As many of the top stories in 2022 developed across a period of months, if not the entire year, we have chosen six major themes and what has happened across the course of year.
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Tanker market boom
Casting our minds back to January and the idea that the tanker market would be enjoying days in the sun just a few months later seemed rather optimistic. In January we noted that 2021 had been “frankly horrible” for the tanker sector, but in the same month there was a remarkably prescient forecast by brokers Gibsons.
The broker said: “A geopolitical Black Swan event this year, could supercharge the moribund tanker market. Just as a trade dispute between Australia and China impacted dry bulk trades. The risk of a major confrontation between Russia, Europe and the US could completely redefine oil trade. assessing the impact of a possible oil embargo on Russia is a near impossible task. But undoubtedly global oil trade and prices would be severely impacted.”
By the end of October it was an extremely different picture and our New York Correspondent Barry Parker reported: “As the cliché goes, “the tanker sector is on fire.” Charter hires have reached stratospheric levels on the back of longer voyages for crude oil and for refined products, as well as small and large gas carriers.”
As the latest phase of sanctions against Russian oil exports came into force in early December things continue to look extremely good for the tanker sector.
Impact of war in Ukraine
Much of what caused the boom in the tanker market has been the war in Ukraine, which of course has impacted much than just shipping, not least the citizens the of the country itself. But the invasion by Russia also left over a thousand seafarers stranded on vessels at Ukranian ports.
Over the coming months seafarers would gradually be evacuated from stranded vessels. However, a blockade of Ukranian ports quickly started to have a serious impact on global food markets and prices as the country is major exporter of wheat and grain. Over a period of months much work was done to create an international corridor for grain exports from Ukraine with a humanitarian corridor and was up and running by the end of July.
“Inchcape Shipping Services (ISS) reported the ports of Odessa, Chornomorsk and Pivdennyi open as of 27 July. ‘We can expect the first vessel sailing by the end of the week, as it’s critical to release the vessels which are still blocked in ports,’ said ISS. Once blocked vessels are cleared, activity will continue via convoy, accompanied by a lead vessel.”
The humanitarian corridor has continued to provide a vital lifeline for grain exports, if on occasion it has been threatened with closure. Meanwhile the war continues to have other impacts on shipping such as the growing dark fleet of tankers aimed at busting sanctions against Russian oil exports.
P&O Ferries mass firing
Switching gears considerably and at the start of 2022 the name Peter Hebblethwaite would have meant little to most, but he was in few short months to hit global headlines. Peter Hebblethwaite is of course the CEO of P&O Ferries who was to be branded Britain’s most hated boss.
The branding of P&O Ferries boss as the most hated was a result of the mass firing of 800 seafarers over Zoom on 17 March. “Video circulated online of the moment P&O notified some of its staff by Zoom call that their employment was ending the same day.”
Somewhat ambitiously P&O Ferries had planned to have its fleet back in service with agency crew within seven to ten days of the mass seafarer sackings. However, the return to service of P&O Ferries did not go remotely to plan and by the end of May it was still struggling to get it all its vessels back into service.
On 26 May we reported on the UK Maritime & Coastguard Agency clearing the Pride of Canterbury in a Port State Control inspection. “One vessel in the P&O Ferries fleet still needs a Port State Control inspection before it can return to service. The whole fleet of 10 ships required inspection after P&O Ferries sacked 800 of its seafarers without warning by Zoom call on 17 March.”
The fleet did all get back into service, but the backlash has continued and in October Hebblethwaite was forced to drop off a panel at the annual Interferry conference and in November voted the world’s worst boss by the International Trade Union Confederation.
Container shipping mega-profits and plunging spot rates
Container shipping has enjoyed unprecedented earnings in 2021 and 2022 but as this year has progressed it has become clear that this is not going to last. We started out 2022 reporting that analysts Drewry had upped their annual forecast for container shipping’s EBIT in 2021 to $150bn to $190bn. As 2022 continued the profits reported by lines were to get even more staggering and in August we reported on the results of Maersk in Q2 just as they were hitting their peak. Delving into Maersk’s Q2 results: “Maersk reported an underlying EBIT of $8.9bn for the second quarter but behind the 15th consecutive quarter of on-year earnings improvements, there were signs of change. Profitability in the group’s ocean segment rose ‘significantly’ compared to Q2 2021, as softening volumes and shot-term rates were comfortably offset by higher contract rates.”
