LIFE BEGINS AT 50How the Lion City is planning for the next half century

Market Report 2015www.Splash247.comSingapore

CONTENTS

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EDITORIAL DIRECTOR Sam Chambers sam@asiashippingmedia.com

CHIEF CORRESPONDENT Katherine Si katherine@asiashippingmedia.com

CORRESPONDENT Jason Jiang jason@asiashippingmedia.com

ONLINE EDITORHolly Birkettholly@asiashippingmedia.com

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Copyright © Asia Shipping Media Pte Ltd (ASM), 2015.

Although every effort has been made to ensure that the information contained in this review is correct, the publishers accept no liability for any inaccuracies or omissions that may occur. All rights reserved. No part of the publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means without prior written permission of the copyright owner. For reprints of specific articles contact grant@asiashippingmedia.com.

3 Editor’s Comment

5 Government

7 SSA

9 Survey

12 Port

15 Owners

21 Offshore

25 Bunkering

29 Maritime Singapore at 50

41 Finance

43 Yards

47 Shipmanagement

48 LNG

50 Haze

Singapore Straight51 Piracy

53 HR

57 Events

59 Travel

60 MarPoll

Market Report 2015www.Splash247.comSingapore

29

UP FRONT

No time to rest on laurels

Shipping folk do like to whinge. Not surprising

in today’s climate, I admit, but even in the

best of times they’ll find something to moan

about. We use this title for the local shipping

community to have a moan, to raise issues that

government should react to – it is the third time

we’ve polled Singapore maritime and I am proud

to say each time we note how local authorities do

genuinely read your thoughts and opinions and try

to come up with solutions.

As in previous years common gripes include

rising costs and the lack of available local talent,

and by extension the restrictive immigration laws

in place since 2012.

Yet, let’s just take a step back and admire how

this little island-nation has come to rule the

maritime roost in a very short amount of time.

Singapore has topped many polls of late

crowned as the world’s top international maritime

centre. It has in the space of a decade completely

usurped Hong Kong’s position as Asia’s shipping

hub. Tellingly, when putting together a magazine

for Hong Kong this year, of 250 people interviewed

more than 80% said Singapore would be their

choice to set up in Asia were it not to be Hong

Kong.

Singapore’s rise to the top has been remarkable

and is brilliantly charted in the centre pages of this

magazine by award winning author Paul French,

who takes readers through the republic’s maritime

history as our own tribute to the Lion City’s 50th

anniversary.

What I find admirable is all the talk from the

powers that be to make sure that this maritime

dominance continues. Here the example of Hong

Kong can once again paint its own picture –

dithering, hubris and little leadership has seen it

throw away its Asian mantle.

Singapore Shipping Association president

Esben Poulsson, himself a Hong Kong resident

for many years, warns Singapore’s maritime

community now is not the time to rest on laurels.

He and the authorities continue to explore what

areas of the Singapore maritime setup could be

strengthened: finance and insurance are high up

on the agenda. Hopefully, they’ll take some of the

suggestions from our readers in the following

pages to heart too.

Sam ChambersEditor

Across the World

www.damicoship.com

5www.splash247.com

GOvERNmENT

Extra money is being spent to develop interest in maritime careers, but more is needed

‘Human capital is the key enabler for the future of maritime Singapore’

T eo Chee Hean, Singapore’s

deputy prime minister, received a

rousing round of applause in late

September when announcing a further

raft of initiatives designed to get more

Singaporeans involved in the maritime

sector.

In the next five years, the Sectoral

Tripartite Committee for Transport (Sea)

led by the Maritime and Port Authority

(MPA) hopes to attract more than 1,200

Singaporeans to join the maritime sector

as seafarers and port operations officers.

Speaking as guest of honour at a

packed Singapore Shipping Association

(SSA) dinner, Teo (pictured) outlined

more plans to alleviate the crunch in

maritime human resources in the Lion

Republic. These included a SkillsFuture

Earn and Learn programme for maritime

– a one year course with a certificate and

S$5,000 ($3,519) for anyone completing

it plus S$15,000 for any employer who

then takes on a trainee. The government

also has launched Maritime Singapore

Connect, a new portal for maritime jobs

and information.

“Human capital is the key enabler for

the future of maritime Singapore,” the

deputy prime minister said.

Teo acknowledged the importance of

maritime in Singapore’s economic make

up, saying there were 5,000 companies

involved in the sector locally, accounting

for 7% of GDP and 170,000 employees.

Despite the nation’s preeminent status

on the global maritime map these days,

Teo warned: “We also face intense global

competition.”

The news comes as human resources

remains one of the most pressing issues

for maritime firms operating in the Lion

Republic, as evidenced throughout this

magazine and our annual Singapore

survey.

MPA’s chief executive, Andrew Tan, is

adamant that government is handling the

issue and has put the correct resources in

place to address the perceived shortage,

telling Splash: “We are on top of this now.”

The private sector, while applauding

the amount of money invested in

developing local talent, remains

concerned however that maritime is still

not viewed as an attractive career option.

Matt Conway, from recruitment

firm Faststream, speaks for many of

the industry, noting: “Singapore is a

talent short market, with a very finite

talent pool of experienced and qualified

professionals in the maritime industry.”

Hopefully, the results from Splash’s

groundbreaking survey carried in this

magazine will resonate with the powers

that be.

7www.splash247.com

Esben Poulsson, the new president of the Singapore Shipping Association, has identified priorities for the Lion Republic to look into as it seeks to bolster its leading maritime hub position amid growing local competition

Busy agenda

Esben Poulsson has hit the ground

running as the latest president of

the Singapore Shipping Association,

identifying quickly what the city-state

needs to do to bolster its maritime

position. Poulsson, who took over from

Evergreen’s Patrick Phoon this July, tells

Splash he has three immediate priorities.

First, he calls for SSA to play an active

role and make meaningful contributions

to the workings and development of

the Tripartite Maritime Manpower

Taskforce initiatives for both seafaring

and shorebased jobs, spearheaded by the

Maritime and Port Authority of Singapore

(MPA).

“We want to create a wow factor for the

maritime industry amongst the younger

generation,” says Poulsson.

Secondly, SSA will support and promote

the development of a ‘Singapore Clause’

as an integral part of the Singapore

War Risk Mutual. Additionally, SSA

will continue to work closely with the

Singapore Maritime Foundation (SMF) on

promoting the Singapore Sale Form for

wider acceptance.

A third plank of his tenure will be to

develop the next generation of leaders,

something Poulsson says is very much

part of the ongoing efforts of the SSA and

its industry partners in attracting young

talent to the shipping industry.

SSA will continue to develop ways

to improve Singapore’s ship finance

capability across the board, and

promoting Singapore’s capital market

“I think shipowners, and indeed all

our members, rightfully expect the SSA

to offer value for their membership, by

providing analysis of industry trends,

high quality technical information,

regulatory guidance and updates on

regional and international issues and not

forgetting the educational and networking

opportunities that our active calendar of

events offers throughout the year,” the

SSA president says. The association’s

networking events are legendary in

shipping circles, often attracting more

than 2,000 people at a time.

SSA now has 477 member companies,

making it one of the larger national

shipping associations in the world.

Its membership could swell in the

coming months with many anticipating

a big Greek shift to the Lion Republic,

something Poulsson would welcome.

“A number of Greek owners have

already established a presence here,”

he says, “and although I do not have

any specifics or figures, I think it is well

known in Greece, as it is many other

countries, that Singapore is a very

attractive country from which to operate

a shipping business.”

As well as Danish national Poulsson’s

commitments to the SSA, the Singapore

Maritime Foundation, the International

Chamber of Shipping, the Asian

Shipowners’ Forum and Straits Tankers,

the former Torm man is chairman of

Enesel Pte Ltd, a Singapore management

subsidiary of Athens-based boxship

operator Enesel.

Admitting that times remain tough

for many in the industry, Poulsson has

pushed forward a raft of initiatives to try

and help out. SSA is advising authorities

to reduce port dues for offshore vessels,

the hardest hit sector in shipping at the

moment.

We want to create a wow factor for the maritime industry amongst the younger generation

SSA

doesn’t need to be difficult

The road to success

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SURvEy

In compiling this magazine Splash sent

out a survey to 250 of the top names

in Singapore maritime to gauge the

community on key local issues. The

responses form quite a checklist for the

local government to ponder if it genuinely

wants to grow as an international

shipping centre.

The words in September of Esben

Poulsson, the new president of the

Singapore Shipping Association (SSA),

echo through much of the responses

below. It is vital for the city-state not to

rest on its laurels; there’s still much to do,

he said. See page seven for more on SSA.

In general, respondents said that the

republic’s very high prices – whether it

is for rent, salaries or more general fare

– is just about worth it given the hugely

vibrant maritime centre the republic has

become. However, there were plenty of

moans about the costs of being based

here.

“Rents and salaries are becoming

prohibitive,” says Pankaj Khanna, the CEO

of fast emerging local dry bulk owner

Pioneer Marine.

“Other locations in the region are

catching up with better efficiency levels,

and Singapore would be outplaced if

the costs are not contained,” warns Biju

Oommen, CEO of feeder line, Orient

Express Lines.

While there are more economical

places, there are few alternatives that

are as safe and stable as Singapore and

none with the same level of support

infrastructure, argues Norstar Ship

Management’s managing director Chris

Kirton, a popular refrain that others also

mention. “What you get back is worth the

cost,” is the neat summary from Mary

Baey, CEO of Satcom Global Singapore.

Captain Ashok Sabnis, founder of

Goodwood Ship Management, points out

currency fluctuations are helping out

somewhat with the strengthening of the

US dollar this year and the comparative

weakening of the Singapore dollar.

“When the rate was $1 to S$1.20 last

year it was a strain for everyone, but that

situation has eased a little now,” he says.

The sky’s the limit as long as it’s not obscured

by the haze

The local shipping community debate whether the city-state is pricing itself out of the market

The value proposition

doesn’t need to be difficult

The road to success

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SURvEy

Rents and salaries are becoming prohibitive

Yes it has, agrees Edna Lim from C&C

Technologies, but other currencies,

notably neighbouring Malaysia, have

weakened much more. “Singapore is not

the most cost efficient place to base Asian

operations,” she reckons.

Interestingly, Kuala Lumpur came

top in our poll of where else companies

would chose to base themselves in Asia if

they were to move away from Singapore.

However, it was a very close race, unlike

a survey we carried at the same time in

Hong Kong. Remarkably, 83% of those

surveyed in Hong Kong - on choosing

an alternate Asian location to base their

operations - opted for Singapore, a telling

statistic on the handing over of the baton

of power in Asian shipping circles over

the past decade.

Government checklist In terms of where the government could

improve Singapore’s maritime set up

the majority of respondents focused on

the human resources crunch and by

extension immigration issues which we

have expanded upon on page 53.

Other ideas put forward included the

suggestion by Mike Meade, the founder

of offshore brokerage M3 Marine, of

applying similar tax breaks to shipping

services that have been applied to

shipowners and shipmanagers.

Meade also called for a more diverse

legal framework that would attract the

leading lights away from London.

Also featuring in the survey were

questions on piracy, which we cover

on page 51 as well as how the annual

haze from fires in Indonesia is affecting

business, something analysed in depth on

page 50.

Our final question asked if Singapore

had peaked as a maritime centre. A

majority – 63% – said the city had not, but

many noted the trend to shift backroom

staff to cheaper climes would continue.

Growth for Singapore would continue, but

at a slower rate.

“As long as Singapore provides the

business infrastructure, encourages

companies to do business, recognises

and adapts to the changes in the world

markets, then the sky’s the limit,”

commented Captain Jonathan Walker from

London Offshore Consultants, adding: “As

long as it is not obscured by the haze.”

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from our flexibility, worldwide coverage, performance,

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For further information please contact our regional

HQ office located in Singapore.

