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Content
Contents
8
31
Interview 8 ‘MbPT is a multipurpose cargo handling port serving this hinterland’ - Ravi M Parmar, Chairman, Mumbai Port Trust (MbPT) 13 ‘Project Exports can promote both merchandise and services together’ - Ajay Sahai, Director General & CEO, Federation of Indian Export Organisations (FIEO) Guest Coloumn 15 Time to Replicate Success of Indian Shipping Industry - Capt Sudhir Subhedar 17 SEZ for ODC Cargo - Capt Sekhar Features 18 Global Standards Implementation towards Ship Recycling Industry - Vijay Arora 23 Warehouse Receipt: As an Instrument for Financing - Dr Devajit Mahanta 6
August - September 2014
28 FDI in Dredging and Port Construction Industry: Correlation with FDI - Prof Dr GYV Victor 31 Duty of Care for Offshore Travel - Pieter Rieder Shifting Focus to Defence Shipbuilding: Risks 34 Assessment of Indian Shipyards - Anand V Sharma 37 SmartMarine 3D: Integrating Ship Design & Production - Igor Juricic 41 Freight Watch – July to August 2014 – Niteen M Jain & Nazir Ahmed Moulvi Marine Archaeology 43 1926 Steamship Discovered in Lake Ontario News 50 Indian News 56 Foreign News 59 Marine Tech 62 Book Review
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a) Pass in 12th Std (10+2) with PCM average not less than 55% and 50% marks in English at SSC or HSC (OR) b) With Physics as individual subject in one of the year, B.Sc. in physics, math’s, Chemistry or Electronics with an average of not less than 55% marks in final year. (OR) c) B.E./B. Tech. Degree from I.I.T Or from college recognized AICTE/UGC/DEC.
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a) Pass In 10+2 (12th Standard) with 50% aggregate marks in any Stream. b) Pass In 10 +2 (12th Standard) in any Stream.
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Prefe rably 17 to 25 yrs
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7) Electro Technical Officer Course (ETO). (DG Approved) 8) HND in Nautical Science in Association with South Tyneside College / City of Glasgow College MCA (UK) 9) HND in Marine Engineering in Association with South Tyneside College / City of Glasgow College MCA (UK)
25 Years
01st August
25 Years
01st August
21st July
Pass in Plus Two (12th Standard) or its equivalent with Maths, Physics and Chemistry Prefe group in Class XII, and preferably at least 50% in English (equivalent to IELTS 5.0 rably Jan & minimum)(1st Year at BPMA & 2nd Year at STC / COGC (UK) Awarded Best National 17 to Sep. Nautical Centre of Excellence status by UK Govt. 25 yrs Website: www.stc.ac.uk / www.cityofglasgowcollege.ac.uk. 20) RESCUE BOAT ONE DAY UPGRADATION 16) PROFICIENCY IN SURVIVAL 10) CHEMCO – SPECIALISED TRAINING 13) OIL TANKER 21) NAVIGATION WATCH KEEPING AB FAMILIARIZATION FOR CHEMICAL TANKERS OPERATIONS CRAFT AND RESCUE BOATS 22) PERSONAL SURVIVAL TECHNIQUES 14) CHEMICAL TANKER 11) GASCO - SPECIALISED TRAINING ( PSC & RB ) 23) PERSONAL SAFETY & FAMILIARIZATION FOR LIQUEFIED GAS TANKERS OPERATIONS 17) SHIP MASTER MEDICARE 15) LIQUEFIED GAS SOCIAL RESPONSIBILITIES (PSSR) 12) ATOT / TASCO – ADVANCED TANKER 24) FIRE PREVENTION & FIRE 18) MEDICAL FIRST AID TRAINING PROGRAMME ON OIL FAMILIARIZATION FIGHTING ( FPFF ) 19) ELEMENTARY FIRST AID TANKER OPERATIONS IGS / COW
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27) AFFC (ADVANCED FIRE FIGHTING COURSE)
28) Up-gradation Course For Engineer Officers (1st Monday of Every Month)
29) E. C. D. I. S.
30) R.O.C /A.R.P.A 31) NWKO (NCV) 32) 2ndMate (FG) 33) Mates Phase I & Phase II 34) ASM (FG)
REFRESHER COURSES
35) REFRESHER TRAINING FOR PERSONAL SURVIVAL
TECHNIQUES. AS PER STCW 2010. 36) REFRESHER TRAINING FOR PSC RESCUE BOAT. AS PER STCW 2010 37) REFRESHER TRAINING PROFICIENCY IN FIRE PREVENTION AND FIRE FIGHTING. AS PER STCW 2010. 38) REFRESHER TRAINING FOR ADVANCED FIRE FIGHTING. AS PER STCW2010. 39) SHIP MASTERS MEDICARE REFRESHER (MLC-2006) 40) MEDICAL FIRST AID REFRESHER (MLC -2006) 41) Refresher and Updating Training for ( SHIP SECURITY OFFICER )
AS PER STCW 2010.
42) Bridging Course for Sailing Electrical Officers to ETO. (16 DAYS ) 4th -Oct /7th -Nov/4th Dec-2014 43) Up-gradation Course for Deck Officers (3rd Monday of Every Month) 44) MEO CLASS-II-SECOND ENGINEER (NCV)(MARCH/JULY/NOVEMBER) Value Added Courses:-
45) BRIDGE TEAM MANAGEMENT ( BTM )
46) BRIDGE RESOURCE MANAGEMENT ( BRM )
Interview
‘MbPT is a multipurpose cargo handling port serving this hinterland’ Mumbai Port has long been the principal gateway to India and has played a pivotal role in the development of the national economy, trade & commerce - caters 10 per cent of the country’s sea-borne trade handled by Major Ports of the country in terms of volume. Ravi M Parmar, Chairman, Mumbai Port Trust (MbPT), details on the port’s strength, unique competency to cope with changing pattern of maritime trade, future expansion plans, etc in an exclusive interaction with Rakesh Roy. He also shares his view on constraints that result in inadequate share of coastal shipping to trade activities in the country, FDI & private sector participation in port development, Cabotage Law, Government policy, etc.
In 2013-14, twelve State-owned major ports handled about 58 per cent of the country’s trade by volume shipped by sea, This includes crude oil, coal, container cargo, fertiliser, all aggregating to 555.49 MT.
Shri Ravi Manubhai Parmar is a senior Indian Administrative Service (1992 Batch) officer having more than 22 years of experience in Public service. On education front he has graduated in Commerce and holds Master’s Degree in Public Administration from prestigious Maxwell School, Syracuse University, New York, USA and a certificate from the same School. During his long career Shri Parmar has held several key positions at Centre and State Government level in sectors like Health, Transport, Industries, Steel, Personnel, Home, Welfare, etc. Shri Ravi M. Parmar, IAS, was Deputy Chairman of Mumbai Port Trust before he assumed charge of Chairman of Mumbai Port Trust in May this year. He is also entrusted additional charge of Chairman, Kandla Port Trust since January 2014.
8
August - September 2014
The performance of non-major ports in cargo handling has been elevating since last few years. Major ports have been showing dismal performance. May we have your comments, please? I partially agree with the statement in so far as it relates to elevating performance of non-major ports. In the last decade, Indian Port Sector has witnessed certain structural changes and the State owning major ports have given way to greater private participation in this sector. Maritime Agenda 2010-2020, issued by the Ministry of Shipping, has set a target capacity of over 3,130 MT by 2020, largely through private sector participation and more than 50 per cent of this capacity is expected to be created at non-major ports. However, in 2013-14, twelve State-owned major ports handled about 58 per cent of the country’s trade by volume shipped by sea. This includes crude oil, coal, container cargo, fertiliser, all aggregating to 555.49 MT, which was 1.8 per cent more as compared to 545.83 MT of the cargo handled by major ports in the previous year. To site an example, in 2012-13, Kandla Port created national history by handling 93.62 MT cargo recording 13 per cent increase over its last year traffic. Considering the fact that cargo-handling capacity of Kandla Port was 92.02 MT, handling 93.62 MT of cargo was not dismal by any means. Mumbai Port Trust also handled record traffic of 59.18 MT in 2013-14. In 2012, The Government relaxed Cabotage Law for Vallarpadam terminal allowing foreign owned and foreign registered container ships to carry cargo between Indian ports. Do you expect the Government should give such relaxation in Cabotage Law to other Indian Ports also? If ‘yes’, how will it help to boost Indian Shipping sector? Aside from the Cabotage Law, there are several factors which result in inadequate share of coastal shipping to
Interview trade activities such as double handling cost, import duties on bunker oil and spares, high manning scale which increases operational cost, stringent specification for vessel construction leading to higher capital cost, competing rail and road transport, lack of separate facilities at the ports for coastal cargo, etc. As far as Cabotage law is concerned there are countries in the world, for example South Africa, where there is no Cabotage Law. However, coastal shipping there could not achieve desired results. To give boost to the short sea shipping, it is necessary to address the issue holistically.
According to you, how will PPP model boost the infra development in the port sector?
The biggest challenges ahead of major ports can be summarised as capacity constraints, low level of mechanisation, low pace of project execution, lack of last mile connectivity, unavailability of specialised berthing, shallow drafts etc. At the Port level, expansion projects and green field projects are envisaged to deal with these bottlenecks.
PPP projects were introduced in the Indian port sector in the late 1990s to increase the capacity. Private sector participation was expected to result in improvements in the operating efficiency and performance standards. The Govt. of India allowed 100 per cent FDI for port development projects. Between April 2000 and January 2014, Indian Ports reportedly received FDI worth USD 1635.40 million. It is true that the progress of PPP Projects in the country has not been up to the expectations. This can be attributed to the various impediments at Pre and Post award stages. The problems at the pre-award stage were mainly lack of clarity on the bidding framework, pre-qualification criteria, concession terms etc. At the bidding stage, there have been instances when the tenders were discharged and re-invited due to procedural issues. At the Post-award stage, time taken to get environmental and other statutory clearances was high and post commissioning the BOT terminal faced operational problems because of their high dependence on port trust for common facilities like capital dredging, pilotage, vessel movement which affected their efficiency.
Foreign investment in port sector has declined in last few years despite of 100 per cent FDI in the sector.
Success of PPP project in port sector depends on the way these issues are addressed. Of course, some
What are the current biggest challenges ahead for major ports in India? What strategies have you undertaken to maintain the positive growth momentum?
10
August - September 2014
Interview
progress has been made and to address the pre award stage problems ‘model documents’ have been framed. Besides this, Regulatory and Policy initiatives have been taken to clear the bottlenecks, such as passing of Land Acquisition, Rehabilitation and Resettlement bill 2011 to remove impediments in land acquisition by empowering the Govt. to acquire land on behalf of private party taking up public project like those in railway, port, and power sector. However, viability of port projects also depends on other strategic considerations like cargo potential, extent of handling infrastructure, draught and land cost. No doubt the port sector has undergone considerable change since the 90s in terms of trading pattern. Then how is MbPT executing its strategies to cope with the changing needs of maritime trade? If you look at the cargo composition of the world trade, you would notice a tripod with almost equal quantity of containerised, dry bulk and liquid bulk cargo. Dry bulk trade is on the rise after 2013, having seen the second highest contracting trend after 2010. The position for the near future looks promising considering various factors like the increase in the US grain production, coal-based electricity generation in Japan and the
reports of the European Economic recovery. The dry bulk fleet is also expected to grow by less than 5 per cent per year up to 2020. Mumbai Port Trust is a multipurpose cargo handling port serving this hinterland. It is a traditional comprehensive port designed to handle bulk cargo. The port, however, has successfully adapted to changing shipping needs and cargo packaging from break bulk to unitisation/palletisation and containerisation. Besides this, it has also developed specialised berths for handling POL and chemicals. The Port is looking forward to raise its bulk handling capacity through different projects in the pipeline as well as on the design board. The Port is also envisaging handling of bigger sized panamax vessels in its anchorage area. The Port is equipping itself to handle containerised cargo through its OCT project, execution of which, of course, is delayed for some reasons but will hopefully be complete soon. MbPT is considered as the principal gateway to India’s International & National trade, caters almost 10 per cent of the country’s sea-borne trade handled by major ports of the country in terms of volume. Can you please tell us the USP of the port (Please August - September 2014
11
Interview share the cargo handling capacity, storage capacity, dry-dock etc. of the port)? Presently the Port has 26 cargo berths including BPS at Indira dock complex. It also has 4 berths for handling POL at JD, 2 berths for chemicals at PP, passenger cum cargo berth at BPX, 2 berths for ferry ships at new ferry wharf. Its total cargo handling capacity is 49.25 MMT. Extensive facilities are available for storage of cargo in the docks and outlying areas. Pre-shipment storage facilities have been accorded to all types of export cargoes. The Port has approximately 270,000 square meters covered space and 500,000 square meters open space besides 6000 slots for containers. The liquid storage capacity of the Port is 490,000 KLS approximately. The Port also has a dry dock in its Indira Dock Complex with length 304 meters and beam 30 meters approx. The existing facilities at this Dry Dock provide all major services for repairs to the ships. Specialised berths for handling POL and chemicals caters to nearly one fifth (about 19 per cent) of POL Traffic handled by all the Major Ports in the country. These multipurpose cargo handling and ship repair facilities at the port are its USP. What are the future plans of MbPT in terms of cargo & storage capacity expansion, dry-dock & dredging enhancement. Tell us about the new projects in pipeline and how will manage the finance for the same? Construction of off-shore container terminal berth, Redevelopment of Harbour Wall berths, Construction of Second berth for handling liquid chemical/specialised grades of POL off New Pir Pau Pier, Improvement of Rail connectivity are some of the on going projects. Besides this, the port is concentrating on developing facilities such as Deepening/addition of anchorages, developing bunkering facilities, developing FSRU terminal, mechanisation of mid sea operations by employing floating cranes etc. which would add to the cargo handling capacity of the port without putting any additional burden of vehicular traffic on the otherwise busy city roads. What changes would you like to see in Government policy on port sector? What are your expectations from the forthcoming Union Budget? The Government of India has allowed 100 per cent FDI for port development projects. A 10-year tax holiday has also been given to enterprises engaged in the business of developing, maintaining and operating ports, inland waterways and inland ports. The Cabinet Committee 12
August - September 2014
The biggest challenges ahead of major ports can be summarised as capacity constraints, low level of mechanisation, low pace of project execution, lack of last mile connectivity, unavailability of specialised berthing, shallow drafts, etc.
on Economic Affairs (CCEA) has approved five projects involving an investment of over ` 17,630 crore (USD 2.93 billion) to increase the capacity of major ports. Of the five projects approved, four are container terminals and one is a multi-purpose cargo berth project in Mumbai Port. It is well-known that India’s expenditure on logistics activities is one of the highest in the world equivalent to 13 per cent of GDP, higher than that of developed countries like US (9.9 per cent), Europe (10 per cent) and Japan (11.4 per cent). This is due to combination of many factors like industry fragmentation and infrastructure facilities. The competitiveness of an export-oriented sector is adversely affected by inefficiencies in the logistics cost due to inadequate infrastructure facilities. This area needs strategic attention to boost country’s EXIM trade. Port performance in the last year. Registering an increase of 1.14 MMT over previous year, Mumbai Port handled all time high 59.18 MMT of cargo in the year 2013-14. This mainly comprised 60.8 per cent POL and Chemical, 23 per cent general cargo and 16.2 per cent stream cargo. Comments on the Port’s 142 years symbiotic relationship with the city of Mumbai. Mumbai Port has so far been known mainly for its multipurpose cargo handling facilities. However, in order to make port more city friendly and create synergy with city, Mumbai Port Trust is planning some projects to cater to the leisure, traffic, water transport, water sports, entertainment, etc. needs of the city. This will include projects such as Marina, Floatel, Floating Restaurants, Entertainment Zone at Marina Bay, etc.
Interview
‘Project Exports can promote both merchandise and services together’
A
fter the 1991 economic liberalisation, India’s Foreign Trade has been zoomed in manifold from less than USD 50 billion in 1991 to over USD 850 billion in 2013, says Ajay Sahai, Director General & CEO, Federation of Indian Export Organisations (FIEO). While the new Foreign Trade Policy (FTP) (2014-19) is expected to unveil shortly, he details his view on existing FTP, FDI in retail, regional and bilateral trade agreements of India and the key focus areas of the new FTP, in an exclusive interview with Rakesh Roy.
After the 1991 economic liberalisation, how did Foreign Trade Policy (FTP) of India play a crucial role to propel the country’s GDP and economy growth? The economic liberalisation set India on the path of globalisation and made it an outwardly looking economy. The Foreign Trade of India zoomed from less than USD 50 billion in 1991 to over USD 850 billion in 2013. The share of International Trade (both goods and services imports as well as exports) contribute to over 55 per cent of country’s GDP. FIEO feels that the share can touch 60 per cent by 2018-19. The Foreign Trade Policy did contribute to such growth particularly on export front by diversification of markets as well as products. The focus programmes announced by the Ministry of Commerce did help in diverting the attention of Indian exporters from traditional markets to new and emerging markets. This has changed the product profile of exports. New and emerging sectors of exports like Engineering, Pharmaceuticals, Chemicals, Electronics, Marine, etc are playing dominant role in country’s exports. What is your take on existing foreign trade policy (FTP) of India? Is it adequate to compete with developing countries to boost trade & business? The Foreign Trade Policy should look at providing a conducive environment for manufacturing and exports. The focus of the policy should be on providing technology
The share of International Trade (both goods and services - imports as well as exports) contribute to over 55 per cent of country’s GDP. FIEO feels that the share can touch 60 per cent by 2018-19.
required for exports, reducing cost of credit, encouraging aggressive marketing, and addressing ground level transaction cost. The introduction of Export Promotion Capital Goods Scheme, Interest Subvention for Exports, MAI & MDA Support, besides, High Powered Committee on Reduction of Transaction Cost did attempt these issues respectively. However, the challenges remain and the new Policy should hopefully address the left over concern. What is your perspective on FDI in retail? Is it a boon or bane to Indian Economy? 100 per cent FDI in single retail trade is already permitted. The reservation is with regard to multi-brand retail which may impact the small shopkeepers in the neighborhood. Since such shopkeepers are vital for socio economic need August - September 2014
13
Interview of the country, we are little cautious in entering multibrand retail in the country. There is need for detailed study about its impact on country as a whole before a final call is taken. While FTP is aiming to provide consumers with good quality goods and services at internationally competitive prices, what are the measures should be taken at the same time in creating a level playing field for the domestic produce & for creating employment?
I personally feel that the Foreign Trade Policy should have a strategy to supplement ‘Make in India’ which can be a game changer in years to come.
The Foreign Trade Policy did provide level playing field to domestic manufacturers. In fact, it is only the trade policy of India which has a concept known as Deemed Exports to provide same level field to the Indian exporters as is available to a foreign supplier. Under the mechanism, the Indian supplier of goods (both Capital Goods & Raw Material) can supply the goods near the international price as the component of taxes and duties (excise and basic customs duties) are refunded by the DGFT under Deemed Exports provision. Once you are encouraged to supply free of taxes component and with freight advantage, you can replace a foreign supplier. This has been found a very effective instrument of imports substitution.
supplement ‘Make in India’ which can be a game changer in years to come.
Could you please throw light on India’s regional and bilateral trade agreements?
Project Exports can promote both merchandise and services together. The increasing demand in Africa besides, Middle East and Russia provide a huge market opportunity. The FTP should also analyse the product profile of the global trade and should encourage products/ sectors which can be winners in such scenario.
