How I SMI - Ship Management Internationalshipmanagementinternational.com/wp-content/uploads/2012/...crewing shortage and advances in technology are impacting on their services 34 High

COVER STORY FIRST PERSON

10 Industry bodies call for armedguardsShip owners and managers have voicedtheir concern over a lack of any realprogress in resolving the piracy issue

10 Managers request voice inpiracy proceedingsCrew managers have hit out against a lack of input when it comes to piracynegotiations

11 Owners reluctant to endshipmanagement contractsThe threat of expensive termination fees,against a backdrop of continued lowfreight revenues, means high costs whenchanging shipmanagement provider

11 Creating capital by cuttingcarbonShipping industry professionals debatedthe challenges facing clean-tech andrenewable energy at the Creating ClimateWealth summit in London

12 Pancoast hangs out for FMMsoft loanBrazilian-based offshore operatorPancoast Trading has finally seen somemovement at the Brazilian Fundo deMercante Marinha which will lead to asoft loan for the company allowing it toproceed with a newbuilding programme

12 Shipping confidence dips toall-time lowOverall confidence levels in the shippingindustry fell to their lowest level for threeand a half years in the three months endingAugust 2011, according to accountant andshipping adviser Moore Stephens

13 AKD warns Dutch ship ownersagainst hiring armed guardsShip owners who hire armed guards couldface criminal prosecution, leading Dutchlaw firm AKD has warned following therelease of a report recommending greaterprotection against piracy for the Dutchmerchant fleet

NOTEBOOK

8 STRAIGHT TALK - Forewarned then forearmed

14 Roberto GalliThe current Executive VicePresident of Syndarma (theassociation for Brazilian flagship owners in Brazil) usuallyhas his finger on the pulse ofwhat is happening, especially inRio de Janeiro, his home town

5

THE MAGAZINE OF THE WORLD’S SHIPMANAGEMENT COMMUNITY ISSUE 33 SEPTEMBER/OCTOBER 2011

SEPTEMBER/OCTOBER 2011 ISSUE 33 SHIP MANAGEMENT INTERNATIONAL

Training & Crew Retention

p34 High seasturning high-

tech18 How I WorkSMI talks to industry achieversand asks the question: How doyou keep up with the rigours ofthe shipping industry?

29 InsiderDenis Petropoulos, ExecutiveDirector of Braemar ShippingServices plc

74 The Bucket ListProminent shippingprofessionals share theirpersonal and business ambitions with SMI

SHIPMANAGEMENT FEATURES

NEWBUILDING

73 Bold owners, determined yards make the runningCoupling an evidently keen price with a track record in passenger ship construction, MHIrecently signed a memorandum of understanding with Carnival Corporation covering two125,000gt cruise vessels destined for the US group’s German brand, AIDA Cruises

24 Technically soundLeading technical managementproviders explain how thecrewing shortage and advancesin technology are impacting ontheir services

34 High seas turninghigh-techA “digital revolution” is almostupon the shipping industry asthe sea plays catch up to land-based technology and seafarersdemand broadband and high-tech communications devices

66 Lightening the loadAs the economic downturncontinues to influencedecisions over buildingprojects worldwide, wiseplayers within the heavy liftsector are adapting to takeadvantage of growingopportunities in wind, miningand offshore

MARKET SECTOR

92 What smart homes are wearing - in the bowels ofthe earthIt’s official: home interiors is the new porn. Like voyeurs seekingafter lustful thrills and titillations, we allow an increasing numberof TV programmes to let us into great and grand designs for living

94 Shaken, not slurred?Aston Martin’s vehicles are as conspicuous as they are classic buthow will life-long fans of the brand react to it’s microcar creation,the Aston Martin Cygnet?

REGIONAL FOCUS

45 The truth behind China’s VLCC ordering plansThe tanker markets were reported to have been spooked in earlySeptember by the rumour that Chinese oil companies may orderup to 80 VLCC newbuildings from Chinese yards

46 Stemming the flowIt was almost a case of déjà vu when Frontline’s Chief ExecutiveJens Martin Jensen was quoted in the maritime press in the middleof August claiming that owners in the very large crude carriermarket should take a $500 million gamble and scrap 50 olderdouble-hull vessels in order to help ease oversupply in this sector

TRADE ANALYSIS

40 Harbouring success through prosperous portsThe ability of Belgium and The Netherlands to survive what is theworst shipping crisis to hit for decades will rely as much onprosperity in the world’s main producing areas like the Far East aswell as its determination to remain committed to what it does best

48 Strategic focus on higher added-value sectorsAs a country with extremely limited natural resources, SouthKorea has made its way in the world through unerring industrialendeavour and exporting achievement

BUSINESS OF SHIPPING

80 AdHocGreenwich Maritime Institute plans Masters degree in securityProlonged high yen is affecting Japanese ship managersGoltens offers a safe solutionSave our Seafarers campaign hits 20,000 markIndia cracks down on old shipsIBF reaches three-year pay settlement Australian shipping incidents down between 2005 and 2010

LIVE

85 Objects of Desire Things that make you go oooh!

6 SHIP MANAGEMENT INTERNATIONAL ISSUE 33 SEPTEMBER/OCTOBER 2011

REVIEW

88 BooksGiants of the Sea by Joachim PeinJerusalem: The Biography by Simon Sebag MontefioreMercy by Jussi Adler-OlsenThe Zero Point Conspiracy by Donald Crighton

MusicSuperheavy: SuperheavyCleo Laine: JazzRed Hot Chili Peppers: I’m With You

FestivalJZ Shanghai Music Festival

TheatreBackbeat Duke of York’s Theatre, London

ArtPicasso: Masterpieces from the Musée National Picasso

DiningAlinea: Lincoln Park, Chicago

WinesGerman wines get serious

LIFESTYLEBUSINESS VIEWPOINT

55 Counteracting the elementsSix Britons in a small boat-cum-sledge this summer braved icefloes and polar bears to voyage 450 miles to the magnetic NorthPole, from Resolution Bay in the Northwest Territories of Canada

SHIP REPAIR

70 Conversion contract for Lloyd WerftGermany’s Lloyd Werft (Bremerhaven), one of northern Europe’smain exponents of the refurbishment and conversion industry, is toconvert Harren & Partners’ heavy lift vessel Combi Dock IV intoa specialised OSV

- Oman Drydock opens for business- MMHE continues its growth in the LNG tankerrepair market

58 Prevention is better than cureThe American Salvage Association tells SMI about the importanceof salvage as a preventative measure in environmental protection

62 Vessel operations: With all the trimmingsFinding a vessel’s optimal trim – the difference between the ship’sforward and after drafts, and particularly its effect on itsmanoeuvrability – can provide better speed and lessen fuelconsumption

64 Greenshoots

ECOVISION

DISPATCHES

30 Grappling with a ‘bittersweet’ solutionThe shipping industry has become the first to introducemandatory global greenhouse gas emission standards. Theprinciple of extending enforceable environment protection rulesto the high seas meets one of the crucial calls made by theworld’s top marine scientists

8

STRAIGHT TALK

The shipping business magazinetoday’s owners and managershave been waiting for

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September/October 2011 Issue No. 33

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Editorial Director: Sean MoloneyDeputy Editor: Helen JaureguiJournalist: Samantha GiltrowEditorial Support: Debra MunfordRegular Contributors: Margie Collins

Michael GreyJames BrewerThomas Ország-LandMartin ConwayRobert WardPaul Bartlett

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Editorial contributors: The best and most informed writers serving the globalshipmanagement and shipowning industry.

If there is one thing the shipping industry isgood at, it is being seen to be singing fromthe same hymn sheet when it has finally

had enough of banging its head against theproverbial wall of international obduracy.

Before it was the unfair criminalisation ofthe Hebei Two; this time it is a united call forthe use of armed guards onboard those shipstransiting the pirate infested waters of the Gulfof Aden. Okay, the plea by the world’s shipowners delivered under the auspices of theInternational Chamber of Shipping and itsfellow Round Tablers, was for the globalcommunity to sanction the use of a UnitedNations force of armed military guards to bedeployed onboard ship to tackle the piracy crisisin the Indian Ocean, which it says is spirallingout of control. While in a separate move,InterManager launched its own campaign toallow owners and third party managers thefreedom of choice when it comes to employingarmed guards onboard those ships they manage.

Admirable moves indeed, borne almostcertainly out of a desperation because as themonsoon season in the region comes to an end,pirate attacks will almost certainly start toescalate. The industry call for an organisedarmed guard solution is also understandablewhen you consider that the combined might ofthe world’s navies in patrolling the area is akin,as one naval expert described it, to an area thesize of western Europe being patrolled by fourpolice cars. And the recent public airing in thepress by two of the world’s largest shipmanagers – V.Ships and Anglo Eastern – of theirfeelings of frustration and helplessness in beingeased out of the hostage negotiation processeswhen their crews are captured, is alsosymptomatic of a growing gulf between whatthe owners want and what the managers wantwhen it comes to getting their prized assetsback.

But such efforts must go hand-in-hand withthe co-operation of the navies and must besanctioned at the highest level. You cannot co-operate enough to save seafarers’ lives.

With a headcount of at least 166 privatesecurity companies seeking the attention and thewallets of the world’s ship owners andmanagers, it is hardly surprising that the use ofarmed guards is dominating the headlines. Yesno ship with an armed guard has so far beenattacked, but according to Capt Keith Blountfrom EUNAVFOR, it is only a matter of timebefore this statistic is overturned.

As he told a recent International Chamberof Shipping conference is London, “I believe itis only a matter of time before a ship with aprivate security team onboard is takensuccessfully by pirates.” The military, he says, isentirely agnostic to private security teams andallows shipping companies to make their owndecisions. But from a military perspective it is adangerous place operating in the Gulf of Aden,he claims, and it is even more dangerous whenyou don’t know if the pirate-infested ship youare approaching has armed guards onboard ornot.

So putting the well-being of the seafarerfirst, co-operation and understanding on theissue of armed guards is needed. Flag statesneed to understand their obligations andhammer out a solution with the owners andmanagers and the world’s governments need tostart thinking about a credible solution thatresolves the Somalia crisis once and for all. Butfor the time being, if armed guards are necessaryto protect lives at sea, then they should bedeployed but with the agreement of all.

Sean Moloney

Welcome to Ship Management International

Forewarned thenforearmed

SHIP MANAGEMENT INTERNATIONAL ISSUE 33 SEPTEMBER/OCTOBER 2011

Ship owners and managers have voicedtheir concern over a lack of any realprogress in resolving the piracy issue

by calling for armed guards to be allowedonboard ships transiting pirate-infestedwater.

The global shipping industry(represented by the Round Table ofinternational shipping associations) hascalled for the establishment of a UnitedNations force of armed military guards totackle the piracy crisis in the Indian Ocean,which it says is spiralling out of control.While in a separate move, InterManagerlaunched its own campaign to allow ownersand third party managers the freedom ofchoice when it comes to employing armedguards onboard ships they manage.

In a hard hitting letter to UN Secretary-General Ban Ki-Moon, the InternationalChamber of Shipping (ICS), BIMCO,INTERTANKO and INTERCARGOdemanded a “bold new strategy” to curbrising levels of piracy which have resulted inthe Indian Ocean resembling “the WildWest”.

The letter stated: “It is now abundantlyclear to shipping companies that the currentsituation, whereby control of the IndianOcean has been ceded to pirates, requires abold new strategy. To be candid, the currentapproach is not working.”

Regretting the increasing necessity forshipping companies to employ private armedguards to protect crew and ships, the letterstressed: “It seems inevitable that lawlessnessashore in Somalia will continue to breedlawlessness at sea.”

The shipping industry organisations –which represent more than 90% of the worldmerchant fleet – say they fully support theUN’s long-term measures onshore aimed athelping the Somali people but are concernedthat these “may take years, if not decades, tohave a meaningful impact on piracy.”

Asking the UN to bring the concept of aUN force of armed military guards to theattention of its Security Council, the letteradded: “The shipping industry believes thatthe situation can only be reversed with a boldapproach that targets the problem inmanageable pieces. We believe that animportant element in this approach would bethe establishment of a UN Force of ArmedMilitary Guards that can be deployed in smallnumbers onboard merchant ships.

“This would be an innovative force interms of UN peacekeeping activity but itwould do much to stabilise the situation, torestrict the growth of unregulated, privatelycontracted armed security personnel and toallow those UN Member States lackingmaritime forces – including those in theregion most immediately affected – to make

a meaningful contribution in the area ofcounter-piracy.”

The InterManager campaign, which hasreceived more than 90% of support from itsmember companies, will lobby flag states andcharterers to change their rules relating toarmed guards onboard ship.

It claims that any decision taken to arm aship should be based on a robust riskassessment of each vessel and its situationand should be unhindered by restrictive FlagState legislation.

Industry pressure for greater protectionof ships transiting danger areas such as theGulf of Aden has grown following concernsover the effectiveness of navies operating inthe area. Latest industry statistics suggestthat since 2008, more than 3,500 seafarershave been captured by pirates with around 60dying as a result of their captivity.InterManager, whose members include crewmanagers, is keen to give all support possibleto protect its seafarers from the mental andphysical torture, degrading treatment, fooddeprivation and dehydration that those heldhostage suffer.

InterManager believes the industry needsto work harder with those entities such as flagadministrations, oil majors and bulkcharterers who prohibit owners fromprotecting their assets as they believe theyshould be protected.

Alastair Evitt, InterManager President,said: “At the end of the day it is the welfareof our crew members and their families thatis at stake and there cannot be too manyinitiatives running in parallel to address thisdisgraceful situation.”

Ship managers have hit out against alack of input when it comes to piracynegotiations, complaining that ship

management companies have no voice whenit comes to securing the safe release ofvessels on which their own crew are held.

Roberto Giorgi, President of V.Shipsand Peter Cremers, Chief Executive ofAnglo-Eastern Ship Management, bothwent to the press stating they felthelpless during hostage negotiations asshipowners and insurers maintain their

position as key representatives on theseafarers’ side.

While both Mr Cremers and Mr Giorginoted that owners face a tough task innegotiating the safe release of their vesselsand crew, they highlighted that the interestsof seafarers are not being properlyaddressed. They argued that while ownersand insurers hold a definite financialincentive in the release of cargo and vessels,other stakeholders, including managersshould play a role in the proceedings.

10

NOTEBOOKSHIPMANAGEMENT NEWS AND REPORTS FROM AROUND THE WORLD


Industry bodies increase callfor armed guards

Managers request voice in piracy proceedings

Ship owners could find themselvesincreasingly locked into existingthird party shipmanagement

contracts as the threat of expensivetermination fees, against a backdrop ofcontinued low freight revenues, mean thecosts of changing management providercould prove too high.

Lars Modin, President of the V.Ships-owned International Tanker Management,said the market for ship managers wasslowly increasing as more deliveries startedto come out of the world’s shipyards andowners erred away from terminatingexisting management contracts.

He told SMI: “For the next six to 12months, the number of ships needing to bemanaged will increase. No one is lookingto change their managers because of the

costs involved; it can cost between$100,000 and $150,000 to change managerand new managers will have different ideasto old managers. An owner wishing toswitch management contracts would alsohave to pay a termination fee so I do notthink anyone will terminate theirmanagement contracts during this period.”

The major issue facing ship managers,he said, was dealing with ship ownerdemands to force down management fees.“But this is proving very difficult when itcomes to managing ships with a certainquality and a certain cost.”

However, according to Lars Modin it ispossible to cut vessel operating expenses tothe bare bone for a year or so but only if youhave a robust management procedureonboard ship and if you agree to spend

some money afterwards to maintain thelevel of quality.

“We are working hard to keep costsdown and this is appreciated by owners.This is something you can do if you havegood management onboard; you canoperate the ship well for some time yet stillcut back to bare bone but you then need toknow that you will have to spend somemoney afterwards again to bring it up to theacceptable standard.

“We haven’t seen any owners sufferingto the extent that they have to get rid of theirships. I don’t foresee any of my clientsdoing that. But with more ships coming outof the yards we are taking over morenewbuildings now although many ownersare trying to postpone delivery times,” headded.

The shipping industry’s attitudetowards climate chaos has alwaysrecognised the financial incentives

of fuel reductions but now, Europe’s firstCreating Climate Wealth summit hasfurthered this approach by assessing howrenewable energy and clean-tech solutionscan be harnessed to maximise wealth-creation strategies across the industry.

Held at University College London on13th and 14th September, the CreatingClimate Wealth summit brought togetherprofessionals from the shipping industryand beyond to discuss the challenges facingthe clean-tech and renewable energysectors, while encouraging debate as to howto best overcome these unique challenges.

Presented by The Long Run Venture,which helps businesses to deliver fastercommercial returns from sustainability, and

The Carbon War Room – an initiativewhich connects entrepreneurs to createmarket-driven solutions to climate change,the summit worked to highlight marketbarriers – particularly those which reinforcethe status quo and so, prevent sustainablesolutions from gaining financial backing.

Peter Boyd, Chief Operating Officer ofThe Carbon War Room, said: “Althoughpolicy is often part of the solution, we wantto make sure it is actors in the room who aregoing away able to act differently, ratherthan saying that so long as Washington sortsit or Canberra sorts it, everything is good.Policy, capital and technology all need tocome together in a working marketplace tosolve climate change. Arguably policy is anecessary but insufficient condition to getthings done and technology isn’tnecessarily the bottom end – I’m sure there

are representatives with technologies whichare not being bought or are sitting on thesidelines – the idea is how to get moneymoving around the right mechanisms.”

NOTEBOOK

11SEPTEMBER/OCTOBER 2011 ISSUE 33 SHIP MANAGEMENT INTERNATIONAL

Owners reluctant to endshipmanagement contracts

Creating capital by cutting carbon

NOTEBOOK

Brazilian-based offshore operatorPancoast Trading has finally seensome movement at the Brazilian

Fundo de Mercante Marinha (FMM, orMerchant Marine Fund) which will leadto a soft loan for the company allowing itto proceed with a newbuildingprogramme.

However, Mario Froio, ManagingDirector of Pancoast, the Braziliansubsidiary of Greek shipping lineKrontiras, told SMI that his company wasstill facing some “unfortunate bureaucraticdelays”.

Not having met for more than a year itwas a relief to Pancoast, and otherapplicants (including Kingfisher andSpanish shipping company Elcano) thattheir requests for FMM funding werecloser to approval, but irksome thatdocumentation sent to the Department ofthe Merchant Marine (which administersthe FMM) some months ago may nowhave to be sent again.

Froio would only say diplomaticallythat “bureaucracies will be bureaucracies”but further investigation by SMI

discovered that the extra delays (andindeed the delays in the FMM meeting inthe first place) are/were due to thewholesale firing of various officials withinthe Ministry of Transport and FMM.

Brazil’s President Dilma Roussefffired transport minister AlfredoNascimento back in July, and various ofhis cronies have been forced out of theministry since then.

With contracts already signed withstate controlled oil company Petrobras, andthe Rio Nave shipyard (ex-Caneco) in Riode Janeiro, Pancoast and Froio can’t waitforever.

Froio added: “A reliable and honesttechnician, Sergio Passos, has beenconfirmed as the new Transport Minister.He’s very experienced in this sector sothings should start to move forward now.”

Froio also said there was still nothingfurther to report on Pancoast’s negotiationsto buy two Platform Supply Vessels fromNorskan (the Brazilian arm of Norwegianoutfit DOF ASA) for around the $60M to$70M mark for the pair.

Overall confidence levels in theshipping industry fell to theirlowest level for three and a half

years in the three months ended August2011, according to the latest shippingconfidence survey by leadingaccountant and shipping adviser MooreStephens. Fears about overtonnaging,and continuing uncertainty about theglobal economy, were the main reasonsfor the decline in confidence. The risingcost of marine fuels was also a cause for concern.

In August 2011, the averageconfidence level expressed byrespondents in the markets in which theyoperate was 5.3 on a scale of 1 (low) to10 (high), compared to 5.6 in theprevious survey in May 2011. This is thelowest figure recorded since the surveywas launched in May 2008 with aconfidence rating of 6.8, which remainsthe highest rating achieved thus far.

Pancoast hangs out for FMM soft loan

Shippingconfidence dipsto all-time low

NOTEBOOK

Ship owners who hire armed guardscould face criminal prosecution,along with their onshore staff,

leading Dutch law firm AKD has warned. This follows the release of The De

Wijckerslooth Committee report, whichhas recommended the Dutch governmentshould move towards a greater level ofprotection for its merchant fleet, includingthe use of armed guards, should this bedeemed “necessary”.

However, the report also advised thatsuch security personnel should only beemployed by the government and mustonly perform their duties with authorityfrom the Ministry of Defence.

Under current circumstances, thereport acknowledged that the hiring ofprivate, armed security guards directly byship owners is not desirable and thisshould only be contemplated “in case ofspecial conditions”.

Jan Kromhout, a partner with AKD inRotterdam, said: “In the event that Dutchship owners do hire armed personnel, orprovide weapons to those onboard, those

directly involved, as well as shore basedpersonnel (including the ultimatemanagement of the company) could facecriminal prosecution. Furthermore, shipowners could be faced with locallegislation covering the import and exportof weapons in the event that the vessel hasweapons onboard and enters thejurisdiction of another country.”

The committee also noted that shouldthe government make use of its ownresources by engaging reservists or hiredarmed security guards with temporarymilitary status, this would not representprivatisation of security duties. Noamendment of legislation or regulationswould be required when creating extradefence capacity in this manner.

The recommendations of thecommittee could usher in the level ofprotection against piracy considerednecessary for merchant vessels but thealternative, whereby ship ownersthemselves hire private security guards(an approach endorsed by the RoyalAssociation of Netherlands Shipowners)

would entail “several problems”according to the committee, requiringdrastic amendments to Dutch legislationand regulations and under normalcircumstances, such changes wouldrequire “several years” of consultationprior to becoming law.

Mr Kromhout concluded: “Clearly, itis the duty of government to do its utmostto protect the merchant fleet from attacksby pirates. In the event that thegovernment is not able to fulfil its duties,for whatever reason, it will have toemploy outside help. It is not desirablethat privately owned companies hirearmed protection to perform the dutieswhich are the responsibility ofgovernment, which should retain itsmonopoly of force. Furthermore, the costof providing protection against piracyshould be borne by the state. Ship ownersshould only be allowed to hire privatearmed guards in special situations, in theevent that the government is not able tofulfil its duties.”

AKD warns Dutch ship owners against hiring armed guards

As a journalist covering Brazil formore than 15 years, whenever Ineed to find out what is going on

in the high-level shipping circles of theSouthern Hemisphere ‘paradise’, I oftenend up calling Roberto Galli.

For the current Executive VicePresident of Syndarma (the association forBrazilian flag shipowners in Brazil) usuallyhas his finger on the pulse of what ishappening, especially in Rio de Janeiro, hishome town and the ‘heartbeat’ of theBrazilian maritime community.

And his sense of rhythm and pulseextends beyond office hours too, as he isbass player in Cocktail Lounge, a band inwhich he performs with four of his friends

in various barsand

restaurants around the ‘CidadeMiravilhosa’ (Marvellous City).

His performances have been relativelyrestricted this year owing to a shoulderinjury and also the demands of Syndarma,which represents 37 shipping companies inBrazil and has to deal with a large raft ofissues on behalf of some of the country’sleading ship owners.

Throughout this year Galli, along withoutgoing Syndarma President HugoFigueiredo, has been instrumental indrawing up the best arguments for shippingcompanies to lobby politicians in Brasiliaregarding crew shortages and Brazilian flagowners paying over the top for bunkers andtaxes in general.

“I absolutely love my work,” he told uswhen SMI visited him in his Rio office,“and this year has been a particularly hecticone, especially in recent weeks.”

Indeed it has. Galli’s job has been taking him to

Brasilia - the inland capital of Brazil, some750 km from Rio - at least three times amonth and he has also been involved in anumber of ‘road shows’ where he has beenintroducing the new incoming SyndarmaPresident, Bruno Rocha of Wilson, Sons, tothe country’s key decision makers andpower brokers. Galli and Rocha have beendoing the rounds of the ministries of

Agriculture, Trade, Industry andCommerce (TIC), Transport,

the Ports Ministry (SEP)and Antaq, the powerful

body responsible forall waterborne

traffic in Brazil.The much-

publicised ailing infrastructure in Brazil –particularly vis a vis airports – has madethese numerous Brasilia trips much moregruelling than they used to be with far moredelays involved.

Galli, a Brazilian of Italian descent (asSMI readers have probably already guessedfrom his name), said that the explosion ofactivity in the Brazilian offshore industryhas also added significantly to hisworkload. Syndarma already has anoffshoot, ABEAM, that deals with offshoresupply vessels, but now anotherassociation, the Association of BrazilianCabotage Shipowners (or ABAC) has beenre-invigorated.

“It has lain dormant for a while but wehave revived it, like a phoenix from theashes,” explained Galli, in his usualcolourful way. “We have seen such aphenomenal growth in the offshore andcabotage sectors that we felt maybe anassociation for the cabotage players wouldhelp them to lobby for their specific issues,such as paying too much for bunkers andlocal taxes, etc.”

Among the big issues of 2010 were thecrewing, and especially officer shortagesfacing Brazilian flag shipowners.

“Thanks to the co-operation of theBrazilian Navy I think we are starting towin this battle,” reflected Galli.

“Against this difficult background thenavy has been first class and has beeninstrumental in boosting the number ofgraduates, and this year we should seearound 700 officers graduate from the twonaval academies: one in Rio and one inBelem. That is a good increase from 510last year and we should be producing closeto a 1,000 recruits per year by the end of2012.”

Those figures will go a long way toassuage fears that more and

more vessels willnot be operated

in Brazilowing tothe lack of


Roberto Galli Executive Vice President of the associationfor Brazilian flag ship owners, Syndarma

By Robert Ward

fully qualified officers. Some vessels havealready been unable to sail on time due toshortages.

Government cutbacks in the early2000s saw graduate numbers fall from 400per annum down to 250, but the 350 in 2009and then 510 in 2010 plus the extra capacitynow installed should see targets reached, oralmost reached, by 2014, when many moreBrazilian flagged vessels are due to comeinto service.

As well as the two academies run bythe Brazilian Navy and CIAGA (Centre ofInstruction Admiral Graca Aranha), anumber of fast-track and short courses havealso been introduced, with the navy’spermission, and these allow graduatetrainees and applicants with some shippingbackground to be fast-tracked so they canbecome officers within 18 months or twoyears instead of the four years it takes forcadets starting straight from school.

“If Syndarma, the navy and all therelevant bodies hadn’t acted promptly wewould have seen dozens of ships all lyingidle in Guanabara Bay because thereweren’t sufficient officers to man them,”warned Galli.

Galli feels that Sindmar had got itsnumbers and forecasts wrong, because itdid not take into account the rapidexpansion currently underway in Brazil, thegrowing market, the fact that some officerswork in terminals and equipment industriesand the natural wastage when somegraduates decide in the end they don’t wantto go to sea.

Another big issue for Brazil andSyndarma for the rest of this year is theRegistro Especial Brasileiro (REB, orSpecial/Second Brazilian Register).

It is expected that Syndarma, under theleadership of Bruno Rocha, and backed byGalli, will launch a major offensive thisyear and next to strengthen the REB.

Galli explained: “We have had the REBfor some years now in Brazil but it needs tobe adjusted and expanded. It needs to havemore flexibility and better fiscalarrangement and some of our members arethinking maybe we should have a tonnagetax like in the UK. Many vessels have re-flagged with the UK flag and maybe thesame would happen here with the REB. Iknow that Bruno Rocha will be making thisa priority.”

Galli looks forward to the day, in a fewyears’ time, when he can retire and spendmore time sailing and, especially, bossanova’ing.

He told SMI: “I really love my workand I love playing the bass too. My bandplays all the Brazilian classics, of bossanova, of Tom Jobim, and Joao Gilberto,plus standard jazz classics like Cole Porter,Burt Bacharach and many more. We give itour all when we play but we play for fun

and know we are not professionals. Forinstance one of our gigs was once cancelledbecause the piano player fancied a holidayin America.”

For SMI readers who might be visitingRio de Janeiro in the next few months,Cocktail Lounge are playing everySaturday at the French Bistro, locatedbehind the Meridian Hotel, on AtlanticaBoulevard, Copacabana.

Galli may be a keen amateur with hismusic, but in the work environment he isvery professional and he enjoys his currentjob too.

Galli took over as Executive VicePresident of Syndarma from the highlyrespected Claudio Decourt some four yearsago and he knew then what a tough job itwould be and that the highly respectedDecourt was a tough act to follow.

“Yes indeed, Claudio is a good friendof mine and we go back a long way, and heis such a distinguished and respected figurein the Brazilian shipping community that Iknew I would have my work cut out to fillhis shoes,” confessed Galli.

But with great gusto and bonhomie theBrazilian with Italian blood set about thebusiness of trying to fill those Decourt size41s (9s in UK sizes).

Like Decourt, Galli is definitely oldschool, and in many ways a romantic whenit comes to the world of shipping and hedoesn’t exactly like the way the glory, themajesty and the personal touch isdisappearing. He explained: “I think thattoday investors invest in a shippingcompany, just as they would in a farm forcows, or a factory for tyres, and ownershipis far different from when I was making myway through the ranks of the Brazilianshipping industry.”

“I have to admit that for me,” reflectedGalli, “a ship is much more than just anassembly of steel and electrical cables,made to produce money and wealth forinvestors. To me it is also like a person, withsomething inside it, which is why we referto them as she or her. I guess you could saythat a ship definitely has a soul. Today there

is less of that ‘old-time amor’ for the seathan there used to be.”

And Galli believes the lack of lovefrom so many now working in the maritimebusiness has been partly to blame for thevery serious crew shortages in Brazil today.

To deal with this problem Syndarmacommissioned an independent report fromthe University of Sao Paulo and this tome(published three years ago) stated by theyear 2013, the number of officers requiredwill be around 4,400 and the numberscoming through the system will only fill3,000 places, leaving a shortage of around1,400, or about 30%. This tome picked upthe tone of the shipping community andhelped Syndarma argue its corner.

With the changes announced last yearsome of those shortfalls should have been plugged.

For more than 20 years Galli workedfor Docenave, the shipping arm of the thenstate-owned mining giant Companhia Valedo Rio Doce, which is now called Vale, justas Docenave has transmogrified into Log-In Logistica SA.

Most of the time Galli was occupied inthe bulk shipping sector, and one of hisresponsibilities was for shipping iron orearound the world. He then went on to workin the container sector, firstly running theMediterranean services, then calledPaulista, for Libra Navegacao.

Galli enjoyed that as it took him back tohis Italian roots on several occasions. Librawas then taken over by Chilean carrierCSAV, and renamed Companhia Libra deNavegacao, at which point he left. Nextstop was to run the container division ofDocenave, and a year as a granite exporterwas followed by five years trying to restoreIvaran as an operator in Brazil, following arequest from owner Erik Holte-Sorenson.

