It’s Not All Gloom and Doom.

After a steady diet of stories in the maritime trade press about shipping companies teetering on the verge of insolvency, it was refreshing to read the latest news from Neptune Orient Line (Lloyd’s List, Sept. 2).

The Singapore-based shipowner reported a profit of $42.8 million for the first half of the year, compared to a $369 million loss during the same period a year ago. The major reason for the turnaround is the dramatic cost savings achieved by the company’s APL liner operations. APL claims to have reduced operating costs by $504 million in 2012, and another $240 million in the first half of 2013 through a structured program of efficiency improvements across its fleet of 132 ships. The lion’s share, some 60 percent, came from savings in fuel costs. Another 25 percent resulted from terminal productivity improvements.

Measures implemented by APL in 2012 included more accurate speed measurement and control, vessel monitoring, trim optimization, port ETA management, cold-ironing in port, use of larger vessels to achieve lower costs per container, better scheduling and a crew incentive program to focus the attention of on-board personnel on improving fuel efficiency. This year, the company is focusing on standardizing operating procedures across the fleet, a structured vessel retrofit program to improve technical efficiency, improved procedures for bunkering, careful bunker purchasing and selective replacement of older tonnage with newer more efficient ships.

APL vice president Søren Anderson was quoted as saying this is just the beginning. He insists there is still plenty of room for further cost reductions.

Refreshing news indeed!

The subject of operating efficiency and cost reduction is the fundamental question that will be addressed at the SHIPPINGInsight 2013 Fleet Optimization Conference, which takes place Oct. 23-24 in Stamford, Connecticut. (Full disclosure: my company is co-owner of the conference.) Executives from over 17 major shipping companies will be joined by experts from classification societies, bunkering companies, engine manufacturers, naval architects, shipyards and suppliers of equipment and services, to examine practical solutions to improve ships’ operating efficiency.

You can register online at www.shippinginsight.com/event-registration. I urge you to register soon and to book your room at the Stamford Sheraton at www.shippinginsight.com/location. It’s likely rooms will be sold out, so you should act quickly to take advantage of the special conference rate.

Gloomy News

If you want a snapshot of the state of the shipowning business, just look at the headlines in the August 16 issue of Lloyd’s List, reporting on quarterly earnings reports from publicly held shipowners.

  • “Thoresen Shipping Reports Operating Loss”
  • “Torm Cuts Losses But Is Still Hampered by Debt”
  • “Evergreen Marine Posts Second-Quarter Losses”
  • “Yang Ming Dips Into Red Amid Weak Rates”
  • “Wan Hai’s Second-Quarter Net Profit Tumbles 67%”
  • “Spot Rates Blamed as U-Ming Profit Falls over 50%”

Stephen Chen, spokesman for Taipei-listed U-Ming, summed it up nicely. “The problem is there are too many ships in the market, so better demand can help but not much. And the ordering spree from private equities this year may prolong the downturn.”

In a business climate characterized by persistent overcapacity, weak demand, disastrous freight rates, tight credit, low scrap prices, rising fuel costs and an increasingly burdensome regulatory regime, shipowners, already encumbered by high levels of debt, face a bleak near-term future. Many are already teetering on the edge of insolvency. It will likely get worse. As the new ships on order are delivered into a market that is already oversupplied, freight rates will almost certainly remain depressed in most segments.

To be sure, the owners placing orders for new-generation more fuel-efficient ships may emerge the winners. They are betting that savings in fuel costs will give them a competitive advantage over other shipping companies operating older less-efficient tonnage. They may be right, but they will still continue to struggle for solvency.

Regardless, it is clear that owners must reduce operating costs. That’s the subject that will be on the table at the SHIPPINGInsight 2013 Fleet Optimization Conference, of which my company is co-producer. The conference convenes Oct. 23-24 at the Sheraton Stamford Hotel in Stamford, Conn. We have assembled a lineup of speakers, panelists and moderators that includes senior executives from 17 major shipowners, as well as classification societies, shipyards, naval architects, consultancies, IT companies, engine manufacturers and suppliers of products and services. This year’s conference also includes a focused LNG Workshop, featuring a panel of experts discussing the issues, challenges, solutions and best practices for widespread adoption of LNG as an alternative marine fuel.

In addition to the conference agenda, there will be ample opportunities for less formal networking at the lunch breaks and evening cocktail receptions.

The deadline for Early Bird registration expires soon, so I encourage you to register now and take advantage of the $200 discount off the full conference rate. And while you’re at it, you can book your room online at the Sheraton Stamford Hotel at the special conference rate of $165/night.