It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Saturday, February 10, 2024
Report: Tanker Makes U-Turn After U.S. Launches Sanctions
NS Leader docked in Croatia as the background for a Greenpeace protest (Bojan Haron Markicevic photo courtesy of Greenpeace)
There have been questions about how effective the U.S. sanction effort is against tankers and if the enforcement of the Price Cap imposed on Russian crude oil is having an effect. Yesterday, the U.S. Treasury Department announced it was listing a tanker that it contends has repeatedly violated the $60 price cap and made five port calls in Russia in 2023, and now that tanker has changed its AIS setting to “waiting for orders.”
The NS Leader, a 115,850 dwt crude oil tanker built in 2007 was the subject of yesterday’s actions. Bloomberg was the first to report the vessel had been sailing in the Atlantic near Portugal with its destination listed as Primorsk, Russia when the sanctions were launched. Bloomberg’s data shows the vessel cut its speed in half, made a U-turn, and changed its declared destination shortly after the sanctions were announced. The AIS signal shows it was returning from a trip to India.
According to Bloomberg, this is not the first time it has happened either. They report two months ago the crude oil tanker Viktor Bakaev (118,000 dwt) undertook a similar maneuver after it was listed by the United States. In yesterday’s action, the U.S. Department of the Treasury’s Office of Foreign Assets Control highlighted that both of these tankers, along with four others that were previously listed, were all managed by the UAE-based company Oil Tankers SCF Mgmt FZCO, which was also included in yesterday’s action.
The U.S. authorities reported that Oil Tankers SCF manages oil tankers beneficially owned by the Government of the Russian Federation through Sovcomflot. They noted the Russian state-owned shipping company is also subject to the prohibitions from a previous Executive Order. The United Kingdom also sanctioned Oil Tankers SCF.
The U.S. authorities reported yesterday that the NS Leader had been used in November 2023 to transport a Russian oil cargo sold by a UAE-based company at over $80 per barrel. That company, Zeenit Supply and Trading DMCC, was also included in the enforcement effort.
Yesterday’s actions referred to the NS Leader as being owned by “Liberia-registered NS Leader Shipping,” but contended that the Government of the Russian Federation is the ultimate owner of the NS Leader. While the U.S. and several major databases including Equasis list the tanker as registered in Liberia, other databases including MarineTraffic report the NS Leader was recently transferred now sailing under the flag of Gabon.
The NS Leader is no stranger to controversy. A month after Russia invaded Ukraine, the tanker was docked in Omislj, Croatia unloading Russian oil. Activists from Greenpeace staged a protest against the use of Russian oil in Croatia and the European Union with the NS Leader as the backdrop. They were calling for an end to all fossil fuels but also to immediately stop the import of Russian oil.
Since the U.S. and the Western Allies began their enforcement efforts on the price cap there have been other reports of interruptions to the flow of Russian oil. Greek tanker operators have been reported to be abandoning the Russian trade for fears of retaliatory sanctions. Bloomberg and Reuters have also reported tankers and oil deliveries to India and elsewhere being delayed or deferred due to the sanction efforts.
U.S. Container Import Volumes Soar Prompting Retailers to Increase Forecast
Containers volumes are forecasted to increase after a strong January with the U.S. West Coast ports seeing the gains (Port of Los Angeles file photo)
Despite all the challenges being reported for container shipping and the negative outlook presented by the carriers, U.S. import container volumes are soaring and expected to continue their upward momentum through at least the first half of 2024. This comes as economists continue to point to the resiliency of the economy and the apparent soft landing to the feared 2023 recession.
U.S. container import volume had its largest month-over-month gain in January 2024 in the last seven years according to data released by Descartes Systems Group, a software provider for logistics-intensive businesses. Their February Global Shipping report highlights a 7.9 percent increase in overall container import volume in the U.S. in January 2024 versus December. They report a nearly 15 percent rise in imports from China, highlighting that most of the volume went to the ports of Los Angeles and Long Beach.
The strong growth in January 2024 also brought container volumes back up to year-ago levels and even slightly ahead of January 2019 before the pandemic. Descartes calculates volumes were up nearly 10 percent year-over-year to a total of 2.27 million TEU in January 2024. This is also 9.6 percent ahead of January 2019.
