The Baltic - Summer 2012

the Baltic

the

Lessons from the Titanic

SUMMER 2012

Ravi Mehrotra: risk taker Panama Canal woes Dubai back on track

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 2012

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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) 1483 527998 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 2012 www.thebaltic.com

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Contents Chairman’s message 7 Mark Jackson Baltic briefing 8 7

The risk taker

10 Cutty Sark reopens 11 ASBA/Baltic cocktail party 12 Forza Italia 13 Sporting contacts

8

Logbook 16 Crossing guards People, places, plcs 19 Word games

10

Baltic comment 22 Michael Grey State of the market 23 Tankers

19

25 S&P 27 BIMCO 30 Dry Bulk 31 Heavylift and Offshore 34 Towage and salvage

31

38 Shipmanagement, crewing and education FFA 42 Steel challenges Environment 44

44 Going Green? theBaltic Summer 2012 www.thebaltic.com

3

Contents Oxford Analytica 48 Rough ride on the Panama canal Maritime security 48

51 Counting the cost of piracy Risk management 56 Risky business Shipbuilding

51

60 Backs to the future Consultancy and surveying 62 Surveying the future Forest products

  62

64 Paper trail Maritime Cluster 67 Dubai is back on track Libya

  64

72 Time of change Finland 73 Applying the Finnish-ing touch Insurance news

67

76 Insurance parlance 78 ITIC Legal news 79 Flying the flag?

73

88 Events theBaltic Summer 2012 www.thebaltic.com

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Chairman’s message Mark Jackson

Chairman’s message W

ith my retirement from the Baltic Board rapidly approaching, it is with a mixture of sadness and relief that I find myself penning

my last Chairman’s Message for the Baltic magazine. The past three years have been difficult for an industry facing a high probability of a prolonged period of low freight rates, high costs, piracy, sanctions and an increasing regulatory burden on both its vessel operations and financial transactions. We have endeavored to support our worldwide membership through these tough times by providing advice, blacklisting those who have failed to honour their contractual obligations to our members, lobbying governments to ensure a level playing field for shipping and keeping our subscription fees down.

We have also successfully launched a trading facility for dry FFAs. Baltex has been up and running for a year now and has made good progress. We now have 30 principals Tradewinds

signed up and trading on the system and all the FFA brokers are able to use it. But the key challenge remains to convince the FFA market to incorporate screen trading into their everyday thinking and transactions before external forces make them. Most trades are still telephone

Mark Jackson

brokered, but the advent of greater government regulation of OTC derivatives coupled with

member can take a “level 3” subscription to our

much stricter regime covering the use of Baltic

the many advantages for end-users including

tanker and dry market services and instantly

data deliver greater profits and therefore greater

speed of transaction and transparency mean

redistribute the information to their clients who

dividends for panelists and members, or would

that change is inevitable. I remain confident that

may or may not be members. This means

it be counter-productive? I don’t pretend to

the Baltic will not regret its decision to develop

that there is a large group of companies out

have the answers to these questions, but I do

a multi-lateral FFA trading system.

there who see little value in joining the Baltic

know that in our information age, much of the

Another key challenge still facing the Baltic

Exchange as they receive our data for free

value of the Baltic Exchange lies in its data.

Exchange is extracting greater value from its

directly from our members. Should a member

This is an issue which the Baltic Exchange will

indices and freight market information services.

who has not participated on the panels which

continue to look at.

Whilst we continue to clamp down on any

enable the Baltic to produce such a well

It has been a pleasure serving as Baltic

unauthorised publishing of our data, under

respected source of independent freight market

Chairman and I wish my successor all the best.

the current arrangements any shipbroker

data continue to be allowed to do so? Would a

theBaltic Summer 2012 www.thebaltic.com

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Baltic briefing

The risk taker Bill Lines meets Indian entrepreneur and Baltic Exchange member Ravi Mehrotra, CBE

W

ill we see the likes of Ravi

the reefer sector as well as setting up drilling

to greet the guest, but a small friendly team

Mehrotra again? Probably not.

operations. However, it was this rapid high yield

ushers the visitor to the chairman’s unassuming

An Indian born marine engineer

bond financed expansion that was nearly his

office. The office reflects Foresight’s pragmatic

turned entrepreneur whose ven-

downfall as his company’s bond value collapsed

attitude to business. Indeed it has served as

tures over the years have included shipowning,

in 2002 and the company went into Chapter

the company’s headquarters since its founding

oil exploration, cruises, restaurants and now

11 administration. The company emerged from

in September 1984 and many of the team

shoe manufacturing, Ravi Mehrotra is a man

the ashes and moved into the containership

members have been with Foresight since its

who bought his first ship in 1984 and has never

and tanker markets as well as an unsuccessful

early days.

let an opportunity slip since.

attempt to develop luxury Indian cruises in 2006.

The lively, with a jaunty smile, 70 year old

His rise from a Shipping Corporation of India

The latest development has seen Foresight form

Mehrotra is charm personified and disarmingly

(SCI) technical superintendent to multi-millionaire

a joint venture with British shoe brand Pavels in

open about both his successes and his

shipowner is a fascinating story. Following a few

an attempt to crack the Indian shoe market and

failures. It is probably his bruising experience

years at sea and then an unhappy stint at SCI’s

become a leading player.

with the bond markets in the early 2000s

head office, it was his posting to Iran in the

and subsequent successful emergence from

1970s which was the making of Mehrotra.

Chapter 11 bankruptcy protection proceedings

He was sent to Iran to be part of the team running Irano Hynd Shipping, a joint Iranian Indian venture operating under the Shah’s regime. However, the Iranian Revolution of 1979 saw the removal of the Shah and the expulsion of most foreigners, but not Mehrotra. Iran was, and still is, reliant on revenue from the oil industry and needed to develop its shipping industry to get its oil on the international markets. At the personal request of the Ayatollah Khomeini, Ravi Mehrotra , then aged only 38, was appointed as the “Principal Advisor on Shipping”, to post

“Shipping really isn’t a brain-teaser, success is just down to hard work”

number of shipowners finding themselves in a similar unfortunate position grows.

Mehrotra puts his successful escape from the clutches of predatory investors down to two factors.

“I went to the best bankruptcy law firm in the US and spent nearly $5m with them. They had never previously lost a bankruptcy case and I had to persuade them to take us on board.

They advised us to go to Chapter 11 voluntarily and we managed to convince the judge that the company still had a life. We were sitting on a

revolution Iran.

Mehrotra

which are of particular interest today as the

describes

the

Ayatollah

cash pile and no ship had ever been arrested.”

as

The second factor was his refusal to give up.

“intelligent and capable” and someone who

The whole story can be read in Ravi

recognised the importance of shipping “to

Mehrotra’s new book What’s in it for You?.

Reliving his experiences with Wall Street, he

ensure the continuing flow of petro-dollars”.

Covering some of the most turbulent times of the

recounts: “I said to hell with you! I didn’t struggle

Despite being a non-Muslim Indian national, it

shipping era, the autobiography gives an insight

all my life to hand over this company, so I rolled

was Ravi Mehrotra who nationalised and then

into how someone without access to personal

up my sleeves and fought them.”

built up the Arya National Shipping Line - today’s

wealth became an independent shipowner,

Islamic Republic of Iran Shipping Lines (IRISL).

survived near bankruptcy and much more.

His description of the workings of the bond markets in his autobiography makes

Stepping into Foresight’s unremarkable

salutary reading to any shipowner. In it we

offices in the City of London to meet the man,

read of vulture funds, restless investors and a

In 1984 he left Iran for Europe and set up

little would the unprepared visitor know that

predatory rival shipowner.

Foresight, buying a $5m tween-decker at an

this is the headquarters of a $1bn international

Understanding Mehrotra’s story is important

auction in 1986 and rapidly expanding into

operation. No grand lobby or wood paneling

to any shipowner seeking third party investment

During his time there the Iranian fleet grew from 28 to 131 ships – larger than India’s own fleet.

8

theBaltic Summer 2012 www.thebaltic.com

Baltic briefing

Freight derivative forums 2012 T

he Baltic and FFA Brokers’ Association will be running a series of forums in Europe and

Asia this year. Covering both the dry and tanker markets, the forums are designed to bring together senior traders and brokers as well as potential market participants. Entry is free to all Baltic members and their guests.

Dry FFA Forum, Amsterdam, 20 September Tanker FFA Forum, Geneva, 15 November Dry FFA Forum, Singapore, end Nov (date tbc) For further details please contact Robin King.

Tel: +44 (0)20 7369 1637 or email: rking@balticexchange.com

Baltic team enters 3 Peak Challenge

Ravi Mehrotra

and students of ship finance today wanting to

British handover back to China, there were just

learn more about the failure of junk bonds.

too many uncertainties. According to Mehrotra,

T

he Baltic Exchange is entering a team into the 3 Peak Challenge, a race up three of the

But could someone of Mehrotra’s ilk emerge

India just was not open to business then and

UK’s highest peaks (Ben Nevis, Helvellyn and

today? Could someone with expertise, a thick

New York was considered to be difficult to

Snowdon) within a 24 hour period in support

contacts book and a willingness to work hard

crack for a new player. After a stint in both

of the Sailors Society. The team will be made

and take some risks, but no personal wealth

Zurich and London, London was established.

up of Laurie Campbell, Paul Stuart-Smith and

But would an entrepreneurial shipowner make

Anastasis Mouktaris. The team is aiming to raise

Mehrotra says probably not. “Today’s

the same choice today? No, says Mehrotra. He

over £11K for the Sailors Society in support

entrepreneurs find it easier to be brokers and

says that although he has no plans to leave, if he

of work sustaining a network of profession-

ship managers rather than owners,” he notes.

were the same position today, then Singapore

ally trained chaplains working as ship visitors in

“In today’s culture, the cost of sweat is never

would probably have the edge.

ports around the globe providing welfare sup-

become a successful shipowner?

calculated. Shipping really isn’t a brain-teaser, success is just down to hard work.”

He also notes that the complexity of safety

“London is losing ground,” he says. “There

port to merchant seafarers. To make a donation

are no new local entrepreneurs and the non-

please visit www.justgiving.com/Balticexchange

dom taxation issue doesn’t help.”

and environmental regulations today, mean

I leave Mehrotra to make his preparations for

that any shipping company needs at least half

a one month trip to his offices in India and work

a dozen technical superintendents, whatever

on his foray into the shoe business. Even at 70

its size.

his appetite for risk is as great as ever.

Mehrotra set up Foresight in London back

What’s in it for You? is published by Macmillan

in the eighties after careful consideration of

Publishers India, www.macmillanindia.com, at

a range of shipping centres. Singapore was

£12.00. All proceeds from the sale of the book

out of the question due to a lack of banking

will be donated to the Amer Maritime Training

facilities at the time; he felt that Hong Kong was

Academy.

dominated by the Chinese and with the looming

theBaltic Summer 2012 www.thebaltic.com

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Baltic briefing

Baltic at Commemorating the 20th Posidonia 2012 anniversary of the Baltic bomb T T he Baltic Exchange will be exhibiting at the

he Baltic commemorated the 20th anniversary of the bombing of the Baltic Exchange in April with

Posidonia trade show this June, together

with the Institute of Chartered Shipbrokers. We will be showcasing all our services, so do come and see us on stand 3510 in Hall 3.

a service at St Botolph-without-Bishopsgate. Baltic Exchange vice chairman Quentin Soanes

addressed the congregation with the following words:

“This service marks 20 years since the lives of all Baltic members and many others besides were turned upside-down by the bombing of the Baltic Exchange by the IRA. Three people were killed, and we are pleased to see Margaret Casey and other members of Tom’s family here today and two

New shareholder directors S

people here today, Jeffrey Blum and Ron Brooks were seriously injured.

In the months and years that followed the explosion that Friday night, many Baltic members mourned. Of course they mourned the loss of life. However, they often appeared to mourn the building itself, which perhaps seems a strange thing. It was indeed a beautiful building and we felt honoured to visit daily. In fact, we loved the place.

But I think that to assume it was the building we mourned is to misread the situation. The Baltic generated an extraordinary sense of community. At the Baltic Exchange we did our business together;

tefan Albertijn (Alfred C Toepfer International)

we ate and drank together; we gossiped, planned and reviewed weekend activities, planned and

and Anthony Carroll (Gray Page), will be

reviewed sports, often playing in the name of and on behalf of the Baltic. Here were our friends; our

joining the Baltic Board of Directors as share-

other family, our second home. It was the sense of community which we mourned.

holder directors at the conclusion of the next

However, we have all moved on. The Baltic has moved on and to some extent re-invented itself,

Annual General Meeting. They will replace Mark

whilst we hope retaining the essence of what it always was. Offices have moved, the business has

Jackson and Paul Over.

changed, but much of the sense of community, as evidenced by the turnout here today, remained firmly intact, despite our continuing sense of loss.

Our service this evening is about moving on. There is no need to forget anything, but it is important

Sadly departed W

to be reconciled, to look forward, and to continue to seek peace and to celebrate it where we find it, especially of course in the Good Friday Agreement.”

e are sorry to report the passing of the

Cutty Sark reopens

following Baltic members:

Antonios K. Antoniou Mr Antoniou was elected a member of the Baltic in 1964, representing Pergamos Shipping Co Ltd until he became a retired member in 1989.

T

he Cutty Sark, once the world’s fastest merchant sailing ship, has been restored following a fire and is now open to the public in Greenwich, London. The Baltic Exchange was one of many

organisations and individuals who contributed towards the vessel’s £50m restoration. The vessel caught fire in 2007 when an original phase of restoration work, for severe corrosion, had already

John Louis-Marc

begun and the Cutty Sark was almost lost. Nearly a tenth of the ship was destroyed, but fortunately

Mr Louis-Marc was elected a member of the

many of the important historical parts had already been removed.

Baltic in 1965 representing Panchripol Ltd until he became a retired member in 1989.

The 143-year-old Grade-I listed vessel has been lifted 11 feet off the ground, allowing

Leslie Dorey

visitors to walk beneath the

Mr Dorey was first elected a member of the Baltic

dramatic contours.

Exchange in 1962. From 1976 he represented

Baltic

Exchange

chief

Tatham Bromage & Co Ltd and became a retired

executive Jeremy Penn said

member in 1993.

that the vessel was “an important symbol of the UK’s

Jonathan Allyson

maritime and trading legacy

Mr Allison was first elected to the Baltic in 1964.

and helps explain why London

From 1976 he represented Tatham Bromage &

has such a breadth and depth

Co Ltd and then Cornavin Shipping from 1993

of maritime services today.”

until his retirement in 1999.

Built and launched in Dumbarton

in

Scotland

David Turner

in 1869, the clipper visited

Members will learn with regret of the death of

most of the major ports in

David Gordon Turner at home in Johannesburg.

the world, making her name

Mr Turner was a member of the Baltic

transporting tea from China

Exchange between 1970-1980 representing

but also carrying everything

Continental (London) Ltd.

from wool to coal.

10

theBaltic Summer 2012 www.thebaltic.com

© Telegraph Media Group Limited 2012

Baltic briefing

ASBA/Baltic cocktail party A

SBA and the Baltic Exchange held a cocktail party during the CMA week this March in Stamford, CT. As ever this was one of the parties

of the week, attended by over 300.

Baltic Exchange chief executive Jeremy Penn and ASBA president Bill Stewart

Craig, Brendan and Robert Dillon

Sandi Ennor, Jeanne Cardona (ASBA) and Meghan McCurdy

James Russell-Walling, Andrew Swan, Van Tsagaris and Ed Lundin

This year’s reception was held at Butterfield8 in Stamford

theBaltic Summer 2012 www.thebaltic.com

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Baltic briefing

Forza Italia Prosecco and Pinot Grigio are leading the charge, but it’s the diversity of her grape varieties that is returning Italy to centre stage, says David Hughes

T

he Italian vineyards are vast, stretch-

such as Lake Garda for the northern vineyards

increasing production from her south and her

ing from the snowy embraces of the

of Valpolicella.

islands, particularly Sicily.

Tyrolean Alps that border Austria to the

Aspect and vineyard plantings are also

Sicily’s wine development has been nothing

southern islands where, if the wind is

determined by height. Italy has the Alps to

short of sensational. First thought to be too hot,

behind you, you’d be heard on the beaches of

the north and the Apennines as a backbone

careful plant selection and modern technol-

Tunisia.

down the centre, giving options galore to plant

ogy has raised Sicily to become Italy’s largest

on south-facing slopes to maximise all the

wine producing region and, for the time being,

daylight hours.

offering exceptional value and range.

The country produces more wine than any other country and Italians, per capita, drink more wine than any other country. However, they don’t

There are some 2,500 grape varieties and it

Sicilian white varieties in your wine shop to

drink all the stuff, for they are the world’s biggest

has been my mission to discover some of the

look for are Grecanico (planted by the Greeks),

exporters. In fact 22% of all wines consumed in

stunning varieties that have lain hidden.

Catarrato, Inzolia, Grillo and Fiano – all pleasant

the world are Italian.

In the “old days”, we were brought up with

and easy drinking.

Historically, Etruscan and Greek settlers

(white) Frascati – from the hills around Rome,

The dark, rich red variety Nero d’Avola (black

produced wine in the country long before the

Soave, made near Verona and Verdicchio in the

devil) is the indigenous king and there are also

Romans developed their own vineyards in the

amphora shape bottle from the Adriatic coast-

the Nerello varieties that blend in reliable brands

2nd century BC. However, in truth, much of

line – all fairly light and easy-drinking with the

like Corvo (which also makes a white wine).

the pioneering towards modern day wine mak-

latter two making some stunning fight-backs.

We must also pay recognition to Sicily’s wonderful dessert wine Marsala, invented by an

ing is due to the foundations set by the Romans,

We have now been overrun by (mainly)

particularly vineyard management, which led

very ordinary Pinot Grigio, which hails from the

to large scale production and, in 3 AD, from

region just north of Venice, or we splash out

The south also gives us notable regions,

the occupied Gauls, they learned barrel-

on Gavi di Gavi, which consists of mainly good

such as Puglia, just above Italy’s heel where

making which replaced the ancient amphora

production from Cortese grapes from the very

reds from the Primitivo and Negroamaro grapes

for storage.

north-west of the country.

give mouth-filling stunners.

Englishman, John Woodhouse, in 1796.

They took the vine to all their conquered

Our reds were (the now excellent) Chianti

A favourite region of mine is Campania,

territories and thus to this day the term “New

from Tuscany and the big, chunky Barolo, from

south of Rome, where extraordinary – although

World” refers to any wine-making country that

the same region (Piedmont) as Gavi. One of the

pricey – food-matching whites such as Greco di

was not ruled by Rome.

biggest misunderstandings is with regard to

Tufo, Falanghina & Fiano d’Avellino prevail with

Some say that the French are obsessed by

Valpolicella, but not the old-days corner shop

the main red from the berry-infused Aglianico.

terroir – the influence soil has on the vine – and

bottle. The northern region of Valpolicella’s

Sardinian wines are also excellent, the native

while this applies with Italy, I feel it is aspect –

grape varieties – of which Corvina is the main

varieties being the white Vermentino and red

where the vineyard is planted – that prevails,

star – makes stunning wines. I love the region’s

Canonnau (Grenache in France).

and Italy, like no other wine-growing country,

easy-drinking, fresh red cherry Bardolino by lake

It was the Chinese, not the Italians who

has aspect aplenty.

Garda, all the way up-to the massive Amarone-

invented ice cream and pasta. However, when it

Water’s influences on climate are essen-

made Appassimento (grapes dried on racks in

comes to the vine, legend says: “Dionysus [aka

tial for wine-growing, creating micro-climates,

the sun or upper levels of a barn to concentrate

Bacchus] was the god who brought pleasure to

counter-acting threats of frosts and chilling

the fruit and sugars,) which, when pressed

mankind and wine to Italy”... and who’s to argue

winds and, particularly in the case of lakes

make the wonderful, rich wine to accompany

with a god?

and rivers, providing both cooling mists and a

rich game/meat dishes.

source of reflection of the sun’s heat.

And with Prosecco – Italy’s current must-

David Hughes welcomes any wine enquiries

Italy is surrounded by water, only five of its

have sparkler, which also comes from the north

readers may have. He also conducts company

20 authorised wine regions do not border on

– one might think that’s the country’s produc-

and private wine tastings. Contact: david@

the four local seas and those five that are land-

tion tied up. But no, Italy’s march back on to

thewine-enthusiast.co.uk or visit:

locked have the benefits of lakes and rivers

the world’s stage is very much driven by the

www.thewine-enthusiast.co.uk

12

theBaltic Summer 2012 www.thebaltic.com

Baltic briefing

Sporting contacts There are many sports clubs associated with the Exchange. In most cases, they are open to both members and staff of member companies Baltic Association Football Club

Golfing Society

Sub-Aqua Club

Stephen Calafti

Chris Cox, c/o Frank Symons Ltd

Lorraine Burns

Anglo Greek Chartering

Devonshire House

The Baltic Exchange

The Baltic Exchange

146 Bishopsgate, London EC2 M4J

38 St Mary Axe, London EC3A 8BH

38 St Mary Axe, London EC3A 8BH

Tel: +44 (0)20 7377 5423

Tel: +44 (0)20 7369 1638

Tel: +44 (0)20 7283 9621

E-mail: info@balticgolf.co.uk

E-mail: lburns@balticexchange.com

Cricket Club

Lawn Tennis Club

Young Baltic Association

Jamie Freeland

Crispin Eccleston

Crispin Eccleston

AM Nomikos

Tel: +44 (0)20 7369 1654

The Baltic Exchange

4th Floor

E-mail: ceccleston@balticexchange.com

38 St Mary Axe, London EC3A 8BH

40 Grosvenor Gardens, London SW1 0EB

Tel: +44 (0)20 7369 1654

Tel: +44 (0)20 7591 1800

Sailing Association

E-mail: jf@amnomikos.com

Simon Cox

E-mail: ceccleston@balticexchange.com

Howe Robinson Shipbrokers 77 Mansell Street, London E1 8AF Tel: +44 (0)20 7457 8421

Key Baltic Exchange contacts Management

Government Broker

Baltex

Tel: +44 (0)20 7283 9300

Pat Swayne

Paul Stuart-Smith

Fax: +44 (0)20 7369 1622/1623

Tel: +44 (0)20 7369 1668

Tel: +44 (0)20 7369 1670

VPN 171 2000

Fax: +44 (0)20 7623 6644

pstuartsmith@balticexchange.com

E-mail: enquiries@balticexchange.com

E-mail: pswayne@balticexchange.com

Chief Executive

Dispute Resolution

Robin King

Jeremy Penn

Barrie Wooderson

Tel: +44 (0)20 7369 1637

Tel: +44 (0)20 7369 1624

Tel: +44 (0)20 7369 1674

E-mail: rking@balticexchange.com

E-mail: jpenn@balticexchange.com

Fax: +44 (0)20 7623 6644

Marketing

E-mail: bwooderson@balticexchange.com

Freight Market Department

PA to Chairman and Chief Executive

Communications

Tel: +44 (0)20 7369 1625

Jill Bradford

Bill Lines

E-mail: wlyth@balticexchange.com

Tel: +44 (0)20 7369 1621

Tel: +44 (0)20 7369 1653

E-mail: jbradford@balticexchange.com

E-mail: blines@navigatepr.com

Baltic Exchange Charitable Society

Membership Manager

8 Eu Tong Sen Street

Jackie Harrison

#17-87 The Central

Richard Butler

Tel: +44 (0)20 7369 1633

Singapore 059818

Tel: +44 (0)20 7283 6090

E-mail: jharrison@balticexchange.com

Tel: +65 6377 0654

Willy Lyth

The Baltic Exchange (Singapore) Philip Williams

E-mail: pwilliams@balticexchange.com

E-mail: richard.butler@baltic-charities.co.uk

Events Room Hire Head of Finance

Jill Bradford

The Baltic website

Duncan Bain

Tel: +44 (0)20 7369 1621

www.balticexchange.com

Tel: +44 (0)20 7369 1627

E-mail: jbradford@balticexchange.com

E-mail: dbain@balticexchange.com

theBaltic Summer 2012 www.thebaltic.com

13

65, Gagarina str., Svetliy, Kaliningrad Region, 238340, Russia www.sodrugestvo.com Tel: +7 (4012) 305-544; +7 (4012) 305-500

Chartering Department chart@sodru.com Agency Department agency@sodru.com Transhipment Service Department tranship@sodru.com

@ For more information on these companies and to view this publication online using the latest Page-Turning technology, visit:

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Logbook

Hellenic arteries Ambrose Greenway chooses a selection of some of the older ferries he captured on camera over the past 35 years, sailing everywhere from Crete to the Ionian Islands

I

n 1952, Greece received four small passenger

Luanda, Somalia and Haiti. Mediterranean Sea

1975 and broken up in 1982. However, in June

ferries as war reparations from Italian yards,

was eventually demolished at Aliaga in 1998

1980 Constantine Ventouris had bought Zeeland

referred to by a good friend somewhat dis-

after briefly being renamed Tutku and then

Line’s 20 year-old Harwich-Hook ferry Koningin

paragingly as the ‘tin taxis’. Kanaris, Miaoulis

Alice. However her sister had been arrested in

Wilhelmina for the route. Briefly named Captain

and Karaiskakis were quickly snapped up at

Patras in 1996, by then sporting a white hull,

Constantinos and then Panagia Tinou, she car-

auction by Petros Nomikos, while Kolokotronis,

and later towed to Elefsis Bay. In November

ried a few cars loaded through a side door and

which also carried the unofficial name George

2002 she was beached in a leaking condition,

for the next 16 years cut an elegant swathe

Potamianos, went to Epirotiki Steamship Co.

but capsized two months later, becoming a

through the increasing numbers of box-like car

Renamed Achilles by George Kousouniadis in

Constructive Total Loss.

ferries. Sold to Minoan Cruises and employed

Tor Lines’ distinctive 24-knot Tor Anglia and

as the day cruiser Artemis between Crete and

Tor Hollandia brought new standards to the

Santorini, she was finally scrapped in India as

In 1961, Hellenic Mediterranean Lines together

North Sea when delivered by Lübecker Flender-

Themis in 2001.

with Italy’s Adriatica inaugurated a ground-

Werke in 1966/67. The latter was acquired by

breaking car ferry service between Patras and

Minoan Lines in 1975 for the Piraeus-Crete

Brindisi via Igoumenitsa and Corfu with the pur-

run before being transferred to the Adriatic in

Voluptuous looks

pose-built Egnatia and Appia, named after old

1986. She later ran between Italy and Turkey,

The unmistakably voluptuous looks of Sealink’s

Roman roads. The former was built on the Seine

but switched back to the Aegean in 1996 on

three class ferries, built at Brest’s Naval Arsenal

in 1960 and the unmatched pair ran with remark-

a Piraeus-Santorini-Heraklion schedule, briefly

in 1972-3, remained little changed following their

able consistency for many years until Appia was

interrupted by a Libyan charter the following

transfer to Greek waters save for minor deck

sold in 1992, renamed Fibi and scrapped in

year. In 1999, she became Fraglines’ Ouranos

extensions aft. The Newhaven-Dieppe service

1995, a year that heralded great change with the

for Adriatic service and in 2007 F Lines’ Maltese

Senlac went to Constantine Ventouris as Apollo

arrival of Pericles Panagopoulos’ sophisticated

flag F Diamond. Arrested in Genoa in 2009, she

Express in December 1987, sisters Hengist

Superfast I. Egnatia was finally broken up as

was sold to Turkey as an accommodation ship

and Horsa following in 1992 as Gerasimos

Natia at Alang in 2001 after a remarkable career

and was scrapped at Aliaga in 2010.

Agoudimos’ Penelope A and Romilda, the latter

1971 (as illustrated), she was broken up at Perama in 1984.

of over 40 years.

In 1976, Loucas Nomikos took delivery of the smart homebuilt car ferry Lemnos from Hellenic

quickly joining the former Senlac in the Ventouris fleet as Apollo Express 2.

General Enterprises at Perama. She became a

After several changes of name and ownership,

Startling appearance

familiar feature in the Aegean and from 1999 to

the former Senlac was broken up in 2010 but

Attracted by the success of the above, Michael

2002 sailed under the Sporades Lines banner

Penelope A still sails as such for Agoudimos,

Karageorgis bought Ellerman Lines’ City of

as Panagia Tinou, but was burnt out at Lavrion

having been Minoan Flying Dolphins Express

Port Elizabeth cargo/passenger quartet in 1971,

in 2003. Rebuilt by A K Ventouris, she sailed

Penelope from 1999 to 2004, and third sister

planning to rebuild them as side-loading car

around the Cyclades for the next four years

Agios Giorgios was still running last summer on

ferries. In the end, only two were converted

first with a white, then a red hull, but then

the Milos run for Ventouris Sea Lines.

at Perama, City of Exeter and City of York

changed to NEL Lines’ blue livery. In 2009, she

Greece’s first Japanese-built ferry was bought

emerging in 1972 as Mediterranean Sea and

was bought by Moldovan owners and still trades

secondhand by Constantine Efthymiades in

Mediterranean Sky for a new Patras-Ancona

as Trabzon.

1966 but later the Cretan company ANEK

service. Their startling appearance, courtesy

The daily ‘Cyclades Express’ run from

came to rely heavily on such vessels, starting

of renowned yacht designer Jon Bannenberg,

Piraeus to Tenos and Mykonos required fast

with Candia and Rethymnon in 1970. Lissos,

together with a bold colour scheme suited the

ships and was inaugurated in 1965 by Petros

acquired in 1987, was a typical ‘long-bodied’

local waters very well, but enraged a few UK

Nomikos’ Leto, the former Newhaven-Dieppe

Japanese long distance car ferry, having been

traditionalists. Plans to convert the other two

channel steamer Arromanches. A year later

built for Shin Nipponkai as Ferry Hamanasu

to luxury cruise ships came to nothing but

she was joined by former running-mate Lisieux,

in 1972. She mainly sailed to Crete but also

the two ferries soldiered on with occasional

renamed Apollon, both being capable of 24

between Patras and Ancona and was finally

charters taking them elsewhere, notably to

knots. The latter was sold to Agapitos Bros in

scrapped at Alang last summer.

