Bulk Carrier Update

Working on the RPMs for Maryville Maritime

Welcome aboard Starbulk!

Korean shipbuilder in Vietnam Hyundai-Vinashin Shipyard

bulk carrier update

News from DNV to the bulk industry

No 01 2012

contents

04 Working on the RPMs for Maryville Maritime

08 ››

Welcome aboard Starbulk!

12 ››

Korean shipbuilder in Vietnam Hyundai-Vinashin Shipyard

Front page photo: Fednav/Anglo-Eastern Federal Welland

bulk carrier update Maryville Maritime................................................ 4

We welcome your thoughts!

Starbulk................................................................... 8 Hyundai-Vinashin Shipyard................................. 12 interview with Michael H. Schmidt................. 18 Green Dolphin concept design........................... 20 Rio Tinto................................................................. 22 SPS – new DNV ClassiFIcation Note2������������������� 23 Fuel saving services............................................. 24 Hull Integrity Management.............................. 26 market outlook................................................... 29

Published by DNV Maritime and Oil & Gas, Market Communications Editorial committee: Michael Aasland, Business Director, Bulk Carriers Magne A. Røe, Editor Lisbeth Aamodt, Production Design and layout: Coormedia.com 1204-050 Print: 07 Oslo AS 6000/05-2012

Please direct any enquiries to DNVUpdates@dnv.com Online edition of bulk carrier update: www.dnv.com/bulkupdate DNV (Det Norske Veritas AS) NO-1322 Høvik, Norway Tel: +47 67 57 99 00 © Det Norske Veritas AS www.dnv.com

2 | Bulk carrier update NO. 1 2012

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editorial

Michael Aasland Business Director, Bulk Carriers Michael.Aasland@dnv.com

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We are facing tough times in our industry.

Ship owners are feeling the combined effect of low charter rates in all size segments and record high fuel prices.

The forecast for crude oil prices is high and, combined with new environmental regulation, it appears there will be little reprieve from high fuel prices in the future.

The shipyards, on their part, are seeing their order books drying up. The rush of owners wishing to place orders is quickly becoming a distant memory. Today, owners – even if they are in the fortunate situation of having financing – are reluctant to order what they may feel are yesterday’s designs.

Designs which, naturally enough considering the previous high rates and relatively low fuel prices, focused on maximising deadweight – sometimes at the expense of fuel economy.

The market fundamentals for both ship owners and shipyards in the bulk carrier sector look relatively good, with long-term demand for iron ore, coals and other bulk products showing strong growth. However, the current oversupply and high fuel prices mean there will undoubtedly be some challenging years ahead.

The ship owners’ and shipyards’ enormous focus on increasing fuel efficiency is therefore natural. How to improve the fuel efficiency of either existing ships or new designs is often the first issue on the agenda when meeting owners or yards. However, this is an area where some owners and yards have limited experience, and where there are many questions and a lot of uncertainty.

In this uncertain situation, it may be beneficial to evaluate what an independent third party can contribute. With DNV’s strong technological basis, it was natural for us to focus on the area of fuel efficiency. We published the first edition of the DNV Guideline for Fuel Saving for Bulk Carriers more than a year ago. This has now been followed up by a revised edition and, more importantly, by a full menu of advisory services for both owners and yards, all with the common aim of improving fuel consumption.

We provide a wide range of services, from small feasibility studies for existing ships to full hull optimisation projects for new designs. However, what they all have in common is that their primary objective is to help our customers get through these tough times and be in a better position to harvest the benefits when the market improves. 

Bulk carrier update NO. 1 2012 |

3

Maryville Maritime

Working on the RPMs for Maryville Maritime “Savings do in fact arise from reduced RPMs. Thus we, at Maryville, have recently initiated a relevant programme, with the cooperation of the major engine manufacturer MAN/B&W, to change all the fuel valves of our engines to the new slide type. Accordingly, we have as of now performed modifications to 23 out of the 32 applicable ships,” says Apostolos Apostolou, technical manager of Maryville Maritime Inc, a fully owned subsidiary of Excel Shipping in Athens.

Photo: Magne A. Røe

Text: Magne A. Røe, DNV

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Sandra

4 | Bulk carrier update NO. 1 2012

Photo: Magne A. Røe

Photo: Maryville Maritime

Maryville Maritime

Apostolos Apostolou, Technical Manager of Maryville Maritime Inc. On the screen to the right all ships managed are visible with only a ten-second delay on current position.

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Christine

He continues: “With this important investment, we have managed to protect our engines, since we can now run on lower RPMs without the fear of any engine breakdowns, and thus significantly reduce our operating costs, in terms of fuel consumption, as well as maintenance costs overall. In addition, we have changed our engines’ operating profile going forward, while all our recently delivered newbuildings are already equipped to this standard.

So, based on the slow steaming RPMs, we are able to enjoy fuel savings in the region of 35% on average per day/ship.”

Photo: Maryville Maritime

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You have evidently invested substantially in efforts to operate in an efficient and environmentally friendly way. Why is this important to you?

“We manage 47 ships for Excel – seven Capesize, 14 Kamsarmax, 21 Panamax, two Supramax and three Handymax – and,

Bulk carrier update NO. 1 2012 |

5

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Photo: Maryville Maritime

Photo: Maryville Maritime

Maryville Maritime

Safety drill onboard Coal Glory.

as an ISO 14001 certified company, fuel efficient operations resulting into cost reductions and environmentally friendly operations are of utmost importance to us.

Our ships trade worldwide carrying cargoes ranging from iron ore to coal, grains, bauxite, fertilisers and steel products.

About half of our fleet is fixed on a time charter basis, while the rest is trading in the spot market, meaning that we almost always pass most of the fuel costs on to our charterers. As a result, charterers have become increasingly interested in fuel efficiency and environmental considerations themselves, differentiating between and preferring owners that can offer these. As a big and important player in the market, we constantly follow and align ourselves to market trends, such as that of slow steaming requests by most charterers arising from their aim to contain exposure to fuel price increases. On the same note, we should of course mention that, like our charterers, our own bottom line is also very important, meaning that investments in fuel efficiency and measures to reduce our environmental footprint through lower emissions will have a positive impact on our operations in the long term.”

6 | Bulk carrier update NO. 1 2012

Many measures have been implemented to reduce sulphur in fuels. Your views on this?

“This is correct and the environmental protection aims of various regulators and the shipping industry overall are on the right track. It should be pointed out, though, that shipping emissions are currently estimated to be only in the region of 4-5% of the total global emissions, which is significantly lower than other global emission contributors. On the other hand, the fact is that emissions from the shipping industry are on a rising path, so that marine engines’ emissions shall inevitably be further regulated going forward, a trend which is also supported by the engine makers’ efforts to produce new and even more fuel-efficient engine designs. However, the introduction of low sulphur fuels had somewhat of a contradictory effect on the older engines, which are not designed to operate with these fuels and thus lead to costly technical modification solutions. In our efforts to become pioneers and contribute to this trend, we have also investigated ways of using scrubbers on some newbuildings but eventually concluded that the investment costs are very high compared to the low return on

investment unless a vessel were to constantly operate in SECA and ECA zones. In addition, the continuous increase in bunker prices has led to worse quality bunkers worldwide, with an alarming frequency of fuels with high contents of silicone + aluminium, known as cat fines. These particles grind all the combustion-related components in the engine, eventually resulting in huge and costly engine damage as well as off hires. It is unfortunate that, in our day-to-day operations, three out of ten times we find cat fines of above 60 ppm, which is the latest ISO 8217 standard limit, in bunkered fuels. However, I do believe that the shipping industry, in cooperation with the major bunker suppliers worldwide, will take steps to improve the bunkers quality in general and protect owners and vessels.”

Are charterers becoming more environmentally focused?

