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According to Hellenic Shipping News, shipping finance has shown its first signs of growth over the past year. The Petrofin Index for Global Ship Finance, which started at 100 in 2008, has risen 1 point (from 62 in 2021 to 63), showing an increase for the first time in eleven years.

According to Petrofin Research’s annual report, released yesterday, loans from the top 40 banks for shipments in 2021 are $290.12 billion higher from $286.9 billion in 2020. 3. Asian and Australian (APAC) banks show the only growth, from $100.85 billion to $114.75. APAC increased its share of the Global Portfolios from 35% to 39.5%.

The share of European banks further decreased by $9.78, or 5.8% year over year. Within Europe, the big drop in German banks continues, although the trend has slowed down. Greek banks posted 14.2% year-on-year growth, while Scandinavian banks continued their overall decline and downplayed lending in favor of using their services for shipping.

“According to Petrofin Research, we can provide an indicative and cautious figure for global ship financing, including all forms of lending, leasing and alternative providers, of approx. $500 billion. Total global bank lending from all banks including local banks amounts to approx. 340,000 million dollars, that is, approx. 2/3 of the total global financing of ships.

There is mounting evidence that due to the Russian invasion of Ukraine, coupled with high energy prices, geographic sanctions, higher interest rates, slowing global growth and concerns about an incoming recession, Bank lending in 2022 has been interrupted as caution prevails among banks. China’s targeted closures and economic slowdown have added to previous concerns and are also having a temporary impact on Chinese leasing,” the report noted.

In its analysis, Petrofin Research said that “as 2021 unfolded and Covid-19 restrictions eased, global economy GDP rebounded from -3.1% to +5.9% y/y, seaborne trade from -3.5% to +4% YoY, while fleet growth was limited to a 2.9% increase. The above change was aided by continued monetary easing by central banks, low interest rates and a resurgence in demand for goods and raw materials, leading to increased fleet congestion and inefficiency. As a result of these developments, charter rates in most sectors (except oil tankers) have skyrocketed by 50% for LNG, up to 185% for dry bulk and multiples for containers (Clarkson statistics). Ship values followed suit, while scrapping slowed. All in all, a remarkable change. Banks, under the aforementioned favorable conditions and prospects, faced increased demand for loans, as well as competition from other non-bank lenders.

The report noted that “global bank lending showed limited growth. According to the latest Petrofin Research ©, Chart 1 ranks the portfolios of the top 40 ship finance banks, which collectively stood at $290.12 billion at the end of 2021, an increase of 1.12% year-on-year. This growth may seem small, but it represents the first increase since 2011. New bank loans were strong in 2021, especially towards the second half of the year. However, it should be noted that the newbuild order book, which stood at 200m tonnes DWT at the end of 2020, fell to 177m tonnes at the end of 2021, but rose to 219m tonnes on 30 /06/2022 (Clarkson).

The Petrofin Global Index (Chart 2) shows the development of ship finance versus global fleet growth from 2008 to 2021. The long decline in ship finance loans was mainly due to the exit of many big European names from ship financing during the period. This withdrawal process appears to have run its course. The 2021 bank credit marks a long-awaited recovery.”

“However, compared to the growth of the global fleet, it is clear that such growth was not primarily financed by banks, but by relevant non-bank financing sources, including private fleet cash flows and liquidity from private fleets. owners. Within the top 40, 21 banks are based in Europe, 16 in Asia/Australia and 3 in North America. European banks still have the lion’s share at US$157.2bn.

The share of European banks fell further, from 58% to 54.19%. Within Europe, the share of German and Scandinavian banks continued to fall, while Greek banks showed a year-on-year increase of 14.2%.

Relatively new/small banks like Bank of Cyprus, Hellenic, Pareto, M&M bank, etc. they grew during 2021 and provided plurality to the available sources of bank financing. Total shipping-related bank lending for all banks, including numerous domestic banks worldwide, which are outside the scope of this research, at the end of 2021 is projected to be approximately US$340 billion. An estimate of the global exposure to ship financing would include all forms of direct or indirect financing.

