Horizons June 2020

Issue 54, June 2020

Horizons.

Connecting tomorrow’s thinking to the challenges of today.

WHAT’S ON THE HORIZON FOR: Remote working

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Technology 10 Wellbeing 18

Floating storage.

Remote working.

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Surveys undertaken remotely are still viewed with caution by some. Here, LR’s James Forsdyke and Sean van der Post explain some of the reasons why the interaction between hardware, software and human expertise offers an unbeatable formula.

Making the case for remote surveys.

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Industry viewpoint.

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Technology.

James Fanshawe CBE MNI, Chair of the UK’s Maritime Autonomous Systems Regulatory Working Group, discusses COVID-19 as a catalyst for technology to enhance the capabilities for all those connected with life at sea.

Triple A: Maritime’s opportunity to advance Automation, AI and Autonomy.

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James Pomeroy, LR’s Group Health, Safety, Environment and Security Director, gives his thoughts on the new nature of risk.

Coping with the changing nature of risk. 16

Wellbeing.

Insights from the maritime workforce: how shipping employers have been navigating COVID-19.

Hear from LR’s M&O Commercial Director Andy McKeran as he talks about his digital vision for LR and how keeping trust, mutual benefit and respect as the central components will be the key to success.

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For the first time in a decade, large numbers of ships are heading for lay-up as a result of the COVID-19 pandemic. We delve into the key challenges facing operators and how LR can provide assistance.

Owners look to lay-up as they navigate COVID-19 trade declines.

Decarbonisation.

Regulation.

LR’s Global Sustainability Manager Katharine Palmer highlights the key areas of importance when it comes to zero-emission vessels.

Keep up-to-date on all current and future regulation, as well as access support to help keep you compliant throughout COVID-19.

Collective drive for shipping’s decarbonisation. 20

Maintaining your Inventory of Hazardous Materials, compilation is just the beginning.

Market outlook.

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Balancing European ambition and recovery with shipping’s recovery and the global consensus on reduction of GHG emissions from ships.

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News.

A steady hand as Cruise looks to the future.

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Catch up on the latest developments at LR from our teams around the globe.

Market expansion and diversification over the past decade: what’s next for LNG?

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HMM Algeciras takes centre stage as world’s largest boxship.

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Short-term challenges, long-term ambitions.

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What’s happening in our world.

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As we continue to face change due to COVID‑19, Head of Brand & Communications Nicola d’Hubert speaks to LR’s Nick Brown about why this is a great opportunity to embrace new ways of working for the long‑term. Paul Bartlett takes a deep‑dive into remote surveys with LR’s James Forsdyke and Sean van der Post to explore what the accelerated uptake means for both the marine and offshore sectors. We work with subject matter experts for insights into decarbonisation, seafarer wellbeing and IHM compliance, while Paul Bartlett discusses the LNG market and uptake over the past two decades with LR’s Gas Segment Manager, Panos Mitrou. The team also takes an in‑depth look at floating storage and lay‑up requirements. Our designer for this issue is Kaz Kapusniak.

Viv Lebbon

Nicola Good

Paul Carrett

Nicola d’Hubert

Paul Bartlett

If you have any feedback or suggestions for upcoming issues of Horizons, we’d love to hear from you. Please get in touch with Viv Lebbon at vivien.lebbon@lr.org

Lloyd’s Register and variants of it are trading names of Lloyd’s Register Group Limited, its subsidiaries and affiliates. Care is taken to ensure that all information provided is accurate and up to date. However, Lloyd’s Register accepts no responsibility for inaccuracies in, or changes to, information. © Lloyd’s Register Group Limited, 2020. A member of the Lloyd’s Register group.

Contents

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Meet the team

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Lay-up.

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LR experts take a look at the impact of recent events on their respective industry sectors and provide an overview on expected opportunities and challenges. In focus are Cruise and the Oil and Gas sectors.

Leadership.

Transition man.

Safety.

Turbulence in oil markets pivots focus on floating storage technical needs.

Learn about our Industry-wide survey to gather insights on how organisations have supported staff during COVID-19.

IMarEST President Kevin Daffey shares his view that technology will play a crucial part in helping the shipping industry find its way out of the pandemic.

Looking to the future.

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A look at class requirements and technical challenges associated with converting tankers to moored units and storing fuel.

Catalyst for change.

The current pandemic is eliciting change in the way we work. Some of this change holds valuable lessons… and it is time we embrace these for the long‑term.

We have all been forced to do things differently in the wake of COVID‑19, and I’d be surprised if, in the post‑COVID‑19 world, we went back to how things were.

In fact, it would be a mistake if we did.

From my perspective, despite the challenges, this is a real opportunity to take a fresh look at how we do things. We all know that our industry is one that relies upon relationships and it is often criticised for its conservatism. However, necessity has forced the industry, at scale, to look beyond its traditional approach and engage with new technologies to harness the power of remote connections and keep the industry moving. There are many benefits to capitalise on if these ways of working continue as a permanent feature; not least of which are improvements in efficiency, increased safety, and optimised utilisation of the entire maritime workforce.

For us at Lloyd’s Register (LR), this has resulted in an accelerated demand for remote surveys, but this is not the limit

of the remote services we are providing.

We are seeing growing interest in our digital twin assurance, structural health management services. We are also supporting our clients with cloud‑based bespoke solutions that deliver business value across many areas of their operating environment, integrating data to optimise business performance, focused on individual assets, fleets and people; for example, our Cloud Fleet Manager – ship management tool. Hopefully, you will have also seen our recent announcement concerning Euronav’s Machinery Planned Maintenance and Condition Monitoring Scheme (MPMS(CM)), where we are now delivering approval via remote techniques.

The significance of our response during this crisis, with this innovation in remote and technology‑enabled working, has been made clear to me during my many conversations with clients, alongside their praise of the enhanced teamwork and collaboration they have experienced while working with us. Digital technology may

be enabling new ways of working, but it is the expertise and experience of our people that make the difference and has brought our clients and colleagues closer together, enhancing remote collaboration during these challenging times.

The need for collaboration at this time cannot be underestimated, so it is critical that we have a unified industry approach.

To this end, we continue to work closely with flag states, regulators and other industry partners to drive consistency in remote working practices.

There may be a physical distance between us, but I have seen many parts of the industry come together, and I hope this strengthened impetus on collaboration, as well as acceptance and accelerated take‑up of digital technologies, is a legacy we are left with long after COVID‑19.

Nick Brown Marine and Offshore Director, Lloyd’s Register

Horizons June 2020 3

REMOTE WORKING

Making the case for remote surveys.

Surveys undertaken remotely are still viewed with caution by some, but experts at LR believe that reticence over new survey methods, which make the most of digital technology, is misplaced.

Here, James Forsdyke, LR’s Head of Product Management, and Sean van der Post, LR’s Global Offshore Business Manager, explain some of the reasons why the interaction between hardware, software and human expertise offers an unbeatable formula.

Words: Paul Bartlett

Restrictions on travel amid the COVID‑19 pandemic is forcing unprecedented change on some of shipping’s age‑old procedures as access to ships in ports, and oil and gas assets in offshore waters, is barred. Yet ships continue to fulfil a vital role in the global supply chain and energy facilities can’t easily be switched off. Both must continue to operate efficiently and safely whether surveys are due or not.

LR has had a wide range of remote survey options available to clients for years, particularly in the offshore space where floating assets stay in place or are fixed to the seabed for long periods. But COVID‑19 has forced a new reality on many who have traditionally relied on the physical presence of a surveyor at the rig or ship.

Nick Brown, LR’s Marine and Offshore Director, believes that the dramatic uptake of remote services and support is a trend that will inevitably 4 Remote working

continue, and likely gather pace, long after the virus. His sentiment is borne out by LR’s frontline experts – James Forsdyke, Head of Product Management, and Sean van der Post, Global Offshore Business Manager.

Remote Survey Champions Both experts agree wholeheartedly with Brown’s thinking. They highlight LR’s recent focus on remote services, notably its team of Remote Survey Champions located in no fewer than 16 of the world’s key shipping and offshore hubs. These experts can be linked digitally to their clients whenever necessary, and LR’s systems are ‘technologically agnostic’, meaning that connectivity can be based on Microsoft Teams, Skype or WhatsApp. If a client has no systems in place, the classification society has its own system – LR Remote.

The team, despite the worldwide coverage, are interconnected by digital

communications, real‑time data transfer, live streaming and all of the other technologies that have been developed recently, but which the virus has now made essential. The remote survey champions are a hub of excellence who support and guide LR’s frontline colleagues and clients alike with remote surveys, ensuring consistent practices and safety at all times. Furthermore, Forsdyke believes that LR’s remote inspection techniques, combined with digital data transfer and the expertise of top specialists, can provide an equivalent service to physical attendance.

He goes further, stressing that this is not a short‑term reaction to the crisis.

LR, he says, has been working with customers remotely where appropriate for many years. What COVID‑19 has done is significantly broaden the range of use cases where remote support is considered appropriate, providing the industry impetus needed to embrace what

What COVID‑19 has done is significantly broaden the range of use cases where remote support is considered appropriate, providing the industry impetus needed to embrace what technology has been able to offer for a number of years. technology has been able to offer for a number of years.

In times past, a traditional survey would involve a surveyor travelling to a location, going onboard a ship, meeting key personnel and then heading to the master’s office to check on the validity of certificates and other documents. It’s a process that could take a significant proportion of the available time. Then the surveyor would undertake the actual survey.

Remote. And present.

We’re ready to help you transition to remote solutions, bringing immediate benefits for your business. For more information about the complete range of LR Remote Solutions that are available, please visit: www.lr.org/en/ remote-solutions/ Or, download our Remote Survey Brochure here.

Horizons June 2020 5

REMOTE WORKING

Exploring new ways of learning.

It isn’t just our ways of working that are being challenged by the COVID‑19 pandemic, our ways of learning are needing to evolve as well.

The COVID‑19 outbreak has been a catalyst for exploring different ways of doing things, with remote capability becoming critical in recent months. At this time, traditional classroom training schemes have temporarily paused, leaving room for the development of more accessible, virtual learning programmes.

Our team has been working hard to reshape some of our key global courses, such as Risk Management and Incident Investigation, to offer a virtual classroom experience with sessions delivered in real‑time by experienced tutors. Via the use of our online platform and interactive tools such as WebCam, chat‑boxes, whiteboards and polls, our virtual attendees become familiar with risk management concepts and how to carry out operational risk assessments and incident investigations, from wherever they are.

Led by world‑class subject matter experts and field specialists, LR’s training courses advance knowledge around class, statutory and regulatory requirements, as well as safety and environmental management, ensuring technical excellence and operational efficiency, while fostering a robust safety culture.

In a world of increased complexity and challenging times caused by the COVID‑19 outbreak, investing in skills is vital for success and keeping people, ships and the environment safe. With the risk landscape evolving, and the emergence of new regulation and novel technologies, the industry needs people who can do the job correctly and in a timely manner.

Find out about our virtual training courses: www.lr.org/en/training/marine/

A technical assessment of a recent malicious email campaign against the maritime sector Are your email habits putting you at risk? Email is one of the most common means of communication, but is also an easily and widely abused system for providing entry points for attackers into our organisations. In particular, during the recent pandemic, we have seen a significant rise in the amount of Phishing attacks carried out by email, meaning organisations need to be even more vigilant.

