SHIPPING AND SHIPBUILDING MARKETS

Annual Review

2023
Contents

Offshore Wind
Energy ............................ 07

Carbon Markets ............ 17

Shipbuilding .................. 25
Shipping &
Ship Finance.................. 55
Shipbuilding
Dry Bulk......................... 61

Tanker............................. 73
Markets
Chemical &
Small Tankers ............... 89
600 BRS Group is focused on the world, people
and technology through its two main affiliate
LPG .................................. 97 Employees worldwide companies, BRS Brokers ([Link]),
a global and international shipbroking company,
LNG ............................... 107

Offshore....................... 115
240 and AXSMarine ([Link]), a maritime
data and software provider delivering decision
Shipbrokers support services.
Cruise............................ 123

Containerships ........... 129 100

MPP................................ 145 Assets transactions per year

Ro-Ro............................ 151
5,500
Car Carrier.................... 157 Chartering transactions per year
Mercy Ships ................ 163

BRS Group - Annual review 2023 1

 Let’s make History! It must be admitted that the continued use of
HFO will slow down the transition to cleaner fuels
at precisely the point in time when it should be
accelerated. 2030 and 2050 are ‘tomorrow’. We
cannot simply expect to hit carbon reduction
Humankind has a knack for self-inflicting wounds: targets right on these dates without a targeted
epidemics, inflation, war, pollution, climate plan and corresponding action. In 2022, we saw
change, pain and suffering from another age… we too many dual fuel vessels switch back to HFO as
extremely strong LNG prices eroded the economics
used to think. Still there is nothing that we cannot of LNG propulsion. This turn of events was a
fix with science, technology, common sense, huge step back as dual fuel main engines are less
goodwill and determination. efficient at using only HFO compared to specialized
main engines resulting in higher consumption. In
addition, HFO requires heating, not to mention
One topic on which there should be a clear consensus in the shipping additional fuel consumed to operate scrubbers.
industry is the banishment of heavy fuel oil (HFO). Although HFO These additional demands add up to an extra 3 to
replaced coal as a fuel sometime in the 20th century, this ‘dirty’ fuel 5 tonnes of HFO consumed on the largest vessels,
has become increasingly vilified in the 21st century as the industry’s which could otherwise be saved.
focus has moved towards reducing its environmental footprint.

HFO is a danger to human health as it releases during its combustion Bunker Prices in Rotterdam
SOx, NOx, heavy metals, particulate matters, black carbon and (calorific values corrected in VLSFO equivalent)

chemicals (aromatic hydrocarbons, benzenes) known to cause EUA Futures $/mt

EUA Futures $/mt
Russian Nord
cancer. As such, no national authority allows it to power land- $/Mt invasion
of Ukraine
Stream 2
explosion
based forms of transport. It is only used in the shipping industry 4,000
4,000
due to its attractive price and the sector’s lower environmental 3,500
3,500
standards set out by the international shipping regulator, the 3,000
3,000
International Maritime Organization. These factors combined with 2,500
2,500
wide availability have seen the shipping industry become addicted 2,000
2,000
to HFO. Regardless of the practical and economical convenience 1,500
1,500
of HFO, the industry must escape its toxic grasp. At a time when 1,000
1,000
many shipowners are trying to find cleaner alternatives based on 500
500
molecules such as LNG (CH4) or methanol (CH3OH) or LPG (C3H8 0
0
and C4H10), including some molecules (methanol for instance) 2019
2019
2020
2020
2021
2021
2022
2022
that can be manufactured using renewable electricity (solar,
wind, hydro) and existing CO2, shipping regulators can no longer 2,000
2,000

pretend that the environmental footprint of HFO is comparable

1,500
with the alternatives. 1,500

1,000 896
1,000 896
869
Emissions reduction compared to conventional HFO engine (%) 869
705
Air 705
576
polluant 500 576
544
LNG LPG Methanol 500 544
518
518
379
379
Up to 40% for 2S Diesel cycle Up to 20% for 2S 30%-60%
Nox 0
Up to 90% for 2S Otto cycle Diesel cycle (Tier II compliant) 0
Oct 22 Nov 22 Dec 22
Oct 22 Nov 22 Dec 22

Sox Over 90% Over 90% Over 90%

VLSO 380 cst LSMGO LNG

PM Over 85% Over 85% Over 85% Methanol Propane Butane

Source: Bureau Veritas

All fuel in ton of VLSFO equivalent

IFO 380cst Propane Butane
(scrubbers) VLSFO LSMGO LNG Methanol as CIF cargo as CIF cargo

2023 Jan 1st

379 544 869 896 705 576 518
Rotterdam

2 BRS Group - Annual review 2023 3

 “It is not because things are difficult that we do not dare, This race to the bottom needs to be stopped and the playing field
levelled to enable cleaner molecules to compete with the economics
This represents about 350 dual fuel ships or
about 250 dual fuel ships per year if we exclude

it is because we do not dare that they are difficult” of HFO. For example, methanol reduces emissions of SOx, NOx,
CO2 and fine particles by 90%, 60%, 25% and 85%, respectively,
LNG carriers that have always been propelled
on LNG. At this pace, it will take more than 100

Seneque compared with HFO. Under the current regime, HFO will always be
cheaper than cleaner, high-grade fuels simply because it is a toxic
years to have a full dual fuel fleet in place, further
assuming that it will fully meet the 2050 targets.
residue that is left at the end of the refining process. Although the
demand for HFO should eventually decline, we could also envisage There is an urgency across the world to seriously
a future scenario where shipowners will be paid to take a by- engage in the fight against climate change in
product that nobody else wants or can use, something already seen which every industry is involved and bears
in the recycling industry. its own responsibility. The shipping industry
need to take drastic solutions and focus on the
The goal of the 2015 COP 21 meeting was to limit global warming to existing fleet. Banning HFO in an orderly way
a level below 2 degrees, preferably 1.5 degrees, compared with pre- so as to take care of everyone’s interest would
industrial levels. According to a forecast made in December 2022 be a sensible solution. It is already banned in
by the UK’s Meteorological Office, 2023 could be one of the hottest Arctic and Antarctic areas. Other methods to
years on record with the average global temperature forecast to reduce shipping’s environmental footprint could
be about 1.2 C higher than before humans started to drive climate be adopted today, notably embracing slow
change. The IMO’s initial greenhouse gas (GHG) strategy envisaged steaming (a reduction of 20% of speed would
a reduction in the carbon intensity of international shipping of at result immediately into a 50% drop in CO2 and
least 40% by 2030, and 70% by 2050, compared with 2008; and GHG emissions). Meanwhile, it is evident that
that the total annual GHG emissions from international shipping increased resources must be diverted to longer-
should be reduced by at least 50% by 2050 compared with term solutions such as the development of carbon
2008. The strategy includes a specific reference to “a pathway neutral e-fuels and the development of green
of CO2 emissions reduction consistent with the Paris Agreement corridors where cleaner fuels would be available,
temperature goals”. and which would be characterised by stricter
environmental legislation and more efficient
At the end of 2022, a bit less than 30% of the worldwide shipbuilding logistics optimising ship use.
orderbook of 3,600 newbuildings (actually 1,047 ships) and a bit
more than 22% of the worldwide shipbuilding orderbook excluding That is why the International Maritime Organi-
LNG carriers was dual fuel and due for delivery by the end of 2025. zation should also follow in the footsteps of the
European Union and develop a carbon tax for
shipping with a reasonable amount of levy per
including LNG Excluding LNG
ton of CO2 to become the international norm
Dual-Fuel Propulsion Delivered On Order Delivered On Order and a way of levelling the playing field between
LNG 903 834 274 509 HFO and cleaner fuels.
LNG / biogas 3 3
Back in 1987, a worldwide ban on ozone-depleting
LNG / electric 6 9 6 9
chemicals was agreed under the Montreal Protocol
LNG / hydrogen 2 2 to save the ozone layer that absorbs most of the
LNG / wind assisted 1 1 ultraviolet radiation from the sun. This resulted in the
Lpg 50 94 50 94 banning of chemicals such as chlorofluorocarbons.
Methanol 23 53 23 53
Human action to save the ozone layer has worked
as hoped, and according to a recent UN report it
Electric 37 35 37 35
may recover in just decades.
Electric and wind assisted 1 1

Wind assisted 19 6 19 6

Ethane 23 10 23 10 The shipping industry could show its leadership

now by phasing out HFO and in doing so make
Totaol Dual-Fuel 1,062 1,047 433 722
Will these gates to heaven disappear? history!
All Ship 41,824 3,609 41,142 3,273
François CADIOU
% 2.5% 29.0% 1.1% 22.1% Chairman

4 BRS Group - Annual review 2023 BRS Group - Annual review 2023 5
Offshore Wind
Energy: Ambitions
and Challenges

CSOV ISLAND DILIGENCE

7
 BRS GROUP
OFFSHORE WIND ENERGY

I. An ambitious plan to develop offshore wind energy on a global scale

The main driver of the global energy transition as well as European energy
security is electrification. DNV, a consultancy, estimates that (i) the share of
electricity in the global energy mix will raise from 19% today up to 36% in 2050 Total capex 2023-2030
and (ii) electricity generation will double by 2050 (from 27 PWh p.a. till 62 PWh
p.a.). Offshore wind energy is to increase 26-fold during the period. RoW

As a consequence, market consultancy 4C Offshore estimates that capex China

dedicated to the offshore wind industry will reach $700 bn over the period 2

2020-2030, from $35 bn in 2022 till est. $106 bn in 2030 (i.e. 200% increase). 15% Europe

While global capital expenditures remained stable at around USD 35-40bn p.a.
over the period 2020-2023, a sharp increase is expected in 2024 and 2025 due
41%
to installation of large bottom-fixed wind farms recently awarded in Europe
and the installation of large projects of the US East Coast market. Another sharp
Est.
increase is expected in 2029-2030 with the installation of the first large-scale $ 600bn
21%
floating wind farms. The growth in capex and thence installation of offshore North
America
wind farms is expected to be driven by Europe in the coming decade (est. 65%
of total 2020-2030 capex).

21%

APAC ex. China

Offshore Wind Global Offshore Wind – Est. Annual capex per region,USDbn
Sources: from 4C Offshore Limited 2023

Global Offshore Wind - Total capex per region,

-2030
2020

Energy: Ambitions Global Offshore Wind – Est. Annual capex

and Challenges Mteu

$bn 2

15%
120

Ramp up wind 2022 saw countries around the globe strengthening their commitments towards
the development of offshore wind energy. The war in Ukraine and subsequent 100 94
101
106

41%

power ‘on a large

drastic increase in energy prices focused attention once again on European
82
energy security and reinforced (if not accelerated) a strategic re-balancing of
80
the European energy mix towards locally generated and sustainable energy.
scale, in a short To accelerate their development, the European Commission signed a motion to
56
67
21%

simplify the process of getting permits for renewable projects (one of the main 60

time and at a
48
hurdles for their development so far). And in September, during the COP27 UN 40
39 35
Climate Change Conference in Egypt, 9 countries from 3 continents – namely 40 Europe

competitive price’ Belgium, Colombia, Germany, Japan, the Netherlands, Norway, UK and the US
- joined Denmark in the Global Offshore Wind Alliance (GOWA) and pledged 20
21% China

to tackle climate, to ramp up wind power “on a large scale, in a short time and at a competitive
price” to tackle climate, energy and security crises. 0
APAC ex. China

energy and Such an ambitious development plan raises many questions or concerns about 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
North America

security crises the ability of the industry to deliver it. In this paper, two key challenges are
addressed: Firstly, across the short term; the provision and installation of wind
Europe APAC ex. China North America China RoW
RoW

turbines and secondly, across the longer term; the logistics required to install
floating wind farms.

Sources: from 4C Offshore Limited 2023

8 BRS Group - Annual review 2023 BRS Group - Annual review 2023 9
 BRS GROUP BRS GROUP
OFFSHORE WIND ENERGY OFFSHORE WIND ENERGY

EUROPE
Capacity installed per year in Asia Capacity installed per year in Europe
MW MW
As previously stated, Europe is expected to become the
largest recipient of offshore wind dedicated capex. From
30,000 14,000 30,000
2027
14,000onwards, Europe is expected to overtake Asia
(including China) in terms of new capacity installed per
12,000
12,050
year and, by 2030, should install 40% more capacity than
12,000
12,050
30,000 14,000 30,000 14,000
25,000 25,000 Asia. The largest contributor to these figures is the UK,
12,050 which from 2026 onwards, is expected to install more 12,050
10,000
12,000 10,000
12,000
25,000
20,000 25,000
20,000 capacity than the US on an annual basis. The other main
17,597 17,597
contributors over the decade will be those countries
8,000
10,000 8,000
10,000
20,000 20,000
with an already-established track record in offshore wind,
15,000 15,000
17,597
5,657
17,597 notably Germany, Denmark,
5,657
the Netherlands, France and
6,000
8,000 6,000
8,000
Poland.
15,000
10,000 15,000
10,000
4,000
6,000 5,657 4,000
6,000 5,657

10,000 3,770 10,000 3,770

5,000 5,000
2,000
4,000 2,000
4,000

3,770 3,770
5,000
0 0 5,000
0 0
2,000 2,000

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
0 0 0 0

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Belgium France Italy Poland United Kingdoms China South Korea Belgium France Italy Poland United Kingdoms China South Korea
Denmark Germany Lithuania Portugal India Taiwan Denmark Germany Lithuania Portugal India Taiwan
Estonia Greece Netherlands Spain Japan Vietnam Estonia Greece Netherlands Spain Japan Vietnam
Belgium
Finland France
Ireland Italy
Norway Poland
Sweden United Kingdoms China
Philippines South Korea Belgium
Finland France
Ireland Italy
Norway Poland
Sweden United Kingdoms China
Philippines South Korea
Denmark Germany Lithuania Portugal India Taiwan Denmark Germany Lithuania Portugal India Taiwan
Estonia Greece Netherlands Spain Japan Vietnam Estonia Greece Netherlands Spain Japan Vietnam
Finland Ireland Norway Sweden Philippines Finland Ireland Norway Sweden Philippines
Sources: from 4C Offshore Limited 2023 Sources: from 4C Offshore Limited 2023

ASIA
Capacity installed per year in the Americas Global floating wind capacity installed per year
8,000
In Asia, China will remain the undisputed largest developer MW
7,000 MW
8,000 7,000
of offshore wind farms despite 2022 being characterized 6,500 6,500

7,000 by a drastic fall in new installations. From 2025 onwards, 7,000

8,000 6,000
7,000 8,000 6,000
7,000
China will, according to a Global Wind Energy Council 6,500 6,500
6,000
7,000
(GWEC) report, install above 10 Giga Watts (GW) of new 6,000
7,000
5,000
6,000 5,000
6,000
capacity per year. Other main developers in the regions
5,000
6,000 will be Taiwan (an existing offshore wind farms operator), 5,000
6,000
4,000
5,000 4,000
5,000
and new countries including South Korea and 4,019 Japan. 4,019
4,000 4,000
5,000 Indeed, each country is projected to see more than 1 5,000
3,000
4,000 3,000
4,000
GW of new capacity installed per year across4,019 2025-30. 4,019
3,000 3,000
4,000 Additionally, Vietnam is expected to become the next 4,000
2,000 2,000
2,000 significant market for offshore wind owing to its thriving 3,000
2,000
3,000
3,000 3,000
economy and the associated need for it to increase
936 936
1,000 electricity supply. 1,000
2,000 1,000
1,000
2,000
2,000 2,000
132 132
0
1,000
0
1,000
936
0
1,000
Developments
0
1,000 in floating offshore
936

2021 2022
132
THE
2023 AMERICAS
2024 2025 2026 2027 2028 2029 2030 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021 2022
132 2023 2024 2025 2026 2027 2028 2029 2030 wind farms
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
0 0 0 0

2021 2022
In 2023
the Americas,
2024
the development
2025 2026 2027
of offshore
2028 2029
wind
2030
farms 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Floating offshore wind
2021
farms
2022
that can
2023 2024
be2025
installed
2026
further
2027 2028 2029 2030
China Italy across this South
decadeKoreawill almostUnited States
exclusively be driven by Canada China Italy South Korea United States out atCanada
sea and catch stronger and more regular winds are
France Japan Spain United States France Japan Spain United States
Greece Norway
the US, with their
Taiwan
first commercial wind farms coming Greece Norway Taiwan
not expected to be commissioned on a large scale before
China
Ireland Italy onstream inSouth
Portugal 2023
United (Vineyard Wind
Korea
Kingdoms 1, South Fork on the
United States Canada China
Ireland Italy
Portugal South
UnitedKorea
Kingdoms United States the end of the decade. However, up to 14 countries
Canada
United States
France JapanUS East Coast).
Spain The Biden administration has recently France Japan Spain acrossUnited States
all continents are currently working on various
Greece Norway Taiwan Greece Norway Taiwan
Ireland
announced United
Portugal an ambitious
Kingdoms
plan to construct 30 GW of Ireland Portugal United Kingdoms
programs and projects. Consequently, GWEC expects the
offshore wind capacity by 2030. Based on this ambitious installation rate of new floating wind farm to be around
target, and actions implemented by the federal and state 1 GW per annum in 2025 and increase up to 7 GW per
administrations, GWEC predicts that up to 27.5 GW could Sources: from 4C Offshore Limited 2023 Sources: from 4C Offshore Limited 2023 annum in 2030, mostly supported by projects in the UK
be built in the US from now until 2030. (Scotwind), South Korea, Japan and the US.

10 BRS Group - Annual review 2023 BRS Group - Annual review 2023 11
 BRS GROUP BRS GROUP
OFFSHORE WIND ENERGY OFFSHORE WIND ENERGY

Can the industry manage to install so many

II. SHORT TERM. turbines and such a short time?
Can a global supply chain support such growth? – the case of the turbine
As an industry-standard, offshore wind turbines today (on bottom fixed As a conclusion, the main bottleneck to reach the ambitious
foundations) are installed using a self-propelled jack-up vessel with a heavy global installation targets might not come from issues related
crane and high lifting height called Wind Turbine Installation Vessel or (“WTIV”). to procurement and delivery of turbines and foundations
-even as their size increase. Securing access to installation
This ambitious commitment can only materialize if it is supported by a strong As the size of the turbines increases, the WTIV needs to have bigger deck, vessels (foundation installation vessels, WTIV, cable-layers,
and efficient supply chain. The main single capex item of a standard wind to transport larger and heavier turbine components, and have a bigger and etc.) may become a challenge for several developments in
Capex for a typical fixed-bottom offshore wind farm stronger crane, to install gearboxes and blades at a higher altitude. As an
farm is the procurement of wind turbines with may represent up to 35% of the years to come.
a project’s total capex, on top of which come installations costs. Could they illustration, the blade of a 15MW turbine is 115m long. As early as 2025,
become a bottleneck slowing down the global offshore wind development? WTIVs will be required to transport and install such long blades 200m above
Insurance during construction 0.9% sea level. The global WTIV fleet with crane above 500t (able to install turbines
Construction finance 3.9%
Contingency 9.3% Wind turbine manufacturing is a very concentrated market. In 2021, 10 wind with capacity of > 4MW) totals 33 units, of which, 22 are on the water and
Decommissioning 3%
Turbine 34.7% turbine manufacturers supplied 3,340 offshore wind turbines worldwide. 11 are on order to be delivered between 2023 and 2025. Looking at the fleet
Plant commissioning 0.9%
Lease price 4.5% Of these 10 suppliers, 7 (including the 3 largest) were based in China, 2 in of WTIVs with cranes above 2,000t and sufficient outreach (able to install the
Europe (Vestas and Siemens Gamesa) and 1 in Japan. Outside China, the turbine with 15MW capacity), the fleet today stands at 2 units. Meanwhile
European suppliers dominated the global market with main manufacturing another 11 are on order.
hubs in Denmark, UK, Germany, France and Taiwan. Although we may not
see newcomers emerge in this market in the short term, it is expected that Can we consider that the WTIV fleet is large enough and has the right charac-
Soft Costs local players like Doosan in South Korea or Mitsubishi and Hitachi in Japan teristics to support the expansion of offshore wind across this decade?
17.9%
will support the expansion of their respective markets. In addition, large
Turbine 34.7% Chinese manufacturers are already venturing abroad. For example, turbine 1. WTIVs can also be used to install foundations – more specifically monopile
manufacturer Goldwind has set up an office in Denmark. Consequently, there foundations. As such, the global WTIV fleet might not be used at full capacity
Assembly /
installation is no specific concern in the market about a potential short-term bottleneck to install wind turbines. Certain WTIV owners have already made the strategic
Balance of System
10.4%
47.5%
for the procurement of offshore wind turbines - even if new investments, decision to dedicate their WTIV fleet 100% to monopile installation.
especially in Europe and in the US, would be required to address the drastic
step-up from 2025 onwards.
2. Out of 33 assets, 6 (18%) will operate in heavily protected markets
(China, USA, Japan) and are therefore unlikely to be deployed elsewhere.
In parallel, the capacity of the wind turbine is increasing, hence reducing the
Electrical
number of turbines required, shortening installation times and consequently
Infrastructure 17.6% Development
2.3% strengthening the economic viability of offshore wind projects. Offshore 3. WTIV may represents a challenging market for certain investors due to three
wind turbine manufacturers have been able, through innovation, to steadily key reasons: (i) relatively low revenue visibility due to seasonal, campaign-
Substructure /
increase the size and capacity of the turbines: from 8 MW turbines currently based term employment contracts 1-2 years max, (ii) a high entry ticket: a
foundation 12.6%
installed, to 15 MW currently on order, to efforts to design and construct 20 newbuild costs $250-350m and (iii) a highly competitive current market with
15 owners controlling the 33-strong global WTIV fleet. Most of the vessels
MW turbines by the end of the decade.
under construction have been ordered on speculation.
Sources: from 2020 Cost of Wind Energy Review, Tyler Stehly and
Patrick Duffy, National Renewable Energy Laboratory 2021.

Evolution of Wind
wind turbine
turbine haights
heights and
and output
output

300m 13-15 MW

9 MW
200m 7 MW

4 MW

2 MW
100m 1.2 MW

0.5 MW
1-12kW

19th C 1990 1995 2000 2005 2010 2015 2025

Sources:
Source :From Bloomberg NEF
From BNEF

12 Picture(right): Jan de Nul’s WTIV VOLE AU VENT performing turbine installation in France in 2022. BRS Group - Annual review 2023 BRS Group - Annual review 2023 13
 BRS GROUP BRS GROUP
OFFSHORE WIND ENERGY OFFSHORE WIND ENERGY

III. LONGER TERM.

The Logistic challenges of the installation of floating offshore wind farms.

‘Long range, deep How to manufacture

and transport large floaters?
sea, transportation To support turbines of 150-200 meters, floaters need to be very stable and as
is on a critical path such come with a very heavy footprint.

towards increasing Both the Hywind Scotland and Kincardine pilot projects count 5 turbines (i.e. 5
floaters each) and have an overall respective capacity of 30 MW and 50 MW.

efficiency and
In comparison, a 1 GW floating offshore wind farm uses 15MW turbines (i.e.
the largest commercially available) which will require 67 foundations!

reducing the The industry is working on various floater designs and although certain designs
are using concrete instead of steel (Hywind Tampen), it seems likely that the
carbon footprint majority of the floating offshore wind farms to be installed in the years to
come will have steel floaters. Considering that the steel quantity estimated for
of offshore wind each floater is twice that required for monopile foundations for bottom-fixed
wind farms we can expect that, to manage a floating wind project’s capex, the
farms’ manufacturing of such floaters will require large and cost-efficient fabrication
capacities. In most cases, these will be located far from the installation sites
in Europe or the US.

As the world already plans for the strong growth of floating Long range, deep sea, transportation is on a critical path towards increasing We expect that questions related to manufacturing and transportation of wind farm), it will require the use of port facilities with
offshore wind by 2030, many technical challenges are efficiency and the carbon footprint of offshore wind farms. This leaves floaters will, in the near future, become more and more important and directly enough depth at quayside to bring the floater alongside.
currently being addressed by the industry. These include companies in the offshore wind sphere grappling with how to transport, in influence floater designs. We might see, in the years to come, new vessels This reflects that most of the floaters designed today have
floaters’ design, permanent mooring solutions, dynamic a timely and efficient manner, these hundreds of foundations or sub-parts. dedicated to floaters/ floaters component transportation in a similar way as several meters draft and extra sequences to bring the
power cables and heavy maintenance. Another issue that The bulk of the fleet of suitable vessels is composed of semi-submersible we have recently seen new freighters dedicated to the transportation of wind floater from its offshore storage position to the assembly
has, so far, not been heavily discussed is logistics and transportation vessels and large deck carriers. However, their number is turbine components. quay and then to send it back to its storage position (for
port operations. limited, and these vessels are already being used in other competing markets each move, this involves mooring and unmooring the
(notably high and heavy, oil and gas). In addition, existing assets can only Ports operations – what is needed? Bottom-fixed wind turbines are assembled asset). An alternative approach would be to keep the
carry a few foundations or large components per trip. To limit the requirement on pre-installed foundations by WTIVs. To perform such installations, a port floaters moored on the seabed and install the turbine
of very large (and expensive) transportation vessels, several companies are and sheltered deep water area(s) will be required to load on the foundations with floating cranes or sheerlegs.
today offering floater designs that can be transported in pieces and assembled and large turbine components onto a foundation installation vessel and a
at a site close to installation. WTIV, respectively. Existing commercial ports are already used to perform Finally, port facilities addressing these constraints might
such activities. The use of harbour services and requirements for floating potentially be located far from the wind farm site. In
wind farms is very different as turbines are installed on their floaters in this case it would require extra time for towing fully
sheltered areas close to shore and then towed out at sea and moored to the assembled floaters and turbines to site, hence extra
seabed once on site. logistical complexities.

The developers of floating wind farms will need to source and secure (and Problems around port operations to support the
potentially compete for) port access with: development of floating offshore wind at the commercial
stage are still being addressed by various industry players
1. Large onshore storage areas for wind turbine and floaters components. today. This has seen certain companies investigate
concepts of constructing temporary “floating ports” that
2. Large offshore storage areas for floaters waiting for turbines to be installed would not require large shore facilities and could hence be
and fully installed floaters + turbines waiting for tow out to site. Such offshore mobilized in shallow waters closer to the wind farm site.
storage areas must be large enough to accommodate several floaters in various These could be relocated and reused for future projects.
stages of assembly and include all relevant mooring permits.
The installation of floating offshore wind farms requests
3. Tugs, barges, and relevant moving and lifting assets – including large crane very different technology, competences and assets than
to install turbines on floaters. One of the first floating wind farms, namely bottom-fixed offshore wind farms. Today a few years
Hywind Scotland used the 7,000t semi-submersible double crane Saipem ahead of the expected ramp-up of the floating offshore
7,000 to install the turbines on the floaters. This may have been seen by some wind market, there remain many issues and challenges
as an “overkill”. In comparison, the most recent Hywind Tampen project is to be resolved. This undoubtedly makes this market
using a Mammoet shore crane for installation. particularly interesting as, again, it will require new type
of assets not existing today to support installation and
Although the use of a shore crane is certainly seen as the most economically future maintenance which in turn will help to drive future
suitable solution (also used during the installation of the Kincardine offshore growth of the sector.

14 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture (left): Seaway ALBATROSS carrying Hywind substructures. 15
Carbon Markets

Let’s shed some light

on these unchartered
waters
Shipowners are already experiencing pressure to
reduce the footprint of maritime transport from
investors, cargo owners and consumers. In addition,
this year could bring significant changes to the
maritime industry as new emission regulations are
coming into force. At the international level, two
IMO regulations entered into force at the beginning
of this year to measure and promote the efficiency
of existing vessels, while the European Union
delayed the inclusion of the shipping sector in its
key climate tool, the European Emission Trading
System (EU-ETS) until 2024 but voted to broaden its
scope and strengthen its requirements.

17
 CARBON MARKETS CARBON MARKETS
THE CONCEPT BEHIND INTERNATIONAL REGULATIONS

EU Emissions Trading System (EU ETS) FuelEU Maritime

Addresses: Ship GHG emissions, tank-to-wake approach Addresses: Fuel well to wake GHG intensity
Applicable measures: All GHG reduction measures Applicable measures: Alternative fuels, shore power, wind

EU Emissions Trading System (EU ETS)

Addresses: Actual carbon intensity EEDI / EEXI
Applicable measures: All measures except logistics Addresses: Ideal carbon intensity
INTERNATIONAL REGULATIONS Applicable measures: New ships - hull, machinery, LNG,
speed, Existing ships – speed, basic hull improvements
Almost 200 countries signed up to the United Nations- However, the implications of the CII enforcement are more complex. The
led Paris Agreement in 2015, committing themselves to CII is an operational efficiency measure calculated as grams of CO2 emitted
tackling climate change. Following this agreement, the per Dwt nautical mile on an annual basis. The CII calls for a 2% annual CO2
International Maritime Organization (IMO) set targets carbon intensity reduction between 2023 and 2026 or an 11% cumulative Source: adapted from DNV
to reduce greenhouse gas emissions from the shipping improvement by 2026 vs a 2019 reference level. Future reduction rates for
industry by at least 50% by 2050, compared with 2027-30 are yet to be determined and will be decided as part of a review to
2008 levels. However, the past year has seen growing be concluded by January 2026.
industry and political pressure to raise the goal to a 100%
reduction by 2050 in order to be in line with the net zero Vessels will be given an annual rating ranging from A to E, where A and B are the other hand, higher scrubber penetration in the larger sizes of the fleet
by 2050 pledges from major economies of the world related to major superior and minor superior performance respectively, and D (VLCCs, Capesizes etc) makes speed as a commercial and operational tool more EEXI CII
agreed in Paris. The IMO’s Marine Environment Protection and E to minor inferior and inferior performance, respectively, while C is the complicated to use and is likely to reshape the chartering strategy regarding
Committee (MEPC) made progress at end-2022’s MEPC minimum carbon intensity compliance rating. The ratings will be derived from spot and period charters. This suggests that the bargaining power between
For Ships: For Ships:
79 meeting and expect to finalise their GHG reduction the attained CII calculated on an annual basis, which will be compared with shipowners and charterers in each trade and vessel segment will differ and
strategy at MEPC 80 to be held in mid-2023. the CII reference line. The attained CII will be calculated based on the Annual will ultimately dictate the optimal mix of strategies in each sector in relation
Energy Efficiency ratio (AER) formula, which is a supply-based metric. to operational performance. • Ships built before 2013 • Larger than 5,000 gt
IMO’s measures to cut emissions • Larger than 400 gt • Measured every year
• Measured once • From 01/01/2023 onwards
Currently there are no penalties for the most carbon-intensive ships. However, In anticipation of the CII enforcement, the market has stipulated that modern,
1 January 2023 marked the introduction of the IMO short speed reduction is being discussed as the primary tool to reduce ships’ fuel energy efficient eco vessels may be preferred and gain a structural premium.
term mandatory measures adopted at MEPC 76 in 2021, consumption and emissions in order for them to comply with the CII. Meanwhile, trade flows could potentially shift due to higher voyage costs. This Depends on: Depends on:
namely the Energy Efficiency Existing Ship Index (EEXI) means that even though there is no regulated penalty in place, an endogenous
and the Carbon Intensity Indicator (CII). These short-term Several interested parties have voiced concern over potential market market penalty will arrive in the form of a multi-tier freight market with • Operational efficiency
• Ship type
measures are implemented in support of the intermediate distortions driven by the AER metric. For example, the most fuel inefficient modern eco vessels enjoying premiums particularly in the West, where the • Length of voyages
• Capacity
target set out in the context of IMO’s initial GHG strategy vessels might increase their ballast legs in order to inflate the annual distance EU is further increasing the voyage cost burden via the EU-ETS. In addition, • Time spent idle
• Propulsion
• Fuel consumption
back in 2018, which aimed for a 40% reduction in vessels’ travelled which would improve their CII rating. Furthermore, there is no lower speeds particularly of the vessels rated ‘D’ would increase inefficiencies
carbon intensity per transport work by 2030 vs 2008. penalty in place that would help bridge the gap between the potential earnings and thereby tighten effective fleet supply. However, this development is likely
Attained EEXI Results in:
loss incurred by having to steam at optimal speeds dictated by commercial not to be uniform across regions. If achieving the required CII is prioritized in
The EEXI is a technical measure addressing the design factors vs optimal speeds dictated by efficiency criteria, while increasing the commercial decision making, then a scenario could develop where the AER
of an existing vessel by retroactively imposing energy ballasting distances in order to achieve CII compliance. metric risks reducing inefficient vessels’ speeds and utilization, which would • Ranking A (good) - E (bad)
efficiency requirements equivalent to the Energy see the speeds of efficient vessels rise. • Minimum of C must be attained
Efficiency Design Index (EEDI) of newbuildings. The The above could lead to differing freight market impacts across maritime • D 3 years in a row or E once
• Certificate issues
• Assessed once a year
EEXI is a one-off certification at a ship’s first annual, sectors, as dry bulk, tankers and containers (together accounting for around Finally, although we suggest that freight market tiers related to CII performance (kept on board)
• A ship's CII letter shows its
intermediate or renewal survey of its IAPP Certificate 80% of global marine fuel consumption) do not stand at the same point in will emerge in 2024 when 2023 performance reporting will take place, an efficiency attained the
on or after 1 January 2023. It is expected by market the shipping cycle. Meanwhile, the technological profile of the existing fleet impact on nominal supply fundamentals will likely not be seen immediately, previous year
participants to be relatively straightforward with some is diverse. Therefore, the operational and commercial chartering strategy but in two to three years’ time. This reflects the timeframe in which ships rated
engine derating involved or the installation of energy selection criteria will differ substantially within each fleet. Furthermore, if ‘E’ or ‘D’ will have to implement their reported carbon intensity correction
EEDI CII Rating
saving devices that reduce standardized CO2 emissions VLSFO prices were to move higher versus 380 Cst fuel over the coming years, plan. If these vessels are not able to comply in time, they will naturally be
related to the installed engine power, capacity of the eco and non eco vessels without scrubbers are more likely to have an optimal squeezed out of the market, accelerating scrapping and incentivizing fleet •A Major Superior
vessel and speed for the least efficient ships in the fleet. speed closer to the speed required to satisfy the minimum CII required. On renewal which is required the decarbonization of the shipping sector.
•B Minor Superior
• Same concept for new
•C Moderate
ships built after 2013
•D Minor Inferior
•E Inferior

18 BRS Group - Annual review 2023 BRS Group - Annual review 2023 19
 CARBON MARKETS CARBON MARKETS
NATIONAL / SUPRA-NATIONAL REGULATIONS SUMMARY OF THE PROVISIONAL AGREEMENT

NATIONAL / SUPRA-NATIONAL The inclusion of shipping in the EU-ETS To ensure a smooth inclusion of the maritime sector in the EU ETS, the Panamax Narvik to Amsterdam
surrendering of allowances by shipping companies will be gradually increased
REGULATIONS To date, the European Emission Trading scheme (EU-ETS) is the only carbon with respect to verified emissions, and they will be liable to surrender 360t CO2 – 100% covered by EU-ETS
Estimated cost in 2024 = € 13,000 *
market in the world that has officially decided to include the emissions of allowances according to the following schedule: 40% of verified emissions
the maritime industry in its scheme. Other carbon markets are considering reported for 2024, 70% of verified emissions reported for 2025, and 100%
Policymakers have drawn up several instruments to adding the maritime sector in their scheme: Britain launched a consultation of verified emissions reported for 2026 onwards. While 100% of emissions Suezmax Basrah to Rotterdam
discourage greenhouse gas emissions: bans, direct last May on possible changes to its UK-ETS, including adding the maritime produced from intra-EU voyages will be covered, only 50% will be covered
carbon taxes and carbon markets. Governments around sector. Meanwhile, China and Japan are also thinking to expand their scheme for extra-EU emissions. The idea behind this second discount is that the other 2,300t CO2 – 50% covered by EU-ETS
the world seem to prefer market-based options when to shipping. 50% of the emissions of the voyage should eventually be accounted for by the Estimated cost in 2024 = € 41,400 *
it comes to the control and limiting of emissions from carbon scheme in the non-EU country.
energy intensive businesses. As of January 2023, there *based on a carbon price of €90/t
are 26 active emission trading systems across the world. Using BRS’ carbon calculator tool, we can help shipowners and charterers
Meanwhile, another nine are under development and Rules applicable to shipping estimate the emission of each voyage and the carbon cost they will incur.
expected to become operational in the next few years.
EU negotiators from the Commission, the Parliament, and the Council of Furthermore, shipping will have to cover not just its CO2 emissions but also
Regulated carbon markets are schemes that require Member States struck a provisional agreement on 29 November last year, methane, nitrous oxide. Methane and Nitrous Oxide GHGs were not included in
businesses whose emissions exceed a defined threshold, which broadly confirms the announcements and drafts which had leaked over the monitoring obligation that started in 2018 but will be included in ETS from
or who operate in specific industry sectors, to obtain previous months. 2026 after a two-year data collection period. Finally, negotiators have agreed
a permit, often called an allowance, for each tonne of to allocate the revenue from the sale of 20 million auctioned allowances to
carbon dioxide equivalent that they emit annually. These Since 2018, ships larger than 5,000 Gt calling ports in the European Union, the EU Innovation funds which will be focussed on decarbonising the shipping
carbon permits are tradable assets and can usually be Norway or Iceland have had to monitor and report their CO2 emissions to sector.
purchased during government auctions or on exchanges. the European authorities. From 2024 onwards, these ships will be included
Every year, companies included in a carbon market in Europe’s Emission Trading scheme where they will have to purchase
scheme will have to give back to the regulation authority European Allowances (EUA) and give them back (surrender) to the EU. Large
enough allowances to cover their annual emissions. offshore vessels larger than 5,000 Gt. will have monitoring requirements from
2025 and will join the ETS in 2027. The European Commission justified the Summary of the provisional agreement:
5,000 Gt. threshold based on the potential administrative burden, claiming
that although it would exempt 45% of ships that operate in Europe, it would
only exclude 10% of the emissions. However, in response to criticism of this Preliminary agreement between the EU Commission,
threshold, EU policymakers eventually decided to include ships larger than Parliament and Council - 29/11/2022
400 Gt in the monitoring mechanism from 2025. Subsequently, a revision of
the ETS directive in 2026 will determine whether they will be required to join Larger than 5,000 Gt.
the EU-ETS. Vessel
Larger than 400 Gt. if new ETS review approves it in
minimum size
2026

100% of the emissions for voyages between EU ports

and at berth in EU
Voyages affected
50% of the emissions from voyages that departed or
arrived in EU
EU ETS
Ukraine
UK Turkey Gradual phase-in starting with 40% of the emissions
Quebec Nova Scotia Kazakhstan China Starting phase
Sakhalin (RUS) in 2024, 70% in 2025 and 100% in 2026
Washington
Pennsylvania Massachusetts
Oregon Japan
New York City CO2 from the start in 2024.
California Saitama GHG gases
N. Carolina Switzerland Montenegro covered
CH4 and NO2 from 2026 after a two-year monitoring
New Mexico Tokyo period.
S. Korea
Pakistan Taiwan
Mexico
Thailand Vietnam Offshore Offshore vessels larger than 5,000 Gt. to join the ETS

Fr. Guiana
Philippines activities in 2027 after a two-year monitoring period From 2024, ships
Colombia
Indonesia No dedicated ocean fund but income from the sale of
larger than 5,000 G.t
Brazil New fund?
20 million EUA must go to the innovation fund, which
in turn will revert the proceeds to shipowners willing will be included in
to modernize their vessels.
In force the world’s largest
ETS responsibility is on the vessel owner/manager,
Under development Chile
Who pays? who could optionally negotiate with the charterer on
a contractual mechanism for sharing cost.
carbon trading
Under deliberation
scheme, the EU-ETS
New Zealand

20 Picture: EMISSIONS TRADING WORLDWIDE. BRS Group - Annual review 2023 BRS Group - Annual review 2023 21
 CARBON MARKETS CARBON MARKETS
EUA PRICE DEVELOPMENTS THE FUELEU MARITIME REGULATION PROPOSAL

Despite the energy EUA price developments

crisis, 2022 saw EUA In 2021, the price of emitting one tonne of CO2 in Europe tripled, driven
by a sharp rebound in EU’s industrial activity, soaring financial and energy

prices consolidate markets, the strengthening of emissions regulations, and increased interest
from speculators. Accordingly, European Allowances (EUAs) traded in their
widest yearly range ever: moving from the low 30s EUR/t at the beginning of
around EUR 80/t January 2021 to a maximum of 90.75 euro in December. Last year saw prices
consolidate around the 80 EUR/t level, signalling to market participants that
carbon prices around the 15 – 30 EUR/t mark that they were used to since the
launch of the system in 2005 were now a thing of the past. The FuelEU maritime regulation proposal
EUA
EUA Futures
Futures Russia’s invasion of Ukraine took the world by surprise and had a profound The FuelEU Maritime proposal, as well as the extension of the scope of the
effect on global energy markets. Price volatility, supply shortages, security EU-ETS to the maritime industry, is part of the large climate policy package
€/t
€/Ton issues and economic uncertainty have contributed to what the International proposed by the EU Commission in July 2021 entitled Fit for 55 which aims
Energy Agency termed “the first truly global energy crisis, with impacts that to reduce the block’s GHG emissions by at least 55% by 2030 compared
100
will be felt for years to come”. The value of European allowances plummeted with 1990 levels. Despite progress in recent years, the maritime sector still
90 in the days following the invasion, pushed by major divestments from relies almost entirely on fossil fuels and therefore is a significant source of
speculators, Russian companies with production facilities in Europe, and greenhouse gases and other harmful pollutants. The goal of this proposal is
80
concerns that the ETS might not be a priority for the EU in the coming months. to promote the use of renewable and low-carbon fuels in maritime transport
70 Despite the war, carbon prices never fell below 55 EUR/t and 15 days after the to reduce the greenhouse gas intensity of the energy used by ships by up to
start of the conflict, EUAs had already rebounded to 80 EUR/t. In August 2022, 75% by 2050. The IMO estimates that about 64% of the total amount of CO2
60 as Europe was struggling with sky-high energy and gas prices, EUAs reached reduction in 2050 would result from the use of alternative fuels. However, the
50
the maximum of the year at 99.22 EUR/t. However, as some reforms to the switch to new fuels takes time.
EU-ETS proposed in 2021 have been softened and new ones introduced to
40 take into account the new economic landscape, the carbon price calmed down The main problems this initiative addresses concern the low uptake of
and closed the year at 84 EUR/t. In February 2023, the benchmark carbon renewable and low-carbon fuels (RLF) by ships calling EU ports and the low
30
contract rallied above the 100 euro mark for the first time ever since the start use of zero-pollution fuels by ships at berth in EU ports. The FuelEU Maritime
20 of the EU-ETS in 2005. While the reforms included in the Fit for 55 package Regulation proposal evaluated three policy options in its impact assessment:
are expected to support the carbon price in the medium term, in the short
10
run few fundamental factors can justify three digit prices. The supply of EUAs 1. A prescriptive approach that would require vessels to use an increasing
0 via auctions is expected to increase to help finance part of the RePowerEU share of RLF. The type of fuels and the corresponding shares would be
2018 2019 2020 2021 2022 plan, the Carbon Border Adjustment Mechanism (CBAM) will not start cutting established in line with the technology’s maturity and its GHG saving
free allocation before 2026, and it will do so only gradually, while the major potential.
economies of the world are still struggling with high inflation rates and a slow
Source: The ICE down in economic growth. 2. A goal-based approach requiring fuels used in navigation and at berth
to meet maximum GHG intensity targets. A maximum limit on the GHG
content of energy used by ships in navigation (e.g. CO2 eq/MJ) is identified
to deliver comparable GHG emissions reductions on a well to wake basis
as in Policy 1. This target will become more stringent over time which
would require operators to increase the overall share of RLF in their fuel
mix (or switch to more innovative solutions such as hydrogen-based fuels
or electricity at berth).

3. A goal-based approach similar to Policy 2 but with a mechanism to

reward and foster over-achievement and encourage the development of
more advanced, zero-emission technologies. Possible rewards include the
provision of free EUAs to companies overachieving their targets.

In all three policy options, the use of onshore power supply will be mandated
from 2030 onwards for the most polluting ships in ports (containerships,
passenger ships and RoPax ships) unless they use cleaner alternatives (e.g.,
batteries).

Against this policy proposal by the European Commission, the TRAN

committee of the European Parliament adopted a report in October 2022
with amendments on the commission’s proposal. Although, the proposed GHG
emissions intensity reduction targets for 2025 and 2030 were maintained, the
European Parliament introduced higher cuts from there onwards compared
with those proposed by the EC – 20% as of 2035, 38 % from 2040, 64 % as
of 2045 and 80% as of 2050. Furthermore, a 2% penetration target for fuels
RFNBOs (Renewable fuels of Non-Biological Origin) from 2030 was introduced.

BRS Group - Annual review 2023 23

Shipbuilding

A year of contrasts
2021 had been an incredible year for the
shipbuilding industry with about 140 m dwt
(2,000 ships) of newbuilding orders, the
second highest volume across the previous
ten-year period. This had allowed shipyards
worldwide to book most of their slots over
2022, 2023 and 2024. To a lesser extent,
2022 continued the positive momentum of
2021 and saw about 89 m dwt (1,447 ships)
of new orders placed, which was slightly
above deliveries (78.5 m dwt). Last year’s
orders did, however, help extend full yards
into 2025, thereby maintaining the three-year
horizon beyond which both shipowners and
shipbuilders feel uncomfortable to commit.

MINERAL BOCIMAR
Artist´s impression of an ammonia-fueled 210,000 DWT
Bulk Carrier under construction in CSSC Qingdao Beihai
Shipyard for CMB Group.

25
 0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
SHIPBUILDING SHIPBUILDING
KEY POINTS OF 2022 KEY POINTS OF 2022

bulk tanker container other

Fleet evolution Deliveries vs demolitions

Fleet Deliveries vs. Demolitions KEY POINTS OF 2022 Summary 2021 2022
Million
Million dwt
dwt Million
Million dwt m dwt 140.5 88.9
Orders
2500 200 ships 2,014 1,447
The demand for newbuildings of each of the three main components of the
merchant fleet decreased last year. However, it should be noted that even if m dwt 84.5 78.5
the demand for container carriers fell, down from 57 m dwt to 30 m dwt (- 27 Deliveries
150 ships 1,291 1,226
2000 m dwt), orders remained strong, which made it the second-best year across
the last 10 years and the main contributor to the total new orders placed last m dwt 231.0 240.9
year. After being sustained in 2021, the demand for bulkers was much weaker, Orderbook
100 ships 3,415 3,622
1500
down from 48.6 m dwt to 27.4 m dwt (- 21.2 m dwt). The demand for tankers
was even weaker plunging from 22.1 m dwt to 8.7 m dwt, the lowest across m dwt 2,072 2,141
Active Fleet
50 the previous ten-year period. However, 2022 will be remembered for the sharp ships 40,823 41,826
increase in newbuilding orders of the ‘other types of ships’ which reached a
1000
record high of 22.2 m dwt, driven by the exceptional demand for LNG carriers m dwt 11.1% 11.3%
Orderbook/Active Fleet
0 (+ 16.2 m dwt) and Pure Car Truck Carriers (PCTC) (+1.9 m dwt ). ships 8.4% 8.7%

500 As a consequence of this firm shipbuilding activity, newbuilding prices continued

-50
to steadily increase, following the trend which began in 2021. They only started
to run out of steam in the last quarter of the year when they plateaued, although,
0 -100
as always, this depended on the type and size of vessels ordered. For example, Orderbook 2021 2022
newbuilding prices for LNG carriers and PCTCs continued to rise across the year
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 in the wake of unabating demand. Price increases were mainly fuelled by the Market Share 47.7% 50.3%
competition between buyers for the remaining yard slots, and as building costs
China m dwt 110.1 121.3
Deliveries (M DWT) Demolitions (M DWT) Fleet evolution (M DWT)
rose (raw materials, energy, wages, marine equipments). However, the general
Deliveries Demolitions Fleet Evolution ships 1,708 1,794
strengthening of the US Dollar against the main shipbuilding currencies (Yuan,
Orders Won, Yen and Euro) may have helped somewhat to mitigate price rises.
Million dwt Market Share 29.6% 29.0%

The question of propulsion remained a conundrum for most shipowners. Korea m dwt 68.3 69.8
Orders
300 However, the number of dual fuel vessels ordered continued to soar from 152 ships 626 734
ships in 2020 (or 14% of new orders) to 388 ships in 2021 (or 22% of new
Million dwt Market Share 17.6% 15.1%
orders) and then 482 in 2022 (or 33% of new orders) including LNG carriers
250 and LNG bunker vessels. It is interesting to note two trends: Firstly, that bulkers Japan m dwt 40,7 36.5
and tankers, apart from a few cases, stayed away from dual fuel propulsion.; ships 612 587
Secondly, that dual fuel methanol gained some traction in 2022.
200 Market Share 2.4% 2.3%
The three Asian shipbuilding giants, together accounting for about 95% of Europe m dwt 5.5 5.5
150
the global orderbook by deadweight, continued to fight fiercely while trying
ships 288 319
to focus their efforts on high value transactions. For example, in 2022, a few
additional Chinese yards entered into the high-end segment of building LNG Market Share 2.8% 3.3%
100 carriers. Accordingly, China's shipbuilders took orders for up to 55 large LNG
ROW m dwt 6.4 7.9
carriers in 2022, which accounted for about 30% of the total global LNG carrier
orders. This saw the entry alongside Hudong-Zhonghua which had been the ships 180 188
50 sole Chinese shipbuilder building LNG carriers until last year, of newcomers
such as Jiangnan, Dalian and CMHI and attempts from Yangzijiang. Chinese
shipyards also received orders for 70 PCTC/PCCs, accounting for about 79.5% 2022 also saw a remarkable number of transactions in
0
of the world's orders. the second-hand market as approximately 3,992 (203 m
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 dwt) changed hands. This was slightly less than in 2021
China improved its market share from 47.7% to 50.3% while increasing its where 4,174 ships (223 m dwt) were sold and purchased
orderbook significantly. Although Korea's market share inched down from 29.6% but remained comfortably above average. This activity
bulk tanker container other
Bulk Tanker (Inc. Chemical and Small Tankers) Containers Others to 29%, it managed to increase its orderbook slightly. Japan's market share supported second-hand prices at firm levels.
slipped from 17.6% to 15.1% which saw its orderbook contract. Meanwhile, the
shares held by the rest of the world (RoW) grew from 2.6% to 3.3% while the
share of Europe remained at about 2.3%.
Fleet 2021 Deliveries
2022 vs. Demolitions
Million dwt Million dwt Newbuilding deliveries inched down slightly both in deadweight and number
GT Dwt N° Ships GT Dwt N° Ships of ships terms in 2022 at 78.5 m dwt (1,226) versus 84.5 m dwt in 2021.

