Michael Everard CBE Receives Honorary Doctorate from University of Greenwich

We are pleased to announce that Michael Everard CBE, a senior figure in the UK and international shipping communities, received an Honorary Doctor of Business Administration from the University of Greenwich on Wednesday 24 July 2013.

Within his career Michael served as Chairman of F.T.Everard & Sons between 1988 and 2006, a family firm which during the twentieth century became leading owners of coastal vessels and small short-sea tankers. It was unique in remaining in private ownership and management for over a century. At the time of the company’s sale to James Fisher plc, in 2006, it owned eleven tankers.

Michael has also served as President of the Institute of Chartered Shipbrokers; as Chairman of the UK Chamber of Shipping; as Vice-Chairman of the International Chamber of Shipping; and as Vice-Chairman of Council and Chairman of the Executive Committee of the Mission to Seafarers.

Michael has been actively involved with the University of Greenwich through his membership of the Greenwich Maritime Institute Advisory Committee, where he acts as a ‘critical friend’, providing advice and assistance and facilitating industry contacts. He also sits on the Greenwich Forum an independent body established in 1973 formed to promote Britain’s awareness of the sea which is administered by the Greenwich Maritime Institute.

Alev Adil, the University’s Orator, says: “Michael Everard has always set the highest industry standards in terms of safety, quality and innovation in the shipping business. Today we’re celebrating his long and distinguished career and his involvement with the Greenwich Maritime Institute, where he regularly shares his extensive knowledge of shipping policy issues with our postgraduate students.”

Honorary degrees are awarded to individuals of distinction who have made a major contribution to the work of the university, or who have earned prominence for activities associated more widely with education, business, culture, creative work and public service and the Greenwich Maritime Institute are delighted that Michael was able to accept this prestigious award last week.

Michael Everard Pic

Conference Programme – China’s Growth as a Maritime Power: Global Sustainability


We are now accepting bookings for this conference which will be hosted by the China Maritime Centre, Greenwich Maritime Institute and held at the University of Greenwich on Tuesday 10th September 2013.

Topics will include the following maritime dimensions:

China’s Ocean Shipping
Governing Marine Protected Areas
Maritime Labour Convention
China’s Global Seaborne Trade
Seafarer Fatigue
Green Ship Recycling

Please click here for a copy of the full draft programme.Programme Draft

Delegate fees include a delegate pack, attendance at all presentations, lunch and refreshments throughout the day plus a post-conference drinks reception.

To make an online booking please visit the following website: www.eventbrite.co.uk/event/6943445031

The ‘Chinamax’ aka* ‘Valemax’: an (iron) ore carrier drama

They emerged as a popular breed in the 1950s, but then lost prominence in the seventies and eighties when the ubiquitous bulk carrier took over world seaborne dry bulk commodity trade. Since then they have adopted a low profile. Now they are making a dramatic rush for renewed fame, on an impressive scale. The ore carrier, actually a much bigger version designated as a VLOC or very large ore carrier, is reshaping the global shipping market.

The group of ultra-large ships currently being introduced, since 2011, are the leviathans of the shipping world. Their carrying capacity is over twice that of a large 180,000 deadweight tonnes ‘capesize’ bulk carrier, typically used in the iron ore and some other trades (although a number of bigger ships also exist). This new generation of mega capacity 400,000 dwt VLOCs have a length of 360 metres, a beam of 65 metres and a draft of 23 metres, an immense size.


Only a small number of ports around the world, plus a few more under development, have big enough dimensions and facilities to accommodate these vessels. Such ports, in both the iron ore exporting and importing countries, mostly handle vast quantities of iron ore annually in continuous flows, enabling large ships to remain fully employed. Currently, loading ports in Brazil, and discharging ports in Europe, China, Japan, Philippines plus a new terminal in Sohar, Oman, are able to accept the biggest ships. The new ‘Valemax’, originally known as ‘Chinamax’ 400,000 dwt ore carriers were designed with full awareness of employment limitations.

Their lineage goes back to the middle of the last century. At that time, tweendeck tramp steamers used in the dry cargo trades, the market workhorses, were proving unsuitable for burgeoning iron ore transport business. The concept of a specialised vessel, with a size and characteristics making it ideal for carrying this commodity, evolved. When ore carriers were introduced, many were very large in comparison with other existing dry cargo ships and were able to achieve economies of scale (a lower transport cost per tonne of cargo carried).

Starting with a small number of ships in the early 1950s (a very few had been introduced previously), from 1954 onwards the world fleet of ore carriers grew rapidly. In 1960 there were 119, with an average size of just under 24,000 dwt, based on figures compiled by shipbrokers Fearnleys. By 1975 the total had risen to 298 and the average size had increased to almost 54,000 dwt. Subsequent fleet growth was slower and their popularity faded.

