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UPDATE - MPV - DECEMBER 2010
Safmarine is currently in the process of expanding its MPV (multi-purpose vessel) fleet. Six new ships - of which the Safmarine Sumba delivered in October 2010 is the first - will join the Safmarine MPV fleet between 2010 and 2011/12. These vessels are Safmarine's first new owned MPV vessels since it became a member of the A.P. Moller Maersk Group in 1999.
Q&A with Grant Daly, Safmarine Head of MPV:
Briefly explain the overall strategy and service network for your MPV operations?
Strategy:
Safmarine's MPV strategy is built on the needs of our MPV customers and the needs of our core market.
Africa is a core region and the traditional strength of Safmarine. Where and how we deploy our ships is influenced by customer needs in terms of cargo types, port requirements, routings and vessel size. We also recognise the shift in cargo sourcing patterns from traditional supply markets and will continue, as we have done, to adjust our product offering accordingly.
Service network:
Safmarine currently offers six regular MPV services linking West Africa with Europe, Asia, North America and South Africa.
Direct calls are made at more than 60 ports on Safmarine's MPV services, which are versatile and flexible.
Not only can odd-shaped cargo be loaded, but all the Safmarine MPV vessels are geared with cranes which is important for loading and discharging cargo at ports which do not have adequate shore crane facilities.
Safmarine's MPV services have grown significantly in the past few years. To what do you attribute this growth?
One of the advantages of the Safmarine MPV services is our ability to offer our customers the option of shipping both containerised and non-containerised cargo on one vessel, at the same time and with one transportation document.
Another advantage is our ability to provide a global service. Customers can ship all the cargo needed for a single project from diverse locations around the world, using a single shipping line (ie Safmarine).
While MPV vessels are designed to carry cargoes which are not suitable for containers (because the cargo is odd-sized or heavy lift), we also have customers who prefer to load their cargo as break-bulk cargo (even if it could fit into a container), so the MPV service also accommodates those particular needs.
In a nutshell, it's the MPV's flexibility that makes the service so attractive.
What has 2010 been like for the MPV business?
2010 has been a challenging year with the relatively low oil price of the past year limiting, for example, new investments.
Projects typically have an extended delivery period from planning through to final delivery and while the 2009 economic crisis did not impact the MPV sector as significantly as the container business (due to existing projects running to completion), new projects were slow to be initiated.
As result of this volatility, we continue to adjust our MPV services to meet customer demand.
We do, however, expect business conditions to improve in 2011.
Your MPV services serve West Africa - which are the focus/demand areas and how do you see them evolving?West Africa remains a region of great potential, rich in natural resource and supporting infrastructure demands.
Recent oil and gas discoveries in Angola and Nigeria bear testament to this, as does the infrastructure development in Equatorial Guinea (these are but a few examples).
The pace of development and MPV demand mirrors these developments.
Cargo sourcing patterns certainly reflect the increasing role of Asia and particularly China in the supply of infrastructure materials. This is, however, not unique to MPV.
The Chinese investment in projects in Africa is a clear indicator of their longer term positioning.
Briefly describe your MPV customer base.
Our business to the West Africa niche ports is mainly linked to the oil and gas industry, mining and civil works' industries.
Our vessels are built to accommodate the full range of cargoes, including containers, breakbulk cargoes (principally cocoa and coffee), neo-bulk (timber, steel), project modules and oil and gas-related cargoes.
The typical Safmarine MPV/breakbulk customer hails from the oil and gas and mining industry as well as the West African infrastructure business (port, road and rail construction), power generation plants, cement manufacturing and windmill industry.
MPV exports from West Africa include cocoa and lumber.
Does your MPV product offering include landside services?
Landside services are not our core focus or expertise, but should a customer have such a requirement we can certainly facilitate an introduction to a suitable and professional vendor.
What aspects are important to shippers active in the MPV business?
Shippers are increasingly realizing the value of not only basing decisions on freight rates. Other factors, particularly service flexibility, are becoming important in the project cargo/breakbulk industry.
What about rates?
Breakbulk rates are to a large extent influenced by container freight rates.
