In this week's Wavelength Podcast the focus is squarely on the impact of recent attacks on shipping by Houthi rebels in the Red Sea and Gulf of Aden.
With two vessels being hit, one sinking and one leading to the tragic death of three seafarers the questions on how shipping and the international community should respond.
US-based security analyst Ian Ralby argues that the focus should be put on supporting the Yemen government.
Adam Corbett, TradeWinds insurance correspondent offers insights into the insurance cover for vessels and what may and may not be able to happen with any salvage operation.
We also look at the impact of the Red Sea attacks on the container market, notably charter rates-
And it is International Women's Day, so our correspondent Holly Birkett has been talking to Elpi Petraki, president of WISTA about what this day should mean in the shipping industry
Full Transcript below:
Transcript
Introduction
Craig Eason, TradeWinds
Hello and welcome to the new TradeWinds Wavelength podcast.
This is your regular podcast to help you keep up to date, with your finger on the pulse of the shipping and maritime industry.
My name is Craig Eason, I’m your host,and, this podcast is following the news so relies on drawing on the expertise of all the editorial team of TradeWinds, as well as reaching out to those who can help you understand what is happening in your industry.
In this episode:
Escalation in the Red Sea as the Houthi attacks on ships lead to the first fatalities of seafarers and how salvage of abandoned or sunk vessels could become a tough nut to crack.
And how the container lines have profited on the back of rerouting to avoid the red sea region.
And how today, which is Friday March 8th if you are listening on the day we publish, is a day we really should not be needing to celebrate is all things were equal.
Red Sea situation
Craig Eason, TradeWinds
The Red Sea situation took a turn for the worse this week with an attack by Houthi rebels on a vessel that led to the deaths of three seafarers.
It was an outcome that many feared.
The vessel is the 50,448-dwt True Confidence (built 2011). It had a crew of about 20, from the Philippines, India, and Vietnam. There were also two armed guards onboard from Sri Lanka and Nepal. It was on a passage from China to Saudi Arabia and Jordan with a cargo of steel products and trucks, according to owners and manager of the vessel.
The attack, consisting we believe of a single ballistic missile scoring a direct hit on the vessel bridge, occurred when the the ship was in the Gulf of Aden about 50 nautical miles south of the Yemen coastline.
Immediaty after the attack the International Maritime Organization, and just about all of the shipping organisations issued statements deploring the attack on innocent seafarers.
IMO secretary general Arsenio Dominguez
We all need to do more to protect seafarers, and I once again call for collective action to fortify the safety of those who serve at sea. International trade depends on international shipping, and international shipping cannot go on without seafarers.
Craig Eason, TradeWinds
Arsenio Dominguez, secretary general of the International Maritime Organization. His comments were backed by shipping organizations like the International Chamber of Shipping, Intertanko, Bimco and others issued a joint statement stating that “The frequency of attacks on merchant shipping highlights the urgent need for all stakeholders to take decisive action to safeguard the lives of innocent civilian seafarers and put an end to such threats.”
I spoke to maritime security expert Ian Ralby, founder and chief executive of IR Consilium about the implications of this attack and the actions that could be taken in the region
Ian Ralby, IR Consilium
For a long time, people were operating under the seeming notion that because nobody had died or nothing had sank, the situation wasn't really as bad as it seemed.
I think we can now get to the point where the absence of harm does not mean the absence of danger, because we have seen the harm. It is real, and we have to start recalculating how we approach the situation, because there has been an increase in the presence of naval assets to protect shipping and at the same time there's been an increase, not only in the frequency and intensity of attacks, but now in the consequences of them.
This brings up the question of whether the Red Sea is in any way safe for shipping.
What we've seen since the the 19th of November is that the container carriers made the first decision to reroute. They were the first to say it is not worth losing a seafarer, we are not going to lose a cargo, lets go around.
And with the decline in the amount of containerized cargo moving through, what we saw was that basically the residual were bunkers and tankers. And so it's no accident that the last several hits have all been on on bulk cargo vessels and that that makes a lot of sense.