16

theBaltic Summer 2012 www.thebaltic.com

Logbook

War reparation Achilles at Piraeus in 1977

HML’s long-serving and successful car ferry Egnatia

Karageorgis’ brightly painted Mediterranean Sea at Corfu in 1975

Minoan Lines’ Ariadne at Piraeus in April 1977

Nomikos’ smart little Lemnos off Vouliagmeni

Ventouris’ elegant and popular Panagia Tinou

Agoudimos’ Penelope A still sails on the Rafina-Mykonos route

ANEK’s Lissos made short cruises to Syros in her later years

theBaltic Summer 2012 www.thebaltic.com

17

People, places, plcs

Word games London needs to take action on marine wordings says the Association of Average Adjusters chairman, Paul Silver.

Plus: adjuster demand, rising claims, safety risks and piracy

T

he London insurance market needs to

for Loss of Hire “do not constitute a modern fully

documentation fills in the obvious cracks and

address shortcomings in standard Loss

thought through set of policy conditions that the

stops up the holes,” he told members.

of Hire wordings if it is to be a “go-to”

more adventurous London insurers might use to

“If London wishes to remain the pre-eminent

market for this important type of marine

build up the current level of activity for the Loss

market, then it needs to be at the forefront in all

of Hire market to a more vigorous level.

aspects of marine insurance.”

business, the Chairman of the Association of Average Adjusters (AAA) has warned.

“If the London market is to think of increas-

Addressing the AAA’s annual general meet-

ing its share of this class of business or even

ing, Paul Silver said the so-called ABS conditions

expanding the market, it may need a sounder

Demand for the services of average adjusters

of some modern, well-

remains at high levels despite increased com-

drafted market conditions.”

petition and changes in the marine industry,

ABS wordings emerged

according to Silver.

in the Lloyd’s market and

“It is clear from talking to colleagues that

have become a London

there is no shortage of work out there. The insur-

standard wording despite

ance industry continues to value the set of skills

a number of efforts to

that average adjusters offer, which you simply

develop alternatives. As

cannot obtain elsewhere,” he said.

well as being an important

“However, I am concerned as to what will

strand of insurance in its

happen when people like me call it a day – will

own right, Loss of Hire is

there be enough qualified practitioners to take

often seen as an essential

over? There are exciting career prospects for a

part of a wider package

young average adjuster, and we urgently need

required by ship owners.

more of them.”

The Norwegian market,

It can take about four to five years of part-

which has specialist Loss

time study with some claims experience to

of Hire insurers, is a leader

pass the necessary exams and achieve the

in this area.

gold standard of Fellowship of the AAA. Silver

While

AAA Chairman Paul Silver

Industry shortage

long-term base in the form

acknowledging

estimates that the market will require around

that the ABS wordings

two new Fellows a year for the next decade to

were fit for purpose, Silver

meet demand and replace those who are likely

said they were lacking in

to cease practising.

clarity and comprehensive-

According to Silver, as an average adjuster it

ness and created unneces-

helps to start young, but it offers a career that is

sary work. “ABS conditions

intellectually challenging. It also offers the oppor-

are still workable, but it

tunity for overseas travel to younger people he

requires assureds, brokers

says and because they are studying for a profes-

and insurers to ensure

sion and becoming highly skilled “we hope there

that the covering policy

is reasonable financial reward at the end of it”.

theBaltic Summer 2012 www.thebaltic.com

19

People, places, plcs He acknowledged there is a “bit of a generation

office or somewhere where you have experience

agers not only for their own fees, but also for

gap” with the older fellows of the association but

of claims in real life.”

disbursements paid on owners’ behalf. When

this presents a great opportunity. Even if newcomers don’t wish to spend their whole career

One of the attractions, he says, of the career is you can work and study at the same time.

ship managers try to collect the funds due, they are faced with a claim for negligence in the

in the industry, it still represents a “wonderful

But there are no signs of average adjust-

management of the ship. In ITIC’s experience,

training for careers in the marine insurance and

ing dying out, said Silver. “The profession has

once shipowners fail to put managers in funds,

shipping environment”.

changed and there are rather fewer. However, in

the situation rarely improves and usually deterio-

Possibilities to move on to working with

the past eight or nine years, the demand for our

rates. The resulting claims are time-consuming

owners, charterers and the like obviously exist.

services has been pretty steady, if not growing.

and costly to defend.

However, Silver says that if starting off training

We don’t see much change in demand despite

ITIC says that it is of the utmost impor-

as an average adjuster, the individual has to

the ups and downs of the shipping economy in

tance that ship managers’ records and cor-

consider it as a long term opportunity.

years since 2008.”

respondence with shipowners are clear and

The natural inclination is to look for university

New entrants have to understand they are

in good order. By way of illustration it cites a

graduates, he says. For people coming ashore

not in a huge industry, he said, but they can

dispute between the manager and owner of a

it is a suitable career provided you can cope

become experts in the area which they are work-

ship involving a balance of funds owed to the

with starting again at the bottom. The insurance

ing in, and that is quite an attractive proposition.

manager. It was agreed that those funds would

market as a whole may also present prospective

be put into an escrow account. The matter

candidates, he adds and people who are drawn

remained idle for five months, until the owner

to this kind of claims work from the general

Claims on the rise

raised a claim against the ship manager, through

insurance market.

International Transport Intermediaries Club (ITIC)

its lawyers, for alleged negligence. The owner

“Theoretically you could study for the asso-

says it has seen a noticeable increase in claims

claimed that the ship manager was in breach

ciation exams in complete isolation, but I think

against ship managers by shipowners who are

of its duty to maintain the ship in an efficient,

you would have difficulty passing the fellowship

going through difficult financial times.

employable state and that, as a result, it had suffered significant losses.

exams, particularly when you have a practical

In the latest issue of its Claims Review, ITIC

paper at the end of it,” said Silver. “You do need

notes that, as result of their financial difficulties,

The claim put forward by the ship owner was

claims experience, ideally

within an average

owners resist paying for the full maintenance of

in excess of $17m and included alleged losses

adjusters office, or within a broker or insurers

their ships and also end up owing ship man-

in respect of the vessel’s future employment,

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20

theBaltic Summer 2012 www.thebaltic.com

People, places, plcs expenses paid by the shipowner for repairs/

and elsewhere; and the emer-

spares/drydockings, reduction in the vessel’s

gence of ice shipping and its associ-

market value, and other additional damages.

ated navigational and environmental

The ship manager rejected these allegations

complications.

in full and lawyers were appointed by ITIC to

Commenting on the findings

defend its position. The manager maintained

of the report, Dr Sven Gerhard,

that the vessel’s condition had deteriorated due

AGCS’s Global Product Leader Hull

to age, constraints of trade, and expenditure and

& Marine Liabilities, says: “While the

maintenance restrictions imposed by the owner.

seas are safer than ever today, the

The manager further stated that the owner was

industry needs to address these

fully aware of the deficiencies and the condition

new risks proactively. For example,

of the ship when it was taken under manage-

ultra-large ships pose challenges for

ment. Despite this, the owner had not taken the

insurers due to their sheer size and

necessary steps to facilitate remedial action.

value, while others raise concerns on

Lawyers for the owner aggressively pursued

structural integrity and failure. While

the claim against the manager. However, the

scale alone does not make these

manager’s files and correspondence on the ship

ships riskier, the increased sizes

were in good condition and a thorough audit

introduce specific risks that need to

trail existed for every decision regarding the run-

be addressed, such as salvage and

ning and maintenance of the ship. The ship was

recovery considerations and emer-

eventually scrapped, but the owner continued to

gency handling.”

maintain that it had a claim against the manager,

The largest modern contain-

even though it was unable to provide any proof

er ships under construction are

or to document its losses.

so big that there is space below

Eventually, after two years, the claim was

deck for a basketball court, a full

finalised on a drop-hands basis. The total cost

sized American football stadium,

of the legal fees to defend the innocent ship

and a spectator-filled ice hockey

manager was $250,000.

arena. Ships of this size raise questions of

Safety risks

Senior partner IRI Clay Maitland

adequate loss coverage in the event of an

convention, what are we going to do when other

incident and potential structural limitations,

issues come to the fore?”

says AGCS.

There should be an international convention

Despite greatly improved safety records in the

The report also highlights the continued chal-

century since the Titanic, the maritime industry

lenge of human error in maritime operations – a

faces new challenges driven by the continued

factor which remains critical despite 100 years

The fear of giving offence and trying to do

growth of worldwide shipping, according to

of technological and regulatory improvements in

things by committee is “absolutely disastrous,”

specialist marine insurer Allianz Global Corporate

safety. Over 75% of marine losses can be attrib-

he continued. It is possible for the industry to act

& Specialty (AGCS).

uted to a wide range of human error factors,

fast, he said, citing the example of the US follow-

In the 100 years since the sinking of the

including fatigue, inadequate risk management

ing 9/11 when a new convention was pushed

Titanic, the world commercial shipping fleet has

and competitive pressures, as well as potential

through in four months. However, “not one effort

trebled to over 100,000 vessels, yet overall ship-

deficiencies in training and crewing levels.

has been made by any government at the IMO

that provides for a place where pirates can be tried, he said.

ping loss rates have declined from one ship per

Dr Gerhard explains: “As technological

to secure an international convention that will

100 per year in 1912 to one ship per 670 per

improvements reduce risk, so does the weak-

give us a legal framework to deal with the crime

year in 2009.

est link in the system – the human factor

of piracy,” Maitland said. He agreed with the

While factors such as new technology and

– become more important. This is where the

union position that seafarers, particularly foreign

regulation have tremendously improved marine

industry should focus most closely, so that best

seafarers, are not a matter of concern.

safety, new risks have emerged. AGCS’s report,

practice risk management and a culture of

Maitland renewed his call for a spokesperson

Safety and Shipping 1912-2012: From Titanic

safety becomes second nature across the

for the shipping industry who could get these

to Costa Concordia, based on research from

world fleet.”

issues across. “This piracy issue is an issue

Cardiff University’s Seafarers’ International

where the unions, flag states and many others

Research Centre (SIRC), highlights several key

in the industry are in agreement. But instead of

challenges for the industry including the growing

Piracy convention call

saying let’s do something about piracy, we are

trend to “super size” ships and cost pressures

Clay Maitland, senior partner of Marshall Islands

not doing it. Let’s talk about what can be done.”

pushing ship-owners to source crews from

manager IRI, has renewed his calls for a conven-

Statements are being made at IMO about

emerging economies where standards of train-

tion of piracy, saying that not enough is being

defensive measures, but, he said “we need to

ing and assessment can be inconsistent.

done and priracy is spreading.

get beyond that and say what we are going to

Other significant safety risks include reduced

The piracy issue, he believes, has revealed

do to suppress piracy. Simply saying we are

crewing numbers, which may compromise

“how ineffectual our own institutions are.

eventually going to put forces on land is not

margins of safety and encourage human error

This does not bode well for the future. If we

going to solve the problem. I think we should

risks; increasing bureaucracy on board ships;

can’t all get together on the suppression of

ransom the crews, but I think we should go after

the continued threat of piracy off Somalia

piracy including agreeing on an international

the pirates”.

theBaltic Summer 2012 www.thebaltic.com

21

Comment – Michael Grey

Pass the port W

hat do we understand by “infra-

who may have nothing to do with the port, but all

structure”? It’s a curiously mod-

ears will be closed to these arguments. Ports are

ern word, that certainly wasn’t

not alone in this. In the small town where I live, we

around when my faithful Imperial

have been waiting nearly 20 years for a bypass,

Reference Dictionary (complete with thumb-

which the government has persuaded a developer

holes) was published. It is also one of those

to build, when he can raise the substantial

words that can probably mean pretty well what

sums from selling sufficient numbers of houses –

you want it to mean, which makes it notably

difficult in current economic circumstances. But

attractive to politicians.

governments are adamant. Having managed to offload their perceived responsibility for roads,

Utilities, like waterworks and pipelines,

they are not willingly going to take this back.

motorway networks and canal systems are understood to be part of the national infrastructure,

British ports point out, quite reasonably, that

with “infrastructure funds” happy to take them off

on the Continent, it is the governments that

the hands of governments when they are put up

provide the infrastructure for port improvement,

for sale. Thus, infrastructure has acquired a sort

with the ports (or usually their customers in the

of subsidiary meaning in that these elements are

case of “landlord” ports) building the terminals

part of the system required for civilised life and,

on the nice new quays and dredged accesses.

because we cannot do without them, they take

They also point out that they have to compete

on an attraction of their own in investment terms.

for business with the ports of the near continent,

Is a port infrastructure? In that ports are

which are not paying for miles of motorways and

essential to a nation’s well-being, undeniably

railways, out of the sums they can prise out of

necessary to facilitate the flow of trade, ports

Michael Grey

the hands of shipowners. It always seems to me that British ports do astonishingly well, when you

surely could be so defined. Can a fleet of ships be collectively defined in such a fashion? Shipping is

the extortionate sums raised from that paid

consider these handicaps, but it must be like

of course derived demand in that their just being

in the various taxes imposed on road users.

batting with one hand behind your back.

around cannot necessarily persuade a shipbroker,

That system, which has probably served us

Doesn’t the European Union, which is

or anyone else, to use them. They have to

reasonably well since the Roman legions laid

supposed to have some sort of regulatory role

compete for business in a way that motorways or

down the first national road network, we are

in the management of ports and their subsidies,

water distribution companies clearly do not.

given to understand by recent transport ministers

have a responsibility for more of a level playing

Ports raise virtually all their revenues from

of various political persuasions, is very much old

field in this matter? There must be more to

ships coming and going, so one might suggest

hat. Thus, if an expanding port discovers that its

Brussels life than the Habitats Directive? Hasn’t it

that their operation is even more a derived

expansion plans are handicapped by a grossly

any policy about infrastructure that can make port

demand activity than shipping itself and thus

inadequate road system, it can offer every kind of

life throughout Europe more equal. There is a bit

could not be termed “infrastructure”. So one

supplication to government, but all will be deaf to

of a deafening silence here too.

of the great mysteries of the universe is why

its entreaties. The port must build it itself.

There is a sort of confused logic in government

ports are apparently so attractive to infrastructure

This can be very big money, which is

circles which suggests that the UK policies (if they

funds, when their revenue stream is so uncertain.

why it was deemed once part of the national

can be deemed such) are more “fair” in that they

You could argue about these matters for ever.

government’s responsibility and it has really

are unhelpful to everyone. If, for instance, the

But ports, at least in the UK, find that, whether

grown exponentially. We are not talking about a

government could be persuaded to build a third

they are part of the national infrastructure or

short access improvement to the main road from

lane on a trunk road to Port A, then it would be

not, the government of the day is increasingly

a new dock gate, but miles of dual carriageway,

grossly unfair to Ports B and C. If all are equally

interested in having them paying for chunks of

cloverleaf accesses or roundabouts and the

disadvantaged in terms of infrastructure, then the

that aforesaid national infrastructure, in the shape

government makes it clear that port expansion

policy is clearly working admirably. Some may

of access to and from those ports.

plans will be conditional upon such investments.

say it is no way to approach our national port

Once the national road system was thought

The port managers can argue until they are blue

infrastructure.

to be part of the government’s responsibility,

in the face that such road improvements will be

with its repair and improvement paid for by

used by all the delighted inhabitants of the region,

22

theBaltic Summer 2012 www.thebaltic.com

As the PPS to the Minister would say: “I couldn’t possibly comment.”

Tankers

Challenging times Confidence is building in a tanker rate increase, according to accountants Moore Stephens but the next 12 months will be very challenging for owners

T

he latest Moore Stephens confidence

slowing Chinese economy, where authorities have

ticated tonnage in the short sea Far Eastern

survey asked respondents about likely

instituted austerity measures to curb rising inflation.

markets and, to a lesser extent, South East Asia.

movements in freight rates over the

Chinese economic growth is slowing. Having

Taking a broader view, demand for chemi-

next 12 months. The survey revealed

peaked at 11.9% in Q1 2010, according to ana-

cal tankers is expected to exceed supply over

that respondents are now more confident of rate

lysts GDP, it is expected to fall below 9% in 2012,

the next three years, with demand increasing

increases than they were three months previously.

dampening demand for chemical tankers in Asia,

by more than double the fleet’s growth in the

In the tanker sector, the number of respondents

Stalmans said.

median scenario.

expecting rates to increase was up from 30% to

Regional volume flows saw only modest

Demand will grow 5% and 5.7% in 2012 and

35%. Charterers were alone in recording a fall

growth in 2010, due largely to a downturn in

2013 respectively, compared to a fleet expansion

(from 40% to 35%) in expectation of higher rates,

Chinese imports. In 2011, regional volume flows

of 2.3% and 2% in the equivalent period.

against an 8% increase to 15% in their numbers

saw a moderate increase of 2.23% with Chinese

who thought that tanker rates would fall.

imports improving 6.05%.

“In the high fleet supply and demand scenario, 2013 is expected to see the increase in demand

One respondent emphasised: “Oil company

According to Stalmans, Saudi exports grew

outstrip supply by an extra 3.7%, while in the low

charterers are very strong and can push rate lev-

almost 28.71% in 2011 and “this upturn has

fleet supply and demand scenario, fleet supply is

els down. For more than three years, most tanker

underpinned demand for chemical tankers over

expected to decrease,” Stalmans said.

owners have not made a profit.”

the past year”. Demand for tonnage has spurred

Demand for petrochemicals continues to

Naturally enough, concerns have centred not

a steady improvement on most Inter Asia trade-

grow, he said, especially in emerging markets.

just on the effect of sanctions against oil produc-

lanes, which have seen freight levels rise over the

Demand is expected to increase by 5% in 2012

ing nations like Iran, but also on the strength of

past 12 months, despite modest volume growth

and 5.7% in 2013, compared to a fleet growth of

national economies. In a recent presentation to

in 2010 and 2011, he said.

2.3% and 2% in these two years.

the Chemical and Parcel Tankers Conference,

“During the last peak cycle, cheap debt, plen-

organised by Navigate Events in March, Rudy

tiful bank liquidity and eagerness of some ship

Stalmans of SPI Marine (Asia) outlined issues from

Improvements in Asia

finance players to buy market share, led to an

the Asian perspective.

Taking average freight developments on various

order-book for chemical tankers stretching into

With geopolitical tensions between the West

routes throughout the region, overall freight

2012. Despite an uncertain demand outlook, we

and Iran resulting in higher crude prices and with

levels in Asia have improved by over 12% from

expect freight rates will continue to recover into

the prospect of further sanctions on the horizon

Q1 2010 to Q4 2011.

2012, as the number of newbuilding deliveries dwindle, while scrapping picks up.”

– not to mention a potential lack of international

Some 56% of Saudi volumes moved east-

group cover going forward on carriage of Iranian

bound to Asia (plus another 11% to India), while

petroleum products – tanker owners have plenty

47% of Iranian chemical volumes ship eastbound.

to think about.

Volumes eastbound from Iran are expected to

Challenging year ahead

grow further due to upcoming EU sanctions.

The coming 12 months will remain very

Demand for tonnage in the Inter Asia routes

challenging for owners, who will have to rely on the

Higher volumes expected

has spurred a steady improvement in the SE

support of banks to survive and it is reasonable

According to Stalmans, the volume of bulk chemicals

Asia Northbound and NE Asia southbound freight

to assume that some may not, given that

carried on tankers is forecast to rise 4.4% on the

rates, with figures increasing 5.88% and 8.06%

operational and bunker costs remain high.

year to 189.6m, tonnes in 2012, then a further

respectively over the past 12 months.

Given high operating costs as well as finance

5% to 199.1m tonnes in 2013 according to DVB

Historically, many Asian owners have pre-

costs to lenders, as the supply/balance for

statistics. Expected higher volumes on long-haul

ferred to operate their vessel for easy chemicals

chemical tankers tips. It is likely that owners

routes, specifically Middle East to Asia, will boost

where possible, avoiding the high intensity multi-

will aggressively seek to improve freight levels,

tonne mile demand, he told conference delegates.

parcel trades, Stalmans said.

Stalmans said.

Global economic conditions are weak, with

The current trend towards better economies

Threats of a double dip recession, war and

Europe facing a sovereign debt crisis, while

of scale has resulted in a lack of renewal in the

unrest in the Middle East and natural disasters, as

political polarisation in the US is impeding imple-

smaller vessel sector which, Stalmans suggested

well as slow growth in the Chinese market remain

mentation of reforms. This is coupled with a

will lead to a shortage of quality modern sophis-

the “swing factors”.

theBaltic Summer 2012 www.thebaltic.com

23

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S&P

Vessel value Basil M Karatzas looks at the valuation of vessels – and the value of reporting

A

few years ago, in the booming days of

overnight in the middle of the financial typhoon,

overhaul of the price reporting has been trig-

the super-cycle, the London interbank

in order to conceal their cost of funds and alter

gered by signs that certain numbers may have

Offered Rate (LiBOR) was primarily

the perception, provided to the market, their

been ‘manipulated’.

mentioned in shipping circles as a pre-

counter-parties implicitly placed on their credit risk.

Our daily lives are strongly interweaved with

fix to a number, preferably a two-digit number,

However, in a more recent full blown investi-

the worlds of finance and energy, and price

or the “spread”, at which rate a borrower/ship

gation in the matter, it seems that certain finan-

reporting in these two industries affects our lives

owner was able to borrow funds.

cial institutions (or at least their agents) were pur-

whether we are aware of it or not. As with any

For example, “LIBOR + 75 basis points” was

posefully mis-reporting market data, given that

reporting, it is expected that there is always a

indicating a rate of 0.75% above LIBOR, the rate

even a small aberration on the LIBOR rate could

certain degree of bias involved, certain judg-

that banks can borrow funds from each other for

translate into serious money for the settlement

ment, certain inaccuracy. After all, there are

a very short period of time; the borrower, ship

of contracts, especially when the reporting party

more colours than just black-and-white in our

owner in this case, had to pay a rate related to

has an open position in the market. Again, for

lives, and there is sometimes a very fine line that

LIBOR plus the spread as total (floating) cost for

every change of LIBOR by just 1 bp, the nominal

separates facts.

their debt financing. LIBOR has been produced

translation on settlements could be $35bn;

And, of course, facts do not always happen

under the auspices of the British Bankers’

in a timely, predictable fashion or in a conspicu-

Association (BBA) by polling daily market bank-

ously observable manner and transactions in

ing participants, computing an average rate

Overhauling the process

certain markets can be very, very infrequent.

(based on a standard formula and calculation)

Recently, the International Organization of

Sometimes, a “judgment call” or a “guestimate”

and reporting the average rate.

Securities Commissions (IOSCO) produced a

or a “professional opinion” has to substitute for

The necessity of a LIBOR number is, of

circular aimed at overhauling the process of

the lack of data points in order to produce a time

course, of paramount importance since numer-

reporting energy prices. Similar to reporting on

series. Therefore, it is to be expected that there

ous aspects of daily life are settled based on

interest rates in the form of LIBOR, daily data in

is always a certain imperfection in reporting. It’s

such rates (from car loans to house mortgages

the energy markets are produced, published and

just human nature. And, when the stakes are

to credit card rates to commercial loans). It is

used for settlement in the energy markets. Of

so high and the value of the contracts are so

estimated that $350tn of financial contracts are

course, there are clearing houses and exchanges

monumental, besides the “honest” error and

benchmarked or settled against the LIBOR rate,

in the energy markets and their closing prices

expected “inaccuracy”, one may also expect

that is, for each basis point (bp) or 0.01% change

are fairly well accessible.

that there might be a motivation for a deviation in the price reporting to reflect a bit more than

in LIBOR rates, the nominal impact from the

However, there are several more energy

settlement of financial contracts is worth $35 bn.

numbers on less liquid contracts that are col-

Since the early post-Lehman days, it has

lected, tabulated and reported by the Price

The shipping industry, at the whirlpool of

been reported in the business press that the

Reporting Agencies (PRAs), primarily Platts,

the financial and the energy markets, in a

LIBOR reporting and calculation has not been

Argus Media and ICIS; for instance, Platts oil

post-Lehman world of constrained liquidity, and

as straightforward as it seemed and that there

prices are typically utilised for bunker pricing

anaemic economic growth compounded by

were observed unexplained discrepancies in

in the shipping industry. It is estimated that

the Damoclean sword of a series of sovereign

the marketplace.

60-70% of the over-the-counter (OTC) swaps

crises in Europe and possibly an insipient political

Most obviously, weak banks were under-

and options in the energy markets are settled

crisis in China and ensuing economic and

reporting the rate at which they could borrow

against the prices of these three PRAs. IOSCO’s

banking deterioration, has been facing several

theBaltic Summer 2012 www.thebaltic.com

just “human error”.

25

S&P challenges, not least of them, a very illiquid mar-

in the present illiquid market, often the tables

and PRA numbers, with which we have to live,

ket for the sale and purchase of vessels, and

produced from different sources show strong

standardised vessel asset prices are quite often

a yawning gap in “bid” and “ask” for shipping

aberrations, and sometimes transactions take

irrelevant even to shipping market participants; it

assets. In general, the second-hand market for

place well beyond any level of normalcy that

only takes one buyer and only takes one seller

shipping assets has been fairly subdued in the

such reports would predict.

at one point of time to agree on the price for

last year, reflecting weak freight rates, a substan-

Given that the shipping industry consists of

the physical exchange of the shipping asset.

tial overhang of newbuilding deliveries, lack of

a small atoll in the ocean of the industries of

At times when buyers can exert most pres-

debt financing, and an overall lack of conviction

finance and energy, any inaccuracies in report-

sure during a transaction, whether in a weak or

(“buyers’ strike” may be called) from the part of

ing vessel asset prices are of little importance

strong market, they end up with a better value

the buyers; from the part of the sellers, any sale

to the broader markets. Despite BSPA’s popu-

proposition. At times when the seller can resist

at today’s “perceived” market levels will entail

larity, there are no standardised contracts (that

the buyer’s pressure, or, even better, incite a bid-

loss of some or all equity investment, a short sale

is residual value guarantees, and so on) set-

ding war, whether in a weak or strong market, a

and, quite possibly, a loss for the lenders.

tled against any vessel price indices or broker

strong asset price can be achieved.

The lack of market activity in the sale and

reports. Whether we like it or not, as consumers

Although a price reporting mechanism in

purchase market is even more accentuated for

we have to live with LIBOR (that is check your

shipping, similar to LIBOR and the PRAs,may be

modern tonnage younger than five years reflect-

credit card statement, your mortgage note, and

a good thing to have, we doubt that such a sys-

ing the high cost basis of the assets. It does not

so on) and energy prices as reported by the

tem will ever be widely recognised or followed,

come as a surprise then that there are few data

PRAs (that is, check your heating oil bill, and

or even be considered consistently accurate

points in the sale and purchase market, and

so on). However, in shipping any inaccuracies

and dependable. And, as a reporting asset price

a great deal of the existing data points, espe-

in presenting asset values, whether inadvertent

mechanism in shipping, it will be hard to attract

cially for modern tonnage, are neither “trans-

due to the bias of the reporter or purposefully

the scrutiny of regulators and investigators for its

parent” (mostly bi-lateral, off-market deals) nor

due to cognizant error, are only pertinent for dis-

accuracy or lack thereof.

“clean” (vessel employment or soft financing or

cussion and academic purposes.

“compulsion” to sell may be involved).

First of all, the shipping markets are just too

For instance, where vessel valuations are

small to matter, as compared to the finance

Several investment banks, research and

required,such as by banks for loan documenta-

and energy industries. After all, there are no

advisory firms, ship brokerage houses, and so

tion purposes and loan-to-value clause testing,

standardised underlying assets (all vessels are

on produce regularly asset value tables. In a

rarely is there a reference to a certain index

different, even sistership vessels – just take a

similar manner, the Baltic Exchange produces

(such as the BSPA) or standardised tables, but

look at modern Chinese vessels ordered at the

the weekly Baltic Exchange Sale & Purchase

each time the banks require fresh vessel valua-

top of the market).

Assessment (BSPA) index for five-year old ves-

tions, specific to each vessel, from recognised

Second, the market for shipping asset prices

sels only in certain asset classes. In active and

valuators. And once again, there is a very limited

is too parochial to even attract a derivatives

liquid markets, all these data points more or less

derivatives market in shipping or contractual

market. The derivatives market doesn’t seem

converge to the same numbers and, quite often,

obligations on asset prices that are normally set-

to have worked exceptionally well in the more

accurately reflect the market itself. However,

tled again indexed prices. And unlike the LIBOR

liquid freight market and the Forward Freight Agreements (FFAs). Third, in a very illiquid market such as at present, supplementation of actual data points based on actual sales with “professional estimates” may be an event of little consequence. Finally, no two transactions are identical – the nature of the buyer and the seller and the circumstances of each transaction are very important, or even more important, we may dare say, than the asset per se.

As proof, take a look at how fortunes were made (and lost) in shipping in the past decade(s): by taking a position against the indexed, the standardised, the consensus opinion one can find in the papers. After all, indexed prices are good for historical information and contract settlement, but that’s not how money is made.

Basil M Karatzas is the CEO of Karatzas Marine Advisors & Co, a shipping finance advisory and vessel brokerage firm based in Manhattan, New York, representing financial institutions and institutional investors, lenders and ship owners worldwide. Contact him email: Info@ BMKaratzas.com; Tel: +1 713 545 5990.

Opinion and comments in the article herewith

Any inaccuracies in reporting vessel asset prices is of little importance to the broader markets

26

theBaltic Summer 2012 www.thebaltic.com

are strictly the author’s.

BIMCO

Issues and ideas BIMCO’s Documentary Committee discussed a range of new contracts, clauses and systems at its spring meeting in Singapore

B

Committee,

topical issue of solid bulk cargoes that

list and that the ship is not a blocked vessel.

chaired by Karel Stes, gathered in

liquefy. The “Solid Bulk Cargoes that can

However, the reporting requirements proposed

Singapore for its spring meeting on

Liquefy” clause has been developed together

in the clause were felt by the Committee mem-

23 April. Its contract experts reviewed

with the International Group of P&I Clubs to

bers to go beyond what is normally expected in a

a number of new contracts and clauses deal-

address the very serious concerns about loading

commercial agreement.

ing with a variety of topical subjects, ranging

bulk cargoes that may be subject to liquefaction,

The Committee also reviewed a first draft of

from wind farms to solid bulk cargoes that can

but which are not categorised under the IMSBC

the WINDTIME time charter party being devel-

liquefy. A new standard pooling agreement

Code as such.

oped for the offshore wind farm industry. This

IMCO’s

Documentary

Of particular concern are iron ore fines

new contract is based on SUPPLYTIME 2005,

and nickel ore. In numerous cases shipowners

but with many updated provisions tailored to this

According to BIMCO’s chief officer for

and their representatives have been prevented

sector of the industry. The Committee provided a

legal and contractual affairs, Grant Hunter:

by shippers, sometimes by intimidation, from

lot of useful feedback and suggestions that will

“POOLCON is a voluntary and negotiable stand-

sampling cargoes prior to loading.

be relayed to the drafting team. It is hoped that

was adopted following two and half years of development work.

ard agreement for establishing tramp shipping

In addition to the adoption of a

pools and is based on the pool managers time

new contract and three new claus-

chartering in ships in their own name from the

es, the Committee also discussed

pool participants. We have had a lot of requests

a number of on-going projects, as

to develop a tramp pooling agreement in recent

well as adding several new tasks

years and I am delighted that we can now meet

to its busy work programme. There

that demand with the new POOLCON. We also

were two clauses considered by

plan to develop and publish later this year an

the Committee that were returned

‘agency based’ version of POOLCON, where the

to their respective drafting groups

pool manager manages the pool fleet.”

for further work because consenof

sus could not be reached on their

pooling agreements in relation to EU competi-

adoption. The clauses deal with hull

tion regulations, BIMCO is liaising with the

fouling and compliance with OFAC.

