October 7, 2021 / 12:50 PM The global shipping industry has officially hit a crisis point — loaded ships are queued outside ports around the world, and companies are clamoring for workers who may not get off a ship for a year or more. At the same time, the global economy is picking up steam as demand for goods increases. Supply and demand are out of whack, and day rates for ships are soaring as a result, which should be a windfall for ship owners and logistics companies.

On the dry bulk side of the shipping industry, Star Bulk Carriers (NASDAQ:SBLK), Danaos (NYSE:DAC), Navios Maritime Partners (NYSE:NMM), Diana Shipping (NYSE:DSX), and ZIM Integrated Shipping Services (NYSE:ZIM) could see profitability surge as shipping rates rise. What we don’t know is how long the good times will last for these transport stocks. Here’s what we know today about the dry bulk industry.

Dry bulk shipping is in high demand

Dry bulk shipping — or cargo vessels that are built for dry goods and not liquids — rates have exploded this year to levels we haven’t seen since before the Great Recession. According to Trading Economics, the Baltic Dry Index — a shipping market bellwether — is now at 5,167, up 30% over the past month and 157% over the past year.

For some perspective on that period of time, the index is higher than at any time since September 2008, a peak that ended when the Great Recession hit and global demand for goods around the world dropped. But the recession wasn’t expected, and shipping companies had ordered new ships based on high rates, so ship supply kept hitting the market well after the recession hit. That’s not happening today, according to Klaveness Research — at least not yet. There’s only expected to be about a 2% increase in the global dry bulk fleet over each of the next two years. That may mean that the high rates we see today will stay or even move higher if the economy picks up.

Newbuild orders may pick up now that day rates are on the rise, but it’ll take many years for new ships to reach circulation. In the meantime, ship owners should see a windfall in revenue.

Financial results are starting to follow

Each company has a slightly different strategy, which often includes some long-term charters for ships, so there can be a lag between the Baltic Dry Index rising and profits going up. But we are starting to see the financial impact of higher rates on the industry.

ZIM is seeing the impact earliest because it has an asset-light strategy, leasing ships and then renting out space at the prevailing market rate. Its profitability has surged over the past year.

The windfall should continue for a while. I mentioned above that new supply will be slow to come to the market, and right now demand is through the roof. But the market will likely turn eventually.

How the market turns

Supply and demand always seem to come back into balance in the shipping industry. And it’s what management does with its windfall cash that will determine what stocks do. 

If companies spend cash quickly to contract newbuilt ships that won’t be delivered for years or spend it on acquisitions, the money could be lost when the market turns lower. For the foreseeable future, cash generation should be strong in the dry bulk industry, and that should help stocks with exposure to the market. Just beware that the market can turn on a dime when supply exceeds demand, which history says will come eventually.

October 6, 2021 / 1:20 PM Workers at Marathon Petroleum's Galveston Bay Refinery were cleaning up crude oil that spilled from a storage tank Wednesday , according to a company statement.

The oil was contained on the facility's property in Texas City, the statement said. No injuries have been reported.

"The refinery has deployed air monitoring in the community as a precaution, and there is no indication of risk to the community," Marathon spokesperson Jamal Kheiry said in a statement. "Cleanup is under way, and regulatory notifications have been made."

The cause of the spill is being investigated.
The facility can refine up to 593,000 barrels of crude oil a day, according to the company's website. About 1,640 employees work there.

October 5, 2021 / 1:00 PM The COVID-19 pandemic has undoubtedly changed the status quo of the shipping industry. As supply chains shifted, trade patterns once solidified in their routines altered course and a whole industry began to adapt. This exposed areas up and down the supply chain that needed to reform to the demands and challenges of today, beyond pandemic preparedness. Most notably, the latest IPCC report revealed that human influence has warmed the Earth’s climate at an alarming rate, and it is expected that global warming of 1.5°C and 2°C will be exceeded during the 21st century unless deep reductions in carbon dioxide (CO2) and other greenhouse gas (GHG) emissions occur in the coming decades. This report sounded the alarm, and proved, furthermore, that inaction is unacceptable.

The Panama Canal has transcended beyond its role as a shortcut in the logistics chain, offering reduced voyage times along maritime routes and emissions, to an advocate for sustainable shipping and route optimization as a means to reduce CO2. Thus, this past year, it introduced several initiatives to better align with the global response to climate change, as many players in the value chain have done, from shipping lines to cargo owners.

At the start of 2021, the waterway launched the CO2 Emissions Dashboard, which began tracking monthly data on carbon emissions per segment. In April 2021, the Canal also announced its objective of becoming carbon neutral in its operations by 2030, a deadline shared by many in the maritime industry, as the urgency of climate change continues to pose an imminent threat to the Earth’s resources.

