Wartsila sees marine market staying soft
JANUARY 27, 2017 — Wärtsilä has released its financial results for 2016. You can download them HERE. “Thanks to solid delivery execution, growth in Services’ revenues, and an improved project mix in
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Profits down, Keppel closes three yards, mothballs two
JANUARY 26, 2017 — As part of a continuing painful “rightsizing,” Keppel Offshore & Marine is to close three Singapore shipyards and mothball two overseas yards. Parent Keppel Corporation Limited today reported
VIMS orders 93 ft research vessel
JANUARY 12, 2017 — Virginia Institute of Marine Science of Gloucester Point, VA, has awarded Matane, Quebec, shipyard Meridien Maritime Réparation a contract construct a 93-ft research vessel. Designed by JMS Naval
New Seastreak cat will have Rolls-Royce power and propulsion
OCTOBER 20, 2016 — The 600 passenger Incat Crowther designed catamaran passenger ferry on order at Gulf Craft LLC’s Franklin, LA, shipyard for New York ferry operator Seastreak LLC (see earlier story)
Vroon walk-to-work vessel to have Barge Master Gangway
OCTOBER 19, 2016 — The Vroon Offshore Services walk-to-work vessel VOS Start is to be equipped with the new Barge Master Gangway to will safe and efficient transfer of personnel and cargo.
VIDEO: Damen drydocks a Jumbo
OCTOBER 3, 2016 — Damen Shiprepair Van Brink Rotterdam, in the Netherlands, has completed a three-week repair project on the Jumbo Javelin, a DP2 Heavy Lift Crane Vessel owned and operated by
New Miami-Bimini high speed ferry service is up and running
SEPTEMBER 30, 2015 – FRS Caribbean, a subsidiary of German based FRS Group, has introduced a new high speed ferry service between Florida and the Carribean. FRS has deployed the High Speed
Regional Focus: The Comeback King
The commercial fishery has been part of the lifeblood of Eastern Canada for more than five centuries. Adjacency to the fishing grounds was the initial catalyst for the settling of the near countless harbors, coves and inlets throughout the five provinces that border the rich, pristine waters of the North Atlantic. And while the technology and vessels used to prosecute the fishery has changed over the generations, the industry in Newfoundland and Labrador, Nova Scotia, New Brunswick, Prince Edward Island and Quebec is more valuable than it has ever been.
The seafood caught and produced in Eastern Canada is now worth nearly $2.4 billion (CDN landed value) annually.
According to the most recent statistics from the federal Department of Fisheries and Oceans (DFO), the value of all seafood produced in the five Eastern Canadian Provinces totals an impressive $2,387,424. This number is quite staggering when you think about it. Few industries in this region produce products that contribute this much to the economy and gross domestic product (GDP) in one year.
As one would expect, a wide variety of species contribute to the overall multi-billion dollar total. But it will come as no surprise to anyone associated with the fishery or seafood industry in Eastern Canada what group or species really drives the industry here — shellfish. This group of crustaceans accounts for an impressive $2.37 billion.
Lobster is king in Eastern Canada, with a value in excess of $942 million and shows no sign of slowing down. Lobster catch rates are increasing year-over-year. Combine this with record prices and you have the formula for a very valuable and sustainable fishery.
Next in order of economic importance is snow crab, contributing $534 million, followed closely by Northern shrimp at $369 million. Scallops round out the top four shellfish species at $178 million.
The seafood industry continues to be a strong employment driver in the region, responsible for more than 50,000 direct jobs – both seasonal and permanent – in the harvesting and processing sectors. This, of course, does not include the thousands of spin-off jobs associated with the fishery and millions of additional dollars pumped back into the Eastern Canadian economy.
While the fishing industry is producing literally billions of dollars in product each year, it is not without its challenges. In fact, few industries in Eastern Canada, if any, have faced the adversity the fishery has over the decades – including dwindling stocks, quota cuts, labor shortages, constant conflicts with the federal government and building competition from outside Canada. Those catching and producing seafood in this region have seen and experienced it all – but have always persevered.
Northern Cod Stocks
The biggest story coming out of the Eastern Canadian fishery as of late involves groundfish stocks – cod in particular.
In 1992 the Federal Government of Canada declared a moratorium on the Northern Cod fishery, which for hundreds of years had largely shaped the lives and communities of Canada’s Eastern coast. After it was discovered in the late 1980s that the Northern cod biomass had fallen to one per cent of its historical levels, the fishery was essentially shut down, ending the region’s 500-year dependence on Northern cod.
But cod is making a comeback.
A 2015 study into the state of Northern cod stocks off Newfoundland and Labrador confirmed a dramatic recovery for a species that became virtually commercially extinct in the 1990s — a confirmation that commercial fishermen have been documenting and commenting on for several years.
The study, co-authored by well-known and respected fisheries scientist George Rose, reported that the cod biomass has increased from tens of thousands of tonnes to more than 200,000 metric tonnes within the last decade and shows signs of continued growth. In fact, Canada’s federal Department of Fisheries and Oceans (DFO) recently reported that according to its research, the spawning stock biomass was actually in the range of 300,000 metric tonnes.