“January was another solid month driven by surprisingly strong imports from China,” said Chris Jones, EVP Industry and Services, Descartes. He however warns, “The combined effect of the Panama drought and the conflict in the Middle East is beginning to impact transit times, particularly at the top East and Gulf coast ports.”
Descartes cautions that the global supply chain performance could be impacted throughout 2024. They highlight the ongoing limits of transits at the Panama Canal, the disruptions to routes through the Red Sea and Suez Canal, and the upcoming labor negotiations at U.S. Atlantic and Gulf Coast ports. The International Longshoremen Association reported it has given its locals a May 2024 deadline as it works to complete a master contract before the September 30, 2024, expiration.
The National Retail Federation, the trade group for U.S. retailers, is also predicting a strong start to 2024 with a forecast of a better than five percent increase in import container volumes for the first half of 2024 versus 2023. Their Global Port Tracker is forecasting a strong gain of 20 percent for February in part due to the timing of the Lunar New Year in 2023 and the beginning of a slowdown in import volumes a year ago.
“U.S. retailers are working to mitigate the impact of delays and increased costs,” says Jonathan Gold, NRF Vice President for Supply Chain and Customs Policy, discussing the ramifications of the Suez Canal and Red Sea disruptions. He highlights that only about 12 percent of U.S.-bound cargo comes through the Suez Canal,” but warns like others, “the longer the disruptions occur, the bigger impact this could have.”
After a strong February, the NRF predicts volumes will be up at a more moderate pace in the first half of the year. They forecast between 2.65 percent and 5.5 percent gains with only May expected to be flat with the year-ago. Monthly retail import volumes are projected at between 1.7 and 1.9 million TEU per month.
Opposition to the pending $5 billion acquisition of Bolloré Logistics by CMA CGM emerged from the authorities in French Polynesia. In a statement released yesterday, February 6, they reported that they have reached an agreement with the company to address concerns over domination in the freight and logistics market between Europe and French Polynesia that could emerge from the acquisition.
CMA CGM Group recently reported that it is poised to “soon complete” the acquisition of Bolloré Logistics to further bolster the group’s freight management scale and industry reach. The French group reported that it had reached terms for the acquisition in May 2023 which would make CMA CGM among the top five global logistics companies.
The Polynesian Competition Authority received an application in October 2023 for approval for a possible market concentration under the Polynesia Competition Code. While they noted CMA CGM’s worldwide transport of containers, the initial filing highlighted that the company’s CEVA Logistics is only marginally directly active in French Polynesia and only in the market to organize services for the transport of goods. Bolloré Logistics they initially indicated was not active in the logistics services sector in French Polynesia.
The authority, which says its role is to ensure the competitive structure of the market in French Polynesia, however after closer examination determined the “buyout raised a risk of blocking access of freight forwarders to transport services with CMA CGM containers and the risk of increases in the price of services as well as a possible impact on the selling price of goods to the consumer.
Their review showed that Bolloré Logistics carries out services organizing the transport of goods, while essentially managing the import flow. While it does not offer logistic services or organize land transport services, they noted it holds a minority stake in a freight forwarder, Transit et Transport International Tahiti.
The authority confirmed that CEVA only organizes transport in a very marginal way in French Polynesia, but they highlight that CMA CGM ensures territorial continuity between French Polynesia and Europe through its Panama Direct route. The carriers’ Pacific Coast route also connects French Polynesia with the West Coast of America.
They expressed concern that the new entity created in the merger would have had a “high-capacity blocking access to maritime transport of goods on the Europe-French Polynesia route.” They found the CMA CGM has a “quasi-monopoly” on the route and with the acquisition of Bolloré Logistics Polynesia would have added to its dominant position. The Polynesian Competition Authority concluded the transaction was “likely to harm competition.”
Addressing the competition concerns, they have agreed to a settlement that undertakes to divest the maritime activity of Bolloré Logistics Polynesia as well as the activities of Bolloré Logistics France relating to French Polynesia.
“The sale of this activity will make it possible to effectively and proportionately remedy the competition issues identified,” the authority writes in its statement.
They will be selling the customer list of the business. The agreement provides two limited exceptions allowing CMA CGM to offer services for organizing maritime transport of goods to a limited number of multi-destination customers of Bolloré Logistics.
