Bulk Carrier Update No. 1 2009 by DNV GL (old account)

DNV Bulk Carrier Update Information from DNV to the bulk carrier industry

Main topic:

No. 1 April 2009

OPERATIONAL ASPECTS Also inside: I I I I I I

Pro-active maintenance Guideline for lay-up Recycling Research and development Rules and regulations Market outlook

CONTENTS

08 Lay-up guidelines

10 ››

Environmantally sound ship recycling

Photos: front cover ©DNV/Magne A. Røe, p3 ©DNV, p7 ©DNV/Magne A. Røe, p9 ©DNV, p1011 ©DNV/Magne A. Røe, p23 ©Gettyimages, p23 ©DNV, p25 photo Jim Wilson, p27 ©DNV,

››

Peter Hamer in the spotlight

››

DNV Bulk Carrier Update WE WELCOME YOUR THOUGHTS!

COVER STORY Operational aspects …………..…………...4 MAINTENANCE Controlling docking costs…………..….... 8 LAY-UP GUIDELINES Guidelines for the lay-up of ships...10 ENVIRONMENT Environmentally sound ship recycling..... 12 RESEARCH & DEVELOPMENT Optimized hull forms….…………………………………….. 14 Best practice for CSR Bulk approval………….…………...... 16 New and improved Nauticus Hull………….……………….. 18 Requirement Explorer …………..………………………..…. 20 RULES AND REGULATIONS Updates….…….………... 21 IN THE SPOTLIGHT Inspired by the sea..…………….... 24 HOT NEWS DNV to class bulk carriers in Japan………......26 MARKET OUTLOOK Signs of life……………......……… 28

DNV BULK CARRIER UPDATE NO. 1 2009

DNV Bulk Carrier Update is a newsletter published by Det Norske Veritas, DNV Maritime. It is distributed to DNV customers and stations worldwide. © Det Norske Veritas AS Please direct any enquiries to your nearest DNV station or Bulk Carrier Update e-mail: Cecilie.Johansen@dnv.com Editorial committee: Morten Løvstad, Business Director, Bulk Carriers Editor: Magne A. Røe Production: Lisbeth Aamodt Design and layout: Coor Graphic Communications 0903-044 Print: 07Oslo AS, 5,000/4-2009 On-line edition of the DNV Bulk Carrier Update: http://www.dnv.com/bulkupdate DNV (Det Norske Veritas AS) NO-1322 Høvik, Norway Tel: +47 67 57 99 00 Fax: +47 67 57 99 11 An updated list of all regional offices can be seen on DNV’s website: www.dnv.com

EDITORIAL

DEAR READER

Morten Løvstad DNV Business Director, Bulk Carriers

In a survey conducted in February and March amongst shipping companies in DNV’s client base, we asked: “What are the main challenges in today’s difficult market situation?” The response was uniform – the top three challenges are, in order of priority: 1) loss of revenue, 2) lack of financing and 3) a too high cost base. The main topics of this

issue of DNV Bulk Carrier Update address two out of these three challenges. The Market Outlook section by market analyst Jarle Hammer draws lines all the way back to 1970 in an attempt to predict what may happen to the freight rates in the coming years. The articles on operational aspects and how to control docking costs, as well as the ones covering procedures and guidelines for lay-up and scrapping, all address how a shipping company may control its

cost base while maintaining safe and sustainable operations. After a very exciting time from the end of 2007 and up to present date as DNV’s Business Director for Bulk Carriers, I want to personally thank all my DNV colleagues and all DNV customers for making us the fastest growing class society for bulk carriers! Although I will take up the position as Technical Director of DNV Business Assurance in March this year, I am confident

that my successor, Michael Aasland, will work hard to ensure that you all experience that your choice of DNV as your partner is the right one. I can assure you that DNV will maintain its strong focus on quality and safety, both for those vessels that are in operation and for those vessels which are going to be built over the next few years. We are very grateful for the trust you have shown in us over the past years. Happy reading!

DNV BULK CARRIER UPDATE NO. 1 2009 |

OPERATION

Operational aspects Given the past few months’ challenging business climate for owners and operators in the dry bulk segment, even more focus should be paid to cost-efficient and safe operations. This article gives an overview of some important operational aspects in this context, along with practical guidance. TEXT: CHRISTIAN STROBEL, SÖNKE POHL, MORTEN LØVSTAD

IACS Common Structural Rules for MAIN CHARACTERISTICS OF Segment Size range [dwt] Typical Commodities bulk carriers (“CSR Bulk”), according BULK CARRIERS Bulk carriers are Mini <10,000 Minor Bulk, Ganeral Cargo to which all new vessels are to be ships designed primarily for the Handysize 10,000 – 40,000 Minor Bulks, Steel Products constructed according to uniform cost-efficient, large-scale transport of Handymax 40,000 – 60,000 Minor Bulks, Steel Products, acceptance criteria. dry bulk commodities such as iron Grain, Coal Today’s Rules and regulations proore, coal, bauxite/alumina and Panamax 60,000 – 100,000 Bauxite, Coal, Grain, Ore, vide increased safety and operational grain. They have to fit perfectly into Phosphate flexibility compared to the old stanthe overall logistics chain. Capesize 100,000 – 200,000 Coal, Ore dards. However, the challenge of Bulk carriers’ sizes and configuraVLBC >200,000 combining improved safety with tions are optimised to allow the improved efficiency still remains. most economical use of these vessels DESIGN AND OPERATIONAL Optimum size has already been menin the typical trading routes and when carCONSIDERATIONS In the past, the tioned as a main operational criterion, but rying typical bulk commodities. different bulk carrier designs have mainly other aspects may be of similar imporAs a general rule, the market will competed on optimal steel weight and tance. The overall performance of a bulk always seek to use as large a vessel as the deadweight capacity, whereas today carrier is determined by the vessel’s operatrade permits. This is due to economies of designers are focusing more and more on tional flexibility and efficiency and therescale - bigger cargo parcels, faster loading optimal operational flexibility and energy by its economic success in the shipping and discharging operations and bigger (fuel) efficiency. market. This is of particular importance in vessels transporting the cargo will generAdvanced ship technology and the today’s market, where a large number of ate greater profit. introduction of direct strength assessships are competing for a limited transHowever, there are general limitations ments using the Finite Element Method port volume. on the average ship size serving the differ(FEM) at the beginning of the 1980s led From an operational point of view, the ent routes due to factors such as: to reduced lightship weights and thereby a following aspects are to be looked at with I Port Restrictions: Berth limitations (e.g. rise in deadweight capacities. The increasregard to improved efficiency: draft limitations, air draft limitations, ing use of high tensile steel (a higher ratio I Ship Handling length of pier, etc) and lock limitations compared to mild steel) also contributed I Cargo Handling (e.g. Panama Canal, St. Lawrence Seato lighter ships, with the side-effect that I Maintenance and Inspection way, etc). careful evaluation of structural fatigue I Infrastructure Restrictions: A less develbecame a more important issue. In retroSHIP HANDLING The handling of a ship oped port and/or inland infrastructure spect, it could be argued that competition covers all aspects related to sailing on hinders the quick distribution of large on steel weight, with the aim of maximisroute, manoeuvring and berthing in an cargo volumes to and from the port ing cargo intake, was one important reaalways navigationally safe manner. areas. son for the many casualties at the end of The primary obligation of the master is I Trade Restrictions: The demand for individual cargoes at various destinathe 1980s and the beginning of the 1990s. to ensure that the ship, crew and cargo tions is limited. A number of measures to enhance the are not put into unsafe situations. The Consequently, bulk carriers have develsafety of bulk carriers have been impletraining and competence of the crew are oped into well known size categories as mented by the IMO, IACS and the indusessential to fulfil this obligation, and this shown in the table (overlapping and diftry over the past few decades. The most is the reason for the introduction of the ferent size ranges may apply): recent of these is the introduction of the STCW Convention.