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Flexibility: Inducements along trades, at any port for any cargo

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High value: Integrated transport delivery and quality operations

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12 www.splash247.com

Fifteen years from now Singapore’s

port sound like it’ll resemble a Ridley

Scott movie, drones flying around

the place, and driverless trucks delivering

containers to and fro. Much of the details

of this Bladerunner-esque landscape

have been revealed in recent months as

authorities accelerate plans to shift the

port from downtown to Tuas in the west of

the republic.

The port is still growing however in

its original location – in size, if not in

throughput (see box overleaf for the

year’s declining container figures). This

June the prime minister of Singapore,

Lee Hsien Loong, opened phases 3 and

4 of development of PSA’s Pasir Panjang

container terminal (pictured overleaf with

group chairman of PSA International Fock

Siew Wah).

Around S$3.5bn ($2.6bn) is to be

invested in the next two stages of the

terminal’s development, which will

enable Singapore to handle 50m teu of

containers annually by the end of 2017.

While this development is impressive

in scale it is nothing as to what is being

talked about over in Tuas where dredging

is already underway for the new 65m teu

port that could look like a futuristic multi-

storey carpark when completed in 2030.

Planners have had to get creative

because of land constraints in the

republic. As a result Singapore is

considering using a two-tiered container

terminal in Tuas, Maritime and Port

Authority (MPA) of Singapore’s CEO

Andrew Tan has said.

Speaking at the Singapore Maritime

Institute (SMI) Forum in October, Tan

said that the port is exploring building a

double-tiered container terminal.

Tan said: “We should not restrict

ourselves to traditional port layouts.

One of these new land-use concepts is

to develop a platform above part of the

container port on which port-related

and industrial developments, such as

container freight stations, logistic hubs

and other facilities, can be developed to

intensify land use.

“The aboveground space development

over part of the new mega container port

could create significant land area for

the development of a cluster of maritime

and port business activities, including

amenities and possibly commercial-

residential areas for those working in the

area to form a component of the future

Tuas maritime hub.”

There is also the possibility of

developing underground storage.

Another aspect of the new terminal that

will make it a world leader in automation

is the use of driverless automated guided

vehicles (AGVs). AGVs are unmanned

transportation platforms used for

shuttling containers between the quayside

and container yard.

Terminal operator PSA currently has

a fleet of eight AGVs undergoing live

operational trials at its Pasir Panjang

Terminal.

PSA has also signed a memorandum

of understanding with the Ministry of

Transport to develop an autonomous truck

platooning system to transport containers

between its terminals on public roads, as

well as other potential future trucking uses.

The new terminal in Tuas will be revolutionary in its use of technology

Bladerunner vision

Autonomous truck platooning technology can enable us to make

a quantum leap in productivity

13www.splash247.com

PORT

One or more driverless container

trucks will be led by a single manned

truck, thereby raising productivity with

more cargo transported per driver, and

encouraging more trips to be carried out

at off-peak hours, which will improve

traffic flow during peak periods.

Permanent secretary for transport

Pang Kin Keong, who is chairman of the

committee for autonomous road transport

in Singapore, commented in a statement

earlier this year: “As Singapore’s maritime

sector continues to grow and container

volumes increase, the need for efficient

inter-terminal and inter-port haulage has

never been greater. Autonomous truck

platooning technology can enable us

to make a quantum leap in productivity

in the port sector, while addressing

the shortage of drivers in the trucking

industry and adding value to their jobs.”

Deploying drones to drive productivity

is also being researched at the moment

while automated cranes are likely to

feature in Tuas with the whole port

operation making far greater use of

predictive analysis. MPA has this year

teamed up with IBM to look into how best

to harness Big Data for port operations.

The first phase of the Tuas project,

including 20 deepwater berths with a total

annual capacity of 20m teu, should be

operational in 2020.

As MPA’s Tan said in summing up

Singapore’s future port planning: “By

harnessing technology, by our willingness

to experiment, and by learning from

others, we will push the boundaries of

what defines a port.”

THE GLOBAL SLOWDOWN in the

container trades this year has been felt

in Singapore.

The world’s second busiest boxport

handled 6.5% fewer containers in

the first nine months of the year. The

23.5m teu handled in the first three

quarters is down on the 25.1m teu

handled in the same period last year.

The slump became more heavy as

the year wore on – with figures for

September alone showing a 13.5%

year-on-year decline. This greater

drop is in line with carriers’ take on

the markets too, with the number of

idled boxships increasing rapidly in

the latter part of the year, to around

1m teu in capacity – the highest

amount of idled tonnage since the

global financial crisis started. With

many carriers predicting tough

times through to at least end-2017,

Singapore might have to get used to

annual throughputs of under 30m teu

for a while yet.

Global slump hits port figures

We will push the boundaries of what

defines a port

PSA_Powering_A4_FA.indd 1 20/3/2012 1:14:38 PM

15www.splash247.com

OWNERS

Neptune Orient Lines (NOL) is

synonymous with the growth

of maritime Singapore in its

first 50 years. The line has stood out

as the nation’s most famous shipping

name – its boss 40 years back was the

island’s second prime minister Goh Chok

Tong. It has bought, developed and sold

many brands over the years – American

Eagle Tankers and APL Logistics are

two examples. Its acquisition in 1997 of

American President Lines, rebranded now

as APL, marked the first major cross-

border container acquisition – it also

helped reaffirm Singapore’s position on

the global liner map.

Since then, however, APL has lost

much of its lustre, struggling to make

profits and supersize its fleet like its

peers. Steadily losing market share in

recent years, APL has seen its global

capacity share fall to only 2.8% currently,

compared to 4.2% in 2010.

NOL’s majority shareholder, sovereign

wealth fund Temasek, has had enough

and is looking to sell NOL. Two blue liner

giants, Maersk and CMA CGM have been

revealed as interested as we went to press.

Were it to be sold, Singapore will lose a

valuable chunk of its maritime heritage.

Pioneer Marine One of Singapore’s fastest growing

shipowners, Pioneer Marine, has just

made big changes to its orderbook to

make the most of opportunities presented

by the continued drop in newbuild bulker

prices. The company has canned three

newbuild contracts and delayed another

five from 2016 to 1017.

Pioneer Marine’s CEO, Pankaj Khanna

tells Splash that the funds freed up may

be made available for acquisitions should

the right opportunity be found.

Founded in September 2013, Pioneer

Marine owns 13 handysize and one

handymax dry bulk carriers with an

additional eight handysize newbuildings

on order.

APL has seen its global capacity share fall to only 2.8% currently,

compared to 4.2% in 2010

There’s no doubt which local shipping line hogged the most column inches this year

Sale of NOL leads the news

17www.splash247.com

OWNERS

Bengal Tiger Line Feeder operator Bengal Tiger Line

(BTL) defines the very essence of niche

marketing. As a common feeder facilitator,

it has managed to remain neutral in the

industry, only carrying boxes belonging

to the mainlines and NVOs, and operating

only on feeder sectors.

In addition, the company refrains from

direct ownership of vessels, preferring

to go the charter route to avoid any

conflict of interest with its part-owner,

the Schoeller Group, which owns and

operates more than 70 ships.

Nor is there any conflict with Hamburg-

headquartered Passat Shipping, which

operates three 2,700 teu feeder vessels

owned by BTL’s founding partner,

Joachim Von Der Heydt, who has since

moved to Singapore as executive

chairman.

“We have some 35 scheduled vessels,

of which just 15 are directly chartered

in,” says BTL’s managing director Bill

Smart, who joined the company as owner’s

representative in Singapore in 1990.

“We have a range of feeders, from 600

teu carriers to 2,700 teu vessels. India

forms our core business, and we run

services all along the country’s eastern

coast. We handle about 900,000 teu per

annum, using the hub ports of Singapore,

Colombo, Port Klang, Kaohsiung and Jebel

Ali.”

During shipping’s long recession, the

company had its hands full keeping its

nose above water.

“We looked at all the services we had,

and rationalised where possible, to ensure

that we were not overdeploying capacity,”

says Smart. “That is the biggest problem

in the industry – ensuring correct

deployment so that the right balance is

maintained between supply and demand.”

BW It has been another remarkably busy

year for BW, arguably Singapore’s largest

shipowner by revenue. Its product tanker

arm, BW Pacific, went for an IPO in Oslo

this November, but at the last moment

pulled it on deteriorating conditions

for shipping investments. BW Pacific

currently owns an existing fleet of 33

vessels, comprising 17 owned LR1s and

16 owned MRs, and a newbuilding fleet of

12 vessels of which six are LR1s and six

are MRs.

At the end of September BW ordered

a pair of 173,400 cu m LNG carriers

at Daewoo Shipbuilding & Marine

Engineering for close to $400m.

Meanwhile, BW Gas clinched a deal to

provide Egypt with an FLNG for five years.

The contract, which started in October, is

worth $60m a year.

Earlier in the year, BW Group, via

subsidiary BW Euroholdings, bought 6m

shares in New York-listed Dorian LPG

giving it a 10.2% stake in the company.

BW purchased the shares from Scorpio

Tankers at $15.34 each, making the deal

worth $92m in total.

At BW LPG Martin Ackermann took over

as CEO this August. Previously he was

with Evergas.

Epic GasCharles Maltby stepped into to replace

Lars Vang Christensen at Epic Gas this

January when Christensen announced

he was stepping down. Maltby had been

serving as executive chairman prior to

taking on the CEO role. Like Epic Gas’s

founders Chris Buttery and Paul Over,

Maltby’s background includes time at

Pacific Basin.

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OWNERS

We introduced the first commercial bunker fuel testing programme for ships in 1981. Today, customers remain at the heart of our business. We operate a global network of technical experts and offices, four specialist and wholly-owned fuel testing laboratories strategically located in Rotterdam, Singapore, Houston and Fujairah, with access to 200 key bunkering ports worldwide for bunker quantity surveys.

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Veritas Petroleum Services Group

This October Epic Gas sealed a

$120m senior secured credit facility to

help finance roughly two thirds of its

remaining seven newbuildings.

The Singapore-based firm said in a

release: “The company remains committed

to the delivery of a high quality fleet with

an outstanding newbuilding program of

three 7,500 cu m vessels and four 11,000

cu m vessels, plus an additional 11,000

cu m newbuilding to be delivered under a

bareboat charter to Epic Gas.”

Epic Gas, founded three years ago, has

been one of the fastest growing players

in the gas carrier markets, now boasting a

fleet of 45 vessels.

China Navigation This February China Navigation Company

(CNCo) ordered its first self-discharging

cement carrier on the back of a

partnership deal with Golden Bay Cement.

The vessel will be built at China’s Jinling

shipyard and will be specially designed to

operate on the New Zealand coast.

CNCo’s industrial shipping division,

Swire Bulk Logistics, is partnering with

Golden Bay Cement to build, own and

operate the 9,000 dwt cement carrier.

The vessel is scheduled to commence

operations in late 2016.

In June, another CNCo division, Swire

Shipping teamed up with Rickmers-Linie, the

breakbulk and heavylift carrier, to enhance

services in India and the Middle East.

A connecting carrier partnership will

allow Swire to link breakbulk and project

cargoes in India and the Middle East,

through Rickmers-Linie operations, to its

Australia, New Zealand and South Pacific

network via Singapore.

MasterbulkFounded in Singapore as the shipowning

entity for the dry bulk fleet of Westfal-

Larsen, Masterbulk was one of the first

Norwegian-owned shipping companies to

establish themselves in Singapore under

initiatives created by the Maritime and

Port Authority of Singapore (MPA) to

attract shipping investment to the island

state. This February Masterbulk turned 20.

Nick Fisher, the CEO of Masterbulk,

tells Splash: “It’s been a rollercoaster ride

all the way. We’ve expanded, contracted,

outsourced, insourced, and expanded

again. Still, we are proud to have been

here so long.”

This year the Singapore offshoot

of Westfal-Larsen Shipping saw it axe

early plans to get into shipmanagement.

Masterbulk, which owns 20 open hatch

supramaxes, had made plans to diversify

revenues by getting into third party

management. Not only has it now canned

this venture, it has also switched its own

ships to another third party manager,

Rickmers Shipmanagement.

