A consortium of South Korean companies is the latest to announce plans to develop a liquified CO2 carrier vessel that could play a critical role in the global carbon capture and storage process proposed as part of the efforts to achieve decarbonization. The project will be led by South Korean steel company POSCO working in conduction with Korea Shipbuilding & Offshore and the Hyundai Mipo shipyard owned by KSOE. Lloyd’s will act as the class society for the project.
The announcement of the South Korean project follows this week’s news that Japanese shipbuilder Mitsubishi was partnering with France’s TotalEnergies also to develop an LCO2 carrier. In the spring, Wartsila Gas Solutions announced it had received Approval in Principle from DNV for the designs of a cargo tank suitable for transporting liquid CO2. In addition, Danish companies Evergas and Ultragas are also working in partnership to develop tank designs.
In the new project announcement, POSCO said that it would focus on the development of steel that could be used to create the cargo tank to hold the liquified CO2. Korea Shipbuilding & Offshore Engineering and Hyundai Mipo Dockyard will be responsible to develop the welding technology needed in designing and building of the tanks and for the design of the vessel. Lloyd’s Register will handle certification of steel and technical review of storage tank’s design and manufacturing, while the flag state for the design will be handled by the Liberia International Ship & Corporate Registry.
The Korean project is targeting a design for a commercial vessel by 2025 capable of transporting 20,000 cubic meters of liquefied CO2.
Hyundai Mipo had launched another project to design an LCO2 carrier in the spring working with ABS and the Republic of the Marshall Islands Maritime Administrator. The shipyard looks to draw upon its experience in building gas carriers to develop a new class of ships that will support carbon capture and storage.
The Korean news outlet Yonhap is reported that POSCO is working to diversify its business and establish itself in the nascent carbon capture field. Separately, through its energy subsidiary, POSCO announced plans to develop a low carbon waste-to-energy technology. POSCO has also been exploring technologies to decarbonize its steel business.
Rob Phayre, a former ransom delivery specialist who helped shipowners retrieve vessels and crews from pirates, has written a new novel based on his experiences off Somalia. He recently corresponded with The Maritime Executive about the nature of the work and the root causes of Somali piracy.
TME: To start, can you tell us about yourself and your career in resolving hostage situations?
I started my career with seven years as a British military helicopter pilot, and I commanded a flight of helicopters in the Second Gulf War. I had the privilege to fly the first British Army helicopter across the border into Iraq on the first day of the war. I also flew in Northern Ireland during The Troubles. Perhaps one of my best experiences was in supporting British special forces when doing their jungle training in West Africa.
After leaving the British Army, I lived in Africa for nearly 17 years, but I was only involved in resolving Somali pirate attacks for about three of those years. During that time, I worked on more than 30 projects delivering ransoms to Somali pirates. I have also supported a number of organizations resolving other onshore kidnapping incidents. If I had to put a figure on the total amount delivered in ransom, it’s just under $100 million.
TME: Can you tell us about how you would arrange for ransom deliveries?
We developed a special mechanism that allowed us to drop the ransom out of an aircraft by parachute. The pirates would collect the money after it fell into the water, take it to the ship, count it and then leave. At that point another team that we had already pre-positioned would board the ship, cross load supplies, help the crew get it underway again and escort it to the nearest safe port.
There were a number of risks during those projects. Delays could mean the pirates would lose patience and we would have to go back to the negotiating table. The money delivery could fail. We never lost a load to a bad drop, but it was close occasionally. The pirates might not have left the ship after we paid the ransom, or the rescue team could get attacked on the way to collect the ship. We managed all of those risks to the best of our ability.
During the peak of piracy, my team and I delivered a ransom that was worth just under $15 million. To give you an idea of scale, that’s about 160 kilos of hundred-dollar bills – about seven large Samsonite suitcases’ worth. It remains to this day one of the largest ransoms paid for hostage taking at sea.
TME: Did the pirates always leave the ship once they were paid, or did they ever try to hold out for more money?