Read more: blog.nettitude.com/recent‑phishing‑email‑campaign

6 Remote working

Forsdyke compares this to modern banking applications, where you still need a whole range of valid documents before you can proceed, but now you upload all your documents in advance, for prevalidation, making the process infinitely more efficient. And he asks, ‘why can’t classification be the same?’

Unbeatable combination Thankfully, shipping is moving on from these old procedures. Now, says Forsdyke, the interaction between hardware, software and human experts, wherever they may be in the world, offers a really exciting combination that complements and enhances the traditional offering based on physical attendance only.

Far from reducing the role of the human being, Forsdyke says that latest techniques enhance it. LR’s experts in a particular field are instantly available to pass opinion on a specific issue, live‑streamed and on the scene. The client is receiving dramatically more added value from this service, he says, which is faster, more accurate, more incisive and no longer the result of one person’s physical attendance, often limited to a few hours.

Van der Post’s brief covers the assurance of a wide range of oil and gas assets, including subsea pipelines, floating storage terminals, fixed offshore structures and LNG terminals. Remotely operated vehicles (ROV) have been an essential part of his business for years – ROVs and pigging tools are a routine component of maintenance management programmes which Van der Post and his team must audit.

Fantastic opportunity Despite all this, however, Van der Post is enthusiastic about the opportunities for the future. “You don’t make progress any time as quickly as at a time of upset and agreed purpose,” he declares, referring to the virus. “This is an opportunity to extend our remote capabilities in the offshore field.” With about 70% of the UK’s offshore assets under LR’s assurance regime, there is plenty of scope.

However, the UK is only a small part of Van der Post’s portfolio. LR has offshore assets all over the world, from security hotspots in North and West Africa to assets operating in the Timor Sea. Van der Post points to one recent development, forced on organisations like LR by COVID‑19, which amounts to a sea change. Previously, he says, no new procedure could be undertaken without detailed preparations, risk assessments and meticulous rules, written in advance. Safe working practices are, of course, essential, he says, but now the approach is “why can’t we do this remotely?” rather than “we must send someone as soon as possible”.

Both recognise the continued hesitance in the industry; as industry stakeholders collectively gain more experience of using remote techniques and demonstrate the capability, Forsdyke and Van der Post believe there will be continued acceleration of adoption and LR is poised to lead that sea change.

Case study: Remote approach to ISM Document of Compliance and ISO audits.

LR works with Hafnia to perform a remote ISM DOC and ISO audit during COVID‑19.

The COVID‑19 pandemic and subsequent travel restrictions have caused the shipping industry to rethink many activities. When it comes to routine surveys, there has been an accelerated demand for remote inspection techniques.

As part of the International Safety Management (ISM) Code, LR was required to perform the annual Document of Compliance (DOC) audit at Hafnia’s head office to verify the effective functioning and implementation of their Safety Management System (SMS) procedures. The opportunity was also taken to complete ISO audits due at the same time.

As physical attendance was not an option, LR auditors conducted an exhaustive remote audit with approval from Port Authority of Singapore (MPA). LR’s approach to remote surveys is technology agnostic, which meant that the audit could be performed through Microsoft Teams, a preferred tool by Hafnia on this occasion following recent success with other audits. LR can also provide its own livestreaming tool, the LR Remote app, to provide services for clients who do not have a preferred technology.

Documents and presentations were shared, live interviews conducted, ideas exchanged – all remotely across an intensive three‑day period.

“Remote audits can present some challenges, but our team and LR were well‑prepared, ensuring an efficient yet high quality and rigorous process. We value LR’s expertise on remote audits and flexibility around the platform, ensuring the remote audit was technically equivalent to physical attendance by auditors.

This meant the remote audit was performed fast and efficiently, preventing further disruption,” said Ralph Juhl, Executive Vice President, Technical at Hafnia.

Horizons June 2020 7

Supporting the drive for sustainable shipping.

Act now to comply with Inventory of Hazardous Materials EU regulation.

It’s nearer than you think.

Get in touch at lr.org/IHM

Lloyd’s Register and variants of it are trading names of Lloyd’s Register Group Limited, its subsidiaries and affiliates. Copyright © Lloyd’s Register Group Limited, 2020. A member of the Lloyd’s Register group.

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Contents

INDUSTRY VIEWPOINT

Looking to the future.

Technology will play a crucial part in helping the shipping industry find its way out of the pandemic.

The COVID‑19 pandemic has sharpened the focus on how technology will shape the marine world in the future. It’s changed the way we live and work in a way none of us could have imagined a few months ago and we need to find ways to adapt.

As an industry, this involves solutions that keep our people safe. Technology will play a role, and by harnessing the learnings of very advanced technology in industries such as healthcare and automotive, we can accelerate our efforts and find the solutions we need.

There is the technology that moves more shipping roles from ships onto land, which can help us navigate access challenges due to quarantine and travel restrictions. This is likely to see remote capability and autonomous shipping become more prevalent – an obvious way to cope with social distancing and manage the health and safety of those working at sea and on shore.

Tools can make this happen. VR (virtual reality) glasses, for instance, can be used to look at a ship’s machinery; with augmentation via equipment manuals and measured data, information is available instantly to help diagnose problems by the crew, or to send

images back and forth between the ship and shore for more expert and in‑depth diagnosis.

The emergence of digital twinning – a digital replica of a physical entity – helps with understanding how a vessel or a piece of equipment are performing.

Smart sensors incorporated around the ship and within equipment collects data on the real‑time status of the ship’s operation. Connected to a cloud‑based system that receives, stores and analyses, these sensors’ data can be blended with environmental data sets such as weather, tides and currents, to provide incredible insights into how a ship is performing and which can be used to guide decisions made by those on board.

In time, as confidence grows in digital twins, decisions made by humans can be automated as we move toward autonomy to support ship operations.

During the pandemic, remote surveys have also emerged as a way to help keep vessels in class whilst travel bans have been in place. Beyond the crisis, the combination of digital twins and remote surveying could well be the new normal.

As we emerge from COVID‑19 with more automation and remote monitoring, the way we manage human and machine

During the pandemic, remote surveys have also emerged as a way to help keep vessels in class whilst travel bans have been in place.

interaction will also be vital, underlining the importance of educating and informing the maritime community of the significance of the human element in our new reality.

Kevin Daffey IMarEST President

Horizons June 2020 9

AUTOMATION TECHNOLOGY

Triple A: Maritime’s opportunity to advance Automation, AI and Autonomy.

COVID-19 is a catalyst for technology to enhance the capabilities for all those connected with life at sea.

James Fanshawe CBE MNI Chairman of the UK’s Maritime Autonomous Systems Regulatory Working Group

Many things have changed in 2020 as we find ourselves confronted with the fallout from the COVID‑19 pandemic. We have all had to examine and adapt our working practices to ensure that we limit the spread of the virus and keep each other safe. Collectively, we have had to learn what lockdown means without precedent or warning.

10 Technology

This situation has affected us all, but the change in daily routine has been more palpable for those of us working ashore. Afloat, as ships have continued to move around the globe, there have been separate issues to address, notably with crew movements, not to mention virus control in cruise ships. Ashore, we have had to be innovative about extracting

and managing the information we need to maintain our professional services with fewer people on whom to call. We are relying on our laptops and home broadband, without direct access to our many office IT systems or the ability to physically interact with colleagues and our global networks. Video systems are just not the same!

Why now?

Despite recent challenges, the decade ahead will be transformational as shipping harnesses digitalisation and the drive to decarbonise. There is an enormous need for suitable fuel and emission reduction technologies.

When combined with autonomous technologies, they will help the industry move towards meeting the IMO 2050 greenhouse gas reduction targets, as well as enhancing operational efficiencies and making life at sea safer. LR is particularly interested in the outcome of the Short Sea Shipping project being led by the Anglo Belgian Shipping Company, as it will be beneficial to have more solutions and products available that the industry regards as promising and viable environmental and autonomous technological solutions.

Lockdown reminds me of being at sea years ago. Communications were extremely limited. When we left the jetty, we were left without access to those who might support and advise us. We waited with bated breath for the Mufax to give us a grainy weather chart and days would pass without updating the ship’s position while the stars and sun remained blanketed behind clouds.

Flipping the coin, shore‑side authorities had to wait to receive information from the high seas. These days, we expect and demand the instant exchange of data; it has become the lifeblood of maritime business.

So, what will COVID‑19 change? Will we carry on as before or is this a real chance to move forward and embrace the opportunities that technology offers for automation, Artificial Intelligence and, in some cases, the development of autonomous vessels?

There is no single answer to that question.

It will depend on a myriad of factors; types of vessels; their ages; the nature of their operations; the areas in which they sail; their hull and machinery; and the human element. We should not ignore the fact that the following incidents occurred globally between 2015 and 2019: 2,734 hull and machinery damage, 1,817 Collisions, 1,663 Wrecked or Stranded, 1,084 Contacts, 903 Fires/Explosions, 344 Founded, 26 War Loss/Hostilities and 3 crew members

missing. The overall desire to improve safety and become more efficient has never been more relevant and we must find ways to achieve this.

There is growing evidence to suggest that life will be different, but is this because we feel it should be, and will it actually happen? Matching expectations with reality will be tricky and will require strong leadership to adapt to the real and perceived desire for change. Many will return to their offices refreshed, having had time to think, research and plan – so often a missing component in our working lives. Some will acknowledge the benefits of spending more time in their home environments. Others will be leaping at the chance to revert to their old routines.

The transition back may be more difficult than imagined as we re‑embrace freedom of movement.

Whilst it might appear that not much has been achieved in the past few months,

the pace of technology has not been noticeably slowed down by the pandemic.

Many companies, particularly small and medium-sized enterprises (SMEs), have been quietly going about their business and will be poised to spring forward once the tethers have been removed. In fact, there may well be a surge of new technologies that may have to be kept in check to ensure optimal integration into existing maritime systems.

Either way, there is a real opportunity to advance Automation, AI and Autonomy in the maritime sector, whilst reducing emissions to meet the stringent new target figures. This will affect all ships, and Uncrewed Ships will be a part of this process. It would be a good outcome for COVID‑19 to have acted as a catalyst for people to review their thoughts and return to work with renewed enthusiasm to make life at sea safer and to let technology enhance the capabilities for all those connected with life at sea.

About the author James Fanshawe retired from the Royal Navy in 2005 after commanding HMS Hurworth, Cleopatra and Fearless, the UK Task Group and the Devonport Flotilla.

He chairs the UK’s Maritime Autonomous Systems Regulatory Working Group and is a member of the UK Maritime Autonomous Systems Steering Group and the MASG Council. He is also a director of the Anglo Belgian Shipping Company.

Horizons June 2020 11

LEADERSHIP

Andy on influence

Andy on leadership

“One of the key influencers in my career knew how to balance being a gentleman and a scholar.

Even though he was incredibly well‑informed with the charisma of a movie star, his honesty and transparency were striking. The lesson I learned from him was don’t try and be something that you’re not. If you are in a room and you’re not the most knowledgeable person there, that’s not a bad thing.

Always be ready and willing to learn.”

“It’s about coaching and best practice – walking the talk and setting an example. You also have to be open about poor behaviour. Integrity is at the heart of good leadership – honesty and transparency are critical.”

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All about Andy A father of three to Hannah, Poppy and Hugo, Andy lives with his wife in Paris and commutes to Southampton. Cricket and skiing are passions along with a penchant for the fruit of the vine, readily afforded by his country of residence.

Transition man.

Digital success rests on defining the problem and then creating the solution, says Andy McKeran, LR’s M&O Commercial Director.