The extent of the plunge in container spot rates to come was to take even the most pessimistic by surprise. In mid-October we reported: “In a research note entitled ‘Fast and furious’ HSBC noted spot rates reported by the Shanghai Containerized Freight Index (SCFI) had fallen by 51% since the end of July – a decline of 7.5% per week. It was also highlighted that spot rates were now well below the levels of contract rates entered into at the start of 2022, especially on the Transpacific trade.
“In fact, at this pace of a 7.5% week-on-week decline, spot rates may hit the average spot rates of 2019 by the end of 2022e, a level where we expect capacity discipline to meaningfully emerge, especially when rates go below cash costs.”
As spot rates head back down to 2019 levels this is particularly concerning for container lines as they negotiate long term contracts for 2023, and there can be little doubt that earnings will be considerably impacted.
Decarbonisation in focus
It's hard to talk about 2022 without mentioning decarbonisation and emissions. The industry’s ambitions, regulation and IMO targets have gone well beyond their traditional realms of the trade press like ourselves at Seatrade Maritime News. Watching the mainstream press trying to cover week-long bureaucratic meetings at the lumbering beast that is the IMO is not something we ever expected to see.
While the focus has more often than not been on regulation it is moves the industry itself is taking in terms of investing in alternative fuels that are the single most concrete actions. Over the last year we’ve seen growing traction around ammonia and methanol as a marine fuel, the latter attracting significant ship orders. However, while ships are on order the availability of green fuels is another matter. In July we covered an interesting story on potential source of cheap sustainable methanol.
In a September In Focus episode of the Seatrade Maritime Podcast we talked to Chris Chatterton of the Methanol Institute. Amid all the talk on regulation and targets the most significant change is the coming into force of the IMO’s EEXI and CII regulations, latter for carbon intensity proving particularly controversial. These were covered indepth by our correspondent Paul Bartlett in a November In Focus episode and as Paul commented: “The pressure is already on however, as shipowners and operators should have drawn up new ship energy efficiency management plans (SEEMP by the end of this year.”
The December meeting of the IMO’s Marine Environment Protection Committee (MEPC) saw some long-awaited progress on a revision of the IMO’s GHG strategy. IMO Secretary-General Kitack Lim said at the close of the meeting: “It cannot be stressed enough how crucial it is that we keep the momentum and deliver an ambitious and fair, revised IMO GHG Strategy at MEPC 80 next year.”
The return of live events
Moving into the final topic for our year-end review without a doubt 2022 was the year the of the in-person event with a huge bounce back in conferences, exhibitions, seminars and cocktail parties.
Winding back to March and CMA Shipping in Connecticut was one of the first larger gatherings followed Singapore Maritime Week in April although the latter was still restricted to some extent by Covid measures.
But revving it up a whole different level was the return of Posidonia in Greece in June. As we noted at the time on our monthly Maritime in Minutes podcast: “If anyone had any doubts about the appetite for inputs and events post pandemic Posidonia clearly spelled these, the exhibition halls packed with visitors from around the globe. There were huge traffic jams against the venue. And of course, there were the parties.”
It was quickly nicknamed Partydonia and it wasn’t hard to see why. But there was plenty of serious stuff going on as well including for ourselves at the Seatrade Maritime News with a raft of live event coverage as well as recording episodes podcasts with Stealthgas CEO Harry Vafias and Vassilios Demetriades the Shipping Deputy Minister of the Republic of Cyprus.
September saw the massive SMM event in Hamburg back on the calendar. The event was hugely well attended and a had strong theme of decarbonisation running across both the exhibition and conference content. Our Europe Editor Gary Howard summed up the whole event in a piece entitled Drowning in Decarbonisation. “Decarbonisation drowned out every other topic at SMM 2022, but most of the maritime industry still awaits direction.”
The return of events has also meant we have the pleasure of meeting some of you, our readers, in person over the course of 2022, and we look forward to interacting with you both online and in person in 2023.
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