DNV BULK CARRIER UPDATE NO. 1 2009

Figure 1: The Diamond 34 handysize design Figure 2: Illustration of bulk carrier design limits

Load and discharge planning is one of the most essential tasks to be performed by a ship’s crew. It must be ensured that the strength and stability of the ship are not compromised at any time during the loading and discharge processes. The planning of efficient loading and discharging by minimizing the berth time can only be performed within the strength and stability envelope-limits that the ship was designed according to. It is recommended that a ship’s ability to cope with specified loading rates is stated and that the loading and unloading operations are to be time-wise synchronised with the ship’s de-ballasting operations. New designs constructed according to IACS UR S25 have incorporated a 10% overshoot margin for high density cargoes based on the maximum cargo hold mass. This has been incorporated to provide an extra safety margin for any potential discrepancy between the actually loaded cargo and the planned cargo quantity, an aspect which is becoming more and more important as the loading rate and number of loaders increases. This extra margin is in general not incorporated into the design of vessels constructed prior to 1 July 2003, the in-force date for UR S25. The most sensitive areas with regard to the strength envelope limits are the outermost holds in alternate loading conditions. Consequently, efficient means to control the amount of cargo loaded into the individual holds are necessary to avoid overstressing and an unfavourable trim. For Lakesize bulk carriers, it is of great importance to have a high loading flexibil-

ity to cope with the draft restrictions when sailing on the St. Lawrence Seaway and the Great Lakes. Grain stability, permissible still water values and hold mass curves adjusted to the Great Lake conditions can improve flexibility. Further on, including hull girder deformations in the loading computer will give the master more reliable factors for planning the loading. Another important aspect to be considered when talking about ship handling is the exchange of ballast water. The efficiency of ballast water exchange is mainly dictated by the design of the ballast piping system, including the pumps, valves and arrangement of the ballast tank. An approved ballast water management plan guarantees that the exchange process does not put the ship in an unsafe situation if it is complied with. However, it is recognized that one step might take a very long time to conclude, time in which weather conditions can worsen. This is particularly the case for Capesize vessels, where the double bottom and top side tanks are generally connected and extend over two cargo holds in the midship area. Serving smaller tanks would definitely make this operation more efficient. CARGO HANDLING Cargo handling covers all the activities connected with the safe transferral, stowing, lashing and securing of the various cargoes to be transported. Careful consideration needs to be taken of the cargo’s typical behaviour and characteristics. Driven by a fast turnaround time in port, cargo handling is an important design aspect. In general, design require-

ments are to be linked to the harbour conditions, such as optimum hatch openings providing easy access to the hold and shipboard cargo handling gear. Lashing equipment in cargo holds and on deck is important for efficient cargo handling as is appropriate cargo hold ventilation and humidity control. Cargo variety is a typical feature of the smaller bulk carrier segments up to the Handymax size. The smaller vessels may carry all kinds of dry bulk as well as break bulks, such as steel products, forest products or project cargo. In general, dry bulk cargo is handled by port side equipment, whereas fitted shipboard cranes are used

DNV BULK CARRIER UPDATE NO. 1 2009 |

OPERATION

for handling break bulk and project cargo. If the cranes are also to be used for handling dry bulk cargo, this should be taken into account during the design phase and grabs should be stowed on board.

Figure 3: Hold cleaning using a combi-gun

The cleanliness of cargo holds prior to loading is an important issue, particularly for bulk carriers which change their type of bulk cargo very often, such as Handysize and Handymax vessels. Operational efficiency is improved by the ability to perform fast cleaning of the cargo spaces. Providing appropriate cleaning tools and the necessary water and air supply are necessary preconditions. Hence, sufficient pump capacity and a dedicated wash-water

DNV BULK CARRIER UPDATE NO. 1 2009

holding tank may be important design requirements. MAINTENANCE AND INSPECTION It is well known that a lack of maintenance will lead to more rapid structural deterioration and, in the worst case, to loss of life and property. It is a fact that the lack of maintenance and improper inspections by ships’ crews were contributory factors to the massive bulk carrier losses in the past. Costly repairs combined with off-hire may be reduced if a regular inspection and maintenance plan is in place. Such a scheme should focus on typical areas that require attention in bulk carriers, enabling the owner to better control the condition of the ships. With the introduction of the enhanced survey program (ESP) for bulk carriers in 1992, class surveys are carried out much more thoroughly than in the past. However, they cannot replace continuous maintenance, which is still the owner’s responsibility. It should be noted that, through the resolution A.744(18), the ESP requires the ship owner to maintain onboard documentation relating to any inspections carried out by the ship's personnel with respect to structural deterioration and the condition of the coating. To assist the owner in doing so, the IMO has developed A.866(20) - “Guidance to Ships' Crew and Terminal Personnel for Bulk Carrier Inspections” - to provide guidance to ship's crew and terminal personnel with respect to the principal areas on bulk carriers that are likely to be susceptible to corrosion or damage. This

guidance is supplemented by the IACS recommendation No. 76 on “Guidelines for Surveys, Assessment and Repair of Hull Structure – Bulk Carriers”. The maintenance of bulk carriers’ cargo hatch-covers became mandatory with the introduction of regulation 7 of the revised SOLAS Chapter XII, which entered into force on 1 July 2006. This is also part of the ISM scheme. Nevertheless, there is a trend today towards charterers being concerned about the condition of the bulk carrier they are going to charter, and rating schemes similar to the ones used for tankers are becoming more and more popular. With respect to the operational efficiency, a structured inspection and maintenance plan combined with crew training will maintain the availability and reliability of the ship by: I Detecting deficiencies at an early stage I Dealing with problems while they are still minor I Being able to document the ship’s condition I Maintaining a uniform standard across the fleet In DNV, we have the expertise and experience needed to help owners ensure their bulk carriers are operated efficiently. Our philosophy is that a safe and reliable bulk carrier is more easily obtained if it is properly designed, constructed, maintained and inspected. This article will be followed up with more indepth articles on each operational aspect in coming issues of the DNV Bulk Carrier Update.

›› A Panmax vessel being loaded at Carrington Coal terminal which is operated by Port Waratah Coal Services at the Port of Newcastle, Australia.

CONTACT INFORMATION: christian.strobel@dnv.com sonke.pohl@dnv.com morten.lovstad@dnv.com

DNV BULK CARRIER UPDATE NO. 1 2009 |

MAINTENANCE

Pro-active maintenance and how to control docking costs Docking is a standard maintenance task that every ship operator has to do, no matter how the market fluctuates. When the economy slows down and shipping indexes drop, it is more important than ever to conduct the docking and repairs with a focus on cost control while maintaining the value of the assets. TEXT: RICHARD TAO

DNV’s docking services support the ship owner throughout the docking process, thereby significantly reducing the risk of cost and time over-runs. The services focus on optimum solutions, minimizing risk and uncertainty throughout the docking process based on the following key elements: I Pre-docking Risk Assessment I Pre-docking Inspection I Repair Specification I Repair Optimization I Steel Weight and Coating Area Calculations I Emergency Repair Service DNV’s docking service is carried out by a DNV surveyor with extensive docking experience to help you plan the docking. A typical service request may be to estimate how many tonnes of steel need to be renewed to obtain a CAP-2 rating. With DNV’s assistance, a clear picture of what is the most likely case and what is the worst case may be obtained. Based on this esti-

DNV BULK CARRIER UPDATE NO. 1 2009

mate, a better indication of which dock yard will be most suitable for the work may be obtained, as well as of how to fix the cargo to fit the route to the yard. The DNV Docking Service is one of the service elements of Hull Integrity Management, which aims to help ship owners achieve better and more continuous control of hull conditions. Hull Integrity Management also includes the following service elements: I Hull Competence Training: focusing on basic strength, structural defects and hull inspection for ship officers and superintendents. I Hull Inspection Manuals: ship-specific and with unique 3D illustrations which identify what to look for during inspections, where to look and how to report it. I Nauticus Hull Integrity: an easy-to-use hull inspection reporting software tool.

