Who is holding shipping to ransom?

Transcription

Who is holding
shipping to
ransom?
Regional Focus: Cyprus
Tonnage tax will keep
Cyprus in pole position
Dispatches: Iran
London lawyer leads
Iranian maritime initiative
The Big Issue:
Don’t bank on it
Who is holding
shipping to
ransom?
Regional Focus: Cyprus
Tonnage tax will keep
Cyprus in pole position
Dispatches: Iran
London lawyer leads
Iranian maritime initiative
THE MAGAZINE OF THE WORLD’S SHIPMANAGEMENT COMMUNITY
COVER STORY
ISSUE 24 MAR/APR 2010
The Big Issue:
Don’t bank on it
The Big Issue
12 Do not bank on it
BUSINESS VIEWPOINT
p68 Security
and Piracy
A more rigorous approach to financing shipping deals has
changed the face of lending, so in the new climate, how
do ship owners and operators ensure a sympathetic
hearing from their banks?
SHIPMANAGEMENT FEATURES
16 How I Work
SMI talks to industry achievers
and asks the question: How do
you keep up with the rigours
of the shipping industry?
42 Opinion
Stephen Askins, Ince & Co.
Who is holding
shipping to ransom?
6 STRAIGHT TALK -
Fundamentally it cannot be in
anyone’s interest to criminalise
the victims of a hijacking. The
effects of a US move to introduce
these Regulations could have
serious consequences for those
that are affected by piracy
77 MyView
Greece in crisis.
Petropoulos strikes a defiant note
A call to arms
MARKET SECTOR
NOTEBOOK
8 Navies ‘release’ 400 Somali
pirates
New Somali pirate security
force launched
9 Ouside the Box
- Robert Houston
Tsakos and Columbia venture
boost for Greece
Cyprus tonnage tax gets go-ahead
Springing up all over the place...
10 InterManager and ITF to work
together on key issues
ITIC reimburses cash stolen by
Somali pirates
SMI welcomes Christopher Mayer
to the editor’s chair
SHIP REPAIR
44 Ship Registries
Shipping is a cyclical industry and the current cycle is not
one you would rush into joining, says Scott Bergeron,
chief operating officer of LISCR, the US-based manager
of the Liberian Registry
50 Crew Management, Training and Services
Albert Einstein once said you can’t solve problems by
using the same kind of thinking that was used to create
the problems in the first place. Well if he had been in a
position to apply that philosophy to the long-running
problematic sage of the global crewing shortage, he
would have had his work cut out trying to persuade a
disparate and largely procrastinatory industry to come
together and work to solve the anticipated problems that
obviously lay ahead
86 Ship Repair
Necessity is the mother of invention but sometimes survival can be just a matter of exploiting
your strengths rather than reinventing your capabilities. In the case of Belfast’s iconic Harland
and Wolff shipyard, taking advantage of the burgeoning renewable energy sector as well as
benefiting from a brief but rewarding foray into vessel decommissioning was natural, albeit
well thought out, developments of its traditional ship repair and ship building heritage
NEWBUILDING
85 The beat goes on, as does the
industrial drift
MARCH/APRIL 2010 ISSUE 24
SHIP MANAGEMENT INTERNATIONAL
3
REGIONAL FOCUS
ECOVISION
22 Cyprus
89
After some years of false dawns and unrequited aspirations, ship
owners, managers and charterers alike are seeing dénouement to
one of the major issues impacting on how they do business in
Cyprus. What can they expect?
54 Dubai
If the dwindling vehicle queues on the Sheikh Zayed Road are
anything to go by, Dubai still has a long way to go before economic
growth returns to anything like it was before the Lehman Brothers
crash in September 2008. An unusual yardstick it may be, but it is one
locals believe is largely representative of the level of business activity
in the Emirate: less ex-pats equals less cars so by definition less
highway congestion
DISPATCHES
72 Iran
Financial and economic sanctions have enormously complicated the
trading picture between the world and the important maritime nation of
Iran, but even if political issues were solved tomorrow or had never
arisen, all concerned with the shipping process would still need
specialist know-how to ensure their interests were protected
90 Class NK
The Japanese society has developed a new software package to ease the
burden associated with the International Convention for the Safe and
Environmentally Sound Recycling of Ships
92 Waste Disposal
A new kind of passenger has for the last three years, started to make an
appearance on cruiseships sailing in Alaskan waters: they are Coast
Guard certified marine engineers or persons who hold a degree in
marine safety and environmental protection and are charged with
ensuring the vessels are not polluting the state’s waters
94 Green Shoots
BUSINESS OF SHIPPING
82 Nigeria
78 Ad Hoc
Dismissed as a nation with a proliferating piracy network, rooted in
political unrest and economic instability, Nigeria is not seen as being at
the forefront of the international maritime community. Yet despite its
poor international reputation, owners are looking to raise the country’s
shipping profile
Castrol Marine on the ball
CMA - China’s insatiable appetite
China reliant on oil shipments
The Mofflons of Cyprus ride high
Hammond’s mine of information
Germanisher Lloyd lifts AIDA blues
Garrets cracking free-range egg policy
Beware Iceberg lettuces
TRADE ANALYSIS
38 Towage and Salvage
REVIEW
Over the past quarter of a century, a series of major oil spills around
the world has produced successive rounds of new regulations,
impacting on safety management, crew quality and manning
standards, ship inspections, and other areas
98 Entertainment: DVDs:
Taking Woodstock, In The Electric Mist
64 Chemicals and Products Tankers
Has the tide turned for the chemical and products tanker trades? Or
has the prolonged cold snap in the northern hemisphere merely served
to fuel a false dawn? Will the first discernible signs of an upturn in
rates develop into a longer-lasting recovery or peter out? And will
consolidation be the name of the game as leading players revise
strategy in the international marketplace?
Dining: Malmaison, Oxford
Events: Seville April Fair
Books: Moscow Rules, The Secret Servant
LIVE
96 Objects of desire Things that make you go oooh!
LIFESTYLE
BUSINESS VIEWPOINT
4
EcoVision covers the wide-ranging and pressing environmental
aspects of shipping that impact on owners and managers with informative, dynamic and colourful depth, featuring the emerging designs,
technologies, innovations, legislations, schemes and issues shaping the
future of the global shipping business with input from some of the
world's most green-minded industry leaders
68 Security and Piracy
102 Frankenfoods
It is chilling to consider that the number of pirate attacks on merchant
vessels is rising steeply and, as surely as night follows day, will
continue to do so, and particularly in Somalia when the southwestern
monsoon season ends
Thomas Malthus, the English economist, argued, in his 1798 essay The
Principles of Population, that the number of people would increase faster
than the food supply, and that further increases in population would result
catastrophically in a population crash caused by famine, disease or war
ISSUE 24 MARCH/APRIL 2010
STRAIGHT TALK
Welcome to
Ship Management International
MARCH/APRIL 2010
Issue No. 24
www.shipmanagementinternational.com
The Shipping Business Magazine
today’s owners and managers
have been waiting for
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Guy Morel
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Nigel Cleave
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Andreas Droussiotis (Bernhard Schulte Shipmanagement)
Dirk Fry
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6
A call
to arms
It has long been argued that the provision of armed
guards to protect ships from pirates or arming
seafarers increases acts of violence against vessels
and seafarers. Naval protection, non-payment of
ransoms and the will to prosecute pirates in recognised courts of law are said to be the answer.
Such is the view of the International Maritime
Bureau. At the end of March, Director Capt
Pottengal Mukundan said the concern on the part
of ship owners to protect their vessels “was
completely understandable but we don’t agree
with armed teams being placed onboard. Ships are
not the ideal place for a gun battle.”
But ships will increasingly be stages for such
battles as the number of incidents escalates. SMI
reports on p68 that the number of piracy attacks
virtually doubled to over 400 in 2009; these were
the reported attacks. Moreover, pirates are increasingly travelling further out to sea, in the
knowledge that the threat of starvation and death
are better options than their circumstances ashore.
They have no qualms about the force they use.
France permits marines onboard its vessels
and Spain allows its ships to carry armed private
guards. In the perceived absence of strong international action others will follow and some owners
may reflag tonnage to secure protection.
EU Navfor spokesmen make the right noises
and the industry is aware of the legal restraints on
military action. Nowhere has this been seen with
such sense of hopelessness than in the case of the
elderly British sailing couple Paul and Rachel
Chandler, who have been held for five months after
being seized in full view of Royal Navy sailors.
Kenya’s decision to sentence eight Somalis to
20 years in prison, with the promise of more trials
to come is to be welcomed. But only Seychelles,
among other nations, has actively started prosecuting pirates. It’s a drop in the ocean.
Industry and the court of public opinion finds
this unacceptable and inevitably, the use of private
security companies will grow. There are many exmilitary servicemen around who know what they
are talking about, how to converse with terrorists,
react in times of hostage-taking and essentially,
keep quiet after the event.
But, as Securewest International’s Stan
Ayscue says on p20, there is also great disparity in
skill levels and experience of companies offering
such services. Chillingly, he states: “Many firms
that have specialised in security for land sites and
shopping malls are now trying their hand at
maritime security, not realising what a unique
environment it is.”
Then there are the less than professional
outfits, one of whose number, likely to have been
a Kenyan or Somali firm, is believed to have been
involved when a pirate was shot dead by a private
security guard onboard the 2,886 dwt, Panama
flag Almezaan off the coast of east Africa at the
end of March. The Panama flag vessel, by dint of
size and speed, was said to have been a “classic
candidate” for using security guards.
In the absence of naval and/or top drawer
security protection so are many others. Unless
there is political will and unless the international
community gets its collective act together and
prosecutes the perpetrators, we can expect to see
growing roll calls of dead seafarers.
The insurance industry is not advocating the
use of armed guards but wants, in the words of
Jardine Lloyd Thompson’s Sean Woollerson, “to
pull in one direction, with private security
companies coming under the auspices of the
military.
There is little political appetite for handing
out extra resource and no guarantee that navies
will still be in areas of piracy in coming months.
But, as Mr Woollerson says, if the critical mass of
shipping pulls together, the risk can be mitigated.
The alternative – inaction and more attacks, is
unacceptable.
Christopher Mayer
NOTEBOOK
SHIPMANAGEMENT NEWS AND REPORTS FROM AROUND THE WORLD
Navies ‘release’ 400 Somali pirates
There is a complete lack of political will to
prosecute pirates caught in the Gulf of Aden
with naval forces in the region estimated to
have released as many as 400 without charge,
SMI can reveal.
Up to time of writing, it was understood that
of this total, the British Royal Navy had
released 66 pirates, the Dutch had sent pirates
packing with food and water and there were
unconfirmed reports that Kenyan authorities
had not detained any pirates since September
last year. Nairobi is known to want to renegotiate the agreements it has with the European
Union, UK and US navies and as such was
believed to be refusing to take any more
pirates until the situation had been sorted out.
Stephen Askins, a partner at Ince & Co in
London, said the trend showed that while the
rewards for hijacking ships continued to grow
“almost unchecked – and many of the pirates
can’t believe the sums of money they are
receiving”, the risks involved in attacking a
ship are getting smaller.
Mr Askins said there was a steady rate of
attrition in the area with statistics pointing to a
50% drop in attacks on ships in the Gulf of
Aden. Owners had to remember that if an
attack on a ship was unsuccessful there was
every chance the pirates would remain in the
region. Ransoms being paid were also
increasing, he said, with one vessel reported to
have been recently released for $7.4 million
and another for between $5.5m and $7m.
“There is a problem at the heart of this with
the responders and negotiators - some are good
and some are not but none have an innate understanding of shipping. You have an example of a
responder sitting across the table from an owner
who doesn’t know the difference between a
voyage charter and a time charter and doesn’t
think it matter,” Mr Askins said.
Ransom issues p42
New Somali
pirate security
force launched
A ‘non-profit’ organisation that promises to solve the problem of inadequate naval protection of ships transiting the pirate-infested Gulf of
Aden by offering all vessels armed escorts has been set up by a Russian
ex-Master in Cyprus.
Known as the International Law Enforcement Agency, it said its plan
is to be funded by IMO member states while allowing individual ship
owners and managers the opportunity to ‘purchase’ custom-made
security solutions for their individual vessels.
Nikolay Khovrin, a director of the agency, said that while 157 flag
states had pledged to work to fight piracy on the high seas, “the majority
of flag states do not have naval assets and qualified manpower to meet
their counter-piracy obligations under UNCLOS.
“That is why it is our aim to offer such capacity to ship owners on
behalf of his flag state and without undue cost. Our primary task is to
provide sea marshals and ship security details onboard armed RHIBs.”
He added: “As we forecasted last year the piracy in Somali basin has
proved to be a long-term problem. Failing nations of the region are
steadily becoming criminal states with piracy as their major revenue.
There is no any sign from the developed countries that they can seriously
8
tackle the problem. Regional politics signal more violent conflicts and
therefore threats to navigation in the area for years to come. This points to
a full scale war at sea that ship owners, operators and flag states can hardly
imagine.”
Mr Khovrin said the use of RHIBs meant that no weapons would be
carried onboard any of the ships being escorted and that any use of force
at sea would be limited to the self-defence of the members of the vessel
protection detachment (VPD) or visit, board, search and seizure (VBSS)
teams.
“Generally the use of force is restricted to the time when the
VPD/VBSS team is on patrol at sea and not onboard the target vessel. It
can be expressly agreed with the flag State and the ship owner that no
firearms are used or carried or loaded for use onboard the target vessel
and within less than 500 m from the target vessel,” he said.
NOTEBOOK
OutsidetheBox
Cyprus tonnage
tax gets European
Commission nod
Working at sea needs to be
every much as lucrative as
working in the offshore sector
otherwise you will not attract
the young people to the
industry, a leading Middle
Eastern ship manager has
claimed.
“The only way to get young
people to go to sea is to make the pay so lucrative that they will be
desperate to go to sea. And once you lure them in, the chances are
that you will keep them for a few years,” said Robert Houston,
President of Mideast Shipmanagement.
“Once they get their certificates, most of the young Brits and
Europeans work offshore around the UK or Brazil, enjoying one
month on and one month off. And they are getting very well paid. So
until we make deep sea as lucrative as the offshore, we won’t get
them. I don’t know how they will solve it,” he said.
Ten years’ of coordinated effort and close collaboration between
industry and government has resulted in Cyprus finally winning
European Commission approval for a tonnage tax system aimed at
boosting the island’s maritime cluster.
“The model here will try to attract European companies who have set
up [operations] outside Europe and tempt them back to Cyprus. The
more owners and manager who come, the more will follow,” Serghiou
Serghiou, Director at the Cyprus Department of Merchant Shipping told
SMI, ahead of the announcement.
The commission said the new system, authorised for an initial 10
years, would enhance the competitiveness of the Cypriot fleet without
unduly distorting competition. It allows the tonnage tax option to be
extended to crew management companies who otherwise would have
been exposed to 10% corporate tax.
The new system allows the tonnage tax option to be extended most
importantly to bona fide crew management companies, which are part
of the backbone of the island based shipping community. Otherwise
they would have been exposed to 10% corporate tax.
It also extends the tonnage tax to companies with foreign flagged
ships, as long as a certain percentage of the overall fleet is flagged
within the EU, and also to operating charterers.
Cyprus in poll position p22
Columbia and
Tsakos venture
boost for Greece
Athens-headquartered Tsakos Shipping & Trading has joined forces with
Cyprus-based Columbia Shipmanagement, part of Schoeller Holdings, in a
joint venture that will take over management of the Greek group’s fleet of
around 85 vessels.
The new entity, to be named Tsakos Columbia Shipmanagement (TCM),
will start operations towards the end of the second quarter of this year,
managing the 50-strong tanker fleet owned by Tsakos Energy Navigation,
the group’s US-listed, publicly traded tanker company as well as the diverse
Tsakos fleet encompassing tankers, containerships, LNG vessels, ro-ros and
bulk carriers.
TCM will be based in Athens in Tsakos Group premises and current
group shipmanagement personnel will join the new venture. It will operate
independently under its own document of compliance.
“There will be no changes to the existing quality, safety and environmental systems applied by TST or to the pool ofshore and seagoing
personnel employed by TST. This will ensure that service to customers will
continue to be flawless,” the joint venture partners declared in a statement.
Columbia Shipmanagement, estalished in Cyprus in 1978, currently
provides management or crewing services to around 350 vessels. Its
relationship with the Tsakos Group has strengthened markedly over the last
decade.
Springing up all
over the place...
Ship managers may be quick to eschew the accusation of ‘ambulance
chasing in times of crisis’ but the opportunities that abound are cultivating a new flotilla of shipmanagement company start-ups that SMI
has heard of.
Not only did our editorial offices receive a phone call from the
mergers and acquistions department of a leading merchant bank seeking
information about the world’s top 20 shipmanagement companies.
When questioned, he confirmed that a client of his was on the acquisition trail.
But SMI was contacted by a group of Dubai-based masters and chief
engineers keen ‘to acquire a small but efficient shipmanagement
company’. No preference for location or type of managed vessels, they
claimed. You can see their advertisement on p56.
And watch this space! SMI will feature in the next issue, an interview
with a leading ship manager who with significant backing, is launching
a new Middle Eastern tanker management business. Intriguing stuff.
9
NOTEBOOK
InterManager
and ITF agree to
work together
on major issues
Global union the International Transport Workers’ Federation and ship
managers’ association InterManager have signed a memorandum of
understanding encouraging them to work together on areas such as
maritime safety, training, and preventing the criminalisation of seafarers.
The understanding was signed by InterManager Secretary General
Guy Morel and ITF Seafarers’ Section Secretary Jon Whitlow.
The memorandum identifies a significant overlap in the goals and objectives of the two organisations in the field of shipping’s human element. It
also recognises the potential benefits of greater cooperation in areas such
as: criminalisation and the fair treatment of seafarers; the promotion of
social communication onboard ships; meeting the aspirations of young
seafarers; promotion of a safety culture onboard ships; ensuring that
manning agencies meet the requirements of the Maritime Labour
Convention; improving the image and reality of the industry; simplification
of the documentation required to be carried by ships; crew/officer training,
attraction and retention; and improving accommodation standards.
Mr Morel “The signing reflects our focus on the care for our seafarers
and our belief that, with better liaison and co-operation, we can
minimise unnecessary duplication of effort, improve efficiency and
enhance our impact. We have already seen what can be achieved when
the industry unites on issues such as criminalisation and piracy, and we
hope to build on those lessons.”
Mr Whitlow added: “This is a positive step towards developing closer
ties on matters of common interest with international bodies representing ship owners and operators. We hope that searching for common
ground and improving communications and liaison will result in a more
powerful united voice on industry issues.”
The past two years have seen a number of occasions when organisations across the shipping industry have come together to speak out on
issues such as piracy and the unfair criminalisation of seafarers. The ITF
has previously signed a memorandum with INTERTANKO.
ITIC reimburses
cash stolen by
Somali pirates
THE International Transport Intermediaries Club (ITIC) has paid out a
claim in respect of a sum of money stolen from the safe on board a ship
managed by one of its members after the ship had been boarded by
Somali pirates.
In the latest issue of its Claims Review, ITIC reports that, after the
pirates had boarded the ship, they opened fire on the accommodation
block and entered the bridge. Once under the control of the pirates, the
ship was forced to alter course for Somalia, where it was detained by the
pirates for some months before being released.
Before releasing the ship, the pirates stole a number of items from it,
including a cash box located in a safe kept in the master’s cabin. The cash
box included the sum of $15,000 which had been placed on board by the
ship manager. Because
the manager had taken
out ‘cash on board’
insurance, the stolen
money
was
duly
reimbursed in full to the
ship manager by ITIC.
Under the terms of
ITIC’s cash on board
insurance, money can be
covered when kept in a
locked safe on the ship.
ITIC also provides a
range of cover for
managers and agents in
respect of money carried
temporarily in their care
while in transit to a ship.
The cover can be
extended to money,
including petty cash,
kept in the manager’s
office or at his home
overnight.
10
Christopher
Mayer steps in
to editor’s chair
Nearly 35 years on the editorial side of Lloyd’s List, including long stints
as news editor and executive editor of the daily newspaper would seem
to be the right credentials to take over the helm at the shipping industry’s
number one business magazine for ship owners and ship managers.
One of the best known faces in the shipping industry, certainly in the
Greek, Far Eastern, German and southern European markets, he brings a
depth of editorial quality that will only serve to further boost the editorial
strength of Ship Management International.
Sean Moloney, Editorial Director, welcomed his appointment, saying
it represents the latest chapter in SMI’s determination to be the leading
magazine for the shipowning sector. “I look forward to working closely
with Chris. His appointment frees me up to develop SMI’s attraction in
other ways but I will continue to write for the magazine in the months
and years ahead and look forward to strengthening our coverage in our
core areas.”
THE BIG
SHIPMANAGEMENT
THE BIG I$$UE
Do not bank on it
By James Brewer
A more rigorous approach to financing shipping deals has changed the
face of lending, so in the new climate, how do ship owners and
operators ensure a sympathetic hearing from their banks?
There is no doubt that clients will have to make out a clearer and
better case for support, while the funds they can secure are more likely
to come from the issue of bonds and from groups of core banks than
from the once dominant syndicated loan system.
A fascinating insight into the new vetting processes of lenders has
come from executives at two of the institutions; all the more valuable
because several of the top finance sources of recent years are currently
becalmed, in particular German providers as a result of their heavy
involvement with the lately-faltering containership sector.
After some of the largest competitors slammed on the brakes in
response to liquidity problems among the shipping companies they
backed, this has opened the way for a greater
Scandinavian presence on the market.
Nordea Bank, for one, has steadily assumed greater
importance in this sector. A combination in 2001 of
four banks – Merita Bank (Finland) Nordbanken
(Sweden) Unibank (Denmark) and Christiania
Bank og Kreditkasse (Norway) – Nordea is
said to have learned at an early stage from past
mistakes of some of its constituents, and thus
suffered relatively lightly in the shipping slump
which hit markets in 2008.
Nordea, which has more than 300
people within the bank to
support its role as
12
“If somebody goes bust, it will
be a good thing for the rest of
the market. No. There are
people looking to buy
bankrupts’ assets and operate
them at even lower cost”
a worldwide arranger of shipping deals, now sees opportunities for
careful expansion of its ship portfolio, but has established tough negotiating criteria. Lars Kyvsgaard, head of shipping in Denmark for
Nordea, insists: “We will focus much more on corporate governance,
going forward.”
Mr Kyvsgaard told a Copenhagen meeting, which was under the
auspices of the new European Union digital library project SKEMA
(see panel), that even if there has been some economic recovery
globally, difficult waters lay ahead. The economic woes of Greece were
a symbol of the problems afflicting much of the world, he said.
He went on to explain how his bank assessed a ship finance application. This featured an evaluation of the ship owner to ascertain
whether there was a long term strategy – and whether the shareholders
were willing to support the company if there were a need for new equity.
Another question would be: do we have the right sharing
of responsibility between the management, directors and
shareholders? The bank would want to evaluate the
competency of both the board and the management
services. If it were a matter of “only family members
without any knowledge of the industry, then we do
not feel very comfortable.”
Bank analysts would want to be confident that
G I$$UE
SHIPMANAGEMENT
the company has a clear policy “for how it is financing itself and what
kind of structure it would like.” The bank would ask questions about
how much equity it had, how much liquidity; whether there was a very
clear policy for its risk management; and look at its off-balance sheet
obligations. There should also be the right remuneration and incentive
structures in the company.
“We like to be with a company that we can see has a future... and that
has an aim to be a consolidator or industry leader,” said Mr Kyvsgaard.
Nordea preferred to finance companies that have access to cargo. “We
do not want to finance a company that is pure tonnage provider
chartering out tonnage. It is a clear advantage in this crisis if you have
access to cargo,” he said.
Applicants should open their books to the banks, to yield information. “We need high quality information and a flow of information to
the bank, so we can act quickly if needed.”
Then, it was necessary “to evaluate the market position of our
customers. How are they being seen? Are they a strong company in
terms of competitive edge? What is the strategy behind the investment
they would like us to finance?”
Nordea favoured modern assets from approved shipyards with a
good track record. Such assets assumed a long period of life “and it is
easy to be relaxed about a situation like that, compared to older vessels
that do not have a future.” The bank would seek to determine what
would be breakeven freight rates, in comparison to expected spot rates.
“We do not want to finance a
company that is pure tonnage
provider chartering out tonnage.
It is a clear advantage in this crisis
if you have access to cargo”
The security of the financing should be underpinned by loan to value
ratios, with 35% to 40% provided by the shareholders, by the company.
Financial covenants were essential, as a number of companies had
invested heavily without having any kind of financing. “We like to have
some kind of limitations on how much our companies can invest,” said
A platform for sustainable
maritime knowledge
Wise words from the men of finance came alongside a first
glimpse for some people of SKEMA, a project funded by the
European Commission to build what is called “a sustainable
knowledge platform for stakeholders in the maritime transport and
logistics industry.”
Mr Kyvsgaar and Mr Eismark were among speakers at a
SKEMA one-day workshop entitled Sailing Through Troubled
Waters. The seminar was organised by Øresund Logistics in
conjunction with Copenhagen Business School (which hosted the
day including an open event of its Executive MBA in Shipping &
Logistics) and the Maritime Development Center for Europe.
This marks the opportunity for SKEMA to become widely
known and accepted. All members of the maritime and logistics
community are being invited to use and contribute to the development of the platform, which is setting out to be a unique, comprehensive and free-to-access digital library collating research and links
across the sector. Material has begun to be posted on the site, and in
the next few months it should begin to fulfil its role as a major point
of reference. More details on the project are at www.eskema.eu
Mr Kyvsgaard. A corporate guarantee from the parent company was
also important.
In the market at large, the number of syndicated loans had fallen
dramatically. More pilot loans were being seen where the bank is the
only lender, and there were more “club deals” where a number of banks
came in on an equal footing rather than just one of them taking responsibility for a syndication.
Trends in 2009 saw a return to the supply of corporate bonds,
exceeding traditional loans in the Euro market, and making it easier to
finance some areas, but here Mr Kyvsgaard added a note of caution.
Even though the bond system was without financial covenants, “you do
not know who is your counterparty. You are dealing with a number of
investors. That is a challenge,” he said.
13
SHIPMANAGEMENT
After some of the largest
competitors slammed on the
brakes in response to liquidity
problems among the shipping
companies they backed, this
has opened the way for a
greater Scandinavian presence
on the market
He recommended maintaining 50% of a financing from core banks.
“Without a strong group of core banks, it will be difficult to find a
solution.”
Of the range of lenders, he said that some of the largest players were
effectively out of the market: HSH Nordbank, Commerzbank, and Royal
Bank of Scotland. The German banking sector had substantial containership exposure; and the UK banks were being restrained by the UK
government, conscious that the maritime sector was not UK finance.
Mr Kyvsgaard said that Nordea had previously found it difficult to
compete with the German banks on pricing and risk level. “We lost
market share in 2007 and 2008, but there is no doubt we see attractive
opportunities to do business today. For the first time for many years,
we can earn acceptable margins, and our security position is better. We
are talking about historically low values so the risk of losing money on
new vessels is lower today. We have a controlled growth strategy in our
bank within the shipping sector. For new customers, it is a requirement
that the management is experienced and that the company complies
with the corporate governance guidelines.”
He said that the German banks had concentrated on financing
tonnage providers. In the container sector, many vessels were being
redelivered to the owners, German KG partnerships, and there was no
guarantee for the shareholders in these KGs.
He was pleased that the German banks were behaving prudently, and
that the crisis in 2009 was managed in a professional way by many of
them, resisting the temptation for panic sales of assets – vessels and
companies -- which would have created a problem for them.
Mr Kyvsgaard agreed with one of his competitors, Morten Raunholt
Eismark, Senior Relationship Manager for corporate and institutional
banking at Danske Bank, that China was a force to watch in this sector as
in most others. The Nordea Bank executive said that future developments
would include a higher profile in the financing market from Chinese
banks; and Mr Eismark noted that the Chinese yard association said its
members would build 30% more ships in 2010 than in 2009.
The Chinese saw the industry as a strategic resource and were keen
to have more influence in the global shipping market.
Danske Bank, the largest bank in Denmark and a leader in Nordic
markets, has a shipping portfolio of close to $9bn. Thanks to its large
involvement in Norway’s energy industry, offshore supply vessels
account for 20% of the book, while crude oil tankers are at 11%, dry
bulk 9%, cruise and ferry 9%, and offshore rigs 8%.
Mr Eismark said that those seeking to understand current conditions
should remember that an “unbelievable” value destruction over just 20
months had left banks crippled. Lack of available capital made banks
withdraw to nurse local markets, meaning that some segments,
including shipping, had fewer funding sources.
Scarcity of capital led to an increased price of capital, and under the
Basel II regulatory regime, negative rating actions also put pressure on
OVER
HEARD
Clay Maitland, Managing Partner at IRI Inc, addressing the
4th Capital Link Invest in International Shipping Forum in
New York in March.
“There is no question that we are in the presence of a massive
contraction in trade. This comes after a significant expansion of the
world fleet during the last decade. Over the last five years, this has
averaged 7% per year, by capacity, of new ships ordered. During
January 2010, the global fleet expanded further, totalling 80,770
ships of a total of 890.2 million gross tons at the beginning of
February.
“Most of the new ships entering the market have been under
construction in China and Korea. This brings me to my first
prediction, which is that notwithstanding all the talk of cancellations, most of the ships under construction will be completed and
will enter the maritime supply chain over the next few years.
“When it comes to predictions, the old adage “you pays yer
money, and you takes yer choice” still applies. But some predictions
seem to me to be very wise. One prediction is very interesting. This
is put forward by researchers at DnB NOR Bank, to the effect that
Chinese annual iron ore imports will continue to increase, and could
14
peak as high as 1.3 billion tons a year before 2020. This would be
double last year’s level, and would create a demand for a further 584
capesize bulkers by then.
“I believe that overcapacity will continue to afflict the global
shipping market, as deliveries of new tonnage are pushed back by
most shipowners from the years 2009 and 2010 to 2012. This means
that the total supply in the global market will increase by 56% in
2012 – by which I mean newbuildings – by about 56%, by 2012, to
103 million dwt.
“I also fearlessly forecast that the considerable fall in vessel
values and prices is going to greatly reduce the profitability of ship
yards in China, Korea, and elsewhere. We saw that during 2008 and
2009, where the average price of all of the major ship types fell by
30% to 40%.”
SHIPMANAGEMENT
banks. “We have to
reserve more and
more capital to lend to
companies as issuers’
ratings go down,” he said, and
illustrated this with an example. “Under Basel II, if a bank
lent Euro100m to an A rated company, it would need a capital
base of Euro1.25m. If the company is downgraded to BBB, the
bank can only lend Euro37m based on a capital base of
Euro1.25m. To support the full loan of Euro100m, the changed
capital requirement is Euro3.4m.
“Ratings have been moving south since 2007, forcing banks to
allocate increasing capital reserves. Lately, downgrading has lost
momentum, but is still in negative territory.” Shipping loan volumes
had not yet recovered into positive year-on-year territory. Volumes in
quarter four of 2009 were down 51% year on year, but the decline acceleration came to an end in the second quarter of that year – one has yet
to see whether this is a trend.
With a total 2009 figure of $29.6bn, loan volumes, compared to $70m
a year earlier, followed the general market trend downwards. New
money volumes were declining because banks were under capital
pressure, and foreign banks were withdrawing to their domestic markets.
“The Danish banks have been there, for better and for worse,” he said.
Mr Eismark had a decidedly down-to-earth way for detailing the
agenda at banks: de-risking, deleveraging, deposits, disclosure = detoxing.
He listed the main factors in the market as increased pricing; more
rigid requirements for documentation and covenants; shorter maturities;
lower loan-to-value (around 60% to 65%); reduced capacity from
banks, which have increased their focus on existing clients; and for
Danish ship owners, less credit capacity from international banks. The
banks want to oblige ship owners to come the table and discuss things
before they turn wrong.
When the funding gap
for newbuilding and other transactions is considered It seems that the
banking and lending sector in general
(which includes export credit agencies)
has a whip hand. Newbuilding commitments for 2009-12 are conservatively
estimated at $500bn, depending on what
might be the true picture for cancellations
and post-ponements.
Mr Eismark said that the debt requirement for
that level of contracts, at 65%, is $325bn, or $80bn a year to fund. Of
the estimated $50bn in bank lending in 2009, much was committed to
the newbuilding order book.
This $30bn shortfall excluded finance of sale and purchase deals
(sale and purchase volumes between 2000 and 2009 averaged $22bn a
year, and the debt requirement at 65% was $14bn.) In all, this
amounted to a total funding gap of $44bn annually.
Ship owners, said Mr Eismark, faced the double whammy: credit
crunch and recession. Despite this, he strongly disagreed with a
common attitude that “if somebody goes bust, it will be a good thing for
the rest of the market.” He riposted: “No. There are people looking to
buy bankrupts’ assets and operate them at even lower cost.” ■
SHIPMANAGEMENT
How I
work
SMI talks to industry achievers
and asks the question:
How do you keep up with the
rigours of the shipping industry?
Aniello Esposito
ANIELLO ESPOSITO
President, GULF STOLT Ship Management Jlt
“Sourcing of crew is very important and the most difficult thing
at the moment. We are trying to secure crew from the
Philippines, from senior officers to the last deck boy. We
operate other combinations with the senior European officers
and Filipino crew or full Indian complement”
If ever there was a golden opportunity to capitalise on the strengths of
some and the needs of others, then the time is now, it would appear.
The doors to the potentially lucrative third party shipmanagement
sector are slowly being prised open but many of the entrants are not
new kids on the block. Some are established ship owners keen to take
control of their own managed fleets but with the added caveat of
maximising their own efficiencies and cutting their operating costs by
lending their expertise and resource to those fellow owners in need.
Today’s ship owners turned ship managers could well be accused
of expounding the true theories of Keynesian economics by diversfiying their way out of recession, but companies like Dubai-based
GULF STOLT Ship Management acknowledge they have a high level
of vessel management expertise that could and should be made
available to companies outside their own joint venture owning group.
GULF STOLT Ship Management, or GSSM as it is more easily
known, was established as a 50:50 joint venture company in 2009 to
provide a more focused and complete range of integrated marine
services for vessels owned by Gulf Navigation and Stolt Nielsen. As it
claims on its website: Its workforce’s “capacity to shoulder any work
load coupled with their ambition to succeed in the face of cut throat
competition knows no bound. Loyalty to professional ethics and transparency are the keyword behind their strength and success.”