This exercise should be approached with caution, as there is a paucity of information, especially from Asian leasing companies and banks, as well as loan funds on a bilateral basis. However, just as an indication, according to Petrofin Research © the total global exposure to ship financing, including leasing and all other forms of financing, at the end of 2021 amounted to approximately USD 500 billion, of which Total global bank loans accounted for about 2/3 of the total,” Petrofin Research concluded.

Source: Nikos Roussanoglou, Hellenic Shipping News Worldwide

The global iron ore seaborne trade has trended lower so far this year, mainly as a result of China’s diminishing iron ore imports. In its latest weekly report, shipbroker Banchero Costa said that “global iron ore loadings in the full 12 months of 2021 were up +0.7% y-o-y to 1,555.3 mln t, according to vessels tracking data from Refinitiv. So far in 2022, iron ore trade softened again, primarily due to weaker demand from China and supply issues in Brazil. In January-August 2022, global iron ore loadings declined by -2.6% y-o-y to 993.8 mln tonnes, from 1020.6 mln t in the same period of 2021. Exports from Australia increased by +0.7% y-o-y in Jan-Aug 2022 to 584.3 mln tonnes, just a little below 2020 levels, which was the most recent record high, and above the levels of 2018 and 2019. Exports from Brazil, on the other hand, declined by -4.5% y-o-y so far this year to 218.0 mln tonnes, from 228.2 mln tonnes in the same period of last year, although they were still higher than in 2020”.

According to the shipbroker, “demand is weighted down by a weakening economy in China, with iron ore imports into the country down by -1.9% y-o-y to 706.3 mln tonnes in the first 8 months of 2022. On the other hand, the European Union is seeing a revival, with imports up +3.6% y-o-y to 56.5 mln tonnes in the same period. Imports into Europe, however, are still well below the levels of 2019 (62.8 mln t in the Jan-Aug period of that year) and 2018 (65.7 mln t)”.

Source: banchero costa &c s.p.a

“Canada is the fourth largest exporter of iron ore in the world, after Australia, Brazil, and South Africa. In Jan-Aug 2022, Canada accounted for 3.3% of global seaborne iron ore shipments. Seaborne iron ore exports from Canada peaked in 2020, and have been declining since. Canada’s iron ore exports in the 12 months of 2020 increased by +10.3% y-o-y to 56.6 mln t, from 51.4 mln t in 2019. That was itself up +8.4% from 47.4 mln t in 2018. In 2021, however, Canada exported just 53.1 mln t of iron ore, which represented a -6.2% y-o-y decline. So far this year we have seen a continuation of this negative trend. In the first 8 months of 2022, Canada exported 32.8 mln tonnes of iron ore, which was a -3.5% y-o-y decline from the 33.9 mln tonnes shipped in the same period of last year. The vast majority of Canadian iron ore exports are loaded in the St. Lawrence river, in the east of the country”.

Source: banchero costa &c s.p.a

Banchero Costa added that “the largest loading port by volumes is Sept-Iles (Seven Islands), with 18.3 mln tonnes of iron ore loaded in the first 8 months of 2022. Another 12.8 mln tonnes of iron ore were loaded this year from nearby Port Cartier. Additionally, 1.7 mln tonnes were loaded this year from Milne Inlet on Baffin Island, far north in the Arctic. Given the location of the load ports, the natural market for Canadian iron ore is the Atlantic Basin. Nevertheless, given the limited size and lack of growth potential of the European market, Canada has quite successfully diversified also into the Asian markets. The European Union is still by far the top destination, accounting for 39.8% of Canada’s total iron ore exports so far in 2022. The EU, which was already the top buyer of Canadian seaborne iron ore, further increased volumes by +4.5% y-o-y in Jan-Aug 2022 to 13.0 mln t in Jan-Aug 2021, from 12.5 mln t in the same period of 2021. However, this was still well below the 13.8 mln tonnes Canada exported to the EU in Jan-Aug 2019. The second top destination for Canada’s iron ore exports is Mainland China, accounting for a 20.8% share. Shipments from Canada to China declined by -18.8% y-o-y to 6.8 mln tonnes in the first 8 months of 2022, from 8.4 mln tonnes in Jan-Aug 2021. They were also well below the record 12.4 mln tonnes shipped in Jan-Aug 2020. In third place was Japan, with 3.6 mln tonnes in Jan-Aug 2022, down -20.6% y-o-y. Japan accounts for 11.1% of Canada’s total exports”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

