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)
Tuesday, August 08, 2023
Someone is Paying to Refit a Detained Russian Megayacht Worth $700M
Scheherazade under way on sea trials, 2019 (file image courtesy DrDuu / CC BY SA 4.0)
The Russian megayacht Scheherazade had the misfortune to be caught in a European shipyard when Russia invaded Ukraine in February 2022. Unlike the many Russian yachts that slipped their lines and got under way, she was immobile and within reach of EU sanctions. The authorities ordered her detained on suspicion of connections to a sanctioned individual.
That detention came with a big silver lining. Sheherazade has the good fortune to be trapped at a top-tier Italian yacht yard, where she can be maintained by expert staff. While other Russian ultraluxury yacht owners must make do without Europe's world-class repair yards, Scheherazade has everything she needs, and perhaps more.
The shipyard in question, Italian Sea Group, told the FT that the vessel is not only being maintained - the owner is paying for the refit to continue. In keeping with the standards of the trade, the yard did not name the owner.
The identity of Scheherazade's beneficial owner is a matter of debate. According to the U.S. Federal Bureau of Investigation, the vessel's ownership is obscured beneath multiple layers of offshore trust arrangements, as is common for vessels of this class. At the bottom of this structure, the FBI uncovered the name of a former president of state oil and gas company Rosneft, an unsanctioned oligarch named Eduard Khudainatov - who is also the listed beneficial owner of the Russian megayacht Amadea.
Betweem Scheherazade and Amadea, Khudainatov would be responsible for $1 billion worth of megayachts and about $100 million a year in upkeep, and the FBI does not believe it. Khudainatov's reported net worth is below the top ranks of Russia's wealthiest businessmen. In court filings in May 2022, federal agents argued he is acting on behalf of someone bigger.
“The fact that Khudainatov is being held out as the owner of two of the largest superyachts on record, both linked to sanctioned individuals, suggests that Khudainatov is being used as a clean, unsanctioned straw owner to conceal the true beneficial owners of these vessels,” FBI agents suggested in a filing related to the Amadea.
The FBI has some ideas about who the real owner might be, and so do independent researchers. In the two years leading up to the invasion, the Scheherazade's pattern of port calls in the Black Sea aligned with Russian President Vladimir Putin's travel itinerary, according to the New York Times. In addition, a Russian political opposition group claims that half of Scheherazade's crew were employed by Putin's personal security service, the FSO. Flight records show that these personnel regularly rotated between Russia and Italy. "We can’t think of better proof that this yacht belongs to Putin. Even in Italy, thousands of kilometers from Moscow, people are working on it who are officially listed as Putin’s bodyguards and personal staff,” investigator Maria Pevchikh said.
Under EU law, Italy is responsible for enforcing EU sanctions within its borders. The Italian authorities have agreed to allow the refit work on Scheherazade to continue, according to the FT, but will not disclose who is paying for the work. Italy's Finance Ministry acknowledged last year that the vessel has "significant" links to "prominent elements of the Russian government."
India Plans for its First Polar Research Vessel
Chartered icebreaking cargo ship Vasily Golovnin arrives at India Bay, Antarctica, March 2023. India currently charters foreign vessels for its high-latitude science (NCPOR Goa)
As countries become increasingly interested in polar research due to climate change concerns, India is on course to have its first polar research vessel in the next five years. India’s Minister of Earth Sciences Kiren Rijiju made this revelation last week while responding to a query in the Rajya Sabha, the upper house of India’s parliament.
India currently runs three research stations in Antarctica, and a polar research vessel would be used for logistics and resupply missions. Minister Kiren revealed the vessel will also be used as a platform for research, specifically in the Southern Ocean.
According to the Minister, the proposal regarding the ship order is expected to go for cabinet approval during this current financial year. The estimated cost of the vessel is $310 million.
“While the government is in talks with other countries which have expertise in making such ships, we would like to build the vessel in India,” added Rijiju.
Earlier in 2014, the Indian Cabinet had approved over $120 million for acquiring a similar ship. However, the tender was later dropped.
Last year, India’s lower house (Lok Sabha) passed the Indian Antarctic Bill, 2022, partly aimed at regulating the country’s research activities in the South Pole. The legislation came 41 years after India’s first expedition to the Antarctic in 1981.
Meanwhile, Rijiju also apprised legislators on the progress of India’s ambitious Samudrayaan project. Scheduled for 2026, the project is aimed at exploring the deep ocean and its resources. It is being designed and implemented by the National Institute of Ocean Technology (NIOT) in Chennai.
