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Allianz: ‘Shadow fleet’ of tankers involved in at least 50 incidents including oil spills

Vessels have been involved in at least 50 incidents to date, including fires, engine failures, collisions, loss of steerage, and oil spills; shadow tankers also participate in ‘dangerous practice of STS transfers in the open ocean’.

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RESIZED Shaah Shahidh on Unsplash

Allianz Commercial marine experts shared some of the major consequences of growing volatility and uncertainties from war and geopolitical events, climate change risk, including the threat the rise of the ‘shadow fleet’ poses to vessels and the environment and the multi-faceted impacts of rerouting. 

The following are excerpts from the original expert risk article by insurer Allianz :

Recent incidents in the wake of the conflict in Gaza have demonstrated the increasing vulnerability of global shipping to proxy wars and disputes. Between November 19, 2023, and the beginning of April 2024, there were more than 50 attacks against merchant shipping in the Red Sea by Houthi militants in response to the conflict. We have also seen the first total loss of a vessel, the first fatal attack, as well as signs that the crisis may have spread following the seizure of a container ship by Iranian forces in the Strait of Hormuz, the world’s most important chokepoint for oil shipping. The Houthi military group has also warned it would target any ships heading to Israeli ports if they are within range.

Disruption to shipping has persisted longer than expected and is likely to remain for the foreseeable future, says Captain Rahul Khanna, Global Head of Marine Risk Consulting, Allianz Commercial. “While we have seen sporadic attacks in the past, the conflict in Gaza has opened the flood gates. Even if a political solution is reached, we may see attacks continue as there is clearly now an opportunity for those wishing to disrupt shipping in the Red Sea and beyond. Ultimately, shipping has become a ripe target for those wishing to wage a proxy war. It opens avenues for terrorists or militia groups to get recognition and hit global markets.”

Rerouting brings supply chain, trade, risk, inflation, and environmental challenges

Attacks against shipping in the Red Sea and Middle East waters, closely following on from the ongoing disruption caused by drought in the Panama Canal, have amounted to a double strike for shipping, causing yet more issues for global supply chains, as well as significantly adding to the distance vessels must sail.

The attacks in the Red Sea have severely impacted Suez Canal transits, while a lack of rain and the El Nino phenomenon contributed to the second driest year in the Panama Canal’s history, also affecting transits.  Both routes are critical for the transport of manufactured goods and energy between Asia, Europe, and the US East Coast.

At the start of 2024 transits in the Suez and Panama canals were down by more than 42% and 49% respectively, compared to their peaks. Whichever route vessels take, they face lengthy diversions and increased costs. For example, avoiding the Suez Canal adds at least 3,000 nautical miles and 10 days sailing time to each trip, rerouting via the Cape of Good Hope.

Businesses that source goods and components from factories in China and South-East Asia have faced delays and higher costs from longer transit times. Some reported rises of 300% for container hire, and logistical delays, adding up to three to four weeks to delivery times, creating cashflow difficulties, and component shortages on production lines.

Such experiences have thrown the shipping industry and the issue of supply chain resilience into the public consciousness, says Khanna.

“Supply chains have been disrupted by a series of events in recent years, from extreme weather and climate incidents, container ship fires and groundings, through to the pandemic and conflicts in Ukraine and the Middle East, not forgetting the recent Baltimore bridge collapse.

“How should the shipping industry and its customers address this challenge? In today’s interconnected environment it is even more important to have a ‘Plan B’ and alternative options. An unexpected event can have a domino effect globally. Shippers around the world should consider diversification of their supply chains and in some cases nearshoring and onshoring might be an option.”

Increased transparency is also part of the solution, particularly when it comes to tracking cargo. While the global risk environment for shipping has changed significantly in recent years, the average shipper still knows very little about the location of their cargo, which makes it very difficult for them to put effective contingency plans in place to minimize disruption. Ultimately businesses will need to update their approach to cargo risk management and business continuity planning, says Régis Broudin, Global Head of Marine Claims, Allianz Commercial.

Rerouting will also require a shift in the shipping industry supply chain, if large numbers of vessels switch to alternative routes around the Cape of Good Hope for a prolonged period. Container lines tend to ply the same established trade routes, but rerouting will require alternative bunkering, supply, repair, and maintenance facilities. The risk environment could be impacted suggests Wayne Steel, Senior Marine Risk Consultant, Allianz Commercial. For example, storms and rough seas could be more challenging for smaller vessels used to plying coastal waters, especially where crews may not be sufficiently trained and equipped for such conditions.

