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Wednesday, 18 March 15
CHINA-OWNED SHIPS: A RAPID RISE TO BECOME ONE OF THE WORLD'S LARGEST FLEETS - RICHARD SCOTT
 Ships operated by owners based in China have become increasingly prominent on the world’s sea routes. China-owned container ships, bulk carriers, tankers and other vessels are seen more frequently in ports around the world. These ships now constitute the third largest fleet as identified by ownership and control nationality, following Greece in the number one position and Japan at number two. And the China-owned fleet is set to become much larger, one indication of which is a huge volume of new vessels on order at shipbuilding yards. This article looks at how and why rapid fleet expansion has evolved, and who are the major players.
Fleet growth has evolved alongside the spectacular advance of China’s seaborne trade since the early 2000s. Many second-hand ships have been bought by Chinese owners from foreign companies, while newbuilding vessels have been acquired on a vast scale. But the China-owned fleet’s enlargement has generally lagged behind the growth of the country’s import and export cargo movements. This widening gap may be reduced over the years ahead.
The fleet’s tidal surge
During the past ten years, the China-owned fleet has more than tripled in size. From 37.7 million gross tons (GT) at the end of 2004, total capacity rose by 216 percent to reach 119.2m GT at end-2014, according to figures compiled by Clarkson Research and shown in the graph, including all ships of 100 GT and above. This pace of growth was faster than seen in the entire world fleet; consequently China’s share of the global total increased from 6 percent to just over 10 percent.
Expansion has been seen in all the vessel-type categories. The bulk carrier fleet saw the most rapid advance, especially since 2008. Between 2004 and 2014 this fleet almost quadrupled to 69.2m GT, forming the largest portion of China-owned tonnage. The tanker and container ship fleets tripled in size over the past decade to 21.2m GT and 13.7m GT respectively at end-2014. All other ship types together grew less rapidly by seventy-six percent, to reach 15.1m GT. Included in this ‘other ships’ category are gas carriers, multi-purpose and general cargo ships, roll on-roll off vessels and vehicle carriers, cruise and passenger ships and offshore vessels. A large part of these fleets is involved in international trade, but many ships are employed wholly within the huge Chinese coastal cargo movements.
Two aspects of the figures need clarification. Firstly, the choice of gross tonnes to provide an indication of cargo-carrying capacity. For bulk vessels (tankers and bulk carriers) the usual measurement is deadweight tonnes, and for container ships the TEU (twenty-foot equivalent unit) is normally used. Gas carriers are generally described in cubic metres capacity, and other ship types by a variety of tonnages. Gross tonnes provides a convenient common measurement.
Secondly, how can the country of ownership of a vessel be defined? As is well known, a vessel’s flag (the flag of the state in which it is registered) typically provides no indication of ownership nationality. The ownership country is where full control (the parent owning company) is located. However, identifying this location relies heavily on interpretation and subjective judgements. In some cases the real ownership location may be obvious, but in many other cases it is less or much less apparent. At the end of 2014 there were over 89,000 ships included in the world’s merchant (commercial) ship fleet. In a typical year, a huge number of changes take place. Identifying ownership, and tracking changes for the entire fleet is a highly challenging task, and it seems quite likely that numerous mistakes occur, probably unavoidably, despite thorough checking. Perhaps these figures should be viewed as a broad, rather than precise, indication of ownership nationality.
As an example of how statistical data differs, slightly changing perceptions, the foregoing figures can be compared with the widely-used United Nations Conference on Trade and Development statistics. These UNCTAD figures are compiled in deadweight tonnes, and include only vessels over 1000 GT, which are contributory reasons for differences. In this analysis the China-owned fleet’s proportion rises from 6.8 percent of the world total at the end of 2004, to 11.9 percent at end-2013 (the latest available data). The starting position in that decade therefore is almost one percentage point higher than in the data set already discussed, while the ending position is almost two percentage points higher. Moreover, when UNCTAD changed data providers in 2012, the identified China-owned fleet’s deadweight capacity jumped by 53 percent in just one year. Also, the proportion of the world total abruptly increased over twelve months by three percentage points, to 11.8 percent. This narrative seems to illustrate how identification of true ownership is not an exact science and varies among statisticians.
Chinese characteristics
Fleet tonnage expansion involved a huge rise in the number of individual China-owned vessels trading, from 3.821 at the end of 2004, to 6,532 at end-2014, based on Clarkson data. The percentage rise, 71 percent over the decade was well below that of gross tonnage, owing to a rising average vessel size. At the beginning, the average vessel size employed was 9,859 GT, rising to 18,242 GT at the end, an 85 percent increase.
