How I SMI - Ship Management International

Transcription

THE MAGAZINE OF THE WORLD’S SHIPMANAGEMENT COMMUNITY
COVER STORY
ISSUE 15 SEPT/OCT 2008
FIRST PERSON
20 Andreas Sohmen-Pao
Managing Director of BW
Shipping and Vice Chairman of
BW Gas
SHIPMANAGEMENT FEATURES
24 How I Work
SMI talks to industry achievers
and asks the question: How do
you keep up with the rigours
of the shipping industry?
28 On my mind
Danilo Raffa - Fleet Director,
Ishima International
Shipmanagement
91 Insider
Wang Cheng, - Secretary
General, Asian Shipowners
Forum
p52 Fighting the fuel crisis
LETTERS
19 Mailbox
Lessons on Naval Architecture for Economists
8 STRAIGHT TALK -
Too little, too late?
NOTEBOOK
9 Vafias sticks with third party managers
StealthGas boss Harry Vafias has denied reports that
he is moving all his ships into inhouse management
11 BW Gas pooling decision linked to
EC fears
On the Record
Shalabh Mittal - CEO of Mercator Lines
More superintendents looking to return to
sea
More and more superintendents are considering
returning to sea because of the wage scale situation
which is putting pressure on ship managers’
shore-based operations
13 Shipowners spend $6.8 billion
on second hand vessels
OverHeard
14 US cadets to train on
Hapag-Lloyd ships
US merchant navy
cadets can now
undertake vital sea
training onboard
Hapag-Lloyd box ships
under an innovative
agreement signed
between Washington
and the shipping line
Shipping needs to sell itself rather
than ‘opt for the cheapest option’
The shipping industry needs to break the
‘vicious circle’ of trying to find the cheapest
workforce available and start to compete with
other comparable industries for the available
manpower
Schou takes temporary charge at
Wilhelmsen Ship Management
17 Seafarer certificate fraud
‘getting worse’
15 B+H ‘to up’ its cadet
programme
IG members to issue Bunker
Greek ship owners once again dominated the S&P mar- Convention ‘blue cards’
kets by acquiring a total of 146 second hand vessels
This move follows the entering into force on
worth $6.8 billion in the seven months to the end of July November 21st of the Bunker Convention
Google goes
green on the
seas
Owners still need educating
SEPTEMBER/OCTOBER 2008 ISSUE 15 SHIP MANAGEMENT INTERNATIONAL
5
NEWBUILDING
SHIP REPAIR
31 Scale a common factor in areas of market vigour
78 More conversion contracts for Singapore
REGIONAL FOCUS
BUSINESS OF SHIPPING
32 Singapore
Revving hard for the chequered flag
80 AdHoc
In many Singaporean’s eyes, the island comes of age on September
28th, 2008. I’m not talking an anniversary marking a past historical
event but a milestone event marking the start of things to come
Moving at the slowest speed
Titanic restoration for SS Nomadic
Wipe the tears away
There she blows
Internal auditing too isolated for UK insurers
42 Hong Kong
Banging the same drum
but only harder
There is one thing to be supportive
of your operation and there is another to be highly protective of its market position against all the odds
TRADE ANALYSIS
BOOK REVIEW
50 Dun & Bradstreet
Country riskline report for Hong Kong (S.A.R.)
74 Offshore: Concentrating on the silver lining
Accelerated and fast expanding offshore exploration activities
fuelled by the high global oil price have prompted a burgeoning
world offshore supply and anchor handling tug orderbook
DISPATCHES
58 New gas shipment
solutions broaden the
fleet's reach
Although cost pressures and overruns have hit a number of liquefied
natural gas projects, overall capital
expenditure looks set to reach new
heights over the next few years
against the backcloth of rising
energy demand
86 Books reviewed include:
The Port of Medieval London, The Wisdom
of Whores: Bureaucrats, Brothels and the
Business of Aids, Port Royal, Safety and
Health in Ports, ILO Code of Practice,
Aden: The Mythical Port of Yemen, The
Box: How the Shipping Container
Made the World Smaller and the World
Economy Bigger and The Complete Guide to
European Cruises: A Cruise Lover's Guide to Selecting the
Right Trip, with All the Best Ports of Call
LIVE
88 Objects of desire Things that make you go oooh!
64 Caspian profits as Russian waterways open up
Russia is preparing to give western shipping companies unrestricted
access to its 62,000-mile strategic United Deep Inland Waterway
System and the resulting profit opportunities will be enormous
LIFESTYLE
69 Is Greek manning facing crisis point?
92 A ride on the wildside,
with a difference
The Greek government has undertaken, for some years now, a programme to introduce basic seafarer
training in publicly administered
schools but the ship owners and
crew managers believe this may still
be a case of too little, too late
6
SHIP MANAGEMENT INTERNATIONAL ISSUE 15 SEPTEMBER/OCTOBER 2008
Ever fancied flying along upside
down on a horse galloping at
breakneck speed; hanging on by
the tip of your toes whilst
simultaneously performing a
series of complicated acrobatics?
STRAIGHT TALK
Welcome to
Ship Management International
September/October 2008
Issue No. 15
www.shipmanagementinternational.com
The Shipping Business
Magazine today’s owners and
managers have been waiting for
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Ship Management International Editorial Board
Rajaish Bajpaee
(Bernhard Schulte Shipmanagement)
Guy Morel
(InterManager)
Nigel Cleave
(Epic Ship Management)
Andreas Droussiotis (Bernhard Schulte Shipmanagement)
Dirk Fry
(Columbia Shipmanagement)
Sean Moloney
(Elaborate Communications)
Svein Pedersen
(EMS Ship Management)
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Sean Moloney
Reporters:
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Debbie Munford
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8
Too little,
too late?
Is it me or was I imagining things? Prime time television, 7.30am, mid-September, on the BBC no
less, and Hugh Pym, that erstwhile journeyman
reporter pictured standing at Felixstowe docks
talking the eight million or so viewers through
what he described as the start an epic journey of a
container around the world. All part of a new
multi-media feature following a container on an
NYK box ship around the world for a year to tell
the story of globalisation and world economy.
So enthusiastic is the ‘Beeb’ about the project
that it has painted and branded a BBC container
and bolted on a GPS transmitter so viewers can follow its progress all year round as it criss-crosses
the globe. “The Box will hopefully reach the US,
Asia, the Middle East, Europe and Africa and
when it does BBC correspondents will be there to
report on who's producing goods and who's consuming them,” proclaimed the BBC’s website,
enthusisatically.
Excellent stuff, I hear you gasp. At last shipping
is getting some prime-time television coverage.
Well, before we all rush down to the supermarket
to crack open a deliciously cool bottle of
Australian sparkling chardonnay (oops in my haste
I forgot to mention that that would have probably
been shipped in a container as well together with
the glasses and possible the chair I am pulling up
to sit on), let’s ask ourselves why that international bastion of television documentary excellence
has gone down this route? According to its website, the idea of the project is to tell the story of
international trade. Good start, but is it more to do
with trade rather than the role shipping actually
plays in allowing trade to happen – half the world
freezing and half the world starving if shipping
wasn’t there etc etc? With my cynical hat on, I
remain open to persuasion.
I just feel a little disappointed that in these times
of booming global trade, albeit it with the odd subprime crisis and bank foreclosure overshadowing
things, that this outstanding and totally global
industry we call shipping should feel humble
because it is getting a few minutes of primetime
airtime. Don’t get me wrong, it is definitely a move
in the right direction but in my view this should be
happening all the time. The ships and their crews
and their owning entrepreneurs as well as the ports
and the suppliers et al. deserve to feature in every
programme worthy of their appearance. Yes, 95%
of world trade is carried by ship, so let’s start to
shout louder about shipping’s successes.
Keeping on the theme of television coverage, I
was surprised a couple of months back to see on
the National Geographic Channel an excellent
hour-long documentary about the Port of
Singapore. Entitled the World’s Busiest Port, the
documentary gave a highly focused and detailed
account of the difficulties of running a busy port. It
gave the man in the street, a very well thought out
view of how professional shipping is and how
dependent the ships, their crews and the ports are
on everyone in the operations chain to ensure the
ship and its cargo arrives and leaves the port safely. Plenty of video footage of containers and gantry
cranes served to educate and there was even some
high drama when a vessel docked at the port having just evaded pirate attacks in the Malacca
Straits. It made you feel proud to be part of this
industry.
Maybe the BBC and The Box could take a leaf
out of National Geographic’s book?
I first met Hugh Pym when I was a reporter for
Lloyd’s List covering the Braer oil spill off the
Shetlands in the early 1990s. He worked for ITN
then and we helped each other. He gave me first
sight of video footage of the wreck taken from ITN
helicopters and I did my best to explain what it all
meant. You had to cooperate like that in those preinternet days and a friendship was forged. So I am
pleased to see him return to an old stomping
ground.
But I just hope this latest initiative is not one of
those stories that will be forgotten as quickly as it
popped up. Will the viewers be logging on in their
thousands next April to plot the ‘Box’s’ triumphant
return to European waters. Who knows, it all
depends on how well marketed it is by the BBC
through its programme planning.
Too little, too late? Let's hope not.
Sean Moloney
NOTEBOOK
SHIPMANAGEMENT NEWS AND REPORTS FROM AROUND THE WORLD
Vafias sticks with third party managers
StealthGas boss Harry Vafias has denied
reports that he is moving all his ships into inhouse management but has criticised those
managers that talk about their management
prowess rather than delivering the results that
owners’ demand.
In a hard hitting interview with SMI, Harry
Vafias also outlined his crewing plans for the
84 vessels the Stealth Group controls which he
says involves a combination of recruitment and
training as well as paying market rates for its
seafarers, rather than poaching staff at inflated
wage scales.
“Even if I wanted to, I couldn’t handle the
in-house management of all our ships, because
that would mean that except for the huge number of crews needed onboard ship which we
don’t have, we would need to double our office
staff from one hundred to two hundred people
which again is impossible,” he told SMI.
“Even in two years you cannot do it because
you can’t find and employ that many knowledgeable people that quickly. So no, that’s not
our goal. The goal is to continue splitting the
whole fleet in three which is one third managed
in-house, one third operated on bareboat charter, and one third split between two third party
ship managers.”
