Fleet maritime spring 2015

T he Sulphur Emission Control Area (SECA) covering waters in the English Channel, North Sea and Baltic has

become a reality as of 1 January 2015. Under the terms of the EU Sulphur Control Directive 2012/33, vessels operating in these areas can use bunker fuel oil containing a maximum of 0.1% sulphur or continue to use Heavy Fuel Oil with exhaust emission scrubbers that enable them to achieve the required emission level. Similar rules also apply in the areas up to 200 miles off the North American coastlines. Th e Irish Sea and other EU waters will be made subject to similar controls in 2020 while the International Maritime Organisation (IMO) with whom the EU Authorities are now complying, is seeking to secure further pollution reductions from maritime activity in future years.

For Irish exporters and importers using surface transport, there is no escaping the inevitable surcharges that the shipping companies will impose to cover the additional cost of use of low sulphur fuel and/or to defray the cost of installation of exhaust scrubber systems on their vessels. In cases where the vessel carrying the goods operates entirely outside the SECA area, whether to Britain, the Biscay region, or West Africa, it would appear that there will be a fi ve year surcharge free period. However, if the vessel concerned enters the SECA area en route, if only for a very short period, the surcharges will have to apply as that vessel will have to use low-sulphur fuel for the total voyage because most short-sea vessels do not have more than one fuel tank.

In the latt er months of 2014 there was considerable discussion in the shipping trade press of the likely impact of the drop in oil prices on the SECA surcharge regime. Th e answer to this one appears to be that though the prices of both Heavy Fuel Oil and low-sulphur Marine Gas Oil have both dropped by about 33% in the last year, their relative prices to each other have remained fairly constant. Th us the current price (as of 11 December 2014) of IFO 380 Heavy Fuel Oil at Rott erdam stands at USD 340 per metric tonne, down from about USD 580 a year earlier, and current price of Marine Gas

Oil there is USD 586, down from over USD 900 a year earlier. If there is a “good news” element in this story it is that the overall fuel price drop has seen a signifi cant drop in Bunker Adjustment Factor (BAF) that had become a signifi cant part of the overall shipping cost. Even though a typical SECA surcharge on a 45ft container ex-Irish port to Rott erdam is of the order of €62.30, this will be partly off set by a reduction in BAF from that paid this time last year.

Th e eff ect of the SECA surcharge will also vary considerably depending on the door-to-door routing of the cargo. One trailer operator running from Ireland to Italy is quoting a 2% SECA surcharge. In this case the company will only be hit by the surcharge on the ferry running from, say Dover to Calais. If, of course, the haulier runs using the Rosslare-Cherbourg route the impact will be considerably more.

Even if the oil price continues to drop it is not clear that SECA surcharges will remain as they are at present. While Exxon, Chevron and other oil majors have invested considerable energy and

funds in seeking to develop a heavy fuel oil that burned with low sulphur emissions, it is not yet clear that this can be achieved. If not, then the refi ners have a major problem as the market for the heavy fuel oil fraction of their output will drop away while that for the more refi ned product will grow. Th is will make the price diff erence in the marketplace even larger.

In the medium to longer term, Liquefi ed Natural Gas (LNG) would appear to have great potential as a fuel for deep-sea and short-sea vessels. It is a relatively low-cost and low-pollution fuel but, while new-build vessels can be fi tt ed with engines that can run dual fuel or only on LNG, there are extra build costs. Two other problems emerge; fi rst that storage of LNG aboard the vessel requires considerably more space than does fuel oil, second, that relatively few ports have LNG re-fuelling facilities. New EU funds are now being made available to enable ports to install such re-fuelling facilities. It is, perhaps,

disappointing that Britt any Ferries has now decided not to proceed with the building of a new LNG powered ferry following the re-engining of some of its existing fl eet. It has cited cost as the reason for its decision and its inability to secure State funding to cover that extra cost. Th e order cancellation will mean that the “Pont Aven”, which operates the company’s Cork-Roscoff seasonal route will remain as fl agship for Britt any Ferries.

Meanwhile the United Arab Shipping Company (UASC) has had the world’s fi rst LNG ready ultra-large container vessel. Th e ‘Sajir’ has a 15,000 TEU capacity and is the fi rst of a new fl eet of ten sister ships and a further six of 18,000 TEU capacity. All have been designed to have a twenty fi ve year commercial operating life.

