Environmental legislation is currently impacting the marine market segment. Ships were traditionally powered by Heavy Fuel Oil (HFO), which produces high levels of harmful pollutants. LNG is one of the only fuel source able to comply with the environmental legislation.

* Small block with A2 valves installed, used on Nitrogen only and is supplied as an additional unit with all the above

Carnival Corporation Finalizes Contract with Meyer Werft to Build Four Next-Generation Cruise Shipts — August 18, 2016

The four new cruise ships – part of a previously announced nine-ship strategic partnership for the world's largest cruise company – will be the largest ever built based on guest capacity. The vessels will feature a revolu- tionary “green cruising” design as the first-ever cruise ships powered at sea by Liqueied Natural Gas, the world’s cleanest burning fossil fuel MIAMI, June 15, 2015 — Carnival Corporation & plc, the world's largest travel and leisure company, today announced it has signed a multi -billion dollar contract to build four next-generation cruise ships with the largest guest capacity in the world. The contract with Meyer Werft is part of larger previously announced strategic memo of un- derstanding with leading shipbuild- ers Meyer Werft and Fincantieri S.p.A for nine new ship orders be- tween 2019 and 2022. The four new ships will also feature a revolutionary “green cruising” design. The ships will be the first in the cruise industry to be powered at sea by Liqueied Natural Gas (LNG) -- the world’s cleanest burn- ing fossil fuel, representing a major environmental breakthrough. The company said two of the ships will be manufactured for AIDA Cruises at Meyer Werft's shipyard in Papenburg, Germany. Additional information about the ships, includ- ing which new ships will be added to each brand, will be made availa- ble at a later date. Based on Carnival Corporation’s innovative new ship design, each of the four next-generation ships will have a total capacity of 6,600 guests, feature more than 5,000 lower berths, exceed 180,000 gross tons and incorpo- rate an extensive number of guest-friendly features. A major part of the innovative design involves making much more efficient use of the ship's spaces, creating an enhanced onboard experience for guests. Pioneering a new era in the use of sustainable fuels, the four new ships will be the first in the cruise industry to use LNG in dual-powered hybrid engines to power the ship both in port and on the open sea.LNG will be stored onboard and used to generate 100 percent power at sea – producing another industry first innovation for Carnival Corporation and its brands. Us- ing LNG to power the ships in port and at sea will eliminate emissions of soot particles and sulfur oxides. In addition to the two ships be- ing built in Germany, Meyer Werft – which had the capacity to accommodate these four ship -building orders in its produc- tion schedule -- will also build the two additional ships de- tailed in today’s announcement at its shipyard in Turku, Fin- land. Each new ship will be speci􏰂ically designed and developed for the brand and the guests it will serve, underscoring the company's goal to consistently exceed guest expectations and provide f􏰂irst-time and repeat guests with the vacation experi- ence of a lifetime on each and every cruise.Carnival Corporation CEO Ar- nold Donald said the contract is consistent with the company’s measured capacity growth strategy to replace ships with less efficient capacity with new- er, larger and more fuel eff􏰂icient vessels over time. "We are looking forward to executing on the next step in our fleet enhancement plan," said Donald. "At a cost per berth in line with our existing order book, these new ships will enhance the return profile of our fleet. These are exceptionally efficient ships with incredible cabins and public spaces featur- ing a design inspired by Micky Arison and Michael Thamm and developed by our new build teams." Arison is chairman of the board of directors for Carni- val Corporation & plc and Thamm is CEO of the Costa Group, which includes AIDA Cruises and Costa Cruises. Added Donald: “It will be excit- ing to see our shipbuilding team bring these new ships to life. Every step of the way, our focus is on designing state-of-the-art ships that provide a vacation experience our guests will love, and we are putting all of our creative energy and resources into making sure we achieve that goal.” “These ships will expand our leadership position for the Costa Group, the market leader in all the major European markets,” said Thamm. “These will be spectacular ships designed specifically for our guests who sail on our Costa Group brands.” Bernard Meyer, CEO of Meyer Werft, said: “In past years, we have built seven highly successful ships for AIDA Cruises. We are honored that Carnival Corporation has entrusted us with the implementation of this ambitious shipbuilding program, and we look forward to building these four magnificent ships.” The new ship order will allow the Costa Group to continue to build on its leader- ship position in the European cruise mar- ket – a market in which f􏰂ive out of 10 cruise guests in 2014 sailed onboard a Costa Group ship. The Costa Group – along with Princess Cruise Lines, also part of the Carnival Corporation family -- also occu- pies the leading position in the rapidly growing cruise market in China. As part of each shipbuilding company's long-term strategic partnership with Car- nival Corporation, additional new ship or- ders are being explored over the coming decade. About Carnival Corporation & plc Carnival Corporation & plc is the largest cruise company in the world, with a portfolio of 10 cruise brands in North America, Europe, Australia and Asia, comprised of Carnival Cruise Lines, Holland America Line, Princess Cruises, Seabourn, AIDA Cruises, Costa Cruises, Cunard, P&O Cruises (Australia), P&O Cruises (UK) and fathom. Together, these brands will operate 100 ships in 2015 totaling 219,000 lower berths with eight new ships scheduled to be delivered between 2016 and 2018, along with an additional four ships to be delivered between 2019-2022. Carnival Corporation & plc also operates Holland America Princess Alaska Tours, the leading tour companies in Alaska and the Canadian Yukon. Traded on both the New York and London Stock Exchanges, Carnival Corpo- ration & plc is the only group in the world to be included in both the S&P 500 and the FTSE 100 indices. By, John Coles:



““The vessels will feature a revolutionary “green cruising” design as the first‐ever cruise ships powered at sea by Liquefied Natural Gas, the world’s cleanest burning fossil fuel

The four new ships will also feature a revolutionary “green cruising” design. The ships will be the first in the cruise industry to be powered at sea by Liquefied Natural Gas ( LNG ) ‐‐ the world’s cleanest burning fossil fuel, representing a major environmental breakthrough.

The company said two of the ships will be manufactured for AIDA Cruises at Meyer Wer ’s shipyard in Papenburg, Germany. The two other liners will be built in Finland, I think.

Pioneering a new era in the use of sustainable fuels, the four new ships will be the first in the cruise industry to use LNG in dual‐powered hybrid engines to power the ship both in port and on the open sea. LNG will be stored onboard and used to generate 100 percent power at sea – producing another industry‐ first Innova on for Carnival Corpora on and its brands. Using LNG to power the ships in port and at sea will eliminate emissions of soot parcels and sulfur oxides. and more fuel eﬃcient vessels over time. All these ships will be fitted with MAN Diesel and Turbo’s ME‐GI engine, and will incorporate Dynamic Controls LNG gas supply system for ME‐GI gas‐ injection system manifolds. I expect this to be a growing trend for other large ships and should enable a steady flow of such orders for Dynamic Controls Ltd. , for this and other ships as green propulsion is becoming increasing required to meet environmental standards. As part of each shipbuilding company's long‐term strategic partnership with Carnival Corpora on, additional new ship orders are being explored over the coming decade. Carnival Corpora on & plc is the largest cruise company in the world, with a portfolio of 10 cruise brands in North America, Europe, Australia and Asia, comprised of Carnival Cruise Lines, Holland America Line, Princess Cruises, Seaboard, AIDA Cruises, Costa Cruises, Cunard, P&O Cruises (Australia), P&O Cruises (UK) Together, these brands will operate 100 ships in 2015” * Excerpt from Mr. John D. Coles *

e‐mail dated Aug. 18, 2016 [* John Coles CB FR Eng RCNC, re red from the Ministry of Defence (MOD) in 2007. Key points of his career/ experience: 1982, headed the British Admiralty Oﬃce in New London, Connect cut overseeing design/ integration of center sec on of Vanguard class submarines. 1998, Design and Acquisi on Project Manager, Vanguard class submarines, and Project Manager for BATCH 2 Trafalgar submarines, 1994, Superintendent Ships at Davenport. He became CEO of Warship Support Agency in 2001, and Director General Nuclear, for the MOD’s nuclear programs. In 2005 he became IPTL for Future Aircra Carrier (CFV) Integrated Project Team Leader.

