International shipping has the potential to undergo an evolution with developments in autonomy—these developments present opportunities to both increase safety and reduce risk to vessel operations. Zulu Associates, a Belgian company which describes itself as an innovator in marine logistics and focusses on smaller vessels, expects to put small autonomous container ships into the English Channel or Southern North Sea by 2026. In an interview with TradeWinds, the CEO of Zulu Associates, Antoon Van Coillie, indicated that shipping insurance markets are cognizant of autonomous systems and ships. He asserted that financing would not be an unsurmountable barrier, since financial institutions are especially interested in vessel sustainability.

In 2021, the global autonomous ships market had a revenue share of over 89 million USD, and is projected to grow at a compound annual growth rate of 6.81% through 20311.

Continue Reading Big waves: global autonomous ships market on the rise

The Jones Act is a challenge for the LNG industry in the United States. The Jones Act requires that all vessels used to transport merchandise between points in the United States satisfy certain requirements: to be Jones Act compliant, vessels must be U.S.-built, U.S.-owned, U.S.-flagged, U.S.-operated and U.S.-crewed, subject to certain limited exceptions. 

No Jones Act Compliant LNG Tanker

There is currently no Jones Act compliant LNG tanker, and therefore, no LNG tanker can move LNG between U.S. terminals—for example from the Gulf region, where many LNG plants are located, to regions where there is a need for LNG, such as Puerto Rico or New England. As a result, the vessels that pick LNG up from U.S. terminals are all directed to non-U.S. terminals, and the vessels that deliver LNG to U.S. terminals all come from non-U.S. terminals. There are some Jones Act compliant barges that can handle minor operations, such as moving a small quantity of LNG from the shore to a tanker that is waiting at a U.S. anchorage point in order to cool its tanks down. These barges cannot move large quantities of LNG between the regions of the United States that export LNG, and those that need it.

This situation is unlikely to change in the near future. From a commercial perspective, there is probably no business case to invest in building the first Jones Act compliant LNG tanker, because such a vessel will be too expensive to be competitive in the international market, and there is currently not enough domestic need to keep such a vessel employed in the United States only. And from a legal perspective, the federal agency in charge of enforcing the Jones Act’s requirements on the coastwise transportation of merchandise, Customs and Border Protection (“CBP”), has not given any indication that it intends to relax these requirements for the LNG industry.

New CBP Ruling on Two-Part-Loads Scenario

CBP issued on November 14, 2023 a Jones Act ruling (HQ H335463) that further limits the types of operations that foreign LNG tankers can undertake in the United States. As a result of this new ruling, in addition to being precluded from loading U.S.-bound LNG, foreign tankers will be precluded from loading several part cargoes of foreign-bound LNG at several U.S. terminals. 

This is because, when an LNG tanker loads a first part cargo at a first U.S. terminal, and then loads another part cargo at another U.S. terminal, a small portion of the LNG loaded at the first terminal must be released through the vapor return lines at the second terminal, in the form of vaporized LNG or boil-off gas, in order to control pressure levels in the tanks of the LNG tanker during the second loading operation. CBP has held that this is not permissible because the vaporized LNG is transported from the first to the second terminal on a vessel that is not Jones Act compliant in violation of the Jones Act. 

CBP noted in the ruling that the release of vapor at the second terminal is necessary for safety reasons, but emphasized that the Jones Act does not contain any exception for safety considerations. CBP has also previously refused to recognize any de minimis exception to the Jones Act, such that the minimal quantity and value of the product—in this case, the boil-off gas—does not avoid the need to use a Jones Act compliant vessel for any intra-U.S. movement.

Implications for the U.S. LNG Industry

The new CBP ruling effectively prevents the loading of two part cargoes of LNG at two different U.S. terminals, and it can have broader implications as well.  For example, even the transfer of a small quantity of LNG to a tanker for gas-up or cool-down purposes at a location in the United States, prior to a loading operation at a different location in the United States, could be found to violate the Jones Act in view of CBP’s reasoning in the recent ruling: a small part of the LNG transferred for gas-up or cool-down purposes will also be returned to the shore through the vapor lines during the loading operation, and that LNG will arguably have been transported between two points in the United States on a vessel that is not Jones Act compliant.