India has been a great votary of multi-lateralism but was forced to join the race of Free Trade Agreements as over 60 per cent of world trade happens within the trading partners. Most of the FTAs/CECA/CEPA has been signed recently only and therefore, it would be a little pre-mature to judge the efficacy of such arrangements. However, on a broader basis, we can safely say that the gains on export front has been more as compared to imports, if we look at CAGR on both front. The situation may be little different with a particular trading partner, where we may have conceded more on imports rather than gains on exports side. Such situation is unavoidable as we are looking at addressing such anomalies through gains in services exports as well as investments. According to you, what would be the key areas of focus of the new FTP (2014-19), which is all set to commence, to rev up trade in the country? The key focus of the Foreign Trade Policy should be on imparting competitiveness to exports. The strategy to achieve this objective should entail various components. We should attempt to integrate in the global value chain as most of the trade is happening this way. The focus should also be on labor intensive sectors of exports which will propel manufacturing in the country. I personally feel that the Foreign Trade Policy should have a strategy to 14
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What are the key sectors should to be focused by the new government, you foresee, that will augment trade & business in the country? The major focus of the new Policy should be on Services, Project Exports, E-Commerce, High Technology products, besides, existing products and sectors. We are having a favourable trade balance in Services but are nowhere near our exports potential as, forget of promoting Services, we are not yet providing level playing field to this sector.
India’s new Prime Minister’s recent meeting with world leaders has created a lot of aspiration on creating trade & export market. What is your take on it? The visit of the Prime Minister to Japan & US and recent visit of President of China is expected to bring investment worth USD 100 billion in the country. We hope that major investment will flow to manufacturing and infrastructure which in turn will promote exports. The Prime Minister’s focus has been on ease of doing business. In this background, I feel the new Policy will simplify the procedure, introduce predictability and stability besides, introducing EDI in all areas of Exim operations. Your view for the next five years on trade in India. FIEO feels that the country’s exports would touch USD 750 billion in next 5 years while imports may be around USD 900-1000 billion. Such growth in exports is ambitious but achievable. This requires a compound annual growth rate of 19 per cent while we clocked over 17 per cent growth in last 10 years. Pro-active policy and entrepreneurship of Indian exports will see that such targets are reached.
Guest Colomn
Time to Replicate Success of Indian Shipping Industry
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ndian Shipping has the potential to replicate the success of Indian IT of twenty years ago. The Shipping Industry has high expectations from the newly elected Government and particularly from the Shipping Minister, said Capt Sudhir Subhedar, President, ICC Shipping Association, a veteran of Indian Shipping and an expert of coastal shipping in India. For almost 6 decades now, ICC Shipping Association (ICCSA) continues to be the representative body for the Indian coastal shipping industry. With 72 member companies, ICCSA today represents the interests of the coastal shipping industry at various forums including the Ministry of Shipping, Directorate General of Shipping, the National Shipping Board, Tariff Authority for Major Ports, etc.
There is an immediate need in the next budget (2015-16) to relook at Tonnage Tax, exempting shipping services from custom and excise duty, seafarers’ taxation, which has the potential to capture the global demand.
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or the new Government, priority should be to enhance Indian Shipping generally and coastal shipping in particular. Indian Shipping has the potential to replicate the success of Indian IT of twenty years ago. Indian Shipping is an important aspect of national economy which requires requisite support from the Central Government with respect to deregulate some basic laws that date backs to colonial days which will make enabling provisions to modernise Indian shipping. Increase the size of Indian fleet, both foreign going and domestic shipping, so that India’s fuel bill can be substantially reduced. Indian trade could benefit from CIF (Cost, Insurance and Freight) and FOB (Free on Board) sales, thereby reducing logistics costs of India which are amongst the highest in the world. To this end, there is an immediate need in the next budget (2015-16) to relook at Tonnage Tax, exempting shipping services from custom and excise duty, seafarers’ taxation, which has the potential to capture the global demand. There is also a need to substantially August - September 2014
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Guest Colomn
increase the allocation from the Central Government to the Ministry of Shipping and increase the resources of the Directorate General of Shipping so as to serve the targeted goal of quantum leap in the Indian shipping fleet. Readers will note that the word shipping has not featured in Finance Minister’s speech for several years. This is clearly because much larger share of resources has gone to other modes of transport to the detriment of Indian Shipping economy and the present poor status of logistics in India. Furthermore we need to introspect why allowed 100 per cent FDI has not materialised in shipping in last 10 years; in Europe ordinary Doctors and Dentists invest in shipping especially in coastal / rivers transport to aid national policy. Review and arrest sliding status of Indian Maritime education and training including assessment of IMU because what world wants is competent Seamen from India, not marine graduates. IMU, if at all, should be tasked with establishing centre of excellence, R&D and enabling Seaman Officers to progress academic studies at their cost, time and initiative. India’s shipbuilding capacity and marine equipment manufacturing needs to be put on the fast track, as mentioned recently by ex President Dr A P J Kalam in Bombay Chamber of Commerce in February 2014. The Ministry of Shipping should look for adopting the recommendations of KPMG report with respect to coastal shipping that was subjected to the then Shipping Minister in December 2013. This could begin with declaration of the Coastal Shipping Policy and a planned implementation of Maritime Agenda 2020. We look forward to run up to the next budget session significant departure from previous years in seeing shipping making headway and headlines. All of us should make presentation to GoI well in time for next Budget 2015-16 and following years so that Indian shipping, Inland waterways, dredging, concept of Sagarmala gets desired mention and attention. If nothing else, out of all those things which I mentioned, there should be mention in 2015-2016 budget speech, enhancement of Indian Shipping by way of detailed presentation to the Government well before finalising the budget. The recently announced budget saw several adjustments to shipping sector not seen before. The next budget therefore is expected to build on allocation made for Ports development and efficiency, connectivity, Ganga river cleaning and navigation, USD 1 billion funding, fiscal incentives, dredging and infrastructure, PSU Cargo reservations, etc. 16
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The next budget therefore is expected to build on allocation made for Ports development and efficiency, connectivity, Ganga river cleaning and navigation, USD 1 billion funding, fiscal incentives, dredging and infrastructure, PSU Cargo reservations, etc.
As reported in industrial scan we see that coastal shipping by way of Vishakhapatnam Steel Plant and Concur Logistic Park and expansion of VPT, coastal shipping is poised for growth and its rightful contribution to Indian economy. Biggest hurdle of lack of Indian ships for domestic use may get partly solved by the announcement of India controlled tonnage policy and ship building incentive in the pipeline. ICCSA does not support relaxation in cabotage only for one party or Port and hopes that relaxation will be, if any, is supported by affirmative action so as not to undermine Indian Coastal Shipping. Indian Coastal Ships are at great disadvantage compared to foreign ships on the coast due to fuel pricing alone. Indian Coastal Shipping in terms of taxation, shipping finance, manning cost, compliance cost is placed in very difficult situation to take head on relaxation in cabotage. If these impediments are removed, Coastal shipowners / Operators will be able to compete on level playing field. In December last year, ICCSA commissioned KPMG for a report that objectively determined over several cargoes and several routes that there is ` 500 per ton freight differential between road rail and water transport. This is surprising because water transport should have been cheapest. Therefore we are hoping that as an interim measure, Government will announce some incentive scheme rupees per ton per km similar to one announced by the Kerala State Government for movement of domestic cargo over its 500 km coastline. We also hope that the new Government will also look at and review all old laws which come in the way of modernization and Indian Mercantile marine affairs.
Guest Colomn
SEZ for ODC Cargo The author narrates of an SEZ that not only caters to a specific industry, but a segment of manufacturers cutting across industries that make large products, or more commonly called ODC (over dimensional cargo) by the transportation sector.
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EZ are not known to have been a roaring success in India, for various reasons. This is despite the SEZ being an excellent in-principle concept, promising an operating and taxation environment matching the best around the world. Without going into details of why it is no so popular, this article is a description of an SEZ, that caters not to a specific industry, but a segment of manufacturers cutting across industries that make large products, or more commonly called ODC (over dimensional cargo) by the transportation sector. When you see a turbine blade on a truck trailer meandering through ghat section roads, you will agree to the argument of what this ODC manufacturer can achieve by locating himself on the waterfront. The layout of such an SEZ is like a regular industrial park, but with one major difference. Each of the industrial plots has a canal on one side that connects it to the sea. The common use infrastructure is typically articulated self-propelled barges that ply on these 15 m wide and 1.5 m deep canals, taking the large products from the factory to the export vessel at berth outside the sea mouth. The break bulk vessels take these products further on to their export destinations. The sea mouth can be an artificial sea mouth, if the environmental impact is analysed or handled carefully.
Alternately the SEZ can be connected to the sea through an estuary. The maintenance dredging cost will be minimal, only for the estuary, which is shared with the riverine ports. If this SEZ is located on river banks, it saves some canal development charges, but imposes maintenance dredging costs.
Given the increasing loads on the road and rail, the waterways will be the preferred highways of the future. Inland waterways will thrive on point to point cargo movement with minimal inter modal transfers. Such an SEZ will utilise land close to the sea and not occupy waterfront land, thereby not imposing an opportunity cost of a port development. If located on the riverbank, the customs perimeter boundary monitoring will have to account for river traffic sharing space with SEZ product movement. Who will populate such an SEZ? Any manufacturer around the world who makes over dimensional cargo will find it sensible to relocate here. With rising manpower costs in Europe, many brands will relocate their manufacturing to India (of course, if they are not already in China!). The products are typically wind turbine towers and blades, large generators, boilers, marine engines, pleasure yachts and certain project cargoes. Given the increasing loads on the road and rail, the waterways will be the preferred highways of the future. Inland waterways will thrive on point to point cargo movement with minimal inter modal transfers. Factories will find it sensible to locate at the waterfront. While navigable waterfront space itself is always limited, such an Industrial park will act as a waterfront space multiplier.
Capt Sekhar
Director AlphaMERS E: sekhar@alphamers.com
It appears a matter of time before the ODC cargo manufacturers seek to locate near the waterfront and such units will find it easier to share space within an industrial park, instead of having individual waterfront developments themselves or occupying premium space within ports. August - September 2014
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Feature
Global Standards Implementation towards Ship Recycling Industry Ship recycling operation, which is called ‘green’ recycling, due to increasing awareness towards the environmental impact of ship breaking activity, concerned agencies, regulators and administrators have been started to explore and develop common global measures to have a safe and environmentally friendly ship recycling industry. The article discusses on implementation of various global standards developed by international conventions on ship recycling.
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resently, the world is still reeling under an economic crisis. The ship recycling industry is closely related to shipping market cycles and during recessionary times, when freight rates are low and ship owners are short on cash, old and obsolete vessels are sold to scrap dealers in the demolition market which provides a source of cash to ship owners. Although in general the average life span of a ship, considering economic, technical and regulatory limitations, is about 25 to 30 years; the decision to sell a ship for recycling is often dictated by its physical condition which may demand uneconomic repairs at the time of the renewal of the ship’s certificates; an economic crisis can shorten this considerably. Less frequently, ships may be sent for recycling as a result of a regulatory phase out, as was the case with single hulled tankers, or because of regulatory requirements necessitating expensive modifications or refits. In the current market scenario much work can be expected to come for the ship recycling industry. It is unusual for a ship owner to sell a ship directly to a recycling yard. Instead, around 90 per cent of ships sold for recycling, are sold to intermediaries, known as Cash Buyers, which are companies with expertise in the recycling markets and which buy ships from ship owners and sell them to recyclers. Cash Buyers are therefore influential players in the ship recycling market. Ship Dismantle: Seller-Buyer Proportion The ship owners do not sell the ship directly to recyclers/ recycling yards, as they are faced with a number of risks: • A ship has to ensure that the yard that will perform according to the contract. Most ship owners do not have experience of the recycling market in order to mitigate this risk; • A ship owner wants to be paid in cash and not with a Letter of Credit that most recyclers utilise; and • Taking a ship on its last voyage with limited bunkers to a recycling yard’s anchorage can pose significant commercial and logistical risks to the ship owner, especially in a falling market.
Vijay Arora
The Cash Buyer mitigates the above mentioned risks for the ship owner by paying the agreed deposit and the balance of the purchase price in cash. Thereafter, the Cash Buyer usually has pre-arranged a back-to- back sale of the ship to a recycling yard.
Chief Surveyor & Senior Vice President Indian Register of Shipping E: v.arora@irclass.org
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Ship Recycling towards Economic Development of Locals Ship breaking, ship dismantling, ship recycling, ship scrapping, ship disposal, ship demolition etc are different terms which all point to the activity of
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Feature breaking an end of life ship into bits and pieces to recycle and reuse the materials derived from the ships for various purposes. Ship recycling, as the name suggests, at least theoretically should be a green activity supporting sustainable development as it reduces the need to use natural resources for steel making by recycling and reusing tons of unused discarded steel at the end of life ship, and is believed to be the most eco-friendly way of disposing of ships at the end of their economic lives. The benefits that arise from recycling ships are many. When recycling a ship every part of its hull, machinery, equipment, fittings and even furniture is re-used. The industry creates economic development for local and regional communities by large-scale direct employment, by the generation of associated industries, and also by the large scale of trading in used equipment and machineries that takes place. There are additional benefits to the economies of the recycling countries from the recycling of steel, wood, machinery and equipment, which would otherwise have to be imported. Green Ship Recycling & Basel Convention However, while the principle of ship recycling is sound, the working practices and environmental standards in recycling yards in the ship recycling operation often leave much to be desired which cripples the underlying principle of sustainability. Increasing awareness towards the environmental impact of ship breaking activity and mounting pressure from various sources including environmental non-governmental organisations (ENGOs) such as Greenpeace and Ship Platform became an eye-opener for concerned agencies, regulators and administrators. Thus they started to explore and develop common global measures to have a safe and environmentally friendly ship recycling industry. This led to increasing number of shipping companies to adopt policies for ‘green’ recycling of their ships.
• Treat and dispose hazardous wastes as close as possible to where they were generated; and • Minimise international movements of hazardous wastes. At this point that none of the three strategy steps appear appropriate or relevant to the recycling of ships. Basel Convention (BC) does allow trans-boundary movement of wastes: • If this represents an environmentally sound solution; • If the principles of environmentally sound management and non discrimination are observed; and • If it is carried out in accordance with BC’s regulatory system. The regulatory system is based on the concept of Prior Informed Consent (PIC) requiring the authorities of the State of export to notify and to provide detailed information on the intended movement to the authorities of the State of import and any transit States. The movement may proceed if and when all these States have given their written consent. In a further effort to strengthen the protection to developing countries, in 1994, Parties to the Basel Convention adopted the ‘Ban Amendment’, banning export of hazardous wastes from Organisation for Economic Co-operation and Development (OECD) to non-OECD countries. The Ban Amendment has not yet entered into force. It is nevertheless enforced unilaterally in the European Union, through the European Waste Shipment Regulation. (Regulation (EC) No1013/2006 of 14 June 2006- applicable since July 2007). At the end of the 1990s Parties to the Basel Convention considered that the convention should regulate the dismantling of end-of-life ships. As the Basel Convention contains no practical provisions for regulating this activity, its Parties developed and approved in December 2002 voluntary guidelines entitled: Technical Guidelines for the Environmentally Sound Management of the Full and Partial Dismantling of Ships.
Initial attempt to address the problem was to employ the Basel Convention adopted in 1989 which subsequently came into force in 1992. The main objective of the Basel Convention is to ‘control the trans-boundary movement of hazardous wastes and their disposal’. The objective of the Basel Convention is to protect human health and the environment against the adverse effects of hazardous wastes. Its scope of application covers a wide range of wastes defined as ‘hazardous wastes’, as well as ‘other wastes’, namely household waste and incinerator ash.
Note areas where the structures of Basel Convention are unworkable for regulating end-of-life ships: The Basel Convention defines ‘State of Export’ as ‘a Party from which a trans-boundary movement of hazardous wastes or other wastes is planned to be initiated or is initiated’. This means that the State of export is the State from which the trans-boundary movement physically has begun, or is planned to begin. The State where the decision about the movement is taken, or the nationality of the waste, or the nationality of its owner is of no relevance.
The Convention sets out a three step strategy to achieve its aims: • Minimise the generation of hazardous wastes;
Also, ‘wastes’ are defined in the Basel Convention as ‘substances or objects which are disposed of or are intended to be disposed of or are required to be disposed August - September 2014
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Feature of by the provisions of national law’. In relation to endof-life ships such intention may be established by a decision of the owner or by a contract on scrapping. The ship owner, however, has various ways for not making his intention known and has ample opportunity to ensure that the ship’s last voyage is not considered to be a trans boundary movement in accordance with the Basel Convention, for example by not declaring the intention to recycle the ship until she is in the high seas, or in the waters of the recycling State. Because of the enforcement difficulties, the 7th Conference of the Parties to the Basel Convention, in October 2004, decided to invite IMO to consider establishing mandatory requirements that would ensure an equivalent level of control as that established under the Basel Convention (Decision VII/26). Thereafter IMO’s Assembly 24 (December 2005) adopted resolution A.981(24), instructing the Marine Environment Protection Committee to develop a ‘new legally binding instrument on ship recycling”, which will regulate the: • Design, construction, operation and preparation of ships so as to facilitate safe and environmentally sound recycling, without compromising their safety and operational efficiency; • Operation of ship recycling facilities in a safe and environmentally sound manner; and • Establishment of an appropriate enforcement mechanism for ship recycling (certification / reporting requirements). Ship Recycling Industry & Scrap Steel One of the characteristics of the ship recycling industry, certainly for the last 15 years, is that it is concentrated in five countries which have been recycling around 97 to 98 per cent of the world’s recycled tonnage. Three of these countries, China, India and Bangladesh, have large recycling capacities, Pakistan has medium capacity, and Turkey has a small capacity. The rest of the world put together recycles less tonnage than that of Turkey.
The ship owner, however, has various ways for not making his intention known and has ample opportunity to ensure that the ship’s last voyage is not considered to be a trans boundary movement in accordance with the Basel Convention.
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The fact that there is very little ship recycling activity in Europe has often been explained in terms of the inability of Europe to compete with the low labour costs and low compliance costs of South Asia. However, the real reason why ships are not recycled in Europe lies elsewhere: whereas the Asian countries utilise scrap steel in their domestic economies, Europe is a major net exporter of scrap steel. Therefore, the idea of setting up a ship recycling industry in Europe to break ships (with considerably higher labour and compliance costs) in order to export the scrap to Bangladesh or India is simply not credible. On the other hand, the five key recycling countries in Asia share a large appetite for scrap steel, and are also helped by lower labour and compliance costs. Turkey’s steel making uses mostly scrap steel and much less iron ore (around 74 per cent vs 26 per cent), and is said to be the largest importer of scrap steel in the world (around half of it coming from EU). Turkey satisfies around 3 per cent of its steel production needs with scrap steel from ship recycling. China produces around 45 per cent of the world’s steel, its production being six times larger than the second largest producer, Japan. China uses mostly iron ore and only 10 per cent steel scrap in steel making. Up to 2.5 per cent of the country’s needs for scrap steel comes from its ship recycling industry (representing less than 0.4 per cent of China’s steel production). Equivalent figures for the contribution of steel from ship recycling to the steel production of the country, according to the World Bank (The Ship Breaking and Recycling Industry in Bangladesh and Pakistan, World Bank report, December 2010) is 50 per cent for Bangladesh, between 5 per cent and 6 per cent for India, and 15 per cent for Pakistan. China generally, but not always, pays prices around USD 50 to 70 per LDT (light displacement tonnes) less than those paid in South Asia. Turkey in recent times paid around USD 100 per LDT less than the prices paid in South Asia. Turkey specialises in recycling mainly Mediterranean trading ships and European governmentowned ships. Turkey tends to recycle smaller ships, primarily for economic reasons. The price a ship is sold for recycling represents a significant residual value. Last year it represented between 17 per cent and 23 per cent of the replacement new building price. The scrap price is therefore important in the ship owner’s long term calculations. Although a ship owner’s decision on where to recycle his ship is sometimes based on a preference for ‘green recycling’, more often than not it is based on where the ship owner can obtain
Feature Prices and recycled volumes fluctuate depending on the state of the shipping markets (actual and anticipated balance of supply and demand) and on the price movements in the international steel markets.