Managing marine risks is not an easy task, which requires special knowledge and expertise on the subject per se. Customarily, big ship management companies, operating a large number of vessels, employ a small army of marine professionals, manning different shipping departments, i.e Chartering, Marine insurance, Technical, Finance, Accounting, ISM, S&P, IT, Crew, Trading, Legal, Projects, Administration, and Operations department, which have to synchronise, when necessary, working together to discover the optimum solution(s) for managing risks timely, at the lowest possible cost, for their ship owners benefit.

On the other hand, small size companies managing a handful of vessels, usually have limited access, or can’t afford even to employ same or similar specialized and highly rewarded shipping personnel, making risk management for them terra incognita or, if not impossible, a task hard to plan and organize – mostly due to lack of knowledge – in a proactive and efficient way.

One of many risks a shipping company has to manage, is its vessels’ uninterrupted income earning capacity, particularly in a freight slump period.

Maintaining cash flow is literally, for any shipping company, the key for survival and growth. Freight or Hire, is vessels’ income, which often is at risk, particularly when vessel is deemed to be ‘off hire’ by her charterers, due to various causes. Having said that, one could verify in a vessel’s Charter Party terms what are the causes that trigger the activation of the ‘off hire clause’.

WHEN A VESSEL IS DEEMED TO BE ‘OFF HIRE’? and when a vessel’s income earning capacity temporarily seizes and her cash flow is endangered? What is there for a ship manager to do in his effort to eliminate or, minimize at least, if there hasn’t been a successful Risk Prevention Plan in place, the negative results of this probable risk?

Let’s delve into it: A vessel, in general, will be deemed to be ‘off-hire’ if there is an occurrence preventing the full working of the vessel due to, among other things:

•operational deficiencies;
•the removal of a vessel from the water for repairs, maintenance or inspection, which
is referred to as dry-docking;
•equipment breakdowns;
•delays due to accidents or deviations from course;
•occurrence of hostilities in the vessel’s flag state;
• external factors, such as health regulations (i.e Covid-19), legal or political reasons, could trigger the off-hire clause as long as they impose restrictions which affect the nature of the vessel herself and her performance.

•closure of waterways or shipping routes due to natural or manmade causes, or other force majeure events;
•crewing strikes, labour boycotts, certain vessel detentions or similar problems;
•failure to maintain the vessel in compliance with its specifications, contractual standards and applicable country of registry and international regulations or to provide the required crew;
• (‘Any other cause’ which is generally viewed to relate to the condition of the ship or her crew) and or;
• Piracy, WAR, K&R, Hijacking, Vessel’s detention.

Is worthwhile to note that the off-hire event must: a) Not be the result of a breach of contract on the part of charterer and b) Be fortuitous and not a natural result of charterers’ orders.

Some of the risks above can be avoided (as it is explained further) and others is worth transferring to the Marine Insurance Underwriters, in exchange of a fair price (insurance premium).

Risk probability ( % ) and premium cost (rate %) is closely related, however, as mentioned earlier, there are risks which a ship manager can afford and retain, particularly if proper Risk Prevention Plans have been in place for Risk Prevention and Avoidance.

