14.12.2017 13:44:24 //
Timo Hämäläinen

Shipping companies are renewing their fleets

The increase in cargo traffic can be seen in shipping companies’ investments in their fleets. In addition to acquiring new ships, they are also increasing the size of existing vessels.

The economy is recovering. Many cargo shipping companies are acquiring extra capacity.

Finnlines is meeting growing demand by extending four of its vessels at the Remontowa docks in Gdansk, Poland. The first extension is scheduled for completion at the turn of November-December and the last in April 2018.

“The vessels will operate on Finnish and German routes, on which we need extra capacity,” says Staffan Herlin, Head of Group Marketing, Sales and Customer Service.

Each vessel with gain 1,000 lane metres from its extension, which will increase their cargo capacity by almost 30 per cent. The refurbishments will cost about EUR 10 million per vessel.

Herlin says that the extensions will not significantly impact vessel timetables or handling times in port. Advantages include reductions in both fuel consumption and vessel emissions.

Finnlines decided to make this investment before the clear upswing in the Finnish economy.  However, there were already signs of an end to the long recession. 

“We decided that extending the vessels was the quickest and most economic way to meet the forecast rise in imports and exports,” says Herlin.

Herlin says that Finnlines’ transport volumes have increased in a moderate and controlled manner over the past season. There have been fewer fluctuations in imports and exports, which is a good thing for the company. Market fluctuations are the worst kind of poison for a shipping company making expensive investments in its vessels.

“Growth in transport volumes settled down after the seasonal boost brought by the spring. However, they did not collapse during the summer as in previous years. Things have returned to normal – to how they were before the recession that began in 2008.

“Moderate growth picked up again in the autumn – as it should – and we’re expecting November to be our busiest month,” says Herlin.

He hopes the economy will recover in a way that does not make it dependent on increased demand in any single market or product area, but instead leads to overall health throughout the Finnish economy.

“Exports have now taken off in many sectors. General optimism is increasing consumer confidence, and this is being reflected in imports. Developments have been moderate and steady, which strengthens my belief that this growth is based on a sustainable foundation.” 

Herlin thinks the world is not quite ready, but that things are heading in the right direction. 

“For a long time, we’ve been focusing on nothing but operational improvements, optimisation, and savings. Now we finally get the chance to increase net sales,” says Herlin.

Enormous container ships

In 2015, Maersk ordered seven new container ships from the Chinese shipyard company Cosco.  These vessels will be used in the Baltic Sea, and some for Finland’s export and import traffic. The first ship is scheduled to arrive in Europe in January 2018 and the remaining ships should be in service by next September.

The new 200-metre-long ice-class vessels will be able to carry about 3,600 TEU containers at once. This is more than twice the capacity of the company’s current ships.

With the aid of these new ships, Maersk will be able to employ economies of scale: the increased cargo volumes will reduce per-container transport costs. The new ships also boast more efficient technology.  Lower fuel consumption will reduce emissions.

“We have a good market share and a loyal customer base in the Baltic Sea. We believe that it’s worthwhile investing in and improving our services for both existing and new customers,” says Michael Enberg, CEO of Maersk Finland Oy.

Maersk’s transport volumes have continued to increase in 2017.

“Both import and export volumes have risen significantly. However, we believe that the growth rate of the global economy will level off slightly during 2018. One of the most significant factors has been the boost to cargo exports provided by the new Aänekoski bioproduct mill.”

Although the new vessels entering service in the Baltic Sea are enormous, they have a draught of only 11 metres. This will allow them to navigate their weekly route between Kotka and Helsinki without difficulty. 

“Several cranes can handle cargo at the same time. There will not, therefore, be a significant increase in loading and unloading times. However, there may be changes to current timetables and routes.”

Some harbours may have to renew their hoisting equipment to serve these large ships. Enberg says the shipping company has been successfully cooperating with ports and port operators on this.

The new ships will run on low-sulphur marine diesel in order to meet SECA’s strict sulphur standards.

“Maersk has decided to meet environmental standards by using low-sulphur fuels. We believe that it’s the best solution for a shipping company that has over 600 vessels in service throughout the world.”

Raw materials for the steel industry and biofuels

In 2015, ESL Shipping (part of Aspo Group) ordered two LNG dry cargo ships from the Jinling shipyard in China.

“We will bring the ships into service during the first half of 2018. This acquisition came at a good time, as the economy – and thereby also demand for transport – are both growing in our market area for the first time in a long while,” says CEO Mikki Koskinen.

The decision to acquire the dry cargo ships was linked to a contract with SSAB for the transportation of raw materials for the steel industry.

“The ships are part of a joint development project aimed at reducing emissions from the raw material logistics chain in the steel industry. Thanks to the use of LNG and more energy-efficient ships, carbon dioxide emissions from sea transport will be reduced by over 50 per cent per ton.”

Koskinen says that the new ships, Viikki and Haaga, will also be able to carry other loads in addition to steel industry cargoes. He believes that these ships will be seen in Helsinki harbours.

ESL shipping’s vessels currently bring coal to Helsinki’s power plants. However, the use of coal is being systematically reduced. Koskinen says these ships are also ideal for transporting bioenergy products.

“Replacing coal with biofuels constitutes a great opportunity for our business. Compared to coal, seven times the volume of biofuels are needed to generate the same amount of heat. If heat were to be generated using biofuels alone, the Port of Helsinki would receive a shipload of biofuels per day instead of one shipload of coal per week.” 

The size of the ships will not increase, but cargo handling will become more efficient. The ships will be equipped with the world’s first automated bulk-handling cranes. 

“We’re testing and developing automated cranes in collaboration with MacGregor, a Cargotec company.  The cranes will not completely remove the need for human work, but we’ll be able to put our workforce to more beneficial use with regard to ship running and maintenance.”

Koskinen says the company is improving its competitiveness with the aid of these new investments. Although the new vessels will replace the existing ones, the company has no intention of selling its dry cargo ships, at least not for the time being.

In January–September, ESL shipping’s net sales rose by 12 per cent and its operating profit by 11 per cent on the corresponding period of the previous year.