The 2009 International Conference on the Safe and Environmentally Sound Recycling of Ships took place at the Hong Kong Convention and Exhibition Centre, from 11 to 15 May 2009. The Conference was attended by representatives of 63 Member States, two Associate Members, representatives from the Secretariats of the Basel Convention and of ILO and observers from one IGO and eight NGOs. Having finalised the text of the convention, the representatives of the 63 Governments unanimously adopted the ‘Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009’, also known as ‘the Hong Kong Convention’, and six Conference resolutions. Application of the Hong Kong Convention
the best price. The geographic location of the ship after its last cargo and prior to re-cycling is a key parameter in determining the best net price. Prices and recycled volumes fluctuate depending on the state of the shipping markets (actual and anticipated balance of supply and demand) and on the price movements in the international steel markets. Consequently, ship recycling is a very volatile industry with, both recycled volumes and prices varying widely over time. The methods employed for ship recycling are: • Tidal beaching as practiced in Bangladesh, India, and Pakistan, who provide about 66 per cent of the world’s recycling capacity in GT terms • Non-tidal beaching as practiced in Turkey, who provides about 4 per cent of the world’s capacity • Alongside or floating as practiced in China, who provides around 28 per cent of the world’s capacity • Graving dock or dry-dock used in very limited cases International Conventions on Ship Recycling Following the adoption of IMO’s Assembly resolution A.981(24), MEPC 54 in 2006 convened a working group on ship recycling which commenced the development of the text, on the basis of a first draft submitted by Norway. Thereafter, much concentrated work was devoted to the further development of the draft text of the convention: • Four further sessions of MEPC (including three working groups and one drafting group); • Four correspondence groups; and • Three intersessional working groups Three years and two months after the submission of the first draft, a diplomatic conference was held to adopt the convention on ship recycling, probably in record time.
The Convention will apply to: • Ships flying the flag of a Party; and • Recycling facilities residing in a Party The Convention will not apply to: • Warships; government owned non- commercial ships; exclusively domestically operated ships; and ships of less than 500GT The Convention also makes provision for ‘no more-favourable treatment’ for ships flying the flag of non-Parties. Main Requirements for Ships in Service: Parties will ensure that hazardous materials listed in Appendix 1 to the Convention will not be used in their shipyards, or installed on their ships. Ships will be provided with an Inventory of Hazardous Materials (IHM) identifying and quantifying in Part I materials listed in HKC’s Appendix 1 (existing ships) and Appendix 2 (new ships). Existing ships will have an IHM no later than 5 years after entry into force, or when the ship goes for recycling if that is earlier. The IHM will be updated after installations of materials listed in Appendix 2 of the HKC. Ships will undergo renewal surveys verifying the IHM and will be issued with the International Certificate on Inventory of Hazardous Materials (ICIHM) with 5 years’ maximum validity. Main Requirements for Ships Preparing for Recycling: The ship owner (note, the HKC in its definition of the ship owner includes the Cash Buyer) of a ship flying the flag of a Party has to: • Recycle the ship in recycling facilities of a Party State; • Select an authorized recycling facility that is capable to deal with the types and quantities of hazardous materials in the ship (as per IHM); • Provide the facility with copies of the IHM, the ICIHM, August - September 2014
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Feature and with any other relevant information (with which the facility will develop the Ship Recycling Plan); • Notify the flag State of the intention to recycle the ship; • (Once the approved Ship Recycling Plan is received from the facility) arrange for a final survey to verify the IHM and that the SRP reflects correctly the IHM and that it contains other required information; • Following the final survey, obtain the International Ready for Recycling Certificate (IRRC) from the flag State or its Recognised Organiszation.
The third condition currently necessitates that the Hong Kong Convention (HKC) is acceded by any two of the three large recycling States (Bangladesh, China, and India).
Main Requirements for Recycling States: • Parties shall establish legislation implementing the HKC; • shall designate one or more Competent Authorities (CA) and a single contact point to be used by interested entities; and • shall establish mechanisms for ensuring that recycling facilities comply with the HKC and for authorizing* them to operate. (*This authorisation also establishes any limitations imposed on the SRF, as condition for its authorisation. The SRF may be limited by way of the types or sizes of ships they recycle, and by way of the categories and quantities of hazardous materials they can safely process). Main Requirements for Ship Recycling Facilities (General): • SRF shall develop and implement a Ship Recycling Facility Plan (SRFP) that covers: worker safety and training; protection of human health and the environment; roles and responsibilities of personnel; emergency preparedness and response; and systems for monitoring, reporting and record-keeping; • SRF located within the jurisdiction of a Party shall be authorized by that Party. The authorization shall have 5 years’ maximum validity; and • SRF shall only accept ships that comply with the Convention, or which meet its requirements. SRF shall not accept ships they are not authorized to recycle. Main Requirements for Ship Recycling Facilities (Ship Specific) • A ship-specific Ship Recycling Plan (SRP) shall be 22
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developed according to the SRP Guidelines taking into the account information provided by the shipowner (i.e. IHM, ICIHM, plans etc); • A SRF preparing to receive a ship shall notify its CA (Competent Authority); • The SRP shall be approved by the CA and then shall be made available to the ship for its final survey; and • When the ship has acquired the International Ready for Recycling Certificate (IRRC), the SRF shall report to its CA the planned start of recycling. This Convention shall enter into force 24 months after the date on which the following conditions are met: • Not less than 15 States have either signed it without reservation as to ratification, acceptance or approval, or have deposited the requisite instrument of ratification, acceptance, approval or accession in accordance with Article 16; • The combined merchant fleets of the States mentioned in paragraph .1 constitute not less than 40 per cent of the gross tonnage of the world’s merchant shipping; and • The combined maximum annual ship recycling volume of the States mentioned in paragraph.1 during the preceding 10 years constitutes not less than 3 per cent of the gross tonnage of the combined merchant shipping of the same States. The first condition for entry into force (15 States) is not hard to meet. The second condition (40 per cent of the GT of the world’s fleet) is quite demanding, especially when bearing in mind that at the beginning of last year, 44.6 per cent of the world fleet (in GT) flew the flag of one of four open registries (Panama, Liberia, Marshall Islands, or Bahamas). The third condition currently necessitates that the Hong Kong Convention (HKC) is acceded by any two of the three large recycling States (Bangladesh, China, and India). Currently, and in the foreseeable future, no other combination of accessions by recycling States will satisfy the third condition. Accession by all five recycling countries is a feasible and desirable target that will ensure the universal implementation of the HKC. The international community will need to assist (not only with words) the Administrations of the three South Asian recycling countries to make their accession possible and a matter of priority.
Feature
Warehouse Receipt: As an Instrument for Financing One of the important aspects of the Indian commodity derivative market is the introduction of warehouse receipts (WRS) as an alternative solution for market participants to access short-term finance. The concepts of the WRS system is based on warehouse receipts which can be used as collateral for accessing finance. The system is made more sophisticated by adopting measures such as grading of commodities according to their quality, rating warehouses according to their size, reputation and integrity etc. In India receipts issued by Central / State Warehouses are accepted as collateral by banks however those issued by private warehouses are not. Since farmers/traders will not deposit their goods with a warehouse whose receipts are not financed by banks viability of the private warehouse is at stake. Hence there is scope for expanding the warehousing infrastructure and also WRS system by making it mandatory for the banks to endorse private WRS.
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arehouse Receipts (WRS) are documents issued by warehouses to depositors against the commodities deposited in the warehouses, for which the warehouse is the deposit bailee . These are negotiable instruments that can be traded, sold, exchanged, used as collateral to support borrowing, or accepted for delivery against a derivative instrument such as a futures contract. Warehouse Receipts are always backed by underlying
Dr. Devajit Mahanta Financial Columnist E: devajitmahanta@gmail.com
commodities and constitutes an integral part of the marketing and financial systems of most industrial countries. The overall efficiency of these markets, particularly in the agri-business sector, is greatly enhanced when producers and commercial entities can convert inventories of agricultural raw materials or intermediary or finished products into a readily tradable device. The basic features of warehouse receipt finance are relatively simple and straightforward, as illustrated in Figure 1, the client deposits a certain amount of goods into a warehouse in exchange for a WRS. The WRS conveys the right to withdraw a specified amount and quality of the commodity at any time from the warehouse. The warehouse manager is liable for guaranteeing the safety and quality of the stored commodity. The WRS can then be transferred to a bank, which provides a loan equivalent to a certain percentage of the value of the stored commodity. At maturity, the client (e.g., a farmer) sells the commodity to a buyer who then either pays the bank directly, or pays the borrower who then repays the bank. On receipt of the funds or an acceptable payment instrument (e.g., a confirmed Letter of Credit), the bank surrenders the warehouse receipt to either the buyer or the seller (depending on the specifics of the transaction), who then submits the warehouse receipt to the warehouse, which releases the commodity. In case of default on the loan, the bank can use the warehouse receipts in its possession to take delivery of and sell the commodity stored in the warehouse, to offset the amounts it is due. August - September 2014
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Feature
Lender
Borrower
Warehouse
1. Lender a nd B orrower enter into a credit agreement 2. Borrower p laces goods in warehouse
7. Buyer pays lender for goods 8. Lender releases receipt 9. Buyer redeems receipts at warehouse for goods 10. Lender applies buyer’s payment to the loan
Buyer
3. Warehouse issues receipt 4. Borrower offers receipt as collateral to lender 5. Lender grants borrower a loan 6. Borrower sells stored goods to buyer
Source: Keshavan, 2008 VARIOUS WAREHOUSE APPROACHES TO COMMODITY FINANCING AND STORAGE There are three major categories to commodity financing and storage. 1. Public Warehousing 2. Private Warehousing, and 3. Farmer focused approaches Approach 1: Public Warehousing Public warehousing, this term does not imply public ownership, but refers to a company storing goods for public in general on behalf of whosoever wishes to deposit in the warehouse and issues to the respective depositors warehouse receipts that can be used for trading purposes or as collateral for raising finance. This in turn divided into: A: Unregulated Independent Warehouses: An unregulated independent warehouse set up by the company concerned sets up business, invests in grain handling and storage plant, and uses it to trade and provide a variety of other services, including storage and warehouse receipting. In principle these are purely private initiatives, where the company believes it can best serve its business interests by offering farmers and smaller market intermediaries a choice of marketing arrangements allowing for immediate or later sale. Export Trading Company is already offering the service to farmers in Tanzania. The main limitation to this approach is the small number of companies currently able 24
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and willing to offer the service. Banks would not trust many commercial operators to hold third party stock as collateral managers, probably only the largest companies in the Region. B: Warehouses regulated by the State: In this case, the regulatory service is a State-controlled technical service which licenses warehouse and ensures that they perform accordingly to a set of clearly understood rules. This may involve the suspension or revocation of licenses or taking over the management of failing warehouses. There are two major pre-requisites to the establishment of such a service: a) that it can be kept completely free of political influence, avoiding the sort of problems if this cannot be assured one should not try to establish such a service, and b) That there is sufficient demand to make the service self-financing on the basis of user fees. This approach, which builds mainly on the North American experience, is being implemented in Tanzania, Ethiopia and Uganda. C: Warehouses Regulated by a Trade Body: In this case regulation may be carried out on a purely contractual basis, or under delegation of State powers. This approach has quite good prospects in Kenya, though some significant hurdles must be crossed. EAGC (trade body) is already certifying warehouses in Kenya, and can do likewise in other countries. Its survival depends on its establishing fruitful dialogues with Governments. With its membership base, EAGC is moreover well placed to promote exchange trading.
Feature Approach 2: Private Warehousing This approach would allow private players to issue warehouse receipts against their own stock for the purpose of raising bank financing, and also of transferring title to buyers. Potentially this could increase market efficiency, to the benefit of both farmers and consumers at either ends of the chain. It could help establish a more level playing field among trading companies, making it easier for local operators to access low cost capital. It is moreover a sort of selfpropelling innovation, building on the motivations of the proposing company. It is however quite a risky approach, where the regulator has little direct control over the actions of the licensee, who may move stocks around without the knowledge of a regulator who is not on site. Moreover, if such a warehouse operator goes bankrupt, it may also be difficult for the bank to prevent priority being given to other creditors. Approach 3: Farmer Focused Approaches These are approaches involving the storage and financing of commodities deposited (more or less exclusively) by farmers with the objective of supplying local food needs in rural areas or bulking product prior to marketing. There is a general need to increase farmers’ role in crop storage. If more is stored locally in villages, rural people will be more food secure in the lean season, notably households who produce insufficient to cover their needs, or who sell early for financial reasons. Occasionally rural storage initiatives have resulted in large increases in seasonal storage, lessening the need for States to establish price stabilization mechanisms. This is sometimes undertaken through marketing cooperatives. Large and multi-tiered cooperative marketing structures sometimes do not have a very good record, but there is some evidence that primary societies or groups can work effectively in bulking goods for marketing through public warehouses. An alternative approach involves rural storage financed by a local micro-finance institution (MFI). A highly successful experience in Madagascar suggests that this can work well where the local MFI is integrated into a structured microfinance (MF) network that can provide necessary management and financial support. FINANCING AGAINST WAREHOUSE RECEIPTS IN INDIA Financial accommodation against WRS is still not very popular in India although it is exhibiting an upward trend. This is indicated in Table-1 which exhibits data of a large Private Sector Bank and three large public sector banks with respect to extension of finance against Warehouse Receipts.
Year
Private Sector Bank
Public Sector Bank-A
Public Sector Bank-B
Public Sector Bank-c
2003-04
Nil
207.05
3.85
N/A
2004-05
37.26
496.93
3.77
N/A
2005-06
59.92
587.95
2.88
N/A
2006-07
462
645.56
4.11
1.43
Some of the difficulties faced by banks in popularizing financing against Warehouse Receipts and their solutions as envisaged by them, are given below: • WRS to be made transferable through endorsement under Sale of Goods Act. This will enable the WRS holders to take delivery of the underlying goods on the same terms and conditions as would have been to the person who had originally deposited the goods. • Making WRS fully negotiable instrument, under Negotiable Instruments Act 1881, will enhance liquidity of the product and help in mitigating counter-party default risk. • Electronic maintenance of records of such WRS in a dematerialized form resolves the problem of inadequate speed of transaction, splitting of Warehouse Receipts, forgery and loss of receipts etc. • For all types of lending to agriculture sector in general and financing against WRS in particular the risk weight for the purpose of capital adequacy may initially be reduced to the level of 75 percent from the current level of 100 percent. • Difficulty in disposing of a security in case of default would be removed by creating a screen based spot market along with uninterrupted clearing and settlement facilities. • Receipts issued by Central / State Warehouses are financed by banks but those of Private Warehouses are not freely financed by banks. Since farmers / traders will not deposit their goods with a warehouse whose receipts are not financed by banks viability of the private warehouse is at stake. Hence it is necessary that private WRS should be endorsed by the banking system. • High margins, up to 40 percent stipulated by banks create liquidity problem for the farmers who are therefore not very keen on obtaining finance by means of WRS. The margins could be reduced to 10-20 percent if the issues regarding quality and grade and ease of disposing the stocks in case of default as mentioned above are solved. • Some state governments have introduced stamp duty on pledge / hypothecation which have an adverse impact on the nascent WRS in India. Hence at this early stage of development, WRS needs all the concessions from the state until it can bear the burden of state duties. BENEFITS OF WAREHOUSE RECEIPTS WRS are part of a framework of modern market institutions that countries adopt in different forms, to August - September 2014
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Feature develop agriculture and to render markets more efficient and effective for both consumers and producers. This instrument can play a central role in developing the framework of modern market institutions in the following areas. WRS can provide surplus-producing farmers (including smallholders) with a market window which can help them secure the best possible deal, allowing them to deal directly with downstream buyers and financiers, and overcome asymmetric power relationships within the market chain. Smallholder farmers are typically isolated from markets with limited selling alternatives as lack of contact with downstream buyer’s results in their inability to enter into favourable contractual relationship. Farmers (or groups of farmers) can overcome these constraints by depositing their crops in a warehouse that dries, cleans and grades them according to established standards, and holds them until they wish to sell. The warehouse may be linked to a commodity exchange through which the farmer can sell the goods. Alternatively, the farmer may sell privately or make use of a simple settlement mechanism to ensure that he (along with the bank and warehouse operator) gets paid before the goods are removed from the warehouse. WRS provides a platform for the introduction of other institutional innovations, notably grading, contracting and exchange trading. It is difficult to introduce grading
Banks & MFIs seeking secure & easily liquidated collateral
Farmers seeking high prices, accurate weights and measures and credit
Parastatals and food aid managers seeking to procure and recycle stocks more
Source: UNCTAD Report, 2009 26
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systems into markets where most grain is traded informally and not graded. Buyers don’t look for graded produce because it is unavailable, while farmers don’t grade because of the lack of a price premium. By grading commodities on arrival at warehouses, it is possible to overcome this problem. A well developed WRS can provide a focus for development of the entire commodity chain, providing incentives for a range of different parties, including farmers, financiers, traders, processors, public sector buyers, food aid managers and investors in storage capacity. This is illustrated in flow-chart in Figure 2. WRS can help farmers retain more food for their local consumption requirements. This enables the farmers to avoid repurchase grains in the market price when they experience unanticipated shortages for consumption. In fact, in Africa there are numerable instances of farmers ‘overselling’ crops, which are shipped out to urban centers, only to be shipped back as either grain or meal, and at much higher prices in the lean season. Under the circumstances better storage facilities and localized warehouse receipting can help farmers hold back more crops, avoid circuitous transport and better assure their local food security. The availability of secure WRS may also allow owners of inventories to borrow abroad in currencies for which real interest rates are lower, particularly if loans
Traders seeking storage and credit
Input suppliers seeking stockholding
Warehouse receipts system: of high integrity
Investors in storage capacity
Traders and other players wishing to engage in arbitrage
Millers and processors seeking supplies of raw materials
Feature are made against inventories of an export commodity, thereby hedging against the foreign exchange risk of foreign borrowing. This practice is followed in Kenya and Uganda, where coffee stocks are often financed in pounds sterling. Also, since high real interest rates are often linked to perceived risks, particularly when it concerns agriculture, secure WRS may reduce risk and lead to lower lending rates. Correctly structured WRS provide secure collateral for banks by assuring holders of the existence and condition of agricultural inventories “sight unseen”. Warehouse Receipts can be used by farmers to finance their production and by processors to finance their inventories. If there is a default on any obligation guaranteed with the Warehouse Receipt for instance, a bank loan, the holder has first call on the underlying goods or their monetary equivalent. Collateralizing agricultural inventories will lead to an increase in the availability of credit, reduce its cost, and mobilize external financial resources for the sector. WRS contribute to the creation of cash and future markets and thus enhance competition. They can form the basis for trading commodities, since they provide all the essential information needed to complete a transaction between a seller and a buyer. Their availability will thus both increase the volume of trade and reduce transaction costs. Since buyers need not see the goods, transactions need not take place at either the storage or the inspection location. A transaction can take place informally or on an organized market or exchange. In either case, the Warehouse Receipt forms the basis for the creation of a spot, or cash market. If transactions involve the delivery of goods on a future date, Warehouse Receipts can form the basis for the delivery system in a commodity futures exchange. LIMITATIONS ON USE OF WAREHOUSE RECEIPTS The use of Warehouse Receipts is limited in India because of institutional and structural shortcomings, among which the most significant are the following: • State intervention usually in the form of procurement at minimum support price acts as a disincentive for the private storage industry as it ignores price variations over time or in different regions to allow for profitable storage. • Lack of an appropriate legal, regulatory, and institutional environment to support a system of Warehouse Receipts; and • Limited familiarity of the country’s commercial and the financial community with Warehouse Receipts. PRECONDITIONS FOR VIABILITY OF WAREHOUSE RECEIPT SYSTEM In order for a Warehouse Receipt system to be viable, the economy within which it operates must meet certain conditions. The legal system must support pledge
instruments, such as Warehouse Receipts, as secure collateral. The pertinent legislation must meet several conditions (Ministry of Agriculture, 2005): • Warehouse Receipts must be functionally equivalent to stored commodities; • The rights, liabilities, and duties of each party to a Warehouse Receipt (for example a farmer, a bank, or a warehouseman) must be clearly defined; • Warehouse Receipts must be freely transferable by delivery and endorsement; • The holder of a Warehouse Receipt must be first in line to receive the stored goods or their fungible equivalent on liquidation or default of the warehouse; and • The prospective recipient of a Warehouse Receipt should be able to determine, before acceptance, if there is a competing claim on the collateral underlying the receipt. The lack of an appropriate legal environment is probably the single most important constraint on the creation and acceptance of Warehouse Receipts in many developing countries. CONCLUSION One of the important aspects of the Indian commodity derivative market is the introduction of warehouse receipts (WRS) as an alternative solution for market participants to access short-term finance. The concepts of the WRS system is based on warehouse receipts which can be used as collateral for accessing finance. The system is made more sophisticated by adopting measures such as grading of commodities according to their quality, rating warehouses according to their size, reputation and integrity etc. In India receipts issued by Central / State Warehouses are accepted as collateral by banks however those issued by private warehouses are not. Since farmers/traders will not deposit their goods with a warehouse whose receipts are not financed by banks viability of the private warehouse is at stake. Hence there is scope for expanding the warehousing infrastructure and also WRS system by making it mandatory for the banks to endorse private WRS. References: 1. Coulter, J.P. and Martines M. (1998) ‘Brazilian Experience with Grain Warehousing Services and Associated Marketing Tools’, Report for the DFID Crop Post-Harvest Research Programme. 2. Department of Banking Operations and Development (2005) ‘Report of the working group on warehouse receipt and commodity futures’, Reserve Bank of India, Mumbai. 3. Department of Banking Operations and Development (2006-07) ‘Report of the working group on warehouse receipts and commodity futures’, Government of India. 4. Ministry of Law, Justice and Company Affairs (1962) ‘Central Warehousing Corporations Act’, Government of India 5. Ministry of Agriculture (2005) ‘Agricultural Produce Marketing Committee Act’, Government of India. 6. UNCTAD (2009) ‘Review of Warehouse Receipt System and Inventory Credit Initiatives in Eastern & Southern Africa’.
