Thursday, December 07, 2023

Report Zero-Emission Fuels Could Add 50% to Container Shipping Costs

The early moves both among the container carriers and the shippers face substantially higher costs for transporting containers using the new generation of zero-emission vessels and fuels. A new report from independent UK consultancy UMAs seeks both to quantify some of the potential costs and contribute to the discussions by highlighting the challenges that lay ahead for the industry, echoing similar concerns raised by industry CEOs attending the current COP 28 conference and other reports that highlight the potential near-term shortages in the supply of alternative fuels.

“The role of the early movers including cargo owners, and their willingness to pay is therefore vital in setting up a zero-emissions shipping market,” writes UMAS. “This report contributes to that dialogue by providing examples of baseline additional cost per container required to bridge the cost gap considering only technological savings. It shows the room that cargo owners, governments, and other stakeholders have to contribute.”

UMAS used a variety of models to estimate the costs that will be incurred concluding that they could add as much as half to the current price of moving boxes on some routes. Initially, the report predicts there will be a significant cost gap between conventional fossil fuels and scalable zero-emission fuels. For example, in 2030 on the transpacific route, under the best-case fuel price scenario, the cost difference can be $150 per TEU for green ammonia, $210 per TEU for green methanol, and as high as $350 per TEU for green ammonia and $450 per TEU for green methanol in a high fuel price scenario. The lowest cost they find would be $90 per TEU transpacific and even on a Chinese coastal route could range between $30 and $70 per TEU.

The fuel cost gap is now acknowledged as the main blocker for shipping’s transition and tackling it requires a frank conversation about the dimension of the challenge,” said Camilo Perico, Consultant at UMAS, and author of the report. “We need “numbers on the table” and more visibility on how stakeholders can help to cover it.

The report details significant financial burdens, especially for the early adopters which will be needed to move the market forward. The industry has cited these same concerns. The CEOs of five leading carriers last week called for regulatory efforts and a move to level the cost difference between traditional and alternative fuels spreading the premium across all fuels.

UMAS calculates that a vessel operating transpacific would require an additional $20 to $30 million annually by 2030 when you consider both the capex investment in the vessels and operational expenditure. Fuel they highlight would be $18 to $27 million of the added annual cost.

Early adopters will have some choices according to UMAS which will also have an impact on the market. They could go with cheaper but non-scalable fuels such as the much-touted bio-methane, which they conclude will however become more expensive as demand outstrips supply. The alternative will be to invest in fuels with a higher capital expense but it would stimulate the market and become less expensive as production ramps up. UMAS expects that the cost gap will not narrow until 2050.

“The analysis shows fuel costs are a major component of the overall cost and therefore the primary driver of the total cost of operation. With the right demand signals and corporate action during the emergence phase, production and supply of zero-emission fuels and freight services can make a head start in lowering the cost gap that this work has shown,” said Dr. Nishatabbas Rehmatulla, Principal Research Fellow at UCL and co-author of the report.

They are calling for increased dialog and using the data to help plan the long-term approach for the shipping industry. The report notes that there are already emerging subsidies that could close the gap between conventional fuels and the new scalable alternatives. They highlight the regulatory efforts in the EU and U.S. that have the potential to help cover the cost difference on specific routes as well as future initiatives such as programs in the UK and Norway that would specifically support hydrogen fuels.

UMAS concludes that the window of opportunity for corporate action before regulation increasingly closes the gap is only available for a few years. The full report and the analysis are available online to help guide the discussion and the decision that the shipping industry needs to undertake.

Why Clean Shipping Fuels Need Solar-Industry Style Support

Shipping receives nowhere near the media coverage given to aviation, yet the sector also accounts for around three percent of global energy-related carbon dioxide emissions. Its footprint must be tackled rapidly if international climate targets are to be met. Solutions to decarbonize shipping exist, most notably in the form of green methanol, and some shipping firms are investing heavily in a greener future. However, the regulations and financial support needed to scale up the sector and push down costs are still found wanting.