In 2001 he was awarded and honorary degree, Doctor of Engineering, from Bath University. In 2004 he was elected a Fellow of the Royal Academy of Engineering and awarded CB in 2005. ] John Coles CB FR Eng RCNC, re red from the Ministry of Defence (MOD) in 2007. Key points of his career/ experience: 1982, headed the British Admiralty Oﬃce in New London, Connect cut overseeing design/ integration of center sec on of Vanguard class submarines. 1998, Design and Acquisi on Project Manager, Vanguard class submarines, and Project Manager for BATCH 2 Trafalgar submarines, 1994, Superintendent Ships at Davenport. He became CEO of Warship Support Agency in 2001, and Director General Nuclear, for the MOD’s nuclear programs. In 2005 he became IPTL for Future Aircra Carrier (CFV) Integrated Project Team Leader.In 2001 he was awarded and honorary degree, Doctor of Engineering, from Bath University. In 2004 he was elected a Fellow of the Royal Academy of Engineering and awarded CB in 2005.

Slump Sends Big Ships to the Scrapyard. By Costas Paris August 15, 2016

http://www.wsj.com/articles/economic-slump-sends-big-ships-to-scrap-heap-1471192256

Up until a year ago, the shipping industry was ordering ships in droves. This year, orders of new vessels have fallen to a record low and companies can’t get rid of ships fast enough. About 1,000 ships that have the combined capacity to haul 52 million metric tons of cargo will be dragged onto beaches, cut into pieces and sold for scrap met- al this year. That is second only to the record amount of capacity of 61 million so-called dead weight tons that were scrapped and recycled in 2012. The global economic slowdown is putting shipping through its most bruising period since the 2008 financial crisis. Companies including Maersk Line, a unit of Danish conglomerate A.P. Møller Maersk A/S, Germany’s Hapag Lloyd AG and China Cosco Bulk Shipping Co. have 30% moreb capacity in the water than cargo. As the companies, mostly based in Europe and Asia, fight for bigger shares of the global market, freight rates have dropped so low they barely cover fuel costs. In the five years through 2015, owners ordered an average of 1,450 ships annually. This year orders through July fell to 293 vessels, or 11.6 million tons, according to U.K. marine data provider Vessels Value. “Given the tremendous overcapacity, it will take much more recycling and at least two to three years of no growth in capacity to see some balance between supply and demand,” said Basil Karatzas, chief executive of New York-based Karatzas Marine Advisors Co. In the benchmark Asia to Europe trade route, shipping rates are at an average of $575 a container this year, compared with $620 last year and $1,165 in 2014. Anything below $1,400 is unsustainable, operators say. “Freight rates are dismal,” says Anil Sharma, president and chief executive of U.S.-based Global Marketing Systems, the world’s largest cash buyer of ships for recycling. “So you either idle ships, if you can afford it, or recycle.” Mr. Sharma said the typical age for recycling a ship is 30 years. This year the average age of ships getting scrapped is about 15 years. “What’s changing is that young- er ships are being scrapped, but recycling won’t solve overcapacity on its own,” said Maersk Line CEO Soren Skou. “Only market growth can do this,” he said, adding that his company hasn’t scrapped many vessels this year only about 1% of its capacity but it expects to recycle more ships over the next three to five years. Others are more active. Hapag- Lloyd scrapped 16 ships last year, or 60,000 containers, roughly 6.2% of its total capacity. The overcapacity problem has been exacerbated by China’s slowing economy and anemic growth in Europe. Last year, Chinese imports from the European Union fell nearly 14%; Chinese exports to Europe were down 3% in the period. In this year’s first quarter, Chinese imports from the EU fell 7% from a year earlier, a decline matched by exports to Europe. That has drastically affected the container trade. Last year, some 100 Asia-to-Europe sailings were canceled. That amounted to 10% of the traffic that moves 98% of the world’s manufactured goods, including electronics, household goods, shoes, clothing and food. “Drastic fleet-management strategies have been implemented by container operators to reduce their exposure on oversupplied trades, and scrap- ping is one of them,” said Jona- than Roach, a container- shipping analyst at London- based Braemar ACM Ship broking. A global commodities slump hasn’t helped. Beijing has also substantially cut down on imports of commodities such as coal and iron ore, forcing hundreds of previously chartered dry-bulk ships to be idled or recycled. The world’s largest bulk carrier, China Cosco Bulk Shipping, a unit of China Cosco Shipping Co., said in June it would recycle 53 vessels by the end of next year, or 8% of its existing fleet capacity. In the past, recycling a ship has typically generated about one- quarter of the price of a new vessel of the same type and size. But owners say a sharp drop in the price of steel has cut the rate of return to an average of 10% to 15% of the price of a new ship. Two years ago, in India, Pakistan and Bangladesh were paying about $460 a ton of steel.Last year it was $300 and it is now roughly $250, shipowners say. Officials at the Alang scrapyard—one of the world’s biggest, on India’s West Coast— said prices were likely to stay low through the rest of the year,as China is flooding the market with recycled steel. Braemar ACM expects about 550 dry-bulk ships to be recycled this year, 29% more than last year and 48% more than in 2014. About 170 container ships are likely to be scrapped this year, compared with 85 last year and 164 in 2014. The scrapping of other ship types, such tankers, car carriers, general cargo ships and fishing boats, bring the year’s total to