Now, let’s see what is insurable and worth transferring to Underwriters, for a ship manager, so he can wisely act proactively purchasing the traditional LOSS OF HIRE or the more advanced LOSS OF EARNINGS INSURANCE (the traditional insurance Loss of Hire policy, enhanced with a couple add on benefits), to protect his principal’s/owner’s cash flow.

THE LOH (LOSS OF HIRE) traditional insurance cover provides to owners/managers an indemnity in case of a H&M policy covered accident. The Loss of Hire cover responds to a shipowner’s loss of income following physical damage to a vessel. It includes protection against stranding, physical obstruction of the vessel, preventing her from leaving port (excluding ice), and salvage or removal of damaged cargo, offering comprehensive support for shipowners. A vessel put off hire by charterers on account of a damage is generally regarded as ‘deprived of income’ as a result of that damage, which is the trigger of compensation under a Loss of Hire policy (minimum deductible usually 14 days).

STRIKE & DELAY LOSS OF HIRE INSURANCE COVER (its an add on) protects ship operators from otherwise uninsured losses caused by unexpected delays in port and at sea. Complementing both P&I and Hull and Machinery cover, it helps owners protect their revenues and control costs from specified events on board and ashore delaying their ships. Such risks are a continuing hazard to shipping.

PIRACY / K&R/HIJACKING/VESSEL’S DETENTION / WAR RELATED LOSS OF HIRE INSURANCE
In the event that a vessel is seized by pirates, the charterer may withhold charter payments until the vessel is released.

A charterer may also claim that a vessel seized by pirates was not “on hire” for a number of days that exceeds a specific requirement provided in the relevant charter agreement and therefore, the charterer is entitled to cancel the charter party agreement. Despite the fact that many Shipowners/Shipmanagers maintain insurance against such risks, they may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on their cash flow. In addition, any detention and/or hijacking of their vessels as a result of an act of piracy, or an increase in cost or unavailability of insurance for their vessels could have a material adverse impact on their business, financial status, results of daily operations. Currently, market cost is very low compared to the cover offered, same is the probability (% of risk), but not eliminated.

War and war related events causing vessel’s deprivation by her owner can give a reason for charterer to withhold charter payments. War LOH can be included in the War Risk policy at a cost/premium.

Planning and being proactive has been proven to be the best strategy for success in shipping business and since, a healthy cashflow is key for survival and growth, ‘Cash flow protection’ planning is an economical solution for any ship management company who wishes to best manage and control its fleet uninterrupted income.
Source: Marasco Marine, By Anastasios Maraslis, Founder and President of Marasco Marine Ltd*

Source: https://www.hellenicshippingnews.com/when-is-a-vessels-income-earning-capacity-at-risk-controlled-income-can-be-a-key-of-success/

The Port of Los Angeles and a range of elected officials and industry leaders joined U.S. Transportation Secretary Pete Buttigieg today to celebrate the award of a $20 million federal RAISE infrastructure grant for a critical road-railway grade separation project at the Port.

“We’re proud to be here marking such important progress being made, but also recognizing that there is so much more to do to fix the supply chains that were torn up by the pandemic and to make them more resilient for years to come – and right here we have a great example of that,” said U.S. Transportation Secretary Pete Buttigieg. “We are delighted to formally celebrate the award of $20 million to the Port of Los Angeles to reduce trucking delays and allow freight trains to move goods more rapidly, reducing shipping costs as part of the fight against inflation.”

Facilitating faster cargo movement, the new roadway configuration will streamline truck access to an important container and chassis-access facility on the Port’s Terminal Island, reducing traffic delays, truck dwell times and greenhouse gas emissions from idling vehicles.

“L.A.’s port isn’t just the backbone of our region’s prosperity — it’s one of America’s most powerful economic drivers, and a crossroads that helps connect our country to the rest of the world,” said Los Angeles Mayor Eric Garcetti. “When complete, this roadway made possible by the Bipartisan Infrastructure Law and Secretary Buttigieg’s leadership will help our port move cargo more efficiently and meet our most critical sustainability goals.”