He confirmed that the third party managers
he is currently using are Swan and EMS and
outlined the demands he is placing on them.
“We are very fair and reasonable people. If
the managers show they are honest and try for
the best and care about the running costs, this is
appreciated and we will
give them more ships.
“Unfortunately
the
majority of ship managers
are not like that: maybe
because they are too big or
because of bureaucracy, or
because they are understaffed. We have seen over
the past few years,
through our comparisons
and benchmarking, that
we can run the ships more
cheaply in-house and with
fewer problems.
“There are so many
managers out there bragging about their people,
their skills and their history, but in reality the numbers speak on their
own. We face the same problem being a public
company and the ship managers that perform
well will get more ships and continue the business. People who do not, we will reduce our
exposure to them.”
When it came to the manning of his ships, he
said there were three options open to him. “One
option is you pay the market rates and you get
decent crew, not the best, but you get decent
crew. The second option is paying a premium
to the market which means you can poach good
crew from others which is not very good
because then you start a price war and costs go
through the roof. And third is to start training
and preparing crews from new areas similar to
our efforts in South East Asia. But this option
has advantages and disadvantages. The advantage is that if you have trained them and they
are capable, then you’ve got some good, cheap,
loyal crews. The disadvantage is that it takes
time, and secondly if someone goes and offers
them 25% on top of what we’re paying, then
they forget the loyalty and they just dump you.
“We are following option one and partly
option three but many owners are going with
option two. I couldn’t go with option two even
if I wanted because many of my ships are small
and don’t have the profit margin in the income
to attract the best of the best,” he added. ■
9
NOTEBOOK
BW Gas pooling decision linked to EC fears
BW Gas will continue to operate its LPG fleet
independently of any pool arrangement because
of concerns over possible action by regional regulators like the European Commission against
such operations. But it has not ruled out further
partnerships with other companies as long as it
is done in a manner which is not at risk from
regulatory challenge.
The move follows the decision by both BW
Gas and Exmar to terminate their participation
in their respective pools. BW Gas said it would
withdraw from the Exmar-operated MidSize
Pool while Exmar will withdraw from the
BW Gas-operated VLGC pool.
Andreas Sohmen-Pao, ViceChairman of BW Gas, told
SMI that the decision to withdraw from the pools was not
taken overnight. He also indicated that it was not linked to
BW Gas’ recent decision to
withdraw from talks over the
possible sale of its LPG fleet.
He said: “Somewhat independent of the sale process we
felt it was prudent for us to
manage our ships independently rather than on a pool basis. With continuous
question marks in the EU over how they look at
pooling we felt it was prudent to operate our
ships independently. The fact of the matter is
that the pools didn’t have any anti-competitive
effect because if you look at how weak the market has been in LPG over the past 12 months, it
demonstrates one is not using the pools to have
unfair gain or advantage.
“Sometimes we feel the regulators don’t necessarily look at the results in terms of the market. They look at their own criteria and it was
not a risk we wanted to take,” he told SMI. ■
on the
record
Shalabh Mittal
CEO of Mercator Lines
"It is difficult to say whether shipping
rates have peaked. The demand
side looks strong. We are shipping
more coal and iron ore than last
year. Our profits and revenue went
up on the back of a higher number
of ships and higher capacity, which
was up by 68% year-on-year. Freight
rates were also higher. For the next
quarter and the rest of the year, we
have more than 85% of our capacity
locked in. Even though freight rates
are correcting, they are still at a
pretty healthy level.''
More superintendents are looking to return to sea
More and more superintendents are considering returning
to sea because of the wage scale situation which is putting pressure on ship managers’ shore-based operations.
That is why it is important the third party management
sector adopts a controlled attitude to growth that
embraces economies of scale, said one leading player.
“The market is red hot at the moment and we could
get all the business we wanted but for a variety of reasons we don’t because it is all about growing prudently,” said Bjorn Hojgaard, Managing Director of Thome
Ship Management.
It also plays havoc with the officer matrix managers
have to fulfil, “because you can’t grow your pool which
has time and rank with the company. If you have too
many new guys the matrix falls apart.
“This crew shortage situation pushes wages
up very fast and that has a spill-on effect on superintendents especially if the alternative is to go back to
sea and that is starting to happen. There are some
responses to this and one is controlled growth to
the extent that that is possible, ie economies of scale,”
Mr Hojgaard said. ■
NOTEBOOK
Shipowners spend $6.8 billion
on second hand vessels
Greek ship owners once again dominated the S&P markets by acquiring a total of 146 second hand vessels worth $6.8 billion in the seven
months to the end of July, according to data compiled by shipbrokers
Allied Shipbroking. Of them, 86 were dry bulk carriers, 51 were
tankers and nine were container ships. These figures place the country’s
maritime industry in the top spot for second hand sales, while at the
same time point to the continued large popularity of dry bulk carriers as
freight rates continue to rise.
On a global basis, the value of second hand deals reached almost
$25 bn, accounting for a total of 819 ships of 38.3 million tons. Dry
bulk carriers were the most popular with 416 of them, of 16.4m tonnes
and with a value of $12 bn changing hands. A total of 272 tankers of
19.3m tons and worth $8.9 bn changed hands during the period.
China was in second place, with the country’s shipping companies acquiring 67 ships worth $2.2 bn. Of this total, 28 were bulk
carriers while 36 were tankers. German ship owners took third
place with purchases of 38 second hand ships in total. Container
ships were the most popular with 18 being added, while owners
took an additional 14 tankers and six dry bulk carriers.
On the contrary, new building order activity hasn’t been that
intense with Allied placing the total number of orders at 119 vessels, worth $8.2 bn. This compares with 303 ships of 25.3m tons
and worth $16.8 bn during the same 2007 period. ■
OVERHEARD
Andreas Sohmen-Pao
Vice Chairman of BW Gas talks
about future VLCC purchases
“It will be an important sector for shipping
for a long time to come and we would ideally like to be expanding in the sector. We
intend to do so but a lot has to do with timing because we
feel asset prices are at an all time high and so it is maybe not
the best time to be making big bets in the sector. But our
commitment to the VLCC sector remains very strong and our
commitment to growing the business is still very much there.
It could be through either S&P or newbuildings but it is
whether we feel asset prices are at levels where we can get
a decent return and at the moment there is a big question
mark over whether that is the case.” ■
13
NOTEBOOK
US cadets to train on Hapag-Lloyd ships
US merchant navy cadets can now
undertake vital sea training onboard
Hapag-Lloyd box ships under an innovative agreement signed between
Washington and the shipping line.
The accord, signed by Maritime
Administrator Sean Connaughton and
John Murray CEO of Hapag-Lloyd
USA, paves the way for the training
programme to start from October.
“Cadets will receive excellent
training from skilled maritime professionals on a variety of seagoing vessels,” said Sean Connaughton.
“Hapag-Lloyd should be commended
for their commitment to these
American students.”
Cadets must carry out part of their
training on working vessels if they are to
qualify as licensed mariners. US maritime academies hope that training on
one of the world’s largest liner shipping
company will open new opportunities
and experiences for their maritime stu-
14
dents – especially at a time of seafarer shortages.
Captain Eric York Wallischeck,
Assistant Superintendent for Plans,
Assessment and Public Affairs at the
US Merchant Marine Academy, said
the scheme with Hapag-Lloyd will
“give our midshipmen a chance to
sail on some of the more technologically-advanced vessels, and provide
greater opportunities for training
routines with our midshipmen.
“We expect them to acquire
greater professional exposure to
state of the art vessels and more of
an international perspective on the
shipping business than they might
otherwise get just by sailing on
American carriers,” he added.
Captain Wallischeck said he
hoped to see more American
mariners on some of the LNG ships
serving the US, both for security reasons and for mariner experience. ■
NOTEBOOK
IG members to issue Bunker
Convention ‘blue cards’
B+H ‘to up’ its cadet programme
Product Tanker to OBO owner and operator B+H Ocean Carriers
has not ruled out expanding its cadet programme to deal with the
worsening crew shortage situation.
It has already expanded its onboard training initiatives and has
also introduced a comprehensive assessment program for all potential promotions to Master.
Steffen Tunge, Managing Director of B+H Equimar Singapore,
said the situation was getting progressively more difficult “and I am
concerned where it will all end”.
He told SMI: “We have already a fairly large cadet programme
and we will maintain this or even expand it. In addition to our own
crewing agency in Manila, which mainly handles ratings, we have
been working with several crewing agents over a number of years
and they still manage to provide the officers we need. But again
this is becoming difficult and we see that it is hard to get the right
combination of experienced officers to all our ships.” ■
Shipping needs to sell itself rather
than ‘opt for the cheapest option’
The shipping industry needs
to break the ‘vicious circle’
of trying to find the cheapest
workforce available and
start to compete with other
comparable industries for
the available manpower by
making the seagoing profession an interesting option for
a potential career, according
to Anglo-Eastern Chief
Executive Officer Peter
Cremers.
Speaking to SMI, he said
the industry needed to
attract better people, especially when you consider the salary levels being paid.
“I think we should try to break the vicious circle of always trying to
find cheaper people. We need better people in the first place so I think
that with the salaries that are being paid now, the industry should look
at how it makes the job onboard ship more interesting for smart people
in competition with jobs offshore rather than focusing on where can I
find cheaper people. That mindset should finish.”
“If you want a ship to operate like an airliner, you want no mistakes,
no pollution, no collisions, and you want the ship to run like clockwork,
you need the right people for that,” he said. ■
The International Group of P&I Clubs is to issue Bunker Convention
‘blue cards’ to enable those governments that have ratified the
International Convention on Civil Liability for Bunker Oil Pollution
Damage 2001 (The ‘Bunkers Convention’) to issue Bunker
Convention certificates.
The move follows the entering into force on November 21st of the
Bunker Convention. Ships registered in a country which is not party
to the Convention and which requires a certificate because they are
calling at a port or arriving or leaving an offshore facility in the territorial waters of a State Party to the Convention after the entry into
force date, must obtain a State issued certificate from a State Party to
the Convention.