LNG Engine set in Crowley’s new ConRo ship—March 31, 2016

http://hhpinsight.com/marine/2016/03/crowley-maritime-sets-first-man-engine/

The main engine has been set onto Crowley Mari􏰀me Corpora􏰀on’s new vessel, El Coquí, the first of two new Commitment Class ConRo (combina􏰀on container and Roll/On‐Roll/Off) ships that will be pow‐ ered by liquefied natural gas (LNG) for use in the ocean cargo trade between Jacksonville and Puerto Rico. “This state‐of‐the‐art engine technology will add efficiency while con‐ tinuing to reduce impacts on the environment, one of Crowley’s top priorities,” said John Hourihan, senior vice president and general man‐ ager, Puerto Rico services. “Utllizing this green technology is just another way we are demonstrating our commitment to the people of Puerto Rico, our customers and the environment. It alsobears mentioning that neither of these ships, which have been design specifically for the Puerto Rico trade, gets built without the Jones Act – a federal statute that provides for the promotion and maintenance of a strong American merchant marine.” A video showing the progress of settng the engine may be viewed online here. The engine was placed using a series of heavy lifts by 500‐ton cranes in the shipyard of VT Halter Marine, a subsidiary of VT Systems, Inc., where El Coquí (ko‐kee) and sister ship, Taíno (tahy‐noh), are under construction. The engine has a total weight of 759 metric tons and measures 41 feet high, 41 feet in length, and 14.7 feet wide. “Customers will not only be able to experience the same reliable and dedicated service they have with Crowley today, but also will have the added benefit of lower emissions once these two ships join the Crowley fleet,” said Jose “Pache” Ayala, Crowley vice president, Puerto Rico. “Crowley is making a significant investment in the Puerto Rico trade to provide faster transit times while continuing with the ability to carry and deliver the containers, rolling cargo and refrigerated equipment our customers count on.” Designing, building and operating LNG‐powered vessels is very much in line with Crowley’s overall EcoStewardship positioning and growth strategy. The company formed an LNG services group in 2015 to bring together the compa‐ ny’s extensive resources to provide LNG vessel design and construction management; transportation; prod‐ uct sales and distribution, and full‐scale, project man‐ agement solutions. These Commitment Class, Jones Act ships are de‐ signed to travel at speeds up to 22 knots while maxim‐ izing the carriage of 53‐foot, 102‐inch‐wide contain‐ ers. Cargo capacity will be approximately 2,400 TEUs (20‐foot‐equivalent‐units), with additional space for nearly 400 vehicles in an enclosed Ro/Ro garage.