It remains possible that the ruling will be revoked, or that CBP will reach a different conclusion when considering a different scenario, given that each of its rulings is very fact specific.  We expect to see more CBP rulings on the Jones Act compliance of LNG operations as LNG production and export activities are intensifying in the United States.  Players in the industry will likely seek rulings from CBP to optimize the use of foreign LNG tankers in compliance with the Jones Act.

Originally published By Superyacht News in ‘The Superyacht Owner Report’.

Superyacht construction has always been a laboratory for innovation, pursuing the highest standards of comfort, luxury and safety – from the use of fibreglass hulls to the general use of stabilisation systems.

Continue Reading Assessing the risk factor

Threatened with abrogation by numerous amendments submitted by opposition MPs during the examination of the Finance Bill for 2024, the French tonnage tax regime has finally been saved. Indeed, the Government decided to rely on its power under Paragraph 3 of Article 49 of the Constitution, to force through the contested bill without a vote and without any of the contemplated amendments.

Continue Reading French Tonnage Tax regime saved by Government’s 49.3 move in Parliament

The global shipping industry is the backbone of international trade, connecting economies and facilitating the movement of goods. However, it comes with pronounced risks. From adverse weather conditions to regulatory complexities, managing risks in shipping supply chains requires meticulous planning and legal foresight. This article explores three areas in which legal strategies can help the shipping industry meet the challenges can be developed.

Continue Reading Navigating Storms: Some legal strategies for contingency planning in shipping supply chains

We are conducting a short, anonymous survey to find out your thoughts on sustainable fuel sources in the transportation industry, including your understanding of the various options, potential challenges, and expected timings for full conversion to sustainable fuel sources. Please take 5 minutes to complete the survey.

We know this topic is top of mind for many of our clients in the shipping industry, particularly with the expansion of EU ETS into shipping, debate around the Carbon Intensity Indicator (“CII”) Regulations, and the EU’s Carbon Border Adjustment Mechanism (CBAM).

We look forward to sharing the results of this survey in a report in the next few months.

Navigating the turbulent waters of the global supply chain from geopolitical uncertainty, to evolving sanctions, and the adoption of decarbonisation: Insights from Reed Smith’s London International Shipping Week event.

Continue Reading Insights from Reed Smith’s London International Shipping Week event: Managing your supply chain risk

In The “Navigator Aries” [2023] SGCA 20, the Singapore Court of Appeal (the “CA”) clarified that Rule 9(a) of the International Regulations for Preventing Collision at Sea 1972 (the “Colregs”) requires a vessel proceeding in a narrow channel to keep as near to the outer limit which lies on her starboard side as is safe and practicable (the “Limit Requirement”), and not merely to keep to the “lane” that is on her starboard side (the “Lane Requirement”).

Continue Reading Singapore Court of Appeal clarifies the proper interpretation of Rule 9(a) of the Collision Regulations

From April 2023, it is a requirement in collision cases that even where only one party has the information in its possession, electronic track data (“ETD”) must be provided to the other party. This is a welcome amendment to the previous rule that the parties had to do so only where they both had ETD in their possession.

Continue Reading Collision Statements of Case – what must you disclose and when?

This article was first published in Naftemporiki.

The New Code of Private Maritime Law enacted by Law 5020/2023 (the “New Code”), which came into force on 1 May 2023 (with the exception of Articles 4 to 9 concerning the digitisation of the ship registry, which will be in force from 1 November 2023), is an important step towards the modernisation of Greek Maritime Law. The New Code, which replaced the previous Code (Law 3816/1958), seeks to simplify the legal framework for the operation and financing of Greek vessels and align Greek maritime law with international practices. Below is a summary of some of the most important amendments introduced by the New Code and the impact they are expected to have on Greek shipping.

Continue Reading New Code of Private Maritime Law – Maritime law in the 21st century