But as Aniello Esposito, President of GSSM, told SMI, the
company’s managed fleet of 14 vessels could grow to 22 by the end of
the year as Gulf Navigation looks to take advantage of falling vessel
values and enters the sale and purchase market to boost its owned
tonnage. Then there is the potential of third party management work.
“By August we should have 18 vessels, but there are also plans to
introduce additional vessels because Gulf Navigation is planning to
purchase other vessels. Stolt is also planning to switch vessels it
currently has under different managers to the joint venture business. So
16
By August we should have 18 vessels, but
there are also plans to introduce additional
vessels because Gulf Navigation is planning to
purchase other vessels
“
”
SHIPMANAGEMENT
GSSM Managed Fleet
Name
Type
Class
Dwt
Year of build
GULF SHEBA
VLCC
LRS
298,923
2007
GULF SCANDIC
SuezMax
LRS
151,458
1997
GULF AHMADI
PROBO
DNV
47,979
1989
GULF JASH
PROBO
LRS
47,981
1989
GULF RIYAD
PROBO
DNV
47,980
1989
GUL SAFWA
PROBO
DNV
48,015
1989
GULF SHAGRA
PROBO
DNV
47,797
1988
GULF SIEB
PROBO
LRS
47,986
1989
GULF DEFFI
Chemical Tanker
DNV
45,920
2009
GULF FANATIR
Chemical Tanker
DNV
45,920
2008
GULF HUWAYLAT
Chemical Tanker
DNV
45,920
2008
GULF JALMUDA
Chemical Tanker
DNV
45,920
2009
STOLT SISTO
Chemical Tanker
DNV
41,388
2010
STOLT FACTO
Chemical Tanker
DNV
41,388
2010
GULF DEIRA
Crew Boat
BV
23.5 mt
1991
GULF DIBBA
Crew Boat
BV
23.5 mt
1992
GULFNAV
Crew Boat
DNV
23.5 mt
2008
GULFNAV 2
Crew Boat
DNV
23.5 mt
2008
We want our crew to feel part of Gulf Stolt
Ship Management. They can spend a few days
being briefed in the office either when they are
joining or singing off
“
”
suitable for large chemical or dry cargoes and
they are trading worldwide. As a group we do
everything from crewing and purchasing as
Flag
well as full and technical management. The
only thing we don’t do is the chartering
Hong-Kong Flag
which is carried out by the owners.”
Isle of Man
So when will GSSM start to move into the
Marshall Island
third party management sector? “The board of
Panama
directors are expecting this to be done as soon
as possible. I expect it will be happening by the
Marshall Island
second part of this year,” he said.
Marshall Island
Mr Esposito said he would not be
Marshall Island
surprised if in three years time, the GSSM
managed fleet had not grown to around 40
Panama
vessels. Such growth could also see
Saudi
relocation of the company into more
Saudi
dedicated offices in Dubai.
“Sourcing of crew is very important and
Saudi
the most difficult thing at the moment. We are
Saudi
trying to secure crew from the Philippines,
Cayman Island
from senior officers to the last deck boy. We
Cayman Island
operate other combinations with the senior
European officers and Filipino crew or full
UAE (4 crew+30 pax)
Indian complement.”
UAE (4 crew+30 pax)
Originally the company was organised to
UAE (4 crew+39 pax)
recruit its crew through agencies but now it is
looking to directly employed them. “We want
UAE (4 crew+39 pax)
our crew to feel part of Gulf Stolt Ship
Management. They can spend a few days
being briefed in the office either when they are joining or singing off. We
want to satisfy all their questions and instil in them what our expectations
are and what the progress we can expect from them,” he added. ■
ALASDAIR SMITH
Managing Director, SeaTeam Management, Singapore.
it is possible that we could have 20 to 22 vessels by the end of the year.
“The six newbuildings will be entering a pool with Stolt and the
other vessels such as a VLCC and a new 44,000dwt chemical vessel
built by Hyundai Mipo have already secured long term charter deals
with SABIC. Gulf Navigation also has six large PROBOs
(product/bulk) which are very flexible and effective in being suitable
for either the dry or the tanker sector,” he added.
So is Gulf Navigation serious about entering the S&P market
because of falling values?
“Yes, and the purchases will predominantly be chemical vessels
because this is what Gulf Navigation considers as its brand,” he added.
“The message we are also getting out here is that as a company, GSSM
is very experienced in the crude oil and chemical sectors so we are
planning to launch our services also as a third party manager. We have
the expertise here and we are already oil major approved when it comes
to VLCCs, for parcel or commodity type. We have PROBOs that are
“Managers have grown substantially over the years, either
through organic growth or by taking over other management
companies. As a result, we have less managers than ever
before. If the managers get bigger then our influence gets a
little less while our exposure gets a little higher”
The clearest indication yet that big may definitely not be beautiful and
that the specific and really important issues linked with giving a fleet
the highest level of TLC that some may say only an owner can give,
has been swiftly and decisively delivered by the world’s largest
independent tanker owner.
Frontline has become a torchbearer of the type of modern-day
romantic shipowning prowess that captivates the headlines: a celebrity
in its own right, not afraid to flex its corporate and vessel operating
muscles where needed. But it has always done this in the knowledge
17
SHIPMANAGEMENT
Alasdair Smith (left) with Jens Martin Jensen
At the moment there is no intention to
withdraw ships from the managers: we have a
large newbuilding project so we have enough
vessels coming from there and we have quite
a few bareboat vessels that are coming into
the window over the next 24 months which
may or may not be managed by them
“
”
that it is backed up by a host of doting third party managers and a
remarkably small in-house owning team of around 40.
So you can imagine the surprise that surrounded its decision to take
‘between 20 and 30’ of its own vessels away from the third party
managers and place them under the control of a separately formed, but
Frontline-owned and Singapore-based shipmanagement arm. Sea Team
Management, complete with a crewing operation in the Indian city of
Chennai, became an approved management company after receiving its
certificates from DNV.
Alasdair Smith, past General Manager of operations for the owning
company in South East Asia with over 28 years’ tanker experience and
now the Managing Director at SeaTeam, has the expertise to see the job
completed. He was responsible for group business in the region for
Frontline, Golar LNG and Sea Tankers including business development, customer relations, emergency incident response, fleet operations, fleet repairs and maintenance as well as managing the
performance of third party service providers to group companies.
Is it now more of a question of gamekeeper turning poacher?
Prior to joining Frontline, he served as General Manager of ASP
Shipmanagement, Australia. He is also a Master Mariner with 15 years
sailing experience on crude oil and product tankers engaged in
worldwide trade, including six years service as Master.
So what were the reasons behind the decision to set up SeaTeam
and take at least some of the ships away from third party management?
“Managers have grown substantially over the years, either through
organic growth or by taking over other management companies. As a
result, we have less managers than ever before. If the managers get
bigger then our influence gets a little less while our exposure gets a little
higher, said Mr. Smith. “We felt it was a good thing for us to set up an
alternative in-house management company to give us another way of
benchmarking the managers we use. To promote competition we needed
to increase the number of managers we were using as we didn’t feel any
single manager added much value to our operations. This brought us
18
back to considering setting up something in-house and benchmarking its
operations against the other managers. It also gives us a bit of leverage
with the other managers if there is an alternative.”
He continued: “Traditionally Frontline was with Acomarit but
Acomarit was then taken over by V.Ships which then took over V.Ships
Norway and then bought ITM. So the number of managers has reduced
and the competition between the managers has reduced.
“At Frontline we would like to see a manager with a fairly homogenous fleet, managing large crude tankers rather than a manager
managing a mixed bag of ships,” he said.
But as the third party managers’ fleets grow, does it become a
balance between size and personal service? “Yes of course and as the
managers grow what they want is harder to achieve, isn’t it? We
reviewed our shipmanagement options and decided that we definitely
needed to promote competition and have more opportunity for
managers to benchmark against.
“One option was just employing another manager which we didn’t
feel would give us any benefit. The next option was to acquire a ship
management company and tailor it for purpose or even consider some
kind of joint venture. But if we were to do the due diligence and once
you lift the carpet up, you find all the problems. A third option was to
take management into Frontline itself and that was not a really a good
option because one of the qualities of Frontline is to outsource and to
be able to move on issues quite fast. If we had more people and an
operation like this in our office it would detract from that model. So we
looked at starting up a ship management company, owned by Frontline
but which would be a standalone company and would have to compete
with the other managers – what we are trying to achieve is a hybrid
between third party management and in-house management.”
He added: “At the moment there is no intention to withdraw ships
from the managers: we have a large newbuilding project so we have
enough vessels coming from there and we have quite a few bareboat
vessels that are coming into the window over the next 24 months which
may or may not be managed by them”
As Mr. Smith contends, the benefits are that his operation is much
closer to the owner than any traditional third party operator would be
and he does not have the marketing nightmare of having to go out to try
and get more ships into management. “We also do not need to report
different management formats to different owners. We have just one
client. We felt the standalone option was the right model.”
Will SeaTeam look after all the Frontline ships or will Frontline
continue to have its vessels managed by third party managers?
“There is no intention to move away from the third party model but
it is Frontline’s intention to support the new operation to get it up to a
critical mass. The cost of shipmanagement becomes economically
viable the more ships you manage but only up to a certain level. On our
model it is expensive to run 10 ships and you make substantial savings
by going up to 20 vessels. This means that the savings from one ship to
five are huge, from five to ten is significant, ten to 15 still a lot. But
once you get around the 30 to 40 ships level you can maybe squeeze
costs a little bit but not that much.
We had a challenge with our managers to
keep a stable crew onboard our ships and we
feel that by carrying out this duty in-house, we
can certainly instil the softer touch if you like
“
”
“We have modelled SeaTeam to manage in the region of 20 to 30
Frontline vessels and then it has to compete with the other managers,”
he added.
According to Mr Smith, the major advantage of the new operation
will be on the crewing side with SeaTeam benefiting from a closer
involvement with the crews it wants for its ships. The dilution of crew
numbers worldwide is a major concern to companies like Frontline, as
is the poaching of sea staff from one management company to another.
Loyalty, it says, is of paramount importance.
Mr Smith again: “We have seen experienced crew members jumping
from manager to manager: we had a challenge with our managers to keep
a stable crew onboard our ships and we feel that by carrying out this duty
in-house, we can certainly instil the softer touch if you like.
We chose Chennai because the right people
were there and the maritime university was
there. Of course, a lot of the seafarers living in
that area are happy to meet people in the
office in their home city
“
”
Opening the Chennai office
“A seafarer working for V.Ships on a Frontline ship has a mixed
loyalty. He has probably been on a Frontline vessel for some time but
he has also worked for V.Ships for quite some time. If you look at
traditional third party management there is an element of agency
factor there. Look at purchasing, if you have an experienced
purchaser and he spends a lot of time getting the best prices that is
fine, but to secure the top quality purchaser that is an overhead the
manager takes on. If the top purchaser does a good job, the cost goes
to the manager but all the benefit flows straight to the owner. So there
is that conflict of interest in that the manager wants to do a good job
but doesn’t want to do too good a job because it affects his profit,”
he said.
It is also down to the important issue of the crew matrix, isn’t it?
“Of course, the oil majors are supportive of what Frontline is doing.
They don’t hold it against the third party managers but see it as a
progression that Frontline wants to do.”
So what of the SeaTeam team?
“We are building the team to match the fleet. The intention is that
the first vessels should start coming into our management in the next
few months and they already have crew onboard. We have set up a
crewing office in India with fully employed staff there. We chose
Chennai because the right people were there and the maritime
university was there. Of course, a lot of the seafarers living in that
area are happy to meet people in the office in their home city. More
of our seafarers were from that region rather than Mumbai and we
felt that if we went to Mumbai we would be relying more on manning
agencies. We would then lose that personal touch,” he added.
The choice of Singapore as the base for its management operations
was an obvious one and its team of seven is being added to week by week.
“Singapore was the logical place to put shipmanagement as you
have the maritime cluster here and a large pool of qualified people to
draw from,” said Mr Smith. It is also very welcoming to ex-pats with
good foreign schools and family-friendly and the structure is here.”
The final word has to centre on the likely goals of the new operation
and according to Mr. Smith this is simple: “We want to be accepted in
the ship management sector by the oil majors and by our competitors for
being able to provide quality shipmanagement services.”
Sound words indeed. ■
SHIPMANAGEMENT
STAN AYSCUE
Regional Manager - Business Develpoment, Securewest International
The number of private security firms looking to market
services to the maritime community is rising as piracy
escalates. SMI talks to one specialist who believes that while
this may be positive, as it suggests that the maritime industry
is beginning to better understand the risks and changing
dynamics of the piracy problem and is seeking to take action
to mitigate the risks, there is also a great disparity in skill
levels and experience of companies offering their services.
“Many firms that have specialised in security for land sites and
shopping malls are now trying their hand at maritime security, not
realising what a unique environment it is. Our global team comes with
a wealth of knowledge and experience in maritime security. However,
the world is constantly changing and we must be ahead of that change
to accurately inform and manage our clients’ risks,” said Mr Ayscue.
Speaking with SMI from Pakistan, a country increasingly seen as a
hotbed of terrorism, he insisted that even in this internet/information
age there was only so much could learn from reading research.
“You must get dirt on your boots to see the situation yourself and
put that into context as to what it means to our clients operations.”
Last year there were more than 400 incidents of piracy in 2009
while many went unreported. “With the potential rewards being significant there is considerable incentive for the pirates to develop ever more
sophisticated modus operandii. One of the areas often ignored in
considering the problem of piracy is that we are operating in a
globalised world. As easily as we can look up a news story on the
internet or call an agent in foreign port, so can pirates.
“They can find news stories of our naval response and adjust their
areas or methods of operation, access sites showing open source
Automatic Identification Systems or be encouraged by stories of the
large ransoms being paid.
“With our global office and management structure, Securewest
International has the ability to effectively manage a project throughout
any twenty four hour day. So, for example, a ship owner, who has
worked with our US operations to prepare his or her vessel for sail, will
go to sleep as our Singapore operation re-checks the current threat
conditions along the route based on information provided by our 24/7
Maritime Assistance Center,” said Mr Ayscue.
“This information will then be passed to our UK team for any
further planning or adjustments that need to be made to the vessel's
security posture. So as the US vessel owner pours the next morning cup
of coffee, he or she knows that an international team has been on watch
over the vessel's interests.”
Mr Ascye said the payment of ransoms was a particularly difficult
question. The US, under Office of Foreign Affairs guidelines, had
always taken a negative view to negotiating with terrorists on the basis
that there would be no risk if there was no reward. This was echoed in
UK government statements that it would not pay ransoms.
“While the rationale is sound, it will only be truly effective if every
government takes the same stance,” he insisted.
The company serves clients in all areas of the maritime sector from
ports to energy/offshore, containers, ro-ros, bulkers and the like; they fall
into two categories – those with regular routes through high risk regions
and those which only travel to hot spots on less regular short charters.
“Not only do we provide riding security teams, escort vessel
services, vessel hardening consultancy and anti-piracy training but also
crisis management training, satellite tracking, SSAS monitoring and a
24/7/365 Maritime Assistance Center. What we tell our current and
potential clients is that they are unique, so even though we do offer core
services, each will be tailored to meet the particular challenge that their
voyage presents,” he said.
“Many security firms will be happy to send a clients a price an ‘x’
sized team, without taking into account the type of vessel/cargo, speed
20
There are too many private security
providers coming on the market today that do
not appear to fully understand the environment,
which puts not only them but also their clients
at potential risk
“
”
of the vessel, area of operation, and other factors that can effect the risks
to the client and crew. What we ask of our clients is a close relationship
and dialogue to ensure we build the strongest security posture to protect
their interests.”
The company offers clients crisis management training and consultancy services to deal with potential kidnap/hijack and ransom situations.
“The very first thing you learn is that the victim's health and safe
return is the top priority. Once that is understood, we work with the client
to build a framework to accomplish that goal,” he said. “If any government
or organisation decides against the payment of ransom, it must understand
that in isolation this move is unlikely to eradicate the threat, and measures
must be in place to ensure the safety of those captured.
Mr Ascye said he believed Securewest International was the best
suited to offer risk services, not only for its experience and skilled
personnel, but because of its approach to the piracy problem.
“Each client and voyage is unique and requires unique solutions.
We have clients that we have worked with over a decade, yet before
each deployment we conduct a full assessment of their voyage plans
and re-evaluate how the risks have changed and how we will address
them. We constantly look to remind ourselves and our clients that
security is not a ‘noun’”, he added.
Mr Ascye said people too often simply visualized an individual in
a uniform when they thought of security. What security truly means is
whether one felt safer and safer with the steps the company had put in
place to address the client’s risks.
“Securewest International is very proactive in making sure clients
understand their vulnerabilities and the measures we can put in place to
mitigate them. It is steps such as these that make us best suited to offer
risk services. As an industry, it will continue to grow.
“However,” he warned, “there are too many private security
providers coming on the market today that do not appear to fully understand the environment, which puts not only them but also their clients
at potential risk.”
The company, he added, had long been a strong advocate of the
development of industry standards against which individual ship
owners could assess a prospective security supplier and believed this
must be the way forward for the industry. ■
REGIONAL FOCUS
CYPRUS
Tonnage tax will keep Cyprus in
pole position
By Christopher Mayer
After some years of false dawns and unrequited aspirations, ship
owners, managers and charterers alike have seen dénouement to one of
the major issues impacting on how they do business in Cyprus. Now
they can plan ahead.
For, with European Commission blessing, Cyprus is finally to
introduce its much-vaunted tonnage tax system, an initiative designed
to attract owners and tonnage to the island and reverse the discernible
decline of recent years.
The pace of progress towards implementation has accelerated over
the last year, since the Commission released detailed guidance on state
aid granted to shipmanagement, so much so that two minor comments
covering passenger terminal operations in connection with tax qualification “were addressed on the same day,” according to Serghios
Serghiou, Director at the Cyprus Department of Merchant Shipping.
“Once in place our system will be the only approved [system] in the
European Union for open registry and will maintain and improve the
existing role of the Cyprus shipping fleet,” he said.
The register, he added, had been relatively stable in recent months
following a decline in numbers in 2009 and now stood at close to 21
million tons gross; “a doubling of the Cyprus register was a feasible target
within a five-year period”. Such growth would bring real and indirect
benefits with owners and managers employing between 3,500 and
4,000 people and shipping contributing as much as 3% of the island’s
GDP.
“The model here will try to attract European companies who have
set up [operations] outside Europe and tempt them back to Cyprus. The
more owners and manager who come, the more will follow,” said Mr
Serghiou.
“Our aim regarding private sector concern is to provide the means
to make them more viable, for instance though a fiscal policy to reduce
Serghios Serghiou - looking to double the register
22
their expenses and at the same time improve the services Cyprus gives
to the international shipping community.”
Eugen Henning Adami, Managing Director of Intership Navigation
and President of the influential Cyprus Shipping Chamber, told SMI
that implementation would open doors. “We needed to do something for
crew management companies. Shipping professionals and crews do not
Capt Eugen Henning Adami - professionals do not grow on trees
grow on trees and as the capacity to manage is reached so Cyprus, as
the largest third party management centre, will provide these services.”
Thomas Kazakos, Director General of the Chamber, described the
tonnage tax as “a plan for the EU itself” and would mean that owners
would not move to non-EU jurisdictions. The three-tier owning,
management and chartering system would maintain the 35-year infrastructure in Cyprus and enhance the maritime cluster and the services
offered in Cyprus would be fully transparent and legally approved.
“The timing is fortunate,” said Mr Kazakos, “if in a few weeks we
can say we are seeing and preparing for the first signs of recovery. And
if ship finance is not yet flourishing in Cyprus we are optimistic that
these will come at a later stage.
“We are not passing judgment on others; we are doing our
homework well and the government must go on a road show, mostly
outside the EU, to explain Cyprus’ position,” he added.
In this context Mr Kazakos was fulsome in his praise of the efforts
CYPRUS
of recently appointed Minister of Communication and Works, Erato
Kozakou-Markoullis, whose duties encompass shipping. Her 30 years’
experience in the diplomatic and political arena is expected to stand her
in positive stead when it comes to addressing the other key issue
exercising minds – the long-standing ban on trading with Turkey.
“This is an Achilles heel for Cyprus but as long as negotiations go on we
are confident that we may be presented with a solution,” Mr Kazakos said.
“The European Union may be the only institution that can persuade
Turkey to act,” said Capt Adami. “It has made clear to Turkey that the
REGIONAL FOCUS
illegal ban should be lifted. I believe Turkey will eventually play the
right card at the right time. It would be of economic benefit to the EU
if Turkey was in and my personal belief is that it would show the
Muslim world that what we are doing could be an eye-opener and of
benefit and that not all is bad in the western world.”
On cue, UK prime minister Gordon Brown insisted the UK was in
favour of Turkey’s accession to the Union. Following a meeting with his
political Turkish counterpart Recep Tayyip Erdogan in London in March,
Mr Brown was quoted in the Cyprus Mail as saying he had confirmed to
Economides looks to first signs of green shoots
"Shipping is struggling and no one knows when it will recover. It has
affected us as our shipping clients have been affected, as has Cyprus
in financial terms and in terms of image," says Totalserve Chairman
Peter Economides.
"None of our shipping clients have been affected that much that
they have gone bankrupt, but they have restructured. Many companies
are hanging on as much as they can and this year we will hear of
companies going bust, of unpaid bank loans and definitely of a lot of
changing of hands for a lot of vessels. New building orders have to be
delivered and paid for at prices agreed two years ago," he told SMI.
Mr Economides, whose business activities keep him on the international road for some 200 days each year, said Cyprus had become
embroiled in the global shipping crisis after most others, in late 2009
and early 2010, and would come out of it later. Totalserve, he said,
"hoped" the recessionary cycle would be completed this year and that
a new cycle would start in shipping.
"Touch wood, we are growing every year as if there is no crisis, but
at the same time we are cautious," he added. "We have not expanded
further this year beyond the establishment of the office in Luxembourg
and are consolidating before considering further expansion.
"Our clients need professional advice to look after their
businesses when they expand and to get them out of any problems
when they contract."
It was vital for Cyprus that the Turkish embargo was lifted over
the course of the next 12 months. If we get over that hurdle a lot will
change," he added.
Totalserve Group started operations from London in 1972 and
comprises four companies –Totalserve Management Ltd, Totalserve
Trustees Ltd, PG Economides Ltd and PG Economides &Partners
LLG. Contract, commercial and corporate law are key elemets in its
service package. The shipping department, whose clients include
Polish state-owned giant Polsteel, is responsible for the registration of
shipping companies worldwide, the transfer of vessel ownership,
vessel and yacht registration, ship finance, payroll management,
parallel bareboat registration and VAT planning for yachts.
The expansion to which Mr Economides referred has, over the
course of the last year, seen the opening of offices in Johannesburg
and in Luxembourg, taking to 11 the number of offices it operates in
three continents. In February this year, as reported on page 46 of this
edition of SMI, the group was appointed sole global representative of
the British Virgin Islands Shipping Registry.
The appointment came after the UK overseas territory was placed
on the 'white list' of those countries that had substantially implemented internationally agreed standards set by the Organisation for
Economic Cooperation and Development.
"There is no conflict of interest between [our work for] the British
Virgin Islands and Cyprus," said Alkisti Kannidou, legal consultant
and head of the shipping department. "It [the BVI] is an attractive,
regulated jurisdiction."
According to Ms Kannidou, Cyrpus had been "fortunate" to have
an attractive shipping system in place before joining the European
Union. It had retained the favourable provisions, had started off way
ahead and retained that lead.
Ms Kannidou believed that while the recession had seen a drastic
decrease in ship registrations and had produced a domino effect on the
rest of the shipping industry, the group could capitalise on existing
business as it had a large customer base.
Company and ship registration in Cyprus went hand in hand, and
involvement with ship management was first and foremost within the
Cyprus sector.
Peter Economides
In terms of company registration, the predicted or reported
movement by Norwegian and Scandinavian companies had not
materialised, but there had been interest from Poland and Russia.
There had also been some questions from the Middle East and South
Africa had requested the group's opinion.
The team, said Business and Marketing Communications
Manager Andis Petrou, believed that this would be the year when
many plans on the drawing board were dusted off and implemented,
possibly by the end of the summer.
However, the recovery in company registration would be faster
than recovery in the shipping sector.
Malta, the island's main competitor, was in the same boat.
In March, Mr Economides, whose punishing business schedule
still leaves him time to serve as honorary consul of Cape Verde in
Cyprus, admitted to the Totalserve Journal to being "thrilled" the BVI
authorities had entrusted the group with its shipping flag.
The group, he said, had been selling and administrating BVI
companies for many years and had maintained an office there since 2004.
The appointment had elevated his group's business to a whole new level.
Cyprus, he said, was an attractive and legitimate European
financial centre with corporate, information technology and shipping
services. It would see more business from managers, ship owners and
crew managers alike. Owners basing a ship management company in
Cyprus gained extra benefits under European Commission guidelines
on state aid granted to ship management companies allowing Cyprus
to offer a corporate tax discounted from the normal 10% to just 4.5%
for ship management.
The guidelines, announced towards the end of last year, had made
clear that ship managers could benefit from tonnage tax even if crewing
and technical services were provided separately. Until then, only ship
managers who offered crew management jointly for the same vessel
were eligible to join a tonnage tax scheme, on the basis that these were
services that would otherwise be provided directly by the ship owner,
which could benefit directly from entry into tonnage tax schemes. ■
23
REGIONAL FOCUS
CYPRUS
the Prime Minister that Europe would benefit from the cultural, the
economic and political strengths that Turkey would bring to Turkey’s top
table.
But, he warned: “Let there be no doubt, reaching agreement on
Cyprus will require huge courage on all sides. It will require bold
leadership and a spirit of compromise.”
Among the island’s major players there is a sentiment of optimism
abroad, as this survey reveals, and also no-nonsense reality. Bernhard
Schulte Shipmanagement Chief Executive Officer Andreas Droussiotis
told SMI that while the recession had hit Cyprus in same way as others,
it was not so much on third party managers as on the owners.
“With the ship management industry the biggest expansion
[comes] when shipping is in a crisis,” he said. “We have companies
knocking on the door on a daily basis. The situation is two-fold: what
is the financial risk when you take on another owner [when] the biggest
problem we are facing is to get our money? As a company we are lucky
because we have really first class ship owner clients, but you don’t
really know what will happen tomorrow.
“People tend to consider me a pessimist because I don’t consider that
shipping will ‘come in’ again [soon] but in two years, the bare minimum,
because shipping has been hit by the worldwide crisis and surplus tonnage.
There is far too much for the needs and requirements we have.”
Mr Droussiotis revealed that delegates to the Maritime Cyprus
conference last September had been told that with the volume of ships
under construction, there would be up to 65% excess tonnage by 2011
with between 50% to 55% of this total being tankers and bulkers.
“What is the increase in trade we require in order to absorb it?” he
asked. “People have claimed many [vessels] would go for scrap and be
laid up but we haven’t seen many scrapped and laid up ships, and even
if you have many laid up and the business flourishes we will see them
in the market. They are not going to go away.”
Voicing the thoughts of all on the island, Mr Droussiotis said crew
quality was a key issue, given the rapid expansion of the global fleet in
Andreas Droussiotis - opportunities for managers come in crisis times
recent years. “It takes one year to build a ship and 12 years to train a
master from a cadet. We have all realised the problem but it takes a few
years to cope with it,” he said.
Some western traditional companies that had produced officers had
disappeared, as in Germany, the UK, Scandinavia and “even Greece”
and socio-economic changes and such things as criminalisation of
seafarers had convinced those who formerly looked to a career at sea
turn to p29
5th International
Shipping's New Era:
Who are the new
Kings of the Jungle?
Tuesday May 11th, 2010 at the Amathus Beach Hotel in Limassol Cyprus
This one day shipowning & managing summit will plot how shipping will emerge out of this
difficult recession and assess who the winners and losers will be. Speakers and delegates will be
Presidents/CEOs of owning companies and managers as well as high level regulators and bankers.
Confirmed speakers include: Dr Peter Swift, Intertanko - Chairman
Mariella Bottiglieri, Giuseppe Bottiglieri Shipping Company SpA
Robert Houston, MidEast Shipmanagement • Ted Petropoulos, Petrofin
Roberto Giorgi, President InterManager, V Ships
Michael Bodouroglou, CEO, Paragon Shipping • Jan Morten Eskilt, CEO, OSM Group
Capt. Kuba Szymanski, Secretary General Elect, InterManager • Jens Olsen, President of ISSA
Plus others to be announced
Sanctioned & supported by:
Event Sponsored by:
For more details on the conference and/or sponsorship opportunities please contact the conference team:
Ship Management Summit
2010 is being hailed as a year of uncertainty as the shipping
industry starts to position itself to emerge out of recession. But
what effect will the worst shipping crisis in living memory have on
ship owners and managers and their fleets?
Will there be the level of bankruptcies as initially thought and who
will end up controlling the world's fleets? What effect will the
changing face of shipping have on the third party management
sector and will the large numbers of ships scheduled to be
delivered from the world's shipyards materialise and further
impact on the fortunes of the shipping industry this year?
Roberto Giorgi
Dr. Peter Swift
The 5th International Ship Management Summit will
answer these and many other questions
Serghios Serghiou
This one day conference to be chaired by Intertanko
Managing Director Peter Swift will examine 'Shipping's New Era' from
the perspective of the ship owner, ship manager, banker and regulator and
will ask who will be the new Kings of the Jungle in terms of fleets
controlled, legislation passed and shipping services rendered
Mariella Bottiglieri
Sponsorship Opportunities
Jan Morten Eskilt
Ship Management International has a variety of sponsorship and
exhibiting opportunities for this event, giving your organisation
invaluable contact with the delegate audience.
Sponsorship packages can be tailored to meet your strategies, objectives
and promotional budgets and our exhibition package gives you exposure
in and around the refreshment networking area - all sponsorship
packages include access to the full event
Michael Bodoroglou
Previous Conferences
Robert Houston
Hear what delegates said about past International
Ship Management Summits:
Capt. Kuba Szymanski
“A thoroughly worthwhile event for both networking
and the quality of the material discussed”
“One topic covered thoroughly gave depth to the SMI event - superb!”
“It is important that conferences reach conclusions and are
not just talking shops, this did it brilliantly”
“Such a high level of speakers - sets SMI events above the competition”
Asad Salameh
Jens Olsen
For more information visit our website
www.shipmanagementinternational.com/events
Tel: +44 (0) 1296 682051 • Fax +44 (0) 1296 682156
Email [email protected]
Tel +44 (0)1296 682051 or fax +44 (0)1296 682156 or email: [email protected]
CYPRUS
from p24
that this was not now the path to follow, particularly in view of family
ties and shore-based salaries. “Youngsters do not know about tradition,”
he claimed. “So why should they go [to sea] so you can operate a ship
at a profit?”
Mr Droussiotis confirmed that Bernard Schulte Shipmanagement
had frozen wage levels for dry cargo masters this year due to the number
of lay ups and sector restructuring but said circumstances were different
for the tanker sector, where there was a shortage of suitable material. “If
I want a master but cannot find one and he comes to me and says he
wants more, I consider this and take him on if I find him suitable.
“The market has been spoiled by owners, not managers, because as
a manager if you give to one you need to give to all,” he said. “As an
owner you consider different types of ships and trading areas. We
benchmark on a monthly basis and have updated reports from all
crewing agencies, about 23, and our own agencies to see if we are in the
upper range of the market. I don’t want to pay the top wages but at the
same time I don’t want to pay the bottom as you don’t get the right
people or [get] what is left behind by others.”
Mr Droussiotis said the company, which has faced unconfirmed
claims that it has laid off staff in Cyprus during the recession, had
developed all kinds of packages ranging from medical assistance to
families to help retain crew and convince them they were not a contract
number but a part of the team. “They know that if they have a real
family problem we are there to help; we have people who have been
with us since being trained at our school or in India or the Philippines
who are now chief officers, engineers and masters: these people don’t
move easily.
“We cultivate our masters and if you know the deficiencies of
someone you can control the situation better. By using travelling masters
and onboard quality and safety onboard you see better efficiency and
productivity. You cannot afford to lose an officer, especially one of your
own people. If something goes wrong on a vessel who do we blame?” To
this end, Mr Droussiotis said the company had increasingly upped the
number of monitoring visits from shore-based staff.
A key issue was crew and officer welfare. “Certain functions
onboard ship really bring people together, but after a hard day’s work
loading, unloading, attending to port state control, class and other issues
Thomas Kazakos - seeking to enhance the maritime cluster
people need to relax,” he said, insisting he was opposed to recent
suggestions that crew and officers might consider studying individually
after finishing their watches.
“Do you go home and study?” he asked. “A nice meal is extremely
important as food is the biggest ‘entertainment’ onboard. Anyone who
tries to economise on food is stupid. We spend tremendous amounts of
cash to train the cooks.
“We also offer other things such as access to e mail, giving them
something to communicate with their families. Sometimes we don’t
REGIONAL FOCUS
Anna Vourgos and Marinos Vourgos
Fighting hard in a loyal world
"There is loyalty here, people understand what the market is going
through and all segments are trying to pull together."
So says Anna Vourgos, Director of Aphentrica Marine Insurance
Brokers, one of the island’s leading insurance players.
It is almost eight years since, in June 2002, Aphentrica signed
an exclusive agreement with Jardine Lloyd Thompson to provide
Cyprus-based companies with local services supported by the internationally-renowned insurance broker.
But Ms Vourgos and co-director Marinos Vourgos stressed that
Cyprus and its maritime industry players had fought hard to create
an image of the island as a good and proper place to do business.
This recessionary era was not a time to cut corners and jeopardise
safety and quality.
"By cost-cutting, companies may cut such things as advertising,
but they will not reduce standards," Ms Vourgas said.
"This is the time for anyone in the service industry to show their
worth, to think ahead and do anything to help cash flow. Cyprus has
dropped down the league table in terms of [the number] of owners
to ensure quality, and the island is one of the few places in the world
where government works with the private sector to get things done.
If everyone pulls together in a difficult market there will also be
opportunities," she added.
Aphcentrica Marine Insurance Brokers was established in
Limassol in 1994 as a specialist insurance broker and consultant. It
is registered with, and regulated by, the Insurance Superintendent of
the Cyprus Ministry of Finance and in 2005 it became one of the first
overseas brokers to be granted Open Market Correspondent status
by Lloyd's of London.
Aphentrica's approach then, as it remains, was to understand
client operations, listen to requirements, provide innovative
proposals and a timely response and maintain a high standard of
service throughout the insurance process.
