Shipping

UK: Court Considers Whether Carrier Adopted Sound System For Carriage Of
Cargo

A recent decision offers guidance as to the courts approach to a carriers obligations under Article III(2)
of the Hague Rules to properly and carefully load, carry and care for the cargo.
The background facts
The Claimants were consignees under the bills of lading issued in respect of nine consignments of washed
Colombian green coffee beans transported by the Defendant container line from Buenaventura in
Colombia to various destinations in North Germany, transhipped in Balboa, Panama. Each of the
consignments suffered damage from condensation. The bills of lading recorded receipt in apparent good
order and condition. The containers were provided and stuffed by the Defendant carrier. The stevedores
lined the containers with Kraft paper before stuffing.
The bills of lading contained a Clause Paramount making the carriage by sea subject to the Hague Rules
from the time when the goods were loaded on the ship. The carrier disputed application of the Hague
Rules on the basis that the stuffing of the containers by its stevedores occurred before the loading. The
Court considered whether the obligations imposed by the Hague Rules applied to the stuffing of the
containers and, further, whether the carrier had breached its duty under Article III(2) of the Hague Rules
to properly and carefully load, carry and care for the cargo. The cargo was found to be entirely typical, so
the carrier could not rely on any particularities of this cargo to explain the damage.
The Mercantile Court decision
The Court found that, where cargo is loaded into a carriers containers which are subsequently loaded
onto the vessel, it is unrealistic to treat this as anything other than a single loading process. The Court
further commented that even if that were not so, the parties are free to agree on what constitutes loading.
In this case, the carrier assumed an obligation to stuff its own containers and therefore the contract of
carriage included that as part of the loading process. In addition, the Court said that the proper analysis of
the claim was that it did not relate to the stuffing process itself, but to the carriers failure to protect cargo
against damage during carriage, which is breach of a duty at the heart of the carriage. The Hague Rules
therefore applied.
The Court then turned to consider the carriers obligations under Article III(2) to properly and carefully
care for the cargo. The word properly has previously been construed as in accordance with a sound
system. The word carefully was found to refer to the implementation of that system by the carrier. The
Court commented that properly and carefully can be viewed as two aspects of a single duty of care
and so it is not always necessary, or possible, to assign the breach to one or other of them in isolation.

In this case, the Court had to consider whether the carriers precautions (namely lining the containers with
Kraft papers) represented a sound system in preventing condensation damage to the cargo of coffee beans.
The Courts starting point was that if goods, acknowledged to have been received in apparent good order
and condition, are delivered in a damaged state, that can without more be sufficient to justify the court in
inferring a breach of Article III(2) and thus require evidence from the carrier to negate such a breach.
The onus of proof regarding the use of a sound system was therefore found to lie with the carrier.
The Defendant carrier argued that no amount of Kraft paper would have prevented the condensation
damage and that the claim must therefore fail for want of causation. The Claimants argued that the
condensation damage could only have resulted from some inadequacy in the way that the carrier used the
lining paper.
The Court considered the expert evidence and decided that the carrier failed to establish that no amount of
lining with paper of any thickness could have prevented the damage. Even if the carrier succeeded on that
argument, that would not be an answer to the claim. The Court commented that since the soundness
relates to the prevention of damage to a normal cargo from the risks reasonably to be expected during the
contracted carriage, it is no answer to an allegation of breach of that obligation to say that, since such
damage is always unavoidable, no such system exists.
The Court also commented that, in order to conclude whether a particular system of protecting the cargo
is a sound system, the carrier has to demonstrate that there exists a rational, adequate and reliable
basis in the form of studies and research for concluding that this particular system will prevent the
damage. Evidence of general industry practice of using a particular system to prevent the damage will not
suffice in the absence of any theoretical or empirical basis for such practice. Further, even if the carrier
had established that it adopted a sound system, the question would remain as to why this system still
failed to prevent the damage. The carrier would therefore have to demonstrate that it has also exercised
due care in implementing this system.
Comment
The case is a useful clarification of the carriers duty of care under Article III(2) of the Hague Rules. It
also demonstrates the difficulties that a carrier faces in proving that it has cared for the cargo properly and
carefully where cargo, which was received in apparent good order and condition, is then delivered in a
damaged state. The carrier cannot rely on industry practice alone to argue that it adopted a sound system
to protect the cargo. The soundness of the system employed by the carrier must be based on suitable
theoretical and empirical studies.
Source: Ince&Co