CONTACT INFORMATION: HIM@dnv.com

DNV BULK CARRIER UPDATE NO. 1 2009 |

LAY-UP GUIDELINES

Guideline for the lay-up of ships During the major lay-ups in the shipping industry in the 1970s and 1980s, DNV was instrumental in setting the standard for the safe and cost-optimal lay-up and preservation of ships. Due to the financial crisis and economic slowdown, this knowledge and experience are once again sought after, and the guideline has now undergone a complete revision based on the technical developments in shipping over the past two to three decades. TEXT: ØYSTEIN GOKSØYR, RICHARD TAO

The updated DNV interim Guideline for the Lay-up of Ships was issued on 5 February this year, after a complete revision based on the latest technical developments. Various parties involved in laying up ships, such as owners, operators, insurance companies and national and local authorities, have now been invited to give their input and comments in order to achieve a practical and efficient guideline. The new Guideline provides a systematic and cost-effective approach to preparing the ship for lay-up and maintaining it in a safe and cost-effective condition during lay-up. An overview of relevant lay-up considerations, such as a ‘hot’ or ‘cold’ lay-up, the lay-up site, lay-up period, re-commissioning time, class, insurance and flag requirements, is given as a means for the ship owner to make the best possible choices considering the unpleasant alternatives. Practical procedures for re-commissioning the ship are also stated. If the ship is laid up in compliance with the safety and preservation recommendations given in the Guideline, DNV

10 |

DNV BULK CARRIER UPDATE NO. 1 2009

may, following a successful verification, issue a Lay-up Declaration or a Lay-up Preservation Declaration respectively, stating compliance with the said recommendations. So far, the results of the round of consultations clearly indicate the relevancy of the topic. It is of particular interest to observe the industry’s concern about new technology where there is little experience available of the effect of laying up the vessel. This observation was further confirmed at DNV’s Lay-up seminar held in Hamburg on Wednesday 4 March, which was attended by more than 25 participants from the German shipping cluster. Even though most of the approximately 1,000 ships that are idle today are laid up ‘hot’ (i.e. with the machinery kept in operation for the sake of fast re-commissioning), feedback shows that technical challenges occur only a short time after lay-up. For example, for ships laid up in tropical waters, reports are coming in that vessels experience problems with moving after

CONTACT INFORMATION: www.dnv.com/lay-up HIM@dnv.com

a relatively short time due to the growth of flora and fauna along the hull, especially in the crucial areas around the rudder, propeller and bow thrusters. The reports are adding weight to arguments in favour of selecting lay-up sites for ‘cold’ lay-ups (i.e. long-term lay-ups with the machinery out of service) in the Norwegian fjords or similar sites with dry climate. Another argument for selecting lay-up sites in colder waters is the challenge of keeping electrical equipment on board vessels preserved in a safe and cost-efficient way. This subject has become much more relevant today with the large amount of complicated electrical equipment such as computers and automation systems that are on board modern ships. In order to handle the increasing amount of lay-up inquiries, DNV has established advisory services to assist owners in laying up their ships in a safe and cost-efficient way. These services range from advice on the lay-up site and lay-up plans to advice on lay-up, declarations, safe lay-up and supervision during the lay-up and re-commissioning. Examples of issues

frequently handled by our advisory units are lay-up with cargo and safe manning during lay-up. While DNV’s Lay-up Declarations have traditionally been issued with regard to safety and preservation, there is now an increased interest in environmental lay-up certificates. Examples of environmental challenges during lay-up are anti-pollution measures, the re-coating and brushing of antifouling, sewage treatment, etc. These and other environmental issues are under evaluation as an extension to the existing lay-up declarations or possibly as a separate environmental lay-up declaration from DNV. The feedback from the consultation process for the lay-up Guideline is handled by DNV’s Rules Secretariat. The relevant issues addressed above are subject to further investigation at the time of writing and the outcome will be incorporated in the final revision which is due for publication in April 2009.

DNV BULK CARRIER UPDATE NO. 1 2009 |

ENVIRONMENT

Environmentally sound ship recycling The bulk carrier industry has been seriously affected by the current recession in the world economy, and most operators are now facing a market where the capacity outweighs the demand. The effects of this can be seen not only by falling freight rates but also by the number of vessels sent for scrapping. This constitutes considerable resources in terms of scrap steel supply to the steel industry, but also represents an environmental challenge unless the scrapping or rather the recycling - is done in an environmentally sound manner. TEXT: KJETIL MARTINSEN

THE CHALLENGE The volume of tonnage sent for recycling in the first month of 2009 alone was more than 40% of the total recycled in the whole of 2006. The demolition activity in 2008 reached 12.5m dwt, which is nearly double the 2006 level of 6.4m dwt. In January this year, buyer activity had already reached 20% of 2008’s total scrapping volume, with 2.7m dwt purchased for demolition. It is also worth noting that whereas the average age of vessels sent for recycling in the 1990s was 26-27 years, this had risen to around 33 in 2007. All of this indicates that we can expect an even greater focus on demolition in the years to come. A vessel’s technical standard will inevitably deteriorate over time and the cost involved in maintaining the required standards will increase correspondingly until it is no longer economically viable to continue trading. Obsolete vessels represent considerable resources in terms of scrap steel supply to the steel industry. Hence, the scrap value is closely related to the steel weight. Sadly - an obsolete vessel also represents an environmental challenge which calls for serious handling of the issues involved.

12 |

DNV BULK CARRIER UPDATE NO. 1 2009

DNV’S RESPONSE TO THE CHALLENGE DNV has for nearly two decades been actively involved in the problems related to harmful substances on board vessels due for recycling. This is typically exemplified by our involvement with the Brent Spar platform in 1994 following the controversial decision to sink the platform in open water. Since then, DNV has completed more than 25 inventories on offshore installations. Following its efforts in the offshore sector, DNV has strongly advocated an equivalent implementation in the maritime industry through taking an active role in the development of the IMO Guideline in 2003 and further the new “International Convention for the Safe and Environmentally Sound Recycling of Ships” (IMO Convention). The IMO Convention stipulates requirements regarding the documentation of the potentially harmful substances contained in a vessel (Inventory of Hazardous Materials). This is an absolute prerequisite for the proper demolition of the vessel by the recycling yard. To date, close to 50 vessels have been thoroughly inspected and issued with an Inventory of Hazardous Materials by DNV.

In our experience, relevant documentation may be scarce and, when found, may often be misleading. For this reason, DNV stresses the importance of basing an Inventory of Hazardous Materials (Green Passport Inventory) for ships in operation on an on-board survey and not just a paper exercise. With the new IMO Convention, the rest of the industry will also have to follow this practice. INTERNATIONAL REGULATIONS Ship recycling is not currently regulated by any mandatory IMO convention. This will be the case only when the new IMO Convention is ratified. However, the Basel Convention generally prohibits its OECD member states from exporting harmful waste to non-OECD countries. Some administrations interpret this as also being a prohibition against selling vessels for demolition to countries without first removing the harmful substances. The new IMO Convention “International Convention for the Safe and Environmentally Sound Recycling of Ships” provides globally applicable ship recycling regulations for international shipping and for recycling activities. The Convention is