The wind and solar industries are today mainstream players in the power sector. Costs, in particular for solar, have fallen massively everywhere. However, this positive trend would not have happened without significant government backing as these industries were starting out. The shipping industry has been used to accessing cheap fuels and, without similar financial and legal assistance, cleaner shipping fuels will remain an expensive pipe dream.

The shipping sector must reduce its emissions by 45 percent by 2030 compared with 2010 to come in line with the Paris Agreement commitment to keep global heating below 1.5°C above pre-industrial levels, says the Copenhagen-based Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, a not-for-profit research center. Meeting this target will be challenging, but the technology to achieve it exists and companies are engaging with the transition.

First, the technology. Methanol is a chemical compound that has long been in great demand for a variety of industrial applications. It is a relatively benign substance and, as a light liquid, it is easy to transport and store at room temperature. Almost all methanol today is, however, produced from coal and natural gas. Green methanol, on the other hand, is generated from clean energy sources either as bio-methanol or e-methanol. Bio-methanol can come from biogas or the gasification of sustainable biomass sources like agricultural and forestry residues and municipal waste, while e-methanol is produced from green hydrogen from renewable electricity and captured carbon dioxide.

Danish company Maersk has leapt ahead of global regulatory requirements through a commitment to procure only vessels compatible with green fuels and is taking steps towards retrofittings. As part of this transformation, the company has ordered 25 green methanol vessels it expects to come into service in the next three to four years. These decisions will help drive the creation of new green methanol supply chains as Maersk develops extensive off-take partnerships with energy companies.

Maersk is not the only company changing the way it does business. The global order books for low emissions vessels grew six-fold from 2019 to 2022 and changes to bunkering and fuel supply are also beginning to happen. In 2016, there were almost no shipping ports planning green fuel bunkering; by the end of 2022, ports representing around 16 percent of global shipping volume had announced plans to build out green fuel bunkering.

Green methanol supply has also been growing rapidly with total global production capacity increasing by 450 per cent from 2020 to 2023. This figure may sound impressive, but it comes from a very low base. Today, there are less than 0.2 million tonnes of green methanol on the market; we need at least 20 million tonnes by 2030. Further, production costs remain high, leaving large numbers of projects stuck in early-stage development. They will remain there unless we can secure long-term offtake at a price that makes these projects viable — but shipping companies cannot simply pass all of these higher costs to the owners of the cargo they move.

Governments can help solve this affordability gap between the cost of production and customer willingness to pay through "demand pull" initiatives, like the mandates for green hydrogen in the EU’s Fit for 55 package. Such policies create a clear demand signal and the industry can examine how to meet that at the lowest cost. We also need "supply incentives" like the EU's Hydrogen Bank and the US Inflation Reduction Act to help bridge production cost gaps.

Corporate leaders surveyed for Global Corporate Stocktake carried out by We Mean Business, with support from the UN Climate Champions team and consultancy Bain & Company, ahead of the COP28 climate summit, cited the lack of infrastructure to support fuel production and bunkering, commercial constraints and uncertainty surrounding technology pathways as important blockages to system change in the shipping industry. They also emphasized the need for governments to support collaboration between different actors in the shipping sector to push initiatives like "green corridors" where low-emissions vessels are incentivized.

Ultimately, green methanol will not be the only solution to decarbonize shipping. In the coming years, other low-emission fuels, like ammonia, are likely to come onto the market, with the end result being a complementary patchwork of solutions. For the moment, though, governments, and industry, should be focused on green methanol as a proven, easy-to-use solution that, with the right support, can be scaled up immediately.

Brian Davis is CEO of C2X, a standalone company founded by A.P. Moller Holding (APMH) and its shipping arm Maersk to "defossilize" the fuel used by shipping.

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

Report: Financial and Regulatory Barriers Delay Zero-Emission Fuel Supply

Zero-emission fuels such as methanol and ammonia are an important focus in the efforts to reach the shipping industry’s decarbonization targets, but a new report highlights that leaders across the industry believe financial and regulator hurdles are slowing the developments. Presented as a perspective on how to start addressing the barriers affecting zero-emission fuel projects, the report calls for unconventional partnerships and business models supported by regulatory and financial collaborations to overcome the barriers to lay the foundations for a zero-emission future in shipping.