“Then I got the call from HugoFigueredo, the then President of Syndarma,to take over from Claudio Decourt,” hereflected, “and that was an offer I definitelycould not refuse.”

Galli worked closely with Figueredo,who was also President of bulk shippingline Norsul, until just two months ago whenhe was replaced as Syndarma President byBruno Rocha, of the Wilson, Sons shippinggroup.

Reflecting on the differences betweenthe bulk and container shipping sectorsGalli said: “They are completely differenttypes of animal.

“On the bulk side you are dealing withraw materials and with very powerfulpeople. And on the container side you aredealing with many individuals, andsometimes the shippers want to squeezeyou hard for just a few hundred dollars, butthe shipper and carrier need each other, andone must never feel superior to the other. Ifeel today many shipping companies are

FIRST PERSON


I have to admit that forme, a ship is much more thanjust an assembly of steel andelectrical cables, made toproduce money and wealthfor investors. To me it is alsolike a person, with somethinginside it, which is why werefer to them as she or her

“

“

really suffering the pressure – with the oilprice increases, falling freight rates, etc –and I just hope the shareholders allow thecompanies enough oxygen to breathe andsurvive these difficult times.”

Be that as it may, Galli does often havehis finger on the pulse of the Brazilian and,indeed, international maritime scene and hefeels some changes are just about due inwhat kinds of companies set the pace.

He outlined his international economictheory to SMI, beginning: “I think that whathappens in any business is firstlyconcentration leading to uncomfortableoligopolies, and then once the structures gettoo top heavy, a process of atomization setsin and allows niche carriers to operatesuccessfully. I am absolutely convinced thisis what we will see over the next few yearsin shipping.

“This process is already happening inthe airline industry, with small, agileplayers such as Ryanair and easyJet in theUK and Gol in Brazil, coming onto thescene and taking over much of the businessfrom the larger, more cumbersomeoperators.”

And it is against that background thatGalli, a patriotic Brazilian to the core, isvery proud of the resurgence of Log-Inwhich, until April of this year, was the onefully owned, and still operating, Brazilian

container shipping company left on theplanet. In April Maestra Logistica enteredthe Brazilian cabotage trade with two (andnow has three) vessels, and it too was quickto join Syndarma, and ABAC for that matter.

Galli said: “Log-In has been a hugesuccess since the Initial Public Offering(IPO) three years ago. And it is good thatthey have brought new oxygen into thesystem by expanding and buying andbuilding new vessels.”

This month (October) Log-In will startoperating the second of five 2,800 teu,Brazilian flag container vessels, built in theEisa Yard, in Niteroi, for a combined costof $820m.

But Galli is also pragmatic and ispleased companies such as AliancaNavegacao e Logistica Ltda, and MercosulLine, still operate under the Brazilain flag,although under foreign ownerships -Hamburg Sud and Maersk Line,respectively.

At least by flying the Brazilian flag itguarantees jobs for Brazilian seafarers and officers.

“We welcome all new members atSyndarma, whether they are foreign-ownedor Brazilian-owned,” emphasised Galli. “Itis not the nationality that counts butwhether or not the companies observe the

Brazilian law and fly the Brazilian flag. Weare very open about this and I guess this iswhy we are drawing in more and moremembers every year.”

Galli’s other great passion outside ofwork and bass playing – apart from hisfamily, of course – is sailing, which he firsttook up when he was 30 years old.

“Back then we used to be verycompetitive and I took part in manycompetitions in racing dinghies and I wasgood at it,” enthused Galli. “We took partin competitions mostly in Rio de Janeirostate, but sometimes in Sao Paulo state as well.”

Galli was, and still is, a member of theCharitas Naval Club in Niteroi, where his30ft yacht is currently berthed.

Galli usually just sails his yacht aroundGuanabara Bay, near Rio and Niteroi, butonce a year he sails the 60 nautical miles tothe beach resort of Angra dos Reis, therebyre-affirming his love of the sea.

One knows that the SyndarmaExecutive Vice President will always retainhis “old-time amor” for things maritime,and if only more young Brazilian officerscould maintain a similar affection with thesame amount of passion – then Transpetro,Log-In and other Brazilian flag ownerswould have no future problems manningtheir expanding fleets. ■

FIRST PERSON

HOW I WORKSHIPMANAGEMENT

workHow I

SMI talks to industry leaders and asks the questionHow do you keep up with the rigours of the shipping industry?


PER GULLESTRUPCEO & Partner, Clipper Ferries/Ro-Ro

As many as 60% to 80% of shipowners are in favour of armingtheir vessels even though the cost

can be as high as $50,000 per passage.This was the considered view of Per

Gullestrup, CEO & Partner of ClipperFerries/Ro-Ro, when SMI recently caughtup with him in Copenhagen.

“We took the decision three to fourmonths ago that we could not defend ourships without contracting-in armed guards

with light machine guns and who willshoot back. I hear that 60% to 80% ofowners are in favour of arming their ships,which is a lot, and if you figure out thatevery time you do, it costs an ownerbetween $30K and $50K to put armedguards on each passage then you aretalking about a lot of money,” he said.

Mr Gullestrup has built up first handknowledge of dealing with pirates after henegotiated with Somali pirates over therelease of the CEC Future back in 2008.

Pirates held the CEC Future for 71days, and only released the ship afternegotiations and the payment of a ransom

of nearly DKK9 million. Per Gullestrupwas heavily involved in negotiating withthe pirates in 2008. A Somali pirate nowfaces a 25 year prison sentence in the USafter he was convicted.

“Despair is a good word,” to describethe way ship owners feel about the wholepiracy issue, he told SMI. “It is a hard wordbut there are times in a quiet moment whenyou say, look what is going on here. It is2011 and we are five years into this and weare still being run around by a bunch ofcriminals because that is all they are –extortionists, murderers and criminals. Andeven the largest naval powers in the worldhaven’t been able to do anything about itand they won’t until we do somethingfundamentally ashore in Somalia. Untilthen, we will not solve this problem,” hesaid.

“We now have the monsoon seasonand this will have a strong reflection on thelevel of activities going on. But even whenthe monsoon settles down, I suspect youwill see a lot of the ships being armed now.But what will that do to the equation?Hopefully it will put a dampener onactivities but it won’t solve anything.Because the pirates might start to lose too

We took the decisionthree to four months ago thatwe could not defend ourships without contracting-inarmed guards with lightmachine guns and who willshoot back

“

“

HOW I WORK SHIPMANAGEMENT


CLIVE RICHARDSONChief Executive Officer, V.Group

Clive Richardson was in buoyantmood when SMI caught up withhim on September 2nd – the very

day the $520m deal with Omers PrivateEquity finally closed.

The barrister-trained Chief Executive,who has worked in a number of globalbusinesses, including aviation at BAEAirbus and defence at technology companyQinetiQ, has been at the corporate helm ofV.Group for nearly two-and-a-half yearsand is clearly excited by the prospect ofworking with new majority shareholderswho, together with management, havebought out Exponent Private Equity.

“Omers is a powerful new financialbacker for us,” Mr Richardson declared.“The fact that it is a large private equityinvestment group which is evergreenpresents no real exit pressure. What's not to like?”

The ardent supporter of Bath RugbyClub and Liverpool FC lives just outsideLondon with his wife and four children.

Despite the rigours of running the world’slargest shipmanagement business, he hasbeen an accomplished rugby player andnow finds time to keep fit by running four orfive-miles several times a week. He relaxeswith visits to the theatre, reading books and,as a seasoned international traveller, enjoysdemonstrating his culinary expertise bycooking a range of international dishes.

Mr Richardson clearly regards his newshareholders with confidence. “We ran acompetition and considered three out of thefive contenders in the second round to bevery favourable organisations,” heexplained. “But Omers is a tier-one privateequity house and an excellent cultural fit –it is itself a global business and thereforeclearly understands our operations and thechallenges we face in providing a first-classservice to customers all over the world.”

Mr Richardson conceded that theV.Ships management team and its variouspast private equity shareholders have notalways seen eye-to-eye. There haveinevitably been frictions from time to time,but that is partly because it is unusual to findprivate equity firms at what he describes asa “mid-market level” but nevertheless,operating in a global business environment,

much money and the investors will stopgetting the returns they want, they willretrench and ease off. The naval forces willthen say the situation is better and thepirates will be back in action and we willbe back where we started. We as shipowners are very frustrated. If this kind ofcriminal activity happened anywhere elseon this scale something would have beendone about it but 94% of the seafarersinvolved in this are from developingcountries and that is the reason. If the 94%of seafarers were from Europe or the US,I guarantee we would not have beentalking about it now. It is a disgrace,” he added.

Moving onto the general marketconditions, Per Gullestrup is a supporter ofthe notion that what goes down will go upand that the current shipping recession isnothing really new. “Nothing has changed.I have been in the business for 40 yearsnow and I have seen these things come andgo. When I first started in shipping it wasback in 1972 when I was with AP MoellerMaersk and in those days we had the boomand bust years for VLCCs. I witnessed amarket situation where Maersk effectivelypaid off a tanker on one trip and I then sawa market situation where the Norwegiansbuilt VLCCs that went straight into lay upin Oslo Fjord. Some of them never took aironly to go straight onto the beachesafterwards. So what has changed?Nothing, it is just a matter of what is thelength of the cycle. There may be a verygrim situation today but will it last? Ofcourse not because the demand side is notbad. It is the supply side that is theproblem and as owners we manage tomess it up every time.”

Per Gullestrup has moved from theliner sector where he was in for 10 years tohead up the project cargo business and forthe last two years has taken care ofClipper’s non-core activities such as itsDanish domestic ferry business, whichalso happens to be the largest Danishoperator in Denmark through a 50:50 jointventure with the Danish government. Healso heads up the company’s ro-roactivities in the Irish Sea.

“As far as Clipper is concerned ourbread and butter business is still in thehandysize sector. We are not so sorry whenwe see these market gyrations becausewhen the market changes you are flushingout a lot of the older tonnage and you endup pushing the curve quicker. We haven’thad a bad market in handysizes and if youmanage to take in contracts on areasonable level and manage to hedge yourbets on the FFA, then a lot of the ownershave done fairly well. So we are not sosorry about it as we are going through thecleanup phase as we always do. I don’t seeanything new this time.” ■



such as shipmanagement. “That can be thepoint where you get a bit of friction atgovernance level,” he said. This is not oneof his concerns, however, in regard to thenew shareholder.

So, how is it that V.Ships has been ableto attract a string of private equityinvestment groups over the years whoseobjectives are usually fairly short-term,while most other ship management firmscontinue to operate, funded mostly on cashflow and vulnerable therefore to thevagaries of the markets? Following an earlyminority investment by GE Capital after thebirth of V.Ships from the Vlasov Group in1984, Close Brothers bought a stake in 2003and sold out to Exponent in 2007. NowOmers has bought out Exponent, togetherwith management which holds a significantminority stake and upon which MrRichardson would not specify.

A key attraction for external investorsis the fact that in addition toshipmanagement, V.Ships owns asignificant portfolio of marine servicecompanies, including financing, brokering,a marine travel business, a specialist shiprepair and maintenance company, and anextensive manning operation with 25,000seafarers on its books and 17,000 of them inshipboard positions at any one time. “Wepride ourselves on being more than just shipmanagers,” explained Mr Richardson.“Nobody covers all the ground that we do,”he said, referring to a number of keycompetitors including Anglo Eastern,Columbia, OSM, Thome and Wallem. “Weare twice the size of even the largest ofthem.” And in the shipmanagementbusiness, size definitely does matter.

In terms of its core shipmanagementbusiness, Mr Richardson said the companyoffers a service that shipping companies canprovide internally themselves. “But we doit better and more cheaply than many shipowners.” And he is not concerned thatV.Ships is well known for the pressure itputs on suppliers and service providers. “Weare rightly known for providing competitiverates to our clients and if we're aggressive,then we're doing a good job for them. I'mquite proud of that,” he said.

He points out that the V.Shipsmanagement team has built a globalnetwork over the years which is now best-placed to serve the worldwide shippingbusiness, and he points to the company's 70offices in 34 countries which support theoperation, manning and maintenance ofmore than 700 vessels as well as providing

marine support services to third parties. Thisbroad geographical spread has been builtaround a robust network of systems, alldesigned to ensure maximum efficiency atlowest cost.

Mr Richardson commented that privateequity shareholders come with their plusesand minuses, but one of the big advantagesis that cost control is always a major focus.As a result, he said, V.Ships has drivendown costs and raised efficiency throughsound cash, procurement and logisticsmanagement. These underpin groupoperations today and provide an operatingcost framework, he said, that is second tonone.

The focus on cost control has meant thatcertain back-office functions have beencentralised and located in low-cost parts ofthe world. Group accounting, for example,is run out of Mumbai. This strategy, MrRichardson explained, has given thecompany the confidence to claim that it canoffer operating cost savings to any potentialnew customer of at least 10%, excludingfuel and finance. And this sort of marginsoon mounts up over a fleet of ships, hepoints out.

It also means that the shipmanagementbusiness is shielded, to some extent, by thepeaks and troughs of the shipping markets.That 10% in operating cost savings is verynice to have when times are good, he said,but in a tough market such as that prevailingacross a number of shipping sectors today,that margin can become critical. “We candemonstrate that we are 'acyclical' – Wedon't get impacted by shipping cycles,” MrRichardson said.

So, where from here? “Well, we mayhave got a lot of things right so far, butthere’s plenty more to do. To paraphrase thewords of David Cameron, we did fix theroof when the sun was shining. We have abusiness model that is very simple and veryeffective. We plan to increase the number ofships under management; we intend toprovide more ships’ crews; and we plan to

expand our marine service offerings, bothwithin our operated fleet and to third parties.We also aim to grow our marine travelbusiness and anyone reading this article whowants to talk to me about this is welcome toget in touch. There is quite honestly, lots todo.”

Despite its global reach, V.Ships hasmore to do in geographical terms, MrRichardson said, and giving one example,he said: “We are under-weight in Asia”. Hewon’t be drawn on any details but there arecertainly plans to raise the company’s Asianpresence, take on some of the large shipmanagers who dominate that market and tolook for acquisition opportunities in theAsian arena.

“We are a sensitive acquirer ofbusinesses and we have been successful inour many past acquisitions,” Mr Richardsonsaid. It is certainly true that Omers’ambitions for the company and its deeppockets put V.Ships in a very strongposition. “Omers already have an eye for theshipmanagement business today,” heobserves, “but in looking at us, they’ve alsobeen quite open about growing the business.They expect to invest in that process.”

In the short run, the likely growingscale of distress in some shipping marketsmay present opportunities. But this iscertainly not a ‘no brainer’. Mr Richardsonexplained that a large part of V.Ships’successful cost control and low rates arebased on managed ships fitting easily intocompany systems. Distressed assets areusually exceptional, requiring a significantresource commitment which can bedisruptive. In fact, he points out that overrecent months, the company has takendecisions to terminate managementcontracts on about 30 vessels which failedto comply with its operating systems andwere therefore consuming too manyresources in one way or another.

V.Ships is likely to approach anydistress with caution but Mr Richardsonnoted that whereas many believed therewould be lots of distress-related business acouple of years ago, shipping banks optedto ride with it and as a result, there were relatively few arrests and dealrestructurings. Over the last six months,however, there has been a notable pick-upin problem business and he notes that someship finance institutions have made cleartheir intentions to pull out of the sector. Heis adamant, however: “We will carry outdetailed risk assessment, not only on vesselsbut also on clients.”

It may still be early days in V.Ships’new ownership but Mr Richardson clearlyrelishes the prospect of growing groupbusiness over the months ahead. WithOmers’ support he is well-placed. Almostcertainly, a new era in the company’sdevelopment has now begun. ■

We are rightly known forproviding competitive ratesto our clients and if we'reaggressive, then we're doing agood job for them. I'm quiteproud of that

“

We plan to increase the number of ships undermanagement; we intend to provide more ships’ crews; and weplan to expand our marine service offerings, both within ouroperated fleet and to third parties

“ “

“

LEON PATITSASFounder and Chief Executive Officer, Atlas Maritime

As another card in the prestigious deck of young, Athens-based owners, Leon Patitsas has gained prominencesince forming Atlas Maritime in 2004 – an international

player with a fleet of six double-hull aframaxes. Though Atlas Maritime is a relatively new competitor to the

Greek market, Mr Patitsas has a rich family tradition of shippingwhich can be dated back to the Lemos family of L.C. Lemos andEfploia Shipping, who from 1860 to 1914, owned 52 vessels. In1905, Leon Patitsas’s great grandfather, Christos M. Lemos,purchased and captained the company’s first steam ship, the3,550 tonne Marietta Ralli before adding the steam ships Triainaand Efploia to the fleet.

Capt Lemos’s sons, including Captain Leon Lemos – thegrandfather of Leon Patitsas, continued the family tradition byco-funding the London-based business Lemos & Pateras in1937. The Lemos brothers purchased the Liberty ship Hellasin 1947 and established G. Lemos Brothers in London in 1952.Capt Lemos founded the Efploia shipping company in 1967with a fleet of 17 ships and in 1968, Leon Patitsas’s father,Spyros Patitisas joined the family business.

Now, with a new generation at the helm, Leon Patitsas andhis brother Philimon Patitsas, Director of BusinessDevelopment, are drawing on their childhood love of shippingand extensive business experience to make Atlas Maritime asuccess.

“I’m the fourth generation of ship owners and shippinghas always been in my blood – it was a passion for me as achild,” said Leon Patitsas. “I loved the stories and theshipyards, which I have visited since I was a small kid. It’ssomething that fascinates and interests me and my vision isone day, to go back to the shipyards with my grandchildren –to instil this passion and interest in shipping and pass thelegacy on, which my brother Phil and I, will create for the next generation.”

Though this family tradition is of key importance to MrPatitsas, some may be surprised to learn he was born inLondon and retains British citizenship. But despite his dualheritage, Mr Patitsas told SMI it’s the Norwegian maritimeindustry which he is currently looking up to: “Norwegianshipping companies are role models because they are the



leading examples in corporate governanceand in safeguarding shareholders’interests.”

Mr Patitsas said he admired Norwegianshipping companies for creating loyalrelationships with their shareholders and for‘looking after’ their interests, to the extentthat whenever they needed to ‘tap’ thecapital markets and raise further equity tomake an expansion or an acquisition, “theshareholders are there for them”.

With a particular interest in shippingfinance, Mr Patitsas has formed a strongbackground in both the business and hands-on aspects of shipping. In his previous roleas head of Strength Shipping (2000 to2004), Mr Patitsas worked to develop amore corporate ethos and renewed theentire fleet. Previously, Mr Patitsas alsoworked for the Swiss, New York-basedbank Union Bancaire Privée (UBP) as amember of the team which invested assetsinto hedge funds. He also served as anengineer onboard a merchant ship and holdsa Degree in Mechanical Engineering fromTufts University and a Master of Science inOcean Systems Management fromMassachusetts Institute of Technology.

With his robust knowledge of thebusiness of shipping, one might presumeMr Patitsas would be worried aboutGreece’s future as a maritime nation but as

he told SMI, with effort, Greek players willsee a bright future: “It’s going to bechallenging, it’s going to be tough. We haveto stay put – we are fighters, we never giveup and eventually the markets will recover.We are faced with an oversupply of tonnageand this oversupply needs to be soaked upgradually but we are already seeing anincrease in demand for oil which will soakup this additional supply”

So, when riding out the recessionarywaves, what can Greece learn from othernations? “I think Greece should take somelessons from Singapore and we should tryto attract more foreign companies to comeand set up businesses in Greece and givethem incentives. Of course, it’s needless tosay we must have a tax-free environment inorder to attract these kinds of companies.Companies will invest money in Greeceand will hire people – unemployment willgo down and it will be a good thing for the

economy. We have to keep it that way inorder to be competitive for the internationalarena.”

Reiterating his concerns over Greek‘competitiveness’ on the global stage, MrPatitsas also expressed his view that Greeceshould remain a tax haven for owners: “It’sa known fact that ship owners can be verymobile. They can move anywhere in theworld – to Monaco, Singapore, Dubai,Switzerland, so there are other tax havens.If they try to tax Greek owners, it’s onlylogical to assume they will movesomewhere else. We saw that happening inthe 1960s in the US when Kennedyimposed tax laws and many shippingcompanies left New York and went to theUK. We have also seen it recently, when alot of owners left London to go elsewhereso I think it will not be good for the local economy.”

But beyond the stress of the markets,how does Mr Patitsas like to spend his sparetime? “I play a lot of sports, beachvolleyball, water skiing, basketball and Ilove snowboarding – I do all sorts of sportsand this relaxes me a lot,” he told SMI. “Ialso like to read books – it’s going to soundweird, but I enjoy reading books abouteconomics and the world economy(including Fortune magazine) – it relaxes me.” ■

I’m the fourth generationof ship owners and shippinghas always been in my blood– it was a passion for me as a child

“ “

The demands on a technicalmanager’s time are varied andmany, with responsibilities ranging

from technical support, logistics andoperations and service and maintenance,but as a lack of qualified and competentcrew continues to plague the industry,technical managers are concerned overhow to cope with an increasingly regulatedindustry when faced with strict budgetsand aging vessels.

Capt Vijay Rangroo, ManagingDirector of MTM Shipmanagement,explained how problems within technicalmanagement are ‘two-fold’, asprofessionals work to deal with persistentchallenges while coping with newregulations. He added that when regulationsare ‘reactive’, this can usher in a number ofrecurring problems such as human error,due to incompetent crew. Though CaptRangroo welcomes new regulations, he saidthese must be executed in an effectivemanner in order to avoid placing furtherburden upon the shoulders of technicalmanagers. He added that one serious andrecurring issue is a lack of quality crew, apredicament which, according to CaptRangroo, “has continued to plague theindustry for several years” and will easily“be with us for several more”.

Agreeing that crewing is a significantproblem for technical managementproviders, Steffen Tunge, Acting ManagingDirector at Singapore-headquartered MSI

Ship Management, said this shortage ismostly related to senior officers, while hehas not experienced any serious problemsin recruiting ratings and junior officers.“The shortage often led to problems withcomplying with the oil majors experiencematrix for our tankers – this requiresspecific experience levels and service timewith the company,” said Mr Tunge. “Theserequirements are all sensible and we do ourutmost to do even better than the minimumrequirements.

“However, it is often very difficult tomanage and it is likely to take time beforethe situation will improve much. Our targetis to have permanently assigned top officersonboard all our ships and have two groupssharing one ship over extended periods,which will help resolve the complianceissue and add quality to the managementonboard by having a team that really knowstheir ship.”

Although Mr Tunge said he believesthe shortage of quality officers and shorestaff “is still the most serious challenge” forhis organisation, he explained there aresome indications that the situation isimproving, though signs of “tangibleimprovement” are yet to be seen. “Thisleads to pressure on wages as well as notbeing able to secure the right people at theright positions,” he said.

Edward Bucknall, Technical Director atColumbia Shipmanagement, also noted that“qualified crew are the key to successful

management,” particularly owing to thecomplexities of modern vessels. He said thelack of suitable crew is a “constantproblem” for ship managers and thatretention of well-trained, good quality crewremains key in all fields of shipmanagement: “Training courses arerequired to enable the crew to operate thevessel to maximum advantage of equipmentinstalled. Once they are trained there is aneed to retain these crew members as theybecome an asset to the company, assetswhich the company cannot afford to lose.Not only do we lose good crew but theinvestment we have “put in” to train them.We have to work hard to keep our crewretention levels high. This means we haveto gain their confidence that we will operatea modern fleet which is technically sound,supplied with good quality spares andabove all, that their living conditionsonboard are good and their salaries are paidon time.”

Danilo Raffa, Managing Director atSingapore-based ISHIMA InternationalShip Management, agreed that a shortageof good quality crew is having a detrimentaleffect on technical management operations:“We believe the main tool to properlytechnically managing a ship is theperformance of the crew and especially ofthe top officers. It is a particularly difficulttime – shipping is going through a difficultperiod, but it is important to keep the shipmanned by properly qualified seafarers and

MARKET SECTOR TECHNICAL MANAGEMENT


TechnicallysoundBy Helen Jauregui

to keep the maintenance of the vessel ashigh as the required standards of industryas this is the only way to keep the vesselemployed and accepted by the majors butat the same time, cost is a big concern.” MrRaffa added that ISHIMA provides as muchsupport as is required to the crew butultimately, for any ship manager, “if thepersonnel onboard fail to perform, the shipwill not always be well-managed”.

However, according to NikolaySpichenok, Managing Director of Cyprus-based Unicom Management Services,technical management is suffering from thenegative impact of not just a lack of crew,but of qualified crew – though he said thiscan be addressed successfully in-house: “Amodern vessel needs experienced and verywell-trained staff. In our company weemploy only Russian seafarers so for us, itis not so critical because most of ourcaptains started with us as cadets – everyyear we employ around 100 cadets whostart with us as captains or chief engineers.”

Mr Spichenok also expressed concernsover the newbuilding strategies of ownersand said this is having a negative impact ontechnical management providers: “We arefacing a poor market, variable freight levelsand very high bunker prices so ship ownerswant high standard management for lowmanagement fees. Nowadays, age of thevessel is very important. Any tanker olderthan 15 years is very difficult to market,even if it’s in excellent condition – there area lot of new fleets available.”

According to Mr Spichenok, when avessel reaches the age of around 15 years,owners face a “decision making problem”whereby they must either bring the vesselinto compliance with new and forthcomingregulations or scrap the vessel – aproblematic situation as even after 10 years,owners often need to “invest a lot of moneyto keep the vessel in good technicalcondition”.

The need to bring older vessels in linewith modern standards is an importantgenerator of business for technicalmanagement providers but as MrSpichenok explained, this does not mean

shipmanagement companies are keen for aconstant barrage of new regulations: “Thereis a huge impact – we need more and moreresources everyday because of regulations.It’s getting more difficult to manage amodern fleet – it’s not like 15 years ago. Mypersonal opinion is that not many newmanagers will appear on the marketbecause the barriers to entry are verystrong. Some small managers will disappearfrom the market as they cannot survive. Ithink ship owners will look for reliablemanagers and bigger managers.”

“The industry is over-regulated forenvironmental issues – ballast watertreatment is very expensive but there’s nosense in modifying older vessels. It’s aproblem – a vessel can reach five or sevenyears old and you’ve invested a lot ofmoney in it, then the vessel reaches 15years old and you’ve invested a lot ofmoney for a ship which cannot be used inthe market.”

Carl Schou, President at WilhelmsenShip Management agreed that a significantelement of technical management isadherence to rules and regulations and saidone of the “greatest challenges” fortechnical managers is implementing andfollowing these rules: “It becomesespecially difficult when countries adoptdifferent rules for the same issues. Forexample, the US has adopted different rules– so a vessel might have to adhere to severaldifferent interpretations of rules in different

states. On top of the mandatory rules and regulations, we have commercialrequirements which are more or lessmandatory for the specific trade – whichmight differ for particular flag states orinternational requirements. In the future, theindustry as a whole would benefit frommore aligned interpretations of rules andregulations.”

Highlighting the fact thatenvironmental issues and fuel reductionstrategies are becoming more prominentwithin industry, particularly owing to highbunker prices, Mr Tunge said it is vital thattechnical managers and other stakeholderstake heed and comply with such issues.However, he noted that his own company isconcerned with how ballast water treatmentregulations will impact their operations. Hesaid this regulation will prove particularlychallenging for large VLOC ships withballast in excess of 100,000dwt. – he saidthe need for equipment capable of treatingsuch large quantities in a reasonable amounttime “seems to be a huge challenge”.

But as Mr Raffa noted, it is important tounderstand that both owners and managersare ultimately working towards the samegoals through technical management,despite the continuing challenges ofregulations: “We share the same concernsas the owners – we are a service-providerso we must follow what our clients arelooking at. The owners are concerned(especially tanker owners) about thestandard of their ships as acceptable to theoil majors – they are looking to have thecost controlled and to comply withregulations.”

He added that the main issues ofconcern for ISHIMA at this time are controlof emissions and reduction of fuelconsumption and he explained that thecompany is currently studying the marketfor new solutions to assist with this.“During the years when shipping wasbooming, there was much more optimismso everything was seen under a differentlight. The owners were seen doing their bestbut now everybody’s more careful (withcosts). It’s a difficult time for shipping and

MARKET SECTORTECHNICAL MANAGEMENT


It’s getting more difficult tomanage a modern fleet – notmany new managers willappear on the marketbecause the barriers to entryare very strong Nikolay Spichenok, Managing Director, UnicomManagement Services

““

Images Courtesy of Unicom Management Services

tankers – everybody is looking for the lightat the end of the tunnel,” he said.

Mr Raffa also explained that inSingapore, a further concern is theweakening of the American dollar. He saidthe Singapore dollar is “getting stronger andstronger” but as salaries and overheads arepaid in American dollars, its possible toeffectively lose 15% of one’s profits.“Management fees are paid in Americandollars as I must pay the salaries of thetechnical superintendents etc in Singaporedollars but 80% of expenses are inSingapore dollars so we are suffering a littlebit and we hope the US dollar willstrengthen in the near future.”

So, how do technical managementproviders see their sector changing in thenear future? Capt Spichenok said that asowners become more price conscious, somekey changes will occur within theshipmanagement market: “I expect therewill be a process of mergers andacquisitions in the ship managementmarket. We are in a period of change andtransition and as I mentioned, smallmanagers will disappear, and there will beonly a limited number of new managers.”Mr Spichenok added that he expects to seean influx of successful ship managementplayers from India and other Asian nationsand more chief engineers will also hail from

these regions, in response to “a lack ofseagoing experience” currently seen inoffices ashore.

Commenting on how regulations suchas ballast water management could alter thetechnical management landscape, CaptSpichenok concluded that although aninflux of new regulations can be a burdenfor owners, “It is good for the future tomanage vessels closer to compliance withnew regulations as this will push rubbishout of the market. Crew will be happy,managers will be happy to run a new fleet –the only problem is the freight market isvery poor because of a surplus of tonnage.

We have a lot of new vessels and still wehave an old fleet which is a problem – theonly good thing is that scrap prices are very good.”

A further advantage of regulations isthat as the industry continues to adapt andcomply, further emphasis is being placed onnew technologies and methods ofimproving technical managementoperations. Capt Rangroo again: “Ourcompany evaluated several softwaresolutions popular in the industry but finallysettled for developing comprehensivesoftware in-house. This software isdynamic and keeps pace with the changingregulatory environment as well as ourcustomers’ needs. In comparison to oldermethods of working, we now have datadefinitives and analysis of such data forprioritising our work and decision-making.”

