However, this was to be one of Admiral Allen’s last set-piece encounters with the fourth estate, as he approaches retirement on May 25 after completing his four-year term. So assembled reporters mixed bread-and-butter questions equally with those of the valedictory sort.

Admiral Allen fielded the first variety of questions capably, particularly while talking about the federal agency’s budget dilemma. In his State of the Coast Guard address at the National Press Club in Washington last month, he supported the budget cuts imposed on the agency. But this support had a catch.

The Admiral said the USCG was accepting a scaling back of its day-to-day operations only at the price of being allowed to continue overhauling its ageing fleet. Without state-of-the-art equipment, the agency would end up as a “hollow force”, he said.

The speech appeared to have become available in advance to a major national newspaper in the US capital, whose report appeared just before it was delivered. Intentional or not, this apparent “leak” only added to Admiral Allen’s finesse that day.

Lloyd’s List has had a similar experience. In February 2008, Admiral Allen shared with this newspaper the announcements he was going to make about the USCG modernisation in that year’s State of the Coast Guard at the NPC, on condition that they remained embargoed until the morning of the speech.

According to some observers, the modernisation that started on Admiral Allen’s watch is the biggest internal overhaul at the federal agency in half a century.

The fact that such big announcements appeared in newspapers simultaneously with the speeches testifies, perhaps, to Admiral Allen’s “modern” way of functioning. That no one got into trouble for such “mishaps” speaks to his consummate diplomatic skills.

Truly, Admiral Allen is one of the most unconventional commandants to lead the USCG.

These thoughts flashed through the mind as the Admiral in Stamford this week fielded questions about his “legacy”.

Typically, he replied that talk of a “legacy” in only four years is meaningless, in an organisation with a much larger life cycle.

We are inclined to believe this is not so. Admiral Allen came to head the USCG in May 2006 at a time when the agency was riding high, thanks to its rescue efforts in the hurricanes that struck the US Gulf in the summer of 2005. He was the leader of that effort. As the public face of the USCG in the months after the hurricane, he became known for calmly powerful media appearances, which were stacked up against fumbling, bickering or bombastic politicians; or bumbling federal agencies.

Admiral Allen’s work on the agency’s modernisation has been similarly energetic and confident. He may depart claiming the modernisation had germinated as an idea before his arrival, and would have a life of its own after he is gone.

But the incoming commandant, the extremely capable Admiral Robert Papp, indeed has massive boots to fill.

Richard Udell hasn’t shown his face at many shipping conferences the US for a while and probably won’t resurface in a hurry, after the reaction he provoked at the Connecticut Maritime Association Shipping 2010 conference yesterday.

'Offensive', 'infuriating', 'painfull' - just some of the reactions to Mr Udell's comments at CMA yesterday

The Department of Justice senior trial attorney who prosecutes the so-called ‘magic pipe’ cases provoked much anger from delegates when he failed to explain the policy on detaining seafarers while these cases are investigated. He insisted such detentions “protect their rights” – a disingenuous defence of a policy causing much personal anguish for those mariners and their families abroad, who find themselves ‘enjoying’ a prolonged stay courtesy of Uncle Sam and paid for by their unimpressed employers.

On one hand some of these seafarers are possibly witnesses in cases, or end up being defendants. But on the other hand, being holed up in a hotel room — in a region of the country at the DOJ’s choosing – is an incredibly unfair and unjust way to treat somebody supposedly accorded the presumption of innocence. You can only imagine what is going on behind the scenes. Outraged lawyers have recounted stories of crews, their passports seized by US Customs, unable to leave areas, trapped in the US while the wheels of ‘justice’ grind on.

About eight years ago, I remember covering ‘magic pipe’ cases in the US, and the usual practice saw the shipowner usually paid a hefty deposit up front in exchange for allowing the crew to leave. But seafarer rights in the US are abysmal. Many are denied shore leave when they land at the US and are treated as possible terrorists instead of the maritime professionals they are. There are some truly heartbreaking stories behind the headlines about the criminalisation of seafarers.

