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OSG Earns Less amid Weakening Spot Markets

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  • As Poor TCE Rates Push International Seaways to 2Q Loss

NYSE-listed Overseas Shipholding Group (OSG) has delivered lower earnings in the second quarter of 2017 mainly due to weakening spot markets.

The company’s net income was at USD 3.2 million for the quarter ended June 30, 2017, compared to USD 29.8 million for the quarter ended June 30, 2016.

Shipping revenues were USD 96.2 million for the current quarter, a decrease of 18.7% from USD 118.4 million seen in the prior year quarter. The decrease was also driven by lower charter rates.

Time charter equivalent (TCE) revenues for the second quarter 2017 were USD 91.1 million, down 20.6% compared to the same period in 2016.

“Increasing exposure to weakening spot markets during the just completed quarter weighed on top-line performance,” Sam Norton, OSG’s President and CEO, stated.

“However, cost discipline helped to mitigate the effects of these developments, and, together with earnings from our shuttle tanker and lightering operations, served to produce healthy cash flows. Progress continues strengthening our balance sheet and, with over USD 275 million of available liquidity, OSG remains favorably positioned to respond to opportunities in our markets,” Norton added.

For the first half of 2017, OSG reported a net income of USD 8.6 million, down from USD 80.6 million reported in the first six months of 2016.

Shipping revenues for the period were at USD 204.3 million, a decrease of USD 29.1 million compared to USD 233.4 million seen in the first half of 2016. TCE revenues for the first half of 2017 were USD 193.4 million, dropping by USD 33.6 million from USD 226.9 million reported in the first half of 2016.

Meanwhile, mainly driven by lower TCE revenues, US-based tanker shipping company International Seaways suffered a net loss of USD 11.6 million in the second quarter of 2017, compared to a net income of USD 30.5 million posted in the same period a year earlier.

As explained, apart from the decline in revenues, the net loss also reflects costs associated with the company’s debt refinancing.

In 2Q 2017, TCE revenues decreased to USD 69.3 million from USD 101 million recorded in the same quarter last year.

TCE revenues for the crude tankers segment were USD 45.7 million for the quarter, against USD 66.5 million in the second quarter of 2016. This decrease resulted primarily from the impact of significantly lower average blended rates in the VLCC, Aframax and Panamax sectors, and fewer revenue days in the Panamax sector, resulting from an increase in drydock days.

TCE revenues for the product carriers segment were USD 23.5 million for the quarter, compared to USD 34.4 million in the second quarter of 2016. This drop was primarily due to a decline in average daily blended rates earned by the MR, LR1 and LR2 fleets, according to the company.

Adjusted EBITDA was USD 31.8 million for the quarter, compared to USD 62.3 million in the second quarter of 2016, affected by lower daily rates.

“During the second quarter, we executed on our fleet growth and renewal strategy, enhanced our financial flexibility and strengthened the company’s position to optimize revenue through the current tanker cycle,” Lois K. Zabrocky, International Seaways’ president and CEO, said.

In 2Q 2017, International Seaways acquired two 2017-built Suezmax newbuildings,  Seaways Hatteras and Seaways Montauk. Constructed at Hyundai Samho Heavy Industries shipyard, the ships were delivered to the Company in July 2017.

The company also inked an agreement to sell a 2001-built MR, which is expected to be finalized in the third quarter.

“We also completed a USD 550 million refinancing in the quarter, which was recently upsized to USD 600 million… In addition to extending the company’s debt maturities, this successful refinancing … enhances our ability to take advantage of compelling opportunities for shareholders,” Zabrocky added.

Furthermore, International Seaways managed to increase its contracted cash flows in 2Q 2017 by signing two five-year contracts for its FSO joint ventures which are expected to generate in excess of USD 180 million of EBITDA for the company over the contract period.