“This wasn’t an easy decision,”

Fisher tells Splash, “but the economics

of running this as a standalone

shipmanagement business for the number

of vessels involved could no longer

be justified in the current depressed

market. Shipping companies of all sizes

are having to look at where they can

reduce costs and maximize efficiencies.

Shipmanagement is an economies scale

game with increasingly small margins

involved, and I believe we will see further

consolidation in the market.”

Uni-AsiaThese are interesting times for Uni-Asia,

the Singapore-listed diverse conglomerate

with interests in hotels, property and

shipping. The first two strands of the

business are clearly propping the

maritime division, but also allowing Uni-

Asia to position itself for any uptick in its

chosen sector, handysize bulkers.

Michio Tanamoto, chairman and CEO

of the company, reckons handies could

make a comeback in 2017, hence why

he’s keen to pen a series of contracts for

a few Japanese newbuilds soon.

“The handysize market has been slow

due to coal trade volumes in China, new

tonnage and the supply/demand gap,”

Tanamoto concedes. However of the

roughly 3,200 handies in the market, he

points out 16% are over 20 years old and

30% over 15 years old.

“I don’t expect volumes to pick up

the market but scrapping of these older

vessels should provide a recovery

sometime in 2017,” he tells Splash.

Uni-Asia was founded in 1997 by three

Japanese bankers, two in Hong Kong

and Tanamoto in Singapore. Initially the

company started out providing finance to

shipping as well as building up a property

and hotels empire. In 2003 it made its

first foray into shipping investment.

Nowadays the fleet is made up of 15

bulkers, five containerships and two

product tankers. Of this total 13 are in

joint ventures and the rest 100% owned.

It also owns a shipmanagement

company in China, Wealth Ocean Ship

Management, and manages seven vessels

with Tanamoto revealing the company

would like to expand more into third party

management.

MT_

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OFFSHORE

Singapore’s OSV community is facing dire financial straits. Consolidation could be on the cards for some, oblivion for others

Doom and gloom

For much of this decade the Singapore

Exchange was rammed full of

releases from exuberant offshore

support vessel operators announcing

all manner of dramatic expansion plans

on the back of oil prices being in $100+

territory. The past 12 months, however,

announcements have been limited to

dire quarterly results, revenues plunging,

losses growing and contracts being

torched. The hatches have been well and

truly battened down among Singapore’s

large OSV community, but with most

analysts predicting oil prices to remain

low for at least the coming 18 months

there could be some very high profile

bankruptcies coming.

With utilisation and charter rates

down by more than 40% this year the vast

majority of the industry are struggling,

hit hard by overcapacity. Comments Mike

Meade from local offshore brokers M3

Marine, “The market is out of balance

when it comes to supply and demand;

where even in the unlikely event of the

entire rig fleet working, there would be

still be a surplus of offshore support

vessels.”

With banks now reluctant to lend cash

to this toxic sector OSV operators in

Singapore are having to look at higher-

cost alternative funding avenues such

as sale and leaseback of assets as well as

tapping up equity partners.

Leverage at local OSV companies has

risen. The median debt to equity ratio

of 18 Singapore-listed OSV owners was

up by about a third from a year earlier

at 1.08 at the end of the second quarter,

Thomson Reuters data showed.

Deutsche Bank, in a recent report,

does not expect the OSV sector to pick

up anytime soon. Any offshore contracts

which are up for grabs are likely to attract

aggressive bidders, and hence drive down

prices and margins, Deutsche Bank said.

CIMB Research, in another recent

report, notes how some OSV companies

are negotiating with the banks to allow

them to service only the interest portion

of their amortising loans in the interim.

Some are seeking refinancing via loan

top-ups, as they had paid off a portion of

the principal over the past years.

Meanwhile, some are also negotiating

for an amendment of financial covenants.

In addition, most Singapore OSV players

are laying up their fleets and laying off

staff. More desperate measures include

hiring freezes, not replacing employee

attrition, cutting salaries, reducing

onshore and offshore crew as well as

consolidating functional teams.

CIMB does not expect a strong rebound

for the sector in 2016, and advised

investors to focus on tendering activities

to discern the sector’s shifts. More tenders

and enquiries mean the prospect for more

work which, in turn, means a positive

revision in offshore fleets’ utilisation and

day rates expectations.

In a legal update from earlier this

year Oon & Bazul partner Kohe Hasan

suggested low oil prices could lead to

greater consolidation within the OSV

sector.

OSV operators in Singapore are having to look at higher-cost alternative funding avenues

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23www.splash247.com

OFFSHORE

“Smaller and newer OSV operators

may not survive in this harsher economic

climate and are likely to become targets of

larger OSV operators with a healthy cash

flow,” Hasan said.

“The impact of $50 oil has absolutely

decimated the offshore industry,” Fazel

Fazelbhoy, the former head of the UAE’s

OSV major Topaz Energy and Marine,

told the Marine Money conference in

Singapore this September. Fazelbhoy,

who now runs an offshore consultancy,

warned there were another 400 OSVs still

to be delivered.

A bloodbath seems unavoidable to

many in the coming 12 months.

THE MARITIME AND Port Authority

of Singapore (MPA) has extended its

port dues concession for OSVs as the

waters off the Lion Republic become

a parking lot for out of work offshore

vessels.

Incremental concessionary rates of

S$0.50 ($0.35) per day for OSVs have

been extended from the current 90

days to 180 days, with effect from 1

November 2015 to 31 October 2016.

“The rates will be applicable to

OSVs approved by MPA that do not

carry out cargo operations, calling

at MPA designated offshore marine

locations and/or specific anchorages

in port,” MPA said in a port marine

circular.

The revised port dues applicable

for OSVs where period of stay is one

to five days will see rates per 100 gt

of S$4 for the first five days, six to 90

days will be S$4 plus S$0.50 per day

after the first five days, 90-180 days

will be S$46.50 plus S$0.50 per day

after the first 90 days, and 180 days

onwards will be S$91.50 plus S$1 per

day after the first 180 days.

The MPA’s conciliatory stance

to the hard pressed OSV sector

follows an appeal from the Singapore

Shipping Association to ease up on

charges for idled OSVs.

MPA helps out

The impact of $50 oil has absolutely decimated the offshore industry

25www.splash247.com

While volumes at the container

port might have slumped this

year – and shipping remains

largely in the doldrums – there is no

letting up in bunker sales in Singapore.

Bunker sales grew 5% year-on-year in the

first three quarters of the year to 33.5m

tonnes, cementing the republic’s position

as the world’s number one place to fill a

ship with fuel.

As befits such a dominant position,

Singapore often leads the bunkering

industry on making changes, improving

delivery and eyeing new technology.

The Maritime and Port Authority of

Singapore’s (MPA) revised bunkering rules

came into effect on September 1 this year.

The two sets of guidelines, namely

the Singapore Standard SS 600:2014

Code of Practice for Bunkering, and

the SS 524:2014 Quality Management

for Bunker Supply Chain, will “further

enhance consistency in practices in the

delivery of bunkers for vessels calling at

the Port of Singapore” according to a note

from the MPA.

SS 600:2014 sets out guidelines and

procedures to ensure that the correct

quality and quantity of bunkers are being

delivered safely and efficiently, and

includes better controls and safeguards.

SS 524:2014 puts in place a

comprehensive quality management

system for the bunker supply chain, which

the MPA said, “is necessary for bunker

operations in Singapore to continue to be

on par with international benchmarks”.

Another impending change is to

do with mass flow meters. With their

mandatory introduction, Rahul Choudhuri

from Veritas Petroleum Services calls

for support and clarity from the local

authorities to ensure bunker surveyor

jobs are not eliminated. “The situation is

still very grey,” he warns.

LNG developments In July the MPA began the tender process

through which prospective companies will

apply for a licence to supply LNG bunkers

to vessels in the port.

Applicants had to propose an ‘end-

to-end’ LNG bunkering system, showing

their LNG sourcing, supply, marketing

and delivery process. The shortlisted

proposals will be announced by the end of

the year.

The successful applicants will supply

LNG marine fuel as part of Singapore’s

LNG bunkering pilot programme,

scheduled to commence in early 2017.

The MPA plans to provide funding of

up to S$2m ($1.47m) per vessel for up to

six LNG-fuelled vessels that participate in

the pilot programme.

By having full-scale LNG bunkering services, Singapore will be able to serve as a key refuelling

station for Southeast Asia

BUNKERING

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BUNKERING

Singapore has been working on

developing practical operational

procedures and standards for LNG

bunkering operations at the port since

2013.

The MPA has also set aside S$12m

($8.4m) from its Maritime Innovation &

Technology Fund with which it plans to

contribute to the cost of building new

LNG-fuelled vessels.

Interested companies can apply for

a co-funding grant of up to S$2m per

vessel for a maximum of two successful

applications per company.

The scheme is only open to companies

incorporated in Singapore, and the

vessels to be funded must be flagged

under the Singapore Registry or licensed

for activity in Port of Singapore for a

period of at least five years, the MPA said.

Pavilion Energy, the state-funded LNG

vehicle, is also working with the MPA to

develop LNG bunkering on the lines of

LNG bunkering terminals in Europe, and

has commenced talks with the Singapore

LNG terminal to build jetties for loading

ships with LNG fuel.

“By having full-scale LNG bunkering

services, Singapore will be able to serve

as a key refuelling station for Southeast

Asia, and can welcome more international

and regional LNG ships through Asia,”

Seah Moon, Pavilion’s CEO said.

LNG as a ship’s fuel was under the

spotlight at Gastech, the big annual

LNG event, which this year took place in

Singapore.

The move to LNG as a fuel is a game

changer which cannot be ignored, said

Angus Campbell, managing director of

Bernhard Schulte Shipmanagement UK,

(BSM), speaking at Gastech. “Independent

industry predictions indicate that the

use of LNG as a bunker fuel offers

opportunities for early movers to secure a

market leading position ashore and afloat,

and global LNG fuelling will become a

mainstream option.

“It has happened before,” he said. “Wind

gave way to coal and coal in its turn gave

way to oil. The move from oil to natural

gas is simply the next progression in the

evolution of maritime transportation.”

WHILE THE MARITIME and Port

Authority (MPA) continues to cut

back the number of licenced bunker

providers, Singapore welcomed a new

powerhouse bunker supplier this May

with Britain’s BP and China’s Sinopec

forming a bunker storage and sales

joint venture in the Lion Republic.

The 50/50 joint venture will use

both companies’ existing bunkering

locations and activities in the city

and will provide bunkers around the

world. Both companies already have

significant bunkering presences in

Singapore.

“The ports served by BP

Sinopec Marine Fuels Pte Ltd will

be: Singapore; Fujairah, United

Arab Emirates; Antwerp, Belgium;

Rotterdam and Amsterdam in the

Netherlands; Tianjin, Qingdao,

Shanghai, Ningbo and Shenzhen,

China,” a statement said.

The joint venture is seen as a way

for BP to gain access to the tightly

restricted Chinese markets.

For the last 11 consecutive years

BP Singapore has been the biggest

bunker supplier by volume in

Singapore.

New giant formed

Wind gave way to coal and coal in its turn gave way to oil. The move from oil to natural gas is simply the

next progression

COMING SOON!Contact Grant Rowles on grant@asiashippingmedia.com for details

29www.splash247.com

SG50

As with so many things in

Singapore it begins with Sir

Stamford Raffles. Raffles was a

visionary and in 1819 he gazed across

the naturally deep and sheltered waters

stretching between the peninsula that

is now Singapore and the small islands

of Pulau Brani and Pulau Blakang Mati

(better known these days to everyone

as Sentosa) and realised he was on the

shores of what could be a great port.

A captain in the East India Company,

William Farquhar, had originally told

Raffles of the harbour – inhabited

only by orang laut sea gypsies and

cutthroat pirates. But it suited the

needs of the East India Company and

the British Empire perfectly. Raffles

claimed Singapore for the East India

Company (and by extension the British

Empire), made Farquhar the Permanent

Resident and ordered Captain Henry

Keppel of the Royal Navy to clear out

the infestation of pirates. The Port of

Singapore was open for business.