Its key strengths were centred on market relationships and direct
marketing in the international maritime marketplace, technical
claims experience, teamwork and knowledge of the shipping
industry as well as the insurance market.
"Our approach to business, from the beginning, was to build and
encourage long term personal relationships between shipowners,
managers and their insurers in good times as well as bad, our forte
being we are very service orientated and literally pamper our clients
as if they were babies," Director Anna Vourgos told SMI.
The company has more than 60 policy holder clients, having
added another half dozen at the last renewal from as far afield as
Russia, the Middle East, Italy, Malta, Dubai and Syria.
While admitting to a fall in premium income during the current
crisis, it is optimistic of growth, particularly in relation to Russian
business where long-standing religious and cultural ties between
Cyprus and Russia are expected to stand the island in good stead in
coming years.
"We started from nowhere and have always looked to our credibility and business transparency and what we could create," said Ms
Vourgas. "We have gained business through word of mouth and
would always urge potential clients to seek references." ■
29
REGIONAL FOCUS
CYPRUS
Could the German companies move away?
Charalambos Manolis, Managing Director of Acheon Akti
Navigation Company has his colours nailed firmly to the mast, but
with a warning. "I am convinced the future for shipping in Cyprus is
bright but if foreign companies - the Germans, for instance - were
persuaded to move back through their own government initiatives,
this would have a huge impact on Cyprus and its economy. No one
has addressed this at government level as they have been convinced
that everyone will stay in Cyprus," he told SMI.
The company was established in 2002 and, from a high point of
some 22 vessels, now owns and manages a fleet of eight reefer and
general cargo ships. Two fully owned general cargo vessels were
bought recently to trade on a spot basis in the Black Sea and
Mediterranean.
"Some 80% of our business is done with the same charterers and
we plan more acquisitions over the course of the next 18 months,
concentrating on vessels in the 5,000 dwt range," he said. "We have
to be positioned for the upturn, be ready for the good times and attract
more vessels as third party managers. We will be looking to Russian
owners as they have money to invest in shipping," he said.
The company employs mainly Ukrainian and Polish crew and
crew vetting and, above all, crew retention, are vital issues.
"Our time charter deal with Exxon Mobil covering the Salem M
pipe layer involved deploying 10 crew members for eight weeks,
taking them off and deploying another 10 for a similar period to
ensure quality and stability in the operation," he said.
Mr Manolis suggested that the Cyprus government could pay
more attention to the domestic maritime community and to Cypriot
owners. "I believe it is possible to create a strong national fleet. We
have the infrastructure and know how here on the island.
30
Charalambos Manolis - government could pay more attention
"With proper support we can attract owners. We want
government support, particularly when it comes to lending to
shipping for while we have a strong banking system on the island it
does not specialise in shipping. Attention should be paid to this and
also to the provision of industry support services," he said. ■
CYPRUS
appreciate situations onboard and even
after someone has sailed for 10 to15 years
you can forget it.”
Cyprus, he said, would benefit from
its friendly business working environment
and would attract smaller ship
management companies. Big shipmanagement companies would come in, the
small ones would not cope and there
would be consolidation, with more owners
looking to set up third party ship
managers, said Mr Droussiotis.
He believed companies did not have
the means nor want to take responsibility;
it was getting more expensive to maintain a
management company in the manner
expected internationally. “You need to have
international representation and react in
emergency situations. “The risk and burden
we have on our shoulders is big, for if we
fail, it goes for all the fleet we manage. We
take no risks and an owner coming to us
feels safe and secure. We are not going to
risk [things] because we could disappear
from the market overnight. Which tanker
owners would stray with us if Shell or Total
or others for instance said Bernard Schulte
Shipmanagement ships were not
accepted?”
The company currently has 640 ships
on its books and will get around 40-50 this
year, with 50% of the total under full
management.
www.shipmanagementinternational.com
for the full interviews.
REGIONAL FOCUS
Half a minute with...
Dirk Fry, Managing Director,
Columbia Ship Management
Q. Is the recession generating opportunities that
managers hoped for?
A. When shipping is doing extremely well owners earn
good money and they don’t look too closely at the cost.
When shipping goes down the drain, things change a
little bit and owners look much more at the pennies. So
yes there are a lot of new inquiries and some of them
turn into business. Columbia has always been extremely
careful selecting the people it wants and this is reflected
in the fact that at the moment we don’t have any difficulties on the financial side with any of our clients.
Q. Are you seeing your fleet increasing?
A. Yes, slowly but surely. But we are not heading for
exponential increases but we want to grow slowly. What
is most important is to maintain our reputation because
this is what gives us additional business.
Q. How is the Cyprus cluster performing?
A. What is very important for Cyprus is that we will
have the new tonnage tax regulations coming into force
very soon, which should give Cyprus a very sound
financial basis for shipping and shipmanagement. I
believe Cyprus is there to stay and grow. ■
CYPRUS
REGIONAL FOCUS
Dobson head sets reality check
Management interest is picking up, more inquiries are being seen and
people are looking to invest in shipping, according to Bob Maxwell,
Group Managing Director of Dobson Fleet Management, the first British
controlled shipmanagement company to be based in Cyprus.
However, Mr Maxwell had a word of warning for anyone looking to
cut corners in the current economic climate. “Owners have certain fee
levels in their minds and have to be persuaded that the world has changed
over the last decade, for instance with legislation over the last decade and
the bureaucracy that goes with it,” he said.
With the eastern Mediterranean and Gulf concentration “bearing
fruit”, the group this year hoped for a few more box ships and the
potential was good for ro-pax tonnage,” said Mr Maxwell. He hinted that
the company was “close to closing a deal” with owners looking to buy
ships.
The company, he said, was looking too at the gas sector and also at
containerships, an area in which it had past experience.
Turning to crewing issues, he revealed that 99% of staff came from
Latvia, Ukraine and Poland. All ro pax crews were European. Dobson had
looked at China and the Philippines was getting expensive, he added.
“Shipmanagement is still very well placed and shipowners will
consolidate except when it comes to specialist tonnage,” Mr Maxwell
said. “Smaller owners will still look to third party management and
Cyprus is in a very strong position as the tonnage tax will allow us to
attract more tonnage to the island and manage it.”
Dobson Fleet Management was established in 1993 to manage a
series of bulk carriers purchased from the proceeds of the sale of Dobson
Marine Refrigeration by the Dobson brothers. However, it no longer owns
any of its managed vessels and calculates its fees on actual cost plus fee
rather than on a lump sum basis. ■
Bob Maxwell
REGIONAL FOCUS
CYPRUS
Keeping a trained eye
on market moves
Limassol-headquartered Terra Navis Shipping is looking to buy two
handy size vessels to trade between the Far East and India, Brazil and
the Mediterranean/Black Sea.
The company, established six years ago and operated by Managing
Director Christos Chrysanthou, a former chief engineer working
alongside his sons, Panayiotis and Akis, currently has two handy sized
bulk carriers on its books, having disposed of six vessels, four-owned
and two under third party management before the shipping crisis hit.
"We had the vision to dispose of these vessels before the crash,"
said Mr Chrysanthou."
“We are conservative, do not market ourselves and just prior to the
crisis we inspected four vessels and were about to take delivery but we
pulled out. We would have lost $12m on each of the ships," he told SMI.
The company has inspected two vessels in its latest quest,
preferring tonnage built in or around 2005 and 2006 or older tonnage.
"We always target areas least affected by the crisis, for instance
India and China and excellent freight rates of $10,000 a day and
$13,000 a day for time charter. Our policy is to make our own forecasts
and the few ships we have we manage to trade in the places where rates
are satisfactory," he said.
The company uses Syrian and Egyptian crews whenever possible,
describing them as "excellent" and deploys Russian and Ukrainian
crews where needed, in specific trades.
"Our crews follow ISM maintenance programmes; crew maintenance is a big problem and we invest in human relations and knowing
who is onboard one of our vessels," said Mr Chrysanthou. "This has
Chrysanthou Maritime Services
Chrysanthou Maritime Services Ltd is managed by Panayiotis
Chrysanthou with a mission "to deliver high efficiency and costeffectiveness with flexibility and tailor-made solutions, operating
on a 24 hours a day, seven days a week basis."
Its range of activities ranges from marine surveys and inspections to vessel registration and classification, sale and purchase,
ship management and technical consultancy, shipyard representation, security services, safety management and certification of
pipelines and vessels.
The list includes ISO 9001:2000 Quality Assurance Services
and technical studies covering SOPEC, cargo securing,
loading/discharge sequence and grain loading manuals, garbage and
ballast water management plans, tonnage measurements, trim and
stability and damage stability calculations and load line reassignment for deeper draft.
It also covers studies for passenger ships, local strength calculations, finite element analysis, inclining experiments, ship loading
systems, ultrasonic gauging, high speed craft, techno-economic
analysis and feasibility studies.
34
been the secret of the Greek fleet - keeping good officers and never
letting them go off to other companies. It is a two-way relationship."
Terra Navis, with 12 people in Cyprus and 10 in Greece, cannot be
accused of overstating its intentions or over-reaching itself even though
Mr Chrysanthou admitted that it could be a "another matter" if an
opportunity arose.
Akis, Christos and Panayiotis Chrysanthou
"We are not a Hanseatic, a Columbia Shipmanagement or a V.Ships
and we like to have our own ships," he declared. "We control the cargo, the
ship and the trading area and we make a profit from this. Taking in vessels
to manage was a lot of hassle and owners did not correspond to our way of
thinking. It was a question of management versus mismanagement."
Key issues impacting on the immediate future involved shipping's
reliance on India and China and what the outcome would be if China,
for instance, cut or reduced shipments of grain and iron ore.
The question of how many of the new buildings currently on order
would be delivered was also exercising minds."They will most probably
be cape sizes though the handy sizes pose the least problems," he said.
Mr Chrysanthou insisted he was confident the market would not
collapse. "There will be slow and steady steps and we may have ups and
downs but we will proceed and still make a profit."
And while he was critical of the island's banks for failing to provide
finance to shipping from Cyprus, noting that The Bank of Cyprus had
"hot footed off to Piraeus when the crisis struck" he was nonetheless
complimentary of the cooperative efforts of The Cyprus Union of
Shipowners and Cyprus Shipping Chamber.
"At the end of the day, all are working towards a common goal of
bringing Cypriots together," he said. ■
CYPRUS
Arctic challenges
loom for Unicom
RUSSIA’s long-standing connections with Cyprus will gather pace
over the course of the next five years as Sovcomflot’s $5.5bn
investment programme in tankers and gas carriers comes to the fore.
The group, which owns around some 139 vessels including 72
crude tankers, 32 combined chemical and oil tankers and 15 product
tankers, plans to expand its owned fleet with new buildings and by
operating chartered pools of ships and operating more vessels for
other ship owners.
All this will mean a heavier workload for Unicom Management
Services (Cyprus), a member of the Russian group which was established just over a decade ago and currently manages a fleet of 5.5 m
dwt. Of this, 85% are tankers and 1.6 dwt of tanker tonnage operates
under long term time charters in the Arctic.
Sovcomflot recently opened a crude export terminal in the port of
Kozmino, near Vladivostok, from where crude exports for the first
quarter of this year are expected to hit 3.1m tonnes, or 250,000 barrels
per day, rising to 600,000 bpd in the next three years, with the oil to
be transported to refineries in China, Japan and South Korea.
“Moscow’s ambition is to make us two or three in tankers and
there is massive potential,” said SCF Unicom First Deputy Managing
Director Robert Thompson.
As a member of the Sovcomflot group, SCF Unicom operates in
Cyprus as an independent shipmanagement company providing
technical, crew, commercial and operations management including
REGIONAL FOCUS
Robert Thompson
disbursement and freight and hire calculations, marine insurance and
claims handling and the supervision of project and new building work.
SCF Unicom provides full third party management to selected ship
owners and this, rather than the direct management approach, will
become more important as the increasingly heavier burden of legislation
and bureaucracy “forces” companies to go out to third party, according
to SCF Unicom First Deputy Managing Director Robert Thompson.
“Managers manage better and benchmarking is so important,” Mr
Thompson declared.
And, despite European Union targeting of shipmanagement
companies, which had had massive implications and prompted the
company to consider moving vessels back to St Petersburg or
Novorissisk, plus the fact for instance, that management fees had not
changed in numerical value and had shrunk in monetary terms in
recent years, Mr Thompson said he genuinely believed things were
moving it the right way.
“The tonnage scenario will be a benefit to the island and if there
is movement on the Turkish issue this island will take off,” he said.
Mr Thompson talked of a crew retention rate in the order of 80%,
insisting “we look very seriously at keeping our crews.” This was particularly important in specialist trade areas including the Arctic. “We are
competitive payers, offer a host of things such as leave benefits, bonuses
and pensions and find among seafarers that there is not so much in the
way of poaching. I believe the minority that has left will come back.” ■
REGIONAL FOCUS
CYPRUS
Resilient Fama
widens its portfolio
"Our mission is to provide our clients with a comprehensive, cost
effective, quality-driven support service. This will be achieved by
encouraging all employees to be committed to operate as a team, open
to innovative methods to create a performance offering our clients
quality products built to time and within the budget, while
maintaining the group's commitment to safety standards and precautions in place".
So says the Tzortzis family Fama Group, established in the 1940s
in Famagusta and, since 1974, based in the port of Limassol, with a
floating dock built to Lloyd's Register standards, and in Alexandria,
where it focuses particularly on oil rigs, the mobilisation and
demobilisation of offshore support vessels and onshore fabrication.
However, the pace of activity at the Limassol and Alexandria
facilities has slowed over the last four to five recession-hit months
with work centred mainly on skip barges and tug boats and conversions. "Cash flow has not been exceptional," Group Managing
Director, Andreas Tziortzis told SMI,"and owners have tried to drive
down prices while the price of steel has dropped by 25% over the
course of six to eight months.
"The recession, however, gives us the time and opportunity to
upgrade our facilities and we are looking to modify our berthing quay
here in Limassol with a crane on 150 to 160 metres of track by the
end of 2011. As infrastructure goes in Cyprus, we are it,” he added.
Fama's Contracting Division, operational since 1954, continues
to cater for a host of projects in petroleum lubricant installations,
blasting and coating internally and externally, supplying and erecting
new storage tanks, re-bottoming and re-roofing storage tanks and
installing oil separators.
Environmental work has included work on high steel structures
such as the maintenance of towers and masts including the BBC
Seychelles and Akrotiri structures and soil decontamination.
With a permanent workforce of 20 people rising to between 100
and 150 in times of plenty, safety is at the top of the group's agenda.
Its record shows there have not been any fatalities or serious injuries
throughout its existence. The word 'complacency' is not part of
Fama's vocabulary.
Flying squad teams are sent out to offshore vessels and oil rigs to
repair and/or construct steel constructions and/or main engines. Fama is
also involved in special surveys, intermediate surveys, major conversions,
accommodation module fabrications and crane pedestal installation.
Cyprus' geographical location at the crossroads of three continents has helped Fama build a formidable international clientele -
36
95% of whom return to the group as 'repeaters' - including Allseas,
Maridive & Oil Services, Tidewater Marine, Maersk, BOA, Rubicon
and Transocean for whom, in 2008, it carried out repair work on the
jack-up rig Key Singapore.
This project involved constructing the world's two largest
cofferdams, each weighing 400 tons and moving these from Limassol
to Alexandria. Various other repairs and modifications to the rig were
carried out on site.
Other notable projects have included the overhaul of the main
engine and machinery work on the 15,300 dwt Tropic Brilliance, the
construction of a new bow for the 12,200 dwt roll-on roll-off vessel
Epsilon Kyriakos, UN Task Force work, major conversion work on
the passenger ferry Wavedancer and repairs to a number of luxury
yachts including the Um Hurair, Mediterraneo 11, Mystique, INO
Lefkothea, Okeanis and Polys Haji-ioannou's Esmeralda.
Tidewater's Oil Traveller was in the Limassol facility between
October 2009 and February this year and Fama has completed more
than 60 special surveys for the US company.
Another major customer is Maridive, for whom Fama has been
engaged in a number of conversions, including the construction and
installation of new accommodation, a four point mooring system, second
bridge crane pedestal, engine and generator and diving decompression
chamber for Maridive V1 plus conversion work on the Maridive 5000
and the installation of accommodation modules on Maridive 86.
The Egyptian facility covers a range of activities including the
repair of all types of cargo and naval vessels up to 85,000 dwt on
docks with a maximum 267m load on arrival draft, constructing all
types of merchant and cargo vessels up to 38,500 dwt on inclined
berthage and repairing all types of merchant and navy vessels,
platforms and petroleum tanks.
In addition, Alexandria caters for ship demolitions, handling
vessels up to 40,000 dwt, the sale of items resulting from the breaking
such as steel, main engines, diesel generators auxillary generators and
pumps, for example, and the inspection and repair of lifeboats as
certified by Schat Harding.
The group is qualified by the American Bureau of Shipping for
stainless steel cladding of, and the rebuilding of shafts and approved
by the society and Germanischer Lloyd for welding; it has ISO certification and Certified Gas Certification Monitoring and, further
underscoring its German connections, is a certified Voith Schneider
Propulsion Systems service centre. ■
TRADE ANALYSIS
TOWAGE AND SALVAGE
Challenging towage job: Smit tugs
handling the FPSO SSP Piranema
Challenging operating environment
raises bar for owners and operators
By David Tinsley
Over the past quarter of a century, a series of major oil spills around the
world has produced successive rounds of new regulations, impacting on
safety management, crew quality and manning standards, ship inspections, and other areas.
Government agencies in a growing number of countries have
entered into contracts with commercial operators for emergency towing
vessels to be stationed at strategic ports around vulnerable coastlines, or
have invested in dedicated tonnage for the same purpose.
Such initiatives acknowledge that it has often become impractical,
from a costs' standpoint, for commercial companies to keep salvage
tugs and salvage teams in a constant state of readiness at specific
locations, on speculation and without financial assistance, awaiting
potential casualties. Today, companies which maintain a chain of
permanent salvage stations and powerful salvage tugs worldwide,
entirely from their own resources, are exceptional. One such operator is
Tsavliris Salvage Group of Greece, which has continued to invest in its
network in recent years.
While the number of severe oil spills has fallen from over 20
annually in the 1970s to three or four per year in the past decade, the
natural perils of the sea and human error mean that the importance of
resourcing for such accidents and taking appropriate risk reduction
measures has not diminished.
In some parts of the world, the increase in energy transportation as
a consequence of economic expansion or the development of new
resources and export flows has called for improved national measures
as regards spill response and emergency towing capabilities, and one
result has been investment in new generations of coastguard ships
38
incorporating multifunctional search and rescue, high capacity towage,
and pollution prevention capabilities.
A case in point is the trio of 93m Barentshav-class vessels now
entering service with Norway’s Kystvakta (coastguard). In keeping
with a longstanding arrangement, the newbuilds are privately owned by
Remoy Management, and assigned to Kystvakta on 15-year charters.
The UK’s oldest tug and barge company, J.P Knight, acquired a
majority interest in Lowestoft-based Klyne Tugs, the current provider
of ETVs to the UK's Maritime and Coastguard Agency, in 2007. MCA's
contract with Klyne runs to September 2011, and encompasses the
provision of ETVs at four strategic locations around the UK coast. A
fifth vessel, a powerful anchor-handler which also meets ETV criteria,
relieves any of the regular ETVs on station when necessary. The vessel
serving the Strait of Dover is the subject of a joint agreement between
the MCA and its French counterpart, so that she alternates between
Folkestone and Boulogne stations.
Family-owned J.P Knight has a record of innovation in the tug
industry, and its spheres of activity today embrace deep sea and coastal
towage, salvage, ETV services, ship handling and river transportation,
controlled from offices in Chatham, Invergordon, Lowestoft and
Paranam, in Suriname. The latter presence reflects its involvement of
the past 15 years in the South American market and waterway system.
The regulatory framework is set to gain added dimension through
the implementation of the US Coast Guard Salvage and Marine
Firefighting Regulations on 22 February 2011. Certain vessel owners
and operators will be required to designate a primary resource provider
for salvage and firefighting services for each of the Coast Guard zones
TOWAGE AND SALVAGE
It is widely felt in salvage circles that there is a
hesitancy on the part of shipowners and underwriters to allow masters a free hand in calling for
salvage assistance. In theory, the shipowner today
often has a greater ability to explore any or all
options before making a decision
in which the ships will call. Owners and operators, the so-called plan
holders, will be responsible for vetting PRPs to ensure their compliance
with the regulations. PRPs will have to demonstrate that they have a
network for rescue towing, on-site assessment for salvage and marine
fighting, and incident management within the designated zones, and
will be required to have the capability to respond to marine casualties
within defined timeframes.
In this connection, emergency response contractor T&T Bisso
recently announced an exclusive cooperative services agreement with
Foss Maritime Company. T&T Bisso will use several Foss facilities
throughout North America to position lightering and marine firefighting
packages as part of the company's strategy to comply with the new
Coast Guard regulations. Listed as the primary provider to meet salvage
and firefighting service requirements, T&T Bisso is working with Foss
to revise its vessel response plans.
Although not without its detractors, the longevity of the Lloyd's
Standard Form of Salvage Contract, otherwise known as Lloyd's Open
Form), is testament to its enduring practicability, and the fact of its
regular revision to suit the evolving needs of users. One hundred and one
years since its introduction, LOF remains the most frequently used form
of salvage agreement. It provides a regime for determining the amount
of remuneration to be awarded to salvors for their services in saving
property at sea and minimising or preventing damage to the
TRADE ANALYSIS
environment.From the standpoint of salvors and others with firsthand
experience of emergencies at sea, a key strength of LOF is that it can
facilitate swift intervention in a developing casualty situation. As has
been shown on many occasions, delaying the involvement of professional
salvors, and particularly in the early stages of an incident, can increase the
extent, complexity, risks and costs of a salvage solution. In fact, freedom
from delay can make the difference between success or failure.
The concept of LOF in obviating commercial dealings or haggling
at the outset, so as to focus on emergency response and a successful
operational outcome, may seem at odds with today's overarching
emphasis on cost control and budgeting, permeating every sector of
business activities. But the fact that no prior discussion of financial
terms and conditions is necessary, and that commercial issues are dealt
with after services have been completed and recovered property values
and time and costs expended are known, is an approach that is
obviously still regarded as wholly pertinent and acceptable in such a
typically difficult situation as a maritime salvage endeavour.
In most cases, LOF is still settled agreeably between the salvor and
the shipowner, cargo interests and insurers once the job is done, with
the alternative being the arbitration courts. The International Salvage
Union suggests that analysis of salvage payment awards has shown
remarkable consistency over the past decade, with recourse to litigation
being rare.
Modern communications technology has increased not only the
ease with which the master of a ship in distress circumstances may
consult with shoreside colleagues as to salvage assistance, but also, in
many cases, the compulsion on him to do so. It is widely felt in salvage
circles that there is a hesitancy on the part of shipowners and underwriters to allow masters a free hand in calling for salvage assistance. In
theory, the shipowner today often has a greater ability to explore any or
all options before making a decision.
Yet, and despite all the tools available with today's communications
technology, it is only the master at the scene who can properly judge the
actual situation, as to the ship's condition and circumstances, sea state, and
wind and weather, on which to base a decision as to salvage assistance.
TRADE ANALYSIS
TOWAGE AND SALVAGE
One of Smit's core activities is the provision of towage and related maritime
and management services to offshore and onshore terminals in most of the
major oil producing regions around the world. Pictured are two of the fleet's
terminal tugs, Smit Port Said and Smit Damietta
Smit's renown in the field of towage and salvage will see the 'brand'
retained within the new group that will ensue from the merger with
Royal Boskalis Westminster, one of the world's foremost dredging
companies. Boskalis and Smit agreed that the latter's various activities
would be continued from its Rotterdam office under the Smit name
within the combined company, and that existing business plans would
serve as the basis for the further expansion of the group. One immediate
area identified for integration is the terminal tug operations of Smit and
Boskalis' associate Lamnalco.
The unpredictability of the levels of activity and the scale of
resources that are required at any one time for salvage work demand a
certain mindset, skill, experience and business verve. While Smit has a
diversified presence in the harbour towage, terminal towage, barge
transport and ocean towage, heavy-lift, and other sectors, salvage
remains a core activity. The target is to maintain a global market share
of 25%-35% in salvage.
Although the recession impacted on business last year, trimming the
overall operating result to Euros 125.4m from the Euros 137.9m of 2008,
the financial performance was viewed as good. Despite the fact that the
salvage workload was below the historical average, due to less casualties,
the division achieved a very high level of profitability due to the
settlement of salvage cases from previous years, including Euros 10m net
profit from the Thunderhorse project in the Gulf of Mexico during 2005.
40
Harbour towage was the hardest hit by the downturn, although
Smit's chief executive officer Ben Vree reported that the decline in the
harbour towage market stabilised, and even improved slightly towards
the end of 2009. Terminal activities, encompassing towage operations
and related maritime and management services to both offshore and
shoreside terminals, grew substantially in volume and earnings. The
heavy lift and transport divisions, together accounting for about half of
Smit's turnover, initially recorded good fleet utilisation last year, before
the weakening in the spot business took its toll in the latter part of 2009.
The impact of the recession on revenues was mostly keenly felt in
the harbour towage field as regards European operations, although the
decline in ship movements was also pronounced in the company's
Canadian sphere of activities. In the interests of overall profit margins,
a number of tugs were repositioned, mainly from Europe, to support
new undertakings, including the joint venture with Kueen Yang in the
port of Taipei, Taiwan. Smit also contributed three new harbour tugs to
Towmar Smit Baltic, incorporated in May 2009 to provide services in
Lithuania and Latvia. Furthermore, six harbour tugs were transferred to
new terminal contracts in India and Indonesia.
The Brazilian joint venture Rebras completed its 18-tug
newbuilding programme during 2009, while added dimension to the
harbour towage division was conferred by the attraction of a five-year
concession in Australia at the port of Gladstone from January 2011, to
TOWAGE AND SALVAGE
which six new tugs will be allocated. Canadian west coast operations
will be augmented by the recent purchase of tug operator Minette Bay
Ship Docking. In fact, Smit's strategy looks towards realising a 50%
growth in harbour towage during the 2007-2012 period through acquisitions together with the expansion of current activities and fleet.
On the Boskalis side, Lamnalco has continued to extend its
involvement in the energy terminal sector. In the latter stages of last
year, the inaugural call of an LNG carrier at Yemen LNG Company's
new Balhaf terminal signalled the start of services by the Lamnalco
Safir fleet. Four dedicated tugs of the azimuthing stern drive type,
incorporating Robert Allan's RAstar 3600 design, were ordered from
Turkish shipbuilder Med Marine for the Yemeni operation. Each offers
a bollard pull in excess of 95t and free running speed of 15 knots,
thanks to twin Wartsila 3,060kW engines and twin Z-drives, and carries
full escort class notation and firefighting class 1.
There is a case for owners, classification societies
and naval architects to look to ensure safe minimum
speeds of three to six knots rather than the six-plus
knots, even up to 10 knots, that are encountered
Business development arising from new energy outlets was also
demonstrated at the start of 2010 when Angola LNG signed a contract with
the Svitzer Group for supplying marine services at the new LNG export
terminal to be built at Soyo. The 20-year agreement, which carries options
for two additional five-year extensions, takes effect in September 2011.
The fleet to be deployed under the aegis of a local Svitzer company
will feature five Svitzer-designed azimuthing stern drive tugs currently
under construction, plus two utility vessels, two line handlers, two
patrol boats, one pilot boat and one pollution prevention vessel. The
group has also undertaken to train local seamen.
Part of the AP Moller-Maersk group, Svitzer claims to be the
world's largest towage company, spanning operations in some 100 ports
and 35 countries. Its network has also been expanded by the recent
move to create a new towage company in Vietnam. As a joint venture
with Saigon Shipping, the undertaking will be named Svitzer Vietnam,
and will deploy ASD tugs to serve shipping in the Ba Ria, Vung Tai, and
Cai Mep areas, including the growing containership traffic.
A powerful new breed of azimuthing stern drive tug developed for
terminal and escort duties with large merchant vessels has been introduced by the Spain's Boluda Group. Built by Boluda Shipyards-Union
Naval Valencia in the port of Valencia, the 35m VB Bravo is reported to
have achieved a bollard pull of 108t ahead and 101t astern at maximum
engine output, and to have exceeded the specified free running speed of
14 knots. It will assist and escort ships, and conduct oil spill recovery,
pollution control and firefighting operations in Spanish waters.
Two subsequent newbuildings from the Boluda-UNV yard were
scheduled to be phased in to the Boluda Towage & Salvage fleet, one in
March and one in April 2010. These 32m tugs are of the cycloidal drive-
TRADE ANALYSIS
type, offering a 70t bollard-pull capacity. Boluda has a further four
tractor tugs on order for delivery during 2011.
With the gradual drawdown of recent years' record orderbook for
harbour and terminal tugs, in particular, designers are now turning their
attention to fleet operators' ever-more pressing requirements as regards
energy efficiency. The need to achieve increased unit efficiencies, in the
face of tougher commercial conditions and the prospect of a continual
upward trend in bunker costs, is accompanied by more pressing
environmental expectations and controls. The indelible link between
energy used and carbon dioxide emitted increasingly bears on design
solutions and system selection.
Over recent years, the towage industry has shown its ability to cater
to the accelerated increase in ship size and windage, backed up by the
high level of investment in more powerful, highly manoeuvrable tugs.
Operational concerns among tug owners, however, have grown in
respect of the high minimum speeds that characterise extremely
powerful, large containerships, which can lead to problems arising from
high approach speeds to berths, wash, bank effect and surging. There is
a case for owners, classification societies and naval architects to look to
ensure safe minimum speeds of three to six knots rather than the 6-plus
knots, even up to 10 knots, that are encountered today.
Having considerably boosted the group's ship design capacity in
recent years through a succession of acquisitions of technical consultancy companies, Wärtsilä has marshalled its forces to launch the W
TUG concept, characterised by its blend of high performance with
operational flexibility and efficiency. While the legacy firms that today
constitute Wärtsilä Ship Design have provided a fulsome reference list
in the tug sector, the new entity has the advantage not only of its combination of naval architectural experience but additionally of the parent's
know-how as regards engine and propulsion technologies, automation
and lifecycle support.
Through the facility to tap and reflect expertise in all the various
elements of a tug's design, engineering and propulsion, Wärtsilä is
offering an integrated solution which, it claims, better ensures improved
engine loadings, reduced fuel consumption and exhaust emissions, and
higher overall performance levels. Applying the typical operating
profile of a vessel such as its 80t bollard-pull W TUG 80 design
proposal, analysis of the entire system, encompassing hull form, engine,
propulsion and the electrical installation, indicates that the new design
will achieve total efficiency gains of some 6%-7%.
The W TUG 80 is suited to ship-handling at offshore terminals and
harbours as well as high-speed escorting tasks, and also coastal towing.
Two steerable thrusters confer the requisite manoeuvrability, with the
upper bow area shaped for pushing operations, and open water deployments are assisted by a free running speed of 14 knots. The base version
is specified with two eight-cylinder Wärtsilä 26-series engines of
2,600kW apiece, driving the two thrusters, while a hybrid version is
offered with three nine-cylinder Wärtsilä 20-series diesels, in which the
third engine can be used to drive a generator, or provide extra power for
the main thrusters.
The Wärtsilä offering also includes the W TUG 60, conceived for
harbour duties, with an eye to Asia-Pacific markets, and said to be a
competitively-priced standard solution. ■
41
SHIPMANAGEMENT
Ransom payments
Will Washington muddy the waters?
By Stephen Askins
According to a number of reports in trade press and recent comments
from the US State Department, the US administration seems to be
flying a kite to test national and industry reaction to an initiative which
may use existing UN Resolutions and the US OFAC (Office of Foreign
Assets Control) Regulations (“Regulations”) to allow them to take
action, including the banning of ships involved from US ports, against
ship owners who pay ransoms to Somali pirates.
It is difficult to comment in detail because the full scope of the US
proposals has not been aired. Indeed, if the reaction is strong enough no
formal proposal may be forthcoming. However, our understanding
from industry and other sources is that the US is considering having
certain pirate leaders named as ‘designated’ people. These may be
named at a UN level, using UN Resolution 1844.
Given this approach to ransom payments, it is interesting to note
that the High Court in London recently issued a judgment in a case
(Masefield v Amlin Corporate Member Limited 2010 EWHC 280
(Comm)) which involved the hijacking of the Bunga Melati Dua in
2008. One of the issues was whether the payment of a ransom was
contrary to public policy as a matter of English law. It is worth
highlighting the words of Mr Justice Steele (at paragraph 60 (iii) in his
judgment), where he made it clear that he did not think it right to
categorise the payment as contrary to public policy:
US legislation would not seek
to make the payment of a
ransom illegal in other countries.
Instead it would aim to impose
sanctions after the event
“So far as harm is concerned it is truth that payments of ransom
encourage a repetition, the more so if there is insurance cover: the
history of Somali piracy is an eloquent demonstration of that. But if the
crews of the vessels are to be taken out of harms way, the only option is
to pay the ransom. Diplomatic or military intervention cannot usually be
relied upon and failure to pay may put in jeopardy other crews.”
Resolution 1844, adopted by the Security Council in November
2008, is one of a series of UN Resolutions which deal with the deteriorating situation in Somalia (beginning with 751) and in general terms
implores member states to impose travel bans and to freeze the assets
of named individuals and entities who:
(i) import weapons into Somalia
(ii) through their actions, undermine the security and stability of Somalia
42
(iii) prevent humanitarian aid from reaching those who it is targeted at
in Somalia.
One key element of the Resolution is that member states are able to
nominate such individuals or entities to the relevant Committee established by the UN. In their most recent report in January 2010, the
Committee referred to the citing of the Eritrean government by the US,
who, it is believed, have previously named three Al Shebab
commanders, although it is not clear whether those nominations have
been accepted by the UN.
It is understood that the US will also be looking to name either
individual war lords or groups (perhaps by clan or sub-clan) involved in
piracy, on the basis that their actions are undermining and/or threatening the stability and security of Somalia. It is believed that the OFAC
Regulations could then be used to impose sanctions on any entity
paying ransoms to those designated people.
The sanctions could be: (i) the banning from the US of vessels
freed from pirates following the payment of ransom; (ii) the freezing of
assets of the ship owners if they have a registered presence in the US.