CONTACT INFORMATION: kjetil.martinsen@dnv.com

planned to be adopted in May 2009 followed by a ratification process. It will provide regulations for: I The design, construction, operation and preparation of ships so as to facilitate safe and environmentally sound recycling without compromising the safety and operational efficiency of ships I The operation of ship recycling facilities in a safe and environmentally sound manner I The establishment of an appropriate enforcement mechanism for ship recycling, incorporating certification and reporting requirements Hence, the new regulations will contain requirements applicable to ships, ship recycling facilities and administrations. Following the ratification of the new convention, the demand for an Inventory of Hazardous Materials (IHM) is expected

to grow significantly as shown in the figure below. DNV is currently qualifying personnel to provide continued support for this. THIRD-PARTY EVALUATION OF RECYCLING YARDS Demolition is a labour-intensive activity. Most of the recycling yards are located in the Indian subcontinent or China. Bangladesh is the leading recycling state in terms of tonnage (65%), followed by India (21%) and then China, Pakistan and Turkey, which account for the remaining 10-15%. For more than 10 years, ship breaking has been the subject of strong public debate, fuelled first by the images captured at Chittagong in Bangladesh by Brazilian photographer Sebastiao Salgado and published in 1993 in his book Workers , for which he was awarded the Pulitzer Prize in 1997. Such publicity has regularly brought

end-of-life ships, ship owners, ship breaking yards and various authorities into the public spotlight and led to questions regarding the legality of the present practices. Whereas the majority of ships are demolished when stranded on a beach, we see that, with the recent drop in the newbuilding market, newbuilding yards are showing an increased interest in adding recycling to their business. This opens up possibilities for a change in this market and it has been suggested that an internationally recognised classification, certification and audit system for recycling yards should be created. DNV is actively supporting this process and is currently participating in a project with several other involved parties to set up a regime for establishing mechanisms for third-party evaluation of recycling yards.

DNV BULK CARRIER UPDATE NO. 1 2009 |

RESEARCH AND DEVELOPMENT BY DNV

Optimized hull forms and propeller designs

Computational Fluid Dynamic (CFD) tools can be used in combination with model tests to minimize hull resistance, improve propeller efficiency and interaction with the hull, reduce the required power, improve fuel efficiency and ultimately mitigate the environmental impact from shipping. TEXT: OCTAVI SADO, LIV HOVEM

THE CHALLENGE The shipping industry is focusing more and more these days on mitigating the environmental impact of the world fleet, and bulk carriers are no exception. The Marine Environment Protection Committee (MPEC) of the International Maritime Organization (IMO) has been working around the clock to establish new regulations with respect to several marine pollution topics such as accidental spills, exhaust gases, waste delivery ashore, hazardous materials, ship recycling, ballast water, bilge water, anti-fouling paints and sewage. The significant increase in the world fleet over the past five years combined with the proximity of ship traffic in coastal areas and the general public awareness of global warming has resulted in emissions to air being the single most important item on shipping’s regulatory agenda. New technology New technologies with respect to cleaner energy sources are being

14 |

DNV BULK CARRIER UPDATE NO. 1 2009

developed very rapidly, but it will still take some time before kites, sails, solar panels and fuel cells become standardized equipment on ships. However, today’s designs can be further improved by using existing technology and proven analysis methods. One way to minimize the emissions to air of new ship designs is to optimize the hull shape, propeller, rudder and the interaction between all of them to improve the ship’s overall fuel efficiency DNV’S RESPONSE TO THE CHALLENGE The Ship Hydrodynamics and Noise and Vibrations sections in DNV Maritime Technical Consultancy are working together to develop new services in the field of ship resistance and propulsion in order to help shipyards, designers and owners improve the performance of new and existing bulk carriers. CFD tools can be used to numerically

simulate the ship’s behaviour in calm waters so as to predict the overall hull resistance. Wave-making patterns can be estimated relatively quickly using today’s computers, which allow for the screening of several conceptual hulls shapes and identification of key areas for improvement in existing designs. The performance trends and possible efficiency gains observed in the CFD analyses can be verified later on using model tests. Wave patterns and wetted surfaces are very specific to each ship type, so the focus areas for design improvement will also vary according to ship type. Bulk carriers are characterized by blunt hull shapes with high block coefficients to maximize the cargo area. They typically operate at medium speeds of around 14.5 knots. The combination of shape and speed results in the contribution from frictional resistance (drag effects from the wet-

RESEARCH AND DEVELOPMENT BY DNV

CONTACT INFORMATION: octavi.sado@dnv.com liv.hoem@dnv.com

ted surface) dominating over the wave making resistance. For some loading conditions, the viscous effects from the hull can be as much as 80% to 90% of the overall resistance. Typical potential areas for design improvements to bulk carriers to minimize the fuel consumption are: I Bow design and loading condition optimization I Minimized hull friction I Aft ship, propeller and rudder efficiency improvement Fuel efficiency improvements in the hull and propeller can range from 2-3% up to 8-10% but it should be noted that these may vary according to the bulk carrier design as they are directly linked to the maturity of the design and the ship’s actual trade. HULL FRICTIONAL RESISTANCE Several research projects are currently under way to produce solutions to minimize the hull frictional resistance in water, such as air lubrication systems and advanced coating systems. While a lot of promising results are coming out of these research areas when applied to some test case ships, the technology is not yet ready to be rolled

out to the whole bulk carrier fleet. Fore ship design When it comes to the fore ship design, the future operating profile should be considered. While it may not be possible to design all bulk carriers for a specific trade, certain aspects should be kept in mind: I Ensure an optimum bow design for different loading conditions – study the combined effect including a shallow draft ballast condition, rather than a single optimized design draft I Avoid unfavourable drafts and trim levels for long voyages AFT SHIP DESIGN AND PROPULSIVE EFFICIENCY The greatest potential for improvement in bulk carriers these days lies in the aft ship design and, in particular, in the propulsive efficiency. Because of the high block coefficients, bulk carriers will typically generate quite a non-homogenous wake at the propeller disk which could lead to unnecessary energy losses. Numerical simulations using CFD, including viscous effects, can accurately predict the wake distribution for each specific hull design, including the water particle velocities and rotations at the propeller intake. This can be used for:

Designing the aft hull shape and appendages (fins, vortex generators) to improve the wake pattern and increase the propeller efficiency Estimating the hull and propeller interaction effects to improve the propeller efficiency and optimize the propeller clearance Studying the propeller and rudder interaction to reduce energy losses and drag as well as the selection of energy recovering systems aft of the propeller

THE FUTURE – AND TODAY In the next few decades, rather radical changes to hull designs and new propulsive systems may be expected in order to achieve the ambitious emission reduction levels proposed for the year 2040 and beyond. But in the meantime something needs to be done about new designs using existing technology. Even today, numerical simulations using CFD tools make it possible to improve the fuel efficiency of both new and existing bulk carriers. This constitutes a viable and proven solution to optimize ship designs for fuel efficiency, and should be part of all future-oriented efforts to obtain a “green design” that reduces emissions to air.

DNV BULK CARRIER UPDATE NO. 1 2009 |

RESEARCH AND DEVELOPMENT BY DNV

Best Practice for CSR Bulk approval The large number of bulk carriers ordered to DNV class over the past few years, combined with the increased complexity of the hull approval work following the introduction of IACS Common Structural Rules (CSR), has resulted in a high work load at DNV hull approval centres. TEXT: HÅVARD HELLING, ÅKE KARLSSON

In response to the high work load, DNV has recruited many young and promising engineers, as well as more experienced engineers, in recent years. To ensure that these new engineers maintain the same high quality of work as our more experienced engineers, DNV has focussed on training and active onthe-job coaching. The latest effort in this respect is the introduction of a new tool called “CSR Bulk Best Practice”, from which DNV expects to gain both greater efficiency and a uniform quality of hull approval work. KNOWLEDGE SHARING The new “CSR Bulk Best Practice” tool provides practical support for knowledge sharing amongst DNV’s approval centres. This tool is accessed from the global DNV intranet and guides the approval engineers through the entire hull approval process by showing them how to deal with the various calculations as well as describing the verifications needed. The whole hull approval process is covered - from when the first drawing is received until the last drawing is stamped and approved. The Best Practice includes interpretations of unclear rule requirements, instructions on how to carry out the different calculations, hints on how to use the software efficiently, checklists for verification, etc. The Best Practice also includes links to the relevant calculation tools, either Nauticus Hull or other calculation tools. The work process is designed to match a logical hull approval sequence, starting with the establishment of design parameters and followed by a review of the drawing packages for each area of the hull structure. IACS KNOWLEDGE CENTRE DATABASE An important module in the DNV Best Practice tool is a