“The short answer is yes. We, for instance, are working closely with several of our charterers in order to estimate when our ships really need to be at a specific port to pick up or deliver a cargo, thus deriving the ETA (Estimated Time of

Arrival). Such calculations are becoming increasingly important, enabling our ships to sail at reduced speeds but still arrive just on time for cargo operations. In order to satisfy our and our charterers’ environmental concerns, we are also considering other measures, such as propeller ducts of various kinds, boss cap fins on propellers and hull fins. Charterers’ increased concern about fuel consumption, which has become rather persistent lately, is quite a positive development for the global environment as well as fuel savings. So undoubtedly charterers do and will continue even more to prefer vessels that can offer reduced fuel consumption. Thus we feel that we have begun an important effort to build further on our competitive advantage and secure better business for our fleet.”

There are also gains to be made from trim optimisation – what are your views on this?

“We have tried everything and looked at all the angles and, a little to our and our masters’ surprise on some particular vessels, we have found that a forward trim of 0.5 to 0.8 metres leads to a one-knot speed gain, which corresponds to 24 miles a day

with the same fuel consumption. We have tried trip optimisation on many of our vessels and are now in a position to really know where the gains can be found.”

“This must mean that it is important for your shipboard crew to also understand how environmental efforts impact the bottom line. How do you approach this?”

“Well, we operate with a top to bottom Philippine crew and the retention rate of our officers and crew is 92%, which is a relatively high number in comparison to our peers. We provide in-house training and I must say that our crew has a very good understanding of the issues involved.

Overall, we benefit greatly from our training centre in Manila and our crew is truly proud to be working towards our objectives and goals in a market that is rather unfavourable right now. We use advanced online software to constantly monitor the vessels’ daily performance as well as to track their location, course and speed and obtain other useful information. Through the close cooperation between our staff on shore and at sea, we successfully enjoy the most efficient operations combined with the least possible impact on the environment.”

Photo: Maryville Maritime

Photo: Maryville Maritime

Maryville Maritime

So you feel that, as a ship management company, you are satisfying your owner Excel’s and your customers’ demands for efficient operations?

“I feel that we are on top of operations and that we professionally manage the 47 Excel ships. We keep up with future demands and we operate safely and efficiently!” 

Bulk carrier update NO. 1 2012 |

7

Starbulk

Welcome aboard Starbulk!

“Starbulk S.A. welcomes you aboard and wishes you fair winds and following seas.”

This is the first line of the ‘Welcome aboard handbook’ for the master, one of the books in a series of similar publications for all levels of the shipboard crew.

Text: Magne A. Røe, DNV

8 | Bulk carrier update NO. 1 2012

in Athens. Our training centre is equipped with certain machinery and tools that we consider crucial for our vessels’ operation. In addition, we utilise crew evaluation software in order to obtain accurate feedback from each seaman. In this way, we have an opportunity to identify training needs as well as to provide the crew with our mentality and vision for the way that a ship should be operated.

“To Starbulk, it is very important that all our crew understand our policies and way of working so that we can achieve our goals of superior client service by Photo: Magne A. Røe

The books are typically around 60 pages long and outline Starbulk’s operational mode.

When these are placed in a stack by Starbulk’s George Mantalos, we are impressed and sense that ›› Georgios Mantalos, Technical Manager, Starbulk. this is Starbulk’s operational focus – putting Your crew is in focus – while obviously imporindividuals first since they are the ones tant, it seems like you particularly emphasise that make the difference in all operational this element of ship operations? aspects. Mr Mantalos, a naval architect and “Indeed, we put significant effort into marine engineer, is the Technical Mantraining our crew here at our own trainager of the current fleet of 15 bulk carriing centre in Athens, as well as in Manila. ers, which has a combined cargo-carrying In particular, each and every master and capacity of some 1.5 million dwt tons. The chief engineer attends a training session fleet’s average age is ten years.

Photo: Hyundai-Vinashin Shipyard

Starbulk

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Star Sigma

reaching what we call ‘maximum quality’ through zero casualty tolerance. We aim at being a leader in the ship management industry and our crew is a critical factor in this.”

Starbulk is a rather new company with a history only dating back to 2006, and Starbulk SA was established in 2007. How do you manage the company today?

“Our daily operations work is carried out by a group of some 30 persons who are supported by our accounts and financial departments. We place a sufficient number of our vessels on medium- to

long-term time charters. In addition, we utilise our market expertise to place certain vessels on spot charters selectively so as to optimise our financial results. Time charters and pools normally provide high fleet utilisation and more stable revenues.

Being a Nasdaq-listed company, we are very conscious of the competitive environment we work in. We strongly believe that, by providing first-class services to our customers, we also protect the interests of our shareholders. In fact, quality in all aspects of operations is the key phrase for a modern company that has the potential to expand.”

The environmental considerations must be a challenging part of your operations?

“That is correct. Since our inception, we have outlined specific policies regarding the environment in our SMS and implemented procedures and measures in order to operate as ‘eco-friendly’ as possible. We are an ISO14001-certified company and are trying to improve the environmental sensitivity of our crew through our EMS (Environmental Management System).

While we are preparing for the mandatory requirements that will be enforced soon, please note that Starbulk is among the very few companies that participate

Bulk carrier update NO. 1 2012 |

9

Starbulk

in the EU-driven programme called TARGETS (Targeted Advanced Research for Global Efficiency of Transportation Shipping). Our objectives through TARGETS are threefold. Firstly to develop a holistic simulation and optimisation concept to improve the energy efficiency of ships, secondly to analyse and improve the efficiency of the most relevant energy consumers on board and, finally, to use new, alternative energy sources.

“In addition, we participate in forums related to the environment and also work with other companies on emission-control schemes, the policies of which are now under development.

“We believe that an environmentally friendly vessel is also a commercially attractive asset.

“Considering the above, we are working on several projects and policies in order to improve the efficiency of our fleet by reducing emissions and daily fuel oil consumption. In particular, we are working on the de-rating of main engines, installation of ducts, installation of hull and propeller fins and so on. Trim optimisation is also a very important issue that significantly affects a vessel’s performance.

“The continuous monitoring of energy consumption and communication is of paramount importance. In this respect, we install systems that calculate the net energy consumed against the delivered power at any stage of the voyage and transmit data to the company. By utilising such a dynamic system, we are in a position to calculate the vessel’s actual performance, compare it with our experience from previous voyages and take appropriate measures.

10 | Bulk carrier update NO. 1 2012

“Lastly, please note that we have completed an energy audit on board a Capesize vessel. The results indicate that the vessel’s operational status is good.

However, we’ve identified certain points of improvement that will increase the vessel’s efficiency. We’re now working on those improvements and expect to achieve results soon. Based on that good experience and results, we are now arranging for a similar audit on a Supramax vessel.”

How do you implement the environmental efforts throughout your fleet?

“All our masters and chief engineers receive extensive training ashore and on board relating to our policies outlined in the SMS and EMS. Environmental awareness is a separate issue that each technical and marine superintendent must discuss continuously. Classification societies, and DNV in particular, have been good partners in our training efforts. As I already told you, the mentality of those assigned to implement our policies on board (i.e. the crew) is the most important issue that affects the overall performance of the vessel and company. This is the main reason behind our particular attention to crew training.”

You mentioned working closely with DNV on environmental matters as well as training?

“That’s correct and this also includes working with DNV Petroleum Services.

Proper and sufficient fuel management is one of the main issues that form the environmental profile of each vessel. As a result of our excellent relations and direct communication with DNVPS, we are in

a position to provide very important and useful information and guidelines to our chief engineers, as well as to monitor the performance of the fuel oil management on board. It is worth saying that fuel quality is decreasing continually, while at the same time requirements regarding lower gas emissions are increasing worldwide!

“Such a contradictory issue requires a holistic approach and the involvement of organisations like DNV in order to raise the matter with IMO and other industry bodies. It is now time to work on policies and rules that will minimise the impact on our daily operations, improve the EEOI and reduce the vessels’ environmental footprint.