Words: Nicola Good Attentions may centre on what the ‘new normal’ post COVID‑19 will look like for marine and offshore, but for Andy McKeran, LR Commercial Director for Marine and Offshore, there is simply no question that now is the time to be in the industry.

“Maritime is absolutely the place to work because there aren’t many other industries where you have the chance to participate in such an impactful transformation in such a short period of time. It is a sector ripe for change and transformation,” he tells Horizons, pointing to the adjacencies in other industries where technology – particularly in power generation, aviation and automotive – has delivered huge benefits.

“Some may see sustainability and digitalisation as being disruptive, but they bring opportunity. It’s not about change that is short‑lived. It’s very much about all of us getting stuck in – engaging, collaborating and partnering to move the industry forward. It will take willpower and determination to drive this change and, as an industry, maritime is perfect.”

However, there are some caveats, says McKeran, who joined LR last February after spending more than two decades at General Electric (GE). “I have seen many companies developing solutions and then going to try and find the problem, instead of truly defining the problem that you want to solve and only then creating the solution. This has led to a jigsaw puzzle of solutions that don’t do what they said they would do. Subsequently, the industry loses trust in tech promises and more specifically digital solutions,” he explains, reiterating the importance of a collective effort to resolve future challenges.

“We need to recalibrate the whole industry and move away from the silos that we have today. By aggregating siloed data sources and using analytics, we can provide insights and outcomes to clients that will reduce their overall operational expenditures, and maintain their individual competitive advantage where needed,” he says.

“An example of this type of approach in LR is the introduction of the Structural Health Management solution, where we are driving to reduce the operational downtime caused by tank inspections on ships, floating or fixed assets. Production losses on offshore assets can climb into the millions per year, and this approach will inherently increase the safety. Therefore, we have created models capable of integrating multiple data sources, including environmental, sensors and control systems, to aggregate, assess and ultimately predict the tank condition.”

For LR, this technology innovation, development and deployment is critical to contribute to the creation of the pathway to a sophisticated class regime and services in the next few years. Technologies that enable owners and operators to apply the most appropriate planned, condition‑based, risk‑based or predictive maintenance or inspection methodologies will save them millions a year and increase personnel safety levels. This adds benefits of remote capability that many have come to recognise during the pandemic, without putting extra burden on the ship’s crew.

McKeran is quick to stress the advantages of having access to indicators that can inform prompt and effective decisions as knowing what is happening in the moment and how to act can be the difference between success and failure. The ferocious late‑2014 decline of the offshore market, when he was the Offshore Business Leader at GE, was a case in point for him.

“It’s really important to understand what’s happening early enough to be able to do something about it. The [offshore] market just dropped off a cliff face and we hadn’t picked up on the anomalies in market behaviours. It meant that we didn’t make decisions quick enough and this caused pain within the sector – for both our clients and employees.

“The lesson from this was to focus on indicators, keep an ear to the ground and stay pragmatic, even during boom times. In fact, this is when you need to be questioning

yourself the most. You shouldn’t grow fat when the market grows as that’s the time to go lean and put process and practice in place, because the tough times will come as they inevitably do – given the cyclical nature of marine and offshore.”

With more than two decades in the industry under his belt in roles ranging from shipyard commissioning, field services, project management, and more recently running the offshore and global marine businesses of GE, the BSC Electrical Engineering graduate has first‑hand experience of cyclicality of the sector.

A desire to take maritime safely and sustainably into the future is what spurred his decision to join LR. He points to the organisation’s “rich pedigree of trust” and its engagement with stakeholders across the sector, which is different from that at an OEM. McKeran was keen to “sit at the heart of influence, effect change and bring the industry to where it deserves to be and where it can be”. That said, he accepts that there will be challenges ahead.

There are already many examples of where digitalisation has been introduced into the industry that has brought clear benefits.

But this process, he says, must focus on stepping stones to a digital transition as opposed to a wholesale and immediate transformation, with trust being an essential ingredient.

“Navigating the future just can’t be done alone. Digitalisation will change the framework of traditional contracting.

But it must be built around trust, mutual benefit and respect,” he says, adding that accelerated digital take‑up in offshore and naval is due to trust being inherent in those industries.

More importantly, it also relies on those purporting change to practice what they preach. “We can’t simply go out and lecture to the world about what we think they should be doing. Any vision of the future relies on us digitising what we do. After all, we have to eat our own lunch”.

Horizons June 2020 13

NEWS

14 News

HMM Algeciras takes centre stage as world’s largest boxship.

LR class for Hyundai Merchant Marine’s 24,000 TEU vessel, recently delivered at DSME shipyard.

HMM Algeciras, the world’s largest ultra‑large containership (ULCS) with a nominal capacity of 23,964 TEU, was delivered to Hyundai Merchant Marine (HMM) in Korea during a naming ceremony attended by South Korea’s President Moon Jae‑In in April 2020.

Built by Daewoo Shipbuilding & Marine Engineering (DSME), HMM Algeciras is classed by Lloyd’s Register (LR) and Korean Register (KR), with LR contracted as the lead classification society.

The vessel received LR’s ‘Digital Accessibility Level 3 (AL3) SAFE SECURITY’ notation for DSME’s Smart Ship Solution (DS4®), which means the HMM Algeciras systems have digital access for autonomous/remote monitoring and control, but onboard permission is required, and onboard override is possible.

Measuring up to nearly 400 metres in length from bow to stern, the ship

is also equipped with a scrubber system to comply with IMO 2020 environmental regulation.

“We are extremely proud to have classed the world’s largest containership to date,” commented Mark Darley, LR’s Chief Operating Officer. “HMM Algeciras is a sign of the future as shipping continues to meet the growing demand in global trade transported by sea. From concept to delivery LR has supported HMM and DSME in designing and building this vessel, building upon many years of expertise and experience in the containership market.”

In June, HMM Algeciras arrived in the UK for the first time, concluding its first journey from China through South Korea, the Netherlands, Germany and Belgium.

HMM Algeciras is the first in a series of 12 new 24,000 TEU‑class containerships ordered by HMM.

Horizons June 2020 15

SAFETY

Coping with the changing nature of risk.

Resilience and agility, as well as flatter corporate structures and a healthy measure of ‘prudent overreaction’, have all played a role in coping with COVID‑19.

James Pomeroy LR’s Group Health, Safety, Environment and Security Director

We may only be halfway through the year, but there is no question that everyone’s abiding memory of 2020 will be the coronavirus outbreak. The ferocity of the COVID‑19 pandemic has tested citizens, governments and businesses across the world. While we have endured global crises before, the nature of risk and how we should respond to it has changed.

In recent years, abnormal has become the new normal as geopolitical upheaval and the fallout from climate change is felt more intensely. Whether it is terrorism in the Middle East or bushfires down under, these shocks have become far more frequent and immediate due to the connected world we now live in. When they occur, they can really strike to the heart of how we run our companies. The speed and intensity of these incidents reminds us that we now live in a hyperconnected and unpredictable world.

Businesses the world over are built on plans and while these can be effective 16 Safety

for many areas of operation, crisis management requires more than a procedure telling people what to do.

The ever‑evolving nature of risk calls for understanding around the difference between having a plan and planning.

Many of us have had chunky manuals and operational guides thrust into our hands, which we have diligently digested. While they can set out best practice and support with checklists and communication cascades, these documents don’t necessarily hold the answers as crises rarely conform to our best‑laid plans. Planning, on the other hand, ensures we are equipped with the capability to diagnose a situation, apply what we have learned and find a solution and re‑evaluate as and when necessary.

Planning requires that organisations empower and equip their people with skills that focus on agility, resilience and adaptability, as well as an environment where people are trusted and have the confidence to act.

Resilience and agility centre on building capacity in the system to absorb shocks, and fostering the ability to act quickly.

Delegation and building trust across flatter decentralised teams is vital for ensuring a speedy crisis response. This relies on identifying a small number of people at the top, who can make decisions fast and cascade instructions. Failing to do this can hinder action as you could end up running the crisis by committee.

Adaptability is the ability to diagnose the problem and determine how best to respond to it in the moment. Using scenarios and modelling, teams can garner insights about potential outcomes and pitfalls during a crisis. These kinds of exercises – where there is no right or wrong answer – can help those on the frontline build muscle memory in terms of how they think and work as a team and give them the confidence to reappraise plans as is required. We can see this with airline pilots where the focus is not on voluminous plans, but

helping the pilots build ‘muscle memory’ through simulators, enabling them to respond to thousands of potential scenarios safely.

The challenge is that many businesses remain hierarchical, but the world that we live in now requires different skillsets from those based on traditional crisis management. It’s one that calls for tiered structures where teams on the ground are empowered to make the right decision in the moment using the information they have to hand, rather than waiting on those further removed from the crux of the situation to make decisions when details are constantly evolving.

It also involves knowing that ‘prudent overreaction’ is a virtue not a vice when it comes to protecting people, assets and the environment. Even though crises usually require a swift response, all decisions need care and consideration, and a culture of erring

on the side of caution and prioritising safety is essential.

Above all, crises need to be managed in an environment of complete trust, with all teams sharing full information about what’s worked and what’s not worked so that lessons can be learned. For LR, with teams spread across the globe, the early lessons learned from the COVID‑19 outbreak in Asia were invaluable and informed our actions in other locations.

They enhanced our resilience and agility and the speed with which we could respond.

It’s worth remembering that the line between success and failure can be arbitrary. Knowing the three or four things that should be carried forward, as well as three or four things that might have gone wrong, puts you on a stronger footing for next time and builds better situational adaptability. Given the uncertainties of what could lie ahead, planning and preparation should not be undervalued.

Above all, crises need to be managed in an environment of complete trust, with all teams sharing full information about what’s worked and what’s not worked so that lessons can be learned.

Horizons June 2020 17

WELLBEING

Insights from the maritime workforce: how shipping employers have been navigating COVID‑19.

Industry‑wide survey to gather insights on how organisations have supported staff during COVID‑19, pinpointing key trends, best practice and shortfalls around disease management.

There’s no doubt that the men and women who work at sea or in support of shipping are the backbone of the global supply chain. Often working for long periods away from home, seafarers and those on shore make sure goods, whether that’s food, raw materials, manufactured goods or energy, are safely moved from one place to another to meet world demand.

18 Seafarers

The COVID‑19 pandemic has brought employee wellbeing sharply into focus, with many recognising the pandemic’s impact on day‑to‑day operations and crew changes, as well as around mental health and fatigue. With the pandemic landscape changing rapidly, some organisations are struggling to implement necessary support structures. Therefore, it is important that the industry works together to learn from each other, to enact firm and stable disease management

measures, and to ensure that staff are mentally and physically supported.

LR has come together with a variety of industry bodies to deliver ‘The Maritime Industry COVID‑19 Welfare Survey’, soliciting views across regions and at different institutional levels on how organisations have supported their crew and onshore workforce during this global pandemic. The survey will seek to draw insights on organisational culture and its effects on mental wellbeing,

and the lessons that owners/operators can learn from the current crisis.

Importantly, the survey will point to trends that may reshape the maritime landscape around disease management, healthcare and remote working. We also expect it to showcase best practice, as well as indicate shortfalls in onshore and crew management and communication around the crisis.

The survey was launched on 25 June 2020, the ‘Day of the Seafarer’. Find out more: www.lr.org/en/latest-news/surveyingviews-from-the-maritime-workforce/ “This pandemic has highlighted the unique position of many of our seafarers on extended contracts at sea, unable to return home. It is important that we understand how well we are supporting seafarers, as well as working in the maritime industry onshore throughout these difficult times.