While there has been a lot of publicity and discussion about these zero-emission fuel projects, the report concludes that “more than 95 percent of the projects centered on producing these fuels have not yet passed the final investment (FID) phase.” They highlight that this is despite the rising demand for the fuels as indirectly indicated by the more than 180 dual-fuel ships already on order and more planned.

“We are in the middle of what needs to be the decade of action if maritime shipping is to achieve net-zero emissions by 2050,” writes Mette Asmussen of the World Economic Forum and Peter Jonathan Jameson of Boston Consulting Group in the forward of their new report. “We need to eliminate these emissions through scaling of technologies that can power deep-sea vessels.”

Despite the positive momentum, the report highlights that the shippers and carriers that helped to launch the First Movers Coalition for shipping in 2021 are saying that barriers in the maritime value chain and beyond are hindering decarbonization from progressing at the speed needed.

Interviewing industry stakeholders, the report highlights that the nexus between demand and supply is an important dynamic and will help to increase the confidence to invest in the supply side. The interviews with more than 20 stakeholders shed light on the barriers that they believe are holding back the investment decisions and progress that is required.

Ten barriers were identified as limiting the projects from getting past the key FID milestone. The report categorizes the barriers into segments including customer and consumer demand, economic and financial issues and regulatory, as well as supply chain and infrastructure challenges and organizational issues within the companies. They point to issues such as the “green premium” and the lack of clear signals and willingness to cover the costs as well as the gap in offtake agreements and the lack of credible cost estimates.

Existing financial instruments and funds they also conclude are “not fit for purpose in terms of horizons and risk appetite.” At the same time, they point to a lack of near- and mid-term mandates or a global carbon price. Finally, they point to infrastructure issues for the storage and transportation of e-fuels.

The report concludes that while collaborations are underway to overcome the barriers, more needs to be done to get the first movers to take bold actions to advance the development of alternative fuels. “Although daunting, these barriers need not all be overcome simultaneously,” the report asserts.

They call for steps in addition to the support of green corridors that can consolidate shipping’s demand for methanol and ammonia with other sectors to hedge end-market risk. They also see the need to drive offtake agreements suggesting steps including reverse auctions using public-private demand aggregation.

The report also calls for using innovative contracting and financing mechanisms. They suggest that steps such as capacity payments, dynamic contract pricing, and offering equity stakes to strategic buyers could help to overcome the current financial challenges.

The report follows on from a statement last Friday, December 1, by five of the CEOs of the largest shipping companies highlighting the challenges they see in meeting the decarbonization objective. Their message called for greater collaboration and regulator efforts to support the industry during this period of transition.

The Virtual Watch Tower: A Public Good

Lind Watch Tower — (Illustration: Sandra Haraldson)

[By: Abhinayan Basu Bal, Trisha Rajput, Wolfgang Lehmacher, and Mikael Lind]

Building the new economy revolves around data, internet-of-things (IoT), artificial intelligence (AI), cloud and federated computing. The shipper-driven, terminal-centric Virtual Watch Tower / VWT (www.virtualwatchtower.org) is a federated computing initiative, created around fourth-generation logistics control towers of operational end-to-end logistics and supply chain monitoring (VWTnet). This results in an ecosystem that allows collaboration between global supply chain actors (VWT Community) to smartly share private data, enriched by public data. The collaboration allows enhanced visibility, analysis of data, and mitigation of risks such as disruptions or dealing with complex requirements like greenhouse gas (GHG) emissions calculations. Federated computing is chosen over centralized digital systems, where control is situated with the collaborating actors. In the new economy, the emphasis is on ‘collaboration’, and this article is about ‘governing’ collaboration in VWT.

1. VWT – an ecosystem of supply chain actors

As described above, the different watch towers form a digital network, which is about technology; and the actors using the network form an ecosystem, which is about interorganisational relations. VWT aims to provide situational awareness of vital transport and logistics assets, such as cargo and containers, and to facilitate collaborative decision-making between actors based on data insights, e.g., through the VWT virtual pop-up situation room. Both public and private data streams are aggregated to improve accuracy and reliability.