However it does raise the issue that if that class of vessel now decides that it is too dangerous and it decides to move around, all that's left are tankers and a catastrophic spill in the Red Sea far beyond anything we've seen thus far would have consequences beyond any of of the the coastal states abilities to deal with, not just the environmental situation, but the humanitarian situation, because of the reliance on desalination plants around the Red Sea coast.
We have, we've seen the Houthis engage in what they've been doing for for a decade, but mostly out of sight, out of mind, for that time, which is to just escalate and escalate and escalate.
And now they have escalated to the point where shipping is not only feeling the direct economic consequence they are actually losing vessels and losing lives, and that that is a completely different context.
I think we are going to have a period of of immediate reflection as to whether the Red Sea is safe to transit at all, because of the remaining risk on not only the hazard of navigation and loss of life but also environmental and humanitarian consequences, and maybe reevaluate whether any of the the mitigation measures have worked.
Frankly, the Houthis have been overlooked as as a threat for a long time. They've been at war with the government of Yemen for the last 10 years and throughout that time they were claiming they were at war with the US and the UK, and they were desperate to get attention, and yet nobody gave them attention.
They were kind of invisible, even for security analysts. Most did not count the Houthis, along with the likes of Hamas and Hezbollah and al Shabaab and others that operate in the region with actually less overall effect, in in most cases, but I have nevertheless gotten a lot more attention.
Now the Houthis have demanded attention. They've demanded it quite successfully. So we now have everybody responding to them but responding to them as if they were other threats, as if they were someone like the Taliban that really just wanted to govern or they were someone like, you know another group that that, that responded to force with with a bit of deterrent effect.
They are not, they are a unique group with a unique mentality that has a pretty proven track record of how they engage internationally and how they deal with different mitigation measures and unfortunately everything we've done thus far has more or less emboldened them, has strengthened them, has allowed for them to feel relevant for the first time and they love it.
So they are having a field day and every time they are the front page news. They they feel that they have won.
Three months ago, four months ago, you ask a security professional that doesn't specifically address Yemen, who the Houthis were, they probably would not have known. Now you walk down the street and you ask somebody who the Houthis are and they're going to say they're the guys attacking shipping.
So it they, they have really gotten a name for themselves They have gotten to the point of being a global name and a global threat, and they are not going to want to back down from that.
So the question is, how do we get their attention away from shipping and away from the maritime space, and the only way that's going to happen is if they see something that they care about under threat.
What has been so flawed in our approach to try and counter the Houthis is that we've gone after what matters to us and what we think determines how they operate.
We have not gone after what matters to them, and that is territory we have not gone after their ability to control parts of Yemen, and the only actor that really can make a difference in that is the government of Yemen, and so we have failed to embolden the government of Yemen, support the government of Yemen and sometimes even recognise that the government of Yemen is not the Houthis.
The Houthis are doing a very impressive job of claiming to be the government of Yemen. In fact, they issued shipping companies with a fantastic statement about the Yemen humanitarian operations crisis centre or something absurd.
What it is, is the control cell for launching their attacks. They have just branded it in a way that sounds palatable. They are also claiming to be the Yemen Navy, they are claiming to be the government of Yemen, and some people are believing it, not recognising that actually the recognised government of Yemen could still play a critical role in in pushing back against the the Houthi threat.
Craig Eason, TradeWinds
That was Ian Ralby, maritime security expert on this thoughts about the implications of the attack on the Total Confidence that led to the deaths of three seafarers.
As we are recording this episode the True Confidence has been abandoned and floating in the Gulf Aden.
Last week another abandoned vessel, the 32,200 dwt bulk carrier Rubymar sank after being hit, floundered and abandoned. The situation with the Rubymar put the spotlight on war risk insurance for vessels that are still sent through the Red Sea.
As a wreck, there is now a requirement for salvage, but as Ian Ralby pointed out to me, salvage in the region is doing to be extremely difficult.
The vessel is in shallow water we believe and is a hazard to navigation. There are also the environmental risks of the vessels cargo, and its fuel oil which has already been seen to be leaking.
So what do we know about the Rubymar’s insurance?
I asked TradeWinds insurance correspondent Adam Corbett for some insight.
Adam Corbett (TradeWinds)
It looks like the Rubymar had P&I insurance in place. P&I insurance protects the ship owner from third party liabilities like pollution and pays for things like salvage.