As recently cited by the UN Global Compact’s Charting a 1.5 C Trajectory for Maritime Transport brief published this month, the Canal established its decarbonization targets, while encouraging customers to maximize sustainable transits by publishing its data through the Emissions Dashboard, demonstrating actions that can be taken to accelerate decarbonization across the shipping value chain. Just this month, the Panama Canal and more than 150 other organizations across the maritime value chain signed the Call to Action for Shipping Decarbonization, urging world leaders to help further accelerate the decarbonization of shipping.

Looking ahead, the Canal is working on its roadmap to outline the specific steps to achieve its goal of carbon neutrality by 2030, which includes generating electricity from renewable sources, consolidating facilities to minimize the impact of its operation’s footprint, and migrating the Canal’s fleet to electric vehicles and hybrid tugboats. In addition, the Canal will also establish a pricing strategy that promotes the efficiency and low-carbon emissions of the ships that transit the waterway.

To be effective in this movement, however, organizations must put not only sustainability, but also resiliency at the core of their operations. This requires investing in technology, infrastructure and optimizing operations to ensure they are as reliable and efficient as possible. At the Panama Canal, modernization and maintenance programs are planned in advance and then methodically choreographed and communicated to customers with sufficient time to minimize disruptions.

By 2030, the Panama Canal expects to invest roughly $2.4 billion in equipment replacement and infrastructure modernization, and $2.8 billion in maintenance. In addition, the waterway also plans to invest $500 million in digital transformation to maximize capacity and provide added value to its customers.

Implementing an innovative long-term water management system to sustain operations and human consumption will remain a significant focus by the Canal team. In the meantime, the team will continue to maintain transparency by sharing daily water levels at Gatun Lake and announcing draft adjustments at least four weeks in advance.

Transparency and ongoing communication with customers remain top priorities for the Panama Canal team throughout this green transition. Earlier this year, the waterway made modifications to its reservation system to offer additional booking options and flexibility for customers across market segments in anticipation of growing market needs. In the coming months, the Canal will aim to provide further pricing visibility and certainty to better safeguard the competitiveness of the waterway, taking into consideration the route’s value and dedication to providing a competitive service to the global maritime community.

September 29, 2021 / 12:10 PM Star International partners with Maritime Master Welder, Leif Andersen to publish the Seafarer’s Welding Handbook.

The Handbook will be serialised as a free resource and coincides with the launch of a new product and service package for the marine welding community.

The new offering is a step forward in the company’s welding capabilities, providing a single source solution for shipping operators and welding personnel.

Star International has partnered with one of the maritime sector’s leading experts in the development of a new seafarer’s handbook for marine welders.

The Seafarer’s Welding Handbook will be serialised as a free resource for the marine welding community. It forms part of an innovative, new offering to the maritime sector, including on-board consultancy, training, and a comprehensive range of products that have been selected to meet the requirements of the marine welding professional.

Authored by Maritime Master Welder, Leif Andersen, the Handbook is based on over 50 years of experience, combining expert insight, in-depth technical knowledge, and essential guidance on best practice for completing works on-board ship.

The Handbook – together with the revised product and service range – represents a significant step forward in Star International’s welding capabilities, and provides a single source solution for shipping owners, operators and welding personnel.

Jeff Antley, Managing Director at Star International, said:

“Star’s new welding range represents a market-leading selection of equipment and consumables for the marine welder. The entire offering is informed by extensive industry analysis, customer feedback and the first-hand experience of our in-house welding expert, Leif Andersen.

“This is combined with on-board consultancy and training, delivered in partnership with operators to ensure that personnel receive support that is specific to the requirements of the operator and their vessels.

“When combined with the Seafarer’s Welding Handbook, the new offering provides personnel with a single source solution for all welding requirements on-board ship.”

Leif Andersen, Author of the Seafarer’s Welding Handbook and Maritime Master Welder at Star International, said:

“The Seafarer’s Welding Handbook is an indispensable resource for marine welders at all levels of experience.

“Covering 24 sections, the Handbook includes technical guidance for a huge range of challenges that welders may encounter on-board ship, details the tools required to complete the job and offers step-by-step guidance that ensures the work is completed safely and to a high standard.

“The Handbook is dedicated to the colleagues I have worked with in educating new generations of welders and whose hard work and enthusiasm has helped to improve both best practice and the safety of welders at sea; Erling Fagerholt, Arne Andersen and Erling Budal.”

In addition to the Handbook, new services will include on-board training and consultancy, backed by an extensive range of products, including welding machines, consumables, gases, cold welding polymers and safety equipment.

The Seafarer’s Welding Handbook will be published as a series of free downloads and covers topics including hot work permits and working safety on board ship, the different welding, brazing and cutting processes and a number of welding repair solutions. 

The first section ‘’Hot work permits and safety precautions in connection with welding and cutting work on-board’ is available now via star-international.co.uk, with subsequent sections being published every fortnight.

Founded in 1995 by a group of Maritime & Business Professionals, Navieramar International came out as a Company fully committed to providing the highest level of service to its clients ... Read more

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