An example of the new breed making an impact was the Orelia, delivered in 1954, first of a class of six sisterships. Owned by a subsidiary of the famous old British shipping company Furness Withy, these ore carriers were built specifically for long-term charter to the British Iron & Steel Corporation, carrying ore to UK ports. With a lifting capacity of just 9,000 dwt, the vessels were minnows compared with today’s giants, but they greatly improved efficiency in the trade. Progressively larger ships designed for carrying ore to European and Japanese ports followed.

Fast forward to the current era, and the phenomenal long boom in the dry bulk freight market between late 2003 and mid 2008. During this period Brazilian mining company Vale, one of the world’s largest iron ore suppliers, experienced difficulties competing with other suppliers – especially Australian – in the Asian regional market. China’s extremely rapidly growing import demand was a particular focus. Freight rates for ore cargoes to China from Brazil were far higher than freight rates from Australia, reflecting the much greater voyage distance from Brazil (about 3.5 times the Australian distance). Higher freights raised the delivered cost of Brazilian ore to China way above the comparable cost of Australian ore.

How could Vale improve its competitive position? There was an obvious answer involving massive capital investment in shipping capacity, not always a palatable option for a mining company. Much bigger ships to achieve scale economies, many of them, and all under the control of the commodity supplier, could reduce exposure to volatile freight market rates, sharply reduce freight costs, and greatly improve competitiveness. Vale decided to take this course of action, and in mid-2008 ordered a series of twelve 400,000 dwt vessels from Chinese shipbuilders Jiangsu Rongsheng. Further newbuilding orders followed. Additionally, long term transportation contracts were concluded by Vale with several other shipowners who, in turn, placed orders for similar-sized tonnage.

Altogether a remarkably large number of VLOCs, 35 in total, were ordered by Vale and its shipowner partners from shipbuilding yards, mostly in China and also in South Korea. The first ship, Vale Brasil, was delivered by Daewoo Shipbuilding, South Korea in April 2011. More were completed later in that year, followed by an acceleration of the delivery programme over the next twelve months, continuing into 2013. In June this year Lloyd’s List reported that 27 Valemax ships were operating, leaving 8 still under construction.

When all the giant ships are fully operational in Brazil’s iron ore export trade, they could be carrying over 50 million tonnes of cargo annually, assuming four round trips per year. This volume represents 15 per cent of annual Brazilian iron ore exports to all destinations (which totalled a colossal 326m tonnes last year). The exact quantity carried will depend on where they are employed (mostly to Asian destinations) and on the precise characteristics of the voyages.

Has this strategy – one of the biggest industrial shipping strategies ever seen in the dry bulk sector – proved successful? Two factors have dramatically altered the economics since the original plan was introduced. Firstly, the global dry bulk freight market collapsed in late 2008 and has remained low, even depressed at times, greatly reducing all open market freight rates. As a consequence the additional cost of transporting Brazil’s long distance exports to Asian destinations, compared with shorter distance costs from competitor Australia, diminished as well. Secondly, China refused to allow the new leviathans to discharge in Chinese ports (resulting in the generic name change in May 2011 from Chinamax to Valemax), a severe disadvantage. This ban actually adds more costs, incurred by transshipping iron ore into smaller vessels permitted to use ports in China.

So a large part of the strategy’s original justification has been undermined. Low freight rates on the spot market have the effect of reducing the advantages of employing Valemaxes. Moreover, adding transhipment costs resulting from the China discharge port ban is an unattractive feature. Vale has installed a floating transfer station in Subic Bay, Philippines, to offload cargoes into conventional capesize ships for the final leg of the journey to China. Also, a permanent transshipment hub is under construction on land at Teluk Rubiah, Malaysia.

But exclusion from Chinese iron ore discharging ports may not continue much longer. Several have the physical capacity to accept 400,000 dwt vessels, and others are being developed. In late 2011 Dalian received one mega shipment. More recently in April this year a part-loaded Valemax was received at Lianyungang. Granting wider permission would potentially benefit steel mills by lowering their transport costs on ore imports from Brazil, an even more valuable advantage when (eventually) freight market rates recover.

Chinese government policy banning these ships, officially announced in January last year, apparently reflects, mainly, opposition to their use from the China Shipowners Association, which has declared the ships to be monopolistic and unfair competition. However, recently there have been some tentative signs that this stance may not be maintained permanently. One expedient may be Chinese shipping companies becoming owners of some vessels, a possibility which has been under discussion previously.

(* aka = also known as)

Richard Scott
GMI visiting lecturer and MD, Bulk Shipping Analysis
(e-mail: bulkshipan@aol.com)