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Feature
FDI in Dredging and Port Construction Industry: Correlation with FDI By introducing 100 per cent Foreign Direct Investment (FDI) in the Dredging and the Port Construction Sector, there was a general notion that the big time foreign players will positively contribute to the developing of the Industry, however such notion was proved to be different from its concept. The article highlights the loopholes that hampered the industry in the past and some of the corrective measures for successfully forthcoming of FDI for the development of marine sector in the country.
Dredging and Port Construction industry is a very specialised, highly capital intensive investment industry with very slow returns, the highly capital investment equipments requires specially trained seafarers to operate and navigate the dredgers, any downtime or waiting for the new assignment shall certainly make a black hole in the financial books of the contractor.
Prof Dr GYV Victor
Chartered Engineer (UK), Marine Arbitrator & Certified Dredge Master Secretary General, Eastern Dredging Association (India) Executive Director & Deputy Chief Executive Officer Dharti Dredging and Infrastructure Limited, Hyderabad E: gyv@india.com
28
August - September 2014
T
he Dredging and Port Construction industry perspective depends on two factors namely - the Government initiatives and the Investor funding approach, although both may appear to be interlinked in reality it is not. As the former initiative is based on the Government Policies, Guidelines keeping in view the Government agenda and Political promises that were made to the citizens of the Nation, unlike the later which is based on the balanced revenue – cost model, wherein the investor will concentrate to have a higher revenue than the cost. Perhaps it is a notion that the investors are driven by Government initiatives, whereas the investors are driven by the demand and supply model to work in the hassle free environment. Foreign Direct Investment [FDI] is a common concept that the industry is well aware, in early nineties when the globalisation followed the liberalisation formula, most of the developing countries including our country, Republic of India in a calculated careful approach opted for the Foreign Direct Investment and gradually increased the cap limit of the investment to 100 per cent FDI in the Dredging and the Port Construction Sector. By introducing FDI in the Dredging and the Port Construction Sector, there was a general notion that the big time foreign players will positively contribute to the developing Indian Dredging and Port Construction Industry, however such notion was proved to be different from its concept. The Indian Government swung into action to safeguard the budding Indian Dredging and Port Construction Industry that was at the verge of collapse due to the inequality in taxes regime, the vessel capability, equipment strength, manpower requirement and interpretation of the International format of contract documents. Such inequality resulted to be threat as the developing Indian industry is no way and/or close to match the international companies. To avoid such inequality, the Government of India took initiatives to protect the Indian contractors by introducing the Dredging Policy, Dredging Chartering Circulars and Guidelines, Dredging Guidelines, Pre Tender Guidelines and introduction of the Marine
Feature Tonnage Tax regime for the Indian Contractor. Notwithstanding the proactive measures undertaken by Government initiatives, the inequality can’t be bridged as the spectrum of equipments, the know-how of the dredging techniques coupled with the modernisation to keep abreast with the development of Science and Technology, the infusion of the sophisticated electronic gadget with continuous adoption of research and development of the international companies can’t be equated to the Indian Dredging and Port Construction industry. It is evident from the past decade, most of the big volume soft material dredging works were awarded to the international contractors for their competitive prices and for availability of bigger dredgers with higher volume hopper capacity, inspite of the partial protection policy of the Indian companies, introduction of the Marine Tonnage Tax, Purchase Preference Scheme, the Indian Dredging and Port Construction Industry costing appears to be way above the cost of the international contractor. Dredging and Port Construction industry is a very specialised, highly capital intensive investment industry with very slow returns, the highly capital investment equipments requires specially trained seafarers to operate and navigate the dredgers, any downtime or waiting for the new assignment shall certainly make a black hole in the financial books of the contractor. Due to the Demand and Supply mechanism of the Dredging and Port Construction sector, not many investors including the Foreign investors are readily willing to invest in this sector due to the higher magnitude of known and unknown risks, such risk analysis if not conducted regularly for the operational project management of the Dredging and the Port Construction industry shall be the cause to result in the financial breakdown of the company leading to closure of the company. The lack of proper dredge repair complex or yard, availability of the essential spares, availability of the technical competent Engineers are a major setback to the Indian Dredging and Port Construction industry. Although Dredging and the Port Construction industry is limited, it is imperative without the existence of the Dredging and the Port Construction industry - the Major, Non Major, Minor and other ports shall cease to exist as almost all the ports around the Indian coastline are either artificial ports and or semi artificial ports located at estuarial, riverine, direction of the sedimentation movement zone and or at the confluence zones, wherein dredging is mandatory for the safe navigation of the fully loads vessels in the port areas. If there exists shortage of the dredger capacity and also if the cost of dredging is high due to various other factors of the Indian Dredging and Port Construction industry, the Port may not be in a position to miss
the opportunity and or create the plume without undertaking dredging campaign shall result in closure of the port and hence the Employers do exercise their option to invite Global tenders and shortlist the most competitive contractor. It is also an established fact that the international contractors usually deploy higher volume hopper capacity dredgers to be more economical and also to complete the project schedule ahead than planned with smaller capacity of hoppers. Although the international contractor incurs higher mobilisation and demobilisation cost, the early completion of the project is the major factor that contributes to their competitive cost factors with higher profit margins than the Indian contractor who participates with smaller capacity hopper dredgers. In the light of the above, the pertinent question arises, to have a revisit to understand, are Indian Dredging and Port Construction sector liable for collapse in the wake of the wake of the above arguments placed. It is interesting although the international companies participate for the hard strata dredging ports, maintenance dredging projects, the competitive edge is displayed by the Indian Dredging and Port Construction Sector over their foreign counterparts. The competitive edge and the ruling over their foreign counterparts are mainly due to the long term expertise on the conventional mechanical dredging and the in-house solutions that are much cheaper than their counterparts who depend more on the scientific analysis rather than the ground realities. Inspite of the clear advantage, Indian Dredging and Ports Construction Sector lacks the commercial and legal acumen when compared with their international counterparts that always results in disputes and arbitration that could have otherwise solved by the formation of the mutual Dispute Resolution Board. Other Major sharp contrast between the international and the Indian contractors are the willingness to propose alternative cost effective options to the clients with conviction that may result in win – win situation for both the contractor and the client. Nonetheless, the Government initiatives lack the coordinated effort to have a long term plan and long vision to sustain the growth of the Port sector. The long term plan or the vision that visualise the usage of the unpolluted means of cheaper transportation and development of the system had been neglected for various reasons. India being one of the most well connected country by rivers, most of these rivers are perennial rivers, the source for irrigation, drinking and at times lashes the fury of nature by flooding with undaunted phenomena due to encroaching of the river beds by urbanization and or due to illegal sand mining. One of the great poets of Tamil who always strived for the unity of the nation prophesied that river of the north August - September 2014
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Feature vital player for decreasing the flooding effect.
FDI vs FDI [Foreign Direct Investment vs First Develop India] is an apt slogan and mission to ponder upon, it is not too late to develop the three pillars of the port sector for faster evacuation of the goods sustaining our environment, eco systems based on cost effective mode of transportation.
to be interlinked to the rivers of the South that was echoed by then People’s President of India. To develop and sustain the port industry, the development of three pillars i.e. the coastal navigation, the river/inland navigation, interlinking of the rivers are mandatory. FDI vs FDI [Foreign Direct Investment vs First Develop India] is an apt slogan and mission to ponder upon, it is not too late to develop the three pillars of the port sector for faster evacuation of the goods sustaining our environment, eco systems based on cost effective mode of transportation. It is worthwhile to mention in the west and the developed countries that has almost protected policy for their entire coastline, Dredging and Port construction industry is successful due the development of the three pillars of the port sector that reduces the undue pressure on the roads and railways mode of transportation. On an average, Indian roads transport goods more than they transport the citizens of the country, increasing the wear and tear, congestion, pressure on the roads leading to chocking of most of the vital roadways. Government initiatives need to be more focussed to develop the inland/river navigation by interlinking the perennial rivers by training them. Inland and/or river navigation to be interfaced with coastal shipping, thereby developing our coastal waterways. Coastal waterways to be infused hub/transhipment ports to have better coordinated evacuation of import cargo from the ports and or loading of the export cargo. The inland waterways, coastal shipping shall generate local employment, reduce the pressure on the rivers thereby reducing the flooding effects, the carbon emission shall be reduced, reducing the environmental impacts on the eco system and finally the cost effective safe mode of transportation shall reduce the pressure on the roadways and railways. Interlinking of rivers will not only boost the post sector prospects but shall also be a 30
August - September 2014
Notwithstanding above, it is interesting to note that any initiative first should address the creation of the resources already available, hence it is very pertinent that the age old dams of our country have to be desilted as from our records there are scantly information with regards to desilting of the dams, water catchment areas and reservoirs. Desilting of the water bodies shall increase the water holding capacity that shall increase the regulated water flow resulting in the increase in underwater table. However one should not fail to appreciate desilting of the water bodies is a herculean task and not easy as to dredge the navigational channels. Secondly training of the rivers is mandatory with proper embankments for regulated flow of the water and for inland navigation. Urbanisation and encroachment of the river view lands should be banned, mangroves plantation should be encouraged on the embankments. Unless the above Government initiatives are undertaken to ‘First Develop India’ with long term planning and vision to have united nation by interlinking of rivers, desilting the water bodies for regulated flow, training of the rivers fro inland and river navigation to be interfaced to the coastal shipping, the Foreign Direct Investment from the investors shall not be forthcoming for the development of the marine sector.
References: 1. Daily Shipping Times, Vol. LV No. 63 ( 2014, April 7) 2. Joseph Fonseca, “Dry Bulk Trade comes out of the gloom” www. maritimeprofession.com (2014, Janauary 29) 3. Hono. H. (2009) Bulk Shipping Business. Dry Bulk Transport. Nippon Yusen Kabushiki Kaisha Annual Report.30 4. International Energy Outlook 2010. Highlights (2010, May 25). Retrieved from http://www.eia.doc.gov/aiaf/ieo/highlights.htmal 5. Statistical Tables: World Bulk carrier market (2009) Shipping Statistics and Market Review Volume 53(4), 21. 6. Stopford, M (2009) Maritime Economics (3rd ed.) New York: Routledge. 7. Summary (2010, October), Shipping Insight, 5-6
Features
Duty of Care for Offshore Travel Cost control and round-the-clock support is top of the list of priorities for offshore businesses when it comes to travel and crew transportation.
T
he past few months has seen indications that duty of care is growing into a main priority, to some degree, because Travel Management Companies (TMCs) as well as travellers are increasingly aware of threats around the world. In addition, companies in their quest for new markets are sending employees not just to BRICs [Brazil, Russia, India and China] but also to new and emerging markets such as the CIVETS [Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa]. A number of areas within these markets pose growing risks to travellers.
In a successful Duty of Care program, leading firms study their travel management data every year to seek out patterns, detect and discern where the risk lies, and develop resolutions back into the arrangement
In addition, businesses in offshore industries such as oil, gas and shipping, where travel can involve visiting some of the most inhospitable locations in the world, it is especially true. As well as providing an efficient and cost effective service, specialist travel management teams, who have an in-depth knowledge of these sectors, can be paramount to ensuring that workers are protected when they are travelling overseas or offshore. Recent research carried out among travel bookers and buyers in the energy sector at the Offshore Europe conference showed that safety and security tops the list of priorities for travel buyers and bookers in 2013 and 2014, alongside cost control. Emergency traveller tracking and specialist support was chosen by 37 per cent of respondents as the most important service when it comes to overseas travel, followed by round the clock service which was selected by 25 per cent of respondents. Three main factors were also highlighted as crucial when it comes to 24/7 support from travel management companies (TMCs) – safety and security of travellers, dealing with changing schedules and plans, and efficiency and expertise related to travel in different time zones.
Pieter Rieder
Global Head - Energy and Shipping Sales The ATPI Group E: pieter.rieder@atpi.com
Most TMCs that deal with clients in the offshore sector work with specialist third party organisations such as International SOS and AKE to provide assistance depending on the nature of the incident – whether it’s a medical issue or a security threat. The TMC acts as an important ‘integrator’ – providing relevant support for clients as part of one manageable duty of care package. August - September 2014
31
Features Moving crews around is a ‘Mission Critical’ activity, whether one is in the energy sector or the shipping sector, whether the crew are for an oil rig, a remote gas installation or a merchant vessel
Organisations in energy industries always take duty of care very seriously and other sectors can learn a lot from them. Most companies already have policies in place for the protection of employees when they are at their place of work such as on a remote oil rig in the middle of the Sabah Basin. There is still a way to go when it comes to duty of care cover when employees are travelling to and from the rig itself or another work related destination however. Specialist TMCs can plug this gap and can put emergency processes in place to deal with any eventuality, wherever the traveller is in the world, via data integration and traveller tracking technology. Situations or conditions that aren’t usually dangerous can be life threatening in remote locations, for example if a diabetic runs out of insulin when they are in a remote part of West Africa, it’s more severe than if they were in a European country with easy access to medical facilities. Medical emergencies can happen anywhere. Duty of care is no longer just a ‘nice to do’ it’s a necessity for businesses in all sectors, from energy to finance. In a successful Duty of Care programme, leading firms study their travel management data every year to seek out patterns, detect and discern where the risk lies, and develop resolutions back into the arrangement. Road traffic accidents are the most common type of incident when it comes to work-related travel and within Asia these occur most frequently in metropolitan cities. People also get sick on business no matter what industry or country they’re in. This proves how important it is for all industries to sit up and listen when it comes to duty of care – not just businesses where employees travel to far flung destinations across the world like Angola and Algeria – things can happen closer to home too. Duty of care policies can be compared to insurance – one does not actually think about it until something actually happens and then it is really needed. 32
August - September 2014
It’s all about being prepared for situations that are difficult to imagine happening, for example when there’s suspected terrorist incident, the mobile phone networks may shut down so you need to have plans in place for other means of contact or monitoring such as traveller tracking. Tracking is one of the most important factors when it comes to duty of care. Organisations and travel managers need to know exactly where all of their employees are at any one time so that they are able to communicate with them and provide the right kind of support. Moving crews around is a ‘Mission Critical’ activity, whether one is in the energy sector or the shipping sector, whether the crew is for an oil rig, a remote gas installation or a merchant vessel. There’s a real feeling of concern for the wellbeing of individual employees in the offshore sector – it’s not just ticking a box in terms of duty of care requirements. The topic of traveller safety and security will continue to move higher up the global agenda, particularly for offshore companies, where organisations are exploring in more remote locations to find oil and other resources. Technology has also played a huge part in the progression of duty of care. Joint effort, transparent communication and a holistic approach are also crucial for supplying
Features good duty of care. Many medical companies now regularly provide diagnosis for travellers via video link in their preferred language, wherever they are in the world. It will be fascinating to see what other new technologies are available in another ten years or so and how it will transform the way we deal with duty of care.
Outcome: The operation came to an end at 18.00 – a full ten hours after initial contact was made – after all team members were transported safely to other destinations. The team was commended by the client for ‘providing an excellent service’ which was ‘greatly appreciated’.
How Can A Duty Of Care Travel Policy Be Created? By: • Planning a unique policy well-defined to the organisation’s / travellers’ requirements • Collecting requisite data • Assessing various hazards and warnings • Educating the traveller • Overseeing travel related activity • Awareness of the particular demographic of business travellers
Joint effort, transparent communication and a holistic approach are crucial for ensuring good duty of care
• Discretion when dealing with predictable risks • Protective adjuncts in the policy that advise, alert, follow and/or assist traveller • Response adjuncts permitting withdrawal or other insurance assistance Case Study 1:
Case Study 2:
Incident: A recent rig emergency in the North Sea, off the coast of Scotland, for a global multi-energy provider meant that over 200 members of staff had to be quickly and safely evacuated.
Incident: One of the world’s leading oil field service companies faced the evacuation of over 300 staff from Algeria due to an increased security risk in early 2013.
Solution: As soon as the ATP Instone team was made aware of the incident, the Aberdeen onshore team started gathering relevant tools and information for the evacuation process. Two senior members of the emergency team were on-site at the client’s crisis centre at a hotel at Aberdeen Airport, whilst a back-up team were on stand-by to offer additional assistance. Following the onsite briefing, air and rail tickets were issued for personnel requiring onward travel. Due to the immediate nature of the evacuation there were a number of Norwegian and Romanian personnel in Aberdeen whose passports were believed to have been left behind on the rig. Some of the employees needed temporary travel documents to be issued by their respective consulates to enable them to travel home. The rescue team liaised with the Norwegian consulate and gathered the information required for the issue of temporary documentation and the whole process was completed during the same afternoon. ATP Instone also liaised with the Romanian consulate in Edinburgh, and appointments were made for the Romanian nationals so that the documents could be issued the following morning.
Solution: Within an hour of the initial call our team had established a disaster recovery team and two of our senior employees were deployed to London Gatwick airport where they dealt with incoming charters flights from Algeria and arranged onward travel for workers to their home destinations. A number of employees who were evacuated were foreign nationals with no legal right to ‘land’ in the UK without the correct documentation. The emergency team worked with immigration officials to collate the correct documentation for onward travel, despite the constantly changing situation. Two members of the travel team remained at Gatwick with the client until the last employee boarded his onward flight, over 48 hours after the original emergency call was taken. Clear channels of communication between the client and our team delivered the highest level of service in extremely difficult and ever changing situations. Outcome: The client commented: “The ATPI team has been beyond excellent. I am very grateful for their input during the whole process. I see their personal standards and commitment to getting the job done, with little or no sleep for 72 hours, as going above and beyond anything we could have expected. August - September 2014
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Feature
Shifting Focus to Defence Shipbuilding: Risks Assessment for Indian Shipyards The four prominent sources of newbuilding orders since 2009 for Indian shipyards have been Indian Navy, Indian Coast Guard, Shipping Corporation of Indian and ONGC. All these four entities constituted more than 80 per cent of the orders placed on commercial shipyards in India in last 4 years.