The difficulties these sanctions could cause for ship owners are
compounded by the fact that during the recent collapse of the freight
market, many shipowning companies registered a presence to avoid
Rule B Attachments in New York. These attachments are a freezing
type injunction employed by companies seeking security for claims for
litigation in other jurisdictions. The threat of action against companies
with offices registered in the US may therefore have some teeth.
It is difficult to understand the rationale behind this move. It
appears the motives may be to persuade the pirates that there is no
economic benefit in piracy or to force the industry to take greater steps
to prevent piracy.
US legislation would not seek to make the payment of a ransom
illegal in other countries. Instead it would aim to impose sanctions after
the event. There are precedents where the US has imposed sanctions
which can interrupt what would otherwise be regarded as normal trade.
Cuba is a good example and the shipping sanctions being imposed on
shipping companies involved in the delivery of refined petroleum
products to Iran show how wide ranging these sanctions can be.
US proposals appear to assume that the pirates approach a hijacking
in a rational way. They clearly do not. Even if they became aware of such
new law, they would simply assume that if the ship owners could not
pay, the fact that they have captured cargo and have shown themselves
perfectly happy to wait for months for ransoms to be paid demonstrates
a belief that money will eventually be paid from somewhere.
Perhaps a better approach would be to increase the risk to pirates
by ensuring that national laws are robust enough to prosecute pirates
and would be pirates. Reports often appear in the press of pirates being
captured by naval forces only to be released at a later date without
prosecution. It would be better to address this ‘catch and release’ policy
before we criminalise the ship owners. Having said that, at the time of
writing there have been encouraging reports of the French handing 22
recently captured pirates to the Puntland authorities and Kenya
SHIPMANAGEMENT
“Fundamentally it cannot be in
anyone’s interest to criminalise
the victims of a hijacking. The
effects of a US move to introduce
these regulations could have
serious consequences for those
that are affected by piracy”
sentencing eight others to 20 years in prison. It remains to be seen if this
will continue.
One rationale for this initiative could simply be that it is a way to
change the ship owners’ approach to self-protection. There has been
criticism voiced by US Admirals to the effect that ship owners are in the
main not adopting Best Management Practice Guidelines and a
plaintive cry that ship owners should ‘do more’ to help themselves.
These steps may include having armed guards on board and it
appears to be US policy to move towards the arming of US-flagged
vessels. Raising the stakes for other ship owners, particularly those with
US registered offices or whose vessels regularly call at US ports,
through new regulations may pressurise them into taking more robust
steps to protect their vessels from hijackings, and thus negate the negate
the need to pay a ransom. This may clash with the flag state policy or
indeed give rise to the other issues, not least the fear that the violence
could escalate. Recent events in the Indian Ocean, with reported fire
fights between pirates and Spanish fishing trawlers, highlight this fear.
Fundamentally it cannot be in anyone’s interest to criminalise the
victims of a hijacking. The effects of a US move to introduce these
regulations could have serious consequences for those that are affected
by piracy, while doing little to address the issue of preventing piracy
and dealing with those responsible. The reality is that ship owners are
driven by a commercial imperative to free their ships, and, as long as
the ransoms remain a minor percentage of the values involved, that will
remain the case. Introducing additional hurdles could see the practice of
paying ransoms driven underground or elaborate structures being put in
place to avoid falling foul of new regulations.
It is interesting that the US is focussing on Somalia alone, notwith-
standing the fact that piracy can and does happen elsewhere.
Furthermore, this legislation would be specific to shipping and does not
address extortion in the wider sense. The issue is further complicated by
the fact that in the US the act of ‘hostage taking’ of a US national
overseas is regarded as terrorism under the Patriot Act and knowingly
paying money to those involved in terrorism is a criminal act.
Laws attempting to ban ransom payments and indeed freezing
assets of families involved have been introduced elsewhere, notably
Colombia and Italy, although these too have generated debate. In
Colombia these laws were subsequently subject to a Court ruling that
allows ransoms where humanitarian factors demand them.
Furthermore, these bans were accompanied by the outlawing of kidnap
and ransom insurance, which is now a well-established insurance
product in the Lloyds market.
It is therefore difficult to see how the US could take unilateral
action against a ship owner without also condemning various insurance
companies specialising in this area. Even if such a move was possible
it is, of course, made more complicated in shipping in the sense that
losses incurred by piracy are a legitimate insured peril and payable
under ordinary hull and/or war policies (depending where the risk falls).
This then is the real crux of this problem – who pays the ransom and
how will the Regulations affect them?
But who pays the ransom? The ship owner may take the lead in any
negotiations but ultimately would look to his usual insurer (in the
absence of a dedicated kidnap and ransom policy) to pay ship’s
proportion of the ransom, either as a sue and labour expense or in
General Average. If the latter (i.e. when the vessel is laden) then cargo
interests (and more likely their insurers) will pay cargo’s proportion.
Crew, of course, do not contribute to the ransom despite the fact that the
threats are essentially made against them.
There are also circumstances (although rare) where the time
charterer agrees to bear the cost of a ransom and takes out applicable
insurance on the basis that they are bearing the risk of time. Where
Time Charters were entered into before the global economic downturn,
some of the exposures to losses over a three to four month hijacking are
considerable. They can be in excess not only of the final ransom
payment, but also of the original, higher demand.
Even if the legislation singles out the ship owner, questions remain
as to exactly who the regulations would cover. Would they cover the
shipowning company, the managers and other ships under management
in the same group?
What about those companies where the technical management is
done by a different third party company? The key issue appears to be
the payment of a ransom, in which case what consideration will be
given to the cargo interests who may in fact pay a greater proportion of
the ransom in certain circumstances? Further how would the
Regulations apply to the insurers themselves?
It is difficult to see how the Regulations could be formulated (save
that the US has a reputation of making them as wide-ranging as
possible). Putting that aside there is also the very real difficulty of a ship
owner knowing exactly to whom he is paying a ransom and whether
this person is a nominated individual as per UN guidelines. A ship
owner will have done well if during the course of a negotiation he is
able to determine which Somalian clan and sub-clan he is dealing with,
letting alone identify the individual with whom he is dealing.
Penalising the ship owner, who is but one stakeholder in a maritime
venture, would appear not to be the most sensible way to deal with the
continued burden of piracy and ransom demands. The reward side of
the equation for pirates continues to rise and although the coalition
naval forces appear to have adopted a more aggressive approach to the
issue, there appears no commensurate increase in risk to a pirate of
being arrested and taken for prosecution.
If national governments want to introduce new policy perhaps that
is a better place to start. Some 50 pirates have been captured in the past
week, 35 by the French navy. It will be interesting to see what happens
to them. ■
Stephen Askins is a Partner in the London office of Ince & Co.
43
MARKET SECTOR
SHIP REGISTRIES
Anticipating
the
storm
By Felicity Landon
Shipping is a cyclical industry and the current cycle is not one you
would rush into joining, says Scott Bergeron, chief operating officer of
LISCR, the US-based manager of the Liberian Registry.
“The shipping industry is only for the serious, long-term, quality
players who have enough about them to survive the bad times and to
help their clients do the same,” he said. “And there is a lot that responsible, proactive ship registries can do to help.”
His comments come shortly after the Liberian-flagged fleet broke
through the 100 million gross tons barrier for the first time; a reflection
of the fact that while shipping generally faced the toughest of times in
2009, ship registers have largely (so far) continued to ride the wave of
new deliveries – with fleets expanding thanks to orders placed back in
those long-distant boom years.
That, of course, can’t last forever, a fact that prompted Paul
Fairbrother, Manager of the UK Ship Register, to warn recently: “I
think we are all going to see a very hard time in the coming year to 18
months. Last year we were still riding the crest of the wave, but now we
have dropped off.” There was, he said, a bumpy ride ahead.
Frans van Rompuy, Belgium’s Director-General of shipping, also
said that while newbuildings continued to join the Belgian-flagged fleet
through 2009, there were now clear signs of deliveries coming to an
abrupt halt.
44
Bill Gallagher
“Good shipping people with
experience are still not really
easy to find, so you have to
make your decision when they
appear – and that is exactly
what we do”
The tipping point in
terms of newbuildings will
come at different times for
different registers, of
course; but for now,
Liberia is highlighting the
fact that its fleet has grown
by 40m gt in the past five
years, while the Marshall
Islands, managed by USbased IRI, has moved up
into third place in the
league table of world
flags, behind Liberia,
thanks to a series of LNG
tankers and other deliveries through 2009.
The Marshall Islandsflagged fleet stood at a
total 52.3m gt at the close
of 2009 and reached 55.4m
gt by mid March 2010.
SHIP REGISTRIES
Scott Bergeron
“The shipping industry is
only for the serious, longterm, quality players who
have enough about them to
survive the bad times and to
help their clients do the
same, and there is a lot that
responsible, proactive ship
registries can do to help”
After some concerted marketing, IRI president Bill Gallagher is
predicting further significant growth in 2010. The Marshall Islands has
focused on “decentralising” and a steady expansion of its network of
offices in the past few years. Now the focus is more on consolidating
and refining, he says.
The Marshall Islands has expanded its team in London with the
appointment of a naval architect to work on technical issues, a marine
engineer to contribute to the flag’s safety and inspection processes, and
a shipping lawyer with regulatory and commercial background. All
three will contribute to the register on a global level, and the appointments are in response to the flag’s expansion.
“You have to be careful that you don’t suddenly find yourself so
big that you are not able to match your clients’ expectations or demands
on the business,” said John Ramage, IRI’s worldwide business operations director. IRI has a policy of snapping up the right people up when
they become available, he says. “Good shipping people with experience
are still not really easy to find, so you have to make your decision when
they appear – and that is exactly what we do.”
While the big challenges – regulations, quality, safety and training
– remain the same, the recession has added a whole new dimension to
ship registration activities, with issues such as lay-ups and newbuilding
cancellations to consider.
The Liberian Registry, for example, has introduced specific
measures “to help owners and operators survive some of the worst
effects of the worldwide economic downturn and the resultant difficult
market conditions,” said Mr Bergeron. These have included an
initiative to strengthen security for ship mortgagees, putting in place
special arrangements for ships in lay-up and developing a pilot scheme
for extending drydocking intervals.
“Liberia is committed to helping owners and operators prepare
properly in every way for safe and profitable operation,” he added.
“Liberia has exceeded its all-time tonnage records by signing up topquality owners and operators who are attracted by our excellent safety
record, our high standards of responsive and cost-effective service, and
our proactive approach to problem-solving across all areas of the
business. When you are attracting quality owners, it makes it easier to
attract still more quality owners – even in the toughest of markets.”
The question has been raised as to what impact the recession will
have on quality and safety in the shipping sector. In today’s regulatory
framework, said IRI’s John Ramage, this simply can’t be an issue. “Port
MARKET SECTOR
State Control’s job is to weed out or stop substandard shipping. They
don’t care what the market is doing – for them it is totally irrelevant.
They have to monitor the quality condition of ships. And for us to
provide a good service to our clients, we have to make sure that we are
on the white lists of all the Port State Control MoUs – and we have to
be able to interact with our clients to give them advice and help them
weather the storm.”
Companies still seem to be training and certifying seafarers at the
same sort of rates, according to Paul Fairbrother at the UK Ship
Register, who said he had not seen any significant change in vessel
detention numbers.
The regulatory burden has been highlighted as one of the biggest
issues for ship registers in recent years, and the Maritime Labour
Convention, likely to be ratified in 2012, is a massive example of this.
While broadly welcomed for establishing better conditions of work
and pay for crew, the MLC is creating high levels of work for flag states.
“This is such a far-reaching convention – not only does it tie
together lots of International Labour Organization resolutions which
flags presently deal with in separate entities, but it also brings in new
aspects which the flag state must legally enforce,” said Chris Sawyer,
Principal Registrar of the Barbados Maritime Ship Registry.
BMSR has decided to split the inspection and compliance processes
for MLC. For ships that are being built, it will delegate to class, because
this phase is to do with the design, structure and building of the ship –
including ventilation, heating, soundproofing, cabin size facilities, etc.,
said Mr Sawyer. But once the ship is in service, and MLC relates to
employment contracts, crew welfare, safety, etc., this will be covered by
BMSR’s own people. “The crew is right at the top of the list for a flag
state – therefore we want to keep that with our people and train our
people accordingly as to what MLC requires,” he said.
However, he warned, there were complex matters to be resolved. A
proportion of the convention’s requirements were not specific and one
should ask for the flag state to make an interpretation.
“Therefore there is a lot of work to be done by flag states to decide
how they are going to interpret certain points.”
This included matters such as seafarer employment contracts,
conditions of employment and leave ratios, he said. “All of these things
will be of great interest to owners, because they have to be added to P&I
cover and so on. And not only do we have to carry out certain interpretations but we also have to have it written into law. That is all going to
take time – and we want to make sure we don’t ratify something which
is unworkable.”
A key aim behind the creation of the Barbados Ship Owners and
Managers Association last November was to engage owners and
managers in the discussion of requirements and legislation. But with the
MLC timing, “instead of one point to discuss every week, they have
about 14 every two weeks.”
In the broader field, Mr Sawyer predicted that implementation of
MLC – and flag states’ individual “interpretations” could make
changing flag rather more problematic for owners.
“Rather than just saying I like the look of that flag and where it sits
on the white list, you will have to go into what the requirements are for
45
MARKET SECTOR
SHIP REGISTRIES
crew employment, etc.,” he said. “It might be that the owner’s crewing
arrangements wouldn’t comply with their flag of choice.”
The Marshall Islands was closely involved in MLC from the early
days of discussions but, even so, IRI agrees that there is a lot of work
in some areas that wasn’t necessarily envisioned – for example, in
offshore units and passenger ships.
“There are areas where you really have to sit down with owners
and come out with an interpretation, and we are going back to the ILO
with a number of issues that come up – questions are arising that you
would not have envisaged,” said Mr. Gallagher.
“We were very fortunate that we were involved in [IMO] meetings
on MLC at the very beginning,” added Mr. Ramage. “We really took
quite a proactive role in that. We have had a team of four people
working on MLC since inception and all of our laws and regulations
have in fact been changed.
“From the owner’s perspective, if you have a good owner who
keeps his ships in good shape and treats the crew well, then MLC
doesn’t actually make a huge difference to him in real terms. The
biggest change is that the ship will be inspected for compliance. But in
line with ISM and ISPS, we have delegated this to class, and the owner
can discuss convenient times with class for inspections to be carried
out. There is a lot of commonality between ISM and MLC anyway,
especially with regard to conditions and safety inspections.”
In fact, he said, the earliest aims of MLC were partly overtaken by
the shipping boom and shortage of seafarers which forced owners to
offer better terms in order to hold on to officers and ratings.
A register ambitious for growth is the British Virgin Islands Ship
Registry, part of the Red Ensign Group and open for pleasure and
commercial yachts up to 3,000 gt and general cargo ships.
BVI has appointed Cyprus-based corporate services company
Totalserve Management as its sole representative agent for the registry
around the world, and the target is expanding the fleet, said Alkisti
Kannidou, head of Totalserve’s international corporate department.
Christopher Sawyer
“Not only do we have
to carry out certain
interpretations but we
also have to have it
written into law. That
is all going to take
time – and we want to
make sure we don’t
ratify something which
is unworkable”
“It is easy to promote the BVI flag; it has very low initial registration fees and it is very strict on standards and quality, because it is
under the umbrella of the UK,” she said. “Ships flying the BVI flag
have the benefit of British diplomatic and consular support and Royal
Navy protection, as well as access to the expertise of the Maritime and
Coastguard Agency, and they are very proud of that.”
Totalserve, which has had an office in the Virgin Islands for six years,
is taking on vessel registration, the issuing of certificates, processing
ownership and name changes and organising vessel inspections.
“We will work to get the BVI numbers up and we expect to
increase our own department,” said Ms Kannidou. “At present BVI
takes commercial and pleasure yachts and general cargo vessels – but
not passengerships, cruise ships, tankers, bulkers, etcetera. But in time,
if our cooperation goes well, then we will have to take up with the UK
government whether we can change this.”
A key area of focus for Totalserve will be clients who might have
registered with the Cyprus flag but would have a problem with the
restrictions of the Turkish embargo as a result.
“Sometimes we have clients who might wish to register their yacht
with Cyprus but they want to go into Turkey,” said shipping assistant
Chloe Kyprianou. “That would be a problem. This also includes any
connection with Cyprus such as being with a shipmanagement company
in Cyprus – Turkey won’t accept anything to do with that. So we offer
a flexible opportunity to go to BVI – and the added benefit that we have
an office out there.”
The Vanuatu Ship Registry now has close to 700 vessels in its fleet,
adding up to a total 3.5m gt, after a 7% increase in gross tonnage last
year. Art Bjorkner, Vice President of New York-based Vanuatu
Maritime Services, says he expected to see double that growth rate in
2010.
“That is tough for shipmasters and owners.
The vessel master must really stay on top of
regulations on pollution, antifouling, ballast
transfers – it just keeps going on and on, and it
comes faster and faster”
Vanuatu may not be large compared to the Marshall Islands,
Liberia or Panama, he says, “but we are getting a lot of vessels and we
have a niche area, with major companies in the offshore market having
their vessels under the Vanuatu flag”.
The register has been picking up some Japanese owners that have
transferred from Panama, says Capt Bjorkner. He puts the growth in the
Vanuatu-flagged fleet down to service. “The bureaucracy of some of the
larger registries, owners don’t care for any more. They want service and
to be able to talk to somebody who understands their problems. We
give our customers individual service, we have a lot of seagoing
experience and we know what shipowners like and need.
“The head of our ship registration has been with us for over 20
years, so we have tremendous expertise in this office.”
The biggest challenge for registers and the industry was keeping up
with the new regulations coming out of the IMO, believed Capt Bjorkner.
“That is tough for shipmasters and owners. The vessel master must really
stay on top of regulations on pollution, antifouling, ballast transfers – it
just keeps going on and on, and it comes faster and faster.” ■
46
MARKET SECTOR
CREW MANAGEMENT, TRAINING AND SERVICES
Solving an old problem
with new solutions
Albert Einstein once said you can’t solve problems by using the same
kind of thinking that was used to create the problems in the first place.
Well if he had been in a position to apply that philosophy to the longrunning problematic sage of the global crewing shortage, he would
have had his work cut out trying to persuade a disparate and largely
procrastinatory industry to come together and work to solve the anticipated problems that obviously lay ahead.
When it comes to poorly trained seafarers and an industry that
lacks the right image needed to attract dynamic young people to a
career in shipping, then the writing is on the wall and has been on the
wall for at least a decade now. But still the industry is in a quandary
about how to resolve the crew shortage and competence issue ahead of
the demands being placed by an anticipated 5,000 to 6,000 ships
coming out of the world’s shipyards.
Ten years ago ship owners didn’t see proper recruitment and
training as their problem. In a strange sense that is still the case at least
with elements of the shipowning fraternity still intent on passing the
buck to the waiting third party manager and then haggle over the
resultant training costs or at the very least poach someone else’s crew
to look after their own immediate crewing needs.
“The main concern for the global manning sector is the lack of
competent officers,” reiterated Ole Stene, Managing Director of Aboitiz
Jebsen and immediate past President of InterManager. “And we see that
if the shipping industry starts to recover from this current recession,
there will be new ships coming into the market that will need 70,000 to
80,000 new officers. It is a huge challenge for a market that is already
under pressure to supply manpower.”
Ole Stene is based in Manila and knows first hand the impact the
crewing crisis is having on a national industry which is responsible for
50
supply up to 30% of the crewing needs of the world fleet. “The
Philippines right now is providing more than 270,000 seafarers and that
number is not increasing but more and more owners and managers are
coming to the Philippines in the hope that they can find quality officers
and seafarers for their fleets. So that is putting extra pressure on the
country’s manning industry.”
One positive aspect he claims is the effect the higher numbers of
vessel scrapping and lay ups have had on wage levels. A wage spiral
that has been under huge pressure for the last two to three years is now
flattening out, he claims, and there is not so much poaching of crew
occurring. “So in that respect that element of pressure is not there so
much as before,” he said.
But training of competent seafarers has to remain at the forefront
of everything the industry does yet according to Stephen Bond,
Managing Director of Videotel, providers of maritime training material
to the shipping and offshore sectors, people are still being asked to do
more and more with less and less. Huge amounts of new legislation
coming on stream such as the Maritime Labour Convention and the
revision of STCW means seafarers have to be as well trained as they
can be and as up to date as they can be.
“It doesn’t matter how you put the training message across: people
still have to be given a certain amount of time to get themselves up to
speed and to keep themselves up to speed,” he told SMI. “That is one of
the big challenges. You need experienced people with as much training
as you can give them. But there are constant changes to MARPOL, or
SOLAS, not to mention the MLC which hasn’t yet kicked in and people
have still got to get to grips with that. For ship owners and ship
managers to stay in business, they have to keep up with their training
requirements,” he warned.
CREW MANAGEMENT, TRAINING AND SERVICES
So is the shipping industry doing enough when it comes to training?
Mr Bond again: “I think it probably is because you can over saturate.
Enough is being done within reason but there will always be those owners
or managers who don’t want to do the minimum: there will always be
those who like to poach and not put the investment into training.”
He added: “Managers have got to get help from their owners and I
think the better owning companies realise they can’t just give their ships
to a manager and expect him to get on with it. They have to make a
provision for budget, they have to make a provision for the number of
people onboard ship and they have to make sure there is time for training.”
The issue of loyalty is another case in part and both Ole Stene and
Jacqui Apps, Crew Manager with Auto Dynamic Positioning Systems,
an offshore manning operation run out of Plymouth in the UK, point to
the view that this could be achieved if crew managers were seen as the
human resource arm of the owner. “We act as the HR department for the
companies we work for so they treat us like an out sourced in-house
resource. The guys who work for us also know they are working for the
client we are working for.”
Mr Stene again: “We are focused on the partnership model in that we
are the partner of the owner and act as his external personnel department.
So what we are trying to do is build up loyalty for each ship owner by not
offering too high wages, but competitive wages and to come up with
benefit packages that keep the families satisfied and happy.”
This was a point raised by Andreas Droussiotis, Chief Executive
Officer at Bernhard Schulte Shipmanagement: “Our crew know that if
they have a real family problem we are there to help; we have people
who have been with us since being trained at our school or in India or
the Philippines who are now chief officers, engineers and masters and
these people don’t move easily.
“We cultivate our masters and if you know the deficiencies of
someone you can control the situation better. Travelling masters and
onboard quality and safety onboard means you see better efficiency and
productivity. You cannot afford to lose an officer, especially one of your
own people.”
MARKET SECTOR
Robert Houston
“Getting competent officers and crew will always
be the biggest concern and it hasn’t been sorted
out since the time I was at sea. You have a
situation where you can employ a really good
master for $10,000 per month against a reasonably
good one for $8,000 and they always choose the
latter, the cheapest. I find it incredible”
51
MARKET SECTOR
CREW MANAGEMENT, TRAINING AND MANAGEMENT
“You need experienced people with as much
training as you can give them. But there are
constant changes to MARPOL, or SOLAS, not to
mention the MLC which hasn’t yet kicked in and
people have still got to get to grips with that”
While family welfare is an important factor, pay is still an issue and
according to Jacqui Apps, there is a definite attraction for crew to move
to migrate to the offshore sector because of the high day rates.
Robert Houston, President of Dubai-based Mideast
Shipmanagement – the in-house shipmanagement arm of the National
Shipping Company of Saudi Arabia, has his own views on the interrelationship between the marine sector and the offshore sector.
“The only way to get young people to go to sea is to make the pay so
lucrative that they will be desperate to go to sea. And once you lure them
in, the chances are that you will keep them for a few years,” he told SMI.
“Getting competent officers and crew will always be the biggest
concern and it hasn’t been sorted out since the time I was at sea. You
have a situation where you can employ a really good master for $10,000
per month against a reasonably good one for $8,000 and they always
choose the latter, the cheapest. I find it incredible.”
As a tanker manager, satisfying the needs of the oil majors is
crucial. And satisfying the stringent demands of the crewing matrix can
be a major headache if you do not have the right resources and qualified
seafarer pools. “We are moving people around to make the matrix work
because when you are taking on new ships, you don’t have a lot of
experienced masters and chief engineers standing around. You have to
get an experienced master onboard. And we have stopped ships just to
change the crew,” said Mr Houston.
So is there room for manoeuvre on the matrix? “There are some of
the majors, depending on your past record, who may look at things and
say OK it is a one off. The SIRE inspection report will come in and
some may say this is a company we have never had a problem with so
we will let it go through. If the master has been a master for 20 years
and the fact he has only been with you for one year, there has to be some
consideration for it.
“But it is becoming more and more difficult for the oil majors to
get SIRE inspections done because they don’t have the people; it is
being farmed out to third party organisations. If you declare your levels
of TMSA and the SIRE inspection reports being done all reflect that
that is a true picture then the oil majors should accept you, maybe with
one or two Sire inspections a year. That is the only way we can go. To
do a SIRE inspection every three months is crazy. The worst part is if
we don’t have a SIRE inspection for whatever reason, they won’t come
and do one. And if you don’t have a valid SIRE for six months then the
ship won’t be taken,” he added. ■
REGIONAL FOCUS
DUBAI AND UAE
light
Searching for the
at the end of the tunnel
By Sean Moloney
If the dwindling vehicle queues on the Sheikh Zayed Road are anything
to go by, Dubai still has a long way to go before economic growth returns
to anything like it was before the Lehman Brothers crash in September
2008. An unusual yardstick it may be, but it is one locals believe is largely
representative of the level of business activity in the Emirate: less ex-pats
equals less cars so by definition less highway congestion.
Newspaper headlines a year ago alarmingly spoke of bankers
exiting Dubai in their hordes and leaving their company cars in the
airport car parks complete with keys in the ignition. Not surprising when
you consider that under Dubai law it is illegal if you fail to honour a
debt, be it a mortgage or a car loan. The advice on the ground has always
been to act like ‘Slim’ and get out of town until the dust settles.
But while Dubai continues to force its way out of the grips of the
global credit crunch, the maritime cluster is doing a good job getting on
with ‘business as usual’. Well not that ‘usual’ really when you note that
office rents have started to plummet instead of increase and wages have
to a certain extent stabilised.
Every cloud has a silver lining and it seems that those businesses
not involved in real estate, retail or the hotel sector may just have
managed to escape the full force of this particular economic El Niño.
54
“I draw the comparison with Manhattan in
the depression of the 1920s. Everything
went down but Manhattan is still there
today. Like Dubai, they decided to get big,
they are big, and they will always be big”
When you consider that third party managers are starting to count
their chickens as ship owner demands for a more cost-effective vessel
management alternative forced the setting up of at least two new third
party management start-ups SMI was told of during its visit to the
Emirate, shipping industry claims that it is not as badly affected may
hold water. Ship owners need to cut costs and they need to build in
efficiencies. Backed up by Dubai’s infrastructure, this particular
emirate could hold the key to a growing shipmanagement sector.
Fingers crossed.
“I draw the comparison with Manhattan in the depression of the
1920s. Everything went down but Manhattan is still there today. Like
DUBAI AND UAE
REGIONAL FOCUS
Lars Modin - ships naturally want to be managed from here
growth in Qatar or elsewhere. Dubai has become an open place to
work,” said Mr Modin.
This was a point reiterated by Robert Houston, President of the
National Shipping Company of Saudi Arabia’s in-house vessel
management vehicle Mideast Ship Management, who claimed that it
was the drop in house prices that was bucking the trend of the boom
days of Dubai.
“Almost everyone here is an ex-pat of some sort and housing
allowances were rising to the tune of 20% to 30% per year, so that has
all stopped. The cost of living was rising 20% per year and that has sort
Dubai, they decided to get big, they are big, and they will always be
big,” said Lars Modin, President of V.Ships-owned International
Tanker Management.
Speaking from an office his company is soon to leave in favour of
grander and significantly cheaper accommodation near the Media City
area of Dubai, Mr Modin remained objective about the situation in
Dubai. “There are still a lot of ships coming into ownership in this
region and naturally they want to be managed from here. In the wake of
the recession, the balloon has burst so owners now need to focus on the
cost side. As a ship manager we can offer a solution because many of
the Dubai-based owning conglomerates have taken their shipmanagement in-house. But they now have to clean things out and make their
operations more efficient. There is a possibility for more managers to
come in,” he said.
The drop in office rents was one factor attracting more businesses
to the area. “I foresee a good year ahead for shipmanagement in that
respect: a lot of good things can happen.
Remember, Dubai is the only place between Singapore and Europe
that has an infrastructure that can support ship management and
everyone in the region wants to come to Dubai even if there is higher
55
REGIONAL FOCUS
DUBAI AND UAE
of stopped as well so it has helped us as a company, because in
shipmanagement the only cost we have is our people. The rest of our
costs are the same no matter where you are. Yes, you do have exchange
rate differences, but we are paid in Dirhams and the Dirham is linked to
the dollar, just like Hong Kong.
Admitting the mood certainly among the shipping fraternity was
very much business as usual, Mr Houston said he was not seeing a lot
of confidence generally returning to Dubai. “There are still a lot of
worries,” he said. “People who bought property here have lost a
fortune: will they get their money back? Probably never. I don’t know.
Miranda Strawbridge-Dockerty, Marketing Manager at Mubarak
Marine, the marine services business specialising in offshore towage,
salvage, port operations, heavy lift as well as emergency rescue and
response, said that while companies were tightening their belts because
of the crisis, spending was still continuing.
“Shipping and offshore transportation has been affected but not as
badly affected as it could have been,” she said. “We have seen a distinct
downturn as we had more than one vessel sitting at the quayside at a
time whereas normally you would rarely see any sitting there other than
the harbour tugs waiting on the next move. So there has definitely been
an economic hit here with people being a bit more picky and choosy
about what they spend on. And that comes from the people we deal with
out of Europe and out of Asia, other Middle Eastern countries and even
from the US.
“They are all watching their pennies but they have not stopped
Chris Steibelt
“Dubai is in dire straits because it over
extended itself. While it is not affecting
shipping or trade as much, there are a lot
of people involved in the construction
sector and they are not getting paid which
is affecting the economy”
Christopher Mills
Legal firms report ‘more litigation’
The construction and retail estate crisis that propelled Dubai’s
financial plight onto the world’s newspaper front pages has had a
knock-on effect for the shipping and insurance sectors with an
increase in litigation related to company disputes and default, a
leading Dubai lawyer has claimed.
Dubai’s insolvency laws have also been brought more up to date
with the issuance of Decree 57, a legal framework designed to deal
specifically with the settlement of disputes related to Dubai World
and its subsidiaries (the Corporation).
According to Clyde & Co, Decree 57 establishes a tribunal to
deal with such disputes, composed of three prominent judges
including the Chief Justice and Deputy Chief Justice of the DIFC
Courts – Sir Anthony Evans, Michael Hwang and Sir John
Chadwick (the Tribunal).
Christopher Mills, a partner at Clyde & Co, told SMI: “On the
litigation side we have seen an increase in business, more disputes
and more defaults and more need for lawyers to get in and help
people get through their problems.
“I suppose you could say it came to a bit of a head when Decree
57 was issued and the Dubai government stepped in to bring the
insolvency laws a bit up to date but only in relation to one group of
companies. They recognised that while everything was fine in the
good days, you could get by with fairly archaic solvency laws but a
change was needed and DP World was the group that they decided
needed help for this. And I think that will act as a catalyst for change
in the insolvency laws generally.
“At the moment, if a company starts to go under then the
directors of the company are looking to book a one way ticket out of
here because the personal liability associated with that. The decree
57 does take bits off Chapter XI legislation and UK insolvency law
and applies it here so if we could move in that direction, should we
go through something like this again it will be a far less painful
process,” he added.
Are you for sale?
We would like to acquire an existing small but efficient ship management
company, no preference for location or type of managed vessels, all
inquiries will treated with confidence please forward all inquiries to
[email protected]
Mohammed Ismail Majid
Business Development Manager, Middle East Power Plants, Wärtsilä LLC P.O. Box 61494 Dubai, U.A.E.
56
DUBAI AND UAE
spending. Our business is picking up in varied sectors and there are
large jobs coming up now than before versus what was before,
primarily a multitude of smaller jobs. So there is a shift. It appears to be
that there were a lot of projects in their early stages that were put on
hold one or two years ago and never went to tender, and now we see
they are starting to come to tender. We have big requirements for small
tugs as well as barges that won’t start until the end of 2012. These
projects are going out for their initial bid processes now to see what the
market is saying. There are oil and gas EPC works and plant developments going on and there are LNG terminals being built in the region.
There is also new port infrastructure and actual new ports being
designed. In Salaleh and Fujairah, they are building new facilities and
in Ras al Khaimah you will see more container terminals coming in.
Even in Dubai they are looking at changing some of the unused box
space into more container terminals. So there is a constant look to grow
and the spending of money to make more money,” she said.
Carsten Ladekjaer, Managing Director of the Dubai office of
International Bunkering Middle East DMCC, a major regional bunker
trading company, added to the debate: “I believe you can compare
Dubai to other places in the world when it comes to the general mood
in shipping. Of course Dubai has been hit hard by the crisis in terms of
the real estate: a lot of the activities going on in Dubai are still related
to the real estate sector and since the crisis came in Sept 2008, of course
a lot of shipping activity has been scaled down.
“However, since then, most companies have adapted to the
situation in shipping and we are starting to see now new activities
coming back on stream, on a small scale. We see these smaller players
still have the networks to find the business in the region. Dubai is a hub
for the region so a lot of the business we see here is related to India or
Pakistan or other Gulf countries. There are still activities moving on
even on a smaller scale.
“Dubai still has a role to play as a maritimeas a cluster and I believe
it will be able to maintain that in the future as well. I believe in Dubai
because what they have initiated here, they still seem very focused on
REGIONAL FOCUS
MyView
Capt Peter Bengtsson
GAC (Dubai)
Managing Director
... gives his thoughts on
concerns of an international
embargo against Iran
“Those concerns about
embargoes on Iran have been
around for a long time and
there have been periods of
greater uncertainty and
imbalance in the region –
various wars and conflicts –
and still there has been no
real embargo that has
affected Dubai in the way
that people would have
feared. There are so many
strong interests in the region
acting against a war that
there is a very strong
sentiment for cooperation
that underlies all talks here.”
keeping to their targets although they realise they will have to slow
down. In the long run they have the same ambitions and I believe they
will succeed as well by making the right investment decisions in things
like port developments etc,” he said.
Chris Steibelt, Managing Director of global ship spares logistics
REGIONAL FOCUS
DUBAI AND UAE
specialist GAC Marine Logistics, was less positive about the sentiment
in Dubai. “Dubai is in dire straits because it over extended itself. While
it is not affecting shipping or trade as much, there are a lot of people
involved in the construction sector and they are not getting paid which
is affecting the economy,” he said.
