Tanker Shipping & Trade October/November 2017 by rivieramaritimemedia

October/November 2017 www.tankershipping.com

â&#x20AC;&#x153;Palau would like the system to be re-evaluated and is calling for support from others in the maritime sectorâ&#x20AC;? Panos Kirnidis, chief executive officer, Palau International Ship Registry, see page 18

CARGO TANKS SHOULD NEVER STAY EMPTY FOR LONG Tankguard Special Ultra delivers the shortest turnaround available on the market with the widest cargo resistance. High cargo resistance and fast desorption give the fastest turnaround time between cargos, helping ship operators optimise cargo flexibility and maximise profitability. All backed by a proven coatings partner with over 50 years experience in the tank coatings industry.

www.jotun.com/tankcoatings

October/November 2017 volume 11 issue 5 Regulars 3 COMMENT 4 CONTRACTS & COMPLETIONS 9 ANALYSIS 11 LEGAL BRIEFING 43 BEST OF THE WEB 44 LAST WORD

Safety

contents Editor: Edwin Lampert t: +44 20 8370 7017 e: edwin.lampert@rivieramm.com Brand Manager – Sales: Paul Dowling t: +44 20 8370 7014 e: paul.dowling@rivieramm.com Sales Manager: Chris Tims t: +44 20 8370 7015 e: chris.tims@rivieramm.com

14 Distinguishing between the trivial and the vital 16 Searching questions asked of new cyber insurance search engine

Head of Sales – Asia: Kym Tan t: +65 6809 3098 e: kym.tan@rivieramm.com

Ship registries

Production Manager: Sasha Tan t: +44 20 8370 1718 e: sasha.tan@rivieramm.com

18 Flagging up anti-competitive practices 21 Is it possible to talk about a new normal?

Vetting 24 Use the data buried in SIRE to identify exactly where the shortcomings lie 26 Clarity sought. Clarity provided on motivated reasons

Conference preview 28 A new venue, a new awards dinner, but the same rigorous focus on the issues

China 31 A resurgent industry is poised for more tanker business

Turkey 35 Yards are winning new orders and in new business areas 36 Strong and stable approach championed by Ayden Marine

Shortsea/inland tankers 39 A consolidating sectors draws Asian interest

Next issue Main features include: escort tugs and pilotage; STS transfers; coatings; ice operations technology Tanker type shuttle tankers: classification, designs, operations, business, markets and trades

Subscriptions: Sally Church t: +44 20 8370 7018 e: sally.church@rivieramm.com Korean Representative: Chang Hwa Park Far East Marketing Inc t: +82 2730 1234 e: chpark@unitel.co.kr Japanese Representative: Kazuhiko Tanaka Shinano Co., Ltd. t: +81 335 894 667 e: kazujt@bunkoh.com Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Head of Content: Edwin Lampert Executive Editor: Paul Gunton Head of Production: Hamish Dickie Business Development Manager: Steve Edwards Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK

Subscribe from just £249

Total average net circulation: 4,000 Period: January-December 2015

Subscribe now and receive six issues of Tanker Shipping & Trade every year and get even more: • supplements: Tanker Shipping & Trade Industry Leaders and Ballast Water Treatment Technology • access the latest issue content via your digital device • access to www.tankershipping.com and its searchable archive. Subscribe online: www.tankershipping.com

Disclaimer: Although every effort has been made to ensure that the information in this publication is correct, the Author and Publisher accept no liability to any party for any inaccuracies that may occur. Any third party material included with the publication is supplied in good faith and the Publisher accepts no liability in respect of content. All rights reserved. No part of this publication may be reproduced, reprinted or stored in any electronic medium or transmitted in any form or by any means without prior written permission of the copyright owner.

www.tankershipping.com

Tanker Shipping & Trade | October/November 2017

Our drive, our promise A partner through involvement. Together we make the difference. We are MarFlex and we offer complete solutions for performing and monitoring the entire cargo handling process on board your ship. Itâ&#x20AC;&#x2122;s what we call Pumping Excellence. Marintec China 2017 Visit us at Hall N2 - H31

visit www.marflex.com Pumping Excellence

COMMENT | 3

THE TANKER INDUSTRY’S GAME OF DRONES

pparently, drones were the most gifted item over the last holiday season. But how are they faring when it comes to our world of tankers? Regular readers will know that we have been tracking the use of drone technology for some time. We brought you news of the first drone delivery to a vessel at sea last year when Maersk Tankers used a Xamen-drone to deliver a small parcel near Kalundborg in Denmark. We also kept you abreast of tests using drones to support the hull survey of two vessels at Remontowa Shipyard in Poland overseen by DNV GL. We followed that up with an extended report on the first production survey using a drone on the Carl Büttner Shipmanagementowned chemical tanker Apollo. We can now bring you news that Bureau Veritas has entered into a joint investment project, with the working title RECOMMS, to develop drones capable of inspecting steel structures in enclosed spaces.

Key investment partners for the confined space ambitions include Akzo Nobel, Barrier Group, Bureau Veritas, Drone Ops, Hempel Paints A/S, Marine Technical Limits and a so-far unnamed major oil company. Safinah Ltd, coating specialists and consultants, is the RECOMM project manager. In the first phase of development the drone will be designed to carry an unobstructed HD camera as well as lighting and batteries with suitable strength, durability and longevity to perform structural and coating inspections within a ballast tank while providing reliable clear images fit for comparison with close-up inspection. According to Bureau Veritas technical director Jean-François Segretain eliminating the need for staging erected for class renewal surveys could save in the region of US$90,000 for a VLCC, based on dry docking costs in China for ships of 10 years and older. So we can conclude: uptake of drone technology in the maritime sector is

Click here for more editor's comment videos

www.tankershipping.com

gathering pace. It may be a while before the average tanker owner wakes up to find one capable of performing advanced surveys in their Christmas stocking. But what is undeniable is that major interests are jostling for position in what you might call the tanker industry's very own game of drones.

TACKLING COMPLIANCE AND CORRUPTION IN THE TANKER SECTOR This issue of Tanker Shipping & Trade carries a powerful indictment of port state control. In a hard-hitting piece, Palau International Ship Registry chief executive officer Panos Kirnidis focuses on the “dubious and questionable port state control (PSC) inspections that have resulted in Palau International Ship Registry being placed on the Paris MoU blacklist.” He writes: “There needs to be a more serious look at how PSC operates in some parts of the world. Political influences can play a damaging part in PSC detentions. Add into this volatile mix corruption and sheer incompetence in some parts of the world, and it is not hard to see why there needs to be a tighter control on PSC and the economic and management issues that are directly affected.” These important issues will be pursued at November’s Tanker Shipping & Trade Conference, Exhibition and Awards in London. Since ship registration is an integral part of the business, no owner or operator should miss this vital discussion. I look forward to seeing you there. TST

Tanker Shipping & Trade | October/November 2017

4 | CONTRACTS & COMPLETIONS

ORDERING OF T NEW TANKERS ABOUT TO PAUSE The combined number of newbuildings and in-service vessels are more than enough to handle current and future demand by Barry Luthwaite

he tanker contracting boom continued over the past two months but there are signs, with a revival in bulk carrier business, that activity in the wet sector will become less frenetic. Certainly, owners with enough tonnage to meet demand will welcome a pause because it would help freight rates. These rates have eased in recent months, but still provide viable earnings and profits. More owners are seeking pooling arrangements with major owners for economy of scale and stability in a still volatile trading climate. Any doubts that the tanker revival has stalled are more than dispelled with a look at contracting so far in 2017. It stands at an impressive 254

Will the market preserve its balanced outlook?

Tanker Shipping & Trade | October/November 2017

www.tankershipping.com

CONTRACTS & COMPLETIONS | 5

TANKERS CONTRACTED SINCE JANUARY 2017 BY VESSEL TYPE AND VESSEL COUNT

VLCC SUEZMAX SMALL TANKER

21 3

SMALL PRODUCTS SMALL CHEMICAL PANAMAX MEDIUM PRODUCTS MEDIUM CHEMICAL HANDYSIZE

7 3

11 18 19 66

HANDYMAX

AFRAMAX

units of all types, up from 188 vessels in mid-July this year. The deadweight has risen from 20,915,715 dwt to 28,825,158 dwt, but is countered by a fall in the overall order backlog from 1,082 vessels aggregating 98,286,463 dwt to 1,058 tankers totalling 95,274,649 dwt. Part of the backlog fall is due to the increasing rate of deliveries, which so far in 2017 number 319 vessels that have added 32,040,646 dwt to the global fleet. Confidence abounds and the outlook is good. Older vessels will succumb to recycling if prices hold up at levels now in excess of US$400 per ldt. The longpredicted age expiry of 15 years is likely to materialise sooner rather than later given the appeal to charterers of a younger fleet meeting strict environmental legislation, which will induce higher freight rates. Substandard vessels need to be eliminated. There is little doubt that shipbuilders owe a huge debt to the tanker sector for their salvation following the dry-bulk drought of over a year. The low prices still

www.tankershipping.com

on offer have played a huge part in the ordering boom. Recent bankruptcies and the severe thinning of capacity to reduce huge debts have aided shipbuilding stability. For the most part, prices remain static except for increases of US$13M for extra equipment to meet environmental legislation from 2020. Looking at the investment picture, Greece leads the way with 170 tankers committed, totalling slightly over 24 million dwt. Greece is followed by China (117) and Japan (110), but in each of the latter two cases many vessels are for the domestic construction account. Greek owners are phasing out older tonnage in favour of newbuildings. Shipbuilders are hungry for business from Greece, whose owners are cash fluid but tightlipped over fund raising. To date no Chinese leasing company has been used to raise finance, but Eletson Corp just signed a deal with China Shipbuilding Industry Corp (CSIC) for acquisition of four LR2 product tankers on a sale and lease-back basis (the vessels are secondhand units). The

deal is the first concluded by CSIC Leasing, which hopes to rival Bank of Communications Financial Leasing (BCFL) in newbuilding financial packages that enable owners to refinance existing debt. Each of the leasing companies is a division of a large shipbuilding group. South Korea is offering similar assistance, mainly from Korea Development Bank. Financing is a fast-changing scene: many banks have withdrawn from the business, and private equity investors regard shipping as a bad long-term investment. The most popular choice is still the 50,000 dwt MR2 product carrier: 227 units are on order. The worry is still that history will repeat itself. Hundreds of MR2s were contracted up to 2015, but recovery never came and market rates were crushed. The resultant plethora of deliveries now enjoying the recovery will hit the new tranche of newbuildings in the next two years, which could deflate the markets. Sixty-six MR2 units have been ordered so far this year, outstripping 2017 deliveries (63). Despite the moves to

renewable and cleaner energy, forecasts of the demise of the crude oil carrier have proved somewhat premature. A number of owners have invested in VLCCs and Suezmaxes. There are 126 VLCCs on order, aggregating 39,773,825 dwt. This year has proved a busy one for this type, with 51 ordered to date and 42 delivered, commissioning 16,133,592 dwt and 12,946,837 dwt respectively into the global fleet. The Japanese majors have been busy renewing VLCC fleets as vessels age and COAs come up for expiry in two years. Some orders have recently been placed, while others are under negotiation for probable conclusion this year. Up to 20 VLCCs are stemmed for construction. NYK booked two plus optional one at Japan Marine United, as well as a further unit from Namura. The vessels will be jointly owned by a Japanese financial company, and bareboat chartered to NYK with full purchase options. Several Japanese orders stay under the radar for months before being revealed. It is a proven fact that some shipyards are holding building slots for previously cancelled vessels with tier II

Tanker Shipping & Trade | October/November 2017

6 | CONTRACTS & COMPLETIONS

engines specified. These are mainly occupied by bulk carriers, but several MR2 tankers have been concluded where the keels were originally laid in 2015 (thus qualifying any sale to specify tier II engines, saving US$13M for the contractors). This happened for the first time with a VLCC for Mitsui OSK, a rare occurrence of construction in China. The vessel will deliver in September 2018, doubtless with a tier II engine (saving around US$3M on refinement to meet new emission regulations). This flexible application of compliance surrounding the fitting of earlier model engines has led to around 50 ships being snapped up at cheaper pricing because keels were laid in 2015. But the

majority of vessels must be at the document of contract stage only, because if so many keels were laid the shipyards in question would not be able to move on with subsequent orders. Having endured a successful period of business after a 25% devaluation of the yen against the US dollar, the yen has now strengthened, making Japanese ships very expensive. Foreign owners always know they will pay more for Japanese ships (a 5-10% premium over those made by rivals China and South Korea) but persevere safe in the knowledge that quality ships will be delivered on time. There is evidence of more Japanese owners ordering overseas, though, as domestic

owners shun higher prices. Shipyards prefer local currency payments over US dollars. For foreign business, the Japanese trading housesâ&#x20AC;&#x2122; formula of bareboat charter with purchase option provides rich dividends. Norden and Torm, plus Norwegians, are big customers. In September, Imabari christened its newbuilding dock at Marugame, which will enable construction of the largest ships. Imabari initially sought a breakthrough in large containerships, but it now has eyes on VLCC tonnage also (especially in view of homeowner requirements). The question now is will the newbuilding boom continue and overheat the market?