This Industry‑wide survey will help us to determine what is being done, how mental health and wellbeing has been affected, and what we can do better as an industry to support our people,” says Jo Stokes, LR’s Senior Principal Human Factors Consultant.

Click here to take the survey

LR’s Human Factors team The LR team combines expertise from ergonomics, psychology, physiology, sociology, anthropometrics and biomechanics to provide newbuild and in‑service human factors support to enhance health, wellbeing, safety, usability, performance, and user experience.

From as early as Concept through to Disposal stages, we provide: • Human‑centred engineering design support (to reduce the likelihood of human errors) • Operational support that improves organisational culture, safety and performance by understanding human behaviour, capabilities and limitations, health and welfare needs.

We specialise in a range of human factor services, focusing on marine and offshore sectors, but providing support to all industries and sectors.

Research helps tackle the stress and loneliness of life at sea Lloyd’s Register Foundation (LRF) is supporting research to protect seafarers during COVID‑19 and beyond.

The extended isolation of seafarers during the COVID‑19 epidemic has highlighted the stresses of life at sea. As the CHIRP Maritime Programme, a confidential safety reporting initiative supported by LRF, has found, this could lead to long‑term physical and psychological health implications for crew members. CHIRP Maritime has recently published three insight articles which seek to further explore the difficulties that mariners are encountering during these extraordinary times. Insights can be found on their website publications page, entitled COVID19 General Medical Advice, Focus on Seafarer Wellbeing during the COVID‑19 Pandemic and Trapped by COVID‑19 – highlighting the plight of seafarers on board vessels.

The seafarer’s life, never easy, has evidently become more and more stressful in today’s competitive commercial setting. LRF is working with researchers to persuade shipping firms to improve conditions for their employees, who may be at sea for up to a year without a break. This puts their mental and physical health – and the safety of shipping – at stake.

LRF has awarded a grant to a project being run by Cardiff University’s Seafarers International Research Centre (SIRC), to bring much‑needed change to this challenging career. They have drawn on years of global research to come up with a new, more humane, specification for accommodation on ships. It could see an end to noisy, cramped, cluttered cabins that lead to lack of sleep and dangerous levels of fatigue, a contributory factor in one in 10 accidents at sea. Read more

Horizons June 2020 19

DECARBONISATION

Collective drive for shipping’s decarbonisation.

Zero‑emission vessels require investment, technology and community readiness, as well as collaboration from stakeholders in maritime and beyond.

Katharine Palmer LR’s Global Sustainability Manager

Shipping’s transition to low and ultimately zero‑carbon operations is being driven by the relationship between the new fuel technologies evolution and the associated investment case for different vessel types. However, the industry must also consider the wider picture; specifically, the readiness and engagement of the entire stakeholder community to adopt new fuels and technologies.

In producing our latest research, Techno‑Economic Assessment of Zero‑Carbon Fuels, LR continues to work closely with the University Maritime Advisory Services (UMAS) to provide insights in all three areas – investment, technology and community readiness – to help the industry think more deeply about the 20 Decarbonisation

necessary parts of the jigsaw that must fit together to deliver this pivotal transition.

The primary driver for the competitiveness of a zero‑emission vessel (ZEV) when compared to a ship running on fossil fuels is the price of fuel. Clearly, it is very difficult to have absolute certainty about how these costs will evolve; however, an understanding of upper and lower price ranges and the total operations cost sensitivity to oil price changes mitigates any risks and exposure from an economic perspective.

Physical characteristics of fuels, such as their lower volumetric energy density, will mean changes to how we store and handle fuels on board, which may in turn impact cargo‑carrying capacity for some ship types – for example,

ammonia has half the density of LNG today. So this will need to be built into design considerations early to ensure vessel designs are futureproofed.

Applying a carbon price to the fuel means that the economic case is more viable earlier.

For the fossil‑based fuelled ships, this is less attractive, making zero‑carbon fuels cheaper earlier, which could occur around 2040.

Overall, the Total Cost of Ownership (TCO)* for e‑fuels is trending towards a continuous reduction every decade, whereas biomass‑derived fuels are not showing as consistent a trend. The trend shows that, under a high‑price scenario for biofuels, the TCO increases, and under a low‑price scenario the TCO either stays flat or slightly decreases.

Partners point to three‑pillar approach.

In April this year, LR and UMAS published their latest assessment of the current and future fuels available to shipping to help define the optimum solutions as the maritime industry seeks to reduce greenhouse gas emissions. The report, supported by the Methanol Institute, examines the three primary pillars of the adoption of zero‑carbon fuels when compared with traditional fossil‑based fuels; their readiness from an investment, technology and community perspective.

The study illustrates that regardless of which zero‑carbon fuels emerge as favoured options from an economic perspective, from an onboard technology perspective, ZEVs are likely to be technologically possible in the next few years. However, for owners and operators to be confident around future investments, the industry will require confidence in the wider community around the fuel supply chain, both in terms of the availability in the quantities required and the land‑based infrastructure for production, supply and distribution.

The assessment of technology readiness for the various zero‑carbon solutions also provides an insight into the current barriers to market uptake, with screening and assessment undertaken on a fuel‑agnostic basis, intended to help the industry identify opportunities for new approaches. The scope

As the investment case evolves over time, a strong link between fuel production and price develops; subsequently, the way this evolves through the decades means that different zero‑carbon fuel options are more economically viable in different decades and there is no “single solution” option that is more economically viable from today through to 2050.

Regardless of which zero‑carbon fuels emerge as favoured from an economic perspective, in terms of onboard technology, ZEVs are likely to be technologically possible in the next few years. However, to be able to make future investments requires confidence about the fuel supply chain, both in the availability of the quantities required and the land‑based infrastructure in place to generate and support them.

From a technology readiness perspective, methanol, LNG and diesel are more mature than hydrogen and ammonia. There are rules and regulations currently in existence and there are vessels already using these fuels. From an onboard technology perspective, there are minimal differences, for example, between using bio‑methanol, e‑methanol or NG‑methanol; the same applies to LNG. Mechanical prime movers and potentially fuel cells will have to be modular and

includes onboard procedures for bunkering, onboard storage, processing, conversion and propulsion.

Assessment of investment readiness includes a complete examination of energy source price scenarios, ship‑specific case studies, total cost of operation, fuel‑related voyage costs, impact on cargo‑carrying capacity and a sensitivity analysis.

The third element considers lifecycle emissions and the evolution of the energy landscape in other sectors to provide the context of the wider energy and industrial sectors.

Techno‑Economic Assessment of Zero‑Carbon Fuels is the latest in LR’s series of reports in collaboration with UMAS, looking at fuel and technology trends for the marine industry, aimed at developing new knowledge and tools that can contribute to policy debate. Previous reports include Global Marine Trends 2030, Global Marine Fuel Trends 2030, Global Marine Technology Trends 2030, Low Carbon Pathways 2050, Zero Emission Vessels 2030 and Zero‑Emission Vessels: Transition Pathways.

Download Techno‑Economic Assessment of Zero‑Carbon Fuels.

adaptable, but this part of the challenge is considered manageable compared to ensuring that the right fuel is ready, as well as the required supporting infrastructure on land is available.

Therefore, the bulk of the technology challenge is in land infrastructure and in the supporting energy sector. This will also call for flexibility to ensure resilience to supply chain impacts.

resulting from the pandemic, it will be even more important to ensure that the decarbonisation of shipping stays on the agenda and strong policy and implementation remains on track to set economic growth on the right trajectory.

Irrespective of the price uncertainties, the market will not drive the transition to zero as the price spread across the different fuels is too large.

In addition to investment and technology readiness, community readiness is an exceptionally important driver of the necessary changes – what may be ready from an investment and technology standpoint may not be ready from other stakeholders’ perspectives.

The choices made in the next decade are critical. This action relies on understanding the dynamics and interactions between technology, investment and community readiness within the range of ship types, sizes and operational profiles. Decarbonising the shipping sector requires substantial and collaborative effort across maritime and energy stakeholders and beyond into the wider system.

Future fuels will be expected to not only meet GHG emission criteria, but also other air pollutant standards (e.g. NOx and particulates) and contribute to broader sustainability criteria at regional and national levels. These broader criteria will increase acceptability to stakeholders as potential options for maritime applications given that they will neither have unintended impacts on local air quality, nor shift the problem to an increase in upstream emissions.

Once the world enters the recovery period post COVID‑19 and faces up to the inevitable financial challenges

Looking into how the energy landscape is evolving in other sectors, we should draw similarities and understand how we can work together to meet one goal. Actions may include policy development, investing in innovation, undertaking research and development, energy efficiency and change in consumer behaviour. *TCO = additional fuel‑related voyage costs per year + additional capital cost of new engine + additional capital cost of fuel storage system + impact on revenue due to the space requirements of the fuel storage system.

Horizons June 2020 21

MARKET OUTLOOK

A steady hand as Cruise looks to the future.

Joep Bollerman, LR’s Global Manager at Passenger Ship Support Centre in Miami, on lay‑up strategies, remote surveys and potential changes to cruise operations post‑COVID‑19.

22 Lay‑up

COVID‑19 has had a dramatic impact on every shipping market, but the cruise sector has been plunged into unprecedented crisis. As of May, the entire cruise fleet is effectively laid up, cruise lines are facing a financial crisis, and no‑one knows what the future holds.

However, Joep Bollerman, Global Manager at LR’s Passenger Ship Support Centre in Miami, is surprisingly calm.

Despite a non‑stop schedule of online meetings and conference calls with cruise clients, he had time to share his thoughts with Horizons. These are pretty valuable: few in the cruise sector have more experience than him – as a Chief Engineer at sea with Holland America

Line for 10 years prior to joining LR and rising to head the society’s cruise division in Miami, America.

We’ll be back Despite the untold disruption, Bollerman has no doubt that most of the cruise industry will survive. “Cruise will be back,” he declares, pointing to recent successful initiatives by large cruise groups to raise more equity and debt in the markets. He concedes, however, that cruise lines will not be as strong as before because of the huge costs of keeping ships idle for many months to come.

LR, with the largest portfolio of cruise clients, is well‑placed to provide wide‑ranging advice and support at this difficult time. These include, but are not limited to, choice of lay‑up strategy, technical issues on safeguarding ship systems and electronic installations, post‑virus design considerations, and non‑shipping management system support from specialists in LR’s other divisions, including Food, Beverage & Hospitality.

As the speed and scale of the pandemic became evident, cruise lines were faced with formidable challenges, including ships at sea with sick passengers and no port for evacuation; how to repatriate thousands of crew as airlines grounded planes and countries shut their borders; accessing essential support when technical experts could not come on board; and, of course, all of the usual requirements from flag states and regulatory authorities.

Remote support In this context, Bollerman explains that LR’s remote survey and technical support systems have proved invaluable. Much has been accomplished that would not have been possible even a couple of years ago. Remote surveys have been completed successfully and LR has fulfilled an essential role as a strong link between cruise lines and flag state authorities, making the case successfully for remote surveys to flag state personnel who have sometimes shown reluctance to accept this new approach.

Given the current situation, the lines are facing up to a number of challenges.