Initial discussions with ratifying states suggest that the majority are
prepared to issue certificates to such ships. A small number of State
Parties – UK, Liberia and Cyprus – have agreed to issue certificates to
ships registered in non-State Parties irrespective of whether they are calling at a port in their territory or arriving/leaving offshore facilities in their
territorial waters after the entry into force date. ■
Schou takes temporary
charge at Wilhelmsen Ship
Management
The hunt is still on for a replacement to Geir
Sekkesaeter, the highly vocal President of
Wilhelmsen Ship Management but in the
meantime Carl Schou, head of crewing at the
former Barber Ship Management operation,
has taken over as acting president until a
final solution is in place.
Geir Sekkesaeter recently announced that he was swapping Oslo
for Glagow by moving to head up shipmanagement operations at
Teekay. He was seen as something of a rising star within the shipmanagement sector and some sources suggest the move to
Glasgow is only the first step in a planned rapid movement up the
Teekay senior management ladder.
Wilhelmsen Ship Management has been searching for a new
President since June but as Geir Sekkesaeter is due to leave the
company soon for Teekay, Carl Schou has taken temporary charge
of ship management operations. ■
15
NOTEBOOK
Seafarer certificate fraud ‘getting worse’
An EU-sponsored pilot project to combat seafarer certificate forgery has highlighted shocking worldwide concern over the degree of
fraudulence permeating the marine industry.
The project, branded ‘Get Quality’, revealed
that “nearly every tenth seaman worldwide has
had direct or indirect experience of fraudulent
certificates,” and this pressing issue takes on a
distinctly international dimension given that
the majority of seafarers serve on board vessels
under foreign flag.
Captain Jazeps Spridzans, project partner,
underlined how “a considerable volume of such
fraud undermines the training and certification
system, evokes suspicion and distrust between
partners and countries in recognition of certificates, and causes danger to human safety at sea.”
The project, which involves Germany, the
UK, Lithuania and Latvia, started in October
2006, with the aim of confronting concerns surrounding seafarer competency. It has designed
an anti-fraud tool system to help tackle the
problem head on.
However, despite an IMO involved study in
2001 which released the deplorable statistic of
12,635 detected cases of certification forgery in
that year alone, no follow up effort has been
made since to combat the issue.
One of the largest concerns is the lack of verification process following proof of certification,
and the study revealed that 29% of port employers do not even see original certificate documentation, relying only on verbal assurances or
claims, and 55% of German shipping companies
never verify a certificate’s authenticity.
Captain Spridzans said: “The existing version of STCW Convention does not request
administration to verify all ancillary certificates
and educational diplomas of the candidate for
certification.
“For combating forgery in the maritime sector,
concentrated countermeasures of all countries are
necessary, including the obligation for certificate
issuing administrations to verify all background
documents for certification such as educational
diplomas, sea-service periods, medical certificates, and training certificates,” he added.
The pilot project conducted in Latvia proposed that in addition to certificate verification
processes to be imposed, industry authorities
Google goes green on the seas
Google, in its bid for worldwide domination, has set its
sights on the shipping industry
with the potential launch of its
own ‘internet navy’. The global
giant is seeking to implant the
supercomputers responsible for
carrying out its extensive internet searches
onto offshore vessels situated within 11km
from the coast.
In the effort to go ‘green’, the floating data
centres will use wave energy to power and cool
their computer systems, while simultaneously
reducing the huge company costs incurred from
property taxes on its extensive data centres,
currently sited all over the world.
Google stated that the computing centres will
be “located on a ship or ships, anchored in a
water body from which energy
from natural motion of the water
may be captured, and turned
into electricity and/or pumping
power for cooling pumps to
carry heat away.”
The lucrative plan hopes to
reduce the monumental amount of electricity
required to both carry out its internet searches and
in ensuring that these vast systems do not overheat, and with data centres consuming approximately 1 per cent of the world’s electricity, the
carbon footprint these computers are stamping
out is a sizeable one.
How soon the Google fleet will take to the
seas is as yet undetermined, but such vessels
could sail towards a greener future for internet
computer power.
should also introduce a digital image database
on which all official seafarer documentation is
stored via a secure and confidential internet
website.
While such proposals for official and thorough inspection systems to be introduced and
enforced worldwide have been suggested, the
marine industry now awaits further development via official bodies such as the IMO in the
imperative protection against illegal and fraudulent seafarer certification.
Owners still need
educating
Owners and managers still need to be educated about the broadband communications
onboard ship but they are slowly coming
round to the benefits, according to David
Hess, Managing Director of Corporate
Satellite Communications.
The current economic factors are playing
a role but there are those in the market who
know they need broadband on the vessel but
then it comes down to the different solutions
on the market, he said.
CSC has just acquired Digital Video
Systems, a 32 year old company with expertise in building and installing large scale satellite antenna arrays for the maritime segment.
LETTERS
MAILBOX
Lessons on Naval Architecture for Economists
SIR.The stability of an empty ship, the centre of gravity of which
is higher than when loaded, is controlled through ballast tanks i.e.
those tanks in the ship’s bottom which are selectively filled and
emptied with sea water to ensure satisfactory and safe sailing conditions. As the need for accurate control of the stability increases,
as for example in container vessels, so does the number of ballast
tanks in the design of the ship.
The existence of a single space for ballasting has long been discarded, not only because large free surfaces affect ship stability
in a negative way, but also because of the real danger of the ship
going down in case of water ingress when in loaded condition.
Compartmentised ballasting spaces effectively limit flooding,
thereby enhancing the chances of vessel survival.
The logic of naval architects reminds me of the applicable logic
in the case of the independent economies in the past. In the past,
say,two decades ago, before the Uruguay Round, the ship bottom
of the world economy was divided in small national entities.
National currencies and import duties played the role of ballast
tank bulkheads. This system ensured certain important advantages
as for example the protection from spreading of economic crises,
the responsiveness of each one of the economies to the traditional
tools of monetary policy and the controlled allocation of investment and resources in the economy.
Globalization, which also has advantages, such as cheaper
goods for all, optimized resource allocation on a global basis based
on each country’s comparative advantage and strong increase in
the international trade volume, has become possible with the lowering of import duties, in many cases followed by relaxation of foreign exchange restrictions, in other words, the demise of subdivision. The first economies which have benefitted from these developments were the economies of the Far East which have since been
showing very strong economic growth.
In practical terms what has happened reminds of communicating
vessels.
A single economy, all together in the ups, all together in the
downs, difficulties in economy management at all levels as the
ship rolls in response to large free surface effects stemming from
unrestricted capital movements due to speculation and relocation
of investments. The response of the system has become erratic, if
not downright unsafe.
Even though the problem appears to have enormous dimensions,
the options open to the policy makers are notably limited. From
what we are in position to know today, either effective control
mechanisms of the globalized economy – which I personally doubt
if there are any – will have to be put into motion, or retrograde
steps will have to take effect , increasing the number of ballast
tanks until an acceptable degree of stability is achieved. If nothing
happens, we shall all have to familiarize ourselves with an eco-
nomic environment characterized by uncontrollable rises and
abrupt plunges. I have no idea what that implies for the contemporary state, yet I have the hunch there will soon be governments
with the hands raised in despair.
I hasten to add that a massive ingress of water has at all costs to
be avoided – and I intentionally avoid giving an example- without
any bottom subdivision, as in that case the outcome is easily predictable by the laws of physics.
Let us consider our responsibility, dear colleagues from the economic profession, except if this in reality belongs to the politicians, who will be called to handle economies in parametric roll
with the expertise of an apprentice magician in matters of vessel
stability.
Dr Alkis John Corres,
Chairman of the Hellenic Association of Maritime Economists
SIR. Stunned by the unequivocal level of piracy currently sabotaging the world’s fleets, I beg to question the preposterous inclination towards granting these terrorists their demand for a substantial
cash reward in the mutilation of a ship owner’s property, crew and
trade operations.
Why are we debasing
ourselves to the extent
of satisfying their corrupt and aggressive
behaviour, providing an
inherently
unequal
trade-off between what
is a sincere and honest
trade and a vilely illicit
hostage scam; all in the
name of human rights?
It escapes me, that in
a society and an industry
that is facing major challenges with an economic downturn, and legislation and restriction
at their summit of responsibility, that we are allowing such
abysmal episodes of piracy to continue, unsupported by any major
authority and left to face the consequences and the sticky financial
aftermath which ensues. Underwriters and P&I Clubs are in the
major firing line, but ship owners and operators are the ones who
will have to face this sad music of humanity when it encroaches
onto the industry to a degree of interminable disrepair.
James Lorenz,
Cape Town, South Africa
19
Andreas Sohmen-Pao
Managing Director of BW Shipping and Vice
Chairman of BW Gas
Andreas Sohmen-Pao doesn’t need to say much to be heard because
he is part of that new breed of young and highly educated entrepreneurial talent that is slowly starting to change mindsets in the global
shipping industry. His business and educational credentials are
impressive. Born in 1971, he has served as Vice Chairman of BW Gas
since 2003; is Managing Director of BW Shipping and is also a member of the Advisory Board of Deutsche Bank (SHL). He holds a double first class honours degree from Oxford University and an MBA
with distinction from Harvard Business School. Impressive credentials, indeed. But it is his views on shipping’s future that make particularly interesting reading, especially in light of its poor image and the
issue of over ordering versus the problem of adequate and effective
manpower supply.
“I think it’s a clear fact that there’s a lot of demand for an increasing number of ships to be manned and maintained,” he said. “The
industry is responding by increasing training and by increasing cadet
programmes onboard its ships. It is also trying to make itself attractive to new recruits.
“So it’s not a static picture where only one side of the equation is
moving. I think there is a clear response as well. But sometimes what
we’re talking about is a temporary mismatch, or to put it another way,
I guess I would say there’s sometimes a lag time to be able to respond
fully and effectively to these types of challenges. During that period
there are risks, either in terms of cost inflation or in terms of our standards and in stretching people too thinly. But I am confident that over
time, this equilibrium will return.”
But it is today’s ship managers who are assuming responsibility for
the thrust of the global training push. Do you think it is because they
failed to institute the levels of training they should have done years
ago?
“I think it would be very hard to argue that enough has been done
because when it comes to training, there are always improvements
one can make. Even in a scenario where the manning demands are
stable, I think that additional training can bring benefits and maybe
one might reach a point of diminishing returns on hard skills.
