"Our path forward is to help our clients decarbonize and we see ourselves growing into a carbon management consultancy for the special tanker industry."
What have been the main developments at New Asia Shipbrokers over the past year?
A key milestone has been to grow the business in biofuels and related bio-feedstocks. New Asia Shipbrokers (NAS) is also heading towards a model of providing more services besides brokerage: We want to add value to our clients from a sustainability angle by presenting them opportunities to offset their carbon footprint. Not many in our industry are thinking about sustainability, but the world is clearly moving in that direction whether we are ready for it or not. Under our consultancy arm New Asia Shipping, we continue to provide tailor-made solutions for clients, and this part of the business has been thriving. Our team has transitioned to a hybrid work culture while preserving the same level of efficiency and productivity as before.
Could you share more details about the opportunities you identified in biofuels?
Biofuels is a capital-intensive, niche market occupied by a handful of big traders. The entry barriers for shipbrokers are also quite high. The business requires a good level of familiarity with the product, the type of tank and the type of ships required, together with many such considerations. NAS was able to find a sweet spot in this market thanks to our experience – personally, I have been involved in the biofuels business since 2008. On the cargo side, about 40-50% of our business is represented by biofuels and related feedstocks; the balance is shipping chemicals.
The strong European mandate for cleaner energy creates a huge demand for biofuels, but the feedstocks are in Asia. Biofuel-related trade has grown by almost 50% from the Far East (China and Southeast Asia) to Europe in the last year. From 50,000 tons/month in 2017, current volumes are at 300-350,000 tons/month. There are 6 t/y of renewable fuel capacity globally today, and this could grow fourfold in three years’ time. Neste’s new refinery in Singapore will alone require vast amounts of feedstocks, which will drive shipping, especially on the specialized tanker side.
How is the war in Ukraine impacting tanker markets?
Back in November last year, analysts were spelling doom and gloom for the clean tanker market because of the oversupply of tanker ships; yet this became one of the best performing tanker markets, due to the imbalances created. But the situation in Ukraine is likely going to have an even bigger impact on shipping because, unlike the pandemic which gave way to bouts of recovery, the current crisis puts sustained pressure on tanker shipping. Europe is already diverting away from Russian petroleum products, LNG, and chemicals, and is most likely to procure from Asia (which has higher capacities). The growing dis-attachment from Russian exports will create multiple opportunities not just for petroleum tanker shipping, but also for specialized and chemical tankers.
How do you think China’s growing capacity for chemicals will change trade patterns?
With the large number of plants coming up in the country, China will become a formidable exporter of chemicals. China is relying more and more on gases like ethane or propane as feedstocks for petrochemicals, both of which can be shipped on a long-term basis at much lower freight costs, which makes them amenable for long-haul travel. We can already see a lot of aromatics like glycols moving across the Transpacific from China or the Far East to Europe – something uncommon in the past. I see China becoming a significant production force while for Europe it makes more sense to downsize its refinery capacity as it focuses on protecting the environment.
How is the shipping industry preparing for a carbon-neutral future?
I personally see no progress. Stories about VLCCs engaging in carbon-neutral voyages to ship crude oil have been making the news, but this carbon neutrality status is obtained by offsetting the carbon footprint with carbon credits purchased on the open market. This is a traditional, reactive industry, worried about the costs above all. Pledges about investments in decarbonization are often empty-handed and designed to please shareholders. The owners and the charters will feel pressurized to do something only when direct policies or penalties are implemented.
Do you have a final message for our audience?
Our path forward is to help our clients decarbonize and we see ourselves growing into a carbon management consultancy for the special tanker industry.