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.

Shipping Faces Some Grim Realities

What if the predictions of economic recovery are wrong? Clay Maitland takes a hard look at the prospects for the future, and it’s not necessarily a pretty picture. 

I commend to your attention the article posted earlier this month by Clay Maitland on his blogsite. In his own inimitable style, he presents the case that shipping companies are not coming to grips with the new harsh reality of a lingering and resilient worldwide recession affecting world trade. See his full text at http://www.claymaitland.com/2012/08/01/shipping-faces-some-grim-realities/.
Mr. Maitland is a well-known figure and astute observer of the international maritime scene. He is managing partner of International Registries, Inc., and chairman of the North American Marine Environment Protection Association. He will be the keynote speaker at the SHIPPINGInsight 2012 Fleet Optimization Conference in Stamford, Conn., October 8-10. I can guarantee you’ll find his comments illuminating, interesting and entertaining.  Register online now at www.shippinginsight.com, to take advantage of early-bird discounts.

Rising fuel costs + low freight rates = net loss for container fleets

More sad faces at major container lines. Hapag-Lloyd blames soaring fuel costs for 2nd quarter loss.

Bloomberg today reported that Hapag-Lloyd AG, Europe’s fourth-largest container line, reported a second-quarter loss after soaring fuel costs offset modest improvements in freight rates. The CEO, Michael Behrendt, was quoted as saying, “High bunker prices in particular cause our expenses  to increase dramatically – they are by far the biggest cost factor for our business.” The company said the average fuel price jumped 14 percent to $694 per ton during the last year. Freight rates did not keep pace. The weighted average freight rate in the second quarter increased 7.4 percent to $1,594 over the first quarter of 2012, and was 4.1 percent higher than Q2 2011. Behrendt noted succinctly, “The cargo on board our vessels has to cover the cost of transportation.” Sad but true.

Hapag Lloyd operates a fleet of 147 containerships with a total fleet TEU capacity of 667,531 TEU. The company took delivery of the 10,000 TEU Hamburg Express last month, and has another nine 13,200 TEU ships on order.

Hapag-Lloyd is in good company. Bloomberg noted that A.P. Moeller-Maersk and CMA CGM both posted losses last year. The combination of overtonnage on key routes, sluggish growth in world trade volumes, soaring fuel costs and persistent low freight rates will not get better soon, and it is critical for fleet operators to seek out new ways to reduce operating costs.

To that end, I encourage you to attend the 2012 SHIPPINGInsight Fleet Optimization Conference, October 8-10, in Stamford, Connecticut, where industry experts will deliberate on technical solutions and best practices to optimize efficiency of ship operations.

I am especially happy to tell you that Clay Maitlandhas agreed to serve as keynote speaker for the conference. I am certain his unique expertise and insights will enrich the debate. He joins a top-notch roster of more than 30 speakers. You can register online and take advantage of early-bird discounts.

Note: This post originally appeared in the Maritime Professional, one of our media partners.