Most owners have ordered in the faith that in 2020 (when new environmental legislation kicks in) many tankers will be sent for recycling because owners will not want to incur extra expenses to comply with legislation. Shipbuilders are likely to return to their main diet of bulk carriers. It is a fair bet that order intake for wet tonnage will drop, but the combined number of newbuildings and in-service vessels are more than enough to handle current and future demand. TST Source for all figures in these tables: BRL Shipping Consultants. Data as at 29 September 2017

TANKERS DELIVERED SINCE JANUARY 2017 VESSEL TYPE

DWT

AFRAMAX (LR2)

6,701,540

HANDYMAX (MR2)

2,946,427

HANDYSIZE (MR1)

680,857

MEDIUM CHEMICAL

140,443

MEDIUM PRODUCTS

44,994

PANAMAX (LR1)

297,939

SMALL CHEMICAL

645,974

SMALL PRODUCTS

69,757

SMALL TANKER

161,946

SUEZMAX

7,403,932

VLCC

12,946,837

GRAND TOTAL

319

32,040,646

Tanker Shipping & Trade | October/November 2017

www.tankershipping.com

The Future is Clear ME-GI dual fuel done right

MAN B&W MC/MC-C Engines MAN B&W ME/ME-C/ME-B Engines MAN B&W ME-GI/ME-C-GI/ME-B-GI Engines The new ME-GI generation of MAN B&W two-stroke dual fuel ‘gas injection’ engines are characterised by clean and efcient gas combustion control with no gas slip. The fuel exibility and the inherent reliability of the two-stroke design ensure good longterm operational economy. Find out more at www.mandieselturbo.com

Position Reference Sensors for Shuttle Tankers

• Operating range to 10km • Automatic sensor and beacon acquisition • Guidance Marine Dashboard control • Station and beacon compatible with legacy Mk5 systems

Mk6 10,000m ®

• Building on 40 years of Artemis pedigree

1,000m

Guidance Marine Ltd, 4 Dominus Way, Meridian Business Park, Leicester, LE19 1RP, UK Tel: + 44 116 229 2600 Email: sales@guidance.eu.com

www.guidance.eu.com

www.marine.direct

2,500m

Supported by our worldwide support

ANALYSIS | 9

MSI forecasts period of sustained higher scrapping for tanker market Fleet age profile, low rates, high scrap prices and regulations are all set to drive a four-year surge in scrapping volumes, says MSI Analyst Kieran Hess

he pickup in tanker scrapping seen in Q3 has set the scene for a resurgence in demolition volumes that looks set to be maintained beyond the end of the year. At a forecast 5.9M dwt, 2017 is predicted to see much higher volumes of tanker scrapping than the 2.5M dwt recorded in 2016, according to MSI data. While demolition volumes slowed in Q2 the situation is changing rapidly, with 4.6M dwt removed from the fleet in Q3 2017 alone. MSI expects a major increase in scrapping totals for 2018 through to 2021. A number of factors provide the basis for the MSI forecast for higher scrapping levels. The first, and most important, is the fleet age profile. Despite the increase in overall fleet size, MSI highlights the increase in the proportion of ships over the age of 20 years from 3.9% in 2012 to 6.3% in 2017. This coincides with a reduction in scrapping from 11.9M dwt in 2012 to 3.1M dwt in 2015, with scrapping volumes remaining low into 2017, driving an increase in the proportion of the fleet over 20 years old. When it comes to vessels over the age of 20 years for each market segment, all excluding the 10-70,000 dwt range, show an upward trend

www.tankershipping.com

between 2014 and 2021. VLCCs and Suezmaxes show the greatest increase in the proportion of vessels over 20 years old, with VLCCs rising from below 1% in 2012 to 6% in 2017. Suezmaxes over 20 years old double in the same period. Although the 10-70,000 dwt sector shows a decline in ships over this age, the trend maintains an upward trajectory from 2015, and the overall proportion of vessels over 20 years old remains significantly higher than the other sectors at 8.9% in 2017. The Base Case shows the MSI forecast proportion of vessels over 20 years old out to 2021. This increases to 9.9%, which includes its sizeable scrapping assumptions. The zero scrap scenario

gives a forecast for the same, but with no scrapping. It shows a 58% increase on the proportion of ships over 20 years old, at 15.5% of the fleet. Even with substantial scrapping expectations in 2018-21, the age of the fleet continues to increase and the MSI scrapping forecast may actually seem conservative. Low freight rates and higher scrap prices are supporting the commercial case for increased demolition. LDT prices have increased overall during the year and in September, the 300,000 dwt La Paz was reported scrapped at a price of US$415 per LDT. Prices are now around US$115 per LDT greater than in September 2016. In addition, rates across the tanker sector have been subject to a downward trend since 2015. Q3 has already shown positive signs in terms of capacity removals. Seven VLCCs were scrapped. Six Suezmax vessels were scrapped, three times as many as in Q1 and Q2 combined. Fourteen Aframaxes and LR

This increase in demolitions will support a rebalancing of fundamentals in the tanker market, providing a constructive backdrop for future earnings increases

tankers were removed. In 2018 MSI forecasts 15.8M dwt to be sent to the breakers. Through to 2021, MSI expects high levels of scrapping activity, peaking in 2020 at 17.2M dwt. This increase in demolitions will support a rebalancing of fundamentals in the tanker market, providing a constructive backdrop for future earnings increases. TST

20+ YR OLD FLEET VS SCRAPPING 14

Mn Dwt

25+

19-25

15-19

6 % of 20+ Yr Fleet (RH Axis)

4 2 0

2012

2013

2014

2015

2016

2017

Tanker Shipping & Trade | October/November 2017

Because with proper network security you can forsee the future

VANIR • 24/7 Monitoring • Automatically stops traffic from dangerous sources • Prevent sensitive information being leaked outside your network • And much more …

If you wish to be at the forefront of maritime cyber security contact Port-IT W W W . P O R T- I T. N L

I www.port-it.nl T +31 (0)10 260 00 41 E sales@port-it.nl

OUR BALLAST WATER SOLUTIONS ARE PURE AND SIMPLE

We will help you to clear things up! UniBallast can retrofit your vessel(s) by building in a ballast water treatment system. Or just install our Universal Ballast Water Port Connector (UBPC) for easy discharge of your ballast water to any treatment facility according to the latest USCG/IMO standards. Just contact us for conclusive advice and a simple & effective solution. Whatever fits your needs. www.uniballast.nl

LEGAL BRIEFING | 11

WHAT ARE THE BIG LEGAL THEMES

FACING TANKER OWNERS?

The rise of China, climate change, protectionism and free trade: the eighth edition of Shipping and the Law, hosted by Studio Legale Lauro, considered shipping’s big themes

BELOW CENTRE: Giacomo Gavarone (centre): ”Sometimes we compete, sometimes we co-operate”

www.tankershipping.com

he morning of the first day of the eighth edition of Shipping and the Law, hosted by Studio Legale Lauro set the tone for much of what followed: a combative discussion about the threats that confront the industry and whether they can be considered opportunities. The first session, moderated by former Guardian environment correspondent Terry Macalister, considered how China’s role as a demand driver sat alongside its broader global ambitions. Mr Macalister described China as “a buzzing hum constantly in the background of any shipping conversation, and so far the noise has been positive.” China is projecting shipowning and shipbuilding capacity unlike anything the West has ever seen, but its acquisitive appetite is concerning ports and regulators in particular. As ECSA president-elect Panos Laskaridis noted, a recent brainstorming exercise with the EU on changes in the next 20-30 years included how to respond to China’s aggressive expansion. “We shouldn’t sit back and watch China buy things up, then decide it’s a threat. We should look at it as a tremendous opportunity to work with them, and we would like to see easier access to China in return for investments in Europe.” He pointed out that despite predictions that China would overtake Japan and Greece in fleet ownership rankings, China had not done so in a decade: “In capacity terms, the distance has widened – you cannot develop in 10 years what takes 2,000 years to learn.”

For Confitarma president-elect Mario Mattioli, the potential of One Belt, One Road at 12 times the size of the Marshall Plan is challenging and scary as well. Italy must look at it as an opportunity, despite being at the end of the belt. “Our strategy should be to act as a logistics platform, but we are at risk from real-world events. We need to create political consensus on the sea – not a ministry of merchant marine, but a ministry of the sea,” he said. ICS chairman Esben Poulsson was more optimistic that the progress that China has achieved can be managed in a way that is beneficial and good business for both sides. “Certainly the progress has been dramatic and the spin-off benefits tremendous, especially for the wet and dry bulk markets. From a regulatory point of view, China has proven itself to be committed to the WTO and we have engaged as shipowners in company-to-company dialogue at a high level,” he said. As the sole regulator in the room, EU director of waterborne transport Magda Kopczynska said that the EU needed to take defending European interests more seriously in future: “We are certainly looking more closely at third-country investment in Europe. We need to be attentive to get fair and similar deals when European companies go to China.” The dialogue that shapes the current maritime landscape is 12 years old, and she said the EU attached growing importance to the maritime dimension of trade and China’s role within it. “China has potential as a connectivity platform

Tanker Shipping & Trade | October/November 2017

12 | LEGAL BRIEFING

provided investments are made with transparency. We don’t doubt China must be taken seriously, but discussions on an industry level are not enough. Negotiations are more powerful on a government level than on an individual basis,” she asserted. But would the EU actually intervene if China moved to buy any more EU port resources? That was not for the Commission to say, but there is a need to set ground rules in discussion with port authorities and national governments, she said. There was some consensus on the issue of climate change, though still plenty of room to dance. Admitting she was “an optimist by nature,” Ms Kopczynska noted a change in attitudes in the industry, with a “clear indication and commitment that shipping is willing to take the challenges seriously.. She officially acknowledged and applauded the industry for the ICS submission to MEPC 71, and said that “by the end it was clear both industry and green NGOs were equally frustrated by the slow pace of progress. I hope what we will get from the next intercessional is a vision on what elements need to be agreed.” Mr Poulsson agreed the industry had been slow off the mark, but it remained “responsible, adaptable to change and ready to understand our role. There is a strong incentive to reduce fuel costs, and optimism around positive dialogue.” Mr Laskaridis suggested a more novel approach, though not one that is policy so far. “Despite not being in the Paris Accord, we realise we have to contribute in a fair, proportionate and equitable way. We will have to pay to reduce impact carbon by operational measures such as regulating slow steaming. If you go faster, you will have to pay.” While the impact of regulation on markets is becoming easier to identify, there is far less certainty about how the shift toward protectionism and populism will impact shipping. This could be because the effects have not yet been felt, or because the risk has been overstated. Explaining the current situation, Roberto D’Alimonte, chair of the political science department at LUISS Guido Carli, put it indelicately: “A lot of people frustrated by Globalisation may have given us a greater degree of equality at a global level, but at a country level inequality has grown”. As globalisation’s servant, shipping and ports stand to suffer from a reversal, but Antwerp Port Authority president Marc Van Peel noted – for his port at least – no effects of the Trump trade policy. But “Brexit will be a major issue for European ports, and there will be winners and losers. North continent ports could take traffic from Dover, Southampton and Felixstowe. What we fear most is the lack of a sensible agreement.” Like many people in the industry former ECSA president Thomas Rehder was simply bemused as to why the UK would turn its back on the world’s