European Community Shipowners Association

As far as hull fouling goes, the

(ECSA) to set up a meeting with the European

Committee members felt that further

Commission’s

DG

consideration needed to be given to

COMP to discuss the key principles of the

the duration of idling as a result of

agreement prior to publication.

charterers’ orders, following which

Given

the

highly

sensitive

competition

nature

directorate

POOLCON will be published along with detailed explanatory notes during the summer.

the owners’ performance warranty would be suspended pending inspec-

Also adopted by the Committee were three

tion and/or cleaning of the hull by

new standard clauses covering EU advanced

the charterers. The proposed OFAC

cargo declaration requirements under voy-

Clause provides a mutual obligation

age charter parties; slow steaming under a

on owners and charterers to warrant

voyage charter; and a clause addressing the very

that they are not on the OFAC SDN

theBaltic Summer 2012 www.thebaltic.com

Grant Hunter

27

Corporate viewpoint Canfornav

Innovative approach Canfornav discovered the ideal system to guide it through the forthcoming ECA zone requirements

I

t is no secret that shipowners are under pres-

could easily disappear if the vessel’s voyage

This was interesting enough for us to look

sure to cope not only with the escalating cost

was extended due to bad weather. Therefore,

into AWT’s innovative, on-board weather

of fuel, but also stringent legislative and environ-

we felt that in addition to a fuel management

routing program, BonVoyage system (BVS),

mental demands, that will require large monetary

plan, we had to implement a proper voyage

which provides high resolution wind, wave and

outlays, in the near future.

management plan.

current forecasts to captains, with forecast

Fuel costs account for 70-75% of the

An article by John Eaton of Applied Weather

data for 10-16 days, updated four times a day.

daily running cost of a ship today and these

Technologies (AWT) caught our eye, in which he

Contained in BVS are tools to optimise voyages

costs will dramatically increase once the North

stated, and we quote in part:

that can save 5-8% of fuel costs on voyages.

American “ECA” zone comes into effect on

“Can a 7% savings from economical steaming

In addition, vessels can send their tracks to

1 August, 2012 where ships will be required to

increase voyage costs by 10%? Economical

AWT’s global view fleet management system,

burn fuels not exceeding 1% of sulphur in a 200

steaming is increasingly used by ships trading

where operators can view positions and overlay

nautical mile “wrap-around” exclusion zone, at

in a high fuel cost/low freight rate shipping

forecast conditions ahead .

a premium of between US$75-100 per metric

market. While there are benefits, operators must

tonne and more.

evaluate potential problems: the ramifications

Hausheer of AWT resulting in a trial period

After

various

discussions

with

Carl

All this is giving shipowners a massive

of speed instruction while considering weather

on board one of our vessels, we are pleased

headache and transportation managers are

conditions en route, and that fact that ships

with the results and our captains, who have

facing numerous challenges to use limited

sailing at slower speeds will spend more

been involved in this pilot project, speak highly

resources, in the most economical way, to

time at sea and are more likely to encounter

of its capability as an additional tool at their

reap the maximum benefits. The impact of

adverse weather.

disposal to plan optimal vessel route safety and fuel conservation.

fuel prices and slow steaming, to reduce

“In some cases, it may be prudent to

consumption, immediately jump to the fore,

consider alternate speed options during portions

Driven by necessity, shipowners are looking

but is this the optimum solution? Canfornav

of a voyage to avoid weather situations that

for ways to reduce costs and future success will

did not think so and felt that whatever gains

can lead to excessive steaming time and extra

depend on embracing innovative technologies to

made in fuel reduction by slow steaming

fuel consumption.”

accomplish this.

Mandarin in the Welland Canal

28

theBaltic Summer 2012 www.thebaltic.com

BIMCO a final draft of this contract will be ready to be

and then uploading that file to idea before being

contract template. Using a “trusted partner”

adopted in November.

able to insert it into a document. With the new

process, users will, in the future, be able to pro-

Virtual arrival was another issue discussed

version of idea, users will at last be able to cut

vide other nominated idea users with permission

at the meeting. It had originally been planned to

and paste text directly from any file on their

to review and amend their contracts. Each user

draft a slow steaming clause for voyage charter

desktop directly into a contract template in idea.

will be allocated a different colour coding when

parties that incorporated a virtual arrival provi-

Chief among the new features of idea 2 is

they make changes to the document so that the

sion. However, the drafting group quickly con-

“smart documents”. These are new versions of

negotiating process can easily be followed by

cluded that this would result in an overly com-

the 115 templates of standard contracts availa-

the parties until a final agreement is reached on

plex clause and that the issue of slow steaming

ble to idea users. The new templates guide users

the wording. This new feature will be released

under a voyage charter and virtual arrival should

through the completion of a contract by prompt-

later this year.

be dealt with in two separate clauses. The

ing the user with recommendations to insert

The new version of idea will be available to

Committee reviewed the draft virtual arrival

the latest versions of standard clauses, such

all users in May. There will be no change in the

clause and provided positive feedback to the

as War Risks, into older contracts; by ensuring

pricing structure for the pay-per-print features of

drafting group to assist it in the completion of

that users fill in certain important boxes, such

idea – it is a free upgrade.

this task by later this year.

as the choice of applicable law and arbitration,

The next meeting of BIMCO’s Documentary

Following the publication of the highly suc-

before they can finalise and print the contract;

Committee will be in November in Copenhagen.

cessful GUARDCON contract and the adoption

and by recalling details of names, addresses and

in Singapore of the standard Pooling Agreement

ship details previously entered by

and three new clauses, the Committee has freed

the user. Further enhancements,

up some resources to enable it to tackle new

such as built-in context sensitive

projects. The new projects will include a revision

explanatory notes for each clause,

of the BIMCO War Risks Clauses; a review of the

are under development.

Piracy Clauses; and the possible development

Another request from many

of some recommended clauses to address con-

users has been to allow the PDF

cerns with possible liability issues related to the

files produced by the system to

maritime Labour Convention 2006, in respect

be combined with other docu-

of crew provided by crew managers on a lump

ments, such as ships’ plans and

sum basis and charterers’ personnel employed

drawings, so that a single PDF file

on offshore vessels.

containing all the material relevant Resolution

to a particular fixture or agreement

Clause is also to be revised to incorporate a

can be produced. idea 2 has this

new Asian arbitration venue – Singapore – as

feature built-in which allows an

a fourth choice of arbitration venue under the

unsecured image file of the con-

clause (the others being New York, London and

tract to be produced that can be

a free choice).

easily added to another PDF using

BIMCO’s

Standard

Dispute

At the meeting in Singapore a new version of

software such as Adobe Acrobat.

its widely used online contract editing system,

Perhaps the most revolution-

idea, which was first launched in Beijing in 2001

ary feature of the new version

and is now regularly used by over 2,500 compa-

is the ability for more than one

nies. Users, on average, conclude around 2,500

subscriber to work on the same

contracts per month on idea.

Idea in action Idea 2 is built around Microsoft’s Word 2010 word processing application, which brings with it not only the power and stability of much more modern software, but also the ability to introduce features to idea that are beyond the capabilities of the current version. Possibly the feature most requested by users has been the ability to cut and paste text from other applications, such as e-mails and word processed documents.

The security software used to protect the underlying text of BIMCO contracts in idea has, up until now, prevented the cut and paste function from being enabled – which has meant that users wanting to add text to a document in idea have had to use a rather laborious process of copying the text to a file via the BIMCO website

theBaltic Summer 2012 www.thebaltic.com

29

Dry bulk

Battle of the giants The ongoing battle of iron ore giant Vale to trade its very large ore carriers in the Chinese market has taken another turn, as the Brazilian company retaliated by refusing to use Cosco’s vessels.

Plus: first quarter results and Chinese contracts

A

s the dispute between Vale and Cosco

freight rate environment improves. As we remain

been in the past. We remain returns-orientated

continues, Cosco said it expected

focused on preserving the ability to capitalise on

and will not seek growth at unjustified prices by

the impact of Vale’s refusal to use

future rate increases, Genco’s large and modern

assuming excessive market risk.

its vessels to be substantial, and

fleet positions it well to continue to provide mul-

told Bloomberg that it was considering filing a

tinational charterers with high-quality tonnage.”

“Going forward, our contracted cash flow, combined with our conservative capital struc-

complaint with the Chinese Ministry of Commerce.

In further results, Safe Bulkers net revenue

ture, put us in a position to execute quickly,

Cosco president Ma Zehua told the press:

for the first quarter of 2012 increased by 4% to

should attractive opportunities arise in a down

“Many recent steps taken by Vale aren’t rational.

$44.1m from $42.3m during the same period in

market, or to remain firm and benefit from the

We believe its decisions are based on its per-

2011. Net income for the first quarter of 2012

upside of a healthy market environment.”

ception that Cosco is doing something to lobby

decreased by 21% to $21.6m from $27.3m,

Meanwhile, an early May casualty was Italian

the government to not allow Valemaxes into

during the same period in 2011. Adjusted net

shipping company Deiulemar Compagnia di

Chinese ports.”

income for the first quarter of 2012 decreased

Navigazione, which was declared bankrupt with

While recent comments about the Valemax

by 16% to $22.9m from $27.4m, during the

debts estimated at about €860m. A judge had

vessels have centred on potential safety con-

same period in 2011. Vessel operating expenses

previously rejected an arrangement with creditors

cerns, the company’s decision to invest in

increased by 42% to $8.1m for the first quarter

proposed by the company.

400,000 dwt iron ore carriers is worrying dry

of 2012, compared to $5.7m for the same

cargo operators because of the potential

period in 2011.

However, there was some good news from the latest Moore Stephens survey of business

There was also a positive message from

confidence, which found that in the dry bulk

Costamare, whose CFO Gregory Zikos com-

sector all the indicators pointed upward. There

mented on the company’s first quarter results.

was a 15% increase from the all-time survey low

“Since the beginning of 2012, we have been

of 23% to a more optimistic 38%, in the overall

Results good and bad

prudently renewing our fleet by taking advantage

number of respondents who thought that dry

Dry cargo woes continued at Genco, which

of attractive steel prices and charter-free values.

bulk rates would rise over the next 12 months.

recorded a loss of $33.1m for the first quarter,

At the same time, we have reduced our re-

with the company continuing to pursue its short

chartering risk with only four vessels coming out

time charter strategy.

competition threat in an already weak market suffering from over-capacity.

of charter during the year, excluding two vessels

Bocimar contract

According to president Robert Buchanan:

for which the charterer has the option to extend.

The dry cargo concern of CMB group Bocimar

“During the first quarter, management main-

The charters for those four vessels account for

has recently concluded a contract for the

tained a short-term time charter approach in

less than 2% of our 2012 contracted revenues.

acquisition of two 176.000 dwt Capesize vessels

a challenging drybulk market. By securing our

“In March, we completed a follow-on public

on very competitive conditions. It concerns

vessels on short-term or spot market-related

equity offering with net proceeds of approxi-

two units under construction at the Chinese

contracts, combined with an efficient cost struc-

mately $100m. The Konstantakopoulos family

Zhoushan Jinhaiwan yard. Delivery is scheduled

ture, we expect to generate significant operating

participated by buying 10% of the shares. We

for June 2012. The ships will be named Mineral

leverage and drive future performance when the

will be selective in our investments, as we have

Hope and Mineral Faith.

30

theBaltic Summer 2012 www.thebaltic.com

Heavylift and Offshore

Heavylifts muscle in Heavylift companies have been benefiting from investments by oil, gas and power companies as well as port development.

Plus: transportation projects and the world’s largest stinger ramps

T

owned

he Russian heavylift market has been

Experienced operator

going from strength to strength.

offices and branches in 38 countries.

Russian heavylift operator Sovfracht was

In 1992, Sovfracht was reorganised into a

invest-

established in 1929 by the council for work

joint stock company as part of the Sovfracht

ments of the private and state-

and defence of the USSR as exclusive general

Group – one of the Russia’s largest independ-

agent of the Soviet Merchant Marine with the

ent transportation services providers, operating

monopoly for chartering tonnage.

in nearly all segments of the transportation mar-

The oil

total

and

volume

power

of

companies

of

Russia in 2010 was 688 billion roubles – 19% up on 2009 (580 billion roubles). In 2011,

Up to 1991, Sovfracht provided freight

ket (including rail and container freight forward-

the total volume of investments by oil, gas

transportation of USSR foreign trade and was

ing, ocean freight, port infrastructure, project

and power companies increased by 54% com-

a structural division of the Ministry of Merchant

cargo and heavy lift logistics), with cargo turno-

pared to the previous year, totalling one trillion,

Marine of the USSR, the exclusive broker and

ver of 31 million tons and revenue of over €1bn,

60 billion roubles according to Sovfracht.

lines operator for all the Soviet fleet, and also

with a nationwide network of branches, foreign

The forecast for 2012 is one trillion, 139 bil-

the exclusive agent for Soviet shipping abroad,

subsidiaries and 1500 employees now.

lion roubles, and for 2013 it is one trillion, 126

with more than 400 companies, representative

Delivery of heavylift cargo to Vankorskoe

billion roubles.

Investment by Russian oil companies in modernisation and reconstruction will amount to about 1.5 trillion roubles by 2015. In particular, Rosneft expects to spend about 302 billion roubles; Surgutneftegaz some 261.5 billion roubles; Lukoil more than 200 billion roubles; Slavneft 1,015 billion roubles; and Bashneft 314 billion roubles.

Total investment in offshore projects will reach 7 000 billion roubles by 2030.

The main consumers of heavylift equipment are located in the European part of Russia, but the points of intensive growth of heavylift transportations will be in uninhabited regions of Siberia and the Russian far east including offshore, according to Sovfracht.

The tendency to increase the weight of each heavylift unit, deterioration and, on occasion, a total absence of transport infrastructure in Russia make the problem of transporting heavy lift units a very real one.

Conditions of roads and vessels have been deteriorating and there are no sea-going heavylift vessels under Russian flag to call at Russian Arctic ports.

Ice class

theBaltic Summer 2012 www.thebaltic.com

31

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Heavylift and Offshore and Priobskoeoil gave the company unique experience of transporting cargoes through the North-East Passage and some of Siberian rivers with navigation two weeks per year only. “We are sure that our experience will be demanded on implementation of projects on the Arctic shelf,” said a company spokesperson.

“Now, we are engaged in federal transportation projects for ROSATOM, the Ministry of Defence and major oil companies that need investment into transportation infrastructure.

Our engineering centre, established in 1986, evaluates all possible means of transportation, surveys conditions of the route – roads, bridges, river depth and navigation equipment, railway crossings and berths – and reconstructs, reinforces or build new infrastructure, including roads and temporary berths.”

To realise this project, the company is increasing its fleet and starting negotiations for three special river barge newbuildings, and bareboat charter a HL-vessel.

Stinger ramp shifting With a fleet of 16 heavylift vessels, SAL provides customised and reliable sea transportation solutions for all types of project cargoes, including heavy machinery, equipment for the oil and gas industry, (offshore) wind energy, cranes

Geraldton

and floating cargo.

SAL was awarded the contract to trans-

which the module carriers like Dockwise and

others familiar with the difficult conditions at the

port the largest stinger ramps ever built from

the seven other deck carriers later needed to

port expected it to take at least 10.

Rotterdam to Singapore. MV Annette carried

use for discharging of the modules. SAL was

Despite the challenging conditions, the SAL

out this challenging shipment in April 2012. For

bidding against Jumbo and Biglift, but due to

team managed to perform a safe and very

the oversized cargo with a unit weight of up to

an aggressive pricing strategy was awarded the

efficient operation. Thanks to the high stability

880 tonnes and dimensions of up to 42.50m ×

contract, worth in excess of US$15m. Regine

characteristics of Svenja and the skills of the

15.10m × 18.00m, SAL’s engineering depart-

was the vessel which SAL nominated for the

vessel’s master and crew, all modules were

ment designed a complex understructure for

Gorgon project.

discharged to their position in just five days –

weight distribution on deck.

The project in Geraldton was successfully

accident free, and with no damage to the cargo.

Both engineering and manufacturing of the

completed in February 2012. MV Svenja has

weight spreading system had to be done in a

completed the transportation and positioning

So what are the prospects for further port

very short time. The stinger ramps were then

of five wharf modules weighting up to 700 tons

work? According to Eike Hemp, operations

loaded and discharged by floating crane.

for the new iron ore export facility (berth

manager for SAL Heavy Lift Australia, oppor-

In Singapore, the stinger ramps will be

number 7) in the Port of Geraldton. The mod-

tunities are particularly good in the remote

assembled by Keppel Shipyard in order to com-

ules were loaded in Thailand and transported to

locations of Australia, where qualified labour

plete the building of MV Castorone, which will

site in Geraldton, where they were discharged

is rare, and to which locations it is difficult and

become the world’s largest pipe laying vessel.

on to stabbing piles.

expensive to transport construction machinery and materials.

Heavylift operator SAL has also been work-

Two major issues had to be overcome in

ing on two projects at Gorgon and Geraldton .

order to make this happen. First, an innova-

Port developments offer potential for SAL

Among the trademarks of the fleet are its

tive mooring solution had to be developed to

and other heavylift companies. Large parts, like

high crane capacity of up to 2,000 tonnes SWL

ensure a safe and stable position for the vessel

concrete caissons, wharf modules and berth

and their speed of 20 knots, imperative for the

alongside the unfinished berth. Second, the

dolphins, can be pre-fabricated and shipped

safe delivery of time-sensitive cargo.

Port of Geraldton is very exposed to swell and

to the site.

Sune Thorleifsson, senior director of the

statistically only one in four days is suitable

Future port projects in Australia that might

project department at SAL Heavy Lift’s head-

for heavylift crane operations. Therefore, any

be interesting for the company include: Port

quarters, explains that the Gorgon project was

low swell windows had to be used to ensure

Hedland SW Creek, the Geraldton berth 6

awarded by Chevron to Boskalis, to Murray &

completion on time.

extension and James Price Point (for Browse)

Roberts and then to a local forwarder for the

The target to complete the operation was

caissons and wharf dolphins for the ro-ro jetty,

six days, but the Geraldton Port Authority and

theBaltic Summer 2012 www.thebaltic.com

as well as the Wiggans Island Coal Terminal.

33

Salvage

Salvors take the bull by the horns Efthimios Mitropoulos has praised the efforts of salvors in protecting lives, property and the environment as the number of operations rises

F

ormer IMO secretary-general Efthimios

self confidence attempt what sometimes looks

the accident happened nonetheless. Once the

Mitropoulos

impossible or unachievable – and most of the

evacuation was completed, the parties turned to

time you succeed”

the salvage industry – “most certainly you know

saluted

the

efforts

of

salvors at the International Salvage Union’s Associate Members day, saying

Although the number of ships lost and

better than me how difficult and complete the

that the services of the salvage industry cannot

pollution to the marine environment has declined,

operation to salvage what is left from that once

be overestimated.

Mitropoulos said that the danger of an accident

proud and majestic ship is going to be”.

“While you may not be very popular when

with serious repercussions on human life,

Mitropoulos paid tribute to salvors and crews

shipping goes about its business uneventfully, it

property and the environment is always there,

who, he said, did not hesitate to risk their lives

is to you and your specialised service everybody

“either because something goes dramatically

in order to save others, safeguard property

turns at time of crisis – to safeguard life and

wrong on a ship or because of the omnipresent

and prevent pollution under the spotlight of

property at sea and to protect the marine

fear of a human error”.

public and political scrutiny. He expressed anger

environment,” Mitropoulos told members. “It

Commenting on the Costa Concordia

that salvors could occasionally find themselves

is when others admit there is little they can do

accident, Mitropoulos asked who would have

facing criminal prosecutions when they should

that you take the challenge on, take the bull

expected the ship to ship to hit the rocks

instead be praised for their work.

by the horns and with sheer determination and

on a calm evening in the Mediterranean, yet

Salvage services by International Salvage

2011 ISU pollution prevention survey

34

theBaltic Summer 2012 www.thebaltic.com

Salvage 2011 ISU pollution survey

Union members rose last year compared to

tonnes of potential pollutants salved per year.

ISU members. The Lloyd’s Open Form salvage contract continued to be the most widely used

2010 according to the ISU’s annual pollution

In 2011, the major change was a significant

prevention survey released to coincide with

decrease in the quantity of “other pollutants”

the event.

salved – down 75% from 257,158 tonnes in

Some 71 services were carried out under

Although the number of services increased,

2010 to 63,338 tonnes this time. However, the

other salvage contracts – a major increase

the quantity of pollutants salved overall was

figure for 2010 was larger than is typical due

probably as a consequence of the Japanese

down on 2010, despite a significant rise in most

to salvage services provided by ISU members

Tsunami of March 2011. The number of wreck

categories. The overall decrease from last year

to two vessels carrying large cargoes totalling

removals in 2011 was up to 17 from niine the

is explained by the 2010 numbers, including two

170,000 of kerosene which is recorded by ISU

previous year.

large oil product tanker cargoes.

under the “other pollutants” category.

The total of all pollutants salved in 2011

The quantity of crude oil salved went up by

was 496,331 tonnes, compared with 574,386

32% from 195,300 tonnes in 2010 to 258,647

tonnes in 2010 – a fall of 14%. The average

tonnes in 2011, which is a more typical figure

annual figure for the 17 years for which data

than that of the 2010 survey.

is available continues to exceed one million

There were 221 services carried out by

contract, with 55 services (57 in 2010).

Four other types of salvage contracts were used and 82 services were carried out on a fixed price or daily rate basis.

A total of 23 casualties needed to be lightened of all or some of their pollutants by ship-to- ship transfer, a slight decrease on 2010.

PICTURE Pollutants salved in the past year

theBaltic Summer 2012 www.thebaltic.com

35

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Pre-MBA (optional) Module 00

Accounting and international economics

18-20 Sept. 2013

Copenhagen Denmark

23-28 Sept. 2013

Copenhagen Denmark

02-06 Dec. 2013

Copenhagen Denmark Copenhagen Denmark

Shipping as a Business and a Market Module 01

Shipping as a business and a market + Leadership

Understanding the Global Environment Module 02 Module 03

Supply-chain management – new logistical challenges International economics and market analysis + Leadership

10-15 Feb. 2014

Focus on Maritime Issues Module 04 Module 05

Ship design 07-11 April 2014 The maritime legal framework Operational management and information technology 23-28 June 2014 + Leadership

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Investment analysis, risk management and finance

01-05 Sept. 2014

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International marketing and organization Introduction to ISP Process Managing strategy and change Introduction to Industry Analysis + Leadership

03-07 Nov. 2014

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12-17 Jan. 2015

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18-20 March 2015

Graduation

08 August 2015

20-22 May 2015 05-07 August 2015

Copenhagen Denmark Copenhagen Denmark Copenhagen Denmark Copenhagen Denmark

Shipmanagement, crewing and education

Titanic technique How does the way the ship’s loss was investigated in 1912 compare to today’s accident investigation techniques?

Plus the importance of mentoring, a new training series and key performance indicators

R

ear Admiral John Lang, former chief

in apportioning blame”. One hundred years ago,

for not responding to the Titanic’s rockets.

inspector of marine accidents for the

he said, people wanted stories of heroes, but

Blaming the Californian, and effectively one man

UK’s Marine Accident Investigation

also scapegoats and somebody to blame. “In

– Captain Lord – for the great loss of life was a

Branch said that while he was in the

many ways not much has changed, instead of

“monstrous miscarriage of justice” in view of the

role he took an interest in the Titanic and found

heroes and self sacrifice we have scandal, hand-

British Board of Trade failure to regulate for an

himself comparing the way the ship’s loss was

held video cameras, trial by media and the fear of

adequate number of lifeboats.

investigated in 1912 with the way accidents are

being prosecuted”.

investigated today.

This, he told PYNDA delegates, set an

“The Titanic foundered not just because

unfortunate example that persists to this day,

Speaking at the Plymouth Nautical Degree

of excessive speed, hubris, the intervention of

namely the compulsion to pin the blame for any

Association (PYNDA) conference at the IMO

J Bruce Ismay or even a poor lookout. It was

accident on the master and “too often charging

in April one question that concerned him was

created by a number of factors, all coming

him with a criminal offence. Criminalisation of

what a modern investigator might make of the

together to create the accident chain that is

the seafarer is, in my opinion, the least helpful

evidence and whether, given today’s techniques,

a common denominator in every accident,

measure of all to improve safety at sea. I won’t

an investigator would reach the same conclusions

Lang said.

go so far as to say it does nothing to improve

as 100 years ago. The techniques he had in

While he said he was not going to dissect the

safety, but the aim pour encourager les autres

mind were “for the investigator to be led by

original Titanic findings, he did take issue with

is a poor substitute for an in-depth analysis as

the evidence, have no preconception as to the

one aspect of the outcome, notably the targeting

to what went wrong and, more importantly, why.

outcome, eschew hindsight and have no interest

of the cargo ship Californian for special blame

“The great weakness of apportioning blame is it gives the prosecuting authority a wonderfully warm feeling that it has satisfied the political need for heads to roll and yet does hardly anything to uncover the real underlying reasons as to why the accident has happened.”

The premise that 80% of accidents at sea are caused by human error is common. However, according to Admiral Lang, “the reference to error is a curious one, as it suggests that the problem is entirely due to a stupid and unforgiveable mistake by one person. Whenever human error is identified as a cause, the instinctive solution today is to sack the poor man involved, bring in new regulations or fit another computer.”

Despite huge improvements in technology, training and awareness of crew needs, “we still don’t really understand the human factor in the maritime world.” He suggested that what needed to happen was learning more about the psychology of crew members, how they responded to information with which they were presented and removing some of the pressures under which they work. “So often, we do nothing

Dealing with the human factor (source Videotel)

38

theBaltic Summer 2012 www.thebaltic.com

Shipmanagement, crewing and education more than pile on the commercial pressure give

accident proved, personal video recordings were

learn from the accident or “will it be another case

[the crew member] another DVD to watch in his

appearing on TV screens while the event was still

of ‘all’s well, it’s only human error and somebody

cabin and deny him shore leave.”

be played out, he said procuring “instant and

has been fired’,”.

On sighting the iceberg that caused the Titanic accident, the first officer of the watch

seriously misinformed analysis of what might have happened”.

Mentoring matters

ordered to go hard starboard. “How you think

What will benefit safety at sea most is to bear

the officer of the watch should react if, for even

in mind that no accident is caused by a single

André le Goubin of London Offshore Consultants

good reason, he had to give the same order in a

event. “We need properly trained, independent

described himself as “a mariner with a concern”.

modern cruise ship doing 20 knots plus?”

investigators to find out what went wrong.

He told the PYNDA conference that he believed

He cited the accident in 2006 involving the

The compulsion to apportion blame, and even

that the underlying cause for accidents and

Crown Princess when an officer corrected what

worse, criminalise the seafarer is aggravating

incidents aboard vessels today was due to a lack

he thought was a malfunction and put the wheel

the problem not helping it. It is persuading some

of knowledge, which was traditionally passed on

hard over. The result was a list of 24 degrees and

mariners to cover up what they have done and

from one to another through mentoring.

298 crew and passengers were injured.

that is where the problem lies”.

He conducted research as part of a

Reports said the incident resulted from

“Safety at sea could be greatly improved

master’s degree with a view to showing that

human error and the National Transportation

by having casualty investigations carried out

a contributory factor to marine accidents was

Safety Board of the US found a lot that was

by investigators that have no vested interest

a lack of knowledge gained from professional

wrong, Admiral Lang said. Princess Cruises

in the outcome and are totally independent of

on-the-job experience and knowledge not being

took measures to prevent it happening again

the regulators. Evidence given to investigators

transferred from senior to junior officers on

and “everybody went home happy, except the

needs to be treated in complete confidence

board modern merchant navy vessels. It was,

second officer who, I believe, lost his job. There

and it should be mandatory to have findings

and still is, his aim to engage the industry in a

must be something wrong with the system

made public. Investigators need to understand

conversation about mentoring and the transfer

whereby the officer of the watch, who may feel

the human element in a marine environment,

of experiential knowledge, he said. He defined

the need to put the wheel hard over for whatever

he added. Technology, he said, has made a

mentoring as “the act of sharing knowledge

reason, but hesitates to do so because of the

massive contribution to improving safety “but I

without a designated reward”.

possible consequences.”

sometimes think that we have forgotten the man

The key element, he said, is to learn from an

who has to live with it.”

In researching responses to the question of what was the most significant lack of

accident and make real improvements to safety

IMO has to do more to make sure that

knowledge that leads to accident or incidents,

at sea. Turning to the Costa Concordia, Admiral

investigations are properly carried out. In the

he expected to see issues like application of

Lang said it would be naive to think that we

case of the Costa Concordia, the question he

collision regulations, standards of certification

will never have another marine disaster. As the

said he wanted answered was whether we shall

training and reliance on technology, to be some of the issues raised. Although these responses were made in research, 53% of respondents cited “lack of feel, seamenship, intuition,

practical

knowledge

and experience”.

Other examples of responses included “ships’ officers have ceased to be trained to think and act independently, make decisions based on their own judgement and be accountable for them”. Inability to act intuitively and inability for modern officers to use their own senses, for example sight and sound as well as their brains to make decisions, were also cited.

The North of England P& I Club recently highlighted the number of claims at anchorage and the lack of understanding of anchoring issues, Captain le Goubin told delegates. There was a need to indentify barriers to the exchange of information between senior and junior crew members.

