Misdeclared Lithium Battery Cargo Caused Cosco Pacific’s Fire

The cause of the fire in one of the cargo holds of the giant containership Cosco Pacific is the spontaneous combustion of a lithium battery cargo, which was not properly declared, China Cosco Shipping said in an update.

As indicated in the International Maritime Dangerous Goods Code (IMDG Code), batteries, regardless of the chemistry they use, alkaline, lithium etc, are characterized as dangerous goods due to their corrosive character. As such, they have to be declared properly in order to be stored correctly and avoid a fire hazard.

Cosco said that the owner of the cargo was found to be Wan Hai Lines and that the related cargo was declared to be in three containers under the bill of lading, adding that all three containers were assigned for unloading. The declared product name was spare parts and accessories.

The cargo was loaded in the port of Nansha and the unloading port was supposed to be Nhava Sheva.

As World Maritime News reported yesterday, the fire broke out on board Cosco Pacific while the vessel was underway from Port Klang, Malaysia to India’s Nhava Sheva Port on January 4, 2020.

The fire was put under control by the ship’s crew using the cargo hold’s CO2 suppressant, however, the extent of the damage to the cargo is unknown.

There have been no injuries reported to the ship’s crew.

Due to the fire, the Chinese-flagged ship was diverted to Colombo for inspection of the cargo and safety of the ship, where it remains moored.

Shipping has reasons to be optimistic despite serious challenges

The shipping industry has a number of reasons to be cheerful as it enters a new decade, despite some serious challenges in the immediate future, according to accountancy and business advisory firm BDO.

Confidence in the shipping industry was high at the end of 2019, and despite a general slowdown in global GDP, demand for the industry’s services remains strong while a contraction in newbuilding orders and a steady stream of recycling have brought supply under control.

Richard Greiner, partner, shipping & transport at BDO, also noted that last year marked the 150th anniversary of the opening of the Suez Canal, which in many ways helped to revolutionise the conduct of global shipping markets.

“Now, on the cusp of a new decade, whilst there is nothing comparable in prospect, there are nevertheless a number of very important fundamental changes in the offing, and moreover a number of reasons to be optimistic about the fortunes of the industry over the coming decade,” Greiner said.

“Shipping nevertheless faces some serious challenges in the immediate future, not least the need to comply with new regulations. Environmental Social Governance (ESG) will assume increasing importance. With IMO 2020 in effect, the fuel price differential becomes a significant factor from day one of the new decade, and it will be instructive to see whether freight rates will cover the increased costs thus incurred,” he observed.

Greiner added that IMO 2020 scrubber retrofits in drydock will continue to keep tonnage off the water, although shipments of low sulphur fuel will boost the product tanker trades.

“Elsewhere, operating costs are forecast to go up, while geopolitics and trade wars and sanctions will continue to exert their customary influence. The first full financial reporting season with the new lease accounting standards in force will no doubt see bigger balance sheets for some in the industry,” Greiner said.

“We now know that Brexit really does mean Brexit, but what does Brexit itself really mean? There are a number of presidential and parliamentary elections scheduled for 2020, including those in the United States, Egypt, Greece, Hong Kong, New Zealand, Poland, Singapore and Venezuela. Each has the potential to impact shipping in a positive and/or negative way.  

“Other issues facing the shipping industry at the dawn of a new decade include exchange rate volatility, and the question of whether US interest rates will continue to fall. LIBOR will not be replaced until the end of 2021, but the time to prepare is now,” he said.

The biggest challenge of all, perhaps, is the need to maintain and increase technical innovation in ship and engine design, and to harness the required technology through the likes of Big Data and Artificial Intelligence (AI), as well as not to forget to plan for the seafarer of the future, Greiner pointed out.

“Over decades, most markets historically rise as often as they fall. Shipping has weathered the past decade better than many predicted, and so enters the new one all the stronger for that. If it can meet the financial, technological and regulatory challenges which it faces, it will continue to be attractive to existing and new investors alike,” he said.

Yang Ming to introduce new Taiwan to Japan service

Taiwan’s Yang Ming Marine Transport Corp will launch a new Taiwan-Japan Service (JCH) to enhance its intra-Asia service network.

The new JCH, scheduled to start on 26 January, will provide weekly direct service between Kaohsiung, Osaka, Kobe and Hakata.