Tanker Shipping & Trade | October/November 2017

biggest single market, but he had a different target in mind: the US Jones Act. He called it “an extreme protectionist policy that has created a maritime museum, stifled innovation and resulted in an outdated fleet. It exists at a great cost for the environment and consumers, and it doesn’t help shipbuilding or create employment.” Neapolitan shipowners have had some of the worst of a terrible decade, and in some cases have been ill-prepared for the changes that have hit the industry. Often small, family owned and used to traditional banking relationships, these owners are now led by a younger generation – and the changes are taking hold. In the ‘Past and Future’ session, former Young Confitarma president Andrea Garola pointed out the difficulty of reconciling more capital intensive and technical vessel operations with the ability of a family company to take a final investment decision. He said: “New niche solutions such as LNG as fuel are even more expensive and more technical. They completely change the financial structure for us. New sources of finance can bring new vessels into market, but it’s up to us to decide whether this presence is enemy or friend.” He added that he would be in favour if not of consolidation, then at least of pooling or sharing ownership in place of the 100% model, and in favour of far more co-operation on services (such as purchasing) that allowed local owners to work together. As Mariella Bottiglieri observed, when everything changes, a Darwinian approach applies. Trades, ships and the legal framework have changed, so the sector’s approach to finance has to change too. She explained: “Shipping needed an alternative, and the only reason private equity funds are fashionable is because the banks are not there. The banks used to be the perfect guy forever, but they disappeared. A PE fund is not going to be there for life, so it’s important to find a timeline that suits both parties.” Young Confitarma [a group of your shipowners] president elect Giacomo Gavarone added that the challenge was not necessarily about finance, but rather about finding the right partners with whom to manage the business. “It means looking outside your family in new markets to find the right partners to share risk in international joint ventures. Sometimes we compete, sometimes we cooperate,” he said. TST

ESBEN POULSSON (ICS): “Progress has been dramatic and the spin-off benefits tremendous”

While the impact of regulation on markets is becoming easier to identify, there is far less certainty about how the shift toward protectionism and populism will impact shipping

www.tankershipping.com

www.idudesign.com 87 Callingham Rd, Pittsford, NY 14534 USA

taro® cylinder lubricants

IDU Creative Services +1 585 248 5229 team@idudesign.com

your first defense against cold corrosion Adapt to fast-changing marine requirements and protect your engine. Taro cylinder oils from 25 to 140BN — lubricants for today, and tomorrow.

chevronmarineproducts.com

Chevron Global Lubricants 179986->Tanker Shipping & Trade Cylinder Lubricants Half-page 190x130mm October Ad.2.indd 1

BIO-FUELS CAN YOUR SHIPS CARRY THEM? Your Oil Discharge Monitoring Equipment (ODME) must be certified to the current MEPC regulation* To find out more email sales@rivertrace.com

* RESOLUTION MEPC.240(65) – came into force 1st January 2016 AMENDMENTS TO THE REVISED GUIDELINES AND SPECIFICATIONS FOR OIL DISCHARGE MONITORING AND CONTROL SYSTEMS FOR OIL TANKERS (RESOLUTION MEPC.108(49))

+44 (0) 1737 775500 www.rivertrace.com

SPECIALISTS IN WATER QUALITY MONITORING

10/5/17 12:21 PM

14 | SAFETY

Real-life marine risk assessment:

is it trivial or vital for quality assurance? AVERAGE RATING OF EACH CATEGORY 4.4

4.5

4.6

4.7

4.8

Certification and documentation SMS and operator's procedures manuals

4.9

4.6 4.8

Crew management Navigation management Safety management

5.0

4.9

5.0 4.7

Environmental protection & pollution prevention

4.9

Structural condition and class documentation

5.0

Cargo and ballast system

5.0

Mooring

5.0

Communications

5.0

Series engine and steering gear compartment General appearance and condition Vessel risk profile (VRP)

ver the years, technological advancements have made sailing a lot more efficient and secure, though a lot of the challenges remain the same. Meanwhile, new pitfalls could lead to unexpected operational and financial losses. A ship is like a factory floating on the sea. Every ‘cog’ on board needs to work effectively and efficiently to guarantee a safe journey, and seamless communication is essential. Hidden risks can jeopardise a vessel’s safety and cost in many ways. Fixing the consequences is neither quick nor cost-effective. The need for effective and efficient evaluation of fleet management issues, including proactive measures to minimise risk, is a common topic among decision makers. It is essential to document the quality of a vessel from various perspectives, e.g. management, safety, overall condition, human element etc. Prevention at Sea (PaSea) marine risk auditors can identify and evaluate the operational reliability and readiness of a vessel by identifying the risk factors that may contribute toward or result in a serious incident – before they escalate. PaSea’s Marine Risk Assessment for quality assurance purposes service takes into consideration the risks and pitfalls that may be faced by mariners during each day of operation. PaSea assessments revolve around the identification of common risks and the detection of traceable deficiencies, and well-trained assessors pride themselves on being able to identify potential risks that may result in unpleasant delays,

Tanker Shipping & Trade | October/November 2017

4.9 4.7 4.87

incidents or loss of hire. PaSea achieves this by inspecting the vessel from different angles after splitting it up into zones consisting of different areas of inspection, e.g. safety management, navigation, structural safety, engine operations, human element, mooring, cargo operation, etc. A detailed inspection report – encompassing data processing, statistical analysis and suggested proactive measures – is delivered to the client. The report mirrors the ship’s risk profile by taking into consideration all the results of the assessment. So whether you are a shipmanager, banker, insurer or charterer, PaSea offers a comprehensive solution: identification of potential risks to your shipping business and help eliminating or mitigating them. The aim of the marine risk assessment for quality assurance is not merely to point out non-conformance but rather to ensure that deficiencies are identified and resolved, safeguarding the smooth execution of the project. During the configuration of the vessel risk profiling (VRP), all activities that could affect the vessel operator, fleet operations and performance are evaluated thoroughly. Risks are identified and risk-control options are proposed, allowing risks to be isolated, mitigated or maintained at an acceptable level. Maintaining an outstanding low risk profile helps build a good reputation, the main way to improve the earning capacity of the fleet and reduce operational costs. TST

www.tankershipping.com

SAFETY | 15

CASE: MARINE RISK ASSESSMENT ON BOARD A TANKER OF 115,000 DWT The following are six examples of some of the findings of a Marine Risk Assessment for quality assurance purposes on board a 115,000 dwt tanker during its stay at the port of Rotterdam. The report was carried out by an experienced and qualified PaSea marine risk auditor. Some of the findings were of critical importance.

Finding 1 – Active fire protection

Finding 4 – Main deck drain system

The fire-protection sprinkler system installed in the bosun store was found to be supplied by seawater. The electrical motors for the hydraulic mooring system are located in the bosun store. If the sprinkler systems were to be activated, it is important to know what would be the extent of the damage as well as the consequences of using seawater with respect to the motors. A fire-protection water sprinkler system is installed in the steering gear room. If the sprinkler system were to be activated, it could possibly result in a high risk of corrosion of the machinery as well as loss of the vessel’s steering, with unpredictable consequences.

The drain system on the main deck, located under the save-all of the lubricant oil supply connection, was found to be inoperable. This area is prone to pollution incidents, so the drain system’s smooth and undistracted operation is crucial in such cases. PaSea Proposal: The drain system should be maintained as necessary to ensure its readiness for use at all times. PaSea suggested the initiation of a campaign dedicated to and revolving around the maintenance and assurance that the drain system is operable.

Root cause: The vessel was built and delivered with this system installed, with no recommendation as to the type of fire-fighting system that should be installed. PaSea proposal: PaSea drew the ship operator’s attention to this issue and suggested that alternative solutions should be investigated.

Finding 2 – Lubrication of the piping system expansion joints

Finding 5 – OWS piping system

The expansion joints of the vessel’s piping system were lubricated with grease. Although this is a common practice, grease hardens the rubber material and the pipe will eventually lose its tightness. The positions where such expansion joints are located constitute high-risk areas. Failure of the expansion joints could have drastic consequences for the ship. Other lubricants such as Vaseline can be used instead of grease.

The OWS piping system was not tamper-proof in accordance with Marpol regulations and the approved system drawings.

Root cause: Common practice is not always the best approach. PaSea proposal: PaSea suggested that the ship change its lubrication practice and that the company prepare a campaign to change the current practice and procedures followed by the fleet for the lubrication of the piping systems’ expansion joints. PaSea suggested that the technical superintendents be trained accordingly and that they verify the implementation of the new practice on each visit to a vessel in the fleet.

PaSea proposal: The use of tags and seals, and brightly colored marker paint, can deter unauthorised bypassing and other illegal practices. In addition, PaSea suggested the fleet-wide enforcement of a sealing system (i.e. all pipe lines and flanges of the OWS system should be sealed) and the entry of a seal number in the seal record. This is an efficient and cost-free measure. Relevant reference: EXXON Requirement F17. Ref.: VIQ 6.31

Finding 3 – EEBD air quality

Finding 6 – ETA chain

The quantity of oxygen in each emergency escape breathing device (EEBD) can be checked by the pressure indicator. According to manufacturers, these must be replaced every 15 years. But considering that the EEBDs remain idle for long periods, the quality of the air is not verified. It is essential to know the quality of the air prior to use in an emergency.

The chain used for the emergency towing arrangement (ETA) was stored in the forecastle space, so it is highly unlikely that the chain could be retrieved within the required time limit (not more than an hour) in case of an emergency.

Root cause: Common practice. PaSea proposal: PaSea advised contact with the makers in order to obtain further instructions on how to check the quality of the oxygen contained in the EEBD devices. Relevant regulation: All ships shall carry at least two EEBDs within accommodation spaces. Ref.: SOLAS II-2/13.3.4.2 Ref.: SOLAS II-2/13.4.3.1

www.tankershipping.com

PaSea proposal: The chafing chain should be stowed in a place where it can be easily connected to the strongpoint. PaSea suggested a campaign dedicated to the proper storage of the ETA chain and its use in case of an emergency, to verify current status and assure awareness of best practice. Relevant Ref.: Resolution MSC.35(63). Ref.: VIQ 9.25

Tanker Shipping & Trade | October/November 2017

16 | SAFETY

Risk-management software developers launch first cyber insurance search engine T

he first search engine with an ability to directly compare cyber-insurance policies is now available to insurance brokers, and the company that developed it says it will soon offer subscriptions to businesses. Touting the software’s ability to compare coverage quickly and isolate gaps, developers of the Cyber|Decider search engine STORM Guidance told delegates at the launch in Lloyd’s of London’s Old Library that they have thus far inputted 16 insurers’ policies into the search engine wholesale and have plans to include others. STORM Guidance chief executive Neil Hare-Brown told Riviera Maritime Media that full-coverage cyber-insurance policies are uncommon in the maritime sector, and that his insurance comparison engine would give companies a way to compare the aspects of coverage that most concern their business interests. “It depends on what you do in marine – if you’re a cruise line that has loads of customer data your primary concern may be protecting that, but if you’re a freighter it’s probably industrial control issues,” Mr Hare-Brown said.