“Starbulk will support all initiatives of that kind.” 

Photo: Starbulk

Starbulk

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Star Delta

Bulk carrier update NO. 1 2012 |

11

Hyundai-Vinashin Shipyard

Korean shipbuilder thrives in Vietnam Hyundai-Vinashin Shipyard Co Ltd (HVS), a high-quality bulk carrier builder, is like a vigorous Korean tree that has taken strong root in Vietnamese soil.

Photo: Hyundai-Vinashin Shipyard

Text: Matthew Flynn

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Lee Young Hoon, President and CEO of Hyundai Vinashin Co Ltd.

“We have the best Korean technology and also the mentality of the Korean approach.

We can do. We will do!” said Mr Lee Young Hoon, President & CEO of HVS. “We will become the best shipyard for bulk carriers in the world and we are preparing ourselves to achieve this ambition.”

He pointed out that HVS has achieved its success through its relationship with its parent company, Hyundai Mipo Dockyard Co Ltd, which is a 70% shareholder and controls all the commercial factors, design work, procurement, production and service guarantees for all the vessels built in the yard.

Sixteen of the ships built to date and another 11 ships in the order book are classed by DNV. As part of the journey

12 | Bulk carrier update NO. 1 2012

to becoming a dedicated shipbuilder, Hyundai-Vinashin selected DNV for its ISO quality certification.

Mr Lee called DNV “a partner in our strategy to deliver the highest quality bulk carriers to the international market.”

He also pointed out that “We have 110 Korean shipbuilding specialists and 3,700 Vietnamese workers. We have completely transferred all of the best practices, quality control and discipline from our parent company Hyundai Mipo to our site in Vietnam.” He added that reputable ship owners, such as E.R. Schiffahrt, Norden, Geden, ESL Shipping and others, that have built here “enjoy productivity and quality that is the same standard as that at our parent yard in South Korea.”

In the first quarter of 2012, HyundaiVinashin reached a new milestone in its newbuilding history with the delivery of the 82,000 dwt bulk carrier named M/V Ams Pegasus I to HI-Invest. The vessel was the largest delivered by the Koreanmanaged shipyard since HVS first started building ships in 2008.

DNV is the primary classification partner for the shipyard. Hyundai-Vinashin’s first two vessels, delivered in July 2009 and October 2009, were built to DNV class.

These two 56,000 dwt bulk carriers for German owner E.R. Schiffahrt were selected as Significant Ships of 2009 by the Royal Institution of Naval Architects.

President Lee is very proud of what has been achieved by the yard in such a

Photo: Hyundai-Vinashin Shipyard

Hyundai-Vinashin Shipyard

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Hyundai-Vinashin Shipyard overview.

short period and very confident about the yard’s great prospects, pointing out, “we are facing a very weak demand for ships at the moment, but I really don’t have worries. We are fully backed by the financial strength of the Hyundai Group. This is when we are able to spend even more time strengthening the already high capability of our workforce. We invite international owners to visit the shipyard and see for themselves the high standards that are in place here.”

Market misconceptions Only a onehour drive from the bustling coastal city of Nha Trang in southeastern Vietnam, the shipyard is ideally positioned, with a 10-month dry season with low humidity

and two-month rainy season from October to December. The site is protected from the open sea by a large island several kilometres offshore. The sunny tranquillity and beauty of the natural landscape of the nearby coastline is in sharp contrast to the somewhat long shadow cast by the market perception that any shipbuilding site in Vietnam is far behind one in China.

To clarify the first misconception, Mr Lee said HVS is recruiting from 10 universities in Vietnam and has 3,700 employees working in the yard. “Our experience of working in Vietnam is that the workers are in fact very optimistic, open-minded about international practices, passionate about craftsmanship and above-all very hardworking.”

The other challenge faced by HVS is that caused by the financial troubles at Vinashin Group.

“It’s true that the Vietnamese enterprise Vinashin Group has encountered some severe difficulties, but here I must emphasise that Vinashin’s involvement with the shipyard is as a contributor of the land.

They have not invested financially in our shipyard and nor are they directly involved in any management of the shipyard,” said President Lee. Hyundai Group signed the joint-venture contract with Vietnam Shipbuilding Industry Group (Vinashin), according to which Hyundai has a shareholding of 70% while Vinashin has a shareholding of 30%, in 1996 and Vinashin’s 30% stake

Bulk carrier update NO. 1 2012 |

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Photo: Hyundai-Vinashin Shipyard

Hyundai-Vinashin Shipyard

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ER Basel 56K BC.

is for land rental only. All investment in the shipyard has been done by Hyundai Heavy Industries Group and the shipyard has Korean management and key personnel (general managers), which means HVS is entirely independent from the Vinashin Group.

HVS operates as a subsidiary and subcontractor of Hyundai Mipo Dockyard (HMD), which takes full responsibility for business development, engineering and procurement. Virtually all the steel plate and equipment are shipped from South Korea, except for some foreign-licencebuilt equipment such as MacGregor cranes and hatch covers.

14 | Bulk carrier update NO. 1 2012

“Any clients who have come to our shipyard can immediately see that this shipyard achieves very high quality, like our parent company, but is just located in Vietnam,” said Mr Lee. HVS does not have its own marketing division as it serves as a subcontractor of the Korea-based HMD according to a very specific agreement between the parent and subsidiary. The shipyard operates inside a Korean IT system which controls production and human resources.

HVS has adopted the same quality assurance and Health Safety & Environment systems as HMD. Ships are built by HVS according to a design and production

package supplied by HMD. HMD has delivered over 600 newbuildings and HVS is following the same path.

Foreign owners such as Norden, for example, expect and experience the same attention to safety and quality as is the case at HMD. “As a Danish company, our standards and the flag standards are extremely high.

We have very strict standards with regard to safety and the environment. Actually, we are fully satisfied by HVS’s standard both in quality and safety,” said Kim Hai Nguyen, a Naval Architect & Site Manager with Norden, which has ordered six ships and taken delivery of four from HVS.

Photo: Hyundai-Vinashin Shipyard

Hyundai-Vinashin Shipyard

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Working discussion.

Hyundai-Vinashin Shipyard

History and delivery record:

Hyundai-Vinashin Shipyard Co., Ltd. (HVS) is a joint venture between Hyundai Group (Korea) and Vietnam Shipbuilding Industry Group (Vinashin).

1996 – Established as a joint venture

shipyard 1997 – Yard ground breaking 1999 – Completion of yard construction 2008 – Repaired & converted more than

900 ships. Commencement of

shipbuilding business 2009 – Delivered two ships. These HVS-built

and DNV-classed 56K bulk carriers

were selected as Significant Ships

of 2009 by the Royal Institution

of Naval Architects 2010 – Delivered five ships.

Accreditation to ISO 9001 – 2008

by DNV 2011 – Delivered nine ships

Established on 30 September 1996, the shipyard covers a land area of 100 hectares and an open sea area of 172.5 hectares, with a 1,500-metre-long quay.

The shipyard has in operation two graving docks, one 400,000 dwt (380 metres * 65 metres) and one 80,000 dwt (260 metres * 45 metres), equipped with one 450 tonne goliath crane and two 250 jib cranes, as well as other state-of-the-art facilities.

Hyundai-Vinashin order book Ship Type

Order

Owners

82,000 dwt

3

HI-Invest, SK Shipping, Saint Michael

60,000 dwt

1

HMM

56,000 dwt

9

Geden, ESL

37,000 dwt

8

D/S Norden A/S, Densa

Sum

21

Bulk carrier update NO. 1 2012 |

15

Photo: Matthew Flynn

Hyundai-Vinashin Shipyard

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56,000 dwt bulk carrier under construction in number two drydock.

“We do bear in mind that Vietnam is a developing country where the challenges are substantial. At the same time, we don’t compromise on our quality requirements for the shipbuilding process and our care for workers,” said Mr Nguyen. “HVS positions itself as HMD located in Vietnam, and we have found this to be very true.”