One significant characteristic of the current fleet is the predominance of relatively young ships. At the end of 2014, based on the number of vessels, 80 percent of tankers were less than ten years old (built 2005-2014). The comparable figure for bulk carriers was 68 percent, and for container ships 51 percent. Modern ships usually have superior operating advantages, being more efficient and more economical.
A large part of the China-owned fleet is operated under open registries. At the end of 2013, based on UNCTAD figures, 63 percent was registered by foreign flags, similar to the 65 percent proportion one year earlier, up from 49 percent ten years earlier. The role of the Hong Kong flag has grown strongly. The advantage of this arrangement, for many China-owned ships involved in international trade, is greater operational, financial and regulatory flexibility under open registries, compared with national flag registration. Ships participating in coastal trade are required to fly the Chinese national flag.
While much of the fleet growth reflected new ships purchased, China’s shipowners’ vessel purchases on the international second-hand market also comprised a major part. In 2014, for example, a 5.7m GT total was bought, according to Clarkson, although 56 percent of the number of vessels resulted from transactions with domestic owners. Second-hand purchases often have substantial advantages for buyers, including immediate availability for trading and, often, involve lower capital expenditure than a comparable newbuilding vessel.
Although growth in the China-owned fleet has been impressive over the past decade as a whole, annual growth varied greatly, within a 2 percent to 25 percent range. The fastest annual advances were seen in 2009 and 2010, when there were two consecutive 25 percent surges. Since then, a marked deceleration has occurred, down to only a modest 2 percent in 2014, when the bulk carrier fleet’s capacity actually diminished marginally, and tanker fleet capacity was flat.
Policy and economics drivers
Accompanying this fleet evolution, several recent signs of broad action by China’s government on aspects of shipping policy have been seen. At the beginning of this year, the Ministry of Transport published details of aims for upgrading the country’s shipping industry and improving services and competitiveness in the global marketplace. Previously, two months earlier, intentions to support and modernise China’s shipping were reported. Specific items listed were encouragement of mergers and acquisitions and private investment involvement, together with development of cruise shipping. More support from domestic financial institutions was encouraged. These policy objectives followed publication of guidelines for developing and supporting shipping, including tax changes and regulatory reform, while applying pressure on companies to improve and modernise their fleets. The stated aim was to build an efficient, safe and environmentally friendly Chinese shipping system by 2020.
Previously, towards the end of 2013, a new scrapping subsidy plan was introduced by the Chinese government to benefit both shipping and shipbuilding industries in China over the period up to 2015. The subsidy is restricted to China-flagged ships. Shipowners participating are required to place newbuilding orders with Chinese shipbuilders at least equivalent to the vessel tonnage being scrapped in domestic recycling yards. This policy has assisted a number of Chinese shipowners with their fleet renewal programmes. The plan was seen as being especially valuable for the coastal trading fleet operating under the China flag.
For some time, it has been clear that the Chinese government’s intention is to achieve a larger proportion of the country’s seaborne trade transported by ships owned by companies based within China. This aim has been most visible in the VLCC (very large crude carrier) segment of the oil imports trade.
Reports have suggested that the government’s target is to see as much as 85 percent of foreign crude oil purchases carried by Chinese controlled ships. A huge newbuilding order by Chinese shipowners for up to eighty VLCCs has been anticipated, as a result. But, although a number of new tankers of this type have been ordered, and some have already joined the fleet, there are no signs of the target being achieved. According to a recent report by E A Gibson Shipbrokers, only 8 VLCCs were delivered to Chinese controlled companies in 2014, preceded by just 5 in the previous twelve months. However, orders for new VLCCs stood at around 30, for delivery at a rate of about 10 ships annually from this year up to 2017, implying a possible acceleration in the pace of transport capacity expansion.
A trend of expanding global seaborne trade volumes, a major contributor to which comprises rising imports into, and exports from, China provides growing opportunities for participation by Chinese shipowners. Cost-competitiveness enhances potential for involvement. These features, becoming well established over the past decade or longer, are the fundamental economic drivers of growth in the China-owned fleet of ships. But there is some evidence that subdued freight rates on the international market, and therefore low profitability for shipowners, during many of the past few years, has deterred investment by Chinese companies. In these circumstances, China-owned ships, employed in both China import or export trade and in international cross-trades, experience poor or mediocre investment returns.