He forecasted that the insurance market would focus in on cyber-insurance language to develop specific cyber policies, and cited the recent ransomware attack on container shipping giant Maersk as a case study to which many insurance companies would refer. “In terms of marine, I think it will become more of a specialist area. There will be more policies that are tailored to the market, especially around business interruption,” he said. “Maersk are suffering – there’s a very long tail on that, as well. It’s amazing how a truly global business can suffer so far down the line.” Ultimately for insurers, Mr Hare-Brown said, “You’ll see more compensation around just-in-time supply chain issues – and many of [the policies] are not really optimised for that at the moment.” Although the Cyber|Decider search engine is aimed at saving time for insurance brokers who serve small and medium enterprises (SMEs), Mr Hare-Brown said he was ready to sell subscriptions to larger organisations, such as shipping conglomerates, whose in-house risk management teams do their own research and “effectively broker to themselves”. He was quick to point out that many global businesses enter into bespoke policy agreement with insurers. For smaller groups, though, the 16 insurance providers included in the software cover 80% of the policies sold. Currently, according to consultant Diane Jenkins who helped to develop the product, less than 10% of SMEs buy cyber insurance, leaving a great deal of companies vulnerable to the costs associated with cyber attacks. And those costs, according to Mr Hare-Brown, are growing. “Unfortunately, businesses can no longer absorb the worst-case losses they could absorb 15-20 years ago.” Ms Jenkins agreed, saying “The difference in policy coverage in the Business Interruption sections is quite stark. Some will only cover you for 90 days or less.” Put in real-world terms, Ms Jenkins pointed back to the Maersk attacks. It has just gone 90 days since the attacks, and, she pointed out, Maersk still haven’t tracked down some of their containers. “How much Business Interruption loss are they going to face?” she asked. “We just don’t know yet.” TST LEFT: Unfortunately, businesses can no longer absorb the worstcase losses they could absorb 15-20 years ago. This realisation is one of the key drivers behind the new database

Tanker Shipping & Trade | October/November 2017

www.tankershipping.com

CleanSOx Compact One fuel, All sources, all waters, Always

Benefits: · Operates with one fuel in all areas and harbours · No need for major rebuilding of the vessel; minimum footprint requirements · Reduced installation and commissioning time · Future proof solution · Minimum CAPEX and OPEX

Marintec Visit us at hall N1 stand N1K01, N1K11

tel: +47 21 04 33 11 email: sales@cleanmarine.no Strandveien 15, 1366 Lysaker, Norway www.cleanmarine.no

18 | SHIP REGISTRIES Palau

FLAG REGISTRIES:

why is the maritime sector allowing the anti-competitive environment to continue? Panos Kirnidis* takes a critical look at Flag States competitiveness

We are not asking for a dilution of the regulations affecting the critical issues that classification societies, flags, registries and any other relevant bodies are subject to

ecently my flag, Palau International Ship Registry (PISR), has suffered from dubious and questionable port state control (PSC) inspections that have resulted in PISR being placed on the Paris MoU blacklist. Given that anybody can easily access inspection records, white, grey and black lists have an enormous impact on the reputation and the ethical and commercial position of the parties involved â&#x20AC;&#x201C; the owner, the shipping company and the flag of the vessel. Many conflicts have emerged among these parties and while authorities who participated in research indicated no conflicts, flags and shipping companies have given the opposite view and incidences of unreported cases are common. PSC officers do not work to a common standard for inspections. The selection of ships to be audited does not follow random sampling and so does not reflect the real situation. The mathematical formula used is biased against smaller registries. There is no substantial historical evidence to show that there is a direct relationship between the calculated target factor (age, flag or Recognised Organisation) and the standard of the ship There needs to be a more serious look at how PSC operates in some parts of the world. Political influences can play a damaging part in PSC detentions. Add into this volatile mix corruption and sheer incompetence in some parts of the world, and it is not hard to see why there needs to be a tighter control on PSC and the economic and management issues that are directly affected. Despite the fact that the majority of PSC inspections are conducted on a highly professional, transparent and equitable basis, incidents of corruption

Tanker Shipping & Trade | October/November 2017

have been unofficially reported at a number of ports worldwide, notably in the Black Sea region. Some of these cases show that the PSC was used as geopolitical leverage for a specific time period. If a registry had several vessels trading in the Black Sea region and other registries had no ships in that area, the picture will not be a genuine reflection of the performance of the two registries. It is important to stress that the MoU should be an agreement between maritime administrations and not governments, as stipulated in all Memoranda. Another major issue is that it can be proven, statistically, that local PSC favours its national registered vessels or vessels with the national RO. Take, for instance, the statistical performance of Russian-flagged ships detained in Russia,; French-flagged ships detained in France, or Italian-flagged ships detained in Italy. The shipping industry needs ways to tackle this alleged corruption among some PSC officers, who are extorting large payments by threatening to detain vessels in port. The problem is so severe that the international shipping associations (Intercargo, Intertanko, BIMCO and the International Chamber of Shipping) addressed their concerns to the PSC MoUs, suggesting that they establish fully independent internal affairs review panels to confidentially assess any complaints of corruption or negligence. So many shipowners and crews, feeling exposed, left under threat, but the proposal was rejected by the PSCs on the basis that established procedures are considered adequate. The most vulnerable ships seem to be bulker vessels because of the variety of

www.tankershipping.com

Palau SHIP REGISTRIES | 19

facilities visited, compared with tankers or container ships. Remember that PSC officers are bound by a Code of Conduct, as vessels, companies, flags and ROs are ruled by international conventions. The Code of Conduct for PSC officers encompasses three fundamental principles against which all actions of officers are judged: integrity, professionalism and transparency. We expect compliance with these principles and codes, as we are adhering to the applicable maritime rules and regulations. The United Nations Conference on Trade and Development (UNCTAD) states that “Entities engaged in the same or similar lines of activity should be subject to the same set of legal principles and standards to ensure fairness, equality and non-discriminatory treatment under the law.” According to the OECD, “competition is central to the operation of markets and fosters innovation, productivity and growth, all of which create wealth and reduce poverty.” The current PSC standards do not, in our opinion, meet these definitions. There is not a common standard or code for PSC inspections, so at the end of the day the PSC officers carrying out the survey are the ones who decide if the vessel will be detained. These inspections rely more on the prima facie impression of the inspector to decide the extent and scope of inspection. The same vessel can be released from one port and then detained in another port soon after. Communication difficulties both on the part of PSC inspectors and ship crews can result in detention even though there might be no deficiency. There are no translators or interpreters to assist with documentation, for example. There is also the issue of organisational structure: the lack of communication, common activity and uniformity among the PSCs seem to be obstacles to solving the problems. Another issue is the lack of a grace period to appeal against the results before they become available to various interested parties. Without even an inspection/ detention report sent (neither to the owner nor the flag administration), you can see detention records that give you even more “credits for the black list membership.” Since we established PISR seven years ago, we have been working toward the development of a smart registry, one for the here and now with future-proofed technology and foresight. What we are fighting against, though, is an outdated

www.tankershipping.com

THE LACK OF COMMUNICATION, COMMON ACTIVITY AND UNIFORMITY AMONG THE PSCS SEEM TO BE OBSTACLES TO SOLVING THE PROBLEMS inspection system that can plunge a newer and smaller registry into a vicious circle. Even though the overall number of detentions by PSC can be lower than for larger fleets, more detentions and more inspections can be explosive for a registry like PISR. If you go by the risk factor, the flags with a greater number of ship calls have more risk and should be targeted. But the PSC focus on so-called blacklisted flags even if the number of ships calls is lower. PISR recognise that over the past few years the PSC MoUs have seen developments in training, communication, procedures and aids. We are supportive of the current activities to harmonise the practices of the PSCs and the desire for more transparency, including PSC instructions for the training of officers; references to the deficiencies found during an inspection in order to limit incorrect reports; publication of handbooks and guidelines for FSIs; and certain inspection guidelines for campaigns and New Inspection window regimes. Yet it is not clear if inspection results will improve with just the above-stated actions. Palau would like the system to be re-evaluated, and is calling for support from others in the maritime sector that want a transparent and fair system for the rewriting of the mathematical algorithms. This will help attract new entrants into the sector and increase competition. We are not asking for a dilution of the regulations affecting the critical issues that classification societies, flags, registries and any other relevant bodies are subject to. We are asking for a review of the anti-competitive practices defining the performance lists. That way at least we would all know, no matter what our size or perceived industry standing, that the ports our vessels are sailing in and out of are adhering to one set of regulations. We are all sailing the same seas, are we not? TST

Panos Kirnidis (Palau): “We are all sailing the same seas, are we not?”

*Panos Kirnidis is chief executive officer of Palau International Ship Registry

Tanker Shipping & Trade | October/November 2017

committed to the quality of the world fleet We are committed to upholding the values of safety, security, and environmental protection. This is evidenced through the quality of our fleet and outstanding port State control record as the only major international flag to remain on the United States Coast Guardâ&#x20AC;&#x2122;s Qualship 21 roster for 13 consecutive years. We achieve this goal through 24/7 service provided from 27 offices, staffed with experienced personnel, located in major shipping and financial centers around the world.

International Registries, Inc. in affiliation with the Marshall Islands Maritime & Corporate Administrators

info@register-iri.com | blog.register-iri.com | www.register-iri.com

Cyprus SHIP REGISTRIES | 21

THE NEW NORMAL FOR FLAG STATES

Cyprus flags 83 tankers with a total tonnage of 2.7M, which represents 11.36% of the Cyprus fleet

As tanker owners and operators actively seek to improve margins, Cyprus’ Department of Merchant Shipping acting director Ioannis Efstratiou explains how flag states can help

www.tankershipping.com

he shipping industry is no stranger to pressure. But in the context of today’s challenging market conditions, the development of new regulations and the evolution of existing ones are having a significant impact. Now more than ever, tanker owners and operators are actively exploring ways of improving margins, and this is driving changes in what they need and expect from flag states. There is no doubt that the role of flag states is changing. But the provision of proactive support, technical advice and consultancy is not something new: leading flags such as Cyprus have been doing this for many years. With ships checked, vetted and surveyed to such a level that they are generally operated to a higher standard than required by IMO conventions, tanker operators set high standards. This is why tanker operators look for technical ability and a good reputation when choosing a flag. Inclusion in the ‘White List’ of the Paris, Tokyo and other MoUs for port state control is critical to avoiding unnecessary surveys, inspections and delays. It also provides assurance that a flag has the right knowledge, experience and technical competence. But accessibility and a fast, consistent response to questions and emergencies of a technical nature are also

imperative. Time matters when owners need a quick decision over a dispensation because of a fault in a piece of equipment, for example. It may not always be possible to arrange a repair in the next port, so a dispensation is needed to allow the work to be delayed by a short period. We know that a personal approach and continuous flow of communication is extremely important to tanker owners and operators. To enable this, the Cyprus flag has maritime offices in Piraeus, London, Hamburg, Rotterdam, and New York City. The flag has a highly skilled and multilingual workforce, and takes pride in 24/7 accessibility and consultative approach. Cyprus has registered tanker vessels for many years, so it is well versed in understanding and dealing with the issues that tanker vessels may encounter, and has many technical experts with the knowledge and expertise to effectively answer technical queries in a timely manner. Being state owned, the flag is able to assist individual ships and effectively leverage its 23 bilateral agreements on merchant shipping. This is far from the norm: many flags have only a skeleton staff that merely answers emails and issues certificates. The value add that certain flags offer extends far beyond the bare essentials of registration and