Cargo traffic congestion slowly easing at West Coast ports

Cargo congestion at the two busiest U.S. container ports has eased considerably in the six weeks since
West Coast dockworkers and shippers reached a tentative labor deal, but port officials said it would take
several more weeks for freight traffic to return to normal. The most obvious sign of improved cargo flow
through the ports of Los Angeles and Long Beach is a sharp decline in the number of inbound freighters

kept waiting at anchor for dock space to open, Los Angeles port spokesman Paul Sanfield said on
Wednesday. Nine vessels stood idle outside the twin ports on Tuesday and Wednesday, down from the 31
stacked up at anchor during the height of the cargo crisis that reached the point of near gridlock in
February, Sanfield said. He said berths were normally available as soon as freighters arrived at the two
ports, which together handle 43 percent of all containerized goods entering the United States.
Sanfield said the average time it took cargo ships to get in and out of the terminals declined to 7.6 days
last week from 8.4 days in early March. Turnaround times usually average four to five days, he said.
Cargo loads were reported to have faced lag times of two weeks or more during months of labor
negotiations at all 29 U.S. West Coast ports between the International Longshore and Warehouse Union
and major shipping lines and terminal operators. Port slowdowns, blamed by each side on the other as
pressure tactics during the talks, snarled trans-Pacific maritime trade and reverberated throughout the U.S.
economy, extending to agriculture, manufacturing, retail and transportation.
A settlement was reached on Feb. 20 with the help of a federal mediator and intervention by U.S. Labor
Secretary Thomas Perez. The terminals and their union workforce have since made steady progress in
clearing the cargo backlog, although it will likely take several more weeks for the ports to regain their
ordinary rhythm, Sanfield said. He said operational issues that hampered cargo traffic through last year
must still be addressed, including the growing number of supersized freighters now calling on the ports.
But damage to West Coast port business had already been done, he said, as some customers began to
reroute shipments. A Journal of Commerce industry poll of 138 shippers published days after the labor
settlement found 65 planned to direct less cargo through the West Coast this year and next.
Source: Reuters (Reporting by Steve Gorman; Editing by Peter Cooney)

Samsung Heavy wins combined US$1.2 bln orders from Hong Kong, Europe
South Koreas Samsung Heavy Industries Co. said Wednesday that it has clinched two orders worth
nearly US$1.2 billion to build container carriers and oil tankers for shippers in Hong Kong and Europe.
Under the $950 million deal with Orient Overseas Container Line (OOCL), a Hong Kong-based container
shipping and logistics service company, Samsung Heavy will deliver six 20,100 twenty-foot-equivalent
unit (TEU) container carriers by November 2017, it said in an e-mailed statement. Samsung Heavy also
said that it has signed an estimated $230 million deal with a European shipper to build four oil tankers,
but failed to reveal further details, citing a confidentiality agreement. With the latest orders, the
shipbuilder has posted $2.3 billion in new orders in the first quarter of the year. The new orders are for 10
container carriers, six oil tankers and two liquefied natural gas (LNG) carriers.
Source: Yonhap

DP WORLD Announces Proposed Acquisition Of Fairview Container Terminal In Prince

Rupert, Canada
DP World Limited yesterday announces its agreement to acquire Maher Terminals Fairview Container
Terminal (Fairview) in Prince Rupert, British Columbia, Canada from Deutsche Bank. Fairview presents
growth opportunity in a market with attractive and growing demand. Fairview is a purpose built terminal
with an efficient sea-rail link and has a current capacity of 850,000 TEU (twenty-foot equivalent

container units), with a just-announced Phase 2 expansion that will take capacity to 1.35 million TEU.
The concession period runs to 2034 with an extension to 2056 after the completion of Phase 2. Total
consideration payable is C$580 million (US$457 million*) for the total outstanding stock of Fairview on
a cash-free, debt-free basis (subject to customary adjustments). The completion of the transaction is
subject to applicable Canadian regulatory approvals and is expected to occur in the second half of 2015.
DP World Limited has been a significant investor in Canada, as operator of the CENTERM terminal in
Port Metro Vancouver. The transaction will provide significant benefits to Canada, including to the
Province of British Columbia, to the City of Prince Rupert, to First Nations communities, and to
importers, exporters and consumers, including:
Implementation of the phase 2 expansion expected to be completed in the first half of 2017, which will
add capacity and efficiency to Canadas Asia-Pacific Gateway and Corridor. Expansion is projected to
create more than one-half million hours of construction work and more than 500 FTE jobs
Undertake feasibility assessment in relation to development of the lands intended for further expansion
which could potentially increase the capacity to 2.45 million
TEU
Access to DP Worlds world class productivity-enhancing best practices in container terminal
development and operation
Access to DP Worlds state-of-the-art supply chain security and safety practices
Net increase in employment levels in Canada
Substantial Canadian participation in the management of Fairview
Enhanced competition in the provision of container terminal services on Canadas west coast
Sultan Ahmed Bin Sulayem, Chairman, DP World, said: We are delighted to extend our global footprint
with a second terminal in Canada. The value proposition is compelling and the addition of capacity to our
portfolio will contribute to DP Worlds continued growth and the delivery of shareholder value.
Mohammed Sharaf, Group Chief Executive Officer, DP World, said: Fairview Container Terminal offers
the fastest access for vessels traveling between Asia and North America. The terminal also offers the
highest productivity rates on the West Coast and an efficient rail link to the hinterland. The long-term
concession and ability to build beyond the current phase 2 of expansion presents a fantastic opportunity
for DP World. We are delighted to announce this transaction and look forward to further enhancing the
ports operations under DP World management. *US Dollar calculations were converted at a rate of
1US$ = C$1.26818 being the midmarket rate on 31 March 2015.