I ran into Rev William Fensterer in my travels around the exhibitors booths yesterday, from New York’s Seafarers & International House. He told me about the case of a young crew member detained in Greece over a case where drugs were found on board (innocent of course), who has since died upon his release. The cost to crew members’ physical and mental health cannot be overlooked.

Not that Richard Udell appears to care. The DOJ has refused to allow lawyers to move their clients to areas of the US where their quality of life might improve, virtually imprisoning them in hotels in isolated and faraway areas. Is it not more humane to allow them to live in areas where they can have some form of social interaction with the rest of the world? Where is their discretion? If shipowners with a good reputation and longstanding trade connection with the US agree to return seafarers who are witnesses in trials, why can’t they leave? why refuse to allow video evidence?

The senior trial attorney didn’t have any answers yesterday. This arrogant and contemptuous disregard for the industry seems to guarantee that innocent seafarers will continue to be needlessly caught up in this ‘War on Environmental Crime’, not just the ‘War on Terror’ if their ship calls at a US port.

Shipping needs a Richard Branson figure. That thought struck me as I pondered why politicians pay such scant attention to the industry.  Many of the high-profile shipping names on the delegate’s list here are powerful, influential and wealthy men, with much to offer any legislative agenda – and money to donate – yet politicians keep wasting opportunities to meet them.

Virgin ships anyone?

This train of thought started when I looked at the programme and saw that Congressman Elijah Cummings, chair of the House subcommittee on US Coast Guard and Maritime Transportation, had failed to turn up to deliver the keynote welcome address.

Now the US is currently gripped by health care reform fever, which has kept legislators holed up in Washington DC all weekend, and presumably on Monday as well.

But could you imagine the congressman treating a powerful health lobby group or similar like this? At least there would be a televised message, a substitute sent, some message of apology. Nothing. (well none I heard or saw anyway).

Last year Cummings did turn up at the CMA. For about an hour or so. He gave his speech and then walked out the conference immediately. No lingering, no networking.

The same happened in Germany the other week. At a conference of ship financiers, which brought together a staggering breadth of banking and financial expertise at a time of crisis, the country’s national maritime coordinator Hans-Joachim Otto also appeared to treat the audience with disdain. He turned up during the morning coffee break, stood by himself, gave his speech and then immediately walked out to his next appointment. There was little indication that he was interested in meeting anyone, learning more, or contributing.  It was a duty fulfilled.

Which gets me back to Richard Branson. Politics is all about the personality these days. And so is business, to a lesser extent. Can you see either Cummings or Otto doing the same to an audience that included Richard Branson?

Cummings - too busy for shipping?

Shipping needs a person with the charisma, energy and enigma of Branson. Somebody who can engage and circulate confidently with the mainstream media, straddle business and politics, promote the industry to the mainstream, and crucially, makes shipping relevant.

Otherwise shipping will keep on being overlooked by people like Cummings and Otto. For until those who make their millions in shipping want to play the game and come out from under the radar, politicians will keep on snubbing them.

Nicholas Pappadakis of Intercargo brought up an example that has seldom been discussed in a public forum: the different worlds that airline crews and mariners inhabit.

Pappadakis speaks at CMA

Airline crews walk in and out of immigration and security at crowded airports, through special lanes provided for them. Occasionally, there are news stories that hint of an airline pilot’s “bravery” after dumping excess fuel into the ocean before landing. It is a fair assumption that this pilot simply walks out of the airport, and goes home.

Mr Pappadakis cited the latter example, and asked the CMA audience: “It is considered routine operating procedure for the airline pilot to dump extra fuel into the sea. Can you imagine this being the case with ships?”

The question was linked with the larger issue of how to attract young mariners to seagoing careers, when all around them are messages that they would not be allowed shore leave, and would go to jail for accidents that may have little to do with them.

In this context, InterManager chairman Roberto Giorgi surprised even the most jaded thinkers with the example of a maritime college in Chennai, whose dean told him that the publicity surrounding the Hebei Spirit duo had seen applications skyrocket.