Nobody yet knows for how long the global cruise fleet will lie idle in various forms of lay‑up ranging from ‘hot’ to ‘cold’. But

LR is well‑placed to provide advice and support at this difficult time, including choice of lay‑up strategy, technical issues on safeguarding ship systems and electronic installations and post‑virus design considerations. Also non‑shipping management system support from specialists in LR’s other divisions, including Food, Beverage & Hospitality.

Bollerman believes that most operators will want to keep their vessels as hot as possible: “Our clients want flexibility,” he says. “This is more expensive in terms of daily cash burn, but reactivation after cold lay‑up can sometimes cost more than a ship is worth.

That has to be taken into account.”

“Flexibility is important for various reasons,” he explains. “A cruise operator might want to take advantage of an unexpected slot at a repair yard so that a survey can be completed ahead of time.

There might be a hurricane on the way.

Then there is the issue of survey status: a cruise ship coming out of cold lay‑up would require all its surveys to be carried out at the same time. Instead of two, you’ve got 20 and that’s a nuisance. If we can do some remotely, that’s a great help.”

Risk assessment An important part of LR’s role across all of its activities is the mitigation of risk.

Of course, this is absolutely central to the choice of lay‑up strategy, but Bollerman gives some other examples. At one stage, the classification society was asked to assess the deployment of cruise vessels as hospital ships. Clearly an entirely different risk assessment was required for a vessel to operate as a floating hospital.

Risk mitigation will also be central to the reintroduction of existing vessels when the time comes, Bollerman points out. The provision of medical facilities on board will be a key consideration,

particularly for expedition vessels sailing in remote areas.

“We have already seen cruise ships unable to offload sick passengers in Florida, where there are probably as many hospitals as anywhere, because they were full,” Bollerman notes. “In remote locations, there might only be a couple of ICU beds – in fact, the ship itself could be by far the largest medical facility across thousands of square miles.”

With a substantial share of the record orderbook for cruise companies – more than 100 vessels at the beginning of this year – Bollerman and his colleagues are also closely watching negotiations between cruise lines and shipbuilders as they seek to extend the orderbook and postpone deliveries. This is in both parties’ interest. Shipyards are cutting capacity and laying off workers while cruise lines don’t want more capacity when there is no market.

When the virus is under control or a vaccine has been developed, Bollerman expects that existing ships will require some modification, as will vessels under construction. But he is certain that most seasoned cruise‑goers will not be deterred.

“There’ll be some changes to vessel operation, and we may need different luggage handling systems, for example,” he says. “After the virus, there might be a temperature scanner in every cruise terminal, for example.”

Horizons June 2020 23

MARKET OUTLOOK

Market expansion and diversification over the past decade: what’s next for LNG? Using LNG as a marine fuel is a sensible strategy amid tightening regulations, new economic realities and the development of the new zero carbon fuels of the future, says Panos Mitrou, LR’s Head of Gas. Words: Paul Bartlett

Panos Mitrou, LR’s Global Gas Segment Manager, has been dealing with LNG as fuel for the past eight years. Over this period, he has seen the use of LNG expand and diversify from just a few LNG carriers using boil‑off gas for convenience to far wider adoption across a range of shipping sectors. In recent months, the LNG as fuel question is part of the decision‑making process in approximately 50% of new projects.

Today, despite the sceptics, he is more passionate than ever about the future for LNG as a fuel.

There are plenty of naysayers who discount LNG because, as a hydrocarbon, it still has a footprint. Combustion usually involves some methane slip, and unburnt methane can be 30 times, 85 times for those who prefer to overweigh short‑term impact, more potent as a greenhouse gas (GHG) than carbon.

Therefore, they claim, LNG used as a marine fuel generates only modest GHG savings.

Mitrou is not remotely fazed by these arguments, which he addresses patiently.

He then lists some of the reasons why adopting LNG at this time makes eminently good sense.

Maturity and tightening regulations LNG as fuel is already a mature technology capable of meeting stricter carbon reduction regulations likely in phases three and four of the IMO’s Energy Efficiency Design Index (EEDI).

Embryonic marine fuels such as ammonia and hydrogen may offer significant potential in the longer term, Mitrou concedes, but LNG can deliver a concrete 15% and more reduction of GHG today. In the mid‑term, it could embrace primarily sustainable biogas and to a lesser

LR chosen for LNG Canada export terminal project in Kitimat.

LR has signed a 55‑month LNG contract to support LNG Canada with the safe construction and delivery of a new liquefied natural gas (LNG) liquefaction plant and export terminal located at a site in Kitimat, BC, Canada.

The contract is for third‑party verification and Canadian Registration Number (CRN) services that LR will perform during the pre‑commissioning, commissioning and start‑up phases of the project. With this tender award, LR becomes the only third‑party verifier working on Canadian LNG projects.

LR’s third‑party verification services will ensure that individual components have been constructed and tested in accordance with the quality assurance programme expected by Liquefied Natural Gas Facility Regulation (LNGFR). This will see LR verifying the project quality assurance programme for the design and procurement phases, followed by the Inspection Test Plans and Inspection Test Records during the project construction and commissioning phases.

24 Market outlook

LR will also validate Technical Integrity Verification plans for engineering, fabrication and commissioning, and the Change Management Plan (CMP) for the design and construction phases. Throughout this contract, LR will provide additional audit and engineering services at site to verify the compliance of safety critical equipment and systems, such as gas‑fired equipment (incinerator and gas turbines), across the entire facility. This will align with audit activities performed by the British Columbia Oil and Gas Commission (BCOGC).

John Hicks, LR President of Americas Marine and Offshore, says: “Winning this major project demonstrates LR’s strong capability and long history in the LNG space, following recent wins with Goldsboro LNG, Bear Head LNG and LNG Canada, three of the largest LNG projects in Canada. This makes LR the preferred classification society to work with in Canada. We are incredibly proud to be awarded this contract and look forward to working with all the stakeholders, including BCOGC and LNGFR on this project.”

extent synthetic methane. Its nature as a hydrogen carrier and its cryogenic technology may constitute some of the foundations for the fuels of the future.

There are many gaps in safety or terminal handling regulations relating to these new fuels, Mitrou points out, let alone any class rules. We are working in expediting this process but, as LNG has taught us, this takes time.

The LR expert moves on to some of the other reasons underpinning LNG fuel development. As well as being a mature technology, LNG offers significant practical and economic benefits.

Anybody ordering an LNG‑fuelled ship today can be assured that there will be suitable global bunkering infrastructure in place at key locations by the time the vessel is delivered, he predicts. And shipowners will be able to rely on an abundant future supply of gas, less susceptible to geopolitics and volatile price swings than oil, and much cheaper than other sulphur‑compliant fuel options.

Wide emission benefits In its early stages, LNG was pioneered by the leading cruise line companies due to the pressure to reduce SOx, NOx and particulates which were being generated, Mitrou explains. At that time, the emission of GHGs was not on the table. Cruise lines, Mitrou points out, were therefore focused on local pollution aspects, and these progressive companies consequently installed the engines that were most suitable for cruise ship operation. They were usually four stroke, low pressure units with relatively poor methane slip performance and therefore only modest GHG reduction properties. But Mitrou says that this move was not deliberate – cruise lines had other priorities, namely local pollution levels.

He highlights that technology advances on methane slip in most combustion technologies – particularly in low pressure, Otto cycle engines – have had significant reductions already, and advocates that more is to come through proper engineering assessment and analysis. He also points to high pressure, two stroke diesel cycle engines and the combined cycle gas turbine, not yet used in a marine context, which could generate virtually no methane emissions.

As well as advances in combustion technology, Mitrou predicts that methane performance will be improved further by exhaust gas after treatment technologies.

Engine designers and manufacturers are engaged in intensive research and development projects on these issues, he says.

Carbon pricing around the corner Mitrou turns to the political backdrop. He expects that the EU will implement some form of carbon pricing before the middle of this decade, a move that is likely to involve charterers in the carbon‑reducing process. A pricing scheme has significant implications both for ship operators and their customers and will, of course, widen the price gap between sulphur‑compliant fuel oils and LNG. This could even stimulate retrofit demand, Mitrou believes, which so far is limited by expense and complexity. But carbon pricing would change the cost‑benefit analysis overnight, transforming the payback profile. Apart from low LNG bunker prices, vessels would have another significant cost advantage and could, of course, continue to trade without penalty in proliferating emission control areas.

Finally, Mitrou concludes with a plea to all parties in the marine fuel debate.

He believes that the future lies in a widening energy mix in which LNG has an important part to play.

It’s not an either/ or, Mitrou insists.

Marine fuels will comprise a greater mix and their evolution requires everyone’s collaboration.

If hydrogen is to be developed over the medium term, for example, then the cryogenic expertise developed in developing LNG as a fuel will be essential.

And the companies with experience and a track record in operating LNG‑fuelled vessels are likely to be amongst the first to adopt liquid hydrogen as fuel.

It’s not an either/or, he insists.

Marine fuels will comprise a greater mix and their evolution requires everyone’s collaboration.

Horizons June 2020 25

MARKET OUTLOOK

Short‑term challenges, long‑term ambitions.

Oil price volatility since the start of 2020 has added to the challenge of COVID‑19 project delays in the oil and gas sector, but nonetheless opportunity remains strong.

Sean van der Post Global Offshore Business Manager

The past six months have been tumultuous for the oil and gas sector.

Not only have operators had to navigate COVID‑19 challenges and work around quarantine requirements, they have also had to ride the wave of oil price volatility.

The pandemic has limited the movement of people and restricted access at facilities and offices across the globe, along with the major offshore yards in China and Korea, which has led to delays on many projects. This disruption in North Asia has been relatively short‑term as activities have recovered to near pre‑COVID‑19 levels over the past couple of weeks. A lower oil price and how this changes the project landscape for operators is a greater concern.

Reduced demand due to COVID‑19 has affected the oil price, but the sparring among the big producing nations around

market share and associated output has had a more significant impact that has required the industry to recalibrate medium to long‑term prospects.

Having started the year well, with prices above $60 a barrel, there has been a historic slump which has seen oil prices dipping below $0 a barrel in April. Fluctuations in the oil price have affected operators’ cash flow and the funds they have available for investment, especially among those companies still recovering from the 2014 downturn.

There will be projects that move forward, but most operators are treading a cautious path and delaying CapEx investments while re‑evaluating the market and expected return on their investment, given a lower oil price environment. In the aftermath of the 2014 downturn, CapEx expenditure on new projects has undergone rigorous sensitivity

Oil demand has taken a knock from COVID‑19, but as the global economies begin the difficult journey to recovery from the pandemic, it will return.

26 Market outlook

checks to pricing fluctuations, but even these did not foresee the demand destruction resulting from COVID‑19 lockdown measures and the recent oil price war. It is no surprise therefore to see these delays being announced. While these actions will leave scars for some years to come, as we look forward to 2021 and beyond, we see a more optimistic future for the sector.

Oil demand has taken a knock from COVID‑19, but as the global economies begin the difficult journey to recovery from the pandemic, it will return. This poses the question about whether future supply, given the recent project delays, will meet demand forecast in years to come, and which of the major supply countries will be best placed to grow and meet this demand forecast. The low‑price environment is seriously affecting the gross domestic product of many exporting countries, resulting in significant budget deficits and limiting capital available for future investment.

While there is agreement between the OPEC++ nations to meeting production cut targets, the need to meet national obligations will place significant pressure on this agreement while they collectively work towards bringing supply in balance with demand and tackle reducing the 1bn barrels in storage.

For shale producers in North America, it has been a particularly difficult time.