Dry
Dry bulk prices keep falling, but buyers remain scarce

The dry bulk market has remained in the doldrums over the course of the past few weeks, with inevitable
downward pressure on asset prices, a trend already evident since July of last year. However, buyers
remain a rare sight on the SnP market, as banks remain reluctant to finance acquisitions in such a low
market. According to the latest report from shipbroker Intermodal, we observe a strong negative trend in
asset prices that has kicked off back in mid-2014, but which has nevertheless still hasnt convinced
buying interest to the extent that one would think. This trend affects all segments and ages with the most
representative examples those of the 10-year old Panamax and the 5-year old Cape, the prices of which
are currently at a massive discount compared to a year ago.
According to Intermodals SnP broker, Mr. Panos Makrinos, the obvious question that rises among the
majority of shipowners and potential investors is whether this is the right time to invest in second hand
vessels or not, but this time round the argument for investing is very hard to make as the present earnings
from the very depressed freight market are at levels that in many cases fail to even cover operation
expenses. So does buying a ship at a low freight market entail a substantial risk? The answer is a
definitive yes, but as it has happened many times in the past, such risks have proven to be excellent
investment choices when improved freight levels finally take place following a market recovery. The
million dollar question is as always what is the best time for such investments, and one that cannot be
answered as the perfect timing or accurately calling the bottom is a very rare occurrence in this
market to begin with, Makrinos noted. The broker added that when looking at the very low asset prices
and the fairly intense buying interest of the last month, especially for vessels build post 1990, one could
observe that some key players are eager to buy at the lowest price they can achieve right now, having in
mind that the BDI has reached its historical bottom recently and a gradual rise is bound to happen even at
a pace that might not secure immediate profit for shipowners.
Makrinos also mentioned that at the same time, the oversupply of available tonnage in the dry market
remains a very important issue, especially if one takes into account the number of bulkers that are due to
be delivered this year following the ordering spree of 2013. Slippage and cancellation might help this
number eventually come in lower than expected, while on top of that, intense demolition activity is
already offering hopes for a much needed breather in the dry bulk market, despite the fact that demo
prices are currently in the range of $360-380/ldt. Although a slight increase in steel prices has been
observed in the past couple of weeks this is not yet reflected in demo prices, but if it eventually does, we
expect the number of bulkers heading for scrapped to accelerate.
Concluding his analysis, Makrinos said that despite the fact that the dry market is not currently showing
signs of a recovery being just around the corner, I believe that we will sooner rather than later observe
more intense buying interest being transformed into actual deals, especially for vessels that are easier to
charter these days and still manage to do so over OPEX levels, such as geared sizes build after 2000, he
concluded. Meanwhile, in the ever so critical demolition market, Intermodal said that following a long
period of low prices and extremely negative market sentiment, things seem to finally start improving in
the demolition market. Prices across the Indian subcontinent managed to close off the week with a gain of
$10-15/ldt, while dry bulk vintage tonnage still made up for a significant portion of the recently reported
deals. At the core of this long awaited market reversal, lies the improved price of steel, which kicked off
in the beginning of the week prior and finally managed to feed through demo prices as well. On top of
that, the stabilization of the Indian rupee has also helped sentiment, as it has, at least for now, eased some
of the always present exchange rate risk worries. The improved demo prices were immediately reflected
on the increased number of deals that concluded last week in India and Bangladesh, where prices had
fallen the most during the past months, while if steel prices stabilize we expect to see some additional
price upside during next week as well. Prices this week for wet tonnage were at around 230-405 $/ldt and
dry units received about 215-380 $/ldt. In a separate report, Allied Shipbroking noted, things seemed to
have gathered pace this week with price offers firm-ing further, and a more competitive biding war being

seen amongst the different Indian Sub-continent destinations. It seemed there was considerable optimism
amongst buyers which have gotten rid of the shackles of previous high purchase made and large stocks
of cheap Chinese steel, and their renewed freedom came with a strong appetite for speculative buying and
renewed sentiment for what lies ahead. There are still a good number of candidates out there for grabs
with a strong majority being dry bulkers, while even this hasnt dampened spirits. This new momentum is
looking primed to continue on over the next couple of days at least, though caution must be held, as the
fun-damentals are still off from any certain direction and are looking any-thing but bullish as we move
forward. In terms of concluded business it is important to note that there was a number of candidates
amongst the dry bulk tonnage that were report-edly receiving offers close to the USD 400/ldt mark, while
of note was the handymax GOLDEN TRADER (48K dwt, 10,283 ldt, blt 1994 Croatia) which received
a price of US$ 410/ldt for destination India, Allied Shipbroking noted.
Source: Nikos Roussanoglou, Hellenic Shipping News Worldwide