The success of VWT is dependent on the balance between actors through governance. The most important element of VWT governance is control of data because visibility and analysis are directly related to the creation and use of data brought about by technologies such as blockchain, AI, cloud and IoT. The key is to place control of data in the hands of the VWT Community. This is achieved by making VWT a ‘public good’.

2. VWT as public good

The governance of VWT reflects ‘public good’ thinking, as proposed by the American scholar J.F. Moore, and envisages an ecosystem where actors co-envision and co-manage ‘co-evolution’ among themselves. Co-evolution means that each actor of the ecosystem ultimately shares the fate of the network as a whole, regardless of the individual actor’s strength or power.

So far, VWT has followed the co-evolution approach to build consensus among its actors through living labs and working groups. In the coming phase of VWT, technology providers will co-create digital solutions responding to the needs of cargo owners, and transport and terminal operators. The actor focus is crucial as it resolves the paradox to hold back data, and the sense of community takes precedence to garner trust. In addition, the notion of ‘public good’ can be assumed to be ingrained in VWT as funding support came from governmental agencies in Sweden and Singapore to foster digital innovation and create economic and societal value.

Public good is ‘non-rivalrous’, i.e., an individual’s consumption of the good does not influence what is available for others; and ‘non-excludable’, i.e., no one can be excluded from consumption of the good. Typical example of a public good is a lighthouse where one ship’s use of the beacon does not prevent other ships from using the same.

For VWT to become a public good, VWT as a ‘legal entity’ needs to act as a fiduciary for its community members, i.e., someone who manages the asset for the benefit of another. VWT is poised to do that as a non-profit entity. Then VWT as the ecosystem orchestrator has control of data collection and data use, where the community members can influence the orchestration rules, and VWT in its role as fiduciary assures that data use follows those rules, which means that it is difficult to centralize control by a specific actor.

The cooperative nature of VWT necessitates establishment of a governance model comprising rules that guide the interaction of the actors, decide what behaviors are encouraged or discouraged, and choose how to enforce them. This governance model is a critical design choice for VWT because it replaces the hierarchical direct forms of control found in traditional vertical supply chains with indirect forms of control.

2.1 How the VWT balances actors through governance

Governance is important because it ‘encourages lots of innovation and allows complementors as well as users to benefit in a sustainable manner’ (Gawer, 2022). As explained above, VWT is an open network of economic actors that self-organize in their quest for exchange of information, where no specific actor is in control. Centralised control is avoided because that contradicts with the self-organizing nature of VWT. The governance model of VWT is established through various means, including the Project Agreement, Power of Attorney, other ecosystem orchestration rules, software tools, open-source licenses, etc.

VWT’s governance model is designed with the following considerations in mind.

(i) Foster co-opetition - In VWT, competitors cooperate to achieve a common goal. This is known as co-opetition, which is a mix of the words cooperation and competition. When competing actors join VWT to cooperate, they have already analyzed their position and decided to share their ‘special sauce’ with other actors. VWT fosters co-opetition through governance rules by striking a balance between openness and control so that actors can share their special sauce without giving away the recipe.

(ii) Balance openness and control – VWT as ecosystem orchestrator strikes the delicate balance between openness and control. On the one hand, with openness, VWT transfers design capabilities and attracts contributions from third parties through APIs that grant access to the platform. On the other hand, with control, VWT secures and protects the compatibility of the platform through governance. For example, using openness, VWT may create the possibility for cargo owners to access data from multiple transport operators through APIs. Then, through control, it would provide governance for the data-sharing process between various actors in the VWT Community.

(iii) Balance value creation and value capture - VWT creates value through network effects, a business principle where the service becomes more valuable as more actors use it. The governance rules ensure that there is the possibility for actors to capture the value created through cooperation in an equitable manner.

2.2 Societal aspects through KPI-triangle

VWT views value to be both societal and economic. In VWT, societal aspects include sustainability, which goes together with economic considerations of participating actors. Sustainability represents one corner of the key performance indicator (KPI)-triangle through environmental impact, which is balanced with two other corners, namely, operational cost and delivery precision. The KPI-triangle is an essential part of analytical services. Thus, one of VWT’s objectives is to ensure that value capture is not only for actors in the VWT Community but also for the society at large. This objective aligns with emerging solutions for non-financial reporting, such as WEF stakeholder value principles that create ways to measure sustainable value creation.