Prominent players
Within the entire China-owned fleet of ships of all types, about two-fifths measured in gross tonnes is contributed by three state-owned enterprises. These are: China Ocean Shipping Company (Group), usually known as COSCO; China Shipping Group (CSG); and Sinotrans & CSC. Another prominent company, also state-owned, is China Merchants Group. The largest shipowner in the private sector is HOSCO.
A number of separate individual company fleets of specific vessel types are large parts. At the end of 2014 there were nine, each of at least 2 million GT, which dominated the industry. The biggest, according to Clarkson data, were COSCO Group’s bulk carrier fleet amounting to 160 ships of 8.7m GT, China Shipping’s container ship fleet totalling 76 ships of 5.8m GT, and the COSCO container ship fleet consisting of 79 ships totalling 4.5m GT. The next largest component was the 4.4m GT tanker fleet in the new China VLCC pool.
In August last year, a joint venture to operate VLCCs was announced by China Merchants Energy Shipping (with a 51 percent shareholding) and Sinotrans & CSC (49 percent shareholding). China Merchant’s existing nine tankers of this type were the initial component, together with ten newbuildings on order. A few months later the new enterprise, named China VLCC Company, acquired eight VLCCs from the bankrupt Nanjing Tankers, originally a subsidiary of Sinotrans & CSC. Another nine VLCCs operated by Nanjing, plus a recently-delivered newbuilding, were taken over by year-end, raising the China VLCC total to 28 tankers. This company seems destined to be one of the tanker market’s largest players.
Navigating further growth ahead
What is the outlook for future fleet development? One clear indication is new ships currently on order for China-based shipowners. At the end of 2014, Clarkson statistics show that the total of these was 625 ships of 32.1m GT, equivalent to 27 percent of the capacity of the existing 119.2m GT operational fleet. This huge order volume was the largest by owner nationality, exceeding that of Greece (30.4m GT), Japan (15.4m GT) and Germany (11.0m GT). Just over half of the China total volume, 16.4m GT is scheduled to be completed by shipyards and delivered to owners within the current year, 2015. A further 12.2m GT is due for delivery in 2016.
Although this new capacity being added implies fleet expansion, projections for China (and other countries) are often surrounded by great uncertainty. Aspects which are usually difficult to forecast reliably are numerous. Major uncertainties include the timing of newbuilding deliveries (compared with the recorded order book schedule), and how much additional ordering will occur. Also, scrapping of existing old or obsolete tonnage is hard to predict. The disposal of existing ships in the fleet to, and acquisitions from, owners located elsewhere (second-hand sale and purchase activity) is not accurately predictable either.
Nevertheless, signs point firmly towards continued enlargement of cargo-carrying capacity in the China-owned fleet of ships during this year, the Year of the Goat and further ahead. The large-scale order book is a convincing indicator, and anecdotal evidence also demonstrates intentions to add tonnage. Backed by a government strategy for shipping industry development, and accompanied by President Xi Jinping’s vision of a 21st century Maritime Silk Road, the China-owned fleet seems set to achieve greater prominence.
Source: Article by Richard Scott, Visiting Lecturer, China Maritime Centre, University of Greenwich & MD, Bulk Shipping Analysis | Hellenic Shipping News
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Sunday, 01 March 15
BDI INDEX SLIGHTLY UP CAUSED AN INCREASE IN THE PANAMAX, SUPARAMAX AND HANDY SIZE INDICES
COALspot.com: The freight market saw some gains this week and BDI was up 5.26 pct closed at 540 points. However the Cape index failed to follow BDI ...
Friday, 27 February 15
WEEKLY US COAL PRODUCTION DOWN AN ESTIMATED 14.0% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 16.5 million short tons (mmst) of coal ...
Thursday, 26 February 15
DRY BULK MARKET COULD REBOUND FROM HISTORICAL LOWS IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market could exit from its historical lows in the coming weeks, as Chinese buyers reenter the market after the holiday celebrations. T ...
Thursday, 26 February 15
COAL POLICY RISK: HIGHER ROYALTIES FOR IUP HOLDERS - BAHANA SECURITIES | JAKARTA POST
The Energy and Mineral Resources Ministry plans to raise coal royalties charged to mining operation permit (IUP) holders by the end of the first qu ...
Thursday, 26 February 15
DRY BULK MARKET LOOKING FOR POSITIVE MOMENTUM, BUT PROSPECTS REMAIN DIM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the Baltic Dry Index (BDI) inched a bit higher over the past couple of sessions and the Chinese are returning to the market after a week long hi ...
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Showing 3171 to 3175 news of total 6871 |
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- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Indogreen Group - Indonesia
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