Brazilian Iron Ore exports surge 11.6% to reach 25.3mm tons in February
According to customs data, Brazil accounted for 18% of Chinas overseas purchases in 2014 compared to
19% in 2013. The country is home to Vale, one of the worlds largest mining companies. As a result,
shipments out of Brazil are a key metric to watch. Higher export volumes have a positive effect on
shipping rates, which are a critical variable affecting dry bulk shipping companies revenues, earnings,
cash flows, and share prices. According to data from the countrys Ministry of Development and Trade, or
MDIC, Brazilian exports of iron ore were up 11.6% year-over-year to 25.3 million metric tons in
February 2015. Compared to January 2015 levels, exports were up 8.4%.
Average iron ore prices plunged 48% in February 2015 from where they were the same month a year ago.
This decline has negatively affected the SPDR S&P Metals and Mining ETF (XME) that invests in
industries such as steel, coal and consumable fuels, gold, precious metals and minerals, aluminum, and
diversified metals and mining. Lower prices have cut Brazilian iron ore export revenue by 42%.
Shipments from Brazil accounted for 25% of seaborne trading. However, due to weakening growth in
steel production, Brazils share may narrow. Nevertheless, seasonality in Brazilian iron ore exports may
improve the pace of shipments for the rest of 2015 and possibly buoy Capesize rates.
Brazils iron-ore exports to China will remain stable for five years but then a sharp slowdown in the
Asian giants housing market will trigger a reduction in demand for steel, said the managing director of
Beijing-based consulting firm Gavekal Dragonomics for a report published in Hellenic Shipping News. In
a report by EFE News Service, Arthur Kroeber, a US economist, was cited as saying, Chinas real-estate
sector has already reached its peak and therefore Brazil must find other growth mechanisms.
Source: Customs Today

Apr-Feb thermal coal imports into 12 major Indian ports jump 19%: IPA
Indias 12 major government-owned ports handled about 77.74 million mt of imported thermal coal
during the 11-month period of April-February, up 19% year on year, the latest data from the Indian Ports

Association showed. However, coking coal imports over the 11-month period of the current fiscal year
fell to 29.16 million mt, down 1.6%, the data showed.
Paradip port on the east coast handled the highest volume of thermal coal imports during the period, at
27.41 million mt, up 20% on the year. Paradip also received the highest coking coal shipments over AprilFebruary, at 7.07 million mt, an increase of 11.8%. The 12 ports are Kolkata, Paradip, Visakhapatnam,
Ennore, Chennai, VO Chidambaranar (Tuticorin), Cochin, New Mangalore, Mormugao, Mumbai,
Jawaharlal Nehru Port Trust and Kandla.
Source: Platts

Iron Ore Seen Extending Slump Below $50 as BHP, Rio Decline
Iron ore, which fell below $50 a metric ton on Wednesday, may extend losses as weakening producer
currencies cut mining costs, reducing incentives for the supply cuts needed to balance the market,
according to Societe Generale SA. Lower energy prices have lessened freight expenses and the inability
of many high-cost Chinese miners to cut output means that iron ore will stay weak, Mark Keenan,
Singapore-based head of commodities research for Asia, said on Thursday. The steel-making raw material
will probably drop into the low $40s a ton in the coming weeks, IG Markets Ltd. said in an e-mailed note.
Prices plummeted last year and extended losses in 2015 as Rio Tinto Group and BHP Billiton Ltd.
expanded low-cost supply as demand from China, the biggest user, weakened. Global consumption will
shrink this year for the first time since 2009, Deutsche Bank AG said in a report on Tuesday, forecasting
prices may drop below $40 as producers costs ease. Miners shares declined on Thursday, with
Australias Fortescue Metals Group Ltd. tumbling at the lowest level in more than six years. The weaker
currencies provide a degree of insulation at the producer level from falling dollar prices of iron ore,
Keenan said by e-mail in response to questions. Declines in bunker fuel, driven by the fall in oil prices,
have also reduced shipping costs of ore significantly. Lower Price Ore with 62 percent content at
Qingdao lost 3.5 percent to $49.53 a dry ton on Wednesday, according to Metal Bulletin Ltd. Thats the
lowest level since 2005, based on daily and weekly data from Metal Bulletin and annual benchmarks
compiled by Clarkson Plc, the worlds largest shipbroker, for ore delivered to China. Prices declined 30.5
percent this year. The Australian dollar and the Brazilian real dropped 18 percent and 28 percent against
the U.S. currency in the past 12 months as commodity prices fell, data compiled by Bloomberg show. The
Australian dollar is trading near its lowest level since 2009 and the real is near its weakest since 2003.
Chinas economy, which consumes about two-thirds of iron ore transported by sea, expanded last year at
the weakest pace since 1990 and will probably slow further in 2015. Efforts by policy makers to stimulate
growth have had only limited impact on the iron ore market so far this year, Morgan Stanley said. On
Monday, the Peoples Bank of China lowered a down-payment requirement for second homes and the
finance ministry exempted some homeowners from a sales tax. Construction accounts for about 56
percent of Chinas steel demand, according to estimates from Standard Chartered Plc. Pessimistic
Market The market remains pessimistic amid the supply glut and weak domestic demand for steel in
China, Australia & New Zealand Banking Group Ltd. wrote in a note on Thursday. The recently
announced mortgage-policy measures have done little to support the iron ore price, the bank said. Iron ore
for September delivery fell 2.8 percent to close at 380 yuan ($61.32) a ton on the Dalian Commodity
Exchange, the lowest for a most-active contract since trading began in October 2013. Steel reinforcementbar for October delivery sank 2 percent to 2,342 yuan a ton on the Shanghai Futures Exchange, the lowest
since trading started in March 2009.
Seaborne supply will exceed demand by 55 million tons this year, rising to 184 million tons in 2018,
Morgan Stanley estimates. The worlds biggest mining companies will add 310 million tons of output

