the Baltic
the
s u mm e r 2 0 1 1 T h e O f f i c i a l M a g a z i n e o f t h e B a lt i c E x c h a n g e
summer 2011
A unique Antifouling “Beyond silyl”
From Low VOC and fuel savings to environmental protection
- a new generation -
the
BALTIC The Baltic is the official magazine of the Baltic Exchange Tel: +44 (0) 20 7623 5501 E-mail: enquiries@balticexchange.com Website: www.balticexchange.com The Baltic is published for the Baltic Exchange by Maritime Media Ltd The Diary House, Rickett Street London SW6 1RU Tel: +44 (0) 20 7386 6100 Fax: +44 (0) 20 7381 8890 E-mail: inbox@mar-media.com The Baltic annual subscription rates £110 for UK, Europe or the world, sent airmail including P&P
Publisher
W H Robinson editor
Sandra Speares Tel: +44 (0) 20 7386 6120 E-mail: sandra.speares@mar-media.com
SALES manager
David Scott E-mail: david.scott@mar-media.com
DESIGNER
Justin Ives
ISSN 0967-0394 This publication is printed on PEFC certified paper. PEFC Council is an independent, non-profit, non-governmental organisation which promotes sustainable forest management through independent third party forest certification.
The Baltic is published on behalf of the Baltic Exchange and is supplied to members as part of their annual membership package. However, the views expressed in The Baltic are not those of the Baltic Exchange, its directors, its officers or the publishers unless expressly stated to be such. The Baltic Exchange is the world’s premier and oldest international shipping market. Most of the world’s open market bulk cargo chartering is negotiated at some stage by Baltic members who represent leading international companies. Other activities include the world’s most important market for buying and selling ships, specialist freight by air and commodity dealing. The Baltic Exchange operates a strict code of business ethics encapsulated in its motto ‘Our Word Our Bond’. The Baltic Exchange disclaims any responsibility for the advertisements contained in this magazine and has no legal responsibility to deal with them. The responsibility rests solely with the publisher.
theBaltic Summer 2011 www.thebaltic.com
1
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Contents Chairman’s message 7 Mark Jackson Baltic briefing 7
9 FSA approves Baltex – launch imminent 10 Forging closer Chinese links 12 Baltic/ASBA reception 13 Choose the Baltic for arbitration hearings 14 Presenting in Japan
14
15 Young Baltic Night 16 Summer wines 17 Contacts Logbook 18 Driven by hot air
25
Industry News 20 People, places, plcs Baltic Comment 23 Michael Grey 30
State of the market 25 Tankers 26 S&P 30 BIMCO
38
32 Dry Bulk 38 Heavy lift 47 Towage & salvage 51 Shipmanagement, crewing and employment Environment
55
55 Green shipping
theBaltic Summer 2011 www.thebaltic.com
3
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Contents Oxford Analytica 58 Derivative regulation proposals foster confusion FFA 61
61 All clear for FFA trades Ship supply 66 E-trading for suppliers Risk management
66
68 Risky business 75 Maritime communications Geographical focus 77 Norway
  68
79 Hamburg Cargo focus 81 Slow but steady progress for breakbulk Port focus
  77
82 Middle East Belgium Law 85 Cracking the code Insurance
82
88 Insurance parlance 90 ITIC Legal news 91 Legally speaking
85
104 Events theBaltic Summer 2011 www.thebaltic.com
5
Chairman’s message Mark Jackson
Chairman’s message We are also working hard
Authority has approved the Baltic
to ensure that the needs of the
Exchange’s freight derivative trading
commercial side of the shipping
screen Baltex has been greeted with a
industry are not overlooked by
mixture of excitement and trepidation. For some
regulators. For example, the
it represents a huge opportunity to bring in new
UK is currently in the process
players into what will now be a more tightly regu-
of
lated FFA market and to improve transparency.
covering the payment of bribes
Others however worry that they will lose market
under the UK Bribery Act. How
share to a screen. Only time will tell whether
this law will impact facilitation
these hopes and fears come to pass, but the
payments made to get ships
Baltic Exchange will continue to do what it
through canals, ports and
believes is best for the marketplace as a whole.
channels remains unclear, but
Freight derivatives trading is not the everyday
we are liaising with the UK
business of many of the members of the Baltic
authorities to make sure that
Exchange. Baltic Exchange members come in
the government understands
all shapes and sizes. From the big commodity
how the international shipping
houses to the sole trader shipbroker, the
industry functions and what
breadth and depth of Baltic member activities
shipbrokers,
is astonishing. I am always surprised by how
owners need to do to ensure
many niche trades and services are provided by
that they remain on the right
our members.
side of the law. We have
implementing
legislation
agents
and
Many members do not and will never trade
published advice to members
freight derivatives. Some take only a passing
on our website and hope to be
interest in our daily freight market assessments.
organising a seminar on the
It is important that the Baltic Exchange does
issue later this year.
Tradewinds
N
ews that the UK’s Financial Services
Mark Jackson
not lose sight of these members’ needs and we
The Baltic continues to perform a lobby role
support charities close to individual members’
need to ensure that we continue to offer all our
for members, particularly regarding the non-
hearts. One such member is Phil Parry, founder
members a wide range of support.
domiciled tax status of non-UK residents. We
of the recruitment consultancy Spinnaker who
For some, it is simply enough to be part
have recently appointed a lobbying consultancy
has asked me to become involved with fund
of a highly reputable self-regulated market
to ensure that our concerns and hopes for
raising for the world renowned Great Ormond
whose members’ business ethics are based
change are expressed at the highest levels of
Street hospital for children in London. Against
on the motto “our word our bond.” Knowing
Westminster.
all the odds, the staff at the hospital saved Phil’s young son Oscar’s life, battling successfully
that your partners and potential partners
These are just a few examples of the
are able to understand that your business is
practical support which the Baltic delivers to
against his leukemia. Now fully recovered after
trustworthy and comes with the endorsement of
its members, but if there are areas which you
years of treatment, Oscar is leading a normal
the internationally recognised Baltic Exchange
or your company feels that the Baltic Exchange
childhood. Phil has now launched the OSCAR
is invaluable. On a more practical level, our
through its collective size, reach and expertise
(Ocean and Shipping Community Advancing
disputes resolution service continues to help
can deliver assistance, do let us know.
Children’s Health and Research) campaign and
Baltic members recover monies owed to them
Our charitable role is also one which we take
hopes to raise half a million pounds towards
when all other channels fail and we are able
seriously. Not only have we provided funding for
the remaining £2.2 million needed for the Seas
to provide companies with advice on the
a lifeboat in Salcombe, Devon for many years,
and Oceans themed floor in the new hospital
experience of others members when entering
but we also support a range of shipping related
building. See www.gosh.org/oscar for full details.
into business with a new counterparty.
charities including the Sailors Society. We
theBaltic Summer 2011 www.thebaltic.com
7
Baltic Briefing
FSA approves Baltex: launch imminent T
he UK’s Financial Services Authority
stakeholders to benefit from faster execution
and principals and has been developed in close
(FSA)
Baltic
and a more efficient transmission to clearing. It
collaboration with the market. All live prices can
Exchange’s subsidiary Baltic Exchange
has been designed to attract new financial and
be seen by Baltex screen members, but the
Derivatives Trading Ltd (BEDT) to run
commodity-orientated participants who prefer to
trader’s identity is kept anonymous to all except
trade in a regulated environment.
the nominated broker. As well as a live trading
has
authorised
the
a Multilateral Trading Facility to offer trading in Forward Freight Agreements (FFAs). Baltex, a central screen based trading solution for the dry
Baltex users will be able to trade the following routes:
those who simply want to see the depth of the market. This view only mode will also be made
FFA market, will go live shortly. The Baltic Exchange board met on 4 May
screen, a view only option will be available to
Dry Bulk Voyage FFAs
available through quote vendors. Baltex is designed to be an easy to use tool
and gave BEDT its full support for the roll-out
C3 – Capesize Tubarao - Qingdao
of the system.
C4 – Capesize Richards Bay – Rotterdam
for freight derivative traders. It incorporates a fully
C5 – Capesize W. Australia – Qingdao
bespoke screen layout, built-in warnings and
C7 – Capesize Bolivar - Rotterdam
functionality which can be tailored to traders’
Baltic Exchange chairman Mark Jackson said: “In establishing and funding the Baltex
needs as well as an Application Programming
system, the Baltic continues its core role in facilitating the development of the shipping
Dry Bulk Timecharter Trip FFAs
Interface (API) which can be used to interface into
marketplace in all its forms. This is the right
P1A – Panamax Transatlantic RV
in-house systems. Baltex is closely monitored by
response to broad market developments and
P2A – Panamax Skaw-Gib/Far East
a compliance team in London.
emerging regulatory change.”
P3A – Panamax Japan-SK/Pacific RV
BEDT chairman Paul Over said: “FSA
S7 – Supramax East Coast India – China
regulatory approval means that Baltex is also countries. Baltex also has provisional approval
Dry Bulk Time Charter Average FFAs
from the Swiss Financial Market Supervisory
Capesize TC Average
Authority (FINMA), subject to receipt of letters
Panamax TC Average
to it from the FSA. Baltex is expected to
Supramax TC Average
gain authorisation from other jurisdictions in the
Handysize TC Average
authorised in all European Economic Area
coming months.” Baltic Exchange chief executive Jeremy Penn
Baltex has been developed by the Baltic
said: “We are pleased to have finally received
Exchange, the world’s only independent
the FSA’s approval and Baltex will be opening
provider of daily bulk shipping indices and
for business very soon. We have held back the
route assessments, over the past two
launch to allow companies wishing to participate
years. The trading system itself is run by
enough time to deal with the formalities of
Baltic Exchange Derivatives Trading Ltd, a
signing documentation.”
subsidiary of the Baltic Exchange. Baltex is
Underpinned by the highest supervisory and compliance standards, the Baltic Exchange
based on technology developed by Elysian Systems.
brand, as well as a high level of support from
The screen provides live FFA prices and
the market, the launch of Baltex will mark
will support straight through processing
a step change in the way in which freight
to the international clearing houses CME,
derivatives are traded. This is a trading system
LCH, NOS and SGX. The transaction’s
created by the shipping market and presents
clearing status is displayed in real time.
a unique opportunity for all freight derivatives
Baltex can be used by both brokers
theBaltic Summer 2011 www.thebaltic.com
FFA traders are incouraged to sign up
9
Baltic Briefing
Forging closer Chinese links
Signing an MOU between Maritime London and Shanghai Pudong New Area.
T
he Baltic Exchange continues to build
and information services in the coming years.
Other highlights included a visit to the
its profile in China, forging closer links
The signing was witnessed by Alderman Michael
Chongqing Shipping Exchange, which specialises
with government officials and ship-
Bear, Lord Mayor of the City of London, Jiang
in the sale and purchase and registration of
ping related businesses. This effort was
Liang, vice chairman of Shanghai CPPCC &
Yangtse River ships and showcasing the Baltic
underlined with a series of visits this April both
governor of Pudong New Area, Zhu Jiajun,
Exchange’s services at the China International
with the Lord Mayor of the City of London and
vice governor of Shanghai Pudong New Area,
Marine Port & Shipbuilding Fair in Nanjing. The
Maritime London to Shanghai-Pudong as well as
Zhu Jianhua, deputy director of the Shanghai
trade fair was opened by Baltic chairman Mark
exhibiting at a shipbuilding trade show Nanjing.
Municipal Transport & Port Authority (SMPTA)
Jackson.
Led by Baltic chairman Mark Jackson, the
and Baltic Exchange chairman Mark Jackson.
Baltic Exchange marketing manager Robin
trip began with a ceremony in Shanghai to
Baltic
development
King said: “There is a huge amount of interest
showcase the Baltex trading system for freight
manager Sun Wei said: “We were glad to see
from Chinese shipping companies and maritime
derivatives as well as witness the signing of an
that the event was well attended by a diversified
professionals as to both the role of the Baltic
agreement for greater co-operation between
audience from most of the major shipping
Exchange and the benefits of joining. We are
UK promotional body Maritime London and
regions in China, including Tianjin, Dalian,
working hard to demonstrate both how modern
the Economic and Information Technology
Guangzhou, Chongqing, Zhejiang Province and
shipbroking practice is based on the timeless
Commission of Shanghai Pudong New Area.
Fujian Province, along with Shanghai. We were
traditions of trust and fair play as well as how
The Pudong financial area of Shanghai is busy
encouraged by the genuine interest in freight
the Baltic Exchange’s indices are constructed
building closer connections with the international
derivatives shown by the many representatives
and their relevance to Chinese companies. A
maritime services sector and hopes to enhance
of the China shipping communities at the event.
growing number of Chinese companies are
its shipbroking, legal, insurance, financial
Following the event, we have been approached
joining the Baltic Exchange and we expect this
and accounting services as well as maritime
by a few Chinese organisations with cooperative
number to continue increasing.”
education, classification, surveying, research
proposals in connection with Baltex.”
10
Exchange
business
theBaltic Summer 2011 www.thebaltic.com
Baltic Briefing
There is a huge amount of Chinese interest in the Baltic Exchange
Xu Dazhen, deputy director general of Shanghai Pudong Lujiazui Financial Zone Administration with Baltic chairman Mark Jackson
Lord Mayor of London Alderman Michael Bear
theBaltic Summer 2011 www.thebaltic.com
11
Baltic Briefing
Baltic/ASBA reception T
he Baltic and Association of Ship Brokers & Agents (USA) teamed up to host a reception in Stamford, Connecticut during March’s Connecticut Maritime Association Week. The week also saw the Baltic Exchange holding a consultative meeting for US based members.
Paul Hirtle (LB Chartering), Willy Lyth Jeremy Penn (Baltic Exchange) and Tom
Jeremy Penn and Charles Timberlake (Atlas
(Baltic Exchange) and Axel Ditlev
Roberts (Compass Maritime and ASBA)
Shipping)
Somonson (U Sea Bulk)
Baltex team grows T
he Baltic Exchange’s Baltex executive team is now five strong with the recent addition of
Sabrina Gravelle (Baltex Office Manager) to the team. The team is responsible for market surveillance and compliance. Pictured left to right are Paul Stuart-Smith (chief operating officer) Anastasis Mouktaris, Laurie Campbell, Yucel Unsal and Sabrina Gravelle.
Baltic Irish night raises the rafters M
arch saw the Baltic Exchange Irish Society hold its 29th annual dinner with a guest
appearance by TV and film actor Adrian Dunbar. Over 500 guests from across the shipping community combined traditional Irish food with a night of drinking and singing, accompanied as ever by Pat McNamee’s band. Previous celebrities joining the dinner have included boxer Barry McGuigan and actor James Nesbitt. Over £9,000 was raised for the Integrated Education Fund of Northern Ireland. The charity sup-
ports the continuing development of multi-faith schools in Northern Ireland. The evening was chaired by Brian Nixon of Morgan Stanley.
12
A great night for all
theBaltic Summer 2011 www.thebaltic.com
Baltic Briefing
Choose the Baltic for arbitration hearings T
he Baltic Exchange has opened its doors to arbitrators seeking a neutral London based venue to hold maritime hearings and mediations.
Members of the London Maritime Arbitrators Association (LMAA), which is itself now based at the Baltic Exchange, enjoy preferential room hire rates as well as professional support service. Based on the first floor of the Baltic Exchange, the top class facilities include sound proofed separate meeting rooms, quality catering and are flexible enough to meet almost any arbitrator’s requirements. According to Baltic marketing manager Robin King, the Baltic makes “an excellent choice for any arbitrator seeking a reputable venue for his hearing.” He adds: “We’re a stone’s throw from numerous City law firms, can put on a great lunch as well as being fully equipped with all the latest audiovisual equipment that any arbitrator would expect from a top maritime venue.” www.balticexchange.com/venue for further details.
Changes to vessel definitions T
he Baltic Exchange is currently undertaking a review of the definitions of its panamax and capesize vessels to ensure that they
continue to match the market norm. One proposal under consideration is the increasing of capesize vessel definitions from 172K dwt to 180K dwt and panamax vessel sizes from 74K dwt to 76K dwt. Any views on the subject should be addressed to the Baltic’s head of freight market information, Willy Lyth. Email: wlyth@balticexchange.com
New director joins Baltic Board A
The Baltic Exchange can be used for arbitrations
drian Wooldridge of Navios Maritime Holdings has been elected to the Baltic board as a shareholder director this July. He will be joined
by Haralambos Fafalios of Fafalios who was re-elected to the board.
theBaltic Summer 2011 www.thebaltic.com
13
Baltic Briefing
Presenting in Japan T
he Baltic Exchange’s marketing manager Robin King and Asia Pacific general manager
Philip Williams delivered a presentation on the role of the Baltic to CLSA Asia-Pacific Markets Japan Forum in Tokyo at the end of February. Attended by 750 institutional investors from 19
Extra year in office for Mark Jackson
A
t the request of the Baltic Exchange
for the dry freight derivatives market, we are
Board, current chairman Mark Jackson
pleased that our constitution permits the flexibility
will continue in the role for one further
to extend Mark’s tenure,” said Paul Over.
year, extending his current two year
term which commenced on 8 July 2009.
Mark Jackson commented: “I feel privileged to have been asked by
countries and 600 senior executives from more
The plan was initiated by the Baltic
my fellow Directors to stay on and to have
than 150 Japanese corporations, the Baltic
Exchange’s vice-chairman Paul Over and
the opportunity to have a continued role in the
Exchange speakers were able to showcase the
unanimously ratified at a recent Board meeting.
development of the Baltic’s projects. We have
shipping markets, the role of the Baltic’s indices
“Right now the Baltic needs both stability
an exciting year ahead and I am sure the next
and the fundamentals of freight derivative trad-
and continuity of leadership. Mark has done
12 months will be a defining period in the history
ing. Other presentations made during the four
an excellent job in broadening the activity of
of the Baltic Exchange.”
day event covered finance and strategy, geo-
the Baltic in step with the developments of
It has been customary for Baltic Exchange
politics and economics, culture and consumer,
its markets and the Board is very keen that
chairmen to serve a term of two years before
commodities, transport and real estate, as well
he should stay on to complete the task. His
being replaced by the vice-chairman, though
as energy and technology.
leadership in the freight derivatives arena has
on a number of occasions in the past chairmen
CLSA is one of Asia’s leading brokerage and
been indispensible. With the Baltic on the cusp
have served longer terms.
investment groups and holds its Japan Forum
of launching Baltex, a centralised trading screen
every year.
ICS celebrates centenary T
Athens shipbroking reception
he Institute of Chartered Shipbrokers celebrates its centenary and is marking the
occasion with a gala dinner at the National Maritime Museum in Greenwich on 26 May and
T
he Baltic Exchange will be holding a cocktail party at the Athens British Embassy prior to
the publication of a book, Quality Ashore, which
the Hellenic Shipbrokers dinner this June. Details
chronicles the story of ICS from 1911 to today.
are still to be finalised, but please contact the
The 128 page book is available in hardback
Baltic Exchange’s Athens representative Maria
(ISBN 978-0-901772-01-5) and softback (ISBN
Tierris. Email: mtierris@balticexchange.com
978-0-901772-02-2). The Institute will also be sponsoring a Baltic Broker Friday lunch session in the Baltic Exchange bar on 20 May. All members are welcome.
New dates for freight derivative forums T
he date of the Baltic/FFA Brokers’ Association dry freight derivatives forum has been moved
from June to 19 October. The forum will still take place in London and will incorporate a meeting of the Freight Market Information Users Group. The corresponding forum for the tanker market also takes place in London on 18 November. Philip Williams addresses Japanese
For further details, please contact Robin King.
audience
Email: rking@balticexchange.com
14
theBaltic Summer 2011 www.thebaltic.com
Baltic Briefing
Vianne Zhang, Angela Broughton and
Young Baltic Night
Janina Lam
Kemy Koleva and Jo Simmonds(Howe Robinson)
T
he latest and ever popular Young Baltic Night took place in March at London’s Kanaloa bar. Open to all members of the Baltic Exchange aged 35 and
under, the Young Baltic Association holds regular get- togethers throughout the year. For further details please contact Cris Eccleston. Email: ceccleston@balticexchange.com
Jo Simmonds (Howe Robinson), Crispin Eccleston (Baltic Exchange)
Lauren Moore, Sarah Lovie, Carolina Hassan and Yasmin Dennis
and Sarah Anthony (Clarksons)
(all SSY)
Charlie Howarth (ICAP Shipping), Seb Hawthorn (EA Gibson), Josh Hawksley (World Tankers), Bertie Tibbles (EA Gibson)
Alex Tsavliris (ICAP Shipping) - second from right and friends
theBaltic Summer 2011 www.thebaltic.com
15
Baltic Briefing
Summer wines
As we step onto our patios with ever-optimistic expectations of a long, warm summer, David Hughes offers some interesting options to bring to the party
Y
es they were surprised last summer
Stanlake Park Regatta White, Spain’s many
much around the world, they’ll all have offerings
when I stepped onto the patio with
offerings include the crisp, citrusy Verdejo variety
and as usual, my advice is generally that you’ll
the day’s first offering: Sherry! Not
from the Rueda region and whilst Albariño is
get what you pay for.
auntie’s oxidised Bristol Cream, but
generally excellent it’s become popular and the
Flying the flag, if you’re holidaying down
actually chilled, crisp, dry Manzanilla (made from
price has risen accordingly. Try and find the
Devon way, look out for ‘Pebblebed Rosé’ made
the Palomino grape) and I poured normal wine
Godello variety, also from Galicia, which will
locally in the Exe Valley.
measure sizes as the guests picked at mixed
show the similar nectarine, apricot nuances.
salamis, olives and nuts. Do give it a try; it’s dif-
Those flavours are also found in the Viognier
ferent and it really works.
variety, now widely grown throughout southern
And yes there’s Red
France. Also good examples are from California,
When it comes to summer reds my two tips are:
Australia and Argentina.
firstly choose the right variety and secondly give
White wines
The zesty lime offerings of the wonderful
the wine a good chill, but not too iced up that it
Muscat is one of only four noble varieties allowed
Riesling grape come from Australia’s Clare or
in Alsace; search out a good producer and you’ll
Eden Valleys. The ever-popular Sauvignon Blanc
Excellent targets: France: Beaujolais’ Gamay
not be disappointed by the wonderful light,
either explodes out of the bottles from New
variety is a cert! A good Beaujolais-Villages
grapey sensation that makes it one of the great
Zealand or a tip for the more restrained but
will suffice as will some of the region’s lighter
aperitif wines. Alsace apart, Brown Brothers Dry
delicious style is to look for Quincy from The
crus: Chenas, Chirouble and Fleurie. Cabernet
Muscat, is an excellent offering from Victoria,
Loire Valley, different to and certainly cheaper
Franc from the Loire eg: Saumur-Champigny,
Australia.
than Sancerre.
Chinon. A great favourite of mine is Bardolino
shuts down the wine’s fruit expression.
Alsace is the home of another great taste
from Italy’s northern region from where the
bud tingler - Pinot Blanc, light, fresh with some
lighter Valpollicella’s hail. Bardolino has lovely
green apple and citrus, it’ll also match the salads
Rosé, Rosé
vibrant cherry flavours and if you come across
on the table as will Austria’s Grüner Veltliner
When we visit the sunshine holiday shops and
Chiaretto, snap it up!
variety which is gaining in popularity. Again
thoughts turn to wine, it’s Rosé that comes to
Australia’s Brown Brothers Tarango (it’s a
fresh, crisp and dry and your guests will enjoy
the fore. And we’re drinking more and more
grape variety) is widely available and will make
discovering a variety from somewhere different.
of the stuff and many shapes and forms it
friends and if the purse strings allow, chill down
Chenin Blanc seems to be ruled by South
has taken. From the ‘blush’ offerings with their
New World Pinot Noir: New Zealand, Australia,
Africa which produces inexpensive, light tropical
sweetish twist that also tend to hit the shelves at
California, South Africa and Chile.
fruit offerings. Chenin’s home, the Loire Valley
the lower end all the way to the expense of good
has the excellent appellation of Vouvray which
Rosé Champagne, Cava and other sparklers.
produces dry, off-dry, sweet and sparking Chenin. I have always been a great fan of good
For sure, sparklers set the style but I find consuming fizz in the sun equals a rotten head
any further guidance or advice, please do contact me.
the following morning, so I keep to the still stuff.
Muscadet (must be ‘sur lie’) for its minerality
I must confess I am a fan of the good old
and perfection with cold shellfish and seafood.
standard - Mateus Rosé which has that off-
However if you wish to sample the new kid on
sweet, light spritz that I find matches anything
the block, try Picpoul de Pinet, from France’s
spicy.
Languedoc region which will bring back
France’s Provence is probably my favourite
memories of dining by the sea shore. Portugal’s
Rosé region. Light pink colour (the wine trade
Quinta de Azevedo’s lovely fresh Vinho Verde
call it “onion skin”) dry, with lovely underlying
has caused a sensation of a different type. From
summer berry fruit flavours, I find it the most
the land of cork they have used screw cap which
elegant. The real food matchers come from the
has caused more of a storm than the country’s
Rhône and if you like the bigger style, seek out
Euro debt!
Tavel although Provence’s neighbour, Bandol’s
And don’t forget Old Blighty! Kent’s Chappel
Rosés can also beef it up a bit. If you’ve a large
Down’s ‘Flint Dry’is refreshing and if you’re in
gathering, the Loire’s Anjou produces excellent
the Berkshire area seek out the excellent local
and well-priced dry and off-dry Rosés and pretty
16
Wines in this article are generally available in good wine shops and supermarkets. However,
theBaltic Summer 2011 www.thebaltic.com
David Hughes was a shipbroker from 19611983 when he “moved from shipping to sipping” – opening a wine bar-restaurant in Old Spitalfields in 1984. After 25 years the business was sold and he is now a wine consultant. A retired member of the Baltic Exchange, he conducts corporate, company and private wine tastings and is available for information and the supply of wines. www.thewine-enthusiast.co.uk david@thewine-enthusiast.co.uk
Baltic Briefing
Sporting contacts There are many sports clubs associated with the Exchange and in most cases they are open to both members and staff of member companies Baltic Association Football Club
Lawn Tennis Club
Sub-Aqua Club
Stephen Calafti
Crispin Eccleston
Lorraine Burns
Anglo Greek Chartering, The Baltic Exchange
Tel: +44 (0) 20 7369 1654
The Baltic Exchange
38 St Mary Axe, London EC3A 8BH
E-mail: ceccleston@balticexchange.com
38 St Mary Axe, London EC3A 8BH
Tel: +44 (0) 20 7283 9621
Tel: +44 (0) 20 7369 1638
Sailing Association
E-mail: lburns@balticexchange.com
Cricket Club
Simon Cox
Jamie Freeland
Howe Robinson Shipbrokers
Young Baltic Association
AM Nomikos, 4th Floor
77 Mansell Street, London E1 8AF
Crispin Eccleston
40 Grosvenor Gardens, London SW1W 0EB
Tel: +44 (0) 20 7457 8421
The Baltic Exchange 38 St Mary Axe, London EC3A 8BH
Golfing Society
Tel: +44 (0) 20 7369 1654
Chris Cox, c/o Frank Symons Ltd
E-mail: ceccleston@balticexchange.com
Devonshire House 146 Bishopsgate, London EC2M Tel: +44 (0) 20 7377 5423 E-mail: info@balticgolf.co.uk
Key Baltic Exchange contacts Management
Government Broker
Marketing
Tel: +44 (0) 20 7283 9300
Pat Swayne
Robin King
Fax: +44 (0) 20 7369 1622/1623
Tel: +44 (0) 20 7369 1668
Tel: +44 (0)20 7369 1637
VPN 171 2000
Fax: +44 (0) 20 7623 6644
E-mail: rking@balticexchange.com
E-mail: enquiries@balticexchange.com
E-mail: pswayne@balticexchange.com
Chief Executive
Dispute Resolution
Willy Lyth
Jeremy Penn
Barrie Wooderson
Tel: +44 (0)20 7369 1625
Tel: +44 (0) 20 7369 1624
Tel: +44 (0) 20 7369 1674
E-mail: wlyth@balticexchange.com
E-mail: jpenn@balticexchange.com
Fax: +44 (0) 20 7623 6644
Freight Market Department
E-mail: bwooderson@balticexchange.com
The Baltic Exchange (Singapore)
PA to Chairman and Chief Executive
Communications
8 Eu Tong Sen Street
Jill Bradford
Bill Lines
#17-87 The Central
Tel: +44 (0) 20 7369 1621
Tel: +44 (0) 20 7369 1653
Singapore 059818
E-mail: jbradford@balticexchange.com
E-mail: blines@navigatepr.com
Tel: +65 6377 0654
Philip Williams
E-mail: pwilliams@balticexchange.com
Baltic Exchange Charitable Society
Membership Manager
Richard Butler
Tel: +44 (0) 20 7369 1633
Tel: +44 (0) 20 7283 6090
E-mail: jharrison@balticexchange.com
Jackie Harrison
Baltic website: www.balticexchange.com
E-mail: richard.butler@baltic-charities.co.uk
Events Room Hire Head of Finance
Jill Bradford
Duncan Bain
Tel: +44 (0)20 7369 1621
Tel: +44 (0) 20 7369 1627
Email: jbradford@balticexchange.com
E-mail: dbain@balticexchange.com
theBaltic Summer 2011 www.thebaltic.com
17
Logbook
Driven by hot air Over 60 years have passed since gas turbine propulsion was first tested in the Royal Navy gunboat MGB 2009. Now widely used in naval ships, its application in commercial shipping has been rather more sporadic, as outlined by Ambrose Greenway
T
Rotorua and Union Rotoiti for Trans Tasman
he first commercial experiment with gas
which used a regenerator to recover heat from
turbines came in 1951 when Shell’s
exhaust gases, clocked up some 9,900 hours,
service together with two BHP bulkers Iron
Anglo-Saxon Petroleum Co replaced
7,000 of them on residual fuel.
Carpentaria and Iron Curtis. Around the same
one of four diesels in its 12,000 dwt
1960 marked the apogee for free-piston
time Chevron built five gas/electic tankers and
diesel-electric tanker Auris with a 1,200hp British
machinery with five vessels completed: Bolton
Hilmar Reksten the gas carrier Lucian, which
Thomson Houston unit designed to run on
Steam Shipping Co’s Rembrandt; Waling van
used methane boil off as additional fuel. Several
heavy residual fuel oil. She crossed the Atlantic
Geest & Zonen’s small reefers Geestland and
were eventually re-engined but in the meantime
in March 1953 under gas power alone and the
Geeststar, the Dutch whale catcher Robert
further experience had been gained in Russia
overall results were encouraging enough for all
W Vinke and the Russian Pavlin Vinogradov,
with the gas-powered freighter Parizhkaya
four engines to be replaced by a single large
first of six 5,800 dwt timber carriers. Success
Kommuna (1968), resulting in four Kapitan
gas turbine in 1955. Lighter than a diesel and
proved elusive and in 1964 the Geest ships were
Smirnov type ro-ros completed at Nikolayev
easier to maintain, it proved to be no cheaper
converted to diesel and the whale-catcher laid
between 1978 and 1987, which were broadly
than a diesel per unit of power produced and the
up whilst the loss-making Rembrandt was sold
similar to the Admiral Callaghan in concept and
greatly increased cost of its installation cancelled
to Greece in 1967 and quickly re-engined.
speed.
out other savings, leading to the abandonment of the project.
Gas turbine development then switched to
In the passenger field, Boeing’s advanced
marinised jet aircraft engines with low weight
jetfoil propelled by gas turbine-driven waterjets
In France, meanwhile, early versions of a
to power ratio and the first units went to sea
had made its debut in 1974 followed three years
free-piston engine, a type of diesel using air
in the MSTS ro-ro Admiral William M Callaghan
later by Finnlines’ impressive 31-knot Finnjet, the
cushions instead of a crankshaft to return the
completed by Sun Shipbuilding in 1967. Capable
world’s largest and fastest ferry designed to sail
pistons invented by Argentine Raul Pateras
of over 25 knots, one of her original twin Pratt &
between Travemunde and Helsinki in 22½ hours.