The minister said three personnel will be sent to a depth of 6000 meters in a submersible named MATSYA 6000. It has endurance of 12 hours under normal operation and 96 hours in case of an emergency.
With the Samudrayaan Project, a first of its kind in India’s ocean exploration history, the country hopes to join the elite group of countries with specialized capacity to conduct deep ocean research.
Salvage Teams Board Fremantle Highway as Investigation Begins
Fremantle Highway was towed into Eemshaven, Netherlands on August 3 (Rijkswaterstaat)
Salvage teams boarded the burnt-out car carrier Fremantle Highway on Monday as the next step in the efforts to fully assess the damage while a comprehensive investigation has also been launched to understand the cause of the fire. Speaking with the Dutch media, executives from SMIT and Multraship which are working on the salvage detailed some of their initial findings.
The hulk was towed into the Dutch port of Eemshaven arriving during the day on August 3 after the firefight. The fire broke out overnight on July 25 and when the crew was unable to contain the fire, they called for assistance from the Netherlands Coast Guard. As the fire continued to spread, the crew was evacuated while a broad team was formed for the multi-day firefight.
Salvage teams were permitted to board the vessel and begin work after the safety authorities in the Dutch province of Groningen completed an initial inspection on August 5. They reported that there was no longer any danger aboard the ship from the fire and it was safe with the teams to proceed aboard the vessel.
Speaking during an interview with the Dutch outlet NOS Radio 1, Richard Janssen of SMIT Salvage said the first steps included dewatering the ship and making sure that there was a safe environment. Tests were conducted on the atmosphere in different compartments. They also established temporary lighting aboard the vessel and a working area for the salvage team.
The initial inspection is showing that the engine room of the vessel is intact. He said that the cars on decks one through four appeared from a visual inspection to also be intact. He said there were both gasoline and electric cars on those decks. Media reports are saying that possibly as many as 800 of the 3,784 vehicles, which included 498 electric cars, aboard could have survived the fire without damage. Possibly helping, Janssen reports deck five of the vessel was empty.
The suspicion which the investigators will seek to confirm is that the fire began on deck eight. Janssen reports that the fire had raged through decks six through eleven. He said it was probable that they would remove many burnt-out car frames.
A new crew is being sent to the ship to help the salvage team with the ship’s systems. They will concentrate on the engine room, getting some of the systems back online, and helping pump the fuel.
Fremantle Highway will be offloaded in Eemshaven after the investigation (Groningen Seaports)
Ultimately, they expect the car manufacturers to work with the team to determine the status of the cars. Volkswagen has now confirmed that it had a small number of cars aboard the vessel in addition to BMW which is believed to have had as many as 1,000 BMW and Mini cars aboard. Rolls-Royce also said it had a few cars aboard and is working with the buyers directly. SMIT reports there were also some construction cranes aboard the vessel.
At the same time, the Dutch Safety Board working with the authorities from Panama, the ship’s flag state, has launched an official investigation. They are concentrating on the origin of the fire and working to establish if it was in fact an electric car as speculated by the media that started the fire. The vessel’s owner, Shoei Kisen Kaisha, has said it also wants to investigate the fire, but according to the salvage team, it is unclear if they will be sending an independent inspection team to the Netherlands.
The car carrier was operating under charter to Japan’s Kawasaki Kisen Kaisha (“K” Line) which reported that there were 21 Indian nationals as the crew as well as a superintendent and pilot aboard when the fire began. They said that 22 people had been hospitalized reporting that 21 people had been released by July 31. The pilot was released from the hospital on August 2 and the captain on the following day. One crewmember died from injuries sustained while jumping from the burning ship.
Leendert Muller, managing director of Multraship speaking with the Dutch media cautioned that the recovery operation would continue for an extended period of time. He said it could take weeks before there is clarity.
Officials for Groningen Seaports, which is the economic operator and authority for the Eemshaven port, said they expect that once the investigators have completed their review and the insurance adjusters have gone through the vessel that the cars will begin to be unloaded onto the dock. They speculated it could be another three weeks before unloading could begin but noted that the dock, however, is already committed to another shipping company starting in October. They said due to the strong demand from offshore supply ships, dock space is very limited in the seaport.