However, from the start, the Port of

Singapore was not to be just another

weigh station on the trading routes of

the British Empire, but rather something

distinctly more – a free port protected

by naval warships. Raffles himself

fell to ill health and returned home to

England to die in 1826. However, before

leaving, never to return, he gave William

Farquhar explicit instructions regarding

the future of the port - that Farquhar

should maintain free passage of all

ships through the Strait of Singapore.

Further, to support and enforce this

order, a military and naval presence was

to be established alongside the trading

post. From that moment Singapore was

to be both a free port and a key naval

garrison. The combination of these two

roles was to be decisive in the history of

the port of Singapore.

Being a free port meant relaxed

customs and excise conditions to attract

trade; it meant a port not exclusively for

the use of the East India Company and

the British. Being a free port also meant,

crucially, relatively few controls on

transhipment. This was at the very heart

of Raffles’ dream for the port, according

to Professor Peter Borschberg, of the

Department of History at the National

University of Singapore. “Singapore

was always conceived and designed

as a free port, and it remained so

through the nineteenth and much of

the twentieth centuries as well.” This

was a masterstroke in the development

of the port. Unlike the ports in British-

controlled India or the newly created

foreign-controlled Treaty Ports of China,

Singapore was not a major source of

commodities or manufactured goods

to be shipped out to the wider world

like a Shanghai or a Bombay; nor was

it the gateway to a potentially giant

market for western goods, such as

Canton (Guangzhou) or Yokohama.

Rather Singapore’s existence hinged on

becoming the most important calling

station between India and on to the

Far East. For once the much overused

saying, ‘geography is destiny’, was true.

Singapore’s geographical location at

a crossroads of the East and West was

to be, from its very origin, fundamental

to its success as a trading port. As Peter

Borschberg adds, “If you come from

West Asia or the Bay of Bengal and you

wanted to go to the Far East, and you’re

doing this either in the age of sail or in

the age of steam, there are really just

two entry points - the Straits of Malacca

or the Sunda Strait.” Today the Port of

Singapore remains the world’s most

crucial transhipment point – Raffles’

initial dream has long been realised.

Georgraphy has been Singapore’s

destiny.

From pirate nest to free portCelebrating 50 years of the republic, award-winning author Paul French writes exclusively for Splash on the history of maritime Singapore

30 www.splash247.com

The Port of Singapore’s early

development occurred in tandem with

other major revolutionary changes to

global trade. The new harbour rapidly

grew - the first drydock known as

Number 1 Dock was completed in 1859;

the second, Victoria Dock, in 1868 to be

followed by the Albert Dock in 1879. In

1900 what had been known as the New

Harbour was officially renamed Keppel

Harbour – the man who had chased the

pirates away over 50 years before visited

to witness the renaming ceremony.

Captain, now raised to Admiral, Henry

Keppel was 92 years of age. At the same

time as the facilities were constructed so

other changes occurred – in the 1850s

trade opened with the Kingdom of Siam;

the Straits Settlements were formed in

1867 giving Singapore greater access

to the hinterlands of Southeast Asia

and, crucially greatly increasing the

volume and speed of West-East trade via

Singapore, the Suez Canal was opened

in 1869.

The Port of Singapore was already

one of the world’s busiest. Ships crowded

the harbour, labourers unloaded cargoes

on to tongkangs – light wooden cargo

boats – which took the precious cargoes

down the Singapore River to be stored

in warehouses and go-downs. The city

grew up around the port, thriving from it,

profiting from it.

The Three NetworksSingapore’s rapid growth was based

on the three main networks of trade

that flowed through the waters just

offshore of the settlement. The Chinese

Network connected all of Southeast

Asia to the teeming southern Chinese

ports stretching from Hong Kong and

Canton up through Fujian to Amoy

(Xiamen), Ningpo (Ningbo) and Shanghai

– everything from lacquer ware and

opium; pig bristles and eggs flowed

through this network. The Southeast

Asian Network linked the myriad islands

of the Indonesian archipelago with

highly valuable spices at its heart. Lastly

the Indo-European Network connected

the Far East to the ports of the Indian

Ocean littoral and on to Europe. These

networks were of course complimentary.

Spices flowed into Singapore from

remote Indonesian islands for

transhipment on to markets as far away

as London and Amsterdam where they

fetched extraordinarily high prices;

Chinese manufactured goods (in those

days including pig bristle toothbrushes,

fine porcelain, ornate furniture) went

out to the world and vice versa. East

India tea clippers moored alongside

Chinese junks. As steam superseded

sail so the Port of Singapore became a

major coaling station. Pirates remained

a problem – in the Malacca Straits and

elsewhere – and so British warships on

patrol were also a regular sight.

Within a decade of its formation

the Port of Singapore had become

the dominant port of Southeast Asia.

It’s success at the heart of the three

networks crucial, but its historic

creation as a free port essential, to

its success. Its largest regional rival,

Batavia (now Jakarta), under Dutch

control, retained cumbersome and often

expensive restrictions. Both the English

country traders and the Chinese junk

traders deserted Batavia for Singapore.

Tanjung Pinang in the Riau Islands,

31www.splash247.com

SG50

previously the main port for the spice

trade, lost its position to Singapore too.

By the turn of the century Singapore

was clearly the dominant regional port

rivalled only by Bombay to the west and

Shanghai to the east.

King Rubber and Lord TinSingapore had once been the sleepy tip

of an often somnambulant peninsula.

But in the 19th and early 20th centuries

that changed and brought another bonus

to the Port of Singapore. As the British

developed Malaya so Singapore became

the Straits Settlements’ primary port of

export. Across the world the demand for

manufactured goods drove demand for

tin; the development of the bicycle, the

automobile, modern shipping, all drove

demand for rubber and Malaya was the

major producer of King Rubber and Lord

Tin. Fortunes were created and invested

in developing an infrastructure of road

and rail that ran the length of the Malay

Peninsula. Their final stopping point?

The Port of Singapore.

The construction of the Johor-

Singapore Causeway began in 1919.

It opened to cargo trains in September

1923 and to passenger trains a

month later. Steam trains brought tin,

petroleum and rubber to the port as well

as passengers for the liners that docked

on both the coastal ferry services and

the routes west to Europe via Suez

and to all points East – Hong Kong,

Shanghai, Kobe, Yokohama, Honolulu,

Los Angeles, San Francisco and

Vancouver. If you wanted to get to New

York then take your pick – west via Suez

to Marseilles or Southampton and then

across the Atlantic, or east to California

and then either the long route by sea

via the Panama Canal or cross country

on the new transcontinental railroads.

The Port of Singapore really did connect

the world. But take a train south from

as far away as Bangkok, Butterworth

(change for Penang) or Kuala Lumpur

and the southern terminus was the

Keppel Road and, after 1932, the Tajong-

Pagar Railway Station – in sight of the

port – a wonderful art-deco station of

white marble with statues representing

agriculture, industry, commerce and

transport. A few changes of train might

be required, but steam trains now

connected the Port of Singapore to as

far away as Kunming and Chongqing

in China; across the vast expanses of

French-controlled Indo-China and even

into the heart of Burma.

War and More WarThe First World War was to have

a profound affect on the Port of

Singapore despite the conflict never

directly reaching the country. The port’s

economy boomed as Britain sourced

unprecedented levels of crude rubber,

oil and tin from the country to fuel the

nation’s war machine. A new flag was

also seen fluttering from ship’s masts

in the port too – the Stars and Stripes.

Between 1912 and 1914 only one major

cargoship flying an American flag called

at Singapore. In 1915 over seventeen

large American-flagged cargo ships

called at Singapore. In 1917 (when the

United States entered the war in Europe)

over twenty US-flagged ships called

at the port and three companies – the

newly formed Singapore-Pacific line, the

Waterhouse Steamship Line of Seattle

and the Pacific Mail Steamship Company

of San Francisco - had commenced

regular services between Singapore and

the Pacific coast of the US. Even after

the armistice, when the war ended in

Europe, demand for oil, rubber, tin and

a host of other commodities boosted

the port’s revenues. As it celebrated the

centenary of its founding by Raffles,

back in 1819, Singapore’s port was at

its zenith in terms of shipping tonnage,

profits and cargo volumes. It seemed

that both war and peace had been good

for the Port of Singapore.

And the port’s strategic importance

as a lifeline during the Great War did not

pass unnoticed in London. Nor did the

growing power of the Japanese Imperial

Navy in the Pacific and China Seas.

Cash-strapped as the British Empire was

after the devastation of the war money

was found to build a massive naval

base in Singapore. Construction began

in 1923 and was eventually completed

in 1939 at the then phenomenal cost

of $500m. Adjacent to the commercial

port the naval base featured the world’s

largest drydock, the third largest floating

dock, enough fuel storage tanks to

support the entire Royal Navy for six

months and all protected by heavy

15-inch guns positioned in Fort Siloso,

Fort Canning and at the new Royal Air

Force base at Tengah. Upon completion

Winston Churchill, then First Lord of

the Admiralty, declared Singapore the

“Gibraltar of the East.”

But it was not to be. Singapore was

to be a naval base without a fleet. As the

Second World War spread from Europe

to Asia in 1942 after the Japanese attack

on Pearl Harbour, the European empires

in Asia crumbled. The Japanese occupied

French Indo-China, took the strategic

port of Shanghai and then Hong Kong

on Christmas Day 1941. Singapore

was next in their sights. The Battle of

Singapore raged from February 8 to 15,

1942 and ended in a British surrender.

The Japanese Imperial Army occupied

both the naval base and the commercial

Port of Singapore. Now prime minister,

Churchill called the fall of Singapore to

the Japanese the “worst disaster” and the

“largest capitulation” in British military

history. The next three and a half years

were to be dark ones across a Singapore

under Japanese occupation. But in

August 1945 Tokyo surrendered and

Singapore, and its port, were liberated.

The next phase of the port’s history was

to be as part of a newly independent

Singapore and to take place in a world

which was to see, in technological terms,

arguably even more change than the

previous 100 years.

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33www.splash247.com

SG50

Independence came to Singapore

in August 1965. The early 1960s

had seen a tough time for the Port

of Singapore. Disagreements with

the newly independent Malaysia saw

Singapore eventually break away as

a separate nation and this meant that

much of the port’s traditional business

from the Malay heartlands moved to

other ports. Additionally, much of the

former tonnage that had flowed through

Singapore from Indonesia was now

diverted to other regional ports. As a

new, small island nation Singapore was

forced to embrace a greater sense of

self-reliance and this, in part, meant

that the Port of Singapore reverted to

what it had been in its earliest days – a

transhipment centre. Geography was

still integral to Singapore’s destiny.

However, Singapore began to

emerge as something new; something

it had never been before really – an

export-oriented economy that aimed

to be a vibrant and value-added

manufacturing economy in its own

right. Singapore, essentially for the

first time, began exporting itself, and

its locally produced goods, out to the

world. The role of the port was essential

to realising the nation’s inaugural

prime minister Lee Kuan Yew’s goal of

rapid economic development driven by

entrepreneurship, innovation and trade.

In 1964 the Port of Singapore

Authority (PSA) was formed as a

statutory body, effectively making the

port a development agency to ensure

its continued crucial role to the rapid

development of the country in these

early days. Being small means being

nimble, being able to move quickly

to gain advantage. Singapore was to

embrace this advantage and make two

key decisions in the 1960s that, at the

time, appeared to be massive gambles,

but ones that ultimately ensured the

long-term growth and continued success

of the Port of Singapore. Looking back,

with the benefit of hindsight, these

decisions appear obvious. But they

were far from that in the mid- to late-

1960s and deserve to be explained and

remembered.