Pescara, were installed in the coasters Cantenac
Whitney turbines was replaced in 1969 by the
Her twin Pratt & Whitney outfit was augmented
and Mérignac completed for Worms and Co in
first of the now popular General Electric LM2500
in 1981 by two diesels for running at a more
Le Havre in 1954. Controllable pitch propellers
units. Pratt & Whitney engines were also used
economical 18 knots in winter.
were required as the gas turbines were non-
in four 26-knot Euroliner class containerships
Further fast ferries appeared using LM2500
reversible.
completed by Rheinstahl Nordseewerke in
or the more powerful LM2500+ engines, notably
Across the Atlantic, experiments to increase
1971/72 for Denholm subsidiary Scarsdale
Stena’s HSS series, but the first cruiseship to
the speed of Liberty ships in the US Reserve
Shipping for long-term charter to Seatrain. All
be powered by them was Celebrity’s podded
fleet to 15 knots led to two being lengthened
were converted to diesels following their sale to
propulsion Millennium in 2000, closely followed
and fitted with gas turbine machinery in 1956/7,
OOCL in 1981.
by three sisters and parent company Royal
in the John Sergeant’s case a 6,600 shp
Ironically the delivery of the next batch of
Caribbean’s four-ship Vantage class headed by
General Electric heavy duty unit, whilst the
thirsty gas driven ships coincided with the oil
Radiance of the Seas. In the rival Carnival stable,
William Patterson was given six GM Pescara
price rises in the mid 1970s. These included six
Queen Mary 2 together with some Holland
type free-piston gasifiers generating 6,000shp.
ro-ros from the Whyalla yard in South Australia:
America and Princess ships use gas turbines
The latter proved disappointing but John
Broken Hill’s Iron Monarch and Iron Duke in
to supplement their diesels for extra speed or
Sergeant, operated by United States Lines for
1973/4 and two pairs of sisters for USSNZ in
when sailing in ecologically restricted waters
MSTS, averaged 16.8 knots on her first Atlantic
1975/6, Seaway Prince and Seaway Princess
such as Alaska.
crossing and her more efficient installation,
for the Tasmania service and the larger Union
18
theBaltic Summer 2011 www.thebaltic.com
Logbook
Shell’s pioneer gas-powered Auris
Bolton’s Rembrandt proved costly
Transatlantic containership Euroliner (Fotoflite)
Seaway Prince and sister had short working lives
Finnjet clocked up 30 years in service
Russian ro-ro Kapitan Smirnov
HSS fast ferry Stena Discovery
Millennium, first gas-powered cruiseship
theBaltic Summer 2011 www.thebaltic.com
19
People, places, plcs
Industry News P
iracy has continued to dominate the
As the state of lawlessness spirals downward
According to Mr Baker: “Governments and
agenda in recent months, not least
in the Indian Ocean and the level of violence that
supranational bodies imposing sanctions expect
because of concerns over the mis-
pirates are prepared to use to coerce seafarers
international trading companies to be aware of
treatment of seafarers held hostage
and to influence the hostage negotiation
them and to have taken steps to ensure they are
by pirates and the recent case of the Asphalt
increases, this breach of the ransom agreement
not in breach.”
Venture, where the vessel was released on pay-
sets a precedent that is of the utmost concern.”
The Club is advising members to produce
ment of a ransom while seven members of the
evidence showing they have taken measures to
crew continued to be held, sparking international
ensure that all international sanctions have been
condemnation at the use of seafarers as human
New IMO secretary-general
complied with. “Shipowners are expected to
shields.
Six candidates have been nominated by
know what sanctions apply, to whom they apply
As the International Maritime Organization
their governments to take up the position of
and to what cargoes they apply,” Mr Baker says.
said: “using seafarers as human shields to
secretary-general of the International Maritime
continue to engage in piracy – one of the most
Organization when Efthimios Mitropoulos stands
heinous of crimes against humanity at sea – is
down at the end of the year. They are: Lee
Sovcomflot results
totally unacceptable.”
Sik Chai of Korea, Andreas Chrysostomou of
Sovcomflot’s gross revenues were up 7.4% last
A protest march was organised in India last
Cyprus, Neil Ferrer of the Philippines, Jeffrey
year at $1.3bn compared to the previous year’s
month by the seafarers union National Union
Lantz of the US, Esteban Pacha Vicente of Spain
figures, the company has announced.
of Seafarers of India (NUSI), Maritime Union of
and Koji Sekimizu of Japan. The election will
Earnings before interest, taxes, depreciation
India (MUI) and shipowners associations Indian
take place at the IMO council meeting in London
and amortisation were $533.3 million, down 3%
National Shipowners Association (INSA), Foreign
next month.
from the previous year’s total of $549.7 million.
Owners Representative and Shipmanagers
Net assets were $3.12 billion compared to $3.01
Association (FOSMA), Maritime Association
billion in 2009. The company took delivery of 13
of Shipowners, Shipmanagers and Agents
Sanctions guide
vessels, mostly newbuildings during the course
(MASSA) and other stakeholders. This industry
North of England P&I Club has issued a new
of the year.
march was coordinated by NUSI. The intention
guide to explain to shipowners how to deal with
According to Sovcomflot chief executive
was to highlight the crisis and demand from
the increasing number of international sanctions
Sergey Frank, “In 2010 Sovcomflot Group
the Government of India the safety of Indian
in place worldwide.
delivered a robust financial and operating
seafarers.
Writing in the Club’s newsletter Signals,
performance despite the background of another
In a joint statement, the International Chamber
head of loss prevention Tony Baker says:
challenging year for the shipping industry – the
of Shipping, ITF, Indian National Shipowners’
“Trade sanctions are at the forefront of modern
year of the weakest freight market in the past
Association, NUSI, MUI, IMEC, InterManager,
diplomacy and can be imposed by individual
decade.”
Intertanko and BIMCO registered their protest
countries or supranational bodies such as the
Chief strategy and financial officer for the
about the situation. The suggestion is that the
UN and EU. However, this can result in a
company Nikolay Kolesnikov added: “During
pirates decided not to honour the agreement
patchwork effect that makes it difficult to know
the year we had a successful and well-received
made with the ransom payment in retaliation for
exactly what sanctions apply to what goods in a
debut in the Eurobond markets, adding to the
the arrest of Somali pirates by the Indian navy.
particular state.”
group’s investment capacity and allowing it to
“This is a fundamental change to previous
Mr Baker says sanctions are a particular
take advantage of market opportunities. We
practice and moves the issue from being just
problem for shipowners, who often transport
maintain a conservative financial policy, with
between the shipowner and the pirates to being
goods from one country to another with no real
a significant portion of the group’s contracts
between the pirates and a government. It is a
legal connection to either. “An additional issue
being of long-term nature. The group’s move
major shift in the pirate-hostage equation which
for container carriers is they are wholly reliant on
into higher value-added sectors combined with
will need to be considered and addressed by
shippers stating truthfully the contents of their
very limited exposure on chartered-in tonnage,
the international community,” the industry bodies
boxes. Furthermore, the often complex web
modest order book and capital discipline at
said.
of contractual agreements involving ships and
a time of inflated prices in previous years
cargo can obscure entities that may be subject
continue to underpin the delivery of long-term
to sanctions.”
sustainable growth in line with the Group’s
“Our thoughts are very much with these seafarers and their families, as well as with all the other seafarers who are being held by the Somali pirates, and with their families.
20
The Club is warning that if an owner breaks a sanction, ignorance may not be a defence.
theBaltic Summer 2011 www.thebaltic.com
strategy. Future contracted revenues at the end of 2010 amounted to $ 4.9 billion.”
People, places, plcs The number of dry bulkers and tankers which suffered total losses continues to be low relative to the world fleet, but there appears to be a trend of losses to larger vessels. The size of the average dry bulker lost has risen from 19,000 gt in 2008 to 23,000 gt in 2009 and 32,000 gt in 2010. For tankers, the average has risen from 8,000 gt to 11,000 gt and then to 36,000 gt in 2010. As far as major serious losses were concerned, IUMI says back year figures continue
MLC certificate
the original HMRC rules and clearances, which
The Liberian Registry has carried out the first
in some cases now no longer apply, at least in
“The leading cause of serious or partial losses
ship inspection for compliance with the ILO
HMRC’s view. HMRC should also now consult
remains as incidents involving the machinery and
Maritime Labour Convention 2006 (MLC), ahead
on the reasons for its changed interpretation of
engineroom, accounting for 35.7% of cases
of its entry into force.
the tonnage tax rules.”
over the last five years. Half of all such losses
to deteriorate.
occurred to vessels over 20 years of age”.
The inspection was performed on board
Attritional losses in the mobile drilling rig
the 7,000 teu containership UASC Yanbu, owned by D Oltmann Reederei GmbH & Co KG
IUMI stats
segment in 2010 continued to be high, partly
of Bremen, Germany, and managed by Anglo
In spite of the major efforts to improve safety on
because of the significant increase in the size
Eastern Ship Management Limited, at the port
board ships, major casualties at sea continue
of the fleet and in the number of wells drilled.
of Hamburg on March 29, 2011.
to reach “disturbing” levels, according to the
This points to the inadequacy of insurance
latest report by the International Union of Marine
deductibles, given the impact of inflation and
Insurance.
rising labour and material costs, says IUMI.
Seatrade award
The IUMI statistics, which cover any incidents
Mobile drilling rig claim costs last year spiked
Paul Ioannidis, Emeritus Vice-Chairman of
involving vessels over 500 gt show the number
sharply following the total losses of the
the Alexander S. Onassis Foundation was the
of incidents reported in 2010 have continued the
Deepwater Horizon and Aban Pearl.
winner of the the Lifetime Achievement Award
negative trend of the previous four years.
at the Seatrade annual ceremony. Mr Ioannidis
There have been 623 serious losses reported
is also one of the longest serving members of
to date for 2010, a similar figure to 2009. This
Deepwater Horizon report
environmental group Helmepa and also served
means that 2010 joins the five worst vessel loss
The report into the Deepwater Horizon blow out
as chief executive of the Onassis Group fleets
years in the last 17.
in which 11 people were killed has pointed to acts
as well as a director of American Bureau of Shipping.
UK Tonnage tax
According to the Club “The pattern seems
and omissions by Transocean, including poor
to dash hopes raised a year ago of a reversal in
maintenance of electrical equipment, bypassing
casualty experience when shipping activity had
of gas alarms and automatic shutdown systems
slowed as a result of recession in many leading
that could prevent an explosion as well as lack
nations”.
of training of personnel. Transocean’s safety
Accountants Moore Stephens say companies
Patrizia Kern, senior underwriting director at
management system was called into question
operating within UK tonnage tax could consider
Swiss Re, commented that “even ahead of a full
as was the company’s ability to instill a safety
leaving the UK, as a result of the revenue
picture of the year from claims reports, there was
culture.
and customs body’s’ decision to unilaterally
no doubt that the failure to stem the high level
reinterpret the regime rules.
of casualties was of great concern to insurers”.
Deepwater Horizon’s flag state, the Marshall Islands, was also described as being “ineffective
According to tax partner Sue Bill:“Given the
“When IUMI’s annual conference is held in
in preventing this casualty”. By delegating
substantial increase in the UK fleet since 2000,
September, our committee will undoubtedly
all of its inspection activities to “recognised
it is widely considered that UK tonnage tax
report higher 2010 figures for total losses and
organisations,”
has been a success. At the outset, the regime
serious losses, illustrating the longtail nature of
on-board oversight surveys, the RMI effectively
promised clarity and stability, but HMRC’s
hull and machinery claims,” she said.
abdicated its vessel inspection responsibilities.
unilateral reinterpretation of the rules could be
without
itself
conducting
Total losses for 2010 numbered 63, similar to the figure for 2009. However, IUMI says that
detrimental.” may
since last year’s report “the outcomes for 2008
Green scene
have a detrimental effect on UK shipping as
and 2009 have deteriorated. The number of
ClassNK took another step forward in its efforts
internationally mobile shipping groups consider
reported total losses has increased for 2008
to help improve the efficiency of international
leaving the UK. They do not appear to arise from
from 89 to 96, and for 2009 from 67 to 86.
shipping today with the release of its new
government policy, but from changes in HMRC’s
This would suggest that 2010 will be similar to
environmental efficiency analysis software,
views that were finalised without consultation
its preceding two years. At this early stage of
PrimeShip-GREEN/EEOI. The new software is
with the shipping industry.
development of the book, nearly 600,000 gt has
a shipboard and web-based software system
already been reported as lost in 2010, against
for calculating and analysing the environmental
nearly 645,000 gt in 2009”.
efficiency of ships in service in line with the IMO’s
“These
fundamental
changes
“In considering their effect, HMRC needs to ensure that it continues to act fairly and reasonably by protecting shipowners who elected into the regime for a ten-year period based on
Weather continues to be the major cause of
Energy Efficiency Operational Index.
total losses, followed by groundings.
theBaltic Summer 2011 www.thebaltic.com
21
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Comment – Michael Grey
Beware of what you can’t see I
t is curious to note, as some medieval mariner
which are inscribed lists of their famous
might have remarked when swimming for his
victories; ports which were not dredged, or
life after his ship had foundered due to the dep-
industrial activities which never eventuated
redations of the dreaded Teredo Worm upon
after their fierce resistance. It must be like the
his bottom planks, how often the ambitions of
headquarters of celebrated regiments, whose
marine people are frustrated by the activities of
colours bear their battle honours and are the
the smallest creatures. And it has been so down
subject of enormous pride to the soldiers which
throughout the ages, whether we are consider-
succeeded them. One can imagine the gold
ing the effects of the teeth of goosenecked bar-
threads commemorating the environmental
nacles upon iron and steel, or even the microbes
campaigns to defeat the port authorities who
which are able to slake their voracious appetites
wished to expand their operations at the alleged
upon the vital organs of a diesel engine. The
expense of worms, newts, mudhoppers, grubs
well-educated marine industry person today has
and fleets of wading migrants. The steel mills,
to know as much about biology as one who
mines, refineries, chemical works and other
practices this science professionally.
industrial enterprises which were not built are
These
days,
even
the
tiniest
testaments to the campaigners’ zeal. What
marine Michael Grey
inspiration!
with their welfare. Once it was a few nose-ringed
cuddlability of the cub of a giant panda, in the
Cornish port of Falmouth which hoped to
activists who would demonstrate outside industry
way that the mad green legions of California
expand marine operations into its useful harbour,
offices with placards, or chain themselves to
adhered to the cause of this silt dwelling species.
with various enterprises expected to employ
the anchor cables of dredgers. Now these
They lobbied, they rallied and marched, they
some 800 people in what is an area not exactly
footsoldiers report to regional, international and
camped outside the state legislature and even
overflowing with job opportunities. But they have
national agencies whose words are law and who
managed to gain support for the lugworm in
reckoned without the latent powers of the algae
have the powers to bring any mighty industrialist
Washington. Some 12 years after the wretched
which apparently swarms in these warm western
to his knees, sobbing and pleading for mercy.
port authorities had identified the requirement
waters and which marine biologists believe
It is very strange how many of the daftest
for deeper channels and a bit more water
would be irretrievably harmed by the dredging,
things seem to have their genesis in the fertile
alongside their berths, they were still fighting with
digging and waterside construction that would
imagination of Californians. It was way back in
the environmental bodies. Eventually, perhaps
be necessary. And the wretched folk of Falmouth
the 1970s that I remember laughing uproariously
because they had finally managed to persuade
are now quailing before the terrifying powers of
about the difficulties being faced by the Port
the politicians that the net benefit of a port not
the European Habitats Directive, which seems
of Oakland, which had decided that if it was
silting up, with the loss of hundreds of jobs,
to have the ability to prevent any form of useful
not going to face economic stagnation, it had
was marginally greater than the welfare of the
industrial activity between the North Cape and
to accommodate the bigger and deeper ships
lugworms which ruminated on the harbour
the western fringes of Romania.
which were then coming into service. The port
bottom, the dredgers cautiously arrived to move
commissioners had, however, failed to take
some mud.
creatures have immensely powerful friends in
The latest victim is, we understand, the
the environmental agencies which are charged
The Habitats Directive has the power to make strong men weep. Falmouth, which has
into their calculations the welfare of the blue-
Maybe I am being unfair, but the madness of
known disappointment from time to time – I
nosed lugworms which lived a blameless life
Californians has since spread like bubonic plague
seem to recall a huge container ‘hub’ was
buried deep in the silt on the harbour bottom,
throughout the whole world, and environmental
once promised for the port – is now to have
and which, it was assumed, would be deeply
law is as respected and immutable as that
its ambitions frustrated once again, by a small
disturbed by the great steel buckets, grabs, and
prescribed by the Medes and Persians. I clearly
primitive life form, which I would doubt more
trailing dragheads of dredgers.
showed very bad judgement, all those years ago,
than a handful of the most devoted marine
The blue-nosed lugworm is not what you
in suggesting that concern about the habitat of
biologists would have recognised. There is a sort
might describe as a creature radiating charm.
invertebrates was a subject for humour. I am told
of David and Goliath feel to this story, except
Indeed, the only time people ever met one was
that I should repent.
that the David, in this tale of our times, is armed,
as they fastened it on to a fishing line to use as
I suppose in places where environmental
bait. But you would have thought that it had the
activists gather, they may have banners upon
theBaltic Summer 2011 www.thebaltic.com
not with a sling, but the nuclear warheads of the dreaded Habitats Directive.
23
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Tankers
Newbuild glut Rates remain weak as tanker fleet grows
N
ewbuilding levels continued to dog
OPEC shortfall
to buyers having problems making payments
the tanker market in the first quarter
Platts latest OPEC survey found that increasing
because of the international sanctions.
of the year, despite strong demand for
production in other OPEC countries failed to
According to Simon Newman, senior tanker
tankers resulting from a rapid rise in oil
cover the Libyan shortfall in March. According
analyst at ICAP Shipping, in the medium term
to John Kingston, Platts global director of news:
trade prospects in the product tanker market
The tanker market has continued to be weak
“Even the simple counting of barrels shows how
look promising, with refinery shortages or
as although oil consumption is on the increase,
difficult it will be for the market to recover from
capacity being squeezed, especially in Latin
there is still the question of absorbing new
the loss of so much Libyan crude.
America and Africa, but also to a lesser extent
consumption last year.
“Beyond that, the quality of the crude coming
in China, India and the US however, longer term
According to Erik Andersen of RS Platou
out of Libya is one of the highest in the world,
developments in refining will catch-up. He told
Economic Research, even if a third of the
with very good yields on the transportation fuels,
the International Parcel Tankers Association
tankers scheduled for delivery this year do not
particularly diesel, which the world needs. So
chemical and product tankers conference in
materialise, the company estimates that 40m
one barrel of crude from another OPEC country
March that he expected an “increase in east/
dwt of deliveries this year will push fleet growth
doesn’t neatly replace one barrel of Libyan
west long-haul trade as demand recovers, with
up by 7%.
crude. The market will need to see a decline in
India primed for export of high-end products to
demand to balance, and we are seeing signs of
the Atlantic basin”. He also predicted increase
that reaction to higher prices ongoing.”
in intra-Atlantic basin trade, with increases from
tonnage.
The good news for owners is that high growth in oil consumption and seaborne oil trade
Europe and the US to Latin America and Africa.
looks set to continue this year, according to Mr
While he said that the fleet growth is easing
Andersen. While the IEA forecast for global oil consumption increase this year is 1.6%, Platou
Iranian wild card
after a number of years of high growth, it will,
believes that this is too bearish a forecast,
Mr Andersen also considers Iranian oil company
however “be a slow-and-steady recovery as
given the fact the IEA had to revise its forecasts
NITC’s use of 25 to 30 of its VLCCs for floating
demand growth begins to take up the slack of
upwards on a number of occasions during the
storage in the second quarter of the year over
previous years of excessive deliveries”.
course of 2010.
the last five years as a potential “wild card” this
Newbuilding
prices
will
likely
remain
year. The use of tankers for floating storage has
suppressed due to excess yard capacity;
had an impact on freight rates. At the end of
however, as demand improves “the real
Seaborne oil trade up
March there were 16 NITC VLCCs being used
challenge to the industry will be preventing
Platou estimates that seabourne oil trade grew
for storage, which he suggests may be due
excessive take-up of cheap orders”.
4% last year, and was up 5% during the first two months of this year. However, Mr Andersen does not expect to see much effect on freight rates as the 1 million barrels of exports from Libya are being compensated by Saudi Arabia. He also estimates that following the tragic events in Japan, while the need to shut down the nuclear reactors might lead to an increase in ton-miles for tankers, the knock-on effect would be about $3,000 extra per day for VLCCs.
theBaltic Summer 2011 www.thebaltic.com
25
S&P
Steady as she goes Basil M. Karatzas, managing director for projects and finance with Compass Maritime Services looks at vessel prices
V
essel asset prices had followed closely
were bouncing off the bottom and the maximum
vessels are at present at approximately the same
the precipitous drop of the freight
impact was felt from the ‘stimulus packages’
or even better levels as compared to January
market in the second half of 2008.
worldwide. The BDI bounced ferociously from
2010 data (but slightly lower than the asset peak
Based on data provided by the Baltic
below 700 points at the worst point of the cycle
achieved somewhere in the summer of 2010 for
Exchange, the Sale & Purchase Assessment
in November 2008 to more than 4,000 points in
most asset classes).
Index (BSPA) for five-year old vessels in both
May 2010, and the tanker indices, both for dirty
Asset prices in shipping, as in any other
the dry bulk and tanker markets (Figure 1) has
and clean, recovered from the bottom achieved
industry, are influenced by many factors. As
shown a high degree of correlation to the freight
in April - May 2009 (about six month lapse after
important as present or future earnings may be,
rates (Figure 2) as depicted by the three Baltic
the dry market), to triple in the following year and
there are several parameters that may influence
Exchange freight indices (BDI for the dry bulk
reach a peak at about the same time the dry bulk
the decision making on the price to be paid for an
market and the BDTI and BCTI for the ‘dirty’ and
markets did.
asset or even the attractiveness of the asset to a
‘clean’ tanker market, respectively).
Since the market peak in late spring and early
new type of buyer/entrant to the market.
Of course, the second half of 2008 and the
summer 2010 (Figure 3), the dry bulk market
Vessel asset prices have been holding well,
first part of 2009 were unusual times in many
has dropped by one-half; however, the tanker
especially for modern vessels or assets with
respects, the sort of ‘black swan’ events that
indices have been fluctuating within a trading
forward delivery (such as newbuilding contracts)
occur so rarely that few believe their existence
range with the ‘clean’ tankers (BCTI) showing
and in the mind of many investors, act as a
beforehand: freight rates were in a free fall in
the most signs of promise and improvement.
physical hedge against inflation concerns. When
part due to the financial turmoil and the ‘sub
In a weaker freight market, or for that matter
central banks worldwide had been trying to
prime crisis’, lack of trade finance and a great
in a market with no direction, one would expect
outdo each other in terms of quantitative easing
degree of uncertainty and exacerbated systemic
that vessel asset prices will be deteriorating.
(ie printing fiat money), inflation concerns are
risk to the worldwide financial system. When
After all, the prospects for higher earnings are
obvious in the minds of investors, especially
there were doubts about the survival of long-
not clearly visible or especially enticing, and
ship owners and funds, as they have the most to
established financial institutions, trade was
therefore investors (and shipowners) would opt
lose in an inflationary environment. Ownership of
severely impacted, a sizeable part of the world
for investments in alternative assets/industries
vessels, ‘steel’ as some owners have expressed
fleet remained unemployed, and there was little
with better prospects. The following graph,
it, provides a physical hedge against inflation
demand for the purchase of vessels.
Figure 4, depicts the BSPA index for five-year old
worries, especially to an owner with in-house
Since the second half of 2009, world trade
vessels since January 2010. With the exception
shipping expertise who can acquire and maintain
has slowly been returning to normality (‘reverting
of capesize vessels, asset prices for five-year old
the ‘steel’ with the least amount of expense.
to the mean’ as statisticians would say) as demand for cargoes has been improving overall. Furthermore, the most prominent central banks worldwide acted in an orchestrated manner to create excess liquidity and maintain a very lenient and accommodating monetary policy (ie quantitative easing, historically super-low interest rates etc) It can be said that since the beginning of 2010, as far as shipping markets are concerned, the focus has been again on trade and freight rates and the extent of the financial ‘carnage’ has been contained to the lack of debt financing or the higher standards in terms of covenants and lower extent of leverage permitted. In the first half of 2010, there was a more or less ‘V-shaped’ recovery when the markets
26
Figure 1: BSPA since January 2008; source: The Baltic Exchange
theBaltic Summer 2011 www.thebaltic.com
S&P (vessels) provide a natural hedge in terms of construction/replacement cost and also as the ‘vehicle’ of transporting the commodities in the new world order, when the world economies fully recover. A by-product of the low interest policy of many a central bank is that savings accounts provide minimal returns (negative returns in certain instances), and therefore the opportunity cost of buying a shipping asset is low. Furthermore, the policy of low interest rates is further desirable for the owners/buyers with strong balance sheets since they can borrow at a historically low interest expense level or otherwise obtain competitive financing to take over projects or assets under default. As hinted previously, at certain times the Figure 2: Baltic Freight Indices since January 2008; source: The Baltic Exchange
market may be significantly impacted by the influx of new entrants. While traditionally there were ‘standard’ players/owners whose actions and timing could set the market, since the collapse of asset prices in late 2008, several new parties have been closely following the shipping markets. Several of such parties, some as private equity or hedge funds, have steadily been invested in shipping assets in the last year. In preliminary calculations, a few billion dollars have already been invested in existing shipping assets and newbuilding contracts and there is a multifold amount of money committed on the sidelines and seeking opportunities to invest in shipping assets. These new types of investors bring new inflows to the shipping markets with the direct impact of minimising the fall of asset prices at a market ‘down-tick’, maintaining strong prices and momentum at average rates
Figure 3: Baltic Freight Indices since January 2010; source: The Baltic Exchange
or magnifying the asset price increases during a market ‘up-tick’. Of course, not all asset classes/market segments in shipping behave uniformally, with some sectors better than others, some or most of the time. Furthermore, within the same asset class, certain types of vintage of vessels might react quite differently to the markets. For instance, while asset prices for modern tankers have faired well given the circumstances, first generation double-hull tankers have seen their values fall more as they have a hard time competing with modern vessels in a weak freight environment. And it is the weak freight environment, as the main driver of asset prices, that has many market participants wondering
Figure 4: BSPA since January 2010; source: The Baltic Exchange
whether asset prices may have to soften more in order to reflect the market.
A corollary to inflation worries is that
turmoil since 2008 has given the opportunity to
commodity prices are set to only increase both
certain companies and countries to strategically
Basil M Karatzas is Director for Projects &
in the foreseeable future and also from a long-
align themselves for better and less expensive
Finance with Compass Maritime Services, a
term, strategic perspective. It is obvious that
access to commodities. In a world economy
Baltic Exchange Member, in the USA. Basil can
there is a struggle in full swing at present for
and new trade status quo where commodities
be reached at BKaratzas@Compassmar.com or
control of natural resources, and the financial
are so much sought after, the underlying assets
Basil@BMKaratzas.com
theBaltic Summer 2011 www.thebaltic.com
27
Corporate viewpoint NITC Tankers
NITC Tankers M
uch has been written of the Iranian shipping company NITC. Some
Mohammad Souri
of the more realistic and committed issues have been given little
emphasis. Sanctions have of course created a challenge, but NITC has overcome this challenge and now boasts P & I cover and Hull and Machinery insurance for all vessels. P&I arrangements are in place for all ships trading in its international fleet, with up to $1bn of pollution cover for any possible incident. Operating one of the world’s largest fleets of modern and environmentally friendly tankers seems natural to NITC boss, Chairman Mohammad Souri, a veteran board member at Steamship Mutual for 27 years. The company is also a full member of Intertanko and the International Transport Workers Federation to name but two organisations. NITC is 100% privately owned, respects all international conventions and has never been engaged in any activity prohibited by the US, United Nations or European Union. “It upholds the highest operational standards and remains a reliable business partner in all matters,” Mr Souri has said. The company also has been recognised both internationally for its environmental efforts, committing to cut fleet emissions by 28% The company also enjoys an exemplary record in matters of safety and quality being detention and pollution accident free for the last 15 years, and is up for an environmental award at Norenvironment and continuous education of
something of a wild card when considering how
NITC has undergone something of a
seafarers, NITC is globally recognised as a
freight rates would develop – most notably in
rebranding exercise in recent times, not least in
brand, and recent changes in its flag or logo do
the second quarter of the year. Are payments
the use of the new logo, which distances it from
not make any changes in its essence,” he says.
being affected by the sanctions?
a publically-run operation. The company has
So what are the main messages he wants
“It is the usual practice of all oil producing
emphasised its commitment to transparency as
to get across about the company? “We are at
countries like Iran to overhaul refineries in
far as its operations are concerned. So does Mr
the service of world energy and we consider
summer time and thus they would have some
Souri feel that this has created a greater level of
ourselves the most reliable business partner;
excess oil which has been kept as storage for a
transparency and how does he think charterers
we work hard and spare no efforts to become
certain period of time. The process of blending
consider the company’s operations?
the topmost tanker operator worldwide”.
light oil with heavy crude can be another reason
Shipping.
for storage tanks to be used accordingly”.
“Due to its good career and commitment to
Market analysts like Platou have recently
the needs of global oil major clients, integrity
been quoted as saying that the amount of
DVB Bank has recently issued comments
of technical operations, total respect for the
Iranian oil held in floating storage facilities was
on falling prices for VLCCs in the second-
28
theBaltic Summer 2011 www.thebaltic.com
Corporate viewpoint NITC Tankers
NITC/Oman Shipping has been nominated as a Nor-Shipping Clean Ship Award winner for the ‘SIFA’ – VLCC
hand market, but Mr Souri is upbeat about the
programme is concerned, the question remains
fleet and also a new fleet for chemical tankers
outlook.
whether China is a more favourable option
so as to serve the needs of our country, as well
to South Korea because of the attitude to
as increasing world demand.”
“The falling price for VLCCs in the secondhand market is the result of gloomy seaborne
sanctions or the availability of bank finance.
So what is the main message he wants
trade and to my experience this situation
According to Mr Souri: “Nowadays, ships
to get across to those with whom he does
cannot last long, and the market will be
built in China can be compared with Korean
business? “NITC, as a leading oil shipping
stabilised and rebalanced within the next two
vessels. China shipyards show more flexibility
company, is proud of being committed to quality
years,” he predicts.
towards hi-tech specifications and the owner
and safety, and is ready to extend hands to all
can enjoy very good support from Chinese
partners in all fields of oil, gas and chemical
banks to finance vessels built in China”.
shipping. We are open to cooperating and
As the scourge of piracy continues, and ransoms have been paid without the release of crew members, attitudes have been changing,
The outlook may seem downbeat as far
sharing views with new partners, to strengthen
not least about arming vessels or taking vessels
as freight rates are concerned, but Mr Souri
the campaign against pirates of Somalia who
into the danger zone in the first place.
remains upbeat.
have become a critical nightmare for the whole
“The piracy situation in the Gulf of Aden
“In spite of the gloomy seaborne trade
region is deteriorating day by day. NITC has
market, I am optimistic about the future. I
so far faced 36 attempts on its fleet and
strongly believe that the second decade of this
although we continue to seek safe solutions
century will be a milestone for the change of
to hinder pirate attacks, unfortunately no
oil transportation routes and the reduction of
effective solution has been found yet and the
oil exporting countries. The increasing world
golden age of pirates is realised by increasing
population and energy demand are other
ransoms, as well as more modern piracy
influential factors.”
equipment. However, NITC sticks to IMO rules
In terms of growing the fleet, Mr Souri says
and regulations; we are still crossing our fingers
this will depend on the foreseeable demand
and hoping some preventive measures will be
for oil, especially in the Persian Gulf region, as
adopted.”
well as South Pars oil and gas projects. “We
As
far
as
the
company’s
newbuild
seaborne trade.”
certainly need to organise a new LNG carrier
theBaltic Summer 2011 www.thebaltic.com
29
Bimco
From slow steaming to lay-up The highly topical issue of slow steaming and how it is handled in charterparty clauses is just one of the items on BIMCO’s agenda. Pernille Kaervad Jacobsen reports
B
IMCO’s documentary work programme
contract stems from the anticipated coming
that RECYCLECON will provide a useful stepping
remains substantial and includes a
into force of the IMO Hong Kong (Ship
stone in implementing Convention requirements
number of major projects such as the
Recycling) Convention. The aim of the new
in the interim period before the Convention
development of a standard contract
contract is to provide a specialised agreement
comes into force. It is hoped that a final draft
for the laying-up of vessels, a standard pooling
for owners and recycling yards who share
of RECYCLECON will be ready in June for the
agreement for the tramp trade, a green recy-
the same common objective of wanting ships
Documentary Committee to consider at their
cling contract and a suite of clauses for slow/
recycled in an environmentally safe and socially
meeting in Vancouver.
economical steaming. In addition, BIMCO and
responsible
the Norwegian Shipbrokers Association (NSA)
named RECYCLECON, is intended to provide
have agreed to undertake a joint revision of
commercial parties with a contractual platform
SALEFORM 1993
SALEFORM 1993.
that reflects the principles of the Hong Kong
Following industry consultation, BIMCO and the
Convention.