Tanker Shipping & Trade | October/November 2017

22 | SHIP REGISTRIES Cyprus

certification. Proactively sharing intelligence with shipowners and operators must constitute one of the main obligations to clients, offering the best advice to directly support the protection of their business interests. From a leading flag, ongoing and proactive communication and the sharing of intelligence in the form of circulars and seminars, for example, is expected. But, in addition, owners and operators are increasingly looking for a flag that is not simply an industry spectator and aggregator of information, but, rather, is directly involved in addressing and shaping industry issues, challenges and regulation. They want an influential champion that proactively ensures that their best interests are effectively represented. In an industry continually challenged by new and increasingly rigorous regulation, the key for flag states is to ensure that they can field a knowledgeable team of experts with a detailed understanding of the legislative requirements. This enables the provision of guidance to help shipowners achieve compliance, while managing costs and any impact on operational efficiency. Ballast provides one example. Cyprus is still to ratify the convention, but the regulations are fully understood and implemented. At MEPC 71, the deadline for retrofitting vessels was extended by two years to the first survey after September 2019, while for newbuildings it remains the case that a ballast water management system must be installed on all vessels with a keel laid after 8 September 2017. The requirements and timescales have shifted. Although an additional two years on the deadline for retrofitting vessels may not sound like a long extension, with many owners choosing to renew their five-year International Oil Pollution Prevention Certificate (IOPPC) on the cusp of entry into force, this pushes industry compliance out by up to seven years. To facilitate a smooth compliance process, minimise the strain on drydocking capacity and lead times, and to allow shipowners to demonstrate a commitment to driving improvements in the environmental sustainability of their operations, it is strongly recommended that the harmonisation of all statutory certification is maintained. But we will work with shipowners to establish the best and most effective course of action for achieving compliance and will, on a case-by-case basis, allow for the earlier completion of the IOPPC renewal survey and a deharmonised approach regarding all statutory certification. The Cyprus flag is continuously working with regulators and shipowners to employ innovative solutions that help ensure efficient and costeffective compliance with regulations. As one example, Cyprus employs an online Electronic Seafarer Application System (eSAS) for the submission of applications for the Seafarer’s Identification and Sea Service Record Book. Under the International Convention on Standards of Training, Certification and Watchkeeping for

Tanker Shipping & Trade | October/November 2017

Seafarers, it issues endorsements attesting the recognition of non-Cyprus certificates of competency issued by countries whose certificates of competency are recognised by the Republic of Cyprus electronically. Electronic oil record books (EORBs) are now permitted on board Cyprus-flagged vessels, helping to eliminate any unintentional human error that could expose shipowners to the risk of crippling fines and criminal prosecution. According to the US Coast Guard, more than 100 vessels have been criminally prosecuted for oil-book violations in the United States over the past 10 years, and incorrect or missing oil-waste transfer records can result in severe penalties including criminal prosecution. EORBs prevent oil record books from going missing on board and mitigate the risks associated with discrepancies between oil record-book entries and the actual capacity of the oily water separator, as well as false log entries. By enabling operators to accurately record ORB entries in an electronic format, this helps shipowners and crews mitigate the risk of costly delays, penalties and fines that can run to millions of dollars. Ranking as the eleventh largest merchant fleet worldwide and the third largest fleet in the European Union, Cyprus flags over 1,000 oceangoing vessels with a total gross tonnage exceeding 23M. Cyprus flags 83 tankers with a total tonnage of 2.7M, which represents 11.36% of the Cyprus fleet. In today’s challenging operating environment, choosing a high-quality flag that is committed to safety, security and excellence can pay dividends. Key considerations include ease of registration, low registration fees, strategic geographical location, robust regulatory protection, and the fact that the Cyprus flag is the only open registry in Europe to have a tonnage tax system approved by the European Union. As Cyprus aims to consolidate and further develop its role in world shipping, these benefits and more will continue to support tanker owners and operators in their quest for compliance and commercial efficiency. TST

IOANNIS EFSTRATIOU (Cyprus): “Continuously working with regulators and shipowners to employ innovative solutions”

www.tankershipping.com

The worldâ&#x20AC;&#x2122;s oceans are big enough for a novel superior flag

PALAU INTERNATIONAL SHIP REGISTRY THE NEXT GENERATION FLAG

EUROPE I GREECE I 5 SACHTOURI STR, PIRAEUS - Tel: + 30 210 4293500 USA I TEXAS I THE WOODLANDS I 9595 SIX PINES DRIVE - Tel: + 1 832 631 6061 Alexandria Beirut Bremen Cape Town City of Port of Spain Constanta Dalian Dubai Fuzhou Genoa Guangzhou Hamburg Houston Istanbul Kansai Kerala Lagos Limassol London Miami Moscow Nakhodka North Vancouver Odessa Panama City Piraeus Qingdao Riga Sakhalin Santo Domingo Shanghai Singapore St. Petersburg Tainan Tartu Valletta Varna Vladivostok

24 | VETTING

THE TROUBLE WITH

OBSERVATIONS Oceanfile Marine’s David Savage offers a personal view of the deficiencies inherent in the current approach to tanker vetting

actors considered by oil companies to determine spot charter acceptability are many, complex and not always consistent. A vessel’s vetting history, the operator’s fleet performance, recent changes of operator, management, class, flag, structure and age considerations are all taken into account. Other factors include specific voyage risks (political/weather/war/ piracy threats etc.), casualty data, port state and TMSA results, and the financial status of the operator. In many cases, though, the decision to accept or reject is strongly influenced by acceptable SIRE results. An acceptable SIRE result is critical.

Unfortunately, tanker vetting continues to be fixated by counting numbers of Observations as a measure of quality. Fleets are benchmarked and personnel rewarded/ penalised based on this arbitrary and often misleading measure. In many cases an ‘acceptable SIRE result’ is often less a measure risk and more a raw count of the number of Observations contained in one or more SIRE reports. Two Observations in Chapters 4 (Navigation), 5 (Safety) or 6 (Pollution Prevention) are likely to result in rejection, regardless of the nature of those Observations. The overzealous SIRE inspector frequently records numerous trivial

Observations, forgetting that his role is to report details on the condition of the vessel and standards of operation observed to allow assessment of the vessel, preferring to impress his principals with numerous Observations that have no bearing on the risk a vessel might pose. Post Erika, when oil companies were closely monitoring events in the Paris courtroom, it became apparent that their vetting processes were deficient. Until that time, use of SIRE generally relied on the review of a single report relating to an inspection conducted within recent weeks or months by a trustworthy oil company. The realisation that any one, or more, published and available SIRE reports might contain serious Observations that would result in a vessel’s rejection led to many oil companies deciding that all available SIRE reports for vessels of potential interest were to be analysed. The preference for many, but not all, was to favour software solutions over the expertise of vetting superintendents. This led to the introduction of auto-vetting systems in conjunction with varying degrees of manual oversight. Auto vetting uses algorithms where the VIQ questions are pre-assigned with Low-/ Moderate-/High- risk values. Whenever reports are imported, the system applies the appropriate risk weighting to all questions where negative Observations have been made. These are added up to deliver the risk measure associated with the vessel. These systems are flawed, though they are at least more effective than a simple

CENTRE: David Savage (Oceanfile): “Use the data buried in SIRE to identify exactly where the shortcomings lie”

Tanker Shipping & Trade | October/November 2017

www.tankershipping.com

VETTING | 25

count of the number of Observations. The reason they are flawed is that VIQ questions pre-assigned with High-risk values that are answered with a negative Observation will deliver a High-risk result. An Observation associated with a High-risk value question containing trivial content (e.g. “Oil marks were noted on the doormat to the vessel’s office”) will deliver an erroneous High-risk result. This might easily result in the vessel being either rejected, or put on Technical Hold until such time as the operator can persuade the oil company vetting department to examine the report contents and have the vessel re-appraised. At the very least, delays will occur and may result in a vessel being deemed nonacceptable to one or more charterers, and chartering opportunities may be lost. In such cases it is essential that the operator provides immediate and persuasive evidence to demonstrate that the evaluation is flawed. Auto-vetting systems are smart but lack a crucial component - the Mark 1 eyeball of an experienced mariner. An accurate assessment involves evaluation of every report, confirmation that Observations are justified and that the automatically derived Low-, Medium- or High-risk result properly reflects the words of the Observations. For a big oil company, this is not a realistic expectation because of manpower constraints and the thousands of reports that are analysed each year. Vetting decisions are made by the system and it will be up to the Operator to convince the oil company to take another look when report contents do not warrant rejection. For an operator, use of SIRE reports as accurate measures of risk make it essential that every report is analysed relative to the risks identified, as well as the acceptability criteria of the oil company’s’ vetting expectations. It is essential that operators paying oil companies US$5,000 or more for inspections ensure that they are gaining maximum value for their outlay. In assessing a report, if the potential risk value is appropriate to the Observation, nothing needs to be done. If the Observation is trivial but the question has been assigned as High-risk, then the potential risk value must be reduced. Conversely, if a VIQ question assigned with a Low potential risk value has an Observation response that warrants a High-risk value, the risk rating must be increased. After assessment, the report will deliver results that accurately measure the level of risk associated with the vessel.

www.tankershipping.com

Post Erika, when oil companies were closely monitoring events in the Paris courtroom, it became apparent that their vetting processes were deficient

Operators who recognised that SIRE reports contained huge volumes of information to help them identify weaknesses and shortcomings needed software to access/analyse this data and measure risks much more effectively. In 2013 Oceanfile was asked by users to provide the means to measure the risk levels associated with SIRE report Observations. Operators recognised the shortcomings associated with counting the numbers of Observations, and of pre-assigning High-/Moderate-/Lowrisk values. They also wanted to assign responsibilities, measure ship and shore personnel performance, identify hotspots, assess equipment reliability, quantify risks, pinpoint shortcomings and direct remedial/corrective actions to prevent repetition. The Oceanfile Risk Assessment tools provide all of these as well as the means to adjust potential risk value as appropriate to the Observation. Of course, cheating is easy and setting all Observation risk levels to zero will deliver risk-free results, but those tempted need to be careful. Those operators that thought that satisfying TMSA in 2004 merely required them to assess themselves at Level 3 or 4 for every element were embarrassed when undergoing their first TMSA office audits. The ‘Honesty is the best policy’ approach is crucial when dealing with safety, pollution prevention and risk. Anything less will have seriously misleading and potentially dangerous consequences. When confronted by oil company auditors armed with their own statistics, operators need to produce very compelling data to demonstrate that these properly reflect fleet’s performance and assess the risks associated with each and every inspector Observation and for every inspection conducted. Cheaters will only fool themselves: they will find themselves and their company in embarrassing situations when auditors look into their results. Those operators that are passionate about driving excellence, eradicating pollution and enhancing safety use the big data buried in SIRE to identify exactly where shortcomings lie and what corrective and preventative measures need to be taken. If risk ratings are honestly applied, they will deliver statistics to support the company’s policies that constantly drive improvements. In such cases they can be confident when confronted by auditors who demand “Show me – prove it!” TST

Tanker Shipping & Trade | October/November 2017

26 | VETTING

TANKER INDUSTRY STILL SEEKS CLARITY ON VETTING Intertanko’s annual meeting in Houston played host to a lively session on vetting. Tanker Shipping & Trade was able to attend and report on the key talking points under the Chatham House Rule. This states that information disclosed at the meeting can be reported by someone present, provided the source of the information is not identified. Delegates learnt that there are about 186 different permutations and combinations for satisfying current oil major vetting requirements, a statistic that inevitably led to much discussion around the number of vessel inspections. One owner referred to present vetting requirements as “completely unrealistic”: “We have terminal inspections, ships get inspected by the oil majors, by the chemical companies, yet when they go into port, they go alongside, the terminal 201610_IL9001(420x142)-03.pdf 1 2016-10-13

11:43:34

wants to inspect them for their own standards. We would like to see a lot more interaction between the shipping divisions and the terminal divisions, and sharing of information on that side.” Another request was that port state control and OCIMF collaborate more strongly, and that information sharing prior to an inspection be enhanced. The most common causes of vetting failures were identified as engineroom issues, maintenance of machinery, pumps leaking, deck machinery leaking and the rather broader ‘officer competence.’ Or as one delegate put it: “I am not really concerned about stencils on deck. But the officers on deck really concern me!” This led to calls for SIRE inspections to include detailed interviews with the Master and the chief engineer.