Figure 1: VWT KPI-triangle

KPIs are quantifiable measures of performance over time for specific objectives that assist organizations in their decision-making. In VWT, KPIs present the possibility to allow businesses to partake in responsible decision-making through increased visibility, so that they can manifest themselves as ethical businesses fulfilling their Environmental, Social, and Governance (ESG) obligations. Conversely, it may be argued that the KPIs of VWT provide an acceptable approach to navigate through the complexities of sustainability actions in supply chains.

The discussions in the VWT Community at living labs reflect that the actors are mindful about the pressures of emerging sustainability regulations. For the actors, the ‘environmental impact’ corner of the KPI-triangle may act as an ‘ecosystem binder’. For example, GHG emissions calculation is a feature under the ‘environmental impact’ corner and balancing that with the operational cost and the delivery precision corners is of common and mutual interest to the actors of the Community. Such common and mutual interests bind the actors together.

VWT orchestrates and promotes ‘collective decision-making’ that requires input from several actors with competing interests by optimizing their KPIs collectively. This aligns with Moore’s view, where he describes an ecosystem to provide ‘a vision and proof of concept that multiple contributors with differing interests can join in common cause’, making it a ‘public good’, which as an intangible asset subsists as an idea ‘in the mind of the possessors’ (Moore, 2006).

Based on the ‘ecosystem binder’ and ‘collective decision-making’ arguments, VWT, as a ‘public good’ creates a sense of community and mutual trust amongst actors, which propels them to share their business data and participate in the digital transformation process ‘responsibly’ to balance societal concerns with economic gains.

3. Thinking ahead - VWT dynamics

Conceptually, the ‘sense of responsibility’ is embedded in the design of VWT through a mix of internal governance, external regulation, and feedback loops. If the actors are not mindful of their ‘sense of responsibility’ towards the VWT Community, that creates misalignment resulting in ecosystem tensions. The ‘sense of responsibility’ is represented by generativity, which is the interaction of social and technical elements that enables digital transformation. Generativity acts as a force that creates various feedback loops and maintains the long-term stability of the ecosystem (Basu Bal, 2023). Generativity results in continued emergence through the formation of complex wholes from parts which comprises the dynamic relationship between people, technology, and organizations during the ongoing cycles of design, appropriation, and use of information systems (Basu Bal, 2023). This emergence phenomenon is referred to as VWT dynamics, that balances economic value creation and sustainability.

VWT dynamics may be compared to the sight of hundreds of birds moving across the sky in giant swathes, as a single entity. They twist and swoop and change direction in split seconds and ensure the safety and protection of the whole flock. Scientists believe that large flocks do not have a social hierarchy, but they still move and change direction in perfect unison because each bird reacts to the changing dynamics by observing their neighbors. The above phenomenon is known as murmuration and is an example of emergence, which in this article is referred to as VWT dynamics.

Returning to the conceptual construct, the governance of VWT is envisaged as listening to endogenous feedback of the actors and being responsive to exogenous feedback from external regulations. The emergence phenomenon of the VWT dynamics is presented in the figure below.

Figure 2: Conceptual framework of VWT dynamics (adapted from Basu Bal, 2023).

The figure depicts VWT through the rectangle on the left and the tensions explained in section 2.1 above through the cloud. Any quest for seeking greater control of the VWT ecosystem by one actor would cause misalignment as shown by the arrow leading to tensions. This would trigger the rules of governance to resolve the tension internally within VWT as shown by the arrow marked endogenous feedback.

VWT should not be understood as an isolated island. If VWT leaves a tension unresolved, that may lead to a societal concern and attract the attention of lawmakers, resulting in external regulation (law/ regulation/ guideline) mandating VWT to address the concern. In the above figure, societal concern is represented by the arrow leading from the tensions cloud to the grey rectangle of external regulation, which then feeds into the VWT rectangle through the arrow marked exogenous feedback.