Riding the Singapore Cable Car

from Mount Fabre out across Keppel

Harbour towards Sentosa it’s hard to

imagine Stamford Raffles standing on

the banks, surveying the harbour and

deciding to create his legacy of the free

port of Singapore in 1819. Down below

dozens of ships are moored; hundreds

more out to the horizon waiting to enter

the port and, aboard them, thousands of

metal containers. The pirates and the sea

gypsies are long gone, but it’s equally

hard to envision that in 1966 not one

containership plied the trade routes via

Singapore. All the more amazing then that

that year PSA announced, to a frankly

startled global shipping community, that

it was going to build a container terminal

at the East Lagoon. Singapore was not

a rich nation but did manage to secure

a S$45m loan from the World Bank to

fund the construction of the terminal. Six

years later, in 1972, the MV Nihon, sailing

from Rotterdam with a cargo of 300

containers berthed and was unloaded

with the terminal’s new Hitachi cranes.

East Lagoon Container Terminal was

to be renamed Tanjong Pagar Terminal;

the lone MV Nihon was to become a

stream of containerships, growing each

year; by 1985 Singapore was the busiest

container port in the world. At the

inauguration ceremony for the terminal

Lee Kuan Yew told the press: “Singapore’s

raison d’ être is its port; Singapore must

strive to remain a major hub port.”

The second visionary decision

Singapore took was to vertically

integrate their new economy. It was

not enough to create a value-added,

export-oriented manufacturing base

on the island; nor to equip PSA with a

container terminal ahead of its time.

Singapore also decided to create its own

shipping line in 1968 at a time when its

population was barely 2m people and its

GDP was but a fraction of what it would

become. Wholly-owned by the Singapore

government, Neptune Orient Lines (NOL)

was to be Singapore’s national line, its

creation designed to bolster and support

the island’s economic development

through offering local manufacturers

low freight rates to boost exports.

As the 1970s rolled around the

question for Singapore, its government

and port authority was whether or not

the initial foundations – the creation of

PSA, the building of a container terminal

and the founding of NOL – would be

enough to weather the very stormy

weather approaching.

The 1960s saw dramatic local maritime developments

Independence and self-reliance

34 www.splash247.com

The 1970s were to see some of the

worst crises to face global trade

and the global shipping industry

in the second half of the 20th century.

Yet, Singapore initially powered on. By

the mid-1970s the length of highways,

streets and rural roads illuminated with

streetlights had almost tripled from

892 km at independence to 2,281 km;

planning had begun for Singapore’s

second power station at Senoko even as

the new Jurong Power Station was still

under construction; work began on an

entirely new passenger airport at Changi

while also expanding the old airport

at Paya Lebar as a dedicated air cargo

hub. New manufacturing centres were

being established in Jurong, Redhill and

Tanglin.

PSA was still expanding Singapore’s

port infrastructure too. It took over the

former British naval base at Sembawang

and established the Sembawang Wharves

handling breakbulk and specialised

cargoes including heavy equipment,

steelworks, and cables. In part this

equipment was needed to support

Singapore’s massive construction boom

that saw the city transform from low-

rise to high-rise by the mid-1980s. A

new terminal was also built at Jurong

to support the development of the new

Jurong Industrial Estate (JIE). The far-

sighted decision to build the Tanjong

Pagar Container Terminal was paying

off for PSA – those Hitachi cranes were

working day and night.

Goh Chok Tong, who was to go on

to become Singapore’s second prime

minister, was managing director of NOL

and expanding the line precipitously

– embracing the coming wave of

containerisation as well as cementing

NOL’s (and by extension Singapore’s)

position in the Europe-Asia trade

through joining the ACE Consortium

with partners OOCL, K Line, Cosco and

Franco-Belgian Services. ACE quickly

became known as the ‘third force’ in the

global container shipping business.

But Singapore was not the only Asian

country to attempt to revive its economy

through expanding low cost production.

The 1970s was the start of the same

process for many regional nations

that would, with Singapore, emerge as

the Asian Tigers of the 1980s. Taiwan,

South Korea and Hong Kong were all

attempting similar strategies. Malaysia

was attempting to reduce its reliance

on Singapore’s terminals by developing

Port Klang as the country’s national

load centre, and Tanjung Pelepas

as a regional transhipment centre;

Hong Kong was ramping up its port

infrastructure and Hong Kong-based

port operators were already, by the

end of the 1970s, starting warily to eye

southern Chinese port locations as sites

of possible future development.

Perhaps the major challenge to both

Singapore as a nation and PSA in the

1970s was the 1973 oil crisis, which

by its end in 1974 had seen the price

of a barrel of oil rise from $3 to $12.

Between 1965 and 1973 Singapore’s

annual average real GDP growth was

12.7%; inflation was generally low

and prices stable. However, the high

degree of Singapore’s manufacturing

industry that was foreign owned and/

or invested and the policy of boosting

exports at all costs had the effect of

exposing Singapore to the oil price

shocks of the decade. The 1973 oil

crisis did put a dent in trade and GDP

growth, down to an average of 8.7%

between 1973 and 1979. However,

what made the global recession more

manageable for Singapore than for most

regional economies in the 1970s was its

traditional position as a transhipment

centre and as an entrepôt economy. Oil

may have quadrupled in price but it

was still in demand and still needed to

be shipped and that invariably meant

via Singapore from the Middle East to

oil hungry nations with no domestic

reserves such as Japan.

The combination of the global shock

to the system of the oil crises of 1973,

and then again in 1979 following the

outbreak of the Iranian revolution, and

the rise of regional competitors, both as

export-oriented economies and potential

transhipment hubs, meant Singapore

had to be radical in its thinking once

again. And it was. Singapore looked at

where the world was shifting after a

tumultuous decade and decided, against

the popular consensus, that perhaps it

was just possible that the long dormant

Chinese dragon was about to awaken

from three decades of Maoist slumber.

Competition and crisesOil shocks and nearby infrastructure growth proved challenging in the 1970s

35www.splash247.com

SG50

Singapore weathered the 1979

oil crisis and the turbulent

economic start to the 1980s

surprisingly well. To counter over-

dependence on exports and foreign

investment the government spent on

domestic consumption. This meant

cash to continue the construction

boom as well as large public works

programmes – following technical

surveys in the 1970s, the first trains

ran on the island’s MRT system in 1987.

However, by the mid-1980s Singapore

faced the double-whammy of a saturated

construction industry seeing fewer

large-scale projects in the pipeline

and the slowdown in many key trading

partners and the markets of Europe and

North America. Meanwhile, much of the

economic stimulus (certainly in terms of

jobs) from oil refining and shipbuilding

were being ameliorated by new and

lower cost competitors in the region.

Singapore moved into recessionary

territory economically in late 1984. In

1985 GDP growth was -1.4%. However,

the country managed to make a quick

recovery by 1986.

There were a number of factors

that helped Singapore recover so fast.

One was the generally continuing good

conditions at PSA’s terminals. Singapore

had become the world’s busiest

container port by 1982, achieving

1m teu in a year for the first time.

Buoyed by this growth PSA invested in

construction of the Keppel Container

Terminal adjacent to the Keppel Harbour

facilities – it eventually opened for

business in 1991 with 14 berths and

42 cranes in operation. Additionally in

the 1980s Singapore had emerged as a

major producer of bunker fuel and was

able to keep the price low in a generally

oil inflationary world. Cheap bunker

fuel was a significant inducement to the

world’s major shipping lines to continue

transhipping through Singapore.

It was also the case that PSA had

continued investing – not just in

more port infrastructure, but rather

in the coming wave of technological

advancement that reduced bureaucracy

and made hub ports attractive to

shippers. In 1984 PSA introduced

PORTNET - a one-stop 24-hour paperless

electronic system, linking PSA ports

with the global shipping community.

In 1988 CITOS followed, an enterprise

resource planning (ERP) system that

coordinated and integrated PSA’s entire

port operations. The berths, cranes and

yards were in place – innovations such

as PORTNET and CITOS made them

more efficient, easier for shipowners to

use and streamlined the whole business

saving both PSA and its customers time

and money. This concentration on the

back office processes of the shipping

trade by PSA echoed the wider strategy

of Singapore to create jobs and business

through embracing finance and the

new knowledge economy. Throughout

the 1980s Singapore morphed into

one of Asia’s foremost banking centres

attracting multinational regional HQs,

stock listings on the local market and

creating thousands of new, office-based

jobs for its generally highly educated

workforce.

Singapore had weathered the storms

of the early- and mid-1980s remarkably

well. However, it had learnt the lesson

of exposure and realised that it needed

to look beyond its traditional trading

partners of Europe, Japan and North

America to new markets. Today, China

seems an obvious choice, but it was far

from obvious in the 1980s. The country

was only a couple of years past the

upheaval and turmoil of the Cultural

Revolution; it was an overwhelmingly

poor, largely agrarian nation with

outmoded industry, dilapidated ports,

a creaking infrastructure where it even

existed, and little to no contact with the

outside world for three decades. But

where most of the world saw potential

chaos and an economic basket case,

Singapore’s prime minister Lee Kuan

Yew, it seems, saw opportunity.

Michael Barr, a professor at

Australia’s Flinders University, says:

“Lee spotted the rise of China before

anyone else.” Deng Xiaoping, whom

Lee described as, “a great leader who

changed the destiny of China and of the

world” made a state visit to Singapore in

1978 (pictured) and was impressed with

what he saw. Building on the success

of the 1978 visit Singapore-Beijing

bilateral relations slowly emerged

throughout the 1980s. In 1985 Dr

Goh Keng Swee had become a special

economic adviser to China’s nascent

coastal Special Economic Zones; the two

countries bilateral trade was growing

slowly. Singapore was engaging with

Beijing before it had actually officially

established diplomatic relations with the

country (which happened in 1990).

‘Engaging China’ was to be a buzz

phrase for Singapore in the 1990s and

the small island state was to find itself

well positioned to take advantage of

the waking dragon. However, what was

seen as an opportunity for Singapore

was also sometimes a threat and, while

Singapore had survived the economic

quakes of the 1980s in robust form,

the 1990s were to provide additional

challenges.

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SG50

T he 1990s looked set to be a

good decade for Singapore, and

its port. In the first year of the

decade PSA crossed the 5m teu in a year

mark and became the world’s largest

container port. The Keppel Terminal

began operations and a year later the

PSA’s Brani Terminal also went into

operation. Volumes through PSA’s

terminals surged – by 1994 Singapore

passed the landmark of 10m teu in a

single year.

It was the decade of containerisation

as the rising ‘Asian tiger’ economies

emerged as ‘demon exporters’ and

China’s experiments with Special

Economic Zones paid off and it became

a major exporter too and the so-called

‘factory of the world’. At the same time

Asian nations’ demand for oil, other

commodities and primary inputs surged

to new record levels and much of this

transhipped through Singapore. The

lines of VLCCs and containerships

queuing up to pass through Singapore

grew ever longer.

At the same time Singapore itself

emerged as a leading high-end, value-

added manufacturer of semi-conductors

and other hi-tech components, while

also extending its reach into the global

finance, banking and knowledge working

economies. These were record years for

retail sales and tourism too – Changi

had emerged as the major airport hub

for the region.

Singapore appeared exceptionally

well-positioned vis-à-vis the emerging

economy of China. Trade with China

hit S$3bn in 1990 and kept on growing.

Singapore put down roots in China –

most publicly with the much-publicised

Suzhou Industrial Park in 1994, close

to the rapidly emerging megalopolis

of Shanghai and in the heart of the

manufacturing belt of the Yangtze River

Delta. PSA too was becoming

involved deeply with China.

In 1996 PSA established its

first ever overseas project in

Dalian. Singapore was moving

up the value chain; going

global as an exporter and

an investor and becoming

both the world’s largest

transhipment port by some

margin and also a centre

for hi-tech innovation in

petro-chemical, bio-tech and

pharmaceuticals. In January

1995 Singapore cemented its position

as a global economic power by joining

the World Trade Organisation.

Perhaps a high point in Singapore’s

economic growth and emergence in the

1990s was the 1997 acquisition of the

shipping line APL by NOL for $285m.

In response to the growing movement

of goods of all sorts – from refrigerated

foods to dangerous chemicals – around

the region APL Logistics was formed to

position the company as a major force

in managing supply chain operations in

the region.

However, once again it was outside

forces that rocked Singapore. The Asian

Financial Crisis erupted in July 1997.

