Category Archives: Shipping

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BIMCO launches new cybersecurity clause

BIMCO is one of the leading standardization forces in the world of shipping. Here is an example related to cybersecurity.

How do you write a contract that binds participants to provide an appropriate level of cybersecurity?  As the article makes clear, cybersecurity has been an issue in several recent shipping incidents.  Cyber attack is very real, and shipboard systems are great targets; they have low-speed interfaces to the network, there are relatively few kinds of content transmitted, and they operate in international waters where there is no specific enforcement.  And cybersecurity can be expensive, though it is low-cost compared to the damage that could result from just one incident.

Standards are needed.  BIMCO springs to the task.  The drafting team consisted of a law firm, shipowners, P&I clubs, and Klaveness, a maritime investment firm.  There’s a two-fold notification process; immediate notification of an incident, and then a detailed notification once an incident has been investigated.

The parties are required to share the information throughout. This last point is important, because cyber events often require joint resolutions for mitigation and future prevention.

The contract element also requires any third parties employed by the participants to have adequate cybersecurity, and makes the primary firms responsible for seeing to it.

Now we will have to see whether the clause catches on in the contracts we see written.  There is always a risk with a top-down driven standard; it may miss the issues the market needs to address.

Research has shown (albeit in other contexts, such as health care) that top-down standard initiation often does not produce the penetration of results that flexible evolution of a standard does.  However, someone has to start the ball rolling, and here we have a credible effort.

Let’s now see more innovation in this area of contracting, and let’s see the results in the open, so the best combination of terms emerges and gets global acceptance.

screenshot-Digital Ship 2019-05-24  via BIMCO launches new cybersecurity clause – Digital Ship – The world leader in maritime IT news

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Hamburg deepens Elbe channel

The project will cost $700 million, and it went through a long series of legal battles, mostly about environmental issues.  But now the project is ready to begin. The Port of Hamburg let the contract to DEME engineering, as World Maritime News reported.  Dredging Today reported that the contract has a value of EUR 238 million (including VAT). The article below contains many facts about the project’s scale, but does not offer a completion target date.

It is interesting to point out, as  did in his Loadstar article, that Hamburg, by virtue of its inland location, is also able to link with rail service via the One Belt One Road initiative of China, as well as multiple barge routes.

The Maritime Executive reported that the project was approved finally in August of 2018.  But such a large investment takes time to get ramped up.

There is still some resistance to the project and there are a few appeal opportunities left. But it seems very unlikely that opponents will take them up.

The port has recently experienced an upsurge in container traffic.  According to Port of Hamburg, almost one-third of the container traffic is related to China.  Seaborne cargo throughput reached 34.6 million tons, up 6%.  Container handling reached 2.3 million TEUs.  Some of this was due to four new transatlantic services run by THE alliance.

And hinterland traffic grew 8.0 percent.  Hamburg is famous for offering many feeder links, including around 2100 block train (unit train in US lingo) connections.

Part of the upswing is due to volatility induced by the tariff games going on in the world right now.  Firms are stocking up before the tariffs go into effect.  Whether the upward trend will continue is unclear, but certainly deepening the Elbe waterway will offer ocean carriers greater flexibility in route selection.

I have a special fondness for the Port of Hamburg after visiting it for the IAME conference in 2016.

screenshot-Dredging today 2019-05-21  via DEME Bags Elbe Deepening Contract – Dredging Today

logo  via Elbe upgrade signals opportunity for port of Hamburg to regain former glory – The Loadstar

screenshot-Maritime Executive 2019-05-21  via Hamburg Receives Approval to Dredge the Elbe

screenshot-World Maritime News 2019-05-21   via Elbe Deepening Contract Goes to DEME | World Maritime News

screenshot-Port of Hamburg 2019-05-21  via Port of Hamburg | Port of Hamburg – strong first-quarter growth powers upswing

 

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Swine fever set to reduce China’s soybean imports further: USDA

Asim Anand writes in Platts agriculture report that China is suffering from substantial losses in their pig population due to African swine fever (ASF).  The pig herd has declined by 20%, and that translates to less need for soybeans.   Estimates run to 22 million mt less.

I’ve been watching the world soybean flows since 2014 when my colleague Cris Clott and I, working with Althea and Libby Ogard, and with help from Scott Sigman, wrote an article about the soybean flows and the possibilities for containerization of soybeans as opposed to bulk transport.

US soybean exports to China have fallen by 85% due to the imposition of a tariff of 25% on US products by China.   So world wide there is a glut of soybeans and prices are dropping fast. Prices of US soybeans are under $9 per bushel, the lowest since 2016. (See graph from USDA-NASS).

Prices Received: Soybean Prices Received by Month, US

Graph from https://www.nass.usda.gov/Charts_and_Maps/Agricultural_Prices/pricesb.php retrieved 2019-05-14.

We can expect this trend to continue, and as the trade war with China escalates, US soybeans will cease to be exported to China at all.  Exports represent about half of the US production each year, and China is the largest customer.  We can hope for a change, but I’m guessing this market is virtually gone for the US, as the other soybean-producing countries, Brazil and Argentina especially,  move in and establish supply chains around the world.

 

screenshot SandP Global Platts  via Swine fever set to reduce China’s soybean imports further: USDA | S&P Global Platts