The grey rectangle is shown in gradient because, in some instances, an external regulation could be shaped by a larger societal concern in general, which does not arise from the tensions of VWT, such as climate change. In that case, the lawmakers may decide to promulgate external regulation and inject that directly into VWT for resolution. This could particularly be the case when lawmakers impose regulatory strictures that could be channeled through VWT, to use digital transformation as a tool to promote sustainability. The recent IMO and EU initiatives to decarbonize shipping may eventually take that course to use digitalization as a tool to promote sustainability. In that case, the KPI-triangle of VWT, which is currently geared to cater to CO2 measurement of shipments, could be that specific tool to combat climate change and act as an ‘ecosystem binder’.

4. Conclusion – VWT: trusted ecosystem orchestrator

This article highlights the importance of VWT to have a balanced governance framework for digital transformation and sustainability to go hand in hand and reinforce each other in international trade and transport. The analysis demonstrates that - (i) VWT as a ‘public good’ in conjunction with the ‘co-evolution’ approach develops a sense of community that enables actors to repose trust on each other; and (ii) VWT as an ecosystem orchestrator enables policy goals such as decarbonization which may serve as ‘ecosystem binder’. Overall, the article concludes that the value creation of VWT is embedded with societal concerns, which would lead to the long-term stability of the ecosystem and thus protract value capture.

Acknowledgments
We acknowledge and appreciate inputs received from Jan Bergstrand from Swedish Transport Administration, Markus Ekwall from Dania Connect, Fu Xiuju, Yin Xiao Feng, and Zhou Rong from A*Star/IHPC, Margi van Gogh from World Economic Forum, Kenneth Lind from RISE, Anders Rystedt from Alleima, Janne Swinnen from Scania, Stefan Väre from Stora Enso, and Phanthian Zuesongdham from Hamburg Port Authority.

About the authors

Abhinayan Basu Bal is a Senior Lecturer at the School of Business, Economics and Law at University of Gothenburg. He lectures and researches in commercial and maritime laws with emphasis on digitalization and sustainability. Since 2013, he has been the accredited Swedish observer to UNCITRAL Working Group-IV on E-Commerce.

Trisha Rajput is a Researcher at the School of Business, Economics and Law at University of Gothenburg. Her current research focuses on platforms that facilitate trade; and enhance the visibility, efficiency and predictability of global value chains. Her work on single window interoperability has been presented at UNCITRAL.

Wolfgang Lehmacher is partner at Anchor Group and advisor at Topan AG. The former director at the World Economic Forum, and CEO Emeritus of GeoPost Intercontinental, is Advisory Board Member of The Logistics and Supply Chain Management Society, Ambassador F&L, Advisor GlobalSF, Advisor RISE, and member of the think tanks Logistikweisen and NEXST.

Mikael Lind is the world’s first (adjunct) Professor of Maritime Informatics engaged at Chalmers, and Research Institutes of Sweden (RISE). He is an expert contributor at World Economic Forum, Europe’s Digital Transport Logistic Forum (DTLF), and UN/CEFACT. He is co-editor of the first two books on maritime informatics, and is co-author of Practical Playbook for Maritime Decarbonisation.

References

Basu Bal, A., (2023). The generative carriage of goods. Journal of International Maritime Law, 29(2), 92-118.

Gawer, A. (2022). Digital platforms and ecosystems: remarks on the dominant organizational forms of the digital age. Innovation: Organization and Management, 24(1), 110-124, https://doi.org/10.1080/14479338.2021.1965888

Moore, J. F. (2006). Business ecosystems and the view from the firm. The Antitrust Bulletin, 51(1), 31-75.

Thomas, L. D. W., & Tee, R. (2022). Generativity: A systematic review and conceptual framework. International Journal of Management Reviews, 24(2), 255-278. https://doi.org/10.1111/ijmr.12277

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

NTSB: Dragged Anchor Caused San Pedro Bay Oil Spill

The National Transportation Safety Board (NTSB) has called for new VTS safety measures after the anchor-drag incident that caused an oil spill off the coast of California in October 2021.