Competitive edge to sharpen Since it started operation in 1999, HVS has acquired extensive know-how and expertise in shipbuilding techniques through repair and conversion work on various ship types, including sophisticated offshore projects.

HVS cut its teeth in the repair sector.

Until it stopped ship repair work in 2011, it had repaired over 900 ships, including some very complex conversions and repairs such as lengthening Pure Car Truck Carriers by 28.8 metres, crane vessels, Floating Storage Offloading units and even platforms.

Since venturing into the newbuilding market in 2008, the company has focused on bulk carrier newbuildings from Handysize up to Kamsarmax-size and has successfully delivered 22 high quality ships to

16 | Bulk carrier update NO. 1 2012

worldwide customers.

All shipbuilders are facing hard times based on continued concerns over the European debt crisis and the imbalance between supply and demand, and HVS is no exception.

Furthermore, due to the lack of finance, the poor charter market and the increasing number of idle vessels, contracting activity has slowed down considerably and the market prices remain under downward pressure while all related building costs (material, labour and other services) are increasing continuously.

HVS also senses severe competition from Chinese yards, which have access to cheap human resources and government support.

However, in this global downturn, HVS believes that strengthening its quality and competitiveness is the only way to survive and thrive.

“I don’t worry about the market situation since I see the current market conditions as an opportunity to train our workforce,” said President Lee. “We will develop qualified workers to prepare for the market upturn.”

There are 3,700 permanent staff and

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Hyundai Vinashin at the start of a perfect day.

1,000 subcontractors working at the shipyard. In addition to the focus on enhancing employees’ basic technical skills, HVS is also investing in developing management skills at the yard.

The yard has 110 Korean experts who are managers and general managers. Vietnamese staff are currently acting as middle management. A number of Vietnamese workers go each year to HMD for training for further promotion to upper management positions.

HVS’s Education & Training Department is mainly responsible for the training and development of Vietnamese workers. HVS organises many training courses guided by Korean instructors or well-known local professors. In addition, HVS regularly dispatches Vietnamese staff to HMD for training in up-to-date technology and “studying the working spirit in shipbuilding.”

According to Mr Park Tae Wook, Vice President of HVS, the shipyard has two shifts – 7:30 am to 5:00 pm for all types of work and then a night shift from 7:30 pm to 6:00 am, which is only allocated to steel cutting, block blasting and painting. The yard can handle 450 tonnes of steel a day

Photo: Matthew Flynn

Photo: Matthew Flynn

Hyundai-Vinashin Shipyard

››

and can now build 20 ships a year.

The yard’s productivity has improved gradually since 2008 and there is even further improvement ahead.

The pace of construction is 10 months from steel cutting to delivery, with 4.5 months for block fabrication, three months in the dock and 2.5 months at the quayside. This compares to eight months at HMD. “The labour productivity is now 2.0 compared to 1 for Korea, and the target for the coming years is to bring this to 1.5 by 2014,” said Park Tae Wook, the Vice President for the Customer Support Division.

HVS also benefits from the leading edge design work of the HMD design office, which has 700 employees working on new designs on a regular basis. They use the state-of-the-art engineering system to constantly search to improve the portfolio of designs using the latest generation of engines, optimised hull forms and energy saving technologies.

In order to meet customers’ various needs for fuel efficiency and environmental features, HMD is currently focusing on developing the latest “ECO” designs to

Kwang Ho Baek, DNV Principal Surveyor, NB & CMC Manager, South Vietnam.

satisfy the increasing global demand for higher efficiency vessels.

Three areas of focus Quality improvement, cost reductions and safety guarantees are currently HVS’s three focus areas.

HVS’s management highlights that the quality of the ships has been showing up quite well even compared to HMD, based on a strict consideration of non-conformity reports and guarantee claims.

Being selective with owners and other partners has been one of the keys to HMD’s and HVS’s success.

Over the past 15 years, HVS has achieved close and good cooperation with all the international classification societies, such as DNV, KR, ABS, NK, relating to both ship repairs and newbuildings.

“We are very happy with DNV as it operates at the highest level of professionalism and is one of the world’s top classification societies. Even minor comments and/or recommendations are carefully reviewed so as to ensure customer satisfaction,” said Mr Lee Jong Chan, General Manager of the Contract Management Department.

“From when HVS commenced the first

newbuilding project with DNV until now, we sincerely appreciate DNV support and cooperation in all respects, especially its willingness to clarify issues at the initial stage,” said Mr Lee Jong Chan.

HMD is known as the world’s leading shipbuilder for medium-sized Product Carriers, Containers, Pure Car and Truck Carriers, Ro-Ro/Con-Ro Vessels and LPG Carriers. Due to HVS’s abilities, HMD has recommended some customers to order certain types of bulk carriers from HVS to get the same quality and safety standards as from HMD but at a better price.

HVS’s status is as HMD’s subcontractor for construction while HMD will remain as the main contractor and will undertake all the Contract’s guarantees and responsibilities.

At this moment, HVS only focuses on the construction of bulk carriers but other ship types may be considered in the future, depending on the market situation.

“As always, HMD has a glorious track record of various ship types and will be able to support us in building other ship types based on their know-how and the experience we have been accumulating,” said President Lee. 

Bulk carrier update NO. 1 2012 |

17

Interview with Michael H. Schmidt

The new wave of efficiency Michael H. Schmidt, the designer behind bulkers such as the Diamond 53 class and the new Seahorse 35, tells DNV how efficiency has moved up the agenda in the industry and is now fuelling fresh designs, new optimisation devices and a need for more robust product testing practices.

Text: Alan Johnstone

Schmidt, who left Danish firm Grontmij in 2009 to set up Schmidt Maritime, is arguably one of the few industry figures who seems to be actively enjoying the bulk segment’s current woes.

“From my point of view, a difficult market is an interesting market,” he beams, with obvious guilty pleasure, going on to explain how the need for greater operating efficiencies presents compelling design challenges.

“It’s no longer just a relentless pursuit of greater deadweight, there’s more complex problems to be addressed,” he says.

“A few years ago, fuel consumption wasn’t really an issue. People were actually willing to churn out inefficient vessels because the demand and inflated rates made fuel costs, quite frankly, marginal when compared to profits.

“But of course,” he adds, with a quick nod to the current climate of oversupply, weak demand and record fuel prices, “that’s all changed now.”

Driving change With fuel accounting for roughly 70% of operating costs on today’s bulkers, and increased regulatory and environmental pressure, fuel efficiency has emerged as a top industry priority – as conveyed by the prevalence of the issue at the recent DNV-Bulkforum seminar, held at DNV’s HQ in March.

This is mirrored in the designs of the latest breed of vessels, such as Grontmij and Schmidt’s Seahorse 35, which, like the hugely successful Diamond 53, was developed in close conjunction with DNV. This latest design promises “economical

18 | Bulk carrier update NO. 1 2012

and efficient operation”, slender body lines and the option of operating on two separate HFO and MDO grades, allowing the ship to burn low sulphur HFO and MDO in SECA areas and EU harbours, and standard operations outside sensitive areas.

The Seahorse 35’s most economical speed setting – Eco II, operating at 13 knots at full DWT draft– offers HFO fuel consumption rates of 17 t/day when the optimising Mewis Duct device has been fitted.

This kind of performance, Schmidt states, can give shipowners and operators an edge.

“The Handysize bulk carrier fleet is aging and a lot of ships have poor performances. Within the context of that market, if you can prove that your ship delivers better fuel consumption then you have a very solid business case when it comes to chartering it out.

“That can make a real difference in a market characterised by faltering demand and charter rates.”

Fuel saving features Having an optimised hull and an efficient propeller and main engine are the first giant steps on the path to good performance. If a ship has these from the outset then there is less of a need to try and add incremental devices to regain lost energy.

