SHIP BUILDING IN CHINA DECLINING

China was one of the leading shipbuilding country for particulars types of ships. In  2007  shipbuilding accounted for 23% of worldwide total new building orders. Top was South Korea which accounted for 33%.

Due to the slump economy worldwide ship building order has dropped by 37% comparing to that China's order dropped by 44%. It is probably due to the fact China is specialized in building only certain types of ships and mostly the bulk carriers. Worldwide decline in shipping industry has hit hard bulk carrier market.

Analysts say that the trend will continue for at least two years more and ship manufacturing industry will be hit hard by the effect of worldwide new building slump.

The irony is that it is a cycle that continues. Due to slump in new building in 5 years time shipping industry will face crisis for bulk carrying vessel and the market will be bullish again. 

Shipping community only can hope that the sailing remains smooth during this choppy economic marked.

MT HEBEI SPIRIT- AFTERMATH

On 8th December 2007 a crane barge owned by Samsung collided with the MT Hebei Spirit about 6.2 miles off the coast of South Korea. Collision caused 3 large hole on the hull of the tanker and released an estimated 2.8 million gallons of crude oil. The spillage cove rd a very large coastal area of South Korea.

After being detained in South Korea for the last one year, an appeals court in South Korea on Wednesday pounded with jail term for Indian Master and Chief Officer of the vessel in connection with oil spillages for MT Hebie Spirit. 

It is reported that the jailed Master and Chief Officer of the Hebei Spirit are being held in inhumane conditions which breach their human rights and go against their religious principals,as stated by the InterManager, the association of International Ship Managers. The message from InterManager, who represents near about 2,500 oceangoing ships and 125,000 crew, very clear that the shipping industry will not stand idly by while this injustice continues. 

While speaking in this week's Seatrade Middle East Maritime Conference in Dubai, general secretary of InterManger Mr Morel told delegates he believes the court’s decision was based on a “inaccurate, if not incompetent” report. InterManager has vowed to submit an official complaint to the United Nations for breach of the Human Rights Act and is calling on all its 125,000 seafarers to send a personal message of protest against unjust acts to the South Korean Government.

InterManager stated that “The two officers have now been thrown into jail and we have received reports indicating that they have been mistreated. Some of these mistreatment include: public humiliation after the sentence; being confined to a small, filthy cell without proper heating and proper facilities; being refused proper visiting time; and being forced to accept a feeding regime that is against their philosophical or religious beliefs. These are direct breaches of their Human Rights".

"InterManager members are considering several actions (that will continue until Captain Chawla and Chief Officer Chetan are freed):

1. Encouraging all seafarers from all our organisation’s members to send a personal message of protest to the Korean authorities calling for the immediate freedom of Capt. Chawla and C/O Chetan – a potential total of 125,000 people.

2. Adding a clause to any contract our members agree with Korean firms, indicating that both parties support the legitimate request for freedom of Capt. Chawla and C/O Chetan – and bear in mind that our members have a total turnover in sole crew operations of some $5 Billion.

3. Appealing to the Human Rights Commission of the United Nations for it to intervene with the Korean Government and asking for their help to organise the immediate release of our crews.

4. Not opposing our crew members who refuse to serve on ships bound for Korea, on the basis that they fear for their freedom once they arrive there. Mr Morel concluded: “This affair is the worst thing that could happen to an industry that is already having so much difficulty in attracting young people. How can we explain to our apprentice officers that, even if they do their job well in all aspects, they may end up in jail for long periods for incidents in which they bear no responsibility?”

The very goes about is that firstly the vessel was at at anchorage while the collision took place and secondly first quote verdicted Master and Chief Officer as huilt free in the spillage incidence, which was reversed by appeal court almost after one year.

Source: Intermanager

New inspection regime to start on 1 January 2009
Friday, 12.05.2008, 11:30pm (GMT)

Norway is enforcing International Labour Organisation Convention No. 178 – the Labour Inspection (Seafarers) Convention. DNV will conduct these inspections in accordance with requirements set by the Norwegian flag authority.