through 2017, Deutsche Bank said on Tuesday, forecasting that iron ore will average $51 this year. BHP
decreased 2.1 percent to 1,438.5 pence at 10:23 a.m. in London, declining for a third day, as Rio lost 0.6
percent to 2,745 pence. In Sydney, Fortescue, Australias third-largest shipper, which last month urged
major miners to adopt an output cap, sank 4 percent, while BC Iron Ltd. weakened 4.2 percent and Atlas
Iron Ltd. tumbled 7.7 percent.
Source: Bloomberg

Wet
Ship owner Euronav sees positive tanker market going forward

The tanker market is poised for a continuation of the climbing trend of freight rates, as fundamentals
remain positive, with ship owner Euronav adding its voice to the optimistic views of the market.
According to the ship owner, supply and demand for seaborne transport support the view of a robust
market in both the short and medium term. In its earnings release report this week, the companys
management noted that its well positioned for this market structure having expanded with the support of
the capital markets during 2014 to become the largest, independent pure-play crude tanker platform in the
world. In addition, management has deliberately positioned the fleet to have around 16,000 days open to
the spot market for 2015 where we expect continued freight rate expansion it said. According to
Euronav there are several supportive factors in the tanker market. Firstly, demand for oil has remained
robust over the past three years. The fall in the oil price since October should stimulate additional demand
as the reduction in the oil price should act as a direct stimulus to the global economy. The benefit of lower
oil prices also implies a reduction in one of our key operational costs namely bunker fuel, said the
company.
It added that secondly, the tanker fleet order book is at his lowest since 1997 and vessel supply should
remain restricted for at least the next two years. Thirdly, the financial crisis has changed the landscape for
shipping finance as many previous providers of capital, particularly European Banks, have withdrawn and
those left are increasingly constrained by capital adequacy rules. This development provides a clear
advantage for transparent, well capitalised platforms such as Euronav who have and will continue to work
in partnership with the capital markets. Euronavs effective use and access to capital markets has been
repeatedly demonstrated, in particular during the last 18 months. Fourthly, ton-miles, which have
structurally increased in the last 3 years, should continue to have a significant impact on the demand
dynamics of the tanker markets. The Atlantic is effectively long oil and this oil supply is feeding demand

from non-OECD and especially from Asia and the Far East. Therefore, traditional trade lanes should
continue to be replaced by longer haul routes with the Far East as their ultimate destination. This in turn
should act as a multiplier effect on the underlying demand for oil which we expect in any event to exhibit
further growth as the fall in the oil price should stimulate economic expansion and energy needs over
time, Euronav said.
It went on to note that other factors provide an encouraging background: short term, the oil price
contango may continue to drive support for floating storage and reduce capacity. Lower bunker costs may
make speed less of a cost issue BUT ship owners should not waste fuel so speeds in ballast will vary as to
whether the ship is sailing to a cargo or not. No rational ship owner will want to speed up just to wait. The
industry has learnt over the past five years how to manage variable voyage costs and speed is the key
factor. It concluded its analysis by noting that tanker markets should continue to grow but are expected
to remain volatile. This volatility is an essential element of the tanker sector. It should not be forgotten but
embraced as it provides the Company with ongoing opportunities to deliver value.
Source: Nikos Roussanoglou, Hellenic Shipping News Worldwide