The news of the groundfish recovery has been met with optimism— so much so that DFO just announced in August of this year, the first expanded commercial Northern cod fishery in decades.
Another bright spot for the Eastern Canadian fishing industry is the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union. Once ratified in 2017, this free trade agreement will lead to the dropping of the punishing tariffs now applied to Canadian seafood exported to the member states of the EU. Not only will this agreement increase the profitability of Eastern Canadian seafood companies now shipping product overseas, but will open up a vast array of new, hungry markets, with an appetite for fresh, top quality Canadian seafood.
Shipbuilding Resurgence
When any industry is doing well and its participants are prospering, that good fortune has a tendency to spill over to related spin-off and supply companies – and the Eastern Canadian fishing industry is no exception.
One area that has seen a renewed revitalization in recent years is the region’s shipbuilding industry.
Many Eastern Canadian yards, that a decade ago were either shuttered or only producing a few vessels per year, have sprung back to life and are now at capacity – with many booked up to three-four years. New fishing vessels are in demand in Eastern Canada more than ever and the region’s naval architects and builders are just trying to keep up.
Rick Young is witnessing this growth and resurgence in shipbuilding first hand. Young is a Director and Owner of TriNav Marine Design and Marine Services International – two St. John’s, Newfoundland-based companies that design and provide in-depth technical assistance to the Eastern Canada shipbuilding and marine sectors.
“There was considerable vessel construction activity in Newfoundland and Labrador from 1995 to about 2005, mostly related to changes in the industry from harvesting groundfish to harvesting shellfish. Nova Scotia and the other Eastern Canadian provinces have seen a steady growth in vessel construction in the past five years or so due to strong market prices for lobster and also because much of the fleet was getting old and required replacement,” Young said.
He noted that fishermen have lobbied hard over the years and have been successful to have DFO change many of their vessel size restrictions.
“This has allowed fishermen to construct larger and safer vessels that can travel further offshore for longer periods of time, while increasing quality with such features as live wells and refrigerated sea water tanks.”
Now with the potential for a renewed groundfish fishery in the near future and continued strong prices for shellfish, fishermen are willing to invest further in newer and multi-purpose vessels, Young added.
“This will allow them to be more diversified, have a longer fishing season and be more profitable. Fishermen it seems, always find a way to adapt to the changes in the industry and persevere. We will be there with them side-by-side to help make this happen.”
The optimism expressed by industry leaders, such as Rick Young, seems to be contagious throughout the Eastern Canadian fishery.
After years of uncertainty, combined with the constant nattering of the naysayers mumbling about how the fishery will soon be no more, the industry is on the upswing – driven by positive factors that could help this still valuable business turn the corner and further increase in value.
Just as sure as the strong Northeast winds will continue to buffet the shores each year, those prosecuting the seafood industry in Eastern Canada will stand by their resolve and continue to produce the products that continue to drive the growth and evolution of this critically important, multi-billion dollar machine called the fishery.
ABOUT THE AUTHOR
Kerry Hann is the Managing Editor of The Navigator Magazine, the largest publication covering the marine and fishing industries in Eastern Canada. Hann, based in St. John’s, Newfoundland and Labrador, has been covering the North Atlantic fishery and other natural resources-based issues in various capacities for nearly 25 years.
Eastern Shipbuilding delivers MPFSV to Harvey Gulf
SEPTEMBER 1, 2016 — Eastern Shipbuilding Group, Inc. Panama City, FL, reports that it has delivered the M/V Harvey Stone (Hull 234) to Harvey Gulf International Marine, LLC of New Orleans, LA.
The unwanted ship: Break it or lay it up?
To lay-up a vessel means to stop using it for a certain period. It will simply be anchored in appropriate waters or a berth for a few weeks or even a couple of years. The reasons for the lay-up might be to postpone over-capacity or to wait for a better scrap price before selling it. However, lay-up costs need to be taken into account, too.
For example, a six-month lay-up of a Capesize bulker in Malaysia’s Labuan costs between $1,000 and $2,000 per day— far less than the cost of operation which hovers around $7,000 a day, but an investment, because the longer the vessel is in lay-up the higher scrap steel or charter prices have to rise.
Scrapping a vessel means selling it to a ship-breaking yard where workers will cut it to pieces and recycle the steel and other metals, chemicals, and equipment. The owner will receive a price based on the total light displacement ton (LDT) of scrap metal the vessel contains; equipment is taken into account, too.
The market demand defines the LDT price, which is at its lowest in many years. Just recently buyers were offering $270/LDT (as of May 2016), a year ago Capesize bulkers could easily fetch $100/LDT more, and two years ago the figure was $200/LDT more.
Can higher LDT prices be expected? Well, the number of bulkers sold for scrapping is expected to rise throughout 2016 (according to Peter Sand, BIMCO)—this is strengthening the supply. Furthermore, in Asia demand for steel is currently low.
How to lay-up a ship?