But the big question is whether it included the war risk elements, which comes into play when claims are the result of terrorism or some war related incident which was in this case.
There is a bit of doubt about that.
Looking at the situation generally, ships like the Rubymar are finding it more and more difficult to find insurance.
War risk underwriters are increasingly reluctant to insure ships with any sort of affiliation to the US, UK or Israel, or charging at rates which are pricing them out of the market.
It is a difficult market for ships like the Rubymar to secure insurance, and earlier this year, we saw the insurers say that they would no longer cover war risk related risks for ships like Rubymar, which are insured in the fixed premium insurance market.
If that additional layer of war risk cover was not in place, then the salvage and pollution prevention measures wouldn't be covered under its normal P&I policy.
So what will happen in this case, I don't know. It might well be that they will some form of war risk cover in place, but what the limits of that cover will be is questionable.
And it does look like obviously, given the security requirements in that area, plus the difficulty of the job itself, it looks like it's going to be very expensive if that pollution is going to be contained or if anything needs to be done with a wreck.
Container trades
Craig Eason, TradeWinds
When the Houthi attacks on shipping began there was a quick response from the container lines as they began to reroute round the Cape of good hope. A longer voyage than the Suez Canal.
While it has upped transit times, fuel costs and emissions, it has had a significant kock on benefit for tonnage providers, as Eric Priante Martin, TradeWinds US Bureau chief now reports.
Ericn Priante Martin, TradeWinds
The Red Sea crisis has led container freight rates to soar as ships took longer routes to avoid the Suez Canal, although those rates have stabilized.
And the situation has had a follow up impact for the shipowners here in the US that charter their ships to the container lines.
While these tonnage provides don’t get the direct benefit of the ups and down of container freight rates, they have seen an appetite from the liner operators to lock in ships for longer, and at higher rates, rebounding from the a slump that followed the end of the pandemic-fueled boom times.
This is Thomas lister, the chief commercial officer at UK-based Global Ship Lease. He was speaking to analysts in a conference call to discuss the New York-listed company’s quarterly earnings this week.
Thomas Lister, Global Ship Lease (during analyst call)
"Conditions have been supportive and that has lifted charter rates in the market and has made charters willing to fix for longer, so ships that would have been fixed for call it you two months to six months towards the tail end of 2023 are now being fixed for 12 months and larger ships are being fixed for as many as two and possibly even three years.
I would say that and I'm talking about the market in general at the moment rather than GSL specifically by the way. And I would say that the larger the ship and the higher the specification there is growing appetite to forward fix in the market by quite a number of months in some instances. So we're always doing the best we can to capitalize on that environment."
The tonnage providers that can capitalise on this environment are the ones that have container ships coming off charter while the Red Sea crisis’s impact is still being felt.
Greece’s EuroSeas, whose shares are also listed here in the US, has already jumped at that chance. This is chief executive Aristides Pittas briefing analysts.
Aristides Pittas, EuroSeas (during analyst call)
"Certain of our vessels whose charters expire during this time have benefited from these disruptions, and we anticipate our vessels opening up soon as well as our upcoming newbuildings will likely benefit from the same trend. ... During the fourth quarter of 2023, containership markets were down across all segments, but the trend has reversed since December, primarily due to the disruptions in the Red Sea as vessels are relocated from the region.
For the sectors we primarily operate in, charter rates are above 30% to 35% higher in February from the lows seen at the end of 2023."
Eric Piante Martin, TradeWinds
But what’s not known is how long the Red Sea effect is going to last. Because when it’s over, charter rates are expected to come back down to earth.
International Women's Day
Craig Eason, TradeWinds
Now, today is, if you are listening this on the day we publish the Wavelength podcast, Friday 8th March. That means it is International Women’s Day
So here’s TradeWinds correspondent Holly Birkett, who can help explain what the day is about and how we can all do something about it.
Holly Birkett, TradeWinds
Hi everyone. This is Holly Burkett Friday is a holiday. It's International Women's Day, a day for celebrating the achievements of women, and highlighting key issues that affect women in their personal and professional lives.
But how, and why, should shipping businesses recognise International Women's Day?