CDI’S ‘MOTIVATED REASONS’ SCHEME UP AND RUNNING At last year’s Tanker Shipping & Trade Conference in London, CDI general manager Capt Howard Snaith revealed that his organisation had launched a ‘motivated reasons’ scheme to provide owners with an avenue to appeal an invoice they feel is “excessive.” When a formal application is made through the scheme CDI has a legal basis to look into the fees charged and make an assessment. Capt Snaith told the conference that “since May 2014 we have done 5,200 inspections and received 25 claims for motivated reasons. Of those 25 claims, we have supported 18.” ‘Supporting a claim’ means that CDI can nominate a second inspector for the job. “That is in full compliance with competition guidelines because

VETTING | 27

CAPT HOWARD SNAITH (CDI): “We do listen and we do act”

it is generating competition, and that usually works in actually providing an alternative to the ship operator at a better price,” he explained. Fast forwarding to the margins of this year’s Intertanko event in Houston, Capt Snaith told Tanker Shipping & Trade that in 2017, for the first time, CDI was so concerned by an application for motivated reasons that the complaint was escalated to the executive board. The board unanimously concluded that the inspector had abused his position, and his accreditation was revoked. “So, my message to the market is that you can come to us and tell us your issues. We do listen and we do act,” said Capt Snaith. At the time of our meeting Capt Snaith said there had been three complaints against inspectors in 2017. The complaints were reviewed by the CDI accreditation committee, and two of the three were dismissed because the high number of observations recorded

could be evidenced. The third complaint related to an inspector who missed a CDI inspection. “He had been nominated and accepted for a CDI inspection, and then a SIRE inspection came along so he went along and did that, thinking he could squeeze it in ahead of the CDI inspection,” explained Capt Snaith. “He found out he couldn’t. He never told us about it, so he was suspended for six months.” TST

“He found out he couldn’t. He never told us about it, so he was suspended for six months.”

28 | CONFERENCE PREVIEW

A rewarding experience for the tanker industry A new venue and a new awards dinner, but the same rigorous focus on the issues impacting the tanker industry

At a glance What: Tanker Shipping & Trade Conference, Exhibition & Awards Where: ILEC Conference Centre, London

ovember’s Tanker Shipping & Trade Conference, Exhibition and Awards will see attendees fully briefed on all of the essential elements for successful tanker operations in the year ahead – and beyond. Day one is themed around the commercial, technical and operational drivers powering the chemical and product tanker segments. Day two takes in the commercial, technical and operational factors underpinning the crude tanker sector. As always the concerns of the owner/operator and charterer are placed at the centre of our programme, a fact reflected in their strong presence on the podium across the two days as well as the large turnout generally. A highlight of the programme is the Tanker Shipping & Trade Conference Awards Programme. And this year – for the first time – we will be presenting the awards at a dedicated evening dinner. This promises to be a convivial

When: 14 – 15 November, London

BOTTOM: Tanker Shipping & Trade editor Edwin Lampert, centre, is flanked by winners and sponsors at last year's event

and enjoyable conclusion to day one that will be crowned with awards recognising operational excellence and innovation, technical innovation and environmental performance. The shortlists were produced by our industry advisory panel. Special thanks are therefore due to: Karen Purnell, managing director, ITOPF; Phillip Belcher, marine director, Intertanko; Kim Ullman, chief executive officer, Concordia Maritime; and Andrew Cassels, director, OCIMF. The lists were then voted on by the Tanker Shipping & Trade readership. Winners will be exclusively announced at this year’s event. Our awards will also see two individuals recognised. This year’s Industry Leader Award goes to Nik Tsakos, president and CEO of Tsakos Energy Navigation, and the Lifetime Achievement Award will go to Kishore Rajavanshy, managing director, Fleet Management Ltd. As always there will be many opportunities to network and forge new contacts. These include coffee breaks, buffet lunches and of course our evening receptions. The Tanker Shipping & Trade Conference takes place with the generous support of all our sponsors. Special thanks go to DNV-GL, our platinum sponsor, as well as ABS, De Nora, Dyneema, Eniram, Liberian Registry, The Marshall Islands (IRI), Norton Rose Fulbright and World Fuel Services. November’s event also sees an expanded exhibition. TST

Work at sea:

STS Operations made safer with the PLT 速 The PLT 速 is a precise, safe and reliable air driven line thrower that is commonly used in STS operations. With the heaving line you can transfer a line up to 140 meters away. The PLT 速 can also comply Solas LTA requirements and has NO EXPIRY DATE.

1 Set up the PLT 速 at location. 2 Launch the rubber ball to the vessel. 3 Safely and efficiently connect your mooring lines.

Tlf. +47 755 42 440 | E-post: restech@restech.no | www.restech.no

We supply products & solutions for all your tank management requirements.

P/V Valves

Tank Cleaning Equipment / Gas Freeing Fan

Tank Level Gauging

Inert Gas System

Electropneumatic Gauging

www.scanjet.se

Control your comfort us at Meet ec: t Marin 9 N1D0

OUTSIDE HUMIDITY

35°C 45°C

90% 40%

22º C

Inside

PROVIDED BY HEINEN & HOPMAN

As an international leader in our own field of air conditioning and heating, Heinen & Hopman is used to working with shipyards around the world. At the same time, our global network of local subsidiaries and aftersales centres make us an ideal partner for tanker vessels that criss-cross the oceans. We also understand the stringent operational requirements of such vessels and the need for innovative design. The result is a suberb interior environment and optimum support wherever the vessels may sail.

Tanker Shipping & Trade 190x130_ED20171013.indd 1

www.heinenhopman.com

13-10-2017 10:36:10

CHINA | 31

A resurgent industry is poised for more tanker business What a difference a year makes. The signs are China has put its house in order and is now ready to win more international tanker business by Barry Luthwaite

year ago, China was struggling with mounting economic problems and a loss of confidence among owners in the stability of its shipbuilding industry. All that has changed: China has got to grips with its problems and is implementing changes that will make a real difference to international trading. Such problems stalled the impressive expansion of the domestic tanker fleet. Although the domestic mercantile programme is progressing, it now takes second place on the government’s agenda as a plethora of export tanker business revives the shipbuilding industry. There is more confidence in the air as China

www.tankershipping.com

finally begins to cut debts and adopt a strict audit policy from the so-called ‘white list’ of healthy shipyards. More worrying, perhaps, is the state’s acquisition of all the medium and large shipyards (only one privately owned builder remains). What a difference a year makes. Tanker owners have returned with confidence, safe in the knowledge of prompt receipt of refund guarantees and continuing low prices. New financial inducements to order are apparent. Mergers of shipyards and dissolution of others has moved China toward a more streamlined and competitive industry. With debt problems in South Korea and higher priced ships in Japan (due to the strengthening of the yen against the US dollar), conditions are ideal for a Chinese revival. With the dry bulk collapse the Chinese Government has been forced to instruct shipbuilders to chase tanker orders and capitalise on buoyant owners that have money to spend on account of the bullish trading climate. The emphasis has switched from domestic to export business. The strength of Chinese output is underlined by a tanker backlog of 346 vessels, which will eventually commission 30,031,606 dwt into the global trading fleet. From this figure only 86 units (aggregating 13,048,450 dwt) are destined for the Chinesedomiciled fleet, leaving 260 tankers totalling 16,983,156 dwt for export delivery. These are filling capacity as far ahead as 2020. In the first six months of 2017, the Chinese Government supplied US$17.7M to the construction industry, largely intended

Tanker Shipping & Trade | October/November 2017

32 | CHINA

TOTAL ORDERBOOK FOR CHINESE SHIPYARDS AFRAMAX

5,948,212 DWT

HANDYMAX

2,675,498 DWT

HANDYSIZE

1,514,300 DWT

MEDIUM CHEMICAL

418,200 DWT

MEDIUM PRODUCTS

93,900 DWT

MEDIUM TANKER

187,217 DWT

PANAMAX

1,689,000 DWT

SMALL CHEMICAL

100,690 DWT

SMALL PRODUCTS

97,662 DWT

SMALL TANKER

161,298 DWT

SUEZMAX

4,239,909 DWT

VLCC

12,905,720 DWT

346

30,031,606 DWT

GRAND TOTAL

to support development of new ship designs. The biggest sum went toward projecting designs for large oil tankers to be built at Shanghai Waigaoqiao Shipbuilding, as a switch away from building Cape bulk carriers. The country had previously been preoccupied with the China VLCC programme, which has seen a consortium of domestic owners come together and own, among them, some 50 VLCCs, of which 15 have been delivered. The idea is to increase self-sufficiency and be less dependent on charter tonnage. Now the hunt is on for more export VLCC business. Already 10 vessels are committed for overseas owners. Some Japanese owners are looking to order VLCCs if prices are too high at home. In a year’s time Nantong COSCO KHI (NACKS) will deliver to Mitsui OSK a VLCC that has been on order since 2015. With banks withdrawing from the financing of ships due to hard times and lack of long-term faith in shipping, investment owners have to look elsewhere for funding. Private equity is also in sharp retreat. Around the world Chinese Government finance is providing a lifeline, and not necessarily for ships that must be built in China. It used to be the Export-Import Bank of China leading the way, but in recent months all that has changed in favour of leasing deals. This practice provides a win-win deal for owner and lessor. Basically Chinese leasing subsidiaries of shipyard groups provide finance on a long-term charter basis, with purchase options at a later date or on expiry of bareboat charter. The lessor takes a share of the vessel earnings as a contribution to loans. The main proponent of this scheme is Bank of Communications Financial Leasing (BoCom FL), which becomes nominal owners of the vessels involved. The BoCom FL leasing initiative has spread its wings outside China: financial assistance has been granted to ships on order in South Korea. To date, few Chinese owners appear to have used this method. BoCom FL is financing 28 tankers, viz: 12 Suezmax, six Handymax, six medium products, and four Aframax. Of these, only four Suezmaxes and four Aframaxes are being constructed in China. The balance are all on order in South Korea. BoCom FL will soon be joined by CSIC Leasing, a division of China Shipbuilding Corp. Minsheng Financial Leasing and CSSC Leasing also have loan deals with tankers on order. The latter is the leasing arm of China State Shipbuilding Corp. China’s existing tanker fleet remains at a modest 454 vessels, aggregating 32,469,080 dwt. VLCCs number 56, product carriers

Tanker Shipping & Trade | October/November 2017

174 and chemical tankers 111. The total of 86 vessels on order for the domestic fleet is dominated by 31 VLCCs for delivery up to 2020. Unit wise, the leading owners for trading vessels are Sinochem (47), China Shipping Tankers (41), COSCO Dalian (39), Nanjing Tanker Corp (37) and China Shipping Development (25). China is slowly turning its attention to cabotage, with a number of small and medium size product tankers planned or on order to provide coastal tanker voyages and serve Hong Kong. The statistics here only cover owners with head offices in Mainland China. The merchant fleet is actually larger because increasing numbers of ships are operated out of Hong Kong or Singapore. Unofficially, there is understood to be a more free-trade atmosphere, with Singapore an established broking and fixture hub for tanker business. Overseas registration is increasingly used by Chinese owners. Links and partnerships with overseas owners are being pursued as Chinese fleets build in strength. China is building up a formidable chemical and product carrier fleet. Leading the way is highly ambitious Sinochem, which has ambitions to be one of the world’s leading players, rivalling traditional Scandinavian and European operators. The company is by far the largest chemical operator in China, with 68 vessels (nine of which are under a joint basis with Stolt-Nielsen). Sinochem has more newbuildings on order, and plans VLCCs. The owner also picks up high-quality secondhand tonnage where appropriate. There is a gradual move to transfer all technical management from Shanghai to Singapore under the guise of AOX Singapore because of the size of the fleet. Cosco Group and China Shipping Group have merged to form China Cosco Shipping, advancing consolidation. China is exporting a lot of chemical products to India and South East Asia. With the mergers kicking in and the industry settling down, China will move forward with more expansion. Few domestic owners order overseas, so more domestic orders can be expected. The hunger for export business will continue. It is clear that faith will be placed in the wet trades and not the bulk carriers that gave the nation’s shipbuilding industry the serious problems from which it is only now recovering. TST Source for all figures in these tables: BRL Shipping Consultants. Data as at 4 October 2017

www.tankershipping.com

Regulatory Ignorance can cost you millions! HKC, SOC, EU, BASEL, EPA, TOSCA, IHM, NORM, SRP, RSR...and more? Do you truly understand the impact of regulations to your bottom line? The regulatory world of ship recycling has become complicated. With relatively little precedence, port officials and bureaucrats are often arm-twisted into making decisions based on external pressures. As industry leaders, GMS has a team of dedicated specialists to help you make sense of todayâ&#x20AC;&#x2122;s complex regulatory environment. Do not let regulatory ignorance cost you! Call us.