While we are now seeing that associated

production shut‑ins are beginning to make a significant contribution to the global supply reductions, the lasting impact of this recent downturn across the supply chain is expected to make recovery to the production levels seen earlier this year very difficult over the coming years.

Current uncertainties have affected market confidence and decisions around project plans are being given careful consideration.

But future investment will be required as a recent Rystad Energy report suggests a significant shortage of global supply of oil and gas by 2025. Getting the timing right to rapidly bring new capacity on stream has also never been more critical, especially for companies that are so clearly feeling the pinch.

Big players like the international and national oil companies that are eyeing large CapEx investments, will almost certainly bide their time before committing to these, but smaller players or newcomers financing smaller investments are still looking to push ahead with projects. These agile organisations are well‑placed in getting projects producing in the next three to five years, when forecasts indicate the demand will be there. Projects that are sanctioned or continue towards final investment decisions during 2020/2021 will need to approach project execution differently. With restrictions on travel likely to be in place until the end of year, ensuring resources and expertise are available to a project is going to be critical success factor for a timely and on‑budget delivery.

Many of the organisations across the oil and gas sector will be open to different ways of working, given the experience of lockdown. Where previously the use of remote technology was happening in baby steps, the acceptance around remote capability has leapt forward.

Therefore, LR is readily able to support clients across the world, and importantly, share our global expertise and experience in a manner that is easily available locally to project teams and operations on short notice. In the past, clients would have requested support on the ground, but now there is a greater willingness to utilise remote services, so that costly commitment and delay of relocating teams in the early stages can be avoided without compromising the expertise available to a project. This allows for relationships to be built and knowledge to be shared; clients can then bring in physical expertise when the time is right. It’s essential flexibility for those navigating oil price volatility but still determined to push forward with their plans.

Horizons June 2020 27

FLOATING STORAGE

Turbulence in oil markets pivots focus on floating storage technical needs.

A look at class requirements and technical challenges associated with converting tankers to moored units and storing fuel.

Negative oil prices and off‑the‑scale volatility in crude markets are positive for floating storage, as the next chapter of the COVID‑19 pandemic energy crisis plays out on the world’s fleet of tankers.

Beyond the turbulence, record‑breaking volumes of oil and refined products being stored on tankers at sea are presenting owners and operators not only with sky‑high earnings, but numerous technical and practical considerations.

The vessel’s flag state, age, size, cargo being stored, as well as the storage duration and location, and whether surveys are due and when, all need to be explored.

Most shoreside tanks in key hubs of Singapore, northwest Europe and the US Gulf are already full or leased, after global crude demand collapsed by a third, or some 30 million barrels per day (bpd).

Volumes deployed to floating storage as the surplus overwhelms commercial storage peaked at just under 300 million bbls (barrels) by early June, based on assessments from shipbrokers. That’s enough to meet all of the US oil needs for 15 days. Drawdowns are expected over the second half of 2020 as the oil market rebalances as the world gets back to work.

There are now 261 million bbls of crude and clean products in floating storage

based on Lloyd’s List Intelligence data.

Between 40 million bbls and 65 million bbls of clean products such as gasoline, jet fuel, diesel and gasoil are being stored on tankers, according to research provided from two shipbrokers.

That encompasses 500 tankers worldwide, from very large crude carriers through to smaller, medium‑range and handysize ships.

The data captures these smaller tankers because of changed methodology that defines floating storage as vessels at anchor for seven days or longer, rather than the normal 20‑day period. This change was made to include unsold or surplus cargoes on tankers awaiting discharge at ports, reflecting difficulties securing land‑based storage.

Nearly 10% of the Suezmax fleet, 11% of VLCCs and 9.5% of Aframax tankers are currently being used for floating storage.

An estimated 10% of all clean product loadings and 8% of crude loadings over April ended up in floating storage, reports from energy commodities analysts concluded.

Technically, permanent or semi‑permanent floating storage tankers are defined as ‘moored oil storage units’ or ‘moored oil storage tankers’, using their own anchor

and operated at a fixed location. Survey frequency is considered on a case‑by‑case basis. The Lloyd’s Machinery Certificate (LMC) that encompasses propelling and essential auxiliary machinery covered in special surveys is withdrawn for storage units and can be maintained or suspended for moored oil storage tankers.

Most of the older tankers used for floating storage, particularly off Malaysia and Singapore, supplement tank farms and are defined as moored oil storage tankers. They are frequently linked to oil traders and mainly conduct ship‑to‑ship transfers to other bunker units or smaller tankers. Numbers in Singapore rose over the last quarter of 2019, as oil traders and shipowners sought to secure extra supplies with floating storage of IMO 2020‑compliant low‑sulphur marine fuels.

Tankers used for storing crude and products on a shorter‑term basis gain little from changing their class status to a moored oil tanker, based on recommendations from LR. Unless floating storage is a longer‑term option, repurposing is generally unnecessary unless docking, intermediate, renewal and special surveys undertaken by classification societies need to be accommodated, in which case this needs to be discussed at the earliest opportunity with Class.

We partner with our clients, assisting them to look at the risks, then manage or mitigate them and reach the most effective solutions.

Tony Field LR’s Vice President of Marine and Offshore, Middle East & Africa

28 Floating storage

Even if class and statutory requirements remain unchanged, operators are still encouraged to discuss their vessel’s floating storage deployment with LR, as well as flag states, to check for any new requirements or changed inspection regimes.

“We need to understand where owners intend to park this piece of floating steelwork and for how long,” says Tony Field, Vice President of Marine and Offshore, Middle East & Africa. “We partner with our clients, assisting them to look at the risks, then manage or mitigate them and reach the most effective solutions.”

If the owners do wish to change the class status to a Moored Oil Tanker/Unit, then the survey regime can potentially be reduced, provided the flag state agrees. Any reduction is based on best practice, the age of the ship and considered on a case‑by‑case basis.

The tanker’s survey history and the sea conditions where it will be anchored at a fixed location are also taken into account.

Typically, an intermediate survey could be reduced in scope, and the renewal special survey fully maintained even if dry‑docking can be waived and an in‑water survey accepted by Class and Flag in lieu.

Remote surveys, which were typically used for postponement surveys, minor damages and potentially some outstanding issues after a physical survey, are now proving to be a useful alternative if access to the ship is difficult while travel restrictions remain in place in some countries during this pandemic.

Who pays for hull or propeller cleaning and how it will be monitored – especially if storage wasn’t envisaged at the time of signing the original contract – will depend on the charter party. Hull fouling is expected if vessels are stationary for any period of time and can lead to increased fuel consumption, so whether responsibilities and liabilities lie with the owner or charter need to be agreed.

Degradation of refined products stored on tankers is a well‑documented issue that needs monitoring and specialised quality management to ensure best practice, says Douglas Raitt, LR’s Singapore‑based Advisory Services Manager.

“There’s a need to spread the message that this is not a simple, straightforward matter of storing products for six to seven weeks and then sell it and hope the product quality remains the same,” says Raitt.

“With lighter products such as naphtha and gasoline you may find that over time the composition changes, with evaporation of the lighter ends. For jet fuels and distillates, oxidation stability could impact product quality and suitability for eventual end use. Bacterial growth is also a real threat to clean products. Tanks need to be regularly drained of water condensation to prevent ingress, with regular testing as necessary and dependent on ambient storage temperatures and storage conditions to check for bacterial growth. How long the product is stored, different tank coatings

and their condition can also impact product degradation and cargo values.

“With regards to Very Low Sulphur Fuel Oils (VLSFOs), it should be noted that these may be prone to instability over time so a regular health check through testing is required if fuel is to be stored on board for longer periods of time.”

Unlike 2015 and 2016, when floating storage was last at significant levels, most tankers aren’t being used for contango plays. This means, when the spot price is higher than the future price, oil traders can buy oil on the physical market, take out a futures contract and store and later sell the oil at a profit.

Although anecdotal research suggests that a number of crude and product tankers are being used for this purpose, most storage is enforced as a result of the demand collapse and surplus now flooding the market.

Discharge delays and bottlenecks at the port of Singapore were running to three weeks, rather than the normal three days at the end of April.

Demand for additional Aframax tankers to accommodate accelerating clean floating storage demand through to June supported earnings and rates for the smaller tanker sector. The largest product tankers secured spot charter rates that equated to earnings above $170,000 daily, in April. Meanwhile VLCCs that were averaging $150,000 daily in April are still earning $50,000 by late June, well above breakeven levels of around $25,000 daily for a modern ship of this size.

Horizons June 2020 29

LAY‑UP

Owners look to lay‑up as they navigate COVID‑19 trade declines.

Reactivation requirements, anchorage choice and how best to protect their tonnage are among the key challenges facing operators.

For the first time in a decade, large numbers of ships are heading for lay‑up as the COVID‑19 pandemic crushes demand for consumer goods and widespread travel restrictions temporarily end passenger cruising.

Cargoes carried on containerships are set to fall by 10% this year, the largest decline in this sector’s 64‑year history. Owners of these vessel types, as well as passenger and cruise ships, are among the first in the maritime sector deciding to lay‑up and are becoming reacquainted with regulatory and technical measures to prepare and protect vessels whilst out of service.

This volume of lay‑up has not been seen since the global financial crisis of 2008 and 2009. Up to 15% of the global fleet of bulk carriers and containerships were removed from trading as shipments of dry bulk commodities like iron ore and coal and consumer goods contracted.

This time it’s different. Cruise and short‑sea shipping are the first, highest profile casualties with industry leaders publicly stating in April that prolonged lay‑ups were being considered following the suspension of cruise services.

The smaller, passenger ferry and ro‑ro sector throughout northwest Europe and the Mediterranean is not immune either. There are widespread service reductions and staff retrenchments, particularly in Scandinavian countries and northwest Europe. Companies unable to profitably operate their vessel services on a freight‑only basis are exploring lay‑up options as their vessels remain idle at ports.

The global containership fleet faces similar turbulence with hundreds of scheduled services cancelled through March to May. 30 Lay‑up

This time it’s different. Cruise and short‑sea shipping are the first, highest profile casualties with industry leaders publicly stating in April that prolonged lay‑ups were being considered following the suspension of cruise services.

There are reports that in excess of 11% of the fleet was idle by mid‑June.

In Norway, where many of the North Sea’s offshore services, deep sea and rig companies are based, turnover declined by 25% by mid‑April, according to the Norwegian Shipowners Association.

Passenger ship sector turnover was 79% lower. Lay‑up numbers were anticipated to triple by the year’s end, based on a member survey.

For now, most containership and passenger vessel owners are looking at hot or warm lay‑up options that allow a vessel to be quickly reactivated and returned to service within 24 hours to a week. These restrict ships to lay‑up for periods from up to one month to a maximum of a year.

Cold or long‑term lay‑up applies to vessels spending up to five years out of service, which reduces daily running costs to a bare minimum. The duration of lay‑up is a crucial decision and one that is

particularly difficult to make in the midst of a pandemic. Yet, when the vessel can be expected to return to service dictates the scale of savings to be made.

Anecdotal reports suggest anchorages provided by specialist lay‑up companies are already filling up or booked out.

The warmer waters off Malaysia and Indonesia are popular anchorage areas, while in northwest Europe, some ports have begun advertising availability to host smaller passenger ferry and roll‑on roll‑off ships, aside from traditional locations in Norway.

Most requests are reportedly for warm lay‑ups, which allow for vessels to rapidly return to trading as and when lockdown restrictions ease, which will restart global economic engines and see passengers and consumer goods moving again.