ZEME Prepares to Build 10,000-Ton Green E-Methanol Plant in Dalian
Zhejiang Energy Group, together with its subsidiary Zhejiang Energy Marine Environmental Technology Co., Ltd. (ZEME), is preparing to initiate the construction of a 10,000-ton Green E-Methanol Production Project in August 2023. Once operational, it will become the world's first facility capable of annually producing 10,000 tons of green E-methanol. This joint undertaking between Zhejiang Energy Group and Dalian Shipbuilding Industry Co., Ltd. (DSIC) will be situated on Changxing Island in Dalian, China. The project, which carries an investment of $60 million, is scheduled to be completed by June 2024.
As a leading state-owned energy enterprise in China, Zhejiang Energy Group has consistently placed emphasis on environmentally friendly and low-carbon development. The Green Methanol Production Project signifies a groundbreaking endeavor undertaken by the company, with a prime focus on manufacturing environmentally sustainable methanol using the advanced "wind power to hydrogen synthesis" method.
Additionally, alongside this venture, the group is finalizing a feasibility study for a larger-scale green methanol production base with an annual output of 500,000 tons. Construction for this expanded facility is expected to commence in the second half of the 2024, with the aim of supplying cost-effective and competitive green methanol to the global shipping market by the latter half of 2025.
Before the project commencement, ZEME has already obtained a letter of purchase intention from well-established shipping companies from liners, oil tankers and bulk carriers. Furthermore, ongoing negotiations with multiple other shipping companies are underway to secure pre-purchase agreements for green methanol. Considering the global focus on energy conservation and emission reduction, green methanol is anticipated to emerge as the preferred fuel choice for ship owners in the future.
Interview: ZESTAs' Madadh MacLaine on the Future of Green Propulsion
The maritime industry is in need of technological solutions to power the green transition, from battery-electric to hydrogen to wind-assisted propulsion. Dozens of manufacturers and startups are active in this space, and many belong to the Zero Emissions Ship Technology Association (ZESTAs), the industry body for green-propulsion companies. To learn more about the best options for green power - and how the debate over policy is shaping up - TME recently caught up with Madahd MacLaine, CEO of the engineering consultancy ZEM Tech and Secretary General of ZESTAs.
What changes have you seen in green propulsion in the last few years, and what is the sector's trajectory today?
Well, as an example, I've been participating in the Electric and Hybrid Marine Expo in Amsterdam since 2016, and I was the first person to speak about hydrogen at this event. At the time, I recall people thinking that hydrogen was way out there, and the focus was on diesel electric hybrid propulsion systems. Today, hydrogen is a major area of focus, as well as the massive increase in the size and power density of battery-electric energy storage systems. It used to be that battery systems were in the tens to hundreds of kilowatts, and a 300-kilowatt system was considered large. The largest are now measured in the megawatts, and one of our members has two projects going that have 6.5-megawatt systems.
In short, we're seeing huge changes. And I honestly think that these changes are becoming exponential.
Can you tell us about the commercial prospects of these green-power technologies?
Well, there are already situations where it is more economically viable to go with a fully electric vessel, particularly where there is access to abundant renewable energy for charging the vessel. We've seen that in a number of cases where the vessel operator also owns their own renewable energy generation. By going electric, they've just removed fuel from their bottom line. The capex might be higher, but they drastically reduce their opex.
We're seeing success with wind propulsion as well, because again, with wind assist you're removing fuel from the bottom line.
Of course, with hydrogen technology, we're not in the same position yet. It's no secret that for this to move forward, we require stricter regulations to push people over into these technologies. It's not like knocking off a percent here and there, which is what we're seeing at this point in time from the CII, but drastic reductions.
You know, we have the technology to get us all the way. Some people are calling for absolute zero emissions by 2040, and the technology's there to do it. But we will have to find the right regulatory balance, especially for developing countries. And my personal hope is that we can find that balance using mechanisms in a market-based measure (carbon levy).
What kind of timeline do you expect for getting to an agreement?
I believe that we can have a solid market-based measure document worked out at MEPC 81, which can then be agreed at MEPC 82. I think by the time we get to MEPC 82, we will have seen some significant impacts of climate change coming through, and member states will realize that actually it is to their benefit to move quickly. Even some of the member states that have wanted to go slow on climate action may move toward deeper compromises.
Can this be done incrementally, with "stepping-stone" technologies?
The only way we're going to eliminate the pollution that is causing climate impacts is by reducing our emissions to absolute zero.
Incremental regulations are, in a way, forcing shipowners into half measures. We need to be very careful about our regulations so that we aren't pushing shipowners down the wrong pathway. They've got to comply with the rules in the most affordable way for themselves. There are investments going into fuels and technologies that potentially will make emissions worse if you look at greenhouse gases other than CO2, like N2O and methane.