16 |

DNV BULK CARRIER UPDATE NO. 1 2009

database containing all the rule interpretations from the IACS Knowledge Centre. The Knowledge Centre contains more than 500 questions about the interpretation of CSR Bulk Rules. These questions originate from both the industry and the different class societies, and are answered by an IACS rule maintenance group. In the Best Practice tool, this huge amount of information is organised in a user-friendly and logical structure. This makes it much easier for each approval engineer to be up-to-date on the latest interpretations and rule changes. The Best Practice for Bulk Carriers is the first in a series. The next one will be for CSR Tank, and more ship types are likely to follow. At present, the tool is for use internally in DNV only. At a later stage, it is planned to be used as a basis for external courses as well, so that DNV’s Best Practice tool can be shared with yards and designers. JOINT DEVELOPMENT – COMMON UNDERSTANDING The development of the Best Practice tool has been a joint effort by all of DNV’s approval centres. Through the tool, all DNV approval engineers can share their guidance and advice. In order to maintain its relevance, frequent updates will be issued. The fact that every DNV approval centre is involved in the development and maintenance of the Best Practice tool ensures a common understanding of the CSR Bulk Rules. In addition, Experience Exchange Seminars for all DNV approval engineers are organised at regular intervals. Through these measures, DNV’s customers can rest assured that approval of their CSR bulk carriers will be a consistent process irrespective of the approval centre and approval engineer involved.

RESEARCH AND DEVELOPMENT BY DNV

Figure 1: Top-level work process overview in DNV's new "CSR Best Practice" tool Figure 2: A more detailed description of selected work processes

CONTACT INFORMATION:

Figure 3: Advice on how/what to assess, which loads to apply, Rule references and checklists for verification and quality assurance Figure 4: Advice on how to apply the Nauticus Hull FE tool

ake.karlsson.dnv.com

DNV BULK CARRIER UPDATE NO. 1 2009 |

RESEARCH AND DEVELOPMENT BY DNV

New and improved Nauticus Hull for CSR Bulk With the release of the new version of Nauticus Hull, DNV hull approval engineers, as well as designers and yard engineers, can now enjoy the most efficient design and verification tool for CSR Bulk TEXT: THORBJØRN LINDMARK

›› “All of these improvements add up to major time saving and a better design process for the users,” says Torbjørn Lindemark Nauticus Product Manager at DNV Software.

The support for Finite Element Analysis (FEA) in particular has been radically improved with an enhanced version of GeniE and a new automatic code check. The overall goal of this Nauticus Hull upgrade has been to shorten the design loop, making the design process faster and with a higher degree of transparency and quality. With this new version of Nauticus Hull for CSR Bulk, DNV Software hopes to strengthen its reputation as a pioneering leader in the market for strength assessment of marine structures in general and ships in particular. The latest round of improvements and new features of Nauticus Hull include: I An improved graphical representation of the entire vessel with compartments and cross sections I A completely new, efficient and flexible compartment modeller I An improved and highly flexible load definition module integrated with the compartment modeller I A new cross-section analysis and post-processing module for handling multiple Section Scantling analyses I An automatic code check for the yield and buckling of plated structures in FEA module GeniE I The import of relative deflections from FEA results

18 |

DNV BULK CARRIER UPDATE NO. 1 2009

into fatigue strength calculations of longitudinals at transverse bulkheads. DESIGN LOOP TIGHTENS Key customers worldwide have given feedback and suggestions throughout the software development process. “Based on the feedback from many existing users of Nauticus Hull, we have had a strong focus in this new release on making it simpler to make design iterations,” says Torbjørn Lindemark, Nauticus Product Manager at DNV Software. “This, in turn, will give a shorter design lead time.” Nauticus Hull is the only programme on the market to offer concept modelling, which enables designers to build in more design logic into a core model of the ship. This is used later for many different analyses in addition to post-processing and rule checks. One benefit of this approach is that only one model needs to be updated to effect changes in all subsequent analyses, processing and rule checks for the ship design. Capacity models needed to perform yield or buckling checks can be generated for the whole vessel or for selected areas. “It’s a huge timesaver,” says Lindemark. The new reporting and documentation functions

RESEARCH AND DEVELOPMENT BY DNV

CONTACT INFORMATION: thorbjĂ¸rn.lindmark@dnv.com

Figure: Graphical representation of the compartments and status of cross sections being analysed

in the FEA module GeniE are in a class of their own, and are expected to greatly improve the transparency of the design as well as ease verification and thereby improve quality. The new automatic code check for the yield and buckling of plated structures strengthens GeniEâ&#x20AC;&#x2122;s position as the preferred structural analysis tool for bulk carrier design. Features include checks against allowable stress levels and buckling according to the Common Structural Rules for bulk carriers. Along with the plate code check, the report generator has also been extended to include standard templates tailored according to the CSR Bulk requirements. FASTER In Nauticus Hull, cross sections and compartments are visualised in a graphical model of the vessel. In addition to providing immediate feedback on data input, the graphical presentation enables a quick overview of the current status of the modelling and rule check analysis. The new compartment modeller is designed to facilitate efficient modelling and the entry of compartment data and loads. Section Scantlings is used as a basis for defining cross sections and transverse bulkheads. It provides a powerful tool for the fast genera-

tion of compartments in the cargo area. In GeniE, it is now possible to run code checking of both plated and frame type structures. The buckling capacity model is automatically generated with net scantlings and panel geometry in agreement with the detailed rule requirements mandated by CSR Bulk, including complex non-rectangular plate panels. The code check results can be viewed graphically or in table format. Detailed results for each panel with intermediate results are available. Panel settings can be altered, and subsequent redesigns are easily done. Several panel settings can be altered for each run, such as the settings for the Correction Factor, Panel Net Thickness, Panel Length/Breadth and the Rotation boundary for Panel Buckling. The GeniE report generator comes with templates that easily generate reports for viewing in text format, HTML format or spreadsheets or formatted reports. Customisable filters limit the amount of data reported. Report settings can be saved, making it easy to recreate the same report in another code checking run.

DNV BULK CARRIER UPDATE NO. 1 2009 |

RESEARCH AND DEVELOPMENT BY DNV

Requirement Explorer â&#x201E;˘ IMO instruments are constantly being adopted and amended, and DNV has accepted the challenge to develop an Internet tool showing new and amended IMO requirements for a specific ship. TEXT: SVERRE J. DAHL

By entering the name of a DNV-classed vessel or the DNV identification number into the tool, a list of requirements valid for the specific vessel is provided. It is also possible to utilise the database of requirements by searching for Conventions or Codes, different vessel types, the keel laying date or gross tonnage, using a free text search or searching for the new requirementâ&#x20AC;&#x2122;s entry into force date. Requirement Explorer will be updated shortly after each IMO Maritime Safety Committee (MSC) and Marine Environment Protection Committee (MEPC) meeting. In this way, it should be possible to keep up to date regarding what is on the regulatory agenda. The search results can be sorted by clicking on the

20 |

DNV BULK CARRIER UPDATE NO. 1 2009

headers of each row. A printer-friendly table can be created in order to print out the search result. The table can be copied into a spreadsheet like MS Excel for editing purposes. A complete list of requirements is accessible as a PDF document in the tool. The ship-specific list is available to members of DNV Exchange - in the status page for vessels. DNV Exchange is a service for DNV builders and suppliers as well as managers, owners and flag authorities working with DNV. See www.exchange.dnv.com to log on or to register for the service.