However, even when the sound of champagne bottles smashing against steel has faded into the distance, there is still much, Schmidt states, that can be done to optimise vessels.

“The Mewis Duct is, in my opinion, perhaps the most promising fuel saving device for bulkers,” he imparts, before revealing that he has just spent a week and a half testing the feature in Potsdam.

Available for retrofitting as well as for newbuildings, the duct sits in front of the propeller to straighten and accelerate the flow into the propeller, while an integrated fin system reduces the rotational losses from the ship’s propeller. The resulting improved inflow of water generates higher propulsion efficiency, reducing fuel use and, regulators will note, the resultant emissions.

Initial feedback from testing – carried out with the Seahorse 35 – demonstrated that a 3-4% fuel saving could be delivered by using the Mewis Duct.

As mentioned previously, when fuel costs are so monumental these small percentages can produce big savings.

Schmidt adds that, in terms of retrofitting, an ideal solution for many carriers is a combination of measures that add up to greater overall efficiency – for example, fitting a Mewis Duct in tandem with the latest efficient propeller designs and a derating of the main engine.

Caution needed Despite widespread enthusiasm for the simple, elegant effectiveness of many fuel saving devices (and there are plenty on the market), Schmidt does have some words of warning for Bulk Carrier Update readers.

“All shipowners should exercise caution when listening to the people selling these products,” he advises. “Many of the

Photo: Alan Johnstone

Interview with Michael H. Schmidt

››

Michael H. Schmidt, Schmidt Maritime.

promoters are quoting, to my mind, completely unrealistic figures. It is possible to make relatively high percentage savings on less efficient vessels, but I hear of promoters talking of savings of say 10 per cent or even more, based on just a couple of test cases.”

It is essential, he argues, to have thirdparty evaluation of such claims and rigorous, controlled testing of the products in well-planned and prepared speed trials, with and without a fuel saving device. At the moment, it seems, there is a lack of regimentation on this front, with tests being conducted on vessels that are often

poorly designed in the first place, or that have their hulls cleaned during fitting of the devices.

These sorts of practices can make a mockery of the entire test process and cloud what benefits such measures can genuinely deliver.

It is here, Schmidt imparts, that DNV’s advisory services can help cut through the confusion.

“The revised edition of DNV’s Fuel Saving Guideline for Bulk Carriers (updated in December 2011) is a great overview that gives clear insights into what is available,” he states.

“There are so many unrealistic promises and claims out there, but this guideline gives a more sober assessment of exactly what is on the market, how the measures work and what they can achieve. It’s a very good starting point.”  To find out more about fuel efficiency and obtain a copy of the DNV Fuel Saving Guideline for Bulk Carriers, please contact your local DNV Customer Service Manager.

Bulk carrier update NO. 1 2012 |

19

Green Dolphin

SDARI, Wärtsilä and DNV present

Green Dolphin – a Handysize bulk carrier concept design Shanghai Merchant Ship Design & Research Institute (SDARI), Wärtsilä and Det Norske Veritas (DNV) have collaborated on the first development phase of a project to develop a concept design for a new Handysize bulk carrier.

Text: Adam Larsson, DNV

A challenging and ever changing market situation and new environmental standards are the main drivers behind the project.

SDARI, Wärtsilä and DNV have therefore focused on fuel efficiency, environmental impact, maintenance friendliness and flexibility of operation, in addition to ensuring strength and reliability. The project concentrates on existing technologies currently available for commercial use.

Having completed the first development phase of the project, SDARI, Wärtsilä and DNV will present the concept design at Posidonia 2012. In the second phase, SDARI will take the concept several steps closer to production by preparing a basic and detailed design. DNV will later carry out approval in principle. The concept design has been given the name Green Dolphin following SDARI’s previous Dolphin designs.

The project started with a market and logistics study of the Handysize bulk carrier segment. A large number of ship owner and shipyard inputs were utilised in order to map current and future needs and expectations. Ship-segment-representative trades and operational profiles were assessed in the design process. Based on this study, main dimensions were selected to allow operation in most major ports for Handysize bulk carriers.

The concept design is a five-cargo-hold CSR double-hull bulk carrier with large cubic and deadweight capacity. The high

20 | Bulk carrier update NO. 1 2012

transport capacity in combination with low fuel consumption and operational strengths such as no designated cargo hold for ballast water may give a significant advantage in today’s challenging market.

The hull is designed to achieve optimal fuel efficiency without compromising on strength and operational flexibility. Hull optimisation has been a combined effort

by SDARI and DNV. A no-bulb concept is applied for improved overall performance at different loading conditions, speeds and sea states. Propulsion efficiency is increased through the fitting of a wake-equalizing duct in front of a large-diameter, slowrotating propeller. A rudder transition bulb and rudder fins reduce the hub vortex and recover some of the rotational losses.

Specific attention has been paid to engine configuration, performance and emission reduction technologies. The concept design is fitted with an efficient Wärtsilä two-stroke low-speed main engine, 5RT-flex50-D Tier II. Several fuel tanks

Emissions

for different fuel grades ensure sufficient capacity and flexibility to carry a combination of HFO, low sulphur fuel/ distillates as required, as well as allowing strategic fuel purchasing.

The concept design is prepared for compliance with current and future expected local and global emission regulations through different alternatives; switch to low sulphur fuels, installation of exhaust gas cleaning systems or dual-fuel operation with LNG. Hence, the available design versions include technologies such as an integrated selective catalyst reducer, exhaust gas scrubber systems or, alternatively, an LNG propulsion plant featuring a single dual-fuel main engine and LNG tank and systems. The base case concept design is fuelled by HFO. Preparing the concept design for these alternatives gives an owner full flexibility in selecting the preferred solution that matches the owner’s specific needs and decision parameters. The choice can be complicated and depends

Regulations

Design solutions

SOx

1 January 2015 – 0.1% S in ECA; 1 January 2020 or 2025 – 0.5% S globally

Low sulphur fuels/ distillates or Scrubber system or LNG

NOx

1 January 2016 – NOx Tier III in ECA

Selective Catalytic Reduction (SCR) system or LNG

CO2

1 January 2013 – EEDI

Energy efficient design development

Illustration: DNV

Green Dolphin

››

Green Dolphin

on many factors and uncertainties such as the trading patterns, time spent in ECAs, fuel sulphur levels and slow-steaming regimes, as well as the engine type and configuration.

The daily main engine fuel consumption at 14 kn at CSR with a 15% sea margin and 9.5 m draught is 17.7 t (ISO Ambient Conditions, LCV=42,700 kJ/kg). The attained Energy Efficiency Design Index (EEDI) is more than 20% less than the required index set by the IMO reference line for bulk carriers, thus meeting the 2020 requirement.

The double hull with flush cargo holds (no hopper or top wing tanks in cargo holds 2, 3 and 4) and wide hatch openings improve the loading/discharge operations and facilitate the easy cleaning of the holds, thereby improving the port turnaround time. All fuel oil tanks are arranged aft of the forward engine room A-60 bulkhead, which means no fuel oil tanks are adjacent to cargo holds, making the ship suitable for carrying a wider range of dangerous bulk and package cargoes.

A heavy ballast condition is achieved without using a cargo hold for ballast water. Adequate ballast water capacity is provided in the double sides and double bottom. The cargo holds are equipped with compressed air, power and wash water supply. Wash water holding tanks are included for the storage of clean and dirty cargo hold wash water. The concept design features a ballast water treatment system as well as holding tanks and a treatment system for sewage and bilge water.

The concept design is further equipped with wide foldable double-skin steel hatch covers and four energy efficient fully electric deck cranes with variable frequency drive. The mooring systems and windlass are also electrically driven.

The stern tube bearing features water lubrication instead of oil. The concept design is prepared to be equipped with shaft torque and fuel consumption monitoring systems to facilitate performance monitoring and support implementation of SEEMP and EEOI. DNV’s CLEAN and Recyclable class notations support the

focus on maintenance and environmental friendliness.