“This is a milestone moment in the investment in our nation’s ports and I applaud Secretary Buttigieg for bringing this critical funding to where it’s needed most,” said Port of Los Angeles Executive Director Gene Seroka. “As the Western Hemisphere’s busiest trade gateway, this grant will help us further accelerate our plans to build resiliency, increase efficiencies and sustainability, as well as create jobs.”

The project will entail construction of a four-lane, rail-roadway grade separation, which will allow unimpeded truck access to an 80-acre marine support facility (MSF) on Terminal Island, a central location serving all terminals in the San Pedro Bay port complex. Currently, access to this facility for chassis and empty shipping container storage is impeded by several heavily used rail tracks and a tunnel with low vertical clearance, both of which will be addressed by the project.

When completed, the new rail-roadway will connect trucks directly to the highway system in two directions, resulting in a reduction of 2,500 truck-hour delays daily; a decrease of more than 3,000 metric tons of emissions per year; and a reduction of 1,200 truck miles traveled per day, which will also decrease accident potential in the area. The project will generate 300 new jobs.

The $20 million award comes from the U.S. Department of Transportation (DOT) Rebuilding American Infrastructure with Sustainability and Equity (RAISE) discretionary grant program, which received more funding under the Infrastructure Investment and Jobs Act passed by Congress in 2021. RAISE grants focus on planning and capital investments that support roads, bridges, transit, rail, ports and intermodal transportation.

The busiest seaport in the Western Hemisphere, the Port of Los Angeles is North America’s leading trade gateway and has ranked as the number one container port in the United States for 22 consecutive years. In 2021, the Port facilitated $294 billion in trade and handled a total of 10.7 million container units, the busiest calendar year in the Port’s 115-year history. San Pedro Bay port complex operations and commerce facilitate one in nine jobs across the counties of Los Angeles, Orange, Riverside, San Bernardino and Ventura.

Source:https://www.maritimeprofessional.com/news/port-angeles-awarded-million-infrastructure-379239

AD Ports Group’s SAFEEN Feeders will collaborate with shipping leader CMA CGM Group, a global player in sea, land, air and logistics solutions, in launching a new Southeast Asia service linking Singapore, Colombo and Chennai.

The company’s ‘SAFEEN Pioneer,’ which has a container capacity of 2,034 TEUs, will join CMA CGM Group’s ‘Songa Tiger’ on the India East Coast Express 2 service, connecting these key ports. SAFEEN Feeders will market the service under the name Singapore Chennai Colombo Service (SCC).

This will be SAFEEN Feeders’ first service to call in Southeast Asia, as the company continues to expand its global reach.

Captain Ammar Mubarak Al Shaiba, Acting CEO – Maritime Cluster and SAFEEN Group, AD Ports Group, said: “We are very proud to be working with our partner, CMA CGM Group, on the India East Coast Express service. This service connects key global markets with some of the busiest ports in the world and will help boost trade and improve delivery times. Our aim is to provide key services across the seas where our customers need them most, and today’s announcement demonstrates the breadth of our international ambitions.”

SAFEEN Group delivers a comprehensive range of port and marine services, transshipment, offshore and subsea logistics and feeders services. It deploys a team of professionals and a fleet of state-of-the-art vessels to ensure a full spectrum of maritime logistics, solutions and services are operated effectively and with maximum efficiency.

Maritime hydrogen fuel cell specialist Zero Emission Industries (ZEI) has announced the first close of its Series A funding round. The round is led by Chevron New Energies with additional investment from Crowley.