RULES AN REGULATIONS

Rules and Regulations update The Maritime Safety Committee (MSC) held its 85th session from 26 November to 5 December 2008 at which it made several important decisions. TEXT: SVERRE J. DAHL

INTERNATIONAL CODE ON INTACT STABILITY 2008 (2008 IS CODE) The Code was adopted by res. MSC.267(85) and will be implemented by amendments to SOLAS and the Load Line Convention. It enters into force on 1 July 2010. The practical consequences will be limited as most ships have been designed according to recommendations containing the same requirements. Explanatory Notes to the Code were also approved and issued as MSC.1/Circ.1281. INTERNATIONAL MARITIME SOLID BULK CARGOES (IMSBC) CODE The BC Code, the IMO’s Code of Safe Practice for Solid Bulk Cargoes, will be replaced by the mandatory IMSBC Code adopted by res. MSC.268(85). The IMSBC Code will be implemented by amendments to SOLAS and enter into force on 1 January 2011 (res. MSC.269(85) Annex 2). The provisions of the IMSBC Code may be applied on a voluntary basis by national authorities as from 1 January 2009, pending the entry into force on 1 January 2011. For owners of vessels with DNV class there will hardly be any noticeable changes resulting from the new Code. This is due to the fact that DNV has already treated the BC Code as being mandatory for some years. However, the wording will be changed with respect to the issuance of Statements of Compliance

(SOCs) and Documents of Compliance (DOCs). More importantly; ships may expect more frequent Port State Controls of this subject due to the mandatory nature of the Code. LSA CODE The revised LSA Code, adopted by res. MSC.272(85), will, as from 1 July 2010, apply 82.5 kg as the average weight of persons for the prototype testing of lifeboats intended for cargo ships, freefall lifeboats and rescue boats. When adopting the amendment to the LSA Code, the MSC agreed that the amendment should only apply to equipment installed on new ships. However, regarding the installation of such equipment on existing ships, the MSC considered that the matter was adequately addressed by the principle in SOLAS regulation III/1.4.2. ISM CODE The revised ISM Code, adopted by res. MSC.273(85), will from 1 July 2010 stipulate stronger and mandatory requirements for a company to identify and assess risks and on this basis establish appropriate plans and instructions. The company will from the same date also be required to perform internal audits at least annually (Section 12.1). LRIT-RELATED MATTERS The MSC agreed, in principle, to retain the date of 1 January 2009 for the entry into force of

the new LRIT provisions. The report of the meeting ‘urges’ Contracting Governments to provide their Recognized Organizations with appropriate instructions and guidance in relation to the implementation of the new LRIT provisions as soon as possible. SOLAS DEFINITION OF THE TERM BULK CARRIER As instructed by the Maritime Safety Committee (MSC) at its 84th session, an Intersessional Working Group met in November 2008 to develop an interpretation of the SOLAS definition of the term “bulk carrier”. The report of the Working Group (MSC 85/7/3) was approved by the MSC. The MSC also adopted the resolution MSC.277(85) on Clarification of the term “bulk carrier” and Guidance for application of regulations in SOLAS to ships which occasionally carry dry cargoes in bulk and are not determined as bulk carriers in accordance with regulation XII/1.1 and chapter II-1 and instructed the FSI Sub Committee to include the above resolution in its guidance for PSC officers. In particular, it should be noted that the Guidance that has been developed covers new ships only, and the MSC resolution is non-mandatory. Nevertheless governments are urged to apply the operational measures (paragraph 1.1 of the Guidance) to ships with keel laying on or after 1 January 2009 and the structural

DNV BULK CARRIER UPDATE NO. 1 2009 |

RULES AN REGULATIONS

requirements (paragraph 1.2 of the Guidance) to ships with keel laying on or after 1 July 2010. Some MSC - were concerned that the resolution is non-mandatory. Mandatory uniform application and entry-into-force can only be established by means of an amendment to the SOLAS Convention. The member governments were invited to submit relevant proposals for a new work programme item for consideration by the Committee at the next MSC meeting in May 2009. GUIDANCE Regarding the exclusion of specific types of cargoes carried on dedicated ship types for the purpose of determining ship type and thus avoiding the inappropriate application of provisions in SOLAS, the risks connected with the transport, loading and unloading of such cargoes are taken into account. The excluded cargoes carried in bulk are 1. woodchips and 2. cement, fly ash and sugar. (See paragraph 1.5 of the Guidance) Ships which are not defined as bulk carriers are permitted to occasionally carry dry cargo in bulk provided: (see paragraph 1.6 of the Guidance) 1. they are of double-side skin construction 2. the freeboard assigned is type B without reduced freeboard, and 3. they comply with the following SOLAS regulations as applicable to bulk carriers: I Regulation II-1/3-2.2 - Protective coating

22 |

DNV BULK CARRIER UPDATE NO. 1 2009

of dedicated seawater ballast tanks and double-side skin spaces I Regulation XII/6.2, 6.3 and 6.4 - Structural and other requirements for bulk carriers I Regulation XII/10 - Solid bulk cargo density declaration I Regulation XII/11 - Loading instrument I Regulation XII/12 - Hold, ballast and dry space water ingress alarms I Regulation XII/13 - Availability of pumping systems Smaller ships of less than 100m in length and of single-side skin construction are permitted to occasionally carry dry cargoes in bulk provided: (see paragraph 1.7 of the Guidance) 1. the freeboard assigned is type B without reduced freeboard, and 2. they comply with the following SOLAS regulations applicable to bulk carriers: I Regulation XII/11 - Loading instruments I Regulation XII/12 - Hold, ballast and dry space water ingress alarms I Regulation XII/13 - Availability of pumping systems The Guidance states that flag states should issue ships falling under the provisions of paragraphs 1.5, 1.6 or 1.7 with a statement attesting to the application of this resolution. For additional information: sverre.j.dahl@dnv.com

The Marine Environmental Protection Committee (MEPC) held its 58th session from 6 to 10 October 2008 and made several important decisions HARMFUL AQUATIC ORGANISMS IN BALLAST WATER The MEPC adopted Guidelines for ballast water sampling and Revised guidelines for approval of ballast water management systems, intended to assist in the effective implementation of the International Convention for the Control and Management of Ships' Ballast Water and Sediments (BWM Convention). One final set of guidelines, on port state controls, is being developed by the IMO's Sub Committee on Flag State Implementation and is to be adopted before the Convention's entry into force. RECYCLING OF SHIPS The draft text of the International Convention for the Safe and Environmentally Sound Recycling of Ships was further developed. However, several issues are still not finalised and will be left for the diplomatic conference in Hong Kong in May 2009 to decide. PREVENTION OF AIR POLLUTION FROM SHIPS The discussions on greenhouse gas (GHG) emissions continued relating to issues and market based instruments (MBI), Energy Efficiency Design and Operational indexes. However, no conclusions were drawn and discussions on

application, regulation and implementation issues were deferred to MEPC 59 (July 2009). MARPOL ANNEX VI AND NOX TECHNICAL CODE 2008 The MEPC unanimously adopted amendments to MARPOL Annex VI and the NOx Technical Code regulations to further reduce harmful emissions from ships. These will enter into force on 1 July 2010. GLOBAL SOX REDUCTIONS The main changes to MARPOL Annex VI are the gradual reduction in the sulphur oxide (SOx) content in fuel oil to facilitate reduced SOx emissions from ships by lowering the global sulphur content limit from the current 4.50% to: - 3.50% effective from 1 January 2012; - 0.50% effective from 1 January 2020 (subject to a feasibility review to be completed no later than 2018). It was also agreed that gas fuels such as LNG, CNG and LPG will be exempted from the requirements related to MARPOL samples and Bunker Delivery Notes in Regulation 18. However the sulphur content of gas fuels delivered to a ship specifically for combustion purposes on board that ship is to be documented by the supplier.