Athens, Greece Tel: +30.210.899.0669 Dubai, UAE Tel: +971.4.423.0720 Shanghai, China Tel: +86.216.075.1900 Seoul, South Korea Tel: +82.10.4650.0720

Cumberland, USA Tel: +1.301.759.9240 Hamburg, Germany Tel: +49.40.888.811.130 Singapore Tel: +65.6823.8037 Tokyo, Japan Tel: +81.3.5453.6311

www.gmsinc.net Download on the

snp@gmsinc.net App Store Download on the

App Store

GET IT ON

Email info@uniservice.as Phone (+47) 22 44 31 53

W178mmĂ&#x2014;H108mm

Musasino Radar Level Gauging Smart Measurement Technology Easy Maintenance Simple Installation

Musasino X-Radar

Head Office (Tokyo) +81-3-3726-4412 k.yamaguchi@musasino.co.jp International Sales Office (Singapore) +65-6776-2827 limhl@musasino.com.sg

Innovation | Safety | Performance

STATUTORY COMPLIANCE FOR TANKERS

Air Products nitrogen generators

When reliability matters

DIRECT DAMAGE STABILITY & CargoMax TM

USER DRIVEN | ENDORSED WORLDWIDE: Herbert-ABS CargoMaxTM systems with the Direct Damage Stability option have been approved by IACS Classification Societies for decades. Meet the new IMO MARPOL, IBC, BC, GC & IGC requirements for mandatory verification instruments onboard new and existing tankers.

www.herbert-abs.com

Air Products has been Pioneers in the Nitrogen market since 1982 and more than 1.200 marine N2 generators have been installed onboard ships. If you wish to learn from our 30 years experience, contact us and we will share with you.

See us at the Tanker Shipping&Trade conference, London www.airproducts.no

TURKEY | 35

A mixed trading picture for Turkish tanker interests I

t is very much a consolidation period for the Turkish mercantile marine, which has only 18 tankers on order. Money is tight, necessitating cuts on investment, with expenditure concentrated on secondhand acquisitions. Three years ago Turkey’s major group owners were big investors in wet tonnage, which has by now delivered into the fleet. The existing fleet, which comprises 300 vessels aggregating 8,565,227 dwt, is dominated by small and medium chemical tankers (139) and product carriers (99). Crude oil transport is delivered by 33 vessels aggregating 4,677,297 dwt. Turkey will always have strong players in chemical and products trades, moving cargo from Black Sea and Mediterranean ports to European destinations. The whole merchant fleet comprises 99 owners, but 85 owners trade four or fewer units, underlining the diversity of ownership – but also the lack of concentrated volume in the hands of individual owners. Among these 85, 53 are single-ship companies. Leading owners Palmali Shipping, Geden Line, Chemfleet, Besiktas Denizcilik, and Yilmar Shipping & Trading operate the biggest fleets. Geden Line, once Turkey’s biggest shipowner, is troubled by big problems, which has forced the sale of several tankers. These vessels were ordered as prestigious newbuildings at high prices, but drew lower-than-expected prices on enforced sale. Geden was unlucky to be hit by two hijackings within a year. Its financial problems are set to continue. The company is battling for survival, and its failure would

Shipping, Sweden. The vessels were designed by FKAB Marine Design. Both were ordered in 2015, with the second unit due for delivery in April 2018 (there will probably be slippage, though). In June this year the Istanbul shipyard will build its biggest ship: a single 15,000 dwt product carrier for an undisclosed Turkish account. Delivery is due in January 2019. In recent years the Turkish fleet has been transformed from an ageing one into a modern fleet that complies with the strict regulations applied to chemical and products transport. Domestic owners employ home management or handle such matters in house. One of the most successful Turkish companies is Chemfleet, established in 2006 solely for chemical tanker management. The company now has under its wing 12 units covering small, medium and handysizes. In the past decade, Turkish fleets have gone from some of the worst casualty victims to some of the safest. Management demands dense and comprehensive inspections and audits for tankers on a regular basis. One of the latest overseas companies to open an Istanbul operation is London-based Borealis Maritime, which in 2016 established its own technical management division for its own fleet as regular traders to Turkish ports. The company will offer its services to other owners trading tonnage in the Black Sea/ Marmaras region. TST

Yards are winning new orders – but outside traditional mainstay, stainless steel chemical tankers by Barry Luthwaite

be a major blow to Turkish prestige. In recent months Turkish shipyards have performed strongly in winning export business. There has, though, been less success with stainless steel chemical tankers and product carriers. Productivity dipped and customers like Essberger lost patience with lengthening delays. Signs of better days are being welcomed. RMK Shipyard delivered the 7,000 dwt product carrier Rose PG in September 2017 to PritchardGordon Tankers Ltd, based in Tyne and West Sussex. The same month saw the laying of the keel of an exercised option for a sistership, to be named Lily PG. It is scheduled to be delivered in the second quarter of 2018. RMK is currently the most successful builder for tanker tonnage. It is putting finishing touches to the first of a pair of 9,400 dwt bitumen tankers for Tarbit

Source for all figures in these tables: BRL Shipping Consultants. Data as at 15 September 2017

TANKERS ON ORDER FOR TURKISH OWNERS CHEMICAL CARRIER

77,816 dwt

www.tankershipping.com

CRUDE OIL

469,214 dwt

PRODUCT CARRIER

76,824 dwt

GRAND TOTAL

623,854 dwt

Tanker Shipping & Trade | October/November 2017

36 | TURKEY Ayden Marine

Strong and stable approach championed by Ayden Marine AydenLoad is finding favour with a growing number of tanker operators

yden Marine, an Istanbul-based maritime engineering and software development company, provides services and software products developed in house by specialist engineers. The company has won the Innovation Award at the Golden Anchor Award Ceremony – an honour known as the Oscar of the Turkish maritime sector. Such positive feedback further motivates the company to become a leader in its field. AydenLoad – new-generation onboard stability instrument AydenLoad, a new-generation onboard stability calculation and stowage planning instrument, has been installed on several fleets at home and abroad. AydenLoad provides crew with the opportunity to instantly check a loading condition in terms of stability and strength. Tanker operators have utilised its many features beyond meeting the new damage stability requirements imposed by IMO. AydenLoad’s fully customisable and friendly interface and the speed of the calculation algorithms are the first things that attract the attention of customers. For those who use it once, it becomes an essential instrument for daily operations. Major features include fully customizable stowage planning and additional calculations, including draft survey, automatic loading, parallel midbody distance, propeller immersion, visibility and air draft distance. AydenLoad, which can communicate with all tank level systems with ease, offers instant cargo monitoring during cargo operations. AydenLoad allows customers to control conditions with its 3D simulation screen during the cargo operation, and to check the condition results as intact and damage stability – and then to make the stowage plan promptly. This is why AydenLoad is defined as a new-generation stability instrument.

Tanker Shipping & Trade | October/November 2017

AydenLoad Fleet Interface – full control over the fleet While AydenLoad is used as a stowage planning and stability calculation instrument in daily operations on board, it is also possible to run and access the software of all individual vessels on a shore-based computer at the same time via a special interface. This means it is possible to run all of the vessels’ programs from a single computer with the fleet interface at the same time, and to check a loading condition or a stowage plan sent from a specific vessel. All this makes it very easy, especially for companies managing many vessels, to control everything from a single center. The Stowage Planning Report feature is fully customisable to the desired format, so a management company can save a lot of time by getting the output of the loading condition summary in the format it wants without doing any additional work. ERS – shore-based technical support for vessels in emergency situations Emergency response service is another technical service Ayden Marine provides to tanker management companies. Ayden Marine Emergency Response Service (ERS) member vessels have a shore-based support team consisting of experienced, specialist engineers and advanced in-house-developed computer systems that can be reached in emergency situations. Member vessels will receive help from shorebased engineers on how to deal with the situation through an animated accident scenario . The engineering team can be reached 24/7. They will coordinate with crew on unloading and cargo - ballast transfers for grounding or damage cases, to increase stability and residual structural strength. The Ayden Marine ERS Team will help to reduce the accident’s negative effects on the ship, the crew and the environment. Ayden Marine – a solution partner with specialist staff and support Ayden Marine, with its experienced and specialist engineers and advanced in-house-developed software products, is proving that it is able to offer the best software products and services that tanker management companies need. The company is demonstrating a comparable level of commitment to after-sales support. According to feedback from vessels, the support team has proven itself ready to serve promptly via the remote connection or on board. At the same time, the company is dedicated to the important task of training crews on the software products and the services offered, keeping them informed about current developments and updates. TST

www.tankershipping.com

BRITISH DESIGNED • BRITISH ENGINEERED • BRITISH MANUFACTURED

HEPWORTH MARINE I N T E R N A T I O N A L

PERFORMANCE DESIGNED WIPER SYSTEMS • PRECISION ENGINEERED MARINE HARDWARE 4 Merse Road, North Moons Moat Redditch, Worcestershire B98 9HL, UK +44 (0)1527 61243 marine@b-hepworth.com

www.b-hepworth.com

Norbulk_qpv.pdf

25/10/2017

09:12

Providing top quality ship management for 35 years

High T/C Levels? Minimize your time in yard for Special Surveys  Repair WBT coatings on voyage prior to SS  Prepare for CAP surveys; - easier CAP 1 and 2 ratings  Keep yard stays to a minimum Ballast Tank Upgrades Deck Upgrades Hull / Superstructure UHP Blasting Spray painting Marine Scaffolding Steel repairs SPS Overlay

Coating Inspectors Steel Inspectors Brazil Norway Singapore Gdynia Nigeria

www.msi.no — info@msi.no — T (47) 64 93 30 03

www.norbulkshipping.com

The “Voyage Repair” Specialists

Tanker Shipping & Trade

Conference & Awards 14-15 November 2017, London

Book now at

www.tankershipping conference.com

Tanker business. Tanker operations. Tanker Technology. Join us for this two-day event bringing together professionals from across the entire tanker shipping industry to discuss the business, operational and technical issues impacting the crude, product and chemical tanker trades.

Platinum sponsor

Gold sponsors

Highlights for 2017 include: • NEW: Conference Awards Dinner at the end of day one. • Exclusive insights into consolidation, competition, contracts, completions and capital flows. • NEW: Registries and the regulatory agenda. • Interactive discussions and Q & A through your mobile phone. • Inside the tank: best practice in tank coating, cleaning and inspection. • NEW: Vendor and owner opinion on new and emerging technology. • Ballast water, future fuels and digitalisation discussions. • Outstanding networking opportunities including lunches and cocktail receptions. • The industry’s most credible awards programme. • NEW: Expanded exhibition with suppliers from across the tanker shipping supply chain. Book your place online now at www.tankershippingconference.com/book-now or by contacting Chris Tims on +44 20 8370 7015 or at chris.tims@rivieramm.com

www.tankershippingconference.com

The Marshall Islands Registry www.register-iri.com

Silver sponsors

SHORTSEA/INLAND TANKERS | 39

A CONSOLIDATING SHORTSEA TANKER MARKET DRAWS ASIAN INTEREST

Plain sailingâ&#x20AC;Ś coastal trades in Europe are steady. But government roadbuilding schemes in Asia are stimulating demand for new vessels

Chinese companies have 37 shortsea chemical tankers on order by Barry Luthwaite

www.tankershipping.com

n keeping with the bullish deepsea climate, shortsea tanker owners are enjoying good times. In 2017 there has been a shift of balance with an emphasis on asphalt/bitumen tankers and bunkering units. Year-on-year statistics show that most owners made their moves for new tonnage in 2016. A year ago the order backlog stood at 183 tankers up to 10,000 dwt, aggregating

963,598 dwt. So far 2017 has been one of consolidation, with the order backlog now having dropped to 163 vessels totalling 934,951 dwt. Coastal tankers enjoy longer lives but the smaller categories are up against medium sizes, which are having a greater impact on traditional traders. The link chain (owner, charterer and recipient) becomes ever more

competitive. A closer look at the orderbook reveals the faith shown in asphalt/bitumen carriers and bunkering tankers. A close examination of the economies of Asian countries shows that governments have emphasised road building among key infrastructure projects. These measures go hand in hand with a demand for specialist tankers on the basis of ownership or charter.