Iraq Crude Exports Rise 15% in March to Highest in 35 Years

Iraq boosted crude shipments in March to the highest level in more than three decades, adding to a global
supply glut that has helped push down oil prices by 46 percent in the last year. OPECs second-largest
producer shipped 92.4 million barrels in March, or 2.98 million barrels a day, Oil Ministry spokesman
Asim Jihad said by phone from Baghdad. Iraqi exports gained 15 percent from February, when foul
weather at the countrys southern oil terminals limited shipments to 2.59 million barrels a day, according
to the Oil Ministry. The ministry has made extraordinary efforts to boost crude oil exports to compensate
for the delays in loading of tankers due to bad weather, Jihad said in a statement earlier Wednesday.
Iraqs monthly shipments rebounded amid an oversupply fed partly by the U.S. shale boom and increased
output from Russia. U.S. crude inventories expanded in the week ended March 27 to the most since at
least August 1982, the Energy Information Administration reported Wednesday. West Texas Intermediate
crude is down almost 7 percent this year. North Sea Brent has lost 51 percent from its 12-month peak and
was trading at $56.73 a barrel at 7:21 a.m. Thursday in London.
Internal Conflict Iraq, with the worlds fifth-biggest oil reserves, is rebuilding its energy industry after
decades of war, economic sanctions and mismanagement. The government is also burdened by an armed
conflict with Islamist militants who seized major cities and have controlled much of the country since
June. Iraq pumped 3.3 million barrels a day on average last year, the most since 1979, according to data
compiled by Bloomberg. Among the 12 members of the Organization of Petroleum Exporting Countries,
only Saudi Arabia produces more. Iraq is targeting output of 6 million barrels a day in 2018.
The Middle Eastern nations shipments in March grew even as the $4.46 billion in oil revenue it
generated last month was barely half of the $8.08 billion it earned in May, the peak for monthly sales in
2014. Iraq sold crude at an average price of $48.24 in March, according to Jihad. The government started
selling $12 billion in treasury bonds last week to repay oil companies, Muneer Mohammed Omran,
director general of the central banks investment department, said by phone Wednesday. The drop in oil
prices has led to a decrease in revenue, affecting payments to the companies, he said. Iraq owes
international oil companies $9 billion for 2014, Oil Minister Adel Abdul Mahdi said March 2.
Basra Shipments
The country shipped 84.08 million barrels last month from the southern Basra region and 8.3 million
barrels from the northern oil hub of Kirkuk, Jihad said. While the Basra area has been largely unaffected
by Iraqs conflict with Islamic State fighters, troops from Iraqs self-governing Kurdish region took

control of oil fields around Kirkuk to prevent their capture by the militants. Iraq is installing two new
export facilities offshore in the Persian Gulf and is expanding storage capacity to 15 million barrels by the
end of this year to overcome bottlenecks curbing output, Deputy Oil Minister Fayyad Al-Nima said in a
Feb. 20 interview. Rough weather in the Gulf was halting the the loading of crude on to tankers, he said.
Source: Bloomberg

Japan starts 2015-16 shipping insurance cover for carrying Iranian oil
Japan started Wednesday providing up to Yen 877.8 billion ($7.98 billion) shipping insurance cover for
tankers carrying Iranian crude for fiscal year 2015-16 (April-March), amid uncertainty over Western
sanctions against Iran. Japans insurance cover for Iranian oil is at a record level in 2015-16, up almost
15% from Yen 764.4 billion ($7.88 billion) in fiscal 2014-15, due mainly to a weaker yen against the
dollar. The Minister of Land, Infrastructure, Transport and Tourism Akihiro Ohta signed a contract
Wednesday with one Japanese shipowner to provide insurance to one of its VLCCs carrying Iranian oil, a
ministry official said.
It was not immediately clear when this VLCC will load Iranian oil. In order to get the government-funded
shipping insurance scheme, Japanese shipowners need to sign contracts with the transport minister for
every VLCC the companies use to carry Iranian oil. Japans shipping insurance for fiscal 2015-16 took
effect after parliament passed a provisional budget for the fiscal year on March 30, after it promulgated a
revision to its law on March 27, the official said. The start to Japans shipping insurance scheme for
Iranian oil this year comes against the backdrop of Tehran and the P5+1 world powers continuing their
negotiations over Irans disputed nuclear program, with a possible framework deal as soon as later
Wednesday.
Under the revised act on special measures, Japanese insurance cover will range from a minimum Yen 990
million to a maximum Yen 877.8 billion per tanker in the fiscal year that started Wednesday. Japan
introduced a supplementary insurance scheme in June 2012 to enable crude imports from Iran in the wake
of a ban by the EU on protection and indemnity cover for tankers carrying Iranian oil. Over JanuaryFebruary, Japan imported an average of 207,943 b/d of crude from Iran, down 22% from 234,390 b/d in
same period of 2014, according to data compiled by the Ministry of Economy, Trade and Industry. Iran
was the sixth-largest crude oil supplier to Japan in in the first two months of 2015.
Source: Platts