Our perspective on this is that there should be more focus on smaller vessels with simpler operating profiles, which would support bringing absolute zero emission technologies up to the commercial readiness level and proliferated into the market. From that point, we can increase size and eventually all vessels can make that transition to absolute zero emission.
Accelleron Sees a Key Role for Turbocharging in the Green Transition
In October 2022, Swiss technology giant ABB spun off its turbocharging business as a separate publicly-listed company, Accelleron. The newly-independent firm has 100 years of history with boosting fuel efficiency in diesel engines, and CEO Daniel Bischofberger says that this expertise is more important than ever as shipping moves towards the green transition. TME recently caught up with Bischofberger to learn more about his experience as Accelleron's first CEO and his vision for the company's future.
Can you tell us a bit about your career and how you took on the top post at Accelleron?
Accelleron was a once-in-a-lifetime opportunity for me. I knew that turbochargers were going to be a fantastic business and that Accelleron would be a market leader in high-performance turbochargers for internal combustion engines. My first one and a half years with the company have been full of a positive dynamic and we reached all of our milestones in relatively short time.
My previous career links to Accelleron in many aspects, one being my previous work as head of a gas turbine service business with a multi-billion-turnover and my previous position at Sulzer as a member of the Executive Committee and Division President of the service organization. Originally, I joined ABB - of which Accelleron was a part of before its independence - back in 1993 as a Commissioning Engineer in the Combined Cycle Power Plants business, spending eight years with ABB across various roles. Besides that I have held senior positions at Alstom and Dätwyler, a master’s degree in Industrial Engineering and a BA in Mechanical Engineering from the Swiss Federal Institute of Technology (ETH) Zurich as well as an MBA from INSEAD.
Accelleron saw strong revenue gains in the first half. Can you tell us what is driving the strong demand for Accelleron's capabilities in maritime?
With regards to the first half of the year, we haven’t published our full half year report yet, but recently updated our financial guidance and announced strong revenue growth in the first half of the year of 20%. When looking on the preliminary figures of the first half year, we saw a combination of positive factors in the merchant marine market (container, bulker, tanker) as well as the gas compression with strengthening demand. The orderbook in the marine industry remains at a constant high level. When looking back today on the still rather short time as an independent company since our spinoff from ABB and stock listing in October 2022, I would say we had a very good start.
What sets Accelleron's turbochargers apart from the competition?
Accelleron is the undisputed leader in turbocharging for mission-critical applications, and we provide an end-to-end solution for our customers. Our products help our customers save costs and reduce emissions.
Our strong partnership approach is a real differentiator. For example, we start out by designing turbochargers and our application engineering experts also collaborate closely with OEMs to tailor turbocharger specifications to every single installation. Our operations are based on a foundation of almost a century making significant and continuous investments in technology. But we also challenge the status quo: we recently launched the next generation of turbochargers for two stroke engines, the X300 L series. This provides industry leading power density and efficiency, is easier to service as it does not require a drydock for maintenance and easy to adapt for an increasing variety of fuels. We think this flexibility is exactly what the market needs.
Accelleron is well-positioned to help maritime manage the green transition. Can you tell us about what your customers need most for making the switch to low-carbon fuels?
Large combustion engines are here to stay for long-distance shipping, given the limitations of batteries and other technologies, so we need to ensure that vessels are being turbocharged to be as efficient as possible. Accelleron’s turbochargers increase power output and engine performance by up to 300%, reduce fuel consumption and carbon emissions by up to 10%, while slashing nitrogen oxides (NOx) emissions by up to 60%.
We defined our corporate purpose as “accelerating sustainability in Marine & Energy” – with our role becoming even more critical given the International Maritime Organization's highly ambitious goal to reach net-zero emissions around 2050. We think the marine market will be decarbonized by several alternative fuels including LNG, ammonia, methanol and hydrogen in the short term-future. In the long-run we consider E-fuels, which are produced from renewable energy and carbon dioxide, as the only viable option to achieve the 2050 targets. They are produced by converting renewable electricity into hydrogen and combining this hydrogen with CO2 (in the case of methanol and methane) and N2 (in the case of ammonia). Their combustion is potentially carbon-neutral and they can be used in various sectors, in particular in shipping.
Obtaining the correct mixture of oxygen and fuel will also be essential for fuel efficiency - even more important as future fuels will be initially more expensive than fossil fuels in the beginning. We prepared well for the decarbonization journey ahead of us: and recently acquired OMT (Officine Meccaniche Torino), one of the world's leading manufacturers of marine fuel injection systems. This will expand Accelleron’s position as a leading innovator in alternative fuel technologies, such as hydrogen, methanol, and ammonia. Additionally, we have a leading digital offering with Tekomar XPERT marine software, which helps optimize fuel efficiency and engine performance for vessel owners.