Class societies alongside the flag state, port authorities and insurers are all involved in lay‑up preparations.

For hot lay‑ups that allow 24‑hour reactivation, ports can grant a temporary permit for ships to moor provided that class and flag surveys are carried out, according to LR Marine’s guide to ship lay‑up. Ships remain within normal class and flag state requirements, and the inspection regime is unchanged, although crew numbers can be reduced if they stay within certified minimum limits. Ships can remain laid up typically for one month under these conditions. For hot lay‑up with one‑week reactivation, which normally allows a 12‑month maximum lay‑up, crewing can be below numbers needed to trade if class and flag state agree. Some vessel operations may be restricted.

Warm lay‑up means a ship’s designation is usually officially changed to ‘laid up’ by classification societies. The ‘Laid Up’ notation means that owners have requested that Class continue while the vessel is out of service. To keep this status, if the lay‑up extends beyond the ship’s

annual survey, surveyors must attend to examine hull and machinery before it expires. If a Special Survey is due (a survey done every five years), an underwater examination also has to take place. There is another option to have the vessel de‑classed for inspections and maintain a ‘Laid Up Surveys Overdue’ notation.

If vessels are in warm lay‑up for up to six months, the International Safety Management Code (ISM) and International Ship and Port Facilities Security Code (ISPS) certificates are suspended. These codes, included in international maritime conventions, set minimum standards for the safe management and operation of ships and port and security requirements.

Certification is withdrawn if lay‑up extends longer than six months. A reactivation audit is required for ISM and ISPS if the vessel is reactivated within six months, and an interim survey required for any longer.

Risk assessment for planned manning levels, maintenance of general machinery, safety equipment, systems and alarms are among a long checklist of steps needed to protect the vessel during lay‑up. Steps to protect against hull fouling and corrosion are also necessary.

Whether lay‑ups are greater than 2009 when numbers surpassed 1,000, is uncertain; many owners don’t immediately confirm the status of their ships. But already there are indications that COVID‑19 presents greater challenges for seaborne trade, suggesting that lay‑ups will become a feature dominating shipping over 2020.

Read LR’s ship lay‑up guide A guide for owners and operators on preparing ships for lay‑up and protecting them while out of service.

Horizons June 2020 31

IHM REGULATION

Maintaining your Inventory of Hazardous Materials, compilation is just the beginning.

The 31 December 2020 regulatory deadline for Inventory of Hazardous Materials (IHM) requirements may be fast approaching, but it’s not the end of the story. Far from it.

This is a living and breathing document and implementing ongoing maintenance is crucial.

Jennifer Riley‑James LR’s Senior Ship Recycling Specialist and Product Manager

32 Regulation

Start of project

Shipowner

IHM budget planning and contract arrangements Weeks to months, depending on project scale

IHM compilation

Submission of documentation to LR

IHM desktop approval

Eight weeks minimum if using a third party to undertake sampling and compile the IHM

Onboard verification survey

IHM certification

~2weeks

~1 week

~3 weeks

Lloyd’s Register

End of project

~14 weeks

The end of year deadline for compliance is hardly breaking news – regulations have been around since 2009, with the formal adoption of the IMO Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships (HKC). But it’s only in recent years, with the phased entry of the 2013 European Union Ship Recycling Regulation (EU SRR), that shipowners have really started to engage with the task of IHM compilation en‑masse.

up‑to‑date. Not only to ensure compliance, but because a comprehensively compiled document minimises risks and potential liabilities, and does much to enhance the safety of ships’ crews in the longer term.

With many well on the way to compiling their IHMs to gain certification ahead of the deadline, the focus is shifting to how best to implement ongoing maintenance.

These are, after all, documents that stay with ships throughout their operational lifetime. So it’s important to keep them

Here, LR can help by providing a standard, editable PDF that can be updated as many times as needed and easily stored/transferred due to its small file size. This takes care of the need to quickly update the IHM if any items on board (which are, or could be, part of the

With so much else to occupy minds (and resources) in marine, keeping this maintenance process simple is essential.

Staying consistent – by using the same user‑friendly IHM template across your fleet – is a great starting point.

ship’s structure or fitted equipment), are added, removed or replaced.

These updates should be based on information from a completed Material Declaration (MD) and Supplier Declaration of Conformity (SDoC), requested from the

For more details on the issues discussed here, and to see how we can continue to support your ongoing maintenance through our optional annual survey service, contact your local office today.

Horizons June 2020 33

REGULATION

supplier. To streamline this process, LR also offers carefully designed templates for these documents as part of our service, ensuring a simple and consistent approach for you and your suppliers.

It is also worth noting that the request for your suppliers to complete an MD and SDoC should be included specifically in your procurement policies.

With IHM maintenance truly mission critical, and consistency the simplest way to make it happen, taking advantage of best practices and using the best available tools really will have a positive impact. Ensuring conformity with the legislative requirements becomes a swift and straightforward task, and helps ensure a smoother process when certification is renewed every five years.

IHM

Procurement Policies A procurement policy should ideally: • Request any items supplied to the ship to be accompanied by a completed MD and SDoC as per Resolution MEPC. 269(68) – 2015 Guidelines for the Development of the Inventory of Hazardous Materials and the EMSA best practice guidance.

• Make explicit reference to: — Resolution MEPC.269(68) – 2015 Guidelines for the Development of the Inventory of Hazardous Materials to cover HKC. — Regulation (EU) no 1257/2013 if inclusion of EU SRR hazards is required.

• The policy should preferably cover the hazards listed in both Appendix I and II of HKC and Annex I and II of EU SRR. Note: a blanket statement included generically in your procurement policy stating that hazards must be restricted is not likely to be enough to meet IMO and EU requirements for IHM ongoing maintenance.

34 Regulation

IHM integration into Safety Management Systems

Material Declarations and Supplier Declarations of Conformity

While implementation depends on the systems already in place for managing paperwork onboard vessels, our best practice advice is to integrate your new IHM maintenance process into Safety Management Systems by:

• MDs and SDoCs are required to be collected for all items brought onboard the ship that will or could be part of the ships structure and fitted equipment – even if they contain no hazardous materials. The IHM is all about building up a chain of positive and negative statements about what is onboard your ship, to facilitate safe and environmentally sound recycling at the end of operational life.

• Designating a person responsible for maintaining and updating the Inventory (this person may be employed ashore or on board).

• Ensuring the designated person has appropriate training, qualifications, knowledge and experience to perform their respective duties.

• Ensuring the designated person establishes and supervises a system to ensure the necessary updating of the Inventory in the event of new installation for any hazards present above the defined threshold values, and maintains the Inventory, including dates of changes or new deleted entries based on information provided in the supplied MD and SDoC.

• Unique MD and SDoC should be requested for each individual equipment type brought onboard the ship.

• Multiple units of the same piece of equipment can be covered under a single MD and SDoC.

Balancing European ambition and recovery with shipping’s recovery and the global consensus on reduction of GHG emissions from ships.

A European Recovery Plan and the first Annual Report on CO2 Emissions from Maritime Transport Report are expected to reinforce the need for unilateral European action on GHG emissions from ships, but what are the potential implications?

Recent disruption caused by the COVID 19 pandemic is cited as both an opportunity for decarbonisation – recover in a carbon neutral image – but also an impediment – recover to afford the luxury. However, the fundamentals behind decarbonisation remain: a necessary response to climate change and an opportunity for energy security for states reliant on fossil fuels.

It should come as no surprise that, in their crisis recovery planning, the European Commission is pursuing a more sustainable European economy. While it has noted the detrimental impact of COVID‑19 on the maritime sector, it has also recorded the attractive recovery opportunity offered by carbon pricing in that sector.

The European Commission has also published its first Annual Report on CO2 Emissions from Maritime Transport required by the EU Monitoring, Reporting and Verification (MRV) Regulation. There may be debate about the detail of the full report, as well as the completeness and reliability of the THETIS MRV data – particularly if used in the future as a baseline for carbon intensity reduction or the surrendering of emissions allowances – but headline emission figures from the report will reinforce the case for EU institutions to ensure that shipping is included in the European Climate Law and is subject to the ambition for carbon neutrality that will bind EU member states

and institutions. It will also ensure that shipping is required to control emissions (via an upgraded EU MRV Regulation), pay for emissions (through the EU Emissions Trading Scheme (EU ETS)) and make the transition to sustainable alternative power (with Fuel EU Maritime) that the European trajectory for climate neutrality in 2050 and the EU Recovery Package may demand.

However, as the report itself records, ships calling at European ports in 2018 emitted circa 138 million tonnes of CO2.

In 2015, shipping emitted more than 800 million tonnes worldwide, with updates for 2015 and data for more recent years to be provided by the Fourth IMO GHG Study unlikely to reduce that figure. That potential delta of at least 600 million tonnes of CO2 confirms that whilst Europe can make an exemplary contribution to decarbonisation in shipping, it will not be able to deliver it alone.

It remains to be seen how a reinforced ambition and a sustainable recovery in Europe will be translated into climate diplomacy without compromising the European intent or alienating the other states and an industry striving for recovery and sustainability.

The climate change imperative for decarbonisation has not changed.

Neither has the need to sustain a global, collaborative policy and regulatory response to achieve real reductions in

For further information about these or any other upcoming regulatory changes, please contact your local LR office or visit www.lr.org/imo.

Here you will find various IMO Committee and Sub‑Committee meeting documents.

Visit www.lr.org/en/marine‑shipping/marine‑subscribe/ to subscribe to receive our bulletin with updates of IMO agendas, summary reports and our forthcoming IMO legislation document.

GHG emissions from ships. Caution is needed to ensure that unilateral ambition and recovery do not make the recovery of international shipping from the current crisis, or its future decarbonisation, more challenging than they are already expected to be.

LR: supporting your compliance throughout COVID‑19.

Measures to deal with COVID‑19 have caused many problems for shipping companies who need to ensure their ships remain compliant with national legislation and international agreements. Surveys have been difficult or impossible to arrange due to various restrictions in place and certification has not always been possible to renew or endorse.

Flag states are issuing guidance on contingency measures although not all are aligned and there are many updates. On 2 June, IMO published international guidance for flag states, which includes surveys or certificates which cannot be renewed beyond the three months generally allowed in Conventions.

LR made available a summary page on www.lr.org and LR Class Direct, which provides copies of documents received from flag states indicating how extension requests will be dealt with by their flag state. This also provides guidance from the various Port State Control MoUs. This is regularly updated as the crisis proceeds, and it is expected that there will be a large number of updates following the publication of the IMO Guidance.

Horizons June 2020 35

NEWS

What’s happening in our world.

The world doesn’t stand still and neither do we. Catch up on the latest developments at LR from our teams around the globe.

LR supports Euronav’s optimised Fleet Condition Monitoring programme.

LR has signed an agreement with Euronav to approve its Machinery Planned Maintenance and Condition Monitoring Scheme (MPMS(CM)) for 25 LR‑classed vessels. This will be performed in accordance with LR’s recently updated ShipRight procedures for Machinery Planned Maintenance and Condition Monitoring, helping Euronav optimise maintenance schemes and embrace available technology.

To approve Euronav’s MPMS(CM), LR will conduct a remote audit of the planned maintenance scheme, which involves the review and approval of selected machinery on the basis of satisfactory Condition Monitoring data, and an implementation audit performed during the first annual survey.

“Using technology to perform remote audits helps both LR and Euronav protect the safety of crew, surveyors and auditors while also reducing the need to open up machinery, meaning there are fewer, less intrusive attendances on board,” said Theodosis Stamatellos, LR’s South Europe Marine and Offshore Regional Manager.