Oil Glut Is a Boon to Shippers, as Buyers Stock Up at Low Prices

Jonathan Lee has spent 30 years in the shipping business. But he was as excited as a rookie over the scene
on his screen one recent day here at the international nerve center of his oil tanker chartering and
dispatching company. Although petroleum prices are down worldwide, the business of sending twomillion-barrel supertankers across the seas has never been brisker or more global. Mr. Lee, who works
alongside colleagues in an office that could pass for a suburban stockbrokers, pointed to an arrow on his
computer screen. It showed the location of the supertanker Leonidas, under charter to a subsidiary of the
giant Chinese oil company Sinopec. The Leonidas, traveling empty from the northern China port of
Qingdao, after a stop at Singapore for fuel, was on its way around the southern tip of Africa. Its
destination was a port in Gabon in West Africa. There, it would load a cargo of crude oil and head back to
China, a round-trip journey of about 75 days.

Years ago, you never saw the Chinese chartering in West Africa; now they are the largest charterer
there, said Mr. Lee, chief executive of Tankers International. You are seeing history change in front of
your eyes.
Whats happening with prices and distribution is a new chapter in the history of the oil industry. As with
most products, the price of oil is based on supply and demand. But rather than any big slump in demand,
the plunge in oil prices in the last year is more a result of a growing world supply mainly from higher
output in the United States and OPECs reluctance to cut production. The lower price is in many ways
stoking demand particularly in big energy-importing countries like China and India, which are taking
advantage of what may turn out to be a bargain opportunity to top off their petroleum reserves.
And so supertankers these days are making fewer relatively short jaunts from places like Gabon and
Nigeria to the Gulf Coast of the United States, which no longer needs as much of their oil. Instead, the
ships are making longer and more lucrative trips to India, China and elsewhere in Asia. Staging
areas like the Malongo Terminal in Angola and ports as far from China as Venezuela and Brazil are also
filling tankers that will deliver oil to Asia.
For Mr. Lees London firm and the shipping companies it serves, 2015 is shaping up to be a boom time,
after a run of lean years for oil shippers. What we do is sell space, he said. If our ships are utilized for
considerable periods of time, the remaining ships can be sold at higher prices. Tankers International is
the booking agent for a category of vessels known as Very Large Crude Carriers, state-of-the-art ships
that are about 1,100 feet almost one-fifth of a mile long. Their two-million-barrel capacity is
equivalent to the daily output of a midsize oil-producing country like Norway. At current prices, those
cargoes would typically be worth around $120 million.
There are about 600 supertankers of this class plying the worlds waterways, and Tankers International
books jobs for about 40 of them. Many shipowners line up work themselves, but Mr. Lees firm is the
agent for a group of five companies with shipping interests. One is Euronav, a European operator, which
holds a stake in Tankers International. Others include Trafigura, a Dutch multinational commodity trader,
and Oak Maritime, a shipping business based in Hong Kong.
The computer terminals at Tankers International provide the 17 agents here with extensive intelligence on
the ships of competitors, including not only where they are but when they will reach their next
destinations and how much money they are making or losing. The information is an algorithmic mash-up
of GPS data, intelligence on the financial details of chartering transactions and even the results of safety
inspections.
While Tankers International is wary of disclosing information on the ships it manages, it makes available
a free mobile app with data on competing vessels called VLCC Fixtures.
We used to trade on gut feeling, said Henrik Sick, the firms vice president for chartering. Now we
have better information than other people. And, oh, by the way: Cheaper oil means big savings for the
shipowners, whose supertankers are powered by a heavy, petroleum-based fuel that is cheaper than it has
been in years. That makes those longer trips all the more feasible.
A glut of oil has to be good for the tanker industry, said Simon Toyne, a maritime analyst at Genscape, a
market research firm. Not only do the longer distances and times earn more money for tanker owners, but
ships that are tied up on lengthy voyages cannot be used elsewhere like the Persian Gulf further
tightening the market, which in turn lets the owners charge higher rates.
According to Evercore ISI, an investment banking advisory firm based in New York, spot rates for
chartering very large crude carriers have risen sharply in recent months. In January, when heating season
in the Northern Hemisphere was keeping the supertankers especially busy, they were able to command
charter rates as high as $69,000 a day. Recently they have eased off to the range of about $40,000 a day in

anticipation of the second quarter of the year, which is almost always weak. But even that is richer than
the average rates of $22,000 last year and about $12,000 in 2013.
Source: New York Times