LNG-Diesel Dual Fuel Powerplant Placed in First of Two Ships –March 30, 2016

http://hhpinsight.com/marine/2016/03/crowley-maritime-sets-first-man-engine/

CrowleyMaritimeSets1stMANEngine. in Dual Fuel, LNG, Marine, Milestones by Rich Piellisch Crowley Maritime is trumpeting the setting of the main engine onto its new El Coquí container ship as ‘a critical milestone.’ El Coquí is the first of two Commitment‐class LNG‐diesel dual fuel ships being built for the Puerto Rico trade. Photo from Crowley’s excellent video shows the MAN Diesel & Turbine 8S70ME‐C8.2‐GI engine ‘A‐frame’ being lowered into place. Crowley Maritime reported “another critical mile‐ stone” as the main engine has been installed in its El Coquí newbuild, the first of two Commitment‐class ConRo (combination container and Roll/On‐Roll/Off) ships that will be powered by liquefied natural gas to connect Jacksonville and San Juan. The engine is a MAN Diesel & Turbo‐design 8S70ME‐ C8.2‐GI built at the Tamano Works of Mitsui Engineer‐ ing & Shipbuilding in Japan. It was installed in El

Continued: LNG- Diesel dual fuel powerplant placed in First of Two ships.-March 30, 2016

http://hhpinsight.com/marine/2016/03/crowley-maritime-sets-first

Coquí by VT Halter Marine in Mississippi, where a second Commitment‐ class ship, the Taíno, is also under construction. The engine is a MAN Diesel & Turbo‐design 8S70ME‐C8.2‐GI built at the Tamano Works of Mitsui Engineering & Shipbuilding in Japan. It was installed in El Coquí by VT Halter Marine in Mississippi, where a second Commitment‐class ship, the Taíno, is also under construction. “This state‐of‐the‐art engine technology will add efficiency while continuing to reduce impacts on the environment, one of Crowley’s top priorities,” Crowley Puerto Rico services senior VP John Hourihan said in a release. Placed in Stages The engine was placed in stages via a series of heavy lifts by 500‐ton cranes at the VT Halter yard. “This ship is basically being built around the engine,” Jensen Maritime construction manager Patrick Sperry says in a video on the El Coquíin‐ stallation. (Jensen is Crowley’s Seattle‐based naval architecture subsidi‐ ary. Also quoted in the video are Crowley new construction engineering manager Raymond Bland and construction management VP Ray Martus.) Faster “Crowley is making a significant investment in the Puerto Rico trade to provide faster transit times while continuing with the ability to carry and deliver the containers, rolling cargo and refrigerated equipment our customers count on,” said Crowley Puerto Rico VP Jose “Pache” Ayala. The Jones Act‐compliant, Commitment‐class, Jones Act ships are de‐ signed to travel at speeds up to 22 knots while maximizing the carriage of 53‐foot, 102‐inch‐wide containers. Cargo capacity will be approxi‐ mately 2,400 TEUs (20‐foot‐equivalent‐units), with additional space for nearly 400 vehicles in an enclosed Ro/Ro garage. Deep Experience in Puerto Rico In addition to their main ME‐GI engines (the first to be built in Ja‐ pan; HHP Insight, July 30, 2014), each of the new Crowley ships will have three MAN Diesel & Turbo 9L28/32DF auxiliary engines. Crowley notes that it has served the Puerto Rico market since 1954, “longer than any other carrier in the trade.” The firm has more than 250 Puerto Rico employees, and is “the No. 1 ocean carrier between the island commonwealth and the U.S. mainland with more weekly sailings and more cargo carried annually than any other shipping line.”