Stena Line has taken a diff erent approach to all other operators and is currently converting its Gothenburg-Kiel ‘Stena Germanica’ ferry to operation using methanol, returning to service later in the spring. Th is vessel is of similar size to its ‘Stena Adventurer’ operating Dublin-Holyhead. Th is project is being undertaken in co-operation

FLEETMARITIME | SPRING 2015

FREIGHT FERRY SERVICES

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The SECA becomes a reality

fl eetMaritime: IRISH SHIPPING & FREIGHT

Volume 10, No. 1 SPRING 2015

Compiled by Howard Knott Edited by Jarlath Sweeneyemail: maritime@fl eet.ie

MARITIME I | 43

CMA CGM Marco Polo in Port kelang

Le Havre Port


with engine manufacturer, Wartsila, the Port of Gothenburg, the Port of Kiel and the world’s largest methanol producer and supplier, Methanex Corporation. Th e European Commission is, under its “Motorways of the Sea” programme, fi nancially supporting this €22 million programme. Th e ‘Stena Germanica’ will have the capability to use Marine Gas Oil as a backup fuel.

Deep-sea operator, CMA-CGM and others have started a programme of refi tt ing a signifi cant number of their large container vessels, taking away the bulb shaped bow and replacing with a new straight shape one. Th is is giving considerable reductions in fuel burn when operating at the 16-18 knots which is now the norm rather than the 21-23 knots common when the vessels were built. Vessels currently being introduced on the

Asia-Europe trade such as MSC’s 19,224 TEU, ‘MSC Oscar’ are designed to reduce fuel cost per TEU. Based on 100% ship utilisation the bunker cost per round-trip voyage for an 18,000 TEU ship is estimated to be USD 123 per TEU while that for a 12,000 TEU vessel will be USD 153.

During 2014 there was considerable concern that the introduction of the

SECA would have serious aff ect on, in particular, North Sea and English Channel ferry routes. As at 1 January 2015, the effect has been modest. Th is is most likely down to the strong growth of export business out of both Ireland and Great Britain with, perhaps, surprisingly routes out of the Humber and the Tees seeing the addition of extra capacity, though DFDS did axe the Harwich-Esbjerg service. Th e three times weekly Rosyth to Zeebrugge service operated by DFDS will continue with an upgrade of Port facilities at Rosyth to facilitate the carriage of ISO containers on board. Th is route has considerable potential for hauliers from Ireland using the services to Cairnryan to landbridge Great Britain.

Th e Newhaven to Dieppe service, having secured financial support from the Dieppe Local Authorities, now continues and the addition of a second vessel will double capacity. This will, to some extent, be off set by the loss of the DFDS, Portsmouth to Le Havre route. While the various Competition Authorities have ruled that the Eurotunnel owned ‘My Ferrylink’, Dover-Calais operation should cease, this has not yet happened. Th ough Eurotunnel carryings, both on euro-shutt le for trucks and international rail freight services for containers have increased in 2014, there is no indication of any pressure on capacity there.

Ferry links from the Western English Channel to Iberia have suff ered several service withdrawals with both Transfennica and LD Lines closing their services calling at Portsmouth and also, in the case of LD, Poole, leaving Britt any Ferries as the only operator through the Bay of Biscay with British calls. Th e MacAndrews/DFDS

container services linking Iberia with these islands have been augmented with the addition of a fourth vessel operating into the Irish Sea though the calls to Irish ports remain as before for the moment.

MacAndrews parent company, CMA-CGM has completed the takeover of short sea container

liner company ODPR which operates a network of services linking Scandinavia, Iberia and the Canary Islands. It is also the main member of the Ocean Th ree Alliance which includes UASC and China Container Shipping Company. Th eir 2015 schedule focuses more strongly on Le Havre than was previously the case and this is likely to lead to a revision of the Irish feeder services through that port.

CLdN/Cobelfret has augmented its Rotterdam-Dublin service with the addition of a third weekly frequency. Unlike the other vessels on the Rott erdam and Zeebrugge routes which carry a mix of trailers, containers and new cars, the vessel used ‘Arx’, which the company had used some time ago in a joint service with Eucon linking Dublin and Radicatel in the Seine Estuary, carries only containers.