NSA have undertaken a modest revision of the
manner.
The
contract,
code
The subcommittee, appointed to tackle
industry standard international contract for the
‘Green’ Recycling Contract
the difficult task of reflecting the Hong Kong
sale and purchase of second-hand vessels,
The initiative to develop a ‘green’ recycling
Convention in a commercial agreement, believes
SALEFORM 1993. While the general view of
Green Recycling subcommittee
30
theBaltic Summer 2011 www.thebaltic.com
Bimco the industry is that the contract has served the industry well over the years, it is acknowledged that 17 years without a revision is a long time by any standard and that the time has now come to carry out a revision of the form. The objective of the revision is to bring SALEFORM in line with present commercial and legal requirements in the sale and purchase of second-hand tonnage, while maintaining the fundamental principles of the contract. The subcommittee assigned this task is composed of international experts with commercial and legal expertise in ship sale and purchase. The aim is to complete the revision of SALEFORM 1993 by autumn 2011.
Slow/Economical Steaming Clauses
Pooling Agreement Working Group
The objective of this highly topical project is to develop two suitable charterparty provisions for
designed to be used between shipowners and
hoped that consultation with DGCOMP will help
general industry use, one for time charterparties
third party lay-up managers. It is modelled on
in ensuring transparency for the project, and that
and one for voyage charterparties. It is the
SHIPMAN 2009 and as such is a cost plus fee
any issues the drafters may have in respect of
ambition to address slow steaming for economic
agency agreement with the lay-up managers
compliance with the Guidelines on Pooling can
purposes (fuel saving and capacity building)
acting on behalf of the owners to lease a
be openly discussed. BIMCO will make the draft
and for environmental purposes (emission
suitable mooring from port authorities, as well as
publicly available for the industry for comments
control). Furthermore, the slow steaming clause
providing physical lay-up support services such
after the June DC meeting. It is expected that
for voyage charterparties will embrace other
as watchmen, and monitoring and maintenance
this project will be finalised by November 2011.
slow steaming initiatives such as Virtual Arrival
functions.
whereby the key stakeholders agree to a fixed
The
subcommittee, from
which
laden vessel accordingly. To ensure that every
Wilhelmsen Ship Management, Maersk Vessel
Further to the above projects, a Standard
aspect of this challenging task is properly
Management
Guarantee
considered, the Working Group consists of
recognise that there are a great variety of
underway, which will cover all of the charterers’
industry experts with technical, commercial and
methods and degrees of lay-up applied in
responsibilities and liabilities under the time
legal backgrounds.
the industry and that the standard contract
charter, and a Suite of Bunker Clauses for
The clauses will be designed to reflect the
needs to be able to adapt to suit the needs of
Time Charterparties has been developed,
fact that there may well be sound commercial
users without requiring too much amendment.
which will help minimise the risk of disputes
reasons to reduce speed, such as reducing
The subcommittee is working at full throttle to
from insufficiently worded or absent bunker
bunker consumption/fuel costs and, possibly,
complete its task by June 2011, and it is hoped
provisions. Also, three entirely new projects
to increase demand for tonnage. It will also
that the contract will be available for use already
have been initiated, including a clause relating to
consider issues such as due despatch, deviation
by early autumn this year.
the apportionment of costs and responsibilities
International
specialists
Future Work Programme
representatives
and
lay-up
includes
discharging date and adjust the speed of the
Shipcare,
and vessel performance warranties. Not least,
for
Time
Charterparties
is
with regards to bottom fouling; a recommended
consideration will be given to the use of slow
NAABSA
(Not
Always
Afloat
but
Safely
steaming as part of company environmental
Pooling Agreement
Aground) wording to be added to the berth
policies to help reduce CO2 emissions. The
A BIMCO Standard Pooling Agreement Working
provision of charterparties; and a clause which
Working Group has recently finalised work
Group has been established with the purpose of
will appropriately address the application of
on the Slow/Economical Steaming Clause for
developing a voluntary and negotiable standard
so-called US Office of Foreign Assets Control
Time Charterparties, and the Clause for Voyage
agreement for tramp shipping pools. The
(OFAC) restrictions to non-US shipowners.
Charterparties is making headway. The time
Working Group has completed a full review of
charter version will be put forward for adoption
the agreement and is currently working on the
in June.
underlying charterparties that will be used by the pool managers to charter in pool vessels from the participants.
Lay-up Contract
The pooling agreement is being drafted
Work on a standard contract for the laying-up
as a standard form that can be used in most
of vessels is almost finalised. This project was
jurisdictions with competition laws, as many
initiated by the Documentary Committee in view
states have used European competition laws as
of the increasing number of vessel lay-ups and in
a model for their own system. BIMCO plans to
Pernille K. Jacobsen
the absence of any existing standard agreement.
liaise with ECSA to consult with the European
Documentary Affairs Officer
The new contract, code named LAYUPMAN, is
Commission’s DGCOMP on the agreement. It is
BIMCO
theBaltic Summer 2011 www.thebaltic.com
31
Dry Bulk
Cargo competition likely to be fierce Shipping consultants Drewry have been upbeat in their most recent report on the outlook for the general cargo market which Drewry said is “far better than it has been for some years”
“
With healthy demand and a sensible order-
hemispheres are slowly declining and we do not
Mining companies are also reporting that sales
book, the only caveat to that rosy outlook
see any fundamental upcoming events in the
to Japan are continuing as normal.
when this sector emerges from the downturn
near future which will have any positive effect
is the threat of competition from both dry
to the rates.”
“In the longer term, the aftermath of the earthquake could not only mean an increase
bulk tonnage and ‘pure’ container carriers. Both
The capesize segment was also reported
in thermal coal but also other commodities
these sectors are now squeezing the breakbulk
to be heading downwards as newbuildings
which could be used in the rebuilding of the
market.” the report suggests.
continue to arrive in the market.
infrastructure damaged by the impact of
Drewry sees “positive demand growth for
earthquake and the subsequent tsunami, such
the mid-term, albeit still at historically subdued
as steel, cement and wood. Our brokers have
levels. This would imply that the MPV share of
Japanese energy supplies
not noticed any particular increase in such
these sectors should remain steady; however,
Commenting on the situation regarding energy
commodity imports to Japan, indicating that any
this does not appear to be the case.
supplies to Japan one month after the tsunami
reconstruction has yet to commence and may
“There is always another side to the balance
and earthquake, Braemar Seascope said, in
not do so for the next six months.”
equation – the supply of vessels able to carry
comparison to the 1995 Kobe earthquake when
these commodities. Handy bulk carriers are
the Baltic Dry Index fell 6% in the weeks
the main competitor for the breakbulk demand
following the earthquake but then bounced back
China coal
and the dry bulk orderbook is, to say the least,
20% in the following three months as companies
Panamax and capesize rates could well receive
overfull. This means that competition for cargoes
reconfigured their supply chains: “This time
a boost from China coal imports as the country
is expected to be fierce over the next few years.”
companies will need to focus on the supply of
stocks up over the summer. “Demand has
The other side of the MPV market – general
power due not to power supply loss during the
picked up a lot since power plants are restocking
and project cargo – is also facing increasing
earthquake but also because of the uncertainty
in advance,” a Guangzhou-based trader told
competition from the containership and ro-ro
still surrounding the situation at the Fukushima
Reuters. “Just look at the falling port stocks. It’s
fleets according to Drewry, although it says that,
Daiichi plant.”
definitely bullish for prices.”
“the threat from the container market is reduced
The plant’s operator Tepco said recently that
as the orderbook for that sector has fallen
the situation might take nine months to sort out.
chairman Zhang Xiwu, the company plans to
through cancellations and slippage”.
According
to
China
Shenhua
Energy
“Although ideally this should mean an
become the coal industry equivalent of Walmart.
According to Fearnleys weekly market
increase in thermal coal imports in the medium
The company is building coal reserve bases
update, for handysize vessels the Altantic market
term, which could benefit a depressed dry
in China and is committed to reducing its
remained flat in April with very little new business
bulk market, this does depend on the ability of
consumers’ operational costs. Coal production
and slow activity. “Considerable prompt tonnage
Japanese power plants to further increase coal
is not limited to internal supply but also extends
remains unfixed,” Fearnleys said. The Pacific
power generation.”
to purchases from third parties, Mr Zhang said.
market was also very quiet as charterers were
the
However, China Coal Resource quoted the
“holding back their requirements and allowing
exclusion zone around Fukushima is not
Chinese Customs authority as saying there was
tonnage to build up”. The analyst expected iron
preventing bulk cargoes from reaching Japan.
a 40.7% slide in coal imports in March, on a year
ore cargoes from India to pick up with buying
“There have been no further terminal closures,
on year basis to 9.05 million tonnes and a 67.9%
interest from China.
and many of Japan’s ports did not experience
drop in imports of thermal coal. During the first
For panamaxes the trend has been downward
any damage, providing ample capacity to
quarter of this year 32.3 million tonnes of coal
and even in the event of new cargoes, the
continue imports of coal and other dry bulk
were imported, down 26.4% on the same period
huge supply of available ships meant cargoes
needs. According to reports, only one iron ore
last year, CCR reported.
were swiftly snapped up. “The rates in both
and three coal handling ports were damaged.
32
According
to
Braemar
Seascope
theBaltic Summer 2011 www.thebaltic.com
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Dry Bulk accelerate further to 14.3%”. Steel use in the US is also expected to grow 13% this year, on the back of quantitative easing and tax breaks, according to the association. Central and South America are also considered to be growth prospects for steel use.
CMB results Bocimar’s contribution to CMB’s results for the first quarter of 2011 amounted to E16.3 million, as compared to E12.6 million for the same period last year, according to CMB. “The dry bulk markets were off to a weak start in 2011. In the capesize segment, vessels are currently operating even below break-even, mainly due to the oversupply of newbuilding vessels. With its high coverage ratio Bocimar is fairly well-protected against the supervening volatility in this market” the report said. The other market segments – especially handysize – “remained significantly more stable” the company added, although a rebound in the capesize market was not expected.
DryShips results DryShips, meanwhile, recorded fourth quarter 2010 net voyage revenues (voyage revenues minus voyage expenses) for the drybulk sector down by $5.3 million to $106.7 million for the three-month period ended December 31, 2010, as compared to $112.0 million for the threemonth period ended December 31, 2009. As DryShips chief executive George Economou commented: “As we move through 2011, we are seeing increasingly attractive opportunities to purchase drybulk carriers and renew and/or grow
Steel demand
recovery of the world economy. There are,
our fleet. Our strategy remains opportunistic in
Steel forecasts from the World Steel Association
however, uncertainties deriving from financial
this sector.”
suggest that apparent steel use is set to increase
fragilities in Europe, unrest in some oil producing
The company concluded an order for two
by 5.9% to 1.3 billion tonnes following 13.2%
countries in the Middle East and the earthquake
capesize 176,000 dwt dry bulk carriers, with a
growth in 2010. The association expects world
in Japan, which could have a negative impact on
leading state-owned Chinese shipyard, that was
steel demand to grow by 6% in 2012 to reach a
the recovery and thereby affect steel demand.”
not identified, for a price of $54.2 million each.
Chinese steel use is expected to grow 5%
The vessels are expected to be delivered in the
The WSA says: “This forecast suggests that
to 605 million tonnes this year, compared to
third and the fourth quarter of 2012, respectively.
by 2012, steel use in the developed world will
5.1% growth in 2010. “Given the pace of
still be at 14% below the 2007 level, whereas
steel production in the first quarter of 2011,
in the emerging and developing economies, it
Chinese apparent steel use could be even
Genco
will be 38% above. In 2012, the emerging and
higher,” the association says, although it adds
Genco Shipping meanwhile has reached an
developing economies will account for 72% of
that government efforts to prevent the economy
agreement for a spot market related timecharter
world steel demand in contrast to 61% in 2007.”
overheating would have an impact on the steel
for the Genco Rhone with AMN Bulkcarriers for
sector.
11 to 13.5 months at a rate calculated on 102%
record breaking 1.4 billion tonnes.
Daniel Novegil, chairman of the economics committee said: “2010 saw a steady recovery of
According to the association, strong growth
of the daily rates of the Baltic Supramax Index.
steel demand, which began in the second half of
in steel use in India is expected in the coming
Hire is paid every 15 days in arrears net of a 5%
2009 driven by stimulus packages globally, the
years “due to its strong domestic economy,
third party brokerage commission, the company
resilience of emerging economies, and an overall
massive infrastructure needs and expansion of
says. According to Genco they are maintaining
market recovery. In 2011, we expect to see a
industrial production. In 2011, India’s steel use is
the option to “convert the balance of any period
further 5.9% growth in world steel demand.
forecast to grow by 13.3% to reach 68.7 million
of this charter to a fixed rate based on the Baltic
tonnes. In 2012, the growth rate is forecast to
Supramax Index FFA values at 102%”.
“Our forecast is based on a stable and steady
theBaltic Summer 2011 www.thebaltic.com
35
Corporate viewpoint Canfornav
Canfornav F
lexibility, responsibility and accountabil-
and Canfornav has been working closely with
easy; we have endured many hardships, but
ity are Canfornav trademarks that have
environmental groups, as well as government
with the hands-on approach of the owners,
stood us in good stead over the years
organisations, to improve and minimise our
the diligence and hard work of the employees,
and established us as an important
environmental footprint, and to set standards,
some solid decisions and a bit of luck, it has
player in the Baltic, Atlantic, South America,
especially in environmentally sensitive areas
put us in a good strategic position for many
the East, West and US Gulf coasts, and the
such as the St Lawrence Seaway and the
years to come. We are committed to handysize
Great Lakes.
Great Lakes. Canfornav has partnered with
tonnage for the future and basically operate as
Today, Canfornav operates 31 vessels, with
Ducks Unlimited, the leading conservation
‘old style’ shipowners, concentrating foremost
an average age of three-four years, 25 of
organisation in Canada, to help ensure that
on contract movement within the Great Lakes/
which are owned; annually they carry some 6.5
healthy wetland habitat and enhanced water
Atlantic and West Coast market.
million tons of cargo. We have two supermaxes
resources are guaranteed far into the future.
delivering this year and also six 33,000 dwt bulk
We are members of the Green Marine Initiative,
Canfornav
carriers on order for delivery between October
which requires environmental performance
800 René-Lévesque Blvd. West, Suite 2300
2011 and October 2012, which will increase
improvements on a year to year basis, with
Montreal, Québec
the fleet to a total of 39 vessels with 33 owned.
results being independently audited and verified.
H3B 1X9
This gives us a credible and transparent means
Canada
of assessing our environmental performance.
Tel: +1 514 284 9193
The
company
instituted
a
Quality
Management program over 12 years ago and is ISO 9001 (2008) certified. With a growing
We are proud to achieve 35 years as a
fleet comes responsibility for the environment,
company this year. It has not always been
Saint Lawrence River, Montreal
36
theBaltic Summer 2011 www.thebaltic.com
Fax: +1 514 499 1030 www.canfornav.com
Dry Bulk Dry cargo seminar
sources of cargo supply. Barges are often used
He pointed to three main problems relating
Iron ore fines loaded from India and more
in cargo loading in Asia with the inherent risk of
to high loading rates that could over-stress the
recently nickel ore loaded from Indonesia and
water contamination.”
ship’s structure:
the Philippines have highlighted a number
The mines and load ports in India, Indonesia
• The sensitivity of the total ship or hull girder
of problems in the carriage of bulk cargoes
and Philippines are subject to wet seasons
to shearing force and bending moments from
resulting in loss of vessels and crews, according
where heavy rain is the norm, he told seminar
exceeding the allowable stresses during the
to Captain John Stone of consultants and
delegates. “Outside of these seasons heavy
loading and deballasting operation. • Overloading the local structure resulting in structural damage to the vessel. • Synchronisation of the ballasting operations. “Under SOLAS the master is responsible at all times for the safe loading of his ship and in line with the BLU Code the master and the terminal representative shall agree on a loading plan. This plan consists of a series of steps or loading sequences. Each sequence plans a defined volume of cargo load in and ballast water out, along with applicable consumables to ensure that the ship remains in the permissible limits of the stresses to which the hull is subjected,” Captain Stone said. “It is recommended that high density cargo be stowed uniformly over the cargo space and trimming be applied to level the cargo as far as practicable to minimise the risk of damage to the hull structure and cargo shift in heavy weather.” High loading rates may cause significant overloading within a very short space of time, he said, with a couple of minutes over-run resulting
rain may still be experienced and the surveyor
surveyors CF Spencer & Co. Remote
mining
areas,
stockpiles
in
open areas, local weather seasons, lack of
can conduct additional moisture tests when
in 500 tonnes more cargo in the hold. “One of the problems being seen in order to facilitate faster de-ballasting and hence
necessary and advise the master.”
independent laboratories and equipment, are
Crew vigilance during the loading operation
loading, is the pressure to arrive at terminals with
all part of the problem which ultimately comes
is essential, he explained. If the cargo is seen
minimum ballast on board. This can lead to the
down to attaining a reliable flow moisture point
to splatter in the hold, this is an indication
vessel operating in a lighter than normal ballast
and transportable moisture limit, Captain Stone
that parcels of the cargo are beyond the flow
condition (less than normal ballast condition in
told a seminar on dry cargo issues organised by
moisture point.
the loading manual).
One of the risks to the ship of loading
“The effect of this on the manoeuvrability of
In assisting the master of the vessel to
these cargoes is liquefaction, where the dry
a vessel can be significant. It results in a large
load the cargo safely: “A local surveyor can
cargo changes to a semi liquid states which
trim by the stern to achieve as much propeller
inspect stockpiles before arrival to check that
could cause the cargo to shift at sea, with
immersion as possible, although this may be
the shipper’s samples are representative of
consequent dangers of listing or even a capsize,
less than 100% propeller immersion. This can
stockpiles which must be identified. A visual
Captain Stone told London Shipping Law Centre
result in:
inspection of the consignment can be carried
members. “There is very little the ship can do
• Increase bodily drift due to greater windage.
out to ensure uniformity. Any material which
once liquefaction occurs.”
• Increased difficulty in swinging the vessel
the London Shipping Law Centre.
at low speed due to greater windage in
appears to be significantly different, either in
“There is often pressure from a terminal
characteristic or moisture content, should be
to have a vessel sail as soon as possible on
sampled and analysed separately,” Captain
completion of loading, often with untrimmed
• A worsening steering performance due to
Stone explained.
cargo. This can lead to sliding failure which
lack of propeller and rudder immersion and
“The surveyor has freedom of movement and
occurs when the cohesive strength of the cargo
can get away from the ship during the loading
is not enough to withstand the effects of the ship
operation and travel to stockpiles away from
rolling in a seaway. The result is a shift of cargo
the berth, something possibly not available to
leading to the vessel listing.”
the master,” The surveyor is also in a position to take independent samples from the stockpiles for testing if there are any doubts over the information provided by the shipper, he explained. “The surveyor can report to the master if any wet cargo is found at the stockpiles, or other
significant wind conditions.
large stern trim affecting the turning lever. • Increased loss of speed/power. Minimum ballast condition requires higher engine power and rudder angles to maintain
There may also be pressure from terminals to load quickly because of the presence of several
control and manoeuvre the vessel.” “One of the most notorious challenges in the bulk shipping industry is cleaning holds between
vessels awaiting their turn, he said. terminal
dirty and clean cargo. With limited time and
equipment have led to loading rates of up to
minimal crew, these challenges can lead to failed
16,000 t/hr and turnaround times as short as
inspections, off-hire time and reduced profits,”
14 hours.”
Captain Stone warned.
“Technology
advances
with
theBaltic Summer 2011 www.thebaltic.com
37
Heavy lift, project cargo and offshore
Beluga under the hammer News of Beluga’s troubles has been dominating the heavy lift market in recent months. Helen Hill reports
W
hen news came through that the
revenues and liquidity at the company.”
reputation has undergone so much damage, its fleet could well live on in various forms.
world’s leading heavy lift carrier
Following the revelations the Beluga empire
was in trouble it seemed hard to
has gradually fallen apart; every few days there
In the post-Beluga world it appears that
believe. Beluga was always part
is another announcement about another Beluga
Oaktree will take its part of the fleet forward in
of the bedrock of the industry. But then things
company filing for insolvency as the administrator
the form of Hansa Heavy Lift GmbH.
swiftly moved on apace as it became clear that
Edgar Grönda unravels the company’s structure.
Oaktree said it will be continuing to operate
Beluga Maritime Education, Beluga Offshore
in the steel, breakbulk, project and heavy lift
this wasn’t another victim of the recession.
Training Academy, Beluga Offshore Cable,
market with a fleet of 10 P-type vessels and five
executives,
Beluga Fleet Management, Beluga Marine
F-types.
including Niels Stolberg, the founder and former
Service, Beluga Offshore Crewing, Beluga
With a service team of around 65 employees,
head of Beluga, and several managers are
Shipping and Beluga Chartering are just some
Beluga Chartering will act as the agent “until the
being investigated for possible fraud and false
of the companies to file.
insolvency proceedings have been finalised”.
The real shock came when it was revealed that
two
Beluga
top-ranking
accounting, following filings made by the US
And then if it wasn’t 100% clear before about
A Beluga Chartering statement said that it
investment firm Oaktree Capital to the Bremen
Beluga’s reliance on the German KG financing
assumed this would take place by end of May/
Public Prosecutor.
system it soon became glaringly obvious. In a
mid June. Once
the
insolvency
proceedings
are
Investigations were launched because of
startlingly swift operation Beluga’s 70 plus fleet
suspicions that the accused had since the year
started to dismantle as the KG Houses rushed to
concluded, the new Hansa Heavy Lift GmbH,
2009 incorrectly stated revenues of allegedly
save their ships from the hands of the insolvency
Bremen, will take over the service team and
more than a hundred million Euros, and this has
administrator to protect their investors.
continue operations.
been done to deceive financial investors, the prosecutor stated.
HCI Capital alone took 20 vessels out of the
Between four to eight more newbuildings
fleet and these were transferred to Hammonia
(four P class and four F class) are also expected to join the fleet by the end of the year.
In Germany, if it is discovered that suppression
Reederei, which is jointly owned by HCI, Peter
of the facts was indeed the case, a person could
Döhle and GE Transport Finance. In a matter of
In other moves, several KG Houses are
face imprisonment of up to 10 years in the most
just days, the investment houses withdrew some
working on the possibility of a pool created from
serious cases.
50 vessels and new charters and managers
the ex-Beluga vessels, with negotiations ongoing
were found.
into what sort of pool it should be, which ships
Oaktree Capital, Beluga’s major stakeholder,
should join and who should manage it.
explained the reasons behind its decision to go
Beluga itself is thought to have one vessel
to the prosecutor. The company said it had been
in its fleet that belongs to the company’s
Undoubtedly, Beluga’s decline has hit the
informed that Beluga would need additional
employees. Beluga would not confirm whether
KG system in the short-term, which was only
funding in February, which had been given by
this is correct. Another 20 (largely the P1 and P2
tentatively emerging after the financial crisis.
Oaktree “after a brief period of diligence”. This
series), are thought to be owned by Oaktree or
But there is a sense that everyone acted
had followed what is believed to have been a
Mr Stolberg but Oaktree declined to confirm the
professionally and quickly in the best interests
$280m investment in equity and loans in July
exact status.
of their investors. It is hoped this prompt action
2010.
Most in the industry believe that these
will go some way to restoring investors’ faith in the system.
On the February investment Oaktree said
unprecedented events have been handled – at
it had wanted to know more details about
least by the KG Houses – as well as could
And as the repercussions of Beluga become
where the new money would be used. “When
have been expected. Certainly, the KG Houses
clearer, there is some relief that Beluga’s situation
conducting diligence as to why additional
moved fast.
does not seem to stem from the heavy lift and
liquidity was needed, Oaktree became aware
And even though it is very doubtful that
of significant financial irregularities effecting
there will ever be a Beluga again because its
38
theBaltic Summer 2011 www.thebaltic.com
project market itself.
We complete your project
• Global tramp and liner services
• Local experience
• 120 Vessels
• Powerful versatile fleet
• World wide setup - 24 offices
• new wave - lifting capacity up to 900 mtons
BBC Chartering, Leer
BBC Chartering, Houston
BBC Chartering, Singapore
Phone +49 491 925 20 90
Phone +1 713 668 4020
Phone +65 6576 4130
leer@bbc-chartering.com
houston@bbc-chartering.com
singapore@bbc-chartering.com
Heavy lift, project cargo and offshore ‘K’ Line takes over at SAL
the registration of the 319,000 dwt oil/ore carrier
to an independent regulatory regime,” Noble
‘K’ Line is set to move to 100% ownership of
G Whale, built by Hyundai Heavy Industries in
Denton said.
heavy lift operator SAL Group in June following
Korea to Lloyd’s Register class for operation
Other findings discussed by the round-table
its 50% purchase of the company in 2007.
by Today Makes Tomorrow (TMT) Shipping
participants included an expected increase in
According to ‘K’ Line, with the economic
of Taiwan. Bergeron says, “We are delighted
natural gas prices of the order of 10% in the
rebound, heavy lift business is considered
to share this milestone registration with Mr
coming years as alternative energy sources
an “essential tool for the development of big
Nobu Su’s innovative company, TMT, and are
become more popular.
projects such as those in the oil and gas industry,
particularly satisfied to see continued growth in
which is expected to grow even further”. ‘K’ Line
our Far East client base.”
has said it has a strong commitment to further
According to ExxonMobil one of the fastest growing sources of natural gas supplies is
The Liberian Registry is one of the world’s
unconventional gas, or gas that is produced
largest and most active shipping registers, with
through
In December 2010 and March 2011 SAL
a long-established track record of combining
producers to reach gas supplies in tight rock
introduced the two largest heavy lift vessels in
the highest standards for vessels and crews
and shale as well as coal bed methane.
the world, Svenja and Lone. Both have a lifting
with the highest standards of responsive service
capacity of 2,000 tonnes SWL and a speed
to owners.
expand the activities of SAL.
technologies
that
have
enabled
The oil major expects unconventional gas production to grow five-fold between 2005 and
of 20 knots. The ships “are just as suited to
2030 and that gas will supply 25% of the world’s
service demanding offshore projects within the
needs by that time. According to ExxonMobil
oil and gas industry as they are to assist in
Skills shortage for oil and gas
“technologies enabling economic production of
the installation of foundations for offshore wind
If the offshore industry offers plenty of room
shale gas, tight gas and coal bed methane are
parks”, SAL said.
for growth, there are still challenges ahead,
unlocking important new options for meeting
according to GL Noble Denton.
energy and environmental goals”.
‘K’ Line for its part is planning to strengthen its portfolio by further expanding this business area,
A round-table discussion organised by the
Cautious optimism for the future was
SAL said in a statement. With the addition of the
company to launch a report commissioned from
the watchword in the EIU’s report, although
heavy lift segment to its container, bulk, tanker/
the Economist Intelligence Unit was hosted
the industry faces a more costly operating
LNG, and offshore transportation services, ‘K’
by GL Noble Denton, whose president John
environment and propects of more regulation.
Line will be offering a one-stop shop for a wide
Wishart commented that: “It is clear from the
array of industrial clients, the company claims.
these round-table discussions that the oil and and understands the need to find more
Project cargo faces competition
innovative solutions to operating more efficiently
Drewry Shipping Consultants‘ recent report on
and sustainably.
the multi-purpose vessel market suggests that
gas industry is focused on its future challenges
Heavy-lifters contribute to Liberian-flag fleet doubling Leading heavy lift shipping companies, including
“But in the face of uncertainty about the
Beluga, BBC, NSC and Rickmers, were among
impact of post-Macondo regulation, anticipation
those who helped the Liberian-flag fleet to post
over the true role of natural gas in future energy
According to the market analysts: “Given
record growth figures in 2010. The Registry
economics and ambiguity over resourcing
that the MPV share of the pure container market
has now more than doubled in size in the 10
future projects, the oil and gas industry finds
is so low (less than 2%) it is assumed this is
years since the management of the Liberian
itself holding its breath over how these tough
unlikely to show any significant change over
Registry was assumed by the US-based Liberian
challenges will come to pass.”
the period. More concerning is whether – or
project cargo is facing increased competition from containerships and ro-ro fleets.
International Ship & Corporate Registry (LISCR).
Findings outlined in the report suggest that,
indeed by how much – this sector will encroach
The Liberian-flag fleet was boosted by 586
like so many other sectors of the maritime
on the general and project cargo demand. A
new registrations last year. Of these, 149 were
industry, recruitment and retention of staff
number of container lines are already positioning
newbuildings. Net growth was 338 vessels,
will continue to be a problem, not least as
themselves as project carriers and it is here that
aggregating 13.6 million gt. The average age
the industry continues to expand with further
the real threat to the traditional MPV demand
of the 586 new registrations was 5.46 years,
investment. According to GL Noble Denton,
now lies.”
compared to the 17.32 average age of those
industry players need to work together to solve
vessels removed from the registry. The average
the problem rather than poaching each other’s
age of the Liberian-flag fleet is now just 12 years.
staff. Action, the report suggests, needs to be
Scott Bergeron, chief operating officer of
taken now, so as to ensure adequate levels of
LISCR, says: “The phenomenal growth under
technical staff in the future.
LISCR management is testament to the quality
According to the round-table participants,
of service and responsiveness provided by the
regulation following the Deepwater Horizon
Liberian Registry. Furthermore, throughout the
accident should be “non prescriptive” following
course of this rapid expansion, Liberia’s Port
the approach taken in Europe after the Piper
State Control performance and its safety record
Alpha disaster in 1988.
with all independent rating bodies has been
“In
these
instances,
governments
outstanding. We will continue to seek further
restructured their approach to offshore oil
selective, planned growth of our quality fleet, the
industry regulation completely by separating the
average age of which is falling significantly as
regulator from the commercial operators, asking
more and more owners join the registry.”
them to identify and reduce risks to ‘as low as
Liberia passed the 3,500-vessel mark with
reasonably practicable’ and justify their actions
theBaltic Summer 2011 www.thebaltic.com
41
· Lifting capacity upto 900 tonnes per unit. · Rolling and floating cargo upto 7500 tonnes per unit. · Dangerous/hazardous cargoes : IMO/INF · In-house engineering department for loadplanning and risk assesment. K/S Combi Lift (Head office) • Phone: +45 5816 2030 mail@combi-lift.eu • www.combi-lift.eu
Heavy lift, project cargo and offshore
Heavy duty developments Heavy lift companies have been landing large contracts in recent months
N
etherlands-based company Dockwise
Singapore to Shanghai in Q2 2011 and four
“The divestment of this type IV vessel followed
has announced contracts worth more
STS container cranes from Nantong, China to
from a cost-revenue analysis of the vessels’
than $34 million for HeavyMarine
Savannah, USA during Q4 2012.
operation in market segments with a relatively
According to Dockwise ceo André Goedée:
low contribution to Dockwise Ltd’s result”. Once
“After a depressed first quarter, the spot market
Explorer is delivered to the buyer, it will be
After concluding an agreement with Seadrill,
has shown a recovery and we have steadily
coverted into a floating power plant.