His colleague Capt Peter Bengtsson, GAC (Dubai) Managing
Director, added: “No, Dubai is not coming out of recession – there is
still a lot of correction that still needs to happen and it is still quite slow
and uncertain. So 2010 will be a slow year I think. But Dubai will
recover because it has a strong oil and gas energy base.
Talk of oil reached something of a mild fever pitch in early
February with news that Dubai had discovered a new offshore oilfield
in the Middle East Gulf. There are hopes that the find, the first in nearly
two decades, could help to boost the emirate’s economy.
The announcement was made by His Highness Sheikh Mohammed
bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE
and Ruler of Dubai, at a gathering of sheikhs, ministers and other dignitaries just before a Cabinet meeting. Indeed, so important was the
discovery that Sheikh Mohammed had assigned to Sheikh Ahmed bin
Saeed Al Maktoum, Chairman of the Oil Affairs Department, the task
of evaluating the size of the field, located east of the existing Rashid
field, and production potential.
“The discovery will (strengthen) the economic capacities of the
state (and increase) UAE’s oil production,” Sheikh Mohammed was
quoted as saying. “It will give a strong impetus to all sectors of the local
economy and provide a new source of income, enhancing the comprehensive development of Dubai.”
Analysts said the discovery, if proven to contain commercial
quantities, could provide a welcome boost for Dubai.
“Discovery of oil in Dubai is overall a positive development and
will contribute to confidence building measures,” said Samir Pradhan
of the Gulf Research Centre. “But it remains to be known what the
nature of reserve is, how big the stock is, how deep it is, what the
technologies required are and above all the cost of production.”
DP World ‘on track’
DP WORLD remains on course for a London listing later this year
as the Dubai-based global ports operator reported a 2009 consolidated throughput drop of 8% to 25.6 million teu on revenues down
14% to $2.8bn.
The group reported an adjusted net profit after tax of $333m
against $621m before but announced a dividend of 0.82 cents.
DP World Chairman Sultan Ahmed Bin Sulayem said: “2009
has been a challenging year for all economies and across all industries. In an industry such as ours, where the average terminal
concession is granted for in excess of 25 years, we must continue to
focus on, and invest for the longer term.
“2009 presented the management teams with an opportunity to
review all of our operations and drive through structural cost
improvements and operational efficiencies. Tough decisions were
taken, the results of which will ensure we are better placed to deliver
profitable growth for the future.”
Oil or no oil, according to GAC’s Capt Bengtsson, it is probably a
reflection of the overall industry sentiment that now is the time to
consolidate and to review things with caution. “No one will be throwing
money into big projects until they feel confident that things are moving
in a particular direction and if market fundamentals in a region are
strong, then the maritime cluster here with support from the
government, is a very valid proposition,” he said.
“If anything, the slowdown has helped us as it has stopped costs
rising,” said Mr Houston. “We can look over the next couple of years
and say the cost of running of business in Dubai won’t increase that
much and will not be like the last three to four years – that was a real
struggle. In the past it was tough trying to get people to come out here
as the first thing they would ask is what is the housing allowance?
ANDLERS • SHIP REPAIRE
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58
Gulf Stolt Ship Management
(GSSM), Dubai
A Joint Venture between Gulf Navigation
Holding (Dubai, U.A.E.) and Stolt Nielsen
(Norway) to cater to Technical & Operational
Management of Vessels belonging to both
the Owners. GSSM is poised for receiving
more new Tonnage which is in the pipeline.
GSSM, accredited with ISO 9001:2008, is vested with dedicated and experiences
professionals with high spirit and ambition to always ensuring best of Quality Performance
& Safety. The growth is rapid, with its strength very consistent, and conducive to accepting
Third Party Fleet Vessels for cost-effective, responsible and professional Ship Management
with commitment.
GSSM currently managing 14 vessels comprising:
Suezmax
VLCC
Chemical Tankers Class IMO II (commodity and parcel type)
Large PROBO Vessels
For more information, please visit GSSM website www.gssm-dubai.com or contact:
Gulf Stolt Ship Management
32nd Floor – Saba Tower 1, Jumeirah Lake Towers (DMCC)
Sheik Zayed Road – P.O. Box 123548 – Dubai
United Arab Emirates
Phone: + 971 4 448 2500
Fax: + 971 4 448 2590
Email: [email protected]
www.gssm-dubai.com
REGIONAL FOCUS
DUBAI AND UAE
Mohamad Ahmad Renno
Underwriting Manager, Islamic P&I Club
“The paid claims during the last year were at their highest than in
previous years. Most of these claims were related to the FFO and
crew liabilities and located in Oman and Kuwait as well as Iran.
IPIC can provide full P&I cover up to $500 million on a fixed
premium basis which is suitable for the smaller sized vessels trading
in this area. We are here to serve the ship owners to protect them
from third party claims and at this stage we are trying to run
workshops to introduce the club in a better way to the region’s
shipowning industry.”
Many of the guys coming out wanted a villa, so it was getting
expensive,” he told SMI.
But ship owners and managers are plucky folk and will look for
any opportunity irrespective of the situation. With vessels values
dropping, what will NSCSA’s strategy be moving forward?
“If the market is right we will buy but the market has to be right,”
stressed Mr Houston. “There are a lot of tankers coming out of the
shipyards, more ships than cargoes, so until someone somewhere sees
that balance coming in, then who will spend $100m on a VLCC? In
today’s market you have to be sure you know what you are doing. There
are opportunities, but people say it will be the middle of this year before
we see everything bottom out, but do you believe the experts? Who
knows? The big question is how many ships will come out of the
shipyards but there are a lot of shipyards who will say if you want to
cancel, then give me the cash.”
According to the Mideast boss, cost-cutting is the important
strategic move this year but he was clear where he hasn’t cut back: “We
have cut costs where we can but we haven’t touched spare parts or
maintenance because that is what you need to spend. We have cut back
on some of the projects we were going to carry out – the projects have
been delayed for a year or so – but apart from that we operate the ships
efficiently. If you try and cut corners it will come back and bite you.
My view is accept what the necessary costs are because if you can’t
operate at these levels you shouldn’t be in the business.”
Mr Houston added: “We know what is needed to run a VLCC and
we know we have to invest in the crew and spend money on maintenance because if we don’t then something will happen. You could end
up with a bad SIRE inspection or a breakdown and the oil majors will
be all over you because it is their cargo and their reputation that goes on
the line. We cannot afford to have a problem with an oil major and we
try very very hard to comply with everything they want.”
So what about third part management inquiries? As a quality owner
you must have received requests? Mr Houston again: “We are a division
60
of NSCSA, the in house technical manager, so anyone we managed for
would have to have the same philosophy as NSCSA. You cannot have
two fleets in the same office operating at different levels, it never works.
“Third party management is what I have done all my life and I
don’t want to go back trying to be all things to all men. You get a good
owner who is paying you a good management fees to run his good ships
and then you get a not so good owner with his ships breaking down.
Where are you spending all your time? Well you should be focusing on
the good guy. It is all about volume because you need the volume to
survive. For the next year to 18 months it is all about hunkering down
and waiting for the good times to return. And they will but we are all at
the same level. Keep the costs as low as we can until things get better.”
But what of the service sectors like the ship suppliers? How
difficult are they finding it to cope against a backdrop of ship owner
defaults and late payments that can sometimes extend as far as one year
and even more?
“We have certainly noticed certain clients taking longer to pay their
ship supply bills, which means we can struggle to get our money,” said
David Greenwood, General Manager of Gulf International Marine
Services. “But business has picked up down here. We tend to be
competitive with the big boys and centre on quality and as a result we
have grown steadily in the region.
“We started 2010 like a bullet out of a gun: we always have a quiet
January and we don’t tend to start delivering until February but this
January we recorded one of the best months we have ever had. We have
good relations with a couple of Korea agents and we managed to secure
a bucket load of orders for initial spares and stores,” he said.
This was a point echoed by Johnson Baby, General Manager of
Dubai and Bahrain-based MEMS Emirates Shipchandlers. “There is a
lot of competition here and the main problem we are facing is with
payments. If they pay 90 days we are happy. They are paying after six
months or even after a year. We still have payments from 2008.
“We cannot predict how it will improve, we are hoping for the best
but the market is picking up and we are getting more enquiries,” he added.
Capt Leslie Reis
“The fear is that once the trade increases,
which it won’t in a rush, then there is
enough idle tonnage to not allow this
growth to be seen for the next two to
three years”
DUBAI AND UAE
Saeed Al Malik, President of Middle East-Fuji and also President
of the UAE National Ship Suppliers Association, said sales targets had
dropped on average by between 10% and 20%. However, he said the
presence of larger semi-government owned shipping companies in the
region meant the payment issues could be contained. “We are not
finding late payments as being too much of a problem because the
biggest ship owners here in the Middle East are semi-government
vessels. The governments are rich, they have natural resources, and so
have the capability to pay.”
But cost differentials and the competitive way some suppliers operate
means businesses in Dubai are winning contracts away from competitors
as far afield as Singapore and Rotterdam. As Narayanan Sriram, Director
of Operations at Saifee Ship, the large ship chandlery business located
some miles out of the city centre at Dubai Investments Park, pointed out,
it can be a benefit holding the right stock so you can take advantage of
market demand when it happens. “The market here is good and we can
maintain our inventory by going right to the manufacturing source. That is
how we can keep our prices down. By sourcing from the guys making the
products we can control the quality and the price.
Most chandlers do not hold their own stock but Saifee bucks this
particular trend by holding upwards of 35,000 line items in its Dubai
warehouse. As a holding company for many spare parts, up to 70% of the
items listed in the ISSA catalogue, it will sell to the chandlery market as
well as to the owners and managers. “I can supply 400 items in an order
in 24 hours, whereas many other chandlers cannot,” Mr Sriram said.
One market which has been under global pressure is the container
sector but while revenues may be under pressure there is still a need to
move cargo especially if it is to and from one of the world’s fastest
growing economies.
Leslie Reis, Vice President of Orient Express Lines, a Transworld
Group owned liner feeder operator operating 14 ships of up to 1,300
teus from Mumbai to the UAE, said that while freight rates were clearly
under pressure, trade volumes were holding up. “We have had 20,000
to 21,000teu moving from Mumbai to the UAE and that is maintained.
And to add to this we are seeing a lot of activity going on in the Indian
REGIONAL FOCUS
Saeed Malik
“We are not finding late payments as being
too much of a problem because the biggest
ship owners here in the Middle East are
semi-government vessels. The governments
are rich, they have natural resources, and
so have the capability to pay”
61
REGIONAL FOCUS
DUBAI AND UAE
Carsten Ladekjaer
“I believe in Dubai because what they have
initiated here, they still seem very focused
on keeping to their targets although they
realise they will have to slow down”
sub continent. All is going fine except freight levels are not commensurate with the volumes.
“There have been large volumes and very low freights but from an
owner’s perspective we operate our own ship services so at least our
ships are employed and none are laid up,” he said.
Capt Reis added: “Rates have dropped to rock bottom levels – near
equal to our operating expenditure but there is a lot of activity in the
market in terms of owners being asked for different vessels for different
routes but for lower terms.
“Every segment of the industry has to be treated differently. We are
hopeful that rates will improve over the next 18 months or at least not
drop any further because as you will see as soon as there is a trend
which shows there is money to be made somewhere, all the idle ships
will rush to the same spot and chance their arm there. I do not know
how long it will take before things stabilise and the industry gets back
to normal. If demand increases by a 200,000 containers you will see
ships benefiting,” he told SMI.
So, will certain owners survive others? Capt Reis again: “That
division has already been made and it is very clear now. Things have
settled down and people are resigned to the fact that these are hard
times but that they would rather work with 30% to 40% of the tonnage
they own rather than go the whole hog and try and get employment for
the whole of their fleet. The fear is that once the trade increases, which
it won’t in a rush, then there is enough idle tonnage to not allow this
growth to be seen for the next two to three years. Everyone feels 2013
may be the time when we see the markets improve and profits return.”
And what of Dubai and its future prospects? “I have been living
here for 18 years and the pace of Dubai’s growth has been meteoric. But
you also find conflicts because coupled with growth you need support
from local infrastructure like roads, schools, hospitals and supermarkets
etc. But that did not go hand in hand, said Capt Reis. There was a lot of
activity in the general hustle and bustle and people misconstrued that
for Dubai bursting under the seams. Actually it was not controlled in the
last two to three years – and yes the whole world is in a crisis. So why
can Dubai be unaffected?
“It is logical to say that this part of the world will go through the
bangs when you consider the quantum of money owed and paid back.
It all gives the wrong impression and can raise fears. We were all
carried away with the greed and specualtion and we all thought we
could make a lot of money. People were buying an apartment for
£500,000 pounds and trying to sell it for £6m. We were all part of the
cause so you can’t blame Dubai itself,” he said.
Will Dubai manage to reinvent itself: to emerge stronger? “Yes.
The plans for the future in Dubai suggest it will be be the largest
producer of petrochemical goods in the area. Products like
polypropylene will be produced in large quantities here in UAE.
Already we have the largest sugar refinery in this region. So without
doubt, Jebel Ali will be hard pressed to provide the kind of hub support
needed to cater for these growth opportunities,” he said. ■
TRADE ANALYSIS
CHEMICALS AND PRODUCTS TANKERS
Glimpsing a
light
at the end of the tunnel
Has the tide turned for the chemical and products tanker trades? Or has
the prolonged cold snap in the northern hemisphere merely served to
fuel a false dawn? Will the first discernible signs of an upturn in rates
develop into a longer-lasting recovery or peter out? And will consolidation be the name of the game as leading players revise strategy in the
international marketplace?
It is only a few months since it appeared that Christmas had come
early for the sector as rates edged upwards, albeit towards breakeven
levels, and that the new year had ushered in better times as rates for
medium range tankers climbed to close to $12,000 per day on the back
of gasoline imports to the US. But has this endured?
ICAP tanker analyst Simon Newman is in no doubt. “January did
see good rates but 2009, a year of huge fleet growth and collapse in
demand, is not behind us, a year made all the more painful by the high
levels attained in 2008,” he delegates to a two-day London conference
in March organised by Navigate Conferences and the International
Parcel Tankers Association under the banner ‘Chemical and Product
Tankers – gaining the edge in a tough market’.
“Moreover, this year’s cold January was boosted by high levels of
crude end products and drawing down on stocks and rates have slipped
off since the Chinese New Year,” he added.
Mr Newman said shipyards were keen to book orders and get cash
flowing again and, in a detailed analysis of fleet growth. Last year, 96
vessels had been added to the aframax fleet and 19 taken out as owners
appeared “happy to keep older tonnage active” and for 2010 he
estimated 77 orders and 40 removals.
He felt 2010 would see little in the way of panamax orders, with
the sector “returning to a more positive stance next year”, while
“negative growth in the small medium range fleet had killed off the
negative signs emerging from the larger sizes.”
“January did see good rates but 2009, a year of
huge fleet growth and collapse in demand, is not
behind us, a year made all the more painful by the
high levels attained in 2008” Simon Newman
Bullish figures for oil demand from the International Energy
Agency, the US Department of Energy and OPEC all pointed to the
market going forward in 2010 “in the right direction for shipping
demand,” Mr Newman said.
Car sales in China and India had reached “mind-boggling” proportions
but gasoline demand was not picking up and he suggested cars were more
of a status symbol in these countries rather than a useable commodity.
64
Geir Olafsen, Head of Research at Inge Steensland, which employs
60 people in Oslo and eight in Singapore, talked of a “slight comeback”
in the last quarter but was in no mood to mince words. Long haul spot
rates were down by 34% from the 2008 peak and short haul spot rates
had fallen even further, by 40% in the same period.
Second hand prices were down by 30%-60% from their peak and
close to a 10-year low, new building prices were also down and
shipyards were not making money. “Owners,” he declared, “face an
uphill struggle in 2010.”
“Everyone is under commercial pressure.
Life-saving rules are nothing new but they need to
be enforced. You can do as much training as you
like but without experience the training does not
meet 100% of your requirements” Axel Kahl
Mr Olafsen compared scenarios for what he termed ‘V’ and ‘L’ –
shaped economic recovery patterns; under the example of ‘V’ a deep
recession was almost always followed by a steep recovery with all
indicators pointing in the right (2006/7 levels) direction with manufacturing
output back in positive territory and China and Asia paving the way ahead.
Under the ‘L’ model, debt must be repaid and questions remained
as to when consumers would step into the market.
Most trade growth, he said, would be in long haul business with
regional trade in Europe replaced by long haul activity. Key Middle East
exports expansion would continue and palm and vegetable oil business
would be good tonne mile providers. “Biofuels is not a hype,” he said.
Turning to ‘V’ and ‘L’ case scenario demand for chemical tankers,
Mr Olafsen talked of zero demand in 2009, 5% this year, 7.5% in 2011
and a similar level in 2012 under the ‘V’ model. The ‘L’ model revealed
-2% for 2009, 3% in 2010 and again next year and 6% in 2012. The ‘V’
model anticipated a tight market by 2012 while ‘L’ saw a tight market
in 2012 – 14.
South Korean yards with 10m dwt on the books, had 50% of the
world’s orders followed by China with 4 m dwt or 22%, Japan, Turkey,
Romania and others in this order with cancellations in the 1,000 – 19,000
dwt size range in the vicinity of 932,000 dwt for 2009, 2010 and 2011,
according to Fred Doll of Navigate Events/Doll Shipping Consultancy.
Turning to chartering and issues of quality, Mr Doll made the point
that respectable charterers chartered quality ships with proper
management but others were looking at tonnage purely on price levels
and at certain ways of operating in low quality mode. “In 99% of times
this comes out okay but better self-regulation will help us get rid of sub-
TRADE ANALYSIS
Cicek looks to strengths
standard tonnage. Small owners could access economies of scale
through third party ship management,” he added.
Mr Doll talked of the “consolidation tendency and possible initial
public offerings” as prices had come down and vessel values had hit
bottom. “While 2009 is over and the tendency is towards being
judicious, others are grasping the mettle and not just getting through, as
they did in 2009,” he said.
Each of the speakers was of the opinion that consolidation would
be the name of the game over the course of the next two to three years.
“Banks are more interested,” said Mr Olafsen, a view underscored by
Mr Newman, who added: “Banks are stretching covenants and there
is wider interest in giving leeway rather than forcing fire sales
Turkish shipbuilder Cicek Shipyard has reaped a second dividend
from its bold initiative to construct a series of four 3,100dwt IMO II
chemical tankers to own account through its associated shipowning
company White Tulip Shipping.
Italian shipowner Ciane Spa, based in Augusta, Sicily and part
of the Novella Group headed by the Marco Novella family, has
bought the second of the quartet, Chem Rose, little more than nine
months after concluding a deal for Chem Flower.
The first vessel was handed over in May 2009, renamed
Frecciamare, and deployed providing bunkers to vessels in Genoa,
Savona, Vado Ligure, La Spezia and Marina di Carrara.
Chem Rose was handed over in early February this year,
renamed Brezzamare and deployed on bunkering duties alongside
Frecciamare, though the vessels’ flexiblility is suited to worldwide
trading transporting oil products, chemicals (IMO type II) and
vegetable, animal and fish oils.
The 85m long, 12.6m wide vessels are powered by two
Mitsubishi S12R MPTX, six-cylinder, four-stroke diesel engines,
each rated at 940 kW, with a service speed of 11 knots. Last year
Cicek Vice President Berke Cicek talked of strong interest from
European owners for such vessels despite the overall market
downturn and said double-hulled vessels such as the Frecciamare
and three sisters were in great demand to replaced older tonnage.
He restated his belief in February this year as the second in the
series was handed over and said Cicek’s initiative to start
construction of the four ships to own account meant new owners
benefitted from extremely short delivery periods. Cicek, he said, was
talking to a number of other potential owners and charterers and was
confident of finding buyers who could secure immediate and
profitable employment for these vessels.
“We were not surprised by the interest shown in these ships by the
Novella Group,” Mr Cicek said. “We had identified the bunker trades as
a strong potential market since many bunker tankers are still single-hull
and quite elderly. There is a replacement market and there is also a
requirement for larger vessels like ours since average ship sizes continue
to grow. Large containerships, for example, take on board substantial
amounts of bunkers and they also expect a fast rate of delivery.
Luca Stegagnini, Technical Manager and a board member of
Ciane, described Frecciamare as an “excellent vessel” and that while
being an IMO II chemical tanker it might be considered “over
qualified” as a bunker tanker the company was certain it would be a
good long term investment.
“With her twin azimuthing propellers and a powerful bow
thruster, she is already very popular with our masters who find her
excellent manoeuvrability helps considerably when coming
alongside vessels awaiting bunkers in crowded or otherwise
restricted areas,” Mr Stegagnini said. “More than this though, we see
that her qualities and up to date features will give added value and
wider opportunities in actual and future market conditions.
“For example, while a deep well pumping system may be
unusual on a bunker tanker, it offers us the possibility of varying the
tank capacities we allocate to different grades of bunker fuel. New
regulations on marine sulphur content are expected to see ships
bunkering with different grades of fuel at the same time to meet the
changing legal requirements as they pass from one emission zone to
another. This is a real challenge for operators of older, more traditional bunker tankers,” he added.
In addition to the two remaining vessels in the series Cicek’s
orderbook includes 58,000dwt and 25,000 dwt bulk carriers.
65
TRADE ANALYSIS
of vessels which could have an impact on other parts of the market.”
Mergers and cooperation in industry pools have become commonplace. Nordic Tankers completed the acquisition of various Clipper
Group chemical tanker segments on January 7th this year. The Nordic
Tankers fleet now includes nine chemical tankers, ranging in size from
5,000 to 13,000 dwt and it has responsibility for operating some 55
Clipper chemical and product tanker vessels of between 2,500 and
20,000 dwt. Nordic Tankers’ product tankers are still be marketed
through TORM’s LR1 pool and Maersk’s handytanker pool.
The Danish tanker company TORM had earlier bought half of OMI
in conjunction with Teekay.
Maersk joined the action towards the end of 2008, swallowing up
Swedish tanker operator Brostrom in a $565.2 billion deal. The move
by the Danish colossus came as demand for oil and refined products
including gasoline was showing signs of weakening but, according to
analysts, was based on the proviso that demand would turn around
within a couple of years.
At the time, Johannes Moller, an analyst with Danske Markets, said
Maersk’s acquisition had been triggered by a very weak market. "These
small tankers are making almost no profit right now. With this transaction, Maersk will be consolidating this market."
Maersk said its combined tanker fleet with Brostrom would rise to
from 147 vessels to 241 and that growth expectations for energy transportation, as well as plans to phase out the regulation of single-hull
tanker vessels by 2010, would be two drivers of the tanker market.
Meanwhile, three medium range product tankers purchased by
Norient Product Pool partner NORDEN for close to $80m are currently
being delivered from Turkish owner Dunya. The vessels are the 51,228
dwt Gan-Sabre, built in January 2008 and renamed Nord Sound, the
“Would you go into a room without oxygen? So why
is it that there have been 10 chief officer fatalities
in the last three years. Why are experienced people
dying in cargo tanks?” Axel Kahl
51,213 dwt Gan-Shield, a year older and renamed Nord Sea and the
Gan Spirit, a 51,202 dwt vessel built in October 2007 and renamed
Nord Spirit.
Norient Product Pool, registered and headquartered in Denmark, is
jointly owned by Interorient Navigation Company and NORDEN. With
offices in Singapore, the United States and Cyprus, Norient Product
Pool manages some 70 product tankersranging in size from from
25,000 to 75,000 dwt.
Turning to the crucial subject of vessel operation and crew
management, one speaker raised the issue of maintaining a safety
culture against a backdrop of a declining seaborne workforce and
concerns over crew competence.
“Would you go into a room without oxygen? So why is it that there
“Banks are stretching covenants and there is wider
interest in giving leeway rather than forcing fire
sales of vessels which could have an impact on
other parts of the market” Geir Olafsen
have been 10 chief officer fatalities in the last three years. Why are
experienced people dying in cargo tanks?” Deutsche Shell Chemie’s
Chemicals Manager Axel Kahl asked of delegates.
The fact that there had been 85 nitrogen incidents in the US alone
between 1992 and 2005 “should ring alarm bells”, said Mr Kahl. Health,
safety and environmental issues posed major challenges to the safe
operation of chemical tankers and crew competence was a core issue.
‘We face many crew challenges,” he said. “There is a lack of
exceptional, experienced people. Are we retaining crew and other staff?
Who will be there in 10 years’ time? What does onboard behaviour
mean? Do junior grades challenge senior people? Are you building your
skill pool for new ships and are we training personnel before sending
them onboard ship?”
Mr Kahl asked whether management reviews were robust enough.
“There are a lot on navigation – some 130 a year – but only 25 on
chemical tanker operations. Why are we not sharing best practice? We
see this in the oil industry but not in the chemical tanker industry.
“Are we protecting people? Obviously not, Mr Kahl declared in
answering his own question, insisting that the industry should go back
to basics when it came to keeping people alive and healthy. “Change
behaviour among crew and others – surveyors, terminal operators,
whosoever.
“Risk assessment must be carried out for important things but how
do you assess risk if the risk is not identified? What is good
seamanship?” he asked, pointing out that in former times it took seven
years to reach the status of master. “Now it’s one to one and a half years
or the person will leave.
“In addition, promotion has to take place in ordered fashion; it is
not appropriate for it to hapopen at the same time.”
Mr Kahl said he believed working parties aimed at tackling health
and safety issues and improving life onboard ship were needed in the
chemical industry. “Everyone is under commercial pressure. Lifesaving rules are nothing new but they need to be enforced. You can do
as much training as you like but without experience the training does
not meet 100% of your requirements.
“It is essential to seek guidance on toxic cargoes in order to give
crews the appropriate guidance. There is an expectation that everyone with
certification is properly qualified with the basic certificate. But if you have
200 different chemicals onboard, generic training is not covered.
“We have to look at the entire safety environment – not just the
crew, but pre-inspection processes too. The whole operational
procedure has to be taken into account,” Mr Kahl said. ■
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BUSINESS VIEWPOINT
SECURITY AND PIRACY
Somalia
attacks double
as piracy spirals
It is chilling to consider that the number of pirate attacks on merchant
vessels is rising steeply and, as surely as night follows day, will
continue to do so, and particularly in Somalia when the southwestern
monsoon season ends.
Despite the efforts of naval task forces, the International Maritime
Organization, government, the United Nations Security Council,
BIMCO, private security companies and regional initiatives including
the Djibouti Code of Conduct – the list goes on – the number of attacks
has reached levels not seen for almost a decade.
Latest figures from the International Maritime Bureau’s Piracy
Reporting Centre reveal there were 406 incidents of piracy and armed
robbery in 2009, the first time the 400 mark had been breached since
2003 and the third year in succession that the number of reported
incidents had increased with 239, 263 and 293 incidents reported in
2006, 2007 and 2008 respectively.
68
There were 406 incidents of piracy
and armed robbery in 2009, the first
time the 400 mark had been breached
since 2003 and the third year in
succession that the number of
reported incidents had increased with
239, 263 and 293 incidents reported
in 2006, 2007 and 2008 respectively
SECURITY AND PIRACY
BUSINESS VIEWPOINT
How does one deal with pirates?
“It is naïve to think Somalis will give up a vessel once a ransom has
been paid and a typical scenario is that the vessel will not be released
in under 60 days. It’s complete anarchy – everybody is related to or
working under the supervision of somebody else. Pirate committees
sit down and work out how much a company is worth and how much
can be extorted from it.
The sobering comments are those of veteran security specialist
Simon Fordham of BGN Risk Maritime Security Services who left
delegates to the Navigate Events conference in London in March no
doubt about the scale of their collective difficulties, exacerbated for
instance if female officers were onboard or if the vessel was carrying
dangerous or perishable cargoes.
Captain Chivers had remarked earlier that “if I was an 18-year old
Somali I’d probably be a pirate,” leaving Mr Fordham to hit the nail
firmly on the head. “$7m is the going rate for a laden chemical tanker
so where is all the money going?”
So what course of action should be taken? It was essential to establishing a dialogue with the pirates, said Mr Fordham. “This is criminal
extortion, not a business transaction, and common calculations need to
be put in train with regard to how long you will be in dialogue.
“Keep the dialogue going. For pirates, this may be their third or
fourth experience whereas it’s usually the first time for owners. All
crews are different, they are not military, they are multinational and
this gives pirates the edge. They prefer to deal with non-English crew
as few onboard speak English; they have no sympathy for sailors
when they compare those lives with their own ashore.
“How you play the game – your relationship with the pirates –
depends on how you will get out of it,” he said.
Delegates were also warned to be wary of the concept of ‘citadel’
protection or safe muster points. “Do not assume that a naval boarding
party will come onboard and relieve the crew,” said Captain Chivers.
“Do not go in, lock the doors and say ‘we will wait until the navy
arrives.’ These pirates now have a lot of money and can use it on all
sorts of devices to effect entry.”
BUSINESS VIEWPOINT
SECURITY AND PIRACY
Ransom judgment
clarifies grey area
The majority of incidents related to
the oil industry and fishing vessels
go unreported. Information from
external sources would suggest at
least a further 30 unreported attacks
occurred in Nigeria in 2009
And these are only the reported figures for, as is well known, many
attacks and details of ransoms paid go unreported. Which is why the
bureau continues to urge all masters and owners to report all incidents
of actual and attempted piracy and armed robbery to its centre,
insisting: “This is the first step in the response chain and vital in
ensuring that adequate resources are allocated by governments to deal
with the problem.”
According to the bureau, 153 vessels were boarded in 2009; 49
vessels were hijacked, there were 84 attempted attacks and 120 vessels
were fired upon – compared to 46 ships fired on in the previous year. A
total of 1,052 crew were taken hostage, 68 eight crew were injured and
eight crewmembers were killed.
Incidents attributed to Somali pirates totalled 217 with 47 vessels
hijacked and 867 crewmembers taken hostage compared with 2008 when
111 vessels were targeted by Somali pirates, resulting in 42 hijackings.
The statistics reveal a significant shift in the area of attacks off
Somalia. Whereas in 2008 attacks had predominantly focused on the
Gulf of Aden, 2009 saw more vessels also being targeted along the east
coast of Somalia. “Since October increased activity has been observed
in the Indian Ocean with 33 incidents reported, including 13 hijackings.
Thirteen of these last quarter incidents occurred east of the recommended east of 60° east – including four hijacked vessels. Many of
these attacks have occurred at distances of approximately 1000 nautical
miles off Mogadishu,” the bureau stated.
Piracy, of course, was and is not confined to Somalia. Twenty eight
incidents involving general cargo vessels, bulk carriers, reeferships and
all types of tankers were reported for Nigeria in 2009. Of these, 21
vessels were boarded, three vessels were fired on, one vessel was
hijacked and one crew member was reported killed.
“The majority of incidents related to the oil industry and fishing
vessels go unreported. Information from external sources would
suggest at least a further 30 unreported attacks occurred in Nigeria in
2009,” the bureau said.
The report recognised Indonesia for “tireless efforts in curbing piracy
and armed robbery” in its waters with 15 incidents in 2009 while only
two incidents were reported in the Malacca Straits – the same as in 2008.
70
One of the major problems resulting from acts of piracy is the cost
of getting vessels and cargo back, according to Alex Kemp of
Holman Fenwick Willan. The company, he told the conference, had
been involved with over 40 hijackings in the last two years and
nearly all hijackings resulted in a charterparty dispute.
“We are in dire need of commentary from the courts on this. We
suggest bespoke piracy and hijacking clauses be incorporated for
those regularly transiting high risk waters.”
Mr Kemp referred to the fact that the International Maritime
Organization and BIMCO had recommended against the use of
armed guards but insisted that in the absence of political will owners
were increasingly turning to private military companies. Arguments
against this included legal constraints, insurance considerations and
greater risk to crew.
“I can see insurers refusing claims if owners are not following
best practice. But it is difficult to ascertain if they had done so – you
cannot prove this one way or the other,” he said.
Delegates attention was also drawn to the legality or otherwise
of paying ransom money to pirates, as in the case of the Malaysian
tanker Bunga Melati Dua, which was hijacked in the Gulf of Aden
in August 2008. A crew member died during the attack. Some six
weeks later the owner paid a ransom believed to be around $2m and
the vessel was released with remaining crew and an intact cargo of
bio diesel. Despite having the cargo restored, the cargo owner
(Masefield) claimed indemnity from the cargo insurer (Amlin) for
the actual or alternatively constructive total loss of the cargo (ATL
and CTL respectively). Masefield AG v Amlin Corporate Member.
Ince &Co has reported recently on the case, noting that in the
Commercial Court, Mr Justice Steel had to consider the argument
put forward by the cargo owner that the likelihood that the vessel
would be released by payment of a ransom ought to be disregarded
because ransoms are contrary to English public policy.
“Although they conceded that payment of a ransom was not
illegal. Masefield argued it was contrary to public policy,” said Ince
& Co. “If so, the ability to recover property by making such an
improper payment was something the Court should not take into
account when considering whether a vessel or her cargo were
irretrievable. Irretrievability was a relevant consideration in proving
a CTL since, under s60 of the marine Insurance Act 1906, to be a
CTL a vessel must be reasonably abandoned onj one of two grounds,
The only relevant ground on this occasion was to show that her
actual loss appeared unavoidable.”
Mr Justice Steel offered three reasons why payment of a ransom
should not be considered contrary to public policy. The payment was
accepted by Masefield as not being illegal as a matter of English law.
Where legislative action had intervened to make such payments
illegal, for example the Ransom Act of 1782 (now repealed), the
courts should refrain from entering into the same field, And finally,
while taking into account that ransom payments encouraged further
piracy, no viable alternative had been identified to return crews or
seized vessels to safety. Diplomatic or military action could not
usually be relied on and could even put crews in greater jeopardy.
“The marine market has long been alive to legality doubts about
ransom payments, the known areas of concern being anti-terrorist
legislation, the Proceeds of Crime Act 2002, the impact of UN
sanctions and national legislation,” commented Ince & Co.
“Those issues remain but where they do not arise current practice
has been to treat a ransom as subject to General Average and, if large
enough, as triggering a claim on the hull and cargo policies. A finding
that the payment of these ransoms is somehow tainted would have
bad ramifications well outside this case. Concluding that payment of
a ransom is not contrary to English public policy removes one of then
uncertainties in this still difficult area”.