The Norwegian flag authority, represented by the Norwegian Maritime Directorate (NMD), has directed all its recognised organisations to start inspecting ships as from the beginning of 2009. DNV is one of these recognised organisations. “We have been working closely with both the ILO and several flag states for years. So we are well prepared to take care of the core of this regime – namely the working and living conditions of the seafarers. In addition, we are prepared to make this a smooth transition into one more regime that shipowners have to face,” says Georg Smefjell, the project manager of DNV’s Maritime Labour Convention team. Mr Smefjell adds that a large number of shipowners are well prepared and have established conditions for their seafarers above the minimum requirements in the new regime a long time ago. “However,” he says “all shipowners and operators must be in compliance with the laws and regulations stipulated in the Convention, and they need to start now.” The ILO 178 surveys are to be carried out at intervals of 2.5 years – with a maximum of three years between two inspections. According to the NMD, the surveys are to be carried out during ordinary manning surveys or international safety management audits as appropriate. DNV are in a dialogue with the NMD to determine how this can be effectively done. A new certification regime will be mandatory as early as in 2011. The Maritime Labour Convention (MLC), which is another step forward and has a wider scope to safeguard the seafarers’ working and living conditions, will soon be ratified by the Norwegian parliament. “Required inspections for compliance with laws and regulations in the areas covered by ILO C-178 must start in 2009. By 2011 the ships coming within the scope of ILO C-178 will have to be inspected and certified for compliance with the overlapping and additional requirements in the MLC (Maritime Labour Convention). DNV has informed the NMD that we will be able to link ILO-178 services to MLC certification and offer voluntary certification to those who want to be ahead of the additions to be introduced in 2011,” concludes Mr Smefjell. More information can be found at: www.sjofartsdir.no For further information on the inspection regime, contact: MLC@DNV.com    Source: http://www.infomarine.gr/

Today I want to give good news about shipping. With a renewed  Chinese demand for iron ore and coal has pushed up charter hire as much 3 times in past week. That is abnormal recovery in charter hire after a continuous slum for six months.

It is a good sign and may encourage ship owners to look into shipping business with positive outlook. Revival in charter hire rate has benefited large vessels the most. Some operators said that at least now they are able to recover their operating comparing to running in loss earlier. 

The charter hire rate increase did not affect smaller vessel equally, which generally attracts general cargoes. 

Average spot rates, or the cost of carrying a single cargo immediately, finished the week at $8,261 a day for Cape sizes, according to figures from Pareto Dry Cargo, an Oslo ship broker. The previous week’s average was $2,763, one of the lowest yet seen. Pareto reported a long-term charter of a Cape size ship at $17,500 a day for a year, more than the daily basic operating costs of such a ship. Long-term charter rates are, unusually, higher than those in the spot market because of expectations that the spot market will recover.

(Source: Shiptalk newsletter of 15th Dec 2008)

This would probably a sign of the start shipping market recovery and shipping community earnestly hope for same.

How long the downturn in shipping industry will last?

World economy is in recession. It is the start, none knows where is the end. Recession is an unavoidable phenomena of economy. It has happened in the past, happening and will happen in futures. How strong the policies and monitoring, I doubt if the cycle of recession can be prevented at all. 

Shipping industry has not bee spared from recession. Ship owners, ship builders and all association with shipping industry has started feeling the pinch. Rapid downturn of oil price last July 2008 predicted that probably shipping industry will be most benefited, but it did not. Charter hire went down faster than oil price leaving ship owners in dilemma.

Hellenic Shipping News published a featured item with heading "Cheap Oil May not be a Christmas Gift for Shipping Industry" and under the circumstance it seems to be the bitter truth and unwanted reality. In the same newsletter other scaring news headers are "Ship freight rate falls by 40%" and " Ship owners scrambles to cancel new orders".

So the near future images of the shipping industry is not very bright, at least for next few years. It is bad news for seafarers. Last few years there was great demand for seafarers and, in fact owners and ship managers were scrambling to get good officers and breaking their heads to find means to retain them for long time. In the process salaries of seagoing officers and engineers skyrocketed comparing other industries. Now probably downside of the graph will commence. It is time that seafarers should plan there futures when the market demand will be not like what it was.