Dockwise will be transporting the West Linus
secured bookings. The transport of exploration
Dockwise has also announced contracts for
jack-up rig for North Atlantic Norway, one of
and production equipment is showing signs of
Heavy Marine Transport worth more than $30m
Seadrill’s subsidiaries in the last quarter of 2013.
improvement, and we see a sizeable group of
including one from Baerfield Drilling to transport
Dockwise has also been awarded a contract
new build rigs scheduled for delivery next year,
the semi-submersible rig Amazonia from Yantai
by FGUP Artikmorneftegazrazvedka to transport
improving visibility for the years 2012 and ahead.
in China to Angra Dos Reis in Brazil. The rig
the jack-up rig Kolskaya from Murmansk to
The West Linus is a next award under the terms
will be transported using the float-on, float-off
Magadan via the Cape of Good Hope.
of the MSA between Dockwise and Seadrill and
method and the job is due to start shortly.
Transport awarded to its subsidiary
Dockwise Shipping.
Other contracts include one for Sevan Drilling for the transport of Sevan Brasil from from China to Brazil in the first quarter of 2012.
it is a positive sign that parties are growing into this construction.” Dockwise has also announced it is selling
Other jobs include transporting the Jack up rig Ben Avon for KCA Deutag and a contract from EMAS Offshore to transport the Lewek Chancellor accommodation barge to Luanda.
Dockwise also has a contract transport of
its type IV vessel Explorer with a view to
four lift boats from Freeport to Luba and will
optimising the company’s fleet by focusing on
According to André Goedée: “Trading in the
be transport the Kantan VI jack-up rig from
value added cargoes. The company said that
first quarter has been disappointingly quiet. Only as the period draws to a close are we starting to see a return to more usual levels of spot market activity than those experienced so far in 2011. Enquiry levels are now steadily translating into booked contracts for the second quarter and beyond.”
Fairstar contract Fairstar Heavy Transport was awarded a contract from ENSCO to transport its jack-up drilling rig from Malta to Singapore at a total contract price of $3.8m. At the company’s recent AGM in Rotterdam, supervisory board chairman Frits van Riet commented that the company believed the so-called red box strategy which focused on high value, multi voyage energy infrastructure projects “will generate significant and consistent returns for our company in the next five years”. This year, he said was a “critical” year for
theBaltic Summer 2011 www.thebaltic.com
43
Heavy lift, project cargo and offshore Fairstar as it prepared for Gorgon and other multi-billion dollar energy projects in the final stage of the tendering process. “Fairstar is well on the way to establishing itself within the EPC community as the leading provider of safe and secure marine heavy transport services for major onshore and offshore energy projects.”
Wartsila propulsion Wartsila has a contract for supply a propulsion package for a new semi submersible heavylift vessel which at 270 metres is the largest ever to be built. The ship will be equipped with two Wartsila 6L38 engines and two 12V38 engines for the main propulsion plus a 6L20 auxiliary engine. Also on the shopping list is a reduction gear system, two controllable pitch propellers, two retractable thrusters and one bow thruster. The contract is from Hyundai Heavy Industries for Dockwise Shipping. The ship is scheduled to be launched in 2012. According to Arthur Boogaard, general manager for business sales at Wärtsilä: “This is a major project and a very important vessel that will be operating around the world. It is the largest ship of its type ever built with a unique and new design, and it is, therefore, a great honour for Wärtsilä to have been selected to supply the entire propulsion solution and other equipment.
Woodside Petroleum Laverda oil field Woodside Petroleum has announced that its Laverda oil field may have the potential to contain recoverable oil resources of in excess of 100 million barrels of oil. The company drilled the Laverda North-2 appraisal well last month and “ discovered a gross interval of 18 metres of new oil-baring sands,” Woodside said in a statement earlier this month. “Additional work is required in order to confirm the ultimate size of the accumulations. Appraisal drilling and analysis, plus further geological and reservoir modelling is expected to be conducted to refine this volume, the company added. Laverda North-2 was a planned sidetrack to the Laverda North-1 appraisal well, and was drilled to 2,300 metres. The Greater Laverda area is located in Western Australia’s Exmouth sub-basin, about 10 km west of the Woodside-operated Enfield oil project. Woodside also has interest in the nearby Vincent and Stybarrow oil projects. Woodside is the operator and 60% equity owner of with Mitsui E&P Australia holding the remaining 40% interest.
44
theBaltic Summer 2011 www.thebaltic.com
Corporate viewpoint ZAMIL
Zamil offshore forges ahead Z
amil Group founded Zamil Offshore Services
m2 from Saudi sea ports,
Co. in 1977, as a Saudi private sector com-
designed a new shipyard,
pany working in the diversified offshore marine
and will start construction
business. Today, Zamil Offshore is the largest
this
and most integrated offshore and marine serv-
budget
ices company in the Middle East.
this expansion alone is
Currently, Zamil Offshore offers comprehensive
year.
The
total
allocated
for
almost $130 million.
and diversified solutions to support several
Zamil
Offshore
is
offshore marine needs, especially those related
also known in the region
to the offshore oil & gas industries.
as a leading player in
Zamil’s activities cover four marine business
the
offshore
industry.
areas:
The company currently
• Owners and operators of the largest offshore
operates a fleet of 53
support fleet in the Middle East
vessels, of which 46
• Premier and only shipbuilder and rig repairer in Saudi Arabia • Engineering
and
are owned and seven chartered.
construction
Sufyan Al-Zamil
services
contractors
to
Its
expand
its
plans fleet
include new buildings,
• Sea port operators.
Hassan Abouraya
partnership with other offshore vessels owners,
One of the largest vessels ever built in Saudi Arabia
and acquisition of new
In March, Zamil Offshore Services launched
aggressive programme
its MV Zamil-64. The new DP-2 offshore
to expand regionally and
multipurpose
Support/ROV
in other regions, such
Support/Oil Recovery Support with Moon pools,
as South East Asia and
has 7,200 horsepower, 81 T-BP, 18-tonne bow
Latin America.
AHTSS/Diving
vessels. It has started an
“While
Zamil
expands
regionally,
and
thrusters, and is 1,500 dwt. It is designed to
In April, Zamil will re-activate its branch
meet the highest international standards. Built
in Singapore with the intention of using it to
eventually to the South East Asian offshore
at Zamil Shipyard located inside King Abdul
spearhead the company’s global aspirations.
sectors,” explains Zamil Al-Zamil, “I am confident
Aziz Port in Dammam, Zamil-64 is the second
As for its engineering services, it currently
that there will also be substantially more work
largest offshore support vessel of its kind to be
covers the specialised fields of executing
on its way f the Middle East. Saudi Aramco
built at Zamil’s shipyard and in the region. Zamil’s
and completing several offshore and onshore
is growing its offshore activities to the tune of
shipyard building program includes nine more
services for Saudi Aramco; the offshore hook-
about $200bn in the Middle East Gulf and the
vessels under construction, in addition to three
up project (maintenance, upgrade, modification
Red Sea, presenting plenty of opportunities.”
harbour tugs on its order book.
and commissioning support for ARAMCO’s rigs and platforms in the Arabian Gulf), the Abu Ali
New shipbuilding/ship repair facility
onshore pilling project, a McDermott Manifa
Zamil Al-Zamil, chairman and co-founder, along
project.
project, MOPOS project and the H2S evacuation
with Sufyan Al-Zamil, the president, feels the
Zamil is preparing for more diversification of
time is right for the company to look beyond
the scope of its service offering to the oil and gas
P. O. Box 1922, Khobar 31952, Kingdom of
the local market. Zamil’s success in establishing
offshore industry by diversifying in drilling, oil spill
Saudi Arabia.
shipbuilding in Saudi Arabia whetted its appetite
control and the acquisition of lift barges for use
Tel:+966 3 882 2494 Ext 213
for expanding its shipbuilding and ship repair
in the maintenance of platforms and installation
Fax: +966 3 882 3235
facilities. To date, Zamil has acquired 200,000
of wind farms.
Web: www.zamiloffshore.com
theBaltic Summer 2011 www.thebaltic.com
45
Global leader in ocean towage
Hofpoort 16th Floor, 3032 AC Rotterdam Hofplein 20 The Netherlands
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email sales@fairmount.nl www.fairmount.nl
Towage and salvage
Fair reward for salvage operations Environmental salvage has been on the International Salvage Union agenda for some years now. ISU president Todd Busch gives his views
I
n modern salvage operations the reality is that, after saving life, the most important consideration facing salvors is protecting the environment. Environmental factors are likely to
dominate the development of any salvage plan and its execution. Most shipping casualties have the potential to cause environmental damage. Salvors feel that while environmental consid-
erations have greatly strengthened over time, the legal and financial framework in which salvage is carried out has remained static, leading to unfairness and a failure to properly reward salvors for the environmental benefit they deliver. Even if a vessel’s cargo is inert and benign, there will be bunker fuel and lubricants on board plus stores of paint and other chemicals. It is now considered unacceptable that any of these should be discharged into the sea. When none of the potential pollutants is spilled, there is always the threat of mechanical damage to the coast from the impact of the casualty, particularly when the casualty occurs in sensitive locations such as coral reefs or mangrove swamps. Even in mid-ocean, away from sensitive coasts, consideration of the environmental impact of managing the casualty will still be of high importance. Salvors no longer have freedom of action
ISU president Todd Busch
to save the ship and cargo by any means and frequently are required to adopt a more complex
Article 13 of the Salvage Convention sets out
There are potentially many cases where the
and more expensive approach than would be the
the criteria to be considered when determining
comparatively low value of the ship and cargo,
case if saving the ship and cargo were the only
the level of award to be set as reward for a
when compared with the likely cost of the
requirement.
salvor’s efforts. The level of a salvage award
salvage operation, means that the potential
Salvage operations are conducted under
is often expressed as a percentage of the
rewards are not enough to encourage a salvor
many forms of commercial contract in many
combined value of the ship and its cargo. There
into action, even if the environment is threatened.
different jurisdictions but the overarching legal
is provision in Article 13 that efforts to mitigate
Article 14 of the Salvage Convention
context is the provisions of the 1989 Salvage
environmental damage be considered when
recognises this situation and provides for
Convention.
determining the level of award.
compensation so that a salvor is not “out of
theBaltic Summer 2011 www.thebaltic.com
47
Towage and salvage pocket” if the salved fund is too small to provide a proper reward. Ultimately, Article 14 was not effective and was replaced (in those cases using the most common salvage contract, Lloyd’s Open Form) by the Special Compensation P&I Club clause (SCOPIC). SCOPIC is not a form of reward, but a compensatory regime to ensure salvors are not financially disadvantaged if the salved value is low. The special compensation may be enhanced if the salvor’s efforts are judged to have protected the environment. But it is still not environmental damage mitigation remuneration, but rather an enhanced “safety net”. When the SCOPIC regime is combined with the much more onerous requirement to protect the environment, the effect can be to discourage salvors from attending some casualty vessels which may threaten pollution. It is neither fair nor reasonable when the salvors are the only agents with the necessary equipment, manpower, skill and experience on site to prevent an environmental disaster. Fairness in treatment is one of the key reasons why salvors are seeking a change to the 1989 Salvage Convention to enable them to be properly recompensed for the environmental protection they deliver. There are other good reasons for introducing an environmental compensation or salvage regime. Experience has shown that salvors are increasingly at risk from being turned into criminals for their wellmeaning and voluntary actions taken during a salvage operation. There are recent examples of salvors who have been using their “best endeavours” to save a ship but who have nevertheless been imprisoned because there has been some unavoidable environmental impact from the salvage operation. Natural justice provides a compelling reason for the introduction of a specific “environmental salvage” reward for protecting the environment. Salvors’ efforts are often largely directed at protection of the environment but Article 13 salvage awards do not currently recognise the environmental protection efforts made by salvors. Traditional salvage awards, even where there is a recognised environmental element, are wholly paid for by the ship and cargo property underwriters. There is no contribution to an award from the liability insurers who cover the shipowners’ exposure to claims for pollution and environmental damage and who are the main financial beneficiaries of the salvors’ efforts to prevent a casualty damaging the environment. The International Salvage Union (ISU), which represents the global marine salvage industry, has suggested that awards which recognise environmental benefit could be achieved by amending three clauses of the Salvage Convention. ISU is well aware that not all parties agree with this but it is continuing to make the case for change as it strongly believes that it would lead to a fairer, more just regime in which protection of the environment is more specifically and justly rewarded.
48
Towage and salvage
LOF 2011 After nearly two years discussion at the Lloyd’s Salvage Group, amendments to Lloyd’s Open Form have been agreed and LOF 2011 and amendments to the Lloyd’s Standard Salvage and Arbitration Clauses are set to be announced
K
ey changes to LOF include the publica-
to 195,300 tonnes. The volume of chemical
the Nautical Institute, according to ISU general
tion of awards on the Lloyd’s website
cargoes salved fell 71% to 32,561 tonnes but
manager John Noble.
and the need for the salvage contrac-
the category of “other pollutants” was up 309%
The aim is to included a wider spectrum of
tor to notify Lloyd’s of his appointment
from 62,853 tonnes in 2009 to 257,158 tonnes
casualty responders within the guidelines as
last year. This increase resulted from salvage
the scene of a salvage operation can become
services to two vessels carrying a total of
chaotic with the number of different people
170,000 tonnes of kerosene.
involved, including salvors, local authorities,
within 14 days. International Salvage Union legal advisor Rob Wallis outlined the changes at the ISU associate
Lloyd’s Open Form was the most widely
lawyers and special casualty representatives,
Changes to the LSSA clauses include
used contract with 57 services; last year the
to name but a few. Captain Noble gave as an
security for the arbitrator and appeal arbitrator’s
number of wreck removals fell by two to nine.
example of one casualty where 47 different
costs with provision being made for fees and
Four other salvage contracts were used and 96
people were involved. In the aftermath of a
expenses to be paid in a form agreed by the
services were carried out on a fixed price basis.
casualty the master and crew may be suffering
members day in March.
arbitrator. The clauses have also been amended
from a loss of confidence and “the hoards
to reflect the fact that awards will be published
descend at the time you are at your weakest”,
Casualty management guidelines
he said.
example when a case is continuing in another
New casualty management guidelines are being
negotiations over rates for equipment, of which
forum for fraud.
in future, although it will be possible to make representations to withhold the information, for
Capt
Noble
represented
the
ISU
at
circulated to the ISU membership and other
a good deal more is being used than in the past.
The other change relates to unrepresented
interested parties such as P&I clubs and the plan
A 10% global increase has been agreed with an
cargo interests in containership cases. With
is to publish the guidelines in book form with
increase in the cap on equipment of about 25%.
the agreement of the arbitrator, if the contractor can reach agreement with cargo interests
© Copyright ISU
representing 75% of the value of the cargo, this agreement will be binding on unrepresented cargo interests. Salved cargo with a value below an agreed figure can be excluded from the salved fund and from liability for salvage costs where these costs would be disproportionately high in relation to the cargo’s value.
ISU pollution survey The ISU has recently published its annual pollution survey which shows a drop in tonnages of pollutant salved by ISU members last year compared to 2009. The total of all pollutants salved last year was 574,386 tonnes compared to 1,018,872 tonnes in 2009 – a fall of 44%. The quantity of crude oil salved last year was down 74% from 743,506 tonnes in 2009
theBaltic Summer 2011 www.thebaltic.com
49
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Shipmanagement, crewing and employment
Source of supply There are plenty of owners out there who are outsourcing their shipmanagement, which is good news for companies like V.Ships. However, crew training continues to be a focal point
years ago. There is more retention of crews and less attrition and fewer people moving from one company to another. Salaries, he says, are “much more balanced” because in the current market conditions owners are making sure they get good value for money, so they are not increasing crew salaries. In terms of crew quality, because of the rapid promotion of crew members due to shortage of supply, shipmanagers have been spending a good deal of time on training to counteract concerns about overly swift promotions and their effect on crew members’ ability to do the job. “The commitment of owners and managers on training activity is much more advanced than in the past,” he says. If overly rapid promotion has been an issue, there has been a change recently, Mr Giorgi said. “Now there is a correction, so companies are not promoting as quickly as in the past.” Shortages also led to substantial salary hikes in recent years, particularly for highly specialised sectors like LNG. However, the situation now appears to have stabilised. Salary increases, Mr Giorgi says, have come back to inflation-based increases of the order of 2-3%, but nothing near the 20% increases of previous years. Now rates are much more in line with the trends of the past, he believes. As far as availability of crew for the next
V.Ships’ president Roberto Giorgi
O
generation are concerned: “Unless we create is
moving more towards the Middle East and Asia”.
a better industry for the new generation there
continuing, according to V.Ships’
One reason for this is the kind of tonnage in
will be less people who will embrace the life at
president Roberto Giorgi. It is not
question. “There is much more interest today in
sea because of issues like criminalisation and
that there is necessarily a different
outsourcing in the offshore sector,” he explains.
piracy,” he explains.
approach to outsourcing by the industry but
Offshore tonnage has been increasing with
At this moment in time the problem has
more that there are new players and a different
new players in the market, he says, and the
not been resolved, and in fact it is worse than
type of audience than in the past, he says.
trend towards outsourcing crew management
before, he said.
utsourcing
to
shipmanagers
The sale and purchase market in the past
and technical management to third parties.
Piracy has obviously been a major area of
year has mostly concentrated on the Asian
From the crew point of view, Mr Giorgi says
concern as the level of attacks show no sign
market. “We see the trend continuing, but
there is definitely a different outlook from two
of abating and bodies like the International
theBaltic Summer 2011 www.thebaltic.com
51
Shipmanagement, crewing and employment Transport Workers Federation and the Maritime
V.Ships has had a good couple of years and
Management pointed to an increase in enquiries
Union of India have recently made statements
“we are very happy about our performance”, he
for cadet positions since the financial crisis struck
regarding whether their members should go into
says. Strategically, the company is looking at
and says that the effect of the recession on
the danger zone at all.
major expansion in Asia and Australasia. V.Ships
graduate employment, as well as the proposed
ITF inspector Chris Jones told a recent
has opened a shipmanagement office in Sydney
rise in university tuition fees in the UK, is behind
meeting of the London branch of the Propeller
and the company is looking to strengthen its
the rise in interest in cadet posts.
Club that there were very real concerns among
position in Australia, China, India and Brazil.
“The whole maritime cluster is dependent
seafarers about whether their families would
on high quality candidates passing through
be cared for in the event of their being killed in
the system. The attraction of quality entrants
a piracy attack. He also mentioned the risk of
Ship-based decision making
and training them accordingly is a long-term
suicide among senior officers who feared that
There have been concerns in recent years that
investment. Officer training must be seen as
they would become victims of criminalisation.
crew members are being promoted too rapidly
university-equivalent vocational training.”
Mr Giorgi says there needs to be a more cohesive approach by all industry associations
and therefore have not had time to accumulate experience on the job.
Competitive packages
to come up with something more robust in order
Training is therefore even more important,
to take up the piracy issue at the United Nations
and InterManager president Alastair Evitt told the
Making sure that salary packages and benefits
as a top priority. With the current situation in the
CMA conference in March that decision-making
on offer are competitive with those available
Middle East, the UN has other priorities, but Mr
needs to be a matter for the crew and not shore-
in other companies is equally important when
Giorgi says that piracy needs to be tackled at
based managers.
seeking to attract employees.
its roots, and if there is not a “strong approach
“I regret to say it – but in many cases
Recruitment expert Spinnaker Consulting
going forward, I think in 2012 we will have a
shipboard management teams have to be
acts as the secretariat for the Maritime HR
much worse situation than we have today”.
retrained to think for themselves, to understand
Forum, which groups companies across the
the commercial issues and to have an awareness
industry and allows them to benchmark their
of product and service delivery,” he said.
salaries and packages.
Unions,
P&I
clubs,
underwriters,
flag
administrations and various trade associations “must come up with one agenda and push
Maritime legislation and methods were
that agenda”, Mr Giorgi says. He believes there
“driving decision making from the bridge and
needs to be a single legislative approach to
control room of the vessels
piracy on a worldwide basis and an international
to the respective shore-
court to try piracy cases.
based
Another challenge shipmanagers face is the
Further details about the forum are available on www.shippingjobs.com.
management
office,” he said.
increase in regulation in a depressed market, he
“It
is
incumbent
says. This is particularly true of emissions and
upon the industry to use
waste water management, “Going forward, the
modern communications
cost to the owner is growing, because of new
and training facilities to
regulation, and we have to make sure we have
return the responsibility
a realistic approach so that the industry will be
for onboard management
able to pay for these new rules.”
to the vessels – where it
Will the industry be able to meet the new
rightfully belongs – and in
regulations? “The burden of any new legislation
doing so restore the pride
is always put on the shoulders of the owner.
and self respect of those
I don’t think that is right. All the stakeholders
serving at sea. It is our
should participate, especially owners of the
responsibility to promote
cargo.”
and enhance the image
Managing costs is obviously important – not
of the industry and the
just in the current climate – to watch expenditure
career opportunities that
to which the owner is being committed, Mr
it presents.”
Giorgi says. Although this would happen even in
Mr
Evitt,
a good market, in a bad one it becomes much
managing
more relevant.
of
Meridian
who
is
director Marine
theBaltic Summer 2011 www.thebaltic.com
53
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Green shipping
Can they meet the emissions challenge? As environmental regulation is stepped up, new solutions to lower emissions and costs are vital
E
nvironmental legislation is not going to
tonnes of cargo in 1840 now it is in the order
of sulphur, and carbon dioxide, as well as
go away, and if anything owners and
of 8 billion tonnes of trade, he said. If sea trade
nitrous oxide. According to Chew Hwee Hong,
operators are facing greater pressure
grows by 2.4% per annum, by 2050 it will have
Ecospec’s managing director, the company has
than ever to comply with new rules on
three times the carbon footprint. There are two
the results to prove it is a viable technology.
emissions, waste water treatment and to prevent
obvious solutions apart from partial remedies
Ecospec has joined forces with cruise line
the transfer of micro-organisms in ballast water.
like use of alternative fuels – speed and logistics.
Royal Caribbean to test its technology on
The advent of emission control areas has
In terms of speed – if the bunker price rose to
Independence of the Seas, and also has test
meant questions have been raised over whether
$1,500 per tonne to achieve an 80% cut in the
conclusions for trials on other ships. The working
availability of low-sulphur fuels will be there
carbon footprint, the ship would be steaming at
principle of the CSNOx products is different
in sufficient supplies to meet demand by the
around 12 knots.
from a conventional chemical scrubber, Mr
The other means of reducing costs is to
Chew explained at a recent International Parcel
optimise the use of the intermodal system.
Tankers Association conference in London. It
According to Tom Boardley, marine director
Why is it necessary, Dr Stopford asked for iron
offers an alternative to carbon capture and
at Lloyd’s Register, owners realise they will have
ore to travel at 16 knots or containerships at
storage, which has limitations in shipping
to make decisions on scrubbers and ballast
25-30 knots? If fossil fuels have made us “800
because “you don’t want to store CO2 on ships”.
water, but it is a difficult time for them because
pound gorillas”, he said, “the pricing system
Also, he said, to use CCS the pollutants must
they are hoping there is a cheaper solution to
is not reflecting the locked up value of the fuel
be removed first, which causes space problems
the problem.
that we are using. We should be dusting off old
on ships because of the CCS plant needed on
According to Mr Boardley, it will take a
techniques like cost benefit analysis”. If we did
board. Another problem he mentions is that
year or two of high bunker costs to persuade
this, he said, “we might get some very different
seawater scrubbing technology may eliminate
owners to invest. Economic or slow steaming
ideas about speed”.
SOx but could generate CO2 which would mean
deadline – with a 0.1% sulphur cap in the North American ECA by 2015.
is one way to reduce fuel costs, provided the
Alternative fuels and abatement technology
issues surrounding the use of “with utmost
are two solutions. According to Vince Jenkins,
despatch” can be taken care of in charterparties.
LR’s global risk marine advisor, abatement
Trials on a 100,000 dwt oil tanker at 50%
Clauses to cover economic steaming are under
technologies will introduce high complexities in
gas load showed that the CSNOx technology
consideration at BIMCO.
shipboard technology, with consequent pressure
removed 99% of SO2, 77% of CO2 and 66% of
on crews.
NOx. This means that vessels using the system
According to Martin Stopford, head of
penalties for the shipowner once the new rules are in force.
Clarkson Research Services, the environmental
LNG is obviously one of the big possibilities
can continue to use HFO and still meet the 0.1%
debate is one that the industry needs to look
for the fuel and there is a lot of hope in the future
sulphur content requirement, which is already
at in a broader way. He told a recent Lloyd’s
of biofuels, although Mr Jenskins said it would
in force in the EU, without having to convert to
Register press briefing that the industry has three
depend on where it was procured as to how
distillate fuels.
outstanding challenges: globalisation, climate
well it performed.
According to Dennis Bryant, writing in
change and energy costs, which are going up.
One abatement technology solution which
his online maritime newsletter: “Ballast water
From the economic point of view fossil fuels
has been receiving considerable attention is
management today represents a triumph of
have “transformed us into 800 pound gorillas”.
Singapore-based Ecospec’s CSNOx technology,
politics over technology. It took some years to
Seaborne trade was in the order of 20 million
which aims to drastically reduce emissions
recognise the threat to local marine ecosystems
theBaltic Summer 2011 www.thebaltic.com
55
Green shipping
Intersleek 900 ®
Environmental care Commercial sense Intersleek®900 can enhance your environmental profile as well as your profits, through a reduction of up to 9% on your annual fuel bill and a corresponding reduction in greenhouse gas emissions*. It’s biocide-free and has high volume solids, which means less paint, less waste disposal and lower VOC emissions at subsequent drydockings. With over 400 vessels now coated, Intersleek®900 is the latest generation foul release coating for vessels over 10 knots. Better for the environment, better for your business. To find out more visit www.international-marine.com/intersleek900
posed by large fast ships carrying ballast water
to be repealed in the near future. Therefore,
launched its Mark II technology in March. The
from one part of the world to another.
ballast water management will continue to vex
system is a tailored version of its type-approved
the maritime industry for some time.”
Mark I model, but with the most ‘energy
“Once the threat was recognised, the
demanding’ features of the original removed.
IMO worked to develop a uniform system for
Sales and marketing director Tor Atle Eiken
managing it while not adversely impacting the safety of the ships, their crews, and cargoes.
DESMI Ocean Guard
said; “we are sharpening the already proven
As the management system came into focus,
A.P. Moller – Maersk have teamed up with
OceanSaver technology with our new Mark II
equipment manufacturers began working on
Skjølstrup & Grønborg (UltraAqua) and DESMI
ballast water treatment system; this will widen
technological solutions.
and jointly established the company DESMI
our core market segments, reduce installation
Ocean Guard, which specialises in such
time and complexity for retrofit and newbuilding
systems.
projects, and at the same time enable us to
“The engineering challenges have been immense. As a result, production of approved
continue to be a high quality supplier”.
ballast water technology has lagged. The
“We have been able to combine our
international convention has not yet entered
knowledge of ship technology, large scale water
OceanSaver signed major contracts for 22
into force because parties want to be assured
treatment, and pumping technology, which has
ballast water treatment systems for tankers
that the ships can obtain proven equipment
now resulted in a unique and very sophisticated
during the course of 2010.
to comply with the requirements. Meanwhile,
concept based on proven technology. A clear
numerous coastal nations (and various states
advantage of our system is that it does not
becoming mandatory equipment on board
of the United States) have adopted disparate
use any type of chemicals, which means there
vessels, driven by a legal requirement following
requirements for management of ballast water
is no pollution as a result of the ballast water
the adoption, ratification and entry into force of
– some of which are practically impossible to
treatment,” says Christian Ingvorsen, CEO of
the IMO Ballast Water Management Convention
meet at this time.
DESMI Ocean Guard. The system is based on
in 2004.
“More and more equipment is becoming available in the marketplace to meet the
UV light and ozone, and uses little energy, which has economic and environmental benefits.
Ballast
water
treatment
systems
are
Director of R&D at OceanSaver, Aage Bjørn Andersen said: “OceanSaver is pretty unique
requirements of the Ballast Water Convention.
Another company offering a new ballast
as we are one of the few if not the only ballast
Unfortunately, the local requirements are unlikely
water management system is OceanSaver, who
water company with our own laboratory and
56
theBaltic Summer 2011 www.thebaltic.com
Green shipping
* Depending on application and in-service conditions
testing. This is significant to mention, as we are
the acid strip would normally cost between
associated with the use and transportation of
able to simulate operational conditions and test
e90,000 to e120,000. The Hepburn equivalent
traditional line cleaning chemicals, many of which
components of the system over time. This is an
is less than half the price, at around e40,000 for
have HAZMAT (hazardous materials) restrictions.
assurance to our clients.”
a deep clean.”
Hepburn’s effective and environmental solution
She further explains that Hepburn products have none of the additional risks or costs
to blocked black and grey water pipes can be applied while the ship is in service.
Cleaning up Another green shipping product on the market are Hepburn Bio Care’s biodegradable, nonhazardous and phosphate-free products which successfully cleaned the vacuum black water piping systems on four cruise ships sailing to Brazil after traditional acid cleaning had failed. Within two weeks of Hepburn Bio Zapper and Hepburn Bio WC being introduced into the system in 2010, there was a definite decrease in the scale build-up. During the winter season it was evident that this proactive decision had been a huge success. No major or minor problems had been reported. Most importantly, there had been no problematic blockages of the vacuum systems. Not only does it work but it costs less. Margaret Hepburn, chief executive officer/owner Hepburn Bio Care, says: “For a ship of this size
theBaltic Summer 2011 www.thebaltic.com
57
Oxford Analytica
Derivative regulation proposals foster confusion R
epublicans in the US House of
Analysis
Representatives introduced, on April
Both EU and US regulators are engaged in a
15, legislation to push back deadlines
major overhaul of their derivatives regulatory
• Discouraging trading of derivatives on an
‘flash crash’ of US equity markets, have stimulated concerns over systemic risk.
to complete rule-making on derivatives
frameworks – following through on their G20
OTC basis, in favour of trading on ‘organised
required by the Dodd-Frank financial reform bill
commitments to reform these regimes by the
trading facilities’ (OTFs), which resemble the
by 18 months, until December 2012.
end of 2012.
swap execution facilities (SEFs) proposed
Both in the United States and the EU,
The Financial Stability Board (FSB) warned
as part of the Dodd-Frank Act, and
regulators are following through on commitments
in a progress report published on April 15
promoting centralised clearing of derivatives
to undertake major reforms of over-the-counter
that many jurisdictions would fail to meet this
trades, although creating additional trading
(OTC) derivatives trading rules. Yet many
deadline, unless necessary concrete steps
mechanisms, risks fragmenting rather than
proposed changes carry with them unintended
towards
consolidating markets, and would prevent
consequences, and the accelerated pace
immediately.
implementation
were
undertaken
an expected increase in liquidity that might
at which they are being conducted allows
otherwise result from channelling more
insufficient time for appropriate scrutiny.
OTC transactions onto open, transparent
EU directive
exchanges.
The European Commission has received an
Impact
unprecedented number of comments on
A broader Republican effort to roll back some
proposed revision of its Markets in Financial
Regulators
of Dodd-Frank’s substantive provisions will not
Instruments Directive (MiFID). This will form a
The European Commission also proposes
prevail over White House opposition.
major part of the EU’s new emerging regulatory
creating authority for financial regulators to ban
framework for OTC derivatives trading
outright trading in particular financial instruments,
Problems of regulatory arbitrage in OTC derivative regulation will increase, as other
MiFID fostered competition in share trading
as well as to forbid trading derivatives for which
jurisdictions adopt their own measures in this
after its enactment in 2007 (breaking the
EU regulators mandate centralised clearing, but
area.
trading monopolies of nationally organised
for which no such clearing facility emerges. The
that
exchanges) by permitting and facilitating trading
possibility of creating such authority has also
centralised clearing for derivatives transactions
on alternative venues, and forcing an overall
sparked negative comment, and raised concerns
might create ‘too big to fail’ clearing houses.
reduction in transaction costs. It has served as
that mooted changes would drive transactions
a major driver of the renewed competitiveness
away from regulated venues, paralleling the shift
of European financial exchanges, which are
that MiFID sparked away from exchange trading.