Singapore was better positioned than its

neighbours and close trading partners

in the Association of South East Asian

Nations (ASEAN) such as Indonesia,

the Philippines and Thailand, but was

still affected. GDP slumped to just 1.5%

growth in 1998; the island’s stock and

property markets took a severe beating.

But still the underlying robustness

and the diversification of Singapore’s

economy over the 1980s and 1990s

helped the country to rebound to 5.4%

GDP growth in 1999. It had been what

economists termed a soft landing.

Also helpful was the fact that the one

major regional economy to suffer

almost no fall out from the crisis was

China with its protected currency and

global demand for its cheap electronics

and textiles. China was now one of

Singapore’s largest trading partners and

a major investment destination.

The last few years of the 1990s had

been tough ones for Southeast Asia;

recovery would take years in some

regional economies who, after having

to secure loans for multinational

lenders would have to impose swingeing

austerity programmes and see their

currencies and markets suffer long-term

damage. But Singapore had had one

major advantage – its oldest and most

reliable advantage. While many of Asia’s

economies had been hit exports had

kept on being shipped and the West’s

appetite for consumer goods from

Asia had not slackened at all – indeed

with the availability of easy credit

in Europe and North America it had

burgeoned. The containerships kept on

crisscrossing the oceans and calling at

Singapore.

And so the century came to an end.

The 21st century was hailed as being the

era of globalisation. Singapore and its

port were more than ready to welcome

that kind of century.

A soft landing Asian tigerSingapore fared better than most through 1997’s Asian Financial Crisis

39www.splash247.com

SG50

By the new century Asia’s

port infrastructure looked

unrecognisable from 1965. PSA

continued to build – the Pasir Panjang

Terminal opened in 2000 and continues

to expand through land reclamation.

By 2005 PSA announced it was

handling 20m teu a year, a remarkable

achievement considering 30 years prior

it was handling none. Current plans

would allow the combined PSA terminals

to handle 65m teu per year – quite a

growth over the 1m milestone in 1982.

To secure business against the rise

of other regional ports the PSA began

to enter into a variety of joint-venture

terminals. In 2003 the COSCO-PSA

Terminal (CPAT) went operational

at Pasir Panjang Terminal; two years

later saw the opening of a jointly

managed terminal between PSA and

Mediterranean Shipping Company

(MSC) at Pasir Panjang; 2007 saw PSA

join with NYK and K Line to open a

dedicated car terminal; and in 2008 a

joint container terminal PIL- PSA within

the Keppel Terminal.

These joint terminals mirrored the

Singapore government’s attempts to

further cement ties with key trading

nations through the agreements between

New Zealand and Singapore on a Closer

Economic Partnership and the Free

Trade Agreement (FTA) negotiations

with Japan, Australia and the United

States in 2000. More FTAs have followed

over the ensuring decade. Early in the

2000s Singapore’s influential Economic

Review Committee noted that the island

state should encourage, “A globalised

economy where Singapore is a key node

in the global network, linked to all the

major economies.” Singapore rapidly

embraced the globalisation concept.

In the nineteenth century Singapore’s

great advantage was its deepwater

harbour and location on the most

crucial node of East-West trade. This

advantage was accentuated by Sir

Stamford Raffles and his concept of

Singapore as a free port and the world’s

major transhipment hub. Today, we

talk of ‘killer apps’ rather than simply

advantages but, for Singapore, the

foundation of its success remains the

same in 2015 as it did in 1819 – its

willingness to open out to the world and

trade with it. That has grown from being

simply a weight station and a refuelling

depot, a place to take on fresh water

and aggregate goods from numerous

regional islands and markets. Today it

is as much about taking expertise into

the hinterlands of China – PSA has

operations in many Chinese ports – or

the old trading partners of Europe and

Japan, the emerging markets of Latin

America and India, regional nations

such as Vietnam or Indonesia, or other

key global hubs such as Saudi Arabia

or Turkey. But PSA’s terminals remain

its core business and Singapore’s most

deeply rooted economic activity – in

2014 PSA Singapore was the first port in

the world to have cumulatively handled

500m teu. PSA’s slogan ‘The World’s

Port of Call’ doesn’t look like changing

anytime soon.

The world’s port of callIn the 21st century the Lion City has become by popular consent the world’s top international maritime centre

41www.splash247.com

FINANCE

Expect to hear of more shipping IPOs in the republic once the markets pick up

Exchange to spearhead renewed finance push

Singapore, regularly topping polls as

the world’s greatest international

shipping centre, is looking to boost

the finance side of its offerings.

The Maritime and Port Authority

of Singapore (MPA) is working in a

tripartite group to promote shipping-

related listings on the Singapore

Exchange (SGX). The Singapore Shipping

Association (SSA) is the other partner in

the group.

The total market capitalisation of the

62 maritime listings on the Singapore

bourse stood at S$45bn ($32.69bn) as of

the end of September, according to SGX.

The group will be benchmarking

SGX against the current top bourses in

maritime listings: the Oslo Bors and the

New York Stock Exchange (NYSE).

At September’s Singapore Shipping

Association dinner, Esben Poulsson, the

new SSA president, told attendees the

republic needed to up its game on ship

finance. “We cannot sit on our laurels,”

he said, adding: “We feel we are a little

weak in the capital markets and listings.”

Singapore’s push for more shipping

listings comes at a time where other

exchanges are seeing their shipping

exposure diminish. Local shipping

communities in both London and

Hong Kong have called for their local

exchanges to up their game in chasing

shipping listings this year.

SGX has been upping its game a great

deal of late when it comes to shipping-

related offerings. Its new LNG pricing

mechanism (see page 48) has been well

received by the sector, while it has plans

to grow its dry bulk expertise soon.

The exchange is taking heed of major

customers to try and introduce forward

freight agreements (FFAs) clearing in

Asian trading hours, Splash understands.

The likes of Noble and Cargill have been

urging the SGX to up its FFA game for

years and the SGX is willing to respond

and give London’s LCH.Clearnet a run

for its money, sources connected to the

SGX have told Splash.

“In developing the FFA market, SGX

recognises the importance of a robust

Asian-centric marketplace which is

well supported with an internationally

accepted regulatory framework,” a

spokesperson for SGX told Splash.

SGX is attempting to increase the

number of Asian participants with

hedging needs or who are seeking

exposure to freight prices. It is also

trying to reach out to and share with

freight participants how to manage their

price risks, the spokesperson said.

“Though the majority of the trading

may take place in Europe, the centre

of gravity has been tilting towards Asia

where an increasing number of key

European participants have enhanced

their trading and broking infrastructure

to participate in the Asian timezone.

Such growth momentum will continue

as the number and type of shipping

players, such as physical participants,

brokers and banks, increase over time

and supported by the underlying activity

in the dry bulk market in this region,” the

source said.

Once again Singapore is stealing a

chunk of business that a decade ago

would have been in the purview of Hong

Kong, something not lost on Hong Kong

owner, Kenneth Koo, the chairman of dry

bulk owner, TCC Group. “Hong Kong is

not identified as ‘Asia; from a shipping

standpoint, Singapore has assumed

that mantle. Hong Kong has also lost

its identity as a dry bulk hub,” Koo told

Splash recently.

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yARDS

The fall in the price of oil has hammered Singapore’s top two shipyards leading some to speculate a merger is the best way to survive

Harsh winters tend to follow Indian summers

Meteorologists will tell you

harsh winters tend to follow

Indian summers. Singaporean

yards can vouch for this swift change. No

other sector in Singapore has been hit

so hard by the low oil prices worldwide

than the republic’s main yards run by

Keppel and Sembcorp. The pair - who

defied the odds for much of the past

decade, building up enviable offshore

orderbooks - have yet to secure any new

rig orders this year, a sharp turnaround

from the recent past where they have

the led the world in snaffling up rig

contracts.

Contract cancellations and delays,

combined with a severe drop in new

orders, have seen both conglomerates

report poor results in the first three

quarters of the year. With most analysts

convinced low oil prices are here to

stay for at least the next couple of years

Singapore’s top two yards are doing all

they can to make their organisations

leaner.

Keppel chief executive Loh Chin Hua

said towards the end of October that

his company was readying itself for “a

possibly longer winter” by slashing its

workforce. “We are making ourselves

more efficient [and] leaner,” the Keppel

boss said.

In early November the chairman

of the Economic Development Board

(EDB), Bew Swan Gin, said Singapore’s

offshore and marine industries would

need to reinvent themselves to ride out

the downturn.

“The sector is a significant

contributor to our economy, providing

good jobs for Singaporeans, but the

continued transformation of the industry

is critical for its long-term success,” Beh

said.

Merger mootedWhat Keppel and Sembcorp are suffering

is by no means unique. Shipbuilders

across Asia have been whacked by the

downturn in shipping and then the

drop in the price of oil. In plenty of

other shipbuilding nations – led by

South Korea and China – consolidation

among shipbuilders is now taking

place. Could Sembcorp and Keppel join

forces in this downturn? A far-fetched

idea considering the ferocity of the

rivalry between the pair? However, a

recent report by local bank DBS said

that consolidation is possible for

both companies, as restructuring will

allow the two rigbuilders to streamline

their cost structure and improve their

competitiveness on the international

front.

In plenty of other shipbuilding nations – led by South Korea and China – consolidation among

shipbuilders is now taking place

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yARDS

DBS noted that in the previous

downcycle, Singapore shipyards went

through a major consolidation during

the late 1990s, where various mergers

resulted in the formation of the two

government-owned shipyard groups.

This time, the shipbuilders are

facing an even greater challenge, with

contract wins sinking to record lows and

manpower woes adding insult to injury.

“This may force the yards to look for

ways to restructure. We do not rule out

restructuring, mergers and acquisitions

possibilities, as any cost rationalisation

exercises will boost competitiveness of

Singapore yards amid rising competition

from Korea and China, and the added

burden of operating shipyards in Brazil,”

said the report.

“A potential merger of KepSMM

will create a global champion with

a powerful combination - Keppel’s

market leadership, branding, and greater

overseas experience plus SMM’s world

class facilities in Singapore and Brazil,

which complement Keppel’s older

facilities. KepSMM will account for

almost one-third of the global market

share for drilling rigs by orderbook,”

DBS noted.

Ploughing ahead

Despite the drop in rig orders both

Keppel and Sembcorp remain in

expansive moods. Keppel has used the

downturn in the oil and gas industry

for investment. In August, it announced

the acquisition for $100m of US-based

Cameron International’s offshore rig

business, which includes jack-up rigs

and after-sales services. “Conglomerates

tend to perform well through crises due

to their access to capital,” commented

Keppel boss Loh.

Sembcorp Marine, meanwhile,

recently opened a new steel structure

fabrication workshop. The 120,000 sq

m facility, the largest facility of its kind

in Southeast Asia, will integrate with the

firm’s other capabilities at its flagship

Tuas Boulevard Yard.

In July this year, Sembcorp Marine

consolidated from a multi-business-

unit organisation structure into a single

brand and company under its long-term

‘Transformation for Growth’ strategy.

The company now focuses on

four key capabilities across its global

operations, namely rigs and floaters,

repairs and upgrades, offshore platforms

and specialised shipbuilding.

A potential merger of KepSMM will create a

global champion with a powerful combination

47www.splash247.com

SHIPmANAGERS

High costs and a lack of local manpower mean shipmanagement in the Lion Republic has not taken off as some had expected

Rethink needed if sector is to prosper

Singapore’s shipmanagement

sector looks stale with no real

large contenders appearing on the

global scene. On the contrary, the sector,

which is, like so much else in shipping

these days, ripe for consolidation, could

see any number of local shipmanagers

swallowed up by other players from

around the world.

Location has not been helpful

here. The cost of doing business in

the republic, the aspirations of the

local youth, the lack of a genuine

shipmanagement culture have all meant

that while the republic has thrived as a

hub for all manner of other maritime-

related businesses when it comes to

shipmanagement it is still relatively

small fry without any champions that

can boast more than 200 ships under

full technical management.