For the projects I worked on, yes. Simply put, they were businesspeople – granted, businesspeople with no moral values, but still businesspeople. If they hadn’t surrendered the ship after a delivery, then they wouldn’t have been paid again. They would accrue all the costs of running their projects and not get any more financial rewards. I am aware of several projects where hostages didn’t get released after a payment, but in many cases, they were not negotiated professionally.
TME: Do governments get involved in negotiating with pirates and paying ransoms?
It’s a very grey area. It depends on the government and the part of the world where the hostage taking has happened. The French government, for example, has passed laws that state that they will pay ransoms to get their citizens back. In fact, there have been a number of protests when they haven’t. Most Western governments will publicly say that they don’t make substantive concessions to pirates. That is the right approach in my opinion.
Nation-states making payments with unlimited funds just raises the cost of ransoms for everyone else. However, it is also right that individuals, if they choose to, should be able to pay ransom to release their loved ones. That all works fine and is generally ignored by governments as long as payments are not made to terrorist organisations.
If terrorists are involved, that’s much trickier. You can’t pay them legally, even through third parties. On the plus side, governmental support may be more likely to happen – but that usually results in a security service response. The risk to the hostage goes up considerably.
This became a concern several years into the antipiracy response off Somalia. As soon as there was a lull in the number of vessels being held by pirates, Western governments determined that the risk of inadvertently paying money to terrorist organizations in Somalia was too high, and they made it a very serious offence to pay ransom. I am not aware of any proof that any ransom was ever directly paid to a terrorist group for maritime piracy in Somalia, but there was always the potential for side payments or protection money being paid by the piracy groups. It was certainly a factor in the decision process for many risk management companies.
A final word on maritime terrorism: this is different from piracy or criminality. The objective is completely different. With terrorism, an actor will target either a specific vessel or a specific flag state to enhance their political aims. Money has nothing to do with it.
TME: What were the root causes of Somali piracy?
I believe that the commonly used explanation of foreign offshore fishing vessels plundering the Somali coast is used too often as an argument. Sure, it’s a potential catalyst, but money and power were the key drivers once they were available. Warlords and clan chiefs could raise huge sums of money, equip their personal forces and expand their fiefdoms. Individuals could earn a living that just wasn’t available to them before. Most of the political leadership didn’t have the power or reach to be able to police the whole of the coastline, and those who did have the ability were most likely corrupt. The existence of a failed state provided safe harbor for pirates to bring home their catch and negotiate their release.
TME: How can piracy be defeated?
In the longer term, only sustainable development, other employment opportunities, the removal of available targets, rule of law and effective military response are the way to continue bringing down the maritime piracy risk.
Rob Phayre is the author of The Ransom Drop, a newly-released novel about maritime kidnapping and ransom delivery. It may be found on Amazon here.
The opinions expressed herein are the author’s and not necessarily those of The Maritime Executive.
On 17 July at 0125 hrs the Maersk Njussfjord was boarded and the perpetrators point a homemade handgun at the duty watcher’s head and tied him to the ship’s railing. Seven more perpetrators boarded the vessel and stole a mooring line rope.
On 4 August at 2140 hrs three armed robbers boarded the containership Seaspan New York and were spotted by the ship’s duty crew. One of the perpetrators attempted to stab the duty crew, who was able to evade the attack, but was then tied up by two other perpetrators.
The robbers stole two portable welding machines with cables, 20 reefer cables, three bronze nozzles, and five hydrant caps, and left the vessel before the alarm could be raised.
On 13 August the CMA CGM Cai Mep was boarded at 0130 hrs by five robbers and one pointed a gun at the duty watcher when they were spotted. They ordered the duty watcher to open the storage room and stole 20 buckets of paint. A deck cadet who went in search of the missing duty watcher was also threatened with a knife but was able to escape.
Given international restrictions on crew change vessels have been sailing to the Philippines and anchoring in Manila Bay to undertake exchanges of seafarers.
The latest incidents bring to eight the number of attacks on vessels at anchorage in Manila Bay since the beginning of the year.