Language, he said constituted the greatest barrier on ships and the problem was more prevalent

Costa Concordia

theBaltic Summer 2012 www.thebaltic.com

39

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Shipmanagement, crewing and education on vessels with two nationalities than on vessels

Key performance indicators

companies’ and vessels’ performance. Now

with multinational crews as both sides would

The Shipping Key Performance Indicator Project,

established as the independent, not-for-profit

tend to speak in their own language. One

initiated by InterManager but now administered

KPI Association Ltd, the project is working with

important factor Captain le Goubin said was

by the independent KPI Association Ltd, has

a wide range of industry stakeholders and aims

to have a common language spoken in the

passed an important milestone.

to develop a standard for ships’ performance

mess room and to try and bring everyone

Performance statistics from more than 1,000

measurement that is common to the industry.

vessels are now being inputted into the project’s

The data that each company inputs is

website – enabling the KPI system to produce

completely confidential and cannot be accessed

lack the experience and knowledge to pass on

informative

by any other user of the service. However,

down the line. By reintroducing mentoring, it

measurements for the industry.

together socially.

The challenge occurs when senior officers

and

meaningful

performance

the combined data enables the KPI Project to

was possible to introduce knowledge transfer

Captain Kuba Szymanski, on behalf of the

as old as seafaring itself and get back to a

KPI Association, said: “This is excellent progress

brighter future, he believed.

for the project and indicates a great deal of

calculate industry averages to enable companies to benchmark their vessels’ performance.

The KPI Project is a voluntary industry

industry involvement and support. By collating

initiative that:

performance data from a wide range of shipping

• provides user-friendly tools that can more

Leadership and team working

companies, we are able to calculate key

effectively identify areas to focus on for

Accident investigation is a painstaking and often

performance indicators to enable benchmarking

internal

painful process and, more often than not, the

against industry averages. The more information

companies engaged in ship operation

outcome is a raft of new policies and measures

we have, the more accurate these indicators are,

to avoid reoccurrence. Yet, if well-thought-

which will help to ensure the standards within

out and established company procedures are

our industry are kept high.”

followed in the first place, tragic consequences can be avoided.

In response to the renewed focus on training in this area, Videotel has launched a new training

Norwegian Research Council, Marintek and Wilhelmsen ASA, the Shipping KPI Project standard

tools

improvements

in

activities • provides a more effective communication platform of ship operation performance to

Started by InterManager, together with The

developed

performance

for

measuring

internal and external stakeholders • increases transparency on quality, safety and environmental performance in ship operation • enhances governance in ship operation.

series, “Leadership and Team Working Skills”, which takes as its foundation the importance of good resource management and how it can be achieved.

“With continuing improvements in technology, human factors feature more and more frequently in the causal chain,” explains Nigel Cleave, CEO of Videotel Marine International. “Forty years ago, the average cargo ship was manned by 40-50 crew – nowadays, even on VLCCs, we are seeing crews numbering in the low twenties.

Individuals are required to operate ever more efficiently adding further pressure on board.

This series addresses many of the key issues defined by the STCW and SOLAS conventions, which provide a framework for safe and effective working practices.”

Produced in conjunction with Steamship Mutual, Leadership and Team Working Skills is aimed at all sea-going personnel, having special relevance to the work of the watchkeeping officers in both deck and engineering departments, and is available on DVD and Interactive CD-ROM. Topics include: the voyage plan; bridge and engine room watchkeeping; working with pilots and resource management and accident prevention. There is also a module featuring case studies of five incidents where the bridge team failed to keep the ship out of danger as a result of poor resource management. Incidents are re-created using actors and showing the data available to the bridge team. The audience are invited to view each incident and then to stop and analyse what went wrong and discuss how things could have been done better.

Captain Kuba Szymanski

theBaltic Summer 2012 www.thebaltic.com

41

FFA

Reducing the risk Steady trading volumes.

Plus: route assessments and FIS bunker swaps

T

he use of FFAs has significantly reduced

would otherwise fall due on that date. Section

FIS bunker swaps

the risk of taking on tonnage and FFA

2(a)(iii) therefore suspends a Non-Defaulting

Meanwhile, Freight Investor Services has

trading volume has been steady since

Party’s payment obligations to protect it from the

expanded its commodity broking business into

January 2009 even if proprietary trad-

credit risk of paying a party that may be unable

cleared, over-the-counter bunker swaps. The

ing activity is down, according to Georgi Slavov,

to fulfil its payment obligations in return. The

new service comes in response to escalating

managing director of global research at ICAP.

Court of Appeal’s judgment provided guidance

bunker prices which are hurting shipowner

The FFA market has established itself as

on the effect of this suspension and, in particular,

margins at a time of historically low freight rates.

a useful tool in recent years, he told del-

whether it extinguishes the obligation to make

The new FIS offering will include three fuel

egates at the recent PYNDA conference at the

payment or suspends it and, if so, for how long,”

oil contracts: Singapore 380 centistokes (CST),

International Maritime Organization.

the law firm said.

Singapore 180 CST and Rotterdam 3.5% sul-

While in an upturn everyone will benefit, mak-

“The Court of Appeal’s judgment has clarified

phur barges FOB. In contrast to existing swaps,

ing money in a downturn is much more prob-

several much-debated aspects of the Master

these contracts will be traded in lot sizes of

lematic, he told conference delegates. Modern

Agreement and has provided clarity to deriva-

just one tonne, enabling easier access to these

day operators are proving extremely success-

tives traders. The judgment has been welcomed

markets for smaller players such as shipowners

ful, he says because while operating ships is

by ISDA and, to the extent that it protects the

who need to manage their fuel cost risk for small

nothing new, the way business is being done

expectation interest of parties who enter into

fleets or even individual vessels.

has changed, with the deployment of shipping

derivatives transactions, should be welcomed by

FIS managing director John Banaszkiewicz

market hedge funds. Freight rate levels are

the market in general. It is not yet known whether

commented: “Today’s bunker prices are more

evidently important for the investor because he

there will be an appeal to the Supreme Court.”

than five times greater those seen 10 years

needs cash flow to justify the rate of return on

ago. Market participants cannot afford to ignore

the investment and therefore it is very important

this cost. Interest in trading bunker swaps has

Route assessment

become much stronger recently, with many of

There has been a steady increase of hedging

Two World Container Index route assess-

our clients asking us to help out.

using paper contracts through the FFA market.

ments, covering Los Angeles to Shanghai and

“FIS is delighted to offer this innovative brok-

“While people might talk about the level of FFA

Rotterdam to Shanghai will now be cleared by

ing service, which will enable any counterparty,

trading falling from 2007 and 2008 levels, when

LCH.Clearnet. The addition of clearing, which

whatever their size, to trade as many or as few

you consider the bank trading has been cut

provides risk management for over-the-counter

bunker swaps as they want.”

off due to new regulation, volume has actually

container freight swap trades, has been made

“For the first time, the market has access to

stabilised,” he said.

in response to increased demand to manage

bunker risk management with live prices via our

freight price risk and reflects the growing market

multi-commodity trading screen, making these

acceptance of the WCI.

swaps simple and easy to trade,” he added.

for bank financing.

FFA action

WCI director Richard Heath said: “From its

Court decisions on the interpretation of the 1992

foundation, the World Container Index has been

ISDA Master were handed down by the English

working closely with freight buyers and sellers to

Risk management strategy

Court of Appeal in April when the appeal from

ensure that our products satisfy their needs for

According to OW Bunker’s Serge Laureau,

the judgment in Lomas v JFB Firth Rixson was

risk management. These first cleared contracts

manager for risk management sales: “There

heard with those from Pioneer Freight Futures

represent another step forward for the WCI and

are a number of hedging instruments that can

Company Limited (in liquidation) v Cosco Bulk

for the growing container freight derivatives mar-

be used as part of a holistic risk management

Carrier Company and two others. ISDA was

ket, helping to bring new solutions to a wider

strategy that is tailored to meet the specific

granted permission to intervene.

number of shippers, carriers and intermediaries.”

needs of a customer’s business, as well as their

According to Holman Fenwick Willan: “The

The contracts are similar to Asia-Europe

most interesting issue arising in the appeal

routes already listed by LCH.Clearnet, but differ

“Our focus is on creating a total end-to-end

concerned the interpretation of Section 2(a)(iii)

in that WCI contracts are marked in FEU rather

procurement strategy for our customers, based

of the Master Agreement, which states that if

than TEU, to more accurately reflect the physical

on their immediate and future requirements,

a party is affected by an Event of Default (as

market. Contracts are settled monthly and initially

continuously looking at locking in costs,

defined in Section 6), the other party is under

will be available across the front three months,

managing cash flow and maximising their levels

no obligation to make payment of sums which

four quarters and front calendar periods.

of profitability.”

42

theBaltic Summer 2012 www.thebaltic.com

appetite for risk.

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Environment

Going Green?

Whether there will be enough low sulphur fuel to meet the new regulatory deadlines is just one issue that came under discussion at the recent International Bunker Conference in Oslo

S

hipping faces immense challenges

technology with HFO, MGO and perhaps LNG

cannot burn that fuel coming into the ECA?

with a whole raft of new environmental

for newbuildings.

What if it isn’t possible to source 1% sulphur fuel?

measures, for which in some cases they are not prepared.

“Putting your toe in the water is expensive

Supply of low sulphur fuels is evidently

and Wilhelmsen has been doing this with scrub-

a source of considerable concern. As Adam

Melanie Moore, vice president of environ-

bing technology. Regulations set the playing

Titchie of Shell Trading put it, the provisions

ment at Wallenius Wilhelmsen Logistics, told the

field and we have to play there,” she said. Some

of Marpol Annex VI are not to be taken lightly.

International Bunker Conference in Oslo, organ-

operators will choose to play at the regulatory

While he says that at a global level there is not a

ised by BI Norwegian Business School, that

limits and others will chose to add on their own

supply problem for low sulphur at present, sup-

there are five big regulatory changes coming.

environmental regimes, she believes.

plies may not be in the right area. “If you know

Aside from global SoX regulations and SoX

Some “what ifs” include if Marpol Annex

where the 0.1% fuel is, we want to know,” he

regulation in emission control areas or in individ-

VI is not translated into national legislation or

told the conference. The big shift will be to

ual states like California, there are also NoX reg-

is not enforced, she said. And she raised the

a global cap of 0.5% in 2020.

ulations coming into play from 2016, the start of

question of what happens when entering the

He told the IBC conference that desul-

GHG regulations with the Ship Energy Efficiency

North American ECA if the sulphur content on

phurisation is a costly business, as will be the

Management Plan and the Energy Efficiency

the bunker delivery note matches the regulatory

introduction of scrubbing technology. To make

Design Index from next year. Another layer of

requirement, but for quality reasons the ship

the transition to creating low sulphur fuel might,

regulation will be the Ballast Water Treatment Convention which is undergoing ratification. The fifth issue was particularly sensitive sea areas, ship strike, noise and black carbon regulation.

Wallenius Wilhelmsen Logistics consumes between 500,000 and a million tonnes of fuel, and Moore estimates that it will cost $1m per vessel (with 60 vessels) to fit ballast water treatment systems. The company is also taking a look at what it needs to do to comply with NoX regulations.

The group is having to consider where the price will go not only for HFO, but also low sulphur and MGO, as well as the use of scrubbing technology. Another consideration is where the company will grow in the future and if it will be shifting from the northern to the southern hemisphere, where the regulations differ.

Moore says the company believes that it is possible to come up with solutions, but not a single solution, with a mixture of scrubbing

44

MV Don Quijote

theBaltic Summer 2012 www.thebaltic.com

Environment according to some estimates, involve $100bn of capital. The cost of turning high sulphur fuel oil into gasoil is of “about the same order of magnitude”, he said. “Shipping companies would prefer not to use gasoil, they would prefer to use the low sulphur fuel oil, but it isn’t going to be there”.

The alternative is scrubbing technology, in itself an expensive option, he said, with a $20-$30bn price tag put on achieving scrubbing technology according to some analysis.

Asklak Suopanki, solutions life cycle manager at Warsila Finland, outlined the various options available. These included fuel switching, which was flexible and required a small investment, but meant higher operational costs in the ECA.A complete change to MGO would be the most convenient solution, he said, but operating costs would be high and there was a question of availability. LNG is another solution, but infrastructure is not there at the moment.

Rear Adm. Kevin Cook, director of Prevention Policy for the U.S. Coast Guard, signs a

According to Arnaud Leroy, senior project

memorandum of understanding with the Environmental Protection Agency while the

officer at the European Maritime Safety Agency

EPA’s Cynthia Giles (centre), the assistant administrator for the Office of Enforcement and

(EMSA), some members of the European parlia-

Compliance Assurance, and Gina McCarthy, the assistant administrator for the Office of Air

ment are thinking of introducing an ECA similar

and Radiation, wait to add their signatures in a ceremony,

to that around the US coast for Europe because of concerns over competition, especially for the short sea sector.

the scrubbing route, LNG, or biofuels.

According to Simon Chattrabhuti, director

According to Jeffrey Lantz, director of com-

and head of tanker market analysis at Clarkson

There have been some problems with the

mercial regulations and standards at the US

Shipbroking, a huge amount of refining capacity

0.1% sulphur content for ships at berth in the

Coast Guard, Marpol Annex VI is very important

is being shut down in the US on the east coast.

EU. In Europe, so far, there is no global cap in

to the US and the US only ratified it when the

From 2011 to the first part of 2012, there has

EU regulations. Revisions to the EU regulation

IMO amended it to introduce stricter standards.

been the equivalent of 1m bpd of refinery shut

include aligning it with IMO guidelines with two

As far as the North American ECA is con-

downs, he told IBC delegates. The Philadelphia

schemes proposed for abatement technology.

cerned, the USCG will not be going 200 miles

refinery is expected to shut down a month

The introduction of the 0.1% requirement in the

offshore to inspect ships to ensure they are in

before the North American ECA comes into

ECA resulted in a “battlefield” and a lot of pres-

compliance with fuel regulations, but it will be

force, meaning that bunker fuels will have to be

sure to get the EU to go back to the IMO and

important that ships can demonstrate compli-

imported in greater volumes. On the US Gulf ,the

change its stance, Leroy said. EMSA was work-

ance and if discrepancies are found “they will be

opposite is true, with refining capacity increases.

ing with all sectors to try and see what support

taken further”. Commenting on fuel availability

The problem is that the Jones Act prohibits mov-

they need, he concluded, whether they go down

he said that if ships came in with non compliant

ing supplies from the US Gulf to the east coast,

fuel, the USCG would seek to establish what

unless this is on a US flagged ship. The US

steps were taken to prevent that from hap-

Gulf, Chattrabhuti said, could supply product to

pening. As the new ECA rules come into force

Europe and other sources he mentioned include

on August 1, he advised ships to keep “robust

the Middle East and India, which he believed

logs” and “good fuel samples”. He added

was the real potential source going forward.

that ships should be “upfront on how they stand on compliance”.

MV Boheme

Jane Dahl Christensen , executive vice president of physical supply at OW Bunker, said the

As in northern Europe, concerns have already

key issue to be faced with the new regulations

been raised about the effect the North American

was preparation and owners and operators

ECA will have both on short sea shipping viabil-

needed to start thinking of what to do. While

ity and the environment. US short sea operator

the use of scrubbing technology is one possible

CSL International presented a submission to

solution, there was nervousness in the market

a House of Representatives sub-committee in

about whether manufacturers would be able

April raising concerns about the ECA and calling

to meet the deadline. In addition, she said the

for changes.

desulphurisation process was expensive and

According to CSL president Paul Cozza,

will have an impact on pricing. There is also a

compliance with ECA requirements in 2015

perception in the market that there is a high

would jeopardise the short sea shipping

proportion of substandard fuel in the market.

industry and prices for compliant fuels could

She believed a lot of smaller suppliers will

double. CSL wants to see the ECA reduced from

have difficulty in securing supplies of the low

200 miles to 50 miles for 0.1 % fuels in 2015.

sulphur product.

theBaltic Summer 2012 www.thebaltic.com

45

Corporate viewpoint Advanced Polymer Coatings

APC continues tank coating success

MarineLine® 784 coating system used for chemical tankers now also specified for the growing product tanker market

A

dvanced Polymer Coatings (APC),

tect against a wide range of chemical cargoes,

formation of free fatty acids that can attack and

Avon, Ohio, USA, has developed a

including methanol, acetic acid, and caustics.

corrode exposed coating surfaces.

Bioethanols, derived from the fermenting of

successful business by providing the

A growing business

sugar cane, sugar beet, sorghum, corn, wheat

coating system to line and protect the tanks of

The company is now realising further MarineLine®

and cassava, or starch crops, remain as a single

chemical carriers. Today, more than 350 mari-

growth by serving the product tanker market.

chemical compound. A problem occurs if small

time tankers are employing MarineLine® to pro-

Shipowners are now retrofitting and refurbishing

quantities of water are dissolved in gasoline/

older product tankers to carry a host

bioethanol blends, causing a highly corrosive

of newer cargoes such as biofuels,

situation within the tank.

high-performance MarineLine® 784

a particular sector growing at an

for Chemical/Product Tankers THE tank coating system for carrying CPPs, PFADs, Methanol, and Bio-Fuels.

Rely on MarineLine® 784 tank coating to handle a wide range of cargoes carried by chemical and product tankers. MarineLine® 784 offers enhanced corrosion resistance compared to phenolic epoxies or zinc silicates, at a similar cost. It is faster and easier to clean, with higher cargo purity.

Advanced Polymer Coatings Avon, Ohio 44011 U.S.A.

estimated 15% annually. However, due to the corrosive nature of the cargoes and their detrimental effect and breakdown of conventional tank

coatings,

shipowners

are

concerned about carrying biofuels.

MarineLine®’s

unique

corrosion-

resistant coating is an ideal answer.

Biofuels comprise two categories, each with separate corrosive issues: Biodiesels

or

FAMES

(fatty

acid methyl esters), derived from vegetable

oils

(palm,

coconut,

rapeseed, soyabean and tallow, and

animal

fats),

have

higher

viscosities and are more unstable than conventional diesel fuel. Water contamination is a key problem as FAMES absorb water through seawater ingress, tank washing residues, humidity in tanks, and

+01 440-937-6218 Phone +01 440-937-5046 Fax www.adv-polymer.com

46

other sources. Water can promote

The newly coated MarineLine® 784 cargo

hydrolytic reactions, leading to the

tank coating

theBaltic Summer 2012 www.thebaltic.com

Corporate viewpoint Advanced Polymer Coatings by structural issues, such as weld seams, edges, corners and others. That is why it is vital to ensure surface preparation is done in accordance with recommended specifications, and care is taken to avoid contamination during the coating application.

Following

the

pre-work,

blasting

and

application phases, the cargo tanks are heat cured with forced hot air, to exacting specifications, to fully cross-link the coating to provide unmatched chemical resistance.

Inspection of the coating process is performed during the entire process of the application by experienced, qualified personnel, to ensure the cargo tanks have been coated to high quality standards. After final inspection and A

MarineLine®

approval, the vessel is ready to carry cargoes

inspector spark testing the top coating application

recommended by the coating manufacturer after leaving the shipyard.

The most effective solution is to line the tanks

all excellent environmental advantages. Faster

of the product carriers with MarineLine® 784.

cleaning also leads to prompt turnaround, so

MarineLine® 784 is provided with a semi-

This coating uses a tightly knit, cross-linked

chemical carriers can go back into service

gloss finish, in either standard grey, or a new

organic-inorganic polymer structure to create a

quickly, maximising the usage of the vessels,

ivory colour. The coating is offered in 5 gallon

nearly impermeable barrier. The coating resists

another green benefit.

(19 litre) and 1 gallon (4 litre) kits with catalyst.

chemical and corrosive attack from a wide range

MarineLine® 784, which is sometimes

of aggressive cargoes and assures product

referred to as ‘liquid stainless steel’, is coated

purity from port to port, virtually eliminating

directly onto the carbon steel substrate of the

tainted cargoes from occurring, a real problem

ship’s tanks. This replaces the need to fabricate

for conventional coatings that are trying to

tanks made of stainless steel, which can be

For more information on the MarineLine®

carry biofuels and other cargoes such as CPPs,

very costly. It is estimated by APC that a carbon

784 tank coating systems, contact:

PFADs, and methanol.

steel tank coated with MarineLine® 784 costs

Advanced Polymer Coatings

less than one-sixth of the price for an equivalent

Avon, Ohio 44011, USA

A proven resource

tank fabricated in stainless steel, thus further

Tel: +01 440 937-6218

MarineLine® 784 is already the chosen coatings

preserving resources of the shipowner and

www.adv-polymer.com

solution in the chemical tanker industry, carrying

shipyard.

thousands of different types of aggressive chemicals, including the full range of IMO chemicals.

Proper application a key

Many benefits separate MarineLine® 784

One of the most important aspects

from other types of coatings, and also from

to the success of MarineLine®

stainless steel tanks. These include ease of

784 is proper preparation and

cleaning, assurance of high cargo purity, and the

application. APC has developed a

flexibility to carry and then switch many different

six-step application programme to

types of cargoes. The market for MarineLine®

ensure the tanker owner has many

784 continues to expand as more shipowners

years of profitable service with the

and chemical producers in the industry realise

vessel. These steps include:

the high performance and versatility of this

1.

Pre-blast preparation

protective coating for handling hazardous

2.

Blasting

cargoes.

3.

Spray application

4. Inspection

A ‘green’ coating The

MarineLine®

784 cargo tank lining system

5.

Heat cure, and

6.

Final inspection.

delivers on green principles that have become

Not all other tank coating

so necessary in today’s business environments.

manufacturers employ these steps;

The extremely smooth, hard, slick surface of

however, they have been proven

MarineLine® 784 makes tank cleaning an easy

very effective for MarineLine®.

process. During port changeover, no extensive

Every coating faces inherent

cleaning chemicals are needed to wash the tank

problem areas within a cargo tank.

walls, thus greatly reducing the use of cleaning

In certain locations, breakdowns

chemicals, requiring less fuel consumption for

may be more prevalent; areas

cleaning equipment, and lowering emissions,

where excessive stress is caused

for Chemical Tankers THE tank coating system for handling aggressive chemical cargoes.

Transport all IMO cargoes, especially aggressive acids, solvents and alkalis, with MarineLine® 784 tank coating system. The coating uses a virtually impermeable polymer-based technology to ensure cargo product purity from port to port.

Base Coat

Top Coat

Advanced Polymer Coatings Avon, Ohio 44011 U.S.A.

+01 440-937-6218 Phone +01 440-937-5046 Fax www.adv-polymer.com

theBaltic Summer 2012 www.thebaltic.com

47

Oxford Analytica

Rough ride on the Panama canal The troubled expansion of the canal continues six months behind schedule, putting the completion deadline of 21 October in doubt

W

Analysis

corporate headquarters of choice (see Panama:

the Panama Canal is running six

The outgoing head of the Canal Authority

Business hub aspirations face obstacles –

months behind schedule, and

(ACP), Alberto Aleman, has been playing down

17 February, 2011).

may not meet the completion

the impact of scheduling problems, saying that

Labour conflicts that have dogged the

deadline set by the government of 21 October.

any delay in finishing the expansion work will be

undertaking from the beginning have also been

Some reports say the new sets of locks

a matter of months. However, this is optimistic:

much more severe than expected. Workers’

may not be tested until April 2015, although

• Deficiencies in the quality of the concrete

considerable bargaining power was reflected in

the situation will not be entirely clear for

mix to be used in the two sets of locks,

the government’s decision in January to inter-

several months.

which have slowed down the entire project,

vene in a dispute and decree a 17% increase

were unforeseen, and have led to some

in the minimum pay rate, after 6,000 workers

questioning of the government’s decision

downed tools for six days. However, this

What next?

to accept the lowest bid for the work

initiative has not stopped conflicts:

The Canal administration is putting pressure on

submitted by the Grupo Unidos por el

• In March, a group of workers announced

the contractors to make up delays, with threats

Canal (GUPCSA) consortium, made up of

an indefinite strike over the demand for

of financial penalties of up to $54m if targets are

Spanish, Italian, Belgian and Panamanian

a new collective agreement that would

missed. It will also need to mediate in a continu-

companies. GUPCSA won the locks con-

have included an increase in overtime pay,

ing series of labour conflicts, which continue to

tract in July 2009 with a bid $36m lower

which was called off when the workers’

slow the project.

than ACP’s own estimate.

union, Suntrac, negotiated an agreement

ork on expanding the capacity of

• Pouring the concrete should have begun

with GUPCSA executives.

last January, but this operation was delayed

• Over 4,000 walked out this month in protest

Impact

until July. GUPCSA now says that it is bring-

at poor safety conditions after the death of

• Official statements that delays in finishing

ing in more equipment and skilled techni-

a worker.

expansion work will be a matter of months

cians to recover the lost time.The ACP says

are optimistic.

it has asked the consortium several times for an updated timetable for completion of

Economic concerns

this work, presumably without any result.

Panama is highly dependent on world market

Delays in completion of the expansion project

conditions for continuing growth, but so far has

would not be fatal and some US Gulf and East

emerged relatively unscathed from the global

Coast port authorities scrambling to upgrade

economic crisis. Cargo volumes handled by

their facilities to receive Post-Panamax ships

the Canal reached a record 322 million tonnes

may welcome them – as well as those on the

in 2011, according to Aleman, which expects

West Coast seeking to remain competitive with

around 330 million tonnes to pass through the

the Canal. However, they would undermine

waterway this year.

• Government bargaining power is unlikely fully to overcome labour conflicts that have dogged the undertaking.

• Corruption allegations risk undermining foreign investor confidence.

“Delays in completion of the expansion project would not be fatal”

48

the businesslike image of the government of

As far as Panama is concerned, continuing

President Ricardo Martinelli, which has based

dynamism in the Chinese economy and some

its growth strategy on turning Panama into

sound economic performances in Latin America

the

largely have offset low growth in the US and

logistics

hub

of

the

Americas

and

theBaltic Summer 2012 www.thebaltic.com

Oxford Analytica • One recent outbreak involved dockers

Rome of an Italian businessman, Valter Lavitola,

employed by the Panama Ports Company

who has close links to former Prime Minister

Nonetheless, some aspects of the economy

at the ports of Balboa and Cristobal, who

Silvio Berlusconi – who had been close to

are giving cause for concern (see Panama:

only agreed to call off a three-day strike and

Martinelli.

Martinelli faces long-term challenges – 8

enter negotiations with employers after the

• Italian prosecutors have linked Martinelli’s

December, 2011):

government agreed to arbitrate in the dispute.

name, along with that of the mayor of

Europe (see Panama: Growth has minimal downside risk – 13 May, 2011).

• Rising inflation has been a factor behind

Panama City, former Interior Minister Roxana

growing labour discontent. Panama has no

Mendez, to bribes that Italian companies

central bank and Martinelli has conceded

Corruption allegations

allegedly paid through Lavitola to secure

that the government is virtually powerless to

In addition to problems with Canal expan-

a number of contracts awarded by the

do anything to control consumer price rises,

sion and rising prices, the latest in a series

which were 6.3% higher in March than a

of corruption scandals, which have seriously

• These included one for the construction of

year earlier, according to official figures. The

dented Martinelli’s initial popularity, has embar-

four prisons for 176 million dollars – which

government consequently has been forced

rassing global ramifications (see Panama:

eventually fell through – and another for the

to intervene in conflicts over wage demands

Government faces corruption pressure –

supply of 250 million dollars’ worth of radars

as they flare up.

8 August, 2011). It involves the recent arrest in

and helicopters by three companies belong-

Panamanian government.

ing to the Italian Finmeccanica group.

Martinelli has denied improper involvement with Lavitola, saying that he was merely a facilitator of his relationship with Berlusconi, and has accused the Panamanian opposition press, notably La Prensa, of conspiring to undermine his

government

and

damage

Panama’s

international image by reproducing information published in Italian newspapers. For its part, La Prensa has quoted evidence from former Italian Foreign Minister Franco Frattini that Lavitola and Martinelli were extremely close. The Panamanian leader, who insists that Lavitola had no business interests in Panama, was forced to send the acting foreign minister, Jose Raul Mulino, to Italy to clarify matters.

As Martinelli was elected on an anti-corruption platform, his alleged involvement in a succession of scandals is deeply embarrassing. Implications could be far-reaching. Foreign investment has been pouring in to Panama’s booming economy, and Martinelli himself has been praised on trips to Europe and elsewhere.

However, following the arrest of Lavitola he felt obliged to cancel a scheduled trip to a World Economic Forum meeting in Mexico, where he had been due to meet prospective investors.

© Oxford Analytica 2012. All rights reserved. No duplication or transmission of this document is permitted without the written consent of Oxford Analytica.

Contact us: www.oxan.com/about/ contacts/ or call +44 1865 261 600 or in North America 1-800 952 7666 Panama is highly dependent on world market conditions for continuing growth

theBaltic Summer 2012 www.thebaltic.com

49

marsh.com

SUPPORTING THE RAPIDLY DEVELOPING MARITIME SECURITY SECTOR Rapid market developments in the growing maritime security industry have led to increasingly divergent insurance requirements. To meet the needs of the sector, Marsh, a global leader in insurance broking and risk management, has launched a new insurance facility that provides comprehensive insurance coverage for the Private Maritime Security Company (PMSC) industry.

Developed to support the requirements of the Security Association for the Maritime Industry (SAMI), Marsh’s new facility meets the insurance recommendations of the International Maritime Organization (IMO) circular 1405 and also complies with the insurance requirements of Guardcon.

In the United Kingdom, Marsh Ltd. is authorised and regulated by the Financial Services Authority for insurance mediation activities only. Copyright Š 2011 Marsh Ltd. All rights

Partnering for impactSM Marsh is one of the Marsh & McLennan Companies, together with Guy Carpenter, Mercer, and Oliver Wyman.

Marine SAMI Advert Half Page_2012_124x178_FINAL.indd 1

30/03/2012 14:35:38

Maritime security

Counting the cost of piracy With incidents on the increase in West Africa, what are the steps being taken to counteract piracy?