When freight rates for container services are low, there is often a tendency for certain shippers to temporarily shift their business away from MPV to container services.
However, in most incidents, these shippers return to MPV because of the distinct advantages of the MPV-type services. (Advantages as outlined above).
What is current situation with regard to port congestion in West Africa?
Our MPV business is very focused on the oil and gas and infrastructure projects which in many instances require transportation to ports that may be more challenging to serve than conventional container terminals.
Natural geographic elements - ie river levels and draft restrictions - are also a factor.
However, our history and experience of operating in West Africa for more than 100 years has a significant role to play in how we approach these challenges. We also have the benefit of the AP Moller-Maersk Group structure and investment in Africa in respect of representation, vendor agreements and dedicated resources.
How are the MPV services performing out of South Africa?
Our breakbulk service from South Africa covers a range of ports from Namibia to Cameroun with the primary focus on Angola and the DRC. We also cater for the raw material commodity imports back into South Africa.
Likewise, our Asia to West Africa service has the ability to offer Asia (primarily China) breakbulk cargoes into South Africa.
With China becoming an increasingly dominant supply area as sourcing patterns change, it will become an important market to focus on going forward.
What are the plans for serving other fast growing emerging countries like Angola?
The natural wealth and opportunity that Angola represents speaks for itself - as such, the country is a key market in our MPV service deployment.
We are also committed to playing a small role in the growth and development of Angola via the provision of our MPV services.
We continually review our customers' requirements in line with this, and recently celebrated our maiden call in Port Amboin, which is a Greenfield infrastructure development.
What is the current size of the Safmarine MPV fleet and why has Safmarine decided to expand its MPV fleet?
The Safmarine fleet currently (as at the beginning of November 2010) consists of 14 chartered units and a new, owned vessel, the Safmarine Sumba.
Safmarine's aim is to constantly improve the MPV services it provides its customers.
It was with this in mind that we began the process of rejuvenating our fleet of MPVs in 2009 with the delivery of new vessels on long-term charter and we have continued this process into 2010/2011 with the delivery of new, owned tonnage.
Our investment in new, owned tonnage is not only proof of our commitment to the West African multi-purpose trade, but modern vessels also have a lower environmental impact.
The injection of new tonnage is also important from a customer point of view, because it tends to result in improved schedule reliability of our services. This said, vessel schedules are not completely under our control. Factors such as weather and the port conditions in West Africa also play a role.
When will the new vessels be delivered to Safmarine?
The first vessel was delivered to Safmarine in October 2010. The remaining vessels are scheduled for delivery from 2011 onwards. (No specific dates available - exact delivery dates will be announced closer to the time).
Will these new owned vessels supplement or replace the current fleet?
Both. Although the idea is for the new vessels to supplement our current deployment, we will naturally seek to balance our deployment optimally with the phasing in of new tonnage and phasing out/replacement of existing charters to ensure that we have the right tonnage in the right services to best serve our customers' needs and profitably grow the business.
What are some of the firsts associated with these vessels?
These new Safmarine MPV vessels are not only the first new owned MPVs in Safmarine's recent history (ie since we became a member of the APM Group in 1999), but they are also first generation MPVs, ie, they are the first of a particular design.
These four vessels are also the first ships in the A.P. Moller-Maersk Group to meet the Performance Standards of Protective Coatings (PSPC - IMO Resolution MSC.215 .82) for dedicated sea water ballast tanks.
What are some of the 'environmental' considerations of the new fleet?
Modern vessels have a lower environmental impact and these new vessels do have 'green credentials'. In addition to the PSPC compliance (see above and below), these vessels will also be supplied with a 'Green Passport' which is basically a record of all materials, etc that were used during the vessel's construction.
This Green Passport will remain with the vessel for the life of the vessel and when the vessel eventually goes to the breakers yard, a full inventory of the materials used during construction be available.
The main engines also are built and supplied as IMO NOx regulated marine diesel engines.
Tell us more about the PSPC regulations?