Capt Rangroo added that one furtherimplication of the digital revolution fortechnical management is the potential for afuture system of management similar tointernet banking. As he explained:“Transactions between the ship and theoffice will be internet-based where shipdata will interact with shore softwaresystems, so instead of a superintendent youwould have customer relationship officerswho would liaise between the peopleonboard and the owners or other

MARKET SECTOR TECHNICAL MANAGEMENT

Staring at a computerscreen will not fix your engine,it will only tell you whatparameters are out of lineand perhaps what needs tobe repaired. The hands-onelement remainsEdward Bucknall, TechnicalDirector, ColumbiaShipmanagement

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stakeholders. Competent crew would stillbe required onboard even though this maydwindle down further than what it is now.”

But should technical managementproviders be wary of investing in newtechnologies and methods of working?Edward Bucknall again: “New technologieskeep us on our toes and as managers wemust be aware what is on offer out there andcarefully evaluate each new technology.What is important is not to accept in blindfaith a “new” technology just because it isnew. Some of these technologies may notbe suitable or not suitable at the moment.They may reoccur years later in a differentguise supported by other technologies. Thedigital revolution is here to stay. It providesan excellent tool for collection of data, andspeed of analysis, but it should be viewedwith caution. It does not supersedecondition-based monitoring and effectivemaintenance procedures through the use ofcompetent trained engineers and crew.Staring at a computer screen will not fixyour engine, it will only tell you whatparameters are out of line and perhaps whatneeds to be repaired. The hands-on elementremains.”

Explaining how he believes technicalmanagement will change in future, MrBucknall said he expects it to develop in asimilar fashion to the airline industry. “We

will see much stricter controls coming intoforce with more frequent checks from portstate and flag state together with class,” hesaid. “Advances in engine technology willmean that most vessels will operate safelyand reliably for five years extending forsome machinery after checks for 10 years.Technical crew numbers will be reducedand more work will be done by specialistsfrom ashore.” He added that althoughattempts to use automated systems forNorth Atlantic ro-ro and container vesselsduring the 1980s failed due to unreliableengines, today, the industry is embracing“enormous improvements in enginereliability and the reliability of automatedsystems, both hardware and software.”

Mr Bucknall added that moderncommunication methods have allowedships to avoid complete isolation and so,advice on how to solve technical problemscan now easily be relayed from ashore,verbally and graphically if required. “Withthe continued shortage of seafarers thiswould appear to be one way forward bymaking use of today’s ever advancingtechnology and design,” he said.

Stating that advances in softwaretechnologies could allow for improvementsin technical management operations, CarlSchou said: “The implication of the digitalrevolution for technical management is that

information is spread a lot faster – and it ispossible to receive and send moreinformation, thus leading to a higher levelof technical management. Today’s shippingis quite complex with large amounts of data– and as such this ‘revolution’ was needed.”Mr Schou added that he expects more“specialisation and differentiation” intechnical management for the years to comeas “shipping is becoming quite complexand the advantages of volume/size aredifficult for owners to overcome”.

Steffen Tunge concurred that technicalmanagement is facing a period of transition:“There are already a lot of changes goingon in many organisations. With shipping ina general slump and with increasing costsfor staff, most often in US dollars and littleor no possibility of increasing managementfees, we will continue to see a shift of backoffice functions from high cost areas likeSingapore, Hong Kong and the UK to lowercost areas like India and the Philippines.This is already happening on a pretty bigscale and it will continue. I believe this willbe the main focus for many companies inthe next few years. Training anddevelopment of shore staff and highretention will be another challenge that wewill all have to deal with to succeed in this business.” ■

MARKET SECTORTECHNICAL MANAGEMENT

Singapore is strengthening its position as a technical andcommercial maritime super hub but corporate success cannotbe taken for granted and is as dependent on strong and effective

relationship-building as it is on delivering constantly high servicelevels, according to the head of one of the island’s leading shippingservices businesses.

Denis Petropoulos is an Executive Director of Braemar ShippingServices plc but moved out to Singapore nearly a year ago to head upthe Group’s expanded Asian headquarters which now employs morethan 120 staff at its Pickering Street offices.

“One of the issues participants coming to Singapore expect is thatthe region is going to come to them. But to succeed in Singapore, youhave to be prepared to go out and meet the region. South East Asia isa highly competitive region so drawing on the good relationships madeis crucial to maximising opportunities that may exist. People also havethe wrong impression that you have to undercut your prices in order tocompete. I believe that, while the service you provide has to come upto scratch, it is the companies and the individuals who can build onnew and historical relationships who will prosper,” he noted.

The Group’s five Singapore businesses have been brought underone roof – shipbroking, including offshore, port agency as well asBraemar's technical services of maritime and offshore surveying,marine warranty and hull and machinery surveying, and loss adjusting.These are all represented through its Braemar Seascope, Cory Brothersand Braemar Falconer and Braemar Steege subsidiaries. The SalvageAssociation has also been introduced through a recent acquisition andBraemar has expanded its chartering activities in Singapore by movinginto the deep sea clean and dirty products tanker trades and sale andpurchase.

“Shipping isn't necessarily moving east but it is the growth inshipping that is moving east, Denis Petropoulos said. “The geographyof Singapore makes it an ideal location for a maritime cluster as it formsthe perfect cross roads from east to west – from Australasia, India andJapan, Korea and China to Europe and beyond. Regional demand inVietnam, Malaysia and Thailand as well as Indonesia and Australiameans that geographically, Singapore is very well placed to benefit.But you don’t come to Singapore just to do business with Singapore;you base yourself in the area because you want to do business in thewhole region, which inevitably includes China and India. That meansnetworking, visiting clients and clients visiting you. Singapore is a hub

of cultures as well as of shipping expertise, and the cultures differ inAsia as much as they differ in Europe or the Americas,” he added.

Singapore is growing as a regional hub and as an island it isprobably becoming close to capacity, but it has held onto its position asthe regional capital of commerce and, according to Denis Petropoulos,is going to remain that way. “It has managed its finances well in the pastthree years and as a result has come out stronger,” he said.

But while Singapore may have witnessed double digit GDP growthover recent years, the shipping industry on the island and elsewhere, isstruggling to come to terms with the ravages of the global recession.Ship owners are finding problems offsetting rising vessel operatingcosts against dwindling freight rate revenues. While the environmentin Singapore and the rest of South East Asia is vibrant and shows everysign of remaining so, the question on the lips of experts like DenisPetropoulos is to what extent is the depleted freight market sustainablefor business?

Denis Petropoulos again: “More owners might start locating inSingapore in search of a growing client base and because they want togrow their relationships across the board. Today, it is survival of thefittest. Those ship owners who have made provisions for poorermarkets and who have been conservative in their investments andmodest in ordering ships will survive. They will have to spend moneyearned but they will survive. Some owners who have been somewhateager in ordering, because they were pushed by available money andstarted to order without giving real consideration to what actual demandwill be over the next two years, will suffer and, if they have orderedtonnage at prices that can’t be sustained over the next two years, thenI will say there will be quite a lot of tonnage changing hands.

“The ships won’t go away and one factor that can’t be discountedif the market carries on as it has done, is lay-up. Lay-up has beenpresent in every market segment since the late 1970s when there wasmassive over-ordering following a strong market. The over-orderingstate continued until the mid-1990s when there was light at the end ofthe tunnel. I can’t say we have an identical situation to then, but over-ordering is here and one of the solutions to ships running below OPEXis layup, across sectors.”

But what about scrapping levels, are they at the levels they need tobe at? “Scrap yards do not have the ability to scrap tonnage fast enoughto meet the new supply coming on-stream so lay-up is an agenda itemwhich will be talked about more and more over the next few months.Some harsh decisions will be taken. It is not necessarily the ownerwho will take the decision but the operating company with the debt,”Denis Petropoulos said.

Shipping does have its cycles and unpredictable events can changefreight market directions but the fundamantal demand for raw materialsand energy services is constantly growing in Asia and Braemar remainsupbeat about the medium-to long-term future in these regions. ■

Denis PetropoulosExecutive Director of Braemar ShippingServices plc

INSIDER SHIPMANAGEMENT


Exploting your strength is as much aboutwho you know

The shipping industry has becomethe first to introduce mandatoryglobal greenhouse gas emission

standards. The principle of extendingenforceable environment protection rulesto the high seas meets one of the crucialcalls made by the world’s top marinescientists in a grim new analysis of thestate of the oceans. But a likely delay in theimplementation of the pollution abatementaccords could lead to serious friction.

Negotiated under the auspices of theUnited Nations’ International MaritimeOrganization (IMO), the environmentmanagement deal requires all new shipsabove 400 tonnes delivered after 2015 toimprove their energy efficiency rates by10%, rising to 30% by 2024. This may wellresult in the reduction of carbon dioxide(CO2) and other Greenhouse gas emissionsby up to 50m tonnes a year by 2020, saysthe IMO.

The move coincides with thepublication of gloomy conclusions in anauthoritative new scientific study compiledby two of the world’s foremost natureconservancy organisations concerned withthe marine environment. It projects a phaseof enormous extinction of marine speciesunprecedented in human history.

Considering the cumulative effects ofmany different mounting stressessimultaneously affecting the oceans, itsauthors have expressed surprise at theaccelerating rate and magnitude of thedeterioration of the marine ecology. Theyhave also issued an urgent demand forimproved governance of the largelyunprotected high seas that comprise most ofthe oceans.

Many environment protection pressuregroups have welcomed the IMO energyefficiency accords as a significant move inthat direction, especially during the currentsluggish global climate negotiators. Butthey warn that their real foreseeableconsequences will be mostly symbolic, andthat they must be seen as only the first ofmany essential steps towards curbing theadverse effects of the shipping industry onthe health of the oceans.

Indeed, advanced proposals on furtherregulation to reduce emissions along themajor shipping lanes near the heavilypopulated coastlines have just been initiatedby the European Union (EU). Theindustry’s first response is to reject them.

At present, shipping is responsible forup to 4% of the total CO2 pollutiongenerated by industry. A 2009 IMO study

suggests that, in the absence of correctiveaction, ship emissions might increase by upto 250% in less than 30 years. But big cutsin the pollution yield of ships could beachieved by affordable improvements inengine efficiency and hull design andcoating as well as waste-heat recoverysystems.

The IMO decision amends theMARPOL accords included in the principalinternational convention for the preventionof ship generated pollution. It requires shipowners to introduce an Energy EfficiencyDesign Index (EEDI) for new ships, and aShip Energy Efficiency Management Plan(SEEMP) for all vessels. Otheramendments tighten the definitions and therequirements for ship survey andcertification.

But there are substantial loopholes inthe agreement that could delay itsimplementation. The highly respectedmarine environment protectionorganization Clean Shipping Coalition(CSC) is concerned that intensivebargaining at the IMO negotiating table inLondon by China, Brazil, Saudi Arabia andSouth Africa has resulted in significantexemptions for new ships registered indeveloping countries.

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DISPATCHES


Grappling with abittersweet

solution’‘ By Thomas Ország-Land

CSC last year won observer status atthe IMO. A specialist at the campaigningorganization explains: “If countries chooseto apply the waiver for a newly deliveredship then the application of the EEDIprovisions will be delayed for six and a halfyears. There is a further danger that manyship owners will elect to have their newships flagged in countries that provide awaiver. The first guaranteed effective dateof the EEDI as a global shipping efficiencystandard would thus be 2019.”

Environment organisations also cautionthat, because the new standards only applyto ships replacing older ones at the end oftheir very long lives (typically 30 years),and because the waiver will deferimplementation for many new ships, thefull effects of the IMO accords will take avery long time to make any significantimpact.

Jacqueline Savitz, Senior CampaignDirector for Oceana, comments: “TheEEDI vote is bittersweet. There will be nochange to existing ships that are currentlypumping a billion tonnes of CO2 each year,and for new ships it will take another dozenyears until the EEDI is really deliveringbenefits.”

Bill Hemmings of Transport andEnvironment, adds: “Adopting the EEDI isthe right step but the long delay weakens itsshort-to-medium term impact significantly.If the IMO does not deliver action quicklyon existing ships, then it will be up to theEU to take the lead at a regional level.”

Undue delay could lead to majorconflict. The scientific report issued jointlyby the International Union for theConservation of Nature (IUCN) and theInternational Programme on the State of theOcean (IPSO), includes urgent demands forthe following reforms in marineenvironment regulation and management: ● The immediate introduction by the UN Security Council and its GeneralAssembly of effective governance of thehigh seas beyond the jurisdiction of states.This should be implemented by a globalentity empowered to ensure compliancewith the Law of the Sea Convention andother relevant legal norms and duties and to establish new rules, regulations andprocures to enforce them in a precautionarymanner.● The immediate reduction of CO2

emissions coupled with significantlyincreased measures for the mitigation ofatmospheric CO2

● A reversal of the conventional legalburden of proof to ensure that all maritimeactivities are allowed to proceed only ifthey are shown not to harm the environmenteither singly or in combination with otheractivities.

The IUCN is a global network of morethan 1,000 specialist organisations and

close to 11,000 volunteer scientists. TheIPSO is a consortium of marine specialistsof many disciplines including industry, thesciences, law, mass communications andpolitics. The urgency of the demands issuedafter the conference reflects the sense ofcrisis that engulfed the deliberations of arecent Oxford symposium of scientists thatproduced the marine environment analysis.

Its participants reviewed more than 50of the latest research papers on theenvironmental stresses affecting the oceans.And they issued a desperate prognosis ofthe consequent accelerating decline of the

ocean ecosystems unless corrective actionis taken now.

“Their findings are shocking,”observes Dr. Alex Rogers, ScientificDirector of the IPSO. A professor ofconservation biology at the Department ofZoology, University of Oxford, he is veryfamiliar with the needs of ship owners as hepursues a special interest in the sustainableuse of the oceans and the impact of industryon the marine ecosystems.

“As we considered the cumulativeeffect of what humankind is doing to theoceans, the implications became far worsethan we had individually realised.Humanity is facing a very serious situationdemanding unequivocal action at everylevel. We are looking at consequences thatwill impact in our lifetime, and worse, thelives of our children and the generationsbeyond that.”

And Professor Dan Laffoley, holder ofthe marine chair of the IUCN’s WorldCommission on Protected Areas, notes:“The leading experts on the oceans aresurprised by the rate and magnitude of thechanges we are witnessing. The challengesare vast, but unlike the previousgenerations, we know what now needs tobe done. The time to protect the blue heartof our planet is now.”

The study, “International Earth SystemExpert Workshop on Ocean Stresses &Impacts”, examines the combined effects ofship and land generated marine pollution,global warming, acidification, over-fishingand hypoxia (deoxygenation). It containsthe synthesis of the views of scientists fromthe top maritime research and traininginstitutions who met to consider for the firsttime ever the cumulative effect of allprincipal pressures brought to bear on theoceans by humanity.

They concluded that marine species areat risk of entering a phase of hugeextinction. Their study warns that mankindhas created all the conditions associatedwith every previous major extinction ofspecies known to science.

For example, the levels of carbonabsorption by the oceans are already farhigher than at the time of the last massextinction of marine species some 55million years ago. Up to half of somegroups of deep sea animals were thenwiped out.

“As a result,” the study goes on, “thefirst developments leading to a globallysignificant extinction process may havebegun.” It adds that the speed and the rateof the degeneration of the ocean ecosystemsare far greater than envisioned even by theworst previously issued scientificpredictions. And it warns that the oceansmay prove unable to recover from such adisaster under the relentlessly intensifyingpresent assault of environmental stresses.

DISPATCHES


Humanity is facing a veryserious situation demandingunequivocal action at everylevel. We are looking atconsequences that will impactin our lifetime, and worse, thelives of our children and thegenerations beyond thatDr. Alex Rogers, ScientificDirector, IPSO

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The world shipping industry hasgrappled long with the issue of marinepollution (see SMI, issue 11/2008). TheInternational Chamber of Shipping and theInternational Shipping Federation haveboth welcomed the IMO reforms after along and hard campaign in their favour(SMI, Issue 32/2011). And the UK Chamberof Shipping has just issued a statementurging the industry “to keep the door openon all options to drive a reduction of itscarbon emissions“.

The British chamber believes that theindustry must now advance beyond thepollution-cutting technical improvementsenvisaged by the IMO accords by adoptingadditional economic measures to meet theirtargets and expectations. It saysinternational opinion within the industry isalready divided between the following twoschools of thought on how best to reduceship generated pollution:

One favours the establishment of a CO2

contribution fund to be financed byshipping companies as part of their bunkerfuel purchases. Its advocates argue thatsuch a relatively straightforward approachwould provide a measure of price certaintyfor the industry.

The other would prefer an emissionstrading system, with shipping companiespurchasing permits to offset the cost ofpollution generated by their vessels. Manyargue that such a financing mechanismwould create strong incentives for cuttingpollution.

Mark Brownrigg, Director General ofthe British chamber, argues thatt the issuesare complex and must be consideredinternationally and on many levels throughthe IMO. He projects a lively debate over“which option will provide greater certaintyof outcome and ease of application withoutdamaging the growth of the industry andworld trade”.

But he has roundly rejected currentproposals to bring the shipping industryunder the EU’s expanding pollution

abatement programme – on the groundsthat the EU runs a regional schemenecessarily unsuitable for regulating aglobal industry like shipping. The EUinitiative announced by Janez Potočnik, theEnvironment Commissioner in Brussels,would reduce the permitted volume ofsulphur dioxide (SO2) emissions of ships byup to 90%, and of fine particle emissions byup to 80%.

Potočnik explains: “Air pollution doesnot stop at the coastlines. Land sourceshave been subject to the attentions ofregulators for some time. The time has nowcome for the maritime sector to deliver itsfair share of emission economies, all themore so as the impacts on air quality are feltfar beyond the coastal areas.”

An EU briefing paper elaborates thatships traditionally use heavy fuel oils forpropulsion with a sulphur content of up to5% (compared to a maximum 0.001%permitted in the fuels consumed by trucksor passenger cars). SO2 emissions causeacid rain and generate a fine dust dangerousto human health, causing respiratory andcardiovascular diseases and reducing lifeexpectancy in the EU by up to two years.

The environment commissioner wantsthe maximum permissible sulphur contentof maritime fuels used in sensitive areassuch as the Baltic Sea, the North Sea andthe English Channel to fall from 1.5% nowto 0.1%, starting on January 1st 2015. Otherareas would achieve a bigger cut, from4.5% to 0.5% by the year 2020.

Ships would be allowed to seekemission economies through theintroduction of appropriate technologiesincluding exhaust gas cleaning systems asan alternative to using low sulphur fuels.These changes are intended to fall in linewith the new IMO accords.

THOMAS ORSZÁG-LAND is anauthor and award-winning foreigncorrespondent who writes on global affairs. ■

DISPATCHES


The EEDI vote isbittersweet. There will be nochange to existing ships thatare currently pumping abillion tonnes of CO2 eachyear, and for new ships it willtake another dozen yearsuntil the EEDI is reallydelivering benefits Jacqueline Savitz, SeniorCampaign Director, Oceana

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DISPATCHES


MyView

By Peter Hinchliffe,Secretary General of theInternational Chamber ofShipping (ICS)

“While it is clearly in the interest ofshipping to minimise its CO2 output byreducing fuel consumption, recentlyagreed amendments to Annex VI ofIMO’s MARPOL Convention which – ona global basis - will make the EnergyEfficiency Design Index (EEDI)mandatory for new ships, and the ShipEnergy Efficiency Management Plan(SEEMP) mandatory for existing vessels,were ‘absolutely’ what had been hopedfor by ICS.

“The EEDI is a non-prescriptiverequirement, as the decision over whichtechnologies to use within a specific shipdesign are left to the industry. So long asthe required energy-efficiency level is

achieved, naval architects and shipbuilders may employ whichever solutionsthey deem fit.

“The regulations were absolutelywhat this organisation had hoped for andthe IMO’s decision is an important one,not just for the shipping industry, but Ithink it shows that a consensus can beachieved on climate change within aninternational debate. It’s a global first andbecause the IMO has done this foroperational and technical measures, thismeans it can generate the will to dosomething about market-based measuresas well,” he stressed.

“The shipping industry will fullysupport measures which are ‘parented inthe IMO’ and I am confident that theimpact on world trade and on the businessof shipping will be taken into account. Iam not confident that these factors wouldbe taken into account if the debate occurs at the United Nations FrameworkConvention on Climate Change or as aresult of the outcome of the high level

advisory group which the UN SecretaryGeneral convened.

“The European Commission orperhaps more correctly the EuropeanParliament, makes a habit of trying toforce the IMO’s hand; we saw it doneover recent fuel sulphur contentlegislation and we are seeing it again overCO2 emissions.

“Although people imagine that thiscould mean the inclusion of shipping inthe European Emission Trading Schemelike international aviation, in practice it is clear that Europe does not really knowhow to deal with the complexity ofshipping. CO2 emissions frominternational shipping cannot be reducedeffectively and meaningfully through theincorporation of shipping into anyregional financial instrument. ThereforeICS is strongly opposed to the applicationof any regional Green House Gas schemeto international shipping.”

A“digital revolution” is almost uponthe shipping industry as the seaplays catch up to land-based

technology.The use of broadband and high-tech

communication devices is becoming vitalas shipping companies battle to retain goodquality crew and it’s not just aboutproviding a service so they can keep incontact with home, according to SueHenney, Marketing Manager for HeadlandMedia, which provides news, entertainmentand training services for seafarers.

“With VSATs (Very Small ApertureTerminal) becoming more affordable andInmarsat competing with ‘all-you-can-use’packages, we are on the verge of a digitalrevolution at sea, which will see themaritime sector follow the land-basedtrends from the mid 1990s,” she said.

“As the methods become morecommonplace, we believe the focus willinevitably move to content, for examplemedia and services, which can be deliveredvia those routes.”

Whether it’s being able to watch theirfavourite football team in action on TV, ortaking part in training programmes,seafarers’ demands are relying more heavilyon vessels being kitted out with the most upto date equipment.

“Manpower reports indicate there is adeficit in current officer numbers andchanges in crewing patterns, demographicsand crew sizes put more pressure onshipping companies to meet theexpectations of good quality crew,” said MsHenney.

“New cadets and, increasingly, othersoften require the same level of access totechnology and services that they have on land.”

Headland Media, which provides itsservices to around 225,000 crew,announced recently that, through its CrewMedia Player, it has become the onlylicensed provider of English PremierLeague football coverage to merchantseafarers and with this, crew members cansee every goal from every game.

In addition to the EPL, Crew MediaPlayer delivers a wide range of uniquelicensed video and audio content includingnews and sport from home as well as vitalsafety training and welfare briefs. Theservice can be completely customised so itsuits the nationalities of crew onboard along with the company’s requirements and budget.

Mark Woodhead, Managing Director atHeadland Media, said: “We are extremelyproud and excited about Crew Media Playerand being able to provide English PremierLeague football highlights to seafarers.”

Real-time tutoring is another key areawhere new technology is bringing abouthuge change. Crew members no longerhave to be put into onshore training centres,often at great expense, to further theircareers and learn about aspects of healthand safety onboard. And the emphasis onthe flexibility and usability of this type oftraining will be even more crucial whenship operators soon have to comply with theobligations of the International LabourOrganization’s (ILO) Maritime LabourConvention.

In preparations for the MLC, VideotelMarine International has launched theVideotel Academy MLC 2006 tutor-assisted computer-based training course,the first programme of its kind in theindustry and the first of its kind to offeronline tutoring across the globe.

“The ILO Maritime LabourConvention is probably the single mostimportant international regulation affectingmanning and labour affairs that has beenseen for many generations,” said NigelCleave, Chief Executive Officer at UK-based Videotel.

“It covers every aspect of the manningof ships, from employment conditions to medical standards, and from crewaccommodation to work hour regulations.

“We feel that the extensive trainingneeded should be conducted in real time bya senior course tutor with significantexperience in the field. However, the rangeof roles and responsibilities held by courseparticipants also demands that the trainingbe flexible and available on demand.

The Videotel Academy tutor-assistedCBT training combines distance learningtechniques with the traditional advantagesof the support and interaction provided bylearning in a classroom environment.

“Students really benefit from the abilityto communicate ‘face to face’ with theircourse tutor and receive mentoring andacademic support in real-time,” added Mr Cleave.

The course, which starts this month(October), is online and follows a structuredlearning programme lasting 12 weeks withstudents being encouraged to engage inonline discussions with the course tutor,David Dearsley, and fellow delegates toshare experience and knowledge.

Mr Dearsley has over 45 years’experience in the shipping industry, 25 ofwhich he worked as Deputy SecretaryGeneral of the International ShippingFederation (ISF) where he was responsiblefor co-ordinating the global shipowners’position on initiating, reaching agreement

MARKET SECTOR TRAINING & CREW RETENTION


By Samantha Giltrow

on and then drafting and developing text forthe Maritime Labour Convention (MLC).

Videotel delivers training to some10,000 vessels and through its Videotel onDemand (VOD), and more recentlyintroduced networked version (NVOD), itis incorporating increasingly sophisticatedsoftware allowing training to be carried outby multiple users onboard, workingsimultaneously on different programmes,and recording the actual training performedand synchronising this in the ship owner orship manager’s office.

“We do see development with regard tobroadband, albeit the industry is still someway off replicating what a crew membermay enjoy at home in terms of internetspeed and cost,” said Mr Cleave.

“The main benefit at present, so far asVideotel is concerned, is the ability torecord the training performed, so essentialtoday in terms of monitoring crewdevelopment and providing evidence ofsuch training to various authorities.”

Along with the Videotel AcademyLearning Management System (LMS)platform, which the online MLC 2006course is part of, Videotel also provides,through its BIMCO’s eLearning Diploma(BeDP) course, a joint venture with theshipping association, comprising a highly-focused, web-based, e-learning package.

“Both provide everything you need tostudy your programme, communicate withyour tutor, upload your assignments, chatwith your fellow delegates and researchadditional material to enhance yourstudies,” said Mr Cleave.

Norwegian-based Seagull, anotherplayer in computer-based training systemsfor seafarers, says one of its greateststrengths has been its ability to look atcurrent needs and project future needs fortechnology in training.

“Computer-based training onboardmatched our ability to leverage availabletechnology with an eye on new technologylike maritime broadband. This corecompetence is at the heart of our company.For example, we pioneered several yearsago the ability to have training recordsfollow the seafarer from ship to ship,” thecompany said.

“Through our dependable data transfercapability, the information is replicated to acentral data base and can be retrieved simplyand dependably each time it is needed. Notsurprisingly, some others have found this atechnological challenge and still cannotdependably do so.”

Although Seagull does not offer a real-time training product it believes its way ofoffering distance learning is just as effective.

Lance Savaria, Director, Sales andMarketing, said: “Real-time tutoring is aninteresting change from the shore-basedclassroom courses. Traditionally, schoolshave been limited to the number of seats inthe classroom and deliver a mixture ofgeneral knowledge and the sharedexperience of the instructor.

“We have found that seafarersappreciate our approach to their training. Itanswers the problems they face. It isimportant that the training is easy tounderstand and use, it must be relevant to

the job they do, and it must keep and reportaccurate records and statistics.

“Our approach does not have an onlineinstructor but for many years has exceededthis approach since we have always madethe ship the classroom with a combinationof eLearning, course materials, andshipboard mentoring from senior officerswho, as the mentor instructors, create a verypowerful experience to give hands-ontraining on the equipment.

“This creates the environment of directjob relevance and the immediate ability toget the answers from the experiencedofficers.”

He too believes that moreimprovements will be made with broadbandwhich will enhance what is being offeredonboard.

“Broadband is an important technologythat, over the next few years, will beincreasingly valuable on many fronts, suchas operations, quality of life of the seafarer,and training. We are in front of this curveby making all of our training titles andsoftware available online now. So, theadaptation to a pure broadband format isseamless.”

Mr Savaria said there was no doubttraining was moving more to onboardlearning, as companies looked at the cost-effectiveness it provided, and Seagull nowhad over 7,500 installations worldwide.

“With our major customers in all themaritime fleets, including tankers, bulkers,cruise ships and offshore support vessels,there is no limit to applying our trainingsystem to various types of ships.

MARKET SECTORTRAINING & CREW RETENTION


“We are growing at a steady andsustainable pace. Our goal is to be adaptableand provide answers to our customer’schallenges with effective solutions. Thetraining we provide fits into and assists theentire career cycle of the seafarer and the promotion-readyassessment and appraisal throughout theircareers.”

He added that Seagull’s customers,particularly in the current environmentwhere there is a shortage of talent, wereconcerned with promoting the best peopleand need the ability to do so effectively andefficiently.

However, he believes there is still verymuch a place for being able to learn onshore.

“While the trend and desire is definitelytowards onboard training, there is still a needfor flexibility onshore and our courses easilyprovide that flexibility – training that can becompleted anywhere, anytime.”

But, with the current economic climatestill proving a battle ground for manyshipping owners, is training suffering aspurse strings remain pulled tight? On thecontrary, said Mr Savaria.

“I think on the face of it,the correlation between achallenging economicenvironment andcommitment to training isgenerally misunderstood andtraining becomes veryimportant. The questionbecomes how to deliver thattraining efficiently andeffectively.

“Make no mistake,onboard training is by far themost cost-effective trainingsolution – up to 75% less

expensive. It is also highly effective trainingand, in my opinion as an officer, moreeffective and relevant to the seafarer.”

Videotel’s Mr Cleave agreed: “While,quite obviously, the market is suffering ingeneral, we continue to observe that manyresponsible ship owners and ship managershave taken a pragmatic view in that trainingof crew still remains a high priority.

“We view all training as a blendedapproach, each complimenting each other.There can be no doubt that onboard trainingsaves considerable expense in terms of traveland accommodation when compared with attending a shore-based trainingestablishment.”

However, he said he could not foreseemuch growth in the training business in theshort term: “With supply outweighingdemand at present, it is difficult to imaginegrowth within the shipping sector over thenext 12 to 18 months. Nevertheless, Videotelwill continue to invest in its research anddevelopment where we have some quiteexciting plans ahead.”

Mr Savaria said Seagull’s view, thatonboard training was the future, was shared

by the IMO, flag states, maritime traininginstitutions and major shipping companiesaround the world.

And onboard courses were provingpopular with crew members too as theylooked at gaining a better quality of life awayfrom work.

“Time at home is now more importantthan great wages so, when asked to go to atraditional classroom school or participate inan instructor-led course online it infringes intotheir personal time.”

As mentioned previously, keeping crewhappy while they are onboard is increasinglyimportant in attracting and retaining seafarers.

With the doom and gloom of the globaleconomic downturn has there been a cutbackin providing benefits such as internet accessand entertainment?

Nicola Boarer, Marketing Manager forLondon-based onboard movie providerFilmbank, believes not: “Although budgetsare limited, the recession does not seem to have had an effect on onboardentertainment. Keeping the crew happy isextremely important, and film is truly a costeffective way to keep them entertained.”

Filmbank supplies movies and TVcontent for screenings outside of home andcinema and the maritime sector, which it hasserved since the company’s inception 25years ago, is an important market with a widerange of Hollywood, Bollywood and TVshows on offer.