While Indian Shipbuilding Industry which has been faced severe turbulent waters due to global slowdown since few years, uncertainty of new orders and growth perspectives along with financial uncertainty has made things more worse for the industry. In order to offset fall in business from commercial shipping, Indian yards have diverted their focus in building ships for smaller-size ships, mainly in offshore and defence segments, which increases their overall risk exposure in the industry. Though the dynamics of shipbuilding in both the segments are totally different and due to different technical and commercial aspects associated with defense shipbuilding, the risk associated with growth and revival of shipyards is far higher. The article throws light on the risk assessment for the Shipyards/Shipbuilders who are involving in newbuilding of ships for the defence industry.
S
hipbuilding, globally, is passing through a difficult time, and India is no exception. The industry, which was at peak of its cycle in early 2008 with mostly commercial orders, has witnessed a fall in newbuilding orders. There are several reasons such as oversupplied shipping market, all-time-low utilisation level of ships, poor outlook for growth in trade, etc. Present Outlook As the outlook of the industry is not buoyant, and owners do not see much appreciation in charter rates in the next 2 to 3 years, there is no incentive for ship
Anand V Sharma
Director Mantrana Maritime Advisory Pvt Ltd E: anand@mantrana.in
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Orderbook Up to 2008 (Rs 279 billion)
August - September 2014
Feature owners to explore newbuilding activities on a large scale. The newbuilding orders placed on shipyards, globally, has fallen to less than 20 per cent by value vis-à-vis the share in 2007 and early 2008. This scenario is likely to stay for another 3 to 4 years. Due to global nature of shipbuilding industry, Indian shipyards are also affected by it on a very large scale. Uncertainty of new orders and growth perspectives along with financial uncertainty has made things worse for the shipbuilding industry in India. In order to offset fall in business from commercial shipping, Indian yards have diverted their focus in building ships for the defence industry, which increases their overall risk exposure in the industry. Changing Business Focus Revival of a struggling company is more probable if it is in a good industry with better economic outlook. However, when industry itself is in a downward spiral, even a good company finds it difficult to survive. Compared to 2007, now, majority of the newbuilding orders placed on Indian shipyards are from the government. This constitutes newbuilding orders by the naval forces and other PSUs. The four prominent sources of newbuilding orders since 2009 for Indian shipyards have been Indian Navy, Indian Coast Guard, Shipping Corporation of Indian and ONGC. All these four entities constituted more than 80 per cent of the orders placed on commercial shipyards in India in last 4 years. This is in contrast to the 2008 scenario when more than 90 per cent of the orders came from private sector mostly commercial ships including offshore and substantial new building orders from International clients. Business Comparison – Commercial vs Naval Shipbuilding All the private commercial shipyards in India had undertaken extensive expansion between 2004 and 2007. Expansion of these shipyards was focused on augmenting their capability to build large and more sophisticated commercial ships both in the cargo and offshore segment. However, in current times, though the infrastructure
Orderbook placed between 2009 and 2013 (INR 118 billion)
expansion is complete, due to bad market, shipyards are now focusing more on newbuilding orders for smallersize ships, mainly in offshore and defense segments. The dynamics of shipbuilding in both the segments are totally different. Due to different technical and commercial aspects associated with defense shipbuilding, the risk associated with growth and revival of shipyards is far higher. The size of ships for Navy or Coast Guard is far smaller compared to the infrastructure available at private commercial shipyards, which leads to large-scale underutilisation. Some of the overdesigned infrastructures at these shipyards are largescale steel fabrication plant, material handling equipments, workshops associated with steel fabrication, etc. Unlike commercial shipbuilding, where a 100,000 DWT ship, costing USD 60 million, would consume more than 16,000 to 18,000 tons of steel, a defense ship, with similar value, would not require steel processing of more than 3,000 tons. Hence, there’s an infrastructure mismatch, considering cost breakup, when a shipyard designed for building large commercial ships instead undertakes defence shipbuilding. Commercial shipbuilding is steel dominated. Steel constitutes majority of the cost associated as material processing of steel by way of cutting, bending and assembling, etc. In defense shipbuilding, outfitting and armaments dominate the overall cost of ship fabrication. A commercial shipyard, which has customised its infrastructure, manpower and technical expertise as per commercial shipbuilding, would face large-scale underutilisation of the same while building defense ships. It would also face difficulty in executing defense orders. Some of the infrastructure and expertise required in executing a defense order was not required in commercial shipbuilding, and which, therefore, commercial shipyards lack. Hence, post order procurement, these shipyards would be required to develop them. Process Comparison – Commercial vs Naval Shipbuilding Right from conceptualisation to delivery stage, after trial run, perspective of a commercial shipyard differs in case of defense ships and commercial ships. Processes, duration of tasks at each stage, etc, vary in both the cases. Naval shipbuilding has primarily been controlled by governmentowned defence shipyards. Most of these orders have been placed on cost-plus basis in the past. The present newbuilding concept for Navy and Coast Guard are on fixed-cost basis. However, the mindset of Navy and Coast Guard towards the new realities of shipbuilding in India has not changed. This increases the risks for commercial shipyard intending to get into defence shipbuilding to mitigate slowdown in the overall shipbuilding market. In commercial shipbuilding, an established commercial shipping company takes around 3 months, from conceptualisation to placing order shipyard. When a shipping company floats and enquiry, the shipyard plans August - September 2014
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Feature and prepares proposal, including costing, while working out the commercials for building a ship. The shipyard also collects commercials and delivery schedule of all the critical items. The equipment suppliers, at the time of providing their proposal, also give a timeframe for the validity of that proposal, which is never more than 6 to 9 months from the date they send the proposal. Here, time is of essence. If discussions and negotiations between a shipyard and a customer exceed these stipulated timeframes, then the proposals and delivery schedules of those critical equipments are no more valid. All the stakeholders in the commercial shipbuilding understand this and, therefore, the essence of time is sacrosanct at all stages of the project, right up to the moment of signing between the ship owner and the shipyard. This is not the case in defense shipyard and Indian Navy. Here, as soon as the enquiry is floated the shipyard submits its proposal following the same method it does in commercial shipbuilding. Now, the timeframe stipulated by Navy or Coast Guard in declaring the winner of the tender and also contract signing is indefinite. It takes months before shipyards are technically evaluated and moved to the next stage of price opening. Once the price is opened, as per guidelines, barring some exceptional cases, the order should be placed on the shipyard that quotes the lowest. However, at the time of price opening, prices of all the shipyards are declared along with the lowest one, but the contract is not signed at that stage. It takes few more months, even a year, when the shipyard is called for negotiation and is given the letter of intent. Hence, compared to commercial shipbuilding, where it takes around 3 to 4 months for contract signing from the enquiry date or conceptualisation, defense shipbuilding could take more than one and a half year for the same. This, itself, disturbs shipyard’s whole project planning. At the time of building, there are several stages of approvals and discussions required, both for conceptual designing, engineering and construction of ships, which is not the case in commercial shipbuilding. In commercial shipbuilding, ships’ building methods and other processes are standardised. Interaction between the shipyard and the owner is non-existent, except for quality checks and timelines. For defense shipbuilding, the owner, which is Indian Navy or Indian Coast Guard, perhaps, does not take into account the economics of time while conceptualising or awarding the project. Therefore, the newbuilding process and delivery takes far longer compared to a commercial ship of the same value. This scenario is likely to adversely affect the commercial performance of any shipyard. Growth Outlook Comparison For a commercial shipyard, with limited infrastructure, the only growth option is to improve productivity and deliver more ships using the same infrastructure, where dry dock and slipway is the most critical of all. Hence, a commercial shipyard tries to optimise those resources and plans to deliver more ships from the same slipway or dry dock. This induces an upside growth for the shipyard. 36
August - September 2014
Switching focus of private commercial shipyard, and building defense ships at these yards whose infrastructure is customised to commercial shipbuilding, could be a very risky proposition and its fallouts could be far dangerous.
However, when a naval ship is being built, especially for Indian Navy, the timeframe for assembling and outfitting on the newbuilding berth and the outfitting jetty is far more compared to a commercial ship of same value. From a shipyard’s perspective, the infrastructure is blocked as any sophisticated naval ship takes at least 2.5 years on the building berth even at international shipyards. Sometimes, a shipyard feels it’s just in doing so as one naval ship is several times more expensive than a commercial ship. There is a fallacy in the whole concept. In case of a commercial ship, value addition by the shipyard, in proportion to the total value of ship, is far more compared to the naval ships. In case of naval ships, the bought-out item constitutes a disproportionately large share to the value of ship. Hence, the net earnings available from naval ship are far lower compared to commercial ship. Conclusion For a fixed-price contract, every delay at stages like technically evaluating the suitability of shipyard, the tendering stage, process approval at construction stage, or any other unforeseeable delay at shipyard at the execution stage leads to cost overruns. It is a misconception that commercial shipbuilders would have far better earnings by building naval ships instead. In case of India, private commercial yards were making more profits when they were focused only on commercial shipbuilding. After shifting their focus to naval shipbuilding, their profit margins dropped, and there have been inordinate delays in building these ships, which could even lead to blacklisting or cancelation of defense license. This could create a negative perception about the shipyard in the national and international shipbuilding industry, and also affect the shipyard’s ability to win commercial shipbuilding orders in future. Hence, switching focus of private commercial shipyard, and building defense ships at these yards whose infrastructure is customised to commercial shipbuilding, could be a very risky proposition and its fallouts could be far dangerous.
Features
SmartMarine 3D: Integrating Ship Design & Production Demand for dry bulk trade has been increased gradually by demand for natural resources and energy on the back of high economic growth in emerging countries. As an emerging developing economy, the article summarises the challenges ahead for India port sector to sustain the growth in seaborne trade and the initiatives that will carry forward the momentum for the future aspect.
SmartMarine 3D Design & Integration Tool
SmartMarine Enterprise is Intergraph’s cPLM (capital Product Lifecycle Management) open, scalable solution that can serve as a platform for the integration of data, where global project information can be created, managed, reused and controlled throughout the asset lifecycle.
The earliest stages of a ship or a marine asset acquisition analysis are mainly related to its strategic objectives in order to define which product will be able to maximize the profitability of the investment and decide whether to go for a new-building or a second-hand or converted or modified existing unit. In the design phase, all the requirements and needs defined in the previous conceptual-planning phase are collected and appropriate solutions are proposed in order to establish efficient configuration, shape, dimensions and other characteristics of the planned marine asset. The design process obviously involves engineering activities where structures are defined and the components of the various systems are selected. Often conflicting aspects of the design are solved by iterative methods that are seldom covering the whole lifecycle, because of limited time, resources and adequate tools. Now-a-days advancements in computer technology allow multiple and substantial design changes in a shorter time improving significantly the efficiency of the entire design-to-production process.
Igor Juricic
Regional (EMIA) Business Development Manager Marine Intergraph E: Igor.Juricic@intergraph.com
Considering that the lifecycle of a marine asset can be divided into following three main stages: - Design-to-Production and Delivery or Commissioning or Handover (depending of the floater type) - Operation and maintenance -Decommissioning (end-of-life) The Design-to-Production process can then be further subdivided into the following stages: • Conceptual design • Preliminary design August - September 2014
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Features
Ship Design Process
• Contract design • Functional design • Transitional design (dividing the whole ship into zones for fabrication) • Technological design (work instructions for the yard) Design Comprehensiveness The process gains another level of complexity when the design and building activities are divided among a number of sites and companies spreading across the globe. There is a need for a fully integrated software environment that can accommodate design, fabrication, assembly, and the whole lifecycle management and can provide an overview to all the disciplines and contractors involved in the project. Obviously, the software supporting the process would have also to interface with a range of external, third-party modules for specialised design, analysis and verification activities. In essence, ship designers have to consider a wide range of design options to identify those that most closely cover the owner’s commercial and operational requirements. Consequently, the design process is iterative. When one aspect of a design is changed, it is highly desirable that the software environment automatically updates other components affected by the change. This would make it much easier to identify the impact of changes, as well as the most attractive design options and thereby optimize the design, while saving time. Once a change is decided 38
August - September 2014
upon, it has to be managed effectively, and communicated to all parties involved. Effective change management can save significant costs and avoid delays later in the process, especially during the actual construction of the vessel. Considering the complexity of the process, and the fact that there is not a single tool available that is able to cover all of the above aspects, the solution needs to be found that can accommodate and integrate all the systems. A broader horizontal strategy is needed that extends through the engineering, business, material management, production, and lifecycle management domains. Such a solution should be able to manage the communication among the various tools and to monitor the evolution of the design and the engineering in accordance with the changes coming from different disciplines or parties (owners, designers, regulatory and classification bodies, builders). SmartMarine Enterprise SmartMarine Enterprise is Intergraph’s cPLM (capital Product Lifecycle Management) open, scalable solution that can serve as a platform for the integration of data, where global project information can be created, managed, reused and controlled throughout the asset lifecycle. The core of the solution is represented by SP Foundation while the authoring tools available in the suite range from the functional schematic to material and construction management.
Features details from the functional model and more than 95 per cent of manufactured parts from the detailed model. Specification driven design, rules and automated layout (routing) are features facilitating the creation and the fast modification of the systems belonging to piping/hvac/ electrical disciplines. The flow chart is illustrating the complexity of the design requirements for an essential system compliant with new ‘safe return to port’ regulation.
SPF the data/application integration hub of the SmartMarine Enterprise
It provides a mechanism for marine industries to use one or more products from the own suite in conjunction with a number and variety of third party tools that can be integrated through the platform. Global collaboration between clients, contractors and suppliers is enhanced through common information, which subsequently supports business processes. These overarching and collaborative workflows through internal and external value chains deliver quality information to the desktop, regardless the source application, forming a single source of access to the engineering data of the marine asset. This reliable system facilitates regulatory reviews, and enables faster decisions by means of cross-discipline, crossreferenced data and indices. SmartMarineÂŽ 3D suite tool, which has been developed in conjunction with different stakeholders from the sector, covers the design-to-production of traditional merchant units as well as specialised offshore assets, from the initial stages of the design through its functional, detailed and production-planning phases. The suite offers extensive rule-based structure design functionality, which saves significant time and helps deal with design changes. This function automatically decomposes structures into constituent components and then generates details such as penetrations and connections, inclusive of standard plate-parts, welds and corresponding edge preparations (bevels). Deck and bulkhead plates are largely defined automatically indicating the plane(s) and bounding elements, their stiffeners can also be generated automatically; and all of them will be updated to reflect possible design changes. There are also rules to automatically determine suitable connection types for sectional members e.g. if the size of a beam is changed then the complete connection, including buckling plates, braces and gap clearances, are automatically updated. Experienced users proved that it is possible to automatically generate up to 90 per cent of the structural
Overall Assessment of Essential Systems
Design Versatility A single database is used to contain the model of the marine asset as a whole, it includes all the components, their properties (e.g. material type, industry code, weight, etc.), and the relationship among the components (typical is the relationship among supports, supported pipes/ ducts/trays and supporting structure). This unified data store makes it easier to optimize the design and manage design changes during the lifecycle enabling worksharing across design sites worldwide with no size and geographical constrains (the sharing system is based on standard Microsoft SQL Server technology). As all information about the designed marine asset is kept in the mentioned relational database, it is relatively easy to extract any relevant data about a component, subsystem, system or the whole floater. The information can be presented in the form of a report (Excel file) or a drawing (Smart Sketch file). Based on the stored model, the software automatically generates structural drawings, assembly drawings, isometric views, detail views, and specialised task deliverables as piping isometric drawings (following Isogen de-facto standard). Drawings are rule-based, hence only relevant objects August - September 2014
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Features are included in each drawing and labels and dimensions are automatically updated in case of model changes. Although complete catalogues of metric and imperial structural and outfitting components (SP Reference Data and Standard Database) are available, the system also has a function for user-designed built-up components with non-standard cross-sections, which can be designed and included in the catalogue. These can be used in the design as a standard component and at a later stage, they can be automatically decomposed into the plates for fabrication. Such built-up components are particularly relevant when designing complex offshore structures. Another powerful feature emphasising the importance of the relationship among components belonging to
The suite offers extensive rule-based structure design functionality, which saves significant time and helps deal with design changes. This function automatically decomposes structures into constituent components and then generates details such as penetrations and connections, inclusive of standard plate-parts, welds and corresponding edge preparations.
different disciplines is the Hole Management task, which ensures effective communications among structural designers and piping, HVAC and electrical designers: a robust workflow that increases efficiency and enables changes to be automatically updated. In order to ensure a more integrated approach to the design-to-production lifecycle, enhanced interoperability has been added to boost performance and productivity, particularly in large projects with multiparty contributions. Available interfaces improve cooperation and communications between the different teams and disciplines working on a project. A clear understanding by all parties in a project of how their work relates to that of the others will reduce the effort needed to ensure that all project components are compatible and correctly interfaced. It will also reduce the need to modify designs to fit in with parts of the project provided by others. When many design disciplines, at different locations, work together on a project, there is always a risk that components get in each other’s way. Clash checking and validation function play a substantial role to make it fit for all. Designers can be advised at an early stage of any problems by avoiding expensive and time consuming changes and reworking during production and construction phases. If in addition to that, the tool allows producing general arrangement drawings based on the referenced models, there is a huge potential to increase productivity while shortening project schedules. 40
August - September 2014
From Computer Models to Real Piece-parts Designs being currently produced with the most advanced tools in the market are now highly detailed and objects including a whole set of technological information such as plate and pipe bevels, weld preparation, surface treatment, painting, markings, margins, shrinkage factor etc. The planning module can be used to define and visualise the construction sequence; the module is allowing to aggregate all the components from the 3D model (structural, outfitting, equipment) following production and erection strategies, independently of the system break-down structure used in the functional design stages. Panels, Sections, Blocks or Super-Blocks (using some frequently used assembly names in the marine industry) are including any kind of detailed components that are dynamically changing the characteristics of the assembly itself e.g. maximum dimension, minimum footprint, weight, CoG. In the modern shipbuilding industry, many parties will be involved in the design and building of even a modestly-sized vessel: designers, subcontractors, classification societies, and yards. There is significant scope for efficiency gains by optimising the data exchange between these parties. An effective link with production software will not dissipate the amount of valuable information created during the design-toproduction process, especially not the technological data important for the manufacturing of the pieceparts like plates, profiles, pipes and their assemblies. Currently the preferred way to exchange the data between the 3D model at the end of the engineering phase and the solutions that will manage the production (workshops and construction) is based on open standards, such as XML or on industry-standards such as PCF. A tight integration means that valuable time is saved and data quality preserved when making the transition from design to actual shipbuilding operations. SmartPlant Construction might play an important role in feeding the yard with proper material and timing information to improve planning and logistics, possibly linked to third-party scheduling software like MSProject or Oracle-Primavera. A similar approach is adopted to link the 3D model with external analysis software (e.g. for strength assessment, scantling design, pipe-stress analyses etc.) during the basic design phase: the solution takes relevant data from its internal object model and exports it as an exchange model based on an XML schema. Integrated software, which covers all aspects of the design and building of a ship offers a significant scope for saving time and costs while optimising the design. The opportunity for integrating the work of all design disciplines and automating routine design are also highly attractive in today’s competitive markets.
Features
Freight Watch – July to August 2014
Freight rate on route TD3 witnessed seesaw movement due to a combination of macroeconomic and geopolitical factors.