In September 2019, LR significantly updated its ShipRight procedures for Machinery Planned Maintenance and Condition Monitoring and the corresponding Rules, which enable operators to apply the most appropriate planned, condition‑based, risk‑based or predictive maintenance methodologies to each of their machinery items, in order to suit their specific needs.

Euronav’s Fleet Technical Manager, Theodore Mavraidis, said: “Over the past five years, we have extensively applied condition‑based maintenance techniques throughout our fleet, supplementing the traditional ‘preventive maintenance’ and ‘condition monitoring’ routines.

36 News

Within our organisation, we have built a strong technical knowledge base and valuable expertise enabling the next step. This next step encompasses as its main objectives: the use of our resources, people and equipment, even more effectively; improved efficiency of equipment/machinery performance, which provides savings in operations and energy consumption; and pro‑active condition‑based maintenance that will imply more control over resources, as well as reduce business and safety risk.”

“In this journey, we feel fortunate having LR by our side, supporting us with their established tools and approval framework of the updated ShipRight procedures,” added Mr Mavraidis. “Just as technology has been developing rapidly in fields like telecoms, data analytics, smart devices and infrastructure, the same can be said of asset condition monitoring and we recognise in LR a reliable partner who can significantly contribute to our organisation’s progress in digital transformation.”

EIZO secures LR type approval for maritime monitors via remote survey.

As part of the European Union (EU) Recognised Organisation (RO) Mutual Recognition Type Approval scheme, EIZO Corporation has been awarded type approval from LR for its 19 and 25.5 inch maritime monitors for an Electronic Chart Display and Information System (ECDIS) with radar applications. It’s the first European certificate for electrical equipment in Japan.

The EU RO Mutual Recognition Type Approval scheme covers type approval certification on selected components and equipment for which mutually agreed technical requirements have been developed and agreed by all stakeholders in the EU RO Group, ensuring consistency for different types of equipment.

EIZO’s current line of DuraVision ECDIS monitors (FD2603W, FDU2603WT, FDS1904, FDS1904T) were issued the certificate.

These monitors are built specifically for harsh maritime conditions and are calibrated at EIZO’s own factory to meet

the highly specialised requirements of ECDIS systems. EIZO offers optional optical bonding for each model, which is also produced in‑house.

Kazuhide Shimura, Executive Operating Officer, EIZO Corporation, commented: “Meeting requirements for major maritime classifications such as LR is extremely important in demonstrating that our products are proven for use in harsh environments. EU RO MR ensures that EIZO continues to provide a high degree of customer assurance to system integrators and end users in the maritime market, regardless of their location.”

Fumio Kure, LR’s General Manager in Japan, said: “We are proud that LR was able to issue this certification at this time as we had to rely on remote surveying capability for the approval as surveyor attendance was hindered by COVID‑19 challenges.

Congratulations to EIZO for obtaining EU RO MR Type Approval certificate in addition to LR class type approval.”

LR leading drive to maintain supply chains during COVID‑19 pandemic.

LR is driving proactive collaboration with key shipping stakeholders to support the IMO COVID‑19 recommendations for facilitating maritime trade, including the movement on food and medical supplies, during the pandemic.

Following the publication of the circular on 27 March to all IMO member states, as well as governmental and intergovernmental agencies, where IMO Secretary‑General Kitack Lim stressed it was “crucially important that the flow of commerce by sea should not be unnecessarily disrupted”, LR is pushing to ensure that global sea trade can continue to deliver the services that societies need.

LR’s efforts will focus on encouraging regulators and Recognised Organisations to act more effectively, consistently and quickly during these difficult times by establishing a uniform approach for properly evidenced

postponement of classification and statutory surveys on ships.

“In these clearly extenuating circumstances, LR will push for the necessary changes outlined by the IMO with the regulatory bodies and other key stakeholders to ensure that maritime services continue to operate and deliver the necessary support to counter this pandemic. Each one of us has a role to play in creating the necessary equivalence to the rules and regulations to ensure that the critical supply chains are maintained,” said LR’s Marine and Offshore Director, Nick Brown.

In addition to the above, LR is actively working with the Maritime and Coastguard Agency (MCA) in the UK to drive the necessary changes. The MCA, which has been quick to act at publishing pragmatic guidance for operators and seafarers, is also working to consider a consistent approach across the regulators to expedite the necessary changes.

Hudong Zhonghua Shipbuilding selects LR for two naval projects.

LR has been selected to provide assurance and certification services to Hudong-Zhonghua Shipbuilding Group (HZ) for two significant naval projects with the Algerian Naval Force and the Royal Thai Navy.

The Algerian Naval Force project, consisting of a 96-metre Corvette, will be designed and constructed to LR’s Naval Ship Rules. The Corvette is designed for operations that include patrol, escort and protection of maritime interests within the nation’s Exclusive Economic Zone.

Incorporating a helipad and a crew of 78, it has a range of 3,500 nautical miles and is capable of top speeds in excess of 27 knots. It is scheduled for delivery in 2022.

The project for the Royal Thai Navy, a 210-metre Landing Platform Dock (LPD) ship, can carry up to 800 marines and 20 amphibious vehicles, and has a well-deck that can deploy up to four Landing Craft Air Cushion (LCAC) vehicles – or hovercrafts – of approximately 150 tonnes each. It is also fitted with two large hangars that can carry up to four helicopters and a flight deck that can operate two helicopters. The expected delivery date is 2023.

In addition to its more traditional role, the LPD ship will also be used for humanitarian assistance and disaster relief missions. It is an export variant of LPDs currently in service with the Chinese People’s Liberation Army (PLA) Navy, which are also being built at HZ. LR will provide design and construction certification services to HZ in accordance with LR’s Naval Ship Rules.

“Being selected to collaborate on these naval vessels is testament to our longstanding relationship with Hudong-Zhonghua and both navies. We successfully completed work on two 95m Offshore Patrol Vessels (OPV) for the Thai Navy between 2003-2006 and supported the construction of three 28,000 tonne Corvettes for the Algerian Navy between 2013 and 2016,” said LR’s Head of Greater China, Maogen Xue.

Horizons June 2020 37

NEWS

LR to class new Multi‑Role Ships for Federal German Government.

The German Federal Waterways and Shipping Administration awarded this complex project to Abeking & Rasmussen Schiffs‑ und Yachtwerft SE. The shipbuilders, in agreement with Bundesanstalt für Wasserbau BAW, appointed LR as the classification society for two new 95-metre Multi‑Role Ships.

These next generation vessels will be capable of performing a number of tasks, such as emergency towing, fire‑fighting and buoy tendering, as well as oil recovery and chemical recovery operations. One of the many innovations is the ship’s propulsion concept with LNG as a single fuel.

LR Hamburg office is providing dedicated technical support relating to the complex regulatory framework for these multi‑functional ships. Early design screening of the LNG fuel gas system layout together with many more independent verifications of the initial design concept were performed prior to the final award of the classification contract to LR. Markus Büsig, LR’s M&O President for North Europe, said: “LR welcomes the opportunity to support Abeking & Rasmussen and

their client with these two next‑generation vessels. This is a significant achievement for the LR team as these ships will push the boundaries of flexibility and innovation.”

The design and engineering phase is underway and construction is scheduled to begin in 2021 with the ships due to be delivered in 2023.

LR selected for UK MoD’s Type 31 frigate programme.

LR has been selected to provide naval assurance services for the UK Ministry of Defence’s (MoD) Type 31 General Purpose Frigate programme. The five new vessels will be designed and constructed to LR’s Naval Ship Rules. During the first phase of the programme LR will provide design assessment and support, which will result in formal appraisal of the Type 31 design later this year.

During the later phases of the programme, led by Babcock International, LR will

asssist to ensure it is fully integrated with the shipyard’s digital acceptance systems and that supply chains effectively implement project requirements for equipment certification.

The first Type 31 frigate is scheduled to be in the water in 2023. The ships will be built at Babcock’s Rosyth yard in Scotland.

It is intended that the Type 31 frigates will replace some of the Type 23 (Duke Class) frigates currently serving in the UK Royal Navy’s fleet.

The design, ‘Arrowhead 140’, is a new technology‑enabled frigate that will be able to undertake a wide range of activities, including maritime security, maritime counter‑terrorism and counter‑piracy operations, escort duties and task group support missions. The modular adaptability and flexible construction of the frigate design also make it suitable for export opportunities.

David Lloyd, LR’s Global Naval Business Director, said: “We are delighted to be

Technical Matters LR’s Technical Matters series brings you regular opinion and insight from technical experts on a wide range of topics, from enhancing safety to improving asset performance. In each issue, we will consider how new regulations, technologies and innovations can be pragmatically and safely applied, weighing up the pros and cons in each case, and focusing on practical, efficient application.

Read the latest Technical Matters: info.lr.org/expert/technical‑matters

38 News

partnering with Babcock on the Type 31 frigate programme. Following successful engagement on other major naval programmes in the UK, such as the Type 45 (Daring Class) destroyers and more recently the Queen Elizabeth Class aircraft carriers, we have a deep understanding of the UK MoD regulatory requirements and will be able to tailor our assurance activities to support Babcock and the MoD in the best manner possible.”

Sean Donaldson, Managing Director for Babcock Energy & Marine, said: “We are delighted to welcome Lloyd’s Register to the supply chain for the Type 31 frigate programme. It has been our intention from

the outset to develop a genuine UK‑wide supply chain and we continue to have conversations with other key suppliers

about their capability to support this pathfinder programme for the Royal Navy, and broader export opportunities.”

LR opens new Naval Liaison Office to support Australasian Naval community.

LR has strengthened the local Naval Australasian support structure by establishing a new Naval Liaison Office (NLO) in Sydney, Australia. The office will provide dedicated Naval classification and assurance services, and technical and project management support to the Royal Australian Navy, the Royal New Zealand Navy, and their respective Departments of Defence, and companies in the wider defence industry with local capability.

The NLO will support LR’s wider Naval business throughout the Asia‑Pacific region as more navies and defence industry companies and organisations choose LR’s naval assurance and advisory services.

Steve McDowall, LR’s Naval Business Manager for Australasia, who will lead the NLO, said: “LR is proud to bring this new, high quality, local capability to strengthen our existing relationships with navies, defence departments and the defence industry in Australasia, and the extensive range of services that LR delivers

in providing assurance services to Naval safety and capability management.”

ready to continue partnering with them for ongoing success with local expertise.”

“The new NLO team have a huge naval pedigree and have supported navies and the wider defence community in Australasia or many years,” continued Mr McDowall. “The core capability is built around the management of safety and naval fleets, and also in the design, build and sustainment of future naval ship classes. It is an extremely bright future for navies in the Australasian region and LR is

David Lloyd, LR’s Global Naval Business Director, commented: “Whether it’s the Royal Australian Navy embarking on a considerable newbuilding programme or the Royal New Zealand Navy in the midst of a significant fleet capability upgrade, establishing a Naval Liaison Office in Sydney reinforces LR’s commitment that we are both present and ready to be the classification society partner of choice.”

Expert Voice LR’s Expert Voice podcast series – driving the debate in marine and offshore. Each of our podcasts features leaders and influencers from across our industry, in frank conversation with one another, focusing on trending topics and challenging discussion points.

Listen to the latest podcast: info.lr.org/podcast/expert‑voice

Horizons June 2020 39

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