SECURITY AND PIRACY
The cost of providing naval
escorts, notably from the European
Union, to older and slower vessels
shipping supplies through the
World Food Programme is coming
under greater scrutiny
Thirteen incidents were reported in the South China Seas, the
highest level for five years.
Bangladesh had shown a slight increase in the number of attacks as
compared to 2008 with 17 vessels attacked. Most of the incidents had
occurred within the Chittagong anchorage.
Thirty seven incidents were reported from South America
compared to 14 in 2008. Twelve incidents occurred in the anchorage of
Callao in 2009 compared to five in the previous year. Other countries
affected were Brazil, Colombia, Costa Rica, Ecuador, Haiti and
Venezuela where the majority of attacks were on vessels berthed in port
or at anchor.
Somalia continues to dominate the headlines, having been responsible for more than half of the 2009 figures. According to the bureau,
the attacks continued to remain opportunistic in nature and while the
number of 2009 incidents had almost doubled, the number of successful
hijackings was proportionately less. “This can be directly attributed to
the increased presence and coordination of the international navies
along with heightened awareness and robust action by the masters in
transiting these waters,” it said, with Director Pottengal Mukundan. He
added: “The international navies play a critical role in the prevention of
piracy in Somalia and it is vital that they remain.”
BUSINESS VIEWPOINT
Paul
Chivers of the
Royal Navy told a
Navigate Events conference in
London in March that at least one third of Somali
attacks were successful, with pirates striking further
and further out to sea. Countering piracy was a global
issue said Captain Chivers, as political masters saw it as an
important when it came to negotiations between countries on all
types of matters. Military options rather than “political grandstanding” were essential. “But if everyone is so against piracy, why do
so few nations actually prosecute them?” he asked.
Captain Chivers insisted that attacks in the Gulf of Aden were now
at an “acceptable level” and that this was “as far as we will get” but
warned that the Somali Basin posed a different problem – ‘the tyranny
of distance’ – and the industry could not expect to be provided with the
same levels of protection.
“Piracy will not be solved at sea,” said Captain Chivers. Initiatives
such as the Djibouti Code offered better ways of providing security in
these waters.
The cost of providing naval escorts, notably from the European
Union, to older and slower vessels shipping supplies through the World
Food Programme is coming under greater scrutiny and initiatives such
as the Somaliland Coastguard Development Programme set up by
Simon Jones of Triton International in 2007 could become a key factor.
This “robust deterrent” rather than search for a cure is centred on
the port of Berbera where men are trained at a basic maritime college to
provide a private maritime escort service.
Offshore support vessels act as satellite ships in the Gulf of Aden
for smaller armed vessels that intervene with pirates attempting to
hijack merchant ships. ■
IRAN
DISPATCHES
DISPATCHES
SHIPPING
BUSINES S
REPORTS
FROM
AROUND
THE
WORLD
London lawyer
leads Iranian maritime initiative
By James Brewer
Financial and economic sanctions have
enormously complicated the trading picture
between the world and the important
maritime nation of Iran, but even if political
issues were solved tomorrow or had never
arisen, all concerned with the shipping
process would still need specialist know-how
to ensure their interests were protected.
Sanctions in any event dampen trade,
rather than stifle it. In contrast to the US, UK
and some other nations, Russia is wary of
supporting such restrictions, and China is
lukewarm, so Iran continues to export a huge
72
range of goods, from crude oil to saffron,
Persian carpets to pistachios, fruit to
chemicals. Imports of food, machinery and
manufactured goods proceed in quantity too.
“At Bandar Abbas and Bandar Khomeini
there is a lot of trade going on,” says one
source familiar with the region. Growth
levels of around 10% in non-oil exports are
reported by some sources.
This makes all the more timely an
initiative by Maryam Taher, managing
partner of London law firm M Taher & Co, to
step up services to maritime entities with
“They look at the ship
like any other asset –
there is no separate
legislation. In the
civil code, a marine
asset is considered like
any normal asset”
IRAN
DISPATCHES
Maryam Taher
“There is a huge
advantage in having
people in the region
whom we trust and
respect, and they
trust and respect us”
business activity involving Iran. Ms Taher
specialises in all aspects of shipping,
aviation,
transport,
insurance
and
International trade and energy. The firm
however has built up expertise in other areas
including asset finance, acquisition, company
and commercial and banking matters.
She has formed helpful relationships
with local law firms. Ms Taher says there is
enormous value in having the good will of
such local experts as this gives her firm the
regional presence it has been seeking. “We
originally had planned to have our own law
firm in Tehran. But having experienced the
quality of these people over time, we decided
that it would be far more useful to work in
conjunction with them than going it alone,”
explained Ms Taher.
“We already have best friend relationships with other professionals in Iran such as
master mariners, agents, surveyors, and
engineers. This is in addition to having a
London trained Country Representative, who
is permanently positioned in Tehran, being
our eyes and ears in that market.”
She added: “There is a huge advantage in
having people in the region whom we trust
and respect, and they trust and respect us. In
a recent arrest case in Iran, the person we
appointed to assist us in the matter offered to
put up the substantial security required by the
court in order to expedite matters rather than
relying on time consuming bank transfer
from another jurisdiction. This shows how
important it is to get issues expedited by
people who know and trust you.”
Sanctions at the time of writing have
been directed at IRSL and Bank Mellat, and
have impacted the insurance market, but it
seems that lawyers and other professionals
are legally able to continue advising them and
their counterparties.
The sanctions provisions impinge on
some proceedings, but that is just one part of
the overall picture. “We know that there are
so many Iran related cases waiting to be dealt
with,” says Ms Taher.
This means that ship owners, charterers,
P & I clubs, insurers, brokers, recovery
agents and freight forwarders all need advice
and sometimes assistance to steer them
through potentially choppy waters.
There is obviously scope for many
misunderstandings over interpretation of
charter parties and insurance clauses, and
potential for allegations of breach of contract,
partly because people may be unfamiliar with
the legal system in Iran. In fact, it is clear that
there is an urgent need for a greater degree of
mutual appreciation of the procedures in
London and Tehran.
Born in Iran and speaking Farsi, and able
to travel to Iran at any time without visa
restrictions, Ms Taher is well placed to facilitate resolution of both tricky and basic
issues. Her preference is to resolve disputes
through negotiation and alternative dispute
resolution methods such as mediation. In any
event, it is important to have knowledge
about the court system and its practice, and of
useful precedents.
73
DISPATCHES
IRAN
The international political situation,
which has led to strained relations at high
level, is one element that has to be taken on
board. On top of rising political tension, the
banking squeeze has put up the cost of funds,
with often a very high premium for any transaction involving Iran to cover perceived risk.
Securing extra finance has been quite difficult.
On the positive side, Iranian business people
have a reputation for straight dealing.
“We have been
involved since last
summer in arrest of
bunkers, and in a
long-running piracy
case in which a ship is
carrying cargo to Iran”
The fraught atmosphere has caused
practical difficulties for IRISL, with mutuals
within the International Group of P&I Clubs
declining P&I cover, in the light of Bermuda
(where some of the clubs and their reinsurers
are registered) aligning itself with the US and
the UK in banning trade transactions with the
Iranian company. Some time ago the
company was reported to have renamed many
IRISL comes under the spotlight
HM Treasury passed the Financial
Restrictions (Iran) Order 2009 no 2725
(Prevention of Nuclear Proliferation
Terrorist Financing and Money Laundering)
which came into force on October 12, 2009.
It directs that "relevant persons" must not
enter into, or continue to participate in, any
transaction or business relationship with
Bank Mellat and Islamic Republic of Iran
Shipping Lines.This includes all branches of
Bank Mellat and IRISL, wherever they are
located. Subsidiaries and joint ventures of
Bank Mellat and IRISL and any company
under the ownership or control of these two
entities are not subject to the requirements.
A court may impose a prison term of up
to two years and/or a fine for noncompliance. Those who need to be
involved in transactions and business
relationships with Bank Mellat or IRISL
have to obtain a licence from the Treasury.
"Relevant persons" are defined as credit and
financial institutions in the UK. This means
banks, insurance companies, insurance
brokers in respect of long term insurance,
and providers of investment services and
branches located in the European Economic
Area. Excluded from the directive are
branches located outside the EEA;
subsidiaries not operating in the UK;
financial and credit institutions not
operating in the UK; and subsidiaries
operating in the UK that are not financial or
credit institutions.
Some Iranian shipping companies,
including IRISL, have been named by the
US Treasury Office of Foreign Assets
Control in a prohibition of dealings by US
persons, including provision of insurance
services. Congress has been working on
proposals for sanctions on the export of
refined petroleum products to Iran. This
could cover domestic and foreign entities
that provide ships, insurance or reinsurance
in that trade. In a recent circular, Standard
P&I Club interprets these to include
owners, charterers, managers, crew, and a
P&I club and its reinsurers.
The International Group of P&I Clubs
has not been advised of any further intended
action by the UK government in relation to
insurance arrangements for other Iranian
companies or in relation to trading to Iran, but
says that in the US this cannot be ruled out.
So far, the sanctions are interpreted as
not applying to law firms.
IRAN
Given the deep
gap between laws
and regulations in
Iran and the rest of the
world, foreign insurers
are more interested
in reinsurance
of its vessels and switched them out of the
national flag.
Repercussions are beginning to be felt
throughout the maritime community. The
International Group of P&I Clubs is
monitoring closely the push in Washington
for sanctions. Alistair Groom, chief executive
of Standard P&I Club, has for instance told
members of a proposal to amend that club’s
rules in the light of the likelihood of new
legislation, particularly from the US, tightening sanctions.
Ms Taher, who qualified at Clyde & Co
and worked for other firms before setting up
independently six years ago, is used to large
and complex cases. These have included the
Cita, a container feedership which sank in the
Isles of Scilly giving rise to major claims by
cargo interests worldwide; a major product
liability matter involving more than $100m;
and collisions, arrests and defence matters,
including cases related to piracy incidents.
In Iran, the legal system has a civil law
background , and hence is totally different
from the English common law system. It is a
very old system, and as it is very strict over
authentication of documents, commencing
any proceedings is a very time consuming
affair. Courts accept only original or certified
documents, which then have to be translated
by official translators who are only allowed to
work from originals. “Time therefore is of
the essence when you are trying to arrest a
vessel,” says Ms Taher.
The Iranian Maritime Code itself dates
back to 1964; directives have been promised
on various aspects of it, but have not yet
materialised. Another point to note is that
Iran is not a signatory to any of the Arrest
Conventions. “This shows how important it
is to get matters expedited by people who
know and trust you,” says Ms Taher.
Getting the security back can also be
very difficult, but fundamentally, satisfying
security works as in other jurisdictions, she
explains. Much relies on the judge’s
discretion, and “research indicates that the
treatment is fair and working very well.” An
applicant has to use local legislation for the
arrest of a vessel. “They look at the ship like
any other asset – there is no separate legislation. In the civil code, a marine asset is
considered like any normal asset.”
Her recent cases have involved some of
DISPATCHES
the everyday concerns of the shipping sector
worldwide. “We have been involved since
last summer in arrest of bunkers, and in a
long-running piracy case in which a ship is
carrying cargo to Iran.”
An announcement just a short while ago
illustrates how vital it is for the business
sector to keep up to the minute with developments in Iran. The authorities said that
foreign companies would soon be allowed to
participate in Iran's insurance industry, which
would entail easing of present regulations
prohibiting such participation. This is seen as
an essential step to making the insurance
industry in Iran more competitive, and
bringing it into line with the wider modern
insurance world. The proposals put forward
still require full government approval. At
present, given the deep gap which exists
between laws and regulations in Iran and the
rest of the world, foreign insurers are more
interested in reinsurance than direct insurance.
For several years, Ms Taher has been
researching in depth the legal systems of the
Middle East, including Iran. “Expansion is
definitely going to be on the basis of client
demand,” she says. “We are not going to
expand for the sake of it. You can see that
people need expertise on ship finance,
mergers and acquisitions, banking and
insurance, and we have been working on this.
Our strength is not just legal expertise, we
have diplomatic connections, and access to
experts in London and abroad, giving the
capability to assist the clients fully.” ■
75
SHIPMANAGEMENT
MyView
Greece:
Euro crisis.
Petropoulos
strikes a
defiant note
Lurid headlines and reams of column inches, the threat of national
bankruptcy, allegations of secret deals with Goldman Sachs masking the true
nature of the financial crisis, reports of European Union demands that Greece
disclose the nature of complex financial deals used to conceal the size of its
public debt, fevered speculation as to German and French intentions, the
future of the euro, claims of endemic bribery and tax evasion, strikes and civil
disorder, have all served to focus the eyes of the world on the struggling
country and on beleaguered Prime Minister George Papandreou.
Mr Papandreou has been propelled forcibly to the front of the international stage as the crisis has deepened, and has sought to rally support
with clarion calls to “fight to save the fatherland from whatever the
nightmare possibility of bankruptcy might entail”.
Given such brutal reality, one could be forgiven for suggesting that
the actions of shipowners are far from the top of the collective worry list
for many of the country’s 11 million inhabitants, most of who live in or
around Athens. The man on the Glyfada omnibus may well rail at
suggestions that owners have enjoyed an easy tax ride while contributing
little to the exchequer and that billions of dollars have been squirreled
out of the nation’s banks, but the talk generally is of impending austerity
measures and the damage being wrought on the fabric of Greek society.
Suggestions that the economic turmoil could have a massive impact on
Greek shipping or on global shipping “are wide of the mark”, according to
the internationally-respected consultant Ted Petropoulos, Managing
Director of Athens-headquartered Petrofin.
“Shipping is an international business and not Greek in the sense
that it has very little to do with Greece apart from the ferry business,”
he told SMI. “It is regarded by the international business community as
an international business, and all bankers treat lending to shipping as
international and it is treated as an international risk.
“The maritime industry is not tied down by boundaries; there is no
national link as was the case a century ago. The only link is the fact that
there are around 750 shipowning and shipmanagement companies here
and with the focus of the maritime industries increasingly moving from
west to east, pushing the centre of gravity to Singapore and Hong Kong,
so Greek owners can locate cash anywhere and equally relocate at any
moment,” he said.
Mr Petropoulos maintained that Greece’s problems were “nowhere
near as severe“ as they had been made out to be in the international
press, insisting instead that the Greek maritime industry was in fact
quite well insulated from the nation’s economic woes. “The community
does not feel any threat, more sadness and concern, concern that the
political system has developed an economy that is inefficient,” he said.
“The inefficiency and cost and low productivity of the public sector
is a burden to the private sector which is reacting to well-known international problems related to globilisation by voting with its feet, closing
businesses and relocating to cheaper cost base European Union
countries such as Bulgaria and Serbia. The solution is to work harder
and spend less, to cut the cost of government and the public sector and
provide incentives for Greek and private enterprises to create new jobs.
It would also involve taxing those using tax loopholes,” he added.
Mr Petropoulos quoted a poll showing that some 75% of Greeks
believed there had to be tough, drastic and immediate measures. The
government, he said, had a clear mandate to act. What was needed was
a five-year plan outlining goals and measurements rather than knee-jerk
reaction and plans that had not been well thought through.
“Fear is the biggest factor so one has to be told what’s coming.
Greece has a unique opportunity to get its act together,” he said.
Some 25% of the country’s ship finance derives from Greek banks
headed by the leading quartet Alpha Bank, National Bank of Greece, Piraeus
Bank and EFG Eurobank, and the crisis has raised concerns that the rising
cost of new loans might force owners to look elsewhere for new loans.
Mr Petropoulos conceded that this might be the case over the next
quarter but said he had no doubts whatsoever about the inherent
strength of the national banking model. “The Greek banking system is
one of the last traditional systems in Europe,” he said. “While others are
involved in all types of other business and are knee-deep in liability
management, the Greek system is purely commercial - deposit and fund
loans. Liquidity ratios are healthy.”
With German banking liability to the Greek market estimated at
around $46 billion and French liability almost double the figure at
around $73bn “we cannot afford to see this become a European or international problem. There must be a positive rather than negative
response, because if this is not addressed it will lead to spiralling
recession and this must be avoided.
“Greek shipping is very strong, very liquid and has modern assets and any
banking problems do not affect existing loans,” Mr Petropoulos insisted. ■
77
AdHoc
AdHoc
Castrol Marine on the ball
Lothar Matthäus, Bryan Robson and Terry Venables have at least one
thing in common as the football world gears up for this year’s World
Cup extravaganza in South Africa.
It’s not for having won the highest honours in the game, for only
Matthäus (right), the legendary Germany and Bayern Munich captain –
and world’s most capped international – can lay claim to having
actually won the tournament. He did play in a record five series, though.
Robson, aka ‘Captain Marvel’, played in three World Cups without
success while ‘El Tel’ Venables, capped only twice, is remembered as
coach to the England team in 2006 when a nation’s hopes were dashed
by yes, Germany, in the semi final at Wembley. Intriguingly Matthäus
had been left out of the winning squad after bickering with coach Berti
Vogts and captain Jürgen Klinsmann.
It’s not for management, even though the English duo managed in
harness at Middlesbrough. Nor is it for singing - though Venables, who
once warbled with the Joe Loss Orchestra, would win hands-down.
The answer is to be found in matters maritime. Castrol Marine is
sponsoring a number of key industry trade shows and conferences as part
of its World Cup-related business campaign and has selected the footballing
ambassadors for question and answer sessions at each gathering.
+
+
[email protected]
78
Venables was due up the corporate tunnel at the annual Marine
Propulsion Conference in London in early March when Castrol took the
mantle of title sponsor and Robson followed at China Maritime in Hong
Kong on March 16 when Castrol was in the limelight as lead sponsor
for the official cocktail reception.
Matthäus, meanwhile, was due to take questions in Hamburg on
April 28 when Castrol was title sponsor for the Motorship Propulsion
& Emissions conference. Just what the gathering in a traditionally
partisan norther football stronghold would make of the celebrated
Bavarian remains to be seen. The introduction alone would be worth
hearing given Bayern Munich’s current close links with Hamburg’s
second team, FC St Pauli - though older readers will recall that ‘Kaiser’
Franz Beckenbauer played briefly for SV Hamburg after his illustrious
career with the Bavarian giants and in New York with the Cosmos.
The company is no doubts about reaching customers through the
connection between business and football. “Castrol Marine values high
product performance, efficiency and in-depth analysis of lubricant
performance, in order to develop increasingly effective products,”
declared said Paul Lowther, global marketing communications manager
for marine lubricants.
“Similarly, success in football hinges on winning performances,
maximum proficiency and detailed player analysis after a match to
identify any weaknesses to be worked on and improved.”
Football news updates, competitions and the fantasy football-based
game, Performance Manager, can all be accessed via
www.castrol.com/marine. ■
A combination of China’s insatiable appetite for raw materials and
the growing and significant delays to deliveries of new ships by
shipbuilders could be enough to save the dry bulk freight market
from imploding, analysts, traders and ship brokers told the
Connecticut Maritime Association’s Shipping 2010 conference in
Stamford, Connecticut, in March,
Delegates heard that a large percentage of the existing global,
dry bulk orderbook might not be delivered or could face delays of
up to three years while China’s insatiable appetite for iron ore seems
unsatisfied and this year could help push global seaborne iron ore
trade above one billion tonnes for the first time.
According to Georgi Slavov, head of dry freight and basic
research resources at shipbroker ICAP Shipping, approximately
33% of the world orderbook in dry bulk carriers had been placed in
what he called “high-risk yards”. These were new, privately-owned
shipyards, primarily in China, with little or no experience in
building ships. There was a very real risk of these ships either “not
being delivered, or delivered with very significant delays”, he said,
adding that these delays could be as much as three years.
In contrast, delays in South Korea and Japan were minimal. But the
significant delays in delivering new ships by the high-risk yards could
give enough time for demand to catch up with the supply of new ships.
Mr Slavin said that in the handymax market, up to 40% of the
orders had been placed in high-risk yards.
Cancellations were difficult to quantify, Mr Slavin said, adding
that only around 14% of the existing dry bulk orderbook had been
cancelled over the last year. While cancellations were likely to grow,
these would “not be enough to save the market”.
Another factor that could reduce the threat of new orders is that
options were typically included in the tally of new ship orders, even
though there was no guarantee that the options would ever be exercised.
On a smaller scale, Mr Slavin said that he was aware of two
shipbuilders, which he declined to identify, who had gone to their
banks seeking loans and reporting “fake orders” in order to
strengthen the argument for banks to lend the yards money.
On the demand side, global seaborne iron trade was likely to
reach 1.07 billion mt this year, up from 912 million tonnes in 2009,
Justine Fisher, metals/mining and transportation analyst for
Goldman Sachs said. Global seaborne trade for iron ore was
expected to climb to 1.08 billion tones in 2011 and 1.14 billion tones
in 2012, according to GS forecasts.
She attributed this increase to China and noted that Chinese
crude steel production this year was expected to rise to 627 million
tonnes in 2010 from 570 million tonnes in 2009 and would rise to
696 million tonnes in 2011.
GS is forecasting global, seaborne trade in thermal coal at 657
million mt in 2010, rising to 680 million mt in 2011.
Ms Fisher predicted that capesize average earnings would
remain between $30,000 and $40,000/day throughout 2010.
Peter Sandler, director of ocean freight strategy and business
development at Louis Dreyfus Commodities, said that China had
turned into a net coal importer from being a net exporter in 2001.
This meant that most of South Africa’s thermal coal exports now
went to Asia, instead of northern Europe, adding to tonne/miles
demand for capesize ships.
Ms Fisher observed that China had gone further afield for its
metallurgical coal. “China has had met coal moving from the east
coast of the US to China,” she said, adding all of which pointed to
increased tonne miles demand for the dry bulk fleet.
GS is forecasting global seaborne trade in metallurgicl coal to
rise to 151 million mt in 2010 from 137 million in 2009 and 168
million mt in 2010.
Despite the rosy outlook on the cargo demand side, Mr Sandler
said that freight rates could not escape the effect of the volume of
new ships due to enter the market over the next year, but he said the
downturn was likely to be short-lived.
On the tanker side, the pressure to scrap single-hull VLCCs,
which have to be phased out by the end of this year, is high. Bart
Lawrence, a demolition broker at Compass Maritime, said that, so
far, nine VLCCs had been scrapped, “and the first quarter isn’t even
over yet. That’s nearly the same as the 10 that were scrapped in the
whole of last year.” This would not be enough to offset the pace of
new deliveries.
He estimated that there was one VLCC likely to be delivered
every five days for the next 18 months, but he predicted that there
were another 90 VLCCs “headed” for the breakers’ yards.
On the smaller tanker sizes, several single-hull ships were
likely to be converted into storage units and cease trading, to satisfy
the phase-out regulations. “That’s not an option for VLCCs, where
the conversions are happening on ships that are not more than 10
years old and are double hulls,” he said. ■
China reliant on oil shipments
China is likely to remain dependent on crude oil imports for the
foreseeable future as its own production has reached a plateau of around
4 million barrels/day, roughly half of its needs, Ray Bartoszek, Managing
Director of oil at Swiss commodities trading major Glencore has claimed.
Speaking at the Connecticut Maritime Association’s Shipping 2010
conference at the end of March, he said that China had overtaken the US
as the world’s largest car market, boosting demand for gasoline.
China has invested in its refinery infrastructure and Bartoszek
said that China would need to import 4.19 million bpd of crude this
year to feed its refineries. So successful has that investment been,
China has become a net exporter of light-end petroleum products in
the last two years, mostly to neighbouring countries, Bartoszek said.
China’s crude oil appetite had resulted in a permanent shift in
seaborne crude oil trade patterns, with West Africa eastbound on
VLCCs and Suezmaxes now becoming a fronthaul route, as opposed
to a backhaul. “The trade volume on the route has doubled in the last
two years,” he said. Saudi Arabia remains China’s biggest supplier of
crude oil, followed by Angola, Baroszek added. ■
79
Nothing sheepish about
the ‘Mofflons’ as Cyprus
rugby steps up to a new
international level
Excellent news for the plucky ‘Mofflons’, otherwise known as the
Cyprus national rugby union team, which secured the FIRA-AER 3D
championship with a 15-0 victory over closest rivals Bosnia and
Herzegovina at the Paphiako Stadium in Paphos on March 27th.
The ‘Mofflons’, whose nickname derives from a kind of horned
sheep, had been told by Loukis Pattihis, President of the Cyprus Rugby
Federation that this was the most important game yet in Cyprus’ brief
foray into the echelons of international rugby. The losers, he had
warned, would be “condemned” to another two years in the bottom tier
of European rugby.
SMI hears, too, that the margin of victory could have been greater
but for an off-day on the kicking front.
Cyprus will now be pitted against the likes of Luxembourg,
Bulgaria and Israel, but not Greece, which appears destined for higher
things in Division 3B.
Greece was, in fact, the first team Cyprus faced in its debut match
in March 2007, when the men from the island pulled off a sensational
39-3 victory in front of 2,500 delirious fans in Paphos.
But hopes of a rapid ascent to the higher leagues were dashed in
September 2008 when Cyprus lost 14-23 to Israel in the play-off for
promotion to 3C.
Cyprus’ recent form has been hugely impressive. Last month the
team thrashed Azerbaijan by 59 points to nil, after ending the 2009
calendar year with an impressive 44-5 away victory in Monaco.
Safely does it
Deep sea pilotage in the Dover Strait has always been about vessel
safety even though one of its leading providers can trace its history
back to the post-war mine clearing days.
George Hammond plc has been supplying a deep sea pilotage
service in the Straits of Dover for over 60 years and business appears
to be holding up despite the onslaught of the world’s worst recession to
hit global shipping.
According to James Ryeland, company Managing Director, the
service was incepted in 1947 after “my father got some guys together
who knew they way around the mine fields” But as he admits, all the
arguments are still there for employing quality pilots who can resolve
owners’ safety, language and crew fatigue worries.
Yes, it is true that tanker movements may have reduced in the area
and that pilotage services are reliant on the trade – a worry if you
consider the fall in car carrier numbers – but with a pool of 20 experienced pilots to call on, George Hammond is confident “first class”
owners will see the safety benefits in bolstering its pilotage needs in
this busy sea lane.
Germanisher Lloyd software lifts AIDA blues
German class society Germanischer Lloyd has installed its GL
ShipManager suite on AIDA Cruises's newest cruiseship, the 68,500 tons
gross AIDAblu, to cover planned maintenance, purchasing, stock control,
voyage, port clearance, incident, quality and safety management.
Work on installing the software was undertaken while the $420m
vessel was nearing completion at the Meyer Werft shipyard in
Papenburg, ahead of its 11-day maiden voyage from Hamburg to
Palma, Majorca, which started on February 9. Vessel-specific
equipment, machinery, spare parts and maintenance job data were put
into the database before installation.
AIDA Cruises, Germany’s leading cruise ship company and a
subsidiary of global leader Carnival Corporation, now has GL
Maritime Software in its office and on its seven-strong fleet, the
AIDAcara, AIDAvita, AIDAaura, AIDAdiva, AIDAbella, AIDAluna
and AIDAblu.
"The capability and ease of use of GL Maritime Software,
especially its purchasing, order and delivery management, and
maintenance planning functions, are traditional strengths of our
system that has long been commended by shipping companies of all
sectors," said Torsten Büssow, head of GL Maritime Software.
Germanischer Lloyd markets the software at shipping companies
aiming to improve productivity and transparency in fleet management,
pinpoint additional cost saving potential, improve operational and
strategic decision-making, reduce the risk of unwanted surprises and
lessen the chance of disputes over compliance issues.
The key packages are GL ShipManager, which supports key
processes including planned maintenance, purchasing, stock control,
voyage management, port clearance, incident management, and
quality and safety management.
GL FleetAnalyzer comprises reporting, analyzing and decision
support software that extracts data from operational systems. Users
can monitor key processes, compare costs and performance of sister
vessels, check fleet budget status and analyse cost trends.
GL HullManager has been developed to facilitate the entire hull
integrity process including inspection, reporting and assessment of the
condition of tanks, cargo holds and coatings. The software ensures
charterers are aware that the vessel is being maintained properly.
A fourth element, GL CrewManager, supports functions ranging from
crew recruitment to crew scheduling, crew data to licences and certificate
management and crew history to work flow and task management.
In addition to these management tools the society has made
available solutions for navigational and operations decision support
for cutting fuel consumption, enhancing schedule integrity and
avoiding delays, increasing ship safety and reducing the risk of
damage in severe weather and evaluating the vessel’s lifecycle
performance by monitoring hull stress.
The key components are GL SeaScout, which informs ship’s
officers about circumstances around the ship and what lies ahead, and
ECO-Assistant, which points crew towards the most efficient
operating conditions with the aim of achieving instant fuel saving
without modifications to the vessel.
A 24/7 helpdesk in German and English with the society’s
software experts and no third party provider is available. ■
Garrets implements free range egg policy
Garrets International Limited, the London-based marine contract
catering company, is introducing a free range egg policy onboard the
fleets it manages to take account of changing public attitudes and
pre-empting EU rules set to come into force in 2012.
Barry Samms of Garrets’ purchasing dept, who is overseeing this
project, explained: “We supply more than 7.5 million eggs worldwide
each year and we want all of these to be free range well ahead of the
EU changes regarding chicken farming in 2012. We are introducing
this new policy in the UK, Belgium, Holland and Germany and are
finding our clients are welcoming the opportunity to purchase more
ethically-produced eggs at our competitive prices. We plan to extend
our free-range policy to customers throughout the world as soon as
the right resources become more widely accessible.”
“By supplying free range eggs our seafarers are able to enjoy a high
quality product which we offer with the knowledge that it also helps to
support more ethical food production practices,” he explained. ■
Beware Iceberg lettuces
Ad Hoc had to check it wasn’t April 1st when it came across this
little gem in a UK Sunday newspaper, but it appears that a British
gardener is planning to set sail for the Isle of Man in a giant
pumpkin. According to the Sunday Times, 67 year old Medwyn
Williams is growing a 1,600 lb pumpkin especially for the journey
and will fit it with a seat and an outboard motor for the journey from
his home in Anglesey in North Wales.
“I am totally confident this can be done,” said Medwyn, who is
Chairman of the National Vegetable Society. “We shall call her
HMV Cinderella – Her Majesty’s Vegetable. I have done tests with
smaller pumpkins and might just make it to the Isle of Man.” ■
81
DISPATCHES
NIGERIA
Owners struggle to
raise nation’s image
By Amy Kilpin
Swiftly dismissed as a nation with a proliferating piracy network, rooted in political
unrest and economic instability, Nigeria is
hardly at the forefront of the international
maritime community. Yet despite the
manifestation of its tarnished disrepute, there
is an ongoing struggle to raise the country’s
shipping profile.
The fifth most populous country in the
world, Nigeria is listed among the ‘Next
Eleven’ economies, identified by Goldman
Sachs investment bank as having a high
potential of becoming the world’s largest
economies in the 21st century, and the
country saw an annual GDP growth rate of
5.3% in 2008, an estimated 2.9% in 2009, and
is projected growth of 5% for 2010.
In spite of this, Nigeria is still inherently
poverty-stricken. As part of a wider effort to
bolster its economic foundations, The World
Bank, as of September 2009, has approved
over
130
International
Bank
for
Reconstruction and Development loans and
International Development Association
credits to Nigeria for a total amount of more
than $10.5 billion, in an attempt to alleviate
some of the foreign debt pressure it is
constrained by.
82
Relying heavily on the petroleum
industry, which accounts for 40% of its GDP
and 80% of government earnings, Nigeria is
the twelfth largest producer of petroleum in
the world, and the 8th largest exporter.
However, agitation in the oil-producing Niger
Delta region, where both state and civilian
forces employ varying methods of coercion
in attempts to gain control over regional
petroleum resources, has prevented it from
full trading capacity.
Rising piracy incidents in the Niger Delta
have also had a detrimental impact on
Nigeria’s maritime trade, not only as the high
risk threats have delayed offshore oil projects,
accounting for a reduction in exports, but
primarily because the International Maritime
Bureau ranked Nigeria as only second to
Somalia in the incidence of piracy at sea,
rendering it decidedly expensive for ships to
sail in the region.
According to Emmanuel Iheanacho,
Managing Director of Nigeria’s Genesis
Worldwide Shipping, the notoriety of the
country creates major problems for owners.
This notion was demonstrated when the
company was to take delivery of a ship in
Gibraltar and found it was forced to pay
extortionate costs to secure the services of the
European crew used to sail the ship into
Nigeria, due to the country being regarded as
a high-risk area and a resulting premium
applied on crew wages.
“The consequence was that we were
blacklisted and that we continue to pay huge
amounts of money to get a service which
could have cost us a fraction of what we paid
at that time,” he said.
Ship owners have also argued that the
IMB report on Nigeria may not entirely be
correct, primarily because the incidents on
Nigerian waters are cases of armed robbery
and cannot be classified as pirate attacks, in
comparison to the cases recorded in Somalia,
whereby pirates hijack ships with sophisticated weapons and demand for ransoms
running into several millions of dollars.
“These reports give us a very bad name and
make life very difficult for Nigerian ship
owners,” Mr Iheanacho said.
For ship owners in Nigeria, the infamy
that falls upon the country has been irrevocably damaging, incurring premium costs for
operators and an adverse flag reputation. This
is despite the Nigerian Cabotage Act, enacted
in 2004 to stimulate the development of
NIGERIA
indigenous capacity in the Nigerian maritime
industry, and which requires vessels to be
built in Nigeria, to be registered in Nigeria ,
and wholly owned and manned by Nigerians,
if they are to operate in the country’s coastal
and inland waters.
The Cabotage Law provides for
Cabotage Vessel Financing Fund which is
designed to be disbursed through designated
banks known as primary lending institutions,
however, stakeholders have posited that in
order to realise the good intentions of the
government for the maritime industry, huge
capital is required to be deployed in the
various component areas such as shipping,
ship building, and port construction, among
others.
In fact, the protectionist policy has been
grossly under implemented, and unlike
cabotage law in most other maritime
countries of the world, Nigeria’s cabotage
provides for waivers. Indigenous operators
are of the view that the waiver clause makes
the implementation difficult, inefficient and
faulty. The Cabotage Law has not lived up to
expectation in its implementation as
Nigerians have only 20% share of the market
value, and this negates the primary intent of
the policy that seeks to enable indigenous
operators to net a substantial portion of the
$3bn worth annual market.
While the development of privatisation of
its terminals has engendered healthy competition in the ports, Nigerians have a negligible
productive share of shipping operations,
despite governmental efforts over recent years
to drive its maritime economy forward. It is
estimated that up to 80% of the maritime
business is undertaken by foreigners with the
attendant loss of foreign exchange earning,
loss of employment opportunities as well as
implied threat to national security.
