• Sunday, February 17, 2019

Industry insight: A pulse on the dry bulk market

By BCShippingNews 15 May 2018
An interview with Peter Amat, General Manager, Pacific Basin Shipping (Canada) Ltd.

There is no denying the importance of the dry bulk shipping sector for Canada’s farmers, miners and other resource producers when it comes to getting product to market. For BC Shipping News, there is no better authority for providing insights into that industry than Peter Amat, General Manager, Pacific Basin Shipping (Canada) Ltd. Not only does Peter’s role with Pacific Basin put him in good stead to provide overviews of the West Coast bulk market, but his participation in organizations like the Institute of Chartered Shipbrokers and the Chamber of Shipping gives him a perspective on the bigger picture of the West Coast’s shipping industry.

BCSN: Let’s start with a brief overview of the steps you took to your present position.

PA: I started in the shipping industry in 1994 as a port agent in the Bristol Channel. This was just after getting my Master’s Degree in Transport Economics Maritime from Cardiff University. I then joined with Gearbulk Shipping in 1996 and worked with them for roughly 12 years in offices in London, Jakarta, New Zealand, Vancouver and Shanghai. When I moved from Vancouver to Shanghai, my family stayed here in Vancouver, so following a year overseas, I came back here and started with Pacific Basin.

BCSN: Tell me about Pacific Basin, and specifically, about operations on the West Coast.

PA: Pacific Basin Shipping (PB) is one of the world’s leading owners and operators of Handysize and Supramax dry bulk ships. With our corporate headquarters in Hong Kong, we have a fleet of over 200 ships and operate worldwide with about 3,000 seafarers and 300 shore-based staff in 12 locations around the world, including Vancouver.

Our largest market is Asia, followed by North America and South America but we also have a significant presence in Australia/New Zealand and Europe. About eight per cent of our activities are in India, the Middle East and Africa. In 2017, we carried 66.2 million tonnes of dry bulk cargo — everything from sand and gypsum, salt, coal, wood pellets, grains, fertilizer, sugar to logs and forest products, steel and cement as well as concentrates and other metals and ores.

We have a diverse portfolio of cargoes and customers which provides for great flexibility — if a commodity is down or if a region is down, we can pick up another commodity or move the vessel to another region in the world.

Pacific Basin is really defined by our customer focus and our reputation for reliability and flexibility. We spend time understanding the operations of our customers and tailor our services to their needs. And, because many of our customers will have operations in more than one place, we make sure that they are able to contact any PB office and receive the same service. Our brand is our key – we’ve built long-term relationships with many of our customers and they’ve come to rely on our ability to deliver.

I should mention that we’ve won a number of awards over the years from global competitions like Lloyd’s List, Seatrade Asia, Marine Money, and the International Bulk Journal in categories like safety, ship management, environmental performance and corporate social responsibility to name just a few.

Looking specifically at the Vancouver office, we handle commercial and operational activities from Alaska to the Panama Canal. The office opened in 2005 with two people — today, we have 17 staff. That’s indicative of the kind of growth we’ve seen in this region. Of the 66.2 million tonnes of cargo carried by PB worldwide, we are responsible for about 15 million tonnes of it.

Similar to other PB offices, we have roughly 10 nationalities represented (company-wide, staff represent over 30 nationalities). Currently, our Vancouver office employs more women than men and we also take in a lot of young trainees from UBC and BCIT. We’ll bring them in, train them and see them relocate to other offices around the world.

BCSN: Could we delve a bit deeper into the fleet? In reviewing your website, I see that it’s a very young fleet.

PA: Yes, that’s correct. The average age of our core fleet of owned and long-term chartered ships is 8.2 years. We own and operate the world’s largest modern Handysize dry bulk fleet but we’re also a significant owner and operator in the Supramax segment. We own 103 Handysize and have another 23 on charter, one of which is a new build to be delivered this year; in the Supramax class, we own 25 and have 10 more on charters; we also have two Post-Panamax vessels.