Customers are mainly in Europe andinclude ferries, merchant vessels and somecruise ships and with the profile of a typicalviewer being a male aged 18-30, the mostpopular genres are thriller, action and horrorwith movies generally available on the dateof home entertainment release and some evenavailable before general DVD release.



It was hats up into the air for the 29graduates of the Executive MBA inShipping and Logistics (Blue MBA) at

the Copenhagen Business School (CBS)last month (August) as they graduated asthe successful class of 2011.

Among those receiving their scrollswas Robert Thompson, First DeputyManaging Director of UnicomManagement Services in Cyprus, as well assenior executive colleagues from shippingand transport companies across 18 differentcountries.

According to Irene Rossberg,Programme Director at the CBS, theprogramme has been designed specificallywith the senior executive in mind. “This isa modular programme designed for seniormanagers with very busy schedules. Youcannot expect these people to take a wholeyear off work to do an MBA, so it has to bedesigned to be completed by a busyindividual sitting in a decision makingsenior position. The students have eight oneweek models spread over two years andthey met for those modules where they aretaught the theory. Once the module isfinished they go back to their countries and

write an assignment on a company-basedissue to which they can apply what theyhave learnt,” she said.

The MBA programme has beendesigned to give participants an up-to-dateinsight into shipping economics andmodern management theories and theirapplication in the maritime sector. It adoptsa holistic view of shipping, integratingcommercial, technological and financialaspects as well as maritime law, supplychain management and leadershipchallenges. It takes students to a top international level in businessadministration, reflecting the needs of theindustry in a world where globalisation,enhanced competition and the speed oftechnological change place ever increasingdemands on executive management skills.

Alan Irwin, Acting President of theCBS, said of the course: “It has got largerand we have more experience fromcolleagues in industry who have beeninvolved. We have also got closer in termsof the advice we get from them but theindustry is changing and it is crucial we gowith the changes, which is important forglobal business.” ■


Left to right: Edel Seidenschnur (Chiarman of the Blue MBA Advisory Board), Per Gullestrup (CEO andPartner, Clipper Group A/S), Peter Schütze (Chairman, CBS Board), Alan Irwin (Acting President, CBS), Irene

Rosberg (Director, The Blue MBA)

Arise ‘Class of 2011’

“According to customers it is vital thatcrew are able to relax when off duty and haveaccess to good entertainment options. Filmnights provide an opportunity to socialisewith colleagues which is very important,”said Ms Boarer.

This view was echoed by Sue Henney,of Headland Media, which, along withoffering all the action from the EnglishPremier League, provides many onboardservices including access to internationalnews, sport and training through its digitalCrew Media Player and movies.

“We have official maritime licences withthe major movie studios, which provide uswith latest release DVDs before they areavailable on land. Currently, we generallypost out the actual DVDs on a monthly basisto the ships, although we do have capabilityto provide the films digitally where theinfrastructure onboard allows this.”

Its Crew Media Player is ideally suitedfor ships with larger bandwidths andcapacities.

“It enables shipping companies to get themost out of such technologies for the benefitof crew and company alike,” said MsHenney. “Crew Media Player offers acontrolled, optimised digital video news,sports and information channel for improvedseafarer morale and better staffcommunication.”

Managing Director Mr Woolhead added:“We feel that Crew Media Player takes theprovision of media content to a new, excitingdigital level that sill supply the modernseafarer with the comforts of home, at sea.”

Over 9,000 vessels have taken upHeadland Media’s services including tankersand container ships, though “somecompanies will always spend more thanothers on crew,” she said.

“Ultimately, a well-rested and happycrew is a necessity for the smooth running ofa ship and more shipping companies arebeginning to see the positive aspects ofinvesting in the crew’s well-being.” ■


The ability of Belgium and TheNetherlands to survive what is theworst shipping crisis to hit for

decades will rely as much on prosperity inthe world’s main producing areas like theFar East as well as its determination toremain committed to what it does best.

Shipping service companies in the regionbelieve that in order to continue to yieldsuccess in the face of a wary customer baseand harsh global shipping market, a focus oninnovation and port growth will be keyelements in the fight to remain on top.

Acknowledging that the Port ofRotterdam has vast benefits for the Dutchmaritime sector, Theo Nieboer, ManagingDirector of crewing company OceanwideNetherlands, said that when it rains inRotterdam, it drips in other parts of thecountry because “Rotterdam is the engine ofthe Dutch maritime economy. The portcreates many jobs in the maritime clusterwith flexibility and labour mobilisation as aresult. This means a lot of seafarers switchafter being at sea for some time to interestingmaritime jobs ashore.” He also noted theimportance of investment in the port andcited current developments within theMaasvlakte harbour and industrial area asvital to ensure more berths for container, bulkand LNG vessels.

Describing his intentions to ensurecontinued and steady growth at the port, HansSmits, Chief Executive Officer of the Port ofRotterdam Authority, said political co-operation will be key to the future success ofthe Dutch maritime industry: “The Port of

Rotterdam's positive development isconnected strongly to world trade, especiallythat related to China and Germany. Thesignificant unrest on the financial marketsand its influence on the trust of consumersand producers can have a negative influenceon world trade and thus on our throughput.

“There is a significant need for quickerand clearer political decision-making to swaynegative sentiments. I expect that throughputin the third quarter will stay on target. Julywas a good month and the cargo for Augustand September is already anticipated. In spiteof insecurity about the fourth quarter, I expectthroughput for the entire year to show a light growth.”

Every year, 34,000 sea-going vessels and100,000 inland vessels call at the Port ofRotterdam – one of the busiest ports in theworld and a gateway to the European market,where over 350 million consumers reside –and with an annual throughput of around 430million tonnes, this port remains at theforefront of the Dutch industry by ensuring asteady flow of business for all maritimestakeholders.

In September, the Port of Rotterdam wasnamed as having the best port infrastructurein Europe by the World Economic Forum inits ‘Global Competitiveness Report 2011-2012’. The Port of Singapore was named bestin the world owing to its wet infrastructurewhile The Netherlands came second on theglobal scale, followed by Hong Kong. Interms of ‘total competitiveness’, TheNetherlands moved up from eighth to seventhplace – and according to the World Economic

forum, this was especiallydue to the port’s “improvedclimate for innovation”.

This innovative approachhas served the port well, asaccording to its most recentset of results, 215m tonnes ofcargo were handled at the portin the first half of 2011 – 1%more than in the first half of2010. The total, net result forthe port totalled €98m, anincrease of €8m compared tothe first half of 2010. Incomingcargo increased by 2% to 153mtonnes but outgoing cargodecreased by 1% to 61mtonnes. The throughput ofbulk cargo fell by 4% to140m tonnes, whilegeneral cargo was12% higher at 75m tonnes.

There weredecreases for thethroughput of iron oreand scrap metal (-7%), crude oil (-8%)and mineral oilproducts (-9%) butthe remaining cargossaw positiveincreases – agribulk(+26%), coal (+6%),other dry bulk(+21%), other liquidbulk (+1%), roll

HOLLAND & BELGIUMREGIONAL FOCUS


through

on/roll off (+6%), other general cargo(+28%) and containers (+12%). Containerthroughput increased by 10% to six millionTEU (20 foot equivalent units).

Koen Overtoom, Managing Director,Commercial Division at the Port ofAmsterdam, said that his port has also seen a“fine result” so far this year, with a 3% rise incargo growth. “Growth involved oil products,cars and other roll-on/roll-off products inparticular and we have had a wonderful halfyear in terms of sea cruise activities,” he said,adding that the Port of Amsterdam expects

the current transhipment tostabilise in 2011.

“Several relevantsectors are stillstruggling with thecrisis, but hopefullythe port will continueto benefit from thecautious economicgrowth that isexpected this year.We expect that with any fall

in economic

development, maritime logistics will beaffected as well. In case of oil products(mainly petrol) this cargo flow will maintaina certain stability. For containers and breakbulk the influences of a decrease in demandwill be felt,” he said.

Located at the economic heart of Europe,the Port of Amsterdam handles over 90million metric tonnes on an annual basis andhas facilities for handling, storing andtranshipping a wide range of goods, includingcocoa beans, coal, paper, oil and millions oftonnes of dry and liquid bulk, general cargoand containers.

Describing the Port of Amsterdam’scustomer service ethos as “the red carpettreatment”, Mr Overtoom said the port“continuously works on the maintenance andimprovement of its infrastructure andaccessibility”. Together with the Dutchgovernment, Province of North-Holland andthe City of Amsterdam, the Port ofAmsterdam has made an agreementconcerning the funding of a large new sealock, the purpose of which is to simplifyaccess to the Amsterdam port region. Underthe terms of a covenant, the new lock will beoperational from 2016.

Noting that the Port of Amsterdamintends to be one of the most sustainableports in Europe by 2020, Mr Overtoom citedthe importance of clean operations andintelligent use of the port, cargoes and

location. He described the Port ofAmsterdam’s Sustainability andInnovation Fund as an exampleof a positive green initiative,whereby companies within theport region can apply twice a yearfor subsidies towards projects forsustainable and innovativedevelopment in the North Sea (theport makes €2m available a yearfor this fund).

As Dutch ports continue toflourish, other maritime companiesin the region are benefiting from anincrease in port traffic. SijmenVisser, Global Segment Manager,Marine Maintenance & Repair,from PPG Protective & MarineCoatings, said the Dutch maritimeindustry offers opportunities to

grow, despite some common globalchallenges: “Relative to other Europeancountries, the Dutch economy is still strong.At the same time, the Dutch maritime marketfaces demanding regulatory rules and a highcost base. A great number of Dutch maritimecompanies have managed to overcome suchchallenges through specialisation, innovationand becoming best-in-class. It is because ofthis approach that the Dutch maritimeindustry is expected to outperform theaverage trend.”

Mr Visser added that the “challengingenvironment” Dutch maritime companiesface has led them to “become experts in aclearly outlined core business”. He citedexamples such as Dutch dredging and heavylifting companies as innovative sectors andsaid some Dutch shipyards are still seeing ahealthy number of orders. “Stricterregulations are great opportunities if multi-laterally adopted, because we have some ofthe most flexible and innovative companiesin the maritime world,” he said. “On the otherhand, if regulations are adopted solely on anational basis and in varying ways it will notcreate the level playing field which is key tosuccess in this international and competitivebusiness.”

The Dutch maritime industry hassurvived well trough the recession, but howare low charter rates influencing the industry?Mr Nieboer again: “The sector faced someproblems in general cargo and containerfeeders, but most vessels are sailing again. Asthe Dutch fleet has a lot of specialisedvessels, from large passenger vessels to afleet of dredging material and specialisedoffshore vessels the risks were spread.Traditionally The Netherlands has nocompanies with big bulk carriers and largeVLCC tankers like the Greek companieshave – sectors which faced problems.Business is going up, but very slowly. Forsome kinds of vessels, day rates are still verylow and hardly enough to cover theoperational expenses,” he said.

Describing a shortage of experiencedmarine engineers, Mr Nieboer said that onoccasion, Oceanwide Netherlands has misseda couple of business days in order to wait for“the right crew”. Though Mr Nieboerdescribed a shortage of marine engineers as a

HOLLAND & BELGIUM REGIONAL FOCUS


worldwide problem – even in countriessuch as India and the Philippines, wheremore students are choosing to becomenautical officers instead of engineers – hesaid that marketing initiatives by The RoyalAssociation of Netherlands Shipowners(KVNR) and Dutch Maritime Collegeshave made promising efforts to encourageyoung Dutch people into marine engineertraining.

Agreeing that Rotterdam is a huge portof opportunity for maritime companies,Eric Bezemer, Commercial Director ofRotterdam-based NEKO Ship Supply, saidthat competition at the port is especially

tough. “What I see happening in future, isthat the smaller ship chandlers will havetrouble complying with all the rules andregulations and they will seek some kind ofventure with larger ship chandlers. We tookover a smaller ship chandler less than a yearago, purchasing the majority of shares. Fora small ship chandler, it’s easier to be linkedto a bigger chandler who has, for instance,already achieved an AEO certificate andhas put in place sophisticated software forquotation and order processing – they canlink up and benefit from greater purchasingpower and be more competitive for thefuture.”

On a positive note, maritime companieswith headquarters in Rotterdam can alsoeasily benefit from an increase in customersby serving Belgian ports. As the Port ofAntwerp is only one hour’s drive away, thosebased in Rotterdam can provide goods andservices to this bustling Belgian port with justa simple commute – something which manyDutch companies take part in every day.

Much like its Dutch competitors, the Portof Antwerp has delivered a robust set ofresults, having handled almost 96m tonnes offreight in the first six months of 2011 –representing an increase of 10.4% comparedwith the first half of 2010, when volumelevels reached 87m tonnes. According toofficials, the port is recovering “particularlywell after the recession” having exceeded therecord level (in tonnes) previously reached in2008. The total number of ships calling at theport rose by 7.3%, to 7,745, compared to thefirst half of 2010.

Last year, Antwerp experienced thestrongest growth on the Hamburg-Le Havrerange while an increase in conventional(break bulk) freight was also reported, with atotal of 6.4 million tonnes (an increase of16.9%) more being loaded and unloadedfrom January to June than in the same periodof the previous year. This includes 4.4mtonnes of steel, marking an increase of almost48% on the previous year and fruit cargoes

HOLLAND & BELGIUMREGIONAL FOCUS

have remained buoyant throughout the recession, with volumesincreasing by 3.2% to 0.7 million tonnes.

The Port of Antwerp has also reported positive half-yearlyresults in the ro-ro sector, with 526,841 cars loaded or unloadedduring the past six months. Bulk freight has also been doingwell, with liquid bulk rising by an impressive 31.8% in the firsthalf of this year to 24.2m tonnes. Antwerp’s position as thelargest integrated petrochemical cluster in Europe has also beenassured, and the expansion of storage facilities for oilderivatives has allowed this cargo to expand by 42.2% incomparison with the first half of last year, while crude oil (2.5mtonnes) and chemicals (5.8m tonnes) also expanded, by 17.1%and 16.8% respectively.

Though the port may be booming, how are Belgianmaritime companies progressing through the recession?Headquartered in Antwerp, Compagnie Maritime Belge(CMB) was founded in 1895 and specialises in dry bulkthrough its wholly owned subsidiary company, BocimarInternational – a company mainly focused on the transport ofcoal, ore, grains and other dry bulk goods.

Presenting its results for the first half of 2011, CMBreported a consolidated result of over €19m (2010: almost€86m); an annual turnover of over €237m (2010: over €217m)and EBITDA of almost €77m (2010: almost €76). Bocimar’scontribution to this overall result stands at €32.881m, comparedwith €42.689m in 2010. This included €9.9m of capital gainsfrom the sale of two vessels, though during the first half of2011, five handysize vessels joined the Bocimar fleet – theCMB Boris (33.717 dwt), the CMB Julliette (33.684 dwt), theCMB Virginie (32.626 dwt), the CMB Yasmine (33.647 dwt)and the CMB Ariane (33.660 dwt).

In a statement, CMB added: “Unless scrapping acceleratessubstantially and seaborne trade increases above average,Bocimar expects the dry bulk markets for the next twelve toeighteen months will remain at low averages. Also second-handvalues that are already 15% to 20% lower compared to the startof the year will further erode unless the market picks up.”

Promoting the Port of Antwerp on a global scale will bekey in ensuring future positive results for the Belgium maritimeindustry, but in order to ensure the nation takes full advantageof its import and export capabilities, Belgium will also need toensure its inland waterways are fully operational and in-linewith demand. As Isabelle Ryckbost, Director of the EuropeanFederation of Inland Ports (EFIP), explained, it is expected thatby 2050, eight out of every 10 individuals will be living inurban areas and the need to bring goods in and out of Europeancities in a sustainable and efficient manner will be a keychallenge for the future of shipping and logistics.

On September 16th, political and port authorityrepresentatives from the waterborne cities of Brussels, Berlin,Budapest, Paris and Vienna signed a charter to activate theirwaterway connection, with the aim of achieving sustainableand efficient city logistics. These cities have confirmed theircollective intention to enhance the role of waterway transportfor passengers while also achieving CO2-free freight supply,distribution and logistics.

Brigitte Grouwels, the Minister responsible for the Port ofBrussels, said: “The port of Brussels has an ideal location atthe heart of the international transport hub which offersconnection to three other transport modes, notably to themotorway network, through the Brussels orbital motorway(known as the Ring), to the railway network, by means of aconnection to the container terminal and to the air transportnetwork. By signing this charter, we undoubtedly take a bigstep towards a more sustainable future, both from an economicand an environmental point of view. We also make the link withother ports.” ■

The tanker markets were reported tohave been spooked in earlySeptember by the rumour that

Chinese oil companies may order up to 80VLCC newbuildings from Chinese yards.But should anyone really be overlysurprised?

According to Braemar Seascope,China’s priority throughout its urbanisationand industrialisation process has been tosecure reliable, consistent and affordablesupplies of raw materials and energy. Tomeet this end, it has developed tradingcompanies, mining and resourcecompanies, shipping and shipbuildingcompanies. This is a country run by astrategically minded government with theirengineers holding detailed plans fordevelopment.

China has a stated policy that 50% ofits oil imports should arrive on Chinesecontrolled tonnage. According to BraemarSeascope analysis, almost 50% of spotVLCCs discharging in China in the firsthalf of 2011 were Chinese controlled (thatalso includes time chartered tonnage). Butthis does not mean that China will stopbuilding VLCCs, after all its oil importrequirements are undoubtedly going to grow.

China currently refines about 8.5m bpdof crude oil, at least 7.5m bpd of which isimported by sea. Braemar Seascopeestimates that China is likely to increaserefinery throughput to 11m bpd by 2015and that around 15m bpd is achievable by2018, which would put China on a roughlyequal footing with the US for daily refinerythroughput.

An extra 6.5m bpd of imports by 2018,depending on its source, would requireabout three modern VLCCs a day to meetseaborne import requirements, or about1,100 VLCC shipments a year. If eachVLCC can make nine round trips a yearfrom the Arabian Gulf to the Chinese coast,about 120 VLCCs will be required betweennow and then. Merely to meet its 50%Chinese-controlled imports target, Chinese

ship owners will have to contract 60 newVLCCs for delivery in those coming years.

To ensure that there is sufficient supplyof VLCC tonnage to maintain reliable,consistent and affordable supplies of crudeoil, China may wish to have a surplus oftonnage, particularly if also incentivised tomaintain its growing skilled workforce atthe shipyards. So 80 VLCC contracts,although a little excessive, are feasible.

The Chinese shipbuilding industry hasbeen upgrading its VLCC buildingcapability with a view to competing withothers and no doubt also in order to meetChina’s own requirements. According toBraemar Seascope research, mainlandChinese companies own 39 VLCCS andcurrently have just eight on order. Thesecan be supplemented in part by 24 HongKong–owned VLCCs, with another 17 onorder. These combined fleets and

orderbooks comprise only 13% of theglobal VLCC fleet and orderbook so thereis clearly room for more Chinese-controlledtonnage.

Chinese shipyards delivered 21 VLCCsin 2010 and have delivered another 21 in2011 to September 1st with a further 10 duefor delivery this year. In 2012, 29 areexpected, followed by 23 slots currentlyfilled for 2013. If China is capable ofdelivering 30 newbuilding VLCCs a yearwith current shipyard capacity, and if 20 ayear of these are for Chinese buyers (whocurrently only have eight VLCCs on order,remember), then realistically it will be 2014before Chinese companies start to takedelivery of the extra VLCCs required tomaintain the 50% policy, and 2017 or 2018when the programme completes, which fits in with anticipated refinerydevelopment plans. ■

TANKERS TRADE ANALYSIS

Thetruth behindChina’s VLCC

ordering plans

Note – fleet excludes non-trading single hull ships

SEPTEMBER/OCTOBER 2011 ISSUE 33 SHIP MANAGEMENT INTERNATIONAL 45

In numbers of ships VLCCFleet

VLCCNewbuildings Total

Hong Kong owners 24 17 43

Mainland Chineseowners 39 8 45

Others 490 111 601

Total

Hong Kong owners

Mainland Chineseowners

Others

Total

533 136 689

5% 13% 6%

In percentage of Total

7% 6% 7%

89% 82% 87%

100% 100%100%

It was almost a case of déjà vu whenFrontline’s Chief Executive JensMartin Jensen was quoted in the

maritime press in the middle of Augustclaiming that maybe owners in the verylarge crude carrier market should take a$500 million gamble and scrap 50 olderdouble-hull vessels in order to help easeoversupply in this sector.

Those amongst us with longmemories will recall a similar plea in2009 by prominent Italian bulk carrierowner Giuseppe Bottiglieri for bulkerowners to ‘challenge the crisis’ byrenewing the quality of the global drycargo fleet while also boosting the

number of old bulk carriers beingscrapped.

Mr Bottiglieri’s ‘fleet renewal withscrapping premium plan’ clearly didn’treceive the necessary industry supportotherwise the dry bulk market would notbe in the tonnage supply situation it is in,and the chances of the tanker sectorfollowing a similar line remains to beseen. But as Mr Jensen stressed in aconference call to press after Frontline’ssecond quarter financials, there werearound 50 surplus tankers creating asupply overhang in the Middle EastVLCC spot market each month, which ifaddressed could ‘jump start’ freight ratesand turn around the fortunes of manytanker owners.

“With the latest fall in values it couldbe possible to purchase 50 older double-hull VLCCs at around $1.5bn,” he said.

Frontline itself reported a $35m lossfor the three months between April andJune. It still owns three single-hullVLCCs but the ships are being used forfloating storage and will never return toconventional trading

As Mr Jensen told SMI: “Demand ispicking up but the most disappointingmarket is of course the US market sothere are a lot of tonne miles that havedisappeared. But overall the oil markethas gone up from the big step back at theend of 2008 but we have a big orderbook

facing us.” It was difficult, he said, forowners to operate a $140mnewbuilding when the market wascommanding $10,000 a day. “Thereare a lot of discussions going on aboutpostponements and what they can do.There will be a lot of assets changinghands.

“Generally there will bepostponements on the newbuildingsside because it is very difficult to layup existing tankers because they willlose the oil major approvals. But anewbuilding coming out of the yardcould be put into lay up. There havebeen slowdowns in deliveries and anylay up in the market will affectnewbuildings. It has not started tohappen, yet but you don’t loseanything by sitting around and wealways prefer to wait for the rightvoyage rather than just take the firstcargo available,” he said.

Denis Petropoulos, jointManaging Director of BraemarSeascope Ltd and Executive Directorof Braemar Shipping Services plc,said there was a general

TANKERSTRADE ANALYSIS


flowStemming

the

Denis Petropoulos, Joint ManagingDirector, Braemar Seascope

The retaking of Tripoli and Libya by rebel forces could provide aboost to the tanker markets. But in the current shipping climate, how

deep will that improvement be felt?

Even if there is stability in Libya, noone expects a quick turnaround in oilproduction and exports. Currentproduction is virtually nil, with somesuggestions that it may get up to 300,000barrels per day this year and 500,000barrels per day by mid-2012, with theclimb back to the pre-crisis level of 1.6million b/d taking a further six to 12months. This means full output wouldnot be achieved until 2013 and leave theMediterranean Aframax market‘restricted’ for some time to come.

EA Gibson shipbrokers reportIt is a small part of the market and

will reduce tonnes miles because crudewill not need to be supplied from otherareas but it will take the instability out. Ifwe were in a marginal market that was

poised to be really strong then the Libyafactor would be very pronounced. Interms of tonnage Libya isn’t big enoughto affect the market.

Denis Petropoulos, BraemarSeascope Ltd

The suezmax and aframaxmarkets are where the Libyan markethas traditionally been but I thinkthose markets will benefit fromhaving those supplies back again.I think it will take some time butit will have a positive effect onaframaxes and suezmaxesand then indirectly thatshould benefit VLCCs.

Jens Martin Jensen,CEO FrontlineManagement

“

“

“

“

“

“

anticipation that newbuilding prices willfall because the volume of orders isdropping dramatically.

“People are trying to grasp for goodnews and the news is not particularlygood,” he told SMI. “You can’t get awayfrom the fact that we are in an over-tonnaged market with no significantunanticipated growth; all growth hasbeen anticipated and it doesn’t look likethere will be any further growth indemand as everything has beenanticipated.

“There is an oversupply of tonnagein a market which has been anticipatedfor the past two or three years. The onlysurprises are that people have continued

ordering and will continue to order in amarket which is already oversupplied.That is the only surprise. It is becausesome people were tempted to order in amuch stronger market. Not everyoneordered ships and cash is now burningholes in some people’s pockets. Placingorders now with delivery in two yearstime might not seem a bad idea but thereis tonnage being built now that will befailed in two years time because themarket won’t sustain the cost and theywill be forced to sell,” Mr Petropoulossaid.

The clue to growth will be in therefineries, he warned. However,everything up to 2015 has beenanticipated such as knowledge ofrefinery growth and knowledge oftonnage supplied between now and2015. “Those owners who have divertedtheir fleet between time charter, spot andperiod business will survive this period;but owners who are into asset play aregoing to have a tough time.

“The real question is will fleetschange hands and the answer is yes; butit will be at a percentage of the dollarand not at face value. There will be fleetacquisitions, definitely; there could becharter acquisitions/bareboat but it willbe controlled,” he said. ■

TANKERS TRADE ANALYSIS

TORM has now completed theCompany’s LR1 pool strategy inaccordance with the overall businessstrategy “Changing Trim”.

The company pioneered theformation of Pools in 1990, and theconcept has been very successful foryears. The growth of TORM’s fleet andthe need to be closer to its customers hasnecessitated a change of the pooloperation. TORM will substitute poolswith strategic partnerships wheneverrelevant.

A company spokesman said: “Wehave agreed with the remaining poolpartner Reederei Nord to close the pool.TORM will then operate a fleet of about25 LR1 vessels. In total TORM operatesabout 120 tankers.

Four vessels will be redelivered toReederei Nord by October 2011. “It is anecessary decision for TORM to do this,and I would like to stress that we departfrom the pool as friends with the hopethat we in the future, once again, can findmutual grounds for closer cooperation,”said Tina Revsbech, Senior VicePresident Tanker Division. ■

Torm completes LR1pool strategy

Jens Martin Jensen, Chief Executive,Frontline

JAPAN & KOREAREGIONAL FOCUS


Strategic focus on higheradded-value sectors

As a country with extremely limitednatural resources, South Korea hasmade its way in the world through

unerring industrial endeavour and exportingachievement. Prolific production capabilitiesin key fields have been augmented by rapidadvances in product quality andtechnological self-reliance.

Readily exemplified by the electronicsand automotive sectors, the blend ofproduction scale, technological standard,research commitment and commercial vervedisplayed by the major business groups is alsoclearly manifested in shipbuilding. Theleading Korean shipyards have weatheredglobal financial and economic turmoil and arecreating a better platform for the future byfocusing on the more capital-intensive typesof construction and larger, series-generatingprojects. The sheer capital intensity ofindividual offshore projects has given newdimension to shipyard production.

One of the cornerstones of SamsungHeavy Industries’ strategy has been its drivefor business in what it describes as the marineresources development equipment market,effectively the offshore domain. In this area,the company has achieved a 50% growth inorders over the past five years, and thecontinuing inflow of contracts for drillshipsand floating production units has had a signalbearing on overall business expansion. Thevalue of shipbuilding orders logged during the first six months of 2011, at $14.2billion,exceeded the $11.5bn target for the whole year.

Maersk’s contract award to Samsung inJune for two drillships, together worth morethan $1.1bn, took the yard’s tally to 10 suchvessels booked within a six-month period. Infact, Samsung has attained an unrivalledposition in the sector, by attracting 42 of the 75 drillships contracted worldwide since 2000.

One of the fundamental influences on thecompany’s business total for the 2011 first-

half was the confirmation of an order fromRoyal Dutch Shell for the world’s first andlargest newbuild LNG-FPSO (floatingproduction, storage and offloading) unit. Theproject is worth around $3bn in total, and the‘floater’ will tap at least 5.3m tonnes perannum of LNG, condensate and LPG fromthe Prelude field off northwest Australia.

Shell had earlier signed a masteragreement with a consortium comprisingSamsung and French engineering contractorTechnip for the design, construction andinstallation of multiple, floating LNG(FLNG) vessels over a period of up to 15years, intended to monetise stranded orsmaller offshore gas fields. The nascent LNG-FPSO has main dimensions of 488 metreslength by around 74 m width.

Following on from the delivery in 2010of two LNG shuttle and regasification vessels(SRVs) from Samsung, Hoegh LNG made afurther, major commitment to the fastgrowing market for floating regasificationsolutions by entrusting Hyundai HeavyIndustries(HHI) with two, innovative LNGfloating storage and regasificationunits(FSRUs). Utilising the Norwegiancompany’s in-house design, the two 170,000cu m FSRUs provided a first newbuildreferences in a field hitherto served byconverted vessels. Through options appendedto the agreement, an ultimate series of sixHoegh FSRUs is foreseen from the Korean yard.

HHI’s opening business in 2011 affordedfurther testament to the direction taken by thenation’s leading shipbuilders, whereby theUlsan yard attracted over $2bn-worth oforders for deepwater drillships. Two of thevessels were contracted by Noble Drilling,which took out options on third and fourthnewbuilds, while two ships were booked byDiamond Offshore Drilling, with an option ona further vessel. HHI completed its firstdrillship, Deepwater Champion, for UScompany Transocean in November 2010.

The shipbuilder’s offshore division hasalso landed a $1.2bn contract from BP for anFPSO equipped to produce 130,000 barrels ofoil and 2.2m cubic metres of gas per day, withstorage for 1.06m barrels of oil. The unit willbe assigned to the Schiehallion Field, west ofShetland.

Unerring attention to established, coresectors of business saw the tranche of drillshipcontracts immediately preceded by a dealwith Hapag-Lloyd covering the constructionof four 13,100 teu ultra-large containerships,and the upscaling of six earlier-orderednewbuilds from 8,600 to 13,100 teu capacity.

Indicative of the drive for morespecialised or customised business in the mostpopulous tonnage categories, HHI recentlycompleted model tests for a 190,000dwtdesign of Arctic ore carrier. These wereconducted at the Institute of OceanTechnology in Canada. The proposed vesselwould be the world’s largest icebreakingcommercial ship, able to independentlynavigate waters covered by 1.7m-thick ice atspeeds up to six knots, significantly fasterthan other ice-going traders in heavy iceconditions.

HHI’s technical programme geared toopportunities in the polar regions has alsoembraced the development of a specialwelding technology for the tanks of LNGcarriers and LNG-FPSOs to be employed inArctic waters.

Technological advance in the means ofproduction is going hand-in-hand with therising technological level of the products ofthe leading Korean yards. As a consequenceof in-house development work, HHI plans todigitise all welding processes by 2015.Superseding analogue welding, the digitalwelding process is expected to improveproductivity by 20%, reducing man-hours bysome 1m per year. The digital system alsopromises 10% savings in welding coststhrough reduced material requirements, whileraising work quality.