Bunkering

USMRC LNG Bunkering Course "Key" to Launch of North American LNG Vessel
The United States Maritime Resource Center's (USMRC) liquefied natural gas (LNG) bunkering safety
training course was key in the launch of the Harvey Energy, the first LNG-fueled vessel to enter service
in North America, the USMRC announced in an emailed release. In February 2015, Harvey Gulf
International Marine LLC claimed the title as the first company in North America to bunker an offshore
support vessel (OSV) with LNG.
The USMRC said that its program offers five days worth of training for crew with direct responsibility of
the LNG and gas fuel systems. The LNG bunkering course that USMRC provides to Harvey Gulf
marine personnel is exceptional," said USMRC President Brian T. Holden."The innovative training
ensures our mariners are prepared to the highest standards and enables our crew to play a critical role in
the safe operations of our fleet.
The course also reportedly includes practical demonstrations using a LNG bunkering system simulation
tool, in addition to a full day devoted to LNG emergency response and firefighting. The hands-on parts
of the LNG bunkering training at USMRC provide a true test for our mariners under a range of normal,
unusual and emergency operating conditions they really have to prove themselves, said Chad Verret,
Harvey Gulfs executive vice president of Alaska and LNG Operations.
The USMRC added that it was also finalizing a basic fuels course for crew aboard LNG-fueled ships who
may have safety and emergency response duties. Last month, it was reported that the Harvey Energy,
which has since been chartered to Shell,had begun operations in the Gulf of Mexico serving Shell's deep
water operations.
Source: Ship & Bunker News Team

Worlds First LNG-Powered Containership to be Launched at General Dynamics NASSCO

for TOTE
WHAT: Special event to christen and launch the worlds first LNG-powered containership built by
General Dynamics NASSCO for TOTE. The ceremony will also commemorate NASSCOs 100th ship

launch.
WHEN: Saturday, April 18, 2015 8:00p.m. to 9:00p.m. (Gate opens at 7:00p.m.)
WHERE: General Dynamics NASSCO 2798 East Harbor Drive, San Diego, CA 92113
INFO: The ships sponsor, Mrs. Sophie Saccowife of Michael Sacco, president of the Seafarers
International Union of North America, AFL-CIOwill christen the ship with a traditional champagne
bottle break over the ships hull. Fireworks will commence immediately upon the christening and launch
of the ship. The name of the ship will also be revealed during the ceremony. BACKGROUND: As part of
a two-ship contract signed in 2012 with TOTE, when completed the 764-foot long Marlin-class
containerships will be the largest dry cargo ships of any kind in the world powered by liquefied natural
gas (LNG).
The vessels will operate on LNG, which will significantly decrease emissions while increasing fuel
efficiency as compared to conventionally-powered ships. The LNG-powered ships will also include a
ballast water treatment system, making them the greenest ships of their size anywhere in the world.
Upon delivery in late-2015, the Jones Act-qualified ships will operate between Jacksonville, Florida and
San Juan, Puerto Rico. General Dynamics NASSCO is the only major shipyard on the West Coast of the
United States conducting new construction and repair.
As a complement to its government new construction business segment, NASSCO maintains an extensive
history of commercial shipbuilding. In the past decade, NASSCO delivered eleven commercial ships and
currently has ten commercial ships in its backlog, including the two Marlin Class containerships for
TOTE. For its commercial work, NASSCO partners with South Korean shipbuilding power, DSME, for
access to state-of-the-art ship design and shipbuilding technologies.
Source: General Dynamics NASSCO

Grimaldi Lines Orders More Bunker Saving Upgrades

Rolls-Royce Tuesday announced it has secured orders to fit five more Grimaldi Group (Grimaldi) vessels
with its bunker saving Promas Lite technology. The integrated rudder propeller system is said to have
demonstrated a 20 percent improvement in fuel efficiency following retrofits to other Grimaldi vessels.
Five Grande-class Pure Care Truck Carriers (PCTCs) will now be upgraded with the system which
"significantly increases a vessel's hydrodynamic capability" through the use of computation fluid
dynamics (CFD), thereby reaching fuel consumption. In May 2014, Grimaldi fitted 10 RoRo vessels
operating under the Finnlines brand with the technology. "The retrofitting of the Promas Lite system to
our Ro-Ro vessels last year proved a huge success and a major step forward in our strategic objective to
improve energy efficiency across the fleet," said Paolo Satariano, Grimaldi Group Corporate Technical
Director.
"Rolling out the system to other vessel types in the Group was an easy decision to make and our PCTCs
will now benefit from this innovative technology. "Promas Lite is a version of the Rolls-Royce Promas
integrated propeller and rudder system, designed specifically as an upgrade for vessels already in service.
"We are pleased that the Grimaldi Group sees the Promas Lite as a cost-effective solution for reducing
fuel consumption and meeting emissions abatement regulations," added Rolls-Royce Sales Manager for
Promas, Klas Nygren. In March, DNV GL launched a new CFD-based hull and propeller monitoring
system, saying the world fleet could be sailing with approximately 30 percent more drag than
necessary due to hull and propeller fouling.
Source: Ship & Bunker News Team