We are continually investing in the fleet. Over the last two or three years, we’ve built 12 Handysize and eight Supramax vessels as well as been active in the second-hand market but going forward, our focus will be more on second-hand ships. We see more value in that market right now.

BCSN: Why is that?

PA: There’s uncertainty around the best way to meet emission control regulations so it makes new builds less attractive —you don’t know what to build at this point. That’s the question more for the dry bulk industry versus the tanker or container industry — they know where the vessel will be going for the majority of its life. Dry bulk is a bit trickier. Our ships could end up anywhere and we need maximum flexibility so it’s a big challenge for the bulk carrier fleet.

Take just this region as an example, we stop in at Prince Rupert, Nanaimo and Crofton — you can’t buy fuel there. Now magnify that on a global scale, there’s so much uncertainty and difficulty in choosing what to do.

If we opt for scrubbers, for example, and say we spend $1 million per ship for a refit, that’s well over $100 million to invest by January 2020. That’s a lot to spend with so much uncertainty.

Or if we decide to use IFO fuel, there is no guarantee that sufficient volumes will be reliably available. And even if it was available, it would likely entail a long-term contract for production and storage — and that’s not a feasible option.

BCSN: What about the ballast water regulations? Have you had any issues?

PA: That’s more straightforward now. It’s just a process we’re working through with every dry dock and we’re confident we can meet all the regulations by the time they’re in place. 

BCSN: Are there other regulations or issues that create challenges for you?

PA: There are a few minor ones. For example, there are issues around getting documentation for entry to Canada in a timely manner. We had a ship stuck here in Vancouver for a week while it waited for the Captain to gain entry into Canada from the Philippines.

Immigration is an issue for us. Those trainees we take in from UBC and BCIT, once they’ve gone through the system, they’ll often get the opportunity to work in offices around the world — and vice versa, we have staff from overseas looking to work in our office. The process is very time consuming and there’s no guaranteed outcome. We experience delays and problems with immigration in Canada that we don’t have in other countries or jurisdictions around the world.

Another issue we have, especially for our young trainees, is the cost of living in Vancouver.

BCSN: Earlier you touched on the types of cargo that Pacific Basin carries worldwide. Could you provide some insights into the local West Coast market and trends you’re seeing with commodities here?

PA: For the West Coast, we’ll bring in salt, some grains, sugar, steel and cement. Then the vessels are cleaned — Tidal Transport has been providing us with that service for over 10 years and they are very good at it — before loading for the outbound service, mostly grains, wood pellets, fertilizers, potash and logs.

We also work with Tidal for log loading in Prince Rupert and on the Island. We do log parcelling. That’s a good example of being responsive to the customer’s needs. A few years ago, there were a lot of small shippers looking to get their cargo to market and so now we parcel the logs for them. We provide that service to support them. We also do steel parcelling.

In terms of trends, we’re seeing more construction material being brought in —cement and steel mostly. That applies to the whole West Coast, not just Canada. That business has picked up in the last couple of years which is a good barometer of the strength of the economy. We’re also seeing increased volumes of grain and potash — another good barometer, especially for the global economy. Forest products have been steady.

I should point out that locally, we could use another breakbulk facility. We have three — Lynnterm, Squamish and Fraser Surrey Docks — and ships will be waiting as much as a week to get to berth. The wait adds to costs and makes us less competitive in this market.

BCSN: There are a few additional issues I wanted to touch on but would like to do it within the context of the Institute of Chartered Shipbrokers and the annual conference you host. I understand you’re the Conference Chair.

PA: Yes, that’s correct. I have been involved with the ICS for many years —previously as a board member and past President but currently as the Conference Chair.