“We are driven by a disciplined and balanced capital allocation strategy and enter the second half of 2017 with significant liquidity to continue to opportunistically grow and modernize our fleet. We also continue to maintain sizeable contracted cash flows, as well as upside to a market recovery in both the crude and product tanker sectors. We remain positive on crude tanker fundamentals in 2018 and continue to be encouraged by near-term prospects for a strengthening product tanker market,” Zabrocky concluded.

International Seaways owns and operates a fleet of 57 vessels. Through joint ventures, the company has ownership interests in four liquefied natural gas carriers and two floating storage and offloading service vessels.

World Maritime News

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Maritime

Reps Demand Restructuring Of Terminal Operators, NPA Licensed Agents

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Reps Demand Restructuring Of Terminal Operators, NPA Licensed Agents

 ..Says “Our goal is to effect changes that will restructure and position it to compete in the global space

The House of Representatives Committee on Ports and Harbour has demanded the restructuring of Terminal Operators and Nigeria Ports Authority (NPA) Licensed Agents in the country.

Rep. Nnolin Nnaji, Chairman of the committee, disclosed this at the interactive session with terminal operators and NPA licensed agents in Abuja on Thursday.

“Our goal is to effect changes that will restructure the unique and high-tech sector and position it to strategically compete in the global space.

“This sector is very dynamic and we must constantly review the standards, facilities and operational guidelines to keep pace with its obtainable global best practices,” he said.

The lawmaker reiterated the committee’s readiness to ensure that the sector remained one of the best through appropriate legislation and oversight.

“This is to bequeath to Nigerians, ports and harbours that are properly regulated and better managed for greater efficiency.

“It is important to harmoniously promote the objective of professionalising the modus operandi of this sector to improve our country’s Gross Domestic Product and revenue generation.

“We intend to collaborate with relevant stakeholders in the industry to ensure that appropriate avenues are created for economic development,” he said.

He said the committee was poised to make the ports a hub for better non-oil revenue generation, adding that the house would continue to support total rehabilitation and upgrading of ports, harbours and allied services.

In her contribution, the Registrar and Chief Executive Officer, Council for the Registration of Freight Forwarders of Nigeria, Urunta Chinyere, advised terminal operators to adopt electronic mode of payment.

“This is to reduce human interface in their operations,” the officer said.

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Maritime

SOAN Inaugurates New Leadership, Boosting Hopes Of Crushable Inflation

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SOAN Inaugurates New Leadership, Boosting Hopes Of Crushable Inflation

…Sonny Eja is President, Ekere is 1st Vice President; Iroghama Ogbeifun is Chairman, Technical Committee

When Air Peace made its innocent maiden flight from Nigeria to London on March 30, 2024, the symbolical flight achieved two things: first, it broke the unholy equilibrium fare price amongst available airlines.

Secondly, the gesture sent some powerful signals to the entrenched operators, that a determined indigenous operator has finally berthed; and momentarily, the extortionate fare crashed…! Now, if we should replicate this very gesture in the maritime, with a provision of a ‘national’, but privately run vessels/ carriers, how far or fast would carriage charges crash?

The Air Peace has silently made a deafening statement: no amount of plea would crash prices, except the nation can assertively provide a functional alternative.

SOAN Inaugurates New Leadership, Boosting Hopes Of Crushable Inflation
SOAN President, Sonny Eja.

The distance between Lagos and London by flight is about 6 hours and 40 minutes. The distance between London and New York by flight duration is 7h 30m. So, how come the cost of flight from Lagos to London is always twice as much, compared to the cost of flight from London to New York…? 

The answer is simple: Nigeria is an orphan, and there is no effective competition to mitigate arbitrariness. In the maritime sector, however, the country’s fate is worse: shippers are paying twice for cargo freight. Same for handling charges. There was even a time they were paying for as ridiculous a charge as the ‘Weekend’ levy, in the event that you are unlucky to come for clearing by weekends!

 The growing inflation, the poor masses albatross is both artificial and conspiratorial!