Nazir Ahmed Moulvi
Senior Analyst Department of Research & Strategy Multi-commodity exchange of India Ltd E: nazir.moulvi@mcxindia.com
Niteen M Jain
Senior Analyst Department of Research & Strategy Multi-commodity exchange of India Ltd E: niteen.jain@mcxindia.com
D
aily charter rate for VLCCs on route TD3 (from Ras Tanura, Saudi Arabia, the world’s biggest oil-export site to Chiba, Japan), opened flat at 47.5 Worldscale (WS) points on July 1, 2014 and remained so for an extended period. Despite weak global economic sentiments, freight rate avoided decline due to high demand for vessels, to transport oil out of Iraq and Saudi Arabia. The threat of supply disruptions from Iraq, amidst militia group Islamic State in Iraq and Syria group (ISIS) continuous accession of the country, preempted the move to ship out as much oil as possible before the threats could become real. Additionally, freight rates also found support after Chinese manufacturing PMI which came at 51.7 in July compared with 50.7 a month ago witnessed second consecutive month of expansion. The reading above 50 indicates expansion in an economy. As such, Worldscale points are a percentage of a nominal rate, or the flat rate, for more than 3,20,000 specific routes. Flat rates for every voyage, quoted in US dollars a tonne, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates. Notably, each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch. The freight rates for voyages originating from West Africa rose significantly during the first half of July 2014, given the redistribution of demand from Middle East VLCC supply to West African market supported the level of 47.5 WS points on route TD3. Later, as the supply of vessels increased further, freight rates on the August - September 2014
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Features Shipping Capacity Statistics Particular
Aug-14
Jul-14
MoM % Change
Aug-13
YoY % Change
No of Ships in service
2,300
2,299
0.0%
2,306.00
-0.3%
DWT Weight in ‘000 tonnes’
374,199
373,946
0.1%
373,024
0.3%
No of new ship orders
191
183
4.4%
132.00
44.7%
No of ships under construction
40
42
-4.8%
37.00
8.1%
Order book as DWT %
12.66
12.39
2.2%
9.12
38.8%
No of Ships broken
3
4
-25.0%
16.00
-81.3%
No. of VLCCs sailing with cargo
452
444
1.8%
419.00
7.9%
No. of VLCCs anchored
152
152
0.0%
156.00
-2.6%
Avg. speed of VLCCs in knots (Excl. Anchored) 8.89
8.98
-1.0%
8.91
-0.2%
Oil - floating storage (1000 barrels) Global
115,089
130,165
-11.6%
94,996
21.2%
Middle East Gulf
36,833
39,006
-5.6%
25,906
42.2%
India
3,265
6,121
-46.7%
2,053
59.0%
Source: Bloomberg
benchmark TD3 route faltered. The oversupply of vessels on route TD3 in the second half of July 2014 increased to 19 percent compared in comparison to an average of 16 percent average in entire 2013, according to Bloomberg. As a result the freight rate on route TD3 hit the month’s low of 42.5 WS points on July 22, 2014. Subsequently, as the Brent oil futures prices moved to contango, freight rates strengthened on expectations of revival in floating storage demand for the vessels that was last seen in 2010. A market is said to be in contango when the far-month futures prices trades above the nearmonth futures prices. Contango compensates holder of a commodity for the interest cost associated with buying and carrying inventories. Contango market also reflects the spot prices plus the cost-of-carry. In 2009, top crude oil producing companies and some banks hired VLCC and laden it with crude oil and anchored it off the coast of the UK. The underlying was subsequently sold against futures contract to take advantage of the contango. A back of the envelope calculation suggests a contango of US cents 80 or more per barrel would be encouraging as the VLCC rental for a month works out to US cents 60/ bbl and the current cost of for such trade works out to 2 percent. A VLCC has the capacity to hold 2 million barrels of oil. The current contongo condition in Brent crude oil market was also result of resumption in oil supplies from Libya reducing the premium for immediate delivery. It was also widely believed that to avoid the supply glut, Saudi Arabia would rationalize its own production target and thus contango would likely to prevail for a considerable future. 42
August - September 2014
As a result the freight rate on route TD3 hit a month’s high of 52.5 WS points on July 30, 2014. The month of August witnessed the steep fall in freight rates. Weak manufacturing data and sharp decline in crude oil imports by China alarmed the market about the fault lines in its economy. China is the world’s largest crude oil importer importing about 6 million barrels per day. A decline in imports has huge impact on capacity utilization of VLCCs. “An April (2014) report by Poten & Partners calculated that China’s spot tanker demand accounted for the equivalent of the full utilization of 150 very large crude carriers in 2013, or 23% of the world’s fleet of 633 VLCCs, up from 66 in 2009”, according to Bloomberg news. Charter rates were also depressed due to low activity in Middle East region amidst Ramazan Eid holidays, increaing the spare shipping capacity by more than 23 percent in comparison to available cargoes (to be shipped). As a result, freight rates on route TD3 again touched a month’s low of 42.5 WS points on August 8, 2014. Later, with holiday season ending, availability of cargoes increased, helping diminish some excess supply and thus lifting the freight rates. Expectations of increase in VLCC demand for floating storage again pushed the freight rates to a high of 52.5 WS points. However, the freight rates could stay at elevated levels for long. Poor macroeconomic data from Europe proved to be a drag on the oil demand and hence for the need VLCCs ferrying it. As a result, freight rates again declined to a low of 42.5 WS points on August 29, 2014. Overall during JulyAugust 2014, freight rates declined by 10.5 percent to close the two-month period at a low of 42.5 WS points.
Marine Archaeology
1926 Steamship Discovered in Lake Ontario
File photo of Nisbet Grammer on St. Lawrence River Courtesy: James Kennard
T
he British steamship Nisbet Grammer, the largest steel steamer to have foundered in Lake Ontario, has been discovered by a team of shipwreck explorers. The 253-foot British-built steamship was sank off Lake Ontario’s western New York nearly 90 years ago has been discovered by a four-man team - Dan Scoville, Jim Kennard, Craig Hampton, and Roland Stevens. The team located the steamer thirty miles east of the Niagara River in a depth of over 500 feet of water. The Nisbet Grammer was enroute from Port Colburne to Montreal with a load of grain when she was struck by the steamship Dalwarnic in a dense fog. Steamer Sinks after Collision in Dense Fog The Nisbet Grammer took on a load of grain at Buffalo then passed through the Welland Canal into Lake Ontario and was headed up to the St. Lawrence River in the early morning hours of May 31, 1926. The lake was calm with a slight wind from the northeast. Around 4:30 AM a dense fog formed on the lake limiting visibility to several hundred feet. The Grammer could only hear the warning sounds of a ship’s fog horn as it passed in the night. The steamer continued on but reduced its speed in half to 4.5 knots for the next hour. As time passed, the fog grew even denser and then at 5:30 AM the sound of a new fog horn was heard almost directly in the path of the Nesbit Grammer. Within just a few minutes the Canadian steamship Dalwarnic came into view. The Grammer turned to starboard to avoid the oncoming steamer but there was not enough time for the 253 foot long steamship to avoid the fatal collision. The Dalwarnic struck the Grammer on the port side near the stern just forward of
the boiler house and engine compartment. A lifeboat from the Nisbet Grammer was deployed as was a yawl from the Dalwarnic in which the crew was able to safely escape from the sinking steamship. Within less than 15 minutes the Nisbet Grammer hull filled with water and sank stern first into the depths of Lake Ontario. Nisbet Grammer built as a Canaller in Birkenhead, England In the early 1920’s large steamships full of grain from the upper lakes had to be unloaded at either Port Colbourne or Buffalo onto smaller vessels to pass through the Welland Canal in order to reach eastern coastal ports. In December 1922 the Eastern Steamship Company Ltd of St Catharines, Ontario was formed by seven individuals connected with the grain business. They commissioned the build of ten canallers which would be able to transport grain and also pass through the canal from Lake Erie to Ontario and forego the previous unloading process. G.J. Grammer and his son, Nisbet Grammer, were two of the founders of the new steamship company. Nisbet was also the president of the Eastern Grain, Mill, and Elevator Corporation of Buffalo. He was then elected president of the Eastern Steamship Company. The Nisbet Grammer was built in the shipyard of Cammell Laird and Company of Birkenhead, England and on April 12, 1923 the canaller was launched into the Mersey River. Just as the new steamship slid down the ways into the Mersey River, the sun came out from under the clouds, which one would have thought a seemingly favorable sign of things to come for the Nisbet Grammer, but her fate would take a different turn. August - September 2014
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Marine Archaeology Nisbet Grammer Specifications: Length: 253 feet Beam: 43.1 feet Depth: 17.9 feet Gross Tonnage: 1725 Net Tonnage: 1110 Hold Capacity: 130,000 cubic feet Mean Draft loaded: 14 feet Engine: Surface-condensing inverted triple-expansion steam engine Maximum Speed: 10 knots The engines were coal-fired fed from wing bunkers. Two large single-ended Scotch boilers (Diameter: 12 ft. x length: 11 ft.) provided a steam pressure of 180 pound per square inch to run the engines.
Wreck of Nisbet Grammer
Search for the Nisbet Grammer In September 2008 Kennard and Scoville began the initial search for the largest steel steamer ever lost in Lake Ontario. At the time, what was thought to be an easy shipwreck to find turned out to be more of a challenge than they expected. The search for this steamship did lead to several new discoveries in this area of the lake and more questions than answers into the fate and final resting place of the Nisbet Grammer. During the next 6 years over 80 square miles of deep lake bottom were surveyed until the discovery by the shipwreck search team in late August.
with the remote operated vehicle. It was literally a tug of war as Scoville fought the effect of the lake currents on the long tether to eventually inch the ROV to the hull of the Nisbet Grammer. Arriving at the base of the port bow of the large steamer’s hull it appeared as a great wall just waiting to be conquered. The ROV ascended over 40 feet to the bow rail of the Grammer. Peering through the railing was the view of the staircase leading up to the pilot house. This glimpse of the big steamer was all that would be seen as one of the ROV thrusters failed preventing any forward movement. Sadly the mission to explore the remaining details of Nisbet Grammer would have to wait for another day.
Surveying the Shipwreck
Wreck Commissioner’s Court of Inquiry
Searching for and then surveying a shipwreck in deep depths requires a combination of teamwork and specialized equipment. The search for the Nisbet Grammer was conducted utilizing an Imagenex Yellow Fin side scan sonar system towed by a 2000 foot steel cable controlled by a specially constructed winch designed by Dan Scoville. The shipwreck search followed predetermined grid lines in a method similar to mowing a lawn. Use of an autopilot on Craig Hampton’s boat provided accurate coverage of the targeted search area. The selected grid was determined by researching the Nisbet Grammer – Dalwarnic Court of Inquiry documents by Jim Kennard.
A formal investigation was held in Toronto on June 1517, 1926 into the circumstances resulting in the collision of the steamers Dalwarnic and Nisbet Grammer. The 258 page court transcript provided a detailed account of both vessels leading up to the collision and sinking of the Nisbet Grammer. It was in this document that the speeds, mileage, and times were stated by both ships’ captains. This information was used to narrow down the probable search area for the wreck of the Nisbet Grammer. Mistakes were made by both sides due to the poor visibility created by the dense fog. As a result of the inquiry, the certificate of the Nisbet Grammer captain was suspended for failing to give specific instructions to his officer. The first mate was suspended for three months for not having stopped the ship, sounded the alarm signals or awakened and alerted the captain. The certificate of the captain of the Dalwarnic was suspended for the rest of the 1926 season for failing to exercise the caution which is expected of all seamen. The Dalwarnic’s first mate was exonerated.
Once the Nisbet Grammer was located the underwater remote operated vehicle (ROV) was deployed to video the shipwreck. The ROV designed by Scoville uses a special thin fiber optic tether to communicate with the topside electronics and video display. Using a thin tether has the distinct advantage of minimizing the drag caused by lake currents when deploying very long lengths of cable to reach the deep depths of Lake Ontario. Over 900 feet of fiber optic tether were used to reach this shipwreck. There were very strong lake currents on the day the team surveyed the steamship 44
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Source: http://www.shipwreckworld.com/ Note: The survey of historic shipwrecks in Lake Ontario was funded by a grant from The National Museum of the Great Lakes/Great Lakes Historical Society of Toledo, Ohio.
SMP Marketing Initiative
Safety & Quality in Logistics Industry H
ealth, safety, and quality are extremely important in any organisation. For any organization, the sustainable growth is only possible when we consider that the health and safety of our associates, our customers and the public is our top priority. Loss prevention and sustain profitability is the result of our quality management systems; it should be effective and able to reduce threats to your facility and its supply chain, both internal and external. For strong health, safety and quality culture, it is necessary to develop effective policies, procedures, Standard Operating Procedures (SOPs) and work instructions then promote them throughout the organisation, by monitoring activities and ensuring that colleagues follow all relevant requirements. Take responsibility for oneself and others, as required by law. This is done by knowing about and identifying health and safety hazards and quality issues relevant to the services and work activities. Relation between Safety & Quality Quality is a broader concept than safety. Quality implies identifying customer requirements; defining objectives and indicators for their measurement; designing processes for achieving these objectives; assigning resources required to carry out these processes; executing these processes according their design; measuring the processes performance, and establishing a continuous improvement process for preventing and correcting non-conformities. Safety refers to identify hazards of processes, their causes and potential consequences; to estimate and evaluate their risks; to establish actions for avoiding, preventing or reducing the probability of their occurrence, as well as contingency plans to mitigate losses and damages in the case of the occurrence of risks. Quality is an integrationist concept. Safety is an attribute of quality; as well as it is also itself an objective of quality.
Paramjit Singh Saini Director - Contract Logistics Rhenus Logistics India
Safety should be integrated into process management. Therefore, when we refer to quality concept, the safety is implicit in it. Safety is related to many of the individual indicators of internal and external performance. Hence quality and safety have strong positive correlation. Positive Effects of Safe Working Practices Over the last decade, there has been a significant decrease in the number of incidents, injuries and property damages due to improvements in the awareness of good Occupational Health and Safety (OHS) practices. We can enhance our quality standards by establishment of Safe Working environment and achieve desired customer satisfaction, zero customer complaints, profitability, and market status. Focus areas for Safety Realisation in Logistics Industry The most common issues experienced in Logistics industry include: • Muscular stress (Ergonomic) - such as lifting, reaching, pulling, and pushing. • Falls, trips and slips • Being hit by a moving object • Vehicle and mechanical accidents • Falls from heights • Structural damages • Material handling incidents- such as Loading, Unloading and Storing activity Quality in Logistics Industry To help improve customer satisfaction, greater emphasis is given to the aspect of quality in the supply chain. Quality, in logistics, is about having no errors in shipments, low product damage, on-time orders, high productivity, excellent alignment with customer requirements, and full regulatory compliance, it is also about finding ways to constantly move the bar higher. August - September 2014
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SMP Marketing Initiative Total Quality Management (TQM) is an approach that seeks to improve quality and performance which will meet or exceed customer expectations. TQM looks at the overall quality measures used by a company including managing quality design and development, quality control and maintenance, quality improvement, and quality assurance. Safety & Quality at Rhenus: Rhenus Logistics is committed to operational excellence by continual improvement & Complying all legal & other applicable requirements. This steadfast commitment is founded on our respect for social and environmental issues, a core value that effectively and efficiently drives achievement of our sustainable economic growth and financial performance business goals. Our vision of operational excellence is deeply rooted in our work climate; our expectation is that no one gets hurt and nothing gets harmed. The Company provides the processes, facilities, standards, training, discipline, and work culture designed to ensure: • A safe work environment for our employees and the communities in which we operate Safe products and services for our customers • Environmental protection through responsible resource and waste management; & prevention of pollution • Protection of stakeholder assets Our Beliefs • Occupational injuries and illnesses are preventable. • Safe and responsible management of our operations epitomizes respect and care for each other and the environment. • The fundamental attention to detail that delivers excellence in health, safety and environmental (HSE) matters help us achieve superior competitive business advantage. • Source reduction/elimination is the best waste management practice. Alternatives to source reduction/ elimination will focus on reuse, recycling and waste minimization. Our Principles • People are our most important resource, and such safety is unequivocally our number one (#1) core value. We must constantly strive to achieve zero (0) injuries and illnesses. • We are all accountable for ourselves and the safety of others in the workplace. Working safety is a condition of employment. • Our efforts must be focused on prevention of occupational injury and illness; therefore, we will provide requisite training to our employees to empower our incident prevention culture. • Safety excellence requires proactive and demonstrated 46
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leadership. Management is responsible and accountable. • All employees and contractors are accountable for performing their daily activities in a manner consistent with our HSE policy. • When an injury or serious incident occurs, we will thoroughly and completely determine its cause and share the lessons learned with our facilities worldwide. • We will strive to preserve the environment in which we operate by utilizing resources responsibly and by reducing and eliminating waste from our operations at the source; however, where wastes are generated, they will be handled safely and responsibly. • We will meet or exceed compliance with all applicable laws and regulations. • Our work with the public and regulatory authorities will be conducted in an atmosphere of trust, openness and cooperation. • We will integrate our HSE practices, standards and goals into our global business plans in a manner that assures consistent and effective implementation of our HSE policy. Safe Management Practices at Rhenus • Commitment & Awareness of SHE & Quality Policies • Data, Information & Regulations • Risk Assessment & Reduction • Selection & Monitoring of Subcontractors • Specification & Maintenance of Equipment • Training and Education • Reporting & Evaluation of Incidents & Accidents • Emergency Response • Control of Operations • Periodical Auditing Quality Management Practices at Rhenus We are committed to achieve full customer satisfaction and enhancing it. This commitment is shared by all our employees and is an integral part of the fundamental value system of our company. We are trying to achieve this by continual improvement of products, processes, services & systems designed to meet the expectation of the customer and thereby foster good partnership with them. We are valuing commitment and loyalty as vital and integral to our operations. We are committed to excellence in every sense. We are constantly striving towards generating new ideas, encourage creativity in others and creative approaches to problem solving. We are honest, ethical and reliable in all our dealings. We have created a culture of setting and achieving business results and consistently complying with quality standards and timelines, whereby everyone is accountable together as a team.
SMP Marketing Initiative
B P Marine Academy - Asia’s Best Maritime Institute
B
PMA has achieved the height of success under the able guidance of Shri. R.C. Singh Chairman, Ex. chief Engineer Merchant Navy. Mr. Singh, aged 61 years, born in 1953 at Rasra, Dist - Ballia, Uttar Pradesh, graduated in B’Sc Mechanical Engineering from Sambhalpur university Orissa, served 17 years in merchant navy upto the rank of Chief Engineer, He is dynamic & Innovative in approach, blending Indian tradition with modern needs of training being reflected in this Academy, Beside merchant navy training, he is well connected with Religious and Charitable organizations of also. Mr. Singh has been awarded Ram Charitra Manas Award by All India Port Labour Association. Also Excellency Award 2003 by Lions Club, CBD Belapur.
Prime Time. The Award Was Received By Director Capt. Badal Singh From Chandresh Kumari Katoch Indian Member Of Parliament In The Lok-sabha. • “Education Excellence Award 2013” for being “Asia’s best Marine Institute” by E.T. Now (Times Group) • Mr. Viswanathan Anand Indian chess Grandmaster awards the “Education Excellence Awards 20142015 to Mr. R. C. Singh Chairman his Outstanding Contribution to Marine Education Sector • “Best Marine Academy in India 2012-2013” by Newsmakers Broadcasting and Communication Pvt. Ltd. • “Best Infrastructure amongst All Marine Institutes in India 2011-2012” by BRANDS ACADEMY. • Rated “Outstanding” Marine Institute by CRISIL.
A visionary in Maritime Education and Shipping, B.P. Marine Chairman, Shri. R. C. Singh is something like showing a Candle to the Sun. It is difficult to sum up the undaunted spirit, unquenched thirst and rock solid determination of a man with 80% disability to achieve insurmountable success in the field, chosen by a few, the field of Marine Education. As per Media Marex Bulletin dated 27.05.2013.
Now in March 2014 B.P. Marine Academy has received Certificate of International Accreditation by IAO For achievement of the highest standards in Organizational Management, Business Management and Business Performance through a commitment to quality and continuous improvement.