ReCAAP said was concerned about the continued incidents and the increased level of violence used. “Ship masters and crew are strongly advised to exercise vigilance, maintain constant look-out for suspicious boats and report all incidents immediately to the local authorities. It is also very important for the crew not to engage in a confrontation with the perpetrators,” it warned
The heavy-lift industry is called on to manage unique projects that often require transporting large or heavy structures long distances. Recently, the Norwegian specialized heavy transportation and installation contractor OHT was assigned the unique challenge of transporting a 590-foot-long floating dry-dock nearly 10,500 nautical miles for Promaritime.
The floating dry-dock, which measures 590 feet in length and 121 feet in width, was located in Abu Dhabi in the United Arab Emirates. It needed to be transported to northern Europe for ultimate deployment in France.
The vessel assigned the task of moving the dry-dock was the Hawk. While it is among the top five largest semi-submersible heavy lift vessels in the world, the Hawk only has 515 feet of free deck length available.
The solution developed by OHT was to diagonally load the massive dry-dock for the voyage. That meant that the dry-dock would be overhanging the sides of the vessel, which already has a beam of 182 feet. The width of the overall transport was close to 400 feet with the dry-dock overhanging each side of the Hawk by approximately 105 feet.
“With the exceptional experience of the captain and crew on board the vessel, Hawk was able to safely navigate around Cape of Good Hope with only minimal delays due to adverse weather and without stopping in any safe haven such as Port Elizabeth,” reports OHT.
The transit was completed in 40 days. The day after the Hawk arrived in Brest, the dry-dock was offloaded. It was then towed to the Damen shipyard where it is currently completing repairs and receiving a new coat of paint. After the shipyard, the dry-dock will be towed to the port of Rouen, where it will begin operations.
The online platform for container sourcing is expecting a similar pattern to that was seen for container availability and prices at Yantian port in South China which much of Yantian International Container Terminal was locked down for three weeks due to a Covid outbreak in the second quarter.
The impact in Yantian is still being felt and container prices rocketed from $5,515 in June to $15,336 this month.
“We saw a real and measurable spike in container prices and a major drop in container availability as measured by our Container Availability Index (CAx) when terminals at Yantian saw operations disrupted through most of June,” said Christian Roeloffs, co-founder of Container xChange. “Early indicators suggest we are likely to see the same impact in Vietnam and at Ningbo.”
At Yantian, the CAx level for a 40-foot dry container was 0.61 in Week 17 but fell to 0.47 in Week 22 and 0.3 in week 32.
Looking to Ningbo and Vietnam, where there are current lockdowns, average container prices at Ho Chi Minh City jumped from $2,872 in May to $4,875 in August. For Ningbo where Meishan Island International Container Terminal (MSICT) suspended operations from 11 August Container xChange said it had seen early indicators of an increase in container prices. Average August prices have climbed to $5,731, up from $5420 in June.
“Whether we see a further spike in container prices at Ningbo will probably be determined by how much cargo was disrupted at the port and whether we see additional shutdowns later this month,” said Dr Johannes Schlingmeier, CEO & Founder of Container xChange.
“Even if there are no additional closures it is likely that container prices will rise on lower availability in the coming weeks due to the lag between liner schedule disruption and container availability and pricing.”
The port of Valencia moved 3.28m teu, up 10%, and more than 49.5m tonnes of goods, up 11.1%, during the first seven months of this year, compared to the same period the year before.
Containerised cargo grew by 1.7% and 2.4% in tonnage if compared to 2019, previous to the pandemic.
Exports of Spanish companies operating in Valenciaport, played a strategic role growing by 22.7% with a total of 632,082 containers full of cargo up to 31 July, 116,880 more than in the same period in 2020.
This growth is reflected in the dynamism of sectors such as construction materials, the agri-food industry, chemical and steel products and the automotive sector.
In these first seven months of the year, imports have also increased by 15.53% and transhipment by 7.61%. Between January and July of this year, ro-ro traffic was 14.36% higher than in the same period in 2020, and automobiles registered an increase of 5.35%.
In the year-on-year data for August 2020-July 2021, – a period that is still marked by the complexity of the economic and pandemic situation –a total of 5.72m teu were moved, a number that is close to 6m teu per year.
