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Sept 6, 2023

Shares of Carnival Corporation (CCL) witnessed a remarkable 10% surge today, fueled by the CEO’s declaration of a “phenomenal season.” The company exceeded expectations in its second-quarter earnings report, generating $4.91 billion in revenue, surpassing the consensus estimate of $4.77 billion. Notably, Carnival has no immediate plans to return to China, but its positive performance has prompted analysts from Wells Fargo, Susquehanna, and Morgan Stanley to raise their price targets. CEO Josh Weinstein expressed optimism during the earnings call, highlighting the company’s achievements in revenue, operating income, cash flow, and bookings. Weinstein also introduced the SEA Change program, a three-year initiative targeting strong profitability and sustainability, focusing on carbon intensity reduction, EBITDA per ALBD, and adjusted ROIC. As the company navigates the post-pandemic landscape, investors and analysts eagerly await further developments.

As part of the Marine Board of Investigation, the U.S. Coast Guard has announced plans to transport wreckage and “presumed human remains” from the Titan submersible to the United States. The debris, recovered from the sea floor and offloaded in St. John’s, Newfoundland, will undergo formal analysis. The MBI, the Coast Guard’s highest level of investigation, aims to determine the cause of the accident, assess any misconduct or negligence, identify potential violations, and recommend preventive measures. The National Transportation Safety Board (NTSB) will collaborate with the MBI to determine the probable cause. The Transportation Safety Board of Canada has also initiated an investigation as the authority of the vessel’s flag state. Captain Jason Neubauer, MBI Chair, expressed gratitude for the international and interagency support in recovering and preserving crucial evidence, emphasizing the importance of understanding the factors contributing to the tragedy and preventing similar incidents.

The Panama Maritime Authority (AMP) has pledged to address concerns following its inclusion in the “grey list” of the Paris Memorandum of Understanding (MOU). The MOU is an agreement among 27 countries that oversees safety and environmental standards for foreign ships in ports. To prevent substandard Panama-flagged vessels from being detained in foreign ports, Panama has already removed 216 ships from its registry, which is the world’s largest. With approximately 8,500 vessels, Panama’s fleet has undergone over 45,000 inspections, achieving an impressive overall compliance level of 96.17% and a detention rate of 3.83%. The grey list designation may stem from an aging fleet, as 104 detentions involved ships over 30 years old, and 35 detentions involved ships over 40 years old. The AMP remains committed to improving the fleet’s standards and preserving its international reputation.

The International Longshore and Warehouse Union (ILWU) Canada has issued a 72-hour strike notice to the British Columbia Maritime Employers Association (BCMEA) after failed collective bargaining negotiations. The strike, scheduled for July 1, 2023, has been prompted by the expiration of the ILWU Canada Longshore Local collective agreement. The negotiation deadlock involves over 7,400 longshore workers and foremen, and centers around wages, benefits, working hours, and employment conditions.

The strike’s potential impact on Canadian supply chains and international trade raises concerns, although grain and cruise vessel services are expected to be exempt. The Canadian Minister of Labour and the Minister of Transport have urged both parties to return to the bargaining table to achieve a resolution. Despite the strike notice, the BCMEA remains open to federal mediation and aims to secure a balanced deal to ensure port stability and uninterrupted goods flow. ILWU Canada seeks to protect workers from job erosion, automation impacts, inflation, and rising costs of living. The union calls for genuine negotiations without concessions to end the dispute while preserving workers’ rights and conditions.

Saildrone and the National Oceanic and Atmospheric Administration (NOAA) will collaborate during the 2023 Atlantic hurricane season, deploying a record-breaking 12 ocean drones to intercept and study hurricanes. Already, eight of these drones have been deployed in the Atlantic Tropics and the Gulf of Mexico, with launches occurring from Florida, South Carolina, and the U.S. Virgin Islands. The partnership, now in its third year, focuses on researching the rapid intensification of mild tropical storms into major hurricanes, a phenomenon with devastating consequences near landfall. By collecting data on air temperature, humidity, wind speed, water temperature, and wave height, Saildrone aims to improve hurricane prediction models, enhance forecasting accuracy, and provide earlier warnings to coastal communities.

The data will also be shared with the World Meteorological Organization and over 20 organizations worldwide, aiding global hurricane research. With hurricanes having a significant impact in the U.S., causing over 6,600 fatalities and $1.1 trillion in damages from 1980 to 2021, the research collaboration is crucial for minimizing the destructive impact of these natural disasters.