Accelleron invests heavily in R&D - can you tell us a bit about the kinds of projects that are at the center of your research efforts?
Innovation is at the core of our business. One of the reasons for the spin-off was to enable us to place even greater focus on this area. We invest around 6 to 7% of annual revenues in R&D.
Our activities are R&D is centralized in Baden, where we also find a great ecosystem of partners for our research activities. Our test facilities there have been recently upgraded to provide enhanced testing using biodiesel and hydrogen in turbocharging as well as fuel cells.
We are also working on many initiatives for future fuels and fuel cells, where our turbochargers are ideally placed to increase efficiency and reduce costs. All the fuel types, including LNG, hydrogen, methanol, even ammonia and fuel cells are feasible for us, whichever fuel solutions the industry leans towards. We can offer our customers turbochargers specifically adapted to their fuel choice and needs; our market-leading R&D group helps customers immediately should any issue arise.
Service is key for every OEM - what makes Accelleron's service stand out for the shipowner?
Service is at the very heart of everything Accelleron does. Our global service network and the extremely close customer loyalty are what really sets us apart, which is why we generate 75% of our revenue with services. We provide 98% spare parts availability and deliver within 48h to any airport globally.
We are always on hand, wherever our customers need support. We have more than 100 service stations worldwide, with 2,500 colleagues in over 50 countries. With their skills, competencies and deep technical and industry understanding, they play a key part in keeping our customers’ ships functioning to the highest standards. This best-in-class services offering improves efficiency and reduces downtime for ship owners, therefore reducing the costs of a ship’s operation and improving margins.
Our services offering also makes trying out new fuels far less risky for our customers as they can get support wherever and whenever they need it. We also work to optimize end users’ cost of ownership by offering upgrades and lifetime extensions. Digitalization encompasses all steps of a turbocharger’s life cycle, improving transparency and effectiveness both for Accelleron as well as for its customers.
Can you tell us about your vision for Accelleron and its growth in the years ahead?
We are offering our customers innovative lifecycle solutions in the Marine and Energy sectors and position ourselves as trusted partner for the energy transition ahead, both towards customers and society. Our goal is to strengthen our position in our core markets even further via our role as a core enabler of decarbonization and a leader in fuel transition. The OMT acquisition has extended our technology portfolio and will reinforce this position. Our steps are designed to support our OEM customers to develop more fuel-efficient propulsion solutions and the operators to reduce their life cycle costs and carbon footprint. In addition, the acquisition strengthens Accelleron’s core business as we are involved much earlier in the OEM’s development cycle in future.
Zvezda Has Launched Three LNG Carriers, But Can it Complete Them?
Completed ships and partially-assembled blocks in Zvezda's vast main drydock (Zvezda)
Russia's shipbuilding industry may have difficulties because of Western sanctions, but that has not prevented the Pacific yard Zvezda from completing the hull of Novatek's next icebreaking LNG carrier.
Zvezda has launched the future Sergei Witte, a specialized icebreaking LNG carrier for use at Novatek's Arctic LNG 2 plant. Novatek is the world's only user of this vessel class, and it first ordered the vessels' development from South Korean shipbuilders for its Yamal LNG plant. The 15 Korean-built ships have been transiting to and from Yamal LNG for years, transiting westbound along Russia's Arctic coast during the summer months and eastbound to Europe in the winter.
These ships are in short supply, and Novatek is already building a transshipment facility in Kamchatka in order to reduce the distance they have to travel each voyage. The development of its Arctic LNG 2 expansion plant will require a new, similar fleet.
In 2017, Russian President Vladimir Putin encouraged Novatek and its partners to localize production of the icebreaking LNG carriers at the newly rebuilt Zvezda Shipyard, located just east of Vladivostok. The activity would provide workforce development and financial support for a strategic defense facility: Zvezda is state-owned, has a long history in repairing nuclear submarines, and is laid out to handle aircraft carriers.
“Not only Rosneft but also Gazprom, Novatek and other Russian companies must . . . place orders [with Zvezda] on time. Maybe, they should submit even more orders because Zvezda certainly has the potential for handling more orders than provided for in this [development] plan,” Putin said in September 2017, adding that he “will monitor this project closely.”
The following month, Novatek complied with Putin's directive and said that it would enter a joint partnership with Sovcomflot to build its next 15 icebreaking LNG carriers at Zvezda.