Trade with China was the most important with a total of 356,389 teu at the end of July, 22.61% more than in 2020, followed by the United States, with a growth of 7.86% and 317,989 teu. In third place is Turkey with an increase of 10.74% and in fourth place is India with a growth of 38.18%.
The Far East is the first destination of containers with a growth of 14.55% compared to 2020, followed by the Mediterranean and Black Sea (+6.67%), West Africa (+34.65%) or Atlantic South America (15.59%).
AP Moller – Maersk is making a major commitment to methanol as future marine fuel with an order for eight 16,000 teu dual-fuel containerships at Hyundai Heavy Industries (HHI).
When the eight 16,000 teu vessels are delivered in 2025 they will enable to Maersk to offer carbon neutral shipping to its customers on mainline ocean trades – a first for the industry sector. The contract with HHI includes options for four additional vessels.
While many of Maersk’s competitors are opting for LNG as a low carbon, bridging fuel option, the Danish shipping company has taken the plunge to invest in carbon neutral based solutions from the outset.
“The time to act is now, if we are to solve shipping’s climate challenge. This order proves that carbon neutral solutions are available today across container vessel segments and that Maersk stands committed to the growing number of our customers who look to decarbonise their supply chains. Further, this is a firm signal to fuel producers that sizable market demand for the green fuels of the future is emerging at speed,” said Soren Skou, CEO, AP Moller – Maersk.
Maersk named Amazon, Disney, H&M Group, HP Inc., Levi Strauss & Co., Microsoft, Novo Nordisk, The Procter and Gamble Company, PUMA, Schneider Electric, Signify, Syngenta and Unilever as customers that have committed to actively use and scale zero carbon solutions for their ocean transport.
“Maersk’s investment in large vessels operating on green methanol is an important innovative step supporting H&M Group’s climate goals within International Freight and we are proud to take part in this pioneer journey, “ commented, Leyla Ertur, Head of Sustainability – H&M Group
While Michelle Grose, Head of Logistics and Fulfilment for Unilver commented: “Unilever is committed to accelerating the transition to clean transport solutions, not just in our own operations but along global value chains as we work to achieve net zero emissions by 2039. With logistics and distribution accounting for around 15% of our greenhouse gas emissions footprint, it’s important that we work with partners shifting to lower carbon fuels. We are proud to partner with Maersk as they pioneer carbon neutral transportation on the high seas.”
The methanol propulsion system for the vessels is being developed in collaboration with makers including MAN ES, Hyundai (Himsen) and Alfa Laval. The company plans to operate the vessels on carbon neutral e-methanol or sustainable bio-methanol as soon as possible and the company admits that sourcing an “adequate amount of carbon neutral methanol from day one in service will be challenging”.
The order for eight large-sized containerships capable of being powered by carbon neutral methanol follows a contract for Maersk’s first methanol powered vessel at the beginning of June. The 2,100 teu newbuilding ordered at Hyundai Mipo will be delivered in 2023 for trading the Baltic Sea region.
Last week Maersk announced that REintegrate and European Energy would establish a new Danish facility to produce the 10,000 tonnes of carbon neutral e-methanol needed annually to fuel the 2,100 teu vessel.
The fast-expanding Chinese container shipping service provider, Zhonggu Logistics, is launching a new international service connecting China with Vietnam.
The new CV2 service, deploying containerships from its own fleet, will start its maiden voyage from south China on 27 August, including the ports calls of Nansha-Shekou-Haiphong.
Providing connections to south China inland ports, CV2 service will guarantee ample supply of container and will be available for container’s pick-up and return at multi-locations.
Zhonggu launched its first foreign trade service covering Shanghai, Ningbo and Ho Chi Minh City in March this year, and recently invested in 18 new containerships to expand its service network.
The Greek Court of Audit has approved the sale of another 16% stake in Piraeus Port Authority (PPA) to Cosco Shipping and a five-year extension for the company to complete the investments it has undertaken to make.
The sale raises Cosco Shipping’s stake in PPA to 67% from the current 51%. The new contract between the Chinese company and the seller, the Greek state, go to the Parliament for ratification, and will probably be voted on in the first half of September.