Chevron plans more capital spending cuts– March 9, 2016

http://hhpinsight.com/marine/2016/03/crowley-maritime-sets-first-man-engine/

MELBOURNE, Australia—Six years ago, Big Oil was so confident in the outlook for global energy demand that it bet tens of billions of dollars to turn part of a remote Australian island known for its breeding grounds of rare sea turtles into a vast gas‐export hub. Now, the Chevron Corp.‐led Gorgon plant has become emblematic of how quickly the assumptions that underpinned giant energy bets world‐wide have been shaken by falling energy prices. On Tuesday, Chevron said it had started producing liquefied natural gas—natural gas cooled to a liquid form so it can be transported by ship—from the Gorgon project and the company expects to send its first cargo to customers in Asia next week. However, the plant is becoming operational at a time when investors are more skitish about the health of China’s economy, amid an oversupply of major commodities. Last month, Chevron, which owns nearly 50% of Gorgon, was among 10 U.S. oil companies whose credit ratings were cut by Standard & Poor’s due to the oil‐price rout. Another of Gorgon’s big investors— Exxon Mobil Corp.—had its triple‐A corporate rating placed on watch by S&P for a possible downgrade. Many experts say Gorgon, now estimated to cost $54 billion to build versus an original budget of $37 billion as site construction progresses, offers a scant return on the huge investment with energy prices at current levels. Oil prices were at around $60 a barrel—and rising—in September 2009, when Chevron, Exxon and Royal Dutch Shell PLC signed off on the project’s construction. That is roughly 60% above where oil prices sit now. Gas sales from LNG projects in the Asia‐Pacific region such as Gorgon are linked to swings in oil prices, meaning returns on investment are more vulnerable to volatility in commodity markets than export‐ oriented facilities in the U.S. In 2015, LNG prices in Asia roughly halved. Energy companies say shareholders will benefit from a guaranteed revenue stream from Australia, backed up by a stable regulatory regime. Chevron estimates gas output from Gorgon will last at least 40 years. Also, Chevron and its partners have locked Asian customers including China into deals linked to oil prices that last up to 20 years, meaning they must pay for natural gas supply whether they need it or not.“We expect legacy assets such as Gorgon will drive long‐term growth and create shareholder value for decades to come,” John Watson,Chevron’s chief executive, said. Spokespeople for Exxon and Shell, which own about 25% of Gorgon each, declined to comment. Last year, China’s LNG imports fell 1% as the econo‐ my cooled. At the same time, rapid growth in North American shale‐gas production sparked fears of a global energy glut that is likely to take years to clear. “We’re looking at a world of significantly lower returns compared to the old days of the LNG indus‐ try,” said Michelle Neo, a Singapore‐based analyst at energy consultancy FGE. Gorgon is Chevron’s biggest global bet on LNG and it will produce up to 15.6 million metric tons of LNG a year, plus enough gas to generate electricity for 2.5 million Australian homes. Gorgon, along with seven other gas‐export facilities in Australia and neighboring Papua New Guinea, promised to help redraw the energy map by moving the epicenter of the global gas trade away from the politically volatile Middle East. About $180 billion was commitied by companies including Chevron,ConocoPhillips and France’s Total SA to Australia’s gas‐export industry between 2009 and 2012. As well as concerns raised by the impact of falling prices on margins, onshore LNG projects are costly because they require refrigeration tanks and a network of transportation pipelines, while in many cases sea channels need to be created for LNG tankers to arrive at ports and load up. In addition, Gorgon’s checkered record since starting construction has undermined confidence in its returns. The project “is the poster child of rampant cost inflation gone wrong in the Australian LNG industry,” said Neil Beve‐ ridge, a Hong Kong‐based senior analyst at Sanford C. Bernstein. He estimated that the project’s overall cost could come in at close to $60 billion, or roughly $4,000 a ton of capacity—about twice the current break‐even estimate based on current prices. Gorgon’s construction on isolated scrubland off Australia’s northwestern coastline coincid‐ ed with a parallel investment boom in other resources such as iron ore and gold. The result was that Chevron had to pay more to hire people—from pipe fitters to welders—while the construction frenzy helped to drive up the cost of raw material imports such as steel. A strength‐ ening Australian currency inflicted more pain for Chevron, which had calculated its costs in U.S. dollars. Barrow Island’s status as a government‐protected nature reserve since 1910 also brought complications. Chevron and its partners had to comply with strict environmental conditions, ranging from shrouded lights to avoid disturbing the nightime mating of marine turtles to some of the world’s toughest quarantine procedures to cut the risk of invasive species being brought in by workers. Chevron expects the project to add a little more than 200,000 barrels a day to its production when fully operational. That compares with the company’s output of 2.67 million barrels a day in the final three months of 2015. Gorgon and another Australian LNG project, known as Wheatstone, together accounted for nearly half the US$15.4 billion that Chevron invested in oil and gas in 2014. However, such LNG projects will welcome long‐term cargo revenue and analysts recognize their future potential, despite current price concerns. “If you look from the point when the investment decisions were taken, back between 2009 and 2011, then the project economics are pretty marginal and have suffered,” Giles Farrer, a research director at consultancy Wood Mackenzie Ltd. in London, said. “[But] if you look at the point where we are now, the projects are going to deliver fantastic revenue.”