With the introduction of JCH, the transit time between Taiwan and Japan’s Kansai region is expected to shorten by one to two days at least, Yang Ming said.

“With the new service, Yang Ming will be able to continuously provide customers with more comprehensive and competitive services between Taiwan and Japan,” the Taiwanese carrier stated.

Global container shipping fleet to grow 3.5% in 2020: Alphaliner

The global container shipping fleet is expected to grow 3.5% in 2020 to hit 24.05m teu according to analyst Alphaliner.

The fleet ended 2019 with a total capacity of 23.23m teu and Alphaliner expects 1.14m teu in new tonnage to be added this year.

The analyst sees an increase in scrapping in 2020 especially in the second half of the year as old and less efficient ships are sent to be scrapped as newer vessels undergoing scrubber retrofits to comply with IMO 2020 return to the market. Some 300,000 teu in capacity is forecast to be scrapped compared to 207,000 teu in 2019.

“The scrubber retrofit wave, which had taken more than one million teu of capacity out of circulation at the end of 2019, is expected to continue through all of the first half of the year,” Alphaliner said in its weekly newsletter.

Scrubber retrofits currently account for 75% of the inactive fleet of 1.41m teu and active capacity is set to surge in the second half the year as all vessels being retrofitted return to the market.

“The active fleet would grow by over 5% in the second half of the year due to the combined impact of new ship deliveries and the return of the retrofitted ships,” the report said.

“Carriers will have to manage the increased fleet carefully to avoid adding too much capacity to the market this year. Among the Top 12 carriers, MSC and Maersk have the largest numbers of ships currently undergoing retrofit, while HMM, CMA CGM and Evergreen will have the most new ship deliveries this year.”

DSME Bags USD 711 Mn Order for 6 Boxships

South Korean shipbuilder Daewoo Shipbuilding and Marine Engineering (DSME) has secured an order for six containerships, the company revealed in a stock exchange filing.

The order placed by an undisclosed owner from Africa is worth USD 711 million, DSME said.

The containerships are scheduled for delivery by the end of October 2022.

The latest order brings DSME’s order tally to 39 vessels, including 10 LNG carriers, 10 super crude oil carriers, 11 containerships, 2 super LPG carriers, 5 submarines, and 1 offshore plant.

These orders have a collective value of USD 6.18 billion, accounting for 73.8 % of the shipbuilder’s USD 8.37 billion worth target for this year.

IMO 2020 – A smooth transition

At times in the year running up to the start of the IMO 2020 global 0.5% sulphur cap on marine fuel it felt like a constant refrain of “the sky is falling, the sky is falling” from the shipping industry.

There were all sorts of often repeated dire warnings of likely widespread lack of availability of compliant fuels, mass breakdowns of vessels due to poorly blended fuels, large numbers of ship failing to get their tanks cleaned in time, and contentious detentions for non-compliance.  Ten days into 2020 it is fair to say the sky has not fallen, world trade continues as normal, and it is tempting to believe this has been closer to the Y2K bug in terms of being a non-event than the “once in a century” change it was flagged as being.

So has the transition been really that smooth? Well not exactly, but widescale dislocation of the shipping market has fortunately not materialised, however, there has certainly been an impact on the industry, and some of the possible problems could take a while to materialise.

Fuel price uncertainty

Price uncertainty for compliant very low sulphur fuel oil (VLSFO) remains and has spiked markedly in recent weeks as IMO 2020 came into force. According to Ship & Bunker the price of VLSFO in the world’s largest bunkering port of Singapore has softened slightly to $723.50 per metric tonne (pmt) compared to $740 pmt on 6th January, but remains sharply higher than the $520-550 pmt seen between July to November 2019.

At current levels compliant fuels – either VLSFO or similarly priced MGO – are at levels that equate to some of the highest prices owners ever paid for heavy fuel oil (HFO). Where prices will head remains very much up in the air, even if there is an expectation that VLFSO prices will soften as the market settles. What is clear is that owners are experiencing both high and uncertain fuel prices in the early days of IMO 2020.

Owners with scrubbers cleaning up

The multi-million dollar question for owners opting to install exhaust gas cleaning systems, or scrubbers, was would the fuel price spread justify the investment with a short pay back period. As of 10 January the answer is a resounding “yes” with the soaring VLSFO price noted in the previous paragraphs and the HFO price actually falling resulting a spread in the $300 pmt plus range currently.