By David Tinsley

Already the world’s largest producer ofmarine diesel engines, Hyundai has bothexpanded output and considerably reduced itsown reliance on foreign designs used asshipboard auxiliaries through the rapiddevelopment of its own HiMSEN range offour-stroke engines. Among the latestinitiatives has been the introduction of thevee-type H25/33V series, serving the powerband from 4,080 to 6,800kW, and therevision and 12% power uprating of thesmallest HiMSEN design, the H17/28 type.

A first in material usage has beensignalled by STX Offshore & Shipbuilding’splan to introduce Korean steelmaker Posco’sultra-wide thick plate for newbuildconstruction. STX has invested in therequisite processing equipment, ahead ofother shipbuilders, at its Dairen yard inChina. The high-value product is intended forultra-large ships, offshore plant and energy-related projects.

Daewoo reinforced Korea’s leadingposition in container vessel construction, andunderlined the country’s particularly strongrelationship with the industry’s ‘blue-chip’names, by landing two tranches of contractsthis year from A.P.Moller-Maersk for record-breaking Triple-E ships. The design’s 18,000teu intake is 16% greater than that of thelargest boxship to date, the 15,500 teu EmmaMaersk type. With Maersk now committedto a total of 20 such vessels, representing atotal value of $3.8bn, and with a further 10ships on option, Daewoo is set to realiseserial production benefits on anunprecedented scale.

A preparedness and capability to supplybespoke tonnage, albeit in series, is illustratedby the imminent completion of the first offour 45,200dwt ro-ro/container vesselsordered by Ignazio Messina, the family-owned Italian shipping and logistics group.The design offers a high degree of flexibilityas to trade deployment, while being

optimised to the requirements of thecompany’s African routes. It is distinguishedby an environmental standard warrantingRegistro Italiano Navale (RINA)’s GreenPlus class notation. Each of the vessels hasfour cargo decks, and can accommodate upto 6,030 lane-metres of ro-ro freight or amaximum 2,920 teu containers.

Daewoo is also a contributor to Koreanpre-eminence in drillship construction, withthis year’s order inflow having included twosophisticated vessels capable of drilling to adepth of 12,000ft, booked by Norway’s AkerGroup. The shipyard is also hoping to buildan LNG-FPSO conceived by Hoegh LNGand offering a 3m tonnes per annumproduction capacity plus 220,000 cu m of storage.

Korean Register (KR), meanwhile, issteadily developing its position on theinternational market. The society recentlyformally inaugurated its new Asia-PacificHeadquarters in Singapore, which willoversee the 15 branch offices and surveystations located throughout the region. Bycoordinating the activities of the variousoutstations, KR will provide a morecomprehensive and coherent service deliveryto its customers. It has already openedregional headquarters in China and Europe,and plans further enhancements next year.

Exchange rate factors have this yearintensified the difficulties faced by Japaneseshipbuilders in securing business on theinternational market in the face ofcompetition from China and South Korea.The yen started 2011 at an already weak Y83to the dollar, and has continued its slide, such that the rate was down to Y77 by the end of August.

With a diminishing orderbook across theindustry, some have called for moredetermined state intervention aimed atweakening the yen, to not only provideexport-reliant shipbuilders with improved

chances on the world market, but to create amore solid platform for Japanese economicrecovery as a whole. In the meantime, andagainst the backcloth of a strong yen, Chineseyards have made considerable ground in thebulker market at Japan’s expense, whileKorea has proved dominant in the LNGcarrier stakes.

Although analysts are dismissive ofJapanese shipbuilding as an enduring force inthe face of the Chinese advance based on ship‘commoditisation’ and Korea’s excellingvirtues in high added-value sectors, parts ofthe industry in Japan continue to demonstratea robust approach to business founded ontime-served principles of productivity, qualityand delivery precision.

Seven years on from delivering luxuryvessels for Carnival’s Princess Cruises fleet,Mitsubishi Heavy Industries has shown itsmettle by signing a memorandum ofunderstanding for two ships to be built foranother of the US group’s brands, AIDACruises. All previous and current AIDAnewbuildings, designed primarily to serve theGerman cruise market, have been contractedin Europe.

Although conclusion of the deal issubject to financing, the 125,000gt luxuryvessels are scheduled for delivery in March2015 and March 2016 at a combined buildvalue in the region of Euro 910m. With cruisevessel construction constituting the lastremaining bastion of west Europeancommercial shipbuilding, the prospectiveloss of the AIDA project to Japan is indeed ablow to the industry in Europe. Moreover,successful execution of the order by MHI willno doubt put it in a stronger position to bidfor future work from major players in thecruise business.

Unlike the Korean yards which areendeavouring to enter the field, MHI alreadyhas a track record in cruiseship production,having built Crystal Cruises’ former Crystal

JAPAN & KOREA REGIONAL FOCUS


Samsung's Geoje Shipyard: the Korean builder has emerged as one of the world's leading lights in offshore vesselconstruction, complementing its prolific output of mercantile tonnage

Harmony and two vessels for Mitsui-OSKLines as well as Princess Cruises’ 113,000gtsisters Diamond Princess and SapphirePrincess. Over the past year or so,considerable extra design and developmentresources have been allocated to thecompany’s drive to include a regular cruisevessel component to the output from theNagasaki yard complex.

In another area of outfitting-intensiveshipbuilding, MHI also ranks among easternAsia’s leading names in the construction ofpassenger/vehicle ferries. Much of thisactivity is concentrated at the Shimonosekiyard, where the current orderbook includestwo coastal ferries for Shin Nihonkai and onefor Kawasaki Kinkai Kisen’s Silver Ferry, allfor completion during 2012.

As part of the 2010-implementedreorganisation of the group’s shipbuildingbusiness, focused on achieving a shift tohigher value-added products and creating aleaner management structure, Shimonosekihas undergone modernisation to widen itscapabilities and raise productivity by 15%.The plan was completed in mid 2011, and hasincluded the creation of a new, berthsideassembly area and new heavy-duty craneage.In addition to coastal ferries, ro-ro vessels and special-purpose ships,Shimonoseki has been equipped for theproduction of high-speed aluminium vessels.

Under the reorganisation, and with effectfrom 2012, all commercial vesselconstruction is to be undertaken at theNagasaki and Shimonoseki yards, while theKobe facility will become dedicated tosubmarine production.

In one of the most technologically-advanced, civil marine fields, MHI has thisyear also scored against the Europeancompetition by winning an order for twoseismic survey ships. The deal withNorwegian specialist Petroleum Geo-Services (PGS) entails the next stage ofexpansion of its fleet of unique Ramform-type survey vessels. Two W-class newbuildshave been contracted for delivery in 2013,

and options have been placed on third and fourth vessels, which would have tobe completed during 2015. All previousRamform ships have come from Norwegian yards.

Indicative of the MHI strategy ofcreating added-value in key, target marketsectors, and also illustrative of the Japanesepropensity for continual improvement of established technologies andmethodologies, the company has unveiled anew design of LNG carrier.

The so-called EXTREM generation ofLNGC builds on the enduring popularity ofthe Moss-type spherical cargo tank system,the primary global competitor to GTT

JAPAN & KOREA REGIONAL FOCUS

Hyundai Heavy Industries HiMSEN engines, seen here in genset production at Ulsan

membrane containment. Furthermore, andnotwithstanding the considerable uptake ofalternative powering solutions for LNGcarriers, not least dual-fuel electricpropulsion, the new design caters to thoseowners who still prefer a steam turbineinstallation, by incorporating MHI’s new,more efficient turbine plant.

A recent initiative in Japan has seen therelease by ClassNK of an advisory document,the Noise and Vibration Guideline, and thecreation of new notations endorsing ‘Noiseand Vibration Comfort’ (NVC) and‘Mechanical Vibration Awareness’ (MVA).The notations will be offered from theautumn of 2011 onwards.

The society’s move has been promptedboth by the demand for improved shipboardworking environments, given the linkbetween noise and crew fatigue andefficiency, and the growing awareness of thepotentially detrimental influences ofexcessive vibration on ships’ machinery andequipment. With technological advance andresearch in the field of noise and vibrationattenuation, ClassNK felt that it was appositeto issue a new set of standards for theindustry. The society considers that its newguideline will give owners, operators andshipbuilders a useful tool for accuratelymeasuring and rationally evaluating noiseand vibration levels. ■

JAPAN & KOREAREGIONAL FOCUS

Japanese ship owners have called onthe Tokyo government to allow armedguards to be used onboard Japanese shipsoperating in pirate-infested waters.

The request comes at a time whenattacks from pirates are spreading from theGulf of Aden eastward to the waters offOman and even to the Indian Ocean.

Addressing a meeting of the House ofRepresentatives' Special Committee onAnti-Piracy Measures, Prevention ofInternational Terrorism, Akimitsu Ashida,President of the Japanese Shipowners'Association (JSA), asked that Japan CoastGuard officials and public-sector armedsecurity guards such as those from JapaneseSelf-Defence Forces and also private-sectorarmed security guards be allowed, for thefirst time, to embark Japanese-flaggedships. He also repeated previous requestsfor the dispatch of more destroyers andsupport ships.

Shigeru Kojima, Chairman of the JapanCaptains' Association, said: "Pirates who aregetting more violent pose a threat to ships.We hope security guards armed with self-defence equipment will be permitted toembark Japanese-flagged ships. It may

require legislation, and we hope necessarymeasures will be taken as soon as possible."

Masamichi Morooka, Senior ManagingCorporate Officer and RepresentativeDirector at Nippon Yusen Kaisha (NYK)also appeared as unsworn witnesses at themeeting together with Ashida, Kojima, YojiFujisawa, President of the All JapanSeamen's Union (JSU), and Isami Takeda,a professor at Dokkyo University.

The JSA President told the session thatJapanese shipping companies had orderedtheir ships to take alternative routes and hadinstalled counter-piracy measures such aslaser wire, bulletproof devices andshatterproof films that cover sheets of glassto avert damage to crewmembers frompirate attacks.

The spread of attacks means thosemeasures alone are not enough, he stressed,requesting that the government also takemeasures to allow public-sector or private-sector armed guards to embarkJapanese-registered vessels. He also askedthat the escort zone be extended by around 1,000 km from the current zone and for the dispatch of moredestroyers. ■

Allow armed guards onboard our ships, askJapanese ship owners

Six Britons in a small boat-cum-sledge this summer braved ice floesand polar bears to voyage 450 miles

to the magnetic North Pole, fromResolution Bay in the NorthwestTerritories of Canada. Growing seasonalice melt had made possible this pioneeringfeat, and while it was aimed at highlightingthe impact of climate change, it illustratedat the same time a burning issue foroperators of merchant ships and theirinsurers. As the ice retreats, traders arepushing back the boundaries of waters thatare deemed navigable – but not necessarilysafe.

Just when everyone thinks thatnortherly avenues are becoming morebenign, extreme conditions can ruin theillusion, warns Mark Edmondson,Chairman of London’s Joint HullCommittee – which comprisesunderwriting representatives from theLloyd’s and International UnderwritingAssociation company markets.

The pressure to sail new routes hasbecome a critical question for one of thecommittee’s three sub-committees, whichdeals specifically with navigating limits. Itcomprises underwriters with considerableknowledge about ice navigation innortheast Canada, the St Lawrence Seaway,the Baltic Sea, the White Sea, andelsewhere.

Under a normal hull policy icenavigation is typically restricted by way ofa specific policy provision, subject toamendment by underwriters that the vesselcan trade in a particular part of the world.Sub-committee members are regularlybeing asked how underwriters shouldrespond to proposed voyages to regionswhere there may be limited salvagecapability and scant reliable information.

“We have had a number of enquiriesthis year to the sub-committee both fromwithin our market and from underwritersresiding in other international markets, forexample relating to the Northern Sea Route

where there is increasing interest,” said MrEdmondson. “Only recently, at 162,000 dwtwe have seen the largest vessel ever totransit the Northern Sea passage, indicativeof how this route is developing.” Thecommittee is drafting a market advisorycircular that will be published soon, withguidance to interested underwriters. “Thecommittee has been providing this type ofadvice for as long as I can remember, butonly relatively recently has it beenformalised. It is a very good example of thetechnical function of the committee,” saidMr Edmondson.

Underwriters will want to satisfythemselves before writing this kind of riskwhether there are adequate arrangementswith salvage companies, surveyorsavailable, vessels suitable for the intendedvoyage, crew experienced in Arcticnavigation, ice breaker and pilot services,access to accurate weather information,

weather routing, suitable ports of refuge,and bunkering capability. Much of this typeof practice is encapsulated by thecommittee’s Breach of Navigating LimitRequirements Clause JH132 (recentlysuperseded by JH 2011/002) whichunderwriters often use.

The Northern Sea Route sailing seasonstarted earlier than ever this year, at the endof June, and Russia’s nuclear-poweredicebreaker fleet was kept busy escorting drybulkers and tankers. The inter-governmental Arctic Council has warned ofinadequacies in charts, radio and satellitecommunications, saying: “No research andnone of the simulations have indicated thatthe winter sea ice cover of the Arctic Oceanwill disappear during this century.” Thereis talk of cruise operators stationing shipsin the Baltic year-round, yet conversely,severe ice conditions in the Gulf of Finlandthis February prevented even Russianicebreakers from helping vessels.

Mr Edmondson is Vice-President ofChubb Managing Agent which managessyndicate 1882. He is marine hull classunderwriter for the syndicate, whichrecently celebrated its first anniversary atLloyd’s. “The role of the committee haschanged significantly since I started mycareer,” said Mr Edmondson, who is in hissecond year as chairman of the committee.“It has moved from being a marketpoliceman that almost literally controlledpricing levels to a role that is much moretechnical, drawing up advice andrecommendations to the market on howthey may wish to tackle aspects of risk. It isnothing to do with pricing, deductibles andexcess levels. There is no desire, oropportunity, for members to discusspremium rating. We are well aware of thecompetition rules of the European Union.”

Non-members are invited to participatein sub-committees, to draw in furtherexpertise, and to engage some of theyounger underwriters more deeply with theissues. Priorities on the agenda at the risk

BUSINESS VIEWPOINTINSURANCE & LAW


Counteractingthe elements

No research and none ofthe simulations haveindicated that the winter seaice cover of the ArcticOcean will disappear duringthis century

“

“

By James Brewer

assessment sub-committee includeliquefaction of certain high density cargoes,an issue on which the committee is liaisingwith Intercargo and the International Groupof P&I Clubs, and a paper has beensubmitted to the International MaritimeOrganization. Co-operation with outsidebodies is an essential part of JHC activity,widening contacts with the industry.

Mr Edmondson emphasises the valueof the JH143 shipyard risk assessmentform, introduced by the committee in 2003in an effort to encourage ship owners, yardsand underwriters to identify, manage andcontrol construction risk factors of the kindthat may result in costly fires andexplosions. Mr Edmondson said that thewarranty had improved the risk climate.“You very rarely see a significantconstruction or conversion risk policywhich does not have a JH143 riskmanagement provision,” he said.

Bunker fuel management is exercisingthe committee too: a large percentage of thenumber of partial losses are related tomachinery or machinery space. Not least ofthe worries is fuel switching and the use oflow sulphur fuels, and Mr Edmondson said:“On occasion, underwriters are able toapply technical policy provisions whichrequire a surveyor to look at the way themachinery space is managed. It may be of

benefit to focus such an audit specificallyon bunker fuel, especially when there is aneed for fuel switching or slow steaming.“

Mr Edmondson said of marine hullunderwriting: “It is a very difficult line ofbusiness. The main dynamic is [insurancemarket] overcapacity, something we haveessentially had in our market since aroundthe mid-1990s. Certainly in recent yearsthat has put a natural lid on any reallysignificant increase in rating levels.

“Over the last 24 months there has beena net increase in capacity, including anumber of start-ups at Lloyd’s. Theirsubsequent effect very much depends onhow that capacity is deployed. In myopinion, the new capacity in Lloyd’s isbeing deployed pretty sensibly.”

The shift eastwards in the maritimecentre of gravity is meanwhile “not justabout ship operations, it is about insuranceand finance.” London, Norway, Paris andthe US, well established in the leadership ofmarine hull business, have been joined bymarkets in other territories, notably the FarEast. “The effect is increasingly tocommoditise hull and machinery business:there is a lot of capacity available, withadequate financial security, to insuremainstream blue-water tonnage.

“That encourages a business that hasbecome increasingly price-sensitive. So the

challenge for an underwriter is to make sureyou mix your business correctly betweenthe different risk categories. If you areunderwriting excessive amounts ofmainstream tonnage you will find itdifficult to make a technical profit, withcompetitive pricing levels having beenpretty flat since the first quarter of 2010.”

The reinsurance market is expected tohave to fund something like 80% of theinsured costs of the recent naturalcatastrophes – the tsunami in Japan, theearthquakes in Chile and New Zealand andHurricane Irene. It is widely acknowledgedthat reinsurance costs will inevitablyincrease in general, with an immediatenegative effect on underwriters’ net results– and in addition, the cost of capital hasgone up.

With claims again at worrying levels –“there have been a handful of majorcasualties that clearly demonstrate that ourpremium base as hull and machineryunderwriters is not robust enough” – thereis no question that this line of business isvolatile “not just as a result of verycompetitive premiums, but in terms of therisks we insure. In a subscription marketsuch as ours, the art is to counter thatvolatility by altering line size, selectingrisks correctly, and mixing your book in themost effective way.” ■

BUSINESS VIEWPOINT INSURANCE & LAW

Like that old adage about the iceberg,what is perceptible to the humaneye is not necessarily all that is

present, and as salvage professionals cantestify, the ocean is veiling some adversesurprises beneath its serene, salt waterhorizon.

The number of sunken shipwreckstotals over 8,500 worldwide, 75% of whichperished during World War II, and it isestimated that these forgotten vessels areharbouring as much as 20 million tonnes ofoil and other environmentally hazardoussubstances. These statistics, which at bestare acutely unsettling, indicate a cache ofenvironmental time bombs, just waiting tomake their final ticks before expellingpotentially devastating oil leaks across ouroceans and onto our beaches – but despitewarnings from environmental groups andprofessionals involved in preventativemeasures and clean-up operations, politicaland public awareness of the problemremains underwhelming.

The Exxon Valdez catastrophe of 1989,in which the oil tanker struck a reef inAlaska, spilling over 11m gallons of crudeoil, generated enough public outcry totrigger the Oil Pollution Act of 1990 (OPA-90) – a law designed to assist the preventionof, and response to, oil spill incidents.Arguably, it is the preventative element ofthis act which should garner the mostsupport from public and political quarters,but unfortunately, society has a tendency tofavour reactive rather than proactiveresponses to environmental threats,particularly as war time wrecks arepractically invisible to the public and thecost of salvaging them all would provesubstantial.

One organisation that has taken widesteps to readdress this balance is theAmerican Salvage Association (ASA) – atrade association dedicated to improvingsalvage response and bringing issues ofcommon concern to its members to theforefront.

ECOVISION SALVAGE


Prevention isthan cure

By Helen Jauregui

According to Mauricio Garrido,President of the ASA, the public is notaware of the issue of sunken wrecks, or ofthe importance of marine salvage (theprocess of rescuing a vessel or its cargofrom danger) as a preventative tool in thecase of contemporary vessel sinkings,where early intervention can mean thedifference between a salvageable situationand a massive clean-up operation costingmillions of dollars: “I don’t think the publicis aware at all of what the problem is, andwhat the alternatives are to address thatthreat. With respect to the level ofknowledge of the American public, whenyou talk about ships that are underwater andfull of oil – and that there are thousands ofthem which can leak, they perhaps start tothink that you’ve been reading the works ofJules Verne!”

He added that this lack of publicawareness is a significant challenge forsalvors but one which is motivating them toraise awareness of their profession as a vitalmethod of preventing further damage,whether in the immediate aftermath of amodern day ship wreck or when salvaginga vessel which sank generations ago.

John Witte Jr., Immediate Past-President of the ASA, explained thatinitially, OPA-90 focused on the clean-upof pollutants once they had escaped thecasualty, as opposed to the salvage aspect,which focuses on keeping the pollutantcontained within the casualty and thenremoving the vessel intact. Based on therecognition that safe salvage of the vesselwas the preferred option to cleaning it upafter it spilled, the salvage portion of OPA-90 was later strengthened, culminating inthe implementation of revisions to thesalvage portion in February 2011. “Salvorsare just as important as a strong pollutionresponse capability. Marine salvage is thebest form of pollution control – as long asyou keep the pollutant entrapped, then itcan’t impact the environment,” Mr Witte said.

The ASA has plans to educate youngAmericans at high school and universitylevel of the need for a preventativeapproach to oil pollution. The Associationhas also created a successful trainingcommittee, to provide the US Coast Guardwith a firm basic knowledge of whatsalvage entails. The Coast Guard and ASAwork closely to ensure both parties areengaged in sound regulatory complianceand representatives meet face-to-face on aroutine basis to discuss and solve pertinentissues. The ASA has also formed apartnership with the North AmericanMarine environment Protection Association(NAMEPA) – an organisation which isactive in its efforts to educate and createpublic awareness.

As Mr Witte noted, oil spill incidentsare often regarded as “non-events” until themedia publishes photographs of dead birdsand sea life – powerful imagery which, asMr Witte said, “really brings to life theissues of environmental concern becausepeople can see it. You can’t see it if it’sunderwater and in a small or non-open area,so it’s a fight to gain support.”

But public outcry can only take salvageefforts so far and as Mr Witte confirmed,the “realities of the world in which we live”mean that although a pre-emptive attemptto recover oil before it starts to leak out ofa sunken wreck is significantly cheaper (10times cheaper in fact) than it is to make anin-situ oil clean-up response, the problemof funding still reigns high. “There is agreat deal of positive momentum fromcommercial industries who are certainlyvery interested in looking at theseproblems, but how is it going to be paid for?Money is a significant concern and theseare not inexpensive environmental events.But there has to be a commitment made atsome point or we’re going to have somevery serious and significant environmentalevents which will trigger a much moreexpensive response.”

Paul Hankins, ASA Secretary/Treasureradded: “Salvage is the most importantpollution prevention tool we have whensomething goes wrong, but because thereare no pictures of oil on the beach or oiledbirds (as with response efforts), you don’tget that kind of public outrage – its difficultto get anyone to focus on salvage becauseits a prevention measure and prevention isalways harder to get funded than the actualresponse to a calamity.”

Though actual oil spill incidents maycapture both the political and publicimagination more than potential oil slickthreats from sunken vessels, recent cases ofleaking wartime wrecks have highlightedthe need for a more targeted approach inusing salvage to thwart pollutionnightmares before they occur.

Though many of these wrecks haveremained undisturbed for seven decades,

others have been promoted as divingattractions for adventurous tourists hopingto experience a visual taste of romanticabandonment, as associated with the Titanicor the Lost City of Atlantis. This includesthe wreck of the Hoyo Maru, an oil tankerwhich sank during the 1944 OperationHailstone bombing raid by the US Navyduring the Battle for the Pacific.

Since the war, this vessel, along witharound 60 others which also perished as aresult of this military operation, have madethe seabed of the Chuuk Lagoon in thecentral Pacific region of Micronesia theirgrave, and though local diving businesseshave benefited from the mysteriousqualities of the wrecks, and various formsof marine life have made these vessels their home, a significant oil slick is now emanating from the Hoyo Maru,accompanied by a smaller leak from thesubmarine support vessel Rio de JaneiroMaru. As the Earthwatch Institute (Europe)has reported, this is now a dangerous threatto the people of Chuuk and to the thousandsof species which make this coral reef theirhome, including turtles, sharks, manta-rays,the rare coral type Acropora pichoni and266 different types of reef fish.

The problem has become such a vitalissue that in August, Manny Mori, Presidentof the Federated States of Micronesia,decided to “go international” with the issue.President Mori wrote to the ambassadors ofJapan and the US in his region, to confirmhis decision to make an internationalintervention regarding the oil leak at thePacific Island Forum in Auckland, NewZealand, and the United Nations GeneralAssembly at the UN Headquarters in NewYork.

“I decided to raise this issue now inlight of the imminent danger posed to thepeople in Chuuk by a potential oil spill, asdocumented in a 2008 Earthwatch Study,which predicted that more than 60 wreckshave 10-15 years before they will succumbto corrosion and spill their oily contents intothe lagoon and surrounding marineecosystem,” the President said, highlightingthe fact that the Hoyo Maru is alreadyleaking and that the combined estimatedcontents of the wrecks stands at over 30mgallons of oil.

It remains to be seen whether garneringinternational political support will provedifficult for President Mori, but accordingto Jim Shirley, ASA’s Legal Counsel, muchlike the general American public, most ofthe 535 individuals who man the Senate andHouse of Representatives in Washington,also know little of “the danger of pollutionthat lurks up and down the coastline”.However, Mr Shirley added that supporthas been forthcoming from theSubcommittee on Coast Guard and

ECOVISIONSALVAGE


Marine salvage is the bestform of pollution control – aslong as you keep thepollutant entrapped, then itwon’t impact theenvironment John Witte, Immediate Past-President, American SalvageAssociation

“

“

Maritime Transportation (includingCongressman Elijah Cummings and theCommittee’s Chairman, CongressmanFrank LoBiondo), particularly concerningthe issue of “responder immunity” – theright for salvage professionals attending anactual or potential pollution incident to beimmune from blame and prosecution inconnection to such incidents – so long asthe pollution did not result from the salvageworker’s gross negligence or wilfulmisconduct.

Cases of salvors being held responsiblefor pollution which they’ve come to helplimit, rather than that which they’ve caused,are well documented and include that ofSalvage Master Nick Pappas, who wasdetained in Pakistan during his work tosalvage the Greek flagged oil tankerTasman Spirit, which spilled over 12,000tonnes of oil into the Arabian Sea in 2003.

As Jim Shirley explained, the ASA isworking to ensure that in the US, a similar“blame culture” does not occur: “NickPappas went to Pakistan as a SalvageMaster to help remedy the situation but hewas detained by the Pakistani governmentjust because of his position. The ship hadspilled oil but this was not his fault – he wasthere to remedy it. We’re afraid that suchthings might start to happen everywhere –that the criminalisation of salvors will occurmore frequently. Right now, the salvagecommunity would be happy just to havesome confirmation, regulatory or otherwise(such as through an amendment to OPA-90), that they are entitled to at least thesame responder immunity that is providedto oil spill clean up contractors by OPA-90.”

“Even if we received suchconfirmation, this would be from theFederal Government and we would have toget our 23 coastal states to sign it. Wewould need our inland states with navigablewaters to agree as well, because OPA-90does not pre-empt state law. It is a majorconcern that a salvor who ordinarily, in

respect to the property he’s there to save, isnot held liable for his simple negligence,only damages resulting from his grossnegligence or wilful misconduct. In the caseof an oil spill, he might not only be liablefor his simple negligence but he could beheld strictly liable under some statutes thathave been used by prosecutors in the USgoing after ship owners. It’s hard to getattention on Capital Hill for something as‘unsexy’ as responder immunity for salvorsand to get legislation through, so it’s anongoing battle.”

John Witte added that although to hisknowledge, there has not yet been a case inthe US where a salvor has been foundcriminally liable for a pollution incident, heis concerned that in a big casualty situation,where there is a significant chance forliability, even though a salvor may havetaken every reasonable effort to rectify thepollution problem, circumstances such asbad weather or the deteriorating conditionof the vessel may take over, meaning that inan instant, a salvor could go from workingto try and rectify a situation to facing amulti-million dollar liability law suit.

Paul Hankins added that although theissues of war time wrecks and responderimmunity represent particularly challengingtimes for the ASA, progress is being made.He cited the example of the Montebellosteam vessel which was struck with atorpedo in 1941, just off Point PiedrasBlancas, California. The vessel wascarrying 73,570.99 barrels of crude oilwhen it sank and recently, the Captain ofthe nearby Port of Los Angeles decided theMontebello posed a “significant risk”,particularly as it is adjacent to a nationalmarine sanctuary.

An assessment is now taking place toascertain how much oil remains onboardand how much corrosion damage may haveoccurred and Mr Hankins said he is pleasedthese efforts are “finally coming to fruition”following 18 months of deliberations. Acommon approach of “out of sight out ofmind” may have slowed progress towardsaddressing salvage issues in the US, butwith education and investment, the ASA ishopeful that its pollution preventionstrategies will gain further backing in 2012. ■

ECOVISIONSALVAGE


The remnants of the bulk carrier Fedra which grounded off Gibraltar during a severe storm in 2008. Marinesalvage specialist Donjon Marine removed the remaining superstructure, the engine room shell and thousands of

gallons of fuel and contaminates that remained in the hull following the initial clean-up operation

The environmental costs of shipboardemissions have gained prominencein line with soaring bunkering

prices, forcing operators to seekprofessional assistance to ensure theirvessels are functioning at optimalperformance. Finding a vessel’s optimaltrim – the difference between the ship’sforward and after drafts, and particularlythe effect of this on vessel manoeuvrability– can provide better speed and lessen fuelconsumption.

While finding a vessel’s ideal trim is arelatively straightforward task in port, it canprove challenging when the vessel is at sea,due to factors such as swell, depth, wind,hull deflection and speed. It is only whenthese factors are taken into account, in realtime and while the vessel is at sea that theoptimum dynamic trim can be identified,but decision support system providerEniram has created a solution to thisconundrum.

Headquartered in Helsinki but withoffices in Singapore, Fort Lauderdale,Shanghai, Oslo and the UK, Eniram wasfounded in 2005 and provides solutions todecrease fuel consumption by deliveringthorough and accurate analysis of vesselperformance data and responding to this inreal time. The company employs a range ofspecialists, including marine system

experts, captains, naval architects andsoftware designers to deliver its solutionsand as Philip Padfield, Chief ExecutiveOfficer, explained, demand for Eniram’sservices has increased as bunker costsappear to be “going through the roof”.

Mr Padfield said that as political unrestin oil rich nations such as Libya continuesto ‘exacerbate’ fuel prices, “operators aresaying they really need to do somethingmore aggressive to cut fuel costs,” and thisis driving demand for Eniram’s services. Healso said Eniram’s customer base is beingshaped by the North American EmissionControl Area (ECA), which entered intoforce on August 1st 2011 but will take effectfrom August 1st 2012. The ECA stipulatesa 200 nautical mile zone in which shipsmust reduce their emissions of nitrogenoxides (NOx), sulphur oxides (SOx), andfine particulate matter (PM2.5).

According to the US EnvironmentalProtection Agency, by 2020, emissionsfrom vessels operating within the ECA arepredicted to be reduced annually by320,000 tonnes for NOx, 90,000 tons forPM2.5, and 920,000 tons for SOx –representing 23%, 74%, and 86%

respectively. While the expected cost of theNorth American ECA has been estimated toreach $3.2 billion by 2020, it is expected todeliver health cost savings (especially forthose suffering from respiratory illnesses)of up to $110 billion in the US alone by thesame year.