These are new rules and regulations introduced with regard to paintings and coatings with the aim of reducing corrosion in ballast tanks. The rules are very strict, for example, there can be no sharp edges or pinholes in the welding because this is an area where the paint can 'break down'. All welding has to be smooth and all the lightening holes and scallops in the steel have to have smooth surface edges (2mm radius).
The performance standards of protective coatings, also requires that blasting and painting be done under environmentally controlled conditions ie indoors in an area with dehumidifiers. A full coat is applied by spray painting followed by two stripe coats which are applied on welded seams and scallops around all critical areas. This is followed by a final spray coat. Each and every application is inspected, and any defects immediately repaired.
Furthermore, the entire process is documented! A salt content test of the steel is also done after every blasting and a roughness test done to check if the paint has the correct profile.
All these activities are done in the best interests of building an 'environmentally-sound' vessel structure.
What are your comments on the current MPV order book and possible oversupply of tonnage?
We've learnt a great deal from recent supply and demand dynamics and the economic crisis.
While we cannot influence the market dynamics, we can and will focus on the service we provide and the manner in which we provide it.
Safmarine is of the firm belief that our new MPV vessels are ideally suited to the African business we focus on. The increasing demand on sustainability from the market place, the intake and flexible conversion of the vessels as well as the low draft, are key factors.
Can you tell me more about the 2 X MPVs being built at Jiangsu Sugang Shipyard?
These vessels were purchased while they were under construction; they were purchased from Swiss Cargo Lines and the first one, the Safmarine Sumba, was delivered in October 2010. The second vessel is due for delivery in 2011.
They are 18000 dwt series vessels and the will be managed by Enzian Ship Management.
The specs for these vessels are:
Length Overall: 160.35 m
Length between perpendiculars: 153.4m
Breadth Moulded: 25.20 m
Deadweight: 18 000 t
Service Speed: 17 knots at 90%MCR with sea margin
Complement: 24 crew
Container Capacity: 1,054 TEU
Cranes: 3 MacGregor Electro-hydraulic deck cranes
And what about the four MPV ships Safmarine has ordered from the Wuhu Xinlian Shipyard, Anhui Province?
The first vessel from this yard is expected to be delivered in the first quarter of 2011.
They are also 18000 dwt series vessels and will also be managed by Enzian Ship Management.
The 'Wuhu 4' MPV vessels will be deployed on Safmarine's MPV trades to and from West Africa with specific deployment to be decided closer to the date of delivery.
The specs for these vessels are:
Length Overall: 160.35m
Length between perpendiculars: 153.45m
Breadth Moulded: 25.20m
Deadweight abt: 18 000 t
Service Speed: 17 knots at 90%MCR with 15% sea margin
Complement: 24 crew
Container Capacity: 1 054 TEU
Cranes: 3 x McGregor Electro-hydraulic deck cranes
GRANT DALY - CV
Grant Daly joined Safmarine in 1994 as part of a newly established development unit tasked with expanding Safmarine activities into areas beyond the traditional trade lanes. In 2000 Grant relocated to Singapore as Far East Regional Manager and in 2002 he moved to Dubai as Middle East Area Manager. In 2003 he assumed the role of Regional Executive for West Central Asia, responsible for Safmarine activities within the Middle East and South Asia. He was then appointed, in August 2008, as Safmarine Regional Executive for the Asia Region, a position he held until 30 September 2010. On October 1, 2010 Grant took on a new responsibility in Safmarine, that of Head of MPV (Multi-Purpose Vessel). He is currently based at the Safmarine Head Office in Antwerp. Grant was born in Molteno, South Africa.
"I am a South African with 16 years' experience in the industry. After joining Safmarine in South Africa - which gave me an introduction to and grounding in the industry from an African perspective - I then spent the next 11 years in West Central Asia (Middle East and Indian Subcontinent) and more recently, in Asia.
"With the investment in new tonnage, the importance of Africa as a core region in our MPV strategy, the Middle East and Indian Sub Continent being core regions in Safmarine's corporate strategy, and the ever increasing importance of Asia in the changing sourcing patterns and investment in Africa, I bring an experience and network I believe adds value to my position as Safmarine's Head of MPV."
ends - as at November 2010
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