The global fleet and

2500 200
Reflecting the imbalance between deliveries and newbuilding orders, the global
Market Sales 153,013,125 244,191,020 4,598 127,619,064 203,867,302 3,992 orderbook increased from 231 m dwt at end-2021 to 240.9 m dwt at end-2022

2000
Demolition Sales 14,490,150 23,256,679 505 7,663,180 12,650,021 241
150
to represent 11.3% of the active fleet. Meanwhile, the world fleet of ships of
over 3,000 gt continued its uninterrupted growth since 1999, as it increased to orderbook continued
to grow in 2022
2,141 m dwt (41,823, ships) at end-December 2022 from 2,072 m dwt (40,826
100 ships) one year earlier.
NB Resales 14,409,408 22,218,557 260 14,081,065 19,112,699 226
1500

50

1000

0
26 BRS Group - Annual review 2023 BRS Group - Annual review 2023 27
500
-50
 2,000

1,500
SHIPBUILDING SHIPBUILDING
WORLD ECONOMY, MARITIME TRADE AND FREIGHT RATES WORLD ECONOMY, MARITIME TRADE AND FREIGHT RATES

1,000

500
WORLD ECONOMY, MARITIME Global Trade and World GDP & Active Fleet Growth Tanker BDTI Average Min Max
Global trade and world GDP & active fleet growth
TRADE AND FREIGHT RATES 0
Last year saw a much needed rebound in the tanker market as the BDTI and BCTI 2021 644 492 835
2022 2023
12% annual averages surged to ten-year highs of 1,391 and 1,231, respectively. This
BCTI BDTI
was significantly up from 2021’s lows with that year going down as one of the 2022 1,391 679 2,496
World Economy most challenging years ever for the market, with annual BDTI and BCTI averages
8% of 644 and 532, respectively. 2021 also saw the majority of non-scrubber-
Global economic activity experienced a general slowdown 6.0% fitted, non-eco crude tonnage operate at below OPEX levels. Meanwhile, non-
4.3%
with inflation reaching levels not seen for several decades. 4.1% 3.5% 3.3%
eco, non-scrubber fitted product tankers averaged only close to their OPEX BCTI Average Min Max
3.3% 3.8% 3.6% 3.3%
Russia's invasion of Ukraine and the lingering effects of the 4%
2.8% 3.1% levels even when accounting for slow steaming.
3.6% 3.2%
COVID-19 pandemic including regular, localized lockdowns 3.0%
3.2% 2.8% 2021 532 432 856
2.8%
in China all weighed heavily on the global macroeconomic 0.9% Unfortunately, and without any doubt, the good fortune of the tanker market
backdrop. Accordingly, after a deep recession in 2020 (-3%), 0% last year came on the back and suffering of the Ukrainian people in the wake 2022 1,231 543 2,143
0.4%
-3.0%
a spectacular rebound in 2021 (+6%), global growth slowed of the Russian invasion on 24 February, a powerful catalyst for a rapid and
down in 2022 to 3.2% and is expected to decelerate further -3.3% often chaotic shift in oil flows. As flows shifted, it caught tonnage by surprise
-4% with units not in the right place at the right time. In turn, hire rates soared to
to 2.7% in 2023.
previously unseen levels, especially for those tanker owners which remained In the clean segment, the Baltic Exchange Clean Tanker
Maritime Trade willing to transport Russian cargoes. As the year went on, ton miles continued Index (BCTI) began 2022 at 722, sank to its nadir of 679 on
-8%
to rise as more Russian crude and products was shipped to Asia. Meanwhile, as 3 February, rose to a maximum of 2,496 on 23 November,
2016 2017 2018 2019 2020 2021 2022 Russian barrels were steadily backed out of the Atlantic Basin, this saw Europe
Of the three main trade sectors, only the tanker trade 2016 2017 2018 2019 2020 2021 2022 and ended the year at 1,873. Furthermore, it averaged
witnessed some growth in 2022. After a sharp fall in 2020 especially, have to look farther afield for both its crude and products. 1,231 over the year, compared with 532 in 2021.
(-7.4%), tanker trade rose by 1.7% in 2021 and expanded World
World GDP
GDP Seaborne
SeaborneTrade
Trade World
WorldActive
ActiveFleet
FleetGrowth
Growth
by 3.7% in 2022. Dry bulk trade that had contracted by 2.8 However, it was not only Russia which drove tanker earnings higher. Oil demand Average 1-year eco Time charter rates were as follows:
% in 2020 and rebounded by 3.6% in 2021 remained flat in continued its post-Covid growth, and as inventories fell, especially in the Atlantic
2022. Likewise, container throughput that had contracted Maritime Trade Growth Basin, more and more product was required to be carried by tankers. As the • MR2.........: $14,457 in 2021 and $24,045 in 2022
by 1.4% in 2020 and rebounded spectacularly by 6% in Maritime trade growth year turns, the market appears in relatively healthy shape with earnings for • LR1..........: $15,889 in 2021 and $29,100 in 2022
2021, was flat in 2022. tankers moving well above their break-even levels. • LR2..........: $20,154 in 2021 and $33,630 in 2022
15%

Freight Rates During 2022, 1-year eco Time charter rates fluctuated
10% within the following bands:
Dry bulk Alphaliner Charter Index since 2010 6.0%

4.2%
5.5%
4.3%
• MR2........: between $14,750 and $34,000 per day
5%
Although the annual average Baltic Exchange Dry Index 4.5% 4.2%
2.7% 3.6% 3.7% • LR1.........: between $16,000 and $46,000 per day
2.1%
(BDI) decreased significantly from 2,943 in 2021 to 1,934 BTI • LR2.........: between $21,000 and $54,000 per day
120 1.6%
2.5%
1.9% -0.8% 1.7% -0.1%
BDTI and BCTI
in 2022, last year shall be remembered as the second- 0% 0.8%
-1.2%
best year of the past ten years, just behind 2021. It is 100 - 0.2% In the crude segment, the Baltic Exchange Dirty Tanker
-1.8% 3,000
interesting to note that the last time the annual BDI 80
Index (BDTI) started the year at 675, sank to a nadir of 543
-5%
average exceeded the 3,000 mark coincided with the on 25 January before steadily increasing to, peak at 2,143
60
boom years of the shipping and shipbuilding industry. -7.4% 2,500 at year-end. Across the year it averaged 1,391, compared
Notably averages of more than 6,000 were posted in both 40
-10% with 644 in 2021.
2007 and 2008. 20
2,000
Average eco Time charter rates were:
-15%
0
As has been the case in previous years, the dry bulk market
2016
2015 2017
2016 2018
2017 2019
2018 2020
2019 2021
2020 20212022
was characterized by significant volatility. The BDI started 2010 2011 2012 2013 2014 2015 2016 2017 1,500 • Aframax: $18,567 in 2021 and $29,800 in 2022
the year at 2,285 and sank to 1,291 before end-January. It Dry Bulk Trades Growth (Mt) Oil & Gas Trades Growth (Mt) Container Throughput Growth (Teu) • Suezmax: $21,731 in 2021 and $30,420 in 2022
then climbed almost continuously to peak at 3,369 on 23 Dry Bulk Trades Oil & Gas Trades Container Throughput • VLCC.........: $27,817 in 2021 and $34,460 in 2022
Growth (mt) Growth (mt) Growth (teu) 1,000
May, before plummeting to a nadir of 965 on 31 August. It
then rebounded to hot close to 2,000 on 5 October, before Alphaliner Charter Index since 2010 During 2022, 1-year eco Time charter rates fluctuated
finishing the year at 1,515. 500 within the following bands:

The average 1-year time charter rates illustrate not only 300
Average 1-year Time Charter rates were as follows: • Aframax: between $20,000 and $36,000 per day
0
the decrease in earnings between 2021 and 2022, but also • Suezmax: between $21,000 and $50,000 per day
2022 2023
the significant variations between vessel sizes and that the • Supramax
250 (50-60,000 dwt): $26,770 in 2021 and $22,152 in 2022 • VLCC.........: between $24,500 and $58,000 per day
timing of decisions remains key to shipping. • Kamsarmax.................................. : $26,898 in 2021 and $20,736 in 2022 BCTI BDTI BDTI
BCTI
• Capesize.......................................... : $33,333 in 2021 and $16,070 in 2022
200

2022 was the second During 2022, 1-year Time Charter rates fluctuated within the following bands:
150

best year for the dry • Supramax... : between $11,685 and $33,366 per day
• Kamsarmax: between $10,956 and $30,746 per day
Annual average (ECO)
2022 was the best
year for the tanker
100
• Capesize..... : between $ 2,505 and $38,169 per day Date VLCC SUEZMAX AFRAMAX LR2 LR1 MR2 MR1

bulk freight market 2020 44,933 31,981 24,087 24,644 18,760 16,476 14,548

over the last 10 years,

50
2021 27,817 21,731 18,567 20,154 15,889 14,457 12,538 freight market across
just behind 2021
0 2022 34,460 30,420 29,800 33,630 29,100 24,045 19,450
the last 10 years
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

28 BRS Group - Annual review 2023 BRS Group - Annual review 2023 29
 SHIPBUILDING SHIPBUILDING
WORLD ECONOMY, MARITIME TRADE AND FREIGHT RATES ORDERS AND ORDERBOOKS

Charter rates for cellular ships (6-12 month fixtures) ORDERS AND ORDERBOOKS 2022 saw
Size
2019 avg 2020 avg 2021 avg 2022 avg Change
Orders and orderbooks for standard vessels
shipbuilders
$/day $/day $/day $/day 2022/2021

8,500 teu 25,875 24,425 90,792 124,458 37% Newbuilding orders decreased by 37 % globally from 140.5 m dwt in 2021 to
maintain a
5,600 teu 16,633 18,354 70,479 102,417 45%
reach 88.9 m dwt in 2022, just below the annual average of 94 m dwt over the
last ten years.
three-year
(Panamax) 4,000 teu 11,088 13,792 61,458 83,646 36% In spite of the best freight market in a decade, the largest reduction can be order backlog
assigned to tankers, orders for which slumped by about 60%, dropping from
2,500 teu 9,275 10,027 46,900 59,558 27% 22.1 m dwt to 8.7 m dwt, well below a ten-year average of 26.3 m dwt.
Newbuilding orders for container carriers decreased by 45% going from 55.1 m
1,700 teu 8,096 8,242 33,460 44,438 33% dwt to 30.6 m dwt. However, they remained well above their ten-year average
of 19.0 m dwt, and still totalled their second-highest figure of the previous ten
1,000 teu 6,283 6,125 23,696 28,771 21%
years, behind only 2021. Bulker orders decreased by 45%, dropping from 48.6
Alphaliner Index 72.3 76.5 312.7 421.3 35% m dwt in 2021 to 27.4 m dwt. This was well below the 10-year average of 39
m dwt, and third lowest figure across the last ten years.

New Ordersfor
New orders forstandard
Standard Vessels
vessels per Year
per year
Million dwt
Million dwt

60
Average 1-year Time charter rates were as follows:
Container
• 1,700 teu..........: $33,460 in 2021 and $ 44,438 in 2022 50
After having risen by more than 300% in 2021, the • 4,000 teu..........: $61,458 in 2021 and $ 83,646 in 2022
Alphaliner Charter Rate Index continued its ascension as it • 8,500 teu..........: $90,014 in 2021 and $124,458 in 2022
40
increased by 35% in 2022 to reach record highs. Thus 2022
continued the trend of 2021 which saw a complete market During 2022, 1-year Time charter rates fluctuated within the following bands:
turnaround with the main carriers able to hike their freight 30
rates tenfold. This saw them significantly improve their cash • 1,700 teu.........: between $14,000 and $ 62,500 per day
flow, in turn allowing them to purchase and order ships as if • 4,000 teu.........: between $25,000 and $110,000 per day
20
there was no tomorrow. That dynamic continued until May • 8,500 teu.........: between $52,000 and $155,000 per day
2022 before the market turned and plunged back towards
where it had come from. 10

The incredible and sudden change of fate that took

0
place in 2021 certainly came from the clash of the post- Containership freight
Containership freightrates
rates
VLCC Suezmax Aframax/LR2 Panamax/LR1 MR Handy Newcastle/ Kamsarmax Ultramax Handysize Containership
Covid recovery in demand with continuing supply chain K$/day
K $/day
VLCC Suezmax Aframax / LR2 Panamax / LR1 MR Handy
(3-34k dwt)
Capesize
Capesize
Panamax Supramax Handysize Containership

disruptions as port congestion impeded the long, lean 2020 2021 2022
supply chains that the market had grown accustomed to 2020 2021 2022
160
in pre-Covid times. The opposite occurred in 2022 when
port congestion disappeared, and cargo volumes slumped in 140 New Orders for Specialised Vessels per Year
the wake of soaring inflation and the associated economic
[Link]
downturn. 120 New orders per year (2012 - 2022)
120
100
m dwt 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
80 100

Container carrier
60 Bulk 24.2 75.5 57.2 35.2 16.7 36.8 41.5 25.9 29.8 48.6 27.4
52k 80
40 35k

freight market 20
25k
18k
Tanker
60
65 13.3 33.6 32.6 50.7 11.2 30.1 24.0 27.0 23.2 22.1 8.7

back to normal?
14k
12k
0 Container 3.5 22.7
38 12.5 23.6 3.2 8.6 13.1 7.4 13.0 55.1 30.6
2017 2018 2019 2020 2021 2022
40

23
Other 6.0 9.1 12.5 6.8 1.6 3.8 8.8 8.6 7.9 14.8 22.2
8,500 teu 5,600 teu 4,000 teu 20
10
2,500 teu 1,700 teu 1,000 teu 6
3 2 88.9
Total 47.0 141.0 114.8 116.2 32.7 79.3 87.4 69.0 73.9 140.5
0

8,500 teu 5,600 teu 4,000 teu LNG carriers LPG carriers Ferries & Ro-pax Cruise vessels Chemical carriers Car carriers Ro-Ro
Source: Alphaliner stainless steel
2,500 teu 1,700 teu 1,000 teu
2018 2019 2020

30 BRS Group - Annual review 2023 BRS Group - Annual review 2023 31
 SHIPBUILDING SHIPBUILDING
ORDERS AND ORDERBOOKS ORDERS AND ORDERBOOKS

Bulk Summary 2021 2022

With 75.9 m dwt, the bulker orderbook represented 7.9 % of the active bulker fleet of With 91 m dwt, the container carrier orderbook represented 29.7% of the active Container Summary 2021 2022
964 m dwt at the end of 2022. It is reasonably evenly spread between the five main container carrier fleet of 306 m dwt at the end of 2022, the highest figure of the
Orders m dwt 48.6 27.4 segments of the dry bulk fleet from Handysize to Newcastlemax, with the exception decade. There are wide variations between the main segments of the fleet, although Orders m dwt 55.1 30.6

Deliveries m dwt 37.8 30.1 of the VLOC class where no ships are now on order. Deliveries in 2022 of 30.1 m trends are difficult to isolate. In 2022, the focus was placed on large vessels between Deliveries m dwt 11.7 12.4
dwt were at the second lowest in 10 years, well below the average for the period of 12,000 and 24,000 teu as well as on the units between 5,000 and 7,500 teu on one
Orderbook m dwt 78.9 75.9 Orderbook m dwt 72.8 91.0
43.3 m dwt. side and between 1,500 and 4,000 teu on the other side. Deliveries in 2022 of 12.1
Active Fleet m dwt 936.9 964.0 m dwt were slightly below a 10-year average of 13.5 m dwt. Active Fleet m dwt 293.8 306.2
The bulker orderbook is basically in the hands of two countries: China on one side
Orderbook/Active Fleet 8.4% 7.9% Orderbook/Active Fleet 24.8% 29.7%
with a market share of 62.2 % and Japan on the other side with a market share The container carrier orderbook is in the hands of two countries: China on one side
m dwt 48.1 47.2 of 31.5%. Korea, although the second largest shipbuilding country in the world, with a market share of 57.5 % and Korea on the other side with a market share of m dwt 41.6 52.3
China China
Market share 60.9% 62.2% continues to stay away from the construction of bulkers with no more than 0.5% of 33%. Japanese market share continued to fall, as it slipped from 11 % in 2021, to 8.9% Market share 57.1% 57.5%
its market share. The bulker fleet remains the largest fleet afloat, totalling 964 m dwt. of what is the third largest individual segment with a 306 m dwt fleet.
m dwt 1.2 0.4 m dwt 22.9 30.0
Korea Korea
Market share 1.5% 0.5% m dwt Orderbook Fleet Ratio Market share 31.5% 33.0%

m dwt 25.8 23.9 Handysize/handymax 8.9 118.5 7.5% Existing Orderbook O/E m dwt 8.0 8.1
Japan Japan
Market share 32.7% 31.5% Supramax/ultramax 19.1 197.5 9.7% Size range teu ships teu ships teu % Market share 11.0% 8.9%

Panamax/kamsarmax 17.9 200.1 9.0% above 18,000 153 3,212,425 70 1,674,820 52.1%

Post-Panamax/babycape 4.4 63.9 7.0% 13,300-17,999 261 3,838,514 234 3,574,992 93.1%
12,500-13,299 92 1,198,780 36 472,870 39.4%
Capesize/Newcastlemax 24.9 284.8 8.7%
10,000-12,499 195 2,133,728 13 149,090 7.0%
VLOC 0.0 81.7 0.0%
7,500-9,999 485 4,295,560 55 437,312 10.2%
5,100-7,499 437 2,721,426 159 1,038,976 38.2%

With 30.4 m dwt, the tanker orderbook represented 4.4% of the active tanker fleet 4,000-5,099 633 2,863,469 18 82,176 2.9%
Tanker Summary 2021 2022
of 695.6 m dwt at end-2022, its lowest figure since 1990. Contrary to the bulker 3,000-3,999 269 925,967 75 244,744 26.4%
Orders m dwt 22.1 8.7 segment, there are significant variations between the six main segments of the
The container
2,000-2,999 780 1,982,793 130 339,772 17.1%
Deliveries m dwt 26.1 29.2 tanker fleet from MR1 to VLCC. For example, there are no MR1s under construction,
1,500-1,999 677 1,182,677 140 255,114 21.6%
with most owners instead having opted for MR2 and LR2 units. Deliveries in 2022 of
Orderbook

Active Fleet
m dwt

m dwt
51.1

672.8
30.4

695.6
29.2 m dwt were in line with a 10-year average of 27.9 m dwt. 1,000-1,499
500-999
737
676
853,474
501,620
96
2
111,591
1,120
13.1%
0.2%
carrier orderbook
Orderbook/Active Fleet 7.6% 4.4%
The tanker orderbook is basically in the hands of two countries: Korea on one side
with a market share of 44.4 % and China on the other side with a market share of
100-499 197 66,473 3 975 1.5% hit a ten-year high
m dwt 13.6 9.2 30.2%. However, Korea is under pressure as its market share decreased from 53.8%
China
Market share 26.6% 30.2% in 2021 whereas that of China went up from 26.6% in 2021. Japan’s market share
continued to erode as it dropped from 10.6% in 2021 to 8.6% of what is the second
m dwt 27.5 13.5
Korea
largest individual segment with a 695 m dwt fleet.
Market share 53.8% 44.4%

m dwt 5.4 2.6 m dwt Orderbook Fleet Ratio

Japan
Market share 10.6% 8.6% MR1 0.0 19.0 0.2%

MR2 5.3 86.8 6.1%

Panamax/LR1 0.3 32.8 0.9%

Aframax/LR2 10.9 119.5 9.2%

Suezmax/LR3 3.1 104.5 3.0%

VLCC 7.8 272.6 2.9%

Oil tanker
orderbook now
at its lowest
since 1990

32 Picture: MV BIT WIND, a high heat IMO 2 ice class 1A dual fuel (LNG) bitumen tanker delivered on 23 May 2022 by NYZ (China) to Tarbit (Sweden). BRS Group - Annual review 2023 BRS Group - Annual review 2023 33
 SHIPBUILDING SHIPBUILDING
ORDERS AND ORDERBOOKS ORDER CANCELLATIONS AND DEMOLITIONS

Orders and orderbooks for specialised vessels ORDER CANCELLATIONS IN 2022

The demand for specialized vessels is generally strong in poor newbuilding
markets when prices are low. However, 2022 saw an extraordinarily large Order cancellations in 2022 remained at subdued levels of 1.3 m dwt.
increase in the demand for LNG carriers and PCTC / PCC units in spite of rising
newbuilding prices.
Orders vs cancellations (2014-2022)
Newbuilding orders for specialized tonnage increased globally by 50.5% from m dwt 2014 2015 2016 2017 2018 2019 2020 2021 2022
14.8 m dwt in 2021 to reach 22.2 m dwt in 2022, well above the annual
average of 9.6 m dwt over the last ten years and comfortably the best figure Orders 114.8 116.2 32.7 79.3 87.4 69.0 73.9 140.5 88.9
for a decade. Cancellations 14.7 11.2 12.0 4.4 7.8 2.0 0.9 4.8 1.3

The largest increase came from LNG carriers, orders for which surged by 120.4%
going from 7.4 m dwt to 16.2 m dwt. This was a record over the past ten years
despite very late delivery times which stretched into 2026, and despite prices
which soared across the year from $200 m to $250 m for a standard 174,000
m3 LNG carrier. Without any doubt, that bonanza was driven by Europe’s RECYCLING IN 2022
decision to break their dependance on Russian natural gas. Demolitions in 2022 (n° of ships)
The years follow each other and are alike. 2022 was no exception and the
Newbuilding orders for PCTC / PCC soared by 123.3% going from 0.9 m dwt tonnage sent for demolition remained at subdued levels, totalling no more than
Bulk - 16%
to 1.9 m dwt well above their ten-year average of 0.5 m dwt and only slightly 10 m dwt, the lowest in over a decade and well below the 29.0 m dwt 10- 34 Ships
behind 2021’s ten-year high. Chinese car manufacturing champions such as year average. It represents also less than 0.5% of the total in service merchant Others - 29%
62 Ships
BYD, Geely, NIO are arriving with steamroller force on the European automotive fleet. Every year, the shipping community entertains big hopes that demolition
market. In addition to being supported by Beijing, the strength of these Chinese volumes will increase and bring some relief to markets or simply allow the
groups is that they control the entire production chain of electric cars, including market to evacuate vintage and old-fashioned tonnage. Last year, stricter
batteries. This makes them the match for Tesla with whom BYD is engaged in a environmental legislation and higher steel costs had no effect. It appears that
battle to become the global market leader. market considerations are much stronger and that shipowners wish to surf on
the peaks of freight rates a last time, as we saw for container carriers, tankers
Some offset came from falling orders for LPG tankers. These decreased by and bulkers.
58.9% as they fell from 4.4 m dwt in 2021 to 1.8 m dwt last year. Accordingly, Container - 0%
3 Ships
LPG tanker orders were below their average of the last 10 years. The tanker segment was the most active in demolition, and tonnage sent to the Tanker* - 54%
beach totalled around 6.2 m dwt in 2022, down from 12.3 m dwt in 2021. It 114 Ships

Last year saw new orders for cruise ships signed. Although these were nothing represented almost 1% of the active tanker fleet (695 m dwt).
compared with their pre-covid peaks, they were still noteworthy since orders * Incl. Chemical and Small Tankers
almost vanished during Covid. Indeed, this was the sole shipping segment In the bulker segment, the tonnage sent to the beach reached about 3.1 m dwt in
which had completely fallen into a coma during Covid and its main players 2022 down from 7.3 m dwt in 2021, the lowest figure of the past 10 years and
including CCL and RCCL accordingly lost billions of Dollars. well below the 10-year average of 15.1 m dwt. It represented less than 0.5% %
of the active bulker fleet (965 m dwt).

Logically, very little demolition activity occurred in the containership sector

where only one ship was scrapped in 2022, a record low.

Orders for specialised vessels Demolitions vs deliveries (2014-2022)

2017 2018 2019 2020 2021 2022 N° of Ships 2020 2021 2022 m dwt 2014 2015 2016 2017 2018 2019 2020 2021 2022 Recycling dropped
34.6 36.3 44.4 32.3 28.5 17.0 20.3 21.5 10.0
to a ten-year low
Demolitions
LNG (cbm) 3,145,678 10,815,889 8,886,069 8,126,733 13,498,448 31,215,645 LNG 50 88 189
Deliveries 88.2 94.9 99.0 96.6 79.3 98.1 89.7 84.5 78.5
LPG (cbm) 1,252,298 2,025,601 2,507,769 2,600,895 6,462,814 2,762,024 LPG 7 11 14

Ferries & Ro-pax(gt) 504,373 926,099 888,010 126,989 604,582 358,730 Ferries & Ro-pax 11 19 21

Cruise (gt) 3,067,681 2,369,233 1,631,722 81,371 138,533 467,952 Cruise 7 3 10 Contrary to previous years, a fall in tonnage being demolished was accompanied
by a decrease in the average age of vessels being demolished. In 2022, average
SST Chemical (dwt) 445,900 304,649 404,536 547,469 851,676 644,086 SST Chemical 33 44 31 ages decreased across the board for container carriers from 30 to 29 years, for
bulkers from 30 to 29 years and for tankers from 27 to 25 years.
Car carriers (cars) 38,310 20,830 34,715 21,150 339,490 663,650 Car carriers 3 47 88
Demolition prices rose sharply in 2022 to hit unprecedented levels of $582/ldt,
Ro-Ro (lm) 46,138 124,727 30,426 8,263 41,060 34,744 Ro-Ro 5 14 8 $612/ldt and $622/ldt for bulkers, tankers and container carriers, respectively.
Nonetheless, these prices proved insufficient to attract shipowners.

34 Picture: Havila Castor, HAV 923. Photo: Jan Magne Goksøyr. BRS Group - Annual review 2023 BRS Group - Annual review 2023 35
 SHIPBUILDING SHIPBUILDING
SHIPBUILDING CAPACITY NEWBUILDING PRICES

The number of DELIVERIES AND WORLDWIDE NEWBUILDING PRICES IN 2022

SHIPBUILDING CAPACITY IN 2022
active building Newbuilding prices for bulkers, tankers, container carriers
facilities Total deliveries waned to 78.5 m dwt in 2022 from 84.5 m dwt in 2021. On
a segment-by-segment basis, deliveries amounted to 30.1 m dwt of bulk
rose by around 5 to 10% during the first part of 2022
until early autumn. They then eased to finish the year at
worldwide now carriers (37.8 m dwt in 2021), 29.2 m dwt of tankers (26.1 m dwt in 2021)
and 12.4 m dwt of containerships (11.7 m dwt in 2021).
between 0 and 5% above the levels at the beginning of
the year. This came after they had soared by about 30% in

stands at about In China, Korea and Japan, deliveries all slipped down from 40.8 m dwt to 36.7
2021. Price rises were more acute for in-demand tonnage
such as LNG carriers and PCTCs. For instance, prices for

300, compared m dwt, from 24.1 m dwt to 23.7 m dwt and from 16.8 m dwt to 15.6 m dwt,
respectively.
Newbuilding and asset prices ($ million) 174,000 m3 LNG carriers to be delivered in three- or
four-year time from Korean yards soared from $220 m to
$250 m (+13%). As usual we have to look more precisely at
with the peak The number of active building facilities (yards that either won new contracts Age End 2021 End 2022 % variation the specifications that evolve with time. In particular, the
and/or delivered tonnage during the year) worldwide now stands at about 300, trend for LNG carriers has been to add technical features
of 700 facilities only slightly more than 40% of the peak of about 700 facilities seen in 2007. 15 years 18 16 -11% such ALS, PTO and EGR on top of a now conventional
reliquefication plant, which might be worth altogether
seen in 2007 Kamsarmax
Bulker
5 years 33.5 28.5 -15% about an extra $10 m. Prices for 7000 PCTC dual fuel (LNG)
went up from $83 m to $88 m (+6%) in China.
Newbuilding 35 33 -6%
There is an urban legend in the shipbuilding industry that
shipbuilders make a profit when prices rise. Unfortunately,
Ship deliveries in China, Korea & Japan (2014-2022) 15 years 32 60 +88%
sometimes, building costs increase quicker. This was aptly
VLCC demonstrated last year as Korean stock exchange-listed
5 years 70 98 +40%
Deliveries Tanker companies and first-class shipbuilders such as DSME and
2014 2015 2016 2017 2018 2019 2020 2021 2022
(million dwt) SHI posted significant losses for 2021.
Newbuilding 106 123 +16%
China 35.9 38.7 36.1 38.8 34.8 36.7 38.4 40.8 36.7 Prices in the second-hand market followed a similar
15 years 27 11 -59%
pattern to the charter markets. Second-hand prices for
South Korea 24.5 29.2 35.9 30.8 19.0 32.3 25.3 24.1 23.7 1,700 TEU container carriers strengthened significantly in the first
5 years 43 22 -49%
Containership part of 2022 before plunging in the second part of the
Japan 22.4 21.1 21.6 20.2 20.1 24.6 22.6 16.8 15.6 Newbuilding 27 31 +15%
year. Second-hand tanker prices rose substantially during
the whole year.

Active
Active building facilitiesper
building facilities peryear
year&&region
region(excluding
(excluding offshore)
offshore) US Dollar exchange rates
Million dwt N° of facilities Daily Exchange rates with US$
Million dwt N° of facilities

350 800 1,50

699 131.1
1,260.9
700
300
1,30
600
250 309

500
1,10
200
294 301 0.93
400

150
287 0,90
300

100
200
0,70 6.89

50 100

- - 0,50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

CHINA JAPAN SOUTH KOREA EUROPE ROW N° of World Active Shipyards

China Japan South Korea Europe ROW N° of facilities 100 Yen 1,000 Won 10 Yuan 1 Eur

100 Yen 1000 Won 10 Yuan 1 EUR

36 BRS Group - Annual review 2023 BRS Group - Annual review 2023 37
 SHIPBUILDING SHIPBUILDING
NEWBUILDING PRICES SHIPBUILDING IN THE WORLD

SHIPBUILDING IN THE WORLD Top 4 Chinese shipyards

The top 4 Chinese shipbuilding groups consolidated

Newbuilding prices (million $) Shipbuilding in China their respective positions in 2022 as CSSC, CHI, YZJ and
NTS together accounted for 77% (previously 75%) of the
For the first time since ever, in 2022, China passed the symbolic bar of holding Chinese orderbook. Meanwhile, their combined share
End 2021 End 2021 End 2022 End 2022
China 1st tier* SK/Japan China 1st tier* SK/Japan 50% of the global orderbook. This confirms their domination of the worldwide of the global orderbook increased slightly from 36% in
shipbuilding industry with their orderbook standing at 121.3 m dwt (50.3% 2021 to 39%.
Tankers market share) at end-2022. Despite securing 67% less orders last year (48.1
m dwt) compared with 2021 (71.1 m dwt), Chinese shipyards still managed to China State Shipbuilding Corporation (CSSC) remains the
VLCC 95 106 115 123 secure more orders then their competitors abroad, with their share amounting number one shipbuilding group worldwide holding 42% of
to 54.1% of all orders placed last year. the Chinese orderbook and 21% of the global orderbook.
Suezmax 66 74 71 83 CSSC secured new orders amounting to 22.5 m dwt in
In terms of new orders secured, China supplanted the countries across all the 2022, about 60% more than the largest Korean group HHI
Aframax (A) / LR2 55 (A)/57 (LR2) 59 (A)/61.5 (LR2) 56 (A)/59 (LR2) 67 (A)/70 (LR2) main segments (Bulk, Tanker, Containership). It held the top position in Bulk which secured 14.3 m dwt.
segment with 18.3 m dwt (67%) against 7.7 m dwt (28%) for Japan, top position
LR1 49 58 in the containership segment with 17.7 m dwt (58%) against 10.7 m dwt (35%) Cosco Shipping Heavy Industry (CHI) is the second largest
for Korea. Even in the tanker segment, traditionally led by Korea, it led with shipbuilding group in China, holding 15% of the Chinese
MR2 IMO 3 (12+2) 39 39.5 39 45 3.9 m dwt (44%) against 2.0 m dwt (23%) for Korea. This was a significant orderbook and the third (Last year, CHI was fourth) largest
achievement considering that the country's borders were mostly shut between global shipbuilding group accounting for 7% of the world
Bulkers 2020 and end-2022, with contracts negotiated mainly through video calls. orderbook. In 2022, CHI secured new orders totalling
8.2 m dwt, slightly below the 8.7 m dwt secured in 2021.
Newcastlemax (205k dwt) 65/67 71/73 63 73 Last year, total Chinese shipbuilding output decreased slightly, from 40.8 m
dwt to 36.7 m dwt, reflecting the low ordering activity in 2020. The orderbook In third and fourth position are Yangzijiang (YZJ) and New
Capesize (180k dwt) 60/61 66/68 60 69 / yearly output ratio reached a record with 3.3 against 2.7 in 2021, thereby Times Shipyard (NTS), the two largest private shipbuilders
highlighting that most Chinese yards are completely full for the next 3 years in China with orderbooks of about 14.7 m dwt and 10.7
Kamsarmax (K) 35/36 38/40 33 38 and therefore not proposing delivery slots earlier than 2026 (more than 3 m dwt, respectively. This ranks them in sixth (previously
years after contract signing, even 4 years in some cases). 7th) and eighth position globally. They both secured about
32/32.5 (U) 35/36 (U) 4.4 m dwt of orders placed last year, each accounting for
Ultramax (U) Handymax (H) 32 (U) 37 (U)
28.5 (H) 30/31 (H)
around 5% of global ordering.
Containers

Intermediate (7k teu) 74/75 (6k) 77/78 (6k) 82 90

China
2021 2022 Newbuilding Capacity
m dwt Ships m dwt Ships
Panamax (5.5k teu) 68/69 70/71 70 77 After the reopening of Jiangsu Yangzi Changbo Shipyard
Market share 47.7% 50.0% 50.3% 49.5%
by Yangzijiang (YZJ), Quanzhou shipyard by Quanzhou
Superhandy (2.7k teu) 38 40 40 45 Bulk 48.1 564 47.2 567 Transportation Development Group (QTDG) and the reor-
ganisation of Taizhou Kouan by two local companies last
(1.9k teu) 28 29.5 32 34 Orderbook Tanker 13.6 278 9.2 189
Handy year, the willingness to increase Chinese shipbuilding ca-
(1.1k teu) 23 24 24 27 Container 41.6 534 52.3 627 pacity continued in 2022.
* Prices at China’s 2
nd
tier yards are an estimated 5% lower All ships 110.1 1,708 121.3 1794
Hengli Heavy Industries Group Co. Ltd, a subsidiary of the
Bulk 31.4 374 18.3 247 Hengli Group, won the auction of the assets of STX Dalian.
Tanker 3.8 118 3.9 68 The yard accordingly restarted in January 2023. The ship-
Orders building facility consists of one large graving dock and 4
Container 32.4 412 17.7 208
large slipways, with its output estimated at 1 m dwt/year.
All ships 71.1 1,089 48.1 739
Second hand price evolution during 2022 for 5 year old vessels (million $) The former CEO of Jiangsu Rongsheng Heavy Industries
Bulk 25.1 278 19.0 243
is trying to reopen the giant facility under the name of
Tanker 9.4 162 8.3 155 “SPS Shipyard”. However, reopening is being delayed by
Jan 2022 High Low Dec 2022 Variation Jan- Dec Deliveries
Container 4.5 96 6.9 115 a failure to secure refund guarantees, the lack of a reope-
ning fund and the loss of a restructuring partner. The yard
VLCC 72.35 72.29 21 Jan 93.73 02 Dec 93.58 + 29.3% All ships 40.8 654 36.7 649
is located in the Yangtze River Delta, and was founded in
2006, after which it became the largest private shipbuilder
Aframax 40.76 40.76 07 Jan 59.03 23 Dec 59.03 + 44.8%
in China before collapsing in 2014.
MR Tanker 28.68 28.68 07 Jan 41.39 23 Dec 41.39 + 44.3%

Capesize 45.88 42.39 23 Dec 52.05 01 Jul 42.39 - 7.6% The top 4 Chinese Dalian Shipbuilding Industry Company (DSIC) located in Da-
lian has launched a project to relocate, build and upgrade
Panamax 32.47 29.31 23 Dec 37.65 01 Jul 29.31 - 9.7% shipbuilding groups CSSC, their facilities in Taiping Bay, 100km north of Dalian City.
The aim is to have a modern high-end ship assembly and
Supramax 27.66 24.11 23 Dec 31.12 08 Jul 24.11 - 12.8%
CHI, YZJ and NTS together construction base with an expected annual shipbuilding
capacity of 2.6 m dwt. There is no firm schedule on the
relocation yet but it is expected to take several years to
Values based on Baltic Sale and Purchase Index
accounted for 77% of the complete.

Chinese orderbook
38 BRS Group - Annual review 2023 BRS Group - Annual review 2023 39
 SHIPBUILDING SHIPBUILDING
SHIPBUILDING IN THE WORLD SHIPBUILDING IN SOUTH KOREA

CSSC SWS, located in Changxing island, plans to restart the Ropax and Ferries Shipbuilding in South Korea
facilities which belonged to Shanghai Edwards on Chong- The construction of Ropax and Ferries is mainly controlled by three shipyards: GSI Some newsworthy events of the year
ming island to increase their capacity. with 10 units (4 for GNV, 2 for Moby, 2 for P&O and 2 for domestic companies),
CMHI Weihai with 4 units (3 for Stena and 1 for a domestic company) and CMHI 2021 2022 Hyundai Heavy Industries (HHI/HMD) secured some 48%
Jinling with 2 units (both for Grimaldi). South Korea of new orders placed in Korea in 2022 worth about $25
Overview per segment m dwt Ships m dwt Ships bn (its highest since 2017), well above their initial annual
Cruise target of $17.44 bn. For 2023, the group has set a $15.74
Market share 29.6% 18.3% 29.0% 20.3%
Bulk On top of the famous two 135,500 gt Vista-class vessels (each 323.6 meters bn target for its three shipyards, down by 10% from
Qingdao Beihai, part of CSSC group, has retained its position long and 37.2 meters wide, able to accommodate 5,246 passengers) still under Bulk 1.2 5 0.4 3 2022. Furthermore, the Hyundai Heavy Industries Group
as the shipyard with the largest dry bulk order backlog by construction at CSSC Shanghai Waigaoqiao Shipbuilding (SWS), in cooperation has completed its shift to a holding company structure
deadweight in 2022. The state-owned shipyard had a total with Italy's Fincantieri and to be delivered in 2023, CMHI Jiangsu is the second Tanker 27.5 192 13.5 102 by launching “HD Hyundai”, the new name of the mother
of 8.5 m dwt of bulk tonnage on order consisting of 39 New- Chinese shipyard building cruise ships with three units on order. These are the last Orderbook company.
Container 22.9 197 30.0 295
castlemax and 4 Panamax. In second place is New Times of the four 4,500 gt expedition cruise ships for the Sunstone and two 37,000gt
(NTS) with a total of 4,7 m dwt (20 Newcastlemax and 4 cruise ships for the domestic owner Shanghai Style Cruise. Gas 16.4 222 25.5 318 With their strong orderbook, HHI has revived its
Baby capes) and in third is CHI Yangzhou with a total of 3.0 mothballed Hyundai Gunsan shipyard to fabricate hull
m dwt (4 Newcastlemax and 26 Kamsarmax). All ships 68.3 626 69.8 734 blocks. It is expected to have capacity to produce 100,000
Some significant orders of the year tonnes of blocks annually which it will supply to Hyundai
Bulk 0.4 2 0.0 1
Containerships Ulsan, Hyundai Samho and Hyundai Mipo. Hyundai Gunsan
Yangzijiang, the largest private shipyard in China, confirmed • In 2022, Chinese shipyards secured orders for 172 dual-fuel propulsion Tanker 14.6 106 2.0 23 was built at the height of the shipbuilding boom in 2007
their leadership in the containership segment with an or- ships (excluding LNG carriers) against 150, 61 and 50 orders placed in but was closed five years ago due to the downturn in the
derbook of 11.5 m dwt (114 ships from 1,000 to 24,000 2021, 2020 and 2019, respectively. This represented 58% of total dual-fuel Orders Container 17.2 161 10.7 131 industry.
teu). This is followed by CSSC Jiangnan with 4.4 m dwt (28 ships ordered globally last year and 26% of the total orders placed in China.
ships) and New Times with 3.8 m dwt (35 ships). Meanwhile, Korea and Japan secured 25% and 8%, respectively, of dual-fuel Gas 9.6 135 12.3 143 Of the 164 ships secured last year, 60% were based on
orders placed last year. These orders included 62 dual-fuel (LNG) ROROs, dual-fuel propulsion.
All ships 42.0 412 25.2 305
Tankers 10 dual-fuel (LNG) tankers, 6 dual-fuel (LNG) bulkers, 52 dual-fuel (LNG)
The tanker segment is largely dominated by two shipyards: containerships and 22 dual-fuel (Methanol) containerships. Bulk 1.8 6 0.8 3 Samsung HI (SHI) secured some 20.7% of new orders
New Times with an orderbook of 2.2 m dwt (29 ships in- placed in Korea in 2022 and exceeded their sales target.
cluding 4 Suezmax, 6 LR2s and 19 MRs) and CSSC GSI with • Chinese shipyards secured 80% (70 units) of all the PCTCs ordered worldwide Tanker 11.7 99 16.1 113 For 2023, the annual target has been raised to $9.5 bn. Of
an orderbook of 1.9 m. dwt (28 ships including 9 LR2s and (88 units) and about 30% (60 units) of all LNG carriers (all sizes) ordered last the 56 contracts it secured in 2022, 43 (77%) were for large
Deliveries Container 4.8 31 3.6 33
19 MRs) year (191 units). LNG Carriers. Accordingly, the yard is now concentrating
Gas 5.8 73 3.2 47 on LNG carriers rather than on large containerships and
LNG • Bocimar, a division of CMB group, signed for another 12 Ammonia-ready tankers.
The construction of large LNG carriers has been, for years, Newcastlemaxes at CSSC Beihai which brings the total ordered to 20 units. All ships 24.1 212 23.7 197
limited to CSSC Hudong-Zhonghua which, in 2022, had an Daewoo Shipbuilding and Marine Engineering (DSME)
orderbook of 3.9 m dwt (49 ships). In 2022, under the pres- • MSC continued their expansion and placed more orders for container vessels secured 20% of the total new orders placed in Korea in
sure of high demand and the limited slots available in Korea, in Chinese shipyards. These included 6 x 16,000 teu LNG dual fuel at DSIC, In 2022, Korea ranked second globally for its 69.8 m dwt orderbook (29% 2022 which amounted to $10.4 billion (122% of its initial
three other yards entered the club of large LNG carriers buil- 10 x 8,100 teu LNG dual fuel and 10 x 11,400 teu LNG dual fuel at New of global market share), its 25.2 m dwt of newbuilding orders (28% of global target). 88% of the new orders were for large LNG carriers.
ders. CSSC Dalian secured 6 units for China Merchant, CSSC times and 12 x 16000 teu LNG dual fuel at Yangzijiang. market share) and its tonnage output of 23.7 m dwt (30% of global market Like Samsung, DSME is now concentrating on LNG carriers
Jiangnan received orders for 6 units from the UAE’s ADNOC share). The orderbook remains on par with 2021 despite a 40% drop in the and large containerships.
and Yangzijiang secured 2 units for Germany’s Hammonia volume of new orders secured (from 32 m dwt to 25.2 m dwt).
Reederei and Peter Dohle with the backing of the German Following the failure of the merger between DSME and
government. Another yard, CMHI Jiangsu has entered into In the tanker segment, Korea slipped from first position globally as its HHI, DSME’s main shareholder KDB was actively looking
discussions with Denmark’s Celsius to construct 4 units. yards secured only 2 m dwt of new orders compared with 14.6 m dwt in after a new buyer. Finally, it was the South Korean defence

PCTC
Chinese shipyards 2021. Nonetheless, this still represented 23% all tankers ordered last year.
The containership segment resisted better than in China as the volume of
and energy conglomerate Hanwha Group (South Korea’s
seventh-largest conglomerate) who signed an agreement
2022 saw an explosion in the ordering of PCTCs. Across the
year, 88 ships were ordered including 70 ships at Chinese
secured 80% (70 units) new orders only dropped by 38% compared with 45% in China. The bulker
segment remains essentially reserved for only domestic owners only since
at end-2022 to take a controlling stake in DSME. The
transaction will allow KDB to reduce their share from
yards, who now control 79.5% of the world orderbook. This
is followed by Japan with 15.9% and Korea with 4.5%. Ten of all the PCTCs ordered Korean shipyards decided to exit this segment several years ago. 55.7% to 28.2% within the first half of 2023. It is expected
that the proposed new owner will use the shipbuilder to
Chinese yards share the orderbook of 101 units; GSI (19
units), CMHI Jiangsu (15), CIMC Raffles (13), CMHI Jinling worldwide (88 units) Korean yards still dominate the construction of LNG carriers and accounted
for 71% of orders placed globally (160 new units compared with 86 in 2021).
expand its defence and green energy businesses.

(11), Xiamen (17), CMHI Weihai (10), CSSC Jiangnan (7), However, Chinese yards are gearing up by taking the remaining 29% (60 new Hyundai Mipo Dockyard (HMD) continued to dominate
Mawei (5), CSSC SWS (3) and CMHI Nanjing (1). and about 30% (60 units compared with 14 in 2021) the medium sized shipyard segment (below LR2 size)
and collected most of the small and medium sized new
units) of all LNG carriers Illustrating the strong consolidation of the Korean shipbuilding industry,
88,6% of orders in 2022 were secured by the Big Three, with Hyundai HI
orders placed at Korean yards in 2022. It won 56 orders in
2022 against 92 in 2021 and 51 in 2020. Its main product
(all sizes) ordered last holding 48%, Samsung 20.7%, and DSME 19.9%. Only 8 Korean shipyards
received new orders in 2022 compared with 23 in 2008.
remains the MR tanker and together with its Vietnamese
affiliate (HVS), it succeeded in winning 45% of MR orders
year (191 units) Korean shipbuilding output continued to slightly decrease from 24.1 m dwt
placed worldwide.

in 2021 to 23.7 m dwt in 2022. Meanwhile, the orderbook to yearly output Daehan Shipbuilding disappeared. Welcome to DH
ratio continues to increase and has risen from 1.7 at end-2019, to 2.3 at Shipbuilding! Following the acquisition of the majority of
end-2020, to 2.8 at end-2021 to 2.9 at end-2022. With China now having a Daehan, KH Investment (KHI) renamed the Mokpo-based
ratio above 3.3, it is now easier to find an earlier delivery position in Korea shipyard, ‘DH Shipbuilding’. The yard became then a sister
than in China. company to Kshipbuilding owned by the same main

40 BRS Group - Annual review 2023 BRS Group - Annual review 2023 41
 SHIPBUILDING
SHIPBUILDING IN JAPAN

Shipbuilding in Japan

2021 2022
• Oshima Shipbuiding, Namura and Shin Kurushima,
Japan respectively, the third (1,4 m dwt), fourth (0.8 m dwt)
m dwt Ships m dwt Ships and fifth (0.5 m dwt) largest Japanese shipbuilders,
Market share 17.6% 17.9% 15.1% 16.2% secured a total of 48 ships for a total 2.7 m dwt. In
Japan, 25 shipyards secured new orders including the
Bulk 25.8 347 23.9 322
first five Japanese shipyards which controlled 73% of
Orderbook Tanker 5.4 77 2.6 61 the total new orders in 2022.
Container 8.0 92 8.1 96
• Collaboration is also helping the Japanese yards improve
All ships 40.7 612 36.5 587 their competitiveness. For example, Namura is working
Bulk 13.9 191 7.7 103 with Mitsubishi Heavy Industries on advanced ship
designs. Meanwhile, Tsuneishi Shipbuilding is collaborating
Tanker 1.6 38 1.0 32 with Mitsui E&S Shipbuilding on low-emission designs, is
Orders
Container 5.3 67 1.9 35 this an extension of their ties as Tsuneishi is already the
main shareholder in Mitsui E&S. Furthermore, Mitsui E&S
All ships 21.8 359 11.4 229
has established a joint venture with Chinese Yangzijiang
Bulk 9.7 144 9.5 125 named Jiangsu Yangzi-Mitsui Shipbuilding. This venture
Tanker 4.2 44 3.8 48
offers ship designs and building facilities to Japanese
Deliveries customers. Finally, Kawasaki Heavy Industries also owns
Container 2.3 32 1.8 31 production sites in China through NACKS (Nantong Cosco
All ships 16.8 268 15.6 251 KHI Ship Engineering) and DACKS (Dalian Cosco KHI
Ship Engineering). These yards are currently building
methanol-fuelled container ships.
Japan maintained its position as the third largest shipbuilder in 2022 with its 36.5
shareholder. DH Shipbuilding was previously under the Some significant orders of the year m dwt orderbook (15% market share), its 11.4 m dwt of newbuilding orders (13%) • With the acquisition of the former Mitsubishi Heavy
control of the state-owned Korea Development Bank (KDB) and its tonnage output of 15.6 m dwt (20%). Industries (MHI) Koyagi shipyard, Oshima Shipbuilding is
after filing for bankruptcy restructuring in 2009 when • In 2022, Korean shipyards secured orders for 73 dual-fuel propulsion ships gearing up to build low-emission Capesize bulk carriers
the shipbuilding market collapsed. The yard continues (excluding LNG carriers) against 122 orders in 2021, 38 orders in 2020 and The loss 52% decline in newbuilding orders was proportionally limited in Japan at the giant newbuilding facility. The shipyard recently
to focus mainly on constructing large tankers and large 34 orders in 2019. This represented 25% of total dual-fuel ships ordered considering that orders fell by 63% worldwide. Indeed, last year saw orders for made its mark as a builder of low-emission ships after
containerships. In 2022, they secured 9 ships (2 Suezmax, globally last year and 24% of the total orders placed in Korea. In comparison, 88.9 m dwt secured less than the 140.1 m dwt won in 2021. This reduction hit constructing a 100,000-dwt bulk carrier fitted with a
3 Aframax and 4 x 7,000 teu containerships) compared Chinese and Japanese yards won 58% and 8%, respectively, of the dual- all segments including the bulkers, historically the backbone of the Japanese telescopic hard sail for Mitsui OSK Lines. Established
with 17 ships in 2021. fuel orders placed last year. These orders included 12 dual-fuel (LPG) LPG shipbuilding industry. in 1973, Oshima is controlled by Daizo Corporation,
tankers (9 VLGCs, 3 MGCs), 44 dual-fuel (LNG) containerships and 10 dual- Sumitomo Corporation and Sumitomo Heavy Industries.
K Shipbuilding (ex - STX Offshore & Shipbuilding) who went fuel (methanol) containerships. Japan’s five largest shipyards Nihon (Imabari + JMU), Oshima, Shin Kurushima and
through the same situation as DH Shipbuilding 2 years ago, Namura secured a combined 73.5% of the total new orders placed at Japanese • Sasebo Heavy Industries finally shifted from newbuilding
continued to focus on tankers and succeeded in securing • A remarkable record: 43 Intermediate Containerships between 5,000 yards in 2022, with shares of 52.2%, 10.8%, 6.2% and 4.3%, respectively. to ship repair. Following the acquisition of Sasebo by
new orders for containerships and tankers. In 2022, they and 8,000 teu were ordered in Korea (27 at HHI, 4 at Samsung, 4 at K Namura in 2014, the yard concentrated on building
secured 16 orders (4 Aframax, 8 MRs and 4 x 7,700 teu Shipbuilding, 5 at DH Shipbuilding and 4 at HJ Shipbuilding). Japan’s total shipbuilding output decreased slightly, from 16.8 m dwt in 2021 to bulkers until Namura decided to withdraw Sasebo from
containerships) compared with 25 ships in 2021. 15.6 m dwt in 2022. The orderbook to yearly output ratio continued to increase commercial shipbuilding due the strong competition
• The Big Three secured 71.5% of the 165 large LNG carriers ordered globally reaching 2.3 against 2.1 in 2021, emphasizing the long delivery positions. from China and Korea.
HJ Shipbuilding (ex - Hanjin Heavy Industries & Construction) in 2022 (45 units for HHI, 36 for Samsung and 37 for DSME).
who also changed ownership 2 years ago and focuses only • Since the dry bulk market failed to generate enough
on containerships. In 2022, they secured 4 containerships (2 newbuilding orders, Japanese shipyards could not benefit
x 7700 teu and 2 x 5500 teu). Their orderbook has grown Some newsworthy events of the year from the rapid devaluation of the Yen which fell to a 32-
to stand at 8 ships (2 x 7,700 teu and 6 x 5,500 teu) by year low against US Dollar .
end-2022. • Imabari Shipbuilding and Japan Marine United (JMU), are Japan’s two largest
shipbuilders with an orderbook of 14.2 m dwt (38.8% of Japan’s orderbook)
Dae Sun Shipbuilding and Engineering secured only 5
orders in 2022 (4 x 1,000 teu and 1 small ferry) compared Illustrating the strong and 6.8 m dwt (18.7 % of Japan’s orderbook), respectively. In January
2021, they launched a new joint venture company, Nihon Shipyard Co, with
with 20 ships in 2021. Like many other small and medium Imabari holding a 51% stake and JMU 49%. This new company is handling all
size shipyards, they had some trouble to issue refund consolidation of the commercial ships excluding LNG carriers. In 2022, Nihon won orders for 70
guarantees. Established in 1945, Dae Sun is one of the few ships (against 89 last year) for a total of 6.6 m dwt. At the end of 2022, the
medium-sized shipyards left in South Korea. Domestic steel
manufacturer Dongil Steel became the major shareholder
Korean shipbuilding orderbook of Nihon totalled 235 ships for a total of 21.1 m dwt. This makes
it the world’s third largest after CSSC and HHI.
in early 2021 after purchasing 83% of the yard’s shares
from the state-owned Export-Import Bank of Korea.
industry, 88.6% of orders • Similar to CSSC and HHI groups, Imabari shipbuilding plans to have its own
in 2022 were secured by marine engine manufacturer by creating a joint venture with its engineering
giant compatriot Hitachi Zosen. Imabari will own 35% of the business and

the Big Three Hitachi the remaining 65%. Hitachi is already one of Imabari’s main marine
engines suppliers and it is the only manufacturer in Japan licensed to build
marine engines designed by both MAN Energy Solutions and WinGD.