Just as the lay-up time can vary, the treatment of vessels varies too, and so do obligations and requirements assigned by class, flag state and port authorities. In general, all responsible parties should be informed. For example, some insurance companies may accept a payment hiatus if the vessel is in lay-up for more than 30 days.
The operator must first decide on either a hot or a cold lay-up. In a hot lay-up condition the ship engines and machinery keep running so that the re-commissioning of the vessel can be carried out very quickly, allowing a cheap and easy vessel preservation. However, with long-term low charter rates in mind, many opt for a cold lay-up, which has lower operational and crew costs, and requires less consumables.
In a cold lay-up vessels are only supplied with emergency energy for lights, windlass/mooring winches and fire extinguishing—often by portable generators installed on deck. Depending on the length of lay-up, three weeks or more should be expected for re-commissioning. Should the lay-up be five years or longer then the re-commissioning time is unpredictable and can last months. The main concern here is protection against humidity, leakage of chemicals and condition of the hull (sea chest/sea water lines).
A dehumidifier has to be installed and connected to the engine room; other items to keep in mind are sea-water tanks, ballast tanks and bow thruster rooms.
Classes, Flag States and Port Authorities
Many classes and port authorities expect minimum manning levels during cold lay-ups to cover at least fire, leakage, mooring and security watch. However, the Safe Manning Certificate applies only to vessels in operation or while vessels are safely at anchor, within port limits or alongside. Requirements of flag states and port authorities apply to laid-up vessels. Flag states in general require notification of vessels laid-up for longer periods—the requirements vary from short notification to a detailed lay-up plan.
In addition, during the lay-up class surveys might take place. For example, DNVGL may carry out an annual lay-up survey (covering watertight integrity, bilge system, fire hazards and equipment in use). After lay-up a number of surveys have to be carried out and expired certificates need to be renewed. Some class authorities require a sea trial when the vessel has been laid up for 12 months or longer.
Green ship breaking?
It seems more environmentally friendly to take old ships out of service than to lay them up for later usage, especially as many were built in times when speed was more important than HFO efficiency.
Indeed, ship breaking can be environmental friendly; approximately 85% of a vessel can be recycled – even the furniture and carpets are sold at local markets in Bangladesh and India. However, the problem is that many shipyards do not handle hazardous chemicals as they should, and consequently the lives of workers are endangered. Rising public awareness has prompted the involvement of authorities leading to the Hong Kong Convention and EU Ship Recycling Regulation. Only time will tell whether these efforts will actually improve environmental and working conditions.
Some yards in China, Turkey and India/Bangladesh are already pre-approved and comply with the Hong Kong Convention and/or the EU Ship Recycling Regulation. However, green recycling often only happens on paper. In this respect the , “Ship Breaking Platform” should be considered, as it does not recognize any yard in India to be green and claims it to be a marketing coup.
Conversely some yards in Europe are recognized even by the NGO as environmentally friendly. For example, Fornaes in Denmark cooperates with the Ship Breaking Platform. Keld Kokholm, Manager of Fornaes, explains: “In general, the offered price per LDT is lower than that which non-environmentally friendly yards in Asia offer due to the expensive recycling of toxic substances and higher labor costs. Furthermore, we and some other European yards are sometimes limited by the size of vessel that we can handle. For example can we recycle ships up to 10,000 tonnes GT or 25 meters in width.” Fornaes therefore focuses on local offshore and fishing ships.
Other companies involved in green ship recycling like Grieg Green AS, can handle big vessels. Grieg Green approves yards based on a list of factors including the safety of workers and downstream waste management, all influenced by the HKC and EU regulation. Here, too, responsible acting results in a current price difference of $70 – $90 per LDT. As stated by Magnus Hammerstad, Area Manager of Grieg Green, this figure is volatile and is related to the local scrap steel price.
Why go green?
Companies which plan to maximize their profit will sell their vessel to a so called cash buyer (a ship broker) who in turn will beach it somewhere in Bangladesh, India or Pakistan. This way the original ship owners avoid regulations and legal trouble.
Recently Maersk opted to recycle the Maersk Wyoming and the Maersk Georgia in a ship-breaking yard in Alang, India which is not on the EU list of green ship breaking yards. Maersk stated that it expects to generate an additional $1 million to $2 million per ship by beaching there.
“Without a strict legal framework and financial mechanism, there are very few incentives for ship owners to choose clean and safe recycling,” said Patrizia Heidegger, Executive Director of the Ship Breaking Platform. “Currently, at the EU level we are debating a ship breaking license, and a financial incentive for clean and safe recycling.”
She pointed out that in addition to new regulations, an increasing number of cargo owners as well as ship financers are demanding ship-recycling policies from ship owners. In the future ship owners may lose both financers and clients if they continue to use substandard shipbreaking.
KLP, the largest Norwegian pension fund, published a report on the human rights and environmental risks related to the current practice of ship breaking.
KLP CEO Håvard Gulbrandsen, states in the report’s foreword: “We hope that the report can help raise awareness of the severe human and environmental risks beaching can entail for shipping industry companies, their customers, and also for other investors […]”.