More detailed information about the concept design can be found in the project brochure, which also includes more illustrations and a datasheet. This brochure will be handed out at Posidonia by the project partners or can be obtained by contacting SDARI, Wärtsilä or DNV directly.

This article describes a concept design and data may be updated or changed in future development phases. 

Main particulars Length over all

180 m

Length between perpendiculars

177 m

Breadth

32 m

Depth

15 m

Draught, design

9.5 m

Draught, scantling

10.5 m

Deadweight, scantling

38,800 mt

Service speed at CSR with 15% sea margin at design draught

14.0 kn

Bulk carrier update NO. 1 2012 |

21

Rio Tinto

Rio Tinto

Photo: DNV

Alastair Fischbacher, General Manager Marine, from Rio Tinto receives his DNV UK Committee membership certificate from Martin Crawford-Brunt, Manager UK Classification.

››

Martin Crawford-Brunt, Manager UK Classification, and Alastair Fischbacher, General Manager Marine, Rio Tinto.

22 | Bulk carrier update NO. 1 2012

SPS hatch cover

SPS hatch cover and new DNV Classification Note In today’s competitive shipping industry, reducing production and maintenance costs is vital. A new trend towards the use of innovative steel sandwich structures has emerged and is contributing to a new direction for ship structure technology.

TEXT: PHILIPPE NOURY and KRISTOFFER BRINCHMANN, DNV

››

Figure 1: The Sandwich Plate System: two steel plates bonded to an elastomer core.

Figure 2: SPS newbuilding panel (top) and conventional stiffened steel plate (bottom).

ramps and suchlike. Although at present the application of SPS is mainly confined to repairs, its use in newbuilding is emerging and is expected to grow in the future.

In June 2009, DSME and Intelligent Engineering (IE, the inventor and patent holder of the SPS) established a joint venture to bring SPS construction into mainstream shipbuilding. Since then,

Photo: Intelligent Engineering

The Sandwich Plate System (SPS) is a sandwich concept that is overcoming the cautious nature of the maritime industry.

This is a composite material technology in which two steel plates are bonded to a dense elastomer core (Figs. 1 and 2). Over the last decade, this has become established as one of the preferred technologies for reconditioning tank-tops, decks, vehicle

››

››

Figure 3: Example of single-skin hatch cover structure.

several applications have been developed and are now in use; these principally include liftable car decks, hatch covers (Fig. 3) and superstructure blocks.

The benefits include a simplified and robust structure, a substantial reduction in labour, a significantly smaller welding and surface area, superior in-service performance and reduced through-life maintenance.

In response to this new situation, DNV has revised its ship rules and issued a new Classification Note (Classification Note (CN) No. 30.11, Steel Sandwich Construction) dedicated to the application of steelelastomer sandwich panel constructions, such as the SPS type. The new CN will provide a framework for the classification of ship structures built with this kind of composite construction, and covers both ship repairs and newbuildings. The new CN is available from April 2012.  For a copy of the class note and further ­information, please contact Philippe.Noury@dnv.com or Kristoffer.Brinchmann@dnv.com

Bulk carrier update NO. 1 2012 |

23

Fuel saving services

DNV’s fuel saving services – a brief overview Building and operating vessels in a fuel efficient manner is a prerequisite for succeeding in the present competitive market with its high fuel prices. DNV is here to assist, and offers a wide range of services to help yards and owners save fuel and comply with regulatory requirements.

Text: Etienne Gernez, DNV

DNV can provide technical and operational expertise to save fuel on newbuildings, for example Hull optimisation, and EEDI calculations, and on existing ships, for example Trim Optimisation, Ship Energy Audits, SEEMP and Energy Efficiency management projects.

Hull optimisation The hull shape is one of the most important factors ­determining a vessel’s fuel consumption.

The objective is to reduce the hull’s ­ overall resistance when operating at ­different speeds and drafts. DNV offers assistance to yards, owners and designers to: n Establish an operational profile that determines the conditions for hull optimisation n Calculate the hull resistance of an initial design with CFD

24 | Bulk carrier update NO. 1 2012

Photo: Getty Images/Monty Rakusen

Below is a short summary of some of the advisory services offered. These services are built on DNV’s strong technological basis, particularly in the areas of: n Energy Efficiency Services n Ship Hydrodynamics and Stability n Noise and Vibrations n Ship Operations n Rotating Machinery n Ship Structures and Concepts

Optimise the hull form by proposing and testing several variations of the forebody and aftbody lines n Calculate an updated speed power curve n Calculate the updated EEDI performance and advise on areas where the EEDI could be further improved

estimate the EEDI based on IMO’s guidelines n EEDI Improvement: identify areas which could lead to a significant EEDI improvement with a minimum impact on the basic design n EEDI Technical File: develop a technical document package to support the EEDI calculations and input data, ready for verification

n

EEDI calculation IMO has introduced new Energy Efficiency Design Index (EEDI) requirements that are applicable to all new vessels. DNV offers the following services: n Gap Assessment: a review of all the design and sea trial documents required to calculate the EEDI as per IMO’s EEDI guidelines, including the identification of missing documents n EEDI Calculation at the Design Stage:

Trim optimisation Many vessels are not always operated at optimal trim, leading to increased resistance and fuel consumption. By using CFD, several loading conditions with different speeds and vessel drafts are analysed using operational data or the loading manual as a reference. Relevant trim levels need to be defined so that the ballast tanks can achieve such conditions.

The optimisation study will point out favourable trims for defined combinations of loading conditions and speeds. Optimising the trim by reducing the hull resistance may lead to a fuel saving of 1–5%.

Trim tables and an optional onboard decision-support tool are delivered by DNV to each vessel and are also applicable to sister vessels.

Fuel saving services

Main engine M

nME

(∏ ) ( ∑ ff

f=1

Aux, engine

)

PME (1) . CFME (1) . SFCME (1) + (PAE . C

f=1

Correction factors

FAE

. SFCAE-) +

Shaft motor

((

M

∏f

f

f=1

ff

.

Energy efficient technology (electrical)

�PTI

�eff

∑P

PTI (1)

f=1

–

∑ f=1

. Capacity . Vref . fw

)

feff (1) . PAEeff (f)

Energy efficient technology (mechanical)

)(

CFAE .SFCAE- –

�eff

∑

)

feff (1) . P eff (1) . CFME .SFCME

f=1

Transport work

››

EEDI formula.

››

Trim optimization, a resistance calculation at different speed, draft and trim.

Ship Energy Audit DNV offers to conduct Ship Energy Audits, either as a stand-alone service or as a supplement to the SEEMP or an energy efficiency project.

In a Ship Energy Audit, a team of DNV’s machinery experts carry out an audit on board in order to: n measure the efficiency of energy consumers on board n interview ship staff with the objective of assessing the implementation of procedures and the general level of awareness related to energy efficiency n witness the normal operation of the vessel during different modes and document the overall impressions during the voyage SEEMP IMO’s new requirements as to the Ship Energy Efficiency Management Plan (SEEMP) comes into force on 1 January 2013. DNV recommends companies to use this opportunity to create a momentum for reducing their fuel and operating costs.

For companies that want to develop their own SEEMP, a comprehensive guideline

››

Hull optimization, a resistance calculation of different hull forms.

can be downloaded from www.dnv.com/ SEEMP. DNV can also assist companies in preparing their SEEMP, either to get started or to prepare the plan itself. Key steps in this process are: A. Information gathering, e.g. information on the current fuel consumption, operational profile and measures already undertaken on board B. Interviews and a workshop focusing on improvement opportunities and future ambitions, as well as a ranking of these C. Preparing the SEEMP If done correctly, the SEEMP will not just ensure compliance but also lead to lower fuel consumption.