BPMA IS AWARDED AS:• The “Global Education Excellence Awards 2013” By
BPMA - Navi Mumbai based Institute Dynamic – Foresighted – Enterprising Trusted Name with ISO 9001:2008. Grade A-One & Synonymous with High Quality Training Institute In a short span of 16 years August - September 2014
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SMP Marketing Initiative
the BPMA has build a dynamic academy venture catering to the need of seafaring fraternity, successfully trained Pre-sea -8,500 (Eight Thousand only) & PostSea -3,50,000 Institute has provided more than Rupees 15 Corer towards the education and training at various levels to needy candidates. C.B.D.Campus BP Marine Academy (BPMA) Belapur Campus (Head Office) is located in the Central Business District of Belapur, Navi Mumbai spread over an area of 1,21,528 Sq.Ft. of its own. It is at a two minutes walking distance from Belapur Railway Station, Bus and Hovercraft terminals. Panvel Campus 15 acres cradled in the arms of mother nature, characrised by the scenic beauty facing to a 1000 meter water front with stunning sea view. It is walking distance from the suburban railway station of Khandeshwar / Panvel , 2 minutes from the proposed International Air port and 5 minutes from International Exhibition Centre. A historical Jetty which was constructed by the great Maratha King Shri. Shivaji Maharaj is also a part of the Panvel Campus. 48
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Government of Maharashtra has handed over the entire campus to BPMA to develop, built a State of Art, World class Maritime Training Academy to cater the needs of National and International Maritime Industry. Great care has been taken to match world class facilities.
SMP Marketing Initiative
Connection technology for Ethernet with 10 Gbps from Phoenix Contact
• Without stripping, thanks to fast connection technology • Various IP20 or IP65/67 protection classes M12 and RJ45 device plug-in connectors M12 device plug-in connectors for your devices Design your devices for the future and integrate interfaces for 10 Gbps into your devices. Choose the right connection: • M12 and RJ45 with solder connection for the PCB • M12 and RJ45 with shielded cable connection • Adapters from M12 to RJ45 Pre-assembled M12 and RJ45 cables Depending on the application, cables are available for use in offices and harsh environments. Choose from our wide range of standard patch cable products with IP20 and IP67. Upon request, we will also create your custom solution:
Extremely fast in industrial environments Modern automation processes call for high volumes of data at ever-increasing transmission speeds. Benefit now from data rates of up to 10 Gbps in your devices and systems. These will enable you to achieve smooth communication throughout your entire company network – from the office right up to the machine. Your advantages • Reliable data communication – thanks to components according to the CAT6A standard • Fast data transmission – thanks to data rates with a speed of up to 10 Gbps • Easy cabling without special tools – with IDC and Piercecon fast connection • High level of data security – thanks to special shielding concepts and high-quality materials • High level of flexibility – thanks to versatile housing feed-throughs for devices and control cabinets M12 and RJ45 plug-in connectors for assembly M12 and RJ45 plug-in connectors for assembly The Phoenix Contact M12 and RJ45 plug-in connectors for 10 Gbps can be assembled quickly and easily directly on site – this is facilitated by the Piercecon connection with the M12 plug-in connector and the IDC displacement connection with the RJ45 plug-in connector.
• Different cable lengths and versions • Different plug and socket combinations • Customized packaging and printing CAT6 A – high speed for industry CAT6 A components are components which meet all requirements according to IEC for the full implementation of 10 Gbps in industrial environments. All our products for 10 Gbps device connection satisfy these requirements. Your advantage: fast data transmission and tested suitability for industrial applications.
For further details Please contact Phoenix Contact India Pvt. Ltd. F-26/2, Okhla Industrial Area Phase -2, New Delhi – 110020 E-mail: adverts@phoenixcontact.co.in August - September 2014
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News: India Govt may Give Sops to Shipbuilding Industry
Govt Mulls to Reorganise TAMP: DG Shipping
New Delhi: The government is considering a financial assistance scheme to revive the debt-laden and struggling shipbuilding industry. The government is mulling various options which include lower bank interest rates, infrastructure status to shipyards, a separate fund and also special subsidy to shipbuilders who source raw material and parts locally. The new policy will be different from the old and lapsed policy, which assured a fixed 30 per cent of subsidy from the government on each ship built by Indians till 2007 and hopefully the new revised policy will give the much-needed enthusiasm to the shipbuilding industry. Several shipbuilding companies like ABG Shipyard and Bharati Shipyard are cash strapped and are unable to complete their order books. These companies are restructuring their loans in the hope of getting fresh loans to get their idle shipyards running. Shipbuilders in India had a good time before the global meltdown washed the shipbuilding industry away.
Gautam Chatterjee Director General of Shipping
Mumbai: In giving level playing field between the Major Ports and the privately-held non-major ones, the government is planning to reorganise of port tariffs regulator TAMP, including assessing if there is a need for such a mechanism to be in place and whether privately-held non-major ports enjoy softer treatment, said DGS Gautam Chatterjee. He added that there is a reorganisation of the TAMP (tariff authority of major ports) that is being considered. In what form it will reorganised is still being worked out. “The new thinking is looking at it absolutely from scratch and the need for TAMP,� he added.
New Guidelines to Boost Coastal Shipping Unveiled New Delhi: To give major boost to the coastal shipping, the government has approved new guidelines that will promote coastal shipping to decongest railways and road transport. The Shipping Ministry has instructed all twelve major ports to earmark exclusive berths and green channel for coastal cargo to promote the sector. The ministry has issued new guidelines under which these ports
will have to give priority berthing to dry bulk or general cargo coastal vessels irrespective of the origin and final destination of the cargo. The guidelines, approved by Shipping Minister Nitin Gadkari, also provide for concessional port charges whether the vessel is berthed on priority basis or on normal basis. The guidelines are aimed at promoting Coastal Shipping to reduce pressure on rail and road transport systems.
Major Ports to Deepen Draught to 18 m New Delhi: The Shipping Ministry has asked all 12 major ports it controls to deepen their draughts to 18 meter to allow bigger ships to dock. The ministry has asked these ports to carry out techno-economic feasibility studies for deepening the channel to 18 meter. The plan potentially creates a huge business opportunity for overseas dredging contractors because local firms lack capability to undertake such capital dredging projects Most of the Indian Government-owned ports have a depth under 10 meter, except for a few ports that have depths of 14 meter. Only one port - Vizag - has 50
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a depth of 20 meter and that is in its outer harbour. The depths at Major Ports are clearly inadequate to handle higher capacity ships such as capesize and container ships with a capacity to carry 14,000 standard containers that are increasingly being put to use worldwide. Inadequate depths at India’s Major Ports entails extra time and costs for moving goods as a large proportion of cargos originating and bound for India are routed through transhipment ports such as Singapore and Colombo because of a lack of capable ports to handle bigger ships.
News: India Government Cancels 9 SEZ Projects New Delhi: The Government has cancelled approvals of nine special economic zones, including that of Hindalco Industries, Essar and Adani as no ‘satisfactory’ progress was made to execute the projects. The decision was taken in the meeting of the Board of Approval (BoA) headed by Commerce Secretary Rajeev Kher. Hindalco Industries had proposed to set up an aluminium product SEZ in Orissa. Essar Jamnagar SEZ Ltd, which had proposed to set up a multi-product zone in Gujarat. Similarly, Adani Townships & Real Estate Company Ltd had proposed an IT/ITeS zone in Gujarat. The developer had reported that they could not proceed with the SEZ project due to adverse demand scenario from IT sector and accordingly they are not interested in perusing the project. The other developers whose SEZs were cancelled include Chennai Business Park, Integrated Warehousing Kandla Project Development and Gujarat Industrial Development Corporation.
Port Committee to Recommend Onshore Operation Modalities
Nitin Gadkari Union Road Transport and Shipping Minister
Mumbai: The Government plans to work towards directly connecting all 12 Major Sea Ports with railroads and start a roll-on-roll-off service to transport vehicles easily from factories, said Nitin Gadkari, Union Road Transport and Shipping Minister. He said that the proposal to connect all Major 12 Ports with direct rail has been sent to the Railways and the Shipping Ministry also plans to start a rollon-roll-off service to transport vehicles easily from factories.
Big Investments Needed to Boost Seaborne Trade: Assocham and proper risk allocation are certain key issues affecting port development in India and the new government should initiate paradigm shifts towards these issues to augment seaborne trade in the country. D S Rawat Secretary-General of Assocham
Ahmedabad: Growing at a compounded annual growth rate (CAGR) of over 8 per cent, the seaborne trade in India may cross 830 million tonnes (mt) by 2016-17, according to apex industry body Assocham. “This would require massive investment to the tune of over ` 17,000 crore as there is a need to augment port capacity by over 140 mt from the current level of about 690 mt,” according to Shipping Industry: Today & Tomorrow, a study conducted by Assocham. “Private sector participation is imperative for such huge investments in the shipping sector,” said D S Rawat, Secretary-General of Assocham. He added that lack of a level-playing field for private operators, hinterland connectivity, especially lack of co-ordination between road, rail and port authorities,
The Government needs to act as a facilitator to create opportunities for attracting fresh investments in the shipping sector, more so as about 40 per cent of India’s fleet of ships are over 20 years old, indicating slow rate of new fleet addition. This is good news for the ` 7,300 crore shipbuilding and ship-repair industry as the older fleet requires frequent and extensive repair and maintenance. However, this makes the Indian fleet less competitive as mostly young vessels below 15-years-old are often preferred in international trade, he added. He further said that India can save up to ` 26,000 crore by 2016-17 if we can increase the share of coastal shipping in total traffic carriage, thereby reducing the burden on other modes of transport. There is a need to encourage coastal shipping as a viable mode of bulk freight transportation as it has just about 3 per cent of share in carrying regional traffic, Rawat added. August - September 2014
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News: India Indo-Russia Trade to Touch $15 billion by 2015: FIEO
Panel Suggests Single Agency for Shore Handling of Ships at Major Ports New Delhi: Amid India’s non-major ports eating into the share of 12 Major Ports, a Government-appointed panel has recommended ensuring that shore handing of vessels be done by a single agency to improve the profitability of centre-owned ports.
Rafeeq Ahmed President, FIEO
New Delhi: India’s bilateral trade with Russia is expected to reach USD 15 billion by 2015-end on the back of initiatives taken by exporters to tap that market in the wake of sanctions imposed by EU on Russia. Currently, the two-way commerce between the countries stood at around USD 10 billion. “The sanctions imposed by the EU on Russia gives huge scope and opportunity for Indian traders in sectors, including agro-products, chemicals and textiles to capture the Russian market. We need to tap that space,” Rafeeq Ahmed, President, Federation of Indian Export Organisations (FIEO).
The committee has recommended that the stevedoring and shore handling of vessels in Major Ports be carried out by a single agency as far as possible. Unlike about 200 Non-Major Ports, there are multiple agencies for shore handling and stevedoring at Major Ports at present. The committee said that the non Major Ports have by and large a system of having one agency looking after all the work of landing/loading of ships and shore handling of cargo in their port; this gives a more focused approach to marketing of the port. The recommendations are aimed at protecting Major Ports interests amid their market share nosediving to 57 per cent in 2013-14 from 91 per cent in 1994-95.
India may decline US’ Push for Bilateral Trade Agreement New Delhi: India is likely to turn down the US’ push for establishing a bilateral trade and investment agreement (BTIA), the talks for which were commenced under the previous regime of United Progressive Alliance (UPA). To push its exports into the Indian market, the US had been urging India to have the pact with it that will have a special concessional tariff arrangement. This is
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different from the Free Trade Agreement (FTA), which required tariffs to be reduced to zero in a phased manner. “India is in the process of revising our model BIT Agreement to eliminate the prospects of investorsstate dispute in future. We hope to have revised the model in place in a few months, after which we could resume our negotiations,” a top official said.
New FDA may Boost Exports
Pharma Exports to Cross ` 1 lakh crore
New Delhi: The new Foreign Trade Policy (FDA) (2014-19), which is expected to come in force by October-end, may rev up exports and will have a strong thrust on manufacturing to bring it in sync with the Prime Minister Narendra Modi’s ‘Make in India’ goal.
Hyderabad: Pharmaceutical exports are expected to cross ` 1-lakh-crore mark this year. “The growth would be around 15 per cent and is driven by formulation exports,” said P V Appaji, DirectorGeneral, Pharmaceutical Export Promotion Council (Pharmexcil) said.
According to sources, discussions are still on between the Finance Ministry and the Commerce Ministry over the tax concessions that are required to give exports a fillip, especially in the special export zones (SEZs) which have been fading out.
During 2013-14, pharma exports stood at ` 90,000 crore. Out of this, the share of formulations was 71 per cent. Referring to the work of the council, Appaji said when it was formed the pharma exports were at ` 17,000 crore.
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News: India Kochi Port to Develop Two Major Projects
Paul Antony Chairman, Cochin Port
Kochi: To consolidate its position as a growing maritime hub in South Asia, the Kochi Port has invited expressions of interest (EoIs) for two of its mega projects, Free Trade Warehousing Zone (FTWZ) and Outer Harbour. The two projects are jointly worth ` 22,000 crore.
NMPT Targets 100-mt Cargo Handling Capacity by 2020
P C Parida Chairman of NMPT
New Delhi: New Mangalore Port Trust (NMPT) is in the process of increasing its capacity to 100 million tonnes by 2020. The port has already developed its infrastructure to handle 77 million tonnes of cargoes a year. It is in the process of increasing this capacity to 100 mt by 2020, said, P C Parida, Chairman of NMPT. On some of the development works taken up at the port, Parida said a yard for containers and warehouse for general cargo are being developed. This initiative will help handle more general cargoes at the port. Work on deepening the harbour to 18 metres is also on the cards. This will help accommodate large vessels inside the port, and will make the exportimport trade more competitive in the region, he said. NMPT has been helping the ONGC-led consortium for the development of an LNG terminal at the port. He hoped that the detailed project report on the proposed terminal will be ready by the end of 2014-15.
“FTWZ is intended to leverage the potential of the port to emerge as a key node in the South Asian supply chain, taking advantage of its proximity to Vallarpadam Container Transhipment Terminal. The port floated the global tender to select a partner, who will be proposed as a co-developer under the SEZ Act 2005,” said Paul Antony, Chairman, Cochin Port. The ` 480-core FTWZ project will be developed on 40.85 hectares in Willingdon Island and the port will lease the plot for 30 years. Ready availability of the land is a big advantage and the selected bidder will have the right to allot it on lease for commercial purposes.
Govt to Exempt Vessels Carrying EXIM Cargo from Fuel Duty
Vishwapati Trivedi Shipping Secretary
New Delhi: In a bid to boost coastal trade, the Government has decided to exempt vessels carrying export import cargo from paying customs duty on marine fuel. “A decision has been taken that the coastal vessels which are carrying EXIM cargo or containers will be given duty free fuel. It suddenly cuts down fuel cost in coastal shipping,” said Vishwapati Trivedi, Shipping Secretary. The country at present levies about 25 per cent customs duty on marine fuel. Removal of tax would draw big container ships to Indian coast which is spread across 7,500 km area, he added. About 60 per cent of India’s exports and imports containers are transshipped through ports like Singapore and Colombo. Earlier the PMO had asked the shipping ministry to suggest ways to increase transshipment cargo movement in the country and reduce instances of containers unloading in Colombo. August - September 2014
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News: India India to Develop Bangladesh Port
Software Technology Exports Rising 8 to 10% Yearly Agartala: India’s exports from the Software Technology Parks (STP) across India are rising at a pace of 8 to 10 per cent annually and would further increase in the upcoming years as the industry spreads across the country, a senior sector official said.
Sandeep Chakravorty India’s Deputy High Commissioner in Dhaka
“There are huge software technology markets across the world and India’s export prospect from the sector is extremely vivid,” said Prabir Kumar Das, Director, Software Technology Park of India (STPI).
Agartala: India would develop a river port in Bangladesh to ferry essentials, foodgrain and heavy machinery to northeast region from different parts of the country and abroad. Ashuganj Port over river Meghna in eastern Bangladesh is around 40 km from Tripura capital Agartala.
He added that currently India’s yearly export growth from the software technology is 8 to 10 per cent. After setting of under construction STPs in different states of the country, the export growth would be at much higher speed.
“To develop the Ashuganj Port over river Meghna, India would provide necessary funds. Both northeastern states of India and Bangladesh would be benefited if the river port’s necessary infrastructures were developed,” said Sandeep Chakravorty, India’s Deputy High Commissioner in Dhaka.
Das said the overall exports increased from ` 226,712 crore in 2011-12 to ` 251,498 crore in 2012-13 and the overseas trade further increased to ` 275,000 in the 2013-14.
He added that the Bangladesh Government is also keen to provide access of Chittagong international port to India. Both Indian and Bangladesh Governments are serious (about developing) connectivity between the two countries.
Karnataka, Maharashtra, Andhra Pradesh, Tamil Nadu, Haryana, Uttar Pradesh, West Bengal, Kerala, Odisha and Delhi are the leading ten states in India in software export.
Visakhapatnam to Get ` 30k-cr Port Project Visakhapatnam: Visakhapatnam Port Trust (VPT) and Gangavaram Port are likely to face competition as a project to set up a third port is on the anvil in Visakhapatnam district. According to industry sources, KSR Maritime Projects is looking at establishing a port capable of handling around 100 million tonnes of cargo around Nakkapalle area at an estimated investment of nearly ` 30,000 crore.
The port project is expected to be developed in four phases, as per the documents submitted to the Ministry of environment and forests.The prefeasibility report states that the port will be designed to handle around 60 million tonnes of cargo per annum in about six years from the commencement of the project, which would later be expanded to handle around 100 million tonnes.
AP Govt Urges Second LNG Terminal at Kakinada Kakinada: There is immense potential for the establishment of a second LNG terminal (offshore) at Kakinada as the demand-supply gap is bound to increase in the future and there is no need for any misgiving on the viability of the project, according to MVSR Kamesam, Director, Krishna-Godavari LNG Terminal Private Limited. The KG LNG Pvt Limited is a special purpose vehicle floated by a consortium of companies VGS group of the US and Exmar of Belgium 54
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to set up an offshore LNG terminal with a capacity of 3.6 MMTPA in the first phase and a similar capacity in the second at the Kakinada deep water port. It may be noted that the AP Government has already cleared an LNG terminal at Kakinada with a capacity of 5 MMTPA with Shell as one of the partners. The combined capacity of the two LNG terminals at Kakinada would be 8.6 MMTP.
News: India Karnataka Govt to Develop 5 Ports under PPP Mode
India Initiates Work to Link Northeast with Bangladesh Port
Mangalore: Baburao Chinchansur, Karntaka’s Port Minister has urged to private developers to come forward in developing five minor ports in the State under the Karnataka State Port Development Policy 2014. Chinchansur said that the Karnataka State Port Development Policy 2014 has been introduced by Chief Minister Siddaramaiah for the first time in the state. He said that Honnavar, Manki, Mavinakurve Basavaraj Durga Island, Belekeri and Thadadi ports in Uttara Kannada district will be developed under public private partnership (PPP) mode.
Agartala: India has taken the first steps to construct a ` 70 crore (USD 11.5 million) bridge over the Feni river in Tripura to access Bangladeshi Ports for transporting goods and heavy machinery from other parts of the country to the landlocked and mountainous northeast and to boost trade and tourism, officials said.
“While the Government will provide land, private developers will develop Minor Ports and thereby carry out import/ export business. It is a revolutionary step taken by the Government under the new policy,” he added.
The 150 m bridge would be possible for Indian northeastern states to access Chittagong international port and other ports in Bangladesh to ferry heavy equipment, foodgrain and other essentials from various parts of the country and abroad.
The Tripura Government has asked a New Delhibased private company to prepare the detailed project report (DPR).
Govt to Widen SFIS Scope to Enable Exporters Trade Tax Incentives New Delhi: The Government is likely to expand the scope of Served from India Scheme (SFIS) by allowing exporters to trade the tax incentives earned by them in a bid to spur services exports. The incentives are in the form of duty credit scrips that can be used to pay the customs duty on input imports of capital goods or consumables. If the incentives are made tradable, exporters from sectors such as education, healthcare, healthcare, consultancy and real estate that do not
Cabinet to Clear Iran Port Project
New Delhi: India is all set to get its first overseas port as the Union Cabinet is expected to clear the long-delayed Chabahar project in Iran soon. The port will be developed by a joint venture company formed by the Jawaharlal Nehru Port Trust (JNPT) and the Kandla Port Trust (KPT). Located along the Makran coast in the Gulf of Oman, Chabahar is in close proximity to the Strait of Hormuz which facilitates about 40 per cent of the world’s oil trade, and hence has significant strategic implications for India. Not only would it allow India easier access to Afghanistan and Central Asia without having to depend on Pakistan, it is also being touted as India’s answer to Chinese control over Pakistan’s Gwadar port, just 76 kilometer (km) from Chabahar.
import much will be able to sell them in. The five-year foreign trade policy is set to be announced soon, and the Government likely to set an export target of USD 650-700 billion by 2019. The Government will also make Served from India Scheme (SFIS) scrips adjustable against 12 per cent service tax, besides increasing the overall amount of the scheme.