42 Picture: FEEDER BLOSSOM, Japanmax Feeder Cont of 1,096 TEUS, delivered to Erasmus Shipinvest Group by Kyokuyo Shipyard Corporation on Jan 5 th 2023. BRS Group - Annual review 2023 BRS Group - Annual review 2023 43
 SHIPBUILDING SHIPBUILDING
SHIPBUILDING IN EUROPE SHIPBUILDING IN EUROPE

Shipbuilding in Europe 2021 2022

Europe
m gt Ships m gt Ships
European shipyards saw a 42% increase in the number
Market share 6.7% 8.4% 5.1% 8.8%
of new orders won in 2022 as 99 contracts were signed
compared with 69 in 2021. This came against the global Bulk 0.0 13 0.0 11
trend of slowing new orders. We attribute this increase Tanker 1.2 50 1.7 49
to orders of small dry cargo units (38 units), a ship type
for which Europe is becoming more attractive due to Container 0.0 0 0.2 4
Orderbook
short delivery times. However, the declining cruiseship LNG 1.9 15 1.9 15
orderbook has led to a loss of market share in gt terms
Dry Cargo 0.5 101 0.7 144
from 6,7% to 5,1% despite European yards still having 10
cruiseships on order (all medium sized units). In 2022, Cruise 7.7 77 6.1 66
China, Korea, Japan and Europe accounted for 100.6, 68.1, All ships 12.3 288 10.7 319
25.5 and 10.7 m gt of the global orderbook, respectively.
In million dwt terms, the equivalent figures were 121.3, Bulk 0.0 12 0.0 2
69.8, 36.5 and 5.4 million dwt. Tanker 0.7 28 1.0 26

Container 0.0 0 0.2 4

The region’s total shipbuilding output continues to increase
following the delivery of several large cruise ships. Orders LNG 0.0 0 0.0 0
Accordingly, output hit 2.5 m gt in 2022, up from 1,8 m gt in
Dry Cargo 0.2 38 0.3 62
2021. The orderbook to yearly output ratio of 4.3 is not so
representative in Europe due to the typology of the region’s Cruise 0.1 2 0.5 10
shipyards as there are few large premises building very large All ships 1.1 69 1.1 99
units and a multitude of small yards building small units.
Bulk 0.0 1 0.0 4

Tanker 0.5 29 0.4 23

Container 0.0 0 0.0 0

Some newsworthy events of the year • Germany is in third position reflecting it having one of the world’s best
Deliveries LNG 0.0 0 0.0 0 cruiseship builders - Meyer Werft - who still enjoys an orderbook of 0,7
• Based on current figures, Russia is in first place among mil gt (7 units) representing 11% of the global cruise ship orderbook in
Dry Cargo 0.2 40 0.1 19
the European countries with 3.0 m gt. However, in view tonnage terms. These units will be delivered up until 2025 and no new
of the ongoing war in Ukraine, we are not sure these Cruise 1.4 20 1.9 18 orders were signed in 2022. The country can also count on Flensburger
orders are still valid and will be delivered. The orderbook All ships 1.8 83 2.5 65 Schiffbau-Gesellschaft (FSG) shipyard with 2 RoRo on order and with
of Russia’s Zvezda shipyard consists of LNG Carriers Ferus Smit Leer with its orderbook of 8 small ships (3 tankers, 2 MPP and
for which the hull blocks and other components were 3 General cargo vessels).
to be constructed in Korean shipyards including HHI
and Samsung. Thus, when ranking European countries • Finally, Germany's Fosen Yard Emden, part of the Norwegian Fosen group
together, we believe it is better to exclude Russia until
we have a better understanding of its shipbuilding Orderbook of European shipyards 2022
Orderbook of European shipyards at end-2022 (million GT)
since 2019, which signed contracts for six 3,640 dwt general cargo vessels
in 2021, filed for bankruptcy in mid-2022 after the contracts did not become Turkey’s
industry. Consequently, all European countries move up
the rankings compared with 2021.
effective.
shipbuilding
industry made
Ukraine
Ukraine 2 • The three yards that form MV Werften were sold off individually: Werften
• In 2022, Italy had the strongest orderbook with 2.6 Greece
Greece 2 Wismar was purchased by Thyssenkrupp Marine Systems (TKMS), the
m gt due to Fincantieri’s position as the largest cruise Werften Rostock naval shipyard, specialised in constructing submarines, was
a spectacular
UnitedKingdom
United Kingdom 2
ship builder in the world. By end-2022, Fincantieri has Azerbaijan
Azerbaijan 3
nationalised and converted into a site for making military equipment. Finally,
29 large cruise ships on order, representing 40% of the Werften Stralsund was taken by the city of Stralsund and leased to Norway’s
return in 2022 as
Portugal
Portugal 3
global cruise ship orderbook and which will be delivered Fosen yards.
Norway
Norway 5
up until 2028. Italy can also count on Visentini which is
constructing one large LNG-ready Ropax for Pol Ferries,
and on Mariotti which is building one 23,000 gt cruise
Romania
Romania
Spain
Spain
3

8
• In Finland, the fourth European country in terms of gt, Meyer Turku Oy holds
an orderbook of 0.7 m gt consisting of 4 cruise ships to be delivered up to 2025
orders for 44 ships
ship which will be delivered in 2023. Croatia
Croatia
Poland
Poland
8

4
for Royal Caribbean and TUI. Finnish yards did not receive any new orders in
2022. Rauma Marine are still constructing two 48,000 gt, 1,800-passenger,
were placed at 12
• France is in second place due to its leading shipyard –
Chantiers de l’Atlantique – which has a total orderbook
Netherlands
Netherlands
Turkey
Turkey
83

65
dual-fuel (LNG) ferries for Australian ferry operator TT-Line. The future of the
Helsinki Shipyard is still uncertain. The company sold the SH Diana at auction, shipyards
of 10 cruise units for a total of 1.5 m gt after having Finland
Finland 7 the cruise ship PC6 which was originally ordered by Russian owners. The yard
contracted 2 new yacht cruise ships with LNG propulsion Germany
Germany 27 has been owned by Russian’s Algador Holdings since 2019.
for the Ritz-Carlton Group. In terms of tonnage, this France
France 10
represents 24% of the global cruiseship orderbook. All • Turkey’s shipbuilding industry made a spectacular return in 2022 as orders
Italy
Italy 31
units will be delivered before 2027. The French State for 44 ships, totalling 0.4 m gt, were placed at 12 shipyards. The country is
remains the main shareholder in Chantiers, holding 0 0.5 1 1.5 2 2.5 3 now in fifth position in Europe with an orderbook of 0.5 m gt (65 ships) spread
an 84% stake after European competition regulators N° ofN°
ships
ships Million gtMillion Gt across 19 yards. The Turkon group ordered in their own yard Sedef, 2 x 4000
rejected a proposed merger with Fincantieri. teu and 2 x 3,000 teu containerships to be delivered in 2024. Meanwhile,
Gisan secured orders for 10 ships from Turkish owners to be delivered until
2026. With Chinese shipyards being full, and not so interested in small units,
Turkey is becoming a strong alternative.

Picture: FORTE DOS REIS MAGOS, Elcano vessel, bearing Seller’s hull no. B120K-4 was delivered successfully on 17th Feb.
44 BRS Group - Annual review 2023 BRS Group - Annual review 2023 45
 SHIPBUILDING
SHIPBUILDING IN THE REST OF THE WORLD

2021 2022
• CSBC, the largest yard in Taiwan, managed to sell their
ROW speculative order of 4 x 2,800 teu containerships placed in
m dwt Ships m dwt Ships 2021 to Wan Hai lines while also securing a special order
Market share 2.8% 5.3% 3.3% 5.2% for one MR Tanker from domestic oil refiner CPC Corp
(CPC). The last time that CSBC bagged a tanker order was in
Bulk 3.8 74 4.4 76
2015.
Orderbook Tanker 2.0 50 2.9 49
• US shipyards had an excellent year as five ships were
Container 0.3 12 0.4 9
ordered totalling 0.18 m dwt. A Hawaiian liner operator
All ships 6.4 180 7.9 188 ordered three dual fuel LNG 3,600 teu container ships
Bulk 2.9 39 1.4 21 under the Jones’s Act to be delivered across 2026-27.
Meanwhile, Keppel AmFELS are still building their second
Tanker 1.3 28 1.8 26 2,500 teu dual fuel LNG containership ordered by Hawaii
Orders
Container 0.1 4 0.2 3 PASHA in 2017 and to be delivered in 2023. Finally, Vigor
shipyards secured an order for one double-ended hybrid
All ships 4.3 84 3.5 75
ferry for the US state of Washington.
Bulk 1.1 16 0.8 19

Tanker 0.8 29 0.7 23

• Brazil’s orderbook is virtually empty. No orders have been
Deliveries taken since 2016. Currently only one shipyard (Eisa Ilha)
Container 0.1 4 0.1 6 still has orders (2 LR1s and 1 MR) which were ordered back
All ships 2.3 74 1.7 63 in 2007-08.
Orderbook Rest of the World 2022 (by million dwt)
• India confirmed their return into the international
shipbuilding market in 2022. Chowgule Shipyard secured
12 new contracts, of these 6 were for highly efficient 5,350
Orderbook in Rest of the World at end-2022 (million dwt) dwt hybrid vessels for ESL Shipping’s Swedish subsidiary
AtoB@C Shipping and 6 were for 5,600 dwt general cargo
Singapore
Singapore 2 ships for Dutch company Vertom. Meanwhile, state-owned
Cochin Shipyard ordered 8 x 7,900 dwt general cargo ships
Sri
SriLanka
Lanka 5
for Germany’s HS Schiffarts group to be delivered across
Indonesia
Indonesia 8 2024-2025.
Argentina
Argentina 2
• Although no order has been secured since 2021,
Bangladesh
Bangladesh 23
• Dutch shipbuilders won the highest number of new • Spain is struggling to take new orders despite having several excellent Bangladesh remains relatively active with an orderbook of
orders across the region in 2022 as 11 shipyards yards shipyards. Only four ships were ordered in 2022. Of these, two were for a India
India 30 24 units spread across 6 different shipyards. The largest
secured orders for 82 ships (0,3 mil. gt). Of these, 37 world’s first LNG-fuelled fast ferry for Balearia at Armon. Meanwhile orders Brazil
yard is Bashundara Group with 14 ships on its orderbook.
Brazil 3
orders for mostly general cargo ships were won by 6 for two general cargo ships were received by Murueta. Last year saw a new Bangladesh is a mainly a domestic market. The size of
different shipyards. The main shipyards are Damen giant born as the troubled Barreras shipyard was absorbed by Astilleros United
UnitedStates
States 5 ships built in Bangladesh is below 10,000 dwt.
Gorinchem (22 ships), Royal Bodewes (17 ships), GS yard Armón. Following persistent financial problems over the past few years, in Taiwan
Taiwan 5
(13 ships), and Ferus Smit Westerbroek (13 ships). 2020, Barreras was taken over by the Ritz-Carlton group in order for them to • Despite difficulties in the country, Sri Lanka’s Colombo
Vietnam
Vietnam 46
finish construction of their cruise ship Evrima as well as the Norwegian ferries Dockyard continues to build and deliver ships. They
• Poland did not secure any order in 2022. However, due of Havila Kystruten. However, Evrima was finally completed in Santander and Philippines
Philippines 54 still have 7 x 5,000 dwt eco bulk carriers fitted with
to the 3 x 4,100 dwt dual-fuel ferries ordered at the the Havila ferries in Turkey’s Tersan shipyard. Armon has plans to reactivate diesel/electric hybrid power systems to be completed
0 0.5 1 1.5 2 2.5 3 3.5 4
Remontowa yard by the Polish Government, they stand the facilities on the basis of strong synergies with his yard in Vigo. for Norway’s Misje Rederi. Furthermore, the “Sophie
N° of ships Million dwt
in seventh position in Europe. Poland can also count on N° ships Million dwt Germain”, a cable layer ordered by Orange Marine
Gryfia Shipyard and its partner Stocznia. Poland also was launched in November 2022. Japan’s Onomichi
remains active as a block and hull manufacturer for Some newsworthy events of the year Dockyard owns 51% of Colombo Shipyard.
other European builders. Shipbuilding in the Rest of the World
• The Philippines, led by the Tsuneishi Cebu and Austral Philippines yards,
• Croatian shipyards are falling in the ranking. Brodosplit, The orderbook at shipyards in the Rest of the World (RoW) increased slightly in maintained their leadership of the Rest of the World shipbuilding countries, and
one of the largest of the country’s shipyards, filed for 2022 from 6.4 m dwt to 7.9 m dwt. Accordingly, the region’s global market share held 49% of the total RoW orderbook at end-2022. This compares with shares of
bankruptcy in the wake of the sanctions placed on rose from 2.8% to 3.3% reflecting orders for 8 Aframaxes placed at HVS for Greek 53.8% in 2021, 52% in 2020, 45% in 2019, 48% in 2018 and 54% in 2017. Last
Russia following its war in Ukraine. The yard had a loan owners. year, Tsuneishi secured orders totalling 0,9 m dwt (12 ships). These were all bulk
from the Russian bank VTB for building the ships on carriers (7 Kamsarmax and 5 Ultramax) for Japanese owners. Austal Philippines
order and suddenly flipped to being in cash default. The
new yard – “Uljanik Brodogradnja 1856”- is building a
Deliveries continued to decrease from 3.5 m dwt in 2019, to 2.7 m dwt in 2020,
to 2.3 m dwt in 2021 to finally to 1.7 m dwt in 2022. However, the ratio between
are building a dual-fuel LNG, 115-metre, high speed vehicle-passenger ferry,
named Express 5, for Denmark’s Molslinjen.
India confirmed
drydock for an Israeli shipyard. 3 Maj who is busy with
finalising a 225m Self-Unloading bulkcarrier for Algoma
the current orderbook and yearly output has continued to double each year from
1.4 in 2020, to 2.2 in 2021 and to 4.6 in 2022. • Last year, Vietnam retained its second position in the RoW due to Hyundai
their return to
and a luxury Polar Cruiser for Australian owners to be
delivered 2023, also signed for the completion of the Last year, 14 RoW shipyards secured new orders (compared with 8 in 2021, 7
Vietnam Shipbuilding (HVS) which accounted for 92.4% of the country’s
orderbook. By end-2022 its orderbook totalled - 38 ships (12 LR2s, 22 MR the international
MR tanker which was already under construction at
Brodotrogir and originally ordered at Russia’s Sevmash
in 2004. Brodotrogir still have two general cargo ships
in 2020 and 13 in 2019). The first two yards Tsuneishi Cebu (Philippines) and
HVS (Vietnam) account for 49% and 34%, respectively, of the RoW orderbook and
tankers and 4 Ultramax) for 2.7 m dwt. The country can also count on other
shipbuilders including Pha Rung, Ha Long and Dong Bac. It also has the French shipbuilding
together secured 77% of the region’s new orders in 2022 compared with 92.7% company Piriou who is building small cargo units with sails for Towt and Grain
on order. All the yards are also building blocks for the
cruiseship builder, and neighbour, Fincantieri.
in 2021. Indeed, Tsuneishi only secured 12 ships last year (7 kamsarmax and 5 de Sail and also the Persévérance, the supply sailboat of Jean-Louis Etienne for market in 2022
ultramax) against 23 ships in 2021. the PolarPod project.

46 Picture: CMA CGM MASAI MARA, 6,000 TEU container vessel being built for Delphis (CMB Group) in Qingdao Yangfan for long time charter to CMA CGM. Photo: CMB Group. BRS Group - Annual review 2023 BRS Group - Annual review 2023 47
 SHIPBUILDING SHIPBUILDING
SOME ASPECTS OF THE SHIPBUILDING MARKET Shipyard Deliveries by year SOME ASPECTS OF THE SHIPBUILDING MARKET

N° of ships
12,019 ships delivered between 2005 and 2010
Shipyard
Shipyard Deliveries
Deliveries by year
Shipyard
3,000 deliveries by
by year
year
N° of ships
N° of ships 12,019 ships delivered between 2005 and 2010
N° of ships 12,019 ships delivered between 2005 and 2010
2,558
SOME ASPECTS OF THE SHIPBUILDING MARKET 12,019 ships delivered per year 2005-2010

Too early to talk

3,000
2,500
3,000 2,279
2,234
607
2,558

about shipbuilding
2,558
2,500
2,000 1,903
The future of shipbuilding industry 2,500 658
2,234
2,234
629
2,279
2,279 270
607

expansion
1,609 607
554
1,436
In any period of sustained newbuilding demand, the same question arises concerning 2,000
1,500
2,000
1,903
1,903 658
268
629
629
446 440
658 635 1,291
the response of the industry and whether existing shipbuilders will try to expand 270 1,226
397 1,609 270
1,609 409
554
capacity to address the extra demand or whether others will open new yards? 1,500
1,000 1,436 554 268
771
294
1,500 1,436 367 268
273 446 440 635 1,291
446 440 635 1,291 182
1,226
397 752 1,226
We saw the Chinese group Hengli take over the ex-Korean STX Dalian yard, once 397
TopTopshipyard groups
shipyard based
groups onon
based orderbook 2022
orderbook 2022 447 471
409
604
409 294
353
part of the fourth largest shipbuilding group, that was declared bankrupt in 2014 1,000
500 367 771 1046 294
(in(in
dwt)
dwt) 1,000 273
273
367 771
182
following several years of severe financial struggles. Wuhu might follow with the 752 611 182
319 325 336 384
752 394
604
takeover of the ex-Korean yard – Samjin – in Shandong. Former executives of 500 447 471 604 1046 353
353
0 447 471 1046
Rongsheng made the news pushing for the re-opening of what was in the 2000s 500
Others CSSC 611
2001 2002 2003 2004 2005 2006 2007 2008 2009
611 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
22% 21% the largest Chinese private shipbuildier. At the same time, private yard Zhoushan 319 325 336
336
384
384
394
394
319 325
Yangfan is showing signs of financial troubles which might instigate a closure or the 0
0 Bulk Tanker Container Others
takeover by another group. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
JMU
3% Therefore, it looks too early to make a final statement. Bulk
Bulk
Bulk
Tanker (Inc. Chemical
Tanker
Tanker
and Small Tankers)
Container
Container
Others
Others
Containers Others

Tsuneishi Number of active shipyards by year

3% In the 2000 we saw the formidable expansion of the Chinese shipbuilding
HHI N° of yards
NTS 14% industry, the global market share of which soared from 9% in 2000 to 38% in
4% Number
Number of activeshipyards
shipyards byyear
year
2008, and of, to a lesser extent, the Korean shipbuilding industry which tried to Number of
of active
active shipyards by
by year
Imabari compete by expanding its existing shipbuilders and by opening brand new yards, 800
N°
N° ofyards
of yards
6% N° of yards
CHI many of which have since closed. It is also interesting to bear in mind that in spite 699
676
Yangzijiang 7% 700
of the boom of the mid-2000s, no shipyard in Europe nor in Japan re-opened 800
6% DSME Samsung 800 607 615
7% 7%
during this period. 570
600 699
557 699 676
700 676 520
700
That expansion was followed by massive closures and bankruptcies in the wake 464 607 615
500 607 615
of the 2008 financial crisis and that memory remains vivid in the minds of many 570
600 418 570
600 557 414
banks, investors, owners, equipment makers and shipbuilders that had to adjust 400
557 520
520
392
Top Shipyards % Orderbook in dwt and suffered collateral damage. It also remains sensitive for workers that were shed 500 331
464
464 350 350 345 344
500 315 308 309 301
298 294
CSSC 42% with the tide. 300
418
418
414
414 392
400 392
400 350 350 345
CHI 15% 315
331 350 350 345
344
344
China Shipbuilding is not an industry that makes money. This is demonstrated by the 200 298
298
315
331 308
308 294
309
309 301
301
300 294
Yangzijiang 12% accounts of stock-listed shipbuilders such as Samsung H.I and DSME, two of the best 300

Others 32% shipbuilders in the world having built the finest ships for the finest ship owning 100
200
companies. Besides which, it is a tough job. Consequently, shipbuilders have great 200
HHI 45% difficulty to compete with other industries and retain their labour. It has also been 0
100
Samsung 24% hypothesised that in a global world, marine transportation must be cheap as it 100 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
South Korea represents the last custom barrier between nations. China South Korea Japan Row Europe
DSME 23% 0
China
0 South Korea Japan Row Europe
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Others 9% The shipbuilding industry is a strategic industry, often a provider of navy ships 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
China South Korea Japan Row Europe
and the one who rules the waves, rules the world according to the famous English China South Korea Japan Row Europe
Imabari 38%
quote. It is a source, or rather was a source, of labour at a time when it was less
JMU 18% industrialised. It is a source of national independence and in a post-epidemic world,
Fleet Evolution
Japan
Oshima SaikaI 14% a post-sanctions world, a deglobalized world, governments might push to redevelop Million dwt
40,588 ships
shipbuilding back in the west. 2,072 Mdwt
Others 29%
168 Mdwt
The shipbuilding industry is characterized by inadequate pricing where sale price 11,816
40,588 ships
40,588
ships
ships
2,072
294 Mdwt
is seldom above building costs. The industry has been trying to develop various 2,072 Mdwt
5,401 ships

Laden Super Eco Non Eco strategies to counter low prices and one of the main findings has been to reduce 30,864 ships
168 Mdwt
168 Mdwt
11,816 ships
Vessels type 11,816 ships
(Knt) Eco (mt) (mt) (mt) global shipbuilding capacity via yard closures and consolidations. 1,108 Mdwt 672 Mdwt
294
10,759
294
Mdwt
ships
Mdwt
123 Mdwt 5,401 ships
5,401 ships
VLCC 13.0 46.0 52.0 80.0 11,691 ships
30,864
163 ships
Consolidation has been an ongoing process, as the number of shipyards dropped 30,864
1,108
Mdwt
ships
4,569Mdwt
ships 672 Mdwt
1,108 Mdwt 672 Mdwt
Suezmax 13.0 - 40.0 48.0 steeply from about 700 in 2007 to about 300 by 2022. This saw the active global 378 Mdwt 10,759 ships
Tankers

123ships
Mdwt 10,759 ships

The consolidation
7,097
123 Mdwt
13.0 - 32.0 40.0
shipbuilding capacity contract so that about 1,200 to 1,300 vessels can currently 11,691 ships
11,691 ships
938 Mdwt
Aframax 163 Mdwt
163 Mdwt
12,612 ships
be built and delivered annually compared with the capacity for the construction 4,569
445 ships
Mdwt
4,569 ships
7,507 ships 378 Mdwt

of the shipbuilding
Panamax 13.0 - 25.0 30.0 and delivery of 2,000 vessels per annum in the years 2005 to 2010. 378 Mdwt
7,097 ships
7,097 ships 938 Mdwt
938 Mdwt
12,612 ships
MR2 13.0 - 20.0 28.0 445 Mdwt
12,612 ships
Due to the significant consolidation that took place amongst shipbuilders in the
industry is a response
445 Mdwt
7,507 ships
7,507 ships
Capesize 13.0 33.0 43.0 48.0
Bulkers

intervening years, 75% of world shipbuilding capacity is now in the hands of nine
Bulk Tanker Container Others
shipbuilding groups. Furthermore, 68%, 92% and 71% of the capacity in China,
to improve profitability
Kamsarmax 13.5 - 29.0 31.0
Korea and Japan, respectively, is in the hands of only three shipbuilding groups.
Supramax 13.5 - 25.5 33.0
BulkBulk Tanker
Tanker Containers
Container Others
Others
Bulk Tanker Container Others

48 Picture: STENA PRO PATRIA & STENA PRO MARINE , Launched at Guangzhou Ship Yard (GSI). Photo: Stena Rederi. BRS Group - Annual review 2023 BRS Group - Annual review 2023 49
 SHIPBUILDING SHIPBUILDING
SOME ASPECTS OF THE SHIPBUILDING MARKET SOME ASPECTS OF THE SHIPBUILDING MARKET

EEXI and CII: a convoluted process? If the shipping community is right to criticize the EEXI and CII from their
perspective, the regulations do, however, pinpoint some of the inefficiencies
Much has been written on the EEXI and CII regulations
BTI
in the shipping market that the non-shipping community wish to be addressed.
that came into force on 1 January 2023. Notably Why do we have ships idle, carrying ballast or part cargoes? Why do we have
several major shipowners and operators, including MSC ships sailing at full speed only to slow down and wait for extended periods
3,000
and Oldendorf, have expressed their concern about the before delivering their cargo or crossing oceans in ballast at full speed. Why
methodology and its possible flaws. don’t we have more flexible ships capable of carrying both solid and liquid
cargoes to avoid large bulkers and tankers sailing empty almost half of the
2,500

The EEXI and CII are short-term measures implemented time.

to support the intermediate target set out in the context 2,000
of IMO’s Initial GHG strategy back in 2018 which aims It might be too quick to conclude abruptly and condemn for instance short
for a 40% reduction in the carbon intensity of vessels by sea trade that tries to substitute terrestrial means of transport or the cruise
2030 versus 2008. Critics suggest that a poor rated ship industry since cruises are seldom to ‘nowhere’ and most of the time their
1,500

based on the current CII methodology could ultimately purpose is to reach one destination and stay there as long as possible to visit
be an idle ship in a port, consuming no fuel and emitting the area.
1,000
no CO2, simply because calculations are based on the Containership fleet evo and current orderbook
maximum deadweight of the ship and not on the cargo Shipping sometimes finds itself in the line of fire of public opinion. We need
Containership
Containershipfleet
Million teu
fleetevo and current
evolution orderbook
and current orderbook
actually transported. This thereby denies the realities of to500emphasize the very positive aspects of the industry and issue regular
Million teu
a shipping market characterized by part cargoes, long reminders that transportation by sea is the most energy efficient, and least Million teu
waiting times and sometimes even longer than scheduled polluting, means of transport when measured by ton mile. The industry is 35
0
voyages in the wake of issues including congestion, undoubtedly a victim of its own success, inevitably generating emissions 35
2022 2023
strikes and accidents. Likewise, a modern ship with a very because it transports more than 90% of global trade. News footage of vessels 30

good EEXI, a very low fuel consumption and very low belching
BCTIout plumes BDTI
of black smoke detracts from the public’s appreciation of 30
25
CO2 emissions could still have a poor CII rating compared trade being a vector for economic growth and of the huge progress made by
with an older ship with a poorer EEXI and a higher fuel the industry across the past 10 years which amounts to an eco-revolution. The 25
20
consumption and CO2 emission, because of its operational shipping community must continue with the revolution and further minimise its
20
profile. Indeed, under these circumstances, the CII would carbon footprint, but also learn to publicise its achievements more effectively. 15
be a way to castigate that modern ship. 15
10

The EEXI and CII are positive developments in a sense that Frenzy for container carriers: what’s next? 10
5
they provoke dialog and reflection. No doubt that EEXI
and CII will be revisited. Firstly, due to its imperfections, When looking at the evolution of container freight rates and the almost perfect 5
0
but also since the regulations are just too slow to address bell curve spread across 2021 and 2022, we may wonder if the volumes of 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
0
the task. The CII calls for a 2% annual carbon intensity container carriers ordered - as if there was no tomorrow- was wise and what
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
reduction between 2023 and 2026 or an 11% cumulative will be the consequences of a return to reality? Will the market see another 13
feeder feedermax handy superhandy panamax intermediate neopanamax ulcs megamax
improvement by 2026 vs a 2019 reference level. Future years of miserable markets as we had between 2009 and 2021 after a similar
reduction rates for 2027-2030 are yet to be determined ordering frenzy across 2006 to 2008? feeder feedermax handy superhandy panamax intermediate neopanamax ulcs megamax
Feeder Handy Panamax Noepanamax Megamax
and will be decided as part of the review to be concluded
Feedermax Superhandy Intermediate ULCS
by January 2026. In short, what is important for the
shipping community is that the rules make sense in the
real world and that they are applicable and lead to the
result wanted, namely the reduction of emissions. Containership
Container Fleet
Containership & and
fleet Orderbook Evolution
orderbook evolution Containershipfleet
fleetnew
neworders
ordersvsvsdemo
demolitions
Containership
Million teu fleet new orders vs demo
What is surprising about these rules and regulations is their Million teu Ratio Million teu
Million teu
complexity and lack of ambition. Indeed, the cheapest, 30 70%
most comprehensive and immediate solution remains to 26 m teu 26 mteu 6
reduce power and speed. Therefore, the question of last 5,706 ships
60%
5593 ships
6
25 644
year remains very vivid – why does the shipping industry 5

not decide to simply adopt slow steaming? Since this 5

644
50% 4
has been a broad trend for much of the last 15 years, 20
driven by increasing fuel prices, the industry just needs 4 554 381
32.5% 40% 3
to go one step further. A 20% reduction in service speed 32.5% 554 246
15 471 381
3
could result immediately into a 50% drop in CO2 and 2 454 236 248
7.5 m teu 30% 411 246
GHG emissions. We increasingly accept speed limits for 938 ships
471
454
439
236 248
151 200 156
8 mteu 2 164
terrestrial vehicles when there is a high pollution episode 10 1 253 439 411 111 90
156
1031 ships 157 126 98 151 200
in a city. Yes, we might need some additional tonnage to 20%
1 253 164 82 78 111 90
9 98
cope with the lower speeds, but before coming to that 0 157 126
82 78
5 18 22 60 26 12 1 24 26 54 89 58 93 52 101 86 17 3
point we could also further optimise ships (main engine, 10% 0
9
210 179 192 174 150
-1 195
propeller, auxiliaries), adopt higher bloc-coefficients and 18 22 60 26 12 1 24 26 54
210
89 58 179 192 174
93
150
52 101 86 17 3
195
larger deadweight, design smaller engine rooms and 0 0% -1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

develop enlarged cargo capacity. A reduction in speed 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
would make it easier and less expensive as well to instal
dual fuel propulsion and wind assisted propulsion would Fleet Orderbook Ratio New orders Demolitions
also become more efficient. New orders Demolitions

New orders Demolitions

Fleet Orderbook Ratio
Picture: ECO ADRIATICA, RoRo capacity of 7,800 LM over 5 decks, featuring scrubbers and a hybrid battery system delivering zero emissions in port.
50 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Delivered in August 2022 by China Merchants Jinling to the Grimaldi Group for their own operations. 51
 SHIPBUILDING
PERSPECTIVES FOR 2023

At the end of 2022, the container carriers orderbook

stood at a mammoth 8 m teu, a record level in absolute PERSPECTIVES FOR 2023
terms, and well above the previous peak of about 6 m teu 696 mdwt
11010 ships
posted in 2007. However, there are several differences
that might help to amortize the impact: New orders, prices, deliveries, cancellations
and demolitions
• First of all in relative terms, the shock is less as 8 m teu
represents only 32.5% of the existing fleet whereas in In early 2022, we estimated that around 100 m dwt of new tonnage could be
2007 that represented 60%. ordered in 2022 split roughly as follows: 30 m dwt bulkers, 20 m dwt tankers,
30 m dwt container carriers and 10 m dwt for the ‘others’. We were not far
• Secondly, the ships ordered in 2007 were faster, and in away on the global figure with 88.9 m dwt as well as on bulkers with 27.8 m
theory the whole supply chain needed less tonnage. dwt and 30.6 m dwt on container liners. However, the 20 m dwt expected for
tankers was never in sight as only 8.7 m dwt was ordered while the 10 m dwt
• Thirdly, the ship owning landscape is now very different. projected for the ‘others’ proved to be underestimated as a significant 22.2 m
In 2007, the market had a far greater constellation of dwt was contracted. Yes, we could argue that somewhere LNG carriers took
players with the 10 largest companies controlling only the place of oil tankers in 2022. Considering how the spotlight has once again
60% of the market. Today, in the wake of significant fallen on energy security, it appears that fossil fuels, including oil will remain 4.4%
consolidation, the 10 largest players control 85% of the an integral part of the energy mix for many years to come.
market. Therefore, they have the means to adjust better
to new market conditions. Although there is the potential for a new super cycle in the shipbuilding indus-
try in the years to come to replace all the ships that were delivered in large 30 mdwt
• Fourthly, the implementation of new rules, notably numbers between 2005 and 2010, there remain many issues which could hin- 452 ships
the EEXI and CII will push a number of ships towards der this. These include; macroeconomic headwinds, heightened geo-political
recycling yards and further reduce speed. The average tensions between main economic zones, post-Covid calls for the repatriation
age of the fleet is also older (9.8 in 2007 versus 13.5 in of manufacturing for national security considerations, persistent inflationary
2022). pressure and the lack of a universally favoured marine fuel.

• Finally, the main container carrier owners have accumulated Thus, it is hard to believe that there could be more container owners looking
large financial reserves that will help them to absorb any at to order newbuilds considering today’s high prices and low freight environ-
economic shocks. ment. Likewise, it is hard to believe that more LNG carriers could be ordered In these conditions, we would then anticipate the following individual ordering
considering that they already reached record prices and that the time of de- levels in 2023:
livery is beyond a 4-year horizon. Still some major projects from Qatar and
some other places could defy the laws of gravity. • not more than 10 m dwt for container carriers
• probably 20 m dwt for tankers
• probably 40 m dwt for bulkers
• and 15 m dwt for the ‘others’
• i.e. a global of about 85 m dwt for 2023

Tanker* fleet and orderbook evolution

Tanker Fleet & Orderbook Evolution
Of course, when looking at the tanker fleet and orderbook evolution, we could
find additional reasons for a new wave of tankers to be ordered. However, 2022 NB prices for
tanker owners seem to be exercising caution for several reasons:
Million teu
800
Ratio
60%
dual fueled tankers
Oil tanker 700
• Long delivery time (more than 3 years)
• High prices now close to their 2008 peaks, if and when cost for dual fuel tracked closely 2008
orderbook at its 600
50% propulsion is factored in
• Difficulty to decide about propulsion between conventional or dual fuel and record peak values
lowest since 1990 40%
which dual fuel ?
500 • Increasing difficulty to obtain the finance for oil tankers from banks and other
696 m dwt
financiers in the context of lenders’ ESG commitments.
in relative terms 400
11,010 ships
30%

We believe that a number of cancellations especially for these large container

300
20%
carriers orders will take place or be replaced with new types of ships such
4.4%
as tankers.
200

10% We trust that deliveries in 2023 could reach a figure of around 85 m dwt.
100

0 0%
In principle, vessel scrapping should rise in the near future, especially in the
1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 container sector. Nonetheless, we remain quite cautious on this issue and argue
that not more than 20m of tonnage will be demolished in 2023, all the more
30 m dwt
452 ships
that the situation at recycling yards in Pakistan and Bangladesh has become
Fleet Orderbook Ratio more difficult for plenty of reasons.

Fleet Orderbook Ratio

As for newbuilding prices, we expect them to remain firm during 2023.
*Inc. Chemical and Small Tankers

52 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture: BOCHEM HOUSTON, 25,000 Dwt Stainless steel chemical tanker under construction in CMJL Yangzhou for BOCHEM, CMB GROUP. 53
Ship Finance

Financing cost on
the rise
Shipping finance saw its cost double over the
year, which overshadowed the fact that the
LIBOR was on the exit lane, with the new base
rate – the SOFR – taking over.

55
 SHIP FINANCE SHIP FINANCE
SMOOTH TRANSITION FROM LIBOR TO SOFR SHIPPING FINANCE ACTIVITY IN 2022

Last year came with unexpected events, starting with the

invasion of Ukraine by Russia at the beginning of the year. BYE BYE LIBOR! FIGHTING INFLATION 2022 saw a rise
From an economic perspective, this triggered a series of in interest rates
price increases in energy and commodities, ultimately As of the 1 January 2022, most LIBOR benchmark rates ceased to be published. Inflation had been on the rise post Covid, and the perception was that it
contributing to inflation. After some time, it became clear
that this inflation would not be transitory. Throughout the
Some of the remaining USD LIBOR will follow suit and are expected to be
discontinued mid-2023.
would be possible to deal with it. Furthermore, the invasion of Ukraine helped
accelerate inflation and it hit a level where it was no longer deemed transitory
to reach the
year, the main focus of monetary policy was to reduce
inflation, through successive interest rate increases. This change had been expected. Loan agreements signed in the lead up to this
and rather became self-inflicting. highest level in
Owners with their pockets full of cash continued to repay
date usually contained a clause facilitating a smooth transition, so only older
loan agreements had to be amended to accommodate the benchmark change.
Last year, monetary policy focused on curbing inflation by raising interest
rates. Over the full year, the Fed raised interest rates seven times for a 4.25%
15 years by the
debt and exercise their purchase options to end leases.
The new recommended benchmark rate is the SOFR (Secured Overnight
cumulated rate increase. By end-2022, interest rates reached a 15-year all-
time high.
end of the year
Following news reports relating to multiple detentions Financing Rate). The SOFR is not a strict replacement of LIBOR and holds a
of top shipping financiers, Chinese Leasing activity number of differences to LIBOR. As a capital-intensive industry, shipping is naturally sensitive to moves in
maintained a low profile throughout the year. interest rates. For a financing bearing a floating interest rate of 2.7% early in
2022, the interest cost was close to 7% by the end of the year.
With the rise in newbuilding prices, fleet expansion via
mergers and acquisitions was preferred in a number of While shipping loans were traditionally quoted on a floating basis, shipowners
instances which brought back some activity in this line Major differences between LIBOR and SOFR who were anticipating a rate increase were able to swap some of their
of business. exposures.

Sale and Leaseback transactions, which used to be proposed with a fixed

LIBOR SOFR bareboat rate, had to adapt and move to floating rates as Lessors were
understandably unwilling to take the interest rate risk.

London Interbank Offered Rate Secured Overnight Financing Rate

SHIPPING FINANCE ACTIVITY IN 2022

Bank-to-Bank lending rate Risk-free rate

2021 had been a quiet year in terms of shipping finance activity, and 2022
proved to be even quieter. With ship owners enjoying performing markets for
most segments, their liquidity came from operations and reduced the need to
borrow.
Unsecured Secured with US treasuries
Banks witnessed significant portfolio movements, with continued strong
repayment activity, especially in the container shipping segment. To replenish
portfolios, bankers had a very busy year of origination, doing their best to fill
Based on estimates Based on actual transactions in their books with financing for tankers and bulkers.

Syndicated activity was reported to be slow, with a steep increase in club

deals, at the expense of larger syndicates. The most active banks were the
Covers several currencies traditional European banks as well as a few US banks.
Only covers USD
USD, JPY, CHF, GBP, EUR
Although some shipowners did use their liquidity to expand by acquiring There was limited information on Chinese Leasing
secondhand vessels or ordering new units, the overall spending was throughout the year. It is hence difficult to judge of the
constrained by perceived high secondhand and newbuilding prices. actual level of activity for this market in 2022. While some
deals have been reported and Leasing houses seemed to
While banks are traditionally the cheapest source of shipping finance, the rise have remained active overall, it is likely that activity was
in interest rates contributed to bring the cost of bank debt closer to that of the slower in 2022 compared with previous years.
There is a variety of different SOFR rates, and shipping financiers have largely alternative lenders who had raised funds on the basis of yield requirements Most of the news related to Chinese Leasing had to do
transitioned to using Term SOFR, either 1-month Term SOFR or 3-month Term determined prior to any rate increase. This allowed some alternative lenders with reports of shipping financiers being detained or
SOFR, depending on the interest rate periodicity. to enter into transactions which benefitted from a much better risk profile under investigation. In total, up to 8 shipping financiers
than what they had been used to and thus represented a significant market were reported to be under investigation, including
While SOFR is an overnight rate based on last done, Term SOFR is a forward- opportunity for these players. prominent figures of major Chinese Leasing houses as

Smooth looking rate based on SOFR futures so it moves along anticipated rate hikes
or declines. Some unexpected financing activities for the year included the termination
well as financial brokers.

of business relationships by banks and shipowners with Russian counterparts The impact these investigations will have on future
transition from Changing a financing benchmark rate is not a regular exercise and could have ahead of sanctions. Russian shipowner Sovcomflot ended lending relationships Chinese Leasing activity is yet to be determined.
attracted more attention, but finally what made the headlines was the steep by means of early repayments to the banking pool. Shipowners who had taken
LIBOR to SOFR increase in interest rates witnessed in 2022. leases from Russian lessors GTLK had to source an alternative.

56 BRS Group - Annual review 2023 BRS Group - Annual review 2023 57
 SHIP FINANCE SHIP FINANCE
EVERYTHING GREEN MERGERS AND ACQUISITIONS

Alignment of the Poseidon Principles signatories to 4th

IMO GHG study (2022 reporting)

Alignment of the Poseidon Principles signatories to the 4th IMO GHG Sustainable finance continued to represent a sizeable portion of shipping Other notable transactions included the acquisition of
EVERYTHING GREEN study (2022 reporting) finance activity. As per our own compilation, total volumes reached around Evergas by Seapak, for an estimated enterprise value of
$6bn in 2022. The bulk of the sustainable financing was provided under the $700mn, the acquisition of Carl Büttner by Lomar or the
Finnvera
form of sustainability-linked loans, which are very well suited to the maritime acquisition of Seatrucks by CldN.
One more bank joined the Poseidon Principles initiative in sector. While in terms of volume, the level for 2022 was close to 2021, the
Sace
2022, it now has 30 signatory banks, representing around number of issues was lower at 20 versus close to 30 in the previous year. This On the alternative financiers' front, Northern Shipping
BPI France
$200bn of shipping finance. broadly reflects the slower financing activity seen in 2022. Fund was acquired by Hudson Structured Capital
Export Credit Norway
Management, creating a platform with over $1bn of
Société Générale assets under management.
The third reporting year, covering the 2021 portfolios, Some noteworthy transactions include: the initiative of DEME to switch over
CACIB
continued to see an increase in the number of banks $658mn of their loans to sustainability-linked loans, with KPIs related to low
DNB
providing their portfolio statistics, with a total of 28 carbon fuel and work safety, as well as Ardmore's total $308mn sustainability-
BNP Paribas
linked facilities which uses KPIs related to carbon emissions as well as overall
reporting banks this year. Each of them disclosed how their Citi
ESG performance.
portfolio aligned compared with the 4th IMO GHG study in Danske Bank

terms of carbon emissions. Shinsei

Nordea

This year, results were again difficult to interpret, with still DSF

Deka Bank
Maritime sector sustainable finance
some unusual trading patterns for some sectors affected by
OCBC Bank $ mn
Covid-19, such as container ships stuck in port congestion
DBJ
and lack of activity for passenger vessels. This especially 10,000

affected banks with a large portion of their portfolio in these

SEB

Standard Chartered
The Poseidon Principles
segments. ABNAmro
MUFG
8,000
announced their
With that in mind, the report shows that only 7 signatories
had portfolios aligned with the IMO's GHG strategy.
SMBC

SMTB
6,000
commitment to align
In September 2022, the Poseidon Principles announced
CIC
Credit Suisse
4,000 their framework with
their commitment to be more ambitious than the IMO and ING

SMFL
2,000
the temperature goal of
align their framework with the temperature goal of the Paris
Agreement. This means that new decarbonization curves Sparebanken SR-Bank
Sparebanken Vest 0
the Paris Agreement
will need to be traced as a matter of reference. 2018 2019 2020 2021 2022
-20,00% -10,00% 0,00% 10,00% 20,00% 30,00% 40,00% 50,00% 60,00% 70,00%

Green Bond Green Loan Sustainability Bond

Aligned Misaligned Green Bond Green Loan Sustainability Bond
Sustainability-Linked Bond Sustainability-Linked Loan Transition Bond
Sustainability-Linked Bond Sustainability-Linked Loan Transition Bond
Transition-Linked Loan
Transition-Linked Loan
Months of liquidity at latest reported cash burn rate
(4Q2020 results)

Months MERGERS AND ACQUISITIONS DEBT AND EQUITY CAPITAL MARKETS

17,5

Liner companies took advantage of their pockets full of cash to expand and 2022 was quiet for the equity and debt capital markets,
secure new sources of growth. with a significant drop in activity compared to the
17 previous year.
MSC acquired Bolloré Africa Logistics, which primarily covers shipping,
logistics and terminal operations in Africa for a purchase price of $6.3bn. On the equity side, there was only one IPO, by Excelerate
Energy for up to $416 million, the rest of the activity
16,5 Hapag Lloyd acquired a terminal business comprising of the ownership and consisted in private placement and follow-on offerings.
operation of ten terminals located in the Americas for $1bn, as well as DAL, a
liner specialized in Africa. The US market saw a few issuances, primarily related
16 to the cruise sector, which are typically large in volume.
Now that there seems to be some light at the end of the tunnel, interest in The Norwegian market was very quiet with only 3 deals
the offshore sector was revived with a number of transactions taking place this year which is very low for this market.
in 2022. Helix Energy Solutions acquired Alliance, a US-based company
15,5 providing offshore decommissioning services in the Gulf of Mexico. Swire
Pacific Offshore was acquired by Tidewater.

15

Carnival Royal Caribbean Norwegian

58 BRS Group - Annual review 2023 BRS Group - Annual review 2023 59
Dry Bulk
Navigating the
Turbulence Ahead
Right off the bat, on the first day of 2022,
markets were hit by news of Indonesian
authorities implementing a coal export ban.
As if setting the tone for a disruptive year
ahead, the shipping market then had to deal
with the unfortunate news of the Russian-
Ukrainian war in late February. This caused
a ‘sugar rush’ whereby massive dislocations
and inefficiencies in the dry bulk supply
chain allowed freight rates to surge in the
first five months of the year, continuing the
exuberant streak of 2021.

MV PACIFIST
Capesize Bulk Carrier / 181,458 Dwt / Built 2011 by Koyo,
Imabari / Managed by Nicholas G. Moundreas Shipping S.A.

61
 DRY BULK
CHARTERING

In fact, such an outperformance become a double-edged

sword as it masked the poor import appetite of China in CHARTERING
the second quarter in the wake of Beijing’s “Zero-Covid”
policy while generating unrealistic hopes that there would
be an improvement by the third quarter, supposedly from a Capesize (>125,000 dwt)
“post-Shanghai lockdown” boom that never materialised. In
this context, once the “sugar rush” was over, freight rates 2021 proved to be a fresh revelation as dry freight rates posted their best
inevitably corrected downwards. performance over the past decade as the Capesize C5TC reached a record high
since its inception in 2014. In contrast, C5TC experienced a sharp reversal in
By late 3Q22, and coupled with the ill-effects of the war, 2022. This precipitous decline can be attributed to two exogenous shocks; Firstly,
the prospects in the dry bulk market were significantly the war in Ukraine, followed by China’s Zero Covid policy and the construction
dimmed. This was reflected by rates for geared bulkers sector weakness. In this context, macro fundamentals deteriorated with sharp
which approached levels last seen during the pandemic in interest rate hikes, an appreciating US dollar and a squeeze in the profitability of
2020. Furthermore, the noticeable absence of a spike in steel mills across the world. In particular, China’s steel demand and production
October 2022 capped off a lacklustre end to a turbulent declined, reflecting sustained weakness in the property sector. Irrefutably, the
year. war was the dominant factor in impacting trade patterns, abrogating forecasts
for global commodity markets. That said, the Capesize segment was less exposed
On the commodity side, many industry participants rightly to the war and more leveraged to iron ore fundamentals (aka China’s economy).
speculated that the Ukrainian conflict would fracture C5TC
K$
existing coal trade flows and lead to longer distances and
voyage days in shipping coal, thereby supporting dry
freight. However, that was only just part of the picture.
Coal alone cannot be the sole saviour as iron ore and C5TC
grains were sluggish. For reference, total coal shipments’ K $/Day
Although that was partially offset by a 15m mt decline in its Australian coal designs are at a distinct disadvantage. This could see older
tondays in 2022 improved by 8.4% year-on-year, while imports. Furthermore, India was an opportunistic buyer of Russian coal last year units increasingly heading to scrap over the next two years,
iron ore and grains both registered declines of 5.9% and 100 which provided additional support for Capesizes. which in turn could create supply shortages in the sector.
4.9% respectively. All told, this would have the potential to support freight
The second quarter saw a sharp rise in VLSFO prices (courtesy of the war) which rates over the next few years.
80
Flipping to fleet side, the orderbook remains very limited fueled voyage rates. This rally in vessel earnings was short-lived due to seasonal
due to uncertainties in fuel regulations and soaring Chinese restocking, Europe and India‘s coal import strategy and the rise in
newbuilding prices. However, that was partially offset by 60 congestion in Europe. Demand
demolition falling to a 30-year low as freight rates remained
well-above cash breakeven levels for most of 2022. Thereafter, Capesizes resumed their downward trend in the third quarter, marked Vsl size 2021 2022
40
by the muted Black Sea grain season as the UN-brokered ‘Grains Corridor’ Ld Country Y.o.Y %
segments (mln mt) (mln mt)
To end off an unpredictable year, in December, Chinese was largely a failure. Accordingly, Panamaxes were redirected to compete in
VLOC 136,42 138,44 +1,5%
authorities unexpectedly changed gears in their approach 20 traditional Capesize trades. Another key point was Vale reducing its iron ore
to Covid, going from “Zero-Covid” to “Total-Covid”. On production guidance for 2022, from 320-335m mt to 310-320m mt. Meanwhile, Australia Cape 835,19 840,33 +0,6%
paper, this appeared to be a boon to 2023 prospects as the VLOCs gained market share at the expense of Capesizes. Last but not least, the
0
previously draconian measures were finally abandoned. sustained premium for Capesizes fitted with scrubbers (i.e. approx. 50% of the Small Cape 5,94 4,69 -20,9%
However, anecdotal evidence suggests that local consumers, Jan
Jan Feb
Feb Mar
Mar Apr
Apr May
May Jun
Jun Jul
Jul Aug
Aug Sep
Sep Oct
Oct Nov
Nov Dec
Dec
Capesize fleet) further undercut the $/t voyage iron ore freight, particularly in
the Pacific basin. With Chinese port congestion dissipating, this culminated in the VLOC 169,50 181,58 +7,1%
enterprises and foreign investors are lacking the confidence Brazil
to borrow, spend and invest despite an official narrative absence of an October rally (which was present in 2020 and 2021) that set the Cape 159,90 140,96 -11,8%
2020 2021 2022
to focus on growth for 2023. Hence, it might take some 2020 2021 2022 lackluster tone for the remainder of 2022.
time before the Chinese economy can catch its breath and VLOC 9,29 10,41 +12,0%
observe credible spillover effects. The C5TC saw a brief recovery late in 4Q22 as it drew support from the seasonal Guinea
rebound in Brazilian iron ore volumes and bauxite exports from Guinea which Cape 58,86 80,32 +36,5%
Lastly, the war remained the wildcard for freight with C5TC plunged from $21,000/day to under $6,000/day in January which set the covered a significant number of ballasting vessels. Meanwhile, the Capesize fleet’s
VLOC 10,21 8,21 -19,6%
significant potential upside. Should the war in Ukraine end first quarter off on the wrong foot. The first quarter is typically the weakest average laden speed dropped from 11 knots in Jun-22 to 10.4 knots in Oct-22
soon, it seems inevitable that this would trigger a wave quarter for Capesize due to Brazil’s inclement weather. Low seasonality was which provided a degree of cushioning. However, Indonesian and Australian coal South Africa Cape 78,48 69,43 -11,5%
of external investment for the rebuilding of destroyed exacerbated by an untimely Indonesian coal export ban, which resulted in shipments came under pressure as Europe had a less pressing need to built its
cities and infrastructure. In turn, this will stimulate fresh an oversupply of Panamax vessels in the Pacific, thereby heaping downward coal stockpiles for an unseasonal warm winter. Small Cape 0,51 1,67 +230,3%
dry bulk demand and trading patterns, offering vessels pressure onto the largest segment. Fortunately, several factors combined to
Cape 45,45 71,82 +58,0%
within the Black Sea vicinity both inbound and outbound drive up the utilization of the Capesize fleet and support rates; Firstly, although Indonesia
opportunities. Chinese port congestion declined from multi-year high levels 4Q21 (due to then Supply Small Cape 0,38 0,41 +6,7%
Chinese pilotage unavailability), it remained relatively high to cushion the fall.
Secondly, steady Australian iron ore exports and thirdly, Europe’s scramble for By end-2022, VLOC 0,19 0,00 -100,0%
coal cargoes from further afield due to Russian coal sanctions.
VLOC (220K+ dwt): Active fleet count at 262. Net-ship count increased by 4 Canada Cape 50,84 52,33 +2,9%

Looking at freight rates, C3 (fronthaul voyage) climbed to nearly $30/mt at the (5 deliveries, 1 demolition). Zero orderbook across 2023-26.
Once the ‘sugar rush’
Small Cape 0,80 0,53 -34,4%
beginning of March. The C5 (pacific voyage) route was under pressure at start of
2022 following Indonesia’s’ coal export ban but swiftly rebound from circa $6/ Capesize (160-220K dwt): Active fleet count at 1512. Net-ship count increased Colombia Cape 30,78 31,23 +1,5%

was over, freight rates mt (at the end of January) to $12/mt levels in March as the ban was lifted and
supported by Europe’s appetite for East Australian coal. The C16 (timecharter
by 36 (44 deliveries, 8 demolitions). Total orderbook from 2023-26 stands at
122, 64 to be delivered (4.2% of active fleet) in 2023. USA Cape 17,78 15,61 -12,2%

inevitably corrected backhaul) route was the main beneficiary, with earnings rallying from -$9,900/
day in January to north of $16,000/day in mid-March. European imports of
Smallcape (120-160K dwt): Active fleet count at 14. Net-ship count decreased
by 3 (no deliveries, 3 demolitions). Zero orderbook from 2023-26. Russia
Cape 23,03 34,99 +51,9%

downwards Australian and Indonesian coal increased by 6.6m mt and 5.4m mt year-on-
year, respectively. These were, mainly delivered to the Netherlands and France. The new EEXI and CII regulations coming into force as of January 2023, will
Small Cape 0,79 0,40 -49,5%

Meantime, India’s coal imports from Indonesia skyrocketed by 35m mt in 2022. create an environment whereby older, less energy efficient engines and ship Ukraine Cape 18,41 2,95 -84,0%

62 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture: FLORIDA, Capesize Bulk Carrier, 182,063 DWT, built in 2022 by Namura Shipbuilding Co. Ltd., operated by Diana Shipping Services S.A. 63
 100,000

DRY BULK DRY BULK

CHARTERING CHARTERING
50,000

Seaborne coal volumes (MT)

Panamax
0 (68,000-84,999 dwt)
2018 2019 2020 Vsl segments 2021 2021 2022 2022 Y.o.Y %
It was a largely respectable year for the Panamax market and, despite failing to
reach the lofty standards set in 2021, it remained significantly above its levels Cape 286,647,674 306,180,549 +6.8%
of 2018-19.
C5TC This was
P4TCreflectedP5TC
in the annual
S10TCaveragesHS7TC
of the P5TC, which fell Kamsarmax 226,588,060 232,929,830 +2.8%
by $6,162/day (-23%) from $26,898/day in 2021 to $20,736/day in 2022. This
decline can be partly attributed to the unwinding of Chinese port congestion, LME 193,582,958 205,821,058 +6.3%
whereby average waiting times fell from 19.5 days in 2021 to 6.7 days in 2022, Over panamax 173,603,320 181,832,434 +4.7%
a fall of 66%. Meantime, grain shipped by Panamaxes from the US Gulf fell from
Supramax 139,286,354 133,421,916 -4.2%
36.8 m mt in 2021 to 30.5 m mt in 2022 (-17%).
Ultramax 74,330,978 74,819,180 +0.7%
The war in Ukraine had many impacts , the most attention-grabbing impact for Babycape 56,980,914 50,238,652 -11.8%
Panamaxes was the sharp decline in loadings from the Black Sea. Here, Panamax
annual shipments (for all commodities) decreased by 42% from about 57 m mt Handysize 42,527,036 31,521,350 -25.9%
to about 33 m mt despite the much lauded ‘grain corridor’ in the 2H22. Except Minibulk 26,561,408 25,577,646 -3.7%
for January and February, weekly shipments in 2022 were consistently below
Handymax 24,787,533 23,861,567 -3.7%
those of 2021. Furthermore, historically, Black Sea shipments tend to peak in the
second half of the year, a trend which was sorely absent last year. Small cape 9,182,800 8,095,723 -11.8%

All 1,254 mln 1,274 mln +1.6%

Weekly Black Sea Seaborne Exports
[ Panamax 68 - 85k Dwt ]
Weekly Black Sea seaborne exports Seaborne coal Tonday ([Link])

3 mln Vsl segments 2021 2022 Y.o.Y %

Cape 9,696,443,507 10,889,847,752 +12.3%

Kamsarmax 6,088,858,748 6,782,694,176 +11.4%

2 mln Over panamax 4,438,623,703 5,115,697,848 +15.3%

Babycape and Post Panamax Babycape
(100,000-125,000 dwt) LME 4,224,244,105 4,652,317,453 +10.1%
(85,000-125,000 dwt)
Supramax 3,242,078,070 3,179,553,671 -1.9%
This past year, changes in the geo-political landscape and the Trade patterns saw some shifts even if the total volume of cargo transported
Ultramax 1,886,582,610 2,018,179,707 +7.0%
effects of the war in Ukraine were significant. Russian origin by the segment was slightly lower than in 2021. West Australia remains the 1 mln

Babycape voyages halved year-on-year, with Babycape epicentre of the segment, with close to 35 m mt of iron ore and manganese, Babycape 1,608,751,971 1,567,645,215 -2.6%
shipments grinding almost to a complete halt after the almost exclusively shipped to China, whilst coal and bauxite shipments remain Handysize 781,614,868 588,659,512 -24.7%
August sanctions grace period. Nevertheless, Overpanamax steady. The orderbook is feeble with only 8 units, all ordered for contract business
Load week Handymax 452,338,119 429,085,475 -5.1%
Russian origin shipments remained unchanged in 2022, with rather than tramping, whilst approximately two-thirds of the fleet have surpassed
an uptick in Russian cargo observed on the first-generation 10 years old. 1 5 10 15 20 25 30 35 40 45 50 Small cape 345,208,827 347,078,709 +0.5%
units principally controlled by Head Owners.
Minibulk 317,293,855 304,466,246 -4.0%
Looking forward to incoming carbon regulations, there is an interesting comparison Past 5 full year min-max spread 2021 2022 Spread average
The story of optimism came from agri-product and grains to be made between Babycapes and Capes. In 2022, 33% of the Babycape fleet All 33,082 mln 35,875 mln +8.4%
shipments. Overpanamaxes enjoyed almost 100% growth obtained a hypothetical CII rating below C, whereas only 6% of the cape fleet were
y-o-y in shipment volume. Meanwhile, we were very happy rated D or E. This not only reflects the older Babycape fleet, but also the longer Past 5 full year min-max spread 2021 2022 Spread average
to be singled out by Bloomberg for fixing “grimy” Babycapes ballasts of a young Capesize fleet, of which only 20% is over 15 years old. The fracture in coal trade dynamics benefited both sub segments, Kamsarmax Another factor dragging down Panamax prospects in 2H22
for their first shipments of soybean meals. (79,000-85,000 dwt and Large, Modern and Economical (LME) (68,000-79,000 was the underperformance of the containers sector. This
dwt). Despite seaborne coal volumes hauled by Kamsarmaxes (+2.8%) and removed the main driver behind the outperformance
Southern and East Africa remains a positive story, with Overpanamax LMEs (+6.3%) witnessing modest year-on-year improvements, there has been a of Supramaxes. Further downward pressure came from
Mozambique in particular providing growth in cargo. (85,000-99,999 dwt) disproportionate increase in ton days (calculated as cargo intake* laden voyage disruption to the US Gulf grains export season in October
Manganese, magnetite and chrome shipments now days) which rose by 11.4% and 10.1% for Kamsarmaxes and LMEs, respectively. due to low water level on southern sections of the
regularly compliment steam coal exports from South Africa. The continued popularisation of the modern 85,000 dwt Overpanamax, in place As EU member countries banned Russian coal imports, they had to substitute the Mississippi river.
West Africa should see growth in bauxite and manganese of the original 93,000 dwt Postpanamax has led to a diversification in the number close proximity coal from Russia with that from further away. This resulted in an
ore volumes, with the port of Abidjan and new berth at of operators taking vessels in the Overpanamax segment. Indeed, grain houses uptick of imports from the US, Columbia, South Africa and Australia which was Overall, Panamaxes transported 929.7 m mt in 2022, up
Takoradi, Ghana, both currently unable to load a ship larger were the first movers on the original 85,000 dwt Japanese designs in the middle hauled by these two vessel types. Overall, Panamax coal shipments from these from 914.4 m mt (+1.7%) in 2021. The Panamax market
than Babycape dimensions. part of the previous decade. The new designs are Chinese models (over half the four swing producers increased by 14.4 m mt from 13.3 m mt to 27.7 m mt (+52% accounted for approximately 17.8% of all seaborne dry
Overpanamax orderbook are Chinese built 85,000 dwt units) with Charterers a y-o-y). This reinvigorated the backhaul rates and was reflected in the P4_82 route bulk trade flows across all sizes. This increased demand
In spite of these changes, the principal Australian trades mix of the traditional Postpanamax players, Rio Tinto’s Weipa project, and curious averaging $20,378/day in 2Q22 vs $14,617/day in 2Q21 (+39%). is reflected by Panamaxes completing a total of 13,693
for coal and bauxite on Overpanamaxes and iron ore on Kamsarmax operators, eager to try out one or two units to see how they trade. It voyages in 2022, 255 more voyages than 2021.
Babycapes remain the bread-and-butter of these size was interesting to watch the index period percentage swings during 2022. ECSA grains shipments (including soybeans and corn) made a strong return in
segments. However, the first year of Rio Tinto’s Amrun 2022 for the Panamax market. The La Nina effect which delayed the Brazilian
project saw strong growth in Babycape shipments from the Conversely, after enjoying a renaissance in the five years leading up to IMO 2020, soybean harvest during 1Q21 was less intense in 1Q22. This resulted in notable
deeper water port, away from Weipa. the 90-100,000 dwt units, largely built between 2008 and 2014, are falling back increases in soybean exports ahead of the typical peak export season in 2Q,
out of favour in the face of high fuel prices and a small orderbook. Thus, they particularly in January and February. Panamax ECSA grain stems in January
now receive less premium to the index when taken on period, with the looming jumped from 31 in 2021 to 115 in 2022, while February’s fixtures rose from
spectre of the EU-ETS regulations set to largely exclude them from the North 115 to 165. This development provided critical as these long-haul shipments
Atlantic basin. cushioned the negative impact of January’s Indonesian coal export ban.