Our 2017 conference was very successful and we’ll be following a similar format for 2018. We take a holistic approach to reviewing the issues facing the dry bulk sector. For example, in 2017, we had shipping lines, ports, terminals, resource analysts and representatives from companies like K+S Potash Canada and Pinnacle Renewable Energy, as well as from rail and bunker supply. (Editor’s note: Captain Stephen Brown provided a very succinct summary of the 2017 Dry Bulk Conference which can be found at www.bcshippingnews.com/shipping).

For 2018, we have started planning for the November event. We’ll be looking at emissions and bunker fuel availability as well as addressing some of the challenges we face as an industry locally. And again, we’ll be providing overviews of the market and bringing in representatives from the commodity sector to provide forecasts and highlight issues they face.

The conference has really grown over the past few years. It’s becoming an international industry event that is attracting more and more out-of-town attendance.

BCSN: Are you able to identify some of the issues that will be highlighted within the presentations?

PA: While most of the attendees are looking for information on the market and the forecasts for the coming year, we do look at issues — especially those affecting the local industry: low sulphur fuel availability; vessel speed slowdowns; environmental regulations challenges; anchorages; the Pilotage Act Review, to highlight just a few.

A common theme that is raised during discussions and presentations is the need to ensure Canadian ports remain competitive. All of the issues noted above will have an impact on costs and we all — i.e., the entire supply chain (from the farm to the ship and everyone inbetween) has a duty to find efficiencies so that the entire industry — and hence, the entire country — benefits.

BCSN: The Federal Government recently announced a Port Modernization Review. Do you think that will help with maintaining our competitiveness?

PA: I hope so. I’d like to see the entire supply chain reviewed — not just the ports. In addition, a benchmark should be established that compares ports like Vancouver to other world-class ports — Rotterdam, Hamburg, Shanghai, for example — and how they are attaining greater productivity. Here, we have a shortage of land so our only option is to gain efficiencies on the land we currently have. Seeing how places like Rotterdam achieve greater throughput would greatly assist in our own development plans.

About Peter Amat

After obtaining his Master’s Degree from Cardiff University in Wales in Transport Economics Maritime, Peter started his career in the shipping industry in 1994 when he went to work as a port agent in the Bristol Channel for a small agency.

In 1996, he joined with Gearbulk Shipping’s London office where he worked for three years before moving to their office in Jakarta, Indonesia. Still with Gearbulk, Peter moved to the New Zealand office in 2003 for one year before coming to Vancouver in 2004. His next move was to Gearbulk’s Shanghai office where he stayed until 2007. In 2008, Peter joined with Pacific Basin (Canada) Ltd. to secure a position in Vancouver where his family had remained.

In addition to serving on the Board of the Institute of Chartered Shipbrokers — and filling the role of President for a number of years — Peter continues his involvement with the organization in the capacity of Conference Chair. He also currently sits on the Board of the Chamber of Shipping.

Peter lives with wife Kerri and children Rhoan (11), Imogen (9), and Romily (7). When not working, Peter enjoys soccer, rugby and travel.

About Pacific Basin Shipping

Pacific Basin Shipping Ltd. is one of the world’s leading owners and operators of modern Handysize and Supramax dry bulk ships. Their shipping business is customer-focused, providing over 400 industrial producers, traders and users of dry bulk commodities with a high-quality, reliable and competitive freight service under spot and long-term cargo contracts.

Pacific Basin is headquartered and listed in Hong Kong and operates globally. Their fleet of over 200 ships trades worldwide and employs 3,000 seafarers and 330 shore-based staff in 12 key locations around the world.

With a vision to be the leading ship owner/operator in the minor-bulk shipping space, and the first-choice partner for customers and other stakeholders, PB aims to truly know their customers’ needs, looking for ways to make it easier to do business and stressing the value of long-term relationships over short-term gain.

With more regional offices than anyone else in the dry bulk sector, PB’s chartering and operations staff are positioned close to customers and key markets. This enables their teams — comprising 30 nationalities — to know and understand their customers’ businesses and needs better than any other Handysize or Supramax operator, and to offer a superior, more tailored and localized service in a local time zone.