Other areas impacted include container capacity, older vessels being kept in service as longer journeys means an increasing demand for ships, inflation – according to Allianz Trade analysis, a prolonged period of disruption in the Red Sea could cause it to increase by +0.5% – as well as the environment. The disruption in the Red Sea, combined with factors linked to the Panama Canal and the Black Sea in the wake of the Ukraine war, could erode the environmental gains achieved through ‘slow steaming’, as rerouted vessels increase speeds to cover longer distances. The longer distances caused by rerouting container ships from the Suez Canal to the Cape of Good Hope result in an estimated 70% increase in greenhouse gas emissions for a round trip from Singapore to Northern Europe. Shipping diversions from the Red Sea are already cited as being a primary cause of a 14% surge in the carbon emissions of the EU shipping sector during the first two months of 2024.

Ukraine war: ‘shadow fleet’ risk to vessels and environment

A gradual tightening of international sanctions on Russian oil and gas exports over the past three years since its invasion of Ukraine has resulted in the emergence of a sizable ‘shadow fleet’ of tankers, mostly older vessels that operate outside international regulation and often without proper insurance. This situation presents serious environmental and safety risks in key chokepoints where oil is shipped.

Russia is not the only country to operate a shadow fleet. Iran and Venezuela have used such tankers to circumvent sanctions and maintain oil exports. Estimates put the size of the dark fleet at between 600 to 1,400 vessels, roughly a fifth of the overall global crude oil tanker fleet.

Much of the shadow fleet is likely poorly maintained and may not have undergone appropriate inspections. Shadow tankers also participate in the dangerous practice of ship-to-ship transfers in the open ocean, as well as turning off Automatic Identification System (AIS) transponders to obscure their identity. Vessels have been involved in at least 50 incidents to date, including fires, engine failures, collisions, loss of steerage, and oil spills. The cost of dealing with these incidents often falls on governments or other vessels’ insurers if one is involved in an incident.

“As long as there are sanctions on countries like Russia and Iran, the shadow fleet looks here to stay,” says Justus Heinrich, Global Product Leader Marine Hull, Allianz Commercial. “Given the age of the vessels in the shadow fleet, safety is a big concern. Often these vessels are at the end of their operational lives and are used in a high-risk business.”

Note: The full article by Allianz can be found here

 

Photo credit: Shaah Shahidh on Unsplash
Published: 20 May 2024

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Biofuel

UECC reduces emissions in 2023 by more than doubling bio bunker fuel use

UECC boosted the use of ISCC-certified sustainable biofuel B100 on both owned and time-chartered ships to 14,000 mt last year, up from 6,500 mt in 2022.

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UECC

United European Car Carriers (UECC) recently announced its progress of using alternative bunker fuels and said it was on track to exceed its goal of a 45% emissions reduction by 2030 after more than doubling biofuel usage across its fleet last year.

UECC boosted the use of ISCC-certified sustainable biofuel B100 on both owned and time-chartered ships to 14,000 metric tonnes (mt) last year, up from 6,500 mt in 2022.

The company achieved a total tank-to-wake emissions reduction of over 60,000 tonnes across its 14-vessel fleet in 2023, of which it is estimated increased biofuel use accounted for 40,000 tonnes, with the remainder coming from LNG. This was a near-250% increase on the emissions cut of 24,200 tonnes achieved in 2022.

TheEuropean sustainable shortsea carrier said it has made significant strides in decarbonisation of its fleet of pure car and truck carriers (PCTCs) with the addition of five LNG-fuelled newbuilds and the increased rollout of biofuels in recent years - and this is now showing commercial payback for clients in the light of new green regulations, according to Energy and Sustainability Manager Daniel Gent.

“Consequently, we are well on the way to reach or exceed our 45% emissions reduction target by 2030. This clearly has a positive impact for those bio-supportive cargo owners in terms of reducing costs related to the EU Emissions Trading System (EU ETS),” Gent said.

“Furthermore, 85% of the vessels in our fleet achieved a C-rating last year with the IMO’s Carbon Intensity Indicator (CII) and this year we expect all our ships to achieve this rating or above.”

Gent also pointed out the UECC fleet is already in surplus in relation to the requirement for an average 14.5% reduction in GHG intensity by 2035 under the FuelEU Maritime regulation due to be implemented next year.

The environmental performance of UECC’s current fleet of nine owned and five time-chartered PCTCs has been enhanced through delivery over the past seven years of five eco-friendly newbuilds - a pair of dual-fuelled LNG vessels and trio of multi-fuel LNG battery hybrid units.