64 Picture: NORDIC OASIS, Panamax Bulk Carrier, 75,800 Dwt, built in 2016 by OSHIMA OSHIMA, operated by Nordic Bulk Carriers. BRS Group - Annual review 2023 BRS Group - Annual review 2023 65
 DRY BULK
THE FFA MARKET

THE FFA MARKET

After the remarkable achievements in 2021 for dry bulk freight derivatives, it Macroeconomic uncertainties will continue to influence dry
was going to be an arduous task for this to be replicated in 2022. Nonetheless, bulk recovery in 2023. China’s post-pandemic economic
we entered 2022 with optimism, only to be proven wrong later when actual rebound, its resumption of importing Australian coal, the
levels underperformed their initial expectations as all dry bulk vessel segments correction between inflation and a potentially weaker US
suffered significant setbacks. The sole consolation was that the dry bulk market Dollar, IMO environmental regulations, the risk of a recession
ended 2022 in better shape than it was at end-2020. The average C5TC settled hitting global seaborne trade demand, weather and port
51.7% lower than the previous year at $16,177/day, P4TC down 24.6% averaging disruptions – all will have a vital impact on shaping the dry
$19,400/day. S10TC was the best performer of all 3 mainstream sizes but still bulk market this year. Furthermore, the increasingly popular
down by 17.8% averaging the year at $22,152/day. algorithm executions of FFAs will also add additional
dimensions to market trends and volatility.
During 2020 and 2021, FFAs volumes increased by 60%, driven by several factors
including increased hedging volume by grain houses, algorithm executions, Nevertheless, one thing for sure is that the demand for
speculation by hedge funds and as new market players adopted FFAs into commodities including coal, iron ore and grains still possess
their portfolio. The total traded volume in 2022 was 2.21 million lots, 305,772 fundamental strength. Considering that fleet supply growth
lots lower (-12.1%) than the previous year. While the drop in volume for C5TC remained limited as incumbent orderbook is still relatively
Supramax and Handysize and S10TC was minimal, volumes on P4TC dropped by 299,485 lots (-24.8%) small, and that demolitions are likely to increase this year,
(25,000-67,999 dwt) shifted. Geographic mismatches between vessels and cargoes resulted in the compared with 2021. the dry bulk market could receive some support in latter
fleet being sub-optimally deployed. Risk premiums for voyages across the Skaw- half of 2023.
It’s been one extraordinary ride, but it does seem that the Passero range ballooned as shipowners demanded to be compensated for the 2022 started on the front foot with Q1 and Q2 managing to replicate 2021’s
engine behind geared bulkers that propelled performance lack of nearby cargoes, while insurance companies required hefty premiums. uptrend. However, Q3 saw the market slump on all sizes and was followed by
to giddy levels had finally come to an end as we bid 2022
farewell. This resulted in a ‘sugar rush’ effect whereby geared bulkers managed to shine
an uninspiring Q4. Accordingly, the year concluded with lower year-on-year
averages. In 2023, we expect that the freight market will encounter similar we entered 2022 with
Since 2016, which saw the beginning of the structural upward
even during a traditionally weak first quarter. Back at end-2021, we were
expecting a gentle weakening of dry freight rates in 2022, driven by a tapering off
headwinds to 2022 throughout the year and time charter averages will likely
be on par or marginally lower than 2022 on all sizes (if China’s recovery fails optimism, only to be
trend for the dry freight market, S10TC had been increasing of the initial post-pandemic rebound in global economic growth. In addition, the to gain traction). Capesize seasonality suggests that a real recovery might not
(on an annual basis) steadily from $7,000/day to $10,000/ sterling performance by geared bulkers in 1H22 diverted the attention of market arrive until April or May. Nonetheless, any significant push will not be without proven wrong later
day prior to 2020. Post-pandemic, we initially appeared to participants away from China’s appalling import appetite as Covid remained a challenges and a peak of $40,000/day, similar to 2022, would be ambitious but
enter to a ‘new normal’ for geared bulkers as the average
time charter assessments surged above $20,000/day in
concern there. Indeed, due to its outsized influence, whenever Chinese imports
sneezes, the dry freight market tends to catch a cold. However, the ‘sugar rush’
not impossible. The increasing participation of grain houses hedging programs
could see Panamaxes leading the recovery in Q1. Supramaxes may encounter a
when actual levels
2021. Charterers who had been accustomed to a decade of
low hire rates for these small-sized ships had to painfully
was timely and served as a cold remedy while the market was distracted by
blinded optimism that things would eventually improve by the third quarter amid
more challenging year in 2023 and likely require some positive spillover from the
Capesizes and Panamaxes for support.
underperformed their
(and quickly) re-adjust to a market in which Owners had the
upper hand. Despite S10TC dipping from $26,770/day in
misplaced faith that Beijing’s ‘Zero-Covid’ policy would have been abandoned by
then.
VOLUMES BREAKDOWN OF FFA TC CONTRACTS (IN DAYS) initial expectations
2021 to $22,152 day in 2022, it represents the first time
in a long while that S10TC significantly outperformed C5TC. As the term implies, all sugar rushes are temporary. The war neither induced
In fact, across 2018-20, C5TC had exceeded S10TC for 80% significant congestion levels in the affected areas nor did it materially increase
of the time. Then in 2021, that outperformance dipped to the amount of volume shipped in absolute terms. In fact, volumes for small- Volumes breakdown of FFA TC contracts (in days)
70%. By 2022, this long-established script had a material sized ships decreased last year. However, this loss of volume appears to have
deviation whereby C5TC only outperformed S10TC for 17% been unevenly distributed among subsegments. According to AXSMarine data, 300,000
of Baltic publishing dates. Ultramax (60,000-68,000 dwt) volumes rose by 1.3%. Meanwhile, volumes
shipped on Supramaxes (50,000-60,000 dwt), Handymaxes (40,000-50,000
The small-sized geared vessels benefitted from two unlikely dwt) and Handysizes (25,000-40,000 dwt) decreased by 4.8%, 0.5% and 5.7%,
250,000
one-off developments that resulted in spillover effects; respectively.

Firstly, it was the uncharacteristic rise of container rates While expectations that coal would travel longer distances last year have held
200,000
in 2021, following a ‘lost decade’. This was triggered by true, these mainly benefitted the larger-sized vessels such as Capesizes and
logistic bottlenecks and magnified by the MV Ever Given Kamsarmaxes rather than geared bulkers. In fact, the ton days of Handysizes
Suez incident in March 2021. This was added to by soaring transporting coal declined sharply by 24.2% y-o-y last year. By the fourth quarter,
global consumer spending (in particular Western economies) container spot rates had plummeted despite liners aggressively pursuing blank 150,000
in the wake of government stimulus. These disparate sailings. And with a significant number of container liner deliveries slated for
developments overlapped to create the perfect recipe (for 2023, the timing could not be more unfavorable for geared bulkers. Hence,
liners) or nightmare (for Charterers). To avoid the exorbitant there is a possibility that in 2023, we might observe the end of geared bulkers 100,000
costs of transporting their cargoes in boxes, Charterers outperforming gearless bulkers, if all goes well (igaw) & unforeseen circumstances
resorted to hiring multipurpose and geared bulkers, giving all exempt (ucae).
an unforeseen leg-up that allowed S10TC and HS7TC rates 50,000
to cruise comfortably beyond the $20,000/day threshold While a lackluster freight environment might not be enticing, this could possibly
in 2021. As we entered 2022, early signs of inflation had be the best antidote as it could prove to be the catalyst for ushering in a fresh
signaled that container market could run out of stream. wave of demolitions, thereby setting the stage for modest upturn in 2024.
0
However, another unexpected curveball was then to arrive… Meanwhile, shipowners flushed with cash and little capex requirements would
2018 2019 2020 2021 2022
be in a better shape to survive a turbulent 2023. Lastly, the end of the Ukrainian
Secondly, the unexpected arrival of the Ukrainian conflict conflict remains a wildcard which could stimulate fresh demand for a market that C5TC P4TC P5TC S10TC HS7TC
threw the market into disarray as traditional trade patterns has faced and continues to face numerous uncertainties and headwinds.
C5TC P4TC P5TC S10TC HS7TC

66 Picture: BUNUN QUEEN, Handysize Bulk Carrier, 37,299 DWT, built in 2022 by Saiki, operated by Wisdom. BRS Group - Annual review 2023 BRS Group - Annual review 2023 67
 DRY BULK
THE SECOND HAND MARKET

Capesize values end-2022

(175,000 - 182,000 dwt)
Buyers whose
10 year old: A special survey passed and BWTS retrofitted Capesize, built in
pockets had been
Korea or Japan, was worth about $27 - 28 million at end of the year, i.e. 15 - 18%
less than end of 2021 where values stood around $33 million.
filled 18 months of
5 year old: Eco-type (180,000 dwt) Capesize values stood at $41 - 42 million by good returns now
end-2022, a fall of 10 - 11% from 2021 values of $46 - 47 million.
saw their chance to
buy a younger or
Newbuilding re-sale: The value of a Capesize re-sale built in Japan posted a
decrease of 8 - 9%, ending 2022 at around $54 - 55 million.

Dry Bulk Carrier Demolition Prices larger vessel, built

Panamax-Kamsarmax values end-2022
$/ton (76,000-82,000 dwt) at a better yard
and with a greener
700
10 year old: At the end of 2022, Panamax (76,000 dwt) and Kamsarmax (82,000
dwt) values lost ground compared with 2021 with prices finishing 2022 in the
600 region of $19 - 20 million (-11.5%) and $21 - 22 million
(-10.5%), respectively.
footprint.
500 5 year old: Kamsarmax (eco-type) values closed out the year at about $29 - 30
million which indicates a reduction of 11% versus end 2021 values of $33 – 33.5
million.
400

Newbuilding re-sale: For prompt (3-6 month) delivery ex-Japanese yards,

Kamsarmax re-sales based on NSF contract and 20/80% payment terms were
THE SECOND HAND MARKET 300
As prices came down, the ‘bang for the buck’ increased, and Buyers’ requirements priced at around $37 - 38 million as opposed to 12 months earlier at $40 - 41
rose. Buyers whose pockets had been filled 18 months of good returns now saw million (-7.5%). Similarly, Chinese-built Kamsarmax re-sale values depreciated
Sale and Purchase markets typically lag the chartering their chance to buy a younger or larger vessel, built at a better yard and with a from $36 - 37 million in 2021 to $33 - 34 million in 2022 (-8.5%).
200
markets of that asset. Trends in rates and trades need a greener footprint. Those that had previously targeted older vessels – sometimes
few weeks, better months, to be reflected in asset prices. of inferior specifications – now set their sights on prettier and younger ships.
Brokers know of the arguments from clients, comparing This
100 shift in demand supported prices for modern ships whereas the vintage fleet Supramax-Ultramax values end-2022
seeming apples with oranges when they argue rising ‘last saw its value decline at a much sharper clip. For example, 5-year old Ultramaxes (56-58,000/60-64,000 dwt)
done’ transactions versus softening charter rates. This year lost about 15% of their value between May and November, whereas 20-year old
proved no exception, however, it took longer for the turning Supramaxes
0 were faced with a correction of about 25% across the same period. 10 year old: The price for this type/age of asset (56,000 -58,000 dwt) experienced
markets to manifest in lower pricing. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 adrop 2021
in 2022, falling
2022 by 12% over 12 months and ending the year in the region
Nonetheless, prices were generally expected to weaken, and participants of $17.5 - 18.5 million.
The year began with good activity as it swung with the retreated into the holidays, hoping that the post-Chinese New Year markets
momentum garnered in 2021. A healthy number of would bring betterBangladesh
India rates, and prices, orPakistan
more realistic sellers. 5 year old: Japanese eco-type Ultramax (60,000 - 63,000 dwt) values ended the
enquiries continued to push prices up. Some warning voices year at levels of $ 27 – 28 million recording an average decrease of 6% from the
questioned the sustainability of the run, but not even the previous year.
Russian invasion of the Ukraine could take the wind out Dry Bulkcarrier
Carrier S&P Prices - 5 old
years
of Buyers’ [Link] rates climbed until May. Asset Dry bulk S&P prices 5 year ships Newbuilding re-sale: By the end of 2022, China built Ultramaxes were priced at
Million $
prices lagged, and finally peaked in July, after which they Million $ about $31 - 32 million, whereas Ultramaxes built in Japan were priced at about
weakened steadily until the end of the year. $35 - 35.5 million, a year-on-year depreciation of 4.5% and 3%, respectively.
60
There was a general lack of liquidity across the summer
as the gap between bid and ask widened. In one corner, 50 Handysize values end-2022
Buyers would show downward trend lines in the Baltic (32,000-43,000 dwt)
chartering indices, expecting Sellers to adjust their price 40

ideas in the same direction. In the other, Sellers replied 10 year old: A Japanese-built Handysize (32,000 - 33,000 dwt) was worth about
30 $15 - 15.5 million at end 2022 which represents a reduction of 9% in the values
quoting the more attractive prices from deals done weeks
(or even months) ago. The market took this stalemate into of this asset class when compared with end-2021 values of $16.5 – 17 million.
20
the summer vacation.
5 year old: The larger eco-type units of 37,000 dwt ended the year with values
10
The market improved at the beginning of the seasonally in the region of $23 – 23.5 million, a value loss of 6% in 12-months. Estimated Values are for Japanese, Korean
more active September - October period. Sellers now and top tier Chinese yards – for units built
0
corrected their ask levels and accepted lower prices to Newbuilding re-sale: At the end of 2022 the values of 38,000 - 42,000 dwt at lower quality Chinese yards, a discount
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
see their ships sold. However, Buyers remained cautious Japanese-built units were in the region of $29 - 30 million, 4% lower than 2021. of at least 10-15% should be expected.
given their bearish outlook for 2023 and they accordingly
expected further declines in prices in the months ahead. Capesize
Capesize Panamax/Kamsarmax*
Panamax/Kamsarmax* Supramax
Supramax Handysize
Handysize
Consequently, liquidity did not rebound to the levels seen
*The Baltic benchmark was changed in June 2019 from a 74k deadweight tonne(dwt) Panamax to 82k dwt Kamsarmax.
in 2021 or early 2022. *The Baltic Exchange benchmark was changed in June 2019 from a 74k deadweight tonne(dwt) Panamax to 82k dwt Kamsarmax.

68 Picture: MOUNT ITA, Newcastlemax Bulk Carrier (LNG-dual fuel) , 209,800 DWT, built in 2023 by NEW TIMES, owned by Himalaya Shipping. BRS Group - Annual review 2023 BRS Group - Annual review 2023 Pictures: BELTRADER, Ultramax Bulk Carrier , 61,043 Dwt, built in 2021 by DACKS, operated by Lighthouse Navigation; 69
 39 68 44
5

24 21
0
DRY BULK
-
THE RECYCLING MARKET
VLCC Suezmax Aframax / LR2 Panamax / LR1 MR Handy Capesize Panamax Supramax Handysize Containership

2018 2019 2020

Bulk demo by segment

[Link]
Dry bulk carrier demolition by segment
40
N° of ships

35

30

25

20

15

10

VLOC Capesize
Capesize Smallcape /
Smallcape Panamax / /
Kamasarmax Ultramax//
Ultramax Handymax//
Handymax MiniBulk
MiniBulk
Babycape /
Babycape Kamsarmax
Panamax Supramax
Supramax Handysize
Handysize
Overpanamax
Overpanamax
2021 2022
2021 2022

Picture: STAR AYESHA, Newcastlemax Bulk Carrier, 206,852 DWT, built in 2019 by SWS, owned/operated by Star Bulk.

THE RECYCLING MARKET

Dry Bulk Carrier Demolition Prices
Dry bulk carrier demolition prices
$/ton

700
$/Ton

600

500

400

300

200

100

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Pakistan Bangladesh India

India Bangladesh Pakistan

Dry Bulk Carrier S&P Prices - 5 years

Million $
70 Picture: CIELO D'ITALIA, Babycape, 117,438mt / 2015 / Sanoyas Mizushima / Head owner = D’Amico / Disponent owner = Oldendorff. Photo: Sea-Trial BRS Group - Annual review 2023 BRS Group - Annual review 2023 71

60
Tanker

2022, the start

of a new cycle?
The depressed freight environment of 2021
continued into the beginning of 2022. Although,
even the most bullish market participants hoped
to see a recovery only in the latter part of 2022,
in the wake of an anticipated rebound in global
oil demand, in retrospect, their expectations were
blown out of the water as everything changed after
the Russian invasion of Ukraine on 24 February.

FRONT EMPIRE
VLCC, 303,120 Dwt, Built 2018, Operated by Frontline.

73
 TANKER TANKER
MARKET OVERVIEW MARKET OVERVIEW

early 2020. However, unlike 2020 when rates were propelled higher by a thirst While the uncertainties regarding western sanctions against
for floating storage, but the rise was short lived, on the whole, elevated spot Russia remained a going concern throughout the year, the
earnings persisted throughout 2022 which led to record average TCE earnings bullish sentiment in the tanker market was also fueled by
over the year for many segments, notably Suezmaxes and Aframaxes. On the the lowest tanker orderbook in over two decades which at
other hand, the underperformance of VLCCs resulted in the sector’s average end-2022 stood at 4.5% of the active fleet, partly owing to
earnings ending up below the record high levels of 2008. the fact that shipyards orderbooks are full of containers and
LNG carriers and these orders aren’t easily convertible into
It was interesting to see that the impact of increased ton-miles was greater than tankers. The significant increase in ton-miles implied by the
the effect of the reduced Chinese oil demand, which was curbed by persistent, EU-embargo on Russian crude and oil products, the end of
localized lockdowns as Beijing pursued its zero-tolerance approach to Covid. the lock downs in China and the inelasticity of the supply
Indeed, China’s oil demand is estimated to have dropped by 400 kb/d in 2022. side have contributed towards the upbeat expectations
Meanwhile, its refinery runs fell by 460 kb/d (3.4% year-on-year). This came in of Owners, many of whom believe that elevated tanker
stark contrast with Atlantic Basin refiners which enjoyed record margins and freight rates will persist across the medium term. A new
were incentivized to run at as high as possible operating rates above 90%. tanker cycle has started.

tankersdeliveries
Annual Tanker deliveries
Annual tankers deliveries
N° of
N° of ships
ships
N° of ships

450
450
400
400
350
350
MARKET OVERVIEW 300
300
250
250
200
Following the invasion, many Western companies chose to shun Russian oil. The 200
impacts of this on oil and tanker markets were wide reaching, considering that 150
150
Russia is one of the world’s largest exporters of crude oil and petroleum products.
100
Tanker owners became more cautious amid stronger counterparty risks while the 100
shift in oil flows led to significantly longer voyages. Europe, a geographically 50
50
logical and traditional outlet for Russian petroleum, had to source additional
crude oil from the Atlantic basin and also from the Middle East. Meanwhile, oil 0
0
2000 2001 2002 2003 2004 2005 2006 2007 2009 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
product imports from East of Suez rose. On the other hand, Russia strived to 2000 2001 2002 2003 2004 2005 2006 2007 2009 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
diversify its exports to non-traditional customers, notably in Asia for crude oil
Everything and Asia and the South Atlantic for refined products. Following the events in
Ukraine, many owners, insurance companies, brokers and other maritime players
Annual Tanker
Annual
Annual
tankers demolitions
tankers demolitions*
demolitions

changed after
N° of ships
avoided Russian oil trades altogether. Indeed, by summer, only a handful of
tanker owners were willing or able to lift Russian barrels and received significant 160
160

the Russian premium for doing so compared with non-Russian business.

140
140
This contributed to a record high amount of over 600 secondhand tanker (MR1
invasion of Ukraine and above) transactions with many vintage tankers bought at elevated prices to
120
120
unknown companies based in the Middle East or Asia. Of these, more than 100
on 24 February
100
100
tankers were sold and joined the so-called grey/dark fleet, which was already
being used for transporting Iranian and Venezuelan oil barrels. 80
80

60
Spot tanker freight for non-Russian business also rose significantly driven by 60
inflated ton-miles. This saw volatility return to the tanker market in abundance. 40
For the first time in living memory, the rally in tanker freight rates wasn’t driven 40
by the largest crude tankers, the VLCCs, but by Aframaxes and Suezmaxes, 20
20
which were directly impacted by the rapid shift in crude flows triggered by the
Russia-Ukraine war. These were swiftly followed by clean product tankers which 0
0
also took some strength from shifting middle distillate flows but also received 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
support from low global inventories and rising end-user product demand which
combined to unmask structural shortages of several products in several regions. VLCC Suezmax Aframax LR2
On the other hand, the VLCC market had to wait until September to see spot VLCC
VLCC
Panamax
Suezmax
Suezmax
LR1
Aframax
Aframax
MR2
LR2
LR2
MR1
Panamax LR1 MR2 MR1
earnings rise towards those of the other segments with this being driven by Panamax LR1 MR2 MR1

a geographical imbalance in the fleet. Accordingly, by November, average spot

tanker earnings rose to their highest level since their Covid-related boom of * includes only those vessels reaching breakers' yards.

74 Picture: ARACHTHOS I, Aframax, 115,198 Dwt, Built 2023, Operated by Pleiades Shipping. BRS Group - Annual review 2023 BRS Group - Annual review 2023 75
 TANKER
CRUDE TANKER

Supply side fundamentals did their best to stifle any earnings recovery in
CRUDE TANKERS 2022 with 42 newbuilds hitting the water and a measly 5 ships scrapped
meaning that the fleet grew by 4.2%. Therefore, it comes as no real surprise
VLCC that earnings dipped even lower during the first half of the year than in the
same period in 2021. The 2023 supply forecast is much improved with 23
2022 was very much a tale of two halves for the VLCC newbuilds due and fleet growth projected at 2%.
segment. Although VLCCs were far slower to recover than
Aframax and Suezmax, hopeful signs emerged during On the demand side, OPEC+ has continued its cautious approach with outputs
the latter part of the year with earnings on TD3C (Ras cuts reflecting uncertainties surrounding the global economy and future
Tanura-Ningbo) based on non-eco, non-scrubber-fitted Russian oil supply. Last year saw the release of US strategic stock reserves
units rising from -$7,348/day in Q1 up to $61,364/day as a reaction to OPEC+ perceived inertia which proved to be marginally
by Q4. For scrubber-fitted eco units, earnings rose from supportive for VLCCs. However, with large parts of the western world having
$9,520/day to $79,192/day across the same period. placed restrictions on imports of Russian crude, there has been a significant
Supply and demand fundamentals remained relatively change in trade flows with inter-Atlantic trading developing into a staple for
weak overall during the year. More specifically, the the VLCCs in the second half of 2022. Demand from Europe spread rapidly
first few quarters were uneventful despite the induced into the larger sizes with new suppliers found in West Africa, Brazil and
shock from Russia’s invasion in Ukraine, as China’s the US Gulf. Although this has done little to improve ton miles per se it has
declining crude oil demand and imports in the context enabled Owners to become more creative, and triangulate voyages to bolster
of its zero-COVID policy weighed down on the segment’s earnings.
performance with negative daily earnings on the
benchmark Baltic vessel (non-eco non-scrubber fitted) Looking forward, the impact of China scrapping their zero-COVID policy and
persisting. Yet, deep into Q3 there was light seen at the opening up their borders at the beginning of 2023 on oil demand growth
end of the tunnel and Q4 rebounded handsomely; China’s should not be underestimated. Expectations are that this will spark increased
crude oil imports picked up to support increased refining oil demand, with China now projected to account for around half of global
processing for fulfilling their fuel export quotas resulting oil demand growth this year. However, whether this will translate into higher
in a spike of oil products exports from the country in Q4. imports from longer haul destinations like the US Gulf or Brazil remains to
The recovery in VLCC demand during the latter part of be seen, as for now Europe still needs to plug a huge hole left by Russian
the quarter was also supported by increased deployment barrels and competition will be fierce. Nonetheless even if China sources
of VLCCs on the USGC – Europe trade, as the EU rushed barrels from the Arabian Gulf or West Africa there is reason to be positive.
to secure supplies ahead of the implementation of the On the flip side, US exports may not be as strong on average in 2023 given
crude oil imports ban from Russia on December 5th. that strategic reserve releases have ended, and the 26 million barrels release Suezmax Accordingly, 2022 saw the emergence of the so called
announced recently for April-June is significantly smaller compared to the
180 million barrels released in 2022. “dark-fleet” of mainly older units lifting Russia barrels in
2022 started off at a sluggish pace with a general pessimistic sentiment and the Baltic and Black Sea, and thus postponing scrapping.
relatively bearish expectations, but all that changed with Russia's invasion This has created an effective tonnage contraction for
in Ukraine in the early months of the year. This event dramatically altered non-sanctioned trades for which demand accelerated to
expectations, shifting existing oil trade flows before sanctions were even compensate for the lost Russian oil supply.
put in place and changing the fleet’s trading profile. Suezmax rates exploded
K$/Day
immediately after the invasion and remained relatively firm throughout the All told, 2022 will go down as one of the best the sector
Spot TCE Crude Tankers year with daily average earnings on the Baltic peaking in Q422 at their highest has seen as earnings approached their 2008 records.
level since 2008. TD20 and TD6 averaged $29,021/day and $68,629/day, While ton-miles increased on average last year, it is
K$/Day
180 respectively. worth noting that long haul voyages have essentially
160 been performed by the dark-fleet with Russian oil mainly
On the demand side, we saw significant shifts in oil flows throughout the year. flowing to the East, leading the conventional fleet to
140 With European countries limiting their crude imports from Russia, refineries serve shorter voyages. As we enter 2023, rates have
configurated to process Russian grades had to turn to alternatives from West weakened from their November highs. Nonetheless, they
120 Africa, the US Gulf, and Latin America. In 2022, 530 million barrels were exported remain elevated and we anticipate that they will remain
from US Gulf to Europe against 378.0 in 2021, a 41.0% increase. The Atlantic supported by more intra-Atlantic Basin crude trade and
100
Basin has remained very active and demand for Suezmaxes has increased for as the Middle East sends more crude to Europe to plug the
80 USG-UK Continent and Mediterranean voyages that were previously mainly Russian shaped hole.
operated on Aframaxes. The market in the East underperformed with Chinese
60
Covid-related measures keeping crude oil imports in check and India importing
cheaper Russian oil. The MEG-West enquiries were absorbed by ships willing
2022 will go down
40
to return to West of Suez but rates stayed relatively stable as high market
20 revenues maintained a safety net.
0
On the supply side, the global Suezmax fleet grew by 5.8% y-o-y while very
as one of the best
-20 few ships were sent for demolition. At the same time, few Suezmaxes were
contracted as other ship types have monopolized shipyard slots. Only 21 the sector has
Suezmaxes are scheduled to be delivered in the next three years and the fleet
seen as earnings
-40

2020 2021 2022 is aging fast: 43 ships will be turning 15 years old in 2023, 7.5% of the fleet,
while overall units above 15 years of age now make up 30% of the existing fleet
VLCC Suezmax Aframax
in dwt terms. Simultaneously, the global fleet has seen drastic changes with approached their
sanctions on Russia. Many shipowners stopped calling at Russian ports, while
those that opted to trade there had the opportunity to receive high premiums. 2008 records
VLCC Suezmax Aframax

76 Picture: FRONT CORAL, Suezmax, 157,522 Dwt, Built 2017, Operated by Frontline. BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture: PORTO, Suezmax shuttle tanker, 155,000 Dwt, Built 2022, Operated by Tsakos Energy Navigation (TEN). 77
 TANKER
CRUDE TANKER

Aframax Northwest Europe

and Mediterranean Aframax USG
Aristotle Onassis once ascertained that “We must free Changes in trade flows in the aftermath of the Russian invasion in Ukraine
ourselves of the hope that the sea will ever rest. We came with unprecedented gains for the Aframax segment and particularly
must learn to sail in high winds.” Perhaps no other for the USGC/America trading region. The increase in trans-Atlantic flows as
quote encapsulates shipping in 2022 quite as accurately. Europe increasingly sought to replace Russian crude barrels, subsequently
The talk of the last year was, and remains, the Russian increased Aframax freight with rates in and out of the USG reaching record
invasion of Ukraine which continues to be the main high levels as the year progressed. Crude oil exports from Latin America
driver behind Aframax dynamics. Indeed, Aframax soared during the year, while Guyana’s two-fold annual increase in crude
average spot earnings broke one record after another oil exports, which surpassed 260 kb/d pulled Suezmax tonnage from the
last year, reaching a all-time high of $125,722/day in area (80% of the Guyana liftings were on Suezmaxes) and thus helped to
November and TD19 & TD7 averaging $45,470/day and ease competition from the largest size in the region. More specifically, in
$44,870/day, respectively, across the year, three times the quarter that followed the invasion, US oil imports from Latin America
higher than the average of the previous three years. rose significantly to make up for the lost Russian barrels into the US, as
Washington imposed an embargo on Russian oil imports. Previously, Russia
The Aframax market has also seen the creation and was supplying approximately 6% of US crude oil imports and 29% of fuel oil
expansion of both new and existing trade routes, not imports for a combined 290 kb/d. As a result, crude oil and fuel oil flows
least due to the first armed conflict on European soil from Latin America to the US climbed in April and reached record levels of
since the war in Yugoslavia. Indeed, EU Baltic nations cut around 1.6 mb/din July 2022. Accordingly, earnings for units voyaging on
their Russian imports by more than -40% y-o-y and are TD26 averaged almost $70,000/day during those months, more than three-
now sourcing their crude from a wide range of areas such fold compared to the January-June average.
as the North Sea, the US Gulf and, most notably, from
Middle East via Egypt’s Sidi Kerir terminal (+58% y-o-y). After taking a breather during September, rates resumed their upward
This has seen the transformation of heretofore ‘smaller’ trend thereafter on a series of drivers; a significant portion of the global
players such as PKN into one of the busiest charterers Aframax fleet entered the so-called dark fleet, US crude exports to Europe
out of the Mediterranean, having to substitute Russian hit a record in 4Q, and US refinery utilization climbed above 95% during the
export blend by alternative grades. quarter increasing import demand. Consequently, Aframax tonnage became
structurally tighter in Latin America, and TD9 and TD26 touched record highs
Another significant development last year was the sharp of $188,000/day and $232,000/day, respectively, in November. Overall, TD9
increase in ton-miles against the backdrop of Russian and TD26 earnings averaged record highs across the year at $41,144/day
PRODUCT TANKERS – EAST LR1
crude being shipped into India and China. The increase and $50,135 /day, respectively.
in ton-miles should persist in 2023 as long as the price The LR1 segment was probably the best performing clean
cap agreement remains in place and Russia is forced to segment of all, regularly closing the earnings gap with LR2s.
find new buyers to place its oil. LR2 Despite an ageing fleet of vessels (approximately 38% of
Aframax East the LR1 fleet are above 15 years old), Owners still managed
Looking forward, the Aframax market like every other 2022 turned out to be a big surprise to all. What started off as glum in 1Q22, to keep high deployment rates and Charterers’ reluctance
segment will face a new world order, with new routes and In tandem with other markets, the Aframax market East of Suez has seen an quickly turned into a rocket propelling freight increases across all sizes, due to to use these older units subsided. The segment was not
players and continuously shifting trading patterns. The unprecedented year, with freight levels rising to records highs. the Russia-Ukraine war. impacted by the VLCC cannibalisation and continued to
fact that most of the shadow fleet carrying Russia crude offer flexibility to traders looking to sell to restricted
consists of Aframaxes (more than 40 units), limiting the The East of Suez market has historically been where older tonnage has thrived The LR2 segment benefitted greatly from these geopolitical tensions with a destinations.
tonnage supply that can carry non-sanctioned cargoes, and traded relatively freely. Yet the Russia-Ukraine war created an enormous significant lengthening of ton-miles due to the self-imposed sanctions on Russian
in conjunction with the increase in intra-Atlantic opportunity for older units to sell at a premium into the so-called 'dark fleet', oil and in preparation of the EU embargo on crude and oil products imports from The end of the year saw Middle East Gulf – Atlantic Basin
crude trade as the EU embargo on Russian crude is and as such, tonnage levels East of Suez depleted. Furthermore, Western Russia in December 2022 and February 2023, respectively. Refineries in the fixtures concluded at $5.5 million and TC5 runs at ws 380.
fully introduced make Aframaxes well positioned to markets for most of the year outperformed the East, and generally speaking, Middle East and India started supplying the west, thereby increasing the length This produced earnings of $80,000/day for the former and
outperform the wider crude tanker market. the remaining owners positioned in the Middle East were incentivized to of voyages drastically. By the end of the second quarter, Owners were looking at $90,000/day for the latter. As the LR1 tonnage is shrinking
ballast to the Mediterranean. The net result was a fundamentally tight returns in excess of $80,000/day and by the end of Q3 and Q4 those earnings and with the current structural shifts in trade flows, the
market for charterers and brokers throughout 2022. And with less tonnage, topped $100,000/day for TC1 and runs from the Middle East Gulf to the west. outlook for this segment looks promising.
The increase in ton- rates rose to record high levels in Q4. More specifically, freight rates exceeded $6 million for Middle East Gulf – UK
Continent runs and ws 325 for TC1, whereas, a year ago owners were fixing

miles should persist A big trade shift in the Middle East occurred in 2022, with the dramatic
increase in DPP stems heading West. As a vast number of these fuel oil
below $2 m and ws 110, respectively.
Refineries in the
and/or vacuum gas oil stems emerged from LOA-restricted ports including
in 2023 as long as the Middle East and India
Despite VLCC newbuilding deliveries taking volume by undertaking CPP voyages
Bahrain, Sikka, Vadinar, and Gizan, Aframax owners found themselves with and storage, LR2s benefitted from a strong recovery in the Aframax market with
opportunities and high earnings to return laden to Europe and USA markets. many owners dirtying up to lift fuel oil or crude cargoes, which also drained
price cap agreement In the Far East, the Aframaxes have also managed to reach and maintain
the available clean tonnage. In the meantime, there was more flexibility from started supplying
Charterers and Owners to clean or dirty up vessels from one voyage to the next
remains in place and surprisingly strong earnings. With the collapse of the Kozmino business and
backhaul Korea/Singapore runs, many expected owners to struggle finding
as the clean-up cost was easily absorbed by the high freight margins. the West, thereby
Russia is forced to coverage. Yet Eastern Russia exports were maintained by the 'dark fleet',
and non-sanctioned trading routes struggled with options for most of the
Looking forward, expectations are that freight rates for LR2s will maintain strong
levels this year, as the evolving crude oil and oil products EU embargo unfolds
increasing the
find new buyers to year. Furthermore, enquiry continued to be bolstered by Thai pipeline issues
which are still yet to be resolved. All in all, a usually flat and slow-moving
with Asia well positioned to cover the middle distillates shortfall from the halt of
oil product barrels from Russia to Europe.
length of voyages
place its oil. market has developed into a consistently good earner throughout the year.
drastically

78 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture: STENA PRO PATRIA, MR2, 49,990 Dwt, Built 2022, Operated by Proman Stena Bulk Ltd. 79
 TANKER TANKER
PRODUCT TANKER - EAST PRODUCT TANKER - WEST

MR compounded issues for Charterers. Quarterly earnings averaged approximately

PRODUCT TANKERS – WEST Handy
$35,000/day. The party wasn’t to last and as the Far East softened, and the
2022 was characterised by huge swings in freight driven threat of ballast positions returned, rates quickly came off. Indeed, this kind of As we also saw in other markets, last year a split emerged
by significant imbalances in supply and demand throughout volatility was to become a mainstay of the year and swings of 40-50 points were between the Northern Handy Owners, who could and could
the year. Changing trading patterns and volumes created not unusual as the year wore on. Charterers quickly covered at lower levels, At the start of 2022, the most significant risk facing European refiners not load from Russia. This quickly constrained the tonnage
headaches for Charterers, as traders sought the flexibility thinning out tonnage and setting the stage for what were to become the highest was the possibility of a fresh wave of travel restrictions and the resulting supply in Northwest Europe, as several key owners would
that only the MR’s can offer. Charterers developed tactics freight levels seen of the year with TC17 (Jubail to Dar es Salaam) freight hitting underperformance in jet fuel demand - a substantial source of revenue for immediately ballast back into the Baltic, especially as
to beat Owners at their own game and the huge spikes we ws 555 and Middle East Gulf – UK Continent voyages reaching $4.2m. European refiners. However, through the early months of the year, it quickly Russian Baltic - UK Continent rates approached the ws
saw early on were not repeated. K$/Day became apparent that a different story was going to dominate and shake up 1000-mark. Although the Russian premium widened, cross-
The third quarter began in the same vein, as freight stabilised at high levels and European product tanker markets. The Russian invasion of Ukraine once more Continent rates have remained reasonably buoyant for
The year opened as the previous year finished, without charterers sought to fix forward, which owners were happy to acquiesce, given created the ‘unexpected’, triggering the market to surge to extreme levels and much of the year, and we’ve seen an uplift in UK Continent
much fanfare. The first quarter offered occasional snippets earnings were hovering around the $40k/day mark. allowing ship owners to obtain exceptional returns from their vessels, especially - Mediterranean voyages as more players have looked to
of activity, but any potential gains were quickly capped by 180 those willing to call at Russian ports. Although it is logical to presume that this source product from elsewhere.
the LR segment which similarly remained in the doldrums However,
160
all good things must come to an end, and with a rapidly softening tendency will persist in 2023, the hefty sanctions and the imposed caps on crude
and continually snatched up short haul MR cargoes. market in the west, we started to see ships ballasting both through the Suez Canal and product prices may prove the opposite. After 2021, the year of all the extremes with the lowest
Accordingly, TCE’s stood around the $13,500/day level. and
140 from West Africa, a move we haven’t often seen. This, combined with weaker and not far from the highest rates ever witnessed in the
LR markets (with larger vessels once again on the hunt for stop-gap MR cargoes), Mediterranean Handy market, the expectations for 2022 were
It wasn’t until the unthinkable happened and Russia 120
led to a considerable oversupply of tonnage, and a crash in freight levels. Ballast LRs conservative, if not bearish. The Russia-Ukraine war proved
advanced into Ukraine that the market was sent into a patterns
100 changed again, and we started to see the usual South Africa positions a game changer and splitting the fleet in the Mediterranean
tailspin. February saw bunker prices climb rapidly, and with change heading, and ballast to Singapore. This offered the market some respite The European LR markets have reflected the trends we’ve seen on the smaller into two parts. Russian premiums were as high as ws 1000
so much of the global MR fleet in the West, there were signs from
80 the endless waves of excess tonnage, and we saw freight rebound, although sizes; the war in Ukraine has impacted cargo flows here too, triggering an in 2022 and, on the back of that, non-premium business and
that the market was about to fundamentally change. not quite reaching the peaks of the previous few months. increase in ton-miles and a cargo cascade as Europe shifted to longer haul trades the usual cross-med voyages still achieved and maintained
60
for sourcing its products. For the LR1s, Northwest Europe – West Africa remains high and stable levels throughout the year.
As we moved into the second quarter, fortunes really By
40 the fourth quarter, Charterers had regained their grip on the market and the the busiest route, although we’ve seen sporadic transatlantic activity when the
changed for Owners. The Far East market firmed quickly, tactics of drip-feeding cargo into the market had proven successful (if a little arbitrage was open and the MR fleet could not absorb demand. LR2 Northwest
drying up any potential ballasters and setting the stage 20
risky should a tonnage bottleneck occur). Furthermore, with cargo now in shorter Europe – West Africa activity has been more erratic, as most owners, whether CPP USG
for the Middle East to push further. Traders sought to supply,
0
Charterers’ offers of private cargoes worked their way back into the opening in WAFR or South America, chose to ballast straight to a more reliable
send more product westbound and an unwillingness from fold, and panicked owners who watched rates drop further. Earnings averaged and lucrative Middle Eastern market. If we could sum up last year’s CPP market in the US Gulf in
owners to end up in the unpredictable Atlantic market drove out
-20 at around $32,000/day. Whilst we saw more of the volatility that had now one word, it would be VOLATILITY. After the Russian invasion,
rates ever higher. Furthermore, a slew of regional delays become standard in Middle Eastern markets, it was really Charterers’ flexibility we started to see freight rates never previously heard of.
-40
to resize cargoes as well as their openness to playing a riskier game, that meant MRs TCE’s soared to $70,000/day on average for a few months
that freight never
2020quite recovered to the levels that we saw earlier
2021 2022in the year, before coming back down to $7,000/day. Instead of seeing
despite having seen some opportunities for owners to rally. The first few months of 2022 were relatively uneventful for the European MR the usual cyclical ups and downs of the connected markets,
markets. However, as the situation in Ukraine escalated, we saw substantial and for example when Europe market goes up, it usually attracts
2023 is certainly expected to be another bumper year, with ton-mile demand sustained upward pressure on rates. Between late April and early June, TC2 ballasters from other zones, last year, all zones were bullish,
already having increased, with new refinery capacity coming online and with the (ARA-UK Continent) soared by nearly 200 points, as much of the western world which drove an even more volatile global market that would
price cap on Russian oil products coming into play, not to mention new emissions began to source their petroleum products away from Russia. keep the limited tonnage in a single zone. Geopolitical
regulations.
VLCC Charterers have already proved
Suezmax their savviness in managing the
Aframax uncertainty was the root cause of those levels. The average
market volatility that we have now become accustomed to and whilst we expect As the broad ‘package’ of sanctions intensified, a split quickly emerged number of ships available from week to week barely matched
to see a positive year, the highs of 2022 are not likely to be repeated. between those MR owners who could and could not load from Russia. Those the numbers of cargoes, which drove freight to high levels
who could call Russia increased their profits substantially. After peaking in from the end of February until November. Tonnage was
early June, MR rates dropped off a little over the summer months as demand distributed evenly between Europe, the Americas, the MEG
cooled. However, with the USG market bustling during July, European MR and Asia before the Russian invasion. However, post-invasion
rates regained some lost ground as a wave of ex-USG vessels went short to we observed a strong pull towards Europe, which took a good
TCE Earnings
Spot Products
TCE Earnings TankersTankers
Product the Caribs rather than onto Europe. number of ships away from the USG. The usual benchmark
to assess the USG market, TC14 (USG/-Europe), was slowly
K$/Day
K$/Day
Despite the Mediterranean being quieter for the MRs, the region has replaced by TC18 (USG-Brazil), as South America became the
benefited from its proximity to the tight, active AG market. In choosing to main source of demand. The bulk of our products was shipped
175 ballast further east, Owners have continuously tightened tonnage supply in ECMEX, CBS, Ecuador, Peru, Chile and Brazil and routes
in the Mediterranean, so that Mediterranean -UK Continent voyages have such as USG/EAST and USG/TA that were predominantly NAP
150
demanded a premium over TC2. routes became extinct.
125
With a fresh wave of sanctions on Russia looming, and a sustained period of Although 2022 was one of the best years ever for owners,
100
decent demand as winter began, the fourth quarter proved a solid end to the year they experienced a backlash in December when refineries
75
for the European MRs. Looking into 2023, the situation in Ukraine is still far from down in the USG experienced another freeze, causing exports
stable, and it is unlikely that any significant progress will be made soon. With levels to drop considerably. As of the beginning of 2023, we
50 lofty bunker prices and sustained ex-Europe demand continuing to fuel owners’ are still experiencing the aftermath of the freeze, causing
optimism, the outlook for European MR owners remains broadly positive. refineries to go into heavy maintenance, following record
25
runs in 2022 to capitalize on high margins. Increased US
0 refinery maintenance rates are expected to extend well into
Q1 2023 to also facilitate commercial crude oil inventory
-25 builds, as SPR are largely drawn. All in all, uncertainty remains
as the EU and G7 countries’ sanctions on Russia crude oil
2020 2021 2022
and products imports are in full effect as of February 5th,
and with the U.S. trying to implement more sanctions on the
LR2 (TC1)
LR2 (TC1) LR1 (TC5)
LR1 (TC5) MR2 (TC2)
MR2 (TC2) Russian oil industry, this could create more volatility for the
rest of 2023.