ZEI is the designer and developer of the first-of-its-kind maritime hydrogen and fuel cell system used in the Sea Change, the world’s first gaseous hydrogen fuel cell powered passenger ferry, as well as the vessel’s unique fueling system that allows it to be fueled directly from a hydrogen truck

The new funds are expected to enable ZEI to roll out its next generation fully integrated marine power system and scale quickly to meet the demand within the maritime industry for zero emission propulsion solutions.

“We believe hydrogen is the best path to energy security and decarbonization of the maritime industry. Chevron and Crowley bring a wealth of global experience and an ability to scale deployment across the marine market. We’re excited to leverage this partnership with our industry-leading technology to achieve exponential growth of the marine hydrogen market,” said ZEI CEO Dr. Joseph Pratt.

ZEI is led by Pratt, who has built a team of hydrogen and marine experts with deep industry knowledge and expertise in the design, development, and deployment of hydrogen fuel cell power systems and other critical hydrogen technology. ZEI produces marine-specific turn-key fuel cell power and hydrogen storage systems that deliver superior performance.

“Our intelligent, connected, reliable power systems are the only ones on the market built from the ground-up specifically to meet the rigorous demands of the marine community. Designed to be as easy to install and operate as a marine diesel engine, we are working to build solutions that truly enable the maritime industry to decarbonize without negatively impacting their operations,” said ZEI Executive VP John Motlow.

ZEI says that the investments from Chevron and Crowley create an integrated value chain from hydrogen production to power systems to vessels. It adds that the collaboration will drive value for end users and partners alike through simplified and cost effective fueling and power solutions made specifically for maritime.

“As the maritime industry focuses on lower carbon opportunities, hydrogen is well-suited to address these, and we are excited to collaborate with ZEI to advance this potential,” said Austin Knight, vice president of hydrogen for Chevron New Energies. “Chevron believes in the value of partnering to develop hydrogen solutions that have the potential to scale and support a lower carbon world, and this is a step in that direction.”

Chevron New Energies launched in 2021 to focus on establishing lower carbon businesses in CCUS, hydrogen, renewable fuels and products, offsets, and other emerging areas.

“Investing in and developing innovative, clean energy solutions such as hydrogen is critical to reaching the maritime industry’s decarbonization goals. Crowley can only reach net-zero emissions with collaboration that produces new ideas by partners and stakeholders,” said Tom Crowley, the company’s chairman and CEO. “Working with Chevron and ZEI is an opportunity to help lead the shipping and logistics industry – and the communities we serve – to reach a more sustainable future.”

Source: https://www.marinelog.com/news/zei-gets-backing-from-chevron-new-energies-and-crowley/

Crowley and Chevron have both taken Series A investment stakes in Zero Emission Industries, a hydrogen-propulsion startup formerly known as Golden Gate Zero Emission Marine.

ZEI is best known for the development, construction and sale of the H2-powered ferry Sea Change, which was acquired by operator Switch Maritime in 2019. The vessel was launched at All American Marine in Bellingham in August 2021, and it completed its first hydrogen fueling – the first ever for an American vessel – in November 2021. It is in trials, and is expected to carry 75 passengers at speeds of up to 20 knots when ready to enter service.

“Our intelligent, connected, reliable power systems are the only ones on the market built from the ground-up specifically to meet the rigorous demands of the marine community,” said ZEI Executive VP John Motlow in a statement. “Designed to be as easy to install and operate as a marine diesel engine, we are working to build solutions that truly enable the maritime industry to decarbonize without negatively impacting their operations.”

ZEI closed its Series A funding round on September 8, with participation led by Chevron’s New Energies division and additional participation from Crowley. The undisclosed funding amount will help ZEI roll out its new integrated H2 power system and scale up to meet industry demand. The company noted that with backing from Chevron and Crowley, its partners span the full value chain from fuel production to propulsion tech to vessel operations.

Crowley has a strong history in investing in zero-emissions solutions. It is building the first purpose-built electric tug in the United States, the e-Wolf, and it has announced an ambitious commitment to reducing its carbon footprint – including the tracking, reduction and offsetting of related-party (Scope 2 and 3) emissions.