Mr Padfield said operators of bothcommercial and passenger vessels withinthis ECA are experiencing a period ofreflection as they decide how to satisfy theirrequirements: “A lot of operators are askingbig questions – are they going to changetheir itineraries? Some can and some can’t.Some of the cruise lines are talking aboutmoving their fleets or part of their fleets outof the North American Caribbean marketand into the European market. I met withchief executives from a couple of the bigbrands recently and one of them saidEurope will be the ‘new Caribbean’, as itsgoing to be cheaper to operate there.”

Eniram’s Dynamic Trimming Assistant(DTA) is a system for dynamically (whileconstant movement is occurring)monitoring and optimising vessel trim – apart of the vessel where even the mostminor adjustments can have a substantial

ECOVISION


With all thetrimmingsVessel operations:

impact on ship performance. Launched in2007, DTA is designed to collect prevailingtrim, propulsion power and vesselmovement data and combines informationon current conditions, including speed andweather, to calculate the optimal trim. Thisdata is then presented in a user interfacewhich guides the crew to make ballastadjustments to bring the vessel in line withoptimal trim, leading to fuel savings ofbetween 2% and 5%, which according toMr Padfield, could represent a saving ofaround $600,000 to $700,000 from anoperator’s bunker budget, with a saving of3.18 tonnes of carbon emissions per tonneof fuel.

Eniram has also recruited a network ofservice partners to perform installationwork for the DTA, where sensors areinstalled at the bow, and at perpendiculars.“If it’s a large vessel, this usually means anew sensor every 100 metres,” Mr Padfieldsaid. “We take these into our VesselManagement System (VMS) platformwhere all our data is collected, then we takefeeds from the engine management systemand from the bridge systems so we canshow the operator a picture of everythingthat’s happening on the vessel – the effectof stabilisers, the effect of wind, the effectof adverse weather conditions – all of that is

mapped by ourtechnology.”

Mr Padfield explained how, following afew years of developing products arounddifferent trimmings and safety applications,DTA was launched in 2007 and sold toEniram’s first customer, Norwegian CruiseLine, then Carnival Cruise Lines. Today thecompany has 88 installations onboardvessels around the world. As Mr Padfieldexplained, Eniram has a number of othervessels in the deployment phase and about130 vessels will be completed by the end ofthe year. Eniram’s solutions are currentlyinstalled on 50 cruise vessels and accordingto Mr Padfield, this represents around 25%of the cruise market share, but the companyhas also moved into the container, tankerand bulker segments.

Eniram’s first container shippingcustomer was German operator HamburgSüd, which deployed its primary DTAsystem in summer 2009. In April 2011,Hamburg Süd announced an order for 12additional installations and will deploy thetechnology on all of its post-panamaxcontainer vessels by the end of Q3 of thisyear. Interest within the container segmenthas also come from Hapag-Lloyd whilecustomers within the tanker and bulkermarkets include Maran TankersManagement and Vela International MarineLimited.

Mr Padfield explained the value ofcombining DTA with other applications:

“Of coursethere’s value in

reducing your fuelconsumption, everybody knows

that, but the real value is when you havea deployment across an entire fleet. Wehave a shore side application calledFLEET which gives you an aggregativeview of all your vessels and how they’reperforming. So for example, we have ananalysis capable of monitoring theroughness of the hull and we can showhow much fouling has built up over timeand can advise the operator of when theyshould dry dock the vessel for hullscrubbing or when they should do partialscrubbing with divers or polish thepropellers – so that is really where thevalue is.”

But how would Mr Padfield like tosee Eniram grow in the coming months?As he told SMI, his strategy is to have 500installations in place by the end of 2013,which would provide a good critical mass:“Once we have 500 installations we canstart doing further interesting analysis ofour data. For example, we already know,and our operators know, that some of theirvessels are better built for conditions intemperate climates rather than warmerclimates. All vessels, even those built inthe same yard, are slightly different. But ifwe can get a view of 500 vessels aroundthe world and the unique characteristics ofthese and their environment, I think thatwould be incredibly valuable to us – Idon’t know how we’d leverage that but itwould be valuable to our operators aswell. So that’s where we’re heading andwe’re on track – we’ll have 130 or socompleted by the end of this year.” ■

ECOVISION


Arecycled truck made from trashand powered by restaurantscraps arrives back in the UK

after a two year around-the-worldjourney. Andy Pag and ChristinaAmmon have driven their biotruckfuelled by used cooking oil which theyscavenged from fryers along their30,000 km planet-circling tour across

Europe, the Middle East, Asia and theAmericas.

Pag built the truck in 2009 using anold school bus salvaged from a scrapyard, and using reclaimed materials toturn it into a cosy eco-home. Heconverted the engine to run on wastecooking oil, installing a filtering systemand large tank under the bed. He said:

“It’s an experiment to see if we couldrecycle our way around the world. I’mas surprised as anyone that we gotaround the world without putting anyfossil fuel in the tank.”

Four years ago Pag drove achocolate powered lorry to Timbuktu,using biodiesel made from factory wastecocoa butter.

ECOVISION


International Maritime Organizationsulphur emissions limits will have amajor impact on the cost of operations

in the cruise and ferry sector over thecoming years, as all potential means tomeet the requirements will have an impacton fuel costs; capital expenditure onabatement technologies, or fuelinfrastructure onboard; and ashore in thecase of liquefied natural gas (LNG).

The coming regulations also haveconsequences for lubricants, according toCastrol Marine, where engine lubricantselection is determined by the fuel in use.Paul Harrold, Castrol Technology ManagerMarine and Energy (pictured), said CastrolMarine’s engine oil experience and researchprogrammes are key to ensuring future

lubrication needs can be met.

“While lubricant selection isstraightforward for operation on single fuels,new challenges will arise if multiple fuelsare used,” he said. “Engines burning heavyfuel oil (HFO) can use 20-50BN oilsdepending on the fuels’ sulphur levels andthe severity of the service, while enginesoperating on distillate fuels can use 12-20BN, again depending on severity ofservice. So vessels operating permanentlyon distillate fuels, such as those operatingsolely in ECAs, can use a lower BN enginelubricant, while those burning only HFO(with or without a scrubber) will require ahigher BN lubricant.

Mr Harrold added: “Given the highercosts of distillate fuels, the pay-back periodfor exhaust gas scrubbers will provide astrong financial incentive for operators to fitscrubbing technology where the spacepermits and will encourage acceleration ofthe development of scrubbing technology.

“A potential pinch-point could be thescrubbing industry's capacity to build and fitscrubbers in the surge in last minute demandprior to the new sulphur fuel limits in 2015.Vessels that choose not to fit scrubbers, butoperate on HFO outside ECAs and on lowsulphur fuels inside ECAs, risk corrosion iftoo low a BN lubricant is used, or potentialbuild-up of ash deposits (from the metalalkalis delivering the BN) if the lubricantselected is too high BN.

“This will be particularly true if LNG isthe chosen low sulphur fuel and Castrol iscontinually building its experience of goodoperation on lubricating engines burningLNG as well as engaging with OEMs onlubricant needs for the future.”

Lubes come unstuck underemissions regulations

Australia’sclaim underthreat

Australia’s ability to preserveits massive Antarcticsovereignty claim is under

long-term threat, according to apolicy paper released by leadingthink tank the Lowy Institute.

It says international interest inAntarctica is rising, with major powerssuch as China and Russia voicing theirinterest in the continent's potential forminerals and energy.

Resource exploitation inAntarctica is currently prohibited underan international treaty but countries canwithdraw from this after 2048.

The paper, issued on August 8th,raises questions about Australia’sability to preserve its claim to 42% ofthe continent. Australia’s limitedAntarctic activity is based almostentirely on science and environmentalissues and does not reflect nationalsecurity or energy concerns, the

paper notes.

Eco-adventuresrecycle theirway aroundthe world

ECOVISION


Your choice of hull protection,particularly for vesselstraversing harsh conditions, can

bring delight or despair when it comes todrydocking and finding out whether thehull coating is intact and ready for thenext voyage, or stripped down to bare,unprotected steel and in need of anexpensive re-coating.

Luckily for the superintendent,engineers and paint specialists whointercepted the Royal Research Ship(RRS) Ernest Shackleton during adrydocking in Denmark in early 2011, thehull was found to be in top condition andvirtually undamaged, despite two seasonsof battering through ice up to 2.5 metersthick while facing high levels of abrasivegravel and even volcanic lava.

Stephen Lee, Senior Marine Engineerfor British Antarctic Survey (BAS) – a topenvironmental research centre,responsible for the UK’s scientificactivities in Antarctica and operator of theErnest Shackleton – described hisastonishment when the vessel wasbrought in for dry docking atFrederikshaven, Denmark, earlier thisyear: “The biggest thing was the surpriseat seeing the areas where you’d expect itto have taken a lot of damage...when shefirst came out of the water and onto the

blocks it was a complete shock to all thosepresent. All of us there commented on thecondition of the hull and in particular thatthere was negligible damage at the bows,merely some scratch marks. None of uswould have predicted this. I then jokinglyasked the question, ‘Are you sure you’vetaken this ship to the ice?’”

This was in sharp contrast to thevessel’s previous drydocking, wherealmost the entire hull coating wasdiscovered to have been stripped away,revealing the naked steel beneath – itsconventional ice-going underwater hullcoating was simply no match for theextreme conditions which are inevitablefor Antarctic voyages.

The vessel’s recent drydockingsuccess has been attributed to Ecospeed –an environmentally-safe underwatercoating system from Hydrex UnderwaterTechnology, comprised of vinyl ester andwith a high concentration of embeddedglass platelets, which act as a durable,impermeable barrier.

Following application, Ecospeedcomes with a 10-year guarantee but isexpected to last thelifetime of the vessel,in contrast to moretraditional anti-fouling paints, where

a new application is required with eachdrydocking. On application, two coats ofEcospeed are typically required but thesecan be applied to newbuildings at anypoint in the building process, even if aperiod of bad weather or winter occursbetween applications.

Ernest Shackleton was coated withEcospeed in 2009, and has sinceperformed commercial survey workduring the northern summer, followed bythe loading of cargo and scientificequipment in the Humber for return to theAntarctic. Mr Lee added that during thevessel’s drydocking in early 2011, thepaint inspector, Howard Jess, took dryfilm thickness measurements around thehull, which he noted as 970-1000 micronson average, compared to the originalapplication of 1000 microns DFT on theentire underwater hull, meaning barelyany thickness had been lost, with chipsand scrapes totalling less than 0.1% of thetotal surface area.

Much like Sir Ernest HenryShackleton – the famous British Antarcticexplorer and vessel’s namesake – the

Ernest Shackleton will continue itsmissions with fervour, whateverextreme weather conditions it may encounter, with its hull in safe hands.

A hull lot of protection

As the economic downturncontinues to influence decisionsover building projects worldwide,

wise players within the heavy lift sectorare adapting to take advantage of growingopportunities in the wind, mining andoffshore sectors but as a situation of‘overtonnage’ continues to force pricesdown, only the strongest will survive.

Casualties have included Germanheavy lift carrier Beluga, which filed forinsolvency in March this year, as owners and limited partnership(Kommanditgesellschaftm, KG) houseswithdrew their interests from the company.Oaktree Capital Management – a USinvestment firm which controlled 49.5% ofBeluga shares and specialises in investmentin sectors experiencing downturn ordistressed debt – swooped in to take thereins of the floundering company and inJune, Beluga’s successor, Hansa Heavy Liftwas launched.

Roger Iliffe, Senior Vice President atOaktree Capital Management, wasappointed Chief Executive Officer of thenew entity and as he told SMI, Hansa HeavyLift is learning from the mistakes of itspredecessor: “Beluga had very little in theway of management techniques and it veryquickly outgrew its own capabilities. Wehave a much more focused fleet. Belugahad handy-sized containerships, whichwouldn’t be considered heavy lift ships atall in our definition of the market. Belugahad a more eclectic, project-focused fleet.”

Oaktree Capital Management serves asthe only equity investor in Hansa HeavyLift and its vessels, but when the firmoriginally invested in Beluga, most of itsfunds were soaked up in vessel debt, ratherthan into Beluga itself. This allowed

Oaktree to obtain the ships which HansaHeavy Lift now operates, preventing anyfurther reliance on the KG markets. Thecompany currently has 17 vessels on itsbooks under four flags; Germany; Antiguaand Barbuda; Liberia and Gibraltar, but MrIliffe said his company was also in talkswith Russian partners who are keen for thecompany to have a Russian-flagged vessel.Hansa Heavy Lift is also currently awaitingfive newbuildings (one F-class and four P2-class vessels).

So, an exciting start for this newlyformed company, but Mr Iliffe confirmedhe is ‘absolutely’ concerned about the issueof overtonnage within the heavy lift sector.“I think anyone who’s not concerned abouttoo much tonnage in heavy lift has theirhead stuck in the sand,” he said.“Unfortunately, most of the tonnage wasordered in 2007 to 2008 but our figuresshow that from the beginning of 2009 untilpotentially the end of last year, no-oneordered anything with the exception ofCOSCO (China Ocean Shipping (Group)Company) which had some very large shipsin the 30,000 tonne plus range.”

He added that there seems to have beena slight return to the market this year, butwith orders for “ones and twos” as opposedto large orders. “It’s about working off thebacklog which was created three years agoin 2008,” Mr Iliffe said, adding that theovertonnage situation has forced pricesdown significantly. Though marketconditions are poor at present, he said hiscompany is confident that by the close of2012, prices will start to “come back”. Inthe meantime, Hansa Heavy Lift hasresolved to survive by optimising itsmanagement processes. “It gives us someroom for confidence but I wouldn’t call

myself exuberant” he said, noting thatat present a “cautiously confident”mood is the sensible approach.

According to Mr Iliffe, Hansa HeavyLift has adopted a ‘straightforward’business approach. All of its vessels areheavy lift or super heavy lift and the firm isworking to a modern, six-step managementtechnique which allows customers to tracktheir cargo at all stages.

With offices in Bremen (due to relocateto Hamburg in 2012), Singapore and aforthcoming branch in Houston, HansaHeavy Lift has retained a high number ofex-Beluga staff (around 50 outof its 65 employees) andbenefits from afully integratedteam where allstaff, includingengineering, fleetmanagement, charteringand sales personnel,work in-house. Mr Iliffesaid the decision tokeep such serviceswithin the companyis vital owing to the‘complexities’ of itsvessels and cargo.

Hansa Heavy Lift iscurrently making strides in thewind, mining, and offshoresectors and Mr Iliffe said hiscompany will benefit from Oaktree’sprevious experience within the oil andgas markets as the company owns GulmarOffshore – a subsea contractor with a fleet offive diving support vessels. He added thewind market is looking positive for heavy liftplayers but said caution is required as thisdoes not translate into too many freight tonne

MARKET SECTOR HEAVY LIFT


loadLightening the

miles. “It would be good for us if theChinese producers start to pick up, astransporting wind turbines from Chinato the North Sea is a pretty goodbusiness but transporting them fromNorthern Germany to the North Sea isnot really worth much to us,“ he said.

Concerning the market for heavy liftin the mining sector, Mr Iliffe noted thatlong term, there are positive trends, witha high level of capital expenditure andlong-term perspectives. He said that portconstruction and the expansion of thePanama Canal should bring further

business tothe heavy lift

sector and said heavylift requirements for the

atomic energy market are alsoincreasing, particularly in Russia, where

officials “still see some pretty good exportmarkets for atomic energy”. He added that“despite the dire situation in Japan”following the earthquake and tsunami ofMarch 11th, the region is another growingsector for heavy lift in the long term.

Holger Hinrichs, Managing Director offellow German heavy lift providers COLI

Schiffahrt & Transport and CPCConsolidated Pool Carriers, agreed thatalthough the Japanese earthquake was adistinct human tragedy, it has brought somefurther business opportunities for the heavylift sector: “For years Japan was mainlyexporting its high technology andmechanical products. Since the tsunami andearthquake, demand for import goodsrelating to the power plant and energy sectoras well as the infrastructure/road sector hasincreased substantially. Apart from that,green energy business is getting more andmore popular in Japan these days. Windpower shipments to Japan are regularbusiness for the COLI Group.”

Mr Hinrichs added that the heavy liftsector has had to bear the brunt of cancelledand delayed building projects. He said that2009 to 2010 was a relatively busy year forthe project cargo sector, owing to projectsbeing contracted long term, but he noted thatin 2011 “there is clearly lack of project cargoon a worldwide basis with only a fewexceptions”.

“Demand has changed already – there isless cargo. However, the carrier scene isdifferent as one of the ‘leaders’ hasdisappeared and the fleet is now in the hands of owners and operators who are more careful in their forecasts and planning,” MrHinrichs said.

He explained that from the COLIGroup’s perspective, a positive effect of thisrecent development in the first and second

quarter of 2011 is that “the market isstabilising on a realistic basis”. “Shipowners and carriers with expensive tonnagewill face problems for a longer period,certainly into 2012 and possibly beyond thatperiod. Our company, with the position of abroker working with reliable carriers on aworldwide basis, is going to benefit fromthis recent development,” he said.

Commenting on the Japaneseearthquake disaster, F.B. Bedford, a memberof the board at Dutch heavy lift providerJumbo Shipping, said this will "put back theredevelopment of the nuclear industry” buthe added this will only account for arelatively small sector of the heavy-liftmarket, as the nuclear industry may, in part,be replaced by wind or possibly gas-firedpower.

When asked how the recession willcontinue to hit the heavy lift sector, MrBedford said: “The current financialinstability which is rocking the world andshows no clear signs of steadying isobviously both a challenge and concern.This works in two ways – projects will tendto be delayed or curtailed while their ownersabsorb the currency impact and thedifficulties of pricing in what may be aworld where inflation becomes a majorchallenge. At the ‘work-face’ level there arecurrently too many ships chasing too fewcargoes, and the perpetual challenge offinding, training and retaining competentcrews.”

MARKET SECTORHEAVY LIFT


Since the Japanese tsunami and earthquake, the demand forimport goods related to the power plant and energy sector, aswell as the infrastructure sector, has increased substantiallyHolger Hinrichs, Managing Director, COLI Schiffahrt & Transport

“ “

I think anyone who’s not concerned about too much tonnage inheavy lift has their head stuck in the sandRoger Iliffe, Chief Executive Officer, Hansa Heavy Lift“

“

However, he warned that the term‘global downturn’ is a misnomer,particularly since Asian and Brazilianmarkets are ‘pretty buoyant’. Mr Bedfordadded that demand for project cargo shipsmay have decreased because manufacturinghas generally moved closer to project sitesand so, less ship-revenue miles are required.“This is exacerbated by too many new shipsbeing delivered but actual project cargovolumes are stable and even showing signs

of increase. The offshore industry,including rig-moves is indeed experiencingan upturn in demand particularly from 2012to 2013 onwards,” he added.

When asked if he is worried by anovercapacity of tonnage within the heavylift sector, Mr Bedford said he was “moreannoyed than concerned” over this issue:“It will sort itself out in due course - I seequite a lot of what I would term ‘mid-capacity’ tonnage retreating into what used

to be called “general cargo” sector andearning their keep there.”

Noting how the overtonnage problemhas forced freight rates down, he said thatfor operators who have “financially over-extended” themselves with loans, “the shortterm outlook must be very grim and we canexpect some more bankruptcies or bank-forced sales”. For those looking to purchasenewbuildings, Mr Bedford cited vesselconversions as a wiser option: “A wellplanned conversion, aimed to achieve aspecific result and based upon a suitable,well-maintained and strongly-built ship iscertainly a worthwhile option in a poormarket.”

But how can sensible operators benefitwhile their competitors are feeling theeffects of their vessel spending sprees?Roger Iliffe concluded: “We definitely seein the next 12 to 18 months, there will be anumber of other distress situations arisingamong those companies who benefitedfrom the KG market and ordered too manyships. I don’t know who those will be –they’re more likely to be NorthernEuropean than otherwise. To a certainextent, we see that as an opportunitybecause we’re well-placed financially andif we’re able to pick up good ships at areasonable cost, we’ll do so over the next18 months.” ■

MARKET SECTOR HEAVY LIFTIm

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Germany’s Lloyd Werft(Bremerhaven), one of northernEurope’s main exponents of the

refurbishment and conversion industry, isto convert Harren & Partners’ heavy liftvessel Combi Dock IV into a specialisedOSV (Offshore Support Vessel), theredelivery being a very short period. It isonly 19 months since the vessel, as anewbuilding, left Lloyd Werft. The heavy-lift dock ship then arrived back at theshipyard during early August.

By the time of going to press, the 162.3m long newbuilding will be converted forOffshore Installation Group (OIG) - newlycreated by Harren - into the OIG Giant 11.She will enter service as an offshore supportvessel from the end of September. “It’s notjust the tight deadline that is a challenge forLloyd Werft”, said Lloyd Werft’s ManagingDirector Rüdiger Pallentin. He alsoexpressed delight that the Bremen shippinggroup had again placed its trust in the shipyard and given it yet anotheropportunity to prove its global reputation asa leading builder/converter of specialisedships. “It’s a first-rate job and a sportingchallenge in such a short time-frame, butwe are used to that here at Lloyd Werft,” headded.

For the conversion of Combi Dock IV,Pallentin and his team can also call uponexperience gained with anothernewbuilding - Combi Dock 11. That vesselentered service in the Gulf of Mexico inAugust 2008 as the oil-rig supply ship BlueGiant and today operates as OIG Giant 1for OIG. Both heavy-lift dock ships are partof a series of four built at Lloyd Werftbetween 2007 and 2010.

Harren & Partners has been not only very successful with the Combi Dock ships within the German/Danishshipmanagement joint venture Combi Lift,but has also shown, in the development of

the basic ship concept with Lloyd Werft,that it has an excellent feel for new markets.When the yard re-equipped the first twospecial ships for service in 2008 and 2010,the Bremen firm brought US investmentbankers Goldmann Sachs Capital Partnersonboard. Under the leadership of Harren’sManaging Director Heiko Felderhoff, thejoint venture will be jointly responsible forthe future strategic growth of the OIG andwill steadily expand the fleet.

As with the Blue Giant three years ago,the future OIG Giant 11 (ex-Combi Dock1V) will also get a heli-pad on her bow.Also, like Blue Giant, she will get anadditional, suspended seven-deck extensionto the forward superstructure containingcabins, leisure facilities, larders and a waterpreparation and a biological purificationplants. This time, however, the facility willnot be a series of stacked containers but asingle module.

The suspended module will have agenerous 13 m x 18 m floor area and rise21 m out of the heavy lift cargo hold. Madeof steel, it will be manufactured in twosections at WST Weser Stahlbau, located inBremerhaven opposite Lloyd Werft, beforebeing hoisted onboard by the giant floatingcrane Enak and outfitted by the shipyard.The new accommodation block weighs 500tons and will house an additional 86personnel.

The ship’s two forward, heavy-liftcranes are being significantly lengthened toenable them to reach as far and as high aspossible. As with Blue Giant, the new OIGGiant 11 will also have a moon-pool on thestarboard side of the loading bay. Diversand equipment can be lowered into thewater through this 7.80 m x 7.40 m openingin the ship’s bottom. Lloyd Werft will alsoinstall six more generators to ensure thatnew capacities and workloads get the powerthey need.

OIG Giant 11 will also get some veryspecial capability with the installation of anultra-modern and complex DynamicPositioning System (DPS). The system isnew to this ship and consistent with itsspecialist new tasks. GPS satellite controlwill ensure that during future operationsOIG Giant 11 will be within centimetres ofits required position at sea. This requires therelocation and enlarging of the ship’sforward bow thruster and the addition of afurther hydraulically retractable bowthruster aileron. Two stern thrusters are alsobeing installed.

The real clout of OIG Giant 11, broughthome only now by DPS, lies below her hullin the form of two Azipod thrusters, whichare also hydraulically retractable. TheAzipods can be turned from the bridgethrough 360º, pointing up the specialmanoeuverability of this 162.3 m long and25.4 m wide giant. Their propellers have adiameter of 3 m and hang 3.3 m below thehull bottom.

Lloyd Werft will deliver, what is almosta newbuilding, to Harren & Partners and theOIG during the end of September. Her firstjob will not have anything to do with oil orother seabed mineral resources, but withrenewable energy because OIG Giant 11will transport three turbines for a tidalpower station. ■

Oman Drydock opensfor business

After the major foundation work ofthe Middle East’s Oman DrydockCo (ODC), Duqm, was completed

during April this year (2011), ODC beganrepair operations immediately with therepair of two split-hopper vessels bothowned Belgium’s Jan De Nul Dredging,

SHIP REPAIR


Conversion contractfor Lloyd Werft

proving a historic step and a definingmoment, not only for ODC, but for thewhole Duqm region and Oman as a whole.This progress has continued to allow ODCto enter the Middle East repair business asa major force.

Following the first two repair projects,ODC carried out repair works on an Omanilanding craft named Halaniyat, which isowned by National Ferries Company,Oman which underwent various repairoperations including steel renewal, paintingand machinery repairs etc. The ship was inthe yard for 12 days.

The 22,525 dwt, 1,700 teucontainership, Pacific Trader (ex-DelmasNacala), owned by Germany’s HermannBuss, was redelivered on August 22nd after39 working days in the yard undergoing900 m of cell guide renewal andhydroblasting and painting of 12 ballasttanks. The 8,830 dwt cement carrier Raysut1, managed by Greece’s Sekur Holdings Incwas drydocked on July14th for steelrenewal in cargo tanks (approximately 150tons) and various machinery repairs. The ship also being in the yard for some 39 days.

ODC has successfully repaired 16vessels since April, involving various typesof repairs and various sizes of ships. A totalof seven vessels are currently under repair,and six more are booked. ODC is acquiringthe necessary experience and maintenanceskills for more high-technical repairsrequired for vessels, such as LNG tankers,and conversion projects.

The Omani Government establishedODC in Duqm in 2006 to develop anddiversify heavy industries in Oman inaddition to the oil refinery industry. At thesame time, South Korea’s DaewooShipbuilding and Marine Engineering(DSME) signed a management contract forthe operation of ODC. Currently 50 peopleof above manager level, including the CEO,are from DSME all currently working in theyard.

ODC secured a 1.3 m sq m area inDuqm and equipped the shipyard withstate-of-the-art facilities including twoULCC class graving docks (410m x 95mand 410m x 80m), five quays totalling2,800 m, 14 jib cranes with lifting capacityof 40 ton to 100 ton and a slop & sludgetreatment facility, including slop tanks to

store 10,000 cu m. ODC’s large facility isalso ready to serve not only the ship repairand conversion industries, but also any kindof offshore structure such as platformmodules, jackets, wellheads, etc. Themajority of shipping related companiesworldwide consider that ODC is located ina favourable position outside the Straits ofHormuz and will inevitably play animportant role in the Middle East shiprepairand conversion industries. ■

MMHE continues itsgrowth in the LNG

tanker repair market

Malaysia Marine & HeavyEngineering (MMHE) in PasirGudang, has repaired 12 large

LNG tankers during this year. Only fivehave come from Malaysia InternationalShipping Corp (MISC) – the 152,300 cu mSeri Bijaksana, the 137,100 cu m PuteriNilam Satu, the 148,000 cu m SeriAmanah, the 130,405 cu m Puteri Zamrud,and the 130,000 cu m Tenaga Satu, whichis being converted to a Floating StorageUnit – FSU Lekas. All these LNG tankersare of membrane design.

MMHE has repaired three ships fromOman Shipping Management – the 138,000cu m Sohar LNG, the 147,200 cu m IbriLNG, which entered the yard on twoseparate occasions (all spherical), threefrom South Korea’s Hyundai MerchantMarine (HMM) – the 125,182 cu mHyundai Utopia, the 135,000 cu HyundaiTechnopia (see top left), and the 125,000 cum Hyundai Greenpia (all spherical), andSTX Panocean’s 126,400 cu m STX Kolt(Membrane).

MMHE has a joint venture with SouthKorea’s Samsung Heavy Industries (SHI)to develop MMHE’s penetration in theLNG tanker repair market. ■

SHIP REPAIR


Hermann Buss’ containership, Pacific Trader (ex-Delmas Nacala) in Oman Drydock

Coupling an evidently keen price witha track record in passenger shipconstruction, Mitsubishi Heavy

Industries recently signed a memorandum ofunderstanding with Carnival Corporationcovering two 125,000gt cruise vesselsdestined for the US group’s German brand,AIDA Cruises. The project represents aswitch of tonnage sourcing from Europe toAsia for the AIDA fleet, which is currentlybeing expanded through a seven-ship seriesat domestic shipbuilder Meyer Werft,including two outstanding deliveries in 2012and 2013.

The vessels from Japan would eachaccommodate 3,250 passengers and rank asthe largest ever constructed for AIDA, withscheduled completions in March 2015 andMarch 2016.

Although the ships are within the scopeof the German yard, MHI’s emergence as thestrongest candidate for the deal underscoresthe latter’s new strategic focus. Moreover, theJapanese group is no stranger to Carnival,having delivered two ships for the PrincessCruises’ brand in 2004. In the context of thecontrolling contractual group, the prospectiveAIDA business thereby represents the returnof a past client. Carnival has put the all-incost for these vessels at approximately€140,000 per lower berth, indicating a per-ship price of about €455m.

At the same time, Carnival has extendedits 20-year contractual relationship withItalian shipbuilder Fincantieri by ordering a132,500gt vessel for the Costa Cruises brand.

Due to be handed over in October 2014, shewill become the largest ship in the Costa fleet,offering a lower berth capacity of 3,700. Onthe basis of the overall per-berth cost of someEuro 150,000, the newbuild order value isaround €555m.

As a consequence of landing a contractfrom the BG Group of the UK to provideshuttle tanker capacity in Brazilian waters,Teekay Offshore has returned to SamsungHeavy Industries for a new series of purpose-designed vessels. The order comprises fourdynamic-positioning, offshore loaders of154,000dwt, and has been transacted at a totalcost of approximately $480m. The vesselswill commence operation on 10-yeartimecharter to BG, under an agreement whichincludes provisions for contract extensionsand also vessel purchase options.

Teekay is the world’s largest operator ofshuttle tankers, having taken over Statoil’sshipping entity Navion nine years ago.Samsung has provided the company with itsmost recent tonnage, based on a highlysophisticated design of 108,700dwt, led bythe Amundsen Spirit and Nansen Spirit in2010, followed this year by third and fourthsisters Peary Spirit and Scott Spirit.

Chevron Shipping has also ordered a154,000dwt shuttle tanker from Samsung forhandover during 2013, while the Koreanyard’s latest dealings with Teekay haveadditionally encompassed an FPSO (floatingproduction, storage and offloading) unitspecially designed for duty in harsh-weatherregimes. The FPSO will service a newcontract entered into between Teekay and BGNorge, specifying deployment on the Knarroil and gas field in the North Sea, with chartercommencement in the first quarter of 2014.Fully built-up cost is stated as approximately$1bn.