Stena Line has confi rmed that it will replace the ‘Stena Nordica’ on the Dublin – Holyhead route with its new ‘Stena Superfast X’ this spring. Th e vessel is presently being refurbished at a shipyard in Gdansk (Poland) and will emerge as very similar to her two sister ‘Superfast’ vessels operating the Belfast – Cairnryan route. The replacement vessel will have similar freight capacity to the existing vessel but will off er almost three thousand additional passenger spaces a day on the central corridor route.

In announcing the deployment of the new vessel, Stena said that its introduction brings expenditure to £250 million on its Irish Sea routes over the last fi ve years. At the time of writing Stena Line has not made any announcement about the Dun Laoghaire to Holyhead, HSS service, though the company is currently accepting bookings for that service on its website.

44 | MARITIME II

IRISH SEA ROUTES


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SECA has relatively little affect on available short sea services

Container vessel ARX - ECS

Nordica

Stena Adventurer enters Dublin


MARITIME III | 45

EUROPEAN ROUTES


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Burke Shipping Group, the principal operating subsidiary of the family-owned Doyle Group, has acquired

Greenore Port from the joint ownership of 151 Group and Dublin Port. Greenore is located on the south side and close to the mouth of Carlingford Lough, about fi ve miles downstream of the busy ferry and container Port of Warrenpoint. It is located roughly equidistant between Dublin and Belfast and road links to the M1 motorway are good. Greenore is the only major port in Ireland that is not in State control and its potential has been recognised by An Bord Pleanála, describing it as being one of Ireland’s critical infrastructure assets.

Greenore had been fi rst developed as a railway owned mail boat port complete with a substantial hotel and streets bearing the names of British rail termini. Following the cessation of these services in the 1950’s and closure of the rail link to Dundalk the port had been bought by

the O’Rahilly family and was host to a number of early container services operated by Irish Sea Ferries and others.

Pat Brennan, Director of the Burke Shipping Group has advised that they already have a second crane in place at the port and plan to

remove a rock located close to the quay that has hindered the growth of the port for a number of years. Th ey intend to push on and develop the port working with the existing team and investing in equipment and systems so as to bring the port up to a competitive level. In recent years Greenore, which is the only privately owned port on the Irish East Coast, has mainly operated in the bulk cargo sector but the new owners have indicated that they are seeking to develop their business at Greenore with services carrying cargo in any mode.

Th e Burke Group has also recently announced further development of its facilities at the

Dublin Port common user terminal with its investment in a further Rubber Tyred Gantry (RTG) unit bringing its total of these container moving pieces of equipment at the location to seven, and its total investment there to €30 million.

Burke Shipping takes over Greenore Port

Major dredging underway at Rosslare Europort

A major dredging project at Rosslare commenced in early December. This

involved clearing the build up of sand inside the breakwater that had occurred as a result of the persistent storms in the early months of 2014. Approximately 100,000 cubic metres of sand accumulated at the breakwater, far more than the average yearly accumulation of 11,000 cbm. The build up of sand has put one berth at

the port out of use and led to some navigation restrictions.

Th e sand removed from the port by the contractor will be placed just outside low water level at Rosslare Strand. From there it is expected to be carried up on to the beach repeating what had happened at the last dredging in 2011. Th e dredging project has cost approximately €1.4 million.

Ardmore Shipping announces delivery of the ‘Ardmore Cherokee’

Cork based Ardmore Shipping has taken delivery of the ‘Ardmore Cherokee’. Built at Fukoaka Shipbuilding in Japan,

the Ardmore Cherokee is a 25,000 DWT IMO II product and chemical tanker. It becomes the fi ft eenth vessel to join Ardmore’s fl eet on the water, where it has been placed under the technical management of Th ome Ship Management.

Ardmore Shipping was established in 2010 and has grown rapidly within its specialised niche business of product and chemical tankers. Th e company’s fl eet ranges in size from just under 18,000 tonnes to 50,000 tonnes with an average age of under fi ve years and has another nine vessels in order with Asian yards.

Like all vessels in Ardmore’s fl eet, the Ardmore Cherokee has been fi tt ed with an array of fuel effi ciency technologies, including the SkySails’ performance monitoring system, in order to deliver optimal operational performance.

Mark Cameron, COO of Ardmore Shipping, commented: “We’re delighted to have taken delivery of the Ardmore Cherokee. She has been designed and built to the very highest standards and we would like to thank all those involved in her successful delivery by Fukuoka Shipbuilding for their hard work and commitment. We wish her master and crew safe seas and look forward to her contribution to Ardmore’s continued growth.”