For some ideas, I spoke to Elpi Petraki, who is president of the Women's International Shipping and Trading Association, WISTA International.
Hi, Elpi, thanks so much for speaking with me today. It is International Women's Day. Why do you think that maritime businesses should recognize today,
Elp Petraki, WISTA
Like all businesses, I think maritime industry should also recognize the day not just for mere celebration reason, but to realize that the day needs to be there because something is not working. The way should a fit, everything was perfect, then we shouldn't we wouldn't have to celebrate this day.
Holly Birkett, TradeWinds
And what do you think is the best way to recognize the day? Is it a day of celebration? Or is it a day where we can pause and identify areas where we could be better with respect to elevating women in shipping
Elpi Petraki, WISTA
I think there are two different things. By celebrating we are highlighting the day and women. But also we need to reflect. And this is I think the most important, we need to reflect on what have we done the past year to make the business available, easy for everybody equal and fair. And not just for the fact that women are there, and they need to work. But because they're very good at what they do, or at least some of them are good, as good as men are. So we give them the chance. And have we done something about it.
Holly Birkett, TradeWinds
So what's an example of an issue that is affecting a lot of women in shipping right now that you hope maritime employers will recognize and take further action to tackle?
Elpi Petraki, WISTA
I think we can all say that we now have many more women in shipping companies, all the companies around the maritime industry, onshore. And I think we all know that, however, how many of them are on the top of the companies? I think if you see the news, you won't see many stories that women are the ones who are making the news, for good reasons, obviously.
So it means that somewhere, although we have many women, and apart from some bright examples, we have, most of them do remain in middle level management, and they don't make it on top. But why is that? We need to reflect and see. Is it something we do wrong? Or is it the nature of it? Just understand and try to improve it? I think, because it's worth it.
Holly Birkett, TradeWinds
Speaking more generally, how far do you think shipping has come in creating gender equity? Do you think that maritime employers are seeing the benefits of having more women in the workforce? Or do you perceive that there's been a lot of talk and not a lot of action?
Elpi Petraki, WISTA
we had a lot of talk, and I'm happy about it, because in a few years back, we didn't have any talk. So by talking people realize, you know, many people are not aware of the fact that, you know, there are not too many women on top of management.
But with the talk, they realize that and the brighter ones, I think, try to understand why.
And then we see actions.
And why do we want women just for the numbers? No, we know, out of many reports and surveys, that companies who have mixed staff, and equal or sometimes not equal, you don't want to aim for equal all the time just for the number of it, but just out of professionalism, they do well, and they don't do only well financially, but they do well, for the satisfaction of the staff, they haven't, and the new generation needs more of it. It's not like the old generation who would accept, you know, just working in any environment.
The new generation needs different environments, and we need to adapt to it. And I think you asked me if shipping companies or maritime industry has done well or not. And I will say that we see a big difference.
I think in the past couple of years, we see companies that would never asked before, why they don't have women being asking themselves and being wondering what they can do and if that will change the mentality of the whole company.
Holly Birkett, TradeWinds
So finally, I'm going to let you have the mic. What is your message to the maritime industry on International Women's Day this year?
Elpi Petraki, WISTA
I would say just try and see what is good in each person and help them to show what they are made of or what they can bring into the company and what they can bring in this very changing environment for the maritime.
We have a lot of challenges ahead, and I think more mixed environments and again, not only women but other groups that are not so much represented and they will take, they will have the benefit of this discussion will be involved and hopefully we will change our industry to the best.
Not that it was not good so far, but it can be better.
News highlights
Craig Eason
That was Tradewinds Holly Birkett talking to Elpi Petraki, president of WISTA International.
Now I am going to hand you over to TradeWinds news editor Yannick Guerry for some of the other headlines that have made TradeWinds this last week.
Yannick Guerry, TradeWinds
Xxxxxx
Craig Eason, TradeWinds
Well, that’s the end of this first episode of the TradeWinds Wavelength Podcast.
You will be able to find these episodes on tradewindsnews.com, with links to stories and a transcript.
You will also find these episodes on various podcast platforms, so find your feed and make sure you press follow so you get a regular shipping update straight into your ears.
Until the next time, Goodbye.