The class uses membrane containment tank technology, which is a sophisticated, high-value specialty dominated by South Korean yards. With assistance from South Korean shipbuilder Samsung Heavy Industries and French tank technology company GTT, Zvezda has completed the hulls of the first two ships in the series, and it has now launched the third.
Zvezda has not completed a vessel of this type before, and aspiring new LNG carrier builders have had a mixed record of success - even without additional icebreaking features. Avondale Shipyard built its first three LNG carriers under a government program in the 1970s, all of which were refused by the owner over tank defects and converted or scrapped. Hudong-Zhonghua, the first Chinese yard to build an LNG carrier, encountered delays in its first few contracts as it got up to speed with tank technology in 2008-9; it would be another six years before a non-Chinese owner would place an order for a Chinese-built LNG carrier.
In August 2022, Interfax reported a meeting with Putin at which Novatek CEO Leonid Mikhelson expressed a sense of urgency about completing Zvezda's LNG carrier projects on time. Putin acknowledged that there were "difficulties that we know about" and asked that "every effort be made for the projects to be realized," promising additional state support for Zvezda.
GTT, the technology provider for the Zvezda LNG carriers' mission-critical tank membranes, backed out of the project in January 2023 because of EU sanctions exposure. In a statement, the firm said that it would only provide limited assistance for safe completion of the first two vessels in the series.
New Tech Makes Maritime Domain Awareness Affordable for Small Nations
Training on the use of the EU IORIS MDA system (CRIMARIO)
Understanding what’s happening in the maritime domain, known as maritime domain awareness or MDA, is an essential element for any country that wishes to govern its maritime zones. But in the Indo-Pacific, many countries struggle to afford the costly top-down, military-style surveillance systems used by wealthy countries. However, new technologies provide the opportunity to democratize access to information and help Indo-Pacific countries to have sovereign capabilities to better monitor their maritime domains.
In recent decades, many countries around the world have claimed jurisdiction over huge areas of the ocean and exclusive rights over the resources in the water and seabed. Many Indo-Pacific island states now have maritime jurisdictions many times larger than their land areas—Maldives, for example, claims that it is 99% ocean. Some have begun calling themselves ‘blue continents’.
But while drawing lines on ocean maps may look impressive, in reality these are often largely ungoverned spaces. The first, and arguably most essential, step in exercising maritime governance is understanding what’s occurring in the maritime domain. Many countries have little idea about what’s happening far from shore, making their maritime claims more in the realm of theory. The truth is that unwatched space is ungoverned space.
But achieving a reasonable level of awareness over huge expanses of ocean can be an expensive proposition. For rich countries like Australia, MDA has traditionally involved collating visual information from ships or aircraft, data from large military satellites and data from automatic signaling devices carried by commercial vessels (known as AIS). The cost and complexity of these top-down surveillance systems has left many poorer countries struggling.
But a multi-faceted technological revolution is bringing MDA within reach of even the smallest of countries, potentially giving them the tools to understand and govern their own maritime domains at an achievable price. These technologies include satellite-based data, low-cost commercial drones, artificial intelligence, and even crowd-sourcing of surveillance.
First, the proliferation of low-cost commercial and other non-military satellites, many of them in low-earth orbit, has brought much of the oceans under regular observation. These satellite systems use a range of technologies to sense vessels below, such as optical observation, radiofrequency detection of vessels using radio or radars (for example, the Hawkee360 system) and VIIRS, a scanning radar that detects reflected light.
Several web-based platforms are now becoming available at no or low cost to Indo-Pacific countries that overlay AIS with satellite data. This allows users to identify so-called dark vessels that have switched off or spoofed their AIS devices to reduce the chances of detection while they engage in illicit activities such as illegal fishing or drug smuggling. One such platform is SeaVision, offered by the US as part of the Quad Indo-Pacific MDA Initiative. Other equivalent platforms are available, including the EU’s IORIS system and the UK’s SOLARTA system. Importantly, users can have access to multiple platforms from multiple sources, reducing the ability of providers to withhold information.
Multiple data sources are now being supplemented by AI systems (such as the Skylight system, provided for free by a US-based non-government organization) that analyze the behavior of vessels to predict their activities and intent (for example, if a vessel’s track is indicative of a fishing vessel or whether it may be engaging in a ‘dark rendezvous’ with another ship). These systems cue suspect vessels for further investigation by authorities.