Like so many sectors in shipping

these days, perhaps more so in fact,

economies of scale are deemed vital for

prosperity in shipmanagement. By way

of example, the architect of this year’s

mega shipping merger, Peter Cremers,

who combined two Hong Kong entities,

Anglo-Eastern and Univan, tells Splash:

“There are clear advantages of size so

others might be thinking in the same

way.”

It is well known that many European

shipmanagers have been looking at

making a beachhead in Asia with a

possible acquisition in Singapore, but

willing sellers thus far have proven to be

hard to come across.

The fact is, in actual headcounts,

Singapore’s shipmanagement

community is declining, more so than

most other major shipping centres.

As a result of the high costs of doing

business here, many shipmanagers in

the republic have moved to shift as

much of their back office operations to

cheaper climes, led by the Philippines.

These high costs locally are also

inhibiting many owners from shifting

here. Despite significant wooing from

Singapore delegations, Greek owners,

many of whom are looking for new

homes in the wake of the ongoing

financial meltdown in Athens, are not

convinced the Lion Republic is the

answer to their needs. High costs and a

lack of the right manpower are cited as

reasons.

When it comes to shipmanagement,

despite many concessions and initiatives

by the authorities, it is clearly a sector

within Singapore shipping that needs to

be relooked at if it is to prosper.

When it comes to shipmanagement it is still relatively small fry without any champions that

can boast more than 200 ships under full technical management

48 www.splash247.com

On the face of it when Singapore

set out about five years ago to

become Asia’s LNG hub the aim

should have looked fanciful. This tiny

country has no gas resources, no real

gas infrastructure at the time, and was

some distance away from the key demand

drivers in the region: Japan, South Korea

and China.

However, this is the Lion City, a place

where government, once it has made up

its mind to be a hub of a certain sector,

throws everything at it.

This year’s Gastech, the LNG’s big

annual roving confab, held in Singapore

this time round, seemingly served as a the

republic’s coronation as Asia’s LNG centre.

Singapore has had an operational LNG

importing terminal since 2013. It has

three tanks with capacity set to rise from

6m tons a year 11m tons by 2017 with the

addition of a fourth tank. Work to identify

where to position a second terminal to

the east of the republic continues. The

government has intimated a second

terminal could be operational by the early

part of the next decade.

Rising LNG supply and demand within

Asia has prompted plans to establish a

domestic natural gas trading market in

Singapore.

The city-state’s government plans to

set up a Secondary Gas Trading Market

(SGTM) in Singapore for trading LNG

and natural gas domestically on a short-

term basis. The plans were announced

by S. Iswaran, minister for trade and

industry, at the opening of Singapore’s

International Energy Week in late October.

As with many other commodities in Asia, Singapore is positioning itself as the best place to trade gas

Gastech serves as coronation for city’s hub ambitions

Enhancing the maritime supply chain is in our blood in Singapore, honed by many decades of experience

as a seaport and trading hub

49www.splash247.com

LNG

“An SGTM can yield several potential

benefits. It will allow domestic gas price

discovery that reflects Singapore’s

demand and supply conditions. Second,

gas users will be able to complement

their portfolio of long- and medium-term

supplies with short-term supplies,” the

minister told delegates.

“It will also pave the way for the

potential establishment of a gas futures

market,” Iswaran said, but did not specify

a timeframe for the scheme.

The Singapore Exchange plans to

create an Asian benchmark for LNG,

which will negate the commodity’s

reliance on oil-linked pricing.

Singapore’s Energy Market Authority

will aim to provide more detailed

information on the long-term energy

outlook, the minister said.

The city-state is also assessing

proposed land allocation frameworks for

new power plants. Currently, more than

90% of Singapore’s electricity is produced

from imported natural gas, including LNG,

purchased under bilateral contracts.

Singapore can also lead the formation

of a neutral LNG price in Asia, just like

it has done for other commodities such

as oil, rubber or iron ore, according to

International Enterprise (IE) Singapore

chief executive Teo Eng Cheong.

“A well-supported Asian LNG price will

be helpful for LNG trading in Asia,” noted

Teo, in his keynote address at Gastech in

late October.

Teo said the Singapore SGX LNG Index

Group (SLInG), a weekly index based on

the submissions from international LNG

players who offer their assessment of LNG

prices this end, could “evolve to be the

Asian LNG price over time”.

The index, launched by the Energy

Market Company in September, now

comprises about 20 players.

“Singapore is well-equipped to host

this new and more open way of doing

business in the LNG sector,” said the chief

executive of Pavilion Energy Seah Moon

Ming at the same conference, adding that

the country, as neither a significant LNG

seller or buyer, will provide a “neutral

platform” for regional and international

markets.

Home-grown LNG company Pavilion

Energy is growing its business. Seah told

Gastech delegates that the firm, backed

by state investment company Temasek

Holdings, has signed a 10-year LNG

agreement with a unit of Russia’s gas

giant Gazprom .

It has also inked a memorandum of

understanding with Chinese energy

company Huadian to supply LNG from

2020 onwards, in addition to a similar

agreement with Japan’s Jera Co to jointly

procure and invest in LNG.

“We aim to remain competitive and

effective by responding to shifts in all

aspects of demand, supply and price,”

Seah said.

“Enhancing the maritime supply chain

is in our blood in Singapore, honed by

many decades of experience as a seaport

and trading hub,” Seah noted presciently.

The city’s gas hub credentials are growing

fast.

A well-supported Asian LNG price will be helpful for LNG trading in Asia

50 www.splash247.com

HAZE

Just 18% of those surveyed for this magazine say they’d relocate if this year’s smog from Indonesia became the annual norm

Maritime drawcard trumps annual toxic fires

Singapore, famed for its commitment

to green urban living, has long

been bedeviled by the land-clearing

actions of neighbouring Indonesian

plantation owners. This year’s haze

induced by Indonesia’s fires has been

especially bad, the worst in the Lion City

since 1997.

The toxic smoke has brought

significant disruptions to business as

Indonesians went about raising 21,000

sq km of forests and peatland by the end

of October. 21,000 sq km – that’s around

30 times larger than the island republic of

Singapore. In just a few months the fires

alone have emitted more carbon than the

annual emissions of Germany or Japan.

These emissions – which have harmed up

to 75m people in the region this year –

are likely to add about 3% to total global

greenhouse gas emissions from human

activities for 2015.

It is testament to the remarkably strong

drawcard that is the maritime cluster in

Singapore that just 18% of the 250 people

surveyed for this magazine said they’d

leave the country if the recent bout of

haze became the annual norm.

Nevertheless, many expatriates –

especially those with young families – will

mull alternative destinations if the smoke

does repeat to similar levels next year, our

survey found.

Pankaj Khanna, ceo of fast growing dry

bulk owner Pioneer Marine, comments: “If

two months out of the year are spent with

the haze, expats will not want to live and

work in Singapore.”

Matt Cannock, managing director

at insurance firm Markel International

Singapore, says it’s unlikely his company

would reposition from the city-state as a

result of the haze, but it would certainly

make he and his team deliberate about

expansion plans.

Mary Baey, ceo of Satcom Global

Singapore, complains: “It does disrupt the

day-to-day operations of the business

especially where engineers working on

ships installing satellite communications

hardware are put at risk due to decreased

visibility and dangerous air pollution.”

Steve Dillon, from BBC Chartering’s

Singapore office, relates how staff there

have been advised to take holidays if

possible away from Singapore during

the haze period. More incredibly, Dillon

reveals one solution the German heavylift

operator has mulled to keep working in

years to come as the thick deadly smoke

hoves into view.

“We have also considered to build or

purchase an office purpose-designed

accommodation barge, which can be

towed to healthier climes,” he says.

Captain Jonathan Walker from London

Offshore Consultants’ Singapore office,

who remembers the horrendous 1997

haze well, says it is vital people stand up

to make sure action is taken.

“We do not believe that the haze should

be accepted as a norm. It needs to be

urgently addressed by all the regional

governments,” he stresses.

In just a few months the fires alone

have emitted more carbon than the annual emissions of Germany

or Japan

51www.splash247.com

Southeast Asia is the world’s

hotspot for piracy, but could

the worst be over? According to

piracy watchdog, ReCAAP, there were

183 incidents of sea robbery or piracy

in the region last year. Moreover, in the

first nine months of this year there were

another 161 incidents, leading to some

to speculate the scourge could hit new

records in 2015.

“High demand for illicit oil, together

with a well-established black market,

will continue to drive maritime attacks

in Southeast Asia over the coming

months, meaning small tanker owners

face operational, financial and security

threats,” warned maritime security

provider PVI in a release earlier this year.

However, what is most noticeable is

the recent drop off in attacks as littoral

states around the Malacca Straits,

Malaysia and Indonesia get their act

together. The International Maritime

Bureau notes there were just two

hijackings reported in the third quarter

this year.

“The robust actions taken particularly

by the Indonesian and Malaysian

authorities – including the arrest of one

the alleged masterminds – is precisely

the type of deterrent required,” said IMB

director Pottengal Mukundan.

However, ReCAAP warned in its latest

report this October that there was no

room for complacency when transiting

these waters still.

“There is need for continuous

efforts to tackle these incidents by

the authorities and shipping industry

collectively and the importance of timely

reporting by shipowners/operators/

masters, and prompt responses by

maritime enforcement agencies,”

ReCAAP urged.

The majority of the incidents reported

during the first nine months of the

year involved perpetrators operating

in groups of one to six men, consistent

with past trends.

In 83 % of the incidents, the crew was

not injured, although there were reports

of crew being threatened and taken

hostage.

Captain Ashok Sabnis, founder

of Singapore-based Goodwood Ship

Management, tells Splash that the local

maritime crime spree needs to be tackled

by the tripartite system of cooperation

between Singapore, Malaysia and

Indonesia .

“A joint force of naval patrol and

rapid response teams would go a long

way towards solving what has become

a major problem for shipping in the

region,” he says.

In response to the growing threat

posed by robbers and pirates in the

region the Malaysian and Indonesian

navies did form a joint rapid deployment

team this August.

UK security firm Dryad Maritime

says this measure is not enough, urging

authorities in the region to establish a

permanent presence on the Singapore

Strait.

More could be done to tackle the

root causes of piracy, argues Matt

Cannock from insurance firm, Markel

International Singapore.

The CEO of the Maritime and Port

Authority (MPA) of Singapore, Andrew

Tan, tells Splash the republic is doing all

it can to fight maritime crime.

“Tackling the sea robberies and

fuel siphoning incidents in region will

require strong cooperation between

regional countries. On the part of

Singapore, we have beefed up our

security presence in our waters/area

of operations and will continue to

work with our neighbours to tackle the

threat,” he says.

Fourth quarter piracy figures should

paint the full picture.

Hotspot cooling off?Beefed up patrols by the littoral states appear to be working

The robust actions taken particularly by the Indonesian and Malaysian authorities – including

the arrest of one the alleged masterminds – is precisely the type of deterrent required

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53www.splash247.com

Like it not, the government needs to change its immigration rules

Talent pool exhaustion

For the third year running the single

issue that vexed respondents to

our Singapore maritime survey the

most was in the field of human capital.

Despite some measures by government,

the city-state clearly appears to be talent

tight – and not cheap either.

Chris Kirton, managing director at

Norstar Ship Management, does not

mince his words, commenting: “The

talent pool in Singapore is exhausted

with many substandard people in the

market.”

Pankaj Khanna, the ceo of dry bulk

owner Pioneer Marine, bemoans the

fact that salaries in some cases are now

higher than London.

“The local labour market is almost at

100% employment,” he warns, calling like

many others in our poll to 250 people

for easier rules on immigration so

expatriates can see a path to citizenship

or permanent residency. “This will attract

talent,” he insists.

Biju Oommen, ceo at feederline Orient

Express Lines, tells Splash: “It is getting

increasingly difficult to find suitable

talent in Singapore. The shipping

industry seems to have lost its glamour

to attract new talent from the local pool.”

Quite so, concurs Captain Ashok

Sabnis, the founder of Goodwood Ship

Management.