“The students were happy to know that the owner would fight for them, and this caused them to apply,” he said.

Lotuses grow only in the slush.

An unconventional ensemble of opening-day speakers gave voice once again to shipping’s lack of an “image” and the industry’s utter inability to influence politics and policy.

Capt Robert Johnston, vice-chairman of Intertanko, talked up the virtues of trade associations, because such organisations can do what a single shipowner cannot – get some attention among lawmakers. International Chamber of Shipping chairman Spyros Polemis lamented the “out of sight, out of mind” nature of shipping.

Intercargo chairman Nicholas Pappadakis and InterManager chairman Roberto Giorgi threw a spotlight on changing trends in seafaring labour. At appropriate points, owners were asked to “make ships more attractive”; and US law enforcement agencies to stop viewing mariners as “potential illegal immigrants or terrorists”.

These very themes have been voiced at several past CMA gatherings, often in these exact words. And the perennially unanswered questions remain: “Who will bring about the change so eloquently demanded by all? Who will pay for it?”

No, there was no joy in hearing jaded echoes of past CMA conferences all over again. Nonetheless, the return of hackneyed themes is what made this year’s opening session particularly thrilling.

After enduring more than a year of doomsday talk laden with freight rate collapses, penniless banks, idle shipyards, bankrupt companies, blood, gore, and melodrama, could it be that … normal life is back?

Philippe Louis-Dreyfus

Shipping needs passion ‘from the heart and from the gut’

Michelle Wiese Bockmann – Friday 19 March 2010

A PROUD and patriotic Frenchman with a passion for shipping, Philippe Louis-Dreyfus owns one of his country’s last remaining international maritime companies. 

The former merchant banker bought Louis Dreyfus Armateurs, the shipping division of the family-owned, 159-year-old commodities giant Louis Dreyfus Group, in late 2007, because he was concerned that a Swiss cousin would move the maritime headquarters to Switzerland. 

Now his patriotism may be tested further. The Louis Dreyfus Group, in which he remains a shareholder and board director, is one of the last hopes for struggling French container line CMA CGM as it seeks fresh capital to stay afloat. 

The group is one of a series of private investors and hedge funds talking to CMA CGM, as the world’s third-largest container line, also family-owned, undergoes a painful restructuring of its $5.6bn debt. 

“As a French company, as a French group, but also as a person who has dedicated a lot of time and effort to the French shipping network and to promote French shipping, I do not believe that I can be totally neutral and see a fine company like CMA CGM go through real difficulties,” Mr Louis-Dreyfus says.
Any eventual involvement with Louis Dreyfus would include the commodities side of the group and Louis Dreyfus 

Armateurs, where shipping expertise lies, Mr Louis-Dreyfus says. 

“It is a fine group,” he says of CMA CGM, “with very good operating teams, and I believe one should try to help it through its problems. This is one reason for us to look at that file. 

“At this stage, we do not have a clear enough view of the company’s situation and of its immediate future.” 

This week Mr Louis-Dreyfus travels to the US to receive a prestigious maritime industry accolade — the Connecticut Maritime Association Commodore award, to honour those who have made an outstanding contribution to global shipping. 

The highly political and very sensitive debate in France over CMA CGM’s future should not overshadow Mr Louis-Dreyfus’ already significant achievements. 

Since returning to the family group to run the shipping business in 1997, he has served as president of the European Community Shipowners’ Association, and the French equivalent, and has held board positions with French classification society Bureau Veritas and the UK P&I Club. 

He has deeply reorganised Louis Dreyfus Armateurs over the past decade, with an emphasis on quality industrial shipping. The company’s 2008 revenue was €88m ($120m), half coming from diversified companies aside from dry bulk transportation, such as seismic and cable-laying service vessels, as well as logistics and port infrastructure provision in countries such as Brazil and Indonesia. 

“I am dedicated to support my country and its industrial activities, like shipping, in France, which is not always easy. [It is] quite costly, but it has rewards of another kind,” Mr Louis-Dreyfus says. 