The spill released around 588 barrels of crude oil into San Pedro Bay and caused about $160 million in damage, including cleanup costs. It was initiated when a container ship dragged anchor over an underwater pipeline in a storm eight months earlier. NTSB determined that the MSC Danit's anchor contacted and damaged the pipeline during a high wind event earlier in the year, and that stress fractures caused by the impact grew until the leak finally occurred.

Image courtesy USCG

Contributing factors included insufficient training for pipeline controllers and an inappropriate response to leak alarms, NTSB said. The agency found that there had been eight total leak alarms before the pipeline operators in the control room shut down and isolated the line. For 14 hours, the leak continued, and the release would have been smaller if the employees had been trained to respond appropriately, NTSB said.

The NTSB also found that the location of the anchorage allowed too little time for ships' crews to respond to an anchor-dragging incident before hitting the pipeline. The board recommended that the U.S. Coast Guard move the boundary of the anchorage farther away for safety.

The agency also called for new audible and visual alarms at Vessel Traffic Services (VTS) when an anchored ship gets close to a pipeline, along with procedures for VTS to notify pipeline operators of potential damage. The line was not marked on the VTS operators' charts, and they were not aware of the danger when MSC Danit dragged anchor over the area.

“Anchorages need to be designed to account for the size of vessels using them and the time it takes for these ships’ crews to react when anchor dragging occurs,” NTSB Chair Jennifer Homendy said. “Potential damage to a pipeline needs to be reported immediately because the consequences of a pipeline leak are so great."

Chinese Bulker Hits Moored Fishing Boat off the Philippines

The Philippine Coast Guard has reported an allision involving a Chinese bulker and a moored fishing boat off the coast of Occidental Mindorodo. Five survivors were rescued by good samaritan fishing vessels.

According to the PCG, the fishing boat Ruel J was moored to a fish aggregating device off the northwestern tip of Occidental Mindoro on December 5. At about 1600, the bulker Tai Hang 8 struck the Ruel J, and the fishing boat's crew alleged that the ship continued on its voyage without stopping. Ruel J was left adrift.

Images courtesy PCG

Three other fishing vessels - the Joker, Precious Heart and Jaschene - rescued the five crewmembers and towed their damaged vessel back to shore at Sablayan. The PCG checked on the survivors' condition, interviewed them and provided them with basic supplies. Two local agencies also said that they would provide additional assistance.

The agency identified the Ruel J's crewmembers as Junrey Sardan, Ryan Jay Daus, Bryan Pangatungam, Cristian Arizala, and Joshua Barbas.

The PCG plans to report the incident to Tai Hang 8's flag state, China, and will ask for investigative assistance from port state control in the ship's next port of call. It has also reached out to the shipowner, a midsize firm based in China's Hebei province.

AIS data provided by Pole Star confirms that the bulker passed the western side of Occidental Mindoro on the afternoon of December 5, the reported timeframe of the accident. The vessel's AIS signal was last received later the same day.

Huge Chinese Flotilla Swarms Whitsun Reef

A line of Chinese maritime militia trawlers moored at Whitsun Reef (PCG) — A line of Chinese maritime militia trawlers moored at Whitsun Reef (PCG / Jay Tarriela)

The Philippine Coast Guard has released video evidence of a vast swarm of Chinese vessels at Whitsun Reef, a low-lying feature in the Spratly Islands.

As a low-tide elevation, Whitsun Reef is not an island for legal purposes, but it is within the Philippine Exclusive Economic Zone and the Philippines would have governance over its development. Like Chinese-occupied Fiery Cross Reef and Mischief Reef, which have both been covered in sand to create full-scale military bases, Whitsun Reef would be long enough to support a strategic runway if developed. It lies about 50 nm to the west of the nearest Chinese island airbase.

On November 13, the Philippine Coast Guard (PCG) spotted no fewer than 111 Chinese maritime militia trawlers occupying the waters near Whitsun Reef, replicating a pattern last seen in 2021.

The number has now increased to 135 vessels, according to the Armed Forces of the Philippines. Aerial footage of a line of anchored trawlers shows that all had spotless decks and topsides, without the wear and tear of a hard-working fishing vessel, and none had fishing gear or nets visible (below).