“Sadly the fact is most Singaporeans

do not see a life at sea as a viable or

attractive career choice,” he says, adding:

“I have heard Singaporeans refer to a life

at sea as being in a floating prison for

which you have committed no crime.”

So many respondents urged the

government to review the work permit

issue again.

Says Caroline Huot, head of lube

supplier, UniMarine: “The decision

of authorities to restrict foreigners

employment in Singapore is an issue

when looking for specialists and

particularly when language skills or

specific technical skills are needed.”

Other suggestions included this from

Edna Lim from C&C Technologies who

said the government should provide

better schemes to encourage business to

send their staff for training.

The HR professionalsSo what do the professional recruiters

make of the local market? By and

large, the four maritime HR experts

we contacted for this report concur

the market is indeed very tight, but

activity remains fevered in what is by

many recent polls the world’s brightest

international maritime centre.

Matt Conway, managing director

of Faststream’s Singapore operations,

highlights the squeezed nature of the

available workforce.

“Securing good local talent with

the right career motivations is of a

premium,” he says. For expatriates,

Conway explains it is becoming

increasingly difficult to attract the best

talent to Singapore due to the high

cost of living and the fact that most

companies no longer offer the traditional

expatriate package including housing

and schooling allowances.

“If you consider that private schooling

in Singapore is amongst the most

expensive in the world, this can in many

cases essentially rule out the possibility

for expats with children which clearly

further narrows an already very finite

talent pool,” Conway points out.

The talent pool in Singapore is exhausted with many substandard

people in the market

HR

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HR

I have heard Singaporeans refer to a life at sea as being in a floating prison for which you have

committed no crime

According to Jason Tay, managing

director of Singapore’s Direct Search

Asia, 2015 recruitment activities

continue to be busy for the shipping and

commodity sectors, but the same cannot

be said for the maritime and oil and gas

sectors specifically with shipbuilders,

OEMs and offshore drilling and

production asset owners, as the market

continues to be affected by the sluggish

oil price.

“With more mergers and acquisitions

happening in the market, employees

working for these companies feel less

confident with the business, hence

triggering interest to look out for better

opportunities. With this in mind, the

majority of hiring activities in 2015 are

related to filling existing vacancies,” Tay

says.

The government decision since 2012

to promote locals in favour of foreigners

is hurting maritime employment, with

Tay reporting there simply is not

enough local talent to match Singapore’s

broadening maritime hub status.

“It is very unlikely that the creation of

new blood – locals – will catch up with

the demand for talent in the industry, at

least for the next few years,” Tay says.

Phil Parry, chairman of recruitment

firm Spinnaker Global, admits of the

local HR scene: “High staff turnover

and difficulties recruiting have become

a perennial complaint.” He notes how

the industry has been honing in on

ever more specialist skills meaning that

candidate supply is tight.

“When a good one floats by, lassoo

them quickly,” Parry stresses.

Given the paucity of local

seafarers, Parry has a specific urgent

recommendation, telling Splash that the

government would be well advised to

identify the shipmanagement function

as a shortage occupation in need of

relaxation of work permit rules.

Parry observes that Singapore is

in the same boat as any developed

country where its people have many

opportunities other than shipping

competing for their attention.

This is a view also held by Rory

McGuire from Flagship Management

who tells Splash: “Singapore is no

different to any other global locations

– the talent pool is generally small and

is not helped by owners and managers

identifying office-based staff as the

principal source of cost reduction.”

McGuire says clients are still

focusing on technical and commercial

positions, something our survey also

backed up.

As it stands it seems come next year’s

Splash survey, recruitment will remain

the number one issue for the local

shipping industry.

Join us at one of Asia’s biggest maritime and offshore exhibitions and conferences:• 6 exhibition halls and 21,000sqm of exhibition space• 14,239 visitors from Asia• 1,518 participating companies from 60 countries• 16 official pavilions• High-powered conferences and seminars

APM 2016 exhibition space almost sold out.Book your space now!T: +65 6780 4586E: apm@reedexpo.com.sg W: www.apmaritime.com

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57www.splash247.com

EvENTS

Want to meet shipowners

and managers? Need more

options for suppliers or

partners? Networking at events is

a great way to make contacts in the

maritime industry, we all know that, and

Singapore is probably the best place in

the world to do so on a regular basis.

As the industry mostly struggles,

making new contacts and turning them

into new customers will be crucial in

2016. This is a guide on what events you

should attend in order to do so.

In March comes the largest exhibition

of the year, Asia Pacific Maritime.

Taking up two floors at the iconic

Marina Bay Sands complex, this show

brings a host of big name companies

from Singapore and around the world.

You’ll find plenty of industry people

at the event, it draws around 15,000

visitors and there is usually a host of

conferences being held both within and

external to the venue.

Making its debut during the same

week will be the Maritime CEO Forum,

organised by the team behind this

publication. The event is designed as the

anti-shipping conference, in that it will

be a half-day with panels packed full of

shipowner and shipmanager ceos. No

presentations, no slides, no selling, just

the top people in the industry discussing

pressing issues. The Maritime CEO

Forum will be limited in size to ensure

all attendees can make the most of the

day, network and then attendees can

relax at the afterparty which will include

additional invited guests.

Moving onto April, the industry

will be the centre of attention again as

Singapore Maritime Week returns for

the eleventh time. The slogan for the

week is People, Ideas, Opportunity and

there will be plenty of all three. In 2015

the week played host to around 30 events

involving more than 50,000 attendees.

If you’re a member of the Singapore

Shipping Association (SSA) then June

provides a good chance to catch up with

Singapore’s shipowning community as

one of the association’s quarterly cocktail

parties follows on from SSA’s annual

general meeting. The AGM is where the

council and committees are formed, and

so plenty of shipping’s top bosses will

be in attendance. If you’re not a member,

you can always attend as a guest of a

member, just make sure you bring plenty

of business cards as there will be well

over 500 people in attendance.

September is synonymous with the

Singapore Grand Prix and F1 excitement

soon turns into excitement from the ship

finance community as Marine Money

returns on the Tuesday and Wednesday

after the race. Located at the St Regis

Hotel, the event not only draws the entire

ship finance community but it’s a good

chance to meet plenty of shipowners

from Singapore and beyond. There are

always owners from Greece, Hong Kong

and Thailand in attendance amongst

others.

On the Friday of the same week is

the Singapore Shipping Association

annual dinner. For this event, our

advice is clear, get there early and fill

all your pockets with business cards!

In 2015, the event played host to more

than 2,200 people and that was on

the day after a public holiday. Expect

more to attend in 2016, including all

of Singapore’s shipowning community

including offshore owners. Bankers,

brokers, managers, yards, it would be

hard to find an industry segment not

represented at the event. The pre-dinner

networking is second to none, and once

the early speeches are over attendees

wander the ballroom in search of

friends, colleagues and clients. There

are several after parties for those that

haven’t had enough by the end.

Lastly, if oil and gas is your thing,

then at the end of November the iconic

OSEA event will be held at Marina Bay

Sands. This exhibition and conference is

unchallenged in Singapore in terms of

size and crowd. Over four days expect

to see more than 1,500 exhibiting

companies and more than 28,000

visitors - so once again, our advice is,

print more business cards.

The Maritime CEO Forum is designed as the anti-shipping conference: no presentations, no slides, no selling, just the top people in the industry discussing

pressing issues

Splash guides you through the events to attend in Singapore in 2016

Bring your business cards

Join us at one of Asia’s biggest maritime and offshore exhibitions and conferences:• 6 exhibition halls and 21,000sqm of exhibition space• 14,239 visitors from Asia• 1,518 participating companies from 60 countries• 16 official pavilions• High-powered conferences and seminars

APM 2016 exhibition space almost sold out.Book your space now!T: +65 6780 4586E: apm@reedexpo.com.sg W: www.apmaritime.com

16 - 18 March 2016Level 1 & Basement 2Marina Bay Sands, Singapore

APM 2016 visitor registration now open.Register now!

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59www.splash247.com

Graeme Somerville-Ryan teases some off-the-beaten-track places

Beyond the obvious

Maritime conferences are

generally hard work and

educationally focused. Barely

a day goes by in Singapore without some

shipping-related event (see page 57). As

such, a smart attendee should plan for

both diurnal and nocturnal ‘networking’

opportunities. After all, too much focus

on the state of the markets is now widely

accepted to be an HSE issue.

So, where should you take a key client

for a nice bite to eat, and perhaps an

event-appropriate sundowner? And, if

you’ve got a spare hour during the day,

how can you make the most of the local

experiences at hand? Pay attention…

your marketing ROIs and KPIs just might

depend on the following.

Let’s start at the beginning.

Breakfast—it’s the most important meal

of the day. Roti prata is a local favorite.

A flour-based crispy pancake, roti is

one of Singapore’s signature dishes. To

get the best roti you have to ‘go local’

so this will mean an open-air restaurant

or hawker centre. Located a little out

of town, one of the best roti stalls in

Singapore is Mr and Mrs Mohgan’s

Super Crispy Roti Prata. The trip

is worth it, and this is one of the last

places to (reputedly) still make their own

dough.

Labrador Park (or Labrador Nature

Reserve) is a great escape from the

concrete jungle. A reminder of colonial

times and the Second World War defence

of Singapore, this reserve combines

thick vegetation, gun emplacements, and

a waterfront park. It’s also handy to the

MPA building if you find yourself in that

part of town.

Lunch: The second or third most

important meal of the day. Laksa is a

coconut curry dish made with chicken,

seafood, and noodles. It has a bit of

spice to it, and it is a local favourite.

The Zhen Mei laksa on Bukit Merah

Lane has a great local reputation and

the claypot spin on this recipe results

in wonderfully rich flavours. Again, this

is a local outdoors dining experience.

This hawker centre is relatively hard to

find, tucked in between local shops and

apartments (ask a taxi driver to show

you the way). The surrounding area is

also well worth exploring.

Nocturnal drinksAlthough the haunts of Boat Quay,

Clarke Quay, and Club Street still pull in

the crowds, Singapore is going through

a bit of a speakeasy phase. This offers

up a few different options for client

entertainment. So…ruining the surprise

and ‘exclusivity’ of the speakeasy

concept…

Operation Dagger: (7 Ann Siang Hill,

Singapore, 069791): An underground

cocktail bar with great décor and

an impressive set to ceiling lights

(I wouldn’t want to be the lighting

manager).

Location: Try and find the glass door

with a rectangle and inverted crown.

The bar is located at the bottom of the

staircase.

The Library: Much like the ‘tailor’s

shop’ front in the spy movie Kingsman:

the Secret Service, The Library comes

with a ‘front ‘ business and a secret

door. However, it also comes with great

cocktails and food. So…if you fancy

yourself as a covert operative (with a

possible drinking problem), this is the

place to be.

Location: Through the Tailor’s Shop,

47 Keong Saik Rd, Singapore 089151,

PH: 6533 2001

28 Hong Kong Street: Located

at, er, 28 Hongkong Street, through a

non-descript, unsigned, door 28 Hong

Kong Street is Singapore’s original

‘unbranded’ bar and a Splash favourite.

Internationally lauded, this is one of

Singapore’s best ranked establishments.

Reservations are essential.

TRAvEL

The results are in from our latest Singapore poll in which 250 people were surveyed

Your thoughts

mARPOLL

If the recent bout of haze becomes the annual norm, would it force you to move operations out of Singapore?

Has Singapore reached a peak as an international maritime centre?

Do you consider Singapore to be the most cost efficient place to base your Asian operations?

If Singapore was not your preferred option as an Asian base, what would be the preferred option?

Can you find sufficient talent in Singapore to satisfy your business needs?

Is the government doing enough to protect vessels from piracy and theft in the region?

Yes 61%

No 39%

Yes 52%

No 48%

Yes 37%

No 63%

Yes 18%

No 82%

Kuala Lumpur 24%

Hong Kong 15%

Dubai 14%

Mumbai 11%

Manila 11%

Bangkok 9%

Jakarta 4%

Other 12%

Yes 38%

No 62%

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Copyright © 2015 Singapore Telecommunications Limited (CRN: 199201624D).

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