His most recent expansion in Asia, a December 2009 joint venture with Seroja Investments, is now looking to buy secondhand or new vessels, to ship palm oil, coal and agricultural commodities from Indonesia, building on a growing presence in port infrastructure and logistics there. 

Since deciding to go independent, Louis Dreyfus Armateurs has also bought Dutch-based Fairmont Marine, which specialises in long distance towing of floating production, storage and offloading units and semi-submersible drilling rigs. The company has also refreshed its dry bulk and ro-ro fleet. 

Four Japanese bulk carriers have been delivered with long-term charterers to subsidiary Cetragpa over the last 14 months, bringing the fleet to 20 bulkers. 

Interestingly, Cetragpa “very seldom” gets business from the commodities side of the group, despite their close history, and has not counted on covering in-house transport needs for the last 60-70 years, Mr Louis-Dreyfus says. 

Other newbuilding additions last year included two Singapore-built ro-ros for ferry subsidiary LD Lines, with a further ro-pax vessel to be delivered this year. 

Underscoring all company developments is a self-confessed shipping passion, which has been part of the family for five generations. 

“I love shipping. I am interested in shipping and it makes me excited and happy, and you need that in shipping,” Mr Louis Dreyfus says. “I was a banker for 20 years, and it is the most intellectually exciting thing to do. But shipping also also very exciting intellectually, but it needs something different — another scale of passion, from the heart and the gut.” 

Which leads back to CMA CGM. Will the head or the gut be deployed to save France’s last container line? Investors reportedly had until March 17 to decide whether to participate in any cash injection, needed so CMA CGM can access a $500m loan facility. If France’s Strategic Investment Fund agrees to invest, will the Louis Dreyfus Group? 

Mr Louis-Dreyfus does not want to answer specifically. “More generally, I am going to say that if a solution is to be found, it should involve at the same time private money, financial investors and public support — which does not automatically mean public money,” he says. 

“I do not see how things could happen or occur differently. I hope that things will go in the right direction and that the people involved will be wise and look at the situation in the eyes. [I hope] they will accept sacrifices that will not be easy but are very much needed to attract outside investors, allowing the company to get back to business as normal.” 

So as Mr Louis-Dreyfus steps on the podium on Wednesday night to accept the traditional commodore’s hat that comes with the award, he carries the future of French shipping on his shoulders. 

Whether he will pad his biography with a CMA CGM postscript has yet to emerge.

Many are speakers, some are delegates lurking quietly in private rooms doing deals, and others are simply honoured as the CMA’s annual Commodore.

This year Philippe Louis-Dreyfus, president of the France-based Louis Dreyfus Armateurs Group will be honoured as Commodore.

As always it will be hard to cap the performance of the previous year’s Commodore, and with 2009 honouring Capt Wei Jiafu, group president and chief executive of Cosco Group, Mr Louis-Dreyfus has lots to live up to.

Last year’s press conference given by Capt Wei was one of the more unusual  I’ve encountered in my career in journalism.  At a time when the dry bulk industry was in crisis, a coterie of journalists, Cosco executives, and assorted hangers-on  were keenly anticipating Capt Wei’s press conference.

One of shipping’s most influential figures delivered a 30-minute performance peppered with  long unrelated anecdotes from which kernels of relevant information needed to be extracted.

As it turned out, Capt Wei was right: the dry bulk sector did largely recover in the second half of 2009 as he forecast. And his energetic and self-assured delivery meant he skirted around questions about the state of Cosco’s newbuilding orderbook, delivered with the loud and forceful delivery of a man used to addressing large audiences of several thousand  in open spaces.

Capt Wei’s loquacious nature contrasted strongly with previous Commodore, Norwegian shipping magnate, John Fredriksen. Apparently when he accepted the award at the industry’s gala dinner he uttered two words to the expectant audience: “Thank you.”

I’m sure Philippe Louis-Dreyfus will have more to say than that this year.