46 | MARITIME IV


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AN ESSENTIAL PART OF YOUR TEAM

The plans for port development at Dublin and Cork are still under consideration at An Bord

Pleanála, with surprise being expressed in some quarters with the log time that it is taking the Bord to issue decisions. The fast-track planning process for strategically important investments had been expected to be completed within a couple of months.

Galway Harbour’s development project entered the Public Hearing phase in January and this is in advance of formal hearings for this very ambitious project. Meanwhile, the plans for Dun Laoghaire Harbour are at an advanced stage. Th ese plans include the building of a major jett y in the harbour to enable large cruise liners to berth alongside, rather than having to anchor outside and ferry passengers in to the quayside.

On the leisure side, work is expected to commence shortly on the housing and other developments that had been planned to accompany the

building of Greystones Marina in County Wicklow, while the Marina is being further developed with the addition of further pontoons to accommodate another fi ft y boats. Meanwhile in Arklow, work will commence shortly on the development of marina facilities in the dock area that was the traditional home of the Arklow trading ship fl eets in the age of sail, but has latt erly been used as a fi shing harbour. The Dublin Docklands’ development people have also proposed that the Grand Canal Basin is developed to accommodate larger cruising boats coming to holiday in Dublin. Fáilte Ireland has put together a working group on the whole question of marina accommodation around the Irish coastline.

Irish ports and harbours plan to move ahead

Will the opening of the beef market in the US move the container shortage beyond critical?

One piece of export “good news” over the Christmas period was that Irish beef will now be

permitt ed into the US market. Ireland becomes the fi rst European country to secure clearance for such exports and farmers, together with processors and others are very optimistic about securing excellent prices for “green” grass-fed beef in the US market.

Initial expectations are that about 20,000 tonnes of Irish beef will be shipped to the US during 2015 and that this volume will increase substantially in future years. Th ere is, however, one potential downside to this development and it is that it will further increase the pressure for shipping lines to supply reefer (refrigerated) containers for the traffi c at a time when the other major users of such equipment, pharmaceuticals and dairy products are rapidly increasing shipment levels to world markets.

Shipping an annual 20,000 tonnes to the US is equivalent to shipping about 20 reefer containers a week. However, even if the containers were all operated in a closed loop and at high effi ciency with no delays anywhere along the way it would be about six weeks before a particular container is back at the Irish loading point. Th erefore, this traffi c alone would consume about 120 reefer containers. With the removal of the CAP restrictions on dairy production in late spring this year, the volumes of processed

product being shipped out of Ireland to, in particular, Far East markets is expected to increase dramatically, much of this will be shipped in reefer containers. Meanwhile the ‘pharma’ export business is rapidly switching to being a ‘bio-pharma’ business in which rigorous temperature control is vital, again increasing the demand for reefer containers. At the present time the major product fl ow into Ireland using such ISO container equipment is bananas from Central America.

Th e container equipment position for normal ‘dry’ containers for deep-sea traffi c is also very tight with the rapid growth in exports from Ireland and a severe drop in imports from, in particular, the Far East. In a three week period running from end November 2014, one major line sent three vessels each laden with about 150 empty 40ft containers into Cork to meet the Line’s commitments for exports. Within

Ireland there is a great deal of movement of empty containers between the Dublin area and the Munster region.

Th is is not only an Ireland issue. A recent press release from the Port of Rott erdam focused on its www.inlandlinks.eu project. Th is enables shippers and forwarders to see, for each shipping line, at which inland locations empty containers can be picked up or dropped off . Th is avoids running empty to and from depots in Rott erdam and ensures very quick equipment turnaround. It also, through taking out

road miles, meets well with the Green sustainable freight agenda. Somewhat similar schemes are in operation in the wheat belt in the US enabling the mills to be kept advised of any suitable containers being discharged in their region and to re-book them for export loads.

Th is question of container equipment being in the wrong place has been a problem over the years. Many suggestions have been made to deal with it including that of ‘grey boxes’ where individual shipping lines did not own containers, but they were all in a global pool, but they all failed. Clever use of IT must be the best answer together with increased use and sophistication of distribution centres to help optimise equipment use.

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Fleet maritime spring 2015