering the bridge, although Hiscox London Market participates in the reinsurance for the International Group of P&I Clubs.”

Another specialty insurer and provider of reinsurance products, Lancashire Holdings told investors it has some exposure. It said the claims will be “within expectations for this type of event.” Lancashire does not expect to change its undiscounted combined ratio guidance for the year (an insurance industry measurement of profitability based on claim losses compared to premiums collected).

No updates have been provided on the timeline. The teams continue to say they expect to reopen the deep channel around May 10 and have the full channel reopened by the end of May.

Union Deal Will Send Construction-Industry Welders to U.S. Navy Shipyards

IBB welder — An IBB union welder with the Phoenix, Arizona Local 627, 2023 (IBB)

The U.S. naval industrial base is operating short-handed, and a shortage of skilled workers is slowing down construction on critical projects like America's next-generation nuclear deterrent, the Columbia-class submarine. The nation's four public shipyards, which handle submarine repairs, are chronically backlogged. A Cleveland-based company, Bartlett Maritime, may have a solution: a rotational hiring system to tap union welders from the construction trades.

Bartlett has reached a deal with the International Brotherhood of Boilermakers (IBB) - a national union for welders and metalworkers - that allows the firm to recruit from among the Boilermakers' construction industry members, anywhere in the country.

“This agreement that we are signing today makes it possible for members of the construction sector of the Boilermakers union to easily take assignments in the Navy’s shipbuilding industrial base,” said Bartlett Maritime Founder and CEO Edward L. Bartlett, Jr. “It both immediately expands union employment opportunities and adds a vast new labor pool to the Navy shipbuilding industry.”

The deal covers most of the negotiations needed to hire Boilermakers members from any locality and redeploy them to another. Since the construction industry is seasonal, these union members have downtime every year, and they can use those months to take up a temporary job in a shipyard. Bartlett has a $3 million contract with the Navy's BlueForge Alliance to set up the program and provide the retraining needed to prepare construction welders for the needs of submarine construction and repair.

"This agreement is an incredible opportunity for those people," said IBB International President Warren Fairley. "This fills in those gaps."

Bartlett Maritime hopes to start with a rotational workforce for other yards, but it also has long-term plans to build a new facility for submarine component repair in northeastern Ohio, where it can tap into the Great Lakes' industrial workforce. By keeping a rotational pool of refurbished submarine parts ready to go, the component repair plant would speed up depot maintenance at the public shipyards dramatically - up to 14 percent, according to Bartlett.

The firm's ultimate goal would be to set up a fifth shipyard for submarine repair, built from the ground up to modern specifications. "It is essential to have designed-in available surge capacity, which means the fifth naval shipyard is less an option than a solid requirement," argued Edward L. Bartlett Jr. in a USNI editorial earlier this year. "The urgency of the Navy’s submarine maintenance crisis, particularly in the face of the current challenges with China’s naval expansion, necessitates bold and innovative responses."

30 U.S. Sailors and Marines Injured in Landing Craft Training Exercise

JUST LIKE THE REAL THING

The U.S. Navy and the Marines are confirming an incident on Wednesday, May 1, in which 30 sailors are Marines were injured. It happened while the units were training approximately 100 miles off the Atlantic Coast near Jacksonville, Florida, and Georgia. Five of the sailors were more severely injured and medically airlifted to a hospital in Savannah, Georgia for treatment.

Few details were provided on the nature of the incident with the spokesperson only confirming that two landing craft air cushion (LCAC) were involved. The vessels are 91-foot-long armed, high-speed hovercrafts. They are used to ferry Marine Air-Ground Task Force assault units from their Navy vessels to shore. Typically, the LCAC has a crew of five and can carry as much as 75 tons of gear, weapons, and troops.

LCAC approaching Warp in 2023 training exercise (U.S. Navy photo)

The units were conducting pre-deployment training. Reports are they were practicing evacuation missions and deployed aboard the USS New York and the USS Wasp. The New York is an Antonio-class amphibious transport dock with a special ramp and typically carries up to two LCACs. The Warp is a multipurpose amphibious assault ship and typically carries up to three LCACs.

Twenty-five of the injured sailors and Marines were treated on their respective ships. However, medical personnel decided to evacuate the other five to shore. The 2nd Fleet and 24th Marine Expeditionary Unit are reporting that four of the injured individuals were treated and have been released from the hospital. No update was given on the fifth individual.

The Navy and Marines would only say that an investigation is underway into the incident.

US Destroyer Provides Medical Aid, Coordinates Evacuation for Grimaldi RoRo

In a unique situation, the U.S. Navy recently provided medical assistance and coordinated the medical evacuation of a crewmember from a merchant ship sailing off the coast of North Carolina. The Navy determined it was closer to the vessel that was calling for assistance. The guided missile destroyer USS Stout provided assistance and made the arrangements with the U.S. Coast Guard for the evacuation of the injured crewmember from a Grimaldi Line RoRo.

The car carrier Grande Portogallo (12,600 dwt) departed Rhode Island on April 26 bound for Tuxpan, Mexico. Three days later, southbound off the coast of North Carolina, a crewmember suffered injuries from a hot fuel oil spill.

The Italian vessel made an urgent call to the U.S. Coast Guard requesting medical assistance for its injured crewmember. According to the U.S. Navy, the Stout happened to overhear the bride-to-bridge communications between the Grimaldi vessel and the U.S. Coast Guard Station North Carolina. Determining that they were in the vicinity, the Stout volunteered to provide assistance and broke off from its weeklong training exercise being led by the USS Harry S Truman aircraft carrier.

“The crew performed well as professionals, quickly transitioning from tactical training to real-life humanitarian assistance,” said Cmdr. Desmond Walker, commanding officer of USS Stout. “The coordination between our combat information center, bridge, small boat team, and the U.S. Coast Guard ensured the fastest response possible, given the type of emergency.”

The crew of the destroyer prepared a small boat team with medical personnel while the destroyer rushed to the aid of the car carrier. A five-member team deployed on a rigid inflatable boat and embarked on the Grande Portogallo to provide the needed medical care.

USCG helicopter and medical team arriving the RIB just visible standing off to assist (Photo by Lt.j.g. Ian Tumulty/US Navy)

After assessing the medical situation, the team from the destroyed determined the crewmember required more extensive medical care. The Stout remained in contact with the U.S. Coast Guard Sector in North Carolina and coordinated as the Coast Guard dispatched a helicopter. The Coast Guard also dispatched a C-130 aircraft to monitor the situation.

The personnel from the Stout remained on scene until USCG arrived and coordinated the handover of patient care to the USCG, which then arranged the evacuation of the patient to shore via helicopter. The injured crewmember was transferred to a hospital for further evaluation and medical treatment.

Stout’s small boat crew headed back to the ship to resume CSG-8 Group Sail operations. The carrier group is currently in training after a period of maintenance and is scheduled to deploy again this summer.

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