MAJOR dry bulk shipowners and operators are divided over whether there will be any sustainable recovery in chartering rates in 2009.

Those based in the US and Europe are at odds with their more optimistic Asian-based counterparts, who have forecast a second-half revival.

Over the last two weeks major charterers and owners have provided differing forecasts for bulk carrier rates, as the market struggles to interpret the new landscape following the September crash.

Louis Dreyfus Commodities director of ocean freight strategy and business development Peter Sandler was among the most pessimistic.

Rates for bulk carriers would be “up and down” in 2009, but would remain at lower levels, he told the Connecticut Maritime Association conference in late March. “I think we are heading back to dragging at the bottom of the floor of the market before things get better,” Mr Sandler said.

“The herds all think that it can’t get worse, it can get worse and it probably will get worse, especially for dry bulk.”

Bulk carrier spot rates fell steadily last month, after a small February rise that was attributed to Chinese and European steel mills restocking and importing more iron ore. The Baltic Dry Index closed on Friday at 1,506 points, about 87% down from its May 2008 high of 11,793. The BDI hit a low of 663 on December 5, 2008.

“I think we’re in unchartered territory, and it’s going to be a difficult market going around,” Mr Sandler said.

Louis Dreyfus bulk shipments reached 32 million tonnes in 2008, with 175 ships on the water in late 2007, at the height of the shipping and commodities boom, Mr Sandler said. The US-based commodities giant “was fortunate enough” to redeliver most of them before the market meltdown six months ago, and did not default on any of its charters.

Mr Sandler said it was good that commodities prices had since retreated to 2004 levels. “From a dry bulk perspective trading looks horrible and it won’t be until the fourth quarter that you get any improvement on your volumes,” he said.

Two Asian operators of dry bulk tonnage, Chinese government-owned Cosco Group and privately-held Taiwanese Today Makes Tomorrow are more optimistic.

“I strongly believe that bulk carriers will recover by the second half of this year,” Cosco’s president and chief executive Capt Wei Jiafu told the same conference. He said the $590bn Chinese stimulus plan would kickstart industrial growth, with GDP rising by 8%, above World Bank forecasts.

TMT owner Nobu Su also believed that Chinese spending woud push up demand for bulk commodities. “We have hit the bottom in January and February,” he said last week. Rates would go up, but it was too difficult to say by how much. “I think we are coming back, and that’s very, very important for the world economy, and we are seeing it already.”

Navios Maritime Partners chief financial officer Michael McClure offered qualified optimism.

He said delays at Asian yards would see 120-130 new capesize vessels entering the global fleet of 825 in 2009, about a quarter less than anticipated. Lower iron ore prices could see Chinese steel mills import more iron ore from Australia and Brazil, rather than rely on lower-quality, higher-cost domestic supplies. If scrapping of elderly tonnage continued at current rates, ”there was a reasonable chance” that the supply imbalance “may not be too bad in 2009”, Mr McClure said.

About 4.1m dwt of bulk carriers have been scrapped so far in 2009.

However a US-based shipping hedge fund manager, Craig Stevenson, cautioned that the industry “was not going to scrap its way into prosperity”.

“We are not going to have a normal shipping market until we have a normal banking market,” said Mr Stevenson, chairman and chief executive of Diamond S Management. During the shipping boom money was “everywhere and cheap”, he said. “This industry will continue to struggle till we get the banking industry that does normal business.”

A MAJOR driver of any recovery will be how many bulk carriers enter or leave the global fleet in 2009, but there is little agreement over these numbers either, writes Michelle Wiese Bockmann .

“Ships that you see on the orderbook in 2009 are the ships that will come,” said Basil Mavroleon, a director of New York-listed Genco Shipping & Trading, and projects group manager for broker Charles R Weber. In 2010 and 2011, attritition through renegotations, delays and cancellations would mostly affect the smaller bulk carriers on order. About 10% of the existing bulk carrier orderbook this year would be cancelled, and about 50% lacked finance, he estimated.