The Polynesia Competition Authority notes that it notified other authorities including New Caledonia and the European Commission of its examination and cooperated with those authorities. CMA CGM is still waiting for approval from the European Union to close the acquisition, which is the largest in the history of the company.
Norsepower Receives Largest Wind Rotor Order to Deploy on Airbus Vessels
Three large Ro-Ro cargo vessels each with six rotors will be chartered Airbus (Louis Dreyfus Armateurs)
Continuing to make progress with the effort to launch three large, Ro-Ro cargo vessels using wind-assisted propulsion for Airbus, Finnish manufacturer Norsepower reports it has completed the largest order for rotor sails. The vessels, which will operate under charter for transporting airplane components, were ordered last month by Louis Dreyfus Armateurs (LDA) and will be built by China’s Wuchang Shipbuilding.
Norsepower confirmed that it has now finalized the order for what will be the largest installation of rotors, using a total of six rotors on each of the three vessels, supported by a new generation of technology. The design, which was previewed in October 2023, incorporates six 35-meter (115 feet) tall rotors placed in three pairs on each vessel along with two dual-fuel engines running on marine diesel and e-methanol. By 2030, while sailing on the transatlantic route, Norsepower reports that the Airbus fleet will generate approximately 50 percent fewer CO2 emissions compared to 2023.
“This fleet-wide deal is a game changer for the whole auxiliary wind propulsion industry,” said Tuomas Riski, CEO of Norsepower. “Firstly, it is the biggest deal ever made in the mechanical sails market, and in a world first, it includes our brand new Norsepower Sentient Control tool.”
A new patented control system for the rotors developed by Norsepower will help to provide better efficiency for the wind propulsion system and real-time saving reports. The system will permit each rotor to be controlled individually while also providing real-time force measurement, control, and saving reporting.
Norsepower explains the new system will optimize efficiency by managing the complex aerodynamic interactions between the sails and the hydrodynamic behavior of the vessel. The rotor sails use a small amount of electricity to rotate which harnesses the wind to produce the propulsive force which in turn reduces fuel consumption, emissions, and the cost of operation.
The full dimensions of the vessel have not been announced, but they have said that each will be able to carry around 70 40-foot containers and six aircraft subassembly sets expanding Airbus’ cargo capacity. They report that extensive Computational Fluid Dynamics (CFD) and wind tunnel tests have been carried out during the design phase to optimize the sail arrangement and design. They plan for the vessels to begin to enter service in 2026 and gradually phase out the company’s existing fleet. When e-methanol becomes available, they expect to further reduce emissions through the adoption of the alternative fuel.
The operations will also be supported by routing software that will optimize the vessels’ journey across the Atlantic. It will be programmed to maximize wind propulsion and avoid drag caused by adverse ocean conditions.
ALTERNATIVE FUELS
Smyril Line Signed Contracts for Environmentally Friendly RoRo Cargo Ships
Smyril Line is pleased to announce that a contract has been made with the CIMC Raffles shipyard in China to build two new cargo ships for the company. These are two identical RoRo ships, measuring 190 meters in length and having 3,300 lane meters for trailers. The new cargo ships will join Smyril Line's current network, and they are planned to start sailing in 2026. The ships are designed for optimal year-round seaworthiness in the North Atlantic with great emphasize on our crew comforts and wellbeing on board.
The ships are being designed in close cooperation with Knud E. Hansen, naval architects, who, together with the extensive experience of Smyril Line in the North Atlantic, will ensure that the ships are built for the special route between Europe, the Faroe Islands, and Iceland. The ships will be modern and environmentally friendly, meeting all international emission standards. Compared to the company's existing fleet, they will emit significantly less per transported ton. At the same time, the ships will be equipped with a battery system and the possibility for shore power, which means that port operations can be conducted without emissions. The ships will also be prepared to sail on e-methanol, which is considered to be the best future choice for green energy at Smyril Line.
