SHIPPING

SHIPPING Shipowners' perspective Laying up a ship is not a simple matter By Captain Stephen Brown Owner and Director, West Pacific Marine

As the world continues to wrestle with the challenge of COVID19, the immediate, medium, and even long-term implications for the maritime sector appear to be gaining recognition. The decision to lay-up a vessel is usually financial, sometimes operational, but on a personal note and for any seafarer, the experience is always emotional. Accustomed to running hard 24/7/365, when everything comes to a grinding halt and the vessel is left with a skeleton crew the question begs, where from here? Facts dictate the business decision to layup a vessel but the personal uncertainty of those impacted can often be overlooked. It is rarely so simple as switching to another vessel when

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Providing operational excellence and world-class customer service. The estimate is that Q2 of 2020 has seen 250-300 cancelled sailings, primarily on the Asia-Europe and transPacific trades, with those ships still in employment often sailing at below economically optimum capacity.

the whole future of a company, or even an entire sector of the marine industry is in a crisis of the magnitude of today.

On the container front, at the time of writing, around 15 per cent of container capacity is idled which translates to something approaching 3.5m TEU. The estimate is that Q2 of 2020 has seen 250- 300 cancelled sailings, primarily on the Asia-Europe and trans-Pacific trades, with those ships still in employment often sailing at below economically optimum capacity. The consequential impacts through global supply chains are enormous. Likewise, for car carriers, given the global collapse in demand for new vehicles, the fleet is significantly under-employed, resulting in layups and/or early scrapping.

When it comes to ports, the impact of falling volumes has been equally dramatic. Reduced revenues equate to shrinking operating budgets, deferment of capital expenditures and pressure to reduce overheads. There may also be pressure from terminal lease holders to reduce or defer payments, and of course, reduced working hours in the longshore community can quickly impact the economies of local communities.

For the cruise industry, these past months have been punctuated by one blow after another. Subject to exclusion orders from several countries, uncertain return to service dates, securing of suitable lay-up locations, and the nightmare of arranging crew repatriations have, in combination, plunged the sector into an unprecedented crisis from which some may not emerge intact. To their credit, having explored every option to resolve the problem of repatriating crews, compounded by limited flight availability, the cruise lines have themselves switched crews between ships and taken them home by sea, or at least to a close port. As an example of this, there are around 25 large cruise ships anchored in Manila Bay, many having repatriated their Filipino crews but who are then subject to a long wait for COVID-19 testing followed by a period of mandatory isolation before being allowed to complete the trip home. Similar repatriation exercises have taken place elsewhere in Asia, Europe, South America and the Caribbean. The importance of this unprecedented move by the cruise lines is underlined by increasing reports of stress among crews which, sadly, has resulted in a number of suicides.

Despite the best efforts of shipowners across all sectors of the industry, it is estimated by the International Labour Organization (ILO) that some 150- 200,000 serving seafarers are currently at the end of their contracts with many being forced to work well beyond their expiration date. Seeking to address the severity of the situation, the International Maritime Organization (IMO) has issued a 12-step plan to assist governments to enact coordinated procedures for the safe movement of seafarers. The aim is to provide its 174 member states with a roadmap to free seafarers from their Covid-19 lockdown and allow appropriate exemptions for vessels to change crews. The plan is supported by a coalition of seafarers’ unions, shipping industry associations

...UNCTAD has issued a joint appeal with the IMO to reactivation are done according to is whether to opt for a hot- or cold laytheir recommendations. Preserving remind governments of the world’s reliance on maritime guest accommodation areas on cruise vessels is also important. trade and the importance of keeping ships moving and Gard also reminds us that it is not ports open... during the lay-up itself that incidents leading to insurance claims usually and the insurance sector. The protocols weeks but whatever decisions are taken reactivation. For example, prior to spell out the responsibility of governit is important to work hand-in-glove reactivation, Class must perform any ments, shipowners, transport providers with the ship’s Classification Society to outstanding surveys together with an and the seafarers themselves. Beyond ensure that maintenance and insurance audit of the entire machinery installathis, the United Nations Conference on are not compromised. It is an express tion. Depending on the duration of the Trade and Development (UNCTAD) has condition for P&I and hull and machinlay-up, a sea trial must be performed issued a joint appeal with the IMO to ery insurances that the vessel maintains as well as a full Safety Management remind governments of the world’s reliits Classification, either “in operation” System audit. To encourage comance on maritime trade and the importor “laid-up” status. A suspension of pliance, underwriters may include ance of keeping ships moving, ports open Class for any reason will automaticspecific reactivation clauses as part of and, as a direct consequence, the need ally lead to a loss of insurance, and the the insurance cover during the lay-up for all countries to lend support for crew insurance will not be reinstated without period. changes. written confirmation from Class. All that said, extended periods of

Despite this, it has been sad to witThat said, owners will generally quallay-up also run the risk of hull bioness the lack of cooperation between ify for a rebate on insurance premiums fouling with consequential loss of jurisdictions, but there are exceptions. for the period that a ship is out of service speed and increased bunker consumpBoth Singapore and Hong Kong have but in addition to prevention of and protion. Here, Skuld offers detailed advice recently relaxed some restrictions and tection from fire and flooding, leading and clarification as to what constitutes having provided seafarers with “key marine underwriter Gard provides guidan extended lay-up in the form of the worker” designation from the outset of ance on three main requirements which BIMCO standard Hull Fouling Clause, COVID-19, the Canadian government vessel owners must comply with, namely: first developed in 2013 and revised in has now gone further with the imple1.The lay-up site must be described 2019. The clause refers to allowance for mentation of a simple electronic visa with particular attention to the shifting between ports, anchorages or application to facilitate crew changes in weather conditions and must be waiting areas in order to “stop the clock Canadian ports. This includes the waivapproved bty the local authorities. counting.” There is also an attempt ing of the quarantine period applicable 2.The mooring and anchoring arrangeto clarify the ability to undertake an to all non-essential foreign arrivals. ments must be approved by or interim sea passage with speed and durThe European Community Shipowners through the vessel’s Classification ation to remove bio-fouling. Association (ECSA), the World Shipping society. A competent body may All very legalistic but safe to say that Council and Cruise Line International perform the calculations, but the sitting around, particularly in tropical Association are meanwhile campaigning approval should go through the waters, can result in hull fouling and the for a relaxation of the Schengen regional Classification society. need for a clean up if a vessel is to return visa restrictions to allow crew changes 3.The vessel owner should contact to full operational efficiency. across a wide range of European ports. the manufacturers of the critical All food for thought when decid

Returning to the subject of laying up equipment on board and make sure ing where and for how long to lay-up a a vessel, the dilemma for a ship owner maintenance, preservation and vessel. occur, rather it is during a vessel’s up. In a hot lay-up, the ship’s engines Captain Stephen Brown has enjoyed a 50-year career and essential machinery is kept turnin the shipping industry, including senior positions with ing over to allow for early reactivation. some of the world's most notable shipping companies. The operational costs are thus higher Captain Brown was appointed to lead the Chamber of since more crew are required and fuel Shipping of British Columbia, the leading trade assois consumed. In a cold lay-up, vessels ciation providing leadership to the marine industry in are simply supplied with emergency Western Canada. As a Vancouver marine consultant, he power for lights and essential equipprovides a highly professional range of services which, ment including fire detection and fightfor a period of 15 months in 2018-19, included serving ing, overseen by a minimal number of as Interim Director Operations and Safety, Harbour crew. Emerging from a cold lay-up will Master, for the Vancouver Fraser Port Authority (Port generally require at least a couple of of Vancouver).