A
recent
IMF
paper
suggested
What next?
now leading players in cross-border exchange
Both US and EU financial regulators are
tie-ups.
Many banks have vociferously resisted some of these proposals. This opposition may arise
undertaking ambitious plans to overhaul the OTC
The Commission proposes changes intended
more from a desire to retain as much of the
derivatives market. In the short term these efforts
to improve transparency in various markets,
lucrative OTC business as possible, rather than
on each side of the Atlantic are fostering more
following the US lead in many areas.
from principled objection to proposed changes.
confusion than clarity. In the longer term, lack of
These include:
sufficient high-level multilateral coordination risks
• Clamping down on alternative trading
opening up significant possibilities for regulatory
platforms such as ‘dark pools’, which
US approach
arbitrage.
raise significant transparency issues, and
The
high frequency trading, which although
imposed by the Dodd-Frank Act, and the
exonerated from any role in the May 6, 2010
aggressive statutory timetable for completing
58
theBaltic Summer 2011 www.thebaltic.com
numerous
rule-making
requirements
Oxford Analytica
them (within one year after the law’s enactment on July 21, 2010) have already overwhelmed US regulators. Several significant deadlines – albeit
Boerse
some self-imposed – have been missed, in part
(DB)-New York
because increased agency responsibilities were
Exchange
not accompanied by a corresponding increase
Stock tie-up,
in experienced personnel, and augmentation
and might also force more
of resources, particularly for computer and
transactions away to the lessregulated swap execution facilities
information technology.
created by Dodd-Frank.
The European Commission has proposed changes intended to improve transparency
These potential rule changes would
in various markets. On the positive side, the
not be as significant for the rival bid for the
Securities and Exchange Commission (SEC) and
NYSE announced on April 1 by the Nasdaq
the Commodity Futures Trading Commission
OMX Group Inc and IntercontinentalExchange
(CFTC) have so far largely resisted engaging
Inc (ICE) (the terms offered have been
in the turf battles that previously marked their
subsequently sweetened).
relationship; the CFTC has engaged in more
Further, the proposed Nasdaq tie-up does
proposed rule-making since passage of the
not raise the same European competition
Dodd-Frank Bill than it had in the previous
issues as the DB proposals. This is because,
10 years, and even these extensive initiatives
if consummated, Liffe (NYSE Euronext’s
do not satisfy all of the Act’s implementation
derivatives business) would continue to operate
requirements. CFTC chairman Gary Gensler
separately from DB’s Eurex business. However,
recently conceded that many rules the agency
it does raise issues about combining the listings
was required to implement by a July deadline will
businesses of the NYSE and Nasdaq, although
not actually be finalised before autumn.
US antitrust regulators are expected to take
Critics of the process, including CFTC
a more lenient stance on this alternative bid
Commissioner Scott O’Malia, claim that the
(or for that matter, any bid) than their EU
pace of rule-making has resulted in layers of
counterparts.
proposed rules that are unclear, confusing, and fail to provide guidance to the financial industry.
Politics and regulation
Further, the lack of certainty requires assumptions as to what other yet-to-be
Republicans regard the US budget crisis as
proposed rules might dictate, and consequently
a mechanism for blocking necessary funds
undermines the rule-making process.
to enforce Dodd-Frank’s expanded statutory requirements. Yet failure to follow through and enforce regulations has left US regulators in the
Consequences of exchange consolidation
Report by Oxford Analytica
position of seeming ‘paper tigers’, as there has
www.oxan.com
been little apparent consequence for flouting or
The
© 2010 Oxford Analytica
ignoring key statutes.
unintended
consequences
pending
CFTC derivatives rules could undermine the
E-mail: dgautrey@oxford-analytica.com
Thus far, the SEC and the CFTC have avoided turf battles.
assumptions underlying the proposed Deutsche
theBaltic Summer 2011 www.thebaltic.com
59
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2/2/11 16:47:30
FFA
All clear for FFA trades New rules are coming into force to outline which FFA trades are subject to clearing as the number of OTC trades falls
R
egulation, litigation and a dramatic
are concerned a broad class of OTC contracts
impose new regulations on any entity whose
drop in OTC trades based on the
are covered, although spot foreign exchange
country’s regulations might affect the financial
International Swap Dealers Association
contracts, commercial forward foreign exchange
stability of the US and prevent them from
master agreement are just three of the
transactions and some physically settled
trading in the US derivatives markets, Mr Perrott
commodity transactions are excluded.
explains.
issues facing the FFA sector at the moment, according to Holman Fenwick Willan partner Brian Perrott.
The European Securities and Markets
A broad class of OTC derivatives contracts
Authority will have the power to decide which
are covered, including any that are known, or
“The first issue is the dramatic drop in OTC
OTC derivatives must be cleared and according
will be known, as swaps. Spot foreign exchange
trades based on the ISDA agreement, which are
to Mr Perrott, “criteria deciding this are based on
transactions are excluded and the Treasury
down to a real fraction of what they were,” and
systemic risks of not clearing a particular OTC
Secretary has the power to exempt foreign
as a result there is a lot of litigation around FFAs
derivative”. There will be mandatory clearing
exchange swaps and forwards from the clearing
specifically, he said.
by financial counterparties, who must report all
obligation.
In June 2008, total OTC derivatives contracts
their OTC derivative contracts to a registered
Regulators also have powers to require an
accounted for almost 90% of the global
trade repository. The territorial scope of the new
OTC derivative to be cleared, even if no CCPs
derivatives market, but the value dropped by
rules remains unclear, although Mr Perrott says
currently clear the contract.
$100,000 billion in the following two years.
that clearing obligations will apply when entering
There are currently a number of legal cases
Amounts outstanding for OTC derivatives as
into relevant OTC derivatives with third country
going through the English courts involving
far as commodities contracts were concerned
entities.
disputes on OTC FFAs in accordance with
In the US the Dodd-Frank Act was enacted
the ISDA master, or FFABA 2005 and 2007.
on 21 July last year, although most provisions
These concern the interpretation of 2(a) (iii)
Regulators’ attention has focused on the
have yet to come into force in 2011. The Act
regarding the obligations of the parties in the
OTC market, saying it must be more transparent
provides for mandatory clearing by financial
event of default or potential default and whether
and more secured to credit risk, Mr Perrott
counterparties and all contracts that are
the effect of the clause is to prevent payment
explains. The trend is therefore towards cleared
accepted by a designated clearing organisation
obligations from ever arising rather than just to
transactions and reporting of trades even when
(DCO) – the US equivalent of a central clearing
suspend them. Also at issue is the definition
an entity is not obliged to clear. “The market has
counterparty – must be cleared. As far as
of loss that is contained on page 15 of the
overwhelmingly voted for clearing,” he says as
clearing by non-financial counterparties is
ISDA master agreement and in particular the
“clearing achieves transparency.”
concerned there is an end-user exemption.
phrase “assuming satisfaction of each applicable
dropped from over $13,000 billion to around $3,000bn during the same period.
condition precedent”. The case of Lomas v JB
Both the EU and the US have been active in
Non-financial counterparties can opt out
terms of new regulation. The aim of the G20 was
of the clearing obligation if they are using the
to have a harmonious system and “the EU and
derivative for hedging or mitigating commercial
The other two cases are Pioneer Freight
US are acting in tandem so as to ensure there is
risk and they notify the regulator that they are
Futures v TMT Asia before Mrs Justice Gloster
no forum shopping”.
doing so.
and BBL v Pioneer before Mr Justice Flaux.
EU proposals are due to take effect over the course of 2012, while the US equivalent,
Any swaps must be reported to a registered swap data repository or the regulator.
Firth Rixson is currently being appealed.
In the Pioneer v TMT case, Mrs Justice Gloster found for Pioneer saying that FFA agreements
the Dodd-Frank Act, was enacted on 21 July
The act does not apply to derivatives
agreed on FFABA 2005 terms became subject
2010 with most provisions not taking effect
traded outside the US and with all non-US
to FFABA 2007 terms once a FFABA 2007
until July this year. As far as the EU proposals
counterparties. However, the US regulators can
agreement had been made. She also found continued on 64
theBaltic Summer 2011 www.thebaltic.com
61
Corporate viewpoint Cleartrade Exchange
The electronic marketplace for OTC cleared commodity derivatives
C
leartrade
Exchange
Pte
Ltd
(“Cleartrade Exchange”), headquartered in Singapore, commenced trading operations in January 2011
operating as a Recognised Market Operator (RMO) authorised by the Monetary Authority of Singapore (MAS). In the first quarter of 2011 it experienced in excess of 70,000 FFA and Iron Ore lots registered, attracted further membership from the broker & principal community and launched the Cleartrade Exchange China Steel Index. Cleartrade Exchange launched a “central screen” execution venue as a revolutionary new way to trade dry bulk Forward Freight Agreements (FFAs), Iron Ore Swaps, Steel
Swaps and Fertilizer derivatives. The exchange venue has additional commodities planned for later in the year and will continue to expand in response to market demand for other OTC Cleared Derivatives. The venue lists a complete suite of bilateral and OTC cleared contracts for each of these asset classes and provides access to multiple clearing houses for clearing and settlement of those derivative contracts. Cleartrade Exchange offers to members a sophisticated end-to-end electronic trading platform, credit filter technology and risk management platform. In addition it provides a market operations service available to trading and broking members of the Exchange.
62
Richard Baker, CEO of Cleartrade Exchange “We are excited by the momentum Cleartrade Exchange is seeing in the market, it prompted us to open our London office in March and expand the team to address the growing interest in trading on the exchange”.
theBaltic Summer 2011 www.thebaltic.com
Corporate viewpoint Cleartrade Exchange to the increasing number of institutional users
Cleartrade Exchange “at a glance”
that are entering the OTC cleared market. Such
• A regulated trade execution venue
users have, for some time, asked for an effective
• A
Cleartrade Exchange designed in response
electronic solution which addresses the whole value chain of order placement, trade execution,
central,
anonymous
screen
based
marketplace • Support for Principal to Principal Trading,
trade repository and recap management through
Broker Trading and combinations of both
to clearing. Cleartrade Exchange solves this
• Full support for a hybrid market – phone and
value chain dilemma for multiple commodities and enables a variety of trading scenarios. These include broker matched, principal to principal trade and the many combinations in between. Anonymity and order routing are just two but very critical components when operating a transparent, central trading venue; Cleartrade Exchange has placed great importance on getting this right. Cleartrade Exchange is open to membership applications from institutional investors, and interested persons should contact the Cleartrade
screen • Price and Volume discovery, top of market quick hit/lift • Immediate support of FFA’s, Iron Ore, Steel
The electronic marketplace for OTC cleared commodity derivatives Dry Freight FFA’S | Iron Ore | Steel | Containers | Option Trading
Cleartrade Exchange the execution venue for the freight and commodity derivatives markets. • Multi-Broker
• Pre & Post Trade Risk Management
• Multi-Asset Class
• Central Order Book
• Price Discovery
• Straight through Processing
and Fertilizer swaps & others to follow • Trading of outrights, spreads and ratios plus auto generation of implied orders • Central anonymous trade tape and market events – full transparency • Clearing house integration for electronic STP and web trade registration
Global Execution Venue
www.thecleartrade.com | Email: info@thecleartrade.com | Tel: + 65 (0) 6372 9566
• Live and Operational since January 2011
Exchange membership team at membership@ thecleartrade.com
Not just a central screen; a Global Execution Venue built by the market for the market. www.thecleartrade.com E-mail: info@thecleartrade.com Tel: + 65 (0) 6372 9566
theBaltic Summer 2011 www.thebaltic.com
63
FFA the banks who operate clearing facilities can be lengthy,” he says, with detailed forms to fill in and credit and risk assessments to be made before the account is opened. The benefit of this system is that the participants in the FFA market are carefully vetted and have to have sufficient funds, features of due diligence which might have been difficult to achieve with OTC transactions, when entry to the market was often much faster. “Users of the market are more considered,” he says. “Most enquiries are coming from trade customers looking for an FFA based solution to freight risk exposure. “FFAs offer a great degree of flexibility, if your risk exposure comes from a fixed rate, an FFA can quickly change it to a floating rate and vice versa from floating to fixed,” he says. “This brings a greater degree of pragmatism and flexibility to a long-term strategy and increases a company’s ability to react to sudden adverse market conditions.” He recommends that those in the freight market interested in dealing in FFAs should open a clearing account without delay, so that when they decide to trade an FFA they will have already jumped through the administrative hoops and can therefore proceed quickly. Choosing the right bank is important and not that those FFAs agreed on FFABA 2005 terms
issue is whether there will be a tightening or a
only will the bank require sight of documents
became subject to automatic early termination
loosening of the trade.
like the certificate of incorporation or articles
once an agreement had been made on 2007
On the whole, according to Duncan Dunn
of association, but also details of the beneficial
terms. Thirdly, she found that clause 10 of the
of SSY Futures, the FFA market has been a
owner, if the entity is privately held. Money
FFABA 2007 terms did apply to those late FFAs
“great success” and since the substantial fall
laundering and financial terrorism are obviously
which were trying to incorporate FFABA 2007.
experienced by the dry bulk market at the end of
issues that the financial community take very
Fourthly, on the assumption that automatic early
2008 it has performed robustly. He emphasises
seriously and there are stringent tests to be
termination applies, she found TMT was obliged
that FFAs are now a fact of life in mainstream
carried out. It is also important to establish which
to calculate its loss by including sums which
shipping, and says that the most important
individuals in a company are authorised to make
would have become payable to Pioneer in the
feature is that almost all transactions are now
trading decisions before commencing.
contract months prior to the early termination
cleared. As has been shown by the recent
As the FFA markets become more efficient,
date. Fifthly, she found that TMT was obliged
court cases, the updated FFABA agreement
he says, the issues surrounding the use of a
to calculate its loss by reference to sums which
is being tested and disputes seem likely to
central screen are becoming more important.
would have become due to Pioneer had Pioneer
continue. There are those that are still doing
Some users of the FFA market believe a central
not remained subject to an event of default after
OTC trades and they were very important to
screen would make trade faster and more
automatic early termination.
the development of the market but now virtually
transparent, additionally enabling participants
everyone clears, he says.
to trade with anonymity. Greater anonymity and
Mr Perrott, who acted for Pioneer in the case, commented: “We are happy that the
Users of clearing have, of course, to put up a
transparency may appear paradoxical but the
Commercial Court held TMT to account –
marginal deposit, which can require a substantial
aim is for the trader to know what the market is
rendering them liable to pay gains under the FFA
financial commitment, often representing around
doing as opposed to the market knowing what
transactions. This will reassure the market and
15-20% of the underlying deal. For small users,
the individual trader is doing.
also, no doubt, be reassuring to the creditors
“If you want to hold an FFA position and need to
One key question at the moment is whether
of PFF.”
post seven figure margins, it is probably money
brokers will support the Baltic screen as it
However, the swaps market goes well beyond
that will also be needed elsewhere in your
stands, since it allows traders direct access
freight with iron ore swaps, agra products, soft
organisation”, he says. Whereas banks in the
and therefore potentially poses a threat to
commodities and the like. Mr Perrott says there
past were often prepared to advance cash for
broking commissions. “One thing is clear,” he
is increased derivative activity in Brazil and
hedging purposes, they are far more stringent
says, “in a highly specialised and volatile trade
China, particularly as regards iron ore swaps.
today in who they are prepared to finance. This
-based market, a knowledgeable broker at the
can disadvantage the smaller entities.
central hub will be an essential ingredient for its
One question is whether Chinese state companies are going to be able to trade in
“If you do one FFA you will probably do
derivatives. With a huge potential market, the
more, but account opening procedures with
64
theBaltic Summer 2011 www.thebaltic.com
continued success.”
WHAT’S NEXT? Nor-ShippiNg 2011 aSkS the queStioNS. how will the iNterNatioNal maritime iNduStry aNSwer? Find out. Visit our exhibition. Attend one of our five conferences. It’s happening here and it’s all about Next Generation Shipping. The conversation has already started at www.nextgenerationshipping.com. Don’t miss the leading maritime event week. Register today at: www.nor-shipping.com Main sponsor:
MANAGING RISK
Leading sponsors:
A BOEING COMPANY
Ship supply
E-trading for suppliers Although trust remains an issue when ship supplies and purchasers trade online, there are some innovative products out there which should cut costs for owners and shipmanagers
O
nline trading is now a fact of life and the ship supply arena is no different, with marine and offshore e-marketplace ShipServ recording
a “bumper” 2010 with trading volumes up 31% on 2009. According to the company, during the course of last year over four million trading transactions were facilitated by ShipServ, with an annual value of $1.7 billion, with nearly three quarters of a million visitors coming to the site to source goods from over 35,000 suppliers – an increase of 134% on 2009. “We’re delighted that so many marine and offshore businesses rely on ShipServ in their day-to-day operations,” says Paul Ostergaard, founder and chief executive of ShipServ. “With our growth in 2010 we can truly say ShipServ is the one place that maritime professionals come to do business.” Companies that signed up to trade on ShipServ last year included ABCmaritime, Alpha Shipmanagement, BW Gas, Chellaram Shipping, Mowinckel Ship Management, OSM Ship Management, Pacific Basin, Prestige Cruise, Reederei F. Laeisz, SeaCor Dubai, Regent Seven
Paul Ostergaard, founder and chief executive of ShipServ
Seas Cruises, Star Cruises, Tai Chong Cheang ShipServ believes that both buyers and
ShipCrunch last year suggested that, while there
According to ABCmaritime chief executive
sellers benefit from the use of the trading
was a desire to trade more extensively on the
Daniel Wolf : “We foresee considerable potential
platform. Sellers can increase awareness of their
web, purchasers were continuing to trade over
for our fleet and management operations from
brand and increase their orders by as much as
the telephone and face to face because of trust
this partnership with ShipServ”.
115% in six months it claims.
issues when using a new supplier.
Steamship, Tolani Shipping and Wah Kwong.
Some 24% of the world’s cruise capacity, 40%
Buyers also benefit from shorter order cycles,
To get round this issue ShipServ has
of the world’s container carrying capacity and
thus reducing costs, and the company estimates
established TradeRank, which was originally
43% of the world’s LNG fleet all now connected
that a shipmanager with a fleet of 20 ships could
based on activity on the ShipServ trading
to ShipServ TradeNet, the e-commerce trading
save up to $600,000 in a year.
platform but has now added a ratings and
platform for ship supplies, the company says.
66
An industry report produced by ShipServ and
theBaltic Summer 2011 www.thebaltic.com
reviews section.
Ship supply “New for 2011 is the ability for brand owners to manage their authorised agents on Pages.
able to track goods by vessel name and position
Customs regulations
using the Vessel Master database.
Changes to customs regulations within Europe
This not only allows brand owners to set up all
Partners involved in the project include ISSA
have been exercising the minds of members of
their agents on Pages but also means suppliers
and ShipCentric, and One Maritime will allow
European Ship Suppliers Organisation OCEAN,
joining the platform cannot claim authorised
companies to process transactions using a
most notably on the modernised European
status unless approved by the brand owner.
maritime e-commerce system like MarineLink
Customs Code and the future of VAT. Ship
Verified suppliers will get a further boost to their
from EDB ErgoGroup.
supply companies are exempted from paying Torben
VAT, which OCEAN says is “of fundamental
According to Mr Ostergaard: “TradeRank is
Brammer described the project as the next step
importance for the European ship supply
a very powerful way of doing business online
in the development of online platforms which,
industry, a fact which the EU Commission and
that takes the best of the consumer internet and
by the use and mix of multiple information
the Member States of the European Union have
brings it into the maritime trading environment.
sources and the latest technology, take multiple
recognised.
TradeRank,” the company says.
One
Maritime
chief
executive
“The feedback we received on Reviews
information searches, worldwide communication,
“In order to maintain a healthy and competitive
and Ratings encouraged us to believe that
collaboration and ordering processes of ship
ship supply industry inside the European Union,
this was something that buyers and suppliers
supply to the next level.
it is imperative not to create additional costs or
could both benefit from. Brand Verification is
He said: “Our technology products have
burdensome procedures that could hamper the
the next obvious step. Reputation is a critical
allowed us to think of data sources and the
competitiveness of the European ship supply
business tool and ShipServ customers have
use of data in a much different way than ever
industry vis-à-vis third countries under any future
global reputations to manage. Brand Verification
before. With its unique search engines and
legislation regarding VAT.”
allows them to take responsibility for managing
data migration technology, One Maritime has
The organisation also commented on the
their own brands, authorising their agents
managed to build an online platform that gives
Commission’s decision to withdraw the facility
and distributors and also gives buyers the
its users access to a mix of data from multiple
by which national ship suppliers do not have to
confidence to know they are dealing with bona
data sources at the same time.
make export declarations for small consignments
fide companies when they use ShipServ for
“It changes the way that catalogues, for
by 2013.
example, will be used in the future. It will allow
The organisation argues that it delivers
“The ShipServ community is a network
users to search across multiple information
hundreds of goods, whether machinery, spares,
of thousands of businesses around the
sources faster than just opening one printed
or security equipment in very small quantities.
world. With our suite of verification tools, the
catalogue and then to start browsing the
These are very often needed urgently or at the
community is determining who are the best
pages one by one for the right information. It
last minute due to a breakdown, OCEAN says.
suppliers to do business with, be that through
ensures updated information at your finger tips,
The need to replace the part may also be critical
authorisations, reviews or actual orders. It’s an
something that the current printed catalogues
to the correct running of the vessel and OCEAN
incredibly powerful tool, and makes ShipServ
cannot deliver, and it gives subscribers access
says that it would be difficult to fill in customs
an information platform where buyers know they
to download updated data and into their back
declarations and wait for them to be agreed
can trust the information being provided.”
office systems in a much simpler way.
without delaying the departure of the vessel.
sourcing.
“We have mixed the different catalogue data
OCEAN wants to see the exemption linked
reviews service carried out last year:
with specific data for vessel, supplier, owners,
to the authorised economic operator concept
• 84.5% believed a buyer would choose one
managers, vessel locations, industry KPIs and
under the modernised customs code, by which
much more – and the result is: One Maritime.”
only AEOs would be able to apply for the
In a survey of its customer ratings and
supplier with the better customer reviews over another with identical capabilities;
exemption.
• 53.1% saw Pages as an important sales channel for their business; • 52.1% thought adding customer reviews to their Pages listing would help them win more business.
One Maritime Another venture that was launched last year was One Maritime, who linked up with the Intenational Shipsuppliers & Services Association so as to ensure that owners and managers will be able to access ISSA’s ship stores catalogues online or using a CD. Other industry catalogues are also included, which One Maritime claims makes it the “most comprehensive maritime catalogue search engine available on the market today”. Using the search engine it will be possible to call for tenders, order goods and deal with invoices, track owners’ goods, and draw up supply contracts. Owners and managers will also be
theBaltic Summer 2011 www.thebaltic.com
67
Risk management
Risky business Managing risk is an increasing part of company life as currency fluctuations, oil prices and pirate attacks all take their toll. The risks of getting it wrong can prove expensive
L
eading accountant and shipping industry adviser Moore Stephens has developed new software to help clients embed risk management procedures into their day-
to-day business activities. The name of the software, Rhiza, translates from Classical Greek as ‘root’, and is the source of the word ‘risk’ – not inappropriate for the shipping industry on either count. Michael Simms, a partner in the Shipping Industry Group at Moore Stephens, says, “Shipping is an industry which can benefit greatly from reducing its exposure to risk, not least because it is a significant user of outsourced services. Rhiza provides a low-cost, easy-to-use means by which any company, large or small, can greatly improve its performance by embedding risk management into its everyday activities”. Rhiza can accommodate a significant number - and allow flexible reporting – of risks. It provides a single repository for all of a company’s risk registers. Outstanding actions are highlighted to support effective monitoring, while clear management reports can be produced at the click of a mouse. The software is fully adaptable to the specific needs of the company using it. Through five levels of password-protected user access, it provides clear, robust reporting for management and board at the click of a mouse, supports the monitoring and testing of risks and controls, and facilitates compliance with established good practice. Michael Simms concludes: “Rhiza is not just another piece of ephemeral software. We recognised some time ago that there was client demand for consulting advice and support in
help companies embed their risk management
Rhiza fills that gap, and has genuine relevance
implementing risk management systems. We
processes. A review of existing products
for the shipping industry, where our clients like
felt that a specific software tool was needed to
indicated that there was a gap in the market.
the fact that it is easy to use, captures everything
68
theBaltic Summer 2011 www.thebaltic.com
Risk management
in one place, and can provide meaningful
and forwards across Libya’s oil supply centres,
management reports at the touch of a button.”
supply from that area seems uncertain, whoever
Mitigating risk in financial transactions has
wins the battle.
favour of the supplier. The container lines resistance to the use of hedging to offset market fluctuations has been
become increasingly important, not least since
For those companies who did not manage
a source of irritation for some, with SeaIntel
the banking crisis of 2008. LCH.Clearnet has
to secure their budgets, a mix of hedging
Maritime Intelligence boss Lars Jensen reported
been involved some of the higher profile banking
tools could be the key to success in beating
as saying that container companies were missing
crises in recent times, most recently the Lehman
the volatile oil prices, according to Hans Erik
a trick by not using derivatives to mitigate their
Brothers debacle in 2008. LCH.Clearnet acts as
Christensen, managing director of Global Risk
exposure to freight rate fluctuations.
a central counterparty, which means that the two
Management.
other parties are not exposed to each other’s
The Container Freight Derivatives Association
“The increasing trend is now making it
has been set up to promote the use of freight
difficult for many companies to comply with their
derivatives. However, there are other types of
LCH.Clearnet is only exposed to risk itself if
fuel budgets,” Mr Christensen says. “Especially
risk that will have to be catered for, not least in
one of its clearing members defaults. Normally
the ones who were hesitant to secure budgets
the aftermath of the Deepwater Horizon disaster.
this risk would be covered by the initial margin
while prices were still at a lower level. But this
According to Magne Torhaug, director of market
taken from the defaulter, but it also has a default
does not mean that it is too late to catch the
and business development at DNV: “Two areas
fund to cover risk over and above the initial
hedging train.”
in particular can be mentioned: the first is risks
credit risk.
Credit risk is another area where suppliers
due to the extrapolation of design principles.
are having to be careful in the current climate
The second group of difficult safety risks are
LCH.Clearnet covers the latent market risk
and ship suppliers have been considering the
those due to the dynamics of change. An
on members’ positions should they default by:
possibilities of factoring as a means round the
example is the handling of safety during complex
“marking the positions to market and collecting
problem.
operations, where safety barriers change during
margin, made up of cash contributions from members.
losses/paying profits through variation margin;
One thing is clear, contract terms need
the procedures. A major contributor to several
taking initial margin to cover an estimate of
to be worded as closely as possible as there
large accidents has been ongoing repairs or
potential future losses in managing a default in
have been a number of recent legal judgments,
unrepaired system failures, ie systems which
normal market conditions; topping-up this initial
involving, for example, the ownership of bunker
were temporarily changed to be outside their
margin intra-day if necessary; and maintaining
supplies in the event of a default by the charterer
intended design conditions.”
clearing funds to cover potential losses beyond
which have gone different ways in the courts.
Another aspect of risk management is that
that, for example in abnormal market conditions.”
One example was the Fesco Angara case,
provided by companies like RightShip, which
Global Risk Management is primarily focused
which has been heard in the English courts,
offers a ship vetting information system. The
on managing fuel price risks and says it has been
where a maritime lien for non payment of
company has also developed an environmental
receiving a number of enquiries from companies
bunkers cannot be obtained, while it is possible
risk rating due to concerns about shipping’s
who have “missed the hedging train”. Such
in the US courts. Although retention of title
environmental footprint. SOx, NOx, CO2 and
companies, Global says, are now facing budgets
clauses are included to give some recourse to
particulate matter have been high on the agenda,
that are out of control, not least because
the supplier in the event of a failure to pay, and
and RightShip has developed an environmental
of the volatile situation in the Middle East.
in cases where the bunkers have already been
rating standard which complements its existing
As the fighting has been moving backwards
consumed, such clauses do not always work in
risk rating standards.
theBaltic Summer 2011 www.thebaltic.com
69
Corporate viewpoint Rightship
RightShip One area of concern is RightShip’s independence – can people have faith in your system when you are owned by three major dry bulk shippers?
industry know-how to maintain and apply it.
Originally RightShip was formed to pool the
advice, and get the same level of support and
vetting resources and expertise of BHP Billiton
information as high volume charterers who vet
and Rio Tinto. Soon other shippers asked us to
5,000+ vessels per annum.
By offering RightShip as a third party service, we give organisations of all sizes access to a very sophisticated system and group of experts. If you think about it, a one-person start up can search for any vessel in the system, or call for
vet ships for them as a third-party provider, and four years later Cargill became an equal one-third owner.
Warwick Norman
R
Is the star rating system a bit simplistic?
RightShip would not exist if we could not
The one to five star rating is a quick summary of a
operate independently to equally support the
huge amount of detailed data, across more than
competing interests of our owners. And our
50 risk factors, which has been analysed and
third party business has grown bigger and more
processed by a sophisticated risk algorithm. So
diverse every year. As large as our owners’
while the rating might look simple, it represents a
shipping operations are, they now represent
complex evaluation of risk. We also present the
less than 50% of our vetting activity. That says
data behind the rating, to encourage users to
to me that around 200 customer organisations
understand the risks.
are pleased with the benefits they get out
But the most important thing to say about
of subscribing and are comfortable with our
the rating system is that it is not the end of the
independence.
story. It’s a signpost along the way. We will look,
ightShip has been welcomed across
We see a common acknowledgement among
with our customer, at what has led to a ship
the industry for its comprehensive,
our shareholders and our customers that a
being rated perhaps two stars, and often with
easy-to-use online vessel evaluations,
market with higher standards, where fewer low
updated information we may decide the risk is
24/7 phone and e-mail vetting sup-
cost-high risk vessels are employed, is a healthier
manageable and the ship is suitable for the task.
port from experienced maritime professionals.
market for them all to operate in.
We have all worked in commercial shipping operations, at sea and onshore, and our
Its customer base has grown and widened
Is RightShip suitable for smaller organisations?
customers know the goal of our recommendation
has recently launched an environmental rating to complement its existing risk rating and bring
A system like this is expensive and difficult to
the end, the decision is in their hands.
sustainability to the forefront of the selection
create and maintain. We developed the online
It’s getting the right balance and being both
process.
system and enhance it regularly, and we have
systematic and pragmatic. The human element
built a pool of people with the experience and
is vital in getting the best commercial result. But
every year in its decade of operations, and it
But the rise of RightShip has also been accompanied – at times, and in some quarters – by confusion and even suspicion. CEO Warwick Norman says the vetting agency takes that response seriously and works hard to be transparent about its operations, its motives and its plans.
RightShip continues to be a strong commercial success – do you need to worry about your critics? RightShip has always had the ultimate aim of raising shipping quality standards worldwide. Clearly that goal needs industry players working in the same direction, so we listen and respond openly, and tell anyone who is willing to listen how the system works.
70
theBaltic Summer 2011 www.thebaltic.com
is the best commercial outcome for them. And, in
Corporate viewpoint Rightship using a rigorous, independent vetting system means you should get the same decisions, whether it’s 10.00 on Monday morning or 16.30 Friday afternoon, whoever is using the system and whatever their personal level of expertise.
Isn’t your system tough on owners and operators? It’s fair to say some owners have had reservations, although most feel more comfortable when we explain the system. Our vetting is designed to target vessels – and by extension owners and operators who offer them – that carry high risk and do not perform safely and reliably. We do not apologise for that. The flipside is that our approach rewards and gives incentives to owners and operators who invest in their ships, demonstrate good PSC and safety performance, associate their vessels with better-performing flags and class societies and/or link with reputable organisations like AUSMEPA and Green Award. We are always ready to give owners and operators advice and information about how to use RightShip as an opportunity to achieve those commercial rewards. That offer is open, not just to owners and operators who are customers and use our system to benchmark their vessels’
‘approval’ because our system vets each ship
performance, but to all owners and operators.
from scratch each time it’s nominated. New
It just makes sense for organisations to set a
The FAQs on www.rightship.com are a good
data is added every day so a ship’s rating may
common approach to marine risk management
place to start.
change from one nomination to another – which
across their business, not to scrutinise one type
of course is good news for owners, flags, class
of vessel more rigorously than another.
growing significantly over recent years.