"Now is the time to set ourselves new and bigger goals towards reducing emissions in the North Atlantic," says Jens Meinhard Rasmussen, CEO of Smyril Line. "The company's main goal is to ensure safe and reliable transportation of both passengers and cargo, and to connect the periphery of the North Atlantic with the rest of the world. With the new ships, we emphasize futureproofing and leading the company towards a greener energy solution and lead the way for Smyril Line towards the goals for decarbonization in our fleet renewal, supporting the green transition of the shipping industry. We will also transport much larger quantities of cargo with less energy consumption than we do now. The energy saving will be at least 60%. This is an important step for us to achieve our goals towards net-zero emissions by 2050, while we can offer our customers an even better service. We have been operating routes in the North Atlantic since 1982. This is not just one of the world's longest ro-ro and ro-pax routes, but probably also the one with the most challenging sailing conditions. We know from experience that sailing on our route places great demands on both ship and crew, and we have therefore designed the ships with this in mind."
The products and services herein described in this press release are not endorsed by The Maritime Executive.
DNV Study Validates Energy Efficiency Gains for LNG Carriers
ABB dual-fuel electric propulsion system - Image credit ABB
DNV has quantified the gains that owners of liquefied natural gas (LNG) carriers could expect to achieve using the new Dual Fuel, Electric+ (DFE+) solution developed by ABB and MAN Energy Solutions. Comprising MAN’s four-stroke 49/60DF dual fuel engine and ABB’s Dynamic AC power distribution and control system, the solution has been developed to overcome efficiency challenges that are specific to the vessel type.
DNV’s Maritime Advisory assessment concludes that the DFE+ concept is “a competitive and more energy efficient alternative to even the most efficient conventional dual-fuel LNG carrier propulsion designs.” Smaller machinery space requirements could deliver “a conservative estimate” of 5 percent greater cargo capacity. Combined with other steps to optimize performance, the DFE+ concept could contribute to overall energy savings of 6 – 7.5 percent considering the ship’s increased transport work, DNV says.
From January 1, 2023 the International Maritime Organization (IMO) has required shipowners to report vessels into an Energy Efficiency Design Index (EEDI), an Energy Efficiency Existing Ships Index (EEXI) and an operational Carbon Intensity Index (CII). These tools benchmark ships so that owners know what they must do to meet IMO targets for reducing greenhouse gas emissions.
As the newest addition to MAN’s four-stroke portfolio, the MAN 49/60DF engine is optimized for LNG. It is also highly compatible with ABB’s Dynamic AC system, which combines the merits of conventional AC with those of variable frequency to allow the engines to operate on optimal speeds – significantly improving total fuel consumption.
"Owners of LNG carriers face specific challenges in complying with the regulations, given their reliance on propulsion solutions with limited potential for efficiency gains," said Prof. George Dimopoulos, Scientific Advisor, DNV. "The ABB – MAN propulsion concept aims to offer a highly effective way for LNG carriers to meet progressively tightening emissions regulations while also reducing fuel costs."
“With the current global orderbook for LNG carriers including more than 200 vessels, and emission regulations continuing to tighten, owners need new technologies to meet the requirements that apply to this specific class of ships,” said Rune Lysebo, Strategic Market Development, ABB Marine & Ports. “DNV’s testimony on the gains available to LNG Carriers with the new solution developed by ABB and MAN Energy Solutions proves the time is right to explore the next-generation technologies for this vessel type.”
DFE+ could be installed with an energy storage solution to operate as a spinning reserve or come coupled with ABB’s Azipod® electric propulsion. ABB and MAN will also explore integrating fuel cells as the technology matures.
The products and services herein described in this press release are not endorsed by The Maritime Executive.
Hydrogen-Powered Inland Cargo Barge Ready to Sail on the Rhine
H2 barge launched in the summer of 2023 was the first conversion followed by the second vessel completed this week (FPS)
The retrofit has been completed and a new hydrogen-powered cargo barge is now ready to begin operations on the Rhine sailing between Rotterdam in the Netherlands and Duisburg in Germany. Dutch shipowner Future Proof Shipping (FPS), the EU-funded Flagships project, and the Interreg-funded ZEM Ports NS project celebrated that milestone in a project that they believe will serve as a model for the industry.