Cosco demanded the provision in the privatisation agreement allowing it to acquire the extra stake be activated despite not having completed the €300m investment programme it had undertaken to implement within five years of its purchase of a 51% stake in PPA from the state for €293.7m.
Cosco had deposited €88m in an escrow account for the 16% stake in 2016
The Court of Audit accepted Cosco is not responsible for the delays in implementing the investment plan. At least some of the delays involve legal wrangling, such as an appeal by locals over environmental concerns that has delayed the upgrade of a cruise terminal. Cosco itself pointed out, in a November 2020 letter to the Finance and Shipping and Island Policy ministries and Greece’s Asset Development Fund, that it was not responsible for the delays.
It is understood the new agreement calls for Cosco to post letters of guarantee covering 33% of the amount of pending investments. The letters will be called in in case the investments are not completed by the new deadline. Also, the state gets a veto on strategic decisions, but will henceforth only be represented by one member on the 11-member PPA board of directors instead of three.
PPA’s master plan calls for €600m in investments, of which half are the mandatory ones that should have been completed by this month. In fact, less than half, or €140m, of the mandatory investments have been completed; the rest of the projects have either not been licensed or are delayed due to court challenges.
More than 90% of HMM’s seafaring union members voted to strike on Sunday and, if a resolution is not reached, the 453 union members are threatening to resign en masse tomorrow and apply to join Swiss-Italian rival MSC.
HMM’s seafaring and shore-based staff have expressed dissatisfaction over “a meagre” salary increment, despite the company achieving record profits last year, thanks to tight shipping capacity and logistics disruptions caused by Covid-19.
Their grievance stems from an eight-year salary freeze only lifted this year after HMM’s financial struggles culminated in a government bailout when Korea Development Bank (KDB) swapped debt for equity in 2016.
The staff’s unions are demanding a 25% wage hike and bonuses amounting to 1,200% of their salaries.
But HMM management is offering 8%, a bonus of 300% of salaries and a productivity incentive equating to 200%. KDB, HMM’s largest shareholder, is reportedly reluctant to accede to the demands.
An HMM spokesman told The Loadstar: “Negotiations between the management and the labour union are still under way to reach an agreement. Both sides are having a continuing dialogue on this matter and still doing their best for a settlement.”
The Loadstar understands that MSC is offering a salary 2.5 times what HMM is paying, equating to a monthly salary of $13,000-$14,000 to chief officers and a $5,000 for deckhands.
If the strike goes ahead, seafarers on HMM ships scheduled to arrive in Busan tomorrow would disembark in groups, while those supposed to board in their stead will refuse to produce tests stating they are free of Covid-19, a requirement for embarkation.
In July, MSC advertised for Korean seafarers with manning experience on ultra-large containerships. HMM is the only Korean carrier with such vessels and it was clear the advertisements targeted its crew members.
Korea’s Ministry of Oceans and Fisheries (MOF) is now “undertaking contingency planning procedures”, fearing a logistical crisis reminiscent of Hanjin Shipping’s collapse in October 2016, which immobilised its ships, causing many containers to be delayed before being transferred to HMM and alliance partners.
Hanjin’s collapse caused Korean container shipping capacity to plunge from 1.05m teu in early 2016 to 460,000 teu at the end of that year. And if HMM, which has a capacity of 850,000 teu, were to be incapacitated by the first industrial action in its 45-year history, there would be chaos.
The MOF has formed a task force, led by director of shipping and logistics Jeon Jae-woo to “maintain essential business functions and prepare support measures in case of emergency”.
The ministry has said that HMM was on course to achieve a record performance this year and is urging the management and unions to work together “in the nation’s interests” and to consider the threat logistics bottlenecks present to shippers.
Local media reports suggested SM Line, the only other ocean-going Korean carrier, could carry HMM cargo if required, but given the shortage of ships, there is a limit as to how much relief SM could offer.
The Loadstar is known at the highest levels of logistics and supply chain management as one of the best sources of influential analysis and commentary.
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