O

ne hundred and two incidents of

Somalia continues to dominate figures, with

Elsewhere, there has been a noticeable

piracy and armed robbery have been

43 attacks, including the hijacking of nine ves-

increase in the number of armed robbery attacks

reported for the first quarter of 2012,

sels and the taking hostage of 144 crew. Four

in the Indonesian archipelago, up from five in the

with dangerously increasing num-

dhows and a fishing vessel, softer targets that

first quarter of 2011 to 18 in 2012.

bers in West African waters, according to figures

make for ideal motherships, were among the

The report shows that all types of ves-

released in April International Maritime Bureau’s

highjacked vessels. Somali pirates were also

sels in Indonesia have been targeted and that

(IMB) global piracy report.

responsible for the hijacking of a Panamax bulk

the attacks aimed at theft from those ves-

carrier at the end of March.

sels. Fifteen vessels were boarded – 13 while

In total, 11 vessels were reported hijacked worldwide, with 212 crew members taken hos-

But while the number of 2012 incidents and

anchored, one while berthed and one underway.

tage and four crew killed. A further 45 vessels

hijackings are less than reports for the same

Five crew members were taken hostage overall.

were boarded, with 32 attempted attacks and

period in 2011 (97 incidents, 16 hijackings), it

14 vessels fired upon – the latter all attributed to

is unlikely that the threat of Somali piracy will

either Somali or Nigerian pirates.

diminish in the short to medium term unless

GUARDCON contract

further actions are taken.

BIMCO’s long awaited GUARDCON contract

Ten reports were received from Nigeria at the beginning of 2012, equalling the same

The report attributes the reduction in over-

was published at the end of March providing

number reported in Nigeria for the whole of last

all attacks to the disruptive actions and pre-

a standard contract for the employment of

year. A further attack in neighbouring Benin has

emptive strikes by the navies in the region,

armed guards on vessels transiting piracy

also been attributed to Nigerian pirates. The

which disrupted numerous pirate action groups,

danger zones.

reports include the hijackings of one product and

emphasising the importance of the navies in

one chemical tanker, between which 42 crew

both deterring and combating Somali piracy.

Management

time security companies (PMSC) with a clearly

“Nigerian piracy is increasing in incidence and

Practices and the increasing use of privately

worded and comprehensive standard contract

extending in range,” said Pottengal Mukundan,

contracted armed security personnel (PCASP)

to govern the employment and use of secu-

Director of the IMB Piracy Reporting Centre,

also contributed to the decrease in the hijack-

rity guards, with or without firearms, on board

which has been monitoring piracy worldwide

ings. In the incidents reported to the Piracy

merchant vessels. While BIMCO would not like

since 1991. “At least six of the 11 reported inci-

Reporting Centre, more vessels with PCASP

to see the use of armed security guards on

dents in Nigeria occurred at distances greater

have been reported in the first quarter than

ships becoming institutionalised, it recognises

than 70 nautical miles from the coast, which

those not armed.

that while the industry awaits a more perma-

members were taken hostage.

suggests that fishing vessels are being used as motherships to attack shipping further afield.”

The

application

of

Best

This brand new contract has been developed to provide ship owners and private mari-

Until a comprehensive legal framework is in place, however, owners and masters should

nent, long-term solution, armed guards currently provide an effective deterrent to piracy attacks.

Two crew members were killed when armed

make sure that they follow the International

BIMCO’s Chief Officer Legal and Contractual

pirates boarded their bulk carrier 110 nautical

Maritime Organization and industry guidelines on

Affairs Grant Hunter said: “In response to ship

miles off Lagos, Nigeria.

the carriage of PCASP.

owners’ increasing demand for security services,

Attacks in Nigerian coastal waters have

“The EU announcement to expand its anti-

an ever-growing number of private maritime

further resulted in at least three crew kidnapped

piracy mission to target pirates ashore is another

security companies have entered the market to

from their anchored vessel.

welcome move that could further threaten the

meet that demand.

“While the number of reported incidents in

Somali piracy model,” Mukundan said.

“In the absence of a standard contract for

Nigeria is still less than Somalia, and hijacked

As of 31 March 2012, suspected Somali

these services, ship owners and their P&I Clubs

vessels are under control of the pirates for days

pirates still held 15 vessels with 253 crew mem-

are currently faced with the difficult and time

rather than months, the level of violence against

bers as hostages, with an additional 49 crew

consuming task of assessing large numbers of

crew is dangerously high,” added Mukundan.

members being held hostage on land.

contracts from these security companies, all with

theBaltic Summer 2012 www.thebaltic.com

51

Corporate viewpoint Marsh

Security counsel The Marsh SAMI facility brings administrative simplicity – and peace of mind for PMSCs

M

any shipowners are concerned that their

to provide a solution for these various industry

together a jigsaw of policies written independently

Private Maritime Security Companies

groups. From the outset, Marsh focused on

by different insurers nor do they have to try to

(PMSCs) may have inadequate insurance to pay

creating a comprehensive product that not only

work out whether the EL and the MEL dovetail.

for any problems they may bring to a transit.

provides PMSCs with the insurance provision

They can now demonstrate a common cover

Shipowners need to know that their PMSC can

they need, but the inherent reassurances

and enjoy the financial advantages of being part

stand behind a hold-harmless, pay for damage

and comfort leading shipowners require from

of a “bulk buying” group.

they cause and care for their people, regardless

prospective security providers.

For many, Marsh’s facility will be a welcome

of the reason.

This is good news for the industry and will help PMSCs continue to play a vital role in ensuring safety at sea for our shipping fleets.

Conditions in the maritime security industry

development, as there are a number of PMSCs

have changed rapidly in the past 12 months.

that are barely clad in insurance terms through

For example, new flag state requirements mean

gaps in their policies and gaps between policies.

that today unarmed escorts are an exception,

Those that begin to fail audits, find themselves

For more information, contact:

despite being commonplace one year ago. In

struggling to win business, or face a suit for

Nick Roscoe at nicholas.roscoe@marsh.com

response, various organisations that support

underinsurance now have an alternative that has

Mark Jonas at mark.jonas@marsh.com

shipowners and PMSCs have sought to

been designed to avoid these pitfalls.

establish best practice in a number of fields,

The Marsh SAMI facility brings administrative simplicity. The PMSCs no longer have to patch

including insurance.

Valuable contributions have been made by the Security Association for the Maritime Industry (SAMI), the International Maritime Organisation (IMO), the Baltic and International Maritime Council (BIMCO), insurers and P&I Clubs and a number of other organisations, which include many of the PMSCs themselves.

The BIMCO ‘Guardcon’ insurance conditions consolidate many of the conclusions of these initiatives.

However,

an

insurance

clause

can never be as comprehensive as a policy and a PMSC intent on carrying out a “tick box exercise” against these clauses can potentially leave themselves and their client exposed. While, at times, shipowners may fail to identify the exclusions and limitations that underwriters have imposed, there are greater dangers arising from the different interpretations that may be applied.

In the context of Guardcon, questions that will be addressed differently in different policies

include

whether

the

costs

of

medical evacuation are included in “medical expenses and repatriation costs”; when the employers’ liability cover should become effective and cease; what a “reasonable deductible” is; and which clause insures the PMSC for their negligent advice that leads to a kidnap and ransom situation.

Marsh’s SAMI facility, developed with a number of the key stakeholders, is designed

52

Nick Roscoe

theBaltic Summer 2012 www.thebaltic.com

Maritime security varying terms and conditions. GUARDCON’s

the solution may turn out to be the problem. This

last year. The number of successful hijackings

objective is to create a contractual benchmark

issue was highlighted by the shooting of two

fell last year, but eight people were killed and

for the employment of security services so that

Indian fishermen by Italian security personnel

hostages were held for 178 days on average.

minimum levels of insurance cover for PMSCs

on the Enrica Lexie. GUARDCON, he said, was

While the number of attacks is increasing, the

are established and that adequate safeguards

not intended to be a substitute for the proper

number of successful hijackings has fallen and

are put in place to ensure that liabilities and

exercise of due diligence when selecting a

there has been an increase in violence against

responsibilities are properly addressed and that

security company.

the crew. At the time of the presentation, there were 277 maritime companies in the security

all necessary permits and licenses are obtained.”

business, with 60% based in the UK.

According to BIMCO Deputy Secretary General, Søren Larsen: “GUARDCON has been

Vulnerable groups

With the growth in the number of maritime

drafted in just a little over three months by a

According to Sven Hanson, director of the PGS

security companies at the moment, it is worth

small group of experts drawn from ship own-

Group, when researching who the vulnerable

looking into the management of the company

ers, underwriters, P&I Clubs and lawyers with

people were in piracy attacks, maritime security

and what their experience is. “There are manag-

first-hand experience of working with con-

providers were one of the vulnerable groups. He

ers of security companies out there without any

tracts for security services. The speed at

told Maritime London delegates: “If you under-

experience of security at all. That is something to

which GUARDCON has been drafted is a con-

stand the nuances involved in the reputational

be concerned about,” said Hanson.

siderable credit to the drafting group whose

risk and the use of force, the very last that you

While the use of armed guards on ships has

members devoted many long hours free of

want to do is engage with lethal force a pirate on

been successful in avoiding hostage-taking,

charge to the project.”

the open sea”.

there is always going to be the test case and the

The arrival of contractual guidelines on the

What is needed is to project strength and

Italian incident is one “genre of a test case”, he

use of armed guards on vessels has come

have systems and operating procedures in place

said. The possibility that pirates will adapt their

at a time when the number of security firms

to deter the pirates, he said. “Strength and guile”

tactics, techniques and procedures also needs

employed by the industry is multiplying rap-

was the name of the game, as well as a projec-

to be considered, he said, and whether security

idly. Introducing a presentation organised by

tion of force and “a demonstration that you have

firms are capable of emergency response plan-

Maritime London, Stephenson Harwood partner

an intent to protect the vessel, while having the

ning.

Alex Davis said it may be that the placing of

guile to know that lethal force is the last thing

armed guards on merchant vessels will provide

you want to use.”

You need people who understand the tactical issues, Hanson said, but also people who

There were 237 Somali attacks last year, up

understand the reputational risks involved. The

While governments have given varying

from 219 in 2010. The largest ransom was paid

security person needs to understand “that the

degrees of support to the placing of armed

last year, which was $13.5m, with the average

last thing he wants to do is shoot a pirate dead

guards on vessels, there is also growing concern

ransom jumping 25% to an average of $5m

on a skiff. He is representing a multinational

a telling blow in the fight against piracy.

© IMO

Djibouti Code: IMO’s counter piracy programme

theBaltic Summer 2012 www.thebaltic.com

53

Expertise and understanding I

n 1980 RFIB set up business in the heart of the City of London, personal computers were

launched, Jimmy Carter authorised legislation giving $1.5 billion in loans to bail out Chrysler Corporation, and Björn Borg won his fifth

consecutive Wimbledon.

The world has changed a lot since then and so has RFIB. But one thing has remained constant – RFIB’s commitment to build business through personal relationships, listening to clients and building a deeper understanding of their requirements.

The opportunities and challenges that businesses face have never been greater than they are today. Factors such as globalisation, the regulatory environment and the pace of emerging technologies have all contributed to the changing environment in which RFIB now operates. As a successful and growing

together the capabilities of specialist service

However, the value of quality insurance has

business, RFIB works with clients of all sizes

teams, and drawing on networks and alliances,

to be matched by the quality of the insurance

across all geographies and markets to deliver

RFIB creates competitive and robust solutions

broker’s claims service. Its claims service marks

tailored risk solutions that meet and adapt to

for our clients. Solutions are anchored in know-

RFIB as a foremost marine insurance broker. It

their business objectives

how and delivered by a personal service.

has a team of qualified staff who offer a pro-

An established Lloyd’s broker with an

It is RFIB’s people, approach and capabilities

active claims service and can exercise influence

international network, RFIB is a British business.

that has earned the company enduring

to ensure prompt settlement of claims to clients

The company handles all classes of insurance

relationships worldwide with insurance and

in the shortest possible time.

and reinsurance broking together with risk

reinsurance companies, Lloyd’s syndicates and

management advisory services. By bringing

corporate clients.

Since 2008, there have been 167 reported hijackings of merchant ships and 78 reported

It is a proper analysis

crew fatalities. Periods of negotiations have been

of the risks to which an

extended and the sums paid for the release of

individual shipowner is

these vessels have been increasing.

exposed that marks the

RFIB has been at the forefront in assisting

personal care that RFIB

ship-owners against these potential perils. With

takes in ensuring that a

unrivalled access to the major Lloyd’s of London

client is comfortable with

syndicates specialising in this class and long-

the risks that are insured

standing relationships with some of the most

and those that the client

established maritime security companies, RFIB

chooses not to cover.

can facilitate the requirements of all shipowners.

RFIB

has

standing

long-

relationships

From single transits to longer multi transit arrangements,

RFIB

has

the

expertise,

with all of the major

understanding and client focus that sets it apart

international commercial

from other insurance brokers.

and

mutual

marine

insurers – including the P&I

clubs

they

are

–

whether

in

London,

Scandinavia, elsewhere

For more information, contact:

in Europe, the US and

RFIB Group Limited

the Pacific Basin. RFIB publishes

its

well-

respected

P&I

Report

annually,

which

gives

Marine: Nigel Russell – direct tel: +44 20 3004 2861 Email: nigel.russell@rfib.co.uk

a comprehensive analysis of this important insurance

K&R:

sector

Shane Ruddy – direct tel: + 44 20 7621 8359

for

shipowners

and charterers.

Email: shane.ruddy@rfib.co.uk

Maritime security company and their reputational risk and liability.”

but ultimately those costs will be passed on to

Selection and relevant maritime experience are

the end user”.

RFIB also does write land-based K&R policies, for individuals, for example in Latin America.

two issues, also the ability to rise above any

He cites as an example the case of the

It has been writing K&R for the maritime indus-

experience gained in the military, Hanson said.

Pacific Adventurer in Australia, where pressure

try for the last three years. Last year was the

Skills may also not be up to date: “If you haven’t

was put on owners the Swire Group to pay for

firm’s busiest year and this year has been a

picked up a weapon for five years, you will have

the cost of the clean up.

little quieter, perhaps because of the use of

skill fade”. The aim, he said was to get the

One of the problems, he suggests, is that

armed guards on vessels and also the advent of

pirates to turn round perhaps using laser target-

the shipping industry does not have one voice.

BMP 4 outlining best practices for those

ing rather than indiscriminate shooting over the

The logic of liability being limited is to make the

transiting the danger zones.

side of the vessel with an AK47.

environment one in which shipowners can trade

Commenting on the quality of armed guard

Another issue he raised is the fact that

reasonably, he said. Countries with a coastline

operations Ruddy said insurers will not agree to

the ship’s master is in charge and the secu-

benefit enormously from shipping, with the

insure all vessels, particularly if the freeboard or

rity personnel will have to take orders from him.

pendulum moving very much in the direction

speed is too low, but if they do offer coverage,

Movement of weapons around the world and

of “governments riding roughshod over inter-

they will offer a discount if there is a reputa-

the necessary licencing involved is another issue

national conventions”. In the case of the Rena,

ble security company on board. Underwriters

to be considered as is vetting of personnel. “It

costs are liable to be over $100m. He feels there

ensure that they have the required licences

takes a long time to vet every individual.”

must be one voice with political clout to take the

and therefore get on an approved list with the

industry’s part.

underwriters, so there is no incentive for owners

On the kidnap and ransom side, director of

to use a company that is not on the approved

Kidnap, ransom and liability

wholesale and direct Shane Ruddy is respon-

list because they will not get the discount,

Kidnap and ransom cover is evidently a key

sible for placing insurance for single transit

he explained.

feature of the current shipping environment,

vessels going through the danger areas, or multi

Eric Ashley Conway UK Managing Director

notably, but not exclusively, off the Somali coast.

transit deals for shipping companies against

of Protection Vessels International (PVI) said

RFIB was set up in 1980 and now, among its

piracy attacks.

“the maritime security industry is overseen by

other products, provides K&R cover to the mari-

RFIB does not get involved in the ransom

a patchwork of national, supranational and

time industry. It has also been building its insur-

negotiations, as underwriters put this work in

industry-led guidance, regulation and legislation.

ance side and Nigel Russell director, marine, has

the hands of specialist firms. There have been

As a result there are real concerns about widely

a number of concerns in this respect.

ransoms that have gone over the $10m mark,

divergent standards in the industry. The quality

The point Russell makes relates to liability.

but typically ransoms are not of that size, Ruddy

of service provision can vary from a highly pro-

There are a number of conventions that deal with

said, and they tend to be around the $5m region.

fessional, vetted, regulated and trained compa-

this including those covering pollution and wreck

“The insurances that we can easily offer are a

ny, to an opportunistic start-up that chooses not

removal. However, while governments are happy

$5m sum insured but we offer up to $10m. It

to comply with any existing standard and offers

to sign up to the conventions, when an incident

all comes back to capacity and risk appetite for

low cost maritime security to hard-pressedship-

happens on their own doorstep they put all sorts

underwriters.” To put together a $10m ransom,

owners.

of pressure on an owner in order to make sure

one would need a consortium as no single

“The IMO’s Intersessional Maritime Security

that they and their insurers pick up the whole bill.

underwriter would take on the risk, he explained.

and Piracy Working Group of the Maritime

“In the longer term, that is only going to

Associated costs would be added on to the

Safety Committee’s guidance and recommenda-

increase the cost of liability insurance, which is

ransom being typically about $2m-$2.5m. RFIB

tions on the use of Privately Contracted Armed

not only a problem for the ship owning industry,

places all its risk in the Lloyd’s market.

Security Personnel – 1405 and 1406 – represents progress However, until agreed, regulated and enforceable standards are brought in across the board, shipowners will still need to conduct significant due diligence and vetting to ensure the safety of their crews and vessels is in the best hands”.

According to Peter Cook of the Security Association for the Maritime Industry (SAMI), the total cost to the maritime industry of Somali piracy last year was $5.3bn. Speaking at the International Parcel Tankers Association chemical and product tankers event organised by Navigate Events in March, Cook was quoting from the Oceans Beyond Piracy 2011 report.

Costs included : • Increased speed $2.713bn • Security equipment and PMSC $1.112bn • Insurance $635m • Re-routing of ships $583m

© IMO

• Ransoms $160m SAMI estimates that there are more than 200 private military security companies in the Indian Ocean

theBaltic Summer 2012 www.thebaltic.com

• Labour $195m.

55

Risk management

Risky business Management of risk is central to the shipping industry, whether it is credit risk, protecting against rising fuel prices or the challenge of new environmental legislation

R

isk for some is an opportunity for oth-

incident and if this fails to satisfy them, or

on any casualty and the potential duty down the

ers, Georgi Slavov, managing direc-

does not identify causes, contributory factors

line to disclose any such document to opposing

tor of global research at ICAP, told

or measures to ensure that the incident does

parties – such as cargo claimants – in any

the PYNDA conference in April. Sharp

not reoccur, the oil major may withdraw

related litigation.”

deleveraging of the financial system has taken

“With practical and prudent steps any

chartering approval.

place in the years since the market collapse.

Hill Dickinson partner Ian Maclean says in

post incident report produced will be clear

Excessive debts combined with deleverag-

the newsletter that “in-house risk management

and accurate, but carefully worked so that it

ing mean less funds for lending, Slavov said.

plays a vital role in reconciling what can be

satisfies managerial and commercial require-

Lending is scarce and practically unavailable

conflicting obligations: the need to satisfy the oil

ments without laying the owner/operator open to

and the industry is beginning to feel the effects

majors request for a detail post-incident report

detrimental consequence should that docu-

of this.

There are challenges facing the industry going forward, he said, including the issue of climate change and global urbanisation – excessive debt is a risk. Protectionism is rising, “it is a possibility in difficult markets”. A “hard landing” in China he also considered as a risk, although an unlikely one. Sanctions, higher energy and food prices were also to be considered.

Climate change will also have its role to play, notably with phenomena like La Nina, which will cause above average rainful in Australia and Indonesia, with consequent disruption to the coal and iron ore markets.

Another form of risk management highlighted by law firm Hill Dickinson is that of reporting to oil majors following a casualty. As the company reports in its online newsletter covering marine, trade and energy issues, following a casualty, an oil major will expect the owner or operator to provide them with a detailed report of the

56

Georgi Slavov, managing director of global research at ICAP

theBaltic Summer 2012 www.thebaltic.com

Risk management ment become subject to disclosure in subsequent litigation,” Maclean warns.

Meanwhile, announced that its

it suite

Platts

in

February

had

expanded

of

European

forward-dated assessments oil

and

ucts, than

price for

crude

refined

prod-

adding 1,100

new

more data

points to more than 40 forward curves.

The launch of the Platts Valuation Hub means that instead of just being a provider of the risk data “we are also providing companies with the team of people who will do the valuations of their transactions. If a shipping company knows it wants to manage its risk and can’t hire the team to do it for it, it can outsource that work to us,” explains

Paul Waine

Paul Waine, director of risk purported to manage the upside risk, but where

side of it, but understanding that if the regulatory

Advising on how to set up a risk manage-

the market has fallen leaving them locked in to

rules are put in place that a bank undertaking

ment operation is something Platts can do with

a price to which they had not understood they

a hedge for a company which isn’t in a central

a small team, Waine said.

were locking in.

clearing arrangement would have to hold more

data services.

capital and therefore would charge more for

The ship operator looking for that advice

In terms of hedging market risk, it is a ques-

would build that into their own organisation

tion of identifying a suitable counterparty to

going forward. We always like to start with the

hedge that risk: “One of the things we would be

One of the concerns is that if it is more expen-

governance right from the top, that is a very

doing would be to identify that the credit issues

sive to enter into these transactions, it therefore

important message with any risk management

should be thought about.”

makes it less desirable to enter into them and

the transaction.

activity that gets into derivatives, whether physi-

This would be by guiding companies in

companies remain unhedged. One problem is

cal, futures, forwards, swaps or options and

the right documentation to use and also the

the fact that the industry is dealing with a situ-

be able to advise a firm on the effective way

way

ation that has not yet been fully defined, and a

to manage their risk, whatever risk profile the

that documentation.

business has got.

to

structure

credit

protection

into

The emphasis of Platts’ product is on how

regulatory regime whose implementation has been delayed, and which may well change again before it is finally implemented.

This service is tailored to the individual firm

to manage the market risk. “If you manage

and Platts can offer support through the initial

market risk and convert it blindly to credit risk,

stages of hedging activity and make sure it is

you have not done a very good job, so you need

embedded in the business, in a way in which it

to understand how to handle the credit aspects

Under pressure

will be successful.

of the transaction as well which for some com-

There has been a lot of pressure from the

panies can be very small, but for others can be

regulators and the government towards clearing

very problematic.”

transactions, particularly in the US and Europe.

Bad experience

Impact of new regulations has also to be

The question remains as to whether this will

Platts has been involved with a number of firms

considered, including the Dodd Frank rules in

that have had bad hedging experiences in the

the US and the European Market Infrastructure

Cost is one issue, which might put people

past and who want to understand why they

Regulation (EMIR) rules in Europe, which are

off, meaning they may undertake transactions

haven’t worked out.

bring the benefits that regulators believe it will.

aimed at financial transactions, but would require

outside the relevant regulatory regimes, or not

One of the issues is that companies might

in a lot of cases, derivatives to be put in place to

undertake the transaction at all .

be taking and managing risks that they do not

hedge physical oil transactions which might have

fully understand.

to be cleared centrally.

Platts has seen a this phenomenon in the oil

It is question of understanding that process

sector, notably in the transportation of fuel where

and the cost benefits of entering into a centrally

companies have undertaken transactions which

cleared operation as opposed to keeping out-

theBaltic Summer 2012 www.thebaltic.com

Waine warned: “Neither of those is desirable because they won’t be managing their risk, which might lead to more shipping companies going bust.”

57

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.

58

theBaltic Summer 2012 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

‘approval’ because our system vets each ship

It just makes sense for organisations to set a

and use our system to benchmark their vessels’

from scratch each time it’s nominated. New

common approach to marine risk management

performance, but to all owners and operators.

data is added every day so a ship’s rating may

across their business, not to scrutinise one type

The FAQs on www.rightship.com are a good

change from one nomination to another – which

of vessel more rigorously than another.

place to start.

of course is good news for owners, flags, class

How reliable is the data? And how can owners check and fix errors?

deficiencies and minimise risks. Also, customers

How does the environmental rating work?

can apply their own vetting criteria to determine

Similar to the risk rating, it analyses a range of

a ship’s suitability, which may have nothing to do

detailed data to give users a rating and other

RightShip acquires reliable data from many

with the Rightship risk rating – for example, ports

information they can use in vessel selection

independent sources, including IHS Fairplay,

and terminals may set specific beam or draft limits

and benchmarking. In this case the data is

casualty data, Port State Control and terminal

or receivers may have age or other restrictions.

based on environmental performance, so it

societies and others who are acting to remedy

performance information. Owners who are

The simplest answer is that owners make

customers can check the system any time,

their ships more attractive to our customers by

while other owners may have concerns raised

demonstrating good performance, associating

We offer a metric called the Existing Vessel

by charterers or other customers. We encourage

with higher-performing flags and class societies

Design Index, or EVDI, based on the EEDI for new

owners, whether customers or not, to give us

and attending thoroughly and quickly to any

ships but made more fair and reliable for vessels

more data if they wish and tell us if they think

identified deficiency. We’re happy to give owners

already operating. RightShip subscribers and

anything is incorrect.

more detailed advice any time.

others (through the www.shippingefficiency.org

helps customers meet sustainability policies and targets.

site) can use it to measure individual ships, and

How do owners get their ships recommended or ‘approved’ by RightShip?

Isn’t RightShip really designed just for dry bulk ships?

subscribers can also compare and benchmark

That was the original driver. When we started

our GHG Emissions Rating.

Remember that our rating is a signpost, not an

there were systems for tanker vetting, but on

Early days, but we’re pleased with the level

inflexible pass or fail mark. Our recommendation

the dry side there was no easy way of collecting

of customer interest in using these metrics. Of

comes down to whether the user, with our

the disaggregated data that was all over the

course, engine efficiency and bunker costs were

advice, believes the identified risks have been

world. However, we’ve always vetted tankers

already a focus in vessel selection decisions and

addressed or can be managed. A higher-rated

as well, adding value to existing regimes for our

charterparty rates, so users value data to support

ship is likely to be accepted more readily than a

customers, and are pleased to provide vetting as

those decisions.

lower-rated one, but, as mentioned previously,

a third party contractor under the most recent

This is a growing area of demand for data,

the lower-rated ship can be acceptable on further

OCIMF guidelines. In fact, RightShip’s online

advice and support and we continue to talk with

investigation, possibly including an inspection.

vets and inspections for tankers have both been

customers, peak bodies, regulators and other

growing significantly over recent years.

industry organisations about our system.

It’s also more complicated than a one-off

theBaltic Summer 2012 www.thebaltic.com

ships based on relative energy efficiency using

59

Shipbuilding

Backs to the future Developments in ice class ships have led to new ‘Stern First Ice Class’ rules. Plus: cuts in cruise industry orders and eco-tankers

R

ecent orders for ice-going ships have

LR’s Technical Manager for New Construction

seen an increased trend in the use

in Asia.

of podded propulsion systems and

The Stern First Ice Class rules offer the

Important aspects of the rule development effort for Stern First Ice Class were the validation of the rules with industry by leading icebreaking

following key interpretations:

tanker designers, key regulators and operators,

ing in ice, providing a unique capability to go

• The ship is considered as a bow first and

and the confirmation of the interpretation of reg-

astern, or stern first, so improving icebreaking

stern first vessel for application of ice class

ulatory and other rule requirements, and valida-

and reducing ice resistance.

rule requirements for hull and machinery

tion of strength level for the hull and propulsion

Lloyd’s Register (LR) has been very involved

• It is considered as a stern first ship in addition

unit with a review of the current fleet of double

in the development and understanding of

to a bow first ship for application of naviga-

acting ships. This enabled the experience of

requirements for stern first in ice. The Mastera

tion related rules and regulations

all ice class ships to be built into the rule

azimuthing thrusters for ships navigat-

and Tempera – 106,000dwt Neste-owned, so-

• For all other rules and regulations the rule is

called Double Acting Tankers (DATS) were built

applied considering the ship as a bow first

to LR Class in 2002 and 2003 at Sumitomo.

ship only.”

development process.

LR expects that more double-acting tankers will be employed in the Baltic. “If the

They regularly operate in the Baltic, stern first and independent from icebreakers in seasonal heavy ice conditions.

In harsher conditions, tankers dedicated to all-year Arctic operations, such as Sovcomflot’s Mikhael Ulyanov and Kiril Lavrov vessels, are also double-acting vessels that sail stern first through ice. These tankers, dual classed by LR with Russian Maritime Register (RS), will be used to shuttle crude from the Prirazlomnoye platform in the Pechora Sea to the Belokamenka storage and offloading ship moored off Murmansk.

Experiences from classing these tankers has contributed to the development of the first dedicated rule set for “Stern First Ice Class” ships, which was published by Lloyd’s Register in November 2011.

Key elements of the Stern First Ice Class rules include the use of standard operational scenarios to provide designers with a basis for prescriptive rule application that are validated with designers and operators of stern first ice class ships. They include the provision of a framework for alternative load scenarios, where unusual operations are envisaged and the interpretation of international regulations and classification rules based upon past precedents,” explained Robert Tustin,

60

Lloyds Register expects more double-acting tankers in the Baltic to cope with severe ice conditions

theBaltic Summer 2012 www.thebaltic.com

Shipbuilding periodicity of severe ice in the Baltic leads

consequence order intake is not enough to feed

tend to be higher. “Today 15% of the fleet (in

to more frequent occurrence of heavy ice

the specialised European cruise shipbuilding

lower berths) is over 20 years old and major

conditions, then the existing fleet of adapted

industry, which is suffering, in some locations,

refits are needed to extend the commercial life,

conventional tankers with ice class may not

a severe lack of work, also because of the re-

while 28% are aged between 11-20 years offer-

be able to operate throughout the winter

entering of far east competitors.

ing good opportunities for major refurbishments

“The present decline in new-building demand

[and] new interiors or retrofits and upgrades to

“Last winter, the Neste tankers demonstrated

lets us foresee that orders will remain well below

new safety features or introduction of new tech-

the advantages of the double-acting concept

pre-crisis levels (6/8 ships per year compared to

nologies for energy savings and better emission

for severe ice conditions being able to continue

12 on yearly average in the period 2004-2007)

controls,” Antonini said.

navigation season,” a spokesperson said.

operations when large numbers of ships were stuck in heavy ice conditions with insufficient

“Ships’ size increase can only marginally

icebreakers available to break out and escort all

According to Antonini, the introduction of

the commercial shipping in the Gulf of Finland.

more efficient production methods, still offering

This situation could possibly actually worsen in

customers ships of the highest quality, is vital to

future as higher volumes of oil are to be shipped

survive in a highly competitive market.

through a major new oil exporting terminal at

“It is no ordinary work in terms of complexity and value, but European shipyards and

mitigate this gap.”