80 Picture: STI LOMBARD, LR2, 109,999 Dwt, Built 2015, Operated by Scorpio Tankers. BRS Group - Annual review 2023 BRS Group - Annual review 2023 81
 TANKER TANKER
PRODUCT TANKER - WEST FFA MARKET

FFA MARKET

Edible Oils The Russia-Ukraine war contributed to increased tanker market volatility and
consequently a record year, in terms of volumes, for Tanker FFAs (734,972 lots),
Vegoil Palm Oils up 33% on 2021. Significant for wet FFAs in 2022 were the massive increases 2022
2022 TD3C
TD3C spot
spot vs
vs4Q22
4Q22FFA
FFA
in implied FFA TCE levels, and this encouraged additional deferred selling in the $
The global vegetable oil market tightened further in 2022, Approximately 330 MR1s or MR2s were fixed to carry palm oil and biodiesel form of hedging. These kinds of hedging transactions were far less numerous
as the Russia-Ukraine war further exacerbated tight from Indonesia, Malaysia into China, the Mediterranean Sea, Europe, USA or when the implied forward TCEs were well beneath time charter levels. 140
supplies stemming from a severe drought in South America West Africa in 2022, a similar number to the previous year. Out of the 67 MR2
that caused a reduction in soybean yields. Soyabean oil newbuildings that were delivered in 2022, 37 were fixed with palm oils or Case in Point for VLCC: 120
exports from Argentina decreased by 20% year-on-year biodiesel on their maiden voyage. Daily returns moved from about $15-20,000/ On 27/09/2022 the TD3 Cal23 FFA settlement in TCE was $31,470
in 2022 to approximately 6.3 million tons. Out of the 182 day in the first quarter for an eco-ship but increased exponentially to reach On 27/09/2021 the TD3 Cal22 FFA settlement in TCE was $14,400 100
MR1s or MR2s that were fixed with vegoils during the around $65-70,000/day in the second quarter. We expect a maximum 40 MR2s
year, 132 went to India which was again by far the main to be delivered in 2023, which is significantly less than in previous years, so this And the same exercise for Clean with MRs. 80
importer. Biodiesel exports have been similar to last year should provide less FOSFA tonnage for palm oil traders. On 27/09/2022 the TC2 Cal23 FFA settlement in TCE was $25,230
with about 1.2 million tons of SME (Soya Methyl Esther) On 27/09/2021 the TC2 Cal22 FFA settlement in TCE was $5,100 60
imported by Europe, employing a total of 47 MR2s. A total The high price signal induced from tightening global supplies with edible oil
of 231 MR1s or MR2s were chartered from South America importers looking to diversify imports amid the Russia-Ukraine war at a time What a difference a year makes, which is clearly demonstrated with the same 40
with vegoils and/or biodiesel during the year. Freight rates when global demand is expected to grow with China leading the way will likely date in September a year apart, where 2022 FFA values often offered good value
were extremely volatile during the year, starting in the low see trade shifts exacerbating, with Malaysia continuing to gain market share into for those who were looking to sell FFAs. A year earlier, when often the deferred 20
$40s per ton and finishing in the low $80s per ton. This Asia in 2023. paper was at a heavy discount to the underlying time charter rates, there would
produced daily returns of around $10,000/day at their be less eagerness to employ paper hedging against vessels. This change in 2022 0
lowest to $35,000/day at their highest. was one of the major factors behind the record year for tanker FFAs. Jan
Jan Feb
Feb Mar
Mar Apr
Apr May
May Jun
Jun Jul
Jul Aug
Aug Sep
Sep Oct
Oct Nov
Nov Dec
Dec
Fuel Oil
The very low water level in the Parana river in 2022 created In addition to hedging strategies with Tanker FFAs, with the increase in volatility, TD3C spot TD3C Q4-22 FFA
logistic issues for the ones willing to optimize their volumes It was an unexpected year for all of us with the Russian invasion of Ukraine. the appetite for the speculative trading of wet FFAs also increased. Speculative TD3C Q4-22 FFA
and had to load more from other countries, mostly Brazil. The world changed and so did markets which surprised to the upside, reshaping trading can be from the long or short side and can also involve spreads between
flows and beneficiaries. However, challenges also bring new opportunities, different time periods as well as spreads between different tanker routes. Last
Regarding the Sunflower oil exports, the situation has and the fuel oil market was no exception. With high energy prices, initial self- but not least, paper can also be used to create a synthetic time charter, by N° of Tanker TCs in 2020
been extremely critical due to the war between Russia sanctioning and EU restrictions in the first half of the year which evolved into replicating the vessel size in Wet FFA paper, across any of the benchmark routes
and Ukraine. There were almost no exports from the end official sanctions against Russian oil imports, the tanker market became one of for a specific period. A combination of all the above led to a record year for 160

of February until June. Some shipments took place during multiple tiers, notably where lifting Russian barrels gave substantial premiums Tanker FFAs.
140
the second part of the year. The number of Owners able to Owners. Since the majority were craving for up to additional ws100 on each
to consider such shipments was very limited and the regional run, the priority for Owners was to lift cargoes from the Black Sea and 120
premiums involved for the ones able to consider were quite Baltic and transport these to Europe, mainly with STS discharge at anchorages off
substantial. Greece, where volumes skyrocketed compared with 2021. This practice created TIME CHARTER 100
a tight supply of tonnage throughout the year. It is also fair to mention that
80
the first quarter was feverish and volatile with an average TCE of $10,000/
day as markets took a while to react to the initial shock. Thereafter it was a Following the depressing months of January and early February 2022, TC rates Crude tanker TC rates followed clean tankers but with a lag
60
take-off for the bull run where Owners were giving a favor to Charterers by just rose along with spot earnings, as western buyers shunned Russian energy, which and rose significantly in June-July especially on Aframaxes
repeating the last done. Rates escalated as the year progressed with Russian was the catalyst to a rapid redrawing of global oil flows. TC rates for clean tankers and
40 Suezmaxes. VLCC TC rates had to wait until September,
fuel oil increasingly flowing into Asia, increasing ton-miles for the trade. The were the first to rise in March, followed by crude tankers in April. The high when the VLCC spot market finally improved, to catch up
second quarter brought TCEs of $24,000/day while these rose to $38,000/day volatility in clean tanker freight rates propelled TC rates upwards Meanwhile, with
20 other segments in relative terms. As was the case for

and $55,000/day, in the third and fourth quarters, respectively. Record high TCE crude tankers largely lagged due to persistent weakness in the VLCC market. By clean tankers, owners started aiming for longer periods
earnings on TD18 were recorded in December 2022, as they soared to over end-June, one year TC rates had risen from their January torpor by an average by0the summer. However, unlike clean tankers, charterers
$76,000/day, with Russian liftings commanding around $100,000/day. of 56% on clean tankers (MR1s to LR2s) and by 13% on average for crude tankers foundJanit more difficult
Feb Mar to commit
Apr May Jun Julto Aug
3 toSep
5 years periods
Oct Nov Dec

(Aframaxes to VLCCs). on crude tankers, leading to less fixtures of such lengths

During the fourth quarter, we witnessed situations where Charterers had to Crude Tankers with clean
compared Less than 12 months
tankers. 12 months
Nonetheless, anddidn’t
this longer

On clean tankers, 6 months and shorter durations accounted for the majority of Product Tankers
prevent Less than
crude tanker 12 months
TC rates 12 months rates
reaching elevated and longer
on
compete against Russian cargoes to secure tonnage for the usual vanilla runs.
Nonetheless, all the madness came to an end during the Christmas period, with TC deals done until May 2022 when owners started to focus on longer durations, long periods – although not as high relative to clean tankers.
market momentum dissipating into the first month of 2023, leaving owners as they aimed to fix at elevated rates for the longest possible time. Two year
exposed amid tonnage piling up and uncertainty about the short-term outlook. and longer period TC deals gained momentum and were seen fixed a record high By the end of December, 1 year TC rates were up on average
Nonetheless rates have remained stronger compared with the same period last level during the second half of the year. The number of TC deals on clean tankers from January 2022 levels by 126% on crude tankers and
year. This correction could turn out to be positive for adjusting overvalued prices rose compared with previous years, especially on longer than 6 month periods by 143% on clean tankers. During the same period, rates on
and providing new buying opportunities in what we perceive as a structural due to bullish forward expectations. The high number of long TC deals done for 3 years TC rose on average by 39% on crude tankers and by
market shift, as fuel oil cargoes from Russia are expected to increasingly divert clean tankers compared with crude tankers reflects the more consensual bullish 53% on clean tankers.
to Asia and Middle East. market expectations on the former. Market expectations for product tankers
are bullish with ton-miles projected to continue to grow due to the larger oil
products deficit in the Atlantic Basin versus a growing surplus East of Suez.
Charterers that agreed to commit to long periods at multiyear high freight levels
were encouraged to do so not only because of higher spot freight rates and
expectations, but also because fleet growth is projected to decelerate on the back
of the tiny orderbook and that shipyards are fully booked for the next 2 years.
Meanwhile, China’s oil demand is projected to rebound sharply in 2023 after the
end of the Covid lockdowns.

82 Picture: CEDAR, Suezmax, 157,310 Dwt, Built 2022, Operated by Euronav. BRS Group - Annual review 2023 BRS Group - Annual review 2023 83
 TANKER TANKER
SECOND HAND MARKET SECOND HAND MARKET

During the first part of the year, Tanker Owners faced a dichotomy crisis and For the sixth year in a row, the number of transactions for
had to choose whether to load Russian cargoes. During its second part, and further trading increased, the increase was more than 11%
assuming they opted to do so, then they had to choose until when. This was as 34 more transactions were reported than in 2021. The
tough call to make as decisions were not a question of legality or morality (since number of transactions was evenly spread over the year
sanctions were not approved by all countries) but more a question of the image with only couple of months deviating significantly from
that Owners wanted to portray. the average number of transactions. The high volume was
driven by the chartering market and affected in particular
The implementation of sanctions has been the cause of the emergence of new the older units.
ship owning entities which have sought to position themselves specifically for
lifting Russian cargoes. These entities were mainly based in China, UAE and Many Buyers saw the opportunities provided by the
India and were very keen to acquire tonnage on the secondhand market from market and even if prices increased regularly every week,
traditional Tanker owners. The appetite from these Buyers for Ice class tonnage the fundamentals remained strong enough to push them to
was gargantuan and required in order to ensure uninterrupted loadings from acquire more tonnage. Accordingly, many Owners decided
Russia’s oil terminals on its Baltic, Black Sea and Pacific coasts. to take advantage of the situation and began offloading
their older units in order to profit from one of the highest
markets since 2007/2008.
New Orders 2016 to 2022
S&P activity (vessels for further trading)
N° of Ships 2016 2017 2018 2019 2020 2021 2022

N° of Ships 2018 2019 2020 2021 2022

VLCC 15 58 44 39 44 31 2

Suezmax 20 28 22 38 39 13 9 VLCC 48 59 105 101 81

Aframax & LR2 19 37 28 56 39 50 30 Suezmax 28 41 44 38 59

Panamax & LR1 3 8 8 1 0 0 0 Aframax & LR2 66 76 95 129 142

Panamax & LR1 20 33 24 41 61

Vessel value changes from January 2022 to December 2022

For once, Tanker Owners this year had the king’s choice. There was no wrong Re-sale 5 years 10 years 15 years VLCC
SECOND HAND MARKET decision. Whether one opted to keep his ship to enjoy extra-ordinary spot and
VLCC 18.00% 34.53% 59.09% 69.70%
TC rates or sell his vessel, both proved to be right. One may argue that the more A total of 81 VLCCs were reported sold for further trading
patient owners selling at year-end did better than the first mover, but the reality Suezmax 17.39% 36.17% 43.75% 76.19% during 2022, although the number was 20% less than 2021,
‘Man is incapable of is that if money was reinjected in another more modern tanker unit, they did just
as good as the late seller. Aframax & LR2 25.44% 39.53% 64.15% 112.12%
this is still a significant number.

Tanker second-hand prices

choice, and he always The bearish sentiment prevailing in the early days of 2022 was a direct
Panamax & LR1
$m
20.83% 38.71% 47.50% 76.00%
The activity was deeply focused on the older segment, with
more than half of all transactions involving vintage tonnage

acts yielding to the continuation of the previous year when Tanker Owners’ hopes solely relied
on a rebound of the global economy and improvement the global demand for Tanker
100
second-hand prices
that was more than 15 years old.

crude and clean product transportation based on Covid pandemic amelioration, Transaction volumes for ships younger than 5 years almost
strongest temptation’ particularly in China. Fast forward two months and the Ukrainian war broke. $m
90
Tanker second hand prices
halved, decreasing to 16 units reported sold, against 31 in
Overnight, like any citizen of the world, Tanker Owners had to face a new 100
80
2021. Some of these sales were driven by the possibility
- André Gide; French writer (1869/1951) honored situation and trade disruptions created by the conflict saw tanker earnings and $m for Owners to exit from the sector. Prices for very modern
with the Nobel Prize in Literature in 1947. values take a stratospheric trajectory not seen for the last 15 years. Let’s not 90
70 tonnage reached levels that were higher than even the
forget that asset levels were already comfortable at the beginning of 2022 and previous newbuilding price. By way of example there
80
60
over the previous twelve months had already seen values increased (in general) was the sale from the Hunter group of their 4 scrubber-
due to both stronger newbuilding and scrap prices. 70
50 fitted, 2020-Daewoo-built units which took place with
two units being sold at $96m each and two at $95.5m
60
40
Week after week, starting from early March 2022, Tanker Owners for all sizes had each. Once again there was limited activity in the 6 to 10
to adapt instantly to new working conditions dictated by the war itself to start 50
30
years old vessel segment, as 7 units switched hands. Of
with for the safety of their crew and ships. Then Owners had to carefully monitor these, there were two sales from Sovcomflot, which faced
Units sold for scrap per year the war implication in terms of, new trades, the disappearance of counterparties, 40
20 with sanctions, had to take various drastic steps to stay
the appearance of new counterparties, additional ton miles, unexpected high afloat. For vessels built 11 to 15 years ago there were 17
30
10
earnings, but also new sanctions risks. transactions, which was in line with the previous year. As
N° of Ships 2018 2019 2020 2021 2022
20
0 initially mentioned, the focus of the activity was for vessels
VLCC 32 11 2 20 5 These new conditions pushed the market in Owners’ favour and charterers 2016 2017 2018 2019 2020 2021 2022 more than 15 years old with 41 transactions profiting from
10 2016 2017 2018 2019 2020 2021 2022
had to compete and pay higher for the transportation of crude and refined the increased asset values. At the beginning of the year,
Suezmax 23 8 5 10 11 products. To keep it simple, all Tanker sizes saw their values rising from 17% to 0 VLCC 5 years old Suezmax 5 years old 50 VLCCs were expected to hit the water, but in the end
112% whatever age they were (when comparing figures between January and VLCC 5 years old Aframax 5 years old only 43 units were delivered. According to the orderbook
Aframax 5 years
2016 2017old 2018 2019Panamax 2020
5 years old 2021 2022
Aframax & LR2 45 5 11 32 20 December 2022). These new conditions also had a tremendous effect on the at end-December 2022 which stood at 26 units, 23 ships
Panamax 5 years old Suezmax 5 years old
volume of transactions and 2022 will be remembered as a very strong year with VLCC 5 years old Suezmax 5 years old should theoretically hit the water in 2023. Meanwhile, only
Panamax & LR1 10 6 3 12 10
the Aframax size leading on a number of transactions basis. 5 units were sold for recycling last year.
Aframax 5 years old Panamax 5 years old

84 Picture: MONJASA REFORMER, M/T 13.702 Dwt, Built 2003 purchased by MONJASA. BRS Group - Annual review 2023 BRS Group - Annual review 2023 85
 TANKER TANKER
SECOND HAND MARKET SECOND HAND MARKET

Suezmax
Panamax tanker sales increased significantly to an astonishing 61 units sold for
The Suezmax market increased significantly with 59 units further trading, against 41 transactions in 2021. No units less than 5 years old
sold for further trading in 2022 against 38 in 2021. As with were sold. The 6 to 10 years old segment saw a healthy 12 units exchanged but
VLCCs, appetite was focused on older vessels with more were all part of the same gigantic enbloc transaction between Scorpio as Sellers Sales and purchase outlook for 2023
than 60% of the transactions focused on units 15 years old and Hafnia as Buyers. 26 units were sold between 11 and 15 years old, this
or more. represented the most active age segment for the category. Finally, 23 units older It is fair to say that at the end of 2021, the market was basically hoping for
than 15 years were sold at prices significantly higher than their recycling value. China to re-open and for world trade to flourish again in order to enhance
Prices for modern units once again surpassed their energy transportation and bring optimism to Tanker Owners. At the end
contracting price, as was the case with Ciner’s ZEYNEP and In the Panamax (including LR1) fleet, we saw no vessels delivered in 2022. of 2022, we were granted half of our wishes thanks to Beijing's U-turn on
AYSE C, both built at Hyundai Heavy in 2020, which were Meanwhile, there were 10 demolitions and once again no new orders were its zero-tolerance covid policy. However, as we saw, this prediction had
sold for $65m each to SFL. The sales for units less than 5 placed. The total orderbook at end-2022 stood at 4 units, with none expected to nothing to do with the extraordinary year Tanker Owners benefited from.
years old were limited to 4 cases. There was slightly more hit the water in 2023.
activity for units built between 2012 and 2017 with 8 units Looking ahead, we have all the reasons to remain confident in Tanker
sold. Again, there was a little more activity on 11 to 15 year earnings and their values. The war in Ukraine will continue to disrupt
old Suezmaxes with 10 units sold. MR1 and MR2 oil trade patterns and support ton miles. This extra demand will not
only continue until the end of the war, but also until sanctions halt.
Buyers’ attention focused on tonnage older than 15 years As with bigger tankers, MR2 sales and purchase activity once again increased. Indeed, arguably Europe will never again import the volume of oil which
old with 37 transactions for further trading taking place The focus was concentrated on the 11 to 15 year old units which accounted for it previously did from Russia which implies that ton miles will remain
during the year. The increase in values and demand created slightly more than 45% of the total transactions in the segment. This is where supported above their previous pre-war levels. Since we do not expect
the perfect scenario for more matches between sellers and the increase in value was also highest as prices rose by 77% from January to drastic change to the fleet, this suggests that ton miles would only shrink if
buyers. December for 10 years old tankers and by 100% for 15 years olds. the world economy sank into a severe recession. Never say never, but this
seems unlikely.
The Suezmax fleet saw 40 units delivered in 2022 (versus The total number of transactions increased to 176 units compared with 168 in
an end-2021 forecast for 48 vessels) while 11 units were 2021. Only 18 units below 5 years of age were sold, given the preference to keep This brings us to more philosophical questions that Tanker Owners may
scrapped. By end-2022, the total Suezmax orderbook stood modern units as the asset play was higher for older units. In the 6 to 10 year face in the months to come. While there will be no legal or illegal path,
at 20 units, of which 9 are expected to hit the water in old segment, there were 37 transactions reported. The preferred 10-15 year old Tanker Owners will have to pick a side as to whether to trade Russian
2022. segment saw a robust total of 72 units sold. Interest was maintained in MR2s cargoes. One can argue this is not a moral or non-moral issue as this would
older than 15 years as 41 units were reported sold for further trading. be too simplistic and very subjective. The question mark relates to "what
image" an Owner will want to portray and associate his name with, not
As every sale is a symbolic meeting between a buyer and a seller, the sustained only towards the shipping world but also towards its sphere of influence,
Aframax/LR2 and Panamax/LR1 increase in the chartering market brought the demand up to match the potential its national authorities, its clients, its associates and even its family and
supply. Even if modern units were sold at record values, this didn’t discourage friends. The fact that some banks are starting to refuse to finance Russian
The market was more dynamic than ever for Aframaxes buyers and notable numbers of vessels were sold. Nevertheless, as usual, cargoes (whether or not under price caps) might help some of them to
and LR2s with 142 transactions reported against the 129 in vessels older than 10 years presented the biggest asset play opportunity which, choose quickly.
2021. As with the bigger segments, the focus was for units sustained by the market, represented the most attractive units for Buyers and
older than 15 years, with these accounting for slightly less Sellers. 2022 should have been the year when Tanker Owners seriously focused
than 50% of the total transactions in the segment. on CII, EEXI and decarbonization rules. It is clear that their technical
In the newbuilding market, only 43 MR2s were ordered during 2022, and 74 departments did so, but Tanker Owners (the decision makers) were more
A total of 16 units younger than 5 years old changed were delivered against the initial expectation of 87. The total orderbook remains mostly concerned in 2022 with market volatility and seizing opportunities.
ownership, with 4 units being exits from Sovcomflot. A high with 108 units, of which 57 are expected to be delivered in 2023. Only 16 We believe that in 2023 they will have no other choice but to catch up
modest 13 transactions were 6 to 10 years old and included units were reported sold for demolition last year. and put in place their strategy to accompany decarbonization. Typically,
some buybacks by Scorpio Tankers from their financiers. towards the end of the year HFO consuming vessels will need to start
Sales and purchase activity in the MR1 segment more than doubled with 78 making their choices regarding their trading patterns, and the speed and
Of the remaining 113 transactions, 45 were for vessels transactions for further trading. Limited transactions were reported for vessels consumption that they can sustain in order not to end up in the D or E
between 10 and 15 years old and 68 were over 15 years of 10 or less years as only 13 units changed hands. However, this was also category of the CII.
old. Several Owners profited from the market, such as representative of the fleet age profile. There was a significant 29 transactions for
Union Maritime which disposed of 7 of their older units. units of 11 to 15 years old reported. The vessels older than 15 years were the At the start of 2023, the orderbook is low. Newbuilding prices are
Various Chinese and Middle Eastern buyers focused their most active, accounting for 46% of the total transactions. historically high and are discouraging many Owners from placing orders.
attention and were behind the acquisition of the older There will be orders placed this year, but these should be driven mainly
units, in order to profit from the increased charter market As of the 31 December 2022, the MR1 orderbook was left with only 1 unit by necessary and indispensable fleet renewal or by specific employment.
and various opportunities. which has been ordered in 2022, and none are expected to be delivered in 2023.
Meanwhile only 5 units were reported sold for demolition in 2022. The biggest question for the future and the new orders remains the same:
Once again, the Aframax and LR2 segment presented the what is the fuel of tomorrow, will it be methanol, LNG, batteries, ammonia,
highest increase in assets values, moving from a low 25% biofuels or hydrogen? The question remains unanswered and there is no
for the more modern to more than 110% for the vintage OBO global consensus towards the answer and the direction that will be taken.
units. This increase was driven by the upward changes in Looking to the past with the failure of Betamax against VHS (for those who
the market and immediate possibility to pocket from the During this last year there was no registered activity in the OBO fleet either in remember), we know that the best solution is not automatically the one
strong chartering market. second-hand, or in new orders, or in demolition. Nevertheless, the question arises prevailing.
for Owners pondering their future choice of tonnage. Could there be new trades
Out of the 48 Aframaxes (including LR2s) which were in which it could be possible to combine a mixture of dry bulk and liquid bulk
expected to be delivered during 2022, only 42 hit the cargoes? This segment could definitively present some renewed opportunities
water. In 2023, we should see another 54 vessels delivered in order to solve the mayor challenge of new environmental regulations and
while, as of late December 2022, the total orderbook stood limitations for CO2 emissions.
at 96 units.

86 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture: CEDAR, Suezmax, 157,310 Dwt, Built 2022, Operated by Euronav. 87
Chemical &
Small Tankers

2022: At last tailwinds

for chemical Owners
The chemical tanker segment was marked for
years by overcapacity, with Owners expecting an
improvement against the backdrop of declining
deliveries. Finally, 2022 was the year Owners had
been waiting for. The main reason for this was
related to the Russian attack on Ukraine. Sanctions
placed upon Russia by the G7 group of countries,
the EU and others led to the modification of some
trading patterns, thereby, increasing ton-miles.
Accordingly, clean tanker demand was boosted, and
swing tonnage moved out of the chemical market,
improving opportunities for chemical tanker Owners.
Although bunker prices rose, Owners could easily
absorb the higher costs through the significant rise
in spot freight rates across multiple trade routes.

FURE VINGA
(Chemical / oil tanker, 17,999 Dwt, Built 2018) moored alongside
the old Royal Navy ship of the line HMS Belfast on the River Thames
near Tower Bridge.

89
 CHEMICAL & SMALL TANKERS
CHARTERING

nb of ships

SST & Part SST Chemical Tanker (<=19,000 dwt) Deliveries Orderbook Deletions

SST & Part SST Chemical Tanker (up to 19,000 dwt)

Dwt nb of ships
dwt

SST & Part SST Chemical Tanker (<=19,000 dwt)

400,000
Deliveries Orderbook Deletions
37 32
300,000
23
23 20 23
16 20 19
200,000
20 16 16
dwt 14
100,000 14
400,000 3
-
37 32
300,000 2
6 23
-100,000 23 20 23
16 20 19 9 7
200,000 12 10 13 5
20 16 16
-200,000 14
14 19
100,000
-300,000 3
30
-
-400,000 2
6
-100,000 45
-500,000 12 10 13 5 9 7 48
-200,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 202219 2023 2024
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
-300,000
Deliveries 30
Demolitions Orderbook
-400,000
45
-500,000 48
European chemical production carried the burden of
SST & Part
2010 SST 2011
Chemical
2012 Tanker
2013 (>19,000
2014 dwt)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
CHARTERING the soaring energy prices reducing their competitivity
against products coming from the US, Middle East or Asia.
dwt
nb of ships Meanwhile, the continued zero-tolerance approach to Covid
Fleet development and chemical demand in China created port congestion, and thereby tightened
1,400,000
45
vessel supply in the area.
44 After 2016, the strong orderbook threatened a healthy supply-demand balance
SST
SST & Part
1,200,000
& Part SSTSST Chemical
Chemical Tanker
Tanker (>19,000
(19,000 dwt anddwt)
up) 41
in the chemical tanker market as a significant number of deliveries hit the fleet. Owners had to support a sharp increase in bunker prices
1,000,000
Dwt nb of ships But the growth of the stainless steel chemical fleet finally started to decelerate, during 2022 but relief came from the high spot rates. In
dwt 28
800,000 30 going from 1,337 ships in service in 2020, down to 1,307 ships in 2021. most COAs, there are bunker adjustment clauses which
22
1,400,000
600,000 23 21 23 22 were triggered to pass additional bunker surcharges onto
45 21
44
However, this increase remains a reasonable progression and the stainless steel Charterers.
1,200,000
400,000 16 13
12 41
12
orderbook now stands at 5.2% of the existing stainless steel fleet on a number-
1,000,000
200,000
6 of-ships basis, and 6.5% in deadweight tonnage terms. As of today, the stainless COA discussions were difficult at the end of 2022. As spot
800,000 30 28 steel chemical fleet consists of 1,330 ships in service, which marks a halt to the rates were double or more compared with the previous
-
1
22
23 22
fleet’s growth. Deliveries peaked across 2016-18, as on average 67 ships were year, Owners felt it necessary for COAs to reflect a
23 3 3 21 2 2 3
600,000
-200,000
7 5 21 delivered each year. In 2023, 38 stainless steel tankers are slated to enter the substantial part of these increases. When there was a cap
7 7 8
400,000
-400,000
16 13 fleet while another 25 are set to be launched in 2024. range, Owners asked for the maximum increase possible
12
17
12
6 and in the cases where there was no cap, Owners asked
200,000
-600,000
Demolitions stayed at a very low level across 2016-2018 and only boomed in for steep increases or they dropped the COA, instead
-
2010 2011 2012 2013 2014
2021 as 56 ships were sent for scrap. Last year, 22 ships were sent for scrap. preferring to take the risk of entering the spot market.
12015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
-200,000 3 3 2 2 3 This increase in demolition helped to rebalance the fleet. Indeed, this reflected Owners' sentiment that high rates
5
7
7 7 8 will persist throughout 2023.
-400,000
As per our end-2021 forecast, the fundamentals were favorable for Owners
-600,000 17 in 2022 as fleet growth was limited. As we move into 2023, the orderbook
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 remains small, yards are mostly full with limited availability until 2024-2025.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Deliveries Orderbook Deletions In terms of demand, the chemical ton-miles grew by 3-4% during 2022. This
Deliveries Demolitions Orderbook supported a continued recovery after a few years of soft markets. The growth of
The war in Ukraine commenced during 1Q22. This led to sanctions being
imposed upon Russia which rapidly shifted crude and clean petroleum flows. It
the stainless steel
Deliveries Orderbook Deletions
also resulted in longer voyages, increasing ton-mile demand, and strengthening
clean tanker demand. This situation absorbed the swing tonnage which focused chemical fleet
on CPP trade most of the year and remained out of the chemical business.
Consequently, the fleet available for chemical cargoes was reduced and freight finally started to
rates increased progressively during the year.
decelerate
Picture: MORBIHAN, Product Tanker, 9,150 dwt, twin azimuth thrusters and diesel-electric propulsion. Delivered in 2021 by New Yangzi Shipbuilding.
90 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Owned by Rubis Eastern Caribbean Barbados. The vessel services French Guiana. 91
 CHEMICAL & SMALL TANKERS
CHARTERING

Northwest Europe: FAME, CPP and DPP Translatlantic market

2022; and what a huge change from the year before! Russia’s unprovoked As with many other markets, the Transatlantic market saw
invasion of its peaceful neighbour Ukraine threw the world and the markets into an upturn in 2022. This came in the wake of Russia's invasion
enormous turmoil. The result of which saw huge changes in freight levels. of Ukraine which saw a rapid redrawing of oil trade flows.

From February, freight rates across the entire spectrum of CPP for Coasters (4- After a rather calm start to the year, the outbreak of war
9,000 cbm) and Intermediates (14-22,000 cbm) trading Baltic, UK Continent, at end-February led the Transatlantic eastbound market
Mediterranean and Black Sea went into overdrive. Each new fixture set a new high to firm up rapidly across the second quarter with what
benchmark; Charterers were seeing one freight one minute, followed by another initially started as a simple compensation for increased
substantial increase the next; they couldn’t keep up. Owners were fully in the bunker costs, rapidly proved to be the spark for a larger
driving seat! For instance, at the start of the year, 12,500 tonnes of condensate/ fire. As many western firms boycotted Russian-produced
naphtha, transported between Braefoot Bay and ARA saw lumpsum levels of chemicals, European players were unable to source their
around $175,000. This rapidly more than doubled and by early December stood feedstock locally and had to rely on US and Asian imports.
at $430-440,000. Meanwhile, transporting 5,000 tonnes of FAME from ARA This increased the call on tonnage.
to Fawley had been trading at a pitiful $65-70,000 lumpsum and at its height
soared to nigh on $185-195,000. Chemical tanker markets were also boosted indirectly by
a strong CPP tanker market dragging swing tonnage away
The DPP market also evolved over the course of the year, and not to the benefit of from chemical trades, which further limited the availability
Charterers. Driven by a combination of years of low freight levels and as numerous of chemical tanker tonnage in an already tight market.
vessels reached the 15 years age limit, a number of vessels were cleaned up and
moved away from this market. Once Putin took his calamitous decision, Charterers After this hectic second quarter, the third quarter seemed
were scrambling for tonnage on a “first available” basis and freight levels went more peaceful even if the fundamentals listed above
into orbit accordingly! For example, in January, one of the benchmark routes for persisted. Accordingly, freight increases decelerated to a
transporting 15,000 tonnes of DPP between Grangemouth and ARA was trading more timid pace up until the fourth quarter.
at around $160,000 lumpsum. This quickly passed the $300,000 level and by
December stood at $450,000 before the market quietened just before Christmas. Indeed, as winter approached, the energy crisis loomed
large over Europe, production costs rose significantly for the
The environmental challenge As an aside, the usual orderly and calm process of fixing 5,000mts FAME cargoes region's chemical producers, thereby opening an arbitrage
in the Mediterranean took on a new twist as the Coasters were drawn by sky high with US and Asia, not only for feedstock but also for refined
Starting from 1 January 2023 it became mandatory for all vessel in a manner directly reflecting the CII Regulations. On the other hand, the freight rates in the Black Sea, leaving a lack of tonnage in the Mediterranean, and products. This strengthened demand which helped to propel
vessels to calculate an EEXI (Energy Efficiency Existing Ship Owner has only the due diligence (not the obligation) to operate the vessel in a in turn forcing up freight levels there too! freight rates higher.
Index) to determine the energy efficiency of their design manner minimising its fuel consumption.
and to start the collection of data for the report of their All in all, this left a new world order for Charterers to take in and adjust too. On westbound transatlantic trades, the start of the fire
annual carbon intensity indicator (CII). As with the EEXI, the Pressure remains strong on Owners to reduce the environmental footprint of their The main concern now is who will invest in new tonnage and fleet renewal? was not as strong. Accordingly, both Q1 and Q2 only saw
CII of ships will be rated: A, B, C, D, E (from best to least vessels. The current stainless steel orderbook stands at 69 ships, 13 of which For the Intermediates the only Owner seemingly willing to take the plunge in moderate increases in freight, and was largely only driven
performing). Both measures are part of the IMO strategy to are dual fuel with LNG or batteries (combined accounting for 19% of the total emphatic fashion is Furetank of Sweden; they have a large number of new builds by bunker compensation, and limited tonnage availability
reduce CO2 and GHG ship emissions. orderbook). Of these, Fairfield Chemical Carriers has ordered four 26,300 Dwt on order. Meanwhile, other Owners can only look on in envy. Furetank stands a as the European market and CPP tanker demand were
LNG dual-fuel ships set for delivery between 2023 and 2025. These will also be good chance of almost cornering the market in the future while others dither and taking tonnage out of the Transatlantic market. But as the
The application of the new rules raises many questions. equipped with energy-reducing hulls and other technology to reduce their energy sit on the fence! In the Coaster sector, Turkish Owners are the only ones who seem year went on, and European producers managed to claw
Some chemical tanker Owners claim that the CII rating is use. Meanwhile, four LNG dual fuel ships were ordered by Essberger for delivery to have taken on the mantle and consistently invest in this sector. back momentum, COA volumes rose, and the spot market
not completely fair as a ship's rating is hit when they spent in 2023. followed.
more time in port. In the case of chemical parcel tankers, For the future we see some period of re-adjustment in the market with freight
they may call at multiple berths to load or discharge for Although the chemical tanker market was supportive for Owners last year, it had levels coming down again to more “reasonable” levels. However, any period of
different Charterers which potentially could see vessels on been challenging during the previous years. Since chemical tankers are expensive substantial and sustained activity could see this rapidly change. Northeast Asian and Chinese
such voyages receive an inferior CII rating than if they were due to their sophistication, Owners remain hesitant to commit more capital to domestic market in 2022
calling one port/berth to load and discharge a sole cargo. equip their newbuildings with energy saving technology. The question of what
Furthermore, port closures, bad weather or force majeure the fuel of the future will be remains unanswered. Owners are conscious that Last year proved to be the best year for chemical tanker
are not considered. they need to make a step towards improving the fuel efficiency for their new owners over the last twenty years. There are several reasons
vessels. However, opting for one particular fuel is very sensitive since it can for the surge in the chemical tankers market. On the demand
In the EU, shipping will be included in the Emission Trading jeopardize the whole investment if during the ship's lifetime that particular fuel side, the total fleet remained relatively stable. While in
System (EU ETS) in 2024. This will include all ships above becomes unavailable or is too expensive. The current trend is for new orders to be contrast, it was on the supply side where the main changes
5,000 GT and will set a cap-and-trade system. The cap will propelled by an oil-based marine fuel but be equipped with technology to make occurred. The war in Ukraine triggered a surge in the CPP
become tighter every year to reach the EU's target of a 55% them alternative fuel 'ready'. This enables the ship to be retrofitted to operate market and drew some swing tonnage from the chemical
reduction in GHG emissions by 2030 compared with 1990. with alternative fuels including LNG, methanol or ammonia, at a later date. The main concern tanker market to the CPP market. Notably, MR tankers
enjoyed higher earnings in the CPP market and therefore
The next question is to know what will be the cost to
shipping of such environmental regulation and how the
LNG appears the most opted-for solution across the short term. However, it
is hazardous to predict the fuel of choice in the future due to the number of
now is who will the supply of chemical tankers was reduced. Another reason
was port congestion which absorbed certain chemical tanker
burden will split in the case of a time-chartered vessel. unresolved questions. As these include: what will be the global supply of each
fuel and, what will be their availability on a port-by-port basis? Furthermore, invest in new tonnage and aggravated the supply shortage. Accordingly,
spot freight rates increased drastically in the wake of the
BIMCO has recently published its CII Operations Clause for
Time Charter Parties. This publication appears universally
there remain hurdles regarding their safety and the construction and updating of
bunkering infrastructure to permit their delivery onto ships. tonnage and fleet unbalanced supply and demand picture, so that rates for
some trades doubled. Some owners are very confident with
disliked across the shipping industry as, under the clause, the outlook in 2023, but there are still some uncertainties
the time charterer is obligated to operate and employ the renewal? ahead, including the evolution of the war in Ukraine and the
possibility that the world economy could enter a recession.

92 Picture: FURE VINGA, Chemical / oil tanker, 17,999 Dwt, Built 2018. BRS - Annual review 2023 BRS Group - Annual review 2023 93
 CHEMICAL & SMALL TANKERS CHEMICAL & SMALL TANKERS
CHARTERING SECONDE HAND MARKET

The Northeast Asian (NEA) market in the first quarter was

very active, not only intra NEA, but also for southbound
and long haul routes to Europe. Heated by the war between Conclusion Conclusion
Ukraine and Russia, bunker prices strengthened in March.
2022 was the year of Owners' momentum as they finally enjoyed positive
Furthermore, export volumes from China to Europe and 2022 was the year of Owners' momentum as they finally enjoyed positive
US increased in March, and Charterers were very active results after many years of challenges and uncertainty. The question is for results after many years of challenges and uncertainty. The question is for
exporting cargoes including Acetic Acid, SM and Phosphoric how long these market conditions will persist? One of the main drivers was how long these market conditions will persist? One of the main drivers was
acid. The main driver behind the increase in export volumes the post-Ukrainian-conflict shift in the CPP market which made the issue of the post-Ukrainian-conflict shift in the CPP market which made the issue of
was the very low price of the chemical products in domestic overcapacity almost disappear. overcapacity almost disappear.
China compared with international prices.
Into 2023 the chemical tanker market will, above all, depend on how geopolitics Into 2023 the chemical tanker market will, above all, depend on how geopolitics
The market was mixed in the second quarter. Although the evolve and whether swing tonnage will remain more interested in the CPP evolve and whether swing tonnage will remain more interested in the CPP
market remained stable early in the quarter, the lockdown in market rather than in chemicals. On the demand side, even if chemical trade market rather than in chemicals. On the demand side, even if chemical trade
Shanghai, which started at the end of March and continued is less volatile than oil trade, it could be hit by high inflation and increasing is less volatile than oil trade, it could be hit by high inflation and increasing
throughout April, led to the very low efficiency both of mid interest rates, which could slow down its growth prospects. Meanwhile, on interest rates, which could slow down its growth prospects. Meanwhile, on
China ports and vessels. As a result, the tonnage remained the supply side, the requirement to reduce the environmental impact of
the supply side, the requirement to reduce the environmental impact of
tight and freight rates stayed at high levels. Even though, the shipping, together with high newbuilding prices are likely to continue to limit
shipping, together with high newbuilding prices are likely to continue to limit
export of chemicals from China continued to boom, mainly shipowners' interest in constructing new vessels.
driven by the continuing fallout from the Ukrainian conflict. shipowners' interest in constructing new vessels.
Towards the end of the second quarter, the market calmed
down as cargo movements were not as active as in previous
months. However, freight rates remained supported due to
the high bunker costs and strong Chinese exports to the EU
and US.

The third quarter saw the market soften due to weak

downstream demand during the summer. China’s Zero-covid
policy put a lot of downward pressure on its economics and SECOND HAND MARKET
further impacted domestic demand. Some major producers
continuously cut their operating rate and some producers
shut down their plants entirely for maintenance. This also
combined with lower bunker costs to lead freight slightly Small tankers and chemical carriers (3,000-25,000 dwt) The average size of coated tankers sold jumped by almost
lower. Indeed, Owners struggled to fill up their tonnage with 40% to 12,000 dwt in 2022 and also increased for stainless
competitive freight rates. Stay on the scene. steel now reaching 15,500 dwt.

The market was quite flat during the fourth quarter. COA 2022 has been a keeper for small tanker owners of all types. Bunker prices provided the biggest scare: in the immediate
volumes followed usual patterns, but the spot market was aftermath of Russia's invasion of Ukraine, VLSFO prices
hindered. Due to the prolonged zero-tolerance Covid-19 The number of transactions fell by 38% with only 143 sales recorded (down soared by $300/mt to peak at $1100/mt in June. That’s
policy in China, the demand from end users was low and from 230 transactions in 2021). These included 42 stainless steel tankers and 4 a whopping $18.000 per day for a J19 chemical tanker
freight rates fell slightly due to a big drop in bunker prices. bitumen tankers. The much healthier rates across the board changed the nature sailing at 14 knots. However, most owners survived these
Some of the Owners shifted their ships to the Southeast of transactions. The price equilibrium used to be dictated by the Buyers with extra costs thanks to extremely rich spot rates. Notably,
Asia-India market in the wake of a robust palm oil market. Sellers exhausted by many years of low rates and firm bunker prices, not to from the third quarter onwards, the niche market of IMO 2
By the end of the year, the market had recovered its busy mention impatient financiers breathing down their necks to repay loans. But coated tankers of 6,000 to 10,000 dwt saw average rates
status, largely in the wake of improved confidence as 2022 was much more favorable to the Sellers, finally. At last, it made sense 100% higher than the historic of 1 USD per metric ton in
Beijing eased its Covid-19 restrictions. Accordingly, freight again to invest in second hand product and chemical tankers. Hence a much TCE terms.
rates regained their high levels, and all available space was younger age of vessels sold: 13 years old for coated tankers and 15 years for
covered very quickly. As the year turned and COA renewal stainless steel ships. Owners never had it so good since the heydays of 2007.
negotiations were concluded, it appears that most of the Quite logically, less than 1% of the active fleet has been sent to breakers in
new COA freight rates have strengthened. 2022. Stay on the scene, like money-making machines, was the chant. 2023 Outlook
To summarise, 2022 was a fruitful year for all owners of The orderbook has further shrunk to 1.89 m dwt, accounting for 4 % of the active The conflict raging in Ukraine has been the obvious cause
chemical tankers. Looking into 2023, a few optimistic fleet. And for good reasons. Not only have newbuilding prices considerably of the sudden tightening of the market. Nonetheless,
participants, especially owners, are very confident in the increased since the draught of 2020, but smaller vessels are disproportionally something was written on the wall ever since the 2008
market and forecast another bullish year, whereas the impacted as the yards, able to compete on containerships or bulk carriers, lost financial crisis put the brakes on the ordering of new
market view of most of the owners and charterers is quite appetite for smaller newbuilding projects overnight. Also, the choice for green vessels, thereby progressively increasing the age of the
the opposite. They expect that the firm market will not propulsion is even more difficult for smaller vessels (of all ship types) as engine fleet. Indeed, the fifteenth anniversary of the Lehman
persist and will experience a downturn due to a looming makers first develop new products for the larger sizes. As of today, dual fuel Brothers collapse can be seen in its age profile. We
global recession. Nonetheless, they expect China's post- LNG or Methanol engines are essentially available for vessels of 15,000 dwt or therefore expect sale and purchase prices to remain
Covid bounce to lead to a stable rebound in intra-regional above. Hydrogen or ammonia are simply not an option in the foreseeable future strong well beyond the end of the war in Ukraine. We also
and global trade. for this size range. Many owners with the best intentions to renew their fleet foresee fleet renewal starting with the bigger segment
can only be extremely cautious not to order the last generation of pure diesel -15.000 dwt and upwards, with the smaller units having
engines. Lest we forget, the pay-back time for retrofitting scrubbers remains to wait for appropriate green propulsion solutions.
prohibitive for small tankers.

Picture: BITU RIVER, Bitumen Tanker, 16,542 dwt with twin azimuth thrusters and diesel-electric propulsion. Was delivered in October 2022 by CMJL,
94 Yangzhou, for Rubis Asphalt Middle East (RAME). BRS - Annual review 2023 BRS Group - Annual review 2023 Picture: DEMERARA, chemical / oil tanker, 9,188 Dwt, Built 2022. 95
LPG

Moving the
Goalposts
There was a sense of cautious optimism at
the start of 2022, even with a new variant
of Covid-19 becoming prevalent in many
areas. However, the War in Ukraine soon took
the World's attention away from the virus,
followed by inflation concerns as a result of
many stimulus packages aimed to counter
econimic downturn in previous years.

CRYSTAL OASIS
VLGC (Very Large Gas Carrier), 82,000 cbm, built by Kawasaki
Heavy Industries Ltd., Sakaide, Japan, delivered in June 2022
and owned by Kumiai Navigation

97
 LPG LPG
CHARTERING CHARTERING

At the start of the year,, the World Bank predicted GDP

growth for the year to be 4% for the US and Europe, CHARTERING
5% in China, and 9% in India. Although these forecast
growth rates were, in most cases, lower than growth
in 2021, there was a sense of normalization returning VLGC
to the markets, and discussions of inflation were not
widespread. However, economists underestimated how During the early part of the year, in the very large gas carrier (VLGC) segment,
federal aid, supply shortages, and pent-up demand would we saw freight rates steadily drop on the back of tightening arbitrages and a
conspire to accelerate inflation. But mostly they did not lack of demand. However, towards the end of the first quarter, rates started to
envision that Russia would invade Ukraine in February rebound and push up on the back of stronger Indian demand, increasing delays
which injected chaos into global energy and food markets. in Panama and widening arbitrages. Despite the increase in rates, Owner’s
Superimposed was China’s continued zero-Covid policy earnings were initially affected by the sharp increase in bunker prices which
which, through its efforts to protect health of its citizens, was primarily driven by the Russian invasion of Ukraine.
slowed economic growth there.
Rates continued their upward trajectory in 2Q22 as the US – Far East arbitrage
By the end of 2022, actual GDP growth was a few hundred widened in the wake of large builds in US propane inventories. Additionally,
basis points lower than estimated in January, and the real delays in Panama started causing serious headaches for owners and charterers,
global GDP growth for the year was 2.1%. Crude oil and with waiting days reaching double digits in both directions.
natural gas prices soared in the first half of 2022 reflecting
supply concerns related to Russia’s invasion of Ukraine As we got into the warmer summer months, there was a correction in rates.
and as global inventories had, by then, dropped to low BLPG1, the Middle East Gulf to Japan voyage, dropped from $105/mt to $55/
levels. However, prices generally decreased in the second mt between the end of May and the middle of August, including one of the
half of the year as concerns shifted to whether a looming largest ever single day falls, of $9.285/mt, at the start of June. BLPG3, US Gulf to
economic recession would clip demand. Japan, observed a similar fall, from $140/mt to $92/mt over the same period.
However, these drops were short lived, as from September onwards the rates
LPG demand and trade increased during 2022 with China’s went into overdrive.
demand increasing due to PDH expansions and as new
projects came onstream. Accordingly, China’s seaborne Builds in US inventories drove a widening of arbitrages in the final quarter
LPG imports increased by about 10% from 2021 to 26.32 of the year. The large stock levels, a lack of vessel availability, and delays in
mn tons with about 7.8 mn tons imported from the US Panama and Indian ports saw spot rates jump to record highs of $148/mt for
and 7.5 mn tons from Iran. Meanwhile, European demand BLPG1, $132/mt for BLPG2, and $207/mt for BLPG3 at the end of November
increased as the region shifted its energy supply away and start of December. Owners’ earnings for the three benchmark routes peaked LGC
from Russia. All told, global LPG trade increased by 6.96% at around $138,000/day, $160,000/day and $122,000/day, respectively, across
y-o-y to 130.36 mn tons in 2022 which is more than the same period. The large gas carrier (LGC) fleet continued its impressive utilization levels in were throughout 2022. The global LGC fleet is largely
double the 63.66 mn tons traded in 2014. Notably, Middle 2022, as the small fleet of only 21 vessels globally served their trades in both non-scrubber fitted, with only three units (Clipper Jupiter,
Eastern exports rose by 19.2% in 2022 with India and Delays in Panama reached record levels in November which helped freight rates LPG and ammonia. Clipper Venus, Clipper Saturn) fitted with scrubbers and
China remaining the main destinations. firm. Waiting days for un-booked vessels transiting the Neo-Panamax locks none are dual fuel.
reached over 3 weeks for both northbound and southbound transits during the The LGC market is strongly influenced by what is happening with their larger
month which had a major impact on vessel availability in the US Gulf. Auction VLGC counterparts. However, they generally remain less exposed to market As the VLGC sector reached record levels in 4Q22, the
slots were bought for over $2.6 mn. This led to some owners deciding to ballast volatility as a larger percentage of the fleet is fixed to term deals compared to LGC owners with spot exposure were able to take full
2023 should prove to via the Cape or Suez at times. their larger brethren. This was evident when VLGC rates dropped in early 2022,
and most of the LGC Owners’ earnings remained protected.
advantage and push rates beyond their normal limits, with
reports of fixtures being concluded at circa $75,000/day.
be an interesting year Vessel availability remained thin both East and West throughout the final
months of the year, which allowed Owners to remain bullish and keep rates As the world reacted to the conflict in Ukraine, the LGC segment paused to In November, Neopanamax waiting times reached over

in the VLGC segment, high. Despite a drop in the final weeks, the year ended with rates still elevated.
The geopolitical situation in Ukraine may not have caused as much havoc in
see which direction it would go. Many assumed that the shutdown of ammonia
exports from the Baltic and Black Sea would see more length within the LGC
three weeks which meant LGC units became viable for
the transpacific US – Asia trade, as their smaller beams

with a large newbuild the VLGC segment as it did in others, but nonetheless there were some indirect
effects. High natural gas prices led to European producers keeping more propane
fleet and lead to more trader relets. Alternatively, some felt that the increase
in ton-miles required to replace the lost tons would mean more vessel demand
allow them to pass through the Panama Canal's old
locks at reduced time and cost.
in the ammonia segment and drive rates upwards. However, it was ultimately
program scheduled to
in the NGL stream, or burning it as refinery fuel, which resulted in record
transatlantic flows from the US to Northwest Europe and the Mediterranean. the smaller sizes that were absorbed into this market, and the LGC segment’s Ironically, although 2022 saw numerous green and blue
Europe imported 9.82 mn tons from the US in 2022, compared with 6.57 mn product split between ammonia and LPG remained steady, with 8 vessels under ammonia projects announced and discussions about how
hit the water. tons in 2021 and 6.94 mn tons in 2020. ammonia and the rest under LPG. shipping infrastructure can develop to meet the increase
in ammonia demand, the LGC fleet, which as of today is
2023 should prove to be an interesting year in the VLGC segment, with a large As bunker prices rose sharply after the Ukrainian conflict started, Charterers the largest vessel size engaged in the ammonia trade, was
A total of 46 vessels newbuild program scheduled to hit the water. A total of 46 vessels are on course
to be delivered through the year, increasing the global VLGC fleet from 335 to
had less of an appetite to take conventional LGC’s on term business. As such,
LGC owners were obliged to compete in the spot market and price themselves
tempted away from ammonia in favor of LPG cargoes.
This was driven by the aforementioned issues in the VLGC
are on course to be 381, providing that no scrapping takes place. The last time such vast fleet growth
over a relatively short period took place was in 2015 and 2016, when a total of
competitively against VLGC’s. Owners were able to exploit weak VLGC
availability and take advantage of the high rates that were seen in the second
supply which saw rates for carrying LPG soar to levels the
ammonia industry could not compete with.

delivered through the 79 VLGC’s entered service. From July 2015 and October 2016, 12month time-
charter rates dropped from around $73,000/day to $16,000/day and BLPG1
half of the year.

year, increasing the spot rates dropped from $138/mt to a low of $18/mt over a similar period. As VLGC availability dwindled, their rates continued to push higher and LGC rates
eventually hit what many thought would be their ceiling. LGC spot rates usually

global VLGC fleet from However, there are some obvious caveats to the idea that rates will weaken on keep up with their larger counterparts to a certain level, but then normally
the back of the new tonnage, as market conditions do not mirror 2015-2016. struggle to go beyond the circa $40,000/day mark as their size disadvantage
One being the new IMO carbon regulations, the CII and EEXI which should, in becomes more apparent, particularly when bunker prices are high, as they
335 to 381 theory, put performance related restrictions on around 50% of the existing fleet.