“But as far as soft skills, leadership, development, communication,
improving understanding of a companies strategy and the connection
between ship and shore are concerned, I think there are so many
opportunities to take that further. So in a scenario where there is a
potential shortage, that shortfall in training becomes ever more visible. I think again there’s a danger in talking about it too much on an
industry-wide basis because then that could be taken as an excuse for
inaction to say, well the industry hasn’t done enough. I think the best
way to respond is to look at one’s own organisation and one’s own
20
“I think it’s a clear fact that there’s a lot of
demand for an increasing number of ships to
be manned and maintained. The industry is
responding by increasing training and by
increasing cadet programmes onboard its
ships. It is also trying to make itself attractive
to new recruits”
needs and to invest in people, invest in training, invest in getting the
right people in the organisation. And if everybody does that then, low
and behold, as an industry we’re doing the right thing. So I think, of
course, one has to look at the macro picture of what’s happening in
the industry, but in terms of taking action I think there’s no better way
than to start with one’s own situation and organisation.”
A fair comment, especially when you consider that when asked
about the crew shortage crisis, some large more highly capitalised
owners say ‘crisis: what crisis?’ They look after their own crews and
that involves training them. But not all owners are like this and there
are a lot of owners who operate smaller fleets and have to rely on
third party managers to meet their crew supply needs?
FIRST PERSON
“I think it’s a good point, but I think that these people who aren’t
tackling it at an individual organisational level are going to be the
first to suffer the consequences,” said Andreas Sohmen-Pao. “Either
in terms of having to pay substantially over the odds in order to compensate for the lack of attention to these issues, or alternatively, just
having insufficient people or having too many incidents or whatever
it might be. So maybe another way to put this is that there will be an
increasing spread in terms of outcome, whether operational or financial as companies deal with this issue for better or for worse.”
He added: “Well I wouldn’t want to disparage managers against
owners but I would say that there is generally more stability and visibility when it comes to an owner managing his ships because they
are in control of how and where those ships are managed. It’s just a
fact that ship managers are very much subject to the decisions of their
principals which can change at any given time, whereas if one is in
control of one’s own fleet and decisions relating to that fleet, then one
can control that aspect better. The natural consequence then is one’s
willingness to invest in people when there is greater stability and visibility and this would tend to be higher.
“It’s not a given, but generally you’re happier to invest when you
see a long-term value to doing that. And I think that for some of these
soft issues I talked about such as motivation, sense of belonging,
sense of participating in outcomes and in building something and the
job satisfaction that goes with it. Another way to put this is does one
feel like one is contributing towards building a beautiful building
structure, a great company, or does one come to work each day just to
put down another brick which may be a wall, it may be a building, it
may be multiple buildings, but you’re not actually contributing to
building something with lasting value.”
So what about the shipping markets? There is a lot of ordering
going on at the moment with a lot of vessels due out of shipyards over
the next few years and the markets could start to alter?
Andreas Sohmen-Pao said: “I think it’s very hard to summarise
because each market and each sector will march to its own tune. I
think one offsetting factor is clearly the very strong primary demand
for energy and raw materials which will fluctuate because the world
“BW Gas hit the headlines throughout
the summer not only through revealing
its latest set of results but also by
walking away from an approach to buy
its gas fleet”
economy is fluctuating. One has growth in other sectors like the container trades and I guess my view is very different if you talk on a
five-to-ten year average perspective, verses quarter by quarter and
year by year. Because I think we’ll see a lot of volatility looking on
a short term basis. But if one looks at averages over the mediumterm, then some of this volatility will iron itself out through the law
of averaging. I think the danger of volatility is that one can get
caught out in investing in expensive assets and then finding themselves in a short term, very weak market. But if you have a big fleet
and much of that has been contracted at reasonable prices then one
can actually weather quite a bit of this volatility. So I think again,
what it will mean is there may be a wider spread of outcomes,”
he added.
So with this massive amount of business coming onto the market, does
it mean you have to look at more long-term business for your ships?
“Yes, one of the things we have done is to be a little more restrained
on vessel ordering so we have pulled back from any massive ordering
programme. We have significant investments of over $1bn a year, last
year, this year and next year and the general run rate has been at this
level and this is before looking on the M&A front and share acquisitions. But these were investments conducted at lower prices initially or
against fixed contracts so having visibility of cash flow.
“If we look across the group and with offshore being predominantly fixed income, gas being half/half with LNG being all fixed, LPG
being some fixed and some floating then tankers, I would say we have
group wide, a pretty well balanced portfolio right now. As long as
the outlook is volatile we would seek to maintain a balanced ➩
21
FIRST PERSON
“I wouldn’t want to disparage managers
against owners but I would say that there is
generally more stability and visibility when it
comes to an owner managing his ships
because they are in control of how and where
those ships are managed”
portfolio because it allows us to enjoy some of the upside but not
take too much downside risk either,” he said.
BW Gas hit the headlines throughout the summer not only through
revealing its latest set of results but also by walking away from an
approach to buy its gas fleet. The company announced in mid-August
that increased expenses had badly affected results in the second quarter with net profit waning despite revenues rising. The weaker result
was announced on the same day that the company’s board threw out
offers for its entire LPG fleet.
Indeed, the continuing weakness of the US dollar against the
Norwegian kroner took its toll while the company bagged less from
ship disposals. The very large gas carrier (VLGC) fleet in particular
22
enjoyed a torrid quarter as operating profit dwindled in the face of
soaring bunker costs. BW Gas also operated less ships in the period
compared to last year, something which affected the medium gas carrier (MGC) fleet in particular as time charter income slipped despite
freight rates in the sector improving.
On the plus side the Oslo-listed owner managed to cut charter hire
expenses by $4m as the average number of chartered-in units fell
from 8.2 last year to 6.4 this time out.
BW Gas summarised its quarter by saying in its results statement:
“The second quarter of 2008 showed decreasing freight rates for
VLGCs, stable rates for the LGC [large gas carrier]s and increasing
freight rates for the MGCs.” Overall it bagged revenues of $173.5m
in the quarter as compared to $169.2m a year ago. However, net profit was cut from $49.5m to $38m.
In August, BW Gas received conditional offers for its LPG fleet
from interested buyers. After due consideration, the board of directors
decided not to respond positively to any of the offers received.
Around the same time, BW Gas and Exmar jointly agreed to terminate their participation in their respective Pools. BW Gas said it
would withdraw from the Exmar-operated MidSize Pool, while
Exmar would withdraw from the BW Gas-operated VLGC pool.
FIRST PERSON
According to Andreas Sohmen-Pao, BW Gas will continue to operate its LPG fleet independently of any pool arrangement because of
concerns over possible action by regional regulators like the
European Commission against pooling arrangements. But it has not
ruled out further partnerships with other companies as long as it is
done in a manner which is not at risk of regulatory challenge.
Andreas Sohmen-Pao told SMI that the decision to withdraw from
the pools was not taken overnight. He also indicated that it was not
linked to BW Gas’ recent decision to withdraw from talks over the
possible sale of its LPG fleet.
He said: “Somewhat independent of the sale process, we felt it was
prudent for us to manage our ships independently rather than on a
pool basis. With continuous question marks in the EU over how they
look at pooling we felt it was prudent to operate our ships independently. The fact of the matter is that the pools didn’t have any anticompetitive effect because if you look at how weak the market was in
LPG over the past 12 months, it demonstrates one is not using the
pools to have unfair gain or advantage.
“Sometimes we feel the regulators don’t necessarily look at the
results in terms of the market. They look at their own criteria and it
was not a risk we wanted to take,” he told SMI.
So what about shipping in general and its image internationally. Is
shipping suffering from an image crisis, is it invisible, so to speak?
“Absolutely. I think that would be my take on it too which is, I
don’t think people get especially emotional, either positive or negative about shipping. I would say that the most likely response of the
general public is indifference and that’s partly because it’s just something that’s out of sight and out of mind. To gauge the public mood in
the immediate aftermath of an incident is not I think reflective of the
general sentiment towards shipping. Of course people get upset when
there’s an incident on their doorstep, but that doesn’t mean that people are perennially always upset with shipping and that it has a lousy
image all the time.
“I think that over the last few years there’s been a move towards
the positive because shipping has been a profitable business because
people have invested more in image building and in telling the story.
So I think we’re moving in the right direction. It does raise this other
question of what is the trade off between investment and image and
the level of payback. I think where there is tremendous potential is in
making the industry attractive to talented people and in building sufficient good will so that when incidents do occur, there is an understanding amongst the general public and politicians and regulators,
that the industry is doing a tremendous amount of good. So that there
is an undue focus on these problems,” he said.
“I think there is value in image building but we should probably
be realistic about how far we can or should take that because for bulk
shipping as an example, no amount of advertising is going to bring
immediate commercial benefit. So the main reasons for image building, it could be attracting talent, it could be keeping good will for the
industry especially in times of difficulty or incident, or it could be
commercial benefit, and I think that we just have to keep these factors in view when we think about how far we want to take it.” ■
“I think that over the last few years there’s
been a move towards the positive because
shipping has been a profitable business
because people have invested more in image
building and in telling the story”
SHIPMANAGEMENT
HOW I WORK
How I
work
SMI talks to industry achievers and asks the question: How do you keep up
with the rigours of the shipping industry?
JAMES MCADAM
President Asia/Middle East, Neptune Orient Lines
By his own admission James McAdam has ‘a lot of geography’ to deal
with as part of his responsibilities at Singapore’s Neptune Orient
Lines. “It’s easier to describe what is not in that region than for me to
tell you what is in that region,” he smiles.
To put it into a nutshell, his responsibility begins in Japan and ends in
South Africa; it includes East Africa and then everywhere else in
between except for the greater China region which is the Chinese mainland, Hong Kong and Taiwan and NOL’s newest region – South Asia –
which includes India, Pakistan, Bangladesh and Sri Lanka. “So the rest
of North Asia, Japan, Korea, South East Asia from the Philippines over
to Myanmar, Oceania, Australia, New Zealand and then all the Middle
East and East Africa fall under my area of responsibility,” he said. “In
these areas I am responsible for our liner business, our container and
logistics product businesses, and our newest business which is our terminals operations. Not forgetting whatever joint ventures NOL participates in throughout the region, primarily in terminals and some in logistics.” Quite a task, you could say, and one befitting a person with the
right credentials, marketand managerial experience.