This means implementing concepts adopted

their suppliers are well equipped for this kind of work.”

Going green

in other industrial sectors, “such as the applica-

Recognising the ever-increasing demand for

tion of lean manufacturing principles developed

more fuel-efficient and environmentally friendly

by the automotive industry and to stimulate inno-

vessels, leading tanker owner/operator, AET has

Cruise control

vation both in production methods and products

taken delivery of the first of four “eco-design”

European shipyards are facing a tough time as

in our wide network of suppliers, since their

suezmax tankers. These are the first Suezmax

heavy investors in tonnage, such as the cruise

contribution to cruise ship production stands at

vessels to be owned by the company.

industry, have reined back on orders.

80% of the value chain”, he said

Ust Luga.”

Built by Samsung Heavy Industries in Korea,

Speaking at the Seatrade cruise conference

In coming years, he said, “the cruise industry

the first 157,000 dwt vessel was delivered and

in Miami in March, Fincantieri chairman Corrado

will be affected by the introduction of up-to-date

named Eagle San Antonio at a ceremony on

Antonini said: “Notwithstanding the big potential

technical solutions on new platforms developed

26 April 2012. The remaining three sister ships

of the cruise industry, for the time being lasting

in line with the differentiation targets and the

will be delivered during the course of this year.

uncertainty about the economic scenario and

green and safety standards – a big chance for

AET has made a significant investment in

financial constraints make cruise lines more

the renewal and revitalisation of the sector. This

these new “eco-design” vessels to maximise fuel

cautious about their investment policy. As a

process requires a strong collaboration between

efficiency and to minimise harmful emissions.

shipowners and shipyards

Innovations include hull form optimisation and

with their suppliers’ network.”

de-rating of the main engine power for low load

However, new designs that

optimisation. The application of energy saving

are compliant with the up-to-

devices include saver fins, a star propeller and

date rules and requirements,

rudder bulb which will substantially reduce the

involve additional content and

amount of fuel used.

Fincantieri chairman Corrado Antonini

complexity. Consequentially,

Speaking at the naming ceremony, AET pres-

ship costs may be expected

ident & ceo Hor Weng Yew said: “Our partner-

to increase.

ship with Samsung, coupled with an investment

Fincantieri is a front runner

in industry-leading technology and innovation,

to secure a share in STX OSV,

has resulted in a new generation of vessels that

although the European yard is

deliver significant environmental benefits and fuel

not commenting publicly on

savings. This is good for the environment, good

the issue. STX Group, which

for our customers and good for our business.

took over Aker Yards four

“Our customers demand that we offer a

years ago, has announced

flexible service for the transportation of their

plans to sell a 51% stake

cargoes. Moving into the suezmax sector allows

in STX OSV. If Fincantieri

us to deliver a more rounded and complete solu-

is the successful bidder, it

tion to the world’s oil companies,” he concluded.

will put it in a strong posi-

The new suezmax tankers are AET’s first

tion as the deep sea drilling

owned vessels of this size and represent a

market expands.

significant step in AET’s continuing move to

Antonini has also stressed

rejuvenate and re-shape its tanker fleet. Other

opportunities in the field of

recent innovations include the introduction of

refitting and revitalisation of

two newbuild DP shuttle tankers, two newly

ships. New ships in the cruise

converted specialist marine capture vessels, a

fleet are both bigger and con-

fleet of the world’s first purpose built lightering

siderably more fuel efficient

support vessels and four newbuild VLCCs to

than the average ship in the

replace older tonnage in 2013.

fleet, so the returns for those

theBaltic Summer 2012 www.thebaltic.com

61

Consultancy and surveying

Surveying the future Consultancy and surveying work is a key part of ensuring the safety of the maritime industry and the crews that man vessels, but while there is an impressive network of experts available, concerns have been repeatedly raised about a shortage of trained personnel

C

onsultants BMT De Beer is just one

personnel from other industries. Others claimed

lacking, evidence unavailable, crucial pieces of

company that is actively taking steps

such a measure could increase the risk profile of

the jigsaw missing. Before meaningful legal advice

to combat an industry-wide shortage

projects and affect funding. Particular skills short-

can be obtained or strategies developed, it is

of experienced surveyors, putting in

age hotspots were identified in Brazil, Tanzania

sometimes essential that these missing jigsaw

and Australia.”

pieces be brought together. Our role in these

place a three-year strategic action plan aimed at

Peter Russell-Smith, Executive Vice President

cases is to identify and gather information – and

Business Development and General Manager of

in particular evidence – that will enable our clients

BMT De Beer says it works together with

GL Noble Denton, said: “The first few months

to determine liabilities with a high degree of con-

many other survey offices around the world.

of this year have revealed that the executives

fidence and so achieve a satisfactory and early

“The surveyors employed by these offices have

surveyed for Big Spenders were right to forecast

result with the minimum of disruption to their

been carefully selected on the basis of either their

improved performance for the oil and gas industry

business relationships.

quality standards, their service provided to us in

in 2012. But the industry leaders who attended

“We have witnessed the evidence we have

the past or people who have been working with

our event in London have clearly articulated that

obtained in marine disputes withstand varying

(or against us) during our overseas surveys,” the

the sector has not overcome all of its hurdles yet.

levels of attack in negotiations, mediations, arbi-

company says. “All these non-exclusive surveyors

“The discussions that took place have given

tration and court hearings – both in the UK and

around the globe are subject to a monitoring and

us a real insight into the opportunities and pitfalls

abroad. We know how evidence is used and the

evaluation process in accordance with our ISO

that our clients expect to face during the remainder

relative value of different kinds of evidence. Most

9001 standards.”

of the year and beyond,” he continued.

importantly, we know how to get it.”

recruiting, training, mentoring and retaining key surveying and technical support talent.

Skills shortages were also identified at a

“It is clear that, alongside the oil and gas

Marex Marine and Safety Services specialises

roundtable event organised by consultants

industry’s confidence for the future, there is an

in marine and safety consultancy, safety man-

GL Nobel Denton, following the publication of

element of uncertainty over a wide range of

agement systems, audits, risk assessment and

an Economist Intelligence Unit report it com-

issues. Whether the challenge is the success of

studies, technical authorship, safety case reviews

missioned on prospects oil and gas industry

production, the unpredictable nature of energy

and rig moves.

prospects in 2012.

prices, or an impending shortage of the skilled

Formed in 1998, Marex, whose core business

The roundtable discussion found: “Skills

professionals needed to meet the world’s grow-

is Safety Case authorship – introduced in UK

shortages are becoming more acute. The chal-

ing demands for oil and gas, GL Noble Denton

under the Cullen Report following the Piper Alpha

lenge in plugging the oil and gas industry’s gap

stands ready to provide our clients with the

platform disaster in 1988 – now has two expand-

in skilled professionals was identified as a major

essential technical advice that will help them to

ing safety and marine departments, operating

issue in the Big Spenders report. Participants at

grow in testing conditions.”

from harbour-side offices in Aberdeen, Scotland.

the roundtable event recognised that the acceler-

“The worldwide oil and gas market is chang-

ated learning programmes, introduced by some

ing and has opened up to Marex as more coastal

oil companies to speed up the time it takes for

Safety first

states now have a requirement for drilling com-

new graduates to develop necessary skills, were

The investigation of marine casualties is one of

panies to have safety cases,” the company says.

important. However, some argued that more

London-based Marine Professionals main areas

“This is coupled with the fact that the oil majors

needed to be done now to meet the industry’s

of expertise and experience.

are requesting drilling companies to have safety

immediate need for more experienced workers

When an accident, liability may not be clear-

cases even if there is no coastal state legislative

in their 30s and 40s, and suggested bringing in

cut, the company says. “Information may be

requirement. The horrendous Macondo incident

62

theBaltic Summer 2012 www.thebaltic.com

Consultancy and surveying in the Gulf of Mexico will no doubt result in a more prescriptive legislative regime worldwide and a requirement for the expertise of companies such as Marex Marine and Safety Services to become involved in the risk assessment process worldwide. Regardless of legislation there is a need to provide a safe place of work.”

The Marex risk assessment techniques ensure that the workforce is better able to understand the safety case and the implementation of its related regulations. Greater involvement of the workforce is a key point made much of at the joint industry conferences on the topic. Marex employs QRA specialists who have developed robust qualitative risk assessment techniques to fit all levels of hazard, increasing their strength and reputation in this field.

The clean-up operation continues on the Rena since her accident off the New Zealand coast

According to Ian McDougall, managing director of Marex: “Over the past two years, there

retrieved from the wreck and brought to shore is

the impact of debris on the shoreline is most

has been a big development overall in that

fast approaching the 600 mark and container

significant. “It is crucial to target the high impact

work is now being undertaken on a worldwide

and debris recovery company Braemar Howells

areas where debris is likely to be re-floated with

basis rather than formerly only the North Sea.

has been responsible for retrieving these. The

rising tides and deposited further along the coast

Consequently, the team is working in worldwide

company says good progress is being made

– we are working to prevent that happening.”

locations and growing fast.”

on the clean-up of loose debris washed up on

While extensive clean up efforts have already

Coromandel beaches after huge swells pounded

seen a great reduction in debris, Braemar will

the Rena wreck earlier in April.

continue to have a presence in the Coromandel

Consultants Braemar Howells have been deployed to deal with containers from the wreck of the Rena since her accident off the New

Braemar operations manager Neil Lloyd says

for the “foreseeable future,” Lloyd says. Beaches

Zealand coast last year. The number of containers

the priority remains to clear the beaches where

already cleared will be revisited and re-surveyed.

theBaltic Summer 2012 www.thebaltic.com

63

Forest products

Paper trail Cargo diversity is the name of the game for the Port of Tilbury, the market leader for handling forest products and paper in the UK. Plus: decline for pulp and paper products

T

ilbury celebrated its 125th anniver-

bases of production, most notably in Europe and

of significant importance to the industry. The

sary last year and in November got

North America where closures and consolidation

country is now the biggest importer of wood

the green light from the government

have become commonplace.

and wood-based raw material. Through its back

for Project Next, which involves the

“One of the most significant developments

door, Russia is supplying much of China’s need

development of 30 hectares of land to north of

in recent years has been the mass emigra-

for wood and this trend looks set to continue.

Tilbury’s existing port estate.

tion of key players’ capacities to the Southern

China’s construction industry is booming and

The Next development is expected to create

Hemisphere, particularly to South America,

its economic growth is continuing,” Drewry said.

more than 1,100 new jobs and will offer oppor-

where conditions are conducive to production

“Demand for forest products in North

tunities for warehousing, logistics and haulage

and pricing and where long-term prospects are

America, Europe and Japan has taken a severe

activities, the Port of London Authority says in

brighter,” the report continued. “Nearly all the

battering. The demand for printing and writing

its latest handbook for 2012.

global giants have established themselves there,

papers has been weakening since the mid-

Kimberly-Clark, meanwhile, imports wood

often at the cost of heavy job losses at home.

1990s with the onset of electronic media.

pulp for its own use and for third parties through

The pro-business attitudes of governments in

“Apart from overcapacity, the collapsing

the Northfleet Terminal near Gravesend and

these emerging countries, their competitiveness

demand for paper has left these paper-pro-

processes about 75,000 tonnes of imported

in wages and their bounteous yields have all

ducing regions struggling to deal with prob-

wood pulp into paper products at its Northfleet

contributed to the attractiveness of this region

lems caused by low prices and weak earnings.

Mill facility.

as a new manufacturing base.”

The recession was particularly harmful to the

Another 5,000 tonnes of pulp was handled

As in many other areas, the rise of China is

demand for basic materials, such as paper

for third party customers, while the terminal has a pulp barn that offers 5,000 cubic metres of undercover storage with a further 5,000 tonne

source Stora Enso

storage capacity.

Seacon Terminals also specialises in the carriage and handling of forest products and the company operates a fleet of four 2,000 dwt coastal vessels handling cargoes mainly from north European ports and has its own foreign products terminal at Tower Wharf. Forest products represent about 25% of the cargo throughput at Tower Wharf.

The Seacon terminal at Northfleet allows the discharge of steel and paper under cover using up to three 40 tonne gantry cranes. There is also a deepwater berth for vessels up to 50,000 dwt.

However, the past decade has been a demanding one for the forest products sector with the decline in demand for pulp and paper.

According to a report on the sector produced

by Drewry Shipping Consultants earlier this year, “The forest products industry has been left with a severe overcapacity problem in its traditional

64

The past decade has been a demanding one for the forest products sector

theBaltic Summer 2012 www.thebaltic.com

Forest products for print advertising, which is evaporating. It is

According to chief executive Jouko Karvinen:

first quarter results, said: “Despite the season-

unlikely that the demand for these products will

“Our first quarter earnings performance was

ally weak first quarter, we managed to improve

ever recover its previous strength.”

overall in line with our guidance in February.

the profitability of our operations from the level

According to the consultants: “Much of the

However, the return on capital employed

of the second half of 2011. By decreasing costs

outlook for the forest products industry depends

was below cost of capital, which shows the

and maintaining stable pricing across UPM

on the general economic revival. In the case

never-ending need to improve our cost posi-

businesses we were able to improve our per-

of China and much of Southeast Asia, it has

tion and operational performance. In addition

formance. We were also able to maintain a solid

already returned to sustainable growth. But the

to the expected price pressures and varia-

cash flow throughout the quarter.

recovery in the developed world is still fragile

ble cost reductions only slowly improving our

“Even though the low profitability of the

and will take a long time. In any case, in the

profit, we also had operational issues in several

European paper industry as a whole is unac-

post-recession world the forest industry will look

of our mills.”

ceptable, our paper business is heading to the

very different.”

“Cash generation, including further improve-

right direction.”

ment in working capital, remained relatively strong, with improved and very strong liquidity.

Long term contracts

Keeping our cash engines going strong has

Le Havre expansion

While vessel overcapacity continues to dog the

been and remains a key target to finance our

The port of Le Havre has also been extending

shipping sector and affect rates, there have

growth investments in Uruguay and China.

its range of services to the forest products

been some suggestions that forest products

“I am very excited about our most recent

may be less affected because of typically long

investment decision to build a world-class inte-

term contracts between shippers and carriers

grated consumer board and pulp mill in China,

Hermann-du-Pasquier,

that are less affected by steep short term

based on locally grown renewable materials for

Services (HNS) provides treatment services

fluctuations in the market.

the benefit of local Chinese consumers in the

for wood products that are destined for export.

sector.

Installed since February 2012 at Chaussée Héron

Nettoyage

The strengthening of links with the Asian

fastest-growing market,” he continued. “Both

markets was underlined in April when Japan’s

these announced investments are significant

Itochu bought a 24.9% stake in Finland’s Metsä

steps in transforming our company into a value-

A second enterprise should shortly be

Fibre for €472m. “Metsä Group and Itochu have

creating renewable materials company in mar-

installed in Le Havre: Agronet. The development

been in a commercial relationship for decades

kets with significant growth. This is a journey

of this sector follows the treatment of logs in

and the companies have had close marketing

that will take several years, but we are well on

forests being forbidden by ONF owing to the risk

and sales co-operation since 2004,” said Kari

our way, and plan only to accelerate the pace

of pollution of ground water.

Jordan, president and CEO of Metsä Group on

of change.”

announcing the deal.

“The new arrangement is an excellent oppor-

This is the first Le Havre enterprise specialised in this sector.

Henceforth, this operation must be offered by

Meanwhile, Jussi Pesonen, President and

specialised services.

CEO of UPM, commenting on the company’s

tunity for Metsä Group to create more value and stability through co-operation with a strong commercial partner in the growing Asian market and, at the same time, strengthen our position as one of the leading pulp market operators globally.

Both parties can pursue significant synergies in sales and marketing of each other’s products and the co-operation shall be enhanced even further in the coming years.

“In addition, the deal sets the right value for our pulp asset. This transaction is also one of the biggest foreign investments in Finland during the past decade,” he continued.

New merged Finnish port HaminaKotka saw wood pulp exports rise by 10.4% during the first four months of this year compared to last year, but paper exports were down by 20%. The two ports of Hamina and Kotka officially merged just over a year ago.

Quarterly results Paper giant Stora Enso recently announced that operation EBIT for the first quarter of the year was down to €147m compared to €258m last year, mainly due to lower prices in printing and reading and biomaterials and lower volumes in renewable packaging.

Demand for paper products has fallen dramatically due to electronic media

theBaltic Summer 2012 www.thebaltic.com

65

Maritime Cluster – Dubai

Dubai is back on track Dubai has had its share of financial troubles in recent times, but things are now looking up. Clive Woodbridge reports on current developments

F

ew parts of the Middle East suffered from

could have an adverse impact on local traders.

teu of capacity by 2014, through the conversion

the global financial crisis in 2008-9 more

According to the IIF report: “Dubai is more

of an existing general cargo berth into a new

than Dubai. At one point, it appeared that

vulnerable to global economic developments

dedicated container facility. This will add 1860m

the emirate, and its various state-backed

than Saudi Arabia, Qatar, Kuwait, and Abu Dhabi

of quay, with a draft of 17m alongside, designed

enterprises, would implode under the weight

due to its debt, its diversified economy and its

to handle the largest container vessels in service

of a colossal amount of debt, which the crisis

strong links to global trade. However, Dubai’s

or on order.

had left it less able to service. Dubai’s booming

excellent infrastructure and its prime location

DP World has also moved to assure markets

construction sector ground to a halt, real-estate

as a global hub for trade and tourism should

of its improved financial health, by recently

prices plummeted, and expatriates left in droves

continue to underpin diversification and robust

announcing that it will use its existing cash

for more promising pastures abroad.

growth over the medium term.”

resources to repay all US$3 billion of outstanding

Now, though, Dubai seems to be back on

The fact that double-digit container traffic

debt under a revolving credit facility due to

track, albeit with more modest levels of growth

growth returned to Dubai’s Jebel Ali port last

mature in October 2012. This move reduces the

than those seen in the pre-crisis boom years.

year, with DP World reporting a 12% increase

group’s total debt to around US$4.7 billion.

Furthermore, the process of restructuring state-

to 13 million teu in 2011, underlines the extent

DP World chairman Sultan Ahmed bin

backed ventures is proceeding well and there is

of recovery that has taken place in the local

Sulayem said: “We are delighted to be in a

a strong sense of confidence that much greater

economy. Encouraged by this positive trend, DP

position to be able to repay our revolving credit

stability is returning to Dubai.

World has decided to implement a fresh phase

facility six months ahead of schedule. DP World

First quarter 2012 data recently released

of investment at Jebel Ali. This includes a 400m

has a very strong balance sheet, because of

by the Dubai Chamber of Commerce (DCC)

quay extension at Terminal 2, which will increase

the strong cash generating nature of our global

suggests that Dubai’s economy is on course

capacity by around 1 million teu, to 15 million

operations, that allows us to meet the long term

to achieve a sustained recovery. According to

teu annually and which should be operational

strategic requirement for investment in profitable

the DCC, in the first three months of this year

by the end of 2012. Furthermore DP World has

growth opportunities.”

its members saw a 7.8% rise in the value of

announced the development of a further 4 million

DP World achieved a profit in 2011 of

exports and re-exports compared with the first quarter of 2011.

Hamad Buamim, Director General, DCC, reflected that,“The first quarter results are quite encouraging and point to the continued strength of Dubai’s economy and the emirate’s position as a thriving investment destination. The trade sector is responsible for the overall health of Dubai’s economy, supported by its strategic location, advanced infrastructural and financial facilities, unconditional government support and a competitive and safe business environment.”

The Washington Institute of International FInance (IIF) has recently issued a regional GCC report, which estimates Dubai’s economy grew by around 3.2% in 2011. However, it warns of lower growth of around 2.5% in 2012, partly because of international sanctions on Iran, which

DP World Jebel Ali

theBaltic Summer 2012 www.thebaltic.com

67

Maritime Cluster – Dubai Holding, the only listed crude oil tanker operator in Dubai, achieved a much improved result last year, with losses narrowing from Dh237 million (US$ 64.6 million) in 2010 to Dh73 million (US$19.87 million) in 2011. The ongoing weakness of the shipping market globally saw revenues fall by around 18%, however, compared with the previous year, as freight rates declined.

Speaking at the announcement of these results, Gulf Navigation chairman Abdullah Al Shuraim said it had been a tough year for the company. However he added: ”We remain focused on the key strategic targets that we have set ourselves and, in particular, the continued expansion of the VLLC fleet.” Gulf Navigation has said it aims to add two more VLCC tankers, taking its fleet to nine ships, and also to expand the number of chemical tankers it operates to 12.

Drydocks World Dubai

One of the biggest shipping companies to have an operational base in Dubai is United

US$751 million, 67 per cent up on 2010. “Since

for the year to December 2011 was 65%

Arab Shipping Company (UASC). In May this

the decline in global container volumes in 2009,

above expectations and it achieved a net profit

year, the company took delivery of the ninth and

DP World has worked hard to build a more

of around US$118 million. In addition, strong

last vessel in a new fleet of 13,500teu container

robust and profitable portfolio. Our 2011 results

growth has been witnessed by the group in

ships, an initiative that will greatly strengthen

reflect this,” adds Sultan bin Sulayem.

recent months with DWD winning contracts said

the company’s position within the liner shipping

to be worth more than US$250 million since the

trades. The vessels, all built at Samsung

turn of the year.

Heavy Industries in South Korea, represent an

Another shipping-related business that is effectively controlled by the government of Dubai

investment of around US$1.5 billion.

is the region’s leading shiprepair and conversion

Key contracts in-hand include a deal

yard, Drydocks World Dubai (DWD). An ill-timed

signed with Singapore-based AET to convert

The nine new ships will be deployed on

expansion overseas left DWD with a substantial

two newbuild 107,000dwt aframax tankers

UASC’s main trade routes between the Far East,

amount of debt, around US$2.2 billion, but there

into Modular Capture Vessels (MCVS).The

Arabian Gulf, Red Sea and Northern Europe.

now appears to be light at the end of the tunnel.

two vessels, Eagle Texas and Eagle Louisiana,

According to Jorn Hinge, president and chief

DWD has reached agreement with a majority

arrived in Dubai in early 2012 and will both be

executive officer of UASC: “The ships that are in

of the group’s syndicated lenders, giving it the

completed before the end of this year.

service already are living up to expectations and

necessary level of support to implement the

DWD has also secured an order from the

are providing substantial savings in operational

restructuring of its debt over a five year period.

Norwegian firm, Aibel, to build a platform

costs. Combined with recent freight rate

While a minority of the lenders have still to

structure to receive power generated by offshore

increases, this has resulted in a substantial

indicate their backing for the plans, the group

wind farms in the German sector of the North

improvements in results for UASC.”

says it is confident the absence of support from

Sea. Work starts this July at DWD on building the

The investment in the so-called A13

this minority will have no impact on the process

new platform and is expected to be completed

class vessels is expected to yield significant

of getting the business back on a secure

by December 2013.

economies of scale, substantially reducing

Shipping companies based in Dubai are

per teu transportation cost. This should allow

However, to ensure the restructuring goes

also seeing signs of a recovery and a return

UASC to compete more effectively on the main

ahead without any threat from the minority

to greater financial stability. Gulf Navigation

east-west trades over the next few years.

long-term financial footing.

of debtors that have still to agree, the company has filed for protection under Dubai’s Decree 57. The Government of Dubai passed Decree No. 57 in 2009 to allow groups such as DWD, a Dubai World Group subsidiary, to implement restructuring where proposals have the support of a significant majority of lenders, but where there is an absence of the 100% buy-in needed to implement its plans successfully. The DWD Plans now will go before a special Tribunal, but with over 75% of lenders now reported to be behind the plans, the restructuring is expected to get the go-ahead.

DWD points out its as yet unaudited EBITDA

One of UASC’s latest newbuildings

theBaltic Summer 2012 www.thebaltic.com

69

Corporate viewpoint Karbal & Co

World of experience Established by a New York lawyer, Karbal & Co is a full-service international law firm specialising in all aspects of maritime law

K

• Marine insurance

Healthcare

firm that serves the needs of businesses, gov-

• P & I and defence matters

Karbal & Co’s has experience in healthcare

ernments in Libya and the United Arab Emirates.

• Ship sales and purchases

compliance issues while providing comprehensive

It was first established by New York Lawyer

• Ship registrations

legal services to clients in various segments

Dr Mohamed Karbal through a special license

• Finance

of the healthcare industry. Dr Karbal served as

arbal

& Co is a full-service international law

granted to him by Dubai government authorities.

Karbal & Co provides its international and

the General Counsel for the Abu Dhabi Health

Oil and gas

Authority.

Our experience and practice in this field

local clientele with corporate and commercial

Karbal & Co’s vast experience in oil and gas

legal consultancy focusing on oil and gas and all

sectors has encompassed legal consultation on

includes:

aspects of maritime law.

sales, storage and transportation agreements

• Drafting

Dr Mohamed Karbal, licensed in New York,

relating to oil and gas. We have assisted our

Libya and Dubai, specializes in corporate,

clients with their negotiations while providing the

maritime, and oil and gas laws in the Middle

necessary documentation of oil and gas leases

East especially the Arabian Gulf Area . Dr Karbal

and production sharing agreements.

for

international

facilities in the UAE. • Assisting health authorities in the UAE in

reviewing

proposals

submitted

by

international healthcare providers to manage

is capable of providing an exceptional legal analysis while drafting documents concurrently

contacts

management and operation of healthcare

Corporate and commercial

and operate healthcare facilities.

in English and Arabic. His vast experience is

Karbal & Co brings experience, technical

• Advising on government tender process.

in both private and government sectors in the

capabilities and creativity to each project. These

• Reviewing proposed employment contracts

United Arab Emirates and Libya.

qualities enhance our reputation as a firm that

Dr Karbal received a Doctor of Philosophy

assists clients to identify and effectively pursue

(Ph.D.) from the University of Missouri-Columbia,

their commercial objectives.

Missouri, US; a Master of Laws (LLM) in Maritime

Our experience includes:

Law from the University of London (UCL); a

• Formation

Master of Laws (LLM) in International Law from

companies

of

domestic

systems.

• Advising on health insurance and health and

Indiana University, Indiana, US. He is also a

• Foreign investment

member of the Chartered Institute of Arbitrators,

• General corporate representation

London, UK.

• Mergers and acquisitions

In addition to practicing law, Dr Karbal has

for medical staff.

• Drafting contracts on healthcare information

litigation issues.

offshore

• Franchising

Contact us:

held the position of Associate Professor in

• Copyrights and trademarks

Tripoli

various US and international universities.

• International business transactions

Karbal & Co

• Insurance

Suite 163/16th Floor

• Joint ventures

Section 1

Areas of practice Maritime

Tripoli Tower

Karbal & Co maintains a solid knowledge and

Information technology

experience in providing legal advice on local and

Karbal

international shipping and maritime issues.

enables it to represent clients in agreements

Mob: 218 91 713 7002 or

for technology development, procurement,

• Shipping litigation

licensing, distribution and transfer of software

E-mail: tripoli@karbal.net

• Maritime mortgages

and hardware.

Our firm provides advice on the following:

• Arrests

&

Co’s

extensive

Tel: 218 21 336 2536 IT

knowledge

Our IT practice covers all aspects of this

Fax: 218 21 336 2537 218 091 416 1549

Dubai

• Charterparties

developing industry:

Karbal & Co

• Bills of lading

• Software maintenance

Saeed Tower No. 2

• Cargo claims

• Software mupport

Sheik Zayed Road

• Shipbuilding contracts

• Licensing

PO Box 73868

• Arbitration

• Software development

Tel: 971 4 343 2611

• Pollution

• Copyright

Fax: 971 4 343 5644

• Salvages

• Website development

Mob: 971 50 443 4286

• Collisions

• Hardware maintenance

E-mail: dubai@karbal.net

70

theBaltic Summer 2012 www.thebaltic.com

Managing Partner: Dr. Mohamed Karbal Attorney at Law: New York, Libya and Dubai

AREAS OF SPECIALISATION • Maritime/Shipping Law • International Arbitration and Dispute Resolution • Oil & Gas • Commercial and Corporate law BACKGROUND Dr Mohamed Karbal is a licensed lawyer in New York, Dubai and Libya.

Dr Karbal specialises in corporate, maritime, and oil and gas laws.

He has extensive knowledge and experience in international and maritime law issues.

Dr Karbal has held various legal positions in the UAE such as legal counsel for the health authority and the transportation department of Abu Dhabi.

In addition to practicing law, Dr Karbal has held the position of tenured Associate Professor in various American and international universiti es.

LEGAL EXPERIENCE Provided advice to an Abu Dhabi government authority on acquiring the management and operation of healthcare facilities on PPP approach .

Served as a member of tendering committee in awarding Abu Dhabi major hospitals to international healthcare providers on PPP approach.

Provided advice to an Abu Dhabi government authority on the managem ent and operation of public schools on PPP approach.

Provided advice to an Abu Dhabi government authority on acquiring buses for the use of the public.

Represented an Abu Dhabi investment company to conduct a due diligence and negotiating process to acquire and develop a large plot of land in Algeria.

Represented an Abu Dhabi investment company to negotiate with the Yemeni authorities in obtaining permissions to develop a plot of land in Aden.

Represented an Abu Dhabi government authority in selecting a bidder to construct a major highway on PPP concept basis.

Monitored the performance of a hotel management agreement with a prominent hospitality provider for two years.

Represented a client in arbitration procedure regarding a hotel managem ent dispute.

Represented a client in negotiating a hotel management agreement with one of the most prominent international hotel chains.

Represented an Abu Dhabi group of companies in negotiatin g and drafting joint venture agreements, agency agreements, sponsorsh ip, and memorandums of understanding, licensing agreements and articles/ memorandums of association of corporations.

Represented an Abu Dhabi group of companies in negotiating and drafting establishing an Islamic investment project. Partners in this project include prominent Gulf business establishments and an Islamic Bank.

Represented an Abu Dhabi Gas company in negotiation with the Iranian authorities regarding the importation of natural gas from Iran.

Provided advice to a Dubai oil and gas company on various oil projects.

ACADEMIC TEACHING EXPERIENCE Gulf Institute For International Law, Dubai, United Arab Emirates 1998.

Lecturer, subjects: international trade and maritime law.

International Islamic University-Malaysia, Kuala Lumpur, Malaysia 199396. Associate Professor, subjects: public international law, UN law and international economic relations.

Mount Mercy College, Iowa, US 1989-1993. Associate Professor-tenured, subjects: public international law, UN law and the American political and legal systems.

University of Missouri-Columbia, Missouri, US 1988. Instructor, subject: public international law.