98 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture: SEATEAM, 1MGC (Midsize Gas Carrier), 38,000 cbm, built by Hyundai Mipo Dockyard in South Korea, delivered in February 2022 and owned by Thenamaris. 99
 LPG LPG
CHARTERING CHARTERING

Ammonia pricing reached its peak in March as Baltic and Black Sea hubs were Petrochemical gasses
shut off. High pricing stifled demand from industrial and fertilizer sectors,
causing an overall lull in global export volumes. As a result of the drop in The New Year started off firm as Ethylene activity from
demand, product prices started to drop from their initial spike. However, due the US Gulf carried over its strength from 2021. With
to the lack of buying, shortages gradually became evident during summer and strict covid protocols in China still in place, demand was
demand started to return. This, along with another spike in natural gas prices, slow in Asia creating more opportunities for US-Europe
drove ammonia prices higher once more, albeit at a more gradual pace. Rising trade instead. Ethylene exports from Enterprise’s Houston
gas prices in Europe led to numerous plant closures and slowdowns in August, terminal hit a record of about 112,000 mt in January with
prompting players to turn to long-haul imports instead. Accordingly, global majority of volumes heading into Europe, thereby keeping
ammonia prices strengthened, pricing Asian buyers out as they struggled to tonnage in the US short, and open in Europe.
match the premiums being paid by the European importers, thereby leading to
product shortage in Asia. In February, following explosions, YNCC in Korea faced
two shutdowns to their crackers No.1 & No. 3. Accordingly,
The abrupt halt to exports from the Black Sea and Baltic took a combined total product prices for both Ethylene and Propylene increased
of more than 300,000 mt per month off the market, most of which would in the region.
have been imported to Europe or North Africa. As a result, ton-miles in the
ammonia segment increased significantly, as new longer distance trades were Additionally, naphtha and crude prices hit multi-year highs
established. North Africa’s largest importer, Morocco, satisfied most of its in the wake of the Ukraine conflict which impacted both
demand by increasing imports from Trinidad, the US, Saudi Arabia, and Egypt shipping and trade. Owners faced higher fuel prices and
amongst others. Whereas Europe continued to import heavily from Algeria, as accordingly pushed for higher freight rates. Meanwhile,
well as stepping up intake from the US, Trinidad, Indonesia, and domestically traders faced an overall increase in operational costs while
from the Netherlands. The increased ton-miles led to the ammonia shipping the continuous changes in sanction rules eventually led to
fleet becoming stretched and unable to meet the new demands. The number of less product movements.
vessels under ammonia, across all size segments, increased by 24% from 70 at
the end of 2021 to a peak of 87 in November 2022. With the upward trend in oil prices and production costs,
we saw most producers having to reduce their volumes or
As the year drew towards a close, natural gas prices eased which allowed for those that had contracts in place, maximize their COA
European producers to turn away from long-haul cargoes. In November, quantities to avoid Owners’ demands for higher spot rates.
Fertiberia, OCI, BASF increased production at their plants in Huelva, Galeen and In Asia, major cracker operators also had to face higher
Antwerp, respectively, which resulted in a drop in the ton-miles of the global feedstock costs during 1Q22 which eroded their margins.
MGC ammonia carrier fleet. Weak downstream demand pressured olefins prices lower,
causing regional producers’ operating rates to fall, a trend
The midsize gas carrier (MGC) market, like the LGC market, By mid-November, the MGC market was completely sold out, with traders As a chaotic year finally ended, the market had a more balanced look. European which persisted throughout the entire year.
is influenced by the VLGC sector. As the VLGC market managing to snap up any loose tonnage. producers started scaling up production, meaning that they were not relying as
dropped at the beginning of the year, less charterers felt heavily on imports from Asia, the US and Trinidad. Furthermore, winter demand US ethane costs were driven higher by soaring natural
inclined to commit to MGC term coverage. Towards the end of the year, attention turned to the fleet of newbuildings that was seasonally low, and natural gas prices were more modest which pressured gas prices, both at home and abroad. Consequently, US
are scheduled to hit the water in 2023. Charterers initially remained hesitant to ammonia prices downwards. ethane prices increased by 95.5% in 1H22, from 34.0625¢/
However, as the VLGC market faced an up and down start fix these newbuilds on long term charters, with most preferring to take a step USG to 66.625¢/USG. This doubling in ethane feedstock
to the year, the MGC market managed to remain relatively back to see how the market would develop. However, as the year ended, the costs expectedly eroded US cracking margins significantly.
steady, as open vessels were quickly picked up and a small first scheduled newbuilds started to find employment at robust levels. Ethylene in the US is tied largely to natural gas and ethane
handful of Owners were able to influence the market. prices, whereas in Europe and Asia it is more tied into crude
Rates managed to stay strong throughout last year as the influx of new tonnage
European Ammonia Imports (milllion ton-miles) oil and naphtha costs. However, with ethylene inventories
European ammonia imports
The conflict in Ukraine caused some turbulence in the MGC did not test owners resolve as many players thought it might. 2023 will prove much higher year-on-year, and demand for ethylene weaker
xxx
Million ton-miles
ammonia segment, as vessels struggled to cope with the to be an interesting year as Owners’ bullishness will be put to the test again. from polyethylene producers, ethylene prices in the US did
increased ton-mile demand as Europe and North Africa 3000 not follow the natural trend in the wake of with Ethane but
were forced to seek product from further afield after The MGC segment is growing, both in terms of number and size. Exmar’s remained stable throughout the first quarter.
hubs in the Baltic and Black Sea were closed. Prior to 45,000 cbm units, scheduled to be delivered in 2024, represent the largest
the invasion, there were 32 MGC vessels under ammonia MGC’s in the orderbook which at end-2022 totaled 30 vessels for delivery 2500 The effects from the war in Ukraine continued in the
and this number fluctuated throughout the year, before across 2023 - 2025. second quarter, and with uncertainty persisting, trading
increasing to a peak of 37 as the year ended. movements were kept to a minimum with only COA
2000
volumes being active. Despite the spot trading being quiet,
As is often the case within the MGC segment, the summer Ammonia freight rates remained on a high as Owners focused on
months can see a slow-down of activity, and 2022 was 1500 lifting volumes for their contract partners. This resulted
no exception as August saw plenty of prompt availability. 2022 saw severe disruption to the ammonia market, mainly due to the conflict in tonnage remaining tight on the coasters overall. A few
However, this did not persist and after a flurry of fixtures in Ukraine. At the end of 2021, the market was tight in all regions and the traders tried to develop some spot cargoes, but with
1000
the market firmed and balanced once more. overall sentiment was that the market would peak in early 2022. However, with high freight and little margin, this generally made deals
exports from Ukraine and Baltic Sea ports halted after the invasion, this was difficult to conclude.
As the VLGC market picked up towards year end, MGC not the case. 500
owners were pleased to take advantage of the trickle- Ethylene and Ethane movements were the only regular
down effect starting to come into effect. In the final Natural gas and crude oil prices skyrocketed after the invasion, pushing ammonia exports keeping the handysize ships busy. US ethylene
quarter of the year, with the VLGC spot market reaching prices in the same direction. The largest price increases were unsurprisingly in 0 inventories increased by 28% from the previous quarter
records levels and the LGC market essentially being the West, but Eastern producers also raised their prices as more demand was 2017 2018 2019 2020 2021 2022 to 1.45 mn tons. Furthermore, this reflected soaring US
booked out completely, the MGC market was able to take seen for their product. production which hit a record 9.2 mn tons, 31% more
full advantage, securing strong rates on both short-term than 2021. This build played an important part in keeping
and long-term deals. spot prices low.

100 Picture: ECLPISE, Handysized Gas Carrier (LPG/Ethylene), 22,000 cbm, built by Jiangnan Shipyard Group in China, delivered in January 2022 and owned by Petredec. BRS Group - Annual review 2023 BRS Group - Annual review 2023 101
 LPG LPG
CHARTERING CHARTERING

Consequently, ethylene movements from Houston shifted to the East which saw Industry News
the majority of the handysized and 12,000 cbm ethylene fleet doing long-haul
voyages. In turn, this kept availability tight until end of the year. • Invista, a Koch-owned company and affiliate of Flint Hills
Resources, acquired the Flint Hills Resources propylene
Weak demand for petrochemical products, both domestically and for exports, business effective 1 January 2022. This includes the
drove Japanese cracker rates to a nine-year-low in November. The average crac- 658,000 mt/year PDH plant in Houston and chemical
ker rate fell 2.6% from October to 82.2%, this was 12.9% lower compared with facilities in Houston and Longview, Texas. Ownership of
2021. A combination of high prices, a decline in car production, the global macroe- the pipelines that supply these facilities also transferred
conomic slowdown, and a weak Yen pressured down demand for petrochemicals. to Invista and they will continue to be operated by Flint
Hills Resources under contract.
In Europe and as expected, coaster tonnage remained tight as LPG activity picked
up in the winter months. VLGCs saw record high rates which trickled down into • The 50-50 joint venture between Total and Borealis-
the smaller segments and combined with increased spot cargo movements in Baystar (also known as Bayport polymers) - started initial
November and December. commissioning and startup of their new 1 m mt/yr ethane
cracker located in Port Arthur, Texas on 15 April.

New plants in Asia • Italian firm Versalis announced the permanently closure of
its steam cracker and aromatics units at Porto Marghera.
• Sinopec Zhenhai Refining and Chemical company achieved on-specification
olefins production in early January. The cracker can produce 600,000 mt/yr
propylene, 300,000 mt/yr polypropylene and 270,000 mt/yr propylene oxide.

• Qixiang Tengda, a private Chinese company, achieved the on-specification

production of propylene in March at their new 700,000 mt/yr PDH plant at Zibo
in the east of China.

• Chinese petrochemical producer Jiangsu Sailboat reached on-specification

propylene production at their new 700,000 mt/yr propane PDH plant on 4 April. The New Year
• Zibo Xintai from the Chinese private sector has achieved on-specification
propylene production in May at their new 300,000 mt/yr PDH unit located at
started off firmly
Zibo, east of China.
as Ethylene activity
We also saw Middle Eastern ethylene activity more than
double in 2Q22 with about 110,000 mt reported to have
Ethylene imports to China increased to a five-month high of 169,594 mt in July,
up by 13% from June and 30% more than 2021. Meanwhile, incremental imports
• Tianjin Bohai Chemical achieved on-specification ethylene and propylene pro-
duction at their new 600,000 mt/yr MTO plant in the north of China. The plant from the US Gulf
been exported mainly from Rabigh and Ruwais compared were reported mostly from the Middle East, Japan, and South Korea. can produce up to 300,000 mt/yr of ethylene and 300,000 t/yr of propylene.
with the previous quarter when only about 45,000 mt carried over its
was exported. This kept the small 12,000 cbm ships busy In September, Propylene imports to China reached their highest monthly volume • Malaysia’s PRefChem, Pengerang, achieved on-specification propylene and
with products heading both West and East as we saw
more demand with easing of Covid restrictions in China.
since December 2019 as they soared by 75.5% (133,454 mt) compared with the
previous month. The spike came as internal supply had largely been affected
ethylene production from their 1.29 m mt/yr cracker in July. strength from 2021.
Meanwhile, Japan and Taiwan suffered from Ethylene by plant shutdowns and the launching of new downstream units. South Korea • Sinopec added a new cracker at their Yangpu refinery in the South of China. The
supply shortages due to plant outages. delivered 49% of the imports (153, 021 mt), Taiwan 37% (114,722 mt), and cracker has 1 m mt/yr of ethylene capacity. Other additions include 200,000 mt/
Japan 6% (19,023 mt). Other exporters such as Russia, The Philippines, Malaysia, yr of low-density polyethylene, 350,000 mt/yr of high-density polyethylene,
Propylene trade improved in the second quarter as a few and Thailand accounted for a combined 7% of the imports. 800,000 mt/yr of ethylene glycol and propylene downstream units.
new Chinese PDH units achieved on-spec production. For
example, Jiangsu Sailboat reach on-spec propylene at their Chinese petrochemical producer Liaoning Kingfa started their new 600,000mt/ • Chinese Zhejiang Petrochemical’s (ZPC) started the third naphtha-fed cracker
new 700,000 t/yr propane PDH plant, Zibo Xintai achieved yr PDH unit in Panjin City. The unit started running at a maximum utilisation rate with 1.4 m mt/yr of ethylene production capacity.
on-spec propylene at their 300,000 t/yr PDH unit in Zibo of 70% which created demand of around 720,000 mt/yr of propane. The cracker
and Tianjin Bohai Chemical achieved on-spec production is fed by imports to Liaoning in Northeast China. • China’s Lianyungang Petrochemical have achieved stable operations at their
at their 600,000 t/yr plant in North China. With South new No. 2 ethane-fed cracker with 1.25 m mt/yr of ethylene capacity. They With strict Covid
America’s propylene production reduced due to planned In Europe, movements were a little bit slower as operating rates at crackers achieved on-specification ethylene production over 27-28 August.
maintenance in Brazil, some product from Asia headed to
Mexico and Colombia.
remained low as water levels along the River Rhine limited the transport of raw
materials into central Europe. Furthermore, we saw a decrease in Butadiene • In China, the privately owned petrochemical producer Shangdong Huifeng Haiyi
protocols in China
In Q3, the PrefChem facility in Pengerang, Malaysia finally
volumes shipped from Europe to US in July as only about 30,000 mt was
exported compared with 40-45,000 mt over the previous months.
Petrochemical commissioned their new 250,000 mt/yr PDH plant in Shandong
and achieved on-specification propylene production by late August.
still in place, demand
started operations in early July after many on-spec issues
and delays during the first half of the year. Consequently, By the beginning of the fourth quarter, Ethylene demand in Europe was low, • Wanda Tianhong achieved on-specification propylene production in October at
was slow in Asia,
we saw both Propylene and Ethylene exports in the market
for intra-Asia trade. However, by end of the month, the
as cracker operating rates were reduced in the wake of maintenance being
undertaken on three facilities across France and Germany. Meanwhile, further
a new 450,000 mt/yr PDH plant.
creating more
plant had to shut down due to operational issues leaving
traders with little confidence that more products will be
downward pressure on demand came from strikes at two TotalEnergies’
refineries and a third which reduced its output due to feedstock issues. These
• Chinese petrochemical producer Liaoning Kingfa started their new 600,000 mt/
yr PDH unit in Panjin City. opportunities for
US - Europe trade
exported from it during later in the year. strikes persisted for more than three weeks and staff only started returning to
work in the second half of October. • In December, Shenghong Petrochemical started a 1.1 m mt/yr cracker in China, and
propylene demand was boosted by Zhongjing Petrochemical’s new 600,000 mt/yr
polypropylene unit in Fujian. instead.

102 Picture: BWEK BORNHOLM, Pressurized Gas Carrier, 7,500 cbm, built by Kyokuyo Shipyard Corporation, in Japan, delivered in July 2022 and owned by BW Epic Kosan. BRS Group - Annual review 2023 BRS Group - Annual review 2023 103
 LPG LPG

VLGC Deliveries & Orderbook

FLEET FLEET

Cbm

2,500,000

The VLGC fleet stood at

2,000,000
25
24 20
THE FLEET
335 vessels at the end Sixteen VLGG’s were delivered in 2022. Of these, AW Shipping received four
of 2022.
1,500,000 while Evanlend Shipping, Geogas, and Avance Gas received two each. This
compares with 18 VLGC’s delivered in 2021. The VLGC fleet stood at 335 vessels LPG US export to China and ROW
US LPG export to China and the rest of the world
10 at the end of 2022 with 70 units on order, representing 21% of the active fleet. Million barrels/month

All VLGC newbuildings

1,000,000
The majority of these vessels, 51 VLGC’s, are scheduled to be delivered by the
end of 2023. All VLGC newbuildings are dual fuel LPG.
Million barrels per month

are dual fuel LPG.

500,000
As with recent years, there were no LGC deliveries during 2022, and none were
70

1 ordered. The last new buildings joined the fleet in 2015 (3 vessels) and 2016 60

(2 vessels). Therefore, the fleet composition remains unchanged at 21 vessels.

0
The recent trend has been to abandon this segment and to favour the improved 50

2017 2018 2019 2020 2021 economies of scale afforded by larger VLGCs.
Baltic Exchange Liquid Petroleum
Liquefied GasGas
Petroleum Index
Index 40

$/ton
xxxx At end-2022, the MGC fleet numbered 115 vessels following nine deliveries
during the year and no demolitions. There were 30 MGC’s on order at end-year, 30

250 representing 26% of the fleet. Of 2022’s new deliveries, four were delivered to
20
Eastern Pacific Shipping, two to Thenamaris, and one each to Trafigura, Evalend
Shipping, and Anthony Veder.
10
200
The Handysized fleet closed the year at 131 vessels following four deliveries
0
which included two ethylene-capable vessels - the LPG/E/C Electra and the LPG/
150 E/C Eclipse – which were delivered to Fortitude Shipping. One handysized LPG
-10
carrier was demolished during the year, and the orderbook stood at five vessels
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
by the end of the year.
100

The Small Gas Carrier sub-fleet experienced the biggest carrier change following LPG US to China LPG US to ROW
19 deliveries while 6 units were scrapped during 2022. Almost all of the U.S. Exports to ROW of LPG U.S. Exports to China of LPG
50
newbuildings went to different Owners, as only two vessels were delivered to
the same Owner, Hartmann Reederei.
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Developments among gas carrier owners
At end-2022,
LPG Middle East Gulf to Japan LPG US to Europe LPG US to Japan
A year after Navigator Gas and Ultragas finalised their merger of LPG and
LPG Middle East Gulf to Japan LPG US to Europe LPG US to Japan ethylene carriers, Navigator Gas formed a joint venture in 2022 with Greater
Bay Gas of China. The operation will be owned 60% by Navigator Gas and 40%
by Greater Bay Gas. The venture intends to buy five Ethylene carriers by the
the MGC fleet
LPG tonnage delivery and orderbook by vessel type since 2002
LPG deliveries and orderbook by vessel type since 2003
end of 2023. The first transaction of these took place in December 2022.
numbered 115
Seapeak LLC (Seapeak) announced at end of 2022 that they completed their
vessels following
Million cbm
Million cbm
acquisition of Greenship Gas Trust and Greenship Gas Manager Pte. Ltd. and
6
their subsidiaries (collectively, Evergas) from Jaccar Holdings in an all-cash
Tonnage to be
delivered between
2023 and 2025
transaction of approximately $700 million. With the acquisition complete, nine deliveries
Evergas will rebrand and operate as a wholly-owned subsidiary of Seapeak.
5

In March 2022, the Scorpio Group and Kuwait Petroleum Corp. (KPC) announced
during the year and
4 their alliance in forming the Neptune VLGC Pool. KPC immediately entered its
five VLGC vessels in the pool and by the end of the year Neptune VLGC Pool
no demolitions.
3
had chartered an additional three vessels to operate in the pool.

2
Chemgas Shipping has bought four small LPG carriers from Italy’s Gas and
Heat Shipping, thereby expanding its operation to semi-ref vessels whereby There were 30
1
previously they had been operating pressurized vessels exclusively.
MGC’s on order
Finally, on the last day of 2022, GasChem Services and Gasmare Srl. announced
that Gasmare would withdraw from their role as pool manager of the GasChem- at end-year,
Gasmare Pool after more than 20 years of partnership. As from the 1 January
representing 26%
0

2002
2002 2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010 2011
2011 2012
2012 2013
2013 2014
2014 2015
2015 2016
2016 2017
2017 2018
2018 2019
2019 2020
2020 2021
2021 2022
2022 2023
2023 2024
2024 2025
2025
2023 the pool was renamed “GasChemPool.”

Small Handysize Midsize LGC VLGC

of the fleet
handysize small midsize lgc vlgc

104 BRS Group - Annual review 2023 BRS Group - Annual review 2023 105
LNG

2022: a record
year in all aspects.
LNG demand continued to grow at a steady
pace in 2022 as Europe moved to be the key
demand driver after the region saw pipeline
gas supplies from Russia largely cut off. Indeed,
this was the key driver behind rising natural
gas market volatility. Accordingly, today, LNG
is more than ever considered as a geopolitical
tool as reflected by the signing of several,
significant long-term Sale and Purchase
Agreements between USA-based LNG
projects and European or Chinese buyers.

CAPITAL GAS, ARISTOS I

174,000 cbm LNG carrier delivered in October 2020 and built by HHI.

107
 203
200 97 40
70 100
167 30
60 LNG 61 LNG
150 TRADE 49 FLEET
36 20
50 50
21 21 16 10
97 40
100
0 0
30
61 Main LNG importers (MT) Steam DFDE/TFDE XDF MEGI SSD Steam 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 end-2021 and rose to hit $250 million in September 2022,
LNG TRADE
50
36
49 20 Reheat THE FLEET a level it has remained at since. As expected, the Qatari
21 21 16
Main LNG importers
Million
10 project provoked a bottleneck for deliveries of new LNG
Million (MT)
100 carriers which will persist until 2026, as 151 berths were
0 0
Last year, the number of LNG tanker voyages increased to Active On order By end-2022, the fleet of large LNG carriers stood at 611 units representing reserved. Qatar Energy has already placed 66 orders in the
5,957Steam DFDE/TFDE XDF MEGI SSD Steam 902006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
compared with 5,737 in 2021. Consequently, LNG annual growth of 3.4% as 25 conventional LNG Carriers and 2 Medmax LNG four main yards, including 60 orders in 2022. TotalEnergies
Reheat
traded volumes have continued to climb, hitting around 80 carriers were delivered last year. Only 1 LNG carrier was scrapped in 2022, still hold 17 slots reservations at Hyundai Heavy Industries
405 million tonnes in 2022 compared with 386 million compared with a record of 7 units in 2021. More demolitions in 2023 are (HHI) and Samsung Heavy Industries (SHI), with the options
70
tonnes in 2021, an increase of 4.9% year-on-year. Annual voyage number & intake anticipated as shipowners are expected to renew and upgrade their fleets to to be declared in 2023.
Active On order 60 LNG carrier
comply Fleet
with new evolution
emissions in 2022
regulations.
Voyage number Voyage ntake (m mt)
50

165 large LNG

420
40
Annualvoyage
Annual voyagenumber
number&& intake
LNG intake
5,800 400

N° of voyages
Voyage number Voyages
Voyage intake
ntake (m(mt)
mt)
30
LNG
20
carrier Fleet evolution in 2022
Main LNG importers (MT)
5,400
380
LNG carrier Fleet evolution in 2022
carriers were
5,800
420 Million
10
5,000
360

340
Fleet 2022 611 ordered in 2022,
an all-time record
400
100
0
Conversion 2022 2
320
380 2019 2020 2021 2022
90
5,400 4,600
300 Scrapped 2022 1
360
80
Japan
Fleet 2022 ChinaChina Korea South
Japan LNGC in Spain
Korea France
South 2020
611 by yardSpain
France
280
5,000 340 4,200 Deliveries 2022 27
70
Main LNG
Conversion exporters (MT)
2022 2 260
Owners 2022 orders
320
60
Million Fleet 2021 587
4,600
300 Scrapped 2022
3,800
1
240
LNG EXPORTS AUSTRALIA/USA/QATAR (MT/year) Owners of 2022 orders
50
100
280 Global LNG exports have continued to increase Orders
in the wake of higher natural
2015 2016 2017 2018 Orderbooks
2019 2020 2021 2022 N° of ships 500 520 540 560 580 600 620

4,200 40
Deliveries 2022
90 27
gas production in exporting countries. The three major LNG exporters, Qatar,
260 Knutsen OAS
Australia
30
80 Fleet 2021and the USA, which together
587
represent
10
almost 60% of global LNG
Voyage number Voyage intake
15
production have steadily increased their shipments over the last five years. 41 units (39 conventional LNG carriers and 2 Medmax LNG carriers) will be JP MORGAN
3,800 240
20
70
Last year saw 500 Australia overtake Qatar to become the top global exporter with delivered in 2023, a direct consequence of 78,5
a then-record 7880,2
LNG80,6
carriers
81 being Consortium*
2015 2016 2017 2018 2019 2020 2021 2022 520 540 560 580 600 620 28 75,2
82.26
10
60 mtpa. Meanwhile as in 2021, the US posted the largest 32 annual increase 59 ordered in 2021. 68,8 K3
19
in exports as they rose by 10.5% to 77 mtpa. Indeed, US LNG exports are now MOL
0
50
Voyagenumber
Voyage number Voyageintake
Voyage intake more than double their 2019 level. Russian LNG exports also increased in 2022 NYK
despite
40
2019
European sanctions.
2020 2021 2022
33
LNG carrier43,1
new orders H-Line
23 15
30 Japan China Korea South France Spain 34,5
165 large LNG carriers were ordered in 2022, a record for the second consecutive Maran Gas Maritime
Japan overtook China as the world’s top LNG buyer even year. The
21,3price level for a 174,000 cbm LNG carrier with the latest standards CMES
if its imports fell by 2.4%. Across all LNG importers, China Main LNG exporters (MT)
20
- a slow speed diesel engine-based propulsion, a 0.085% boil-off rate and a ADNOC
posted the largest absolute decline in imports last year, as Main
Million LNG exporters
10
reliquefication/subcooling unit - started in the range of $215-220 million at Celsius Tankers
its volumes decreased by 19%. This sudden fall reflects Million (MT)
100 Hyundai Zvezda Samsung
0 NYK/CNOOC/CMES
high prices and sluggish economic growth amid persistent
90 2019 2020 Daewoo Hudong-Zhonghua
2021 2022Jiangnan USA Australia Qatar MOL/CNOOC
Covid-related lockdowns. Global LNG trade was supported
by European demand rising by 60% year-on-year in 2022, 80 Meiji
Australia Qatar USA Russia
an unprecedented increase. On a country-by-country 2018 2019 2020 SK Shipping
basis, France posted the largest increase in LNG imports 70 Conventional LNG carriers deliveries and orderbook Seapeak
as volumes soared by 81.5%. Meanwhile, LNG imports to 60 TMS Cardiff
Spain ballooned by 41%. Conventional LNG carriers by type of engine Conventional LNG carriers deliveries and orderbook
N° of ships
50 Venture Global
250 90
Dynagas
40
203
80 TSM
30
200 70 Minerva
20 167 MISC
60
10 150
EPS
50
Hammonia Reederei
0
97 40 COSCO
European demand 2019 2020 2021 100 2022

61
30 Asyad Shipping
Capital Gas
rose by 60% yoy
Australia
Australia Qatar
Qatar USA USA Russia Russia 49
36 20
50
BW Gas
21 21 16 10
CSSC
in 2022, while 0 0 Hyundai Glovis
Steam DFDE/TFDE XDF MEGI SSD Steam
Chinese imports
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
0 2 4 6 8 10 12 14
Reheat 2006 2008 2010 2012 2014 2016 2018 2020 2024 2026 2028

decreased by 19%
N° of ships
Active On order

Active On order
* MISC, NYK, K Line and China LNG Shipping for QatarEnergy project

108 BRS Group - Annual review 2023 BRS Group - Annual review 2023 109
Annual voyage number & intake
LNG carrier Fleet evolution in 2022
 LNG LNG
FLEET FLEET

the seven existing terminals. The announcement of around 30 new projects in

By 2032, 168 LNG South Korean and Chinese yards have very few available slots. Amongst them,
there are the 17 slots held by TotalEnergies for the postponed Mozambique Europe demonstrates the appetite for FSRUs over the coming years. Around
one third will be in Germany and there are at least four scheduled in Greece. STATUS OF TERMINAL
Export
Capacity
Fleet
requirement
LNG project, as delivery dates have moved back from November 2026 to 2027
carriers will be and 2028, pending final confirmation of the project. The orderbook extends out
At the end of 2023, five new FSRUs are scheduled to be in service in Northern
mtpa #

to 2028 with 8 deliveries scheduled at Hudong-Zhonghua for MOL.

required to meet
Under construction 132 177
Europe for a send-out capacity of 28 Bcm/year equivalent to 19 mtpa of LNG.
HHI accounted for more than 28% of the orders taken in 2022 and so remains Half of these will be in Germany.

the 5% theoretical the yard with the largest orderbook with 86 LNG carriers on order which
equates to 31% of the global orderbook. Daewoo Shipbuilding and Marine In 2022, The Dutch authorities moved first by chartering two FSRUs, the Golar
Proposed 125 196

annual increase in Igloo (170,000 cbm) and the Eemshaven LNG (25,000 cbm), for their new TOTAL U/C & PROPOSED 257 373
Engineering (DSME) and SHI have banked 37 and 36 orders respectively.
The lack of slots available in Korean shipyards has allowed the emergence of terminals at Eemshaven port. Both were commissioned in September 2022.

LNG demand Chinese shipyards with 47 conventional LNG carriers orders taken in 2022. Germany will likely become the largest capacity holder in Europe whereas
previous to 2022, they had no infrastructure to import LNG. Germany chartered Vessel
China’s share of the global large LNG carrier orderbook jumped from 14% in FLEET BALANCE
#
2021 to 27.6% in 2022. 29 orders were placed at Hudong-Zhonghua, a record. 4 six FSRUs for long time periods. The Transgas Force (174,000 cbm), the Transgas
Chinese yards entered the conventional LNG Sector in 2022, Jiangnan Shipyard Power (174,000 cbm), the Höegh Esperanza (174,000 cbm) and the Excelsior
Orderbook -280
Export took orders for 6 LNG carriers for ADNOC, Dalian Shipbuilding Industries Co (138,000 cbm) are expected at Wilhelmsen. The Höegh Giant (170,000 cbm)
Start up Gross fleet and the Neptune (145,130 cbm) are expected at the port of Lubmin. Only the at end Dec 2022
Terminals Region
expected
capacity
requirement (DSIC) which secured orders for 6 LNG carriers from China Merchants Energy
mtpa
(CMES). China Merchants Heavy Industry Jiangsu (CMHI-Jiangsu) took orders Höegh Esperanza was commissioned in 2022. The Exemplar (150,900 cbm) was
for 4 LNG carriers (+4 in options) for Celsius Tankers and Yangzijiang secured also commissioned in December 2022 at Inkoo LNG terminal in Finland. SNAM Expected scrapped vessels +35
Sengkang LNG T1 SEA 2023 0,5 0,3 secured two FRSUs in 2022, the Golar Tundra (160,000 cbm), and the Golar Artic
orders for 2 LNG carriers from Hammonia Reederei and Peter Dohle.
(140,000 cbm) for projects in Italy. Greece targets to host up to 4 FSRUs project
Tangguh T3 SEA 2023 3,8 2,1
as it aims to become a hub for Mediterranean LNG imports. For this purpose, Expected LNG Carriers conversion +40
Tortue West
Ahmeyim 1 (FLNG)
WAF 2023 2,5 3,2 LNG carriers forecast Gastrade acquired the Gaslog Chelsea (153,600 cbm) to convert her into a FSRU
which will serve the Alexandropoupolis LNG import terminal from end-2023. Net Fleet Requirement 168
Arctic 2 LNG T1 Yamal 2024 6,6 8,2 We calculate that 168 LNG carriers are required by 2032 to meet the 5% Finally, France secured the Cape Ann as TotalEnergies will use her in Le Havre
theoretical and observed annual increase in LNG demand. This forecast takes from September 2023.
Golden Pass LNG T1 USGC 2024 6,0 9,4
into account:
Golden Pass LNG T2 USGC 2024 6,0 9,4
• the current orderbook
Golden Pass LNG T3 USGC 2024 6,0 9,4 • vessels being scrapped when they reach years of age FSRU Map
• LNG carriers conversions into FSU/FSRU/FLNG
Energia Costa Azul WCAN 2024 2,5 3,0

NLNG T7 WAF 2024 7,6 9,9

As of 1st January 2023, 132 mtpa of export capacity is under construction, for
which 177 standard LNG carriers would be required according to the trade
NewAge Congo pattern for such liquefaction terminals.
WAF 2024 1,0 1,4
(FLNG)

LNG Canada WCAN 2025 14,0 17,0 125 mtpa of additional liquefaction capacity is estimated to be built to fulfill the
theoretical 5% annual increase in LNG demand across the coming 10 years. This
Arctic 2 LNG T2 Yamal 2026 6,6 8,2 additional liquefaction capacity will require 196 standard LNG carriers.
Pluto LNG T2 SEA 2026 4,9 2,8
Today, 280 vessels are already on order, 35 vessels above 35 years old are
North Field LNG
ME 2026 8,0 11,1 assumed to be scrapped across the forecast and 40 LNG carriers could be
Expansion T1
converted into FSU/FSRU/FLNG up to 2032.
North Field LNG
ME 2026 8,0 11,1
Expansion T2
We estimate that 168 LNG carriers are required in order to fulfill the forecast
Plaquemines LNG USGC 2026 13,3 20,7 increase in LNG capacity across the next 7 years, equivalent to 24 vessels
ordered each year.
Corpus Christi T4 USGC 2026 1,6 2,5

Corpus Christi T5 USGC 2026 1,6 2,5

Floating storage regasification units (FSRUs)
Corpus Christi T6 USGC 2026 1,6 2,5
Following the war in Ukraine, the regular flow of gas coming from Russia to
Corpus Christi T7 USGC 2026 1,6 2,5 Europe was disrupted and had to be replaced quickly. Previous to the war,
European pipeline gas imports from Russia totalled 150 Bcm/year, of which 112
Corpus Christi T8 USGC 2026 1,6 2,5 mtpa was LNG. Germany’s 100 Bcm/year of pipeline gas imports represented
75% of the Russian gas imports to Europe. This 100 Bcm/year is equivalent to
Corpus Christi T9 USGC 2026 1,6 2,5
75 mtpa of LNG and represents a requirement of 116 LNG carriers using the
Corpus Christi T10 USGC 2026 1,6 2,5 current average of shipping intensity.
North Field LNG
Expansion T3
ME 2027 8,0 11,1 European governments have moved quickly and expected regasification capacity
will be around 100 Bcm/year with most projects set to be commissioned in or
North Field LNG
Expansion T4
ME 2027 8,0 11,1 before 2025. It clearly shows the ability of the market to shift from pipe gas
to LNG and for the regasification process to cover the gap coming from the
Arctic 2 LNG T3 Yamal 2027 6,6 8,2 disruption to Russian gas supply. It is important to note that the growth will Newbuilding FSRU Converted FSRUConverted FSRU
Newbuilding FSRU Active Planned
Active Planned
come both from the expansion of existing terminals and from new projects.
TOTAL 132 177
More than 30 Bcm/year of new regasification capacity will come from expanding

110 BRS Group - Annual review 2023 BRS Group - Annual review 2023 111
 LNG LNG
THE CHARTER MARKET THE CHARTER MARKET

During the first semester of 2022, LNG prices remained at extremely high
levels due to the crisis in Russia and early restocking policies. In June 2022,
the Council of the European Union adopted a regulation aiming to ensure
that gas storage capacities in the EU must be filled to at least 80% of their
capacity before the winter of 2022-23 and to 90% before the following winter.
In January and February, the JKM price averaged around $27/MMBtu vs $13/
MMBtu in 2021 (+52%). Meanwhile, in Northwest Europe, prices averaged
around $26/MMBtu vs $7/MMBtu in 2021 (+73%). We suggest that the main
factor driving such high prices was heightened diplomatic tensions between
Russia and Europe. The JKM price hit a record high on 7 March at $84.76/
MMBtu, a rise of $37.46/MMBtu on the previous day, this was subsequently
followed by a record drop of $30.48/MMBtu the next day. Simultaneously,
NWE prices also touched record highs from 4 March to 8 March at around
$60.5/MMBtu. In addition, the shutdown of Freeport LNG (15 mtpa) due to an
explosion in June increased the bullish sentiment on LNG prices.

Prices strengthened steadily from the beginning of the second quarter and
by end-August the JKM and NWE prices had reached $61.5/MMBtu and $65/
MMBtu, respectively. Nevertheless, prices acted counter-seasonally in the Spot Rate for LNG Carriers
Spot Rate for LNG Carriers third quarter, as from end-September, JKM and NWE prices sank below $40/
MMBtu and remained around that level until the end of the year. Normally this Spot rate for LNG carriers
Million $/day
Million $/day
period would see prices increasing due to seasonal demand and restocking Thousand
500 $/day

500 patterns, however, this trend can be explained by the already-high level of
European gas inventories at the end of the third quarter plus unseasonably 450
450 mild temperatures. 400
400
350
350
Charter rates 300
300
During 1Q22 the LNG spot shipping market showed a similar pattern to 1Q21, 250
250
as rates fell from an average of $88,000/day for a 174,000 cbm two-stroke (2S), 200
200 $64,000/day for a 160,000 TFDE and around $38,000/day for a 140,000 cbm
LNG, the second-largest export facility in the US (15 mtpa), has been shut since steam turbine (ST) at the start of the year toward what turned out to be year- 150
THE CHARTER MARKET 150
the beginning of June because of an explosion on a pipeline. These two major to-date lows of $52,000/day for a 174,000 cbm two-stroke, $32,000/day for a 100
factors and numerous100 incidents in gas producing and exporting countries 160,000 cbm TFDE and around $22,000/day for a 140,000 cbm steam turbine
such as maintenance, fires, shortages, and electricity production issues led across both basins by early-March. Beginning February, the first-ever negative 50

LNG prices 50 LNG supply. Nevertheless, 16 mtpa have been added

to a squeeze in global spot LNG freight rates were reported. In addition, charter rates dropped in June 0
as Calcasieu Pass (100mtpa) and the sixth Train of Sabine Pass (4.5 mtpa) due to the shutdown at Freeport LNG, the second largest US LNG export facility, 2022J
Q4 2021 F M A M J J A S O N 2023
D
2022 was marked by a significant increase in LNG prices came online in February 2022 and 2022were complimented by the start-up of 2023
the after an explosion and fire.
compared with the previous year. Last year, the JKM Portovaya LNG FSU (1.5 mtpa) in September 2022. 2S DFDE/TFDE ST
averaged around $34/MMBtu vs $19/MMBtu in 2021 2S DFDE/TFDE ST In 3Q22 rates rose steeply from early July to end-September. Rates for a 2S DFDE/TFDE ST

(+79%). Meanwhile, on the same basis, in Northwest two-stroke rose from $83,000/day to $248,000/day, Rates LNG
for aPrices
TDFE rose
Europe (NWE) prices averaged around $33/MMBtu vs LNG Prices from $60,000/day to $190,000/day and rates for a steam turbine rose from
$16.5/MMBtu in 2021 (+100%). Price rises reflected LNG Prices $35,000/day to $148,000/day.
100
the concomitance between a rise in energy needs and 100
difficulties in increasing the supply. On one hand, the
$/MMbtu
Despite hitting historical highs in 3Q22, in the fourth quarter rates maintained Conclusion
rising energy requirements reflect the competition for their upward momentum. Accordingly, between early October 80 and mid-
supplies between Europe and Asia. Last year, the latter 80 November, rates for a two-stroke rose from $338,000/day to $460,000/day, 2022 has been particularly active and might be
captured a growing share of LNG imports to the detriment rates for a TDFE rose from $260,000/day to $341,000/day and rates for a considered as a “historical year”. Major geopolitical
60
of the former as Europe switched from buyer of last steam turbine rose from $193,000/day to $241,000/day. changes directly impacted LNG trade patterns with an
60
resort to aggressive buyer to replace Russian pipeline unprecedent level of LNG imports to Western Europe
gas. At the same time, China's LNG imports marked an Finally, the tide turned at end-November and rates slumped40in the wake of which increased by more than 50% essentially because
unprecedented decline (-19% vs 2021) as slow economic 40 falling European shipping demand, in the wake of the aforementioned strong of the shortage of pipeline gas from Russia. Meanwhile,
growth and Covid controls impacted demand. restocking and low demand in the wake of mild temperatures. By the end of less LNG was imported by Asia, especially China. This
20
20
December rates had sunk to $188,000/day for a 174,000 cbm two-stroke, re-balancing of the LNG trade, and expectations that
On the other hand, Russian gas supplied via pipeline to around $146,000/day for a 160,000 cbm TFDE and around $82,000/day for a this new trade map will remain in place for many years
Europe plummeted to a post-Soviet low as deliveries were 140,000 cbm steam turbine. 0 to come, had a clear impact on the shipping segment.
0 Accordingly, the expected increase in LNG ton-miles is
drastically reduced due to sanctions, maintenance, and
explosions on the Nord Stream 1. In addition, Freeport -20
demonstrated by the historical level orders placed at
-20 shipyards, notably in the booming activity of Chinese
2022 2023
Q4 2021 2022 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2023
Dec
yards. This historical turning point will have a direct
Asian-NWE LNG spread
impact
JKM
on HH
the structure
NWE
of the LNG shipping activity
Asian-NWE LNG spread JKM HH NWE
in the coming years for shipyards, shipowners, and
Asian-NWE LNG spread JKM HH NWE charterers.

112 Picture: TSAKOS ENERGY NAVIGATION LTD, [Link], 174,000 cbm LNG Carrier delivered in January 2022 and built by HHI. BRS Group - Annual review 2023 BRS Group - Annual review 2023 113
Offshore &
Renewables

A year of
continued growth
The year 2022 was a catalyst for the offshore
markets with a steep increase in the overall
demand for tonnage and services in all regions
of the world.

OLYMPIC ORION
Construction and Service Operations Vessel on Adwen windfarm.

Photo: Olympic.

115
 OFFSHORE OFFSHORE
OFFSHORE WIND OFFSHORE WIND

Whether in the Renewables segment, where scaling

fleets to meet the ambitions of developers is key, or in OFFSHORE WIND
the traditional offshore Oil and Gas (O&G), where access
to energy resources is paramount. This past year has been busy in the renewable market as many industry players
are preparing for a global ramp-up in the installation of offshore wind farms
The Oil & Gas sector has taken the stage front and center from 2024-25 onwards. The market has experienced strong newbuilding
this year with the drastic developments in the geopolitical activity for specialized assets dedicated to the installation of bottom-fixed
sphere. The renewed focus on energy security has offshore wind farms.
created a significant increase in the prices for both oil
and gas as political tensions and sanctions triggered a Wind Turbines Installation Vessels (WTIVs) - At the beginning of 2022, the WTIV
significant shift in trade flows for both commodities. A global fleet with crane capacity above 500t stood at 30 units, 9 of which were
wave of new investments in major projects means that under construction. Three units were delivered in 2022, namely the 2,500t Blue
all the links in the supply chain are now accelerating to Wind owned by Shimizu and the 3,200t crane Voltaire owned by Jan de Nul.
full speed and making healthy economic returns. The
multi-year downturn is behind us, and the next chapter During the same period, four new vessels were ordered – equating to over 10%
of the cycle is being written. There is a balance to be of the existing fleet. The market leader Cadeler ordered another two large Gusto
struck between the immediate demand for energy, and NG-20000X units at Cosco Heavy Industries, bringing their fleet to a total of 4
the future balance of energy diversity. Fears of energy vessels.
shortages were felt across Europe, and the new projects
pushed by Majors were reflective of the urgency. Maersk Supply Service, the first of two new entrants in the market, ordered
a 2,500t crane asset designed to comply with the US Jones Act regulation. At
As a matter of fact, 2022 saw some ongoing dramatic delivery, the unit will go into a long-term employment contract with BP and
changes in patterns of the post-pandemic offshore markets. Equinor to install the Empire 1 and 2 wind farms on the US East Coast. Havfram
Wind’s spinoff Havram AS was the second new entrant. Following the arrival
WTIV fleet (>500t crane) - 2022 expansion Purpose-built
of Sandbrook Capital as a CSOV fleet investor,
new majority - 2022 expansion
and in partnership with PSP
Investments, it placed an order for a WTIV of NG-200000X design with a 3,250t
WTIV fleet (>500t crane) - 2022 expansion crane at CIMC Raffles.

40 70
On the second-hand market, Germany’s Harren & Partners acquired the 2010-built
65
34 500t crane WTIV Thor from DEME with the aim of using the unit alongside their
35
existing 60
Wind Lift 1 unit in the offshore wind maintenance market. In parallel to the newbuilding spree, several owners converted PSVs into CSOVs As the bottom-fixed offshore wind farm installation
30
4 20 during the period. Norwegian owner Norside Wind acquired a PX 121 PSV from market continues to grow and expand into new countries,
30
11 Foundation
50 installation vessels (FIVs) - FIVs combine a large deck, to transport Ulstein and converted her into a 90 accommodation CSOV. the demand for specialized assets should remain strong.,
25 9 foundations for 45 offshore wind turbines, and a high-capacity 36 crane (2,000t – As such, further new orders are expected to be placed in
5,000t). 40
In contrast to a WTIV that has jacking legs – many of which can install Norwind Offshore and REM Offshore, both from Norway, took delivery of their 2023 for the segments listed above, either from existing
2
20 foundations - the 19 foundation installation vessel is a floating asset that will first SOVs, respectively Norwind Breeze and REM Energy. players expanding their fleet (backed by medium or
remain on30 Dynamic Positioning (DP) during installation operations. They are less long term contracts from developers or on speculation)
15 expensive to build and can work 3 faster, but their station-keeping capabilities (Power) Cable Laying Vessels - The global fleet in charge of the installation or newcomers (in protected markets – such as the US or
prevent 20them from installing the turbine itself. Vessels dedicated and built for of power cable has also increased this year, supported by the offshore wind Taiwan, or in the wider international market).
23
10 21 (or converted for) foundation installation are a recent type of asset owned and market’s need for installation of inter-array cables (connecting wind turbines
29
operated by the 26 major Transportation and Installation (T&I) contractors. By the within a wind farm), export cables (connecting an offshore wind farm to shore)
10
5 end of 2022, four FIVs were delivered, namely the newbuild 4,000t crane Orion and interconnector cables (connecting grids between islands/countries).
for DEME, the 3,000t crane conversion Bokalift 2 for Boskalis, the 5,000t les
0
Alizés for0 Jan de Nul, and the 4,000t Qin Hang Gong for Jiangsu Longsheng In January, Belgian contractor DEME acquired the heavy construction vessel
End 2021 2022 Delivery 2022 New order End 2022 End 2021 2022 Delivery 2022 New order End 2022
Marine Engineering. Another three other units are in their final construction Viking Neptun from Eidesvik for conversion into cable laying. On top of the
xpansion Purpose-built CSOV fleet - 2022 expansion stage and are expected to be delivered in 2023, namely the 4,000t crane Green 4,400t under-deck carousel already in place, DEME plans to install a 7,000t
Purpose-built CSOV fleet - 2022 expansion Jade jointly owned by CSBC and DEME, to be deployed in Taiwan, the delayed carousel on-deck, bringing her among the largest cable laying vessels in the
3,000t crane, and Seaway 7’s 3,000t crane Seaway Alfa Lift. fleet once fully converted. On the newbuilding side, Italian cable manufacturer
Prysmian ordered a very large cable laying vessel able to carry up to 17,000t
The multi-year
70
65
Construction and Service Operations Vessels (CSOVs) - The expansions of the of cables. This is only 1 year after taking delivery of the Leonardo da Vinci,
34
On order Delivered CSOV fleet over the last 12 months has been even more impressive. The fleet one of the largest cable laying vessels in the world. At the same time, on the
downturn is behind
60
and orderbook stood at 45 purpose-built units on 1 January 2022 – 19 of other side of the fleet spectrum, Norwegian CECON Contracting ordered its first
20
50
which were under construction. Furthermore, 20 units (a staggering 44% of total vessel: an environmentally friendly 100m LOA vessel with 2,800t carousel,
us, and the next
11
45 36 units) were ordered over the course of the year, while 3 were delivered. targeting the inter-array cable market from 2025 onwards.
40

30
19
25% of the 2022 orderbook (5 assets) were secured by the existing operators
Esvagt, Edda Wind and Acta Marine, leaving 15 vessels ordered by newcomers
Transportation vessels – With the installation of offshore wind farms in new
countries and regions, wind turbine manufacturers bear the responsibility chapter of the cycle is
3
– i.e. companies without an operational track record as of January 2022. Edison
Chouest ordered 2 Jones Act compliant vessels against long-term employment
of transporting components on new routes and over longer distances.
Consequently, high newbuilding activities have been observed on the Heavy being written
23 20 in the US while IWS and Norwind, with an existing orderbook, booked 2 Lift Vessel (HLV) market, with German United Heavy Lift ordering 2 additional
26
29 extra vessels each for delivery in 2024 and 2025. On the newcomer side, 3 150 LOA, 2x450t crane Eco Lifter HLV units and the Jumbo-SAL Alliance
10 companies, namely Norwegian Olympic, GC Rieber, and Singapore-based Marco ordering 4 x 150m LOA, 2 x 400t crane hybrid propulsion HLV units + 2 options.
Polo Marine have a long experience with operating offshore assets while 2 The latter were designed in cooperation with the leading turbine manufacturer
0 others, namely Pelagic, and CMB-backed Windcat, have a strong presence in the Siemens Gamesa which will also charter two of these assets on a long-term
End 2022 End 2021 2022 Delivery 2022 New order End 2022 traditional shipping markets (tanker and dry bulk). commitment upon their deliveries.

On order Delivered

Pictures: BOLD TERN and BLUE TERN performing Wind Park Construction work at Moray East in Scotland. Photo: Henrik Dahl, Fred. Olsen Windcarriers AS,Oslo;
116 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Medium Construction Vessel NORMAND JARL (built 2013) working as a Service Operations Vessel. Photo: Solstad. 117
 In a move seen rarely over recent years, two high specification LCVs joined On one hand a new pipelay vessel project seems to
SUBSEA MARKETS the market in 2022. Both SALT-designed vessels, originally ordered by now- be questionable, on the other hand, the emergence of
defunct Toisa Offshore, and under control of the Chinese yard were sold to floating wind is about to drive and boost the demand
SeaTankers who appointed Norwegian owner Østensjø for their commercial for large versatile subsea installation and construction
The offshore construction market experienced a high level of activity in 2022 and technical management. They have been renamed Edda Sphinx and Edda tonnage also equipped with AHT spread.
supported by strengthening day rates. Savanah and recently relocated to the North Sea.
Diving Supply Vessels (DSVs) – the market was rather
The supply of fully equipped (i.e., with WROVs on-board) subsea vessels In 2022, several owners actively built up their construction fleet by acquiring active in 2022. From having no DSVs at the beginning of
continued to decrease in 2022. Over 2022, the availability of subsea second hand tonnage. Abu Dhabi Ports-controlled Safeen Group acquired the the year, German diversified shipowner Harren & Partners
construction vessels has been low, and at some points in June and July, virtually S-lay vessel crane Sapura 3000 and LCV Nordic Prince, now renamed Safeen built up a fleet of 3 DSVs in a few months. The acquisition
no subsea construction units (with WROVs mobilized on board) were available Surveyor. of Rever Sapphire and Crest Odyssey 1 and 2 from Pacific
in the North Sea for spot work, a situation not experienced in several years. Radiance (renamed Trapiche Emerald and Fire Opal), put
Consequently, Charterers became worried about securing qualified tonnage Dutch contractor Boskalis has continued to build its construction fleet by the new owner solidly on the map. Indian Owner Seamec
2022 continued for short durations at short notice. The Norwegian survey/ IMR specialist taking ownership of the former well intervention vessel crane Norshore took over DSV Subtech Swordfish from UK-based James
Reach Subsea for example had been one of the most active companies in Atlantic (now Boka Atlantic), and the McDermott reel-lay vessel Lay Vessel Fisher following its 2021 purchase of the DSV Subtech
to see subsea chartering high-end subsea construction tonnage for short-term projects with
a pay-as-you-go structure. In 2022, they drastically changed their method of
North Ocean 105 with a 400t subsea crane (now Boka Northern Ocean). These
vessels were stripped of their specialized deck equipment and are now trading
Paladin from the same owner. This means James Fisher
is exiting the saturation diving market. Mermaid from
vessels leaving the securing subsea vessel tonnage by firstly, acquiring Light Construction Vessel
(LCV) Edda Sun and secondly, securing long charter for LCVs Deep Cygnus for
with large flat decks for standard construction work. Thailand is increasing its DSV fleet with the charter of
2019-built Van Gogh which was until recently controlled
conventional O&G 4 years, and Go Electra for 3 years. Several transactions were driven by financial motives. HCV Normand Maximus,
controlled by Solstad, was sold to American Shipping Company allegedly
by direct competitor Ultra Deep Solutions.

markets, presumed 2022 continued to see subsea vessels leaving the conventional O&G markets,
presumed permanently, to work in offshore wind installation. This lower
under pressure from the vessel’s creditors. Interestingly, American Shipping
Company is controlled by Norwegian conglomerate Aker Group, that is also the
Another two DP3 DSCV units are yet to be finally certified
as DSVs and to find a new home: the Norsok compliant

permanently, to work supply increased the tightness of the subsea construction market. Amongst
the most significant transactions were the sales of the Heavy Construction
main owner of Solstad. Upon securing the sale, American Shipping Company
and Solstad signed a bareboat charter agreement and Normand Maximus is
ZPMC Pelagic and the Hai Long Ming.

Vessel (HCV) Viking Neptun to DEME and of the Medium Construction Vessels now back in Solstad’s fleet. Despite O&G activity firming, we do not expect many
in offshore wind (MCV) Paul Candies mentioned earlier, and the Global Symphony acquired by newbuild orders of subsea construction units this year
Jan de Nul. The recent increase in second-hand prices for subsea construction vessels as creditors will first want to make sure they can be
installation In a similar trend, survey companies like Reach Subsea or Geoquip – who
may somewhat limit the number of sales. That said, in 2023, the second-
hand market will be fueled by transactions driven and coordinated on behalf
repaid. The increase in secondhand prices may however
limit the number of vessels leaving the market as well as
acquired the LCV Global Orion in 2022 are now working as much for of syndicate creditors as a consequence of the final restructuring of owners opportunistic acquisitions.
renewables clients as for O&G ones. Navies and Coast Guards around the world including Vroon and DOF.
have also shown interest in subsea tonnage. The Australian navy purchased
the 2017-built LCV Horizon Star (renamed ADV Reliant) and the UK Ministry On the new building front, the real question for subsea contractors as well as
of Defense has confirmed the purchases of the 2019-built 150t LCV Topaz for specialized owners is what comes next? What to build?
Tangaroa and 50t LCV Island Crown.