So is it nothing but good news for scrubber owners? Not entirely. For those who joined the rush to install exhaust gas cleaning systems in the 12 – 18 months it’s turned out the process is more complicated than anticipated with widespread delays at yards taking ships out of service for significantly longer than expected with installations reported to take 45 – 60 days, rather than the advertised 30-day range, equating to longer periods of lost earnings. And whether owners will experience operational and corrosion issues will take a longer time to become clear.

Fuel unavailability

The unavailability of compliant fuels, particularly in smaller ports for vessels on the tramp trades, was an oft repeated concern in 2019. However, by and large it would seem compliant fuels are available. One of those who had flagged such concerns over the last year – International Chamber of Shipping (ICS) chairman Esben Poulsson – told CNBC on 1 January, “Availability was for a long time a concern, but from everything we are hearing availability is there.”

There has been some anecdotal evidence of owners that had not secured supplies in advance experiencing difficulties in procurement fuel on the spot market. Analyst Alphaliner reported at least six containerships idle off Singapore from the end of 2019 that appeared to be awaiting supplies of compliant fuel.

Fuel contamination and incompatibility

The nature of the new blended fuels being used to comply with IMO 2020 has raised concerns of contamination and incompatibility between blends leading to engine issues and possible breakdowns. Just 10 days into IMO 2020 is probably too early for evidence of widescale problems, if there are any, to have emerged. For example the fuel contamination that started in the Gulf of Mexico in 2018 took several weeks to emerge as a pattern of issues flagged up by fuel testers and months for the problem to spread globally.

Detentions for non-compliant fuel

At the time of writing there have been no reported detentions by Port State Control regimes for using non-compliant fuel despite some fairly high figures expected for non-compliance. Whether this is simply regulators being relatively lenient in the early phases of IMO 2020, and the fact it takes time to test fuel samples to prove non-compliance remains to be seen.

Early days

The early days of IMO 2020 coming into force have certainly had impact on the industry, not least in the months spent preparing for it, but so far it appears that preparation has paid off with fears of widespread major problems for global shipping not having transpired.

Hong Kong port container volumes decline 6.3% in 2019

Once the world’s largest container port Hong Kong volumes continued to decline last year by 6.3% to 18.36m TEU.

In a year that saw the formation of the Seaport Alliance among the Kwai Tsing Terminal operators the move did apparently little to stem the fall in volumes with the Kwai Tsing Terminals handling 14.22m teu last year down from 15.47m teu. Mid-streaming volumes actually saw a marginal rise to 4.14m teu in 2019 from 4.12m teu a year earlier.

Hong Kong port has faced fierce competition from terminals in South China and container volumes have declined every year since 2011 when volumes were 24.38m teu, with the exception of 2017 when they moved back up to 20.77m teu.

The 2019 figures will see Hong Kong slipping to eighth in the global container port rankings behind Qingdao, which handled 19.2m in the first 11 months of last year.

PSA global container volumes grow 5.2% in 2020

Singapore-headquartered terminal operator PSA saw a 5.2% increase in container volumes handled worldwide to 85.2m teu powered by its international business.

PSA’s homebase of Singapore reported 1.6% volume growth to 36.9m teu last year, while its international business grew 8.1% to 48.3m teu, in a year that saw the terminal operator continuing to grow its global footprint.

“2019 was a year where the PSA Group expanded our horizons, against a backdrop of trade wars, climate action and varying technological impacts on business and society,” said Tan Chong Meng group ceo of PSA.

“By welcoming new terminals like DCT Gdansk, PSA Halifax and Penn Terminals into our fold, we have broadened our reach and ability to offer greater connectivity to new economies in the Baltics and North America. Beyond our traditional port domain, we also redoubled our efforts to develop more transport options for cargo owners and movers through our new PSA Cargo Solutions arm,” he added.

Looking ahead continued expansion of PSA’s business is on the horizon as well as investments in technology.

“As we begin a new decade in 2020, PSA will continue to build on our global network of ports while harnessing technologies to improve our productivity to serve our customers better,” Tan said.

(Source: American Shipper, G-Captain, Vietnam Customs, World Maritime News)