“This is another proud moment for us, it proves moving cargo with zero emissions and zero impact is not only possible, it’s scalable too,” said Richard Klatten, CEO of Future Proof Shipping. “Successfully launching our second hydrogen-powered inland cargo vessel is just as important an achievement as the first, not just for Future Proof Shipping, ZEM Ports NS, and the Flagships project, but for the future of green shipping.”
FPS announced its plans for the conversion of the two barges in 2021 and working with partners including Holland Shipyard Group´s Werkendam facility, just outside Rotterdam, overcame key hurdles to bring the ships to service. The first barge was completed in May 2023 with the plan calling for the vessel to operate between Rotterdam and Antwerp. It is chartered to BCTN Network of Inland Terminals on behalf of Nike EMEA. The company has said its plan is to put 10 inland and short-sea vessels into service in the five years.
The H2 Barge 2 is the first of two demonstrators in the EU-funded Flagships project, and the second demonstrator of the ZEM Ports NS project. The vessel, formerly Fenny 1 and FPS Waal, was built as a conventionally powered containership. It is 360 feet (110 meters) in length with a capacity of approximately 200 TEU.
During 2023, H2 Barge 2 was stripped of all combustion engines and fossil fuel tanks by Holland Shipyards Group after reaching the yard in August. Now, the vessel has a completely emission-free propulsion system including PEM fuel cells, hydrogen storage, battery packs, and an electric drive train installed below deck. Six fuel cells from Ballard Power Systems raise the total power installed to 1.2 MW. H2 Barge 2 is expected to reduce 3,000 tonnes of CO2 annually when sailing the Rhine.
“Inland waterways are important for freight transport in Europe,” said Mirela Atanasiu, Executive Director ad interim of Clean Hydrogen Partnership. “We are thrilled to see a high-power container vessel being converted to zero-emission. The H2 Barge 2 will bring knowledge on how to retrofit vessels from diesel combustion to zero-emission alternatives, by using batteries in combination with green hydrogen in a fuel cell.”
The second demonstrator vessel in the Flagships project, Zulu 06, will be deployed in Paris in 2024.
“We´ve been working hard for several years to get to this point. Having the first demonstrator on the Rhine is truly a great achievement by Future Proof Shipping and the rest of the partners. The aim of the Flagships project is to take zero-emission waterborne transport to an entirely new level. Now we´re one important step closer to reaching our goal,” says Flagships Project Coordinator and Senior Scientist at VTT, Jyrki Mikkola.
The project was made possible with funding support from the Interreg North Sea Region Programme (Zero Emission Ports North Sea – ZEM Ports NS), Flagships H2020 Project (Clean Hydrogen Partnership), and Netherlands Enterprise Agency (RVO).
British Start-up Completes Sea Trial of Onboard Carbon Capture System
While still early days, our pilot project proves that our technology works.
Sounion Trader was the testbed for the first demonstration of the CO2 capture technology (Lomar)
The UK-based climate tech start-up Seabound recently released the results of its trial of shipboard carbon capture technology. The sea trial of the technology began last September as a crucial step in commercializing a cost-effective method of reducing emissions on board vessels.
The pilot was supported by global shipping companies including Lomar Shipping, and its subsidiary Lomarlabs, as well as Hapag-Lloyd, Columbia Shipmanagement, and the UK Government, among others. The onboard carbon capture system (OCCS) was tested in a 3,200 TEU vessel, the Sounion Trader which is owned by Lomar and currently operated by Hapag-Lloyd. The vessel was built in 2003 and is 40,478 dwt. Before the trials began, Seabound received a class society approval for installation and testing of the device from the American Bureau of Shipping (ABS), with the project also approved by Liberia, the vessel’s flag state.
The trials took two months, while the vessel was on a route between Turkey and the Persian Gulf. During the period, the device captured CO2 at 80 percent efficiency and sulfur dioxide at 90 percent efficiency.
The company promotes that its system is compact fitting inside a container and easy to retrofit (Lomar)
"While still early days, our pilot project proves that our technology works. This breakthrough demonstrates that the shipping industry doesn’t have to wait for new fuels or solutions to reduce its emissions in the future- we can start carbon capture from the existing fleet right now,” said Seabound co-founder and CEO Alisha Fredriksson.