How reliable is the data? And how can owners check and fix errors?
societies and others who are acting to remedy can apply their own vetting criteria to determine
How does the environmental rating work?
RightShip acquires reliable data from many
a ship’s suitability, which may have nothing to do
Similar to the risk rating, it analyses a range of
independent sources, including IHS Fairplay,
with the Rightship risk rating – for example, ports
detailed data to give users a rating and displays
casualty data, Port State Control and terminal
and terminals may set specific beam or draft limits
other information they can use in vessel selection
performance information. Owners who are
or receivers may have age or other restrictions.
and benchmarking. In this case the data is
deficiencies and minimise risks. Also, customers
customers can check the system any time,
The simplest answer is that owners make
based on environmental performance, so it helps
while other owners may have concerns raised
their ships more attractive to our customers by
customers meet their sustainability policies and
by charterers or other customers. We encourage
demonstrating good performance, associating
other targets.
owners, whether customers or not, to give us
with higher-performing flags and class societies
We’ve been asked if it is the same as
more data if they wish and tell us if they think
and attending thoroughly and quickly to any
shippingefficiency.org. It uses the same EEDI
anything is incorrect.
identified deficiency. We’re happy to give owners
data – which of course is used by many third
more detailed advice any time.
parties, including the IMO – and the same MEPC
How do owners get their ships recommended or ‘approved’ by RightShip?
vessel types, but gives a much bigger picture of
Isn’t RightShip really designed just for dry bulk ships?
each ship’s total environmental footprint.
Remember that our rating is a signpost, not an
That was the original driver. When we started
vessels, we and many of our customers are
inflexible pass or fail mark. Our recommendation
there were systems for tanker vetting, but on
convinced of the value of using it for comparing
comes down to whether the user, with our
the dry side there was no easy way of collecting
the relative efficiency of existing vessels in the
advice, believes the identified risks have been
the disaggregated data that was all over the
fleet. And, of course, engine efficiency and
addressed or can be managed. A higher-rated
world. However, we’ve always vetted tankers
bunker costs have been a focus in vessel
ship is likely to be accepted more readily than a
as well, adding value to existing regimes for our
selection decisions and charterparty rates for
lower-rated one, but, as mentioned previously,
customers, and are pleased to provide vetting as
some time.
the lower-rated ship can be acceptable on further
a third party contractor under the most recent
Early days, but we’re very pleased with the
investigation, possibly including an inspection.
OCIMF guidelines. In fact, RightShip’s online
level of interest and see this as a growing area of
vets and inspections for tankers have both been
demand for data, advice and support.
It’s also more complicated than a one-off
theBaltic Summer 2011 www.thebaltic.com
While some people feel EEDI is just for new
71
Corporate viewpoint REDfour MSS
Anti-Piracy Private Security:
a Sector under development, or just a blip in time? REDfour MSS (Maritime Security Solutions) Ltd reviews the backdrop and current outlook
C
urrently 25 vessels are being held
The July 2000 Radio 4 documentary, Turks
combat) the pirates is now clear. The pirates
by pirates in and around the Horn of
on the Coast, put the number of captives at
(be they Somalis or copycat Eritreans, Iranians
Africa, with 545 hostages held cap-
between the 16th and 18th centuries at over
or Western Yemeni’s) are too eager for more
tive onboard or nearby the fishing
100,000, but a more recent estimate has the
success, and yet still seem to be easily deterred
ports secured by the pirates. As is recognised
number of Europeans enslaved between 1530
when well trained and practiced Maritime
the world over, the situation has significantly
and 1780 at 1.25 million. Amazing; and history
Security are aboard.
worsened since mid-2008, when it was first
recounts how the Royal Navy led the charge
Our AMSTs are now in very high demand,
properly acknowledged to be a significant prob-
to try to cease this appalling ‘trade’. However,
with the majority of CSOs, charterers and
lem to the Merchant Fleet around the coastlines
piracy remains with us today – and is as
owners throughout the merchant tanker and
of Greater Somalia.
commercial as it ever was – as the Senior Bey’s
bulk carrier fleets now clear that security is a
in the 500 cannon protected fortress of Algiers
necessary requirement within their commercial
intended it to be.
planning. Most pools now require all vessels
Of course, to give some perspective to the issue of piracy, we should remember that, regrettably, it is nothing new. Peter Newton,
Three years ago, in 2008, very few charterers
transiting HRWs to have some maritime security
a recently retired containership Captain, was
and owners were inclined to protect their
company (MSC) support or accompaniment.
attacked six times over a period 44 years – on
seafaring employees, vessels and cargoes from
True, the costs have not yet amortised across
one occasion being held at sword point whilst
the small, yet prevalent, risk of piracy in the
the board, nor have those paying for cargoes
the pirates stole $27,000 from his safe; this,
seas off the Horn of Africa. The majority, until
seen the rates impact upon their costs, but the
typical of ‘maritime mugging’, has gone on for
recently, preferred to run the risk, hoping to
need to acquire professional maritime security
centuries.
transit safely through these High Risk Waters
has been acknowledged, and the CSOs across
Most notably, and often forgotten, is that
(HRWs). On average, since 2008, between
the merchant fleet are busy ensuring they have
what is now Libya, Tunisia, Algeria and Morocco
24,000 and 28,000 vessels have been transiting
posted security wherever possible.
(operating from Ports such as Deme, Tunis,
through the Gulf of Aden/Red Sea/Suez Canal,
So, there is an identified and persistent
Tripoli, Tangiers, Sallee and most notably Algiers),
and most transit unprotected against a boarding
threat, increasing HRW areas (note the Arabian
was historically where the Islamic sanctioned
by pirates. True, convoying in group transits
Sea, Mozambique Channel and Gulf of Guinea
Corsairs of the 16th, 17th and 18th centuries
in the IRTC has been going on for over two
in 2010-2011) and the industry is in a state of
operated from, authorised by the Sultan in
years (and is now loosely occurring in the
flux as it seeks to regularise its medium-term
Constantinople to raid all Christendom shores
Lower Red Sea) – and this has sometimes
response to piracy.
to seek profitable piracy. British and Western
proved effective, but only in the past eight
European fishing fleets suffered terribly; England
months have we seen a major shift in the
Medium term or long term?
lost many fishermen and vessels; indeed by
thinking of all the major stakeholders (seamen,
Most commentators see the Somali piracy issue
1619 the Corsairs had taken over 300 vessels
owners, charterer’s, insurers and technical and
as one that will last at least 10 years (and
and in 1625 Devon and Cornwall alone lost
commercial managers) towards Armed Maritime
that’s assuming positive land-based solutions
1,000 men. The South Coast of England lost
Security Teams (AMSTs).
are implemented soon). Medium term would
an estimated 20,000 men, with some being
With 90% of world trade and 40% of global
seem to be the best synopsis, with long-
ransomed back, as an organised business, for
energy demand moving via the Suez Canal, the
term opportunities for lasting security perhaps
between £200 and £300.
requirement to deter (or, when authorised, to
being adopted. Should there be a return to all
72
theBaltic Summer 2011 www.thebaltic.com
Corporate viewpoint REDfour MSS denied the right to carry arms in defence of the merchant fleet. No barriers, just safeguarded hurdles that MSCs must prove they can jump to be authorised to offer such services.
Jurisdictionally, where are we? Well, for the first time sine 1820 the US have just successfully charged Somalis for piracy – and we have to hope that nation states surrounding the Indian Ocean (and elsewhere) will take note that sentencing pirates is indeed possible. Longterm prison space has been one issue, but even in Somalia there are new prisons being built to afford the containment space to commit pirates to passed-down sentences.
Naval Security? EUNAVFOR and Task Force 151 continue to do what they can, but the expanse of the Indian Ocean is such that merchant fleet operators recognise that private security options will increasingly dominate. Perhaps better intelligence sharing between the MSC and naval forces can occur, as the two face and fight a common enemy? At REDfour, we would certainly welcome the opportunity to work more closely with EUNAVFOR, and to look to share more intelligence with associate MSCs.
The future? The industry will shortly become much more robustly regulated, with more appropriate safeguards in place - to ensure that ill-prepared and poorly qualified individuals/companies cannot simply offer up their services. The more developed of the MSCs would all agree that, regulated as we are, we should not be viewed as either a necessary evil or as mercenaries. merchant vessels carrying weapons (as was the
Africa piracy threat. Since 2008, we have seen a
We provide a service predicated entirely upon
case until only 30 years ago; of course, some
steady number of new MSC entrants, but more
deterrence – and long may that continue.
always have), should all jurisdictions accept that
recently this has moved from being a steady
vessels have bonded self-protection equipment
trickle to a veritable torrent of new entrants and
Simon Bell, Joint ceo REDfour Security Group
onboard? These are just some of the questions
niche companies, all trying for a slice of the
incorporating REDfour MSS (Maritime Security
now being asked.
security cake. In a growing market there’s always
Solutions) Limited
Within the MSC community there are
more to go around, but with such a rush to join
other issues to prepare for – and some to
what we believe is a specialist maritime security
implement. Should all MSCs be signatories to
service, we worry about weapon ownership,
the International Code of Conduct? This would
import/export visa regulation, ‘borrowed or
seem to be a natural self-regulatory first step.
loaned’ services as seen across the market –
Separately, will some/all join organisations like
and ultimately there will be an incident that sees
SAMI (Security Association for the Maritime
poorly equipped individuals breaking the law as
Industry); a positive accreditation forum for
they try to defend against pirates.
operators, offering their clients a service where
This calls for the regularisation of the MSC
the ultimate service delivery could see UNCLOS
industry, with its qualifications, accreditation,
law being tested and lethal force perhaps having
training, insurance and formal approvals all fully
to be employed.
scrutinised. We’re not calling for over-regulation,
REDfour MSS has been in the MSCs market
but we do believe that accreditation should be
Tel: +44 7710 409916
since the early months of this latest piracy issue
required, with those companies who cannot
E-mail: sbell@redfour-group.com
– delivering services to ward against the Horn of
properly capitalise their AMST service being
www.redfoursecurity.com/mss-services.html
theBaltic Summer 2011 www.thebaltic.com
73
Maritime communications
Maritime communications Being able to contact home is an increasingly important part of crew welfare
M
three-month period.
have
se@COMM is enabled to operate with the
become an increasingly important
latest generation of communications satellites
part of the mix, not least when
offering background Internet Protocol-enabled
ITIC
shipping companies are under pres-
broadband services. This means that users
communications unit on board one ship (which
sure to retain their crews in the face of crew
of these new satellite services can now do
did not include Internet access) failed during the
shortages and mounting pressure to fill highly
so secure in the knowledge that se@COMM
first few months of 2009, it was replaced by a
specialised positions.
is protecting them from unauthorised and
modern broadband unit, but not by the new
potentially expensive usage or access to the
system. This unit was intended to replace the
internet.
existing e-mail and voice communications only.
aritime
communications
Ensuring that crew retention is maintained at the highest levels means ensuring that crew
In the latest issue of its Claims Review, explained
that:
“When
the
existing
But the broadband unit was also capable of
have the means of communicating with their
Hamburg-based Briese Schiffahrts has just
families – a task that charities such as the
installed its 100th se@COMM system and Satlink
Mission to Seafarers are all too often forced to
Inmarsat FB250 FleetBroadband terminal, which
According to ITIC: “The crew, who had
assume when owners and charterers fall down
were supplied by Globecomm company Telaurus
already been notified of the company’s intentions
on the job.
for the 2008 built combination carrier BBC Jade
regarding future internet access for all its
in March this year.
vessels, wrongly assumed that the new unit
The Mission to Seafarers does indeed offer
internet access via satellite link.”
an at anchorage service for those who are
According to Holger Boerchers, Briese
had been provided for their unlimited use, and
unable to visit its facilities in Dubai, by using
Schiffahrts IT manager: “The fleetwide transition
proceeded to download at will. The usual cost
a tender that can come alongside vessels
towards se@COMM and Fleet Broadband
of communications under the old system was
anchored outside the harbour area.
has been a long process that needed great
no more than $1,800 per month. Had the
As Chris Jones, an International Transport
commitment and professionalism from all those
intended upgraded system, including limited
Workers Federation inspector recently pointed
involved. We are pleased to have achieved
internet access, been in place, the monthly cost
out to members of the Propeller Club’s
the 100th installation after working so closely
would have been $3,800.
London branch, isolation from their families
with Telaurus and look forward to a continuing
is one pressure on seafarers’ mental health,
collaboration with them.”
“During a three-month period, before the error was discovered, the crew downloaded
and statistics to be published in the Nautilus
Another company to offer a wide range
freely and managed to run up an enormous
Telegraph point to a rise in the number of
of communications products to connect crew
airtime charge of $436,000. As the shipping
suicides among seafarers.
members to their families and friends, as well as
company had never agreed to this free-for-all
Globecomm Maritime is just one of the
ensuring engine data can be relayed to onshore
use of the internet by the crew, it claimed from
companies providing products that allow users
engineer and providing real time route planning,
the shipmanager the difference between what it
to communicate via e-mail, fax, telex and SMS,
is KVH Industries.
would have paid ($5,400) and the actual amount charged.”
as well as providing web browsing facilities.
The company’s TracPhone and TracVision
The company’s se@COMM product provides
products enable crews, ships and companies
If the cost of making a communications
real time e-mail delivery and pre-pricing by the
to be connected via satellite communications,
error can be substantial, the benefits of
kilobit, which the company says allows users
broadband Internet access and television.
developments in the maritime communications
to control the amount they are spending on communications.
The costs of getting maritime communications
field are considerable. Not only can crew
wrong can be high.The International Transport
communications with their families be enhanced
According to the company, the product
Intermediaries Club has recently highlighted the
but also best practices on ships can be shared
can offer owners and managers the benefits of
case of a ship manager who was required to pay
through the use of high tech tools to ensure, for
shore-based e-mail systems while at the same
$436,000 in communication costs as the result
example, better passage planning and therefore
time providing “an average 50% reduction on
of an error which unwittingly allowed the crew of
reduced costs, as well as real time information
normally incurred costs”.
a ship unrestricted access to the Internet over a
on weather and sea conditions.
theBaltic Summer 2011 www.thebaltic.com
75
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Norway
Testing times for Norwegian operators This year’s Nor-Shipping event will not just be for maritime executives
T
he great and the good will be gathering
Spectron marks the conclusion of this process
what it costs to renew the existing fleet of
in Oslo this month for the bi-annu-
for the OTC segment. In the three years within
large and sophisticated ships. It is no wonder,
al conference and tradeshow, Nor-
the Imarex Group, Spectron has contributed
therefore, that representatives of some of the
Shipping, but the organisers stress
significantly both to results and to the strategic
large chemical manufacturers have started to
that this year, the event will not just be an event
development. We are confident that Marex will
ask who we think is going to serve them in
for international maritime executives.
be a good owner for Spectron going forward,”
the future.
Nor-Shipping is being opened up to school
Without a repricing, combined ideally with
said Imarex chairman Christian Due. which
every effort possible to make the use of these
in order to give them a taste of the industry and
announced recently that NOS cleared tanker
types of ships more efficiently, the answer is
hopefully encourage the younger generation
volume in the first quarter of 2011 was all-time
illusive, he said.
into the maritime industry.
high, up by 25% from the same period last year.
Odfjell did have some good news in March,
Senior industry members will of course be
NOS cleared 75.132 lots of tanker futures in
however, when the St Petersburg Court of
speaking at the conference, with one of the
Q1, accounting for 80% of the cleared tanker
Cassation decided in the company’s favour in
keynote speeches to be made by Petrobras
future market. The maximum open interest in
enforcing an arbitral award in its dispute with
chief executive Jose Sergio Gabrielli, which will
the period was 37,739 lots.
Russian yard Sevmash over damages after
children, graduates, politicians and the media,
Imarex
owns
NOS
Clearing,
mark Brazil’s importance to offshore equipment
Odfjell cancelled a newbuilding contract due to
suppliers.
delays in construction. The arbitral award from
Tough times continue, says Odfjell
the Swedish Arbitration Tribunal now totals about $50m including interest.
FFA
Odfjell chief executive Jan Hammer said in the
One of the major moves in the FFA market
company’s recently released annual report that
in recent months has been the decision of
while the company was expecting stormy seas
Maritime hub
Norwegian derivatives broker Imarex to sell its
in 2010, it also expected the year to turn out
The
over-the-counter business Spectron to Marex
somewhat better than it did.
(NSA) together with Oslo Maritime Network
Norwegian
Shipowners’
Association
“The reality is that freight rates remained at a
(OMN) have established the Global Maritime
According to the company: “Imarex has
level far from being enough to cover our cost of
Knowledge Hub, a professional programme
thoroughly reviewed its strategic opportunities
operations. In view thereof, we have expressed
intended to further enhance Norway as a leading
over the past year, with an objective to create
concern and made it clear for everybody, our
international maritime hub. The programme
value for its shareholders. Imarex is pleased to
customers included, that without an adjustment
supports a number of professorships at several
have reached an agreement with Marex that
of freight rates to a new and consistently higher
leading academic institutions in Norway.
will both produce significant value for Imarex’
level, a re-pricing of our services so to say,
Within the two and a half years that it has
shareholders and ensure continued successful
the chemical tanker business simply is not
been running, the hub has established 20
growth for Spectron.
sustainable,” Mr Hammer said.
professorships at leading universities, such as
Group for £95m.
that
“One can of course argue that the market,
it would be active in the ongoing industry
as governed by supply and demand, will take
consolidation and consider all options to
care of this. Maybe so, but we certainly have
Each professorship is sponsored by an
the benefit of its shareholders. The sale of
a huge gap to bridge, especially in view of
organisation within the industry. The total net
“Imarex
has
continuously
stated
theBaltic Summer 2011 www.thebaltic.com
NTNU in Trondheim and the Ålesund University College.
77
Norway Tore Forsmo, director of the Norwegian
clusters consist of shipowners, maritime
Shipowners’ Association said: “The Global
consultants, yards, equipment manufacturers,
The Norwegian Shipowners’ Association,
Maritime Knowledge Hub is a unique industry
research centres and specialised services –
along with Oslo Maritime Network, will support
effort in showing dedication and willingness to
not to mention shipbrokers, marine insurance
the professorships by making sure that there
invest in the future of the maritime industry and
companies, ship finance and law.
are active finance options available for PhD
in a knowledge-based Norwegian economy,
students. Out of the 20 professorships currently
particularly in a time of severe financial strain.”
worth of the professorships is NOK150 million over a five-year period.
in existence, eight have been received by NTNU.
The Global Maritime Knowledge Hub is intended to create something of a ‘super
Norway has regional maritime clusters as
cluster’, combining the skills and expertise
integral parts of its maritime activity. These
found in all of the maritime clusters within Norway.
BI Norwegian labour survey According to BI Norwegian Business School’s annual labour market survey, some 35% of the school’s graduates from spring 2010 are working with international companies. “I’m very pleased that more and more of our students are considering international companies,” says president of BI Norwegian Business School, Tom Colbjørnsen. “We want to provide the industry with qualified students.” This year, as in 2010, the greatest increase was for masters programmes – up 15% from 2009. Ninety per cent of all BI students who graduated in the spring of 2010 had jobs within six months of completing their studies according to the survey. “The figures confirm that BI delivers relevant high-quality higher education which is in demand in the labour market,” says Mr Colbjørnsen. This is a slight increase from 2009, at 89%.
Legal focus
the buyers – and the buyers’ bank – are
for example, establishing that the mortgage
Before closing a deal in respect of the sale
normally expecting a vessel free of mortgages
will not be discharged until the sellers are in
and purchase of second-hand vessels, it
when taking delivery of the vessel and
receipt of the purchase price.
is necessary to establish the sequence of
paying the purchase price. Unless otherwise
When negotiating the closing procedure,
steps to be taken in relation to payment of
agreed between the parties, Clause 8 of the
a generally accepted principle is that the
the purchase price and delivery of the sellers’
Norwegian Saleform 93 provides that: “In
party taking the first step is only obliged to
documents, writes Linn Hertwig Eidsheim, of
exchange for payment of the Purchase
do so if the other party can provide sufficient
Wikborg Rein & Co, Oslo.
Price the Sellers shall furnish the Buyers
assurance that Party B’s obligation will be
And the first question is whether it should
with delivery documents, namely (...) (d)
fulfilled as soon as possible after Party A’s
be the buyers or the sellers who take the first
current Certificate of Ownership issued by the
fulfilment. For example, if the buyers, or their
step.
competent authorities stating that the vessel
bank, pay the purchase price before receiving
is free from registered encumbrances [a free
the free and clear COE, the sellers (or their
and clear COE].”
bank) must provide sufficient assurance that
Let us look at a practical scenario; the sellers and buyers enter into a memorandum of agreement (MoA) for the sale and purchase
Under both Norwegian and English law,
the existing mortgage will be discharged
of a vessel. The vessel is mortgaged in favour
this clause provides that payment of the
immediately after the sellers have received the
of the sellers’ bank, which will only discharge
purchase price and delivery of the sellers’
purchase price. Similarly, if the sellers’ bank
the mortgage upon receipt of a sum sufficient
documents (including a free and clear COE)
is required to discharge the mortgage prior
to settle the outstanding amount secured by
should take place simultaneously. One way
to receiving the outstanding funds secured
the mortgage.
to avoid last-minute discussion is to agree in
by the mortgage, the buyers’ bank must
Normally, the sellers intend to use the
the MoA or in a Pre-Closing Memorandum
provide acceptable assurance that the funds
purchase price under the MoA to settle the
prior to delivery the sequence of steps that
will be paid immediately upon discharge of
outstanding amount. But the problem is that
are to be taken during the closing meeting –
the mortgage.
78
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Hamburg
Hamburg: shipping hub Hamburg is at the heart of German shipping, and a key global centre for container shipping. The KG system and the container business brought global players to Hamburg. Now the KG system is less healthy, it is fair to ask how long those global groups will stay
“
We are here for the long haul,” says Phrixos
Asian partners is especially helpful in developing
future in the German KG market, which was
Papachristidis, CEO of global shipping group
long-term relationships. “We have worked with
supposed to be paid back in a one or two year
Hellespont. “This is our global base and we
Sanko for many years, for example,” explains
period. Such bridge financing is hardly available
strengthened our commitment to Hamburg
Mr Papachristidis. “We recently set up a joint
any longer and there are very few KG funds in
last year by buying out the two minority partners
venture with them in Singapore to run our
operation at the moment.
in our Hamburg-based shipmanagement com-
offshore fleets. It is one way we reach out
Banks are evidently asking for more covenants
pany and reshaping our corporate organisation
globally. We have our base here and we can be
to be contained in the loan documentation
to emphasise our local identity.”
a bridge into the tanker business and into Asia
and more security, such as guarantees of the
for German interests.”
beneficial owners of the one ship companies
According to Mr Papachristidis, Hamburg offers a lot more than just KG finance as a
Hellespont manages vessels from Hamburg,
financed. Some owners are seeking German
shipping base. “We came here for a number of
Piraeus and Singapore and has its own crewing
bank loans and some getting equity from other
reasons, only one of which was local finance,
company in Manila. Today the group operates a
sources or seeking finance direct from Chinese
and all those reasons are still valid,” he says.
chemical tanker pool and manages a fleet of 21
banks, Mr Lehmann says.
“A good place to live, efficient services, a pool
modern crude, product and chemical tankers,
of shipping talent, a strong shipping community
a bulk carrier and four platform supply vessels.
With the value of ships going down, the issue of loan to value has raised its head and
and the strong local demand of a sound
This year marks the 10th anniversary of
many owners have tried to get waivers from
economy are all good reasons to be here. We
international law firm Ince & Co’s establishment
the financing banks who are normally entitled to
were originally a Canadian company and we
of an office in Hamburg and two new partners
demand prepayments or additional security in
entered the German market cautiously with the
were appointed at the beginning of the year –
case the loan to value covenant is violated. Such
help of two good partners in 2004. We have
Georg Lehmann and Tim Schommer – bringing
schemes are possible but have to be acceptable
now established our position here in Hamburg,
the number of partners in Hamburg to seven.
to the banks, Mr Lehmann says.
we have an expert German staff and strong
According to Mr Lehmann there is a
There has been a certain amount of
relationships with German banks, charterers
good shipping climate in Hamburg and most
consolidation among banks and in March
and investors. As for access to finance, we see
restructuring work has been concluded although
Commerzbank announced plans to merge
the German banks becoming active again, and
some remains ongoing. German banks, he says,
Hamburg-based
although KG projects have taken a knock, I am
are facing more competition, particularly from
Schiffsbank AG into Commerzbank AG. Some
sure KG finance will re-emerge, probably going
Chinese banks.
banks have been pulling out of shipping, but
ship
financier
Deutsche
back to its roots and relying less on the banks.
With the crisis at Lehman Brothers’ the
there are also new entrants Mr Lehmann says,
With or without local finance, Hamburg has
German KG system collapsed and it has been
but mostly for smaller projects. Hamburg is
shown itself to be an excellent base from which
difficult to get equity from German investors,
a strong ship finance market and almost all
to operate a high quality global shipping group,
Mr Lehmann says, and many closed-end ship
German banks are based in Hamburg, he says.
and we expect to grow further here as the
funds had to agree on refinancing with their
He acknowledges that from his view the
recovery strengthens and opportunities arise.”
banks. Before the crisis it was easier for shipping
market for loans appears to be tight, and much
targeting
companies, in particular for closed-end ship
higher margins and security as well as stronger
shipmanagement as an additional revenue
funds or private placements to obtain a bridging
covenants are required nowadays.
stream and says its experience of working with
loan to cover equity to be collected in the near
Hellespont
has
been
theBaltic Summer 2011 www.thebaltic.com
While before shipping loans were highly
79
Hamburg individual documents, loan documents are
times. For example, last year, the Liberian
“Our clients in Germany have also welcomed
becoming more standardised he says, based,
Registry became the first ship registry outside
the option provided by Liberia of having audits for
for example, on the LMA standard which makes
the EU to introduce an initiative to significantly
2006 Maritime Labour Convention compliance
it easier for the ship financing banks to syndicate
strengthen security for ship mortgagees. This
carried out either by class or by the flag state.
the loan at a later date.
was made possible when Liberian maritime law
Liberia is the only flag state administration
was amended to enable Liberian ship loans to
which is offering this option. It has also recently
qualify under the so-called Pfandbrief (covered
developed a block fee agreement for MLC
Liberian Registry close to customer base in Hamburg
bonds) law. In this way, it became possible for
audits, which means that the expenses and
German banks to use their refinancing tools to
workload for shipping companies are reduced
The Liberian Registry believes in being close to
the benefit of both parties – the lending bank
to the lowest possible levels.
its customers, and that is why it has a dedicated
and the borrowing shipowner.
“German owners and operators are an
office in Hamburg. The registry, which last year
“German ship finance banks have on their
integral part of the success of the Liberian
also opened an office in Leer to service the
books roughly 50% of the debt of the world
Registry, and Hamburg is a natural place for the
important Emsland-based shipping community,
merchant fleet. Pfandbrief refinancing means
Registry to establish a base – a great shipping
currently numbers over 3,500 ships, aggregating
substantially lower costs for them, while
service in a great shipping city.”
approximately 115 million tons, and German
shipowners get the benefit of lower margins
Hamburg’s position as a great shipping city
owners and operators represent the single
on their ship loans. Liberia is the only non-EU
is of course supported by Blohm+Voss, which
jurisdiction which is accepted under the German
is heavily involved in the super yacht business
The Liberian Registry has had a fully
Pfandbrief Act, and as such it offers the same
and has undergone a number of refurbishments
representative office in Hamburg for more than
advantages in terms of refinancing, the same
of existing yachts. The European Commission
six years. Jorg Molzahn, a senior vice-president
attractive banking terms, and equal treatment
approved the sale of Blohm+Voss to Abu Dhabi
of LISCR, the company which manages the
with EU jurisdictions. Today, Liberian mortgages
Mar last year.
Liberian Registry, and managing director of the
are as welcome by German banks as any EU
Another company to be Hamburg based
Registry’s office in Hamburg, says: “Hamburg
jurisdiction mortgage under the Pfandbrief Act.
is classification society Germanischer Lloyd,
is a great shipping city, right at the heart of
Furthermore, there is now an added incentive to
whose subsidiary company FutureShip offers
the industry. It is vital for the German shipping
non-German clients of German banks seeking
consultancy services on fleet design aimed at
community to have immediate access to ship
to finance their ships via a German bank loan.
improving efficiency and reducing costs. One
largest element of that total.
“There has also been a lot of interest in
product on offer is ECO-Assistant, which aims to
Germany in the Liberian Registry’s Extended
increase the operational fuel efficiency of existing
“Liberia is a proactive ship registry, and
Drydock Programme, which helps to keep ships
ships with limited investment. An onboard tool
the recent worldwide economic downturn has
trading and earning money, without any adverse
provides the crew the optimum trim for every
produced a number of examples of how it has
consequences for safety or efficiency, when
operating condition
been able to come up with innovative solutions
otherwise they might have been required to
to help owners and operators through difficult
enter drydock for inspection.
registry services and expertise, and Liberia provides that.
80
theBaltic Summer 2011 www.thebaltic.com
Cargo focus
Slow but steady progress for breakbulk While ports have been bouncing back after the recession, breakbulk is tending to lag behind
I
f the recession was slow to hit the breakbulk
the port were up 1% in 2010 compared to the
Sud said, in view of continuing financial problems
trades, and natural disasters like that in Haiti
previous year’s figures and although there were
in Europe, the Middle East situation and natural
have hit operations, recovery has been some-
gains in sectors like construction and materials,
disasters like the floods in Australia and Japan’s
what slower as well.
and basic metals, woodpulp was down 54% to
earthquake and tsunami. In the first quarter
In announcing its first quarter 2011 statistics,
51,498 tonnes and paper and paperboard by
of 2011, the company said cargo volumes in
Europe’s leading port for breakbulk business
15% to 1.1 million tonnes. On the outbound leg,
most trades matched expectations, despite the
Antwerp said that while the port handled 47.3m
vehicles fell 74% last year with nitrogen-based
disruptive factors.
tonnes of freight in the first three months, up
fertilisers down 32%.
However, “freight rates, in contrast, are
12.7% on 2010 figures. Antwerp had shaken off
That said, overall breakbulk activity through
under pressure almost everywhere, and this
the recession although conventional/breakbulk
the port was up 15% to 16.8 million tonnes, with
against the backdrop of continuing rises in
and dry bulk segments were continuing to lag
a rebound in demand for forest products as a
bunker prices, which cannot be passed on to
behind.
key driver of growth.
customers sufficiently by way of corresponding
“Both these sectors suffered heavily during
surcharges. An added factor is that the
the recession, but are slowly recovering.
discounts or improvements in terms negotiated
Moreover, the recovery is not simply related to
Hamburg Sud
between shipping companies and service
the state of the economy,” port authority chief
Following the historic crisis year of 2009 and
providers during the 2008/2009 crisis cannot be
executive Eddy Bruyninckx said.
a first-time ever decline in global transports
held, leaving lines with additional cost increases
In the conventional/breakbulk field 2,926,057
in container liner shipping, 2010 saw an
to absorb”.
tonnes of freight was handled, an increase of
unexpectedly sharp volume rise, according to
11.7% compared with 2010. The best performer
shipping giant Hamburg Sud.
Notwithstanding this bad news, the company said that “Impetus is expected again in the
The company said it benefited from a
second half of the year from, above all, the Asian
resurgent world economy along with Brazilian
region as well as from Europe. The outstanding
There were mixed results for fruit (up 3.7%
sister company Aliança, as well as the tramp
domestic economy and the strong currency are
to 338,552 tonnes), paper and cellulose (down
activities operating under Rudolf A. Oetker (RAO)
buttressing Brazil’s demand for commodities
47.3% to 191,901 tonnes), granite (up 15.6% to
and Furness Withy Chartering. Shipment volume
and, with it, the economic development of South
82,526 tonnes) and non-ferrous metals (down
in the container liner services last year came to
America overall”.