“I started my career with APL and I was with APL for 12 years,
with little more than half of that time spent here in Asia between
assignments in Thailand and Japan. Then I spent four to five years in
the supply chain business working for a company called Menlo
Logistics based in the San Francisco Bay area. I headed up international operations for Menlo, and then I accepted an offer from NOL
to join the company in late 1999. I returned to Asia where I spent four
and a half, almost five years in Japan again, responsible for Japan,
both Koreas, North and South, as well as Russia and Far East, and
then here in Singapore for the last four years.”
Looking at the container carrier sector over other vessel sectors,
companies like NOL are quite unique because of the close relationships
they have to have with the ports and also with logistics provision. How
is that affecting the way you are beginning to look at your operations.
Is it important that you have a lot of fingers in a lot of pies?
“Certainly in the area of logistics here in Asia in my area, there is
very close linkage between pre-distribution services, origin logistic
services such as value-added consolidation or pre-order segregation
of shipments, ticketing, labelling – those kinds of services that let retail-
24
“
As our terminals group continues to grow,
it will provide operational efficiency and
throughput security to our container arm as
well as to our alliance partners that use that
terminal and hopefully also provide some
economic efficiencies and energies
”
HOW I WORK
SHIPMANAGEMENT
on-year through June to July, I believe their inflation was 26%
to 27%. That does a couple of things immediately. It increases
our cost of doing business; it increases our customers’ cost of doing
business and it raises the overall cost of doing business in the country and starts to have manufacturers and importers looking for alternatives. That leads to the second thing that I think is the biggest challenge in our industry which is anticipating the next move of our customers. Where will they go when they start to move more product
out of China? Will it be to Vietnam? Will it be to Cambodia? Will
it be back into Indonesia, which, this year, surprisingly, is showing a
surge in cargo volumes not like we’ve seen in a long time in
Indonesia.
“Then how do we as a carrier get assets, get people and get infrastructure in place to be prepared for the next market? Manufacturers
move very, very quickly and to disassemble a factory and reassemble
it in a foreign country can be done within two or three months. When
it happens, it usually happens by an industry segment so you don’t
see one toy manufacturer moving, you see 20 moving. Where one
garment manufacturer moves you see fifty. And getting ready for
that, being positioned for that, is a huge job,” he concluded.
“
We’ve just announced a few months ago
a terminal investment project in Europe, in
Rotterdam. It is a very large project that
involves ourselves, some of our alliance
members, as well as Dubai ports
”
ers go directly to stores or directly into retail distribution areas. So loading containers that are ‘store ready’, if you would, so by the time they
get to destination there is very close alignment with our liner company
in that regard. As our terminals group continues to grow, it will provide
operational efficiency and throughput security to our container arm as
well as to our alliance partners that use that terminal and hopefully also
provide some economic efficiencies and energies.”
Today’s ports are suffering from congestion. So is there enough
port space to enable the ports to meet the needs of the carriers? James
McAdam again: “It depends on the area that you’re talking about.
Yes, many ports are crowded, many ports are congested, certainly in
places like Vietnam where we’ve seen some very unusual congestion
just this summer but ports are also growing. The PSA here in
Singapore is expanding. We announced last year a terminal investment project in Europe, in Rotterdam. It is a very large project that
involves ourselves, some of our alliance members, as well as Dubai
ports. That concept of alliance building or consortium building to
take on the magnitude of financial investments required to build these
new state of the art super container terminals, will continue I think.
It’s good because it provides a way for risk sharing to be distributed
amongst carriers as well as amongst investors and then to the extent
that we provide our own operating personnel. It allows us to manage
both our costs as well as our deployments more effectively,” he
added.
Now looking at your ‘geography’, what are the main concerns facing you at the moment? “Well the issues that you mentioned are kind
of the cover charge for doing business in Asia today – such as rates,
capacity and congestion . There are very few places we call at where
we don’t have some element of those in play. In this region, my
biggest concern right now is the rate of inflation. In a number of key
countries that I’m responsible for, inflation is at, or exceeding, all
time record highs. Especially in a county like Vietnam where year-
TONY MASON
Secretary General of the International Chamber of Shipping and the
International Shipping Federation, ICS/ISF
Tony Mason left a career with a shipping company to head up one of
the shipping industry’s most prominent industry associations. But as if
taking over the mantle of Secretary General of the International
Chamber of Shipping and the International Shipping Federation,
ICS/ISF was not enough, he followed in the footsteps of one of the
shipping industry’s most iconic personalities, Chris Horrocks. A man
who, by Tony’s own admission, “knew everything and knew everybody”.
“Chris was a superb leader for the organisation but there’s also a lot of
depth and quality in the organisation of 16 people he left behind,” Tony
Mason said. “And the hard graft is done by the people who go to
the IMO and other meetings and who are regarded by their
counterparts and governments and other industry associations alike
with a high degree of respect. The work of ICS staff like Peter ➩
25
SHIPMANAGEMENT
HOW I WORK
it’s important we go there and actually remind the
Commission and other EU institutions that there is an
international world out there, not just a European one. We
can perhaps sometimes be a bit more forceful with our
message in Brussels because at the end of the day, we get
back on the train and go home. ECSA is also working on a
number of purely European issues as well as dealing with
the international agenda. So we work very closely with
them: almost all their members associations are also members of ICS so it would be strange if we didn’t have some
form of alignment of positions. We rarely go to see the
European Commission without going with one of the
ECSA team.”
Tony Mason is pragmatic in his approach to the tasks
facing his team and while he acknowledges that the
ICS/ISF has a significant role to play in the global shipping
industry, he is mindful of not only concentrating on “the big
headline tasks which get the large press coverage but also
on the more detailed work to do with bodies such as the
IMO. "For example, we are doing a lot of work with governments on the Hazardous and Noxious Substances
Convention which needs to be reinvigorated because governments are not ratifying it at the moment, we are representing the international industry in the discussions at
UNCITRAL on a new convention on cargo liability which
is hopefully coming to a conclusion. So these are pretty dry
subjects that are still very important for the ship owners but
In a way I’m only the figure head but nevertheless
which are quite time consuming and require a lot of attenit’s important that the top man is out there projecting an
tion to detail and expertise from my team,” he said.
There is a growing consensus that there are too many
image and I’ve been working hard at getting around,
industry associations in the shipping industry and that they
getting known. I’ve also been doing a lot of work in Asia
should pull together on the important issues facing ship
to help overcome the worry that we are sometimes seen
owners and managers. But what sort of feedback are you
getting from the ICS/ISF membership on this question?
as a Eurocentric organisation
“I have to say, having come relatively new to the world
of trade association, it’s a pretty complex backdrop and I
Hinchcliffe, who masterminds our work at IMO’s, MSC and MEPC,
guess someone coming down from Mars and looking at the setup would
has continued without change since Chris’s departure. So in a way I’m
probably say, ‘Why on earth is it set up like this’. But it is how it is and
only the figure head but nevertheless it’s important that the top man is
we work together pretty effectively. We have our network of national
out there projecting an image and I’ve been working hard at getting
association members which is pretty important to us because the lobbying
around, getting known. I’ve also been doing a lot of work in Asia to
they do nationally compliments the lobbying we do internationally. So
help overcome the worry is that we are always seen as a Eurocentric
that, I think, works well together. Then there are the direct entry associaorganisation which, in truth, we’re not. It is important to demonstrate to
tions such as Intercargo and Intertanko who have their own roles and
the Asian shipowner community that you are lobbying as much for
expertise and there are some overlaps with what we do. The Round Table
them as for the Europeans," he told SMI.
of international shipping associations (Bimco, ICS/ISF, Intercargo and
But what are the challenges involved in a job like your? “The biggest
Intertanko) tends to make the headlines when we don’t agree on somechallenge I have to say is the volume of work. We all complain about
thing but in fact 90% of the time, we do tend to agree on the main issues.
being over worked, but the volume of regulatory issues grows year-onWe get on and work together to pursue common goals.”
year. The actual number of IMO meetings, the number of IMO subBut are there too many associations because as you suggest, there is
groups, correspondence groups and so on can be measured statisticaloverlap? "ICS is unique in being an association of associations, so we
ly, and they’re going up. For an international association promoting
believe that our structure sets us apart from the ‘direct entry’ associations
international regulation, we now not only have to be in IMO and ILO
whose membership is open to shipowners and other commercial organisupporting the development of sensible international regulation for the
sations in the industry. All these direct entry organisations clearly have
global industry, but we have to be in other places particularly Brussels
memberships who value what they do – that is surely the acid test. In a
and Washington persuading them not to rush in with national or regionway it would be simpler if there were less of them but they’re all there,
al legislation, but to let IMO do the job for which it is mandated. And
and are fulfilling a role for their membership. I think as long as we talk to
that’s a whole range of work that never used to be there to the same
each other and find the common ground then that’s fine. For example at
degree. So our work is both proactive and also defensive.”
IMO you find the majority of industry papers are co-sponsored by the
But surely, you rely on the work of your member organisations in
main organisations with an interest in that particular subject, so I don’t
such situations, such as Alfons Guinier and his team at the European
think it works to the detriment of the industry to have a variety of organCommunity Shipowners’ Associations (ECSA)? “Absolutely and we
isations. As I say, as long as the ship owners wish to support those organwork in close harmony with them, but ultimately they are representing
isations and get value from them then I think it’s just incumbent on us all
European shipowners and while our messages are normally aligned,
to work together.”
“
”
26
HOW I WORK
SHIPMANAGEMENT
think there is more going on than some commentators realise.”