Positive steps have, nevertheless, been
taken by the country, and the Nigerian Maritime
Administration and Safety Agency is looking to
sign a memorandum of understanding with the
Indigenous Ship-owners Association of Nigeria
and the Shipping Association of Nigeria to
collectively monitor the nation’s seas to curb the
activities of non-Cabotage compliant vessels.
The Nigerian maritime community is
keeping up the good work, and at the end of
2009, Nigeria was re-elected as a Council
member of the International Maritime
Organization in category ‘C’ at the annual
general election. The Nigerian delegation was
led by the Honourable Minister of Transport,
Ibrahim Isa Bio, who described Nigeria’s
victory as well deserved and as a sign of
greater good things to come for the country.
“These reports give
us a very bad name
and make life very
difficult for Nigerian
ship owners”
Emannuel Iheanacho
In the wider effort to improve its
shipping economy, SAN, the Shipping
Association of Nigeria, also recently
announced that it will transfer its member’s
vessels to the Nigerian Ship Registry. The
Association’s President, Emeka Ndu, said
during a visit to the management of the
NIMASA in Lagos: “We are happy about
achievements of NIMASA in the past eight
months and this has served as an incentive for
us to desire to be 100% compliant with
Cabotage requirements. As a result of the
positive flow from NIMASA, we have
decided to transfer all our vessels unto the
Nigerian Ship Registry.”
Speaking in the same vein, DirectorGeneral of NIMASA, Raymond Omatseye,
said that the decision of the Association to
transfer all its member’s vessels to the
Nigerian Ship Registry was a welcome development, and revealed that the agency was set
to disburse the Cabotage Vessel Financing
Fund so as to ensure that the indigenous
operators compete favourably with their
foreign counterparts.
“Though the maritime industry is
matured, it’s still in the infancy stage for
DISPATCHES
Nigerians, but it’s time for Nigerians to take
over the business in the nation’s maritime
sector. The issue of the Cabotage Vessel
Financing Fund is key to our heart. As much
as we are ready to disburse this Fund,
NIMASA is also committed to ensure
business for our indigenous operators, this is
why we want our ship registry to be first
class,” he said.
Following this move, Nigeria is now
targeting a yearly addition of 700 vessels from
2011 on its ship register after the migration
from closed registry to hybrid registry by
NIMASA. The closed registry had restricted
the number of vessels flying Nigeria’s flag to
less than 30 ships, but in this optimistic step
forward, the conditions for registration under
the hybrid platform will be liberalised.
In addition to becoming a viable revenue
earner for the federal government, it is hoped
that the move will renew interest of the international oil companies on Nigerian flagged
vessels for offshore support contract considerations. The new registry will also reverse
the trend whereby Nigerian flagged vessels
are targeted at foreign ports under port state
control. Mr. Omatseye, said that due to the
change, annual tonnage growth of 500,000
will be achieved from 2012.
Another of the country’s target areas is to
address the Nigerian maritime industry’s huge
manpower challenges, especially in critical
areas requiring specialised knowledge. To
overcome the challenges in light of a
projected increase in shipping activity in the
country, the various associations and authorities have called for concerted efforts to
evolve a strategy for the training of personnel
in all facets of the industry.
Conspicuous for the wrong reasons, it
seems as though Nigeria is raising the bar on
standards and focusing on gaining the respect
it deserves as a growing maritime institution.
Despite being steeped in a financial quagmire
and on shaky political ground, the nation is
sitting on a goldmine that, due to these factors,
it has not been able to benefit from, but with
new governmental drivers and collective
maritime efforts being voiced with determination, Nigeria may just become a shipping
hotspot. ■
83
NEWBUILDING
NEWBUILDCONTRACTS
THE BEAT GOES ON,
AS DOES THE
INDUSTRIAL DRIFT
By David Tinsley
With Korean and Chinese yards having
achieved new contractual milestones in the
higher added-value sectors of the business, in
addition to securing much of the work arising
from revived demand in the more populous
categories of merchant shipping, the industrial
shift to the orient appears unabated. Where the
remaining European bastions of major,
commercial shipbuilding activity continue to
demonstrate resilience is in the field of
cruiseship
construction.
The
recent
announcement that a letter of intent for a 1,750cabin newbuild had been signed by STX
France with MSC Cruises followed
Fincantieri's memorandum of agreement with
Carnival covering two 1,800-cabin vessels for
the group's Princess brand.
As the only remaining major shipyard in
France, the future of the STX complex at St
Nazaire, previously part of Aker Yards of
Norway and still widely identified with its
former name Chantiers de l'Atlantique, has
attracted political interest at the highest level.
The French government's wish to see the
business survive and prosper appears to extend
beyond the fact that it has a one-third stake in
the enterprise, obtained in November 2008.
French belief in the strategic national importance of certain industrial activities carries real
conviction, it seems. Last year, a naval order
was brought forward for a third Mistral-type
helicopter carrier, and St Nazaire could also be
in line for a deal arising from negotiations
between France and Russia over a further series
of such vessels.
In the meantime, the new cruiseship
project also promises to ensure production
continuity. It is anticipated that financing
arrangements will be concluded shortly, with a
view to having the 1,750-cabin vessel ready for
MSC by mid 2012. The 140,000gt newbuild
will be a near-sister of the MSC Fantasia and
MSC Splendida, completed in December 2008
and July 2009, respectively. While luxury
passenger vessels have underpinned the
orderbook at St Nazaire for some time, STX
France is also looking to develop market
opportunities in other specialised fields,
including cablelayers, drillships, and offshore
wind turbine installation vessels.
While Europe ostensibly seeks to re-enter
the LNGC market, through publicly-funded
measures such as the EU-sponsored IMPROVE
research project, European know-how has
contributed to China's forthright entry to this
sector. The 147,700cu m Dapeng Sun was
phased into service during 2008 as the first large
LNG tanker to have been built in China and the
lead ship in a series of five. The French arm of
Aker Yards, now STX France, had entered into
a technical cooperation agreement with
contractor Hudong-Zhonghua Shipbuilding,
part of the China State Shipbuilding
Corporation, covering all five vessels.
The technical pact enabled the French
shipyard to commercialise its know-how and
better maintain the option of returning to LNG
carrier construction at its own yards in the
future. Now, Hudong-Zhonghua has landed an
order for a sixth vessel of the 147,000cu m
class, to be commissioned into the Chinese gas
import traffic by Shanghai LNG Co in 2012.
Recourse in the design to French technological
know-how is also reflected in the adoption of
the well-proven GTT No.96 membrane cargo
tank containment system.
There are other potential strands to China's
development in this category. The future
construction of two LNG carriers in China is
covered by a conditional agreement signed last
year by UK integrated gas producer and
supplier BG Group to provide long-term
shipments of gas to China from Australia.
Furthermore, recent reports from Japan
indicated that Mitsui OSK Lines envisaged
ordering four LNGCs from Chinese yards, to
be delivered between 2014 and 2016 to serve
gas shipment contracts to China.
A huge LNG-FPSO(floating production,
storage and offloading) unit of 468m x 74m
main dimensions figured among a tranche of
export contracts announced on March 9 by
Samsung Heavy Industries.
Confirmation of the FPSO came eight
months after the Royal Dutch Shell group
selected a consortium comprising Samsung and
the French offshore engineering group Technip
for the design, construction and supply of a
number of floating LNG “facilities” over a 15year period. Industry experts predicted that as
many as 10 LNG-FPSOs could be ordered
within the timeframe of the master agreement
signed by Shell Gas & Power Developments.
The lead vessel will produce 3.5m tons of LNG
per year in Australian waters, where she is
scheduled to start operation in 2016.
Samsung's fresh order intake included nine
tankers. Four of these are understood to be the
options on aframax carriers newly confirmed
by Stena Bulk in conjunction with partners and
the Angolan oil company Sonangol.
The move extends the programme at
Samsung to six such tankers, all of which are to
be assigned to the Stena Sonangol Suezmax
Pool.
The earlier contracted vessels, Stena
Superior and Stena Suede, are due for delivery
in 2011, with the latest quartet of newbuilds
expected during the latter part of 2012. It is
claimed that the design adopted will offer a
reduction of up to 15% in fuel consumption
compared to conventional suezmax tankers
currently in operation.
The extension of the series at Samsung
followed Sonangol's announcement of an order
for five 160,000dwt tankers with Daewoo
Shipbuilding & Marine Engineering. These
tankers are also destined for the Stena
Sonangol pool, and occupy a delivery
timeframe between mid 2011 and the
beginning of 2013. SSSP appears to be poised
for further growth, as several quality owners
with new suezmax tankers have applied to
become members. ■
85
SHIP REPAIR
Diversification
for the right reasons
By Sean Moloney
Necessity is the mother of invention but sometimes survival can be just
a matter of exploiting your strengths rather than reinventing your
capabilities. In the case of Belfast’s iconic Harland and Wolff shipyard,
taking advantage of the burgeoning renewable energy sector as well as
benefiting from a brief but rewarding foray into vessel decommissioning was natural, albeit well thought out, developments of its traditional ship repair and ship building heritage. Add to that the backdrop
of a tough economic shipping climate and you have a business strategy
with ‘thinking outside the box’ written all over it.
“Coming from a pure shipbuilding background it was very difficult
and very challenging when you were so susceptible to the vagaries of
one particular market. So having gone through that pain back in the late
1990s, we decided we didn’t want to have that situation again,”
explained David McVeigh, Sales Manager.
“No matter what you did and no matter how efficient you were, if
the market was against you then you were likely to take a real hit. So
we looked to diversify into a number of different areas. From pure
shipbuilding it was then more oil and gas work for years before the
renewable energy became an option. We tried back in 1997 to diversify
into the renewable energy sector but the market just wasn’t ready: no
contacts were being placed. It has taken a further 10 years for that
market to come to fruition,” he said.
According to Mr McVeigh, Harland and Wolff was fortuitous
through the downturn in that the contracts it had in place were
negotiated over years, placed in advance and the monies were all there.
“They went ahead and we didn’t have any cancellations,” he said. The
contracts the yard won on the renewable energy side were part of
altogether much larger projects that were going to go ahead irrespective
of the global recession. “You were talking major investments of billions
of dollars, so even our side of the business, which was small, was still
significant to us.”
Mr McVeigh was direct about Harland and Wolff’s strength in the
renewable energy sector. While it may not be the only yard capable of
constructing the jackets, monopiles and transformer platforms, its long-
86
“Where our costs may be slightly
higher is down to the size of our docks.
But the euro to sterling exchange rate
also makes us very competitive with
any part of Europe now”
time association with the oil and gas sector draws some strong comparisons. “I would love to say we are unique but I don’t think we are. But
there is a great correlation between the ship builder, the oil and gas
sector, and then the renewable energy sector. The biggest problem the
renewable energy sector had was that it was not ‘marine’. Wind farms
started out onshore and then moved offshore. As a result, they started to
come up against the same problems, made the same mistakes and
needed the same solutions that the oil industry experienced when it
moved offshore.
“The correlation we have with the renewables market is that we
know how to build marine structures and we know about the demands
of class. The solutions that have already been proven – painfully and
expensively – in the oil and gas side are directly applicable to the
renewable sector as the wind farms moved more and more offshore.
They have gone from onshore to near-shore and now they are getting
into deeper waters,” he said.
So where is the business coming from? “Well, we started by
working on projects in the Irish Sea and as we were the only really
heavy engineering company of our type in the area, it put us in a good
position. What we have found is that as we move further up the value
added chain, the more work content you put into the raw materials or
the components, then the further afield you can take the projects.
“We are tendering for a lot of these projects but its success depends
on the distance to the field and what the soil conditions are as to
SHIP REPAIR
whether it will be a monopile or a traditional jacket or gravity base. We
do not see ourselves being a turbine manufacturer, but the manufacturing and outfitting of the modules such as transformer platforms are
similar to work carried out for the oil and gas sector,” he stressed.
You can detect from the way the company has progressed that
business opportunities like wind farms and vessel decommissionings,
such as the much publicised MSC Napoli, are less the icing on the cake
but more a case of trying to increase the size of the available cake.
“Napoli was an excellent project for us in that it did exactly what
we wanted it to do in proving that you can successfully decommission
a vessel with a zero impact on the environment,” said Mr. McVeigh.
“This was particularly difficult because it was a casualty and there
was contamination onboard that would not normally have been there had
you been decommissioning an old vessel in a planned manner. The
European Union is going through the throes of identifying what we would
need to do in order to make this aspect of the shipping business work and
there is a belief that Europe should look after Europe’s problems rather
than exporting Europe’s waste problems to those least equipped to deal
with it.
“If you decided a set of rules that only European ships can be
decommissioned here in Europe we would not have enough yards to deal
with the problem, so it is not a question of protectionism but of setting a
standard then letting the international market achieve that standard. But
the standard has to be properly audited because we have been in the
same situation where there is a constant evasion of the rules – paying lip
service to the rules and then the horror stories will come through.
“We were heavily audited when we decommissioned the MSC
Napoli but the greatest benefit is that with a dry dock you have a
physical barrier between you and the environment so that if the
unexpected happens you still have this safeguard. This doesn’t happen
if you are on a beach or if you are dismantling at a pier. The most
environmentally way is in a dry dock,” he said.
So what about the repair side of the business? With so many
shipbuilding yards looking to the repair sector for business, surely this
presents its own problems?
“Proximity is king and as there is a lot of competition for business.
What we have seen from the ship owners is a keenness to secure
budgets and get the best value for money. Along with our vast docks,
we have nearly a kilometre of quaysides. We are licensed to open grit
blast and paint on these quaysides which is quite a unique position,
allowing comprehensive vessel in-water projects without the necessity
and cost of a dry dock. This can be a vast saving for our customers.
David McVeigh
“What we have found is that as we move
further up the value added chain, the
more work content you put into the raw
materials or the components, then the
further afield you can take the projects”
“Owners are asking us to start taking over responsibility for other
areas of the contract that would be outside of our norm, such as accommodation refits. We have a mechanism where we give our customers a
daily bill so that allows them to see what they have spent at any one
time. It requires a lot of effort but the advantage is they know what they
have spent and if they have to release any amounts of funds towards the
end, they can keep a fighting reserve at the end. More often we are
dealing with repeat customers and they know they can trust this slope
of cost all the way through and they know what they have towards the
end.”
But how competitive is a yard like Harland and Wolff when it
comes to cost? According to Mr McVeigh, labour costs in Northern
Ireland are still lower than mainland UK. “Where our costs may be
slightly higher is down to the size of our docks. The euro to sterling
exchange rate also makes us very competitive with any part of Europe
now,” he added.
Business is looking good for this year, contends Mr McVeigh, and
when you consider a yard is lucky if it has repair stems for the next
three months then you know what he means. 2009 did produce dock
utilisation levels around the 75% level, so business is there.
A question SMI put to him, was how has the recession affected
shipowners’ own repair strategies and were they more demanding or in
some cases delaying unnecessary work?
“We have been looking critically at where we can reduce costs to
help our customers reduce their costs,” he said. “We’re confident we are
going to get a lot of repeat business but I do feel that the customers need
us to work along with them to help stretch their budgets which are
under pressure. We look to where we can shave costs and do things
better, exercises are ongoing from an engineering point of view to see
how to reduce costs of the wet and dry repairs.” he added. ■
87
Compacting your waste disposal problems:
how going green could
save you money
Green shoots
Also: Class NK cuts ship recycling red tape
ECOVISION
Class NK cuts
ship recycling red tape
The Japanese society has developed a new software package to ease the
burden associated with the International Convention for the Safe and
Environmentally Sound Recycling of Ships
Adoption of the Hong Kong International Convention for the Safe and
Environmentally Sound Recycling of Ships by the International
Maritime Organization in May 2009 signalled a future where all
concerned in the life of vessels of above 500gt operating internationally,
from design to disposal, will have to follow set procedures ensuring
they are recycled in a safe and green manner.
Against a background of high accident rates, rising death tolls and
pollution emanating from beach-based, low technology ship breaking
work in developing countries, work towards creating the Ship
Recycling Convention at the IMO has often appeared overly
painstaking. While some parties have consistently argued that the Basel
Convention implicitly includes ships in proscribing the export of toxic
waste, the new Ship Recycling Convention, agreed by 63 countries,
supersedes a non-existent ship-specific global regulatory framework.
Under the terms of the convention, life responsibility for the ship
extends to its preparedness to be recycled and the preparedness of the
ship recycling facility to create a recycling plan and receive the ship in
a safe and environmentally protected way. A critical requirement is that
the ship must have a fully developed and maintained inventory of
hazardous materials onboard, listing their quantity and
location, including wastes and stores.
The inventory is taken to be the base
document that ensures the safety and
health of workers, prevents
pollution, and promotes the
substitution
of
harmful
substances and the efficient use
of resources.
Entry into force of the new
convention could come as early as
2012, with a deadline being set for
existing ships likely to be by 2017.
Precedent suggests it is more
likely to be phased in
between 2013 and 2015
though some European
interests believe this
could come later. If
so, the European
Union may move
towards internal
regulation of
its own.
Entry
into force is
contingent
on 15 states
90
representing not less than 40% of the world’s merchant fleet in terms of
gross tonnage signing up without reservation. The convention also
stipulates that the combined maximum annual ship recycling volume of
the ratifying states during the preceding 10 years constitutes not less
than 3% of the gross tonnage of the states.
In the case of new ships, the shipbuilder will be required to develop
the initial inventory, Part 1, on delivery of the ship, which is to include
details regarding the location and amount of hazardous material
contained in the ship’s structure and equipment onboard. Parts 2 and 3,
including operationally generated wastes onboard and stores, will need
to be itemised by the shipowner just before recycling.
At the final survey stage, before a ship is taken out of service, the
recycling plan will be checked against the inventory of hazardous
materials (including bunkers and operational stores) provided by the
shipowner, to ensure that they are consistent. The ship recycling plan
itself, based on the inventory supplied by the owner, will need to be
approved by the recycling facility’s national authority.
Hazardous challenges
It is recognised that at the new building stage it is not realistic to expect
the shipbuilder alone to investigate all the hazardous materials
contained in all the products onboard the ship. Cooperation must be
established through the complete maritime supply chain. Data on
hazardous materials needs to be transferred from upstream suppliers to
those down stream, and finally to the shipbuilder.
Accordingly, the Ship Recycling Convention sets out a unified way
to transfer such information, with suppliers submitting two documents
about the products used onboard to the upstream supplier or shipbuilder.
The ‘material declaration’ includes information such as the
supplier’s name, product information, and a Yes/No column concerning
the content of itemised materials above a given threshold. The second
document, a Supplier’s Declaration of Conformit, shows how the
product has been made, giving the assurance that the products on the
materials declaration have been manufactured to conform to a specific
procedure.
Clearly, collecting and collating this information represents a
massive undertaking, adding workload, paperwork and costs for both
shipbuilders and suppliers alike.
ClassNK, with some 7,000 ships under class that eventually will
become subject to the convention, and more coming into service, points
out that creating inventories of hazardous materials onboard all existing
ships (including new buildings) within the five years after entry into
force (or before the ship goes for recycling, if that is earlier), as the
convention stipulates, represents a critical challenge for industry. In
anticipation of this challenge, the
society has moved to develop a
ECOVISION
specific product to ensure what international regulators have laid out
can be achieved, in the shape of its latest software package, PrimeShipINVENTORY which cuts the workload and cost of preparing the
inventory of hazardous materials used onboard new ships by making it
possible to exchange material declarations between shipbuilders and
their suppliers electronically, according to the society.
The package allows a supplier to create an Excel-based material
declaration data file and a supplier’s declaration of conformity file in
pdf format. The files are sent to the shipbuilder by email and imported
into PrimeShip-INVENTORY, where the inventory of hazardous
materials and their location onboard the ship is specified. The full
inventory is then generated automatically, with data ready for export to
ClassNK for approval. This will eliminate the shipbuilder’s need to
record material declarations and post the data in the inventory format
because PrimeShip-INVENTORY will have calculated the amounts of
hazardous materials at each location automatically.
ClassNK considers this a critical issue for the entire industry and is
backing its judgment by distributing PrimeShip-INVENTORY free of
charge to shipbuilders and suppliers.
To date ten Japanese shipbuilders have developed their inventories
using the first available version of PrimeShip-INVENTORY and the
opening months of 2010 will see ClassNK begin distributing an
improved second generation product for new ships, drawing on
comments from users.
PrimeShip-INVENTORY is described as a client/server application
with clients accessing the database installed in a server. Requiring the
processing power of a Pentium III or greater (1.0 GHz or greater) and
memory of 1.0 GB or greater, ClassNK estimates that a single ship file
would take up 20-50MB. Running on Windows 2000(SP4)/2003/XP,
PrimeShip-INVENTORY is compatible with Microsoft.NET
Framework 2.0.
“PrimeShip-INVENTORY will be an essential software tool for the
development of ship inventories as required for all ships greater than
500GT by the Ship Recycling Convention,” says ClassNK. “With
owners, suppliers and shipbuilders already facing mounting paperwork
as new safety and environmental regulations come into force,
exchanging information electronically using a product tailor-made to
meet the necessary challenges posed by the new convention can significantly reduce their burden.”
To meet the convention’s standards, existing ships will pose a
separate challenge. Documentation will have to corroborate actions
taken throughout the history of the ship, and the process will be even
more complex and time consuming. It will involve verification of asfitted drawings and manuals and also visual and sampling checks at
dry-docking from the bottom of the engine room to the top of accommodation area for identification of materials onboard and their location
by the individual or organisation designated as an expert as described in
the convention. The resulting inventory of hazardous materials will
then have to be submitted to the flag administration or recognised
organisation for approval.
ClassNK is further committed to investigating the methods for
inventory development to cover existing ships. Its partner, Japan Ship
Technology Research Association, had suggested that even if original
documents were easily accessible, the process itself could take up to
one month for an existing ship, while factoring in the availability of
experts could mean the entire procedure lasting up to three months. The
cost of such a process will depend on the type, age, and size of the ship
as well as the availability of related resources.
In order to minimise workload and cost for shipowners, ClassNK
has devised a specific expert management function to meet the
convention’s structures, insisting: “While we fully realise the
challenges involved, our goal is to provide a complete service to
address the needs of shipbuilders, suppliers, and ship owners in
addressing the demands of the convention, so that the maritime industry
can smoothly implement this very necessary regulation. ■
91
ECOVISION
COMPACTING
your waste disposal problems
A new kind of passenger has for the last three years, started to make an
appearance on cruiseships sailing in Alaskan waters: they are Coast
Guard certified marine engineers or persons who hold a degree in
marine safety and environmental protection and are charged with
ensuring the vessels are not polluting the state’s waters. The Alaskan
state programme, which employs as many as 60 ‘rangers’ inspecting
shipboard waste disposal methods, is an example of US state and
federal efforts to keep billions of gallons of cruiseship waste from
polluting coastal waters.
Followers of such things point to the marine waste disposal
problem being compounded by the surge in the numbers of cruise
vessels and cruise passengers. With some of the larger cruiseships
boasting upwards of 6,000 passengers and crew, the volumes of plastic,
metal and cardboard waste produced can generate their own onboard
space-saving as well as fire and health-risk problems – let alone the
problem of ensuring the waste is ultimately disposed of in the most
environmentally-way.
An innovative waste disposal system which one leading ship
manager has branded as solving all its cost, environmental and spacesaving problems onboard ship has been developed by a Cyprus-based
company. And it is targeting the global ship supply market as well as the
global shipmanagement sector as an opportunity for getting it to market.
The MARSAL baler is unique in that it crushes shipboard waste
“Once landed ashore, the ship
will land a bale of plastics or
cardboard or old tin cans.
Ships should also be
encouraged to separate
onboard aluminium and tins”
92
“Worldwide, ship owners are
charged by volume for their
garbage collection so if we can
reduce the amount disposed as
well as benefit the environment,
then I can’t see a downside”
such as plastics, cardboard and tin down to a sixth of its original
volume – in turn producing a ‘waste bale’ that can be safely and
environmentally disposed off when the ship returns to port. Plans are
also afoot to manufacture a machine that can be capable of 'shredding
and crushing' waste glass such as bottles.
Limassol-based MARSAL Waste Management (Managed by a
local ship supplier JGS) currently has 12 of its innovative waste
disposal baling systems onboard Columbia Shipmanagement-managed
cruiseships and talks are ongoing to supply units across Columbia’s
entire managed and owned fleet.
Chris Goldsworthy, NYK Fleet Manager at Columbia
Shipmanagement, said the space saving as well as cost-saving
properties were major factors in the system’s favour. “Worldwide, ship
owners are charged by volume for their garbage collection so if we can
reduce the amount disposed as well as benefit the environment, then I
can’t see a downside. It also benefits onboard safety by reducing the
risk of fire.”
He said he was in discussions with Columbia’s fleet director to make
the MARSAL baler a fleet-wide item for all Columbia managed ships.
Martyn Gibbon, MARSAL Managing Director, said the costs
associated with conventional waste disposal onboard ship, not to mention
the space needed to store the hundreds of plastic bottles and tin cans
produced by cruiseships and cargo vessels meant it was important that
owners and managers looked at the right solutions to dispose of their waste.
“We estimate that an average cargo ship carrying a compliment of
20 will produce 6cu m of waste material a month, most of which is
suitable for recycling: that could equate to $24,000 per year in disposal
costs. I am also convinced that by separating tin, aluminium and
plastics and then crushing them down to manageable disposable bales,
ship owners could find themselves in time, being paid for the waste
instead of incurring the levels of costs they do at the moment. It
happens ashore so why shouldn’t it happen at sea?”
He added: One machine can do three different things – cardboard,
plastics and metal. Once compacted, you are left with a bale whose size
can be modified to meet the needs of the vessel. A machine can be
designed to suit whatever dimensions needed. We can produce a
machine to fit in any space and to accommodate whatever bale size.
“Once landed ashore, the ship will land a bale of plastics or
cardboard or old tin cans. Ships should also be encouraged to separate
onboard aluminium and tins. My vision is that while you are charged to
have waste removed, in a perfect world you may get paid to have it
taken away. So some ports may pay so many dollars a kilo for
aluminium, for instance,” he stressed.
According to Mr Gibbon, research shows that it can cost up to $350
to dispose of a cubic metre of waste. And the costs are higher offshore
with the costs of hiring a barge ranging up to an extra $3,000. ■
ECOVISION
Thomas Schulte sets the pace on recycling
German bulk- to-container shipping giant,
Thomas Schulte, has become the first global
shipping company to voluntarily commit
itself to the requirements of the Hong Kong
Convention on Ship Recycling even though
entry into force of the convention is expected
to take at least another five years.
Hamburg-based Schulte, which operates a
fleet of almost 50 vessels, has contracted
Germanischer Lloyd to issue certificates for the
fleet of 33 existing and 18 new container ships.
The convention, adopted in May 2009,
will require vessels to carry an Inventory of
Hazardous Materials, a ship specific
document that lists all materials onboard a
ship that may be hazardous to health or the
environment, and that require careful
handling or special awareness.
To date only France has signed up to the
convention which will make an IHM
mandatory for all new and existing ships
above 500 tons gross, covering all materials
used for constructing and equipping ships.
The emphasis will be on materials already
identified as hazardous which might still be
found in shipyards, shiprepair yards and
onboard ship.
IHM preparation for new vessels will
rely on the exchange of information between
shipyards and their suppliers. Thousands of
documents will be involved and, as some
50,000 existing vessels will have to comply
with the convention within five years of
ratification, early implementation will allow
for smoother preparation and certification,
according to Germanischer Lloyd.
Thomas Schulte’s in-house technical
management
vehicle
OCEAN
Shipmanagement has charged the class
society-approved HazMat expert company
Environmental Protection Engineering in
Greece with preparation of the IHM.
OCEAN Shipmanagement technical
director Frank Heidrich said Schulte
considered ship recycling to be an integral
part of the life cycle management of ships.
“Our responsibility for the vessels is
beginning at the design and construction
stage and ends with the demolition. Ships
have to be recycled at the end of their operational life in a safe and environmental sound
manner,” he added.
The Hong Kong Convention also creates
a new requirement for owners to sell ships
only to recycling facilities that meet the
standards and have been authorised by the
national ‘competent authorities’. Recycling
facilities will be required to prepare a Ship
Recycling Plan to specify the processes under
which a ship will be recycled, depending on
its particulars and its IHM. All parties will be
required to take effective measures to ensure
that ship recycling facilities under their jurisdiction comply with the convention.
OCEAN Shipmanagement is one of four
group companies through which Schulte
handles its fleet management. The others are
TWS Chartering & Shipbroking (chartering
brokers) Nautilus Crew Management
(personnel management) and Blue Water
Funds (procurement of shipping investments/private placements).
Responder move could benefit China’s pollution commitments
Hong Kong-based OSRO China has laid the
foundation for a consortium of oil spill
response contractors which it believes will
fulfil China’s obligations throughout its ports
under prevention and control of marine
induced pollution regulations enacted at the
beginning of March.
David Schaus, head of the Hong Kong
operation, said: “From our past experience
and relationships with oil sludge collection
contractors, we have been able to build a
network of Level 1 responder applicants,
that, on approval from China’s Maritime
Safety Authority (MSA), will form a turnkey pollution control product that will allow
ship owners to sign a single Agency
Agreement while meeting all statutory
requirements.”
The newly introduced requirement would
require ship owners to have contracts in place
with local oil spill response organisations
which currently do not exist. Previously, the
China MSA has called on existing oil sludge
collectors and/or tank cleaning contractors to
assist the MSA as and when required during
pollution incidents. In the past, these
companies have had oil pollution clean-up
94
equipment on hand for their normal operations, in addition to access to the MSA’s
inventory.
The new China legislation stipulates a
licensing process (to be approved by the
MSA) for potential oil spill response
contractors. On approval of which they
would be able to contract with ship owners to
become responsible for any pollution cleanup requirements from their ships.
OSRO China Ltd’s sister company,
Baoyu Seaclean , an established oil sludge
collection, pollution control and tank
cleaning company in its own right, is one of
the companies that have applied for a Level 1
approval as an Oil Spill Response organization in Shenzhen and is included in
Appendix 2 of the regulation authorizing it to
sign agreements in the interim period.
An Agreement is now being offered by
OSRO China Ltd, based on international
guidelines from the P+I Clubs and ITOPF
(International Tanker Operators Oil Pollution
Fund) which, pending formal MSA approval
in each port, will meet the statutory requirements of the above regulations.
“Our Agreement will provide a Pan-
China coverage, commencing with the 10
major ports.” Mr Schaus continued. “The aim
of the network is to start with a Level 1
responder in each major port and then expand
into other ports until complete coverage has
been achieved. Our goal is to relieve ship
owners of the obvious problem of
signing individual, non-standard
pollution control agreements
in every port their
ships call in China.”
ECOVISION
Antwerp gets largest fuel cell in the world
The Solvay chemical company is investing
in a very large fuel cell for its SolVin site in
the port of Antwerp. The fuel cell, being
built as part of the Flanders-South
Netherlands Hydrogen Region project, will
be the first of its kind.
It will be the largest fuel cell to form
part of an industrial process and to generate
electricity continuously. Out of the more
than €5 million being invested by Solvay,
€1.5 million is being financed by the
Hydrogen Region project.
The prototype fuel cell will take excess
hydrogen from electrolysis in the SolVin
vinyl production plant in Lillo (a
Solvay/BASF joint venture) and convert it
into electricity, thus raising the energy
efficiency of the electrolysis process. With
this project, Solvay aims to demonstrate
that fuel cell technology is able to generate
a peak output of 1.7 MW and to produce 1
MW continuously in normal operation.
Solvay’s special polymers and the
SolviCore proton exchange membranes
play an important role in the fuel cell.
SolviCore is a joint venture between Solvay
and Umicore.
“The fuel cell in the Lillo plant will not
only raise the efficiency of the electrolysis,
but will also give Solvay and SolviCore the
ability to maximise the efficiency of the
fuel cell technology on an industrial scale,”
said Leopold Demiddeleer, Executive Vice
President of Future Businesses at Solvay.
Solvay is confident that fuel cells will
become an important new energy
technology, powering numerous applications such as generators and cogeneration
units. The SolVin 1 MW pilot unit will
make an important contribution to the
further development of this technology.
Frank Denys, hydrogen expert with NL
Energie & Klimaat, added: “The fuel cell
unit in Antwerp is a huge step forward. This
multimillion euro investment will speed up
development enormously, and is also a
good step up towards more and larger
projects. It shows that smart applications
are possible too in the chemical industry or
electricity generating stations. This project
also demonstrates the great progress that
has been made, thanks to focused research
and good demonstration projects. I’m sure a
lot of people will be surprised by it.”
Flanders – South Netherlands
Hydrogen Region was set up to develop
hydrogen know-how and apply it to
projects in this region. The SolVin project is
also the largest in the world to generate
electricity from hydrogen.
Class NK commits ¥2.2 billion to joint
GHG reduction programme
ClassNK Chairman and President Noboru
Ueda has announced that the Japanese
classification society will commit ¥2.2
billion ($25 million) in research and
funding as part of its participation in a
national joint research and development
programme to reduce maritime greenhouse
gas emissions.
ClassNK’s commitment will cover
more than 25% of the project’s total budget
of ¥8.5 bn ($95 million) through 2012.
Mr Ueda, who will become the
Chairman of the International Association
of Classification Societies this July, added:
“Classification societies must take a leading
role in the reduction of greenhouse gas
emissions. Our commitment as an industry
must go beyond merely helping to establish
goals for reducing maritime emissions. We
must actively contribute to developing,
funding, and promoting concrete, practical
technologies to make the achievement of
these goals a reality. The commitment we
are making today is an important step in
that process.” The programme is part of a
national effort to reduce GHG emissions
established by the Japanese Ministry of
Land, Infrastructure, Transportation and
Tourism last year. More than 20 projects
currently being conducted by major Japanese
maritime companies have already been
selected for funding and assistance by MLIT.
Wärtsilä and
Hitachi Zosen
fuel cell based
power plant
solutions in
Japan
Finnish giant Wärtsilä and Hitachi
Zosen have underscored two decades of
cooperation by signing a business
development agreement to develop and
market fuel cell-based power solutions
for power generation applications in
Japan. The combined heat and power
applications will be operated on city
gas or bio gas.
Wärtsilä is seen as a global leader
in the development of fuel cell products
based on SOFC (planar solid oxide fuel
cell) technology though the applications
will be developed by both companies
and marketed by Hitachi Zosen.