Control Areas (SECAs) will be gradually reduced from the current 1.50% limit to: - 1.00% effective from 1 July 2010 - 0.10% effective from 1 January 2015. The revised Annex VI will allow for an Emission Control Area to be designated for SOx and particulate matter, or NOx, or for all three types of emissions from ships. NOX EMISSIONS FROM MARINE ENGINES More stringent requirements for nitrogen oxide (NOx) emissions from marine engines were also agreed in order to facilitate reduced NOx emissions from ships, with the most stringent controls on so-called "Tier III" engines, i.e. those installed on ships constructed on or after 1 January 2016 and operating in Emission Control Areas. AMENDMENTS TO NOX TECHNICAL CODE (NOX TECHNICAL CODE 2008) The amended Code includes a new chapter based on the agreed approach for the NOx regulation of existing (pre-2000) engines established in MARPOL Annex VI, and provisions for direct measurement and monitoring methods, a certification procedure for existing engines, and test cycles to be applied to Tier II and Tier III engines. For additional information: Eirik.Nyhus@dnv.com

SULPHUR EMISSION CONTROL AREAS The limits applicable in Sulphur Emission

DNV BULK CARRIER UPDATE NO. 1 2009 |

IN THE SPOTLIGHT

Inspired by

the sea Peter Hamer, Middle East area manager for DNV, has been completely absorbed in seafaring life from his boyhood. Fairplay’s Jim Wilson meets him. TEXT AND PHOTO: JIM WILSON

SEAFARING ABILITY Peter Hamer had spent about 30 days at sea on his first trip when he nearly died. “They sent someone around to my mum’s house at night to say ‘Sorry Mrs Hamer, your son’s lying unconcious in a hold somewhere off Nigeria’...” He was then 16 years old and had fallen into a hold. It was not the most fortuitous way to begin a life at sea. But for Hamer, now the newly-appointed Middle East area manager for class society DNV, there was only one thing to do. “I went back to sea. What a great life it was,” he enthuses. “There were three weeks in Japan, six weeks in Australia. On the West Africa run, the captain ordered us to all hire a truck and head out into the bush! You’d never do that now,” he laughs. Hamer was just 13 when he was captivated by the beauty of mountainous Snowdonia in Wales and the training ship HMS Conway. “I was totally inspired. With the Menai Strait, the backdrop of gorgeous Snowdonia and then, being a boy, playing with boats...” He tails off in his recollection. “It was sometimes quite a harsh environment. Boys would be teaching boys and we would be rowing down the river in the ice,” he adds. When he was little more than a boy, Hamer received an O-level (then a British

24 |

DNV BULK CARRIER UPDATE NO. 1 2009

certification of high school education) in navigation and seamanship, and set out for sea. Hamer’s early seafaring time was a fantastic learning experience. Apart from being a ‘world citizen’ and less of a ‘Brit abroad’ owing to extensive travel, he developed a solid seafaring ability. “You were proud of your apprenticeship. You had a good base of knowledge. You were able to do the right thing,” he says. THE REAL SEAFARER LIFE Then he learned what it really means to be a seafarer. In 1983, he’d just taken his master’s ticket when he was asked to take a 100 year-old Baltic Trader through the Bay of Biscay, off the west coast of France. It was in winter, rough and open to the elements. “It was a life changing experience. It was one of those moments. You felt like you could have been working 400 years ago. It was very testing. It made me realise that, after 10 years at sea, I’d not been at sea. It was a stimulating experience and it opened my mind,” Hamer says. He began working for Outward Bound, an outdoor education company that aims to inspire personal growth through challenging expeditions. “It was a huge adventure,” Hamer exclaims. He was sailing a square rigger and helping every kind of

person from every corner of society, he was based in a beautiful village overlooking the city and sailing all over the Far East. “I loved my time there. It was a very special time,” he says. But it was intense. “The idea was to give people an experience they’d never forget and I was doing it month after month. I was drained,” he says. An encounter with a surveyor made Hamer realise how much knowledge he had. Desirous of a new direction, he gave up everything and enrolled as a mature student in Newcastle, UK, to study naval architecture. “All of the mature students sat at the front like eager puppies,” he laughs. DNV A small-seeming detail changed Hamer’s life following graduation in 1991. DNV offered him expenses to attend their job interview and the other employers didn’t. For a just-married man with a newborn son, money was important. So he met DNV’s Ole Møller. “I thought ‘here’s someone I can learn from’. So I spent eight years in Liverpool, doing everything – engines, certification, propellers, tankers, even wind farms. I got tremendous exposure to all sides of the business,” Hamer says. One of his favourite jobs from his Liverpool days concerned the

NAME: PETER HAMER CURRENT POSITION: DNV area manager Middle East. CAREER: Naval architect and class surveyor. Began a maritime career at age 13. Spent 15 years at sea. Extensive experience of sailing ships. Speaks Chinese.

technical evaluation of a mizzen-mast put into the concrete at Priory Dock. “When I went to see the mast, it was from the HMS Conway, which I’d climbed as a boy. It was brilliant. I loved that day,” he smiles. Time rolled on and, in 1998, he got a call. A return to Africa beckoned. Hamer became a station manager in Durban with a small team and his responsibilities grew until he was country manager for sub-Saharan Africa. “We opened up Ghana and Nigeria. We helped create a pocket of offshore excellence there,” he says. It was success after success and, by 2006, DNV wanted to rotate Hamer to the Middle East. He’d never worked in the region before, so he decided to give it a shot and ran a one-man station in Qatar for a time. Now, as an area manager for the Middle East, Hamer hopes to expand the DNV business using the overall framework and value through innovation and change. And that’s appropriate for a man whose life, to date, is perhaps best summarised in the Goethe quote: “Plunge boldly into the thick of life, seize it where you will, for it is always interesting.” This article has been reproduced with kind permission from Fairplay.

DNV BULK CARRIER UPDATE NO. 1 2009 |

HOT NEWS

A semi-open bulk carrier from Oshima Shipyard (the vessel is not linked to the article). Customer Service Manager for Oshima Shipyard, Yo Hirokawa ››

DNV to class bulk carriers in Japan In January, classification contracts for eight semi-open bulk carriers were concluded to DNV class at Oshima Shipyard. TEXT: YO HIROKAWA

Says the head of DNV’s Maritime Service Centre in Kobe, Jan Kvålsvold: “These contracts have been secured, despite the turbulent economic times, due to patient and efficient teamwork between DNV units world wide and a strong relationship with Oshima Shipyard.” Two of the vessels will have a European owner while the other six will be chartered to the European owner but have smaller, local Japanese owners, so-called tonnage suppliers. Says the Customer Service Manager for Oshima Shipyard, Yo Hirokawa: “Success in the local tonnage provider market has for years been a major challenge to DNV. These vessels therefore represent an important milestone for DNV. The country manager for DNV Maritime Japan, Johan Tutturen, took up his new position in January this year and is of course very pleased that 2009 has started off so strongly. Says Tutturen: “These new contracts to DNV class are very welcome and we are eager to use this project to demonstrate DNV’s commitment to supporting the Japanese shipbuilding industry even when the market is facing rough weather.”

26 |

DNV BULK CARRIER UPDATE NO. 1 2009

DNV is personal, characteristic and friendly.

DNV BULK CARRIER UPDATE NO. 1 2009 |

MARKET OUTLOOK

SIGNS OF LIFE amidst gloomier prospects Dry bulk freight rates have recovered significantly from the shocking bottom levels seen in early December. The Baltic Dry Index in early March was more than three times higher than three months before – and still 82% below the extreme peak seen last spring. Second-hand values were quick to adjust to new market realities and interesting opportunities are seemingly again available for vessel purchase against mid-term time charter levels. TEXT: JARLE HAMMER, HM STRATEGIES

There are, however, reasons to question the sustainability of the recent dry bulk market recovery. The newbuilding market has dried up completely, whereas formal lay-up is still very limited and scrapping has not really taken off. Many charter parties fixed before the market collapse have been cancelled or renegotiated and resettled at much lower levels. ORDERBOOKS Scheduled dry bulk vessel deliveries of 74 million dwt through the full year 2009 correspond to nearly 18% of the fleet of almost 419 mdwt at the beginning of this year and scheduled 2010 deliveries of 101 mdwt correspond to 24%. In comparison, reported scrap sales totalled only 1.2 mdwt in the first two months of the year. Slippages have increased strongly and delayed deliveries are expected to be significant, but cancellations are not expected to have much impact before the latter part of 2010. Hence, the fleet growth will accelerate considerably in the short to medium term. A closer look at size ranges shows very large differences with regard to order book shares.