Source: https://www.maritime-executive.com/article/crowley-invests-in-h2-propulsion-startup-zei

Clarifying, clearing (up), construing, demonstrating, elucidating, explaining, explicating, expounding, getting across, illuminating, illustrating, interpreting, simplifying, spelling out, unriddling, deciphering, decoding, analyzing, breaking down, disentangling, undoing, unraveling, unscrambling, untangling, resolving, solving, defining, specifying, annotating, commentating, glossing

These are all words either meaning or related to the term “demystifying”..

Demystifying actually means “to make plain or understandable” and this was the prime objective and reason why Shipping and Freight Resource was started in 2008 – to make shipping and freight “plain, understandable and simple” to Joe Public..

Through various knowledge and education-related articles and news and insights articles, this site aims to demystify shipping and freight jargon..

It is recommended you read this article first to know the difference between Maritime, Shipping, Freight, Logistics and Supply Chain itself..

This installment of “Demystifying Shipping and Freight Jargon” is about The Flag of the Ship..

Like people, a ship also has a nationality assigned to it.. This is represented by a flag that the ship flies at all times.. A ship is assigned a flag through registration with a Ship Register or Ship Registry and the ship is expected to follow the rules and regulations enforced by this register at all times..

The nationality or port of registration is shown on the stern of a ship.. In the above example, the marking on the stern tells the world that the ship called CAPE ORCHID has been registered in Port Elizabeth in South Africa (you can see the South African flag)..

Any ship over 100 GT (Gross Ton) irrespective of whether it is a cargo vessel, fishing vessel, passenger vessel etc, has to be registered.. This registration grants the ship physical and legal protection of that flag/flag state which may be applied to vital areas such as safety of cargo and life of those on board the ship..

Ships need not necessarily be registered under a country’s own flag.. For example a ship owned by British nationals need not be registered mandatorily under the British Flag or UK Ships register.. It may be registered with registries other than the British Registry..

Types of ship registers

Some ships fly the flag of their own country, meaning it is owned, operated, and manned by nationals of that country..

This form of registration is called “Traditional Register” wherein the owner of the ship should necessarily be from the country of registration and the place of business should be in the country of registration..

Some ships fly the flags of other countries, like a ship owned by a Japanese firm flying a Maltese flag.. This form of registration is called an “Open Register“..

Many ship owners also opt for what is known as a “Flag of Convenience” (FOC).. An FOC is a type of open registry that offers (among other things) an attractive fiscal regime, substantially lower administrative fees, flexible to loose maritime safety policies, and lower costs for the ship owners..

FOC is a pejorative term used for an open registry and a FOC usually has no genuine link between the state and the ships that are flagged under that state..

For example, the ship is not owned by anyone from that country of registration, the ship is not operated by anyone from that country and the country of registration has no crew members or any other kind of administrative, technical, or social connection with that ship..

Because of this, organizations like the ITF (International Transport Workers Federation) find it difficult for unions, industry stakeholders and the public to hold ship owners to account as they may not follow the various regulations set..

The list of countries that have been declared as FOCs by the ITF’s fair practices committee can be viewed here..

Why is a flag important in shipping..??

A flag provides an identity to a ship which means the ship’s national state has exclusive dominion over the ship and no other nation can exercise dominion over that ship although a ship of any nation can navigate the oceans freely under the “guiding principle of the sea” which is freedom..

Of course, there are caveats here in the form of sanctions against certain countries which are enforced in shipping based on the flag/nationality of the ship..

As an example, the International Association of Classification Societies has withdrawn the Russian ship register’s membership after Russia’s attack on Ukraine..

This means ships flying the Russian flag are under sanction and any country doing trade with Russian flagged ships do so under risk of such sanctions.. There are political caveats to this as well which you can read about here..

The registration of a ship plays an important role in ensuring safety and security of the ship and significantly contributes to the protection and preservation of the marine environment..