Energy Efficiency services While the SEEMP is a simplified way to ensure fuel savings on board vessels, additional savings can be achieved through a more structured approach focusing on all areas, such as the voyage planning, bunker

purchasing, hull cleaning, engine condition, strategy & plans, culture on board and performance management. This structured approach has been delivered through more than 50 Energy Efficiency projects for more than 1,000 vessels. DNV has extensive experience and can benchmark the performance against industry best practice.

Through the project, fuel saving initiatives will be quantified and prioritised. Of course, ultimate success lies in successful implementation on board, and DNV also assists in project management, solution development and implementation.  Contacts For enquiries related to hull optimisation, EEDI calculation and trim optimisation, contact your local customer service manager or the Ship Hydrodynamics unit: NTANO362@dnv.com For enquiries related to ship energy audit, SEEMP and energy efficiency services, contact your local customer service manager or the Energy Efficiency unit: environmentandenergyefficiency@dnv.com

Bulk carrier update NO. 1 2012 |

25

Hull integrity management

Maintaining bulk carriers in an easier, safer and more profitable way through a modern inspection program An operational hull planned maintenance system will improve asset management and give more predictable maintenance costs. Regular, scheduled inspections mean that potential problems may be discovered at an early stage.

Text: Richard Tao, DNV

The inspections can be carried out when time allows and compartments are available. Trained seagoing officers with well established programmes and inspection manuals can conduct the inspections during long sea passages. A working record-keeping system containing photographs and acceptance criteria is a necessary feature. Good record-keeping and documentation on board empowers the personnel to stay one step ahead. The management office keeps the cross-fleet overview revealing fleet trends and sister ship experience. Such system enables operators to manage bulk carriers in an easier, safer and more profitable way. This cost efficient way of managing hull maintenance is getting more focus from the bulk operators in times when the rates are low.

Hull Integrity Management DNV’s Hull Integrity Management (HIM) service

26 | Bulk carrier update NO. 1 2012

››

A 3D graphic view of a typical design 57K DWT Bulk Carrier.

aims to aid ship owners and managers keep continuous and cost effective control of vessels hull condition through a planned maintenance system. The services consists of competence training, hull inspection manuals and Nauticus Hull Integrity Software.

Training by DNV The training of seagoing and office personnel is provided by DNV. This can be arranged at the manager’s premises as 1-2 days of classroom training covering such topics as n The planning and execution of effective inspections

Areas of attention and typical defects on bulk carriers n Corrosion and how to assess it n Acceptance criteria n Photos as a means of reporting n Effective reporting

n

IT-based training programmes are also available and continuously being developed.

Hull integrity management

Cargo Holds – Inner Bottom

Cargo Holds – Transverse Bulkhead

Crack of hopper sloping plating connecting to inner bottom i.w.o. transverse web frames.

Crack of bulkhead and lower stool connections to shedder plates.

Crack of lower stool connection to inner bottom especially in way of diaphragms.

››

Where to look – identification of critical structural details by visual inspection.

Hull Inspection Manuals Knowing where to look and what to look for can help to find defects at an early stage. Seagoing officers are not naval architects and need effective guidance in inspecting a ship’s structural integrity. DNV prepares inspection manuals to make this guidance available on the job in a handy format and with a protective cover. The manual may be prepared ship specific.

The manuals are visual, using photos and structural drawings together with 3D computer models. DNV also prepares vessel specific inspection form and area of attention.

Areas of Attention Inspectors need to know what they are looking for. DNV has experience of ships built to all class standards through class transfers of ships built to other class societies’ standards.

Typical defects and critical areas are identified and updated and included in an inspection manual, thus providing guidance to inspectors. The timely discovery of hull damages will reduce the risk of more comprehensive repairs and

unscheduled offhire and make ship safer in operation.

Hull Inspection forms Vessel specific hull inspection forms provide inspectors proper systematic for reporting, it also enable them to navigate the hull structure and give accurate location of findings. The Hull inspection forms include ship type specific terminology which will ensure a common language when reporting the hull condition. This will significantly improve the quality of the reporting.

Nauticus Hull Integrity software DNV has just finished developing new Nauticus Hull Integrity software. The hull inspection is not complete until the findings have been properly recorded. To capture the value of time and knowledge invested in inspection activities, the findings should be used by both crew and onshore staff to control the condition of the vessel or fleet.

The Nauticus Hull Integrity software is also supporting the Hull Integrity

Management service line, which applies to all types of ships, including DNVclassed vessels and vessels classed by other societies.

Features Nauticus Hull Integrity consists of an onboard desktop application and a web-based onshore management system. The transfer of information between these two systems is managed by automated database updating via standard email messages. It supports planning, inspections, analysis of the hull condition, the organisation of management functions and structured follow-up of work orders and repair specifications. The tool utilises ship-specific 3D technology for unique visualisation of the hull condition. An immediate condition control is enabled by colour coded severity alarms displayed graphically on 3D model for individual tanks Benefits The software is intuitive and easy to use. Combined with DNV Hull Inspection Manuals and Hull Competence training, the software forms a

Bulk carrier update NO. 1 2012 |

27

Hull integrity management

Nauticus Hull Integrity Software that helps ship owners and operators to be in continuous control of the hull's condition

28 | Bulk carrier update NO. 1 2012

hull’s condition. service line, which

applies to all types of ships, including DNV-classed vessels and vessels classed by other societies. The hull inspection is not complete until the findings have been properly recorded. To recapture the value of time and knowledge invested in inspection activities, the findings should be used by both crew and onshore staff to control the Date No.2 Frame condition of theC.H. vessel or #145 fleet.- #183 Inspector: Cross deck

Features Nauticus Hull Integrity consists of an onboard desktop application and a web-based onshore management system. The transfer of information between these two systems is managed by automated database updating via standard email messages. It supports planning, inspections, analysis of the hull condition, the organisation of management functions and Top Wing Tank Sloping Plateof and Vertical structured follow-up work orders Strake (to be reported

and repair specifications. The tool Hatchship-specific coaming utilises 3D technology for unique visualisation of the hull condition. An immediate condition control is enabled by colourcoded severity alarms displayed graphically on 2D tank plans and on 3D models for individual tanks Aft Transverse BenefitsBulkhead (including upper and lower software stoolThe plating) - #145 is intuitive

as TWT Plating)

Anodes

Sediment Level

Pressure Testing

Outfitting Failure

Cracks

Indents

Buckling

Rating

Corrosion

Cracking

Weld

Edge

Rating

General

Hopper Sloping Plate

Structure

Flaking

Coating Failure

Det Norske Veritas AS Area

Ship and easy Side to use. Combined with DNV Hull

Inspection Manuals and Hull Competence training, the software forms a powerful package enabling shipowners and operators to efficiently and effectively manage the hull integrity of their fleet.

Charterers notice better maintained vessels, maintenance costs drop, the risk of accident is reduced and compliance with regulations and standards is easier to achieve.

Inner Bottom

Blistering

Area

For' Transverse Bulkhead (including upper and lower stool plating) - #183

E-mail: HIM@dnv.com Web: http://www.dnv.com Notes Overall For further information please contact your local or main DNV office.

Cross Deck

Hatch Coaming Aft Bulkhead

Structure

Integration with major PMS System To support ship operators to managing Hull inspection and maintenance more smoothly, DNV has worked closely with SpecTec, one of the major PMS system provider, to integrate HIM solution with their AMOS software, so that client does not have to install additional SW on board of vessel. Currently a pilot of the AMOS-HIM integration solution is underway and a working solution ready for market is expected to be available second half of 2012. 

Integrity– software is the software tool Hull Management ››Nauticus Nauticus Hull Hull Integrity that helps shipsupporting owners and DNV’s operators to Integrity be in continuous control of the

For' Bulkhead Ship Side Port Ship Side Stbd Hopper Sloping Plate Inner Bottom Internal Structure

Outfitting

powerful package enabling shipowners and operators to efficiently and effectively manage the hull integrity of their fleet.