28 |

DNV BULK CARRIER UPDATE NO. 1 2009

Thus, at the beginning of March, the order book for 10-50,000 dwt corresponded to 20% of the existing fleet (with 5% for 10-25,000dwt, 40% for 25-40,000dwt, and just 3% for 40-50,000 dwt). Whereas very few orders have recently been placed for the smallest size range of bulk carriers – and for that matter also for the smallest size range of container feeder vessels, it is remarkable to observe the continued interest in multipurpose vessels, with an order book now corresponding to 33% of the existing fleet. Two years ago, only 2% of that fleet was younger than 5 years. It is interesting to observe that the order book for plain bulk carriers of 10-25,000 dwt amounted to only 1.0 mdwt, whereas the order book for multipurpose vessels totalled 8.5 mdwt. Rates for multipurpose vessels seem to be clearly more robust than for container vessels and small handysize bulk carriers in the present market downturn. Going up in sizes, it appears that the order book share for Supramax of 5060,000 dwt was as high as 118% of the existing fleet, whereas the share for Panamax/Kamsarmax of 60-100,000 dwt was

47%. Among larger vessels, small Capesize of 100-150,000 dwt had an order book share of 50%, whereas large Capesize of 150-200,000 dwt saw a share of 92% and the order book share for Very Large Bulk Carriers over 200,000 dwt was as high as 146%. For all vessels above 100,000 dwt, the order book share stood at 97% of the existing fleet for such vessels. ECONOMIC FORECASTS Against this unpleasant fleet scenario, economic forecasts have in the past few months been revised continuously downwards. Apart from China, few countries are now experiencing growth in their industrial production. China’s industrial production growth has fallen back from a 15% level not too long ago to below 6%. The latest reported industrial production figures in important countries show the following declines on a yearly basis: Japan -31%, S.Korea -26%, Euro area -12%, USA -10%, Brazil -15%, and Russia -16%. The two dominant dry bulk importers, China and Japan, saw their export values in January decrease by 17% and 45%, respectively, compared with one year before.

ECONOMIC GROWTH AND EXPECTATIONS Economist 05.03

% change

IP12m Infl.12m GDP 07

GDP 08

GDP 09

USA

-10.0

0.0

2.2

-2.2

-1.5

EURO AREA

-12.0

1.2

2.6

-2.4

0.7

JAPAN

-30.8

0.0

2.1

-5.3

0.5

S.KOREA

-25.6

3.7

4.1

-5.9

0.3

CHINA

5.7

1.0

11.5

6.0

7.0

INDIA

-2.0

10.4

7.9

5.0

6.6

RUSSIA

-16.0

12.0

7.2

-2.0

3.0

BRAZIL

-14.5

5.8

4.7

-0.4

3.2

THAILAND

-21.3

-0.1

4.5

-1.8

2.2

INDONESIA

-2.8

6.9

6.3

1.9

2.2

S. AFRICA

-7.0

8.1

5.0

-0.8

3.1

DNV BULK CARRIER UPDATE NO. 1 2009 |

MARKET OUTLOOK

FREIGHT RATES The recent market upturn drove Capesize spot rates up from a bottom level of USD 2,300 per day to close to USD 40,000, before they dropped back to USD 28,400. At the time of writing, Imarex Futures Capesize quotations stood at around USD 24,000 for Calendar 2010 and USD 23,000 for Calendar 2011. Time charter rates for modern Capesize tonnage have recently been set at USD 28,500 for one year and around USD 25,000 for three years. In comparison, Fearnleys’ latest Monthly Report has calculated the breakeven rate for a five-year old Capesize to be USD 20,900. The present market seems to be fairly well balanced with regard to ship values and period rates. For Panamax, the spot level was USD 16,800, against a oneyear time charter rate of USD 15,500, versus a break-even rate of USD 14,400 for five-year old ships. For Supramax, the present spot level of USD 17,300 was somewhat higher than for Panamax. Supramax time charter rates stood at USD 13,000 for both one year and three years, versus a breakeven rate of USD 12,900. IMPROVEMENT IN CAPESIZE The recent surge in Capesize rates is difficult to explain. One possible reason for the recent strong improvement in Capesize rates was at first sight a significant recovery in China’s steel production after the strong cuts last autumn. China’s pig iron production fell from a monthly high of 43.4 million tonnes in June last year to 33.5 mt in November, before bouncing back to 40.6 mt in January this year, which was 6.5% higher than one year before. A closer look at the Chinese steel industry shows, however, that iron ore imports actually decreased in January, remaining at the

30 |

DNV BULK CARRIER UPDATE NO. 1 2009

low average level of the 4th quarter and were down 12% compared to one year before. Last year, China’s crude steel production rose by a modest 1.7% to 502 million tonnes and the country’s pig iron production was down 0.1% at 471 mt. At the same time, iron ore imports were up 16.0%, or 61 mt, to 444 mt and domestic production of much poorer iron ore was up 15.6%, or 117 mt, to 824 mt. Based on these data, it can be calculated that a stockbuild of almost 70 mt of crude steel equivalent took place in China last year. This is likely to dampen tonnage demand for quite some time. On the other hand, a large number of Capesize vessels cannot be presently be discharged, and therefore act as floating storage space of iron ore. Still, there is also a large number of vessels that are now freed up of congestion in other areas, increasing the pool of potential tonnage seeking cargo. MARKET OUTLOOK The recent market upturn is probably partly the result of market dynamics following large tonnage volumes in semi-layup and mobilization premiums together with some disturbance from the futures market. At present it seems hard to find any strong fundamental reason for significant rate increases for large bulk carriers. Figures for the full year 2008 show that world crude steel production decreased by 1.5% and global pig iron production was down 2.0%. In January 2009, total world pig iron production was down 16.3%, with Japan down 27.1% and the EU down by as much as 47.5%. Thus, China’s share of world pig iron production rose to a staggering 61%, up from 48% in October. An inflation adjusted survey of bulk carrier time charter rates since 1970 shows a

market cycle of 3 years’ duration in the early 1970’s, followed by a cycle of 7 years up to 1980. This was again followed by a cycle of about 9 years up to 1989, before a rather dull and softening period of 13 years up to 2002. After that, there was a fantastic upturn, lasting well into 2008, before the most dramatic collapse ever seen in the dry bulk spot market which also had a strong impact on the time charter rates. Last year, Capesize spot rates varied between the peak at USD 234,000 per day down to just USD 2,300 per day. Capesize time charter rates for 1 year varied between USD 170,000 and USD 18,000. With the general rate recovery seen in the first part of 2009, we can observe that present time charter rates are not particularly bad in a historical context. LONG WAY TO GO Looking at supply and demand fundamentals, it seems clear that the road back to a a well balanced and healthy dry bulk market has to be a rather long one, and there is at present little reason to rush into vessel purchases or to charter vessels on long contracts. On the positive side, raw material and energy prices have fallen significantly. Inflation has almost evaporated in most countries. Interest rates are low, although loans are so far hard to get despite unprecedented stimulation packages. Never have we needed top level international economic cooperation more and a return to greater protectionism would be bad for the growth and prosperity of international trade and shipping.

DNV BULK CARRIER UPDATE NO. 1 2009 |

Shipping is cyclical by nature â&#x20AC;&#x201C; DNV is your partner at all times Itâ&#x20AC;&#x2122;s about partnership. The global economy is behaving like an unpredictable roller coaster, moving faster and in more directions than anybody could anticipate. Many ship owners, ship operators, yards, ship finance institutions, and people are suffering through financial losses and business instability. As your partner we will support and assist you to meet your requirements.

DNV serving the Maritime Industry during any cycle www.dnv.com