Following an initial award to Samsungduring the first half of the year of six LNGcarriers of 160,000m3 capacity, Oslo-listedGolar LNG has extended its newbuildprogramme at the Korean yard throughcontractual commitments to fifth and sixthgas carriers of the same type, and through adeal for an LNG-FSRU (floating storage andregasification unit).

The combined value of the nine vesselsis close to $1.8bn. The six previously-bookedLNGCs are due in 2013 and early 2014, andSamsung has undertaken to complete thesubsequent pair during 2014. The 170,000m3LNG-FSRU is due for handover inSeptember 2013.

Following April’s letter of intent for twoLNG-FSRUs of 170,000m3 capacity, HoeghLNG has now signed a firm contract withHyundai Heavy Industries covering theconstruction of the two ships. In addition, theagreement includes options on up to fourfurther vessels of the same type. The first twovessels are commanding unit prices of$253m, with deliveries in the final quarter of2013 and opening quarter of 2014. Theenvisaged third and fourth ships would alsobe required in 2014.

This year’s surge in new contracts forcontainerships, pushing the global ordervolume to a level corresponding to nearly30% of the existing fleet, has led to warningbells being sounded in certain quarters of theindustry. The fact that allusions to‘overbuilding’ and looming capacity excessesare being made by leading names which havethemselves made major, fresh commitmentsto new tonnage in 2011 will no doubt havebeen met with a certain scepticism in somecircles.

Daewoo Shipbuilding & MarineEngineering is the beneficiary of one of thelatest containership projects, announced inAugust and encompassing five vessels of13,100 teu for Hyundai Merchant Marine. Itis understood that per-ship value is about$135m-equivalent, and entails a deliveryschedule starting in the first quarter of 2014.The project expresses a bid by HMM, and itsNew World Alliance partners APL and MOL,to keep pace with investments in largervessels by rivals including Maersk Line andMediterranean Shipping Company.

The scale of China’s shipbuildingcapabilities and ambitions continues to findnew expression, through the ups and downsof the various global shipping market sectors.Among the latest developments, RongshengHeavy Industries has landed a contract for aseries of 10 bulk carriers of 205,000dwt. Theowning interests behind the deal for the so-called ultra-capesize or Newcastlemax classhave not been identified. The enlargement ofRongsheng’s already considerable bulkerorderbook comes despite considerable, rate-depressing overcapacity in the sector.

Informed sources consider that China’sleaning towards conducting more of its owninternational trade using Chinese-controlled,Chinese-built vessels will generate furthernew orders in the coming months, even ifmarket conditions appear unfavourable. ■

73

NEWBUILDCONTRACTSBOLD OWNERS,DETERMINED YARDSMAKE THE RUNNING

By David Tinsley

NEWBUILDING

SEPTEMBER/OCTOBER 2011 ISSUE 33 SHIP MANAGEMENT INTERNATIONAL

Born in the UK in 1959, Jeremy Penn attended OxfordUniversity, gaining a Master of Arts degree in 1981, and went on tocomplete the Advanced Management Programme at Harvard

Business School. Following a fruitful 20-year career at the Reutersnews agency, including the role of Managing Director at ReutersAsia, Mr Penn joined the Baltic Exchange as Chief Executive in2003, and as he told SMI, there are some key contrasts between thetwo roles: “The biggest difference is scale. Probably my biggest jobwhen I was at Reuters was being in charge of their Asian business,where I had over 2,000 employees and £500 million turnover. At theBaltic we’re just approaching 30 employees so that’s the biggestchange but of course, the upside of that is that you get to engage indetail on far more issues.”

When asked what kind of leadership the modern-day BalticExchange requires, Mr Penn said his role is particularly wide-ranging,encompassing all aspects of business – from dealing with technologyissues; to managing sales and marketing; to meeting with the Britishgovernment to discuss changes to the taxation regime; or taking partin dispute resolution processes – Mr Penn said the diverse nature ofhis work is “what makes the job interesting but of course, “it has tobe done by someone who is prepared to engage with every aspect ofthe Baltic’s business and who is willing and interested to be as wide-ranging as that.”

Echoing his all-embracing approach to working life, Mr Pennhas a varied set of hobbies which he embarks on in his spare time,including winter sports: “Skiing is my big thing. I seem to be pursuingevermore interesting physical challenges. In April this year Icompleted the Haute Route (a ski touring route from Chamonix,France, to Zermatt, Switzerland) and in a couple of weeks I’mclimbing up Mount Blanc for the first time.” As part of his bucketlist, Mr Penn said he’d like to visit a couple of his preferred skiresorts: “A lot of people who know me would say it isn’t possible forme to do more skiing! There are a couple of places I’d like to ski –La Grave in France and I’d like to go back to Jackson Hole(Wyoming, US).”

Though his business life has provided the opportunity for travel,Mr Penn added that prior to reaching his autumn years, he’d like tovisit some key locations as a tourist. During his time at Reuters, MrPenn lived in Asia but he never visited Angkor Wat – a huge complexof temples in Angkor, Cambodia, dating back to the 12th century. MrPenn said he would like to visit the complex one day but Laos andNepal are other destinations in South Asia which he is keen to see.“I’ve also never really been to South America – I’d like to ski in Chileand go to Argentina and Brazil” he added, explaining that his one-

SHIPMANAGEMENT


Jeremy PennChief Executive,

the Baltic Exchange

off visit to São Paulo on business for aquick, 24 hour trip, didn’t really providemany opportunities for tourism, hence hewould like to return to Brazil and visit Riode Janeiro.

Back to discussing business, Mr Pennadded that his roles at Reuters and the BalticExchange have both afforded him theopportunity to ‘monetise’ information, andthe intellectual property associated withinformation, particularly on the financialside – skills which have served him well asthe Baltic Exchange continues to evolve andchange to suit the future.

Describing how the Baltic Exchangehas evolved in recent years, Mr Penn said itsmajor role is now to act as a provider of“benchmark information” for the shippingmarketplace: “We’re still very much amarketplace organisation but rather thanproviding a trading floor, we now providebenchmark rates for dry bulk and tankerroutes around the world. Those rates areused for settling many different contracts,including forward freight agreements whichwe are very much involved in promoting,and we work closely with brokers in theFAS market to promote that marketplace ona worldwide basis. Leading on from that hasbeen the creation of the BaltEx tradingsystem which is a Financial ServicesAuthority (FSA) regulated trading systemfor freight derivatives.”

So, has an electronic-based marketplacecreated a more challenging environmentwithin the Baltic Exchange? “I think it ismore and more challenging as we’re nowrunning a regulated business for anelectronic marketplace for FSAs, we’reproviding a lot more data to the market thanwe did and we’re providing forward curveson a daily basis for all the FSA contracts.”

Highlighting the Baltic Exchange’sefforts to publish data such as dry bulk routeand tanker information during Asianbusiness hours, in order to respond to theneeds of the Asian marketplace, Mr Pennsaid: “We think it’s very important that theBaltic is seen to serve and does indeed servethe worldwide shipping marketplace. Itwould be fatal for us if we were perceived tobe some sort of European only or London-centric organisation, so its vital that peoplein Asia acknowledge that the Baltic servesthem, in the same way we as serve peoplein the European or American time zones.”

Much akin to the Baltic Exchange’sefforts to excel in all of its business areas,Mr Penn harbours some sporting ambitions,including his hopes to complete a marathonin under four hours: “I ran a marathon a fewyears ago and I’d like to do that again, if notnext year then maybe the year after. I’d liketo run it injury free and do it sub four hours.”Last time he took part in a marathon, MrPenn soldiered on despite a calf injury: “Iwas doing it for a charity and so decided to

go ahead and do it anyway, which probablywasn’t very wise – it took me two years torecover.”

Alongside his personal ambitions, MrPenn said on the business side of things, infuture he would “like to see a return to thehigh rates, or at least something approachingthe high rates that we saw in the years upuntil 2008”. Though he acknowledged it’sunlikely that such ‘hot’ rates will occur, hesaid that “good, solid, profitable rates and areduction in overtonnage” would be positivechanges for the future.

Describing some more of his personalgoals, Mr Penn told SMI about his interest incabinet making, through which he hascreated furniture for family and friends. “Ifand when I ever have more time, I’llprobably go on some courses” he said. “I’dlike to do some formal training – it doesn’tmatter if it involves a qualification or not butI’d like to do some formal training andspend more time on it because you need tobe doing things all the time in order todevelop your skills.”

Adding some extra items to his bucketlist, Mr Penn said: “I’ve attempted lots ofthe classic long books so there are plenty ofthose I’d like to finish, including Ulyssesand Finnegans Wake by James Joyce and I’dlike to have another attempt – I think itwould be my third or fourth – at War andPeace (by Leo Tolstoy).” He added that he’dlike to go to the theatre more as at present,he only manages to see a show once everycouple of months.

Drawing his list of ambitions to a close,this adventurous Chief Executive describedhis love of “good food and wine”: “I was

able to get a reservation at the Fat Duck(Heston Blumenthal’s restaurant inBerkshire, England) a few years ago andthat was the most spectacular meal I’ve everhad. You have the tasting menu where yougo through about 12 courses and it reallywas spectacular – excellent and fun – that’sthe most important thing I once missed anopportunity to eat at the Auberge du PèreBise (a gourmet restaurant in Talloires, Lacd'Annecy, France), so I’d quite like to gothere.” ■

THE BUCKET LIST SHIPMANAGEMENT


A lot of people who know me would say it isn’t possible forme to do more skiing!

I’ve never really been toSouth America – I’d like toski in Chile and go toArgentina and Brazil

“

“

“

“

THE BUCKET LISTSHIPMANAGEMENT

Jens OlsenPresident, International

Shipsuppliers & ServicesAssociation and

Director/Part-owner,J.H.Olsen & Co, Copenhagen

Jens Olsen is on a mission and it’s not one he’s about to give uplightly.

Despite having been in office as President of the InternationalShipsuppliers & Services Association (ISSA) for nearly three years,he still has a burning desire to drive the association forward andincrease the recognition of the quality of service and goods suppliedby its members.

For all his working life, this affable Dane has been involved inmaking sure ships have the goods they need, when they need themand it is all thanks to his father, J.H. Olsen Snr who set up the familyfirm back in 1954, which Jens now oversees.

“Ship supply is in my blood,” laughedJens. “It’s been such a huge part of my lifeand was that of my father.”

J.H.Olsen & Co was first established inDenmark as a general ship supply companyand specialist in supplying anchors andchain cables. But it was not as part of thefamily business, that Jens first learned toply his trade; he carried out anapprenticeship at Lauritz Andersen, asupplier specialising in technical stores.

After serving his apprenticeship hespent two years carrying out his nationalservice in the Danish army. Even in thearmy, Jens, who rose to the rank ofSergeant, put his apprenticeship to good usein the Supply Corps. His time in the armedforces was followed by two years of workexperience overseas visiting ship suppliersand shipping companies in the UK,Germany and Holland to gain even morevaluable knowledge before heading back tothe family business in 1968.

He put his army experience to good useby starting to handle military supplies; andsupplied not only the Danish armed forces,but the British armed forces and laterNATO armed forces on exercise inDenmark and northern Europe.

“We still supply the military butunfortunately we are running out of

soldiers! At the moment we are supportingsome military units in Afghanistan,” heexplained.

So, how would he describe his years inthe ship supply industry? There haveobviously been many changes.

“Competition has been fierce andfalling product prices has meant ship supplyhas become less profitable so finding aniche in this business is vital for survival;something we have had to do over theyears.”

Besides the military side of thebusiness, J.H. Olsen & Co started a sidelinein the beginning of the 1970s where itbecame an agent for Coca-Cola lookingafter the important contract with the USNavy, delivering supplies to theMediterranean and Atlantic Fleets frompremises in Nice, France.

That side of the business has ended andthe company now deals mainly with the bigDanish ship owners and supplies themajority of the cruise ships that sail intoCopenhagen, supplying not only food, butalso equipment and spare parts.

“The cruise ships are only really herein the summer months before they move tothe Caribbean and Mediterranean. For therest of the year we deal with ships visitingCopenhagen for fresh provisions.”

Admitting that his associationresponsibilities can take their toll on hiswork time, Jens relishes his role asPresident of ISSA because it enables him tokeep a finger on the pulse of the industry.He is about to come to the end of his firstpresidential term but was elected for afurther three years at this year’s annualConvention which took place on the DFDS-owned ferry the Crown of Scandinaviasailing between Copenhagen and Oslo inMay.

He has drawn up a road map of actionpoints he would like to see implementedbefore the end of his second term. However,if he could wave a magic wand beforeleaving his presidential role, what would beon his ‘wish list’?

“Top of my list, and something which Imonitor very closely, is prompt paymentfrom customers. Suppliers around the worldare hankering for a system which willensure payment from ship owners. They areasking me why ISSA cannot help to makesure we get paid. Of course, it is our wishtoo, and we are looking at different ways tohelp our members.

“Cash flow is our biggest problem andwe are very vulnerable when it comes to thecustomers. Because if they don’t pay us, westill have our suppliers to pay and any delay


in payment is hurting our chances ofsurvival.”

He also hopes that all ship suppliers whoare members of ISSA will become ISSAQuality Standard approved: “This willsignify that the companies are serious andthey want to provide a service that shipowners expect.”

The ISSA Quality Standard was devisedto set the minimum standard bench-mark forthe ship supply industry that ISSA Membersshould strive to achieve and an updatedStandard came into effect on 1st January thisyear to take into account a number of freshinitiatives. These included catering standardsonboard ship and many environmentalconsiderations such as avoiding the use ofexcessive packaging and better control of thedisposal of toxic and carcinogenic materialin port.

Increasing the potential for newmembers in parts of the world where theassociation is not so easily recognised is alsokey and this is why Jens, at the time ofspeaking to SMI, was looking forward to thefirst ISSA regional meeting in West Africa.

“There are still people around who arenot members of the association, and what weare doing now is to hold regional meetingsin places where we would not normally gofor the annual Convention. We go as theISSA Executives with a selective group of

THE BUCKET LISTSHIPMANAGEMENT

I’m not going to be jumping off any bridges! I have afantastic family, a lovely wife and we are both healthy, so whatmore could I ask for?“ “

specialists to tell ship suppliers in the regionabout ISSA and what ISSA can do for themand why they should be part of it. Many ofthose people do not travel to the annualConvention because of business and costsand so we take ISSA to them.”

Jens says the ship supply sector is‘special’ in the way companies cooperatewith each other: “The flexibility we have inour industry is very unique. When people aretogether we are colleagues and notcompetitors and I think that is very specialfor our industry. I see this when I go to thevarious AGMs of the different nationalassociations. We are able to talk togetherabout our problems and the opportunitiesahead.”

J.H. Olsen & Co has been a member ofthe Danish Shipsuppliers Association sincethe company was first established and Jensjoined the Board in 1990; he was electedChairman in 1992, serving for 17 years andwas also elected Chairman of OCEAN, the

European Ship Supply Organisation, in1997, a position he held for six years.

During the 16 years he has served on theISSA Executive Board, Jens has beeninstrumental in helping protect the bestinterests of the ship supply industry. Heinstigated the ISSA IT policy and, as part ofhis IT responsibilities, accepted a Boardposition in the Maritime e-CommerceAssociation.

Speaking of his ISSA role, he said:“Experience does not come from one personalone. It has come from all the Executiveswho have all contributed, and still contribute,and are extremely active within theassociation. Without the experience of otherExecutive Board members I would betoothless.”

“I absolutely enjoy my role as Presidentbecause I feel it makes a difference. In thepast five to 10 years we have manifestedourselves and we are now much morerespected than we have ever been. That is an

achievement that does not come down to oneperson but to the whole Executive Board thatI am very proud to be a part of.”

So, does Jens plan to let go of hiscompany’s reins any time soon?

“I have no plans to retire as yet and aimto carry on as long as I am happy every dayI come in! I am very active in the companyand try to be there as much as possible,because obviously the association takes up alot of my time.

“However, I will not be there foreverand don’t want to literally fall off my chair,as my father did at 84!”

When he does step down, Jens knowsthe company will be in safe hands as his sonSimon, and nephew Jørgen Arildslund arealready both involved in the day-to-dayrunning of the business.

So, when Jens is not working, or touringthe globe with his ISSA hat on, how does hemanage to unwind.

“I love to spend time at our familyfarmhouse in Sweden,” he said. “I’mhappiest when I’m swinging a hammer andsawing wood – I am very much into DIY!

“We also have a boat which is currentlymoored in Malta and I have been sailing fora number of years now.”

His career has seen him well travelled,so is there anywhere he has a burning desireto visit? Apparently not, however he has nottravelled to West Africa before so, when SMIspoke to him, he was looking forward to theregional meeting in Accra, Ghana.

“That will be very interesting and I lovevisiting new places and meeting newpeople,” he said.

Jens also used to be a keen sportsmanand played a lot of badminton, but a problemwith his knee has put paid to any sportingambitions.

Overall he does not feel there are anypersonal goals he has not achieved and isquite content with his lot: “I’m not going tobe jumping off any bridges! I have a fantasticfamily, a lovely wife and we are bothhealthy, so what more could I ask for?” ■



I love to spend time at our family farmhouse in Sweden, I’mhappiest when I’m swinging a hammer and sawing wood – Iam very much into DIY!“ “

80

ADHOCBUSINESS OF SHIPPING ADHOC

AdHocAdHocGreenwich Maritime Instituteplans Masters degree in security


Piracy has become such a huge threatthat the Greenwich MaritimeInstitute of the University of

Greenwich is planning to start a newMasters degree in Maritime SecurityManagement.

Preparation is already underway for thecourse which is scheduled to start inSeptember and is aimed at people wantingto be involved in this important and growingarea, which includes private security. TheInstitute is hoping it will be of particularinterest to people who may be leaving theRoyal Navy and Royal Marines.

The Institute, based in the Old RoyalNaval College at Greenwich, currently hasfour post-doctoral research fellows workingon piracy, along with other key areas such asapprenticeships and the governance of theRiver Thames.

“The scourge of piracy has returned, andalthough it has diminished in the Malacca

Strait it is the number one security problemin the Indian Ocean and a major problem inthe Gulf of Guinea,” said a GMI spokesman.

The Institute currently offers an MA inMaritime History, an MA in InternationalMaritime Policy and an MBA in MaritimeManagement, with all available as a full-time one year, or part-time two year course.

Although the courses are atpostgraduate level, GMI will accept studentswith relevant professional experienceinstead of a first degree – service in theMerchant Navy, the maritime industry,Royal Navy or Royal Marines all counts.The student body is expected to be a mix,with older professionals studying alongsideyounger people wanting to enter themaritime industry. Students enrolled so farinclude one hoping to become a ship brokerand a Master Mariner from Trinity Housewho will be going back to command a larger ship.

The GMI said its graduates were beingeagerly sought by employers and besidesserving in the navies, recent graduates areworking as brokers, lawyers, consultants andacademics, senior management in shippingcompanies and oil and gas companies, aswell as national representatives at the IMO.

“Teaching at this level is criticallyentwined with ground-breaking originalresearch,” said a GMI spokesman. “TheInstitute is widening its expertise to embracemodern maritime security, energy, theenvironment and disaster management.”

Although part of the University ofGreenwich, GMI is partly funded byresearch grants from major ResearchCouncils and other awarding bodies. Itsteaching is linked with a continuingprogramme of new research and fundingopportunities and recent applications includebids relating to the development ofrenewable energy and cleaner fuels.

ADHOC BUSINESS OF SHIPPINGADHOC


Save our Seafarerscampaign hits 20,000markThe Save Our Seafarers campaign

has reached a milestone, attracting20,000 supporters in the six months

since its launch.Through the group’s website they have

all sent individually signed letters to headsof government in 73 countries across theglobe, calling for a firmer stand againstpiracy.

The campaign which raises awarenessof both the human and economic cost ofpiracy, was formed by 25 of the world’slargest maritime organisations. The lettercalls for governments to address six keypoints including the authorisation of naval

ships to hold pirates and deliver them forprosecution and punishment and to fullycriminalise all acts of piracy and intent tocommit piracy under national law.

Since the launch in March,www.saveourseafarers.com has had over65,000 visitors from 175 countries to thesite, and its Facebook page has 3,748 fanswith 657 followers on Twitter.

Japanese independent shipmanagementcompanies are addressing the surgingvalue of the yen by asking ship owners

to accept a hike in shipmanagement feesand dollarised shipmanagement costs attheir overseas hubs, reports Kaiji Press.

In addition, some companies havebegun to request owners to payshipmanagement fees in yen. Given theunusually high value of the yen at Y70 perdollar, shipmanagement companies areseeing their balance sheet worsening rapidlyas they receive revenues in dollars and paycosts in yen.

While shipmanagement demand fromdomestic owners is expected to growsteadily ahead as newbuildings drip feedinto service, shipmanagement companies,headquartered in Japan, find it hard toincrease the number of ships they manageon thinning revenues and higher costs dueto the soaring value of the yen. In themeantime, they are destined to face higheryen-based office management costs and

personnel overhead costs as long as theymaintain hubs in Japan.

Furthermore, the source of humanresources for shipmanagement companies isdwindling as the number of Japanese marineengineers is on the decline. Such engineerswith abundant experience and technicalskills working with shipping operators usedto be the main source of competentmanpower for shipmanagement companies.Accordingly, shipmanagement companiesneed to hire marine engineers fresh fromschool and foster them. Training costs areincreasing as a result.

Independent shipmanagementcompanies, headquartered in Japan, aretrying hard to reduce office managementcosts and streamline operations. They arealso dollarising costs by relocating some oftheir shipmanagement functions overseas.One shipmanagement official said: "Ourbusiness will get thinner in the days aheadshould we be unable to increase yen-basedrevenues."

Goltensoffers asafe solution

Prolonged high yenis affecting Japaneseship managers

Though shipping needs a longerlong-term challenge in piracyprevention, ship repair and

conditioning specialist Goltens is helpingowners safeguard their assets and theirseafarers, and even helping insurers sleep alittle better too.

As pirates raise the stakes on a number ofkey ocean trades, simple, cost-effectivepreventive measures can be put in place toprotect ships and their crew in a matter ofhours, according to Paul Friedberg, Presidentof Goltens Worldwide Services.

"We offer a service out of our Fujairahfacility which encompasses the installation ofa combination of razor wire and hoistablespikes which effectively prevents theboarding of merchant vessels by pirates," he said. "We've already kitted out 24 Vela VLCCs, six Prisco VLCCs and six more VLCCs each belonging to Teekay and Chevron.

"I realise there are complex issuesrelating to the deployment of armed guardson merchant vessels, and the commitment ofnaval vessels, but in the meantime there areimmediate steps owners can take to protecttheir vessels and crews," Friedbergcomments. "International shipping is fiddlingwhile Rome burns."

Costs vary, depending on ship size andtype, but protection can usually be given for$20,000 to $30,000 per ship.

More comprehensive protectionmeasures are also available and have beenrequested by some owners. These include aCitadel "safe room" where ship's crew canretreat. Such spaces are fitted with satellitecommunications and emergency rations.Other protective measures include theblanking off of all port-holes and otheropenings in the accommodation block.

"Compare our protection with the cost ofdeploying armed guards," said Friedberg.

82

ADHOCBUSINESS OF SHIPPING ADHOC


The Indian government has imposedrestrictions on the entry of shipsolder than 25 years into its ports or

territorial waters. It comes after a 27-year-old ship

carrying coal sank 20 nautical miles offMumbai en route to Dahej port in earlyAugust, spilling oil. The two ships thatcollided in Mumbai port last year were also“very old”, Shipping Minister G.K. Vasantold Parliament. Ships older than 25 yearsold would be allowed entry into India’sports only if they met certain conditions, hesaid.

The proposed norms stipulate thatships should be approved by IACS memberclassification societies, have adequateinsurance coverage for collision, wreckremoval and salvage and also appoint anIndian agent to represent the ship owner orcharterer. An Indian agent should providethe port authority and the customs collectorwith details of the ship at least 48 hoursprior to its arrival, the minister said.

There are about 93 Indian ships over25 years of age, the minister said.“However, they will not be affected as theyare all classed with Indian Register ofShipping which is a full member of theInternational Association of ClassificationSocieties.”

India cracks down onold ships

IBF reachesthree-year paysettlement

Seafarers can look forward to higherwages after an accord was reached by the International Bargaining

Forum (IBF) during pay negotiations held in Miami.

The IBF, which consists ofrepresentatives from the InternationalTransport Workers’ Federation (ITF) onbehalf of seafarers, and the Joint NegotiatingGroup (JNG) acting on behalf of employers,agreed a three-year pay deal to be applied toall IBF agreements from January 1st, 2012.This includes an incremental pay increaseover this period whereby a 2% wage increasewill apply on January 1st, 2012, followed bya 2.5% increase on January 1st, 2013. A final3% increase will apply on January 1st, 2014.

This increase will be applied to anelement comprising both pay and unionfunding but the specifics of funding elements,and how the increases will apply betweenofficers and ratings, will be confirmed at localnegotiations to take place between employersand union affiliates.

ADHOC BUSINESS OF SHIPPINGADHOC


There were 546 marine occurrencesreported to the Australian TransportSafety Bureau (ATSB) from 2005

to 2010. The ATSB’s latest report on marine

incidents said there were significantdecreases in reported occurrences in 2008and 2010, however, the number of serious

incidents remained fairly constant for theduration of the period. The number ofaccidents fell from eight each year from2005 to 2007 to three each year from 2008to 2010, which reflected the decrease infatal accidents and people missing duringthe second half of the period, it said.

Injuries sustained were mainly to oneperson in each occurrence; however, therewere occasional occurrences where morethan one person was injured.

The West Australian and Queenslandcoasts had the most marine occurrences,followed by New South Wales and Victoria.More than half of occurrences in theNorthern Territory occurred at sea, andTasmania and Victoria had about 75% and70% of occurrences while at berth or withinharbours.

The most common time period formarine occurrences was between 8am and11am. Most occurrences involved onevessel, however there were 43 occurrences

where two vessels were involved, and onethree-vessel occurrence between a barge intow with a tug and an offshore supportvessel in 2010.

The main vessels involved were bulkcarriers and cargo vessels, which also hadthe highest number of injuries recorded, andclose to one in four reported occurrencesresulting in serious or fatal injuries. Typicalinjuries sustained were falls from height,being hit from falling or swinging objects,and burns from explosions, flame bursts orhot fuel oil.

The most common type of occurrenceinvolved damage to the ship or equipmentfollowed by serious injury and equipmentfailure. Equipment failure, fires andexplosions were associated with the highestnumber of fatal and serious injuries. Cargovessels, bulk carriers and tankers were themost common vessels involved in pollutionoccurrences, making up 22 out of the 25vessels with this occurrence type.

Australian shipping incidentsdown between 2005 and 2010


Tee time with Seve

Golf fans will be clamouring to claim a piece of sporting history with theJaermann & Stübi’s Seve Ballesteros watch. Crafted from the golf clubswith which the late legend won the 1995 Spanish Open, each case islinked to a specific club, making it the ultimate commemoration piece.The watch, made in Switzerland, features scratch resistant sapphireglass, built-in shock absorber, is waterproof to 100 metres and made fromstainless steel with a brushed and polished finish.

Seve Ballesteros Watch£14,000www.harrods.com

Beer on the move

You can get the party started wherever you want with this clever mobilebeer bar. Perfect for private gatherings or company functions this coolcontraption allows you to pour beer in style thanks to an integratedbeer pump that delivers ice cold lager. The stainless steel device alsoboasts an onboard refrigeration system, storage for 8kg of ice, a glasswasher and can also be fitted with an optional integrated gas grill, soyou can barbecue while pouring drinks.

Mobile Beer Bar£7,300www.firebox.com

Objectsofdesire

Kick off the flippers

Kick off your flippers and enjoy an easier way of scouring the sea withyour scuba gear with the BladeFish Seajet. The lightweightrechargeable sea scooter will propel you for up to 40 minutes at justover 3kmph, just long enough to catch a good glimpse of what liesbeneath. While you may not outswim any dolphins at least you will nothave to over exert yourself looking at the wonders of the ocean. Thehandheld device works at depths of up to 20 metres and comes completewith a heavy-duty carry bag.

BladeFish Seajet£279.99www.play.com

LIVEOBJECTS OF DESIRE

LIVE OBJECTS OF DESIRE

86

Soda so good

Make your bar stand out from the crowd with this stunning sterling silver sodasiphon from London-based jewellery designer to the rich and famous, TheoFennell. The distinctive siphon, measuring 340mm in height, combines London-based Fennell’s trademark quirky and original design with traditionalcraftsmanship and skills. You will serve up the coolest spritzers in town!

Silver Soda Siphon£9,000www.theofunnell.com

Small scale St Andrews

This model of the R & A Club House at St Andrews has been handcrafted by TimothyRichards and his small skilled team at the company of the same

name in Bath, UK. Tim has been making sculptures of architecturein plaster for 19 years and this model has

been designed for use as bookends but alsoworks just as well as a stand alonecollector’s piece. British gypsum plaster isthe basic material while etched brass, whitemetal, copper, hand-made glass and goldare used to finish the model. Other modelsin the collection include The Pantheon in

Rome and the Chrysler Building.