First, government’s understanding of the industry is warped and its support, insignificant. The Government functionaries who should assist both the shippers and stakeholders were often either insincere, ignorant or easily cave in under politicians’ pressure. 

No one is as hopeful as the hunter’s wife: she knows her husband did not keep any beast in the forest, yet, she joyfully sings lullaby for the baby on the mat, as she washes the soup pot and grinds the pepper, as she awaits the husband’s return! And the hunter never disappoints.

It is in the same spirit, that shippers would tomorrow, celebrate the inauguration of the incoming President of the Ship Owners Association of Nigeria SOAN, Sonny Eja.

Those who know him at close range described him as a highly focused, truly inspired and totally committed investor, who never disappoints. He is sold to the cause of the shipping industry development. 

Unarguably, he is acknowledged as a resourceful long runner, who often is not only self-motivating, but equally enjoys the special ability to motivate others  Some said it is for this reason that he is so treasured, by the SOAN maiden Arrowhead and Nigeria’s foremost shipping magnate, Engr. Greg Utomwen Ogbeifun.

The President, fortunately, will be fully assisted by tested and trusted ship owners, with enviable skills and technical know-how.. promoters 

These include Dr Louis Ekere as SOAN’s 1st Vice President; Mr. Gbolahan Shaba, the 2nd Vice President; Mr.Babalola Adefariti – Financial Secretary/ Treasurer; Mr. Bem Garba –  Chairman, Training & Capacity building Committee; the shipping industry Amazon, Ms.  Iroghama Ogbeifun as Chairman Technical Committee; Ms. Bassey Adie -Chairman, Ethics & Privileges Committee; and finally, Mr. Emmanuel Okene, who is the Chairman, Finance and membership Committee.

The Doyen of the Maritime industry, High Chief Adebayo Babatunde Sarumi once congratulated SOAN for lifting Nigeria off the lackluster club of 10-Percenters. 

Now, the whole nation would probably look up to SOAN, to midwife a ‘national carrier’ and permanently crash the menace of intractable inflation!

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Maritime

Smugglers Altering Vehicles’ Chassis Numbers–Customs

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Smugglers Altering Vehicles’ Chassis Numbers–Customs

Mr Chedi Wada, the outgoing Comptroller of the Federal Operations Units (FOU) Zone “B”, Kaduna says smugglers are now altering vehicles’ chassis numbers in the bid to perpetuate their nefarious activities.

Wada spoke to newsmen on Wednesday in Kaduna after handing over the leadership of the unit to his successor, Mr  Ahmadu Shuaibu.

He, therefore, underscored the importance of public awareness and compliance with government policies.

Wada reflected on the myriad of achievements and challenges encountered during his tenure.

He commended the resilience of his team in tackling the hurdles posed by nationwide border closures.

According to him, with unwavering support from the Comptroller-General  (CGC), Mr Bashir Adewale, saying that they have successfully curbed smuggling activities within the zone.

He said,  “FOU Zone ‘B’ Kaduna is now well-equipped and effectively managed, marking significant strides during my six-month stewardship.”

Wada acknowledged the pivotal role of the media in showcasing the unit’s efforts while urging the officers to prioritize knowledge acquisition and diligent execution of duties.

He said, “Total commitment and dedication have been the cornerstone of my successes.”

Wada also urged  his colleagues to follow suit,  disclosing that with his redeployment to the NCS Headquarters in Abuja, he will work under the Enforcement, Investigation, and Inspectorate Unit

He also assured of his continued dedication to service, WARING smugglers that his successor is an enforcement expert who is prepared to take charge.

Wada expressed confidence in the incoming comptroller’s abilities to build upon the foundation laid, signalling tough times ahead for the smugglers.

Wada’s redeployment marked the end of his duty of combating smuggling and fostering organizational commitment within FOU Zone “B” Kaduna.

It was reported that until his redeployment, Shuaibu was the Comptroller, Ogun I Area Command, Idi-Iroko. 

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