The use of LNG reduces emissions of CO2 by around 25%, SOx and particulate matter by 90% and NOx by 85%, while the latest battery hybrid newbuilds exceed the IMO target to reduce carbon intensity by at least 40% from 2008 levels by 2030.

UECC is now looking at sourcing alternative carbon-neutral fuels such as bio-LNG and e-LNG for these vessels to further improve their green performance, according to Gent.

UECC’s adoption of alternative fuels has expanded exponentially since the programme was launched in 2020 with piloting the use of biofuel on its vessel Autosky, bolstered by valuable support from owners of its time-chartered vessels, clients such as BMW, fuel suppliers like GoodFuels, industry partners, and parent companies NYK and Wallenius Lines.

“We are now in the fifth year of running our biofuels programme and it has gone from strength to strength. UECC has sought to take a leading role through early-stage analysis of new biofuels to evaluate their potential in terms of technical suitability, sustainability and commercial viability, both  to deliver the best solution for our customers and give the sector a blueprint for assessment and adoption of such fuels based on these three pillars,” Gent explained.

He added that, in terms of sustainability criteria, the company looks for biofuels with the biggest environmental impact, with a typical minimum 90% reduction in GHG intensity from well-to-wake compared with conventional marine fuels. 

UECC has steadily expanded the use of green fuels to cover 30% of its fleet in 2023, up from 18% in 2022, and is on track to achieve 50% coverage this year towards the goal of 80% by 2030, though Gent is confident of surpassing this figure.

He said being proactive in trialling new alternative fuels has also promoted engagement with fuel providers, which has led to UECC’s latest initiative together with biofuel supplier ACT Group as part of an industry collaboration to test the Cashew Nut Shell Liquid (CNSL)-based biofuel FS.100 that he believes has “great potential for sustainable shipping”.

“Increasing the pool of sustainable drop-in fuels offers a pathway for shipping to achieve rapid emissions cuts on existing vessels. Combining alternative fuels with energy efficiency measures such as hull cleaning and electrification with shore power can further accelerate decarbonisation,” Gent said.

“By progressively advancing the use of alternative fuels, we are reducing emissions exposure for our clients and securing regulatory compliance long into the future, while also promoting industry efforts to reach the net-zero goal,” he concluded.

 

Photo credit: United European Car Carriers
Published: 21 June, 2024

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LNG Bunkering

CMA CGM takes delivery of fourth LNG-fuelled containership

Naming ceremony and delivery of vessel, organised at HD Hyundai Mipo in Ulsan, South Korea, marked entry of the fourth vessel in a series of ten specially designed for Northern Europe feeder services.

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CMA CGM takes delivery of fourth LNG-fuelled containership

French shipping giant on Wednesday (19 June) said it celebrated the naming ceremony and delivery of its fourth LNG-fuelled container ship, CMA CGM Tivoli.

Organised at HD Hyundai Mipo in Ulsan, South Korea, on 16 June, the event marked the official entry of the fourth vessel in a series of ten specially designed for Northern Europe feeder services.

“Featuring optimised features for 45-foot containers, increased capacity for refrigerated containers, and innovative forward accommodation to enhance cargo loading and aerodynamics, CMA CGM Tivoli distinguishes itself with a high ‘length to beam" ratio to maximise hydrodynamic efficiency,” the firm said in a social media post. 

“She departed the shipyard on June 15th, 2024, bound for Busan. We wish fair winds and smooth seas to Captain Artur Dumbrov and his crew.” 

 

Photo credit: CMA CGM
Published: 21 June, 2024

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Bunker Fuel

Baltic Exchange: Bunker Report (20 June 2024)

Bunker report panellists include Island Oil Limited, Cockett Marine Oil Pte, Monjasa A/S and KPI OceanConnect.

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Baltic Exchange: Bunker Report (20 June 2024)

The following bunker report has been provided by freight market information provider Baltic Exchange for post on Singapore bunkering publication Manifold Times:

Note:

All values are in US$/metric ton, all-in (invoice price), delivered on board
Delivery in 7-10 days
ISO 8217:2010
IFO 380 3.5% Sulphur
IFO 380 0.5% Sulphur
DMA 0.1% Sulphur

Rotterdam – Waalhaven – Maasvlakte range
Houston – Houston Harbor
Singapore – Anchorage, under SBA Scheme
Fujairah – Offshore Anchorage Area

Submitted weekly at Close of Business UK time, on Tuesday & Thursdays

Panellists:
Island Oil Limited, Cockett Marine Oil Pte, Monjasa A/S, KPI OceanConnect

 

Photo credit and source: Baltic Exchange
Published: 21 June, 2024

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