All these direct entry organisations clearly have
So how has life changed in the shipping
memberships who value what they do – that is surely the acid
industry since those days working for P&O
and how, as a top industry association executest. In a way it would be simpler if there were less of them
tive, does Tony Mason relax?
but they’re all there, and are fulfilling a role for their
“I’m probably a product of my age and
membership. I think as long as we talk to each other and find
generation in that I do like classical music
and I trained as a classical musician, organ
the common ground then that’s fine
and piano, but to the extent I also like the
popular music of the 1960s and 1970s rather
Looking at that problem of the crew shortage, with over 10,000 ships
than the 1990s. I still listen to the Beatles, and Rolling Stones, and Pink
due out of the world’s shipyards over the next three years, how serious is
Floyd and anything like that I can get hold of. I carry a novel round
the problem likely to get? “Anecdotal evidence says it’s probably getting
with me and it’s been the same novel for the last two years because I
worse rather than better. Although also, there has been a tendency to
never seem to finish reading all the copies of shipping periodicals that
slightly underestimate what people are actually doing to resolve shortI carry with me for plane reading. When I am at home my relaxation
ages, It’s been said to me that the Bimco/ISF study has been projecting
centres around family activities, though with three young children, I
gloom and doom for the last ten years. But the projected shortages have
am not sure that classifies as relaxation!” ■
so far never actually arrived. No ship yet
has failed to sail as far as we know for
want of a crew. However looking forward there are some big worries given
the record levels of shipbuilding orders.
While there will be some scrapping,
undoubtedly, in the next three or four
years as well as the phasing out of the
single hulls, there is a real problem there
and it has the risk of getting worse rather
than better.”
But what can the industry do about it
especially concerning the rapid overpromotion of seafarers? “Again are we
hearing the anecdotal stories rather than
seeing the total scale of the problem? I
was quite heartened when I read a little
while ago the comments of a senior executive of a major shipping line who said,
‘We don’t have a problem. We pay reasonable money, we treat our people
well.’ Here is a company who puts a lot
of money into training, and it feels comfortable with where it is. So I think to a
degree, the good employers do not have
a major problem.”
But they’re not the problem, are they.
It’s the smaller operators who will suffer? “Yes, they are the ones who don’t
have on their own the scale to invest in
training of officers. While we as an international association are not directly
involved in implementing solutions we
see our member owners associations putting money into training and giving
financial support to particular training
institutes. So I think if you take all of
those initiatives together, there is a
increasing move for industry actually
putting money into producing trained
seafarers rather than just leaving governments to provide the right number of
places and marine institutes. A further
example is that IMEC is funding a training initiative in the Philippines. So I
“
”
27
SHIPMANAGEMENT
ON MY MIND
ONMYMIND
Danilo Raffa
Fleet Director, Ishima International
Shipmanagement
The company started in July 2005 with two vessels
but its managed fleet has since grown to over 20
ships. Its team of technical experts are supervising
the new construction of as many as 17 vessels in
yards in Korea and Romania among other places.
According to senior management, the company is
currently in advanced negotiations to introduce
further vessels under its management. Ishima’s
headquarters are located in Singapore, with close
proximity to the major shipping routes and crewing
nations. This, it believes, gives it a competitive edge
in utilising a good pool of human resource and
marine related services. In order to be a successful
ship manager the company believes that crew
Shipmanagement is a competitive sector at the moment and
managers are facing pressures such as finding suitably qualified and competent crews to dealing with low management
fees. What is Ishima’s strategy in dealing with these pressures? As a small shipmanagement company is it easier to
control your costs and make the bottom line work for you?
With the number of ships that we manage, the low management fees
currently being paid and taken up by the market don’t help us.
Unfortunately the rising costs of recruiting properly qualified superintendents is affecting us. If the market could work together to allow management fees to rise that would be better. Most of the problem is down
to competition but maybe the competition should be fairer. I believe
that management fees will start to rise but this problem would benefit
from all the competitors working together to push up rates.
Where are you getting your business from?
We get our business from a wide range of owners from different countries. We have clients in Italy, Taiwan and the US, as well as from
Europe and Singapore. Their demands are straightforward in that they
ask that their ships are properly managed with no off-hire. One of the
main problems we face is keeping within the manning budget and this
is proving more difficult because of the escalation in wages. It is also
proving more and more difficult to recruit properly qualified seafarers.
I believe the shortage will be there for some years to come if you consider the numbers of seafarers available, the number of cadets coming
out from the academies and the level of ships coming out of the yards.
Could we start to see some vessels being laid up because of
the shortages?
This is possible and this could start to happen but we are spending a lot
of time and energy in our offices in Mumbai and Manila to fight every
28
competence, systems and the experience of sea and
shore staff must all come together in a
well-orchestrated manner. “It is our mission to keep
every vessel under our care operationally-ready in
terms of technicalities, crew and all certifications.”
day to identify properly qualified seafarers. The important thing is
retaining the seafarers but we have to recruit more but training plays an
important role. On the training side, we have agreements with academies in the Philippines and India and they provide proper training facilities. We are going to develop our strategies in this direction. I can say
we have already started out own training programmes.
ON MY MIND
Qa
SHIPMANAGEMENT
“Where are you getting your business from”
“We get our business from a wide range of owners from different countries. We have clients in Italy,
Taiwan and the US, as well as from Europe and Singapore. Their demands are straightforward in that they
ask that their ships are properly managed with no off-hire”
How concerned are you over the burgeoning world orderbook
and the effect the extra ships will have on crew supply and
management fees?
I am not a maritime economist but according to the last figures I saw
there were a little bit less than 11,000 newbuilding contracts underway,
worth an aggregated 550m dwt. So once they come onstream in the next
three years, they will represent a very high percentage of the global
trading capacity. This
will create, in my
view, an overcapacity
and there will be more
competition for cargoes. Owners will start
to look for more fixed
budgets and we will
need more seafarers
and as a result, wages
will escalate. ■
“Unfortunately the rising costs of recruiting
properly qualified superintendents is affecting us.
If the market could work together to allow
management fees to rise that would be better”
29
NEWBUILDING
NEWBUILDCONTRACTS
SCALE A COMMON
FACTOR IN AREAS OF
MARKET VIGOUR
By David Tinsley
China's mounting appetite for raw materials
underpins what is claimed to be the single largest
shipbuilding order ever contracted worldwide, in
terms of vessel tonnage, entailing multiple bulk carriers of the largest size for Brazilian iron ore producer Companhia Vale do Rio Doce(VALE). The industrial implications of the project spring from a hitherto unmatched unit scale in the very large ore carrier(VLOC) category, at 400,000dwt loading capacity per ship, married to a commitment to a series of
12 such behemoths.
Construction has been entrusted to Jiangsu
Rongsheng Heavy Industries Co, which is required
to deliver the lead ship in 2011 and to meet exacting
standards with regard to the build quality of a new
generation of VLOCs said to incorporate an innovative design. In addition to special attention to structural fatigue life, one of the most significant elements of the technical project is compliance with
Det Norske Veritas' stipulations for the society's
new EL-2('Easy Loading') class notation. EL-2
ensures a design that combines safety with loading
flexibility, and will allow a vessel to load each cargo
hold in one pass.
The series will yield economies of scale and help
reduce volatility in the landed costs of the group's
iron ore exports to China. Besides the economic
rationale, significant environmental benefits are
expected to result from an investment which pushes
the bounds in bulker size. The step-up from a standard capesize unit used in the trade to the
400,000dwt newbuild type promises a reduction of
some 30-40% in fuel consumption per tonne of
cargo carried and a corresponding lessening in carbon dioxide emissions.
Just preceding the completion of Aker Yards'
acquisition by STX Corporation of South Korea, the
European shipbuilding group augmented its workload during August with two high value-added contracts, one concerning the largest ferries ever
ordered to serve P&O's English Channel operations,
and the other encompassing a repeat order for
cruiseships.
P&O Ferries' two 49,000gt ro-pax newbuilds will
be dimensioned with 2,700 lane-metres of ro-ro
space for 180 freight vehicles and 195 cars, plus
facilities for 2,000 passengers. Construction has
been assigned to the Rauma yard in southern
Finland, with completions scheduled in 2010 and
2011, and the deal includes options on third and
fourth sisterships. The latest cruise vessel contract,
albeit still subject to financing, entails two further
ships of the 92,400gt Musica-class from the St
Nazaire yard for MSC Cruises.
Rauma and St Nazaire both form part of Aker's
Cruise & Ferries division, which consists of a total
of five yards in Finland and France, plus three cabin
making factories, a design firm and a life-cycle
service company. This sector of the formerly
Norwegian-owned group has 15 vessels on order
and alone provides STX with a platform for substantially widening its business and assuming an
important position in the luxury passengership field.
Korean yards have been striving for many years to
gain a foothold in the cruiseship market. Also set to
be assimilated into the STX organisation, Aker's
western Norwegian yard network affords the ambitious Korean buyer new opportunities in offshore
vessel technology and construction.
China's rapid industrial advance in multifarious
spheres of production symbolises a changing world
order, but South Korea's astounding success on the
shipbuilding market in recent years is no less testament to industrial will and accomplishment, given
the country's modest size and limited natural
resources. Figures issued by the Korean
Shipbuilders' Association(KOSHIPA) show that the
country's yards set new records in 2007 in regard to
contract intake, vessel completions and workload.
The industry accrued over $70 billion-worth of
newbuild orders over the course of the year, and this
was reckoned to have accounted for about 40% of
the global total. The 23.6m gt of contracts taken in,
set against 10.3m gt of deliveries, extended the
orderbook to 51.2m gt by the end of 2007. Volume
alone is not the full story, since the industry has
shown its mettle in terms of both technology and
contractual performance in achieving leading positions in the LNG carrier, containership and large,
specialised offshore vessel construction markets.
New testament to Samsung Heavy Industries'
prowess in the sophisticated tonnage league was
provided by its recent success in landing a circa$650m drillship contract, the yard's ninth newbuild
drillship order to have been secured so far in 2007.
This year's intake has included a $942m deal with
Stena Drilling of the UK for a 228m x 42m vessel
capable of maintaining drilling operations in severe
weather, including waves of up to 16m, and in
Arctic conditions. Samsung's overall tally of drillships has now reached 24, representing a global
market share of around 70%. Korean shipbuilders'
market hold has also been reinforced by Daewoo
Shipbuilding & Marine Engineering's attraction of a
further export drillship deal.