India to be UAE’s Top Trade Market by 2030 New Delhi: India is expected to be the UAE’s top export and import market by 2030, according to the latest HSBC Tarde Forecast released. Alongside India, the UAE’s fastest growing export market will be China, Malaysia and Turkey, each of which will have the fastest growth rates between 2017 and 2030. Trade between India and UAE has grown from USD 43.46 billion in 2009-10 to USD 60 billion in 201314, representing a 10 per cent share of the total foreign trade of the Emirate. Asia and Turkey will continue to be the most important trade partners in terms of imports. Import growth will be fastest for goods originating from China, India, Turkey and Vietnam. August - September 2014
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News: Foreign Global Shipping Industry Outlook is Stable: Mood Tokyo: In a report Moody’s Japan K.K. said its outlook for the global shipping industry is stable, with moderate EBITDA growth expected amid continued vessel oversupply. “We expect mid- to high-single-digit percentage aggregate year-over-year EBITDA growth for Moody’s rated shipping companies over the coming 12-18 months,” said Mariko Semetko, a Moody’s Assistant Vice President – Analyst. “But this growth reflects reduced costs rather than improved fundamentals.” The just-published industry outlook ‘Global Shipping Industry: EBITDA Growth Will Be Moderate as Shipping Capacity Continues to Outstrip Demand,’ reflects Moody’s expectations for the fundamental
business conditions in the industry over the next 12 to 18 months. The supply of shipping vessels will remain higher than demand for most shipping services, says Moody’s. Slow global economic growth and continued deliveries of new vessels has led to a capacity glut, which limits companies’ ability to raise rates they charge for shipping freight, constraining revenue and EBITDA growth. Moody’s expects that this supply-demand imbalance and somewhat stable fuel costs will continue, and that EBITDA growth will come through cost-cutting measures. These include optimizing cargo routes through technological means, refueling at ports with relatively cheap prices, operating vessels at reduced power to reduce fuel costs, and increasingly using newer, more efficient vessels.
Iraq Blacklists Three Oil Tankers
Samsung Heavy Bags USD 440 mn Order
Iraq: Three oil tankers, two Suezmaxes and one Panamax, have been banned from loading at Iraqi oil terminals as a reaction to direct exports of crude by the Kurdistan Regional Government (KRG) over the objections of Baghdad. The ban is said to have been imposed so as to prevent the tankers transport crude for the KRG.
South Korea: South Korean shipbuilding giant Samsung Heavy Industries (SHI) has won an order amounting to USD 440 million for three Arctic Shuttle Tankers from a European shipper.
The first tanker to load oil from Iraqi Kurdistan, named United Leadership, has unloaded its millionbarrel cargo off the coast of Malta this week after over four months, based on the data on the shiptracking website marinetraffic.com. The ship has been anchored off Morocco for months unable to unload its cargo at the port of Mohammedia, due to various blockades from Iraqi central government.
The client behind the order is Russia’s Sovcomflot, Yonhap new agency reports referring to a confirmation from the shipbuilder. The newbuilds, boasting a capability to travel through 1.4 m thick ice, are expected to deliver by April 2017. Sovcomflot has already ordered three shuttle tankers from SHI in July, worth USD 440 mill. The latest order brings SHI’s orderbook value to USD 5.9 bn.
Shipping Remains Challenged as Global Growth Disappoints New York: The global shipping industry finds no grace from much stronger economic activity going forward, as the global recovery remains fragile and uneven. Shipping being a derived demand of global economic growth, will see lower demand in coming years, all other things being equal, than what was previously expected. This goes for all the major shipping segments, dry bulk, tankers and containerships. The Update of the World Economic Outlook from the International Monetary Fund (IMF) has just been released. Headline global GDP growth is 56
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revised downwards by 0.1 and 0.2 for 2014 and 2015 respectively to reach 3.3 per cent and 3.8 per cent. The IMF points out that global investment has been weaker for some time now, limiting the prospects for higher growth going forward. This has led to a lowering of 2015 expected growth more or less across the board. Moreover the burden from the recent years of crisis still haunts, primarily the advanced economies. Whereas several emerging and developing economies which are running at a higher growth level, are been dragged down by poor export markets.
News: Foreign APM Investing Heavily in Mexico Mexico: APM Terminals Global Terminal Network sees Mexico as a key location in the strategic growth and infrastructure investment planning. In 2012, APM Terminals signed a 32-year concession for the design, construction and operation of a new deepwater terminal at the Port of Lázaro Cárdenas. The project will represent an overall investment of USD 900 million. The first phase of the construction of Terminal 2 (TEC2) will include 750 meters of quay, five ship-to-shore (STS) cranes, 22 automatic stacking cranes and tworailway cranes, and will be able to accommodate very large container vessels.
will further reduce emissions associated with freight transportation, as well as safe and secure transportation of containers to inland destinations compared with truck haulage on highways.
Preparations are underway for the first 300 meters of quay, which are scheduled to be ready in Q1 2015. This will be followed by the installation of the container handling equipment. The completed terminal, which will add 1.2 million TEUs of annual throughput capacity, is projected to become operational in the first half 2016.
Mexico’s imports, measured in constant USD, have also more than doubled from 2000 through 2013, from USD 179.4 billion to USD 390.9 billion.
A key component of the project will be an intermodal transport corridor linking the Lazaro Cardenas marine terminal with APM Terminals own intermodal facility in Mexico City. Use of rail transportation
Shipping Remains Challenged as Global Growth Disappoints
Container traffic at Mexican ports, dominated by Manzanillo and Lázaro Cárdenas on Mexico’s Pacific Coast, increased from 4.21 million TEUs in 2011 to 4.87 million TEUs in 2013, reflecting a growth rate of 15 per cent, more than double the overall Latin American container volume growth of 6.7 per cent during the same period.
Mexico’s largest container port of Manzanillo handled 2.1 million TEUs in 2013, followed by Lázaro Cárdenas, located 340 km (210 miles) farther down the coast in the Michoacán State, with 1.05 million TEUs. The Government of Mexico has announced plans to double port capacity over the next six years to meet anticipated trade growth, particularly on the transPacific trade lane.
China to Lift Restrictions on Foreign Firms in Shanghai FTZ
New York: The global shipping industry finds no grace from much stronger economic activity going forward, as the global recovery remains fragile and uneven. Shipping being a derived demand of global economic growth, will see lower demand in coming years, all other things being equal, than what was previously expected. This goes for all the major shipping segments, dry bulk, tankers and containerships. The Update of the World Economic Outlook from the International Monetary Fund (IMF) has just been released. Headline global GDP growth is revised downwards by 0.1 and 0.2 for 2014 and 2015 respectively to reach 3.3 per cent and 3.8 per cent.
China: The Chinese Government is planning to lift restrictions on foreign investments in several industries including shipping in Shanghai’s free trade zone (FTZ), reports said.
The IMF points out that global investment has been weaker for some time now, limiting the prospects for higher growth going forward. This has led to a lowering of 2015 expected growth more or less across the board. Moreover the burden from the recent years of crisis still haunts, primarily the advanced economies. Whereas several emerging and developing economies which are running at a higher growth level, are been dragged down by poor export markets.
Raising the cap would encourage the world’s shipping lines to expand in China, allowing them to directly tap the booming business at Shanghai’s Yangshan deepwater port, which is part of the FTZ, according to industry officials. Analysts, however, said the latest moves were more symbolic than substantive as it would still be hard for overseas companies in the listed sectors to set up shop in the FTZ due to its limited size, the report added.
The South China Morning Post cited information from a circular from the State Council to ministries and provincial governments that more than 20 sectors are to be opened up to overseas investors in the FTZ. Foreign investors will be allowed to own a controlling stake in joint venture shipping agencies, with the investment cap raised to 51 per cent from 49 per cent.
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News: Foreign Fortuna S Sinks in Black Sea
Pirates Release Vietnamese Oil Tanker
London: The ship collided with the south pier and suffered extensive water ingress. The helicopter evacuation of the crew was hampered by a storm and strong waves, but eventually, the rescue team dispatched from Tuzla naval base managed to pluck the crew of nine Syrians, one Romanian, and two ship’s pilots from the sinking vessel.
Vietnam: The Vietnamese oil tanker that went missing with 18 crew members onboard while en route from Singapore to central Vietnam, has been released by the pirates, a manager from Haiphong Sea Product Shipbuilding, owner of the vessel, said.
The crew were transported to shore and put under the care of the Port Master of Sulina, who arranged for them to be taken to a hospital for medical treatment. No injuries have been reported up to now.
A group of ten armed pirates hijacked the tanker and, once onboard, destroyed the ship’s communication equipment. Two of the crew have been injured, one has a broken leg. The disappearance of the ship had prompted a multinational search-and-rescue operation.
The ‘Fortuna S’ general cargo ship, en route from Giurgiuleşti and carrying 2,650 tonnes of salt to Syria, ran aground and sank in the Sulina seaway, Romania, the Black Sea.
The pirates siphoned part of the tanker’s cargo of more than 5,000 tonnes of gas oil, Nguyen Vu Diep, a Manager at the Haiphong Sea Product Shipbuilding is cited by Reuters as saying.
Maersk MSC Wins US Regulatory Approval to Launch Shipping Pact Singapore: Maersk Line and Mediterranean Shipping Co (MSC), the world’s two largest container shipping lines, won approval from US maritime regulators for a planned vessel sharing pact. The so-called 2M alliance would see the two carriers pool 185 ships on European, transatlantic and transpacific services, which Maersk
Shipping Industry Will Need USD 1.4 trillion over Next Decade UK: Financing of the shipping industry is again on the agenda as new investments are needed to keep up with the upcoming fleet renovation drive and market growth. According to Clarksons data, the cost of financing the shipping industry over the decade from 2014 to 2023 could be around USD 1.4 trillion, a massive step up from the 90s. “But the business has changed dramatically since the early 1990s when it was mostly about tankers, bulkcarriers and containerships. In the coming decade only half the investment (about USD 760 billion) is to finance the replacement and expansion of these core fleets,” said Martin Stopford, President of Clarkson Research. According to Clarksons estimate, two market segments are likely to generate a lot of value-added over the coming decade, those being LNG tankers and cruise ships. Together they account for about 20 per cent of the projected investment, according to Stopford. 58
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Line says would save it USD 350 million a year in costs. The tie-up won US approval after four out of five commissioners at the Federal Maritime Commission (FMC) voted not to seek further information from the two shippers about the impact of the alliance on exporters and ports.
Golden Ocean, Knightsbridge Merging Taiwan: Dry bulk shipping companies Golden Ocean Group Limited and Knightsbridge Shipping Limited have agreed to merge, with Knightsbridge as the surviving legal entity. The merger is subject to approval by the shareholders of Golden Ocean and Knightsbridge in separate special general meetings expected to be held in December 2014 or January 2015 and the merger is expected to close shortly thereafter. Completion of the merger is also subject to the execution of certain definitive documents, customary closing conditions and regulatory approvals. After the merger is completed, the Combined Company expects to have a fleet of 46 Capesize vessels, 10 ice class Panamax vessels, 8 Kamsarmax vessels and 8 Supramax vessels, of which 36 are newbuildings under construction. In addition the Combined Company expects to have a small number of leased vessels and one vessel owned through a joint venture.
Marine Tech
New PORTS Real-Time Data System Officially Dedicated
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OAA, the Jacksonville Marine Transportation Exchange, and the Jacksonville Port Authority have officially dedicated a new information system which will increase safety for ships using the St. Johns River. The system, called Physical Oceanographic Real-Time System (PORTS), provides real-time information on water levels, currents, meteorological conditions, and under-bridge clearance, giving users critical information when traveling through the river. The St. Johns River in Jacksonville will become the 23rd location to use the system and is the second largest PORTS ever established.
PORTS provides real-time information on water levels, currents, meteorological conditions, and under-bridge clearance, giving users critical information when traveling through the river.
Tailored to the specific requirements of each seaport, PORTS is a decision support tool that improves the safety and efficiency of maritime commerce and enhances coastal resilience and natural resource management through the integration of real-time environmental observations, forecasts and other geospatial information. In addition to providing useful information for maritime transportation and coastal resilience, the use of the water temperature and tidal data can be used by the fishing industry to improve catch, while recreational boating excursions can occur more often and be safer through better real-time information available through PORTS.
Giant Vessel to Change Offshore Decommissioning Game: Analyst
The new Allseas vessel, ‘Pieter Schelte’, is able to replace the previous slower method of removing topsides piece by piece with one lift.
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he new Allseas vessel, ‘Pieter Schelte’, is able to replace the previous slower method of removing topsides piece by piece with one lift, meaning a decommissioning job could be done in a fraction of the time, say analysts Douglas-Westwood in their latest ‘DW Monday’ report. With Pieter Schelte, the figures alone are impressive. 382 m long, 124 m wide and with a slot width of 59 m it can remove topsides up to 48,000 tonnes in a single lift, potentially revolutionizing large decommissioning projects. The vessel has already won a number of contracts with removing three platforms from the Brent field up first. Along with this, the versatile vessel will be laying 890 km of trunkline for the South Stream project. In the latest edition of its ‘Subsea Vessel Report’ Douglas-Westwood forecasts that USD 9.75 billion is to be spent installing pipelines globally between 2015 and 2017, demonstrating that the potential is there for significantly more work in both applications in the coming years.
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Marine Tech
SeaBotix vLBV in Air-Deployed MCM Exercise The SeaBotix vLBV300 ROV was recently part of a MCM test exercise put on by Explosive Ordnance Disposal Training and Evaluation Unit One (EODTEU ONE) in San Diego. Two small combat rubber raiding craft (CRRC) containing the vLBV and an AUV were launched from a C-130 Aircraft via parachute to the ocean off Southern California and followed by a contingent of US Navy EOD technicians. It is estimated the equipment hit the surface of the ocean at up to 6 m (approximately 20 ft) per second in the partially-inflated CRRCs. The team then readied the gear and deployed the AUV to scan for any targets.
The SeaBotix vLBV300 enables high risk underwater operations by reducing diving hazards to personnel, mission time, and number of team members required to complete operations.
The SeaBotix vLBV300 enables high risk underwater operations by reducing diving hazards to personnel, mission time, and number of team members required to complete operations. One participant contacted a SeaBotix representative after the exercise to thank them for making ‘extremely rugged equipment’.
Sunken WW II Ship Oil Leak Plugged
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tlantic Coast Marine Group, Inc (ACMG) successfully responds to World War II era motor tanker leaking massive cargo of oil into the Atlantic Ocean’s waters.
Motor tanker WE Hutton was underway in 1942 from Texas to Pennsylvania with a cargo of 65,000 barrels of oil when it was sunk by a German U-Boat, taking 13 lives.
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Beaufort, North Carolina-based Atlantic Coast Marine Group, Inc (ACMG), a marine salvage, emergency towing and environmental services provider, was recently contracted to provide an initial survey and fast response pollution mitigation to a World War II era vessel believed to be the SS WE Hutton. As ACMG explained, motor tanker WE Hutton was underway in 1942 from Texas to Pennsylvania with a cargo of 65,000 barrels of oil when it was sunk by a German U-Boat, taking 13 lives and remaining a watery grave for the past many years until an oil sheen was recently noticed on the waters near its location off the NC coast. Working at the behest of the United States Coast Guard, ACMG’s environmental services unit promptly responded with multiple dive teams and assessed the scope and quantity of the leaking oil. ACMG thereafter developed and implemented a pollution containment and mitigation plan which stopped the flow of oil without compromising the m/t WE Hutton’s cargo spaces.
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Marine Tech
Rowe Adds New DVL to its SeaPILOT Line The SeaPILOT OC is the result of collaboration with several small ROV manufacturers to provide a compact, high performance DVL, designed for observation class ROVs.
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owe Technologies expands SeaPILOT product line for Observation Class ROVs. Rowe Technologies, Inc announced the launch of a new Doppler Velocity Log (DVL) for the SeaPILOT product line. The SeaPILOT OC (Observation Class) is the result of collaboration with several small ROV manufacturers to provide a compact, high performance DVL, designed specifically for observation/inspection class ROVs. The OC is small (5” [127mm] wide x 6” [152mm] tall and 8” [203mm], lightweight (~1 lb [0.45 Kg] in water), is rated for 300m operating depths, and is available in 1,200KHz and 600KHz operating frequencies. To ease integration, the OC supports several input and output data formats and is compatible with a number of third-party control and navigation software packages.
HMAS Bundaberg’s Anchor near Ashmore Island Recovered
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ersonnel in the coastal mine hunter HMAS Yarra have used their diving expertise to recover an anchor and shackles weighing one tonne from the seabed near Ashmore Island. The anchor, belonging to Armidale class patrol boat HMAS Bundaberg, was cut lose when it firmly wedged beneath a large boulder and the sea floor during a recent patrol for Operation RESOLUTE – the Australian Defence Force’s contribution to the whole-of-government effort to protect Australia’s borders and offshore maritime interests.
HMAS Yarra have used their diving expertise to recover an anchor and shackles weighing one tonne from the seabed near Ashmore Island.
Commanding Officer of Yarra, Lieutenant Commander Brendan O’Hara said the initial reconnaissance dive took approximately one hour. “Before leaving the area, Bundaberg marked the location of the anchor using an orange pimple buoy,” he said.
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Book Review
Port Infrastructure Finance [Hardcover] Editors : Pages : Price : Publisher :
Hilde Meersman, Eddy Van de Voorde & Thierry Vanelslander 299 USD 250.40 Informa Law from Routledge Book Description: This book provides an expert analysis of alternative investments routes and the investment strategies available to the major port players, and is a much-needed guide to expanding the investor base for private debt funding of projects from loan providers to bond investors.This book provides expert insight into areas of port infrastructure finance across the main regions of Europe, Asia, Africa and the USA. Topics include how to estimate future demand by way of forecasting; Public-Private Partnerships; corporatisation; the pricing mechanisms for syndicated loans; European port privatisation; finance strategies for ports in Asia, the USA and Africa; and a discussion of the investment strategies available to the major port players.
Dredging in Coastal Waters (Balkema: Proceedings and Monographs in Engineering, Water and Earth Sciences) [Hardcover] Author : Pages : Price : Publisher :
D Eisma 258 USD 185.51 Taylor & Francis
Book Description: The varied use of dredgers has led to the development of a variety of dredger types, from small ones appropriate to modest inshore projects, to very large sea-going dredgers for large-scale projects calling for the storage of dredged material within the ship. This book contains chapters on dredging operations in the Netherlands, Belgium, the UK, Spain, the US, China and Singapore. Additional chapters discuss more general aspects such as dredging techniques, monitoring of dredging operations, and the prospects of dredging in a changing environment. As well as providing information on dredging activities in different areas, it gives an insight into the activities and problems (environmental or other) involved in modern dredging. It will be of interest to professionals and students alike.
Economics of Shipping Practice and Management [Paperback] Author : Pages : Price : Publisher :
A E Branch 256 USD 82.96 Springers Book Description: The subject of this book is treated in a practical way, providing the reader with an overall understanding of the economics of shipping practice. The increasingly important role of management is given more emphasis, especially in the area of budgets, finance, personnel and marketing. The book should appeal to college and university students preparing for shipping, export, international trade and transport examinations, and to practising managers. Its practical approach, explanations and comprehensive coverage make it particularly appropriate for shipping personnel wanting to broaden their horizons through self-study.
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RNI No.: MAHENG/2008/29159 Date of Publication: 1st of every alternate month.