Smaller countries often also struggle to afford air and sea platforms that are key to visual surveillance. All Quad partners are now providing selected regional partners with patrol boats, maritime patrol aircraft, drones and patrol boats (including Australia’s successful Pacific patrol boat program). However, these military-grade assets can still be expensive to maintain and operate, requiring continuing external assistance.
But the proliferation of low-cost commercial drones increasingly enables maritime surveillance at a fraction of the cost of crewed patrol aircraft or military-grade drones. Many of them are controlled through terrestrial radio links, making them suitable only for inshore applications or for surveillance within relatively short distances from patrol vessels. However, as satellite-linked commercial drones become available, they will be suitable for surveillance of distant waters in exclusive economic zones and beyond.
Another approach is to effectively crowd-source MDA by having ocean users be the eyes and ears of maritime law enforcement. Some solutions can be simple. When the Maldives government provided subsidized satellite phones to its fishermen to enhance maritime safety, it also empowered them to give real-time reports of foreign trawlers in their waters, making it a key fisheries enforcement tool.
A new and interesting crowd-sourcing solution is the SeaWatch app, being trialed in the Philippines. It is a maritime equivalent of the popular crowd-sourcing Citizen app used to report traffic accidents or crimes onshore.
The SeaWatch app allows fishermen to use mobile phones to take pictures of (and provide other relevant information on) any vessels they suspect of engaging in illegal fishing or other illicit activities. These geolocated reports are then available to all app users. Reports made from beyond mobile range are automatically uploaded when coverage is reached, which means there may be some latency. (Satellite systems such as OneWeb are also being rolled out that will allow fishermen to communicate via mobile phone with authorities from distant waters.) It also depends on fisherman having access to smartphones, which a reasonable proportion already do, even in poorer countries.
SeaWatch reports may be used by maritime enforcement authorities to ‘tip and cue’ investigation of suspicious vessels or vessels that have been identified as suspect by other means such as AIS and satellite data.
Put together, these technologies are potentially revolutionary for Australia’s smaller neighbors that struggle to buy, operate and maintain high-end military-style maritime surveillance systems. They offer multiple new sources of data and analysis for free or at low cost. Their use can empower many Indo-Pacific countries to achieve a high degree of sovereign MDA over their maritime jurisdictions.
This article appears courtesy of The Strategist and may be found in its original form here.
MONOPOLY IS CRIMINAL CAPITALI$M
Importers Allege Fresh Del Monte’s Shipping Discriminated Against Customers
Shippers blame a lack of chassis and preferential treatment for delaying their products causing the fruit to spoil (Port of Hueneme file photo)
A group of Ecuadorian export produce companies and their U.S. importers filed a complaint with the Federal Maritime Commission (FMC) alleging “unfair or unjust discriminatory practices” from their carrier resulting in more than $2 million in damages and costs under their 2021-2022 freight contracts. The four exporters and two importers filed a joint complaint against Network Shipping (NWS), Fresh Del Monte’s ocean logistics arm, which offered third-party shipping services aboard Fresh Del Monte’s vessels.
The complaint, which was served on August 3, highlights that as a common carrier, “NWS is prohibited by the Shipping Act of 1984 from providing such preferential treatment to one customer to the detriment of others.” After seeking compensation from NWS, the two importers, Coast Citrus Distributors and Amazon Produce Network, both based in the U.S., along with the exporters Refin Tropicals, JW Fresh, Bresson, and Sembrios de Exportacion Sembriexport, all of Ecuador, are asking for relief as the FMC deems just and proper.
They acknowledge that Fresh Del Monte is a competitor of the complainants. However, Fresh Del Monte highlighted in 2022 its practice of optimizing cargo space on Fresh Del Monte’s 13 owned vessels, including six new fully cellular reefer box ships, by offering tailored shipping solutions to a broader audience. Among their marketing proposition they highlighted as being involved in cold storage shipments they understand the “market pain points customers go through.”
Two of the companies, Refin and Sembriexpor, entered into shipping contracts with NWS running between September 2021 and January 2022 during the season for fresh mangos from Ecuador. They contracted for reefers to be transported to the Port of Hueneme in California.
The complaint states that customarily, when the containers arrived, NWS would unload them from the vessel to the terminal and mount them on the truck chassis. NWS provided the chassis and the importers would contract with the truckers to pick up the mounted reefers and deliver them to customers.
Starting in November 2021, they contend that all the available chassis were being allocated to containers delivered by Del Monte to “the detriment of other NWS customers.” The reefer shipments were reaching the port on schedule, but truckers working for the importers said they would be told when they arrived at the port that no chassis were available or that the cargo was not ready. The complaint says 108 containers remained at the port for 10 or more days, with some remaining for over 50 days, leading to the spoliation of fruit.