118 Picture: OLYMPIC TRITON, on Saint-Nazaire windfarm with inter-array cable installation spread mobilized on deck. BRS Group - Annual review 2023 BRS Group - Annual review 2023 Pictures: Heavy Construction Vessel NORMAND MAXIMUS (built 2016). Photo: Solstad, ©Magnus LA. 119
 OFFSHORE
LOGISTICS AND MOBILITY

The outlook for the OSV industry remains positive and should continue to
LOGISTICS AND MOBILITIES (OSV) improve in 2023. Newbuilding orders should accelerate as energy companies
are requiring modern assets, especially in a tight secondhand market where
there is a current lack of available, modern tonnage.
After a strong, multiple year, downturn, the OSV segment
continued to rebound in 2022 on the back of rising demand In the W2W segment, energy companies have increased their demand for such
due to the record profits of major energy companies, types of vessels to carry out inspection and maintenance work on offshore
and tighter vessel supply. Most Owners completed their platforms. With motion-compensated gangways and cranes, these vessels
financial restructuring, parting with their non-core assets bring logistical, environmental, and efficiency advantages when compared
by selling them outside of the offshore industry or by with helicopter flights. The increasing demand from the O&G sector for subsea
recycling them. This positive trend resulted overall in tonnages has reduced the number of available W2W units. Owners have
much improved utilization and, in turn, charter rates. converted modern PSVs into dedicated W2W vessels to serve both the O&G
and Offshore Wind sectors.
Average global day rates jumped by 20% last year. Indeed,
the highest spot rate reported in 15 years was received for
a very large AHTS during the North Sea summer season.
DRILLING AND PRODUCTION
The regional scaling up of investments in offshore oil and
gas (Middle East, West Africa, and Asia-Pacific) led to major
market consolidation. Tidewater concluded the acquisition In the conventional O&G sector, the geopolitical turmoil and the on-
of Swire Pacific Offshore, creating the world’s leading going emphasis on energy security have further boosted exploration and
OSV operator. As part of its strategic growth program, development programs.
ADNOC L&S strengthened its local leading position with
the purchase of Zakher Marine International which also Multiple new projects were approved in 2022 by Majors and independents.
own a large fleet of shallow water well platforms servicing Furthermore, NOCs including Petrobras, Pemex, and Saudi Aramco announced
liftboats. projects as they aimed to maximise national output against the backdrop of a
global energy crisis.
Rawabi, in Saudi Arabia, increased its fleet with several
purchases of Chinese resale units - leaving fewer of these For the drilling contractors, 2022 was a year of recovery with better economics
hulls to be completed - in line with the expansion plans and more work being awarded. Drillships led the way with utilization
of Saudi Aramco. China consolidated its fleet of powerful approaching 90% by year-end, and contracting prices above $400,000/day.
AHTS units to service its local supply and growing This trend was supported by work in the Golden Triangle. Jackups fared very
renewables market with, for instance, the purchase at well as rising demand from the Middle East absorbed a majority of the modern
auction of the Go Pegasus unit. tonnage that until then was sidelined. This has set the foundations for a robust
cycle going forward.
With the industry facing pressures to enhance efficiency these numbers had not been seen since 2017. This upcoming year should see
and reduce emissions and costs, Owners have been asked Semisubmersibles have lagged in this recovery but that segment remained a surge in deployment with 12 FPSOs set to be delivered, while 15 more are
to make significant investments to close the gap and stable throughout the year. After several years of the supply of drilling scheduled for the following three years. The concern of cost escalation due
revitalize their fleets. Barely surviving the downturn, units falling (due to their retirement or conversion for alternative uses), their to supply chain constraints and yard capacity remain despite 2022 seeing
Conclusion
many Owners are not yet in a position to order new charterers are now finding that their supply is tightening, thereby prompting the biggest floating production storage throughput capacity addition since the
vessels. Hybrid-battery retrofitting has gained more and a genuine recovery in the sector. previous cycle peak in 2010.
more traction as a first step to reach this target and meet 2023 should see stronger demand and positive economics
Charterers’ tender requirements. In the drilling landscape, COSL holds the tops spot with nearly 60 units under The medium-term future looks broadly bright as there were 15 projects in all segments of the offshore Renewable and traditional
their banner. The makeup of the other major players has changed following sanctioned in 2022 (11 FPSOs and 4 semis). The Golden Triangle (Brazil/ offshore Oil and Gas sectors.
consolidation that is now slowing down. Valaris is the second largest driller Guyana, GOM, West Africa) remains robust. Brazil still accounts by far for the
thanks to several acquisitions and mergers that were completed in previous most proactive production development campaign although the rate of award Utilisation rates are expected to remain high, hence
years. This year saw Noble drilling significantly increase in size following was down from 2021’s peak. supporting higher rates, profitable margins and cash flows.
their merger with Maersk Drilling. Transocean remains the largest floating rig
contractor with 39 units. The newcomer to the scene was ADES who purchased Worthy of note is that Keppel Offshore and Marine will build the FPSO P-80 In the short term the constraining factors will be supply
more than 20 units last year, doubling their fleet. for the Busios field (Brazil), under a contract worth just shy of $3 billion. The and cost control as every aspect of the supply chain
unit will be one of the largest in the world with a production capacity of 225 grapples with the sudden increase in demand.
It was a busy year for rig transactions with a total of 56 rigs sold, most of thousand barrels per day (kb/d) of oil, the ability to process 12 million cubic
these being driven by Middle Eastern contractors in the Jackup space (ADES metres of gas per day (MMcm/d) and a storage capacity of 2 million barrels. Across the medium term, and in a revitalised environment,
20 units, ANDOC 11 units, and Arabian Drilling 3 units). A major change from First production is expected in 2026. traditional Oil and Gas contractors will have to adapt to
previous years was that very few units were retired or sold for alternative use, these new perspectives and to figure out what tonnage
as most were sold for further use in the drilling space. Accordingly, the prices ExxonMobil continues its development in Guyana, 2022 saw the start of to order, while renewable players are yet to address the
of units increased dramatically. By year-end, yards that had been struggling to Liza Phase 2 as a second FPSO (Liza Unity) started operation in February. demand for more capacity but also for equipment and
find buyers for units that had been undelivered, saw a flurry of activity and The Yellowtail project is progressing with the One Guyana FPSO set to begin technologies adapted to the forthcoming installation and
committed most of these units to buyers, albeit at a discount to newbuild prices. production in 2025. maintenance challenges of floating windmills.

The leased FPSO market remained strong in 2022 after it rebounded in 2021. ExxonMobil is also expected to contract in 2023 for a large FLNG to service
Market leaders such as SBM, MODEC, MISC and BW fared well. Meanwhile, their Mozambique acreage.
outsiders such as Yinson also benefitted. There were more than five new
deployments in the year, three redeployments, three units under construction,

Picture: SONANGOL LIBONGOS, a unit owned by Sonadrill - a 50:50 JV between Seadrill and Sonangol Sonadrill,
120 Picture: VOS ARES, Anchor-handling tug supply vessel, built 2012, managed by Vroon. BRS Group - Annual review 2023 BRS Group - Annual review 2023 she secured a 12-well extension in Angola for ENI at a rate of $402,500 per day. 121
Cruise

Back in Business
2022 was a year of transition. Most
operators could look back at the year with
satisfaction and look forward to 2023 with
great anticipation and optimism with record-
breaking future bookings. However, 2022 also
saw operators winding down and slimming
their fleet, notably Genting Hong Kong, who
kicked off the year filing for insolvency.
Meanwhile, other operators faced complex
sanction-related issues.

EVRIMA
25,401 GT, delivered to Ritz-Carlton Yacht Collection by Hijos de
J. Barreras in October 2022. Photo: Ritz-Carlton Yacht Collection.

123
 CRUISE
DELIVERIES

We finally saw the

cruise industry start
to recover from the
impact of the Covid-19
pandemic. Accordingly,
most of the global fleet
was back on the water.

DELIVERIES

In our book, 21 units above 8,000 gt were delivered in 2022

Name Builder GT Company

EVRIMA Barreras 25,401 Ritz-Carlton Hotel Co SECOND HAND SALES

NORWEGIAN PRIMA Fincantieri Breda 140,000 NCL
The collapse of Genting Hong Kong sent waves through the industry, and the traditional Crystal Cruises was picked up by the Manfredi
VIKING MARS Fincantieri Ancona 47,000 Viking Ocean Cruises
Lefebvre d’Ovidio-led A&K Travel Group. We also saw start-ups such as the French-based Compagnie Française de Croisières (CFC) who
DISNEY WISH Meyer Papenburg 140,000 Disney Cruise Line acquired the former Holland America Line Maasdam, now renamed the Renaissance.

CARNIVAL CELEBRATION Meyer Turku 180,000 Carnival Cruise Line Some of the deals reported in 2022:
CELEBRITY BEYOND Atlantique 140,600 Celebrity Cruises

VIKING NEPTUNE Fincantieri Ancona 47,000 Viking Ocean Cruises

Name Blt Builder Gt Seller Buyer
SEABOURN VENTURE Mariotti 23,615 Seabourn Cruise Line

VIKING POLARIS Fincantieri Vard Soviknes 10,000 Viking Ocean Cruises SILVER ENDEAVOUR 2021 MV Werften Stralsund 20,449 Genting Royal Caribbean Group

HAVILA CASTOR Tersan Tersanecilik Tuzla 15,519 Havila Kystruten nb-LLOYD WERFT 125 2025 MV Werften Wismar 201,000 Genting Disney
SH VEGA Helsinki Sy 10,000 Vodohod
CRYSTAL SERENITY 2003 Atlantique 68,870 Genting Abercrombie & Kent
WORLD TRAVELLER West Sea 9,300 Atlas Ocean Voyages

MSC SEASCAPE Fincantieri Monfalcone 170,412 Msc Crociere AIDAMIRA 1999 Atlantique 47,276 Carnival Corp Ambassador Cruise Line

ARVIA Meyer Papenburg 185,581 P&O Cruises Uk CRYSTAL SYMPHONY 1995 Kvaerner Masa Turku 51,044 Genting Abercrombie & Kent
SYLVIA EARLE Cmhi Jiangsu 8,076 Sunstone Ships
TSM SINGAPORE 1992 Meyer Papenburg 47,413 Peace Boat UAE Buyers
OCEAN ODYSSEY Cmhi Jiangsu 8,228 Sunstone Ships

EMERALD AZZURA Halong 23,000 Emerald Yacht Cruises DREAM 1998 Fincantieri Monfalcone 77,499 Consorcium* Tangshan Donfang Shipping

RESILIENT LADY Fincantieri Castellammare 108,232 Virgin Voyages RESORTS WORLD ONE 1999 Meyer Papenburg 753,38 NCL Holdings Resort World Cruises
MSC WORLD EUROPA Atlantique 215,863 Msc Crociere
RENAISSANCE 1993 Fincantieri Monfalcone 555,75 Iliopoulos Francaise De Croisieres
DISCOVERY PRINCESS Fincantieri Monfalcone 145,281 Princess Cruise Lines

WONDER OF THE SEAS Atlantique 225,282 Royal Caribbean Group DOULOS HOPE 1991 Flender 3,370 Genting GBA Ships

*China Cosco Shipping & China National Travel & BTP China Communications

124 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture: RENAISSANCE, 55,575 GT, built by Fincantieri, Compagnie Française de Croisières, 1993. Photo: Compagnie Française de Croisières 125
 CRUISE CRUISE
DEMOLITION MARKET DEVELOPMENTS AND PERSPECTIVES

DEMOLITION MARKET DEVELOPMENTS AND PERSPECTIVES

When no reliable trading buyer was to be found, the only alternative was for the vessels to be scrapped. We finally saw the cruise industry start to recover from the impact of the
Covid-19 pandemic. Accordingly, most of the global fleet was back on the water.
In 2022, the below deals were reported:
Cruise operators reported record-breaking bookings for future sailings. MSC
Name Blt Builder Gt Seller Recycling Country Cruises stated in October 2022 that it had reached a new milestone with more
bookings in October than it ever had for one month in its history with nearly
400,000 passenger bookings. Norwegian Cruise Line reported similar record
ORIENTAL DRAGON 1972 Wartsila Helsinki 18,455 Machtrans SM Pakistan bookings, with November being the best-booked month in the history of the
company.
GOLD CLUB 1977 B&W 16,852 Mano Maritime Turkey
However, for some, the recovery came too late, such as Genting Hong Kong which
TITAN 1975 Wartsila Turku 15,402 Machtrans SM Pakistan went bankrupt, and their assets auctioned. This saw the traditional luxury brand
Crystal Cruises acquired by A&K Travel Group Ltd. Additionally, the 2021-built
Crystal Endeavor was sold to the Royal Caribbean Group luxury brand Silversea
PEARL II 1981 Hdw Hamburg 18,627 Dido Steel Corp Turkey
Cruises. At the end of the year, Disney announced their acquisition of the
unfinished Global Dream laid up at the MV Werften.
MARELLA CELEBRATION 1984 Atlantique 33,933 Rota Shipping Inc Turkey
With a wave of optimism throughout the industry, we also saw newcomers
MARELLA DREAM 1986 Meyer Papenburg 54,763 Rota Shipping Inc Turkey entering the cruise space, such as the French startups Exploris and Compagnie
Française de Croisières (CFC). Clément Mousset and Cédric Rivoire Perrocha-led
SUPERSTAR LIBRA 1988 Wartsila Turku 42,285 Flash Maritime Ltd Turkey CFC are scheduled to commence their operations early in 2023 with the former
Holland America Line vessel Maasdam, now renamed the Renaissance.
FUJI MARU 1989 Mitsubishi Kobe 23,235 Machtrans Sm Pakistan
Ritz-Carlton Yacht Collection finally saw its first vessel, the ultra-luxury ship
Evrima, which started operating in October. The Douglas Prothero-led cruise
CARNIVAL ECSTASY 1991 Kvaerner Masa Helsinki 70,367 Carnival Cruise Line Turkey operator had suffered more than two years of delays from the Spanish builder
Barreras. With Ritz-Carlton Yacht Collection ordering two larger LNG-fueled
CARNIVAL SENSATION 1993 Kvaerner Masa Helsinki 70,367 Carnival Cruise Line Turkey ships from Chantiers de l’Atlantique and becoming the pioneer of breaking the
barriers for hotel brands to enter the cruise business, we also saw Four Seasons
TSM SINGAPORE 1992 Meyer Papenburg 47,255 Machtrans SM India ordering a 95-suite yacht at Fincantieri, and Aman Resorts launching their long-
anticipated Project Sama in corporation with Cruise Saudi.

GEM 1992 Atlantique 50,764 Silver Star SM India During the pandemic years, we noted a relatively high number of scrappings and
the average age of demolition vessels decreased to 38 years, compared with 42
ARIUS 1993 Atlantique 51,309 Silver Star SM India years in 2021. Although optimism prevailed in the cruise industry in 2022,
the industry was not unaffected by the war in Ukraine. Swan Hellenic, with
STAR PISCES 1991 Masa-Yards Turku 40,053 Silver Star SM India two newbuildings under construction financed with Russian-owned GTLK, had
to overcome sanctions and purchase the newbuildings from Helsinki Shipyard
after an open auction. Meanwhile, Havila Kystruten also had to face issues of
HORIZON 1990 Meyer Papenburg 47,427 Pullmantur Cruises Turkey
similar complexity with their 2021-built and Russian-financed Havila Capella.
Passat Kreuzfahrten
DELPHIN 1975 Wartsila Turku 16,214 Turkey Following the general trend in the shipping industry, cruise operators are also
GMBH
moving in the direction of green fuels. Viking Cruises reported in November that
they had taken delivery of their ocean ship, the Viking Neptune, equipped with
a small hydrogen fuel system, making it the first ship in the cruise industry to
test the use of hydrogen propulsion.

With the pandemic behind us, and China re-opening after three years of closure,
we expect the industry to continue to recover, with a gradual return to pre-
pandemic passenger levels. Interestingly we may see the first large cruise ship
to be built in China enter service in 2023.
Cruise operators
Fleet renewal is expected to continue. Consequently, the second-hand market is
expected to remain relatively active in 2023. Carnival Corporation has already reported record-
announced that it will sell ships, including some of its Costa-branded vessels.
breaking bookings
With a stronger focus on green fuels and higher expectations from passengers
on low-emission travel we expect to see more operators test alternative fuels. for future sailings

126 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture: MSC SEASCAPE, 169,400 GT, delivered to MSC Crociere by Fincantieri In November 2022. Photo: MSC Cruises. 127
Containerships

2022: a boom
and bust year for
container shipping
The extraordinary trading conditions enjoyed
in 2021 by Non-Operating Owners (NOOs),
liner operators and freight forwarders
on the back of the unprecedented Covid-
related demand bonanza continued in
the first half of 2022. However, a gradual
normalization of cargo flows, the return of
capacities previously held up by congestion,
skyrocketing energy prices caused by the
war in Ukraine, and galloping inflation biting
into consumers’ spending power, dramatically
reversed the fortunes of the market’s
stakeholders in the second half of the year.
The reduced cargo demand on many key
routes translated into fast-falling cargo rates,
with charter rates following suit in the last
quarter of the year.

The 15,052 teu CMA CGM MEXICO.

Photo: Piet Sinke [Link]

129
 CONTAINERSHIPS CONTAINERSHIPS
2022 OVERVIEW 2022 OVERVIEW

2022 was off to Continued fall in cargo volumes Covid: still numerous lockdowns
a strong start for In the meantime, cargo volumes and freight rates continued to retrench on most
routes with the SCFI falling back to its pre-pandemic level in mid-December.
The zero-tolerance approach to Covid of the the Chinese
president Xi Jinping continued to take its toll on the
liner shipping, but Only the transatlantic market was doing better, but prospects on this trade were
threatened by the influx of capacity which shifted from oversupplied routes.
Chinese economy and its port systems throughout 2022,
with series of local lockdowns badly affecting one after
conditions started Newbies retrenching Meanwhile, the usual peak cargo season did not materialise, forcing carriers to
accelerate the removal of capacity through service closures, speed reductions
another several major cities and ports such as Shenzhen,
Shanghai or Ningbo. At some point in May, up to 100

to change drastically The handful of freight forwarders and regional carriers who had improvised
themselves as East-West carriers during the cargo boom in 2021 faced a reality
and blank sailings. The idle fleet meanwhile rose by a staggering 154% to 261
ships totaling 1.4 M teu in December. Meanwhile, In December, pictures of
container vessels were waiting for a berth off the Chinese
coast. While the congestion has had some positive effects

in the second half of check. Their business model, based on small ships chartered at extremely high
rates, was simply no longer sustainable in the face of plummeting container
very lightly loaded ships leaving Asia for Europe showed the magnitude of the
overcapacity problem while 13 vessels were identified as returning to Asia via
on container shipping demand, it impacted again the
global supply chain just as it was slowly emerging from
South Africa to save the cost of the Suez Canal transit. nearly two years of chaos. However, fierce anti-lockdown
the year
freight rates. In a sign that the tide was clearly turning, Chinese East-West
newcomers BAL Container Line and CULines closed their opportunistic services protests forced the Beijing authorities to relax the Covid
on the Pacific in June. In September, problems started to surface at UK-based Most market players took a bearish view on the business. Soren Skou, CEO of restrictions from December.
newbie Allseas Shipping which was forced to stop its Asia-UK service after Maersk spoke of ‘plenty of dark clouds on the horizon’ alluding to rampant
struggling to honour hefty charter commitments. In December, ambitious inflation across the globe, the risks of recession and the geopolitical instability
Chinese carrier CULines axed the China-Europe service it was running jointly denting world commerce and demand for container shipping. A record high
with T.S. lines and more casualties are likely to follow. In November, US orderbook could also be added to the things to worry about, with 2.4 M teu
wholesaler Costco, who had chartered seven containerships through US carrier of newbuild capacity due to hit the market in 2023, and a further 2.8 M teu in
Pasha Hawaii took a $93 million charge for the early termination of its charter 2024. These units will struggle to find their place unless cargo demand picks up
commitments. strongly and a massive wave of ship demolition takes place.

2022 off to a strong start,

but cargo rates fall Charter rates nosedive, with a longer time lag Covid-related cargo bonanza: it had to end at some point
2022 was off to a strong start for liner shipping, but conditions After an extraordinarily strong first half of 2022, which saw a raft of record The bonanza created by the Covid-cargo-related boom lasted about two
started to change drastically in the second half of the year. high fixtures propelling the Alphaliner Charter Rate Index to an all-time high years, from July 2020 to July 2022. Many in the market got carried away by
of 563 points in March, the container charter market showed its first signs of chartering, buying and ordering large numbers of ships at record high prices
The first six months provided an exceptionally good weakness in May, with rates gently softening for the smaller sizes. This was the during this period, believing that these extraordinary conditions would be
trading environment for NOOs, liner operators and first time in months that the market was no longer going ‘up’. The mood in the there to stay. However, this underestimated a potential fast return of cargo
freight forwarders with all stakeholders generating record market meanwhile changed, due to the quickly deteriorating macroeconomic flows to their pre-pandemic levels and that port congestion would ultimately
revenues. Tonnage remained in short supply across all environment. Galloping inflation across the globe, driven by soaring food and disappear. As a matter of fact, global container volumes are believed to have
sizes, forcing carriers to charter other ship types such as energy prices, increasingly restricted consumer spending power. It began to been around 4% lower in 2022 than in 2021 and on 1 December 2022 were
multi-purpose cargo vessels and bulkers to meet continued have an impact on container shipping demand and would worsen as the year estimated to be only marginally above their 2019 level. Illustrating this trend,
record cargo demand. Swedish tanker owner Concordia passed as more capacity was being freed up by easing port congestion. a survey of liftings showed that over the first nine months of 2022, Maersk,
Maritime even studied the possibility to transform CMA CGM, COSCO, Hapag-Lloyd, OOCL, Yang Ming, HMM and ZIM carried a
‘P-Max’ tankers into cellular ships to address the shortage In June, import cargoes from China into the US were down by 40% month- total of 71 M teu, versus 74.5 M teu, or 4.6% less than during the same period
of containerships, but the project did not materialize. on-month, as major American shippers had too much inventory. Meanwhile, in 2021.
Meanwhile, more liner shipping newcomers, including container spot rates continued to rapidly fall and dropped below long-term
supermarket chain Lidl hit the market with their own cargo rates for the first time, suggesting that shippers might start to re- Other issues related to the war in Ukraine, soaring inflation plaguing consumer
shipping services. negotiate their long-term contracts. spending power around the world as well as high inventory levels and a
looming recession in many countries, have made matters worse. The brutal
However, despite the continued optimism among market Stocks of the leading container lines plunged on fears that carriers would fail collapse in cargo rates in the second half of the year was therefore a painful
players, the writing was already on the wall for the to stem the cargo rate collapse. Most in the industry agreed that the container reality check for a lot of market participants, particularly for all the newcomers
container trades, with cracks having started to appear shipping bull run was over, while the spike in cargo demand was now ‘a thing but also for some established carriers who aggressively (unwisely?) expanded
on the cargo front as early as January. After reaching an of the past’. their fleet at the peak of the market.
all-time high of 5,109 points on 7 January, the Shanghai
Containerized Freight Index (SCFI), which assesses spot In June, Rolf Habben Jansen, the CEO of Hapag-Lloyd spoke of the ‘risks of
container rates out of China started to fall from the middle overcapacity’ for the first time, which highlighted a clear change of market The end of port congestion
of the month onwards. Apart from a short rally in May, sentiment. The container charter market remained remarkably resilient until
the SCFI was never to pick up again, and fell continuously July. From that point onwards carriers gradually gave up fixing ships for Port congestion gradually eased throughout 2022, although some regional
throughout the year, dropping in mid-December towards long periods, preferring shorter employments of maximum 12 months. As bottlenecks persisted, especially on the US East Coast, in certain European
its pre-Covid level. This descent, which some carriers demand and sentiment weakened, NOOs had no other choice but to bite the ports and in China. The latter in the wake of the localised lockdowns imposed
initially described as a ‘soft landing’ or ‘normalisation’ bullet, although they took comfort in the continuously strong charter rates. by Beijing. Congestion on the US West Coast, once the global hotspot as up
actually turned out to be a proper rate ‘crash’ that took In September, the market nevertheless abruptly took a turn for the worse to 110 ships waited for a berth, finally ended, with the ports of Los Angeles
many by surprise. with charter rates suddenly nosediving. The Alphaliner Charter Rate Index lost and Long Beach officially declaring in November that the problem was
nearly 100 points over the course of four weeks. Meanwhile, fixtures were over. Congestion was the most visible sign of the global supply chain issues
being concluded at levels two to three times lower than in August. The free which plagued world commerce from the onset of the Covid-related cargo
fall in charter rates followed, as expected, that of cargo rates with a lag of a boom. With up to 12% of the world fleet held up at some point, congestion
few months. restrained tonnage supply in an already tonnage-tight market, sending both
cargo and charter rates skyrocketing. Its easing has paradoxically contributed
to the market meltdown observed since September with transport capacities
returning to a market that does not need them.

Picture: Chinese operator CULines was forced to terminate its Far East-Europe service due to the collapse in freight rates.
130 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Here, one of their chartered vessels, the 4,132 teu REN JIAN 19. Photo C.H Mercier 131
 CONTAINERSHIPS CONTAINERSHIPS
2022 OVERVIEW 2022 OVERVIEW

The NOO fleet continues to lose ships to liner operators feeder vessels of 1,000 teu to be ordered by French owner Zephyr & Boree.
Meanwhile, the use of biofuels is growing with carriers such as CMA CGM, MSC
The NOO fleet has lost an unprecedented 600 cellular vessels to liner operators and OOCL increasingly sourcing it for their fleets. Other technologies helping to
since August 2020, when carriers started raiding the sale and purchase market. reduce carbon footprints are also being used, including batteries, carbon capture
This buying frenzy was meant to beat an increasingly expensive charter market devices or wind deflectors, such as that installed on the 20,170 teu ONE TRUST.
and secure ever scarcer tonnage. NOOs in turn could hardly ignore increasingly
attractive purchase offers for their ships. The fleet exodus continued in 2022,
especially in the first half of the year, but gradually slowed down when the New carbon regulations: many questions, few answers
market started to turn in the summer. The most popular ships sold were 1,500-
1,900 teu ships, ‘classic panamaxes’ of 4,000-5,299 teu and ships of 2,000- The new EEXI and CII regulations coming into force in 2023 are raising a lot of
2,600 teu, followed by tonnage of 1,000-1,200 teu. questions among owners and operators of container tonnage. The complexity
of the CII rule, and its difficult enforcement raise fears of a pick-up in legal
MSC was by far the most active buyer, having purchased a mind blowing disputes between owners and charterers. The regulation’s tendency to put at a
253 second-hand ships since August 2020 (including 96 units in 2022 alone), disadvantage ships engaged in shorter voyages or spending long times in ports
followed by CMA CGM with 85 units. or at anchor is raising incomprehension among market participants especially
those involved in feedering and regional trades. Several carriers have voiced
their concern about this, pointing to the unsuitability of the regulation as it
MSC become the world’s largest carrier currently stands. NOOs are also worried their ships could see reduced charter
options and lose value if they obtain unfavorable CII ratings.
In the early days of 2022, MSC overtook Maersk and became the world’s largest
container carrier, 52 years after its creation in 1970 by Capt. Gianluigi Aponte. On the brighter side, these new rules will force ships to go slower, which will
With a fleet capacity of 4,284,000 teu and 645 vessels, the Switzerland-based reduce supply and help address the looming overcapacity. Carriers estimate
Italian carrier bumped the Danish company, long time number one, from its that they might need an extra 5-15% of tonnage to compensate for the slower
top position by a few thousands teu only. Today, the capacity gap between running of ships. Meanwhile, older, less efficient vessels that struggle to comply
the two carriers has grown significantly: MSC deployed in excess of 4.5 M teu might have no other option but to head for demolition.
of capacity as at mid-December, while Maersk was still stuck at 4.2 M teu,
Carriers on course to smash 2021 profits the Danish carrier having decided not to grow any further on the container
shipping side. In the future, MSC will hugely distance itself from Maersk (and Charter rates collapse in line with freight rates
The top ten liner shipping companies recorded a total from most other carriers) with its colossal orderbook currently numbering 123
operating profit of $115 billion in 2021, an all-time vessels for 1.7 M teu. Just as in 2021, the Shanghai Shipping Exchange (SEE) freight index Shanghai
record. Carriers continued to benefit from an exceptionally Containerized Freight Index (SCFI) covering box rates out of Shanghai and the
good trading environment in the first half of 2022, with Alphaliner Charter Rate Index (ACI) covering containership charter rates evolved
SCFI vs Alphaliner charter index 2011-2022
results exceeding those of last year for the same period. Decarbonation: multiple initiatives in 2022, similarly, but at different speeds. After rising strongly in 2021, the box
The figures are staggering: CMA CGM made a net profit of and charter indices both collapsed in 2022, albeit the charter index adjusted to SCFI vs Alphaliner Charter Index 20011-2022
the market downturn with a longer time lag. Comparative evolution of both indices
just under $15 billion, ONE raked in $10.6 billion, Hapag- With global shipping emissions estimated to have increased by 5% in 2021,
XXX
Lloyd registered a net gain of USD $9.5 billion and so on. there is no time to waste to decarbonize the industry. Last year saw LNG
Although the container market has taken a dive from the remain a popular option for fuel propulsion, with a total of 106 orders for LNG- Whilst the SCFI reached its peak of 5,109 points on 7 January, the ACI was at its 6,000 600
second half of 2022, with the last quarter of the year propelled vessels placed in various yards in Asia. Methanol also gained more historic high a little later in March, at 563 points.
expected to be significantly weaker, carriers remain on and more attention as CMA CGM, COSCO, Danaos and MPC placed newbuilding
5,000 500
track to smash their exceptional 2021 results. However, orders, following in the steps of Maersk who meanwhile raised the tally of its The SCFI then started to fall until June, when it gently picked up again. However,
the fast deteriorating environment has seen the eleven 16,000 teu, methanol-powered ship orders to a total of 18 units. Ammonia also this was to be a short-lived rally with the index resuming its descent in July.
publicly listed companies seeing about $90 billion wiped became an increasingly coveted alternative, with a total of 26 ammonia-ready From that point onwards, it would fall at an uninterrupted and much faster pace, 4,000 400
off their market capitalizations between the beginning and containerships ordered during the year, of which 16 units of 16,000 teu were crashing to 2,800 points by September, just over half its January peak.
the end of the year. However, they remain two to three for MSC. While hydrogen has so far not been retained by any owner or carrier
3,000 300
times higher than their pre-pandemic levels. for any newbuilding projects, sail power could soon appear on series of ten While cargo rates, especially for spot freight, lost up to about 45% of their
value in the January-September period, charter rates only moderately softened
during this time, remaining fairly resilient to what was already a clear market 2,000 200

Geopolitics: an unprecedented instability downturn. It was only in September that charter rates suddenly fell off a cliff,
catching up with the cargo rate meltdown, albeit with a longer time lag. 1,000 100
Last year saw extreme geopolitical instability across the
globe, which took its toll on container shipping to various Since then, charter rates have systematically declined, with the ACI falling to
degrees. The attack on Ukraine by Russia on 24 February only 144 points in December, a near 75% decline from its March peak. Despite 0 0

sent energy prices skyrocketing, affecting both consumers this crash, the ACI is still nearly twice as high as at the onset of the Covid 2011 2012 2013 2015 2016 2017 2018 2020 2021 2022
and manufacturers as well as shipping lines. The suspension pandemic. It is also much higher than during the decade pre-Covid: the last time
of container trades with Russia and Ukraine also led to the ACI reached 144 points was in July 2008.
service closures, capacity redeployment and contributed Alphaliner charter index SCFI
Alphaliner SCFI
to aggravating congestion in certain ports. In Asia, the war Standing at 1,107 points at mid-December, and despite a spectacular drop from
of words between China and the US over Taiwan reached its peak of January-February, the SCFI was, still a little above its pre-Covid, Containership Se
its peak in June, raising fears of a large-scale conflict with December 2019, level of 904 points.
possible global implications. Tensions otherwise continued to million $
rise with Iran and North Korea, the latter multiplying its test
New environmental regulations will force ships to go
80
launches of rockets.
70

slower, which will reduce supply and help address the 60

looming overcapacity
50

40

30

132 Pictures: The NOO fleet keeps shrinking. Here the 4,253 teu GENOVA, sold in October by Israeli NOO XT Shipping to MSC; The 9,411 teu MSC SASHA. Photos C.H Mercier. BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture: The 20,170 teu ONE TRUST, fitted with a wind deflector. Photo: Andrew McAlpine. 133
20

10
 CONTAINERSHIPS CONTAINERSHIPS
CHARTER MARKET CHARTER MARKET

Million teu Deliveries

350 CHARTER MARKET VLCS 7,500-11,000 teu Classic Panamax 4,000-5,299 teu
300
250 2022 review 2022 review
200
After the bubble burst, an uncertain outlook The ‘handy’ VLCS segment (7,500-11,000 teu) was in high demand and short Classic Panamaxes (4,000-5,299 teu) continued to be
supply during the whole year. Charter rates continued to extend records until highly sought after during most of 2022, with only a conti-
150
The container charter market started 2022 in a euphoric mood, following on peaking in April, when a 12-month charter for a standard 8,500 teu was nued shortage of ships keeping the fixing activity at low
100
from an extraordinary 2021. After the new year break, demand for container estimated at around $155,000/day. Meanwhile, five year charter rates were levels. Charter rates saw historic highs in the first half of
50
tonnage quickly picked up for all sizes of ships. Charterers were not only (still) estimated in the region of $65,000/day. In the summer, Costamare and Seaspan the year, and reached stratospheric levels in February,
0
2022 Q1 2022 Q2 2022 Q3 2022 Q4
willing to fix tonnage for periods of three or four years like in 2021 at sky- agreed on significant, long term package deals involving tonnage of 8,000 when US carrier Pasha fixed the 4,308 teu IONIKOS for
high rates but were also interested in offering similar period employments for teu-11,000 teu with several major charterers including MSC, Hapag-Lloyd and 3-5 months at $235,000/day, an absolute all-time-high
Million teu Orders forward positions in 2023 and even 2024. ONE. These deals would be the most significant of the year, the market being rate in the history of container shipping. In April, handy
1,200 otherwise quiet due to a continued shortage of ships. units could get fixed for 60 months at $42,500/day, or 48
Meanwhile, US carrier Pasha Hawaii raided the market on behalf of US wholesale months at $52,000/day or 36 months at $55,000/day.
1,000
giant Costco, fixing ships of 2,700-3,500 teu for periods of 36 months and even In September, the market fell abruptly, with the estimated 12 months charter
800 42 months, with some rates reaching the astronomical level of $62,000/day. In rate for a 8,500 teu unit crashing to only half of its April peak. The rate drop In June though, the sentiment started to change, on the
600 February, Pasha established an all-time record in fixing the 4,308 teu, Greek- would continue throughout 4Q22 albeit it gradually decelerated. In December, back of mounting macro-economic and geopolitical uncer-
400 controlled IONIKOS for a period of 45-55 days at a mind-blowing $235,000/ two 8,000 teu, Japan-built newbuildings were reported fixed for 10 years at tainties. Spot ships made their come back and rates started
day, the highest charter rate ever obtained by a containership. only $27,000/day. softening. In September the market abruptly fell with ‘han-
200
dy’ units being fixed at only $45,000/day for 6-12 mon-
0 From March, the market became quieter, mainly as a result of an increasingly 2023 outlook ths, down from just over $100,000/day for similar periods
2022 Q1 2022 Q2 2022 Q3 2022 Q4
acute shortage of ships across all sizes. The Alphaliner Charter Rate Index Around thirty vessels in this segment will see their charters expire in 2023. at the peak of the market in April. Charter rates continued
meanwhile reached its highest ever level at 563 points. At the time, 8,500 However, this does not mean that all the ships will lose their employment. to falter in October and November, to finally stabilise at
(k) Scrappings
10
teu ships were estimated to be worth around $155,000/day for periods of 12 There are also sixteen newbuild vessels, mostly compact units of 7,500-7,800 about $25,000/day in December.
months. Tonnage of 5,500 and 4,250 teu would obtain around $130,000/day teu, expected to be delivered during the year. Most of this tonnage has already
8 and $110,000/day for the same duration. Ships of 2,500, 1,700 and 1,000 teu an employment in place. These newbuildings, mainly ordered by carriers 2023 outlook
6
would command $80,000/day, $62,500/day and $47,500/day, respectively. themselves, will therefore not directly inflate the pool of charter market ships Around sixty vessels will see their charter expire in 2023.
but could indirectly impact the NOO fleet, especially ageing units of 5-6,500 There are only a dozen newbuildings, all of which are
4 From July, the market became shorter term, with carriers no longer embarking teu, some of which might be replaced by these more modern and energy- for Chinese domestic owner Zhonggu Shipping which is
2 80
on multi-year commitments, against a backdrop of falling cargo rates and efficient units. likely to operate them on its intra-China network. Classic
growing economic and geopolitical uncertainty. Most fixtures were typically Panamaxes are expected to remain popular among carriers,
0
70 concluded for 12 months only but charter rates continued to move to historic Otherwise, interest by carriers in compact 7,500-7,800 teu newbuildings or especially at current lower charter rates. However, some
2022 Q1 2022 Q2 2022 Q3 2022 Q4
highs. However, the sentiment in the market was slowly changing, with the modern fuel-efficient units is expected to continue given the versatility and units on high volume routes might be replaced by younger
Alphaliner Charter Index 60 euphoria of the previous months gradually replaced by doubt among charterers. adaptability of this tonnage for numerous North-South or regional routes. and more energy efficient tonnage, especially newbuilding
600 Their flexibility should make them more resilient to any further downturn in units of 7,000 teu. Like for many vessels, the second half of
50 In September, the market abruptly collapsed. In only a couple of weeks, fixtures cargo demand. 2023 could prove more challenging than the first half due
500
suddenly were concluded at levels 35-40% below last done, an unprecedented to a more acute domino effect of the newbuild deliveries
400
40 volatility in container shipping. With a longer time lag, charter rates actually LCS 5,300-7,499 teu of larger tonnage.
‘caught up’ with cargo rates, which had started falling already in January.
300 30
October and November would see a continued weakening of charter rates. 2022 review
200 The ‘LCS’ segment (5,300-7,499 teu) was in high demand for the most part of
20
At the beginning of December, the Alphaliner Charter Index was hovering 2022, although the last quarter saw a reduced interest from carriers. The supply
100 around 144 points, its lowest level since February 2021. Ships of 8,500 teu of prompt tonnage remained extremely tight during the whole year. Charter
2022 Q1 2022 Q2 2022 Q3 2022 Q4 10
ships were estimated to be worth only around $52,000/day for periods of 12 rates strengthened to historic highs in April, when a standard 5,600 teu unit
SCFI 0 months. Tonnage of 5,500 and 4,250 teu would obtain around $35,000/day was estimated to be worth around $130,000/day for 12 months employment.
5,000 and
2011 $25,000/day
2012 2013 for 2014
the same
2015 duration.
2016 Vessels2018
2017 of 2,500,
2019 1,700
2020 and 1,000
2021 Long-term employments of three to five years that were then the ‘norm’ in the
teu would meanwhile command $18,000/day, $14,000/day and $12,000/day, market were in the meantime being concluded at $55-60,000/day, depending
4,000
respectively. on the exact vessel size.
3,000
However, in September, the market suddenly took a turn for the worse, with
2,000 What’s in store for
1,700 Teu 2023?
Geared -10Yrs rates nosediving. In October, a 5,600 teu vessel was estimated to be worth only
1,000 $50,000/day for a 12 month charter. Rates have fallen further since to hover
2,500 Teu Geared -10Yrs
With the bonanza of the Covid-related cargo boom now clearly behind us, the around $35,000/day by mid-December.
0
2022 Q1 2022 Q2 2022 Q3 2022 Q4
charter market 4,500 Teu Geared -10Yrs
outlook for 2023 is very uncertain, with multiple threats on

(k) teu Inactive Containership Fleet

the horizon. 2023 outlook
Around thirty eight vessels in this segment will have their charters expire in The avalanche
On the supply side, even with potentially delayed or cancelled orders, the 2023. Twenty-four newbuildings are also expected to hit the market, of which
1,600
avalanche of newbuildings expected in 2023 and 2024, will be hard to absorb 11 ships are 5,500 teu, eight are 7,000 teu and five are 6,000 teu. The majority of newbuildings
if demand does not pick up substantially and scrapping rises sharply. Also, the of this tonnage already has employment lined up but Alphaliner believes that a
1,200 numerous orders placed by carriers in 2021 and 2022 will be detrimental to
many NOO vessels which risk losing their employments from the second half
couple of 7,100 teu units, as well as three vessels of 5,500 teu remain charter
free. Ratewise, prospects for this segment remain fair for the first half of the
expected in 2023
800
of 2023 onwards. year, due to a continued shortage of ships. However, the direct and indirect
impact of these newbuilding deliveries, that will be felt more acutely in the
and 2024, will be
400
On the demand side, the prospects of a recession in many countries, persistent,
soaring inflation and continued geopolitical instability supporting energy prices
second half of the year, is darkening the longer-term outlook for this segment,
especially for the less efficient ships.
hard to absorb
2022 Q1 2022 Q2 2022 Q3 2022 Q4 at strong levels will keep a lid on commerce and container seaborne trade. These
negative factors will inevitably impact demand for container tonnage, with charter
vessels first in line to bear the brunt of any fleet rationalisations by carriers.

134 BRS Group - Annual review 2023 BRS Group - Annual review 2023 135
 CONTAINERSHIPS CONTAINERSHIPS
CHARTER MARKET CHARTER MARKET

3,000-3,500 teu Asia will continue to be the main market for this tonnage, except for the high 2023 outlook Sub-1,000 teu
reefer and geared units which will continue to trade on high-reefer routes in the Around fifty vessels will see their charters expire in 2023, which is a lot for
2022 review Atlantic. The overall prospects are mixed and will very much depend on how such a niche segment. Although not all the ships will end up looking for new 2022 review
The 3,000-3,500 teu segment had a stellar start to the cargo demand develops, especially in intra-Asia. employment, some carriers might be tempted to upgrade certain services using The sub-1,000 teu sizes had an extraordinary year, even
year, with standard 3,500 teu obtaining in January the numerous 1,700 teu units becoming available next year. On the newbuilding better than 2021, with charter rates reaching unimaginable
$40,000/dayday, for period employments of 36 months. 2,000-2,699 teu front meanwhile, there are only six ships coming, all of which already have levels. At the market peak in April, vessels of 600 teu could
In February rates shot up to a staggering $61,000/day employment secured. be fixed at $19,000/day for employments of 12 months.
for similar employments, boosted by a market raid of 2022 review Units of 850 teu could meanwhile be fixed for 12 months
US carrier Pasha Hawaii. Records continued to be beaten Last year, and especially 1H22, was the best on record for the 2,000-2,699 teu Vessels of 1,250-1,499 teu, especially the high-reefer units, remain popular on at $25,000/day or 36 months at $20,000/day.
afterwards, with the 3,834 teu ZHONG GU LIAO NING segment. The Covid-cargo bonanza pushed charter rates to record levels, with many regional routes, particularly in the Americas. These ships should continue
obtaining in late February a mind-blowing $200,000/day 2,500 teu units getting fixed at $45,000/day for employments of 36 months, or to be relatively insulated from any market downturn, especially in the first half From May, the euphoria started to wane, with charter
for a 3 month charter. $80,000/day for 12 months at the peak of the market in April. From July though, of 2023. However, the more basic units could find their trading environment periods becoming shorter, and no longer exceeding 12
rates started to soften while periods became shorter from August. In September becoming more challenging as we move into the second half of the year. months. Nonetheless, charter rates remained high, ranging
The market thereafter entered a long period of low activity, the market nosedived, with rates crashing to $25,000 per day. The downward from $20,000 to $30,000/day for vessels of 700-850 teu.
essentially due to a chronic shortage of ships. From the spiral continued in the fourth quarter, with standard 2,500 teu tonnage getting 1,000-1,249 teu From September, charter rates started to fall steeply after
summer, terms became shorter with most deals concluded fixed at $20,000/day in November and $17-18,000/day in December. weeks of gentle softening. In November, tonnage of 850
for periods of maximum 12 months. However, rates 2022 review teu could be fixed at $9,500/day, 2.5 times lower than
remained historically high, with a geared 3,000 teu vessel 2023 outlook Last year was the best ever for this segment, with charter rates for standard, at the market peak. The market has since stabilised, with
securing in July a 12 month employment at a whopping Around fifty vessels will see their charters expire in [Link] not all the 1,118 teu ‘CV 1100’ vessels peaking at $40,000 in March for employments tonnage remaining in short supply across most regions.
$80,000/day. vessels might end up looking for a new employment. There will also be thirty- of 12 months, against the backdrop of tight tonnage. Two-year deals were
two newbuildings, five of which are believed charter-free. Vessels of 2,000- concluded at $34,000/day. However, from May, the segment experienced a 2023 outlook
From August, the ‘mood’ started to slowly change, against 2,699 teu are increasingly being used on feeder or regional routes, where downturn, an unexpected development in an otherwise continuously record- Around 150 vessels will see their charters expire in 2023,
growing uncertainties and in September the market they often replace much smaller units. The introduction of the CII regulation high market. Nonetheless, rates remained extremely high, with the standard a high number although a significant proportion of this
crashed. In October, six month charters were fixed at could benefit these sizes which will stimulate the consolidation of some feeder ‘CV1100’ type still fixable at around $34,000/day for 12 months by the end tonnage might see their contracts extended. Meanwhile,
$20,000/day, a fraction of the rates obtainable at April’s services currently using smaller, older, less efficient units. of August. September saw the market suddenly nosedive, with rates falling there are hardly any newbuildings expected, with only ten
peak. Charter rates thereafter continue to fall, to finally to $20,000/day while supply started to increase. Thereafter, charter rates ships due to hit the water, mainly for Chinese accounts.
stabilize at $20,000/day in December. 1,500-1,999 teu weakened steadily to finally stabilise in December at around $12,000/day for The absence of newbuildings continues to raise serious
standard tonnage. concern on the future of these sizes.
2023 outlook 2022 review
Around thirty-five vessels will see their charters expire in The 1,500-1,999 teu segment was among the busiest in 2022, with a constant 2023 outlook
2023. There will be also twenty-nine newbuild deliveries, flow of demand keeping the volume of fixing relatively high, with the exception There are around 125 vessels with charters expiring in 2023. Although
but the vast majority of these ships have already an of a slightly quieter period in March-April. a substantial proportion of ships will see their employments extended, a
employment secured. Only two vessels of 3,000 teu are significant number of vessels might end up looking for new employment. The
believed to be charter free. Charter rates reached all-time highs on the back of a limited supply of ships. orderbook, with 40 vessels due for delivery, including a dozen employment-
At the peak of the market in April, standard 1,700 teu tonnage was being fixed free, will not help. The influx of fuel-efficient newbuildings, as well as the new
Ships of 3,000-3,500 teu remain popular with carriers for at $40,000/day for periods of 60 months while 12 month deals were valued carbon regulations could therefore push many older, less efficient, units to the
certain North-South routes. However, they are increasingly in excess of $60,000/day. Modern ‘Bangkokmax’ tonnage could meanwhile be demolition yards.
forming a niche market, with the best vessels (geared, high obtained at $45,000/day for periods of 36 months. From August, rates started
reefers or ‘wide beam’) remaining relatively insulated from to weaken while periods became shorter. In September the market crashed,
any downturn. with fixtures being concluded at ‘only’ $30,000/day for 12 months. Charter
rates continued to falter afterwards, dropping to$20,000/day in October and
2,700-2,900 teu $14,000/day in November for standard tonnage, and $14,500-15,000/day for
‘Bangkokmax’ units. The market has meanwhile stabilized.
2022 review Alphaliner Top 25 Operators as of 31st December 2022
Vessels of 2,700-2,900 teu are very popular with charterers 2023 outlook
and 2022 was no exception. The extraordinary trading Alphaliner counts around a hundred vessels with charters expiring in 2023, Total existing Orderbook Total existing Orderbook
environment in the first half of the year saw charter rates which is a high number. It does not mean though that all these vessels will become
reaching unimaginable levels for these ships. In February, unemployed with many ships expected to extend their charters. In addition, # Operator teu ships teu ships # Operator teu ships teu ships
standard 2,800 teu tonnage was obtaining $48,000/day seventy-eight newbuildings will hit the market, 35 of which are believed to be
1 MSC 4,600,851 715 1,727,210 124 14 KMTC 148,517 65
for employments of 36 months, or $41,000/day for 48 assignment-free, an equally high number. Although vessels of 1,500-1,999 teu
remain extremely popular, particularly in Asia where ‘Bangkokmax’ units remain 2 APM-Maersk 4,228,174 706 376,413 31 15 IRISL Group 143,468 32
months. Modern, fuel-efficient ‘Chittagongmax’ tonnage
was meanwhile fixed in excess of $60,000/day for charters highly coveted, it will take a strong cargo demand to absorb the available and 3 CMA CGM Group 3,393,190 595 664,378 79 16 Zhonggu Logistics 136,126 103 64,904 14
of 42 months and short employments would be concluded new capacities. 4 COSCO Group 2,871,859 468 884,272 46 17 UniFeeder 132,297 84
at staggering six-digit figures of $150-175,000/day. These 5 Hapag-Lloyd 1,782,791 248 377,656 20
astronomical levels continued unchanged until August. 1,250-1,499 teu 18 X-Press Feeders 130,191 83 112,520 25
6 Evergreen Line 1,661,865 209 465,918 50
From the end of the summer, some rate weakness started 19 TS Lines 109,716 50 99,520 24
to appear while periods became shorter. September saw 2022 review 7 ONE 1,528,921 204 418,430 30
20 Antong Holdings (QASC) 101,696 93 4,888 2
the market falling off a cliff, with both rates and periods The 1,250-1,499 teu segment saw mind-blowing fixtures concluded when the 8 HMM 816,365 75 184,027 17
21 Sinokor 95,268 75 91,582 26
dropping sharply. In November, the going charter rate for market was boiling hot. Illustrating this, a 1,440 teu ‘Hegemann 1400’ was fixed
in March for a period of 12 months at an astronomical $70,000/day, while 9 Yang Ming 707,354 94
standard tonnage was around $22,000/day, falling further 22 Sea Lead Shipping 85,593 22
to$18,000/day in December. a slightly smaller, 1,341 teu ‘MRC 1100’ obtained an equally breathtaking 10 Zim 533,823 138 378,034 43
Global Feeder Shipping
$60,000/day for the same duration. 11 Wan Hai Lines 436,844 145 276,838 38
23
LLC
72,370 26
2023 outlook However, after the market crashed in September, the rates suffered a massive
12 PIL 297,163 91 88,000 8 24 China United Lines 71,572 28 25,300 6
Around thirty vessels will see their charters expire in correction and steadily fell during the fourth quarter. By December, they had
2023. There will also be twenty-eight newbuildings hitting stabilized at around $14,000/day for the ‘Hegemann 1400’ type, a level five 13 SITC 162,418 108 43,769 26 25 Emirates Shipping Line 70,569 15 1,781 1
the market, a dozen of which are believed charter free. times below the spring peak.

136 BRS Group - Annual review 2023 BRS Group - Annual review 2023 137
 CONTAINERSHIPS CONTAINERSHIPS
FLEET AND ORDERBOOK FLEET AND ORDERBOOK

Meanwhile, newbuilding orders totaled 363 vessels for 2.6

FLEET AND ORDERBOOK M teu, versus a record 556 ships for 4.2 M teu in 2021.
MSC alone ordered 60 vessels for 627,400 teu, a staggering
figure. The orderbook now stands at a whopping 7.4 M teu
As of 1 January 2023, the world cellular containership fleet stood at 5,706 representing 28.8% of the existing fleet.
ships, totaling 25.9 M teu. The fleet grew by 1 M teu compared with 1 January
2022, as 182 new ships hit the water including the 24,004 teu EVER ALOT 2023 will see the fleet growing much faster than in 2022,
which became in June the world’s largest container vessel. with over 2.4 M teu expected to be delivered. Unless
demand rallies strongly, this huge influx of capacity will
Scrapping meanwhile stood at historic lows, with only three ships totaling 8.144 trigger a return of overcapacity, which will become more
teu sold for recycling. Despite attractive demolition prices hitting $700/ldt on acute in the second half of the year.
the Indian Sub-Continent, and $470/ ldt in Turkey, owners had little incentive to
get rid of their ships in 2022, especially in the first half of the year, considering Consequently, scrapping is expected to pick up strongly,
the massive profits they could achieve by trading their vessels in a historically with 350,000 teu projected to reach the beaches
strong charter market. on the back of weak trading conditions and tougher
environmental regulations impacting some of the older,
least efficient, ships.

Alphaliner - 2021-2022 - Cellular ships - Essential figures

Ships TEU % Change YoY Ships TEU

Alphaliner - Cellular fleet as of 31 December 2022
st
Fleet as at 31 Dec 2022 5,706 25,996,005 4.11% Fleet as at 31 Dec 2021 5,515 24,970,022

Orderbook as at 31 Dec 2022 938 7,478,031 28.6% Orderbook as at 31 Dec 2021 718 5,814,080
• The cellular fleet counts 5,706 ships of 26 million teu - of which 45.3% is chartered from non-operating owners Orderbook as % of fleet 28.8% Orderbook as % of fleet 23.3%
• The cellular fleet represents 98.5% of the total capacity deployed on liner trades in teu terms
2022 - Containerships activity 2021 - Containerships activity
> Total capacity active on the liner trades is 6,512 ships of 26.39 million teu and 315.9 million dwt

• The orderbook counts 938 ships of 7.48 million teu representing 28.8% of the existing fleet (firm orders only) Ordered 2022 363 2,654,940 -37.5% Ordered 2021 556 4,249,796

• The orderbook includes 380 ships for 2.78 million teu with charter status representing 37.2% of the total orderbook Value of new orders (Est.) Value of new orders (Est.)

Delivered 2022 182 1,009,923 -6.0% Delivered 2021 153 1,075,290

31st December 2022 - Existing 31st December 2022 - Orderbook Deleted 2022 5 10,379 -37.1% Deleted 2021 19 16,521

Size ranges All Of which chartered from NOO All Of which chartered from NOO Breakdown Breakdown

teu ships teu ships teu % Cht ships teu ships teu % Cht O/E Scrapped 3 8,144 -40.8% Scrapped 18 13,778

18,000-24,000 153 3,210,603 51 1,052,626 32.8% 68 1,620,500 20 478,084 29.5% 50.5% De-celled De-celled
15,200-17,999 77 1,245,930 24 380,404 30.5% 120 1,906,721 64 1,006,077 52.8% 153.0%
Lost 2 2,235 -18.5% Lost 1 2,743
12,500-15,199 276 3,807,456 142 1,964,608 51.6% 109 1,542,308 18 262,624 17.0% 40.5%
10,000-12,499 206 2,262,213 137 1,492,973 66.0% 13 149,550 0 0 0.0% 6.6% Average idle fleet 2022 893,002 47.2% Average idle fleet 2021 606,410

7,500-9,999 478 4,242,952 219 1,957,303 46.1% 103 801,868 41 317,868 39.6% 19% Idle fleet at end Dec 261 1,436,698 154.7% Idle fleet at end Dec 165 564,021
5,100-7,499 437 2,727,053 199 1,231,867 45.2% 75 454,597 57 342,617 75.4% 16.7%
Average SCFI 2022 3,410 -9.9% Average SCFI 2021 3,785
4,000-5,099 630 2,855,687 265 1,189,015 41.6% 18 82,176 0 0 2.9%
3,000-3,999 271 937,424 130 455,968 48.6% 80 261,718 24 80,800 30.9% 27.9% SCFI end Dec 1,108 -78.0% SCFI end Dec 5,047

2,000-2,999 793 2,014,608 338 852,094 42.3% 121 315,760 48 133,358 42.2% 15.7% Av. Alphaliner charter index 2022 421.2 35.8% Av. Alphaliner charter index 2021 310.1
1,500-1,999 698 1,213,914 278 490,560 40.4% 133 239,611 61 109,591 45.7% 19.7%
Index at end Dec 144.8 -66.5% Index at end Dec 432.8
1,000-1,499 738 848,266 355 418,355 49.3% 81 94,617 41 49,764 52.6% 11.2%
500-999 771 571,590 352 269,964 47.2% 11 7,310 3 1,950 26.7% 1.3% Average FO $/ton 2022 (Rtm/Sin) 514 25.3% Average FO $/ton 2021 (Rtm/Sin) 410

100-499 178 58,309 55 18,456 31.7% 6 1,295 3 640 49.4% 2.2% FO $/ton end Dec 379 -10.6% FO $/ton end Dec 424
Total 5,706 25,996,005 2,545 11,774,193 45.3% 938 7,478,031 380 2,783,373 37.2% 28.8%
Average VLSFO $/ton 2022 (Rtm/Sin) 762 44.6% Average VLSFO $/ton 2021 (Rtm/Sin) 527

Note: The existing chartered fleet takes into account ships chartered out by non-operating owners to operators, thus it does not take into VLSFO $/ton end Dec 575 -0.3% VLSFO $/ton end Dec 402
account 233 ships for 489,250 teu which are normally owned by an owner-operator but chartered out to another operator, either for
operational reasons (operational exchanges within alliances or partnerships) or because they are surplus to their owners’ requirements.