Tanker Shipping & Trade | October/November 2017

40 | SHORTSEA/INLAND TANKERS

Indonesia and Malaysia are key movers in these sectors. So far nine asphalt/ bitumen carriers have been delivered in 2017. A further 17 are on order, emphatically underlining the bullish demand for road-making materials. There is similar demand in Europe, where Sweden plays an important part in supply of tonnage. There is a realisation that bunkering fleets are ageing and need replacement. This is especially the case for supply of low sulphur fuels, given that the environmental rules are due to tighten even more from 2020. Evidence of this urgency is the fact that 23 bunkering tankers are on order. For the most part, these will cater to low sulphur fuel supply. Some of the orders

are from new owners dipping their toes in the water to test the market: they often target a new bunkering area or charter business. With the latter it is apparent that less developed countries still employ very old tankers largely unsuitable for the job. Minds were concentrated by the recent sinking of a 45-yearold laden Greek tanker, which resulted in a serious oil spill. Greece is among a number of countries in serious need of an overhaul of its coastal bunkering fleet. The scale of movement of products on a coastal or shortsea basis to smaller ports is underlined by a healthy backlog of newbuildings totalling 64 units. Some of these will offer the useful option of coastal or bunkering employment. Scandinavia is a leader

in chemical and products movement, and controls a sizeable shortsea fleet serving North Sea and Baltic ports. This will be added to with the commissioning of 12 units in the next year. All will be built to the highest technical standards, including LNG fuel readiness. The latter is possible due to advanced infrastructure (LNG receiving stations) in Scandinavian and European ports. Surprise investors are China and South Korea, with commitments of 19 and 16 shortsea traders respectively. There is a realisation that rather than chartering in tonnage, more self-sufficiency is needed in cabotage routes serving vast hinterlands. China is certainly closing the door

on outsiders. This is especially the case in the chemical trades, where overall a healthy complement of 37 vessels is committed on the orderbook (several of these will pass into Chinese hands). Singapore will correct its competitive position by taking delivery of 17 new tankers, most of which will operate in home waters bunkering deepsea ships with low sulphur fuels. Many will argue that small is beautiful and offers flexibility of choice for the customer, consolidating and improving vital links in shortsea transportation of marine fuels. TST Source for all figures in these tables: BRL Shipping Consultants. Data as at 30 September 2017

SHORTSEA TANKERS ON ORDER UP TO 10,000 DWT VESSEL TYPE

PRODUCT CARRIER CHEMICAL CARRIER BUNKERING TANKER ASPHALT CARRIER

BITUMEN CARRIER FRUIT CARRIER VESSEL

SULPHUR CARRIER

GRAND TOTAL

Tanker Shipping & Trade | October/November 2017

DWT

394,741

239,896

116,395

62,000

88,320

25,000

4,600

3,999

163

934,951

www.tankershipping.com

Transforming the Transforming the Face of Training Face of Training KVH introduces KVH introduces ™

Videotel Performance The next evolution in maritime Manager training is here.

The next evolution in maritime training is here.

KVH introduces

See for yourself. Demo it today: KVH Videotel • 84 Newman Street • London • W1T 3EU • U.K. • Tel: +44 0 20 7299 1800 • email: sales@videotel.kvh.com ™• videotel.com Videotel Performance Manager www.videotel.com/perform

See for yourself. Demo itThe today: next evolution in maritime www.videotel.com/perform training is here.

KVH Videotel • 84 Newman Street • London • W1T 3EU • U.K. • Tel: +44 0 20 7299 1800 • email: sales@videotel.kvh.com • videotel.com

A Better Ballast Water Treatment System… Efficient, sustainable and effective, the Envirocleanse inTank™ ballast water treatment system is the most advanced and sustainable system on the market. Our inTank™ solution does not require filters or changes to your current ballasting operations. Unlike in-line treatment systems, the Envirocleanse in-Tank™ system works in transit. This saves both time and money because it eliminates time-critical failures and significantly reduces the electrical power needed during port operations when energy demands are at their peak.

A L W AY S C O M P L I A N T No impact to cargo operations

• No filters means no backwashing and no downtime in port • Treatment process takes place in transit

Minimal Crew Interface

• Ease of system operations • Does not require attention of crew while in port

Power Supply Not Impacted

• Continual dosing in transit allows smaller operating unit • Uses power during non-peak demand times • No need to repower a ship

Guaranteed Compliance

• No regrowth potential in transit • Able to meet demands of challenging water

Envirocleanse guarantees compliance every time and in every location. Visit eco-enviro.com for more information and download our informative brochure. Call or click today!

LOWER COST

(713) 840-0404 info@eco-enviro.com

LESS POWER DEMAND N O F I LT E R S A division of Charter Brokerage LLC

a BERKSHIRE HATHAWAY Company

Envirocleanse-Print_Ad-Tanker Shipping & Trade.indd 1

10/23/17 1:27 PM

USING PREDICTIVE ANALYTICS TO REDUCE MARITIME RISK ENHANCING MARITIME SAFETY AND SUSTAINABILITY RIGHTSHIP.COM/Qi

TankerShipping&Trade_Qi.indd 1

26/10/2017 3:39 pm

Connecting you with the shipbuilding & marine, workboat and offshore community in Asia 27 years in the making, APM is the premier ex h i b i t i o n i n A s i a t r u s t e d b y g e n e r a t i o n s o f i n d u s t r y p r o fe s s i o n a l s . I t ’s w h e r e y o u n e e d t o b e – y o u r s t r a t e g i c n e c e s s i t y, f o r a s e a o f o p p o r t u n i t i e s . AT A P M , S T R AT EGY W I L L TA K E YOU EVERYWHERE.

APM 2016 KEY STATISTICS since 1990

BEST OF THE WEB | 43

BEST OF THE WEB

tankershipping.com

Visit tankershipping.com to keep abreast of the latest sector news. On these pages are excerpts from the most popular stories from the last two months. Never miss a major development by subscribing to our free weekly newsletter at www.tankershipping.com

VIDEO: Libyan coast guard fires on tanker The Libyan Coast Guard and Port Security released a video on it's Facebook page that shows one of it's patrol vessels shelling a tanker

Tanker Shipping & Trade

Conference & Awards

14-15 November 2017 ILEC Conference Centre For more information, contact Chris Tims at chris.tims@rivieramm.com

http://bit.ly/TSTLibyacoastguard

New Iraqi tanker venture charters Marinakis-owned VLCC The newly formed Al-Iraqia Shipping Services and Oil Trading venture has taken out a charter on a Capital Ship Management VLCC http://bit.ly/TSTAISSOT

VLCCs and Suezmaxes migrating to the Atlantic Hurricane season provided the dominant news, causing massive damage both in the United States and Caribbean, undermining crude oil demand http://bit.ly/VLCCsSuezmaxestoAltlantic

US Navy removes top officers for ‘preventable’ warship-tanker collision that killed 10 The US Navy 7th Fleet formally relieved the commanding and executive officers of US destroyer USS John S McCain of duty on 11 October in the wake of a ‘preventable’ collision with a tanker in August http://bit.ly/TSTMcCain

To view more whitepapers visit the Knowledge Bank at www.tankershipping.com To upload a whitepaper to the Knowledge Bank, please email Steve Edwards at steve.edwards@rivieramm.com www.tankershipping.com/s/knowledgebank

Editor’s selection:

Editor’s comment:

Exhaust Gas Temperature Sensors.

This paper presents an important and valuable assessment of the benefits of moving away from the conventional ‘rule of thumb’ approach to assessing the state of combustion inside an engine. Electronic sensors developed over the past decade provide more and better information and lower costs.

The capabilities provided by new digital technology. The paper highlights the pros and cons of current types of exhaust gas temperature (EGT) sensor technology and then focuses on the capabilities of digital sensors. It discusses the advantages of new-generation EGT sensors and how they can integrate into the Internet of things.

www.tankershipping.com

www.tankershipping.com/s/knowledgebank/download,view_156.htm

Tanker Shipping & Trade | October/November 2017

44 | LAST WORD

A green light for a green revolution led by Alang Dr. Anand M. Hiremath* on uptake of new approaches in an old industry

n December 2015, maritime media headlines gave news of the first four recycling yards in Alang, India, achieving certification by the international classification society ClassNK as compliant with the guidelines of the Hong Kong International Convention for Safe and Environmentally Sound Recycling of Ships. In 2016, very few reported on the progress made by the rest of the yards in Alang, which acquired statements of compliance with the Hong Kong Convention (generally termed SOC with HKC). In just 20 months, 37 more yards achieved SOC with HKC certification cumulatively from the top class societies: ClassNK, RINA and IR Class in Alang. As of today, a total of 41 yards in Alang hold SOC with HKC certificates and have developed their yards up to internationally acceptable standards. Another 15 yards are in the pipeline. It is expected that within the first quarter of 2018, there will be a total of 55 yards holding an SOC with HKC. This means nearly 50% of the entire number of active yards in Alang will be compliant with the HKC guidelines, well ahead of the ratification of the HKC by the Government of India (there are about 110 operational yards in Alang). The reason for this rapid growth in the number of SOC with HKC certifications is that although the general perception of the ship recycling yard owners in Alang was that they would not be able to meet international standards, they watched four yards doing so and gained enough confidence to pursue the same course for their yards. Furthermore, the yard owners saw some shipowners showing interest in green recycling, so they began to appreciate the concept of green

recycling and the means to achieve it. It is important to note that these yards were developed voluntarily by their owners without any financial support from the government. In recent months it has been noticed that despite the increase in the number of ship recycling facilities that have acquired an SOC with HKC, rather few shipowners have expressed interest in the green recycling of their end-of-life vessels. As per the HKC guidelines, it is the shipowner’s responsibility to provide an Inventory of Hazardous Material report (IHM) to the yard owner before the beaching of the vessel – something that does not happen in most cases. It goes without saying that the maritime industry – especially the shipowning community

– needs to show support to the ‘green’ yards of Alang and increase the volume of floating assets that are sent for responsible ship recycling. Alang’s green evolution took nearly four decades to happen, following the recycling of nearly 6,500 vessels. In the hope that there will be further growth in the proportion of recycling that is green, we will see the remaining 50% of the recycling yards in Alang eventually gain SOC with HKC (pressure from regulatory bodies will play a part). In conclusion, the international maritime industry should embrace the remarkable progress of Alang’s ship recycling industry and support the yard owners as they further develop their investments in green infrastructure, worker training and sustainable recycling methods. TST *Dr. Anand M. Hiremath is lead co-ordinator for responsible ship recycling and head of R&D at GMS

Anand M. Hiremath (GMS): Remaining 50% of recycling yards in Alang will gain SOC

Tanker Shipping & Trade | October/November 2017

www.tankershipping.com

High vessel utilisation Spend less time on cargo operations Efficient switch between different cargoes Hydraulically driven cargo pumps

Framo AS

Tel. +47 55 99 90 00

marine@framo.no www.framo.no

framo.com