R&A Club House, St AndrewModel£250www.theinsideman.co.uk

Pocket projector

Projecting images onto walls and ceilings used to involve noisycontraptions prone to shifting out of focus. Not any more! The iGo DLPPocket Projector is no bigger than a cigarette pack and simplyhooks up to your video device whether it is a DVD player, laptop,smartphone or camera via the relevant cable. It will then beamyour movie, stills and presentations into any flat surfaceacross an area of up to 70 inches. Its size also means it isvery easily transportable, so it is perfect for taking onoverseas business trips.

iGo Pocket Projector£239.99www.amazon.co.uk



review books, theatre, dining, events,culture, films, festival, music,art, dvd, wine

Giants of the Sea (Giganten der Meere. Die Grössten Tankschiffe der Welt)By Joachim PeinKoehler Books €25.60

Big ships mean big profits: that siren callhas worked for cruise ships and containerships, but in the tanker sector it has usuallymeant disaster. Entrepreneurs and oilmajors over the last 40 years have spentbillions of dollars on expensive andtechnically impressive hardware, only toconsign it in short order to lay-up andultimately for shredding into razor blades,in the graphic phrase of one specialistdemolition shipbroker of the 1980s.The Hamburg maritime historian JoachimPein has performed an immense service bybrilliantly narrating the rise and fall of thegenre. He has written not just a classicbook for the industry, but a social andpolitical history of our times. Nations stillhave much of their oil delivered in hugeconsignments, and indeed there remain500 tankers of 200,000 dwt-plus in serviceworldwide (although 43 are single hulledand have a limited life), but most of themare thought to be running at a loss. Thisbook cries out for a translation intoEnglish, but even a rudimentaryknowledge of German and the pictorialaspect will keep the reader captivated.We meet many of the most ambitious andbest known ship owners over the course of60 years. As the global economy recoveredfrom World War II, Greek operators andothers found that they could not supplytonnage fast enough to keep up with thedemand for crude.When the occupying powers lifted theirembargo on shipbuilding in post-warGermany, the “charismatic and crafty”Aristoteles Socrates Homer Onassis askedthe German yards how many ships hewould have to order to put them back inbusiness. Sixteen, came the answer, uponwhich Onassis contracted 18. The tankermarket became an arena for the fiercerivalry between Onassis and StavrosNiarchos. When the former ordered a30,000 tonner, the latter trumped it with a31,000 dwt ship; and then Onassis hit backin spectacular fashion in 1953 by takingdelivery from Howaldtswerke of the45,230 dwt Tina Onassis, named after hiswife, which shipping circles and the pressunanimously heralded as “the world’s firstsupertanker.”The driving force of this market had beenthe American, DK Ludwig, a formerseagoing engineer who foresaw the rolethe Middle East would play. He had been

building tankers at his yard inNorfolk, Virginia, but with muchof Europe and Japan still in ashes,he had the brainwave of signing acontract with the Japanese yard ofKure, which had escaped wartimedamage. Under a 10-year contractin 1951, he went for a series ofships, starting with a 38,000tonner and leading in 1959 to thefirst 100,000 tonner, the UniverseApollo, for his UniverseTankships business. Ludwig scorned the Europeantanker “circus” and treated hisships as workhorses, while Onassis paintedhis showpieces shiny white (expensive andimpractical for the carriage of a dirtycommodity) and put a piano in the owner’s cabin.Onassis over-played his hand bychallenging American oil companies’monopoly of transport from Saudi Arabia,and soon after had to lay up his fleet inPiraeus. He bounced back when the Suezcrisis erupted, and suddenly all his shipswere in demand, at doubled freight rates.This was much to the chagrin of Niarchoswho had his fleet tied up in long-termcharters at much lower rates.Ten years later, an industrial boom spurredthe most profitable era in large tankerhistory. Japan was producing 60% of verylarge crude carriers, and from all sources,from 1967 to 1971, 208 ships eachexceeding 200,000 dwt were put intoservice. Amid boundless euphoria, Japanwas ready to build ships of 400,000 tonnesby assembly line; in Germany, Kielshipyard had plans for a drydock to buildmonsters of 650,000 dwt. A one milliontonner was technically possible. AG Weseroffered a so-called Europa-tanker of392,000 dwt and when it won an orderfrom Colocotronis, even Hapag-Lloydscrambled on to the bandwagon. Wild optimism seemed justified when spotfixtures rose to dream levels in latesummer 1973: a record $400,000 per day(in today’s equivalent) was paid for avoyage by the Norwegian Kong HaakonVII. For owner Hilmar Reksten of Bergenthis yielded a massive profit, givenrunning expenses of only $40,000. Charterers and consumers were lessenthused over such enormous transportcosts. A sharp correction was forecast for

the second half of the 1970s, but the blowstruck like lightning from a clear sky. OnOctober 6th, 1973, the Yom Kippur warbroke out, and OPEC raised its postedprice of Arabian light by 70%, which wasfollowed by an Arab boycott of the US andThe Netherlands.Tanker rates slumped to Worldscale 80from a heady Worldscale 400. No-onewanted to know about long-term charters,and the first of many ships to be laid up, ina Norwegian fjord, was Reksten’s 290,284dwt Sir Charles Hambro, after only oneyear of service, to be followed by therecord-earning Kong Haakon VII. Plansfor 700,000 tonners and nuclear-drivenships were shelved, forever. Companiesand yards collapsed. Thanks to charters from 1980 by Iran inthe Gulf war, large tankers again hit theheadlines, but sadly 36 of them were hit byIraqi weaponry, with the deaths of manyseafarers. Among casualties was theworld’s largest ship, the 564,000 dwtSeawise Giant, but she would be repairedand survive another 21 years.Pein carefully traces the tragic history ofexplosions and pollution incidents whichled to considerable tightening of theregulations and to today’s admirable safetyrecord. But few economic lessons werelearned, and another ordering spreebetween 2004 and 2008 ended in tearswhen rates slumped to $15,000 daily.After 2003, no-one wanted to take the riskof sending a ship more than 25 years old tosea with half a million tonnes of oil. Thisbrought the seagoing career of the SeawiseGiant, later the Jahre Viking, to an end.The behemoth spent five years anchoredoff Qatar, before being driven on to abeach at Alang for breaking.

books


books, theatre, dining, events, culture, films, festival, music, art, dvd, wine

Author Donald Crighton has drawn on hismaritime background to come up with thisnew novel, based on the experiences of exController of the Navy, Admiral SirAnthony Griffin.The Admiral famously asked theadmiralty boffins: ‘What will fuel the fleetwhen fossil fuel runs out?’ Hydrogen

extracted from seawater, they replied, andZero Point’s fiction is inspired by theAdmiral’s experiences.American scientist Harry Keller is close toperfecting a water fuel cell that produceshydrogen from water using less energythan it creates, the scientists’ ‘Holy Grail’,Zero Point Energy. His discovery is set totransform the world providing unlimitedclean energy from the world’s oceans butdark forces are at work and plots to kill

Keller are put into place to stop him in his tracks.A British Naval Intelligence officer, KenDouglas, arrives in New York with thebrief to keep Keller alive so he cancomplete his work, thus a dangerous catand mouse game develops.The author writes in the first person asDouglas and does so informativelybringing enough twists and turns to carrythe thriller along.

Jerusalem: The BiographyBy Simon Sebag MontefioreWeidenfeld £25.00

This is a vast, but highly readable,chronicle of a small city spanning 3,000years of recorded history. Jerusalem –capital of two peoples, shrine of threefaiths – is an epic history of murder,violence, strife and persecution starring along line of tyrants, kings and emperors –Babylonians, Persians, Romans,Christians, Ottomans, Arabs and Jews –all hell-bent on conquest and power.“The history of Jerusalem is the history ofthe world. Jerusalem was once regarded asthe centre of the world and today is moretrue than ever,” writes Sebag Montefiore.

“On purely geographical terms, no cornerof the globe has seen such bloodshed,fanaticism, such glory and tragedy. “This biography is a history of imperialexpansions and endless conflict; the storyof the Bible itself, of the ‘meeting place ofGod and man.”It is said that a great number of first-timevisitors to the city are so overwhelmed bythe religious and historical intensity of theplace that they suffer delusions of theJerusalem Syndrome kind, believingthemselves to be genuine biblical figures.

MercyBy Jussi Adler-OlsenPenguin/Michael Joseph £6.99

Carl Morck is a bellicoseCopenhagen detective sufferingfrom post-traumatic stressdisorder brought on by ashooting incident. He is offhomicide, relegated to thebasement of police HQ as‘chief’ of Department Q,dedicated to cold cases. Thecase of Merete Lynggaard, arising politician who vanishedfive years ago, presumed dead,troubles him; things in theinvestigation have beenegregiously overlooked.Merete is held captive underthe most inhumane conditions.How she survives her years’long captivity forms the nerve-rending narrative of the crimeplot. What shadows from herpast cast this terrible tragedy inher unblemished life? It’s a suspenseful race to saveMerete who has resignedherself to death’s embrace. Youwant Mercy to end; you don’twant it to end.

The Zero Point ConspiracyBy Donald CrightonPegasus Elliot Mackenzie Publishers £8.99

This is the firstalbum forguitarist JoshKlinghoffer whowas brought in toreplace JohnFrusciante in2008, andaccording top

bandmate Flea, he has brought somethingdifferent to the mix.Josh plays guitar, sings and plays thedrums and even wrote for the album, thegroup’s 10th studio disc, which wasproduced by long-time collaborator RickRubin at the Cello Studios in LA wherethe RHCP’s Californication was alsorecorded.It is the band’s first album since StadiumArcadium in 2006 and has received a mixreception from fans with some liking themore toned down sound and othersscreaming it is too mild and that there is anoticeable absence since the departure ofFrusciante.The 14 tracks of great funk-rock stillremain catchy though, particularly the firstsingle ‘The Adventures of Rain DanceMaggie’ and ‘Happiness Loves Company’.

The two big ‘Stones’ ofthe music world,Rolling Stone MickJagger and modern-daysoul singer Joss Stone,are just two of thetalents in the newsupergroup,SuperHeavy.The line up alsoincludes reggae starDamian Marley, son ofthe legendary Bob Marley, Eurthymics guitarist DaveStewart and award-winning Indian film composer, ARRahman, who gave us the catchy Jai Ho in the movieSlumdog Millionaire.And the musical medley works well, with all themusicians bringing something to the party. There arecatchy rock songs with good riffs, world music with Indian influences and reggaebeats, particularly in the popular Miracle Worker, the first single from the album.The singing stars’ voices all mix compatibly and Jagger still delivers in his owninimitable style, even performing in Sanskrit on Satyameva Jayate (Truth AloneTriumphs), the second track on the album. SuperHeavy does seem a strange melting point of talent but it does work and willappeal to many musical tastes.

SuperHeavySuperHeavyUniversal Music

Red Hot Chili PeppersI’m With YouWarner Bros

Backbeat, the word is on the street that themusical telling the story of the birth ofThe Beatles, is opening at London’s Dukeof York’s Theatre this month (October).Adapted from the 1994 film by IainSoftley, the show embarks on the group’sjourney from the famous docks ofLiverpool to search for success in theGerman city of Hamburg.It focuses on the compelling triangularrelationship between the band’s originalbassist, Stuart Sutcliffe, his Germanphotographer lover Astrid Kirchherr and best friend and fellow bandmate John Lennon.Sutcliffe’s death at the age of just 22, inthe same year The Beatles appointed BrianEpstein as manager and they released theirfirst single ‘Love Me Do’ adds poignancyto this vivid portrait of the 1960s.Backbeat, co-written by Softley andStephen Jeffreys and directed by DavidLeveaux with musical direction from PaulStacey, features the all-time classics TheBeatles first produced including ‘Twistand Shout’, ‘Long Tall Sally’, ‘Please MrPostman’ and ‘Money’.

Backbeatwww.atgtickets.comFrom 10th October-24th March 2012

Renowned jazz pianist McCoy Tyner,winner of five Grammys, is just one of themany acts lining up for this year’s JZShanghai Music Festival. The event, which runs from 15th to 23rdOctober, is now in its seventh year and thethird largest jazz festival in Asia. Otheracts include American soul, funk and jazzcomposer and vibraphone player RoyAyers, Singaporean singer Olivia Ong andFrench jazz trumpeter Erik Truffaz.The festival takes place at two locations inShanghai – there will be six outdoorstages at the ‘Green Note’ Expo Park on15th and 16th and this is followed by the‘Masters Hall’ indoor concert series at theShanghai Centre Theatre from 18th to 22nd.

JZ Shanghai Music Festivalwww.jzfestival.com/en/From 15th-23rd October

You can’t keep agood lady downand the queen ofscat, Cleo Laine,is proving that,returning fromthe heartache oflosing hermusical maestro

husband John Dankworth with the re-release of her Jazz album that first cameout in 1989.The remastered reissue featurescollaborations with guest musicians suchas Gerry Mulligan and Clark Terry as wellas saxophonist and clarinetist Dankworthwho died last year.Along with the scatting, Laine’s beautifulvoice has a very wide range and hooksyou into the tracks which include Oh,Lady Be Good and It Don’t Mean A Thing(If I Ain’t Got That Swing).Super shooby do!

Cleo LaineJazz (Remastered)Blue Lable



music

festival

theatre


German wines get serious

Fans of renowned Spanish artist PabloPicasso will have the first, and mostprobably the only, chance to see acollection of his masterpieces in theSouthern Hemisphere, in a specialexhibition at the Art Gallery of New SouthWales in Sydney, Australia.The collection is normally housed at theMusée National Picasso in Paris, but themuseum has closed for renovationallowing an unprecedented global tour.The exhibition will feature more than 200paintings, sculptures, prints, drawings andphotographs spanning every phase of hiscareer until his death in 1973.

Picasso: Masterpieces from theMusée National Picassowww.artgallery.nsw.gov.auShowing from 12th November to 25thMarch 2012


art

Better known for cheap, sweet and semi-sweet low quality,mass produced wines, Germany has had something of a toughtime trying to convince serious wine drinkers that it is nowcapable of producing highly quaffable tipples.Liebfraumilch was a big hit in the 1970s and ‘80s with famousnames such as Blue Nun being the wine of choice, but withtastes becoming more refined, so too have the wines.Now the country is seeing popularity growing for its lighterstyle wines in a bid to limit alcohol-related health problems,and also its red wines which have been increasingdramatically in number during the past 20 years.The lighter wines are often lower in alcohol than thosefrom neighbouring France thanks to the cooler climatewhich means a long ripening season which createsrefreshing, elegant tipples. They also offer the perfectbalance between sweetness and acidity and are ideal as anaperitif or an accompaniment to food.While the climate has always been good for growinggrapes for white wines, mainly the Riesling variety, it hasmade production of red wine very difficult, and in the pastany red wines have been fairly light coloured. However,using different grapes and techniques such as barrellingvineyards have more recently been able to producerdarker, richer, finer quality reds from grapes such as theSpätburgunder, the German name for the popular PinotNoir. The result in these finer quality wines saw a healthyincrease in German wine sales last year. Compared with 2009,

quality wineexports posted an 8% increase involume, and accounted for 80% of allGerman wine exports. The mostimportant exports are the US, TheNetherlands and Great Britain, followedby Norway and Sweden, while the HongKong Market was particularly dynamicdespite its small size.

Top picks:Bassermann-Jordan 2009 Kalkofen RieslingGrand Cru dryTasting Notes: This very dense andcomplex wine is crammed full of exotic fruitflavours with hints of apricot, pineappleand passion fruit. The typical Rieslingacidity is still present but it is very ripe anddelicate. Region: Pfalz Price: £33.99 bottle.

Meyer-Näkel 2008 Spätburgunder S QbA dry Tasting notes: In nose and taste, an elegantcombination of blackberry, morello cherry,redcurrant, raspberry, vanilla, darkchocolate and hints of clove, underlinedwith fine oak. Full bodied and long with anelegant tannin structure.Region: Ahr Price: £34.55 bottle

Wines available from:www.thewinebarn.co.ukMore information on German wines atwww.winesofgermany.co.uk

wine

Based in the Lincoln Park area ofChicago, Alinea is a restaurant full oftheatre and surprise.Currently at number 6 in S. Pellegrino’sWorld’s Best 50 restaurants, Chef GrantAchatz produces progressive Americancuisine that has propelled him to culinarysuperstardom and the dishes on offer willdelight even the most discerning of diners.The deconstructed food offers unfamiliarflavour combinations and is served in andon all manner of implements such as testtubes, cylinders and multi-layered bowlsthat come apart.One such creation includes the BlackTruffle Explosion – a ravioli filled withgelled truffle stock which, when meltedthrough boiling, explodes in your mouth.The 12-course tasting menu costs $150and the 23-course tour menu $225.

Alineawww.alinea-restaurant.comLincoln Park, Chicago

dining

LIFESTYLE INTERIOR DESIGN Enjoy the lifestyle with


What smart homes are wearing -in the bowels of the earth

It’s official: home interiors is the newporn. Like voyeurs seeking after lustfulthrills and titillations, we allow an

increasing number of TV programmes tolet us into bodacious, great and granddesigns for living. With trembling handsand a tremor of anticipation running downone’s spine, we open voluptuously art-worked magazine spreads, drool and gapewith the kind of amazement and wonderonce reverentially reserved for the DeadSea Scrolls and the Rosetta Stone.

Swags of luxurious linen and drapery;a Cezanne here, a Monet down the hall, aRenoir there; stylish indoor topiary; Berbercarpets to sink into; acres of larcenouslypriced bathroom marble; tastefully placedsculptures and gewgaws brimming withmute opulence; intelligently-curatedlibraries and art galleries. Kitchens the sizeof small islands. Ballrooms. Boys’ roomswith every conceivable equipment forindoor sports and electronic games.Temperature-controlled closets, custom-built for fur coats, leathergoods, handmadeshoes and jaunty fedoras. Artificialintelligence systems and sensors that wouldmake Scotland Yard blush; turn heating andlighting on/off; put the music on; flip theDVD; take stock of larders and fridges; takebath-water temperature. No footling pile ofpiffle here.

Every increased possession, wrote JohnRuskin, loads us with a new weariness.Clearly he did notreckon on thewell-

endowed voluptuaries and well-remunerateddenizens of the Royal Borough ofKensington & Chelsea, in prime-residentialLondon, who have in the last few years putin the largest number of applications forbasement extensions. They can’t buildupwards, so they are digging to depths offive storeys underground, to the apoplecticharrumphing and consternation of put-uponneighbours, heritage groups andconservationists who fear for the stability ofwater tables and the structural integrity ofthe soil.

Entire facades are being upended,whole gardens being uprooted and tonnes ofsoil excavated to build multi-storeybasements in vast underground cavities –called ‘iceberg homes’ – for Olympic-sizedswimming pools, Roman baths, his and hersgyms, staff quarters, and pleasingenhancements like a sauna and spa complex,multi-media home cinemas and gamesrooms; the obligatory state-of-the-artsecurity systems and panic rooms;garages and car lifts. And the newnew thing: bespoke wine cellars.Humidors and gun safes optional.

“Fifty years ago, the mainmarket for wine was aristocracyliving in manor homes, whereparents and grandparents would lay

down wine to mature. There are a lot moreyoung people now with money who areinterested in wine. Consequently, people aremuch more open-minded in how to enjoyand share wine. Instead of being hiddenaway, they are now integrated as anadditional [home] entertainment feature. Inmany cases, they are total destinations,” saidStephen Williams of Antique Wine Co. toThe Wall Street Journal.

These are not picayune wine racks fromIkea or fancy-schmanzy food halls.Recherché homes boast well-lit,temperature/humidity-controlled winerooms, with wine-tasting areas, wellaccoutred with the paraphernalia of wine-reverential libations – the comfortablearmchair, fibre-optic lighting, decanters,lead cutters, wine-specific glasses, winetomes. A budget of £6,000 - £10,000 willbuy custom-built rack-lined walls, somewith traditional brick wine bins; glass-

LIFESTYLEINTERIOR DESIGNEnjoy the lifestyle with


fronted vault-style modular cellars, withthermohygrometers to monitor humidityand temperature. Gaggenau’s sleek Vario400 features two separate, adjustableclimate zones for storing 101 bottles of redsand whites in ideal conditions.

Serious oenophiles and epicures are notconstrained by the piffling matter ofbudgets. A recently built £150,000 wineroom in the salubrious environs of Chelseashows off the owner’s wine collection ofmore than 3,000 bottles, in leather-linedshelves carved out of macassar ebony. Thelippy Michelin-starred chef Gordon Ramsayhad a £250,000 wine cellar recently built inhis southwest London home. A Chinesewine aficionado has a wine room in hisLondon home that displays only 67 bottlesof prized Chateau Mouton Rothschild, witheach label designed by a different artist.

What next? All-singing, all-dancing,all-cleansing toilets? Got to believe it! Smarthomes have a talent – exported by Japan, thehome of the samurai and the ronin, the neathaiku, uwami and wabi-sabi – for seriousposterior pampering. The last word, ne plusultra, in cutting-edge toilet technology anddesigner lavatories is Japanese.

The Washlet – made by Toto, theworld’s largest toilet manufacturer – is ahighly automated toilet with an integratedbidet that, at a push of a button on a wirelesscontrol panel attached to the seat or byremote control mounted on a nearby wall,performs several mind-blowing functionsthat are miraculous to behold andexperience. They are some of the mostluxurious, modern and expensive toilets inthe world today; and smart homes plumbwell to have them.

“Once people have tried them, they’llwonder why they never tried them before,”said Jill Player-Bishop, Toto’s UK generalmanager.

With their glittering array of buttons,lights and dials, these futuristic-looking,glistening-porcelain pods – some resolutelysquare, some gently contoured – havebeneath their exteriors exquisitelyengineered intimate hoses, water jets,dryers, air fresheners and deodorisers forwhat converts and fans describe as the“ultimate toilet experience”.

Japanese are the true and faithfuldisciples of Einstein’s dictum: “Everythingshould be made as simple as possible, butnot simpler.” Punctilious in the extreme,they have an obsessive regard forcleanliness, hygiene and sanitation, and taketheir toilets seriously. “Toilets hold a specialplace for the Japanese. They are pinnaclesof high technology, personal comfort andeven national pride,” wrote KumikoMakihara in “Toilet Worship”. Japanesehouseholds have more Washlets than theyhave computers. November 10 is Japan’sToilet Day, with the numbers 11/10 (formonth/day) indicating ii-to (ire), whichmeans ‘good toilet’. In Japanese, the word‘kirei’ means pretty, beautiful, as well asclean and pure. Washlets are must-have,highly functional design objects; they arekirei.

Germ-resisttant Washlets haveautomatically warmed seats and nether-region centred functions that includewashing; of warm jets of cleansing water(minimum of 38°C temperature) shootinggently from precisely aimed nozzles; blow-drying between 40°C and 60°C; seat lids

that automatically open and close (also known as ‘marriage savers’);automatic flushing, and anozone-deodorant system.With a careful nod to waterconservation, they boast

low-waterusage,usually1.6gallons

per flush. Popular bestsellers come inSedona beige or Sanagloss-cotton white.

Some advanced Washlets have massageoptions and a number of water-jetadjustments; they can mix water with soapfor improved cleansing. A bubbly cleaningmechanism cleans the bowl after every use.Some play music to relax the user’s sphinctermuscles. A favourite, among the musicallyinclined, is maker INAX’s toilet that playsFelix Mendelssohn’s Fruhlingslied, Opus 62,Number 6. Imagine a pleasing scherzo asyou perform your diurnal toilette! TheWashlet Zoe, with seven functions, is listedin the Guinness World Records as “theworld’s most sophisticated toilet.”

For the elderly, makers have addedcustomised armrests and a device to helpthem to stand back up again. Ultra-sophisticated Washlets feature a selection ofvibrating and pulsating water jets which, itis claimed, benefit those who suffer fromconstipation or haemorrhoids.

Toto, founded in 1917, controls 60% to70% of the Japanese market, and has madeserious inroads in Asia, the USA andCanada; it is now just coming into Britainand Europe. “Competition has spurredJapanese manufacturers on to even greaterefforts, driving them to develop morecomfortable toilets, to turn the washroominto a place of relaxation,” said TanakaNobuyuki of the product-strategy division ofToto’s rival, INAX.

New developments in the pipeline – agift for valetudinarians – include the additionof medical sensors that measure bloodpressure, blood sugar in urine, pulse ratesand body-fat content. Voice-operatedlavatories are currently being refined torespond to users’ verbal commands.

The style journalist and publisher, TylerBrule, divides the world into the Washlet-haves and the Washlet have-nots. “It’s at thepoint where if you know someone whodoesn’t have a Washlet, it seems odd. It’s likethe rest of the world is unwashed.”

If you have the readies, smart andsplendiferous homes of the 21st Centuryoffer innumerable consolations, a plenitudeof pleasures and rubicund health. Truly ifthey don’t snaffle your heart, they will most

certainly yourbottom. ■

Aston Martin’s vehicles are as conspicuous as theyare classic, largely owing to the brand’s timelessdesign chic, which for generations has kept even

the most studious of young men awake at night,pondering over the prospect of one day owning such asuperb feat of engineering. The celebrated British luxurysports car manufacturer has been endorsed by everyonefrom rock stars to royalty, with King Mohammed VI ofMorocco, Steven Spielberg, the Prince of Wales, RafaNadal, Slash and Courtney Love being just a briefselection of those who bear the classic ‘wings’ logo upontheir key chains.

But unsurprisingly, Aston Martin’s most famousassociation is with slick lady-magnet and absolute superspy James Bond, who first buckled up inside his DB5 forGoldfinger in 1964 and has retained his fictional spyassociation with the brand ever since.

The Aston Martin V12 Vanquish has offered 007comfort and sophistication during even the hairiest ofbullet-ridden car chase scenes. Likewise, with its sleek,graphite blue-grey bodywork, the modern DBS V12model ensured passers-by would turn the sourest shade ofenvious lime green when ‘Blonde Bond-shell’ DanielCraig swerved up to the Casino Royale in Montenegro,for a game of poker so dangerous, he had to endure apoisoning and subsequent cardiac arrest before recoveringto enjoy his final martini of the day.

Bond may have grown accustomed to his garagestuffed with big boy’s toys but if a sabbatical from workwas to bring him back to suburbia, the need for somethingspeedy yet compact would inevitably hit home.Thankfully, the plight of the hectic, modern city slickerhas started to permeate the minds of automotive designersand a trend for compact, city-friendly cars is shaping thefuture of intelligent, cosmopolitan vehicle production.

The Aston Martin Cygnet is the brand’s first forayinto city car design and represents the perfect alternativevehicle of choice, should 007 ever need to pop to theshops for a pint of milk. At just three metres long, theCygnet is a paradox, offering compact styling with theability to squeeze inconceivably into the least generousparking spaces and between the smallest gaps in traffic,but with spacious interiors to prevent any claustrophobic‘sardine tin’ feelings while traversing commuter-ville. Butpredictably, for those hoping to develop their ownpersonal body groove into the driver’s seat of thischarming 2+2, luxury does not come cheap.

At £30,995, the cygnet is definitely at the pricier endof the microcar market and critics have latched onto thiswith blood-starved fangs, particularly as its design isderived from the popular and far less exclusive, Toyota iQ.

Richard Hammond, presenter of the BBC car showTop Gear, clearly stated his distaste for the “ridiculous”concept of “a tarted-up Toyota” and said it represented“how to devalue your brand in one easy move”. Thoughlike Mr Hammond, fans of Aston Martin may be beggingfor the brand’s renowned power to leap from beneath thebonnet like a wolf in sheep’s clothing, the Cygnet lacks thestrength and prowess which has made her older siblingssuch fearsome opponents in the petrol head playground.

The interior has been spruced up to give the Cygnetslightly less of a Toyota-ish feel but the goods under thebonnet will disappoint those hoping for power levels torival Aston Martin’s more classic creations – forget theV12 you’ve dreamt of since infancy and say hello to a97bhp 1.33 VVTI petrol engine with MultriDrivefunction, capable of 0-62mph in 11.6 seconds.

With a top speed of 106mph, the Cygnet won’t satisfythose seeking a speed-limitless road trip on the autobahn,but in its defence, its presented as a nippy city car and hasnever claimed to be anything but (though sometimes, it’sgood to call a Toyota a Toyota).

However, if you’re keen to reach a state of econirvana, the Cygnet could slot comfortably into your greencredentials. One motivating factor behind its conceptionstems from Aston Martin’s need to meet the EuropeanUnion's fleet average emissions standards and the goal ofreducing new car emissions to 120g CO2/km by 2012. So,in a move akin to creating a test tube baby for spare parts,the Cygnet is a creation born out of necessity whichvaguely resembles those which have gone before it andwill prove inherently useful – with emissions totaling amere 116g CO2/km, high sales of the Cygnet will ensurea significant reduction in Aston Martin’s overall fleetemissions.

But for the individual driver, the Cygnet is alsopresented as a form of wonder car for those striving for atrauma-free morning commute. The search for a viableparking space is certainly a daily stress-fest the Cygnethas the power to relieve and one customer who haspublically lauded the car’s practical appeal is motorsportlegend Sir Stirling Moss, who purchased a model in Julyas a surprise birthday gift for his wife, Lady Moss.

Perhaps the most famed couple in motorsport, SirStirling and Lady Moss planned a private dinner incelebration of her birthday at the Royal Automobile Club,in the century-old ‘Palace on Pall Mall’ clubhouse inLondon. On arrival, Lady Moss was greeted by her newAston Martin Cygnet on display in the central rotunda,marking the climax of six months of planning and ‘secret’correspondence between Sir Stirling and Aston Martin.

Clearly delighted with his choice of gift, Sir Stirlingexplained why the vehicle was the perfect choice for the

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love of his life: “My greatest partner ineverything that I do, Susie is an amazingperson and frankly the best wife a man couldhave. Since seeing a pre-production Cygnetin January, I knew it was the perfect car forSusie; a proper little piece of British luxuryand perfect for our life in town.” The Cygnetmay suit the lifestyle of this octogenarian ex-racer and his wife, but despite the need for athick wallet to fund its purchase, a blurrymarketing campaign has left critics unclearas to who the car’s intended target customeractually is.

A recent collaboration with Parisianfashion house Colette introduced 14exclusive ‘Cygnet & Colette’ editions of thecar to the market, allowing deep-pocketedcustomers to reach a whole new level ofluxury branding through extra perks,including quilted sun visors, engraved doorhandle badges and blue leather occasionalcushions on the rear seats.

Perhaps this extra push towardsexclusivity leaves no doubt that the Cygnet’scustomer base won’t sway too far from AstonMartin’s usual clientele, though this doescontradict its initial marketing campaigns.

The car’s first ‘teaser’ advertisementfeatured Parkour – a pursuit which involvesrunning, vaulting, climbing, rolling andjumping across the urban landscape. The

youthful commercial showed a pair of‘traceurs’ (Parkour practitioners), leapingthrough what they dub as an “Aston Martinassault course” within the brand’s factory,where the odd DBS and Vanquish laydormant but illuminated within the darkwarehouse, to whet the viewer’s appetite. Theduo then rush into a bleached white room tomeet their target – the noble little Cygnet,which they swiftly pounce upon before theslogan “Cygnet – free runner” appears andthe sinister, bass-heavy soundtrack fades out.

It’s doubtful this was the advert whichfirst aroused Sir Stirling’s interest in hiswife’s birthday surprise. In fact, one couldvoice disdain over this marketing ploy as acynical attempt to cash-in on a form of urbanculture which is far removed from AstonMartin’s usual customer base – a sector ofsociety comprised of individuals who are

unlikely to be able to afford such a vehicleand, perhaps, wouldn’t even want one. Acommon philosophy against competition andrivalry within the Parkour community hasalso led to criticism of the advert andrendered it somewhat ironic.

So, has Aston Martin missed its mark byintroducing a vehicle which lacks the velocityand sports chic of its predecessors, whileattaching a price tag which could drive fansof other microcars, such as the iQ or SmartCar, straight out of the market?

Not according to Aston Martin’s ChiefExecutive Officer, Dr Ulrich Bez. Describinghis brand’s latest creation as “a premium butcompact package with heart, soul andpersonality,” Dr Bez was adamant that theCygnet does not represent a steering awayfrom Aston Martin’s more traditionalofferings but rather, is the embodiment of it’sbranding: “Our customers need a small carfor urban and city use, and they want the righttools for the right job, to downsize creativelywithout compromising intelligence, artistryand personality.

“It is time to think differently. AstonMartin is honest and we don’t makecompromises. Whatever we do, we do right.If we do performance, we do performance;we don’t downsize or compromise our sportscars. The Cygnet needs to satisfy thedemands of emissions and space. It is a carwithout compromise, just like every otherAston Martin.” ■

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