9.6% to 70,841 tonnes).
roughly 2.9 million TEU, equivalent to a gain of
in this segment was steel, which rose in volume by 41.8% to 1,947,487 tonnes.
During the first quarter of 2011, a total of
23% on 2009.
Crowley
3,741 seagoing ships called at Antwerp, 6.9%
As, in addition to volumes, freight rates
more than in the same period last year. The
recorded a moderate recovery, turnover in liner
Breakbulk operator Crowley has announced that
gross tonnage was up by 15.5%, to 77.2 million.
shipping added a good 45% to just under
it is re-establishing its second weekly sailing to
E3.9 billion. With the inclusion of conventional
Haiti from the Dominican Republic and South
breakbulk and product tanker operations, the
Florida, which was discontinued following the
Vancouver
shipping group’s total turnover increased to
Haitian earthquake because of damage to port
According to Port of Vancouver statistics
some E4.4 billion, 39% up on 2009.
infrastructure, which had affected the effective
inbound breakbulk products passing through
Forecasting for 2011 was difficult, Hamburg
theBaltic Summer 2011 www.thebaltic.com
working of the port.
81
Middle East Ports
Business as usual for Middle East ports Although political tensions are high across the region, many ports report strong cargo growth, which is being supported by ongoing investment in facilities and equipment, Clive Woodbridge writes
P
olitical instability has spread across the
via Jebel Ali port, continue to pick up. According
Non-container traffic volumes at Jebel Ali
Middle East in recent months, as popu-
to Mohammed Sharaf, DP World chief executive:
remain at a relatively low ebb, however. The
lar protests pressing for greater democ-
“It is particularly pleasing to see the UAE region
property market in Dubai is still very depressed,
racy have gained momentum. Despite
continuing the strong performance seen at the
with the result that steel and other construction
this upheaval, for the region’s ports sector it has
end of 2010, with volume and revenue growth in
related cargoes have all but dried up. There have,
largely been ‘business as usual’. This is particu-
the first two months of 2011 well ahead of last
though, been some signs of an improvement in
larly true of ports in the United Arab Emirates
year. Despite continuing economic fragility and
recent months, with ro-ro volumes in particular
(UAE), which has been an oasis of political calm
political turbulence in some parts of the world,
on the rise again.
in comparison to some of its neighbours.
we remain confident that we will make further
Dubai is the region’s main trading hub,
progress in 2011.”
and Jebel Ali is by some distance the biggest container port in the Middle East. In both respects, regional political developments appear to have strengthened the emirate’s attraction to shipping lines and cargo interests.
On road to recovery Certainly all the signs are that Jebel Ali – operated by DP World - is well on the way to recovery after a difficult period, triggered by the world financial crisis and its particularly severe repercussions for the emirate of Dubai, which saw its property development ‘bubble’ crash spectacularly in 2009. The port handled some 11.6 million teu of container traffic in 2010, around 4% up on 2009 levels. This steady singledigit improvement seems likely to be sustained in 2011, as both the local Dubai economy, and other regional markets served by transhipment
82
theBaltic Summer 2011 www.thebaltic.com
Middle East Ports Khalifa competition Both Gulftainer and DP World seem likely to face tough competition within the UAE in the near future from the Abu Dhabi Ports Company (ADPC), which is developing a new, highly automated container facility at Khalifa Port, Al Taweelah, midway between Abu Dhabi and Jebel Ali. Construction work on this project is well underway and the new port is expected to start container operations late next year. Managed by Abu Dhabi Terminals, a joint venture between ADPC and Mubadala, the initial phase of the development will consist of 1,000m of container berths and 2,200m of general cargo quays. These facilities will be able to handle two million teu of containers and 10 million tonnes of general cargo annually. It is expected that once Khalifa port is operational, Abu Dhabi’s existing cargo handling facilities at Mina Zayed
Spare capacity at Jebel Ali
is increasingly seen as the optimum deep-
Having invested heavily in container port
water hub port to service the area based
Ports inside the Middle East Gulf are also
infrastructure in the years leading up to 2009,
on geographical position, political stability and
performing well, particularly the Saudi port of
DP World still has plenty of spare capacity
operational performance and facilities.”
Dammam. Terminal operator IPS, a subsidiary
will close.
available at Jebel Ali and so has no short-term
There are signs that Khorfakkan Container
of Hutchison Port Holdings, handled 1.41 million
plans to build new berths or add more container
Terminal (KCT) may be benefitting from operator
teu in 2010, an increase of almost 12.5%
cranes. But Mohammed Muallem, DP World’s
nervousness over developments in neighbouring
compared with 2009, and a similar rate of
UAE region managing director, says: “We are
countries. CMA CGM has recently shifted its
growth is forecast for 2011 as well. Traffic
constantly monitoring the situation with regard
weekly EPIC and Indian Ocean Island calls
last year was boosted by exports from new
to port infrastructure. If we need to build, then
from Salalah, for example, while Gulftainer has
petrochemical plants in nearby Jubail, as well as
we will build.”
announced that Emirates Shipping Line’s East
strong demand for consumer imports.
Rather than making investments in new facilities
and
equipment,
DP
World
is
Africa service started calls at Sharjah Container Terminal (SCT) in February.
Dammam hub
concentrating on ways of improving productivity,
Towards the end of 2009, Gulftainer, working
introducing new gatehouse technology and
with the Sharjah Ports Authority, added more
A number of new liner shipping customers have
vehicle tracking systems to improve trucker
capacity at KCT, with the opening of a new deep
also started using Dammam as a regional hub,
turnround times for example. Furthermore DP
water, 400m long berth, equipped with super-
including CSAV and Hanjin. Both have included
World is also aiming to move its customers to
post-panamax gantry cranes. This proved well-
Dammam within the rotation of Far East-Middle
a paperless trading environment. The Dubai
timed, giving the port the ability to handle more,
East services, which connect with regional
Trade portal is central to this initiative and has
and larger vessels. Further handling equipment,
feeder networks at the Saudi port.
recently been enhanced by the signing of an
including RTGs and terminal tractors, has been
The dredging of the access channel
agreement with Emirates Sky Cargo. This is
added at KCT and SCT in the past few months,
and berths by the Dammam port authority
seen as a stepping stone towards the integration
Gulftainer points out.
has allowed IPS to promote itself as a local
of sea-air cargo movements, a business that DP World hopes to develop now that the new Al Maktoum airport close to Jebel Ali is open for freight business. Gulftainer, which operates the Khorfakkan and Sharjah Container Terminals in the UAE, has fared even better than its local rival. In 2010 the combined throughput for the two terminals was 3.02 million teu, 10% up on the 2.75 million teu handled in 2009.
Bullish outlook The outlook for the coming year is highly promising. Gulftainer commercial manager, Keith Nuttall, says: “We see growth continuing at both of our Sharjah terminals in 2011, following on from 2009 and 2010. Khorfakkan in particular
theBaltic Summer 2011 www.thebaltic.com
83
Middle East Ports transhipment hub, with growing success. In 2010 the company handled 60,000 teu of transhipment containers, but expects this figure will top 100,000 teu in 2011. To accommodate the additional traffic and meet the needs of new customers, IPS has placed orders for two more post panamax quay cranes, six RTGs and 15 terminal tractors, all of which will be installed by the end of 2011. Investment in gate automation technology later this year is also planned, IPS says.
Umm Qasr expansion One of the fastest growing container ports within the Middle East Gulf is Umm Qasr in Iraq, where reconstruction cargos are leading to a sharp rise in container throughput levels. Gulftainer is now operating Berth 8 in the port, using two mobile cranes, but a new Iraq Container Terminal
and clinker shipments. To support further growth
area for the import and export of rock aggregate
will start operations in late 2011, featuring
in this sector there are plans to build a 1,800m
and other dry bulk goods. This is designed to
two berths and specialised gantry cranes. The
long general cargo quay at Salalah and it is
handle 6-10 million tonnes of cargo annually and
company is also developing a 750,000 m2
hoped that this could be operational by the end
is due to start operations in early 2012.
area of land just north of Umm Qasr, which is
of 2012.
expected to become a major ‘logistics city’.
Jeddah dominates in Red Sea
Outside the Gulf, Salalah in Oman handled 3.49 million teu in 2010, almost the same
Terminal expansion
Within the Red Sea region, the Saudi port
as in 2009, thereby consolidating its position
Meanwhile Oman’s Sohar port is growing
of Jeddah remains the primary shipping hub,
as one of the most important Middle East
in importance as both a container and bulk
handling 3.83 million teu of container traffic last
hubs. Port operator Salalah Port Services (SPS)
port. Sohar’s container terminal is operated by
year. This represents an increase of almost 24%
has no plans for any significant expansion of
Oman International Container Terminal (OICT),
compared with the 3.09 million teu handled
container terminal facilities here for the time
a division of Hutchison Port Holdings, and
in 2009, allowing Jeddah to overtake Salalah
being, although detailed design work on two
throughput last year passed the 100,000 teu
to become the Middle East’s second busiest
more berths has been undertaken by the Omani
mark for the first time, a rise driven largely by
container port after Dubai. An important factor
government and this project could thus be
containerised exports generated from within the
in this impressive performance was the start of
activated quickly, if demand increases.
Sohar industrial zone.
operations by the Red Sea Gateway Terminal
Although Salalah’s container traffic stagnated
The Port of Sohar is currently in the process
(RSGT) facility, which handled over 500,000 teu
last year, the port’s general and bulk cargo
of building a deep-water dry bulk terminal, largely
in its first year of operations. RSGT spokesperson
operations boomed, with the port handling 6.28
to support the shipping needs of the Brazilian
Labna Karim says: “The terminal outperformed
million tonnes, up from 3.72 million tonnes in
mining giant Vale, which is due to commission a
expectations during an internationally rocky year
2009. This increase was driven largely by the
large iron ore pelletising and distribution centre
and Jeddah port overall gained from the opening
start of operations by Salalah Methanol, which
in Sohar later this year. The new bulk jetty
of the terminal. The extra handling capacity,
provided around 0.8 million tonnes of new
will be 600m long with a draft of 25m, and is
state-of-the-art equipment and a deeper access
business, and an increase in limestone, cement
designed to accommodate the latest generation
channel allowed shipping lines to add more
very large ore carriers
port calls.” This year the terminal says it aims to
(VLOCs).
will
surpass one million teu, through the expansion
import iron ore from
of activities of existing customers, including
Brazil to Sohar, where
UASC, Yang Ming, China Shipping and new
steel pellets will be
business for Cosco.
Vale
produced, and these
Saudi ports generally performed better than
pellets will then be
elsewhere in the Middle East over the past year.
distributed to markets
According to figures provided by the Saudi
in the Middle East,
Ports Authority, the country’s ports handled
Indian subcontinent
5.31 million teu last year, a rise of 20%. This is
and
attributed to the country’s ongoing investment
Africa,
using
smaller bulk carriers. As well as this new
bulk
facility,
Sohar
developing
84
terminal is
another
theBaltic Summer 2011 www.thebaltic.com
in infrastructure and industrial projects, strong consumer and corporate demand on the back of high oil and gas prices, growing exports of containerisable products and the increased use of Saudi ports for transhipment.
Legal news Belgium
Cracking the code Work on Belgium’s new Maritime Code has been going on for some time now. It is set to be presented round the country, a chapter at a time, during the course of the year under the aegis of a Royal Commission headed by Professor Eric van Hooydonk, who talks to Helen Hill about the work in progress
competitive position of the Belgian maritime
Belgium is creating a special legal regime for
industry.
ships agents, terminal operators and liabilities
The new Code is being presented chapter
concerning cargo handling. “The ports industry
by chapter around the country in 12 separate
is very important to Belgium so the Code will give
events this year. In September, the Code will be
much more clarity to doing business.”
presented in Liege, in French as well. A national
Other significant changes will see the abolition
conference will then be held in December to give
of maritime insurance law and the creation of a
the industry a chance to offer any feedback.
transport insurance law. There will also be a
Input from this meeting will be used to finalise
specific shipbuilding and repair section.
the draft, preparing it for submission to the
Eric van Hooydonk
And for the first time port customs will be given a legal status. “There is a lot of confusion
government and parliament. Chairman of the 12-strong Royal Commission
and legal uncertainty surrounding the binding
and well-known Antwerp lawyer, Professor Eric
effects of general terms and conditions provided
van Hooydonk explains to The Baltic Magazine:
by the different sectors of the industry. All of
“There is actually little left of the existing law now.
the service providers have their own standards
“We want to give everybody a very good
concerning terms and conditions and there are
chance to study the draft, which is roughly 2,000
also differences between individual companies
pages. We want to make this Code as perfect as
and those set by industry associations.” The
possible before it goes before parliament.”
Maritime
Code
will
facilitate
the
Participants at each presentation include
publication of the general terms and conditions
elgium’s ambitious task to rewrite its
lawyers, insurance experts, public authorities,
by professional associations and companies in
commercial maritime law is moving on
academics,
ships
the official Belgian State Gazette. With an official
apace with the second round of public
agents, shipowners and many other industry
publication there cannot be arguments about
B
terminal
operators,
consultation for the new Maritime Code
stakeholders. Given the enormity of the task,
whether a party was aware of the terms, Prof van
underway. But before the Code enters law there
input will largely be channelled through the
Hooydonk adds.
is still some way to go, with the new draft due to
various professional associations.
be presented to the government by end-2012.
Crucially and for the first time, the new
Crewing, ownership, bills of lading rules,
legal regime will empower the judge to test the
chartering, general average insurance, shipowner
“reasonableness” of any terms and conditions.
some years. In 2007 a Royal Commission for
liability,
insurance,
If a judge finds them unreasonable the judge
the reform of Belgian maritime law was created
carriage of goods, collision cases and limitation
does not have to apply them to the case. “We
to oversee the process. With some parts of the
of liability are just some of the legal sectors being
want to avoid silly discussions about terms and
existing law dating back to Napoleonic times
revamped.
conditions,” he stresses.
Already the process has been going on for
shipbuilding
contracts,
and earlier, the Code and an attractive legal
Uniquely – in what is believed to be one
“With this move we also hope professional
environment is deemed crucial to improve the
of the first countries in the world to do so –
associations and companies will adapt their
theBaltic Summer 2011 www.thebaltic.com
85
ZEEBRUGGE A NETWORK FOR EUROPE
49.6 million tonnes of cargo throughput growing containerhub : 2.5 million TEU 1.6 million new cars 20 daily shortsea links : 12 million tons of roro excellent distribution opportunities to the markets of the UK and continental Europe
www.portofzeebrugge.be ©luchtfotografie henderyckx - d.neyts/vhc - h.snijkers/la comapnia
Legal news Belgium terms and conditions and make sure that they
The Royal Commission has also made a
Commission is in the process of weighing up
are reasonable and that standards will improve,
comparative study of maritime law in neighbouring
the pros and cons of the Rotterdam Rules.
leading to less debate and fewer court cases.�
countries, including the UK, the Netherlands,
Provisionally, the draft will include the Hague
Eventually this will lead to an automatic regulation
Germany, France and Luxembourg. The new
Visby Rules but the Commission is not excluding
of the terms and conditions and port customs by
Code will be translated in French, English and
the Rotterdam Rules. It will largely depend on
the private sector, Prof van Hooydonk says.
German.
the results of the consultation process, he adds.
He stresses that the Commission does not
Prof van Hooydonk has one note of hesitancy,
In parallel to the new commercial law, a draft
want to regulate everything and wants to leave
however, concerning the Rotterdam Rules and
for public maritime law is being prepared and this
some initiatives to the private sector.
its inclusion in the new Code. At this stage the
should be ready before the summer next year.
theBaltic Summer 2011 www.thebaltic.com
87
Insurance parlance
Insurance parlance Political unrest, gun permits and on-line cover for freight fowarders are a few of the items on the P&I agenda
M
onaco-based mutual, the Strike
“All these events serve as a wake-up call
interests have appealed to the SAPS that the
Club, says that there is increased
for shipowners and charterers to ensure they
21-day permit application deadline is unrealistic
interest in umbrella cover as the
have adequate protection in place for delays
and unworkable given the realities of spot market
Club announced a strong renewal
and vessels going off hire. Indeed, an increasing
chartering. But after some initial indication of
performance in spite of delays caused by natural
number
flexibility, the SAPS remains unmoved and the
disasters and political unrest
insurance, typically with a 14-day deductible.”
deadline stands”
the general increases for the year – 10% for
Gun permits
TT Club
Classes I and II, 5% for Class III. Retention rates
Gun crime in South Africa has forced the
The TT Club has launched an online service to
were of the order of 97% despite a punishing
authorities to issue new rules on reporting arms
provide cover for freight forwarders and logistics
year in terms of industrieal unrest, particularly
on board vessels visiting the country’s ports.
operators. The product is named TT Club
of
owners
purchase
loss-of-hire
According to the Club most members renewed on more favourable terms, reflecting
in Europe.
Owners or managers have to apply for a gun
Forwarders.
According to Bill Milligan, chief executive of
permit from the South African Police Service 21
According to Graham Hooper, the TT Club’s
the Club’s manager S C Management, 2010 had
days before the vessel is due to arrive in a South
senior underwriter, crafting the new online
seen some of the worst labour disputes in many
African port. Masters who do not comply with
service to ensure secure cover for a group of
years, with heavy claims as a result
the requirements will be prosecuted.
freight companies trading under very particular
“Unfortunately, we can only say that the
The American Club has issued guidance on
market conditions is key. “Freight forwarders
outlook for 2011 is for more industrial and
the requirements and documents that must be
and other intermediaries must often react
political unrest. Of particular concern is the
submitted to the authorities to comply with the
quickly to the demands of their customers.
question of port closures as a consequence
new rules.
These involve moves of diverse commodities
of the anti-government protests which have
According to the Club “assuming the permit
in differing volumes via varied modes across all
erupted across the Middle East and North Africa.
is granted and the vessel berths in South Africa,
geographies. The complex and unpredictable
“The Club is also affected by natural
the master must arrange for the guns and any
nature of these demands has in the past often
disasters, of course, and recent events like the
ammunition to be removed from the vessel and
made securing comprehensive insurance cover
Australian floods, the earthquakes in Chile and
taken to a police locker for safekeeping. The
difficult,” explained Mr Hooper. “In designing
New Zealand, and the disruptions caused by
items will be returned to the vessel one hour
TT Club Forwarders we have been very much
last winter’s storms, demonstrate the value of
before departure”.
aware of the need to simplify the process of
the Club’s delay cover. The first quarter of this
The upsurge in piracy attacks in the Indian
year has been stamped by the catastrophic
Ocean and off the coast of Somalia has meant
earthquake and tsunami which struck Japan
that more ships are carrying arms if they plan to
in March. Earthquakes invariably bring port
transit the danger zone.
closures, triggering long delays.
88
According to the Club “A variety of vessel
theBaltic Summer 2011 www.thebaltic.com
accepting a given risk in these circumstances.”
@
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Insurance ITIC
Benefits of double-checking Andrew Jamieson of the International Transport Intermediaries Club (ITIC) looks at two recent cases which, although not large compared to many settled by ITIC, are nevertheless good examples of the benefits of double-checking
B
rokers frequently inform their prin-
In tanker chartering, many errors, especially
in question arranged a subcharter. As is often
cipals of facts that will influence the
on port costs, could be avoided by rechecking
the case, the main terms of the subcharter were
outcome of the proposed business. If
the relevant provisions of the Worldscale book.
fixed with the details “otherwise as per as the
brokers get the facts wrong, then, as
On other occasions the required reference
well as the professional embarrassment, they
work is an atlas. A few years ago a charterer had
The sub-charterer asked for a copy of the
can face a claim from the aggrieved client.
fixed a vessel with a loading range of “1/2 safe
head charterparty for its review. The head
head charterparty”.
In the first of our pair of claims the broker
ports Russian Black Sea”. The charterer asked
charter had been sent to the broker, together
was acting for the owners of a vessel trading
its broker if the vessel could load in Odessa.
with a separate addendum. Unfortunately, while
in the Mediterranean. When considering an
Unfortunately, the broker overlooked the fact
the broker passed the charterparty to the sub-
offer from charterers, which included the term
that Odessa is in the Ukraine and not Russia.
charterers, it failed to forward the addendum. The fixture was concluded but without the sub-
“time from 17.00 Thursday or a day preceding
The above claims examples involve brokers
a holiday until 08.00 hours next working day
who thought they knew the answer but failed to
not to count even if used”, the owners asked
check that they were right. The claims involved
The addendum contained provisions in
the brokers for the weekend working times in
a failure to check reference works. Sometimes,
relation to the costs of hold cleaning in the
Algeria.
charterer being aware of the addendum.
brokers will answer a question about a fixture
event that the vessel carried cement. This
The broker answered the owner’s question
from their own recollection, whereas looking at
cargo had originally been excluded under the
“off the top of his head” and got the answer
the charterparty document would have shown
head charterparty but had subsequently been
wrong. The broker advised that the weekend
that they were mistaken. In one case, this led to
permitted on the terms agreed in the addendum.
working times were 17.00 Thursday to 08.00
a failure to declare an option to extend a fixture
The addendum provided that the sum of $7,500
Saturday, when in fact, as set out in BIMCO’s
within the period specified in the charterparty.
could be paid by the charterer in lieu of hold
holiday calendar, the answer should have been
A different sort of failure to check involves
cleaning. The carriage of cement under the
17.00 Thursday to 08.00 Sunday – a difference
taking time to proof-read all of a document.
sublet had been agreed in the main terms but
of 24 hours.
In an article published in March 2008, we
the terms relating to the costs of hold cleaning
The owner agreed to the fixture following
commented on how the address to which the
had not been passed to the sub-charterer.
this negligent advice and had calculated the
message being sent is often overlooked when
The charterer was left with an obligation
freight rate on the basis of the shorter period
the message is being proof-read. Great care
to pay the head owner for hold cleaning but
the broker had given. The vessel was delayed
may be taken over the contents of a message
was unable to reclaim the money from the
in port. The laytime commenced later than the
but, if the address is wrong, the consequences
sub-charterer. The broker had to reimburse its
owner anticipated and the eventual shortfall in
can be severe. We gave an example of how the
principal the $7,500.
demurrage was claimed from the broker.
principal’s confidential bid for a major tender
The claims in this article were simple
had been sent to a mailing list, including all of
mistakes. The claims happened to people who
its competitors.
were not new to the business but working to
This was a modest claim compared to many settled by ITIC. It was, however, a classic example of a claim that could have been
By way of contrast, the second of our claims
tight deadlines. They are, however, reminders
avoided if the broker had checked before
demonstrates the need to check that all the
of the benefits of double-checking what you are
answering.
attachments have been included. The brokers
about to say or send.
90
theBaltic Summer 2011 www.thebaltic.com
Legally speaking
Within the rules Can Rule C replace Rule B as a means of accessing electronic fund transfers? That is the question
I
f electronic fund transfers being processed by
subject of the claim in a maritime dispute.”
is paid by unconditional delivery of the cargo
international banks are no longer subject to
Principal requirements under the rule are that
before payment waives the lien”, Mr Van Praag
attachment by Rule B, Rule B remains very
firstly, the plaintiff has a maritime lien against
explained. “The key point to bear in mind is
much alive, according to Alan Van Praag of US
the property being arrested, secondly files a
that the lien against cargo is a possessory lien.
verified complaint that describes the property
Once the cargo is delivered and passes out of
Mr Van Praag said that Rule B “continues
with “reasonable particularity” and thirdly states
the vessel owner’s possession, the lien expires.”
to provide a highly effective means for securing
that the property is within the federal judicial
Liens can also be asserted by the vessel’s
maritime claims that are pending before courts
district ordering the arrest or will be while the
owner again subfreights owed to a charterer
or arbitral forums anywhere in the world”.
action is pending, Mr Van Praag explained.
by sub-charterers. “While there is no automatic
law firm Eaton & Van Winkle.
He was speaking at a recent London
Liens may be created for cargo damage
lien on behalf of the owner against subfreights,
Shipping Law Centre seminar on developments
or breaches of the charterparty, unpaid crew
charterparties can provide for them and, if they
in protective procedural measures.
wages, salvage operations, claims under general
do, that lien can be enforced.” The lien expires
Federal courts in New York State have been
average, preferred ship mortgages and unpaid
when the subfreights are paid to the charterer.
particularly effective in securing claims against
claims for repairs, supplies, collisions and unpaid
According to Mr Van Praag, although the
international defendants, Mr Van Praag said.
freight. According to Mr Van Praag, owners
US Court of Appeals for the Second Circuit has
New York’s status as a leading financial
can, in certain circumstances, assert a lien
prohibited the use of Rule B to attach electronic
centre means that defendants routinely have
against subfreights owned to charterers by sub-
fund transfers, he says an argument could be
assets in New York or neighbouring states like
charterers.
made that “Rule C allows the arrest of EFTs if
New Jersey and Connecticut, which could be
As Rule C is an in rem procure the claim
there is a maritime lien against the specific funds
bank accounts or investments or debts owed by
must be against the property being arrested
being transferred.” He believes that using Rule
commercial counterparties, he explained.
and the property must be related to the claim,
C to arrest an EFT, such as a wire transfer to
Four basic requirements must be met by
he explained. Rule C cannot be used to arrest
pay freight, “arguably escapes the provision set
the plaintiff to issue a Rule B attachment. First,
property that has no connection to the claim,
forth in Jaldhi” (Shipping Corp. of Indica v Jaldhi
the complaint must assert a valid admiralty
including sister ships, for example.
Overseas, Second Circuit 2009). The Jaldhi case
or maritime claim, Mr Van Praag explained.
Types of property that could be subject to
found that EFTs could not be attached under
Second, the plaintiff has to show the defendant
arrest include vessels, against which cargo
Rule B. However, Rule B can still be used to
“cannot be found in the district”. Third, the
interests can obtain a lien for cargo damage of
attach other types of property.
plaintiff must show the defendant has, or shortly
breach of contract of carriage. The lien covers
In the Jaldhi case, Mr Van Praag said, the
will have, assets in the district, and fourthly, there
everything to do with the vessel, Mr Van Praag
court recognised a distinction by which firstly
cannot be statutory or maritime law bars to the
said.
an EFT can be arrested under Rule C when the
Unpaid freight can be arrested as it is
claim is against the property being transferred
In addition to the maritime attachment
considered part of the vessel, although once it
but, secondly, an EFT cannot be attached
procedures provided under Rule B, the
had been paid to the owners, it would cease
when the claim is against the originator or
Supplemental Rules for Admiralty or Maritime
to be part of the vessel and therefore would no
beneficiary of the transfer. “We are unaware of
Claims also provide for maritime arrest under
longer offer potential for arrest.
cases addressing this distinction in the maritime
attachment.
Rule C, Mr Van Praag told seminar delegates.
In the same way, a lien can be established
context,” Mr Van Praag said. “However, we
“That rule is the procedural mechanism for
against the cargo by vessel interests for unpaid
believe the argument makes sense because
initiating an in rem action by arresting the
freight, for example. However “such a lien gives
an in rem action against a vessel includes the
property, such as vessel or cargo, which is the
the vessel a right to retain cargo until the freight
vessel’s unpaid freight. Therefore, arresting an
theBaltic Summer 2011 www.thebaltic.com
91
Legally speaking EFT that is transferring a freight payment would seem to fall squarely within the same distinction that the Second Circuit observed in Jaldhi for allowing the seizure of EFTs in connection with other in rem remedies.” New
York
has
a
“terrific
attachment
procedure” Mr Van Praag said. It remains to be seen whether Rule C arrests will become as popular on the EFT front as Rule B attachments have been.
Privity and unseaworthiness: ISM impact Both the ISM Code and STCW convention came under the spotlight in Norway’s Court of Appeal recently. Oddbjørn Slinning and Trond Eilertsen of Wikborg Rein & Co, Oslo look at the case. The Court of Appeal in Norway has recently overturned a first instance judgment concerning
Trond Eilertsen
Oddbjørn Slinning
grounding of the general cargo ship Sunna off
alternatively that the vessel was unseaworthy.
instructions and by issuing a non-conformity
Swona in the Orkney Islands, on January 2,
The owners brought a cross-action against the
note – ordered the master to comply with the
2007.
cargo interests to collect their general average
STCW Convention. It could not have been
contribution.
expected that further steps were necessary. The
owners’ liability for cargo damage following the
The Sunna was carrying a cargo of ferrosilicon from Grundartangi, Iceland, to Scunthorpe, when
On June 6, 2009, the Oslo District Court
Court of Appeal accepted this argument and
it grounded off Swona Island. The investigation
gave judgment in favour of the cargo interests.
held that the duty of care was an ordinary duty
following the grounding revealed that the master
The court held that the owners, as represented
of care and not a stricter duty. The master was
had implemented a bridge watch routine which
by the vessel’s DPA (who was also the technical
obviously aware of the STCW requirements and
was not in accordance with the Standards of
inspector and part of the owners’ management
the owners had, except for the port state control
Training, Certification and Watchkeeping (STCW)
team) had negligently breached their duties
inspection two months earlier, a very good
Convention. In particular, a designated lookout
under the ISM Code Articles 6.4 and 12.6.
impression of the master. Hence, the owners
during navigation in darkness was not always
This requires that all personnel involved in the
could not be criticised for not having done more
used.
safety management system have an adequate
to ensure that the master actually complied with
About two months prior to the grounding
understanding of relevant rules, regulations,
the rules and regulations.
it had been pointed out in a port state
codes and guidelines, and that they take timely
control inspection in the Netherlands that the
corrective actions on any deficiencies found.
In relation to the unseaworthiness issue, the owners argued that the vessel had a safety
master’s bridge watch arrangement was not
It was held that the master’s repeated
management system, including a bridge watch
in accordance with the STCW Convention.
breach of the STCW Convention showed that
system that complied with the ISM Code. The
As a result, the owners’ designated person
he did not have an adequate understanding of
crew was experienced and well-qualified, and
ashore (DPA) instructed the master to ensure
the relevant rules, and that the non-conformity
equipped with necessary equipment, manuals
compliance with the applicable rules and
note issued by the DPA following the port
and instructions to perform the voyage safely.
regulations by issuing a non-conformity note
state control inspection in the Netherlands
The fact that the master did not routinely
and giving oral instructions. Irrespective of this,
was not a timely corrective action, because
use a designated lookout during navigation in
the master continued the same watch system
the DPA should have made further inspections
darkness did not render the vessel unseaworthy
and made incorrect entries in the deck logbook
or interviews to check that the master and
at the beginning of the voyage.
to make it appear as if a separate lookout was
crew actually complied with the rules and
being used when it was dark.
instructions given.
The Court of Appeal also accepted this argument and held that the vessel was equipped
In the early morning of January 2, 2007, the
Upon appeal by the owners, the Oslo District
in such a manner that any unseaworthiness that
vessel’s duty officer fell asleep, and for about 45
Court’s judgment was reversed by the Court of
may have existed when the vessel commenced
minutes the vessel continued sailing without any
Appeal. In relation to the question of privity, the
its voyage could have been easily rectified during
lookout. A strong current in the Pentland Firth
owners argued that the requirement of due care
the voyage by using a designated lookout, and
brought the vessel off her track and onto the
should not be interpreted strictly, and that the
was also rectified on one occasion a couple
rocks off Swona Island.
relevant question was not whether any additional
of hours after departure. Hence, the vessel’s
The vessel and cargo were salved, but
precautions by the DPA could have prevented
grounding four days later was not caused by any
both suffered significant damage. The owners
the grounding, but whether a reasonable man in
unseaworthiness existing at the commencement
declared general average, but the cargo interests
the shoes of the DPA at the time, with the skills
of the voyage.
refused to pay their contribution and filed suit at
and knowledge that the DPA had, or ought to
the Oslo District Court, holding the owners liable
have had, would have taken extra precautions.
for the cargo damage on the basis of privity, or
92
In this case, the DPA had – both through oral
theBaltic Summer 2011 www.thebaltic.com
The cargo interests have appealed to the Supreme Court in Norway. Wikborg Rein is acting for the owners of the vessel.