China's maritime militia force operates large, well-equipped trawlers used for "gray zone" operations, like harassing Philippine supply convoys and maintaining a mass presence at geopolitically sensitive locations. While nominally civilian in appearance, these trawlers typically receive military training and heavy government subsidies.

In response to this concerning development, Philippine National Security Adviser Eduardo Año has asked the PCG to conduct a patrol to challenge the "illegal" presence of the Chinese force at the reef. The PCG has dispatched two patrol vessels, BRP Sindangan and BRP Cabra, to visit Whitsun Reef and investigate.

"It is justified and lawful for Chinese fishing boats to operate or shelter from wind in the area, and the Philippines is in no position to make irresponsible remarks," responded Chinese Foreign Ministry Spokesperson Wang Wenbin at a press conference Monday.

China claims about 90 percent of the South China Sea as its own, and has ignored an unfavorable ruling from the Permanent Court of Arbitration in the Hague issued in 2016. Beijing considers all of the Paracel Islands and Spratly Islands to be its own "inherent territory," despite competing claims from Vietnam, the Philippines, Taiwan and Malaysia.

U.S. Navy sends warship past Second Thomas Shoal

The U.S. Navy regularly challenges extralegal maritime claims, including China's sweeping assertions of control in the South China Sea. In the latest of these actions, the littoral combat ship USS Gabrielle Giffords transited past Second Thomas Shoal, a frequent flash point for confrontation between Philippine and Chinese forces.

“The United States has deliberately disrupted the South China Sea, seriously violated China’s sovereignty and security, severely undermined regional peace and stability, and seriously violated international law and basic norms governing international relations,” said PLA spokesman Col. Tian Junli on Monday. “China has indisputable sovereignty over the South China Sea Islands and adjacent waters.”

U.S. 7th Fleet said in a statement Monday that the Gabrielle Giffords "was conducting routine operations in international waters in the South China Sea, consistent with international law."

New Chinese Naval Base in Cambodia Receives First PLA Navy Warships

The newly-built Chinese naval base at Ream, Cambodia, has welcomed its first PLA Navy warships, the Cambodian ministry of defense has confirmed.

Satellite imagery shows several ships alongside the brand new finger pier that Chinese contractors have installed at Ream, where the Cambodian military has leased the north half of an existing naval base to Chinese forces. It appears to be the first time that the pier has received ships (other than construction barges and dredgers related to the project). Imagery obtained by Planet Labs for Radio Free Asia shows two surface combatants alongside the pier. Open-source intelligence analysts have confirmed the find (below).

In a post on Facebook, Cambodian minister of defense Tea Seiha said that several Chinese PLA Navy warships have arrived at Ream in order to support training for the Cambodian Navy. He visited the base to greet them, accompanied by his predecessor (and father), the influential Cambodian politician Tea Banh.

Cambodian Ministry of Defense

The U.S. military has long warned of Chinese plans to build a base at Ream. In 2020, U.S. officials told the Wall Street Journal that they had an early draft of an agreement between Cambodia and China on the future use of the site. The deal would allow Chinese forces to use the northern half of the site for a period of 30 years, with automatic renewal thereafter. Cambodia's constitution forbids permanent foreign military bases, but Western analysts view the quasi-hereditary Cambodian regime as a client of Beijing.

In 2022, contractors began building a large finger pier and a drydock at Ream. Both are far larger than needed for any vessel in the Cambodian Navy's small fleet. Tom Shugart, Adjunct Senior Fellow with the Defense Program at the Center for a New American Security, told RFA that the new pier's dimensions would be long enough for a Chinese carrier. The pier was completed in November.

On the same day as the inaugural port call in Ream, Cambodian ruler Hun Manet - son of longtime prime minister Hun Sen - welcomed General He Weidong, Vice Chairman of the Central Military Commission of the Communist Party of China, the top Chinese defense command. Manet held a reception to "meet and discuss work" at the presidential palace in Phnom Penh.

Gen. He Weidong (left) joins Hun Manet in Phnom Penh, Dec. 3 (Courtesy Prime Minister of Cambodia)

LA REVUE GAUCHE - Left Comment