Charterers notice better maintained vessels, maintenance costs drop, the risk of accident is reduced and compliance with regulations and standards is easier to achieve.

“GEDEN had been using ordinary PMS software to follow-up all hold/tank, void space and hull inspections. However this software is one which was not manufactured for specific purpose of hull inspections and we started to look for an alternative in the market. GEDEN selected DNV HIM software upon a long period of investigations among many products.

DNV HIM provides the owner with a comprehensive follow up and guidance about inspection/condition of tanks and structure in all respect. The most important feature of this software is keeping history of maintenance and defects occur in any part of the structure.

It is not so easy to keep all structural maintenance under control without this kind of software for a company which have a significant number of vessels. “ As commented by Volken Elter, Safety and Quality Manager, DPA of Geden line, who implemented the system for 24 vessels last year.¨

Access Piping

››

A tailor-made hull inspection form for the crew to use when performing high quality hull inspections and recording their findings.

Market outlook

Tough short-term market outlook The dry bulk market has deteriorated significantly over the last six months, although rates have recovered from recent bottom levels. Since the last issue of this report in early November, the time charter equivalents of spot rates have fallen by about 60% for Capesize, roughly 30% for Panamax and Supramax, and about 10% for Handysize.

Text: Jarle Hammer, Hammer Maritime Strategies

Over this period, the Baltic Dry Index has fluctuated strongly. It rose from 1766 points to a peak of 1930 points in midDecember, before crashing to 647 points in early February and thereafter almost doubling to 1165 points, which was still 34% lower than six months before. Time charter rates have been steadier, with one-year Capesize rates down about 33% and decreases of around 15% for smaller sizes over the same period. Whereas newbuilding bulk carrier prices have shown a

general decline in recent months, there have been somewhat mixed developments in second-hand prices, depending on age.

Thus, for Capesize, the newbuilding price has dropped from USD 48.5 million to USD 46.5 m since the beginning of this year. The resale price has dropped from USD 48 m to USD 44 m, the price of a fiveyear-old vessel has slipped from USD 36 m to USD 35 m, and the price of a 10-yearold vessel has fallen relatively more, from USD 26.5 m to USD 24 m. The price of a

15-year-old Capesize bulk carrier ended at the same level, USD 16 m, after previously touching USD 18m.

About one week into May, the reported Capesize spot rate index (average for different routes) stood at a lousy USD 8,800 per day, which is actually the highest level since mid-January (in reality probably somewhat higher when slow-steaming measures are taken into account), whereas the one-year time charter rate stood at USD 14,000 and the three-year time

Bulk carrier update NO. 1 2012 |

29

Market outlook

charter rate at USD 15,500. The calculated break-even rate for a Capesize was USD 17,800. This is based on a five-year-old vessel bought in today’s second-hand market, with an assumed lifetime of 25 years and 8% return on total capital invested. The Panamax spot rate index stood at USD 11,500, with the one-year time charter rate at USD 11,300 and the three-year rate at USD 11,800. At USD 13,300, the calculated break-even was significantly higher for this size too. The Supramax has fetched the highest spot rates for parts of this year and the spot rate index stood at USD 11,700, with the one-year time charter rate at USD 11,500 and the three-year rate at USD 12,000, also below the calculated breakeven of USD 13,000. The Handysize spot rate index stood at USD 9,100 per day, whereas the one-year time charter rate stood at USD 8,800 and the three-year rate at USD 9,500, somewhat below the calculated break-even rate of USD 10,500.

For all vessel sizes, the quoted future rates for the next four years are below the calculated break-even rates, and at about

30 | Bulk carrier update NO. 1 2012

same levels as the break-even rates in 2017.

A comparison of spot rates, time charter rates and futures quotations with calculated break-even rates points to a continued downward pressure on bulk carrier values.

China accounted for as much as 60% of world pig iron production in March 2012. Iron ore imports to China have been the predominant growth element in dry bulk trade over the last few years. China has imported much more iron ore than required for its pig iron production when taking into account its growing domestic production of low-grade iron ore. Thus, substantial stocks of iron ore have accumulated at ports, steel mills and mines.

Figures for the first quarter of this year show the following changes from the corresponding period last year: China’s crude steel production +0.3% to 174.2 million tonnes, pig iron production +4.9% to 165.2 mt, and iron ore imports +5.7% to 187.2 mt. Figures for the first two months of 2012 show domestic production of low-grade iron ore up 16.3% to 153.1 mt, and there are signs

of further increases. Seen against a lower official target rate for China’s economic growth, now set at 7.5% for 2012, and the surge in domestic iron ore production, some analysts now foresee a decline in China’s iron ore imports this year. Last October, the World Steel Association estimated a global steel demand growth in 2012 of 5.4%, with China up 6.0%. In late April, these forecasts were reduced to a global demand growth of 3.6% this year, with China up 4.0%. For 2013, the WSA expects China’s demand growth to remain at 4.0% and global demand to increase by 4.5%. Coal imports to China in the first quarter of the year were about 4% higher than in the last quarter of 2011, and way above the extremely low levels experienced in the first part of 2011 which were influenced by severe flooding at Australian coal mines.

The fleet growth is still overwhelming, but the order book is shrinking rapidly.

Data from Fearnresearch show that the dry bulk fleet increased by 14.4% last year after 16.7% growth in the preceding

Market outlook

year. In the first four months of 2012, the fleet grew by 4.4%, with as much as 16.0% scheduled for delivery during the remainder of 2012, 7.8% in 2013, and just 1.7% in 2014. The fleet growth will also depend on slippage and scrapping. Based on Fearnresearch data, it has been calculated that bulk carrier slippage has decreased from 51% in 2009 to 44% in 2010 and 31% in 2011. The bulk carrier order book as a percentage of the existing fleet has come down from 72% at the beginning of 2009 to 26% in May 2012. Based on data from Clarkson, dry bulk scrap sales increased from 6.4 million dwt in 2010 to 22.3 mdwt in 2011, whereas new orders fell from 97.4 mdwt to 32.9 mdwt. Year-to-date in early May, scrap sales amounted to 11.5 mdwt, while new orders approximately totalled almost 5 mdwt.

Looking at size groups, fleet developments over the last 12 months varied widely. Very Large Bulk Carriers over 200,000 dwt increased by 28% to 65.9 mdwt and had an order book of 52% of the existing fleet at the beginning of May. Capesize in

the 100–200,000 dwt range rose by 14% to 196.9 mdwt and had an order book of 17% of the existing fleet. The Panamax fleet of 60–100,000 dwt increased by 15% to 164.3 mdwt and had an order book of 35%. The Supramax fleet of 50–60,000 dwt increased by 25% to 87.5 mdwt with an order book of 24%. Handymax vessels of 40–50,000 dwt experienced a decline of 3% to 42.3 mdwt with an order book of 9%. Handysize vessels of 25-40,000 dwt are experiencing a revival and saw an increase of 7% to 67.2 mdwt with 22% on order. Smaller bulk carriers of 10–25,000 dwt actually saw a decline of 5% to18.5 mdwt and had an order book of 5% of the existing fleet. Small bulk carriers are often being replaced by geared multipurpose vessels which, in addition to bulk cargoes, also carry containers and fast increasing volumes of project cargoes.

Over the last couple of years, bunker prices have more or less doubled, whereas, for instance, the vessel hire for a Panamax bulk carrier has been roughly halved.

There is therefore a very strong focus on

fuel efficiency now. A new wave of orders for eco-ships, offered at low building prices from distressed shipyards with rapidly shrinking order books, is likely to delay the dry bulk market recovery. However, as eco-ships have significantly lower bunker expenses, older vessels will eventually be forced into lay-up and scrapping. With the present extremely bleak short- and medium-term prospects for shipyards, there is reason to believe we shall see more shipyard and government financing of newbuildings in general. 

Bulk carrier update NO. 1 2012 |

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