There are 3,400 bulk carriers of 293.7m dwt on order, according to Clarkson Research.

Mr Mavroleon said ships ordered at Chinese yards would still be built. They would be bought cheaply and operated by Chinese owners, which would fail to address oversupply worries.

Angela Chao, deputy chairman of privately-held US shipowner Foremost Group, said the orderbook was “terrifying”.

However, orders placed at Chinese state-owned yards would continue while those newer yards owned privately or by provincial governments were more likely to fail, she said.

The Korean Register of Shipping chairman Kong-Gyun Oh forecast just 10% of South Korean orders would be cancelled.

The survey respondents included US and European shipowners, operators, regulators, lawyers, fund managers and bankers, and revealed an overwhelmingly negative outlook for the shipping sector.

The Lloyd’s List industry survey asked five
questions related to major maritime issues as the industry grapples with what US commentators are now calling “the Great Recession”.

A majority of respondents thought that safety standards would slip because of the credit crunch, and also questioned banks’ commitment to
shipping.

With freight rates slightly above breakeven levels for ships purchased and financed at the height of the boom, and with bulk carriers, containerships and gas carriers going into lay-up, there was widespread acknowledgement that owners will cut safety and maintenance corners to save money.

Nearly 87% of the 30 people who responded to the question agreed that the credit crunch threatened the maritime industry’s drive to improve safety standards.

Hopes that significant cancellations would help reduce the bloated bulk carrier newbuilding orderbook in order to improve freight rates are also low.

Less than 41% of the 32 respondents believed that bulk carrier newbuilding cancellations in 2010 would not exceed 60%.

These cancellation levels are among the the most optimistic scenarios currently under discussion by owners and operators.

Just under two-thirds of the respondents said that banks would not remain committed to
shipping.

There was little sign of relief for the global containerships fleet either. Just 26 of the respondents agreed that the container sector had yet to hit
bottom.

A sharp contraction in global trade has seen port throughput in key US ports fall by more than 30% in the months of January and February. However, 78% of those executives surveyed believed the worst was yet to come.

Cosco president and chief executive Wei Jiafu has urged the US to resume buying Chinese goods again to revive global trade. He said he had successfully recommended last month that the Chinese government boost procurements in Europe, in a move to bolster capacity on trade lanes from Asia.

“I strongly believe that bulk carriers will be recovered by the second half this year,” Capt Wei told the Connecticut Maritime Association media conference. He cited a 1.4% rise in Chinese electricity consumption in the first half of March as proof of industrial growth.

“That means customers and users are increasing, that factories and manufacturing has already started,” he said.

Despite Cosco’s dry bulk optimism, its executives are asking for steep discounts as they renegotiate long-term charter rates for bulk carriers in its fleet chartered from European and US owners.

The deals were signed at higher rates before the freight market collapse in the last quarter of 2008, and Cosco is taking a very tough approach, according to those familiar with talks.

Capt Wei said Cosco’s financial status was healthy and that the company had available credit of Yuan75.4bn ($11bn) and Yuan70bn in cash.

The government-owned shipping and terminal group is one of the world’s largest, with a fleet of 800 ships exceeding 50m dwt, including 160 containerships and more than 200 bulk carriers.

Capt Wei also said he had recommended to government authorities that China ban single-hulled tankers to encourage scrapping in the global fleet.

But he provided few details of Cosco’s fleet expansion plans or newbuilding cancellations within the company’s dry bulk orderbook, estimated at 66 bulk carriers.

Capt Wei also said that there had been no pressure from the Chinese government to purchase new ships from Chinese yards, amid fears that about half of the global fleet orderbook will struggle to gain financial backing.

In January 2008, the company decided to scrap plans to order 126 bulk carriers, as “a short-term readjustment” to plans to establish the world’s largest fleet.

He said Chinese gross domestic product growth forecasts of 8% would be reached in 2009, despite a lower World Bank forecast of 6.5%, and attributed the Baltic Dry Index recovery in February to the Chinese’ government’s $580bn stimulus plan.