EDUCATION Master of Laws (LLM. in Commercial/Maritime Law University of London, (UCL), London, United Kingdom.

Doctor of Philosophy (PHD) in International Relations.

University of Missouri-Columbia, Missouri, US. Maaster of Laws (LLM) in International Law. Indiana University, Indiana, US. Bachelor of Laws (LLB) University of Benghazi, Benghazi, Libya.

LICENSES A Licensed Lawyer-New York.

A Licensed Lawyer-Libya A Licensed Legal Consultant-Dubai PROFESSIONAL MEMBERSHIPS, SCHOLARSHIPS An Associate Member of the Chartered Institute of Arbitrators, UK. Member of Board of Advisory, Middle East Affairs Journal, Virginia, US. Received a five years scholarship from the University of Missouri to study a Ph.D. LANGUAGE SKILLS Fluency in English and Arabic: speaking, reading and writing.

PUBLIC LECTURER Guest speaker at the following organisations: University of Missouri, US. Oxford Academy for Advanced Studies, Oxford, UK. Rotary Club International, US. United Nations Chapter/ Iowa, US. Iowa and Missouri (US) secondary schools and churches.

Guest columnist in Iowa (US) and Malaysian newspapers.

Dubai Shipping Agents Association Future Libya Development Form, Dubai Dr Mohamed M Karbal Managing Partner Karbal & Co LLB, LLM, LLM. PhD. Attorney at Law/New York, Libya and Dubai Managing Partner mohamed@karbal.net Mobile Tripoli: (218) 91 713-7002 Mobile Dubai: (971) 50 443-4286 www.karbal.net

Libya

Time of change Major legal changes and a focus on development are expected in Libya in the near future

W

ith the fall of the Gaddafi regime,

industry in the Mediterranean?

Libyan revolution, the Gaddafi regime focused

Libya is set to go through a

Dr Karbal refers to some of the smaller ports

the various branches of government to serve

period of rapid change and the

that serve the surrounding community. “The

himself and his aides,” said Dr Karbal. “Due to

country attends to develope as a

ports, before the start of the revolution, were

the lack of strategic planning, Libya’s maritime

well equipped and the old regime had made

industry is underdeveloped in comparison to its

Established by New York lawyer Mohamed

investments to improve them, thereby increasing

neighbouring states. Libya has to develop new

Karbal who is licensed to practice in New York,

efficiency and productivity in recent years,” he

infrastructure for the sea ports. As the Libyan

Dubai and Libya, Karbal and Co specialises in

said.

economists predict that Libya will serve as a

hub between Europe and Africa.

hub between Europe and Africa, the new ports

corporate, maritime and oil and gas laws, and

With an economy primarily dependant

the Baltic asked Dr Karbal about the changing

upon revenue from hydrocarbons, which

situation in Libya.

contribute about 95% of export earnings,

“While the ports have long been used

“Activities at the ports are slowly returning

65% of GDP, and 80% of government revenue,

for the transport of oil, the new government

again after fighting and sanctions hampered

Libya intends to serve as a hub between

is intending to widen the mix of exports.

the flow of oil during the civil war to oust

Europe and landlocked countries of Africa, Dr

That requires the formation of new alliances

Qaddafi,” he said. “Libya will witness, in the near

Karbal said. Yet to fulfill this ambitious goal,

with foreign investors regarding upgrading

future major legal changes in all aspects of the

the country has to upgrade the network of

infrastructure and dredging the waterways to

economy. The vision and trend of the new Libya

roads that link the Libyan ports and points of

enable bigger ships to dock.

is focused around development and prosperity.

destination in Africa. Libya is also embarking

“With the new regulations that will liberalise

The maritime and shipping sector reflecting this

on building a network of railroads, which will

the economy, Libya will witness an increase

vision will be one of the first sectors to witness

be utilised for such a hub.

in the volume of shipping activities, as well

such a change. With a Mediterranean coast of

What are the needs for future developments

2000 kilometres, seven commercial ports, seven

in the Libyan maritime industry? “Before the

should reflect it.

as rebuilding and equipping ports with new technology.“

petroleum ports, two mixed ports and a port just for the steel, Libya is destined for prosperity.”

Dr Karbal says that the firm’s specialisations will be more in demand in view of current market conditions.

“We

undertake

all

maritime

and

shipping issues. Currently, there is a slowdown in the demand of services due to the new authorities’ policies.

After the elections, which will be held in June this year, a new government will be appointed and major changes in laws and economic policies are expected to take place. There will be positive degree of liberalisation and an expected increase in international trade as a direct result of new liberalised policies.

So what is the importance of Libya’s geographical location to the maritime

72

Libyan ports and points of destination in Africa

theBaltic Summer 2012 www.thebaltic.com

Finland

Applying the Finnish-ing touch Ongoing fleet and port upgrades underline the commitment of Finnish organisations to play their part in supporting regional trade growth

F

inland has long been a pivotal player in

These ships offer a much higher specification

these new ships will provide Finnlines with

the Baltic trades, both as a result of its

that other ro-ros in the fleet and are particularly

much greater operational flexibility and enable

huge forest product exports, in particular,

designed to meet tough environmental standards

the company to compete for a wider range of

but also its role in providing a gateway

in the Baltic region. They feature advanced

container, ro-ro and breakbulk cargoes.

for Russian transit cargoes. To help sustain and

technology designed to reduce CO2 emissions,

develop that position, one of Finland’s leading

for example, as well as greater fuel efficiency.

The new series of ships, the first two of which, Finnbreeze and Finnsea, entered service

shipping companies, Finnlines, is in the process

The new vessels are built to Ice class 1A

in 2011, will replace expensive chartered-

of significantly upgrading its fleet through the

standards and offer 3326 lane metres of ro-ro

in tonnage. Consequently, they will not just

introduction of a series of six newbuildings. The

cargo capacity, offering space for more than

improve the quality of the Finnlines operation,

third and fourth ships in this series, Finnsky and

200 trailers. The lo-lo capacity for containers

but provide a financial boost to the company’s

Finnsun, were delivered in April this year from

on deck is 398 teu and the hoistable car decks

fortunes as well. Uwe Bakosch, president and

China’s Jinling yard and the remaining two are

can accommodate around 600 cars, more

chief executive of Finnlines, says: “These ships

due to be handed over later this year.

than usual with vessels of this size. As a result,

are indelibly associated with Finland. They not

Finnlines latest newbuilding Finnsky

theBaltic Summer 2012 www.thebaltic.com

73

Finland

Mussalo Port in Kotka

only fly the Finnish flag, but are highly innovative

supporting Finland’s international trade, Finnlines

significant for the port, which is situated a short

vessels both operationally and in terms of

is also committed to remaining one of the

distance from the border with Russia.

environmental sustainability.”

country’s biggest operators of port terminal

There are also plans to expand the

Finnlines believes its investment in the new

facilities, handling unitised cargo in Helsinki,

capacity of Kotka’s Mussalo container terminal,

ships will send a powerful signal to the market

Turku, Naantali and Kotka-Hamina, through its

strengthening its position as the country’s largest

that the ro-ro segment, like its traditional ro-pax

Finnsteve subsidiary. This business is under

box port. Last year, HaminaKotka handled a total

operations, will continue to be a core part of its

some pressure, however, and last year suffered

of 612,000 teu, up from 598,000 teu in 2010.

business in future. Bakosch adds: “The new

from lower volumes and increased competition.

Throughput in the two months of 2012 has seen

vessels will also strengthen our already excellent

This prompted a degree of rationalisation,

an acceleration of this positive trend, with the

relations with the major Finnish paper companies

especially in Kotka, with the company selling its

port handling over 98,000teu, compared with

and with Europe’s automobile manufacturers,

two cranes and closing its depot within the port

71,000 teu in the equivalent period of 2011, an

providing benefits in terms of cost efficiency and

towards the end of 2011.

increase of around 38 per cent.

reliability that will enhance their export initiatives and open a window to the future.”

There has been some more positive news

Helsinki, which now handles containers

from other operators in the Port of Kotka, which

through its Vuosaari facilities to the east of the

Alongside the new vessels, Finnlines is

merged with Hamina in May last year, to form the

capital, is also a significant container gateway for

revising its service strategy to create improved

Port of HaminaKotka Limited. One of the most

Finland and last year handled a total of 392,000

connections

One

important developments has been the opening

tee, which is virtually the same as in 2010. Traffic

important initiative is the linking of Helsinki and

of the new Fertilog fertiliser terminal in Kotka’s

in the first quarter of the year has shown an

Kotka ports with the main Russian gateway St

Mussalo harbour, which is handling products

encouraging upward trend, with an increase of

Petersburg through a series of new scheduled

from Russia brought in by rail and then shipped

9.5% compared to January-February 2011.

vessel services. Furthermore, these cargo

overseas. The terminal, which started operations

The fastest growing Finnish container port,

streams will be linked, via Antwerp, to the

in early 2012, is expected to handle around

however, is the Port of Rauma, which last year

international network provided by Finnlines’

1.5 million tonnes of fertiliser a year. This was

achieved an all-time record high of 223,000

parent Grimaldi Group.

previously shipped via Russian ports which were

teu, 35.2 per cent higher than the year before.

served by the state-owned railway company

The volume of cargo shipped in con tainers

OAO RZD at a “special” price.

surged by over 27% to 1.9 million tons. A further

between

key

markets.

In addition, in March this year, Finnlines started a new service connecting the Swedish

increase of 14 per cent was recorded in the first

port of Wallhamn and Ust-Luga in Russia. As a

Russia’s future membership of the World

mark of the importance Finnlines attaches to this

Trade Organisation means that the country

service, it will be operated by one of the large

will have to harmonise rail transport tariffs so

Overall Rauma handled 6.1 million tons of

Jinling newbuildings. Bakosch says: “Russia is

that geographical distance is the main factor

cargo in 2011, an increase of around 10 per

a market we believe will continue to grow fast

influencing costs. This change has made

cent. This was mainly the result of higher

as the local transport infrastructure improves. In

shipping via Finnish ports a more attractive

cellulose exports and grain shipments, as well as

Ust-Luga, good road and rail connections will

option. The new fertiliser traffic will make up

round wood imports. According to port director

allow us access to Moscow and far beyond.”

around 10 per cent of HaminaKotka’s total cargo

Hannu Asumalahti: “Despite the threats in the

throughput and so this investment is hugely

worldwide economic situation, the outlook for

As well as being an important vessel operator,

74

theBaltic Summer 2012 www.thebaltic.com

two months of this year as well.

Finland

Oulu Port

the Port of Rauma is very positive, especially

by building new terminals, as well as upgrading

of bulk ore exports. One of the main incentives

with regards to container traffic.”

existing facilities.”

to increase the depth of the access channel is that it will allow us to accommodate deeper draft

To the north of Finland, the Port of Oulu is

In recent years, Oulu has experienced a

another that achieved record breaking figures

significant growth in traffic related to industrial

last year, with a total throughput of 3.57 million

projects in Northern Finland and, with the

All the signs are that Oulu will capitalise

tons. While this was only about 0.5 per cent up

development of additional wind farms, nuclear

on investments being made in its hinterland

on 2010 overall, there were some very strong

power plans and mining ventures, there are

to achieve another all-time high in 2012.

increases in certain cargo segments which have

expected to be significant further opportunities

Cargo throughput over the first two months

continued into 2012.

for the port of Oulu to provide the specialised

of the year amounted to 489,000 tons, which

cargo handling services required.

was more than double that seen in the same

Forest

products

make

up

the

port’s

vessels, including bulk carriers, at our port.”

biggest cargo flows, but last year Oulu port

Himanen says: “As well as handling imports

period of the year before, and makes Oulu

saw significant growth in dry and liquid bulk

of project cargo for construction sites, we are

the country’s fastest growing major port at this

and container traffic, the latter rising by by 5

very much in the market to handle large volumes

point in time.

per cent, to 33,000 teu. Cement imports were a key factor behind the overall increase, growing by around 30 per cent compared with 2010. Finnsementti is in the process of building new cement silos with increased capacity in the Vihreasaari area of the port, moving from existing facilities in Topilla, in the city centre. This part of the port will be closed this year and converted to other uses.

A new bitumen terminal is being developed in the port and work is also underway dredging the access channel from 10m to 12m.

Port manager Kari Himanen says: “We have continued to enhance the port’s infrastructure by investing in quays, storage areas and equipment. With cargo traffic

still

growing

and

new

types of cargoes passing over our quays, we have responded

Rauma Port containers

theBaltic Summer 2012 www.thebaltic.com

75

Insurance news

Sanctions deadline looms From 1 July the International Group of P&I Clubs will no longer to be able to offer cover for ships carrying Iranian crude, plus insurance regulation is on the rise and TT Club announces growth

S

anctions are a growth industry and

states of the vessels involved – into Iran.”

resulting in shipping not being provided with P&I insurance.

with new measures set to come into

There is a certain ambiguity about what

force in July this year, shipowners

“directly and significantly contribute to the

As far as Europe is concerned, the

trading with states that are deemed

enhancement of Iran’s ability to import refined

regulations are coming through by way of

to be undesirable may be deprived of cover by

petroleum products actually means” said

statutory instruments. Penalties for con-

the International Group of P&I Clubs.

Salthouse. Would cargoes of cement to be

travening the rules include fines and also

Mike Salthouse, who chairs the International

used to build the refinery in Iran be covered by

prison sentences.

Group’s sanctions working group as well as

the sanctions? Would medical supplies des-

acting as a director of the North of England

tined for the refinery be caught by CISADA?

Different measures

P&I Club’s management, told delegates at

The Europeans have taken a difference

the Plymouth Nautical Degree Association

approach, both in relation to Syria and Iran, he

Measures introduced in Europe are different

(PYNDA) conference that the main area of

said. Once again, the coverage is extra-terri-

from those that have gone before because

concern with the US’s Comprehensive Iran

torial and does not only cover oil cargoes but

they target the accidental sanctions breaker,

Sanctions, Accountability, and Divestment Act

also Iranian bunkers. “If you as a shipowner

Salthouse said. In the case of the North of

of 2010 (CISADA) was section 102.

inadvertently stem Iranian bunkers, that will

England P&I Club, there are about 6,000 ships

Other regulations announced recently

mean that your insurance will cease.” Blended

on the books and it is impossible to know

include EU regulation 878/2011 targeting

cargoes will also be covered. “If you are lifting

what any individual ship is doing at a particular

exports of Syrian exports of crude oil and

a cargo out of Egypt which is 90% Egyptian/

time, before there is an incident. “We don’t

their insurance, while EU regulation 267/2012

Libyan crude and 10% Iranian crude, your

have satellites, we don’t have spies. No delib-

targets exports of Iranian crude, petroleum

insurance will cease”.

erate sanctions breaker is going to pick up the

products and petrochemicals.

The measures come into force in relation to crude oil on 1 July 2012 and from that date

phone and say they are going to take crude oil out of Iran bound for China,” he said.

clubs that are domiciled in Europe or obtain

“There is nothing illegal if after 1 July a

Club position

reinsurance within Europe and who form part

Japanese tanker owner takes a cargo of crude

At issue under section 102 is the clubs’

of the International Group will not be able to

from Iran to Japan. It is illegal for us to insure

position on whether it should enter into a

provide cover to 95% of the world’s tanker

it, but there is nothing illegal about the underly-

contract to provide insurance or reinsurance

tonnage if they are carrying Iranian crude oil.

ing trade,” he said.

for activities that can directly contribute to the

Even those insurers not part of the

Another issue is that the burden of proof

enhancement of Iran’s ability to import refined

International Group, but who reinsure into the

has been reversed, Salthouse said. As far as

petroleum products, including the provision of

group do not provide an alternative mecha-

the EU regulations are concerned, Salthouse

ships to supply those products to Iran.

nism, Salthouse said. If a club is in contraven-

explained that he had not found a defence of

Salthouse stressed that these measures

tion of CISADA, it could potentially be put

due diligence. If the club insures a ship car-

were extra-territorial. “The target for this particu-

out of business, because it relies on dollars,

rying Iranian crude after I July “we commit a

lar measure are those people who are insuring

which is the world currency of shipping. Any

criminal offence, end of story”.

perfectly legitimate trades – according to the flag

appeal against the process would take time

76

theBaltic Summer 2012 www.thebaltic.com

In the US, the onus is on the insurer to

Insurance news prove it has compliance systems in place to

at is how the business is managed, not just

TT Club

stop it happening.

the underwriting but the whole business. He

The TT Club announced an 8.5% growth in

The clubs, he said, have “overreacted” on

described the decision making audit as the “spy

premium income, resulting from new business,

the issue because of the seriousness of the

in the camp” and the underwriter will need to

increase in volumes and a continued high level

consequences of getting it wrong. The pooling

justify his or her decisions to management. In

of member retention, in its financial results

agreement has rules dealing specifically with

the event of making a profit on a certain class of

for 2011.

sanctions which say if a ship is traded in such

business, management needs to know why that

a manner to put the club in breach of sanc-

profit was made.

The Club has maintained a stable financial platform and good underwriting results,

tions, club cover will cease with immediate

Underwriting in the past was “by the seat

despite challenging market conditions for the

effect. Similarly, if payment of a claim puts a

of the pants”; now, he said, it is a much more

transport and insurance industries, reinforcing

club in breach of sanctions the policy holder

linear process.

its very strong capital position equivalent at

It is very important, he believed, to get

cannot make a recovery.

A++, the highest rating on the AM Best capital

What is important to bear in mind is the

the capital loading right otherwise it could be

demand is still there and simply by taking away

detrimental to return on capital. Changes in

In his statement, Knud Pontoppidan,

insurance, demand for Iranian crude will not

capital will affect the cost and availability of the

chairman, TT Club, highlighted the challenging

go away. Either vessels will have to trade with-

insurance capacity Insurer.

trading environment the insurance industry

adequacy model, the Club said.

out insurance, or put in place alternative insur-

The hull market is losing money, he told

faced during 2011 that saw heavy losses

ance. Parties who suffer will not be the state

delegates, and it could be argued that hull

in the first part of the year, comprising the

of Iran or the person committing the trade, but

underwriters have been making a loss for

second of the Christchurch earthquakes,

third party victims of accidents, who benefit

the past 15 years. The first quarter of 2012

flooding in Queensland, the earthquake

from third party liability insurance.

was the worst ever for hull insurers, he said,

and tsunami in Japan and the extensive flooding

IMO has crafted a series of treaties based

not only because of the Costa Concordia,

in Thailand:

on P&I insurance cover. “If you take that away

but other casualties including two chemical

those treaties are not going to work in the way

carriers and a container ship off China.

“In difficult insurance market conditions, the Club has performed well. The overall

they were intended to,” Salthouse said. States

Access to the person who writes the

combined ratio continues to be below 100%

will be left to pick up the tab in the event of a

cheque may become for restricted in shipping

(98.6%), meaning that the Club’s outgoings

big oil pollution casualty. If it is not possible to

insurance in the future as shipping companies

in

take away demand for Iranian oil, either ships

become more corporate, he said. Owners will

expenses are more than offset by premium

will have to go uninsured, or have $50m worth

have to show financial transparency. If they

income – which is a very important and

of cover and “wing it”.

can’t show that, they will be penalised. As

a very healthy position to be in with the

far as loans were concerned, these went up

current market conditions as they are,”

in 2011, but mainly because of activity in the

Pontoppidan said.

Rising regulation

cruise industry, he said, but in commercial

According to Simon Stonehouse, class under-

shipping they were down significantly.

claims

payments

and

administrative

UK Club

writer, hull for Brit Insurance, insurance regula-

Today in shipping, assets are reducing and

tion has increased significantly over the past

owners have to obtain credit ratings to obtain

UK P&I Club announced its results for the year

few years, with corporate failures of companies

money. New accounting regulations also mean

ended 20 February 2012 on 10 May with an

like Enron and the World Trade Center, which

that shipowners have to show they are worthy

operating surplus of $11m for the 2012 financial

basically meant the insurance industry was bust,

of a credit rating.

year with free reserves and capital increasing to

he told the PYNDA conference. Interestingly,

With insurance regulation, transparency

in 2005, when the hurricanes hit the US Gulf

in terms of the environment means that small

The club reported an improved claims

Cost, the monetary loss was much greater than

shipping companies will struggle and they will

trend supported by falling claims frequency

the World Trade Center, but “nobody batted an

either have to consolidate, or use third party

since 2008. Investment returned was reduced

eyelid”. Insurers , he said, looked smug.

managers. With the new environmental regu-

to 1.5% as the club de-risked its portfolio.

With the advent of emissions legisla-

lations, what insurers are afraid of is that “we will

and

chairman said: “We are very pleased that for

ing now, Stonehouse said. Shipping loans

development of all this new equipment,”

the second financial year running, the UK Club

are down. The name of the game in insur-

Stonehouse said.

is announcing a balanced underwriting result

capital employed.

up

paying

for

research

Commenting on the results Dino Caroussis,

tion, neither insurers nor owners are laugh-

ance and the shipping industry is return on

end

$486m.

Training will be needed and the fear is that

with a combined ratio, the ratio of claims and

there is a divergence between the people

expenses to premium received, of 97 per cent”

Solvency II is about protecting the policy

designing the equipment and those that are

Hugo Wynn-Williams, chairman of man-

holder, he explained, and more needs to be

actually using it, which may in turn lead to

agers Thomas Miller P&I found the results

done to protect the policy holder. While the UK

moiré accidents at sea.

“particularly satisfying as they come in a year

insurance industry is looking good, he said,

Shipowners want from financial strength

that has seen results elsewhere in the market

European insurers are looking fragile at the

their insurers, but corporate shipowners will

adversely affected by an increase in claims

moment. Solvency II, which comes into force

also require new added value and a insurer

and volatile investment returns.

in 2014, has three main pillars, Stonehouse

to hold their hand in the event of a claim,

“Since 2008, the ongoing shipping reces-

explained:

he said. This could essentially mean that

sion has significantly dampened the volume

the insurer becomes part of the owner’s risk

of claims.

quantitative,

supervisory

and

disclosure requirements.

What the FSA and the EU will be looking

management department.

theBaltic Summer 2012 www.thebaltic.com

77

ITIC

Secondhand woes Andrew Jamieson of the International Transport Intermediaries Club (ITIC) looks at holding deposits under SALEFORM 2012

T

his year has seen the publication by

required to operate a separate bank account

If a dispute arises, the broker should seek

BIMCO and the Norwegian Shipbrokers

for clients. Escrow agreements often specify

advice. Most court systems have a process

Association of SALEFORM 2012, a

that the money will be held separately from the

whereby a person holding funds as a

revised version of the industry’s main

funds of the broker. The parties will accordingly

stakeholder can either pay disputed funds into

be protected if the broker becomes insolvent.

court, or ask the court to determine the issue.

contract for the sale of secondhand tonnage.

One of the new features of SALEFORM

Under SALEFORM 2012, the confirmation

Sometimes a provision that the broker has the

2012 relates to the holding of deposits. The

by the deposit holder that the account has

option at any time to pay the funds into court is

explanatory notes explain that, in recent

been opened is one of the triggers for the

added to an escrow agreement.

years, opening a bank account has become

buyers’ obligation to lodge the deposit. If the

There are a number of other protections that

increasingly difficult and time-consuming. This

broker is using a general client account, as

can be built into a specific escrow agreement.

means that other parties, including brokers, are

opposed to setting up a specific account,

Brokers frequently ask about obtaining an

holding funds in escrow. And in recent years,

the provisions of SALEFORM 2012 should be

indemnity from principals. This will not prevent

ITIC has seen an increasing number of sale and

amended to reflect this.

the broker being liable “come what may”,

purchase brokers being asked to hold deposits

but it is common to see something along the

on behalf of buyers and sellers.

following lines:

The deposit provisions of SALEFORM

Interest bearing

2012 cover the needs of a variety of escrow

SALEFORM 2012 states the account is to

account providers (such as banks and law

be “interest bearing”. The explanatory notes

firms) and were not written specifically for

observe, “The account must be capable of

brokers. Historically, shipbrokers providing this

earning interest which is to accrue to the

service have usually done so under the terms of

deposit, though it must be appreciated that the

a written side-letter signed by both the buyers

interest rate may be as low as 0%”. The obligation

and the sellers. These escrow agreements

is likely to be interpreted as an obligation to

normally cover both the manner in which the

have the money held on the terms available for

money is to be held and the grounds upon

immediately available deposits. Any interest on

which it is to be released.

the money is to be credited to the buyers.

Once the deposit has been lodged, the most obvious concern is that the broker could

The buyers and sellers jointly and severally agree: i) to indemnify the broker upon first demand against all losses, liabilities, costs and claims and demands arising out of and in connection with our holding of the funds in accordance with his escrow agreement; and ii) that the broker’s only obligation is to hold the funds upon the terms set out in this escrow agreement. We will have no liability for any act or omission taken or not taken by us in good faith. For the avoidance of doubt it is the burden of the party alleging

Escrow agreements

incorrectly release the funds and therefore face

Although SALEFORM 2012 provides a space

a liability. SALEFORM 2012 refers to the deposit

for the identity of the “deposit holder” to be

being released in accordance with joint written

inserted, that does not make such deposit

instructions by the parties. That is simple and,

The potential for a claim against the broker

holders parties to the agreement. There is

with most closings, there is little risk. The situation

for negligence can be reduced – but not wholly

nothing to stop brokers from continuing to

becomes far more complicated, however, if

eliminated – by appropriate wording. It is not,

have a separate “escrow agreement” with the

there is a dispute. The contract may provide

however, simply a question of being at fault. If

parties. If they do so, then it is important that

that one party receives the deposit if the other

a dispute arises, the wholly innocent deposit

the SALEFORM 2012 provisions are reviewed

is in default. But the broker, faced with accusation

holder can be faced with aggressively worded,

and, if necessary, amended to avoid any issues.

and counter-accusation, cannot be expected to

conflicting legal demands for the funds. Legal

adjudicate on the issue of who is right.

costs can quickly increase. Deposit holders

SALEFORM 2012 has been drafted on the

we have acted in bad faith to produce evidence thereof.”

basis that the deposit holder will open a specific

Many escrow agreements in current use

account for the transaction. This provision is

provide that, as an alternative to a joint written

obviously applicable when a bank or other

instruction, the deposit holder will release

ITIC treats holding deposits as part of

deposit holder opens a separate account in the

the funds in accordance with a final and

the usual course of business of a sale and

names of both parties. In practice, shipbrokers

un-appealable decision of an arbitration tribunal

purchase broker and would assist the broker.

(and others) may not open a specific account.

or court. The difficulty with such wording is that

Other insurers may not consider that acting as

the broker is not in a position to assess whether

a deposit holder is covered under their policies,

such an award is final and un-appealable.

and the position should be checked.

The Baltic Code provides that members of the Baltic Exchange acting as brokers are

78

theBaltic Summer 2012 www.thebaltic.com

need to make sure they are covered by their insurers if they are dragged into a dispute.

Legal news

Flying the flag?

The Rotterdam Court has recently delivered judgment on an interesting case under the 1952 Arrest Convention.

Plus: disputes and the Athens protocol

I

t has been a subject for discussion among

a contracting state, meanwhile, may be attached

Charterparty disputes

contracting states under the 1952 Arrest

for all sorts of claims if permitted by local rules.

Pitfalls and loopholes in charterparties in rela-

Convention whether the forum arresti rule also

The Rotterdam Court deduced that the

tion to bunker disputes was the subject of

applies to vessels that are not flying the flag of a

Arrest Convention also provides for rules in

a presentation by Olav Vikoren, a partner in

contracting state, writes Ellen Saman-Kole, AKD

respect of vessels which are not flying the

Norwegian law firm Thommessen. Speaking at

law offices, Rotterdam.

flag of a contracting state. It considered that

the BI Norwegian Business School conference in

The Rotterdam Court recently confirmed that

this interpretation was in line with that of many

Oslo in April, he said that bunkers have always

this is indeed the case. The Court delivered a

other contracting states. For that reason, the

been a source of disputes between owners

judgment that confirms that a party can start

court concluded that Article 7 also applied to

and charterers.

proceedings on the merits in the Netherlands on

vessels that do not fly the flag of a contract-

Enhanced refining techniques in the past few

the basis of forum arresti (jurisdiction) under the

ing state and that the matter could be brought

decades have resulted in a decline in quality of

1952 Ship Arrest Convention.

before the court in whose district the attachment

residual fuels used on board vessels. With the

was made.

increased demand for low sulphur bunkers, he

The dispute that led to this ruling had its origins in a collision on 29 April 2010 between

That being the case, the second question

said there has been much more focus on quality

the 25,560 dwt Maltese-flag bulk carrier Kaliakra

to be answered was whether the Brussels I

requirements. Bunkers also make up a substan-

and the UK 143, a Dutch fishing boat, off the

Regulation (EG 44/2001) could prevent the

tial proportion of ships’ voyage costs.

Dutch coast near Den Helder. The Kaliakra col-

Rotterdam Court from recognising jurisdiction

There are rarely disputes involving bareboat

lided with the UK 143 while the latter was fishing.

on the basis of the Arrest Convention. The

charters of vessels, Vikoren said, and the same

Due to the impact of the collision, one fisherman

Rotterdam Court, referring to the Tatry case,

applies to voyage charters. However, 70% of

was washed overboard. Luckily, he was able

noted that Article 71 of the convention stipulates

ships are operating on time charters, with the

to save himself by holding on to a rope from

that it will not affect other conventions to which

charterer responsible for supply of bunkers.

the UK 143.

member states are a party and which also

Cost and quality disputes often arise, he said.

deal with the jurisdiction of the court on

About 70% of marine disputes are settled under

special occasions.

English law, however the solution to a problem

As a consequence of the collision, the UK 143 suffered severe damage and, on 13 January

The Rotterdam Court considered the Arrest

under a charterparty will depend on which law

Convention to be a special convention as intend-

governs the charterparty and the results of the

On 26 January, 2011, the UK 143 started

ed under Article 71 of the Brussels I Regulation.

dispute could vary.

proceedings before the Rotterdam Court on

It was also of the opinion that under Article 71

Disputes on bunkers are basically divid-

the basis, among other things, of Article 7 of

paragraph 2 of the Brussels I Regulation the

ed in to quality and quantity issues, with the

the 1952 Arrest Convention (forum arresti). The

fact that Malta was not a party to the Arrest

quality issue being predominant in recent times,

jurisdiction of the Rotterdam Court was chal-

Convention did not prevent the court from

said Vikoren, particularly in view of new require-

lenged by the Kaliakra, whose Maltese owners

taking recognition of this matter on the basis of

ments for low sulphur fuels. Many owners and

argued that their vessel was flying the flag of a

the Arrest Convention.

charterers, he said, fail to set out the fuel specifi-

2011, the Kaliakra was attached in Rotterdam in respect of claims arising out of the collision.

non-contracting state to the Arrest Convention.