Maersk’s stumble highlights sluggish state of global trade –February 11, 2016

http://www.ft.com/intl/cms/s/0/1d744f1e-d044-11e5-831d-09f7778e7377.html#axzz45ehsMWg8

For moving containers during 2015 than 2014, and the group reporter a $2.5bn net loss for the fourth quarter of last year. US railroads including Union Pacific, the largest, have also recorded big falls in profits for the fourth quarter. Companies that ship dry bulk commodities are in precarious financial positions after rates to charter vessels fell to the lowest levels since the Baltic Dry Index was set up in 1985 to track such data. One key question now is how far the sharp falls in prices for moving goods are a leading indicator of further de‐ mand problems in a global economy shaken by China’s deepening slowdown. The general picture of gloom is countered by conditions in oil tanker markets. Here, despite some recent falls in rates, owners can still generate profits by charging $50,000 a day for a very large crude carrier. It is also noteworthy that Maersk forecasts growth in world container trade of 1 to 3 per cent in 2016, not a downturn in traffic. The air freight market — often quick to slow down in a downturn — is experiencing modest growth. US railroads, while losing traffic in many areas, are benefiting from the booming domestic car market. Erik Stavseth, analyst at Oslobased Arctic Securities, says demand to move freight in many markets appears to be slackening. But he says that in most shipping markets the problem is that owners were too optimistic about future growth levels and overinvested in new vessels. Mr Stavseth points to the oil tanker market as one of several cases in the global economy that illustrate the delicate balance between supply and demand. While the low oil price has stimulated demand for crude and hence the need to move it, the biggest factor in the tanker sector’s positive performance is that the market is short of ships. “That tanker rates are strong doesn’t really underline that the economy is great,” says Mr Stavseth. “It just underlines that the supply‐demand balance is positive.” There is little doubt that conditions in the market to move dry bulk commodities are catastrophic.Average short‐term rates to charter Capesize carriers — the largest kind were at $2,756 per day on Thursday, well below their roughly $8,000 operating cost. Paul Slater, a shipping finance expert based in Florida, says China’s de‐ mand for commodities has waned not only because of its economic slowdown but also because of changes in the coun‐ try’s buying practices. The Chinese government under Xi Jinping has brought order to once chaotic commodity‐buying practices, greatly reducing China’s stockpile. But overall demand is flat ratherthan declining and few industry observers believe a surge could revive the dry bulk ship market, which has been swamped by ves‐ sel deliveries that expected to increase the world fleet by 4 per cent this year. “There’s really an extreme over‐ supply of vessels, built on the premise that China doesn’t slow down,” says Mr Stavseth. Most industry observers believe container shipping lines' problems reflect world economic conditions more closely than trends in other transport segments. Container shipping lines such as Maersk and Hong Kong's Orient Overseas International, parent of Orient Overseas Container Line, carry manufactured and semi-finished goods. They are consequently far more exposed to worldwide consumer demand.

Continued—Maersk’s stumble highlights sluggish state of global trade –February 11, 2016