Canada has signed agreements with Georgia, the Philippines, and the United Kingdom to address the shortage of certified seafarers in the country’s domestic fleet. This initiative, part of Canada’s investment in maritime training opportunities for underrepresented groups, expands the existing Reciprocal Arrangement Program. Foreign seafarers from Australia, France, Norway, and Ukraine were already eligible to work on Canadian-flagged vessels through this program. The latest agreements, announced by Canada’s Minister of Transport on the UN International Day of the Seafarer, include the world’s largest provider of seafarers, the Philippines. The Canadian government recognizes the vital role of seafarers in transporting an estimated 70-80% of goods used daily by Canadians. The Reciprocal Arrangement Program, launched in 2019, allows foreign seafarers to quickly secure employment in Canada’s marine sector if they meet the necessary requirements.

The government’s commitment to maritime industry growth is demonstrated by the $29.8 million investment in the Marine Training Program, extending it for four years. The program targets underrepresented groups such as Indigenous Peoples, Northerners, and women, providing them with training opportunities and facilitating their entry into maritime careers.

Ship-to-ship transfers of Russia’s Urals grade crude oil have moved away from Ceuta, a Spanish enclave in North Africa, due to mounting pressure from local authorities and European Union (EU) restrictions on transporting the oil. Vessel-tracking data compiled by Bloomberg reveals that no transfers have been observed at Ceuta since mid-April. Instead, activity has shifted to the Atlantic Ocean near Cape Verde, the Canary Islands, and the Azores. Western sanctions on Russian oil, prompted by the invasion of Ukraine last year, have forced Russia to seek alternative markets, particularly in Asia. This has led to the emergence of a large number of tankers involved in the transfer of Russian crude in international waters.

However, European countries prohibit companies from facilitating transfers with Russian oil. Spanish authorities reminded shipping services firms of this prohibition in February, leading to a decline in activity at Ceuta. While the waters off Kalamata, Greece remain the most active site for ship-to-ship transfers of Urals, some transfers have also taken place near locations such as Sohar in Oman and Sungai Linggi in Malaysia. The approaching hurricane season will make such transfers increasingly challenging in the Atlantic Ocean.

Cool Company Limited (NYSE: CLCO) has announced the exercise of purchase options for the acquisition of two newbuild LNG carriers scheduled for delivery next year. The company emphasized the attractive delivery schedule and a purchase price approximately 10% below the current market value. The state-of-the-art 2-stroke LNG carriers, being constructed at Hyundai Samho Heavy Industries in Korea, will have a cargo capacity of 174,000 cubic meters and will feature advanced technologies such as the GTT Mark III Flex Membrane cargo tank system, reliquification, air-lubrication, and shaft generators. These vessels offer several advantages, including their best-in-class design and boil-off rate, which make them highly attractive to charterers seeking efficient operations with reduced emissions. Cool Company plans to fund the acquisition with cash on hand and debt financing, with no additional equity required. Discussions are already underway to secure long-term time charters for the vessels, as the global LNG carrier orderbook is largely committed to future liquefaction projects, making available vessels scarce.

London-based petrochemicals manufacturer INEOS Energy Trading has signed long-term charter agreements with Mitsui O.S.K. Lines (MOL) for two newbuild LNG carriers, signaling its entry into the LNG shipping market. The charters complement INEOS’ existing fleet of 12 ethane and naphtha carriers. The company’s commitment follows a long-term Sales and Purchase Agreement with Sempra for 1.4 million metric tons per year of LNG from Texas to Germany, along with the purchase of long-term LNG regasification terminal capacity in Brunsbuttel, Germany. The two LNG carriers, with a capacity of 174,000 cubic meters, will be constructed at Hanwha Ocean’s Okpo Shipyard in South Korea and are expected to be delivered in 2027. INEOS plans to leverage its experience as the largest ethane gas transporter to establish an LNG “pipeline” into Europe, meeting its own demand and that of third parties.

The vessels will feature MAN Energy Solutions engines (ME-GA) and incorporate energy-efficient technologies like Air Lubrication and Shaft Generators, reflecting INEOS’ commitment to reducing carbon emissions and methane slip. The company looks forward to a fruitful partnership with MOL, a highly experienced LNG shipping company.

You can read previous issue of ‘Currents’ here.

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