The patent-pending compact carbon capture device by Seabound works by retrofitting it into a ship’s engine exhaust at the funnel. The CO2 chemically reacts with pebbles of quicklime, which then convert into limestone, keeping the CO2 locked in. The limestone pebbles are temporarily stored onboard and are later offloaded. They can be either sold in pure form or turned back into quicklime and CO2, with the quicklime to be reused for a similar carbon capture process and the CO2 sold for utilization or sequestration.
Following the successful pilot project, Seabound has announced that it will design a full-scale onboard carbon capture device that will capture 50 tons of CO2 per day. In addition, the company plans to deliver the first commercial systems to the market in 2025, with the expectation of scaling to three ships that year, and 10 ships by 2026.
Last month, the Liberian Ship Registry submitted the results of this pilot project to the International Maritime Organization (IMO), ahead of the eighty-first session of the Marine Environment Protection Committee (MEPC) scheduled for next month. The project will act as a case study of a successful onboard carbon capture, demonstrating that this new category of marine decarbonization technology is quickly emerging as an option for the industry.
NO! SEABED WARFARE!
U.S. Navy Picks Three Vendors to Quickly Field AUVs for Seabed Warfare
The U.S. Navy has picked Kongsberg, Oceaneering and Anduril to develop prototypes for long-range, large displacement unmanned subs, hoping to fill an urgent procurement need on a shorter timetable.
The winners will begin live demonstrations of their solutions - not next year, but next month. These companies already have products in hand, and two of them have decades of experience in the segment. The contracts will allow Navy units around the world the opportunity to borrow or purchase large UAVs for testing, according to Anduril.
The Navy worked with the Pentagon's Defense Innovation Unit, which can execute contracts much more rapidly and with more flexibility than most defense programs. The unit was created for this purpose: to bring commercially-based solutions to the military fast, and without imposing excessive up-front cost on the vendor.
Some of the proposed solutions are grounded in tried-and-true systems. Kongsberg has been building its HUGIN line of autonomous underwater vehicles for a long time, and they are an industry standard for commercial and government operators. The extended range HUGIN Endurance variant will be fielded for the DIU trials. “We are excited to bring our many years of AUV experience in support of the U.S. Government and look forward to closely partnering with DIU and the U.S. Navy to support making their LDUUV program a reality,” said Kongsberg Discovery President Martin Fjell in a statement. “HUGIN’s reliability has created a legacy and our continued evolution has enabled us to provide the expertise needed on such a program.”
Australian contractor Anduril is a relative newcomer, and its Dive-LD model has been in testing for the last two years, but it believes that it has a technological edge. Its sub prototype was constructed in large part with 3D printing, so its shape can be adapted to specific payload requirements with greater ease. The company belives in "an agile software-first mindset, advanced manufacturing processes to enable speed and scale, and products built to solve problems."
The Navy has multiple existing programs to develop subsea autonomous drone capability, but some have encountered challenges.
Snakehead, an autonomous sub that was supposed to deploy from submarine drydeck shelters, was canceled after years of in-house R&D effort by the Navy's research establishment. The service cited “Misalignment of Snakehead LDUUV design and procurement efforts with submarine hosting interfaces," which means a "limited availability of host platforms to conduct Snakehead operations.” Not all subs carry drydeck shelters, and the same equipment is also in demand for Navy SEAL insertion and extraction missions.
Boeing holds the contract for the largest class, the bus-sized XLUUV, but the program is years behind schedule. An initial "test article" has been delivered and is in testing in California. The delay appears to crimp operational plans: the service had planned to put the first five delivered hulls into service as soon as possible, according to GAO, even though they will technically be prototypes.
House Committee Seeks Answers to the Decline of U.S. Sealift Readiness
“screaming national security vulnerability”
Ro/ro ships of the Ready Reserve Fleet, center left (USN file image)
The chairman of the House Select Committee on the Chinese Communist Party is sounding the alarm on a familiar problem: the acute deficit of government-owned sealift capacity. Drawing a comparison with China's vast shipping resources, Rep. Mike Gallagher (R-WI) called the much-reduced size and limited readiness of the U.S. sealift fleet a “screaming national security vulnerability.”
The advanced age and physical limitations of the government-owned Ready Reserve have been well-publicized for years, but efforts at reversing the trend depend upon budget availability. The slow decline of the sealift fleet would be a problem in the event of a Pacific conflict, Gallagher said,since these ships (and other U.S.-flagged vessels) would have to carry 90 percent of American military equipment and supplies to war.
