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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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LNG Bunkering

Malaysia: Port of Tanjung Pelepas achieves milestone with first SIMOPS LNG bunkering op

LNG bunker vessel “MT Paolina Cosulich” refuelled LNG dual-fuel container ship “Bangkok Express”, operated by Hapag-Lloyd AG at the port.

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Malaysia: Port of Tanjung Pelepas achieves milestone with first SIMOPS LNG bunkering op

Port of Tanjung Pelepas (PTP) on Sunday (16 February) said it successfully conducted its first Simultaneous Operations (SIMOPS) of liquefied natural gas (LNG) bunkering.

This significant achievement involved the LNG dual-fuel container ship Bangkok Express, operated by Hapag-Lloyd AG, and the LNG bunker vessel MT Paolina Cosulich.

“This milestone underscores PTP's dedication to enhancing our competitive edge in the global market by facilitating clean and efficient maritime operations,” the port said in a social media post.

“We are proud to have partnered with PETCO Trading Labuan Co., Ltd. (PTLCL) and Hapag-Lloyd on this pioneering initiative.”

Manifold Times previously reported the port also achieving its first LNG bunkering operation last year. 

The port completed its first-ever ship-to-containership methanol bunkering operation in November last year. 

Manifold Times previously reported the port achieving its first LNG bunkering operation last year. 

Related: Malaysia: Port of Tanjung Pelepas achieves milestone with first methanol bunkering op
Related: Malaysia: Port of Tanjung Pelepas completes first LNG bunkering operation
Related: Malaysia: Tanjung Pelepas selected to join P41 initiative to achieve green bunkering hub ambition
Related: Port Of Tanjung Pelepas joins G2G decarbonisation scheme between Malaysia and Australia

 

Photo credit: Port of Tanjung Pelepas
Published: 18 February, 2025

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LNG Bunkering

Kunlun Energy wraps up first STS offshore LNG bunkering operation in Hong Kong

Kunlun Energy, a red-chip controlled by PetroChina, said its bunkering vessel refuelled container ship “Zim Haifa Blue Stone” with 2,200 metric tonnes of LNG bunker fuel in a seven-hour operation.

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Kunlun Energy wraps up first STS offshore LNG bunkering op in Hong Kong

Kunlun Energy, a red-chip controlled by PetroChina, on Monday (17 February) said it completed Hong Kong’s first ship-to-ship (STS) offshore liquefied natural gas (LNG) bunkering operation on 14 February. 

Kunlun Energy's 8,300 m3 capacity LNG bunkering vessel refuelled the container ship Zim Haifa Blue Stone with 2,200 metric tonnes (mt) of LNG in a seven-hour operation. 

The bunkering vessel involved in the operation is operated by a Kunlun Energy subsidiary. 

According to a PetroChina official, the receiving vessel Zim Haifa Blue Stone departed from Busan, South Korea, on 3 February and passed through Qingdao, Shanghai, and Ningbo before arriving in Hong Kong on 12 February. 

Its final destination is Istanbul, Turkey. This refuelling operation can meet the ship's fuel needs for the entire journey. 

“The successful implementation of this "ship-to-ship" offshore LNG bunkering operation is another example of Kunlun Energy's efforts to help improve the international shipping hub of the Guangdong-Hong Kong-Macao Greater Bay Area,” Kunlun Energy said. 

“It is expected to attract more green-fuel vessels to pass through Hong Kong, encourage more environmentally friendly companies to conduct business in Hong Kong, accelerate transformation and technological innovation in the shipping industry, and promote the construction of Hong Kong as a green and smart port.”

“This operation holds significant importance for Hong Kong's push toward a green and sustainable shipping industry.”

 

Photo credit: Kunlun Energy
Published: 18 February, 2025

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Biofuel

Wallenius Wilhelmsen successfully completes its first biofuel bunkering trial in Japan

“M/V Tamesis” bunkered 400 metric tonnes of B24 VLSFO blended biofuel, supplied by Mitsubishi Corporation Energy at Port of Yokohama.

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Wallenius Wilhelmsen successfully completes its first biofuel bunkering trial in Japan

Wallenius Wilhelmsen on Monday (17 February) said it has successfully completed its first biofuel bunkering trial at the Port of Yokohama in Japan.

M/V Tamesis bunkered 400 metric tonnes (mt) of B24 VLSFO blended biofuel, supplied by Mitsubishi Corporation Energy. 

This milestone is part of Wallenius Wilhelmsen’s ongoing efforts to reduce its environmental impact and promote sustainability in shipping.

“As part of our commitment to reducing greenhouse gas emissions, we have expanded our locations for biofuel supply. Since 2023, the expansion has included key ports in Belgium, Korea and Singapore,” the company said.

“Expanding to Japan enhances our ability to operate more efficiently and sustainably across our global network.”

Wallenius Wilhelmsen has set ambitious emission reduction targets to reach net-zero by 2040. This includes a 40% absolute reduction of well-to-wake greenhouse gas emissions by 2030 compared to our 2022 baseline, as approved by the Science Based Targets initiative.

Yasuyuki Sakurai, Senior Manager, the Orcelle Accelerator taskforce at Wallenius Wilhelmsen, said: “Achieving these targets require a major shift in energy sources from conventional fuels to low and zero-carbon alternatives. Expanding supply locations and securing sufficient biofuels remain a priority, and we are pleased to have conducted our first B24 VLSFO blended biofuel bunkering trial in Yokohama.”

“While our Reduced Carbon Service customers fully support our mass-balance concept, ensuring sufficient biofuel usage across our entire fleet and trade lanes is key to achieving our long-term sustainability goals.”

Mitsuo Ueda, General Manager of Mitsubishi Corporation Energy, said: “In anticipation of growing demand for biofuel in the marine sector, we have begun storing biofuel at our oil terminal in Onahama (Fukushima Prefecture) and supplying B24 in Tokyo Bay using our barges.:

“We deeply admire Wallenius Wilhelmsen’s leadership in the decarbonisation of the shipping industry and remain committed to playing our part in creating a more sustainable future. We will continue striving to meet industry needs through a stable supply of biofuels and contribute to the realisation of a carbon-neutral society.”

This milestone was achieved through close collaboration between Wallenius Wilhelmsen’s Energy Sourcing team and the Orcelle Accelerator taskforce, which has worked for the past two years to establish biofuel bunkering capabilities in Japan.

 

Photo credit: Wallenius Wilhelmsen
Published: 18 February, 2025

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