In a statement, the companies said:
“Fuel cells are considered to be one of
the most exciting energy technologies
for the future. Since Wärtsilä's fuel
cells can efficiently utilise natural gas,
city gas, and biogas as fuel, they
produce almost zero nitrogen oxide
(NOx), sulphur oxide (SOx) and particulate emissions, all of which are
harmful to the environment.
“Wärtsilä places strong emphasis
on
developing
and
applying
technologies aimed at reducing the
environmental impact of its products.
The continuous development of more
efficient, clean, and sustainable power
solutions is an essential part of
Wärtsilä's strategy.
Fuel cell
technology development supports this
strategy by providing ultra clean and
highly efficient solutions to the lower
power range of Wärtsilä's product
portfolio.”
Erkko Fontell, Director, Fuel Cells,
Wärtsilä Finland added: “The cooperation between Wärtsilä and Hitachi
Zosen provides an important opportunity to optimise future fuel cell
products to meet customer requirements, and to facilitate optimal application development. This is an
important step towards the commercialisation of fuel cell technology.”
Wärtsilä's competence centre for
fuel cell technology is located at
Otaniemi in Espoo, Finland. Operation
of the fuel cell unit is supported by
personnel from Wärtsilä's engine
laboratory in Vaasa, Finland.
95
LIVE
Objects of desire
A touch of wealth
Virgin territory
Now the iPod is a fairly ubiquitous necessity, why not go one
(or ten) steps further with the world’s most expensive,
crafted and fabricated by Stuart Hughes using 149g grams
of solid 22ct gold with a rear Apple logo made from 21 grams
of gold housing 53 diamonds, and an additional 300
diamonds set in the front outer section. Phew.
As if that’s not enough, the device’s main navigation
button also shows off 12 diamonds set in 16 grams of gold,
all of which surrounds a glorious single cut 2.10ct pink
diamond. The term ‘bling’ never seemed so fitting for this
limited edition masterpiece.
To top it off, the iPod Supreme comes in a presentation
box created from white lacquered wood, with interiors made
from Porsche Nappa leather. With only three reportedly
made in the world and at the price of a small house, you’d
better like music.
Necker Nymph
£70,000
www.virginlimitededition.com
Intent on conquering every dimension of space, time and
existence, Richard Branson has unveiled a new DeepFlight
three-person aero submarine that ‘flies’ through the depths
of the ocean at a speed of 2 to 5 knots, with low light and
noise emissions, combined with the ability to sink to 35,000ft
and perform 360 degree turns. Holiday, anyone?
Branded Necker Nymph, the £415,000 flying sub will
reside on Branson’s 74 acre private island in the British
Virgin Islands where it will take guests on underwater cruises
of up to two hours. Designed specifically to operate from the
luxury 105ft catamaran Necker Belle, topping up the £55,000
weekly hire price tag by a quiet £15,000, it can also be
launched from ashore.
Unlike conventional submarines which use ballast to sink
in the water, the Necker Nymph, built by Hawkes Ocean
Technologies (HOT), instead relies on the ‘negative lift’
created by the wings to dive beneath the waves, and its ‘open
top’ design means occupants wear a face mask connected to
tanks and regulators mounted inside the craft and can enjoy
the freedom of “near-ideal 360-degree viewing” from a
recumbent seating position. Deep stuff indeed.
iPod Touch Supreme
£139,995.00
www.stuarthughes.com
Pocket pleaser
Wenger Giant Swiss Army Knife
£499.95
www.wenger.ch
If you came across one of these you truly wouldn’t know
whether to laugh or cry. Equipped with 85 fully functional
implements, the term ‘knife’ certainly doesn’t do this
staggering tool justice, given that it measures 9 inches in
width and weighs over a kilo.
Originally designed to be a pocket knife, the Swiss Army
multi-tool concept has taken on epic proportions rivalling
Bond gadgetry, and while such a triumph of engineering
makes you wonder why there’s a key ring attached to it, one
thing is fairly apparent – that it’s not pocket-sized.
But it’s of little consequence when you’re at liberty to use
the tweezers when picking up the shattered jaw of an
onlooker. Holding almost everything you’d ever need and a
whole lot more you don’t need, the Wenger Giant Swiss
Army Knife blurs the line between utility and gadgetry.
96
There are seven blades, three types of pliers, seemingly
countless screwdrivers, saws and wrenches, a battery
operated torch and a laser pointer with a 300ft range.
There’s also a device that repairs golf divots and an application which magnifies mineral crystals, a tyre-tread gauge,
a signal whistle and a cigar-cutter. Fully loaded? Definitely.
LIVE
A mother of a spoon
Known for its exclusive, high-end appeal, Asprey’s elegant caviar spoon certainly carries
some maritime overtones, and will place you at the top of the refinement scale in any
caviar-consuming social situation.
Made from sterling silver and mother of pearl with an intricate seahorse motif moulded
to the handle, this timeless, classic piece of tableware would fit with seamless luxury in
any fine setting, and with a matching caviar spreader available, you could indulge in
double-edged luxury.
Wine finery
Seahorse Caviar Spoon
£155.00
www.asprey.com
How long a bottle of wine keeps for after it’s been opened is
subject to a number of factors, one being willpower.
However, for those more resistant to the wiles of the
grapevine, the SoWine Bar is a formative solution.
A unique two-bottle preservation and service unit allows
opened wine to be kept for up to seven days, with
independent temperature settings for each compartment
allowing the perfect temperature for serving as well as the
ability to store a bottle each of red wine and white wine.
An integrated pump creates a vacuum seal to slow the
further oxidisation process of the wine, ensuring greater
longevity. The bar system even looks stylish; a perfect
compliment to a dinner party or a wine aficionado’s musthave swank.
A key to boredom
Eurocave SoWine
£359.00
www.aroundwine.co.uk
What do you get if you cross a keyboard with a laptop? The
Eee Keyboard PC, an entire computer crammed into a
keyboard which allows you to turn your TV into a PC so you
can browse the web, watch online videos and display digital
photos, all from the comfort of your own sofa.
Connecting to the internet over Wi-Fi, this portable hitech gem communicates with your television set via a
wireless receiver plugged into the TV, and signals can be
sent using ultra-wideband technology with a range of over 5
metres or through an HDMI cable for a high-definition
theatre experience.
Compact and ultra-innovative, the 5inch touch-screen
panel which allows access to files and controlling the
computer adds a cutting-edge twist to a traditional all-in-one
desktop machine, and given that it’s about as powerful as a
netbook, this system holds the key (or keys) to bringing the
web into your lounge.
Asus Eee Keyboard
£449.00
www.asus.com
97
review
events
SEVILLE APRIL FAIR
Seville celebrates its April Fair (Feria de Abril) from April 20th to 25th
with a dynamic programme of events. Watch traditional horse parades
clip-clop through the city, click your castanets at round-the-clock
flamenco parties and try Manzanilla sherry in one of the feria marquees.
On the south side of the Puente de la Barqueta (bridge), which
crosses the Río Guadalquivir, there is a canvas city known as Real de la
Feria. There, over 1,000 brightly coloured marquees are covered in
decorations and paper lanterns, becoming a temporary home to
thousands of revelers, packed day and night with flamenco dancers.
Many marquees are hired out to private functions, hosted by
families, clubs and companies alike. These require you to have an
invitation, but there are plenty of others and you can roam freely - all
have their own bars. Be sure to order a chilled Rebujito, a refreshing
mixture of Manzanilla sherry and Sprite unique to Seville.
At night, seek out some of the many flamenco events on offer. The
majority run until 9am the next morning - some sevillanos turn up clad
head-to-toe in flamenco costume and have no problem dancing all night.
Try learning a trick or two from them.
Make sure that you get some sleep so you can watch the Paseo de
Caballos (Procession of Horsemen and Carriages) at midday. Horses and
beautifully decorated carriages parade in shining colours throughout the
city, with their riders and passengers decked in fantastic flamenco dress.
Every evening bullfights take place at the Plaza de Toros de Maestranza
de Caballería, known as El Catedral (Cathedral).
Flamenco and bullfighting represent strong cultural traditions in
Andalusia and the April Feria offers a unique insight into the character
and atmosphere of the region. However, if you find the practice of
bullfighting distasteful, then this part of the celebrations is best avoided.
entertainment - DVD
IN THE ELECTRIC MIST
The sight of Tommy Lee Jones as a weathered law enforcer is commonplace in movies and such a frequent occurrence
it’s hard to remember when he’s ever not played the good guy upholding justice. He plays the role so naturally you know
he’ll get to the bottom of a case or catch up with the baddie soon in a round-about style, which works best with a
compelling story and tight action. In The Electric Mist features another assertive performance from Jones as tenacious
cop Dave Robicheaux, though even with a supporting cast that includes Mary Steenburgen, Peter Sarsgaard, John
Goodman, and Kelly Macdonald, there’s a shortage of narrative coherency to keep you hooked.
98
dining
MALMAISON
OXFORD
Lock yourself away in a contemporary sanctuary at the
staggeringly luxurious Malmaison Oxford. Once a
former prison, this elite boutique hotel boasts one of the
finest dining venues in Oxford in an imposing and
unique setting.
Seductively lit by candles and subtly coloured tones,
the Brasserie’s clipped modern décor set against the
ancient archaeological backdrop provides the ultimate
aesthetic experience in the cultural city, and with a fivestar menu to savour, it’s a business or pleasure
endeavour for all.
With starters such as potted Cornish crab with sour
dough and rouille, and brawn and black pudding terrine,
the delicately refined menu is only bettered by its
selection of main courses, which include chorizo crusted
lemon sole with chick peas and herb salsa and free-range
roast chicken breast with chateaú potatoes, wild
mushrooms and truffle.
For the sweet tooth, the menu maintains the tastebud momentum with its twist on traditional classics,
with lavender bavoise rhubarb soup and raspberry bread
and butter pudding with white chocolate custard. An
impressive wine cellar tops it off; definitely not a venue
you’ll be looking to escape from.
entertainment - DVD
TAKING WOODSTOCK
Woodstock was THE music festival. Nothing has matched its influence. An event that
spanned four days with an ever-increasing number of revellers with some of the most famous
bands on the planet - any music festival organised today would love to capture the same
sense of spontaneity and togetherness Woodstock created. It's become a romanticised ideal
of what festival culture should be – an ideal veteran director Ang Lee seems caught up in
Taking Woodstock. This light-hearted tale of how Woodstock found its home on a farm in
1969 hints at the challenges faced with staging such a unique and legendary event, but is far
too saccharin to feel you are getting a true reflection of how an only child saved Woodstock.
Based on the book Taking Woodstock: A True Story of a Riot, a Concert, and a Life by
Elliot Tiber with Tom Monte, the movie tells of Tiber (Martin) working at his parents’ motel
in the Catskills and inadvertently playing a role in setting up the generation-defining festival.
Elliot was a depressed young man struggling to find a foothold as an interior designer in New
York when he moved back to the Catskills to help his aging parents run their failing motel,
The El Monaco. The banking vultures circling, he is at odds with his Jewish parents: his
mother (Staunton) is cold to all customers demanding unreasonable charges for the smallest
comfort such as towels while his father (Goodman) wants to burn the place down and claim
on the insurance – though they can’t afford to get the insurance to make it a worthwhile
sacrifice. Elliot just wants to quit the motel and leave, but fears for his parents and is also
unable to find a way to tell them he’s gay. All is not well at the El Monaco.
Looking for a way to make a fast buck, Eliot hears a neighbouring town has reigned in
on a permit to a hippie music festival and decides to call the producers to lend a hand. His
thinking is he could drum up some business for his parents and save their motel. When
promoter Michael Lang (Jonathan Groff) arrives by helicopter with men in suits and a sackful of cash, they initially bulk at the idea of using the
Tiber’s land – the field is more of a bog than a prime festival foundation. However, at the last minute Tiber recalls another landowner who can help,
and before he knows it he is swept up in helping shape Woodstock itself and putting up thousands of guests in his parent’s motel.
This heart-warming coming-of-age movie is imbued with humour, from Eliot’s awkwardness at being thrust into a major event to his parent’s
Jewish bickering over money and good enterprise. The banter between Martin, Stuanton and Goodman is priceless at times, especially Stuanton’s
turn as a mother baffled by Generation X’s behaviour and convinced everyone wants to con her out of money. Lee does a fine job of crafting the
family unit into a very real trio of characters who are inspired by the events of Woodstock even if they don’t know it before the music starts, and it
is the Tiber’s who give Taking Woodstock its edge. This is the alternative story of the legendary festival that will make you appreciate it even more.
99
review
books
Sometimes life
uncannily
imitates art
By Margie Collins
MOSCOW RULES
By Daniel Silva
Penguin Fiction £6.99
THE SECRET SERVANT
By Daniel Silva
Penguin Fiction £6.99
“By way of deception thou shalt do war” is said to be the motto of
Israel’s Institute for Intelligence and Special Operations, aka Mossad.
Mahmoud al-Mabhouh, a top Hamas commander, was found dead in
his hotel room in Dubai on January 20 this year. Police in Dubai believe
it has Mossad written all over it. Twenty-eight suspects including,
allegedly, Palestinian informants (aka moles), who used cloned passports
and camouflage (wigs, glasses, clothing) are in the frame for the alleged
murder. Israel, now the target of international opprobrium, has neither
confirmed nor denied its role in al-Mabhouh’s death.
Al-Mabhouh was alleged to have played a key role in smuggling
arms – bought with Iranian funds – to Islamist militants in Gaza. When
he was last sighted in Dubai, it was thought he was on his way to the
Iranian port of Bandar Abbas to arrange the shipment of a cache of arms
to Gaza. “He (al-Mabhouh) used to wear coloured contact lenses and
dyed his hair when travelling. He had many passports of different
nationalities – all Arab. Recently he underwent surgery to reshape his
nose,” a Gaza-based informant told Reuters. It’s the tradecraft, stupid!
These spies and agents are all at it!
The world of espionage and intelligence is illicit, dirty, murky and
dangerous. It’s complicated: there is grave concern over the perceived
increased Iranian threat to the State of Israel, either directly or via its
links with organisations such as Hamas. “It is of course due to Israel
being surrounded by similarly backward and corrupt regimes, such as
Syria, Iran, Saudi Arabia, as well as to Israel’s recalcitrance, that the
Middle East remains in a permanent state of tension and Palestinians
suffer,” said George Walden, the former British MP and diplomat.
Following febrile coverage and worldwide censure, prideful
‘Mossad mania’ has erupted in Israel, with memorabilia and spectacles
similar to those worn by the suspects flying off the shelves. On the
agency’s website is this recent recruitment posting: “You have an
opportunity to create a new reality where you can play the leading role.
If you possess intelligence and sophistication, you can make a
difference and fulfil a national mission. If you can engage, charm and
influence people, you may have the qualities we are looking for.”
Applications are said to be on the up.
“Everybody sees a difficulty in the question of relations between
Arabs and Jews,” said the founder of Israel, David Ben-Gurion. “But not
everybody sees that there is no solution to this question. No solution!
There is a gulf and nothing can bridge it. We as a nation want this country
to be ours. The Arab as a nation want this country to be theirs.” It truly
is an insuperable Gordian knot. And, so, sometimes life imitates art.
100
In July 2008, Arctic Sea, a Russian-crewed, Malta flag general cargo
ship ostensibly bound for Algeria carrying a cargo of timber worth
£1.2m, was crossing the Baltic when masked gunmen with AK-47s
boarded and tied up the crew in their cabins. The hijackers, speaking in
eastern European accents, claimed to be Swedish drugs-squad officers
acting on a tip-off that the 4,706 dwt Arctic Sea was carrying heroin.
The vessel then disappeared. Russia’s President Dmitry Medvedev
immediately ordered the navy into action to locate and recover the ship.
Twenty-four days after being seized, the nine-year old vessel was intercepted near the islands off Cape Verde, and the hijackers – variously
from Latvia, Estonia and Russia – were arrested and flown to Moscow
where they are held in jail. The day after their arrest, Shimon Peres, the
President of Israel, visited Moscow in a sudden flurry of diplomatic
activity.
On a secret mission in September, Benjamin Netanyahu, Israel’s
prime minister, flew to Moscow with his national security adviser and
military aide. According to reports, Netanyahu remonstrated with the
Kremlin for selling advanced anti-aircraft systems to Iran. Netanyahu,
reports disclosed, also handed Russian prime minister Vladimir Putin
and Medvedev a list of Russian scientists believed by Israel to be
helping Iran develop a nuclear warhead. “It [the visit] was kept a secret
so as not to embarrass Moscow,” reports said. The Israelis believe that
Iran had already cold-tested a nuclear warhead for its rockets at a
military complex southeast of the capital Tehran. Iran’s Shahab-3B
rocket, capable of carrying a 2,200lb warhead, has a 1,250-mile range
that puts Israel, parts of Europe and US bases in the Middle East within
its reach.
If it isn’t kept under wraps, we will hear more about it this year
when the hijackers will be tried; in the meantime, speculation has been
rife in Israel and Russia that Arctic Sea was carrying something far
more valuable than timber – probably Russian air defence S-300
missiles – a dangerous cargo the Russian government deployed the full
force of its navy to recover.
In ‘Moscow Rules’, published in July 2008, a journalist with
explosive expose material is violently killed, prompting Gabriel Allon,
our protagonist, to leave the peace and quiet of a villa in the Umbrian
hills and put temporarily aside a Vatican masterpiece he – a worldrenowned art restorer – is restoring for his friend, His Holiness Pope
Paul VII. He heads for newly wealthy Moscow, home to a new generation of neo-Stalinists and a powerful cadre of revanchists hell-bent on
reclaiming the might and glory of a once and former world superpower.
Allon, described as a cross between Jason Bourne and James Bond, is
the ‘avenging angel’ and most capable secret servant of Israel, sent on
butt-clenching and blood-curdling missions and clandestine operations
to vanquish enemies and malefactors – Al-Qaeda, Hezbollah and
various other organisations – who would destroy Israel (and the world.)
Ivan Kharkov, Allon’s nemesis, is a former KGB colonel who
heads a global empire built on arms dealing, selling sophisticated
weapons systems to rogue regimes in the Middle East, most of whom
avowedly seek the annihilation of Israel and her allies. In the new
Russia, ultimate power resides in the Kremlin. “Our leaders speak of
regaining lost empires. They use our oil and gas to bully and intimidate
our neighbours. They have all but eliminated the opposition and an
independent press,” Olga Sukhova, a journalist in fear of her life,
tells Allon.
In real life, the journalist Anna Politkovskaya was gunned down, in
2006, in the lift of her Moscow appartment. A fierce critic of the regime,
she was about to publish an expose alleging torture and kidnappings by
Russian military and security forces in Chechnya. Putin, taking
umbrage at the growing disquiet around the world over her murder,
called her a person of “marginal significance.” In 2007, Ivan Safronov,
a military affairs writer for Kommersant, was found dead in the
courtyard of his Moscow apartment. Police said he committed suicide,
by jumping from the fifth floor of his apartment building, even though
he lived on the third floor. His wife said he phoned her on his way home
to say he was stopping to buy oranges. The police conjectured that he
fell from an open window in a drunken stupor, although the autopsy
found no drugs or alcohol in his system. Apparently Safronov was in
possession of information that the Kremlin intended to sell advanced
fighter jets and missiles to Iran and Syria. Meanwhile, in a Thai jail,
Russian Viktor Bout, the so-called merchant of death and world’s
biggest arms dealer, awaits legal proceedings and extradition to the US,
after his arrest in March 2008 following an American-led sting
operation. He is charged with selling weapons of mass destruction to
FARC rebels in Colombia, the Taleban, Hezbollah and Al-Qaeda.
In real life, Russian politics have become more authoritarian as
Putin’s power has deepened. Owing to its economic resurgence, Russia’s
standing in world affairs has increased.
Allon is a reluctant assassin. In
Vienna, a terrorist put a bomb in his
car, killing his young son and
maiming his wife who
would never be restored to
her health and sanity.
Allon understands the
circle of violence; he
killed the terrorist’s
brother
in
an
operation that earned
him hero status
among the ‘Office’s’
operatives,
the
sayans
(volunteer
helpers to Israeli intelligence)
and
katsas
(undercover
case
officers). Getting to know
our
compellingly
attractive hero requires
emotional archaeology.
A
connoisseur
of
despair, Allon
has
hardened himself against
sentimentality, the charms
and seductions of life. In an
unremittingly hostile world
punctuated by heart-stopping
episodes of sheer terror, carnage
and carrion, Allon’s nerve doesn’t
collapse; he has the temperament of a bombdisposal expert; there are no second acts in the havoc and mayhem of
pitched battles; it’s live or die.
In ‘The Secret Servant’, a deadly Islamic terrorist operation is
under way in London, at the heart of which is the kidnapping of the
daughter of the US Ambassador. “They (the British) have allowed their
capital to become a breeding ground, a spiritual mecca, a soft haven for
Islamic terrorists of every stripe...(who) had come to London, where
they were free to publish, preach, organise, conspire and raise money.
As a result Great Britain, the land of John Locke, William Shakespeare
and Winston Churchill, had unwittingly allowed itself to become the
primary incubator of a violent ideology that sought to destroy everything for which it had once stood,” Gabriel tells Ari Shamron, the
special operations’ memuneh (the one in charge), who reminds Allon
that Israel has enemies everywhere and that just because he’s paranoid,
it doesn’t mean they’re not out to get him.
In real life, Dame Eliza Manningham-Buller, director-general of
MI5 from 2002 to her retirement in 2007, said of the Islamic jihad: “The
threat is serious, is growing and will, I believe, be with us for a generation. It is a sustained campaign, not a series of isolated incidents. It
aims to wear down our will to resist.”
In intricately but wonderfully constructed plots, Allon has appeared
in a series of nine books - international bestsellers which have been
published in 25 languages. The author, 49-year-old American Daniel
Silva, was a Cairo-based journalist for the wire service UPI, covering
the Middle East. Later, for CNN, he covered the region’s conflicts and
Washington politics. As international events unfolded in a volatile part
of the world, Silva’s ringside position gave him an understanding of the
twists, turns and tangles of espionage, intelligence and counterintelligence - material for his novels. Compared with some regularity to John
Le Carre and Graham Greene, Silva’s subject matter is always current
and contemporary. The Wall Street Journal described ‘The Secret
Servant’ as: “Frightening: reads like a prediction of continuing
terrorism in Europe.”
In a world slightly gone mad, there are bogeymen – neo-Nazis,
right-wing extremists, jihadists, disaffected would-be terrorists – who
would call down hellfire. If you want your political thrillers crackingly
intelligent, full-bodied and nerve-wracking, read the Allon books and
meet an extraordinary collection of characters, a better class of criminals
and of talent steeped in spycraft that’s forged in the anvil of
adversity and catastrophe. Switch the phone off; be
prepared to miss your supper and to stay
up, fully engrossed, throughout
the night. ■
101
Enjoy the lifestyle with
LIFESTYLE
By Margie Collins
102
LIFESTYLE
Thomas Malthus, the English economist, argued, in his 1798 essay The
Principles of Population, that the number of people would increase
faster than the food supply, and that further increases in population
would result catastrophically in a population crash caused by famine,
disease or war. In many parts of the world, in Africa and Asia, this
much-heralded dystopia has already come to pass and pundits who
claim to be able to divine the future freely cite the Malthusian theory as
a universal call to arms.
In a recent TIME article, Bryan Walsh wrote: “Someday the
exploding global population and damage of climate change could bring
about the collapse of our resource-intensive food supply.”
As food prices continue to escalate, rising faster than earnings,
there have already been food riots in the last two years in some
countries – India, Bangladesh, Yemen, Mexico. Degraded farmlands,
exiguous agricultural resources, droughts and the high cost of food
production have resulted in food shortages, with the UN’s Food and
Agricultural Organization saying that food production needs to double
by 2050 to meet growing food demand, requiring an annual investment
of $30bn, or the world will witness a crisis of Malthusian proportions
from which it will be extremely hard to lift the world’s poor.
This kind of genetic
modification takes mankind
into the realms that belong
to God and God alone
The UN’s forecast for world population growth is 9bn people, by
2050. By its current estimates, 800m people around the world are
malnourished, suffering from vitamin and other deficiencies. “We are
seeing a new face of hunger,” said Josette Sheeran of the UN’s World
Food Programme. “People who were not in the urgent category are now
moving into that category.”
In a number of developing nations, there has been a significantly
marked surge in food demand, owing to rising wealth and the increasing
urbanisation of geographic areas and populations. As they get richer,
they are consuming more meat and dairy products. In China alone, the
consumption of beef, for example, has gone up by nearly 30% since
2000. The quest for global food security and supply, to feed a growing
and crowded planet, has never been more imperative as now, such that
the G8 nations of the world’s largest economies have recently pledged
$20bn worth of funding for agriculture. “There is an urgent need for
decisive action to free humankind from hunger,” the G8 statement said.
Then there are the structural problems associated with global food
economics and politics. The International Service for the Acquisition of
Agri-Biotech Applications has declared that the size of the world’s
arable land has been steadily declining – thanks to deforestation,
droughts and unrestrained rampant development – since 1960, and will
continue to decrease by almost half in the next 50 years. Peter Timner,
agri-economist of the Center for Global Development, said:
“Agriculture scientists are quite concerned about the lack of a pipeline
of new technology.”
So, starve, perish or find a promethean solution?
Biotechnologists study and exploit biological processes for industrial
and other purposes, including the genetic manipulation of microorganisms for the production of hormones, antibiotics and other matter.
Many scientists and economists hold the view that biotechnology –
through genetic engineering and modification of food – could raise
agricultural crop productivity by as much as 25%. Because cloaked in the
secretive confines of laboratories where specific, calibrated changes are
made to their DNA, these GM products have been dubbed – to tendentious cries from the ‘nattering nabobs of negativism’ – ‘Frankenfoods.’
In 1999, Greenpeace ceremoniously dumped several tonnes of soya
beans outside Downing Street, to protest against GM foods. The Daily
Mail and The Guardian – unlikely bedfellows at the best of times –
joined forces to demand a moratorium on the growing of GM crops in
the UK. Food manufacturers and supermarkets, sensing a middle class
rebellion of all-bran types and a marketing bonanza, touted their social
responsibility credentials by sourcing and selling only GM-free
products, overwhelmingly perceived by the public to have the badge of
quality. The Prince of Wales, never one to shirk a cause dear to his
heart, said: “This kind of genetic modification takes mankind into the
realms that belong to God and God alone.”
Despite a lack of a body of incontrovertible scientific evidence,
GM foods continue to be mired in controversy. Many disputatious and
excoriating concerns about GM foods’ effects on the environment,
health and safety, long-term usage and consumption, as well as their
impact on the ecosystem, have been universally raised, but scientists
say they have already become part of our lives. Since the 1990s, GM
soybean, rapeseed oil, corn, rice, sugar beet, tomatoes, potatoes, sugar
cane and papayas, among others, have been launched in the market. In
2006, a pig was ‘engineered’ to produce omega-3 fatty acids.
Transgenes (genetic material introduced from one species to
another) have been used to give some crops desirable qualities and
nutritional improvements. GM rice, for example, has been fortified with
beta-carotene, which is used by the body to convert it to vitamin A and
iron. Pest-resistant, drought-tolerant and virus-resistant Frankenfoods
have had unsavoury and deleterious traits bred out of them.
“Will Frankenfoods feed the world?” asked Bill Gates, billionaire
chairman of Microsoft and co-founder of the highly influential and
well-endowed Bill and Melinda Gates Foundation. “Biotech is not a
panacea, but it does promise to transform agriculture in many developing countries. If that promise is not fulfilled, the real losers will be
their people who could suffer for years to come.”
The Bill and Melinda Gates Foundation and the Rockefeller
Foundation are jointly funding the Alliance for a Green Revolution in
Africa to boost, through better agricultural technology (such as the
introduction of hybrid seeds), the crop output of small-scale farmers, to
help scientists find new seed strains and breeders to grow them, and to
assist wholesalers deliver a sustainable and secure food chain.
Michael Specter, science writer of The New Yorker, wrote: “GM
technologies will be essential for feeding the world, as will other
biotechnological advances. We are either going to embrace new
technologies, with their limitations and threats, or slink into an era of
magical thinking.” This is the theme of his highly acclaimed book
“Denialism: How Irrational Thinking Hinders Scientific Progress,
Harms the Planet and Threatens Our Lives.”
We are either going to embrace
new technologies, with their
limitations and threats, or slink
into an era of magical thinking
The Frankenfood Myth, written by Henry Miller and Gregory
Conko, also takes a long, hard and critical look at the ‘new’ agriculture
biotechnology and the policy debates and controversies swirling around
it. “The heated debate over so-called Frankenfoods is not only about the
pros and cons of genetically manipulating crops to improve their nutritional value and resistance to disease; it also concerns intellectual
honesty. For years, activists opposed to the new science have been
spreading unfounded and inaccurate horror stories threatening to derail
progress vitally needed to feed the world,” harrumphed a review in
Barron’s, America’s premier financial magazine.
As supermarket shelves and restaurant menus have gradually
become minefields of choice on which we have to take a philosophical
or moral stand, the search for truth and accuracy is in danger of being
caught up in polemics.
When asked to what she would attribute her youthful good looks,
Jane Fonda, 72, replied: “I owe 20% to genes; 30% to good sex, and
2%to a healthy lifestyle. For the rest, I have to thank my plastic
surgeon.” In future, the actress and political activist may have to recalibrate her figures to allow for the new ‘wonder foods’. These include
103
LIFESTYLE
FRANKENFOODS
fortified and functional
foods, and nutraceuticals.
In 1989, Dr Stephen
DeFelice founded the
Foundation of Innovation
Medicine in New Jersey,
USA, and coined the
neologism
‘nutraceuticals’ – a conflation of
nutrition and pharmaceuticals – foods and dietary
supplements derived largely
from plants that benefit bodily
functions, supplying protein, essential
fatty acids and other important nutrients.
They are to be found in processed foods,
including cereals and beverages, that claim
to deliver anti-ageing and health-protection
benefits, prevent and treat certain diseases.
Functional foods contain bioactive ingredients which are incorporated into food
products said to have medical and health
benefits. They include essential fibres from
pulses, barley, wheat and oats; unsaturated fatty
acids from canola (rapeseed) oil; omega-3 acids from
fish and flax, and plant sterols and stanols which help to lower
cholesterol and, consequently, to reduce the risk of heart disease. Plant
sterols and stanols naturally occur in grains, legumes, fruits, nuts and
some vegetables. Yoghurts are not only tasty, they are also probably
fortified with probiotics, which are bacteria that naturally occur in, or
added to certain foods and drinks loaded with medicinal and health
properties. Prebiotics, on the other hand, stimulate the growth or
activity of ’good’ bacteria necessary for the healthy functioning of the
digestive system.
Clearly the food-associated problems and exigencies in the
developed world bear no scintilla of similarity to those in the developing, or least developed, world. This is not a country for old or
decrepit men. These are times when surrendering to the ageing process
is not seen as a natural progression of life, but as a moral dereliction of
duty to remain youthful, vibrant and energetic.
Here, our problems are catholic: the prevention of disease;
combating an epidemic of obesity; gerontology and the needs of an
ageing population; whether eating meat is better – or worse – for the
environment; food as an alternative to medicine; weight loss as part of
a personal-vanity regime; boosting immune systems; socially responsible food free from additives, salt, sugar, dioxins, transfats, colourings.
After all, as the French epicure and gastronome, Brillat-Savarin said:
“We are what we eat.”
Danone is creating a range of ‘active’ foods (e.g., yoghurts) that the
food manufacturer says has health benefits, thanks to the addition of
probiotic bacteria that aid digestion and eliminate bloating. They have
also recently launched Essensis yoghurt which, it is claimed, is ‘beauty
food’ for the skin. The world’s largest chocolate manufacturer, Swissbased Barry Callebaut, is developing a low-calorie chocolate with 9%
fewer calories than the average chocolate bar. Weight-loss Lola chocolates, infused with spirulina algae, are said to suppress appetite. Ocean
Nutrition peach juice is said to be good for memory and concentration.
Teavigo, promoted as ‘the everyday every minute spa’ is an extract of
104
green tea that is said to decrease fat absorption.
Food giant Nestle is selling ‘skinceutical’ fruit juices as beauty
products, with its Glowelle range of drinks that promise to deliver
antioxidants for healthy skin. Last year, Nescafe introduced a collagencontaining coffee as part of its ‘beauty from within’ product range.
Nestle scientists are also working on improving ‘oral melting
perception’ in their range of snacks and fruit juices, by adding
chemicals that make consumers produce more saliva, encouraging the
brain to think the food they are eating is quite refreshing.
EPA/DHA, an essential omega-3 fatty acid found in some health
and baby foods, is a vital nutrient for the healthy cognitive functioning
of the brain, and the retina of the eye.
“You can’t build a brand on bollocks science,” said a food analyst
to The Times. “But people are trying to claim stuff I just don’t believe.
As always, the marketing men are way ahead of what the science can
offer.” That is one view.
Eating for health and wellness is now a mammoth – and growing –
industry. With the combined use of biotechnology and medicine, the
ingenious arts of psychology and marketing, food manufacturers who
can convince consumers they can live healthier and better lives by
eating their foods are raking it in. The functional foods market in the
European Union countries alone is worth 3.5bn Euros – and growing.
Studying and researching these trends and developments is the trailblazing Restaurant of the Future at Holland’s Wageningen University,
Europe’s biggest research centre in food science. RoF, founded two
years ago, is both a canteen serving an array of proper meals and a
sensory consumer-research laboratory whose scientists experiment with
new food products, food-preparation techniques and mood-enhancers,
and then closely observe the reactions of a controlled group of diners
who has been registered to partake in a living study of eating and
drinking behaviour. Which salads or drinks will they choose? Do they
linger over certain dishes? Do flowers on a table improve the dining
experience? How bright or low should the lighting be? What fooddescriptive words will trigger what reactions? What food is left over?
“The Restaurant of Life is a living laboratory, a place where scien-
People are trying to claim
stuff I just don’t believe.
As always, the marketing
men are way ahead of what
the science can offer
tists, together with private industry, work on trying to understand why
people behave as they do with regard to eating and drinking,” said Rene
Koster, director of the RoF Research Foundation.
The phenomenal amount of data RoF has already accumulated and
studied is now being used by food scientists and food manufacturers to
assess their products prior to being launched in the market. As food also
has cultural, moral, social and religious significance, the data is also
available to governments.
When asked whether he preferred honey or condensed milk in his
toast, Winnie the Pooh said he would gladly take both, but could do
without the bread, thank you. That’s okay; just don’t tell the men in
white coats at Wageningen! ■

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