As per IMO regulations, all ships must be surveyed in order to ensure that the ships under their register/flag are structurally sound and subscribes to design and safety standards and issue certificates that establish a ship’s seaworthiness..

The registration and linking to a national registry in a traditional register means that these ships may be requisitioned at time of war for the transportation of goods and people in the service of the nation..

The ship’s flag is also of importance in identifying specific registries or flag states that do not take action or turn a blind eye against shipowners who violate the rights of seafarers and in 2022 we are seeing a shameful record of seafarer abandonment..

Top ship flags by ships, DWT and value

Below are the current top-ranked ship flags by DWT (Dead Weight Tonnage), number of ships and value of ships..

As you can see, many ships are flying Flags of Convenience than their own national or traditional flags.. This is because a Flag of Convenience offers shipowners many benefits mentioned above, compared to traditional registers..

Top 10 ship flags by DWT — Source : UNCTAD

Top 10 ship flags by number of ships — Source : UNCTAD

Top 10 ship flags by value of ship — Source : UNCTAD

Iran’s elite Revolutionary Guards have seized a foreign vessel in the Gulf for allegedly smuggling 757,000 liters of diesel out of the country, the Iranian state news agency IRNA reported on Saturday.

The unnamed vessel’s seven crew members, who are foreign nationals, have been handed over to legal authorities, IRNA reported without elaborating on the nationalities of the ship or its crew.

Iran, which has some of the world’s cheapest fuel prices due to heavy subsidies and the plunge in value of its national currency, has been fighting rampant fuel smuggling by land to neighboring countries and by sea to Gulf Arab states.

The Guards have detained several ships in the past few months for smuggling fuel in the Gulf.

Source: https://www.marinelink.com/news/iran-guards-seize-foreign-ship-smuggling-499360

The Kremlin said on Friday that it expected President Vladimir Putin and his Turkish counterpart Tayyip Erdogan to discuss the implementation of a deal on Ukrainian grain exports, which both have criticized, when they meet in Uzbekistan next week.

Putin said on Wednesday that Russia and the developing world had been “cheated”, and that he would seek amendments to the terms of the deal, which expires in November, before it is extended.

“A conversation between Putin and Erdogan is possible and necessary. We expect it will take place in Samarkand,” Peskov said, referring to next week’s Shanghai Cooperation Organization summit in Uzbekistan.

The July deal to unlock Ukrainian grain exports from its Black Sea ports was brokered by Turkey and the United Nations. It remains the only significant diplomatic breakthrough in the six-month-old conflict.

Peskov on Friday repeated Putin’s assertions that the grain deal was unfair on the poorest countries because most shipments were being sent to Europe and other rich countries.

“The agreements are being implemented, but the way they are being implemented does not give any specific benefits to poor countries,” Peskov said.

A U.N. spokesperson for the Black Sea Grain Initiative said on Wednesday that 30% of the grain and other foodstuffs that had left Ukraine had gone to low and lower-middle income countries.

But the United Nations has also said the export deal is a commercial – not humanitarian – operation, driven by the market.

Many of the 100 or so ships that have left Ukraine had been stranded for months by of the blockade, unable to move their contracted cargoes. Most were laden with corn and booked by developed countries to be used for animal feed or biofuels.

Peskov also said further steps needed to be taken to help Russia export its own agricultural products.

The West has not imposed sanctions on Russian foodstuffs or fertilizers, but Moscow says logistical sanctions and restrictions on Russian ships entering Western ports or securing insurance restrict Russia’s access to world markets.

Moscow says easing these restrictions was a key part of the Black Sea deal.

“This issue has not been resolved. It will be the topic for a specific conversation,” Peskov said.

Source: https://www.marinelink.com/news/putin-discuss-black-sea-grain-deal-499344

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GENERAL Archives - Page 12 of 68 - SHIP IP LTD

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