The Daewoo yard's latest tranche of newbuild
contracts has included four VLCCs for Kuwait Oil
Tanker Company. Broker sources indicated that the
price for each of the 318,000dwt crude carriers was
$177m, said to represent a new high. Daewoo is
among the world's most prolific constructors of
VLCC tonnage, and continuity in this field is denoted by the fact that the Kuwaiti quartet took the number of such newbuilds secured over the first eight
months of 2007 to 20. At the time of writing, the
yard was on track to achieve its 12-month target of
$17.5 billion-worth of new contracts overall.
Steelmaker POSCO is among the bidders for a controlling interest in the shipbuilder. ■
31
REGIONAL FOCUS
SINGAPORE
Revving hard
for the chequered flag
In many Singaporean’s eyes, the island comes of age on September 28th,
2008. I’m not talking an anniversary marking a past historical event but
a milestone event marking the start of things to come. Singapore will
host its first Formula One™ Grand Prix race. And as if that was not
enough, the race will be staged around the streets of the island capital, just
like Monaco, and will be the first to be held at night.
Singapore GP is significant because for three days over that weekend, Singapore will be the focus of the world’s attention. With a television audience expected to top one billion worldwide, the island and its
attractions will be there for everyone to see. But there is a downside, as
with most things, and that is that hotel rooms for the three day event are
as precious as gold dust and hoteliers are commanding vastly inflated
sums for the privilege of staying at their hotels. That’s the price of success I’m afraid.
So concerned was the MPA about the issue of hotel room availability and rising tourist costs linked to the race, that it moved its 2009
Singapore Maritime Week from September next year to April 2009 to
coincide with the Sea Asia exhibition. But the fact that the race is being
held annually in Singapore, shows that the island is growing in popularity and economic strength, something that is happening in abundance in
the shipping sector.
Despite the challenges facing the global shipping industry,
Singapore’s maritime industry continues to experience strong growth.
According to government figures, over the past year, the maritime
workforce grew by 12% to 108,000 and already contributes about 7%
direct value added to Singapore's gross domestic product. While 2007
statistics show that the island registered good growth in vessel arrivals,
container throughput, bunker sales, as well as ships registered under
the Singapore flag, the outlook for 2008 remains good and the current
order books for the major shipyards are full until 2011. So a strong
story to be told.
But as MPA Chief Executive, BG (NS) Tay Lim Heng, claims, it is
Singapore’s strategic location at the cross roads for seaborne trade, its
efficient infrastructure, strong industry clusters, an English-speaking
and productive workforce as well as a pro-business and stable political
environment, that makes it well poised to become the international
32
community’s preferred partner to tap into the burgeoning Asian market.
“Rapid economic developments in various emerging Asian countries
from China and Vietnam to Indonesia and India are changing Asia’s
economic and commercial landscape from being the world’s supplier of
goods and services to a significant consumer of goods and services,” he
told SMI.
“In line with these, several leading shipbroking companies have set
up offices here over the past few years. Singapore’s shipbroking sector
has made inroads into new segments including Forward Freight
Agreements (FFAs) and research and consultancy. In shipping finance,
many of the world’s top banks with shipping portfolios have also established operations in Singapore and the range of financial tools available
to the global shipping community is wide. The marine insurance sector
has also been growing, with the number of marine mutuals doubling
from three as at end 2006 to six today, and the number of Lloyd’s
Syndicates from eight to fifteen over the same period,” he added.
That may be true, but costs are also rising and with inflation fluctuating around the 7% mark, wage and living cost rises could start to take
their toll?
“To create a more pro-business environment, the MPA has implemented a number of measures over the past year. For example, it
extended the port dues waiver scheme for new double-hulled bunker
tankers this year. The scheme, introduced in 2005, encourages
Singapore's bunker industry to begin fleet renewal to double-hulled
tankers early,” said BG Tay.
Despite the challenges facing the global shipping
industry, Singapore’s maritime industry continues
to experience strong growth. According to
government figures, over the past year, the
maritime workforce grew by 12% to 108,000 and
already contributes about 7% direct value added
to Singapore's gross domestic product
SINGAPORE
“In April this year, we extended this scheme for a further three years
until March 31st, 2011 to defray the industry's operating costs. By incentivising owners towards fleet renewal, we are also raising Singapore's
bunker service quality. Newly built, larger double-hulled bunker tankers
with modern design operate more efficiently to cater to the increasingly
larger vessels that require quick turnaround times,” he said.
“Additionally, we have also raised the pilotage exemption limit for
bunker tankers from 7,000gt to 15,000gt without compromising navigational safety. This caters to the increasingly larger bunker tankers and
provides bunker operators with greater operational flexibility and cost
savings.”
The MPA has adopted a conscious strategy to actively partner the
industry and other stakeholders to grow the maritime sector. Through
regular meetings and forums, it gathers the maritime stakeholders’
views on regulations and ideas for industry development. This facilitates mutual understanding and collaborations on joint initiatives for a
pro-business environment.
As the world’s busiest bunkering port, it claims its reputation is
achieved “not only because of stringent licensing requirements, quality
assurance standards, and strict enforcement but also active engagement
with industry players,” said BG Tay.
He added: “Engagement is done via regular dialogues and consultation forums. This consultative approach has contributed to the success
of initiatives such as the enhancement to bunker sampling requirements
and the revision of the Gate System for licensing bunker tankers. The
Gate System was introduced in January 2005 and aligns Singapore's
licensing requirements with international regulations on environmentally friendly shipping.
“We also work closely with the community on initiatives to lower
business costs and promote entrepreneurship within the maritime sector. For instance, we launched the WIreless-broadband-access for
SEaPORT (or WISEPORT for short) project this year. This project,
which leverages infocomm technologies, promotes business transformation and operational efficiencies in the port community.
“We have also been responsive to industry feedback and have revised
our regulations to create a more pro-enterprise environment. An ➩
MyView
REGIONAL FOCUS
BG (NS) Tay Lim Heng
Chief Executive, MPA
“Key focus areas include manpower development to ensure sufficient competent personnel to drive the industry. Maritime R&D
which allows Singapore to gain a competitive edge through technological development is another area. To support such developments,
we have established the Maritime Cluster Fund (MCF) which has a
wide range of funding schemes to develop new education and training programmes. We also have the Maritime Innovation and
Technology (MINT) Fund, which promotes maritime research and
innovation development in Singapore universities, research institutes and the maritime industry. All in all, we hope to build a strong
maritime technology cluster in the country to support the maritime
industry and complement MPA’s efforts to further enhance
Singapore’s attractiveness as an International Maritime Centre.”
33
SINGAPORE
OVERHEARD
Kent Paulli
Director
ST Shipping and Transport
“I think the biggest challenge for Singapore right now is to
increase the availability of high quality shipping people and
that’s across the board – finance, brokers, charterers whatever.
That is definitely the biggest challenge Singapore faces right
now and I think that is what’s going to restrict Singapore’s ability to grow further. I think the availability of Singaporeans is the
big challenge because looking at today’s cost structure, if you
rely on ex-pats it becomes extremely expensive and people
move around. I think the biggest challenge for Singapore is to
further develop the availability of higher quality Singaporeans
for the shipping industry.” ■
REGIONAL FOCUS
“We have also been responsive to industry feedback
and have revised our regulations to create a more
pro-enterprise environment. An example of this was
when we revised the harbour craft licence by
removing the passenger number restriction on
board pleasure craft. With the revision, operators
could purchase bigger boats and realise
economies of scale”
example of this was when we revised the harbour craft licence by
removing the passenger number restriction on board pleasure craft.
With the revision, operators could purchase bigger boats and realise
economies of scale. Because these pleasure craft are still subject to
annual inspection and certification requirements, safety is not compromised,” he stressed.
Apart from engaging the shipping and maritime community, the
MPA also consults the community at large including the non-governmental organisations and grassroots to ensure a holistic approach and
relevance in our regulations. One example was seeking feedback from
environmental groups for the Pasir Panjang Terminal Phases Three and
Four development which will see additional container berths. The MPA
spent more than S$20 million on studies and measures to mitigate the
possible environmental impact of the port expansion works.
So how effective is MPA support in garnering maritime sector
growth on the island? ST Shipping Director Kent Paulli believes MPA
support makes Singapore the attractive location it has proved to be.
“You could say our business could be done anywhere in the ➩
SINGAPORE
world. But obviously with
the MPA offering the various schemes they have,
especially AIS, and also
other support schemes and
functions, it just makes it
very attractive for us to be
here. So that’s on a corporate part of the business but
obviously
being
in
Singapore you can say, that
is the hub for our business
in Asia.”
Not wanting to step on
any toes, Kent Paulli
believes the diverse range of
Kenneth Bybjerg, Asia Director for GAC’s Logistic
service functions available
works to Singapore’s benefit. “Singapore has now reached the level of
critical mass that is required to offer the entire maritime industry first
class services reaching anywhere from the broking side to, I would say,
the owning side as well, because depending on which side you are in
the maritime business beit owning, broking, chartering, banking,
finance, law, surveyors, or involved in the shipyards, I think everything
is here. So that’s important and once you reach that critical mass, when
people are sitting on the outside saying ‘should we go Singapore, or
should we go to Dubai or just stay where we are, it makes it a lot easier for people to decide and say yes, we go with Singapore.”
He added: “I don’t think you see the same critical mass in Shanghai
or Hong Kong so I think Singapore has taken the main position but I
think Singapore will be challenged by Dubai. Singapore will also be
REGIONAL FOCUS
challenged by Shanghai in a number of the segments but I don’t think
these two areas or cities are able to give competition across the board,
the same way that Singapore can,” he said.
But it is the rising cost of living that shipowners like Steffen Tunge,
Managing Director of B+H Equimar Singapore, and Andreas SohmenPao, Managing Director of BW Shipping and Vice Chairman of BW
Gas point to.
“Singapore is still a good place to do business, however costs has
been going up quite dramatically over the last two years,” said Steffen
Tunge. “Office rental has more than doubled and personnel costs are
going up faster than I had expected. The very large increase in housing
costs has also put pressure on expat. wages and housing support. This
seems to be cooling a little now. But on the positive side, I like to ➩
REGIONAL FOCUS
SINGAPORE
Coping with the Crew Problem
Strategy adopted by Singapore’s Norwest
Management to manage the effects
• Plan crew rotation in advance, especially for officers, so that we
can identify or limit potential areas of crew shortage. The
rotation plan is given to the vessel on a regular basis and it
further assures the crew of their rejoining schedule before going
on vocation
• Cadet program: Filipinos seamen take up almost 75% of the
global supply of seafarers. We select and identify cadets with
good academic standings and offer them on-the-job training
onboard our vessels. They join our ships as trainees for about a
year where they are trained by the assigned officers onboard.