Commercial profiles
Captain Baileys Ltd Manning Agency W
e are a manning agency located in
• Checking previous onboard experience of
Odessa, Ukraine and are duly registered
crew by contacting their shipowners or crew
For more information please visit our website: www.cptbaileys.com Should you be interested in working with our
under Ukrainian Laws. We have more than 20
agents
years’ experience in providing foreign shipown-
We can arrange all the necessary entry visas
agency and (or) need any additional information,
ers and shipmanagers with Ukrainian seafarers
for crew selected, as we have contact with
please do not hesitate to contact us as follows:
all over the world.
all the relevant consulates/embassies here in
Erlen Baileys
Ukraine.
Director
Our database consists of thousands of seamen for any position, from Master to Deck
We have our own travel agent who would
Boy (vessel’s crew) and from Chief Purser to
arrange convenient travelling of crew to and from
12/7 Fontanska Road
Utility (catering personnel). We are thus able
the vessel, according to the vessel’s schedule
65009 Odessa, Ukraine
to select candidates meeting any shipowner’s
and the shipowner’s instructions.
Tel: +380 482 37 5558
Through these processes we are able to
requirements.
guarantee that work will be done to ensure
Our selection program includes: • Checking
that
all
crew’s
professional
Captain Baileys Ltd.
Fax: +380 482 37 7632 E-mail: baileys@paco.net
complete shipowner satisfaction.
documents are valid and meet international requirements • Testing each candidate’s English speaking/ writing using Marlins Test Program and obtaining their English knowledge evaluation • Testing crew health and absence of drug traces through the Arkhimed-T Medical Centre, approved by the American P&I Club
Copenhagen Business School Executive MBA in Shipping and Logistics (The Blue MBA)
T
he program aims to give participants up-to-
modules will deal with leadership issues and
date insight into shipping economics and
personal development.
“In shipping today, organisations must focus on managing through economic cycles, innovation,
For the final integrating strategy project,
finding new markets, understanding sustainability,
topics should be chosen for their strategic
and the best research and development. A practical
purpose
giving
approach to these challenges is the strength of the
shipping, integrating commercial, technological
participating companies a valuable and practical
Blue MBA, where participating executives gain a
and financial aspects as well as maritime law
analysis. The project serves two purposes: for
wealth of extra international experience from tutors,
and supply-chain management, and leadership
the candidate, the aim is to integrate topics
advisors and fellow students.”
challenges. In this way, graduates of the
covered in the program by using real world data
Prof Peter Lorange, member of the Blue
program develop a complete understanding of
on a problem related to the candidate’s own
MBA advisory board and professor of strategy
the challenges in this sector.
modern management theories and their application in the maritime sector. The program adopts an holistic view of
and
integrating
function,
company. For the candidate’s company, the aim
in the Blue MBA program, president of Lorange
The program takes students to a top
is to have a strategic issue thoroughly analysed,
Institute of Business in Zurich and Immediate Past
international level in business administration,
with proposed solutions and implementation
President of IMD, Switzerland
reflecting the needs of the industry in a world
plans.
where globalisation, enhanced competition,
Start of the next class: 26 September 2011
“The Blue MBA provides great insight into
market understanding, strategic planning, and
(with an optional pre-MBA program 21-23
essential aspects of the shipping and logistics
the speed of technological change place ever-
September).
industry; it gives the overview of the industry and it
increasing demands on executive management
dives deeply into fundamentals like the key drivers,
skills.
opportunities and risks for the various players in the
The program consists of eight one-week
industry. With world-class teaching staff and senior
modules plus a final integrating strategy project
participants from most parts of the industry, it is a
(thesis). The eight modules are delivered on
dynamic learning experience with a good coupling
a regular basis, spread over the duration of
between theory and practice.”
the program, supported by a virtual platform,
For further details please see:
where individual/group assignments and group
Website: www.shippingmba.com
Maritime Technology, AP Møller Maersk (Class
discussions enhance the learning process. All
E-mail: ir.mbs@cbs.dk.
of 2009)
theBaltic Summer 2011 www.thebaltic.com
Bo Cerup-Simonsen, Vice-President; Maersk
93
Commercial profiles
Fairmount Marine BV F
airmount’s main activities are long-distance ocean towage, salvage and heavy-lift trans-
portation. In order to meet the highest quality standards imposed by our worldwide clientele – an absolute requirement when it comes to the towage and installation of the largest and most valuable floating units in the world such as F(P) SOs, gravity base structures, semi-submersible and jack-up rigs – Fairmount Marine operates five long-distance towing vessels with anchorhandling capacities of no less than 205 tonnes bollard pull and an average age of less than two years. In addition to these five supertugs, we operate – together with our Japanese partner
in remote areas or areas where no large dry-
transportation, Fairmount Marine has positioned
Fukada Salvage & Marine Works Co., Ltd – a
dock is available.
itself in the premier league.
fleet of multipurpose offshore support vessels
Fairmount’s staff of professionals both onshore
and semi-submersible barges. Amongst them is
and offshore is entirely dedicated to providing
the biggest semi-submersible barge in the world,
Fairmount’s
the 50,000 dwt giant Gavea Lifter. These barges
solutions for demanding towage and transportation
are perfectly suited for the transport of jack-up
assignments, worldwide. Fairmount’s quality
rigs, modules, topsides and any other (general)
management system and safety, health and
heavy and oversized cargoes. Furthermore, in
environment protection measurements are second
addition to providing a means of transport, they
to none and form an integrated, vital part of all
tel: +31 10 240 2500
have proven to be a perfect platform for dry-
operations. Building on the legacy of Holland as
E-mail: sales@fairmount.nl
docking of semi-sub rigs, drillships and vessels
the cradle of ocean towage and special marine
Website: www.fairmount.nl
clients
risk-free,
It is our goal and our duty to surpass clients’ expectations, every day.
high-standard
Grindrod Limited World class shipping and freight logistics solutions
and Chemical tankers. The Shipping division
Safmarine, operates a feeder service around the
also charters in ships on long- and short-time
southern African coast.
The
Grindrod
Freight
Services
land-based
the
charters, carrying all types of cargo globally.
Johannesburg Stock Exchange and offers a
Offices in Cape Town, Durban, Richards Bay,
operations focus on terminals, intermodal
worldwide range of high-quality shipping and
Rotterdam, Vancouver, Singapore, Tokyo and
solutions, rail, port operations and all facets of
freight services by land, air, and sea.
London ensure the business runs smoothly.
traditional logistics, including international freight
Grindrod
Group
is
traded
on
forwarding, contract logistics and specialized
The business is all about moving cargo and
Grindrod’s sound shipping expertise, strong
providing customers with simple, convenient
customer base and firm partnerships are
solutions to complex operational exercises.
augmented by the service offerings of the Freight
Grindrod is headquartered office n South Africa
Services, Trading and Financial divisions who
Bulk trading solutions
and employs about 5,000 skilled and dedicated
integrate seamlessly to provide total logistics
Grindrod’s Trading division trades worldwide
people worldwide.
solutions across the globe.
in dry and liquid bulk commodities, including
industry solutions.
agricultural products, industrial raw materials,
An expanding fleet with global reach
Growing the future
Grindrod Shipping’s modern fleet trades globally
encompass a major share of the southern
Financial solutions
under the banners of Singapore-headquartered
African ships agency business, sea freight
Grindrod’s bank offers tailored financial solutions
Island View Shipping and
logistics and land freight logistics.
to corporate and private clients.
Unicorn Shipping.
marine fuels and lubricants.
Grindrod’s Freight Management operations
IVS is focused on moving dry bulk cargo such
Grindrod’s Ships Agency is a leading player in
as minerals, coal ores and agricultural products.
its field offering international shipping operators
In addition to financial sustainability, as a top
Unicorn Shipping focuses on moving liquid
a broad spectrum of services in South Africa,
ranked listed company Grindrod is committed
chemicals and petroleum products.
Namibia, Mozambique, Malawi, Zimbabwe,
to minimizing the impact of its operations on the
Botswana and Swaziland.
environment and is committed to community
Grindrod
operates a diversified fleet of modern ships including Capesize, Panamax, Handymax and
The Seafreight Logistics business, Ocean
Handysize bulk vessels as well as Product
Africa Container Lines, in partnership with
94
theBaltic Summer 2011 www.thebaltic.com
projects focused on education.
Commercial profiles
Heidenreich Innovations Safe and precise stowage of chemicals on tankers Can we load this cargo?
System
Our applications have been built on over
System
(MASS), integrated with MCIS, provides the
40 years of experience in the liquid chemical
(MCIS) is a database containing details on
most complete solution for stowage planning.
trade and this gives us a unique insight into the
over 10,000 chemical cargoes. MCIS is
With more than 10 policy checks, MASS ensures
requirements of tanker operators, charterers and
continuously updated with new regulatory and
the easiest and safest stowage for your vessels.
technical management.
safety information and is essential for ship
The policy checks included in MASS are:
Milbros
Chemical
Information
Milbros
Automated
Stowage
operators today. • Tank capacity • MCIS contains data on over 10,000 chemicals;
• Certificate of Fitness
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• Complete integration with your operational
• Cargo stowage history (FOSFA) / (NIOP)
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www.milbros.com
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• “Private Notes” lets you enter remarks on specification, cleaning, cargo handling and
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chartering information.
MCIS – Moving to the web Mid 2011
JSC Sovfracht J
SC Sovfracht was formed in 1929 and during
The company owns and efficiently operates
the Soviet period was the only governmental
railroad wagons, river-sea ships, port complexes,
body in the USSR associated with the chartering of the whole Soviet fleet and all types of cargo,
container terminals and lorries.
Sovfracht is the oldest and one of the most experienced companies in Russia, and is a member of both BIMCO and the Baltic The company’s fields of activity include:
Far East areas of Sakhalin and Kamchatka.
Rakhmanovsky per. 4, bld. 1
Furthermore, Sovfracht is one of the top 10 127994 Moscow
constantly develops strategies and tactics to
• Dry cargo chartering
meet market challenges. It has ambitious goals
• Handysize and handymax, coasters and
for the future, and all the opportunities and capabilities to reach them.
river-sea ships
Marine house
projects in oil and gas research in the Russian
transport companies in Russia. The company
Exchange.
JSC Sovfracht,
Together with Russian Navy fleet, Sovfracht also participates in Russian and international
both export and import.
For more information, please contact:
Tel: +7 (495) 258-2870 Fax: +7 (495) 258-2889
• Projects and heavy-lift cargos • Shipmanagement
E-mail: shipping@sovfracht.ru
• Agency • Sale and purchase Additionally,
Sovfracht
www.sovfracht.ru is
the
general
worldwide agent for Russian Navy. Currently, Sovfracht has 25 affiliated transport companies and regional representative offices which provide a full range of shipping and logistic services in Russia, CIS and the western world.
theBaltic Summer 2011 www.thebaltic.com
95
Commercial profiles
KTK Tugs W
ith a fleet of powerful tugs, The Curacao
most effective and professional service.
kinds of ships manoeuvring in difficult conditions.
Towage Company provides superior tow-
As experts in the towage & salvage field,
They are all equipped with state-of-the art
age & salvage services not only in the bus-
our employees are involved in every stage
fire fighting, salvage and telecommunications
tling Curacao harbour, but also throughout the
of client service, from the towage & salvage
equipment. We pride ourselves on the proven
Caribbean, Central America and the northern
request implementation to completion, offering
raw, pure strength of our tugs, the engines and
coastal regions of South America.
continual functional and technical support.
the machinery we have used effectively since
Our services include: ocean towage, harbour
They have degrees from Dutch nautical schools
1985.
and coastal services, barge and dredger
and are constantly brought up-to-date on the
We have the expertise to turn strength into
transportation, fire fighting assistance, port
latest technological developments. Our close
the power to tow thousands of vessels a year
and terminal towage, crew management and
relationship with the Dutch Marine Division
and have the power to provide a range of
training, and technical maintenance, all based on
makes its expertise, support and guidance
professional, reliable and efficient services.
the Lloyd’s Register Quality Standards.
readily available.
Exceptional
functioning
and
effectively
Our mission statement is “Through expertise,
Our extensive skills encompass all aspects of
directing team members with Nautical, Technical
strength becomes power” and the our vision
implementation and operation, including business
and Management skills, coupled with extensive
is to position itself as a strong and reliable
requirements definition and development of
maritime knowledge make the Curacao Towage
towage company, serving both the domestic
functional specifications for client approval. The
Company strong and reliable.
and international sectors.
Curacao Towage Company is always available
Our mission is to exceed the expectations of every client by offering outstanding customer
online for handling client contact. We possess operational and technical
greater
experience that makes us strong and reliable.
Pletterijweg z/n, Willemstad, Curaçao,
value, thus optimising system functionality
Our powerful tugboats stand ready 24 hours a
Tel: (+599(9) 461-1055
and improving operational efficiency. This
day, able to rush out under any circumstances.
Fax: (+599(9) 461-2055
expertise combined with hands-on experienced
The ASD tugs that we possess can pull at a 360o
E-mail: s.reenis@ktktugs.com
employees, ensures that our clients receive the
angle, making them exceptional guides for all
Website: www.ktktugs.com
service,
increased
flexibility,
and
Combi Lift K/S C
ombi Lift’s main activities are worldwide
Mission: Combi Lift’s mission is to put customers
ocean transportation of heavylift and project
and clients first, through meeting and exceeding
cargoes, and today Combi Lift is one of the world
their expectations. We do this by providing tailor-
leaders within this segment. The current fleet
made heavylift transportation solutions which are
consists of 17 heavylift carriers, including four
characterised by being safe, innovative and reliable.
semi-submersible dock vessels with the ability to
Our mission also extends to our employees and our
load and discharge cargoes by means of lifting,
fleet, both aspects of our business in which we will
rolling or floating the same. The main philosophy
continue to invest substantially.
of Combi Lift is to combine the best expertise
Vision: Our vision is to position Combi Lift as a
allowing us to lift the various projects with the
QHSEP Policy: On 5 September 2007 K/S
leading company in heavylift ocean transportation
Combi Lift and Combi Lift (Germany) GmbH
and logistics, setting the highest standards through
Chartering and operation: The chartering
were the first companies worldwide, within
sound business ethics, inspirational leadership and
and operation departments are situated in Korsoer;
their segment, to obtain DNV certifications
integrated QHSEP best practices.
the two departments comprise a team of skilled
for fully implementing all three Management
personnel. Combi Lift is able to provide customers
System Standards, both ashore and on board
with a service that suits their requirements.
their vessels. In addition to the certification,
highest standards and quality.
Combi Lift updated the OHSAS 18001 standard
Contact details:
Engineering: The engineering & technical
certification from the 1999 standard to the new
Anders Poulsen C.O.O.
management is run by Combi Lift (Germany)
2007 standard. Once again, Combi Lift is the first
Combi Lift K/S
GmbH in Bremen. Working with an experienced
heavylift carrier in the world to obtain this updated
Batterivej 7-11
staff of master mariners, naval architects
standard. Combi Lift views the ISO certifications
4220 Korsoer
and welding experts, Combi Lift is able to
as a key to upholding and maintaining good
Denmark
provide tailor-made solutions that suit individual
business practices. The company’s QHSEP
Tel: +45 5836 2030
customers’ demands and expectations.
policy ensures continuous improvement in
Fax: +45 5836 2025
its Quality, Health, Safety, Environment and
E-mail: mail@combi-lift.eu
Pollution Prevention management activities.
Website: www.combi-lift.eu
96
theBaltic Summer 2011 www.thebaltic.com
Commercial profiles
St. Lawrence Seaway Management H
ighway H2O is a 3,700 kilometre marine
Highway H2O is an alliance of transportation
highway that offers shippers direct access
stakeholders in the Great Lakes/Seaway System
to the commercial, industrial and agricultural
region, working to develop business and deliver
heartland of North America.
greater awareness about the System, locally
Highway H2O is strategically positioned, with
and internationally. Working with its members
access to:
and partners in a stewardship capacity, Highway
• A market of over 150 million people
H2O leverages its collective knowledge about
• A vast network of over 40 ports with key
the System to offer innovative services and
intermodal connections • Incentive programs for new and existing
incentive programs to ensure the System remains a competitive gateway into the future.
cargo The Great Lakes St. Lawrence Seaway
St. Lawrence Seaway Management
System is serviced by a variety of international
Corporation
and domestic vessels that contribute to the
Tel: 905-641-1932 Ext. 5438
efficiency of the System. These include multi-
E-mail: gdelleroseash@seaway.ca
purpose ocean vessels, tug and barge units,
www.greatlakes-seaway.com
and a specialised lake fleet, many of which are
Sponsor of: www.hwyh2o.com
equipped with self-unloading devices.
Twitter: @hwyh2o
A wide range of cargoes move on Highway H2O, including grain, iron ore, pig iron, coal aggregates, chemicals, semi-finished steel, heavy lift and project cargo. Short-sea shipping is gaining momentum and Highway H2O delivers new supply chain solutions.
Severn Trent De Nora WE UNDERSTAND WATER & WASTEWATER TREATMENT
A
process and design advantages. The BALPURE
Accommodating varying crew complements,
system is designed with easy-to-separate subassemblies, eliminating the requirement for
the largest individual OMNIPURE unit treats a peak flow of 65 m3/day of human wastewater.
s the market leader in the design and manu-
design changes to your engine room. BALPURE
Systems have received BV Certification of
facture of electrolytic seawater disinfection
has received Final Approval from the IMO.
Approval and USCG Certificate of Approval to
systems, Severn Trent De Nora brings more than
At Severn Trent De Nora we understand
30 years of marine equipment experience to the
the importance of providing safe and effective
treatment of ballast water and marine sewage.
treatment of grey and black water. That’s
Ballast water is the most frequently cited
why
we’ve
designed
the
IMO Resolution MEPC.159(55).
OMNIPURE™
cause of the introduction and transfer of non-
Series 55 sewage treatment systems to
indigenous species (NIS) into waterways. Ballast
provide wastewater effluent quality well below
water treatment systems, especially those based
MEPC.159(55) requirements while eliminating
on electrochlorination disinfection, are a proven
the necessity to handle waste solids from raw,
approach to limiting the introduction and transfer
untreated influent. Electrolytic treatment of
of NIS.
marine sewage eliminates chemical storage
The patented BALPURE® system is an
issues, dosing equipment and costs associated
effective and economical electrolytic disinfection
with the use of hazardous chemicals since the
solution to meet the most stringent ballast
disinfection solution is produced on site while
Severn Trent De Nora
water discharge requirements. Environmentally
the unit is in operation.
1110 Industrial Blvd
safe and easy to maintain, BALPURE can
The OMNIPURE system boasts minimal
offer energy savings of 60% compared against
maintenance, small equipment footprint, a light-
Tel: +1 281 240 6770
competitive technologies. Ideal for high ballast
weight package along with a unique sludge
Fax: +1 281 240 6772
water flow rate applications, BALPURE uses a
and solids management system that removes
E-mail: sales@severntrentdenora.com
unique slipstream treatment approach that offers
concentrated solids automatically, in situ.
Web: www.severntrentdenora.com
theBaltic Summer 2011 www.thebaltic.com
Sugar Land, TX 77478 USA
97
Commercial profiles
Port of Zeebrugge A
container
be treated within the port area with all the
sea coast, the port of Zeebrugge offers a
transhipment hub; in 2010 it handled 50 million
necessary personalised value-added services.
highly productive hub for a wide range of ship-
tonnes of cargo and 2.5 million TEU. The
Moreover, frequent competitive and reliable
ping companies. Zeebrugge is one of the few
port serves many deep-sea destinations and is
logistics ensure delivery and receipt of cargoes
ports that can easily handle the larger container
connected to the Middle and Far East with 10
throughout Europe.
vessels due to substantial water depth and the
fixed weekly services.
s a major coastal port on the Belgian North
sophisticated terminal equipment.
Zeebrugge
is
a
top-class
The port is always looking to provide its
With these frequencies, the port is well
unique and specialised advantages and to offer
With an array of both deep-sea and short-sea
geared to offer its customers daily shipment
its export tools onto the European market.
distribution capacities, a network of intermodal
opportunities. Zeebrugge successfully serves all
International companies have chosen Zeebrugge
services to reach the markets, and distribution
major shipping lines, and its container trade has
as their distribution hub, and new agreements
facilities within the port area, the site is a logistic
more than doubled since 2003.
are constantly being realised. Furthermore, in
It ranked No 1 in the world in car trade; in
order to be able to face the expected traffic
2010, 1.6 million units were handled for the
growth, new port areas are continuously being
In the short-sea trade, Zeebrugge is the
global automotive industry. Zeebrugge offers its
developed.
prime continental port serving the UK and Irish
network and expertise to the emerging markets
markets in transhipment. Fourteen daily freight
and is also an important platform for receiving
services cover all major destinations on the UK
liquefied gas from the Middle East. The port is
east coast, but Scandinavia and the Baltic in the
thus a major gateway into Europe.
turntable that meets the demands of a very diverse customer base.
north, and Spain and Portugal in the south are
All types of goods, general cargo, reefer trade, project cargoes amongst others, can
also served with frequency.
For more information, please visit: www.portofzeebrugge.be
Holman Fenwick Willan H
leading
(Chambers 2011), our global team of experts
international law firm advising businesses
act across the full spectrum of the international
engaged in all aspects of international commerce.
sale of goods including: soft commodities; oil
With offices in Europe, the Middle East and
and gas; coal; steel; non-ferrous and precious
Asia Pacific, the firm has a built a reputation
metals; derivatives, including over the counter
worldwide for excellence and innovation and has
and exchange-related; freight including both
focused the development of its capabilities in the
physical and financial trading; and trade finance,
following core sectors: Aerospace & Aviation;
bringing together our commodities and finance
Construction, Engineering & Infrastructure;
lawyers to advise producers, financiers, traders
Commodities (including physicals, derivatives
transporters and end users. Our worldwide
and trading regulation); Energy & Offshore;
clients include multinational energy and chemical
Financial Institutions; Insurance & Reinsurance;
companies, coal and metal traders, soft
Logistics; Mining; Ports & Terminals; Shipping;
commodity trading houses, trade finance banks,
Travel and Superyachts.
governments and their agencies, brokers,
olman
Fenwick
Willan
is
a
Our international trade and commodities
insurers and trade associations.
lawyers provide an end-to-end service to clients operating in the world of international
HOLMAN FENWICK WILLAN LLP
commerce. Our focus is on assisting clients to
Friary Court
finance, develop and grow their business, to
65 Crutched Friars
guard against risks, to help them to seek access
London EC3N 2AE
to new markets, to deal with fast-changing
T: + 44 (0)20 7264 8000
international regulations and to assist them to
F: + 44 (0)20 7264 8888
resolve disputes. The only firm to be top ranked
www.hfw.com
in both Commodities: Physicals and Shipping
98
theBaltic Summer 2011 www.thebaltic.com
‘One stop’ security provision for whatever lies over the horizon
Securewest International is a worldwide organisation and leading specialist in maritime security since 1987. Their expertise has enabled them to provide a ‘one stop’ security service to clients from all sectors of the maritime industry including commercial, military, cruise, port and offshore facilities.
UK Office: +44 (0)1548 856001 USA Office: +1 757 461 4343 Singapore Office: +65 8200 3453 info@securewest.com
www.securewest.com
■ Maritime security officers for vessel security and anti-piracy services ■ Crisis management design and training (K&R) ■ Intelligence support from the 24/7/365 Maritime Assistance Center ■ Approved SSAS monitoring and satellite tracking SM
■ Accredited ISPS training and compliance programs ■ Security planning and consultancy
SECUREWEST INTERNATIONAL Specialists in maritime security since 1987
Corporate viewpoint Securewest International
A comprehensive solution to maritime security Securewest International explains why taking a comprehensive approach to maritime security will ensure your vessels and crew are fully protected.
W
ing threat of international piracy
Understanding the environment
and vessel hijack, ship owners
A core service is to provide teams of security
are faced with the difficult task
guards, both armed and unarmed, onboard
of deciding how to properly protect their people
ships. Securewest International’s long experience
and assets. The number of companies offering
has equipped them with an in-depth working
security services appears to be growing by the
knowledge of all types of commercial vessel
day so how can you be sure you chose the best
and they recognise that the actions required to
company to safeguard your precious assets?
safeguard a chemical tanker differ from those
ith the ever present and increas-
Securewest International is a worldwide
needed to keep a RoRo vessel or container ship
organisation and has been a leading specialist
safe. They also fully understand the regulatory
in maritime security since 1987. The company
environment and provide detailed advice to ship
believes that effective vessel security is about
operators on the requirements of the relevant
a range of measures to create layers of barrier
port , flag state, insurance and other authorities.
against potential threats and it is the provider
It is vital that vessel operators are aware of their
with sufficient depth and experience of service
corporate liabilities when opting to place security
provision that will be best placed to offer the
teams onboard their vessels and Securewest
most appropriate solutions. With more than
as well as the military processes and actions
International is extremely well placed to provide
20 years exclusive experience in the maritime
required to ensure vessels and crew remain
expert advice and counsel.
sector, Securewest International has developed
protected.
a comprehensive range of security services that
The
Implementing
physical
security
should
Securewest
involve much more than simply placing guards
will ensure your vessels and crew are kept as
International service is to assist ship operators
on vessels and the teams from Securewest
safe as possible.
take a holistic view of the risks and threats that
International begin their work well before
its vessels might face. Piracy hot-spots are top of
embarking on the ship. A thorough, up to
Combining military and commercial experience
the list but so are adjacent coastlines the vessels
date route threat assessment is provided0
will pass or ports it will visit during its voyage. A
prior to the voyage which, coupled with a
The operational management and security
thorough assessment of the potential threats
vessel assessment, forms the basis of the
teams at Securewest International all have
likely to be encountered is made and advice
solutions proposed. Securewest International is
military backgrounds but, importantly, the
given. Combating piracy is a complex challenge
a signatory to the International Code of Conduct
company’s longevity in the market has given
and circumstances will change from week-to-
for Private Security Providers and the clearly
its people the ability to successfully combine
week, even for the same vessel transiting the
defined and mission specific Operational Orders
military experience with commercial needs and
same waters. Securewest International is expert
and Rules of Engagement drawn up by its
imperatives. Securewest International people
at continually re-assessing and updating the
operations team reflect current best practice.
have a full understanding of commercial shipping
potential risks facing each vessel.
102
cornerstone
of
the
theBaltic Summer 2011 www.thebaltic.com
Once onboard, the team will provide the
Corporate viewpoint Securewest International
Master with a full brief and threat update and
Securewest International’s experience allows
Maritime Assistance Center (MAC) on a 24/7
talk the entire crew through the security plan.
them to provide enough training to ensure a ship
basis to provide real-time, high-quality security
Training will be given and drills undertaken.
operator is confident in times of crisis. Planning
advice to all its clients. Piracy and other security
This ensures that, in the event of an incident,
is of the utmost importance and Securewest
alerts are tailored to client requirements and sent
everyone is confident of exactly what to do and
International will assist the vessel operator
to the relevant ships. Immediate advice is also
how to act to stay safe. Securewest International
through this process. Often, in a crisis situation,
given on vessel routing, port conditions, ISPS
believes that it is important that all personnel
the ship operator is solely responsible for
issues and any other urgent security issue. MAC
understand the risks they face and the mitigating
handling the incident for an hour or more before
is currently used by over 16 million tonnes of
measures to defend against it. Experience has
the authorities become involved. Managing this
international shipping.
shown that crew understanding and involvement
“golden hour” correctly is vital for the safety
MAC is also available to provide a fully
engenders a greater degree of assurance and
of the crew and the vessel operator must
SOLAS compliant Ship Security Alert System
confidence.
understand exactly what actions are to be taken.
(SSAS) monitoring facility to ensure all alerts are
As well as liaising with the hijackers, the operator
managed securely, verified, authorities contacted
Escort vessels
must inform and provide support for families,
and mandated routine testing conducted.
An alternative to placing a team onboard is to
put measures in place to ensure the crew are
Achieving a high level of maritime security is
utilise an escort vessel. This is not an option
safe when released, deal with any media interest
a challenging and complex activity that requires
that Securewest International will recommend
and, of course, maintain business continuity.
a thorough understanding of the commercial
until a thorough threat assessment has been
Securewest International can ensure all relevant
shipping sector as well as the environment
undertaken but it can be particularly useful
training is given to prepare the vessel operator
that poses the risk. It is essential that security
for slow moving vessels such as rig-tows or
for this taxing and stressful process.
activities are comprehensive and fully integrated expert,
into all areas of the business. Securewest
International is an expert at identifying and
Securewest International is also in demand as
International, with its extensive experience of
sourcing the most appropriate vessel to
an ISPS consultant. Services include providing
operating in the maritime sector, is extremely
undertake escort duties and for ensuring the
full training to all company employees to raise
well placed to deliver these services to all those
vessel can operate in all the sea-conditions the
awareness of their own personal security as well
involved in international shipping.
client vessel is likely to encounter. The company
as the security of their vessel or facility. A range
will also place a well equipped and highly trained
of drills are also offered to test employees in live
team onboard and advise on the optimum
situations.
underwater
exploration
craft.
Securewest
As
an
international
security
operating pattern to discourage a pirate attack.
Knowledge is key Training is vital
Maintaining a good knowledge of the threat
A further element in security management is to
environment is central to ensuring the safety
fully train the client’s shore team responsible for
of a ship that is transiting a security hot-spot.
For more information visit:
managing a hijack or other security incident.
Securewest International operates its unique
www.securewest.com
theBaltic Summer 2011 www.thebaltic.com
103
Events
What’s on where A round-up of conferences, exhibitions and events in the shipping world
May 19-20 Athens
June 14-15 London
September 14-15 London
Greek Shipping and Ship Finance Conference Greek shipping’s premier shipping and ship finance even brings together leading players from Greece as well as industry specialist from overseas. It includes dry bulk and tanker industry focuses, capital markets focuses, trends and pressures in bank ship finance.
Freight Derivatives and Shipping Risk Management Managing freight, bunker, interest and counterparty risk two day training course.
ICS International Shipping Conference A high profile list of speakers will debate the key issues facing the industry today, including IMO secretary-general Efthimios Mitropoulos and International Chamber of Shipping president Spyros Polemis.
www.informa global invents.com
May 24-27 Oslo Nor-Shipping Nor-Shipping speaks for itself. One of the biggest events in shipping’s annual calendar, this is the place to see, be seen, meet, learn and make deals. www.messe.no/en/nft/Projects/Nor-Shipping.
www.baltic exchange.com/training
June 16-17 London Advanced Freight Modelling & Trading Spot freight rate dynamics – implied forward rates – technical analysis of FFAs – constructing forward curves, modelling freight rate volatility, VaR, pricing freight options, real options.
www.marinemoney.com/forums/index.htm
June 7-8 London Dry Bulk Insight A top team of analysts look at the future. www.navigateevents.com
June 29-30 Hamburg 4th European Shortsea Congress The only event of its kind where senior representatives from shortsea users, c arriers, ports , logistics providers and the whole range of service providers meet to debate the topical issues of the day and also to network and further business opportunities. www.navigatevents .com
June 9 London Baltic Exchange and FFABA Dry Forum Unique occasion for the dry bulk FFA market to discuss and network. www.balticexchange .com/training
104
www.rvs-monte-carlo.com
September 28-30 Dublin June 21-23 New York
May 26 Oslo
www.marinemoney.com/forums/index.htm
Monte Carlo Rendezvous A major event for insurers, reinsurers and everyone who is worried about their exposure to risk.
www.baltic exchange.com/training
Marine Money Week
Norway Ship & Offshore Finance Forum
September 10-14 Monaco
theBaltic Summer 2011 www.thebaltic.com
International Marine Claims Conference This is the ultimate networking event for the industry and that is after you have decided you are not a Guinness fan. Challenges for insurers and a new set of rules – hear about it at Malahide. www.marineclaimsconference.com
WHAT’S NEXT? Nor-ShippiNg 2011 aSkS the queStioNS. how will the iNterNatioNal maritime iNduStry aNSwer? Find out. Visit our exhibition. Attend one of our five conferences. It’s happening here and it’s all about Next Generation Shipping. The conversation has already started at www.nextgenerationshipping.com. Don’t miss the leading maritime event week. Register today at: www.nor-shipping.com Main sponsor:
MANAGING RISK
Leading sponsors:
A BOEING COMPANY
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