They argue that the complainants had a “reasonable expectation that NWS would provide chassis,” in a timely fashion, and did not receive adequate prior notice that NWS would not have chassis available. At the same time, they contend, “NWS provided chassis for containers delivered on the same vessels for its parent company Del Monte.”
The importers said they tried to obtain chassis from other suppliers, but the other providers did not have appropriate types of chassis available in sufficient quantities. They contend that they also repeatedly informed NWS and Del Monte of the chassis shortage at the port.
Under the FMC process, after the complaint is served, Network Shipping as the respondent has 25 days to file a response for review with the FMC. Under the process, the initial decision of the presiding FMC judge shall be issued by August 5, 2024, and the final decision of the FMC shall be issued by February 17, 2025.
Delays, Cancellations and Costs Mount as Panama Canal Reduces Transits
Limits on transits and drafts at the Panama Canal are impacting shipping (file photo)
Concern is growing across the shipping industry as well as the potentially broader impact following the recent decision by the Panama Canal Authority to reduce the daily number of transits to conserve water. The authority said it working to address an ongoing drought that is not expected to lessen soon, but shipping companies are reporting increasing delays and added costs which had prompted some to look for alternatives and one cruise line canceled planned 2024 Panama Canal cruises.
Panama Canal Administrator Ricaurte Vásquez Morales has detailed the challenges they are facing due to the drought and after repeatedly lowering the draft limits, he announced the Panama Canal would maintain a draft of 44 feet in the coming months. He said this would be upheld “unless significant changes occur in weather conditions from the current projections.” To maintain the level the canal said it would only allow an average of 32 vessels per day to transit during this period, while suggesting the limits would remain in place into 2024.
The canal authority has been encouraging shipping companies to book their slots to minimize delays, but this is a costly process for the shipowners adding to the expense in addition to the transit fees. However, according to the ship agency Waterfront Maritime Services, it appears some ships are taking the advice. They reported last week that the number of vessels with bookings jumped from 38 to 54. However, another 83 ships, up by three, are also expected to arrive at the canal without bookings.
Waterfront Maritime Services also calculates that the waiting time for transits has already risen by approximately two days. Their report shows Neopanamax vessels were waiting last week 10 to 11 days for the northbound transit and as much as 15 to 16 days for the southbound transit. As part of the limit on the number of daily transits, the Panama Canal Authority set the maximum at 10 daily transits for the larger Neopanamax locks. Waterfront also reports for Supermax vessels the wait can now be between 15 and 18 days.
“The delays at the Panama Canal are having a ripple effect throughout the global economy,” said Thomas Zaidman, Managing Director of Sagitta Marine, a Panama-based dry bulk operator. “Ships that are delayed in the canal are forced to take longer routes, which increases fuel costs and shipping times. This can lead to higher prices for consumers and disruptions in supply chains.”
Some of the largest containerships are being forced to offload boxes for transshipment by rail across the isthmus. Evergreen’s Ever Max for example offloaded 1,400 TEU or nearly 10 percent of her load to make a transit on August 1. Some of the major shipping companies have responded to these issues by announcing surcharges on bookings transiting the canal. CMA CGM starting September 1 is expanding its Panama Canal surcharge of $300 per TEU to additional routes including trips to the U.S. East Coast and Gulf Coast. Starting in July, Hapag-Lloyd already introduced a surcharge of $260 per TEU.
At the same time, last week S&P Global in its Commodities Insights report said it was hearing that coal shipments were being impacted. Some carriers they reported are splitting shipments across two vessels while others were exploring diverting to trips around Cape Horn.
Similarly, Royal Caribbean International without supplying a reason has quietly withdrawn planned 2024 7-day cruises aboard the Rhapsody of the Seas cruise ship that were to have originated in Panama and transited the canal. Matt Hochberg reporting on the Royal Caribbean Blog says that passengers have been informed the cruises will now sail a 7-Night Southern Caribbean itinerary with stops in Aruba and Curacao.
The Panama Canal Authority understands the implications but reports it is balancing the issues to keep the canal functioning while also ensuring a drinking water supply for 50 percent of the country’s population served by the same reservoir. Last week discussing the challenges of managing the canal, Vásquez told reports their revenues might decline by as much as $200 million in the next fiscal year due to the water restrictions, but they were working hard to maintain the competitiveness of the Panama Canal and its vital role to the shipping industry.