Their practical knowledge is assessed by the heads of department
and personal attitudes appraised. Reports are sent back to us for
record filing and analysis to identify additional training needs
and potential. The cadets sign a contract with us on behalf of the
owners and we sponsor their board exams, which if they pass,
they will serve an owner for 12-18 months
• Crew retention: we achieve this through proper rotation planning
to assure job security. A rejoining bonus of around one month
basic wage is offered
point out how efficient and professional the Singapore Ministry of
Manpower is when it comes to issuing work permits for foreign workers. If the criteria is right it is normally done in a matter of a few days.
I can’t think of any other place where this works so well. I don't think
Dubai or Mumbai are nearly as attractive as Singapore at this moment
but this can change,” he added.
According to B.S. Teeka, Managing Director of Executive Ship
Management, believes that Singapore has made best use of its strategic
location “and is also investing in the right direction to make Singapore
a leading maritime power in near future.”
Andreas Sohmen-Pao is of the firm belief that some of the issues that
could be said to be benefits of Singapore are also its potential risks.
“And that is if there aren’t enough people, and sometimes it’s a circular
argument because if a lot of players come here at the same time, then the
demand for human resources goes up. If for instance the cost effectiveness of Singapore as a location historically also gets driven up by
demand, and it’s not just about shipping. because multiple industries also
find Singapore an interesting place to work in, it kind of pushes up costs.
38
• Crew skill improvement and upgrade: encouraging young and
potential crew to constantly upgrade their skills to obtain superi
or licenses with the prospect of promotion and ultimately taking
command. Crew holding superior COCs are paid an extra allowance.
• We always keep abreast of the crewing situation in the
Philippines. Crew agents regularly feed us with wages
comparisons and they analysis crewing market trends and
demands to facilitate forward planning and wage scales revision.
This is important for our budgeting purposes and to present to the
owners. We regularly visit the crew agents in Manila for quality
assurance audits and to assess training operations, to meet crew
unions and visit medical centre and facilities
• Treat the crew families well and encourage younger members to
consider seafaring as a career. On occasion, cash advances are
granted to long standing seafarers at their request.
So I would say those are probably the two biggest challenges: finding the
right people and managing the costs. I think the other elements, for
instance the cluster getting bigger, big government being supportive.
These are all positive and only positive.”
But how can you protect against the negative side because costs are
going to rise and staff do move quite regularly between jobs.
“Well I think in terms of the cost side, it’s ensuring that one thinks of
the location from where one operates from. Office costs are not a huge
part of the equation, people cost is obviously more significant. But in
the segment of the business that we are running which is the big tankers,
with our gas business and offshore business, this is a very heavy, capital, intensive business. And so as a proportion, staff costs are very
important but not the be-all and end-all. It’s not like a pure consultancy
or a service business where people are really the main cost,” Mr
Sohmen-Pao said.
“But I think it relates then to your question about people and retension which is that we obviously have to take the necessary steps to
ensure that it’s an attractive work place and take care of some of the soft
elements beyond purely financial ones which are to give people interesting and challenging jobs and roles. To have managers who can motivate staff members and are given the sufficient tools to be able to do
their managerial role well. To allow people to have a lot of involvement
in decision making, thinking, planning and feel a sense of achievement,
the sense of satisfaction from achieving something. The common word
is empowerment; I guess the usual range of HR actions that one needs
to take to make it an enjoyable place to work,” he added.
Kenneth Bybjerg, Asia Director for GAC’s Logistics business,
describes Singapore as being ‘amazingly’ important to GAC, especially considering the expansion the group has undergone in last five
years years. “This is a key location for GAC in southeast Asia and will
always be”.
He added: “We have heard and seen other countries in South East
Asia coming up to compete with Singapore and take a piece of the business away from here but it doesn't seem to have materialised. So I guess
they have managed to keep a grasp of things and the initiatives to support the shipping industry are very good. I would say that I do see ➩
REGIONAL FOCUS
SINGAPORE
countries around Singapore coming up but not to the extent that was
forecasted or expected. So I just see Singapore strengthening its position and I don’t see that changing over the next couple of years.”
But it’s Singapore’s position as a tanker management centre that has
been the driving force to its success, a fact John Marnoch, CEO of ASP
Tanker Management in Singapore, believes has as much to do with the
fact that the main customers are in the region and that Singapore is the
hub of the area.
“While we operated such tankers out of Mariehamn, Finland,
Melbourne and tried to operate tankers out of Oslo and Hamburg, which
for various reasons didn’t work, the company decided to open up a
tanker management operation here in Singapore where our main core
OnTheRecord
Bjorn Hojgaard
Managing Director,
Thome Ship Management
“Singapore is very important
to Thome and is our headquarters. There are no signs
we will move to Hong Kong
or Shanghai or anywhere else
for that matter. We moved a bit of purchasing and accounts to
Manila and we have some operational crewing and training people
there, but Manila will only ever be a regional HQ. Singapore is right
on the busiest trade route and is where east meets west, geographically and culturally. And in contrast to some of the other cities, the
maritime industry has a very high profile here.
“Hong Kong is a fabulous place and is very dynamic but it does
not enjoy the same hot position that Singapore does for shipping.
Support of the MPA is likely to continue because the government
here is very pragmatic in its views and it continues to refine its services to keep them up to date. We will continue to be here and
Singapore will continue to go from strength to strength.
”The caveat, however, for Singapore is the high cost of living,
offices, salaries and inflation and also the relative slide of the US
dollar against the Singapore dollar. That is not a problem they have
in Hong Kong because the Hong Kong dollar is pegged to the US
currency. But hopefully we have seen the US currency decline coming back and there are some signs that the US dollar could pick up
especially if the European economy slows down.” ■
40
customers are.
“We tried to get all the owners to shift their documents of
compliance into Singapore
tanker management, and where
we haven’t been successful
with customers wanting to relocate their ships here, a classic
example being BP which has
two time chartered vessels on
the Australian coast and one in
the Pacific islands (BP thinks it
makes more sense to operate
these from Melbourne), the way John Marnoch, CEO of ASP Tanker Management
we got round that was to have our superintendents based in Australia
report to a fleet manager here in Singapore. So although we have the
superintendents on the ground because it is customer driven, the
responsibility eventually comes to me here,” he said.
He added: “By the end of the year we will manage 20 tankers from
here and the main growth has been that our owner has a part interest in
five chemical tankers of which two have already been delivered, with
the other three due to be delivered by the end of the year. We have had
two additional similar-sized vessels built by the same yard which will
come into my operation so we have seven brand new chemical tankers,
same design and size.”
MSI shipmanagement is one organisation borne out of the bringing
together of local talent but which now operates outside of that joint venture offering a core of activities including ship and crew management,
offshore services, newbuilding consultancy, shipyard and repair services, manpower supply for both sea-based and land-based workers,
marine fuel services, marine agency, surveys and inspection of ships
and technical management.
MSI was the culmination of a joint venture between V.Ships and
IMC which went wrong three years ago with a promising combined
fleet of 90 vessels. According to MSI Managing Director K.K.
“By the end of the year we will manage 20 tankers
from here and the main growth has been that our
owner has a part interest in five chemical tankers
of which two have already been delivered, with
the other three due to be delivered by the end
of the year”
SINGAPORE
Shooting from the hip
Steffen Tunge
Managing Director of B+H Equimar Singapore
“We have made some opportunistic
moves taking advantage of the strong
dry market. Some of the ships that
we had initially planned to be converted to double hull chemical
tankers for the vegeoil market have
instead been converted to dry bulkers. This has been technical challenging and also hard to keep delivery
schedules due to availability of engineering/class plan approval time etc.
However, two ships are out and trading successfully. Another is in
the process of being converted. We have no intention of leaving the
vegeoil /easy chemical market or our involvement in OBOs.
“The OBOs are all on time charter to solid charterers and there
are no plans on changing this strategy. The product tankers and
chemical tankers are also for the most part on time charter or a combination of time charter and spot for certain segments and we are
looking at expanding the fleet if interesting opportunities arises. We
have also entered the offshore business again, after having been out
of it for a long time. This includes a stake in a 300 to 350 person
accommodation barge with DP2 and a large crane for added flexibility. This unit is to be delivered in the last quarter of 2009.” ■
REGIONAL FOCUS
Devanandan, IMC now
has 38 ships under full
management by MSI in
Asia while MSI also manages on a third party basis,
an additional 44 units for
outside owners.
But similar to other managers in the region, MSI is
favouring full technical
management services over
crewing for its third party
clients because of the situation surrounding the crew
K.K. Devanandan, Managing Director, MSI
shortage. He told SMI: “We
are not pushing for crew management but going for 100% technical
management. But with our crewing operations we are putting two to
three engineer cadets on our own vessels right now. We have our own
crewing operations in India, The Philippines, China and Malaysia and
we are setting up one in Indonesia very soon. We are going to start a
training centre to train them up once they have acceptable English and
put them onboard our own ships.” ■
“We are not pushing for crew management but
going for 100% technical management. But with our
crewing operations we are putting two to three
engineer cadets on our own vessels right now”
41
REGIONAL FOCUS
HONG KONG
Banging the same drum
but only harder
T
here is one thing to be supportive of your operation and
there is another to be highly protective of its market position
against all the odds. Ask today’s Hong Kong-based ship
managers what they think of the region’s strengths and they
will support it to the hilt and relegate competing clusters as mere pretenders to Hong Kong’s long-established shipmanagement throne.
All other areas “lack the infrastructure”; are “artificially promoted”
or are just downright “boring” when it compares to doing business in
Hong Kong, they allege. Competition is good, there is no doubt about
that, but surely there must be room for everyone in today burgeoning
shipping industry?
“Hong Kong has always been at the forefront in ship management
business, and it has repeatedly demonstrated its resilience