In summary, the Rotterdam Court ruled that

cation in the charterparty. Standard charterparty

The Rotterdam Court, however, held that

Article 7 of the Arrest Convention provided

it did have jurisdiction. It noted that, under the

forum arresti jurisdiction for vessels flying the

Due to the decline in quality it is now much

terms of Article 8 of the Arrest Convention, it

flags of both contracting and non-contract-

more common to include clauses which specify

followed that, if the vessel was flying the flag of

ing states and that the Brussels I Regulation

bunker quality.

a contracting state, it could only be attached for

allows a party to rely on forum arresti under the

maritime claims as stipulated in Article 1 of the

Arrest Convention.

Arrest Convention. A vessel not flying the flag of

forms are not specific on this point.

“Even without bunker quality clauses or fuel specification in the charterparty there seems to be a global consensus that the charterers

theBaltic Summer 2012 www.thebaltic.com

79

Legal news are under an absolute obligation provide

was not at issue, bunkers needed to be law-

be necessary for a number of lawyers in an

bunkers which are fit for the vessel’s engine,”

fully purchased and not put the vessel at risk

number of jurisdictions to apply different sets of

Vikoren said.

of detention.

rules to liability, limitation of liability, time bars and

This is regardless of whether there is an

The owner also has responsibility to ensure

agreement on the bunker specification, the

the vessel is fit for purpose and can burn the

bunkers must be fit for purpose. However, if

fuel specified to meet the regulations. If the

“The regulation implements the IMO guide-

the vessel has a non standard engine requiring

vessel has sensititive machinery that requires

lines which address terrorism regulated damage

non standard fuel owners have to advise the

specific fuel it is the owner’s obligation to inform

and applies an overall limitation of liability which

charterers they have to provide specific bunkers.

the charterer of that fact.

is the lower of 250,000 SDRs per passenger or

so on”. Under the protocol, liability is increased to 400,000 SDRs per passenger per carriage.

Vikoren said his firm had also seen cases

The vessel’s fitness for service also covers

340,000,000 SDRs per ship on each distinct

where there had been issues with ignition and

fitness from a regulatory perspective, and there

occasion,” she explains. “The compulsory insur-

combustion with low sulphur fuels as well as an

is a risk that the owner would be required to

ance provisions for 250,000 SDRs per pas-

increased presence of catalytic fines that can

pay for the cost of implementing new regulatory

senger evidenced by blue cards (allowing with

damage the vessel.

requirement, he warned.

few exceptions direct actions against insurers)

He cited one London arbitration case where

which apply to the performing carriers for ships

it was held that although the bunkers were within

registered to a Member State have caused great

the specification, they were not fit for purpose

Athens countdown

because of ignition and combustion problems,

13 December 2012 will see the entry into

“The clubs have agreed to provide a blue

and therefore the charterers were held liable for

force of EU Regulation 392/2009, which imple-

card for the liability for death and injury already

the consequences of the engine problems.

ments the Athens Protocol 2002 in the 27 EU

covered by them. The market is expected to

member states.

provide blue cards for liabilities arising from war

charterers had bought bunkers in breach of

Maria Pittordis of Hill Dickinson explains in

sanctions, leading to the detention of the vessel.

the firm’s marine, trade and energy bulletin that

The case was interesting, he said, but it

by adopting the protocol on an EU wide basis,

found that while the quality of the bunkers

“in the wake of major casualties it will no longer

and terrorism. This is where there is still some controversy and uncertainty for the industry”.

A team of English and German qualified lawyers, dedicated to serving the international maritime industry.

FLEET HAMBURG LLP, WiLLy-BRAndT-STR. 57, 20457 HAMBURG, GERMAny PHonE +49 (40) 5 700 700 FAx +49 (40) 5 700 70 200 WWW.FLEET-HAMBURG.coM

80

theBaltic Summer 2012 www.thebaltic.com

Image by thomasfuer / photocase.com

In another arbitration, it was said that the

difficulty,” she said.

Commercial profiles

Rosneft Marine – Raising Standards, Expanding networks R

osneft Marine, Rosneft’s international marine fuel trading office, has achieved significant

growth in its first year of operation. The company supplied more than 700,000 metric tonnes of fuel in its first 12 months and achieved a turnover of almost US$400 million. The company has continued to enjoy phenomenal growth as the international demand for high quality Russian marine fuel rises.

Rosneft’s bunkering division has become one of the top three suppliers in the Russian market since it established its bunkering division in 2007. By having access to its parent company’s facilities, including more than 14 refineries and terminals as well as 36 bunker fuel tankers all over the Russian Federation, Rosneft Marine is able to provide unparalleled assurance of fuel quality on establishing long-term partnerships. The

Far East. Rosneft Marine’s UK office in London

As part of its strategy to provide a supply of

company works with its customers to design

will focus on the global and European markets.

high quality fuel, Rosneft Marine, together with

and implement strategies for a secure and

Mr Brezhnev said: “We are very pleased to

its sister company RN-Bunker, is embarking on a

sustainable supply of bunker fuel, ensuring

announce the opening of our Beijing office. It will

pilot project to establish Rosneft’s first full quality

a mutually beneficial arrangement that has

have Mandarin speakers and this will help us to

management standard in the port of Nakhodka

been received favourably by the market. Last

provide a localised service to our customers in

(NQMBS). This will create an internal bunker

year, Rosneft Marine signed formula based

the Far East.”

delivery standard that is specifically tailored to

term contracts with several major shipping

The company will continue to look at

the needs of the local market while being based

companies. The ability to guarantee the quality

expansion plans in different geographical areas

on existing international standards – the first of

of its fuel and supply at competitive prices is one

where it hopes to capitalise on its multinational

its kind in Russia.

of the reasons why more shipping companies

and multilingual team and offer a superior service

are choosing Rosneft Marine as their preferred

to its global clients, while still delivering premium

partner in Russia.

quality fuel in Russian ports.

while continuing to supply at competitive prices.

Explaining

the

rationale

behind

the

move, Vladimir Brezhnev, director of Rosneft Marine UK, said: “Standards have become

Rosneft Marine is also keen to expand its

an increasingly recognised way of ensuring a

international network to support its global client

reliable and consistent supply of high quality

base. In March this year, Rosneft Marine set up

fuel. Introducing these standards in our ports

an office in Beijing, China, to service the growing

will enable all our operational personnel to be on

demand for premium quality marine fuel in the

the same page and provide our customers with even greater confidence that they are receiving what they pay for.”

Mr Brezhnev also said that the company aims to have similar quality management standards implemented in its operations in all the other ports it supplies in.

“Transparency is one of the core tenets of our business and we believe that standardising our bunker supplying process will set us apart from most of the other suppliers in the Russian bunker market,” he added. “This is part of Rosneft commitment to ensure that high quality bunker fuel is delivered transparently, providing unparalleled assurance of quantity and quality.”

One of the major changes in Rosneft Marine’s marketing strategy has been to focus

theBaltic Summer 2012 www.thebaltic.com

81

Commercial profiles

Leading the Way to Professional Competence stablished in 2009, Competent Maritime

E

(TOTS) for ship practical simulator verification

and Radar/ARPA Simulator from India-based

Professional and Sea Staff (COMPASS) Training

and training courses, which makes COMPASS

ARI Simulator. Furthermore, COMPASS recently

Center Inc was set up through the shared initiative

as the very first training centre in the Asia

linked up with FURUNO to offer type specific

of maritime professionals and practitioners intent

Pacific to be accredited as TOTS provider as

ECDIS training, with the use of FURUNO ECDIS

on having a learning institution dedicated to the

assessed by DNV.

model FEA-2107/FEA-2807.

development and improvement of human resources

COMPASS

training

COMPASS offers a groundbreaking curriculum

in the maritime industry. The Filipino-owned corpo-

provider for ECDIS type-specific by Japan

that delivers globally accepted and best maritime

ration delivers competency-based training and

based manufacturer FURUNO NavSkills™.

practices. Its training programmes are company

assessment programs with the latest technology.

Our competence in the field of medical care

specific and are chosen with the unique needs of

COMPASS Training Center aims to be

has merited COMPASS Training as the official

the individual company in mind and are developed

globally-recognised and the leading valued

host of the Danish Medical Care programme as

to go beyond the basic transmission of skills and

partner of the maritime industry for human

authorised by the Danish Maritime Authority.

theories. Each programme is carefully selected

is

also

an

official

resource development because it adheres to

These recognitions and partnerships with

and developed based on IMO standards and is

international standards in maritime education and

several key players in the global maritime industry

taught by a competent faculty who are active

skills advancement of all personnel in the maritime

are a strong indications that COMPASS Training

seafarers with a long professional and training

field. Its competency-based training programmes

Center ensures the delivery of value added

experience in the maritime industry.

are compliant with the requirements of the STCW

training programmes that promote and maintain

78 as amended under the accreditation of the

the competence of seafarers, both Filipino and

Maritime Training Council of the Philippines. Also

foreign-based nationals.

COMPASS has gained certifications ISO 9001:

Our training services are all aided by state-

2008 QMS requirements and maritime training

of-the-art technologies such as DNV Type-A

standards from DNV, the Swedish Club Academy

approved integrated Bridge System; a fully

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functional Liquid Cargo Handling simulator for

For more information,

course, and is compliant with the standards of

product/oil, chemical, LPG and LNG tankers;

email us at sales@compass.ph

INTERTANKO’s Tanker Officer Training Standards

full mission engine room simulator; and ECDIS

Website: www.compass.ph

Department of Merchant Shipping C

yprus is today a fully fledged maritime centre, combining both a sovereign flag and

a resident shipping industry, which is renowned for its high quality services and standards of

• Registration, training and certification of seafarers, • Control of coastal passenger vessels and small craft,

and environmental protection standards, is the foundation on which Cyprus builds its reputation as a serious maritime flag and as a base for international operations.

The

implementation

of

a

series

of

safety. The Cyprus registry today ranks tenth

• Investigation of marine accidents,

among international fleets and third within the

• Continuous updating of the merchant

legislative and administrative measures for the

shipping legislation and its harmonisation

enhancement of maritime safety and security,

with that of the European Union,

which are in line with the European guidelines

European Union.

Responsibility for the development of maritime activities lies with the Ministry of Communications and Works. Its authority and jurisdiction are exercised through the Department

• Coordination of the EU Integrated Maritime Policy, • Administration of the State Aid Scheme for

of Merchant Shipping, whose activities include:

Maritime Transport and the Tonnage Tax

• Registration of ships,

System,

• Administration and enforcement of the Merchant Shipping Laws, • Control of ships and enforcement of international conventions ratified by the Government of Cyprus, • Protection of the marine environment, • Vessel

traffic

monitoring

in

the

sea

around Cyprus and information system implementation, • Monitoring the conditions of living and work on board Cyprus ships,

82

and the objectives of the local shipping industry, are the measures enabling Cyprus to maintain the “White List” status in the flag assessment systems on port state control.

Cyprus provides a competitive edge to its

• Promotion of Cyprus as an International

clients, with regard to taxes, fees and service

Registry and a base for international maritime

following registration. The New Tonnage Tax

operations.

System secures a stable fiscal environment for

Merchant shipping is a business sector which

Cyprus shipping in the long term.

Cyprus is proud of. It represents an invaluable

It also introduces incentives for new shipping

asset for Cyprus, with significant political and

activities and extends the implementation

economic advantages.

of the EU maritime transport policy beyond the

At the same time, Cyprus has established

European boundaries. This, in fact, provides

itself as a quality registry. The maintenance of a

a new impetus for the shipping industry of

high quality fleet and the effective implementation

the island and creates great prospects for

of the internationally applicable safety, security

future growth.

theBaltic Summer 2012 www.thebaltic.com

Commercial profiles

IMS Marine Surveyors & Analytical Laboratories Ltd. Vancouver, BC IMS was established in January 1992 and has

is a FOSFA Superintendent and CFIA certified

which facilitate International Trading according

grown to become one of Western Canada’s

sampler for Phytosanitary Certification, and is

to governing standards and legal requirements.

largest independent marine surveying and cargo

also the Flag State Ship Inspector representing

IMS Laboratory is a FOSFA Analyst L1 (the only

inspection organisations. IMS has earned a

Bahamas, Barbados, Cyprus and Panama, and

one in Canada) and a COPA referee Laboratory.

reputation as being unbiased, objective and

Class Surveyor for CR Taiwan, OMCS Panama

IMS’s achievements in research and method

professional. Based in Vancouver, Canada’s

& Qualitas Panama. IMS is an IICL Container

development have been recognised by USA

largest port, IMS offers a comprehensive range

Inspector and the only certified ultrasonic hatch

and Canadian authorities and producers in

of professional consulting, superintendence,

cover tightness testing firm on the West Coast.

chemistry and oil testing. The application for

inspection,

The company is widely used by most major P&I

direct testing for sulphur and phosphorus by

and H&M Clubs for their various surveys.

ICP-OES has quickly become one of the most

testing

and

marine

surveying

services across Canada, USA and worldwide for International Traders, Brokers, Producers,

In today’s highly competitive and challenging

widely-used method in North America for the

Buyers, Charterers, Owners, Insurances and

shipping industry, losses can materialise in many

quality of vegetable oil, beef tallow and biodiesel

Legal Entities.

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and

Tel: (1604)298-9968 (24 hrs.)

ISO certified in 2001 and is currently certified

rapid analytical service based on modern

Fax: (1604)298-4862

under the ISO 9001:2008 standards by BSI. IMS

instrumentation and cutting-edge techniques,

E-mail: admin@ims-van.com

JSC Sovfracht J

SC Sovfracht was formed in 1929 and during

railroad wagons, river-sea ships, port complexes,

the Soviet period was the only governmental

container terminals and lorries.

body in the USSR associated with the chartering

Together with Russian Navy fleet, Sovfracht

of the whole Soviet fleet and all types of cargo,

also participates in Russian and international

For more information, please contact:

both export and import.

projects in oil and gas research in the Russian

JSC Sovfracht,

Far East areas of Sakhalin and Kamchatka.

Marine House

Sovfracht is the oldest and one of the most experienced companies in Russia, and is a

Furthermore, Sovfracht is one of the top 10

member of both BIMCO and the Baltic Exchange.

transport companies in Russia. The company

127994 Moscow

constantly develops strategies and tactics to

Tel: +7 (495) 258 2870

• Dry cargo chartering

meet market challenges. It has ambitious goals

Fax: +7 (495) 258 2889

• Handysize and handymax, coasters and

for the future, and all the opportunities and

E-mail: shipping@sovfracht.ru

capabilities to reach them.

www.sovfracht.ru

The company’s fields of activity include:

river-sea ships

Rakhmanovsky per. 4, bld. 1

• Projects and heavy-lift cargos • Shipmanagement • Agency • Sale and purchase Additionally,

Sovfracht

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.

The company owns and efficiently operates

theBaltic Summer 2012 www.thebaltic.com

83

Commercial profiles

Safe and secure at sea T

he economic impact of piracy – as well as

The company serves on the government’s

consultations, and associated intelligence

its dangers – are clear. Increased freight

Security in Complex Environments Group

analysis capabilities – quickly and efficiently.

costs and insurance premiums, higher fuel

(SCEG), in partnership with ADS – the trade

costs and the risk of hijacking. These must all

organisation advancing the UK aerospace,

be considered in any transit passing through

defence, security and space industries – to

the High Risk Area in the Arabian Sea, Gulf

regulate the UK security industry. We strongly

of Aden and Indian Ocean. Neptune Maritime

support an industry-wide standard for all

Security can help. Neptune seeks to reduce

maritime security providers. Our company

risk using its teams of highly trained, armed

directors are invited to speak on key issues at

maritime security specialists to protect vessels,

many conferences around the world.

crews, cargo and corporate reputations.

Neptune believes that intelligence and

Our depth and breadth of experience adds

preparation are essential for a successful

more value than just armed teams – there

maritime security firm. The company believes

is also constant operational support from

that this approach not only reassures clients,

headquarters, operational centres in both UK

but ship Masters and crews, where it can often

and Dubai, and the latest intelligence reports

matter most.

Founded by experienced former members

For more information, contact:

In addition, we have a client-accessible

of the UK’s Special Boat Service (SBS), and

Neptune Maritime Security UK

online information centre and intelligence bank

supported by other specialists, Neptune

Tel: +44 (0) 1202 743 357

to study the latest intelligence reports, review

Maritime Security offers a comprehensive

Website: www.neptunemaritimesecurity.com

contracts and conduct due diligence in a

service to the maritime industry. From its UK

client’s own time and convenience.

(http://www.neptunemaritimesecurity.com/).

and Dubai operations and support centres, the

Neptune Maritime Security UAE

Neptune Maritime Security is a leader in the

company is able to supply clients with armed

Tel: +971 (0) 444 87 580

development of accreditation and compliance.

vessel protection teams, maritime security

Website: www.neptunemaritimesecurity.com

Nordic IT’s superior solution ordic IT is one of the leading communication

N

customer relationship management and other

software providers for the maritime industry.

shipping applications in one unified solution.

Nordic IT currently has direct and indirect pres-

Key components

ence in the UK, Germany, Norway, Finland,

• MARK5’s document management and

• Advanced shipping functionality with the fully integrated sale & purchase module, Position-list & cargo module, position

With headquarters in Copenhagen, Denmark,

database module.

France, Dubai, Hong Kong, Shanghai, Singapore,

workflow

North America, Eastern Europe and Russia.

processes, improves working routines and

Cost cutting and time saving

enhances flow control.

• Replaces stacks of paperwork

Given the highly customer-focused service delivery and technical superior nature of its applications, Nordic IT enjoys a very high degree of customer loyalty and reputation worldwide.

module

& cargo matcher module and shipstreamlines

internal

• E-mail client for individual and group-based messaging.

• Avoids repetitive work

• Delivers full mobility on a group and individual level without the need for message forwarding.

MARK5

• MARK5 can be set-up as a stand-alone solution

Nordic IT’s latest product is the state-of-the-art

or co-exist fully integrated with exchange.

communication software MARK5 – a software

• Corporate and individual contact directory

product especially designed to serve the needs of companies within the maritime industry, who all need reliable and fully supported document and message management software in order to run a

applications.

84

system

load

and

storage

requirements • Eliminates the need for forwarding, copying and disguised rules.

and corporate planning and scheduling.

• Whiteboard for virtual meetings, enhanced

small as well as large companies, locally based or

incorporate massaging, document management,

• Reduces

• Time and task management for individual

collaboration

With MARK5, Nordic IT has managed to

• Super-fast searches

for customer data at your fingertips.

successful business. The system is designed for with affiliates around the globe.

• Streamlines business processes

• Customer

and

instant

messaging

Copenhagen-London-St. Petersburg-DubaiHong Kong-Shanghai-Singapore E-mail: sales@nordic-it.com

relationship

management

Tel: +45 3940 3997

functionality for improved marketing, sales

Fax: + 45 3940 3798

and service towards customers .

Website: www.nordic-it.com

theBaltic Summer 2012 www.thebaltic.com

Commercial profiles

Bringing innovation to the surface PG’s has a well-established reputation in the

P

and accelerated weathering to simulate real-

Innovative coatings solutions

shipping market. Founded in 1722, PPG’s

life exposure conditions, ensuring that product

The working life and profitability of all marine

SIGMA COATINGS® brand has been a symbol

performance meets the challenges of each

vessels is highly dependent upon the coating

of sustainable success built on strong core foun-

specific environment.

systems applied. The SIGMA COATINGS range product

meets these commercial challenges with the

customer demands and provide unique solu-

development and placement from cradle to

latest fouling release technologies, chemically

tions in an ever-changing global market. SIGMA

grave, including a detailed business plan, product

resistant coatings for aggressive and toxic

COATINGS remains firmly at the forefront of the

profile, proper verification and trial launch. The full

cargoes, impact and abrasion-resistant cargo

marine protection market due to our product

process, described in ISO procedures and forms,

hold coatings, superior ballast tank protection and

range that meets every marine requirement.

is the cornerstone of PPG’s high standards and

easy maintenance systems for superstructures

delivers optimal product performance.

and decks.

dations, demonstrated by our ability to anticipate

Visionary quality processes

Our

quality

processes

follow

As a manufacturer, PPG has been certified by

All our coating solutions are built on an in-depth

A complete focus on quality and innovation are

international organisations for compliance with

knowledge of the industry, our customers’ day-

PPG’s integral brand values. By monitoring the

ISO 9001 and ISO 14001 standards. Meticulous

to-day challenges, and the environmental, health

industry and continuously enhancing systems,

strategic planning also ensures that production

and safety standards in the market. By working

supply chain and after sales services, we

facilities meet the demand for products without

closely with our customers we maintain a high

have developed an expert and holistic quality

compromising quality, consistency or reliability.

level of understanding of their constantly changing

approach, constantly investing in R&D to offer the

However, our intention is not limited to simply

needs – not just for today, but also for tomorrow.

supplying high-quality products. We are also

most innovative coating solutions.

The development of any marine coating

committed to providing customers with expert

system requires careful and time-consuming

field service worldwide through our Global

work. Before introducing a new product into the

Field Technical Services department, with most

market, our R&D laboratories carry out extensive

inspectors having undergone special training and

product testing. This includes field-testing

received Frosio, or comparable, certification.

Progress means taking risks T

he world needs risk. Because moving for-

globe and support teams that help them do

ward is about risk. And that’s the business

what they do best. From large corporations to

we’re in. Change is changing. Problems are

mid-sized businesses, we can serve clients in

greater. What we do helps change industries

more than 100 countries. Our capacity means

and turns new ideas into reality.

we can work across their Casualty, Property,

From ships and planes to artwork and

Professional and Specialty risks.

thoroughbreds we are one of the largest Specialty Lines insurers in the world by breadth

Facts and figures

of product range and geographical reach.

We focus our business on P&C (non-life)

As well as knowing what’s already happened,

insurance and reinsurance activities. Our

we’re also tuned into what’s next. Scanning the

companies have strong relationships with the

horizon for new trends. Always watching out for

world’s leading global, regional and independent

new threats.

brokers.

We do risk like no one else

than 1,600 global programmes and lead more

Businesses that are moving the world forward

than 70% of these.

Our insurance businesses participate in more

choose us as their partner. Because we analyze

We have approximately 4,000 employees

the numbers but listen to their dreams. Because

worldwide. Including about 600 underwriters,

we’re experts in our field, but always open to

400 claims experts and more than 200

new possibilities. And because we make top

engineers. And we are continuing to grow.

service and fast, fair claims handling our priority.

It’s

all

thanks

to

widely

experienced

underwriters who are experts in the industries they serve, engineers who work across the

theBaltic Summer 2012 www.thebaltic.com

85

Commercial profiles

Protection Vessels International P

VI is a maritime security company, special-

The company was founded in 2008 by

ising in the provision of embarked security

Dom Mee, a former Royal Marine, and has

teams and escort vessels for merchant ship-

over 100 permanent employees in offices in

ping transiting high risk areas of the world’s

Tiverton, Devon and Caddington, Bedfordshire,

oceans. PVI currently carries out more than

as well as representatives and offices in the US,

180 armed transits of the High Risk Area each

Singapore and Hong Kong.

month and has an extensive logistics footprint throughout the region.

PVI is the leading provider within the sector with more than 2,700 armed transits completed between Jan 2010 and May 2012 by over 850 experienced maritime security professionals, all British, former Royal Marines. In addition PVI owns and operates a fleet of 4 patrol boats supporting the onboard teams and escorting vulnerable shipping assets through the HRA. PVI consults and advises on all aspects of maritime security and training for ship’s crews to deal with various security situations.

Through deterrence and prevention, PVI is

Tel: +44 (0)1884 842 878

capable of providing robust physical defence

E-mail: customerservices@pviltd.com

for vessels as and where required.

Web: www.pviltd.com

About DP World D

P World operates more than 60 terminals

In 2011, DP World handled nearly 55 million

across six continents as of March 2012.

TEU (twenty-foot equivalent container units)

Includes non-container terminals., with con-

across its portfolio from the Americas to Asia.

tainer handling generating around 80% of its

With a pipeline of expansion and development

revenue.

In addition, the company currently

projects in key growth markets, including

has 11 new developments and major expan-

India, China and the Middle East, capacity is

sions underway in 10 countries.

expected to rise to around 103 million TEU by

DP World aims to enhance customers’

2020, in line with market demand.

supply chain efficiency by effectively managing container, bulk and other terminal cargo. Its

www.dpworld.com

dedicated, experienced and professional team of more than 30,000 people serves customers in some of the most dynamic economies in the world.

The company constantly invests in terminal infrastructure, facilities and people, working closely with customers and business partners to provide quality services today and tomorrow, when and where customers need them.

In taking this customer-centric approach, DP World is building on the established relationships and superior level of service demonstrated at its flagship Jebel Ali facility in Dubai, which has been voted “Best Seaport in the Middle East” for 17 consecutive years.

86

theBaltic Summer 2012 www.thebaltic.com

Commercial profiles

SAL sets the heavy-lift standard O

wned by SAL – one of the world’s lead-

Together with its sister vessel, MV Lone, the

operates an international network of agencies

ing heavy-lift organisations – MV Svenja

MV Svenja is one of the two largest heavy-lift

and offices worldwide. It has a total of 570

has successfully completed the transportation

vessels in the world. Both vessels have a lifting

employees across the world and operates

and positioning of five wharf modules of up

capacity of 2,000ts, a speed of 20 knots and

a fleet of 16 heavy-lift ships. The vessels’

to 700 mtons unit weight for the new Iron

a DP System. With these features, the vessels

management is fully handled in-house. SAL’s

Ore Berth (Berth No 7) in the port of

have all the necessary elements for undertaking

internal engineering department deals with all

Geraldton, Australia.

highly complex projects for the oil and gas

technical load-related matters, while developing

industry, as well as for the offshore sector.

innovative transportation solutions for individual

The modules were loaded in Thailand and transported to the site in Geraldton, where they

In November 2011, Mv Lone got DP2

were discharged on to stabbing pile, requiring

upgrade, which means the vessel received one

a very accurate and careful cargo handling.

additional 1,200 kW bowthruster, two retractable

Despite challenging swell conditions, the

azimuths of 1,200 kW each and three 1,600 kW

operation was completed safely and fast.

auxiliary engines to secure the power supply for

customer needs.

the redundant dynamic positioning system.

To optimise the functionality of the high

SAL Heavy Lift GmbH

capacity cranes in offshore operations, the vessel

Buergerei 29

was further equipped with a motion monitoring

21720 Steinkirchen

system. Apart from its high performance, the

Germany

heavy-lifter also possesses an Environmental Passport, which means it meets the highest

Tel: +49 4142 81810

environmental standards. It is also ISO 14001

Fax: +49 4142 810281

and OHSAS 18001 HSE certified.

sal@sal-heavylift.com

From its head office in North Germany, SAL

theBaltic Summer 2012 www.thebaltic.com

www.sal-heavylift.com

87

Events

What’s on where A round-up of conferences, exhibitions and events in the shipping world 30-31 May, Jakarta

11-12 September, Singapore

10th ASEAN Ports and Shipping Conference

Global Liner Shipping Asia Conference

The biggest annual ports, shipping and logistics exhibition in the ASEAN region.

Enquiries@transportevents.com

Focusing exclusively on Asia’s liner shipping industry. www.informaglobalevents.com

26 September, London Lloyd’s List Global Awards 2012

4-8 June, Athens Posidonia 2012 The world’s largest maritime event taking place at the Metropolitan Expo Centre this year. www.posidoniaevents.com

Independently judged and designed to recognise excellence in the shipping industry, The Lloyd’s List Global Awards 2012 acknowledges the successes of top class performance. http://awards.lloydslist.com/global-awards-2012

26-27 September, Singapore

12 June, Cyprus

Green Ship Technology Asia Conference

1st Mare Forum Cyprus

The largest Asia Green Shipping and Green Ship Technology event for the maritime industry www.informaglobalevents.com

Eastern Mediterranean Oil & Gas: Offshore Exploration, Production, Maritime Transportation, Maintenance, Sustainability, Investments and Finance.

To register for the conference please click on: www.mareforum.com/Mare_Forum_Cyprus_Registration_2012.htm

19-20 June, Antwerp Shortsea-Euro Latest in a series of conferences designed to bring together European shipping companies and their customers as well as a range of service providers including ports, terminals, forwarders and 3PLs. www.navigateevents.com

2-3 July, Singapore Freight Derivatives & Shipping Risk Management An introduction in to the use of derivatives in the management of financial risk in shipping. FFAs, bunkers, interest rate, credit, ship value. www.balticexchange.com/training

15-16 November, London Tanker Safety Conference A two day event focused on all aspects of operational safety and emergency response in the tanker industry, and of direct relevance for charterers, owners, regulators, industry associations, finance and insurance, class, system suppliers and service providers. www.rivieramm.com

31 January – 1 February 2013, London Passenger Ship Safety Conference A two day event focused on all aspects of operational safety, security and emergency response in the passenger shipping industry and offering an opportunity to discuss current and future issues, gather intelligence and network with key industry stakeholders. wwwrivieramm.com

4-5 July, Singapore Advanced Freight Modelling & Trading Training course covering forward curves, freight rate volatility, VaR, options pricing and risk models. www.balticexchange.com/training

88

theBaltic Summer 2012 www.thebaltic.com

www.imarex.com

Optimal solutions for freight clearing NOS Clearing is the specialised clearing house for the freight industry: • • • • • • •

The most complete product suite for Risk Management.

Successfully launched FX clearing services to complement the freight product offering.

Offering the most Competitive Clearing Fees and Volume Discount Schemes in the freight market.

Providing the most Flexible Clearing Platform with prompt introduction of new routes according to market needs, first class back office and risk management applications.

First to offer clearing of Iron Ore Options, cash settled contracts enthusiastically welcomed by the industry.

Accessible through Direct Membership or General Clearing Members.

A neutral clearing service open to all Approved Brokers (Now also included Baltex and Cleartrade Exchange).

Markets cleared by NOS: • Freight Derivatives (Dry and Tanker products) • Bunker Derivatives • Iron Ore Derivatives • FX Derivatives • El-certificates • Salmon Derivatives • Power and UK Gas Derivatives Contact us at: Tel: +47 23 25 93 01 Email: operations@nosclearing.com www.nosclearing.com