"In the middle of a new Cold War, the United States finds itself with neither the sufficient military nor civil resources to meet our sealift objective," said Gallagher in a letter to Transportation Command chief Gen. Jacqueline Van Ovost and Maritime Administrator Ann Phillips. "Although the Navy has put forward plans to acquire foreign commercial vessels to be incorporated into the military sealift fleet, there is little indication that such efforts are being pursued at the scale and pace that the moment requires."
He noted that the commercial U.S.-flag merchant marine is also small relative to historical levels and near-peer competitors. Only about 180 vessels remain in the U.S.-flag fleet, a fraction of what was available a few decades ago.
In the letter, Gallagher asked Van Ovost and Phillips to define their plans to restore sealift capability - including their plans to acquire U.S. or foreign merchant ships to join the Ready Reserve or Military Sealift Command. (The majority of government sealift ships are preowned foreign vessels, and fleet restoration plans have historically been structured around this model.) He also made sure to ask if they planned to buy any merchant ships from China, the world's largest shipbuilding and shipowning nation.
Gallagher also asked for an assessment of the practicality of using foreign-flag, foreign-crewed ships to carry America's weaponry in time of conflict - including which countries would be willing to come to the United States' aid.
Marine Insurers Continue to Support Trade in the Red Sea & Black Sea
At its annual winter meeting in London, the International Union of Marine Insurance (IUMI), confirmed that the global marine insurance market is continuing to support trade in the Red Sea and the Ukraine/Black Sea area.
Since the cessation of the Ukraine grain corridor in September 2023, some 10 million MT of grain has been successfully lifted from Ukrainian ports using international tonnage insured by marine underwriters. This is despite Russia damaging Ukrainian shore-side facilities and mining local waters. Insurance cover has contributed to much of the Ukrainian grain harvest being exported overseas which, in turn, has helped stabilise international agri-commodity prices.
In the Red Sea, the insurance market is providing hull and cargo products at affordable prices and vessel owners are able to obtain the cover they require. The attacks are continuing despite military intervention but, fortunately, vessel casualties have not been catastrophic. The impact on Suez Canal transits and global supply chains are significant but this has not affected the ability of the marine insurance market to provide adequate cover – both for Red Sea/Suez Canal transits or for the longer route around the Cape of Good Hope.
IUMI also reported on restricted movement through the Panama Canal due to low water levels causing a restriction on a vessel’s maximum draught from 50 feet to 44 feet. This has reduced daily transits to around 24 vessels from a norm of 34-36 vessels. Sailings are expected to decrease further to 18 vessels later this month. The result is longer transit times as vessels are re-routed - but voyages have been further compromised by events in the Red Sea. The convergence of these two crises comes in advance of the export surge around the lunar new year shutdowns in Asia. Expected consequences may include a shortage of delivered goods, containers out of position, gridlock at freight handling terminals and congestion at ports.
More positively, it was noted that the growth in global marine insurance premiums experienced in 2022 would likely give momentum to the 2023 results which IUMI will publish at its annual conference in September. The 2024 premium base would be harder to predict, however, due to the supply chain issues already mentioned as well as weaker consumer confidence, high interest rates, and an economic slowdown in some regions; inflationary pressures were easing, however.
IUMI’s report on the global marine insurance market along with discussion and debate on the pressing issues of the day will be featured at its annual conference to be held in Berlin 15-18 September 2024. This year, IUMI celebrates its 150th anniversary which is reflected in the conference common theme “Building on 150 years of enabling global commerce.”
The products and services herein described in this press release are not endorsed by The Maritime Executive.
As War Risk Spikes in Red Sea, IUMI Says Cover Remains Affordable
Missile strikes are a real concern for U.S. and UK-linked vessels in the Red Sea, like the Zografia, whose hull penetration is visible at center right (Suez Canal Authority)
After reports of surging war risk insurance rates for transits in the Red Sea, the International Union of Marine Insurers (IUMI) is emphasizing that the global marine insurance market still supports trade in the Red Sea, and at an "affordable price."
War risk cover for transits of the Red Sea has increased from about 0.01 percent of vessel value in early December to as much as 1.0 percent in recent weeks, adding hundreds of thousands of dollars onto the cost of a single voyage. The prices have been driven ever upward by persistent Houthi missile attacks on merchant shipping in the region. Several vessels have been hit and have sustained serious damage, like the bulker Zografia and the tanker Marlin Luanda, and many others have experienced near-miss incidents. Despite a series of U.S. and UK strikes on Houthi launch sites, bunkers, radars and other emplacements, the attacks have continued on a regular basis.
The insurance hikes are largest for the vessels that are highest on the Houthi priority target list - that is, ships with links to the U.S., UK or Israel. Brokers report that vessels with ownership ties to these three nations are paying up to 50 percent more for their war risk cover in the area. And some underwriters are simply refusing to write policies for these vessels, according to Reuters.
During its annual conference, IUMI was at pains to emphasize that cover remains available.
"In the Red Sea, the insurance market is providing hull and cargo products at affordable prices and vessel owners are able to obtain the cover they require," IUMI said Wednesday in a statement. "The impact on Suez Canal transits and global supply chains are significant but this has not affected the ability of the marine insurance market to provide adequate cover – both for Red Sea/Suez Canal transits or for the longer route around the Cape of Good Hope."
Virgin Voyages is Taking the Long Way Cruising from Australia to Greece
Resilient Lady is taking "the long way" to reposition from Australia to the Mediterranean (Virgin Voyages)
Virgin Voyages, the cruise brand started by Sir Richard Branson’s Virgin Group, reports it will be the latest cruise line to “take the long way,” to reposition its cruise ship Resilient Lady (108,000 gross tons) from Australia back to Europe. The repositioning had been planned to sail through Asia, India, the Middle East, and the Red Sea at the end of the line’s first Australia summer season, but now is heading to Africa.
“Like many other cruise brands, we have been watching the current conflict in the Middle East closely, connecting regularly with global security experts to consider the impacts to the repositioning voyages planned for Resilient Lady in 2024,” said a spokesperson for Virgin Voyages. “We remain concerned about potential escalations in this part of the world over the next 12 months and the risk that this presents for safe passage through the region. As a result, we have been left with no choice but to make changes to Resilient Lady's repositioning voyage.”
The cruise that had been planned to make stops including Bali, Singapore, India, Dubai, and the Mediterranean via the Red Sea, will instead become what the cruise line is calling a “once-in-a-lifetime sailing around the coast of Africa.” Other cruise lines including AIDA, MSC Cruises, and Silversea Cruises, decided to forego revenue trips deadheading their ships for the long voyage around Africa. Carnival Corporation reported it decided to reroute itineraries for 12 ships across seven brands, which were scheduled to transit the Red Sea through May 2024.
The Resilient Lady is finishing up her first-ever season in Australia having arrived in Sydney on December 4 and then continuing to Melbourne which became the base for its cruises to Australia, New Zealand, and Tasmania. The cruise line scheduled a total of 17 cruises during the Australian summer and reports it will return for a second season starting in December 2024.
Departing Australia as originally scheduled on March 27, the cruise ship will now call in Mauritius, South Africa, Namibia, Cape Verde, Santa Cruz de Tenerife, Morocco, Spain, and Malta, arriving as scheduled on May 9 in Piraeus, Greece. The trip is being offered in three segments with extended sea time to make up for the extra mileage. Virgin Voyages is offering booked passengers guaranteed spots at no additional cost or the option of canceling due to the changes.
“We know that based on our conversations with passengers and travel partners, they understand the complex geopolitical challenges that have arisen making this change necessary,” said the line’s spokesperson.
It comes as the latest in a series of changes as global events challenged the start-up of the cruise line. The company was forced to delay its first revenue cruise for more than a year due to the pandemic and delayed delivery of its later ships. Today, the company has three of its four ordered cruise ships, with the last one Brilliant Lady still delayed as the company considers its deployment.
“With the very likely continuation of this escalated regional conflict top-of-mind, and in an effort to minimize further disruptions to our passengers’ future vacation plans, Virgin Voyages is now conducting a full review of other geographically similar repositioning voyages and linked sailings,” the company reports.