138 Picture: The 24,004 teu EVER ALOT became the world's largest container vessel upon delivery in June 2022. Photo: Teun Put. BRS Group - Annual review 2023 BRS Group - Annual review 2023 139
 CONTAINERSHIPS CONTAINERSHIPS
SECOND HAND MARKET SECOND HAND MARKET

A total of 295 container ships equivalent to 950,300 teu were sold in 2022, a
SECOND HAND MARKET decline of 49% by number and 53% by capacity compared with the records set
in 2021, when a final breath-taking tally of 2.04 m teu was sold.

End of the Bonanza Most purchases were again in favour end users, and MSC continued its buying
spree into the second half of the year. In total the world’s largest container line
purchased 44% of the total teu capacity sold during 2022, with 92 vessels for
The number of cellular container vessels changing hands
420,000 teu. CMA CGM was the next most active carrier, snapping up 31 ships
on the sale and purchase market dropped sharply in
for 102,500 teu. By contrast, non-operating owners were conspicuously absent
2022, falling back in line with averages seen over the
from the buying market. SFL Corp’s September purchase of two 2,500 teu eco-
previous decade, and driven by a near total collapse in
design feeder container newbuildings from Goto Shipping was the only deal to
deals in the last quarter of the year.
emerge during the year involving a top-10 non-operating owner.

The majority of the sales were concluded in the first half of year. Deal volumes
slowed dramatically in the second half of the year, and a collapse was also
Sales by age segment in 2022 by number of ships evident in prices. The sale of the 8,814 teu NORTHERN JUPITER (built 2010) to
Maersk in June for a reported $133 M gave way to the sale of the sister ship
NORTHERN JASPER to MSC in October for $85 M as reported by brokers, a drop
>25 yrs Re-sales of 36% (see table below). Similarly, the 4,253 teu ‘classic Panamax’ GENOVA,
5% 5%
built in 2007 was also sold in October for a reported $45 M. Comparable
<5 yrs
2011 2012 2013 2015 2016 2017 2018 2020 5% 2022
2021 tonnage was being sold in May for in excess of $70 M and is now fetching only
20-24 yrs between $20 M and $25 M.
14%
5-9 yrs
Alphaliner SCFI 10% The 2,826 teu IRENES RAINBOW (built 2006) was also purchased by CMA CGM
in May for $45 M, with the French line additionally picking up the 2,592 teu,
high-reefer and ice class ‘1A’ MAERSK NIAGARA* (built 2008) the same month
for $50M. In contrast, in December, MSC is believed to have paid $21 M for
the 2,824 teu CARPATHIA (built 2003), while the 2,553 teu [Link] (built 2007) Top operators second-hand appetite
was sold also in December for a reported $13.5 M.
active in the next few months. At the same time, the largest buyers such as MSC
Sale and purchase price prospects are unlikely to improve anytime soon, due are also expected to remain present in the market with selective acquisitions. Operator Units Average Size / Age
to the looming overcapacity triggered by the monumental orderbook. As such, On a bright note, the uncertainties created by the new carbon regulations are
the market could hold interesting opportunities for buyers that have so far expected to convince owners to get rid of their older, less energy-efficient 98 units
been excluded from the market due to the prohibitive cost of tonnage. Among 1 MSC 4,540 teu / 17.5 years
10-14 yrs ships, that would otherwise continue to appear on the second-hand market Q4:13 | Q3:16 | Q2: 39 | Q1:30
15% them are smaller regional carriers and some NOOs, which could become more for further trading.
15-19 yrs 33 units
2 CMA CGM 3,3353 teu / 10.7 years
36% Q4:3 | Q3:4 | Q2:14 | Q1:12
Overall, sales of units in the 1,500-1,999 teu segment proved the most popular
in 2022, representing 20% of all deals concluded. Meanwhile, the largest Wan Hai 9 units
3 2,807 teu / 5.7 years
number of sales were made in the 15-19 year age bracket as buyers were Lines Q4:0 | Q3:5 | Q2:1 | Q1:3
pushed towards older tonnage in the absence of younger sales candidates.
Overall, more than 55% of all sales involved ships of 15 years and over, while 6 units
Breakdown of 2022 sales by
by month
month Container ships sales by
by year
year since
since 2010
2010 4 MAERSK
Q4:0 | Q3:0 | Q2:1 | Q1:5
3,755 teu / 13.5 years
units in the 15-19 year bracket comprised 36% of transactions by number, up
Mteu Ships from 25% in 2021. Transfar 5 units
Mteu Ships 5 1,982 teu / 4.8 years
Shipping Q4:0 | Q3:0 | Q2:1 | Q1:4
200,000 80 2.2 700

50% of deals 2.0

Top of NOO second hand purchases Top sellers by units
70 600
1.8
Tonnage
150,000 60 Units Average Size / Age Sellers Units Average Size / Age
1.6 500 Providers
1.4
50 6 units Goto Ship- 15 units
400 1 Sea Consortium 1,426 teu / 4.7 years 1 1,674 teu / 7.7 years
1.2 Q4:0 | Q3:2 | Q2:2 | Q1:2 ping Q4:1 | Q3:4 | Q2: 5 | Q1:5
100,000 40
1.0 Contships 5 units 11 units
300 2 1,105 teu / 8.6 years 2 Lomar 2,243 teu / 11.4 years
Management Q4:4 | Q3:0 | Q2:0 | Q1:1 Q4:4 | Q3:1 | Q2:1 | Q1:5
30 0.8

200 5 units 10 units

50,000
0.6 3 Conbulk 2,896 teu / 18.2 years 3 MPC 3,388 teu / 11.6 years
20 Q4:1 | Q3:2 | Q2:1 | Q1:1 Q4:2 | Q3:3 | Q2:3 | Q1:2
0.4
100 Pacific Int'l Lines 4 units 10 units
10 4 3,740 teu / 10.8 years 4 Borealis 2,740 teu / 15.5 years
0.2 (PIL) Q4:0 | Q3:1 | Q2:0 | Q1:3 Q4:2 | Q3:0 | Q2:2 | Q1:6
0 0 0 0
Mount Street 4 units Capital Ship 8 units
5 1,945 teu / 21.0 years 5 8,228 teu / 8.1 years
J F M A M J J A S O N D 2010 2011 2012 2013 2015 2016 2017 2018 2020 2021 2022 Capital Investment Q4:0 | Q3:0 | Q2:1 | Q1:3 Management Q4:0 | Q3:0 | Q2:5 | Q1:3

Teu No of sales Sales linked to Hanjin bankruptcy Sales by volume Sales by units

TEU No of sales Source: Alphaliner

Sales linked to Hanjin bankruptcy Sales by volume Sales by units Picture: Bangkokmax tonnage (typically of 1,700-1,900 teu) continues to be very popular with carriers, with no fewer than fifty
newbuildings joining the fleet in 2022. Among them, the 1,781 teu SITC SHENGDE, delivered in October to Chinese Intra Asia specialist SITC.
140 BRS Group - Annual review 2023 BRS Group - Annual review 2023 The ship is seen here passing another 'Bangkokmax', the 1,952 teu CNC MARS on Bangkok's Chao Phraya river. Photo: Teachers. 141
 CONTAINERSHIPS CONTAINERSHIPS
SECOND HAND MARKET SECOND HAND MARKET

Over-Panamax: 45 sales (77 in 2021) Lomar Corp. 2 900 teu and less: 31 sales (40 in 2021)
Sinokor 2
Average age 15.5 years. Average age 20.4 years.
Total teu capacity: 326,357. Minsheng Financial Leasing Co Ltd 2 Total teu capacity: 20,926.
Unit breakdown per quarter: TRF Ship Management AS 2 Unit breakdown per quarter:
Q1: 20 I Q2: 20 I Q3: 4 I Q4: 1 Q1: 7 I Q2: 7 I Q3: 9 I Q4: 8
XT Shipping Ltd (c/o XT Management Ltd) 2

Analysis of 2022 transactions by size Largest Buyers Units

Capital Ship Management Corp. 2
Largest Buyers Units
A.P. Moller-Maersk 2
MSC 29
Containers in short supply Boluda Corp. 3
CMA CGM Group 4
Fonway Shipping Co Pte Ltd 2
OOCL 2
N° of transactions
Size
2022 vs 2021
Variation
Hapag-Lloyd 2
2,000-3,000 teu: 62 sales (108 in 2021) Fujian Shipping Group 2

Ocean Yield AS 2 Average age 14.3 years. Medkon Lines 2

>10,000 teu 7 vs 25 -72% Total teu capacity: 161,717.
Largest Sellers Units Transit LLC 2
Unit breakdown per quarter:
Seamax Capital Management 5 Q1: 26 I Q2: 13 I Q3: 12 I Q4: 11
Over Panamax 45 vs 77 -4 2 % Largest Sellers Units
NSB Niederelbe 4
Yong Yue Ocean Shg Co 2
3,000 – 5,100 teu 52 vs 135 -61% Costamare Shg 4 Largest Buyers Units
RCL (Regional Container Line) 2
Eastern Pacific Shipping (EPS) 4 MSC 21
2,000 – 3,000 teu 62 vs 123 -4 9 % Schulte Group 2 CMA CGM Group 6 HS Schiffahrts 2

Navigare Capital Partners 2 Wan Hai Lines 5 Qingdao Pengteng Int'l Ship Management 2
900 – 2,000 teu 111 vs 185 -4 0 % Danaos Shg 2 Largest Sellers Units Goto Shipping (Starocean Marine Co Ltd) 2
V. Ships (Hamburg) GmbH & Co. KG 2 Tufton Oceanic Ltd 8
< 900 teu 31 vs 48 -35%
Shoei Kisen 2 Borealis Maritime Ltd 5
Zeaborn Ship Management GmbH & Cie. KG 2 SITC 4
Some analysts bet on a market recovery as early as 2024
provided enough tonnage reaches the recycling beaches
MPC Group 2 CSBC 4 and slower speeds have been adopted by operators forced
Capital Ship Management Corp. 2 Lomar Corp. 4 to comply with IMO Carbon Intensity Indicator (CII) rules.

One has to notice that European scrapping is controlled

by a very limited number of small yards. While yards in
Ships over 10,000 teu: 7 Sales (22 in 2021) 3,000-5,100 teu: 52 sales (126 in 2021) 900-2,000 teu: 111 sales (180 in 2021) Turkey, which offer the largest recycling sites, are already
full for the next 9 months. With this in mind, we consider
Average age 4 years. Average age 15.2 years. Average age 13.0 years. that one of the keys to a market recovery is, partly, in the
Total teu capacity: 91,856. Total teu capacity: 216,133. Total teu capacity: 161,864. hands of the policy makers behind the EU Ship Recycling
Unit breakdown per quarter: Unit breakdown per quarter: Unit breakdown per quarter: Regulation (EUSRR) and whether they decide to include the
Q1: 1 I Q2: 4 I Q3: 0 I Q4: 2 Q1: 16 I Q2: 20 I Q3: 13 I Q4: 3 Q1: 35 I Q2: 34 I Q3: 26 I Q4: 16 “greenest” Indian demo yards in their white list.

Largest Buyers Units Largest Buyers Units Largest Buyers Units

Capital Product Part-ners 3 MSC 25 MSC 19 Some analysts
MSC

Evergreen Group
3

1
CMA CGM Group

Pacific Int'l Lines (PIL)

9

3
CMA CGM Group

Sea Consortium
14

6
bet on a market
Largest Sellers Units Largest Sellers Units Largest Sellers Units recovery as early
as 2024 provided
Capital Ship Management Corp. 3 Seaspan 4 Goto Shipping (Starocean Marine Co Ltd) 11

Seaspan 1 Sinokor Merchant Marine 3 Lomar Corp. 5

Zeaborn Ship Management GmbH & Cie. 1 V. Ships (Hamburg) GmbH & Co. KG 3 Mandarin Shipping Ltd 4 enough tonnage
reaches the
Doun Kisen 1 MPC Group 3 Briese Schiffahrts. 4

Navigare Capital Partners 1 Seaspan Corp. 2 Songa Box As 4

Borealis Maritime Ltd 2 Vega Reederei 4 recycling beaches

Trawind Shipping Co Ltd 2

Eastern Pacific Shipping (EPS) 2

and slower speeds
Sea Consortium 2
have been adopted
by operators

142 BRS Group - Annual review 2023 BRS Group - Annual review 2023 143
MPP

Enthusiasm and
Corrections – The
Multipurpose Market
in 2022
In 2022, the multipurpose market exhibited
a variety of emotional highlights. From
extraordinary, exciting levels down to reality
with more reasonable but still positive results
for Owners and Charterers.

RONNIE
F500 design, about 12, 234 mts dwat, built 2021, Loading part cargo
at Hamburg’s south west terminal direction Chittagong and Mongla.

145
 LINER MPP LINER MPP
MARKET OVERVIEW PERSPECTIVES FOR 2022

MARKET OVERVIEW

At the beginning of 2022 we saw Owners celebrating very firm timecharter

rates supported by a substantial freight market which persisted until the
end of the summer. Multipurpose Owners had the liberty to choose between
container business, project and breakbulk cargoes. Since container freight rates
were extremely high, container lines could not accept additional volumes. The
container cargo side still did not see any alternatives apart from looking at any
suitable and available shipping capacity in the market. The MPP Owners were
in the luxurious position to be in driving seat and accordingly generated very
healthy returns.

The market in 2022 started in much the same way that 2021 ended. Despite a
slight drop in activity, the market remained stable and consequently reported
fixtures saw rate levels in the low $30,000s for mainly medium period
charters. Charterers were even fixing larger MPP’s out of the Atlantic (notably
the Continent and the Mediterranean) in order to ballast them to the Far East,
for picking up mainly container cargoes to ship them back to the Continent.
Furthermore, the Pacific market paid very well, resulting in Dry Bulk and MPP
carriers taking containerized cargoes to ship them from Far East, especially
China, to US East, West and Gulf Coasts. On these trade lanes, Charterers
and Operators ballasted their vessels back to Far East since the freight rates
were firm and the bunker prices low enough. Obviously the MPP market was
propelled by both firm container and bulk markets. During the peaks, some of
the usual MPP Charterers even decided to focus on containers, instead of the
windmill cargoes. Usually, in a “normal” MPP market, wind energy cargoes pay
fairly well. However, in this exceptionally high market, not only did the larger
MPPs benefit, but also the compact MPPs (10,000 – 12,000 dwat) participated
in container feedering services and managed rates of around low $20,000/day
for medium periods.

Starting from the third quarter all the way until the end of the year, the MPP
market saw a well anticipated correction. The Atlantic market became very quiet,
and vessels started having trouble to find suitable employment, consequently
being forced to accept lower rate levels. One of the main reasons for this was
the depressed dry bulk market with lower freight rates and a high volume of
open tonnage. Furthermore, higher bunker prices and a collapsing container
market had a direct influence on the MPP sector. On top of that, we saw the
first negative impacts from the war in Ukraine, influencing the corrections
dramatically, resulting in lower time charter rates after the summer break. For
example, in summer we saw employments for larger MPP’s in the region $25-
30,000 /day levels and by September, these had dropped to the $20,000/day
level and even lower. That being said, premiums were still paid for Owners who
remained willing to call at Russian ports. Two of the main countries which have
continued to import from and export to Russia are China and India. With the
ongoing war in Ukraine and the imposition of further restrictions and sanctions,
Russian connected operators became more active and purchased various larger
MPP units of 28,000 dwat for exceptionally high prices, in the range of $26-
28 million. Unfortunately, the aforementioned sales of various MPP sizes had
no significant influence on timecharter rates. The main reason for this was the
ongoing downward correction of the container and dry bulker markets.

The MPP market remains a niche and the

outlook is sunny but also partly cloudy
Pictures: BBC ARKHANGELSK, Sdari Ecotrader 12500 design, about 12,325 mts dwat, built 2020, geared with 2x 250 cranes which are combinable, with windmill
Pictures: ESL AFRICA, loading in Hamburg South West Terminal bagged cargoes and general cargoes direction West Africa, managing owners: Euroafrica equipment on her way to Vaasa, Finland. Photo: Esa Siltaloppi, Media Ltd; LILA MUMBAI, Superflex MPP design, about 29,912 mts dwat, built 2003 – vessel during her
146 Shipping Lines, built December 2007; KEITH, F500 design, about 12,234 mts dwat, built 2019, loading cable reels from Newcastle upon Tyne. BRS Group - Annual review 2023 BRS Group - Annual review 2023 stay in Hamburg, February 2023 loading for account Chipolbrok steel products and project cargo like propeller for MSC container newbuildings direction feast. 147
 LINER MPP LINER MPP
PERSPECTIVES FOR 2023 PERSPECTIVES FOR 2021

Multipurpose Time Charter Rate Development

F-type 12.500 Tons Deadweight, Geared 2013 - 2022*
Multipurpose Time Charter rate development
Multipurpose Time Charter Rate Development
$/Day

F-type 12.500 Tons Deadweight, Geared 2013 - 2022*

23,000
$/Day

20,000
23,000

17,000
20,000

14,000
17,000

10,849 $
11,000
14,000

9,234 $

8,000
11,000

5,000
8,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Daily Time Charter Rate 10 years TC Average 5 years TC Average

5,000 Daily Time Charter Rate 10 years TC Average 5 years TC Average
* 2013-2015: compiled from own fixture information; 2016-2022: -TMI -Toepfer's Multipurpose Index
2013 2014 2015 2016 2017 2018 TOEPFER TRANSPORT
© COPYRIGHT 2019 GMBH 2023 2020 2021 2022

Daily Time Charter Rate 10 years TC Average 5 years TC Average

Fleet and Average Age Evolutions ($/Day)
* 2013-2015: compiled from own fixture information; 2016-2022: -TMI -Toepfer's Multipurpose Index PERSPECTIVES FOR 2023
© COPYRIGHT TOEPFER TRANSPORT GMBH 2023

Charter
24,000 rate 2022
Fleet and Average Age Evolutions ($/Day)
23,099
$/Day Where do we stand at the end of the year 2022 and what is the outlook? The
22,274 MPP market remains a niche and the outlook is sunny but also partly cloudy.
22,000
24,000
Existing tonnage is getting older, and traditional MPP tramp owners are
23,099 disappearing from the scene either due to the sale of their fleets or retirement.
20,000
22,000
22,274
Meanwhile, prices from shipyards remain strong, thereby capping orders for
MPP newbuildings. Indeed, there have only been orders for a very limited
The question
18,000
number of newbuildings, and these have been placed mainly by lines and
operators but not from tramp owners. Consequently, and following this period remains: Is the total
20,000 17,827
of sustained profitability, some tramp owners decided to drydock older tonnage
of 20 years and to continue trading them. This has seen Charterers’ requests volume of MPP
that brokers only offer younger tonnage become unrealistic as the MPP fleet
16,000
18,000 already has an average age of about 16 years. Moreover, the cargo side needs tonnage sufficient to
to realise that the MPP market will mainly offer “experienced” tonnage during
cover the upcoming
17,827
the coming years. Only 30% of the present MPP fleet is under 10 years of age!
14,000
This could mean possible higher earnings for younger tonnage.
volumes of cargoes
16,000
Mar Apr May Jun Jul Aug Sep Oct Nov Dec

The question remains: Is the total volume of MPP tonnage sufficient to cover
14,000 the upcoming volumes of cargoes and projects? We doubt that this is the case.
Thinking ahead, and hoping for a quick end of the war between Russia and
and projects?
Mar Apr May Jun Jul Aug Sep Oct Nov Dec
TC Ukraine, we expect a number of additional projects and requirements in the
market. As a result, we expect older MPP vessels will go for another drydock and
life cycle. Under the scenario that the container and or bulk markets firms, the
outlook for MPP’s is positive but the fleet needs a renewal as soon as possible.
TC The difficulty is the willingness of shipyards to build highly sophisticated MPP
Sources: Toepfer Transport GmbH
/ heavy lift tonnage and for Charterers & investors to be patient and wait 4-5
years before the delivery of their vessels.

148 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture: AAL PULSAN, A-Class, Managing Owners: Schöller Group, about 32279 mts dwat, built 2012, loading Rubber tried Gantries (RTG). 149
Ro-Ro

New Heights
After a strong initial start to the year, uncertainty
soon set in, brought on by talk of high inflation
and rising interest rates leading to a general
economic downturn. Russia’s invasion of Ukraine
cemented this uncertainty, with the ensuing
jump in energy prices boosting inflation and
causing interest rates to climb further. The
optimism of the previous nine months of post-
Covid-19 recovery evaporated and by Q2 cargo
volumes in the lower Baltic Sea trades were
noticeably down. Despite these legitimate
macro-economic and invasion related concerns,
market activity remained at a high tempo overall
due to the simple mismatch in demand for RoRo
tonnage and corresponding supply. The increase
in bunker prices, while problematic for the
RoPax and Ferry segments, failed to curb the
effects of the supply and demand imbalance in
the RoRo segment which witnessed new highs
for sales and purchase transaction prices and
charter rates through the course of the year.

MISANA
One of the two sisters 2200 LM RoRos on long terms TC to Sea-
Cargo, Bergen. She sails between Norway's west-coast and the North
Continent. Seen here loading at Norsk Hydro's aluminium plant in
Høyanger, Norway.

Photo: courtesy Godby Shipping Ab

151
 RO-RO
CHARTERING ACTIVITY

Sale and purchase activity services from the Benelux countries, Spain and Portugal
to Ireland. They now also have a strong service offering
Sale and purchase volumes were considerably higher in 2022 than 2021, as for west coast UK-Ireland.
34 ships changed hands compared with 21 in 2021. This marked a sustained
increase compared with 2020 when only 8 transactions in the segment were Smaller, older ships of up to 1200 LM were sold at
recorded. around €4 million, compared with prices of €2.5-3.5
million in 2021. Slightly larger 90s built ships of 1200-
The average age of the ships sold was 25.7 years compared with 27.5 years 1600 LM were sold for about €5-7 million, a handsome
in 2021 and the average size was just above 1860 LM versus 1,590 LM in increase on the previous year. In the smaller segment
2021. This increase in average LM capacity was achieved through the sale there are fewer and fewer good candidates left, meaning
of some very large ships. The large 6030 LM, quarter-ramp equipped Con-Ro that prices ought to stay strong. End-90s built ships of
vessel Jolly Diamante was sold and renamed Liberty Power. Built in 2011 1600-2500 LM were sold for prices in the region of €11-
at Daewoo Shipbuilding in South Korea, she was sold by Messina/MSC joint- 13.5 million.
owned company to Liberty Maritime based in the USA for a reported price of
USD 72 million. Several large 4076 LM Flensburger built ships also found new At the end of 2022 many operators withdrew ships
Owners; Gardenia Seaways was renamed Ulusoy 16 when she was purchased from the S&P market in order to 'sit and wait' with the
from Siem Group by Ulusoy in Tukey via a BBHP deal. Her sister ship Tulipa view that cargo volumes will further increase as 2023
Seaways was sold by Siem Group to DFDS when DFDS declared their purchase progresses, and in particular that demand from the PCC/
option after 5 years of BB charter. Another sister ship, Fadiq, was sold to a PCTC sector will continue to spill-over into the RoRo
Danish pension fund who in turn bareboat chartered her to DFDS. sector, with operators willing to charter at very healthy
rates for periods of a few weeks up to 12 months.
The Odense built Eurocargo Sicilia with 3663 LM was sold by Grimaldi to
Baja Ferries at a reported price of about €30 million. The last done sale of We expect the secondhand market for RoRos to remain
a sister vessel was the POL Stella sold in 2021 for a reported price of €25.5 firm in 2023.
million. The difference in price serves as a good example of the general
second-hand price increase of 15-20% experienced during 2022, depending
on size, age and whether vessels are scrubber fitted or not.
The taut demand / supply situation for RoRo tonnage that existed at the end
CHARTERING ACTIVITY of 2021 tightened further in 2022 as volumes overall continued to increase
and operators secured vessels in response. Hire rates followed an upwards
CLdN RoRo S.A. based in Luxembourg bought Seatruck Ferries from Denmark
based Clipper Group. The deal was formalised last autumn after a tender Rates are averages
process involving several bidders. Seatruck owns and operates 8 RoRo ships
Apart from the lower Baltic Sea, cargo volumes in 1Q22
trajectory even with soaring fuel prices. Ships were in short supply across the
board. In the 1000-2000 LM segment a little more availability was seen, but of 1850 LM – 2150 LM built between 2008-2012, purposefully designed for including ships with
their services between Warrenpoint-Heysham, Dublin-Heysham, and Dublin-
were surprisingly firm, up 3-4% year-on-year (y-o-y),
bucking the usual trend of a dip in Q1 after the Q4 rush to
Owners did not have to wait long to find employment.
Liverpool. CLdN RoRo S.A. has been building up a substantial portfolio of and without fitted
secure freight. This was in contrast to general sentiment
which was understandably impacted by the effects of the Charter market with scrubbers
war in Ukraine, particularly increasing energy prices. By
the third quarter it was clear that general sentiment was The rhythm of chartering activity was considerably slower in 1Q22 than in
grounded in the developing macroeconomic reality of 1Q21. The number of fixtures concluded in the quarter was about 40% down
rampant inflation, and cargo volumes dipped 5-6% y-o-y. y-o-y, proceeded by a similarly lacklustre 2Q22. Demand for ships eventually
Volumes fell most notably in the Lower Baltic and English increased in Q3 marking a quarter-on-quarter rise of 25%. Fixtures increased in AverageCharter
Average Charter Rates
Rates from
from 2012
2012 to 2022
to 2022 (including ships with and without fitted with scrubbers)
Channel. Meanwhile, North Sea volumes flattened. In line Q4, up about 45% on Q3, but still 25% down on what was a very active 1Q21. €/day
€/day
with the coaster shortsea segment, RoRo volumes in the Overall, the number of fixtures concluded in 2022 was close to 30% lower than
25,000
Mediterranean increased, with Turkey maintaining strong 2021. Despite this, more long period deals were concluded, with a considerable
export volumes and operators on France/Italy/Spain number of ships secured for 12 to 24 months and 3-year periods at rates 24,000
21,000
to North Africa trades increasing capacity to cater for around 10-25% higher than the previous year, depending on the segment and
20,000
demand. whether the ships were scrubber fitted or not. Soaring oil and bunker prices
driven by Russia’s invasion of Ukraine naturally pushed up demand for scrubber 16,250
Cargo volumes for the year overall were down by an fitted vessels by Charterers keen to cut their fuel costs. Fuel cost savings of
15,000
estimated 2% y-o-y. Weakening volumes in Q3 and around 50% could be achieved when sailing in SECA (0.1% sulphur) zones with a
in particular Q4 detracted from the more stellar Q1 scrubber fitted vessel burning 380 Cst fuel. Meanwhile, savings of around 75% 13,500

volumes, leading to the closure of some new services were possible when burning 380 Cst outside SECA zones.
10,000
which had started in 2021. Hansa Destination trading 10,000
Rostock, Nynähavn and Visby which started operating The very hot PCC/PCTC market led to several RoRos with car decks being
in the Spring of 2021, supported by subsidies from the chartered by car carrier operators, with this ‘spill over’ trend strengthening as
5,000
Swedish government, was closed due to high fuel costs the year progressed.
and insufficient cargo volumes. Prior to its closure, the
route was operated using one RoPax of 1800 LM and one Looking forward, and a general scarcity of tonnage will remain the defining
0
RoRo of 2500 LM. Scandic Line trading between Riga and feature of the market for 2023 and in all likelihood hire rates will continue on 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1
2012 2013 2014 2015 2016 2017 2018 2019 2020 Q12021
2021 Q2
Q22021
2021 Q3
Q3 2021
2021 Q4
Q4 2021
2021 Q1
Q1 2022
2022 Q2
Q2 2022
2022 Q3
Q3 2022
2022 Q4 2022
Södertalje with a 1000 LM roro was also closed for the their upward trajectory. In 2022 a good number of newbuildings were delivered,
same reasons. relieving some demand pressure. However, a limited number of newbuldings
1,000-1,500 lm 1,501-2,000 lm 2,001-2,500 lm 2,501-3,500 lm 3,501-4,100 lm
will be delivered in 2023.

1000-1500 lm 1501-2000 lm 2001-2500 lm 2501-3500 lm 3501-4100 lm

Picture: The sisters CORONA SEA and HAFNIA SEA are on long terms TC to Transfennica sailing in the Baltic Sea. The ships are built in 2008, have Ice Class 1A,
152 scrubber fitted, 20 knots and 3350 LM over four cargo decks. Here they are seen in the port of Hanko, Finland. Photo: courtesy Leomar RoRo AB. BRS Group - Annual review 2023 BRS Group - Annual review 2023 153
 RO-RO
THE FLEET

THE FLEET

Newbuilding deliveries in 2022 Orderbook and new orders

15 newbuildings were delivered into the global RoRo fleet The number of newbuilding orders placed in 2022 stood at a record low of 5
in 2022 with a combined total capacity of 74,500 LM. ships. It is worth noting however that the ships ordered are large ones with a
Mainly these were large vessels with, on average, 4950 combined total of 34,000 LM and an average of 6,800 LM. In comparison, 2021
LM. In 2021, 10 ships were delivered with a combined total saw 11 orders totalling 37,000 LM with an average capacity of 3,360 LM.
of 50,000 LM. Newbuilding deliveries are set to decrease
in 2023, with 8 ships totaling approximately 30,000 LM One new order was placed in Japan for domestic trading, with 2,500 LM
scheduled, averaging 3,750 LM. Currently only 4 ships are capacity and a quarter stern ramp. CLdN RoRo ordered two large vessels again
scheduled for delivery in 2024, with a total approximate at Hyundai Mipo, these will be sisters to Celine and Delphine which were
capacity of just under 20,000 LM. delivered in 2017 and 2018, respectively, with 8,000 LM capacity. The new
sisters will be delivered in 2024 and 2025 and will sport a number of fuel
Wallenius SOL, the joint venture between Wallenius and saving features including Rotor sails.
Swedish Orient Line took delivery of two newbuildings from
CIMC Raffles. The ships are 6,442 LM, with high a capacity Grimaldi ordered two more of their GG5G series of 7,800 LM at Jingling, to
of 28'000 dwt each. They are also classed as Ice Class Super be delivered in 2025, bringing the total number of vessels in the series to 11.
1A, enabling them to call at ports in the Gulf of Bothnia all
year round. The orderbook decreased to 18 ships in 2022 compared with 27 in 2021, and
now totals 76,500 LM versus 114,500 LM, a reduction of about 33% year-
Grimaldi took delivery of seven ships, of which four were on-year. 6 of the 18 ships on order are between 1,150-2,500 LM and the
the last in their initial series of nine "GG5G" 7,800 LM remaining 12 ships between 4,000-8,000 LM.
vessels, and the other three slightly smaller ice classed
Finneco ships with 5,800 LM which will be trading in the The limited orderbook will keep supply low and rates under pressure, while
Baltic Sea. All seven ships were built at Jingling Shipyard. persistently high newbuilding prices should maintain a cap on new orders in 2023.

CLdN Group took delivery of Seraphine, their sixth and final

ship from a series of 5,400 LM RoRos. Seraphine and its Recycling activity
2021-built sister – Faustine – have been fitted with dual-
fuel LNG propulsion. Only 6 ships were sold for recycling in 2022, down from 10 ships in both 2021
and 2020. Accordingly, 13,400 LM was erased from the RoRo fleet versus 17,350
Four ships were delivered from Japanese shipyards to LM in 2021, an annual decrease of 23%. The average age of ships scrapped was
domestic Japanese operators. These ships are between 700 35,2 years, slightly more than the 2021 average of 33.4 years.
– 2,870 LM with quarter stern ramps.
The market was surprised to see the Blue Origin owned Jacklyn (ex-Stena
Freighter) sold for recycling in the USA . Built in 2004, she was only 18 years old.

With regard to future recycling in the RoRo segment, there are about 68 ships
Only 6 ships were aged 30 years or more and about 43 ships of over 35 years with more than
1,000 LM capacity. All of these are recycling candidates. There are only 12
FORECAST

sold for recycling ships aged over 35 with more than 2,000 LM. Based on these figures it is
reasonable to expect that the number of ships recycled in the coming years Cargo volumes are expected to trend downwards in the first half of 2023,
in 2022 should slightly increase, but that ships recycled will be of a smaller capacity. but with the small number of newbuilding deliveries anticipated, totaling
less than half the LM capacity that was delivered in 2022, a tight tonnage
situation should come across all size segments. Several large RoPax vessels Only 5 new orders
will be delivered over the course of the year with notable freight capacity.
Nonetheless, the RoPax orderbook is currently shrinking and the effect of the were placed in 2022
deliveries on the RoRo market is not expected to be significant.

We are likely in the middle of an economic downturn and improvements in

compared with 11
cargo volumes will likely only to be seen from the 2nd half of 2023. In general,
we expect an increasingly strong market with respect to charter rates and 2nd
orders in 2021
hand prices. We expect about the same number of charter deals, but maybe
less 2nd hand sales than in 2022. Demand will be outperforming supply and
the second half of 2023 is expected to show improvements in the hire rates.
In addition, if the PCC/PCTC market continues on its current trajectory, this will
simply add to the dearth of RoRos.

Pictures (top): BALTIC ENABLER, One of Wallenius SOL’s two large RoRo ships delivered in 2022 and built at CIMC Raffles, China. She has 6,442 LM
and is 28,000 dwt and Ice Class 1A SUPER. She will carry heavy forestry product and RoRo cargos from the Gulf of Bothnia to the Continent.
Photo: with courtesy from Wallenius SOL. (left): SEVERINE one of the two sisters sailing for the Italian MOD. She is 1756 LM and built in 2012 at
154 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Kyokuyo, Japan. She is owned by Cadena RoRo S.A., Switzerland. Photo: courtesy Cadena RoRo S.A. 155
 Car Carrier

The Sky
is the Limit
Buoyed by continued logistical and
supply chain inefficiencies, including port
congestions, combined with a surge in
Chinese vehicle exports (+54% year-on-year
with approximately 3.1 million vehicles),
particularly of electric vehicles (approximately
680,000 units, +120% Y-O-Y), the car carrier
sector sailed into unchartered waters, defying
pre-2008 market dynamics.

PLUMERIA LEADER
LNG-powered car carrier with post-Panamax beam with
approximately 7,000 CEU. Delivered in March 2022 by Shin
Kurushima Toyohashi in Japan to and operated by NYK.

COPYRIGHT © 2020 NYK LINE. ALL RIGHTS RESERVED. 157

 CAR CARRIER
CHARTERING ACTIVITY

the ongoing conflict in the Ukraine, continued general geopolitical tensions,

CHARTERING ACTIVITY recurring climate-related natural disasters, plus the ever-present possibility of
a “black swan” event. On the upside, 17 units are scheduled for delivery in
2023, so fleet growth is not due to be significantly affected until 2024, when
Chronic scarcity of supply and voracious demand for the first large wave of newbuildings (51 units) is due for delivery. In addition,
tonnage led to never-before-seen charter rates and asset low inventories and pent-up demand could boost cargo volumes. With a bit of
values. Ship owners got comfortable in their driving seats luck, therefore, demand side volatility could be offset by the tight supply side,
and were able to command longer durations on charter leading to another record year for the sector.
coverages. By the end of the year, the time charter rate
for a mid-size ship of 4,900 car equivalent units (CEU)
had reached the mid-70,000 United States Dollars (USD) The Ongoing Anti-Trust Investigation
for three years’ time charter, whereas that of a Panamax
beam ship of 6,500 CEU was in the mid-60,000 USD The sweeping investigation into the global car carrier price fixing scandal that
for five years’ time charter. In most cases, theCar Carrier
charter hasFleet
been Evolution
ongoing since 2012 saw some developments last year. In January,
revenues exceed the value of the ships! The conflict in the Competition Commission of India (CCI) passed a final order against four
Ships CEU
Ukraine had very little impact on market dynamics but Japanese companies – Nippon Yusen Kaisha (NYK), Kawasaki Kisen Kaisha (K
forced
80 operators to cease calling at Russian ports and Line), Mitsui OSK Lines (MOL) and Nissan Motor Car Carrier Co. (NMCC) – for
4,500,000
65 61
re-jig
60
their services, redeploying tonnage elsewhere, indulging in what58 it described
54 as “cartelisation in the provision of maritime
51 4,000,000
particularly to Asia-Pacific, where they were 38
immediately motor41 vehicle transport services.” All four were found guilty of breaching the
40 35 34
absorbed. Such was the appetite for space 31 from Original 22 Competition Act between 2009 and 2012 and24subject to penalties. In3,500,000
March,
21
15 no 19 22 20 21 14
Equipment
20 Manufacturers
14 (OEMs) 10
that some saw 14other
14 Hoegh Autoliners was fined 26.4 million Brazilian Real (BRL) by11Brazil’s Tribunal
3 10 8 11 7 8
2 5
solution
0
than to charter ships themselves. This was the of the Administrative Council for Economic Defence (CADE) 4
for participating in
3,000,000
case of1 Volkswagen 5
Konzernlogistik
5 1 (VWK),
1 SAIC
5
Anji
1 an international
1 1 4 cartel. At the same time, the Tribunal of CADE4 unanimously
7 6 7 7 9 8 2,500,000
-20
Logistics, BYD, Ford, and VinFast, all of which chartered agreed to dismiss the case 15 against
14 14 companies and individuals
15 that executed
21 24
tonnage
-40 directly. The traditional operators finally saw the agreements with the authority, namely MOL,
28 NMCC, NYK, Compañia Sud
2,000,000
35
tables
-60
turn and were able to negotiate cargo contracts with Americana de Vapores (CSAV), K Line, Wallenius Wilhelmsen Logistics, Eukor
the OEMs at substantially higher freight levels, thereby Car Carriers and 54 individuals. The cease-and-desist agreements commit the
1,500,000
-80
ensuring a virtuous and more sustainable industrial cycle. investigated parties to stop participating in anticompetitive practices and to pay
1,000,000
In this red-hot environment, investment appetite, which
-100 over 29 million BRL in financial contributions to the Ministry of Justice’s Fund
had already been re-ignited the previous year, exploded for De Facto Joint Rights. Last but not least, in December, the United Kingdom’s
108 500,000
-120
with 88 ships being inked for construction. After rising (UK) Court of Appeal ruled that a class-action suit on behalf of UK motorists
-140
from its ashes like a phoenix, the sector spread its wings against a group of shipping companies could go ahead. 0

and took off!

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Looking ahead, the expectation is that the logistical

and supply chain disruptions should ease throughout
the course of 2023. This should in turn release some
Delivered (Ships)
After ten years of penalties and
Demolitions (Ships) Fleet Evolution (CEU)
pressure from the sector’s current market dynamics, but
not nearly enough to threaten the newfound status quo. convictions, we still haven’t seen the THE FLEET
A massive 88 new orders were placed during 2022,
equivalent to approximately 660,000 CEU with an
Nevertheless, downside triggers remain high with the average intake of approximately 7,500 CEU. This marks
cost-of-living crisis, continued inflationary pressures, end of this unfortunate chapter a 125% surge Y-O-Y. Spurred by a sizzling charter market,
Based on a capacity of 1,000 CEU and above, at the turn of the year, the fleet tonnage providers and operators alike made a run for
counted 714 vessels equal to just under 4.0 million CEU, with an average age of the shipyards. Of note are the 23 units on order for
Fleet and
Fleet and Average Average
Age Age Evolutions
Evolution 14 years. It marks the third consecutive year that the 4.0 million CEU threshold account of Chinese operators SAIC Anji Logistics (5 units)
has not been breached since 2019. Compared with 2021, fleet and capacity and COSCO Shipping Specialized Carriers (18 units). In
Ships Age
Ships Age
growth were flat, each rising by a wafer thin 0.1% Y-O-Y, whilst average age rose addition, there are the units ordered by third parties and
800 16 by approximately 1% Y-O-Y. This is the second consecutive year of negligible already committed to Chinese operators, namely Zodiac
growth over the past five years, maintaining the average over the past five Maritime with BYD (2 units) and with SAIC Anji Logistics
700 14
years at approximately -1.1%. The last time the fleet experienced double- (2 units), Seaspan with COSCO Shipping Specialized
digit growth was in 2014 (13.6%). The overall orderbook ended the year at Carriers (3 units) and Santoku Senpaku with Guangzhou
600 a whopping 131 units, representing approximately 18% of the current fleet, Ocean Carrier (6 units), a joint venture between COSCO
12
stretching out up to 2027, and accounting for a total of approximately 970,000 Shipping Specialized Carriers, SAIC Anji Logistics and
500 CEU. For the second consecutive year, the orderbook to fleet ratio nearly trebled Shanghai International Port Group’s SIPG Logistics.
10
compared with the previous year (6.3%). Looking back over the past ten years, When you include the existing orders either directly made
400
the previous peak occurred in 2015 at 11%. 128 units, or approximately 98% of by Chinese operators or by third parties with charter
8 commitments from Chinese operators, then the Chinese-
this orderbook, are post-Panamax beam vessels, accounting for approximately
300
960,000 CEU, equivalent to approximately 99% of the CEU capacity on order. controlled fleet shapes out to be an armada of 38 ships!
200
6 Most importantly, a staggering 124 units, equivalent to approximately 95% of This marks a dramatic break with the past and sets the
this orderbook, are endowed with dual fuel liquified natural gas (LNG) propulsion, stage for Chinese operators to load vehicles of Chinese
200 4 reconfirming the sector’s embracing of this technology to cut greenhouse gas OEMs on Chinese built ships, clearly following in the export
(GHG) emissions, and to decarbonization. The exceptions include the 5 units for strategy model of Japanese and South Korean OEMs.
0 2 the Grimaldi Group, which are ammonia ready. Finally, approximately 27 units,
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
or approximately 21% of the orderbook, are without committed employment
upon delivery, equating to an estimated capacity of 192,000 CEU.
Fleet (Ships) Age average

Fleet (Ships) Age average

Pictures: NEPTUNE BARCELONA, car carrier with Panamax beam and with approximately 57,000 square meters on 13 decks equivalent to approximately 7,000 CEU with
158 BRS Group - Annual review 2023 BRS Group - Annual review 2023 3 hoistable decks and scrubber fitted. Delivered in July 2022 by 3 Maj Shipyard in Croatia to Neptune Lines and operated by Hyundai Glovis. 159
 CAR CARRIER
FLEET

These will start arriving, but mainly in 2024. It is then – perhaps – that operators
and owners will replace vintage tonnage for greener newbuildings.
Sale and purchase
Sale and purchase activity posted a strong performance for the third consecutive activity posted a strong
year with 45 transactions, up 40% Y-O-Y. The average age was 15 years, and
the average size was 5,200 CEU, for a total of approximately 237,000 CEU. The performance for the
activity was a mix of arms’ length sales including purchase options (31) and sale
& leasebacks. For a historically illiquid market, it confirms the dramatic shift in third consecutive year
investment appetite for the sector which had begun in 2021. However, given
the prohibitive values of assets, we do not expect activity to stay strong in the
coming year.
with 45 transactions

Fleet Evolution Car Carrier Fleet Evolution

Ships
Ships CCEU
EU

80 4,500,000
65 61
58 54
60
51 4,000,000
38 41
40 35 34
31 24 3,500,000
21 22 19 22 20 21
14 15 14 14 14
20
3 10 8 11 7 10 8 11
2 5 4 3,000,000
0
1 5 5 1 1 5 1 1 1 4 4
7 6 7 7 9 8 2,500,000
-20
15 14 14 21 15
28 24
-40 2,000,000
35
-60
1,500,000
-80
1,000,000
-100

108 500,000
-120

-140 0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Delivered (Ships) Demolitions (Ships) Fleet Evolution (CEU)

Delivered (Ships) Demolitions (Ships) Fleet Evolution (CEU)

Four units were delivered during the year, accounting for approximately 21,400
CEU, with an average capacity of 5,300 CEU. Deliveries slumped by approximately
64% Y-O-Y, down from 11 units, as did capacity with an approximately 65% fall,
down from 61,000 CEU. It goes to highlight how poorly invested the sector had 3-New_Orders_and_demo
Unsurprisingly, in been until the hot streak that began in 2021.
New Orders vs. Average Demolition Age
Ships
Ships Age
Age
Fleet and Average Age Evolutions
a booming market, Two units (Sumire & Freesia Leader) saw their delivery dates deferred to 2023,
accounting for approximately 14,000 CEU.
140
128
40
Age
Ships

demolition activity Unsurprisingly, in a booming market, demolition activity ground to a halt, with
120
800
35
16

ground to a halt nothing sold for the breakers and only one casualty, the Felicity Ace.
700
100
88
30
14

Looking ahead, 21 ships, or approximately 83,000 CEU, representing 2.9% of 600 73

25
80
the current fleet, will be 28 years old and above in 2023. In 2024, 25 ships, 12
20
or approximately 105,000 CEU, representing 3.5% of the current fleet will be 500
58
28 years old and above. As the prevailing hot market dynamics should endure 60
51 10
47 15
throughout the coming year, it is unlikely that these vintage ships will be retired. 400 39
36 34
The coming into effect of the Carbon Intensity Indicator (CII) is unlikely to pose 40
33 8
10
26
a real threat given the fact that its application and enforcement are still a work 300 24 21 23
26

in progress. Despite their attempts at greenwashing themselves as much as 20 6

5
200 9 9 8
possible these days, OEMs are unlikely to turn down poor-rated tonnage as long 3
6 5 3
1
as they are struggling to evacuate cargo and don’t have any greener alternatives. 0 0
4
200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0 2

1999 2000 2001

New Orders (Ships) 2002 2003 2004 2005
Average 2006 Age
Demolition 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Picture: AUTO ACHIEVE, second in a series of three car carriers with dual-fuel Liquified Natural Gas (LNG) battery hybrid propulsion and approximately 30,600 New orders (Ships) Average demo age

160 square meters on 10 decks, equivalent to approximately 3,600 CEU with 2 hoistable decks. Delivered in June 2022 by Jiangnan Shipyard in China for United European BRS Group - Annual review 2023 BRS Group - Annual review 2023 161
Car Carriers (UECC) and operated by UECC. Fleet (Ships) Age average
Mercy Ships

Floating hospitals.
Vessels of hope.
Since over 50% of the world’s population lives
near a coast, our ships are the best way to reach
people in need with personalized, state-of-the-art
medical care.

GLOBAL MERCY
37,000 Gt, is the world's largest civilian hospital ship, constructed
as the first purpose-built floating hospital for the humanitarian
organization Mercy Ships with 6 operating theaters, 199 hospital beds
and 641 volunteers onboard. Build by Stena Roro, Göteborg Sweden.

AFRICA MERCY
16,572 Gt a former rail ferry named Dronning Ingrid (Queen Ingrid)
converted into a hospital ships by Mercy Ships with 5 operating
theaters, 82 hospital beds with 450 volunteers onboard.
Build by Helsingørs Værft AS, Elsinore, Denmark

163
 MERCY SHIPS MERCY SHIPS
CARGO DAY TESTIMONIAL

Around the world, in places without access to medical care,

there are children, teens and adults suffering and dying from TWO HOSPITAL SHIPS TO BRING HOPE
treatable causes. Without help, one child in eight will die Cargo
MercyDay Results
Ships Cargo Day results AND HEALING IN WEST AFRICA
before the age of 5. Together, we can reach these vulnerable
children and families and provide hope and healing. $$

2,000,000
Our hospital ships are filled with state-of-the-art medical Mercy Ships, an international humanitarian NGO, was founded in 1978
equipment and a volunteer crew of doctors, nurses, medical by Don & Deyon Stephens in Switzerland. For more than 40 years, this
1,750,000
staff, technicians, teachers, physical therapists and other humanitarian NGO has been providing surgery to the most vulnerable
caring people driven by mercy to help make the world a 1,500,000 people in Africa.
better, healthier place for all.
1,250,000 2022 was a year of promises fulfilled and hope realized for Mercy Ships.
Mercy Ships and its local partners provided more than 2,000 life-changing 2022, a year of
promises fulfilled
1,000,000 surgeries and trained more than 1,100 health care workers.
MERCY SHIPS CARGO DAY
750,000 • More than 1,200 volunteers from 65 countries
500,000
•
•
Over 200 Senegalese crew members (Day Crew)
186 local partners
for Mercy Ships
• Since 2016, the Shipping and Trading community has
worked together to raise funds for Mercy Ships through • 2,312 surgical operations
250,000
the Mercy Ships Cargo Day, held annually. • 194 participants in training courses for a total of 24,529 hours
Mercy
0
Ships Cargo Day results of training. including 53 future dentists
• Charterers are giving “Mercy” Cargoes to Shipbrokers • 87 farmers trained in sustainable nutritional agriculture
$ 2016 2017 2018 2019 2020 2021 2022
who in their turn donate 50% of their commissions to • projects in 7 African countries
Mercy Ships. Other participants such as Shipowners, 2,000,000
Ship Agents and Marine Survey Companies can also In 2023, Mercy Ships will multiply the humanitarian impact.
make a donation. 1,750,000
The Africa Mercy has recently joined with the Global Mercy in Tenerife,
• The Cargo Day online fundraising event raised $7 million 1,500,000 where both ships geared up for this year. The Global Mercy is now in Dakar
in 7 years by the shipping and trading community! Year Result ($) to welcome patients from Senegal and Gambia until June. After, she will be
1,250,000
in Sierra Leone while the Africa Mercy enters a period of maintenance in
• In 2022, Mercy Ships Cargo Day broke its all-time 2016 314,000 South Africa, enabling her to serve alongside her sister ship for many years
1,000,000
record with $2.0 million that will help change the lives to come! In the second half of the year, The Africa Mercy will travel to a
of thousands of people in Africa. 2017 673,000 new country to bring hope and healing!
750,000

2018 860,000
• Cargo Day 2023 online fundraising event will be 500,000
launched at the beginning of November 2023.
2019 1,300,000
250,000
TESTIMONIAL
2020 787,000
0

2016
2021 2017 2018 2019 2020 2021
793,000 2022
Mercy Ships - Story of Kadidja
Next Cargo Day in 2022 1,999,000

At first glance, Kadidja is just like any other child. The 4-year-old girl is happy
November 2023 Total amounts 6,726,000
and energetic. She loves to dance, play, and eat good food. She brightens
up any room with her fearless energy and hardly ever stops giggling. But
something was holding her back.

More on:
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Join us now on
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164 BRS Group - Annual review 2023 BRS Group - Annual review 2023 Picture: HOULEYE was born with a strange mass on her neck. She received surgery on the Africa Mercy. 165
 Departments Offices
Newbuilding Athens London
newbuilding@[Link] +30 211 1037 300 +44 207 374 65 83
[Link]
Sale & Purchase Beijing Luxembourg
Global Shipbroking Services snp@[Link] +86 10 8221 1718 +352 27 44 93 88

Dry Bulk Bogota Madrid

Market Intelligence bulkgroup@[Link]
bulkffa@[Link]
+57 1 795 46 64 +34 91 564 63 35

Copenhagen Mumbai
Tanker +45 31 78 75 88 +91 22 6650 4242
tankerclean@[Link]
tankerdirty@[Link]
Dubai Ouest Afrique
tankerffa@[Link]
+971 4 440 8400 +225 07 79 00 58 33

Liner Geneva Oslo

liner@[Link]
+41 22 591 2828 +47 46 50 00 94

Chemical Hamburg Paris

specialized@[Link]
+49 40 333 966 999 +33 1 41 92 12 34

LNG Ho Chi Minh Shanghai

lng@[Link]
+84 97 213 47 60 +86 21 6321 5666

LPG
gas@[Link]
Houston Singapore
+1 346 237 3380 +65 6603 3230

Offshore Jakarta Stamford (Connecticut)

offshore@[Link] +62 812 8772 9396 +1 203 487 7014

Research
research@[Link]

Project Finance General Enquiries

pcfa@[Link] contact@[Link]

Carbon
carbon@[Link]

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An online version of this Annual Review is available in English and Chinese on [Link].

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166 BRS Group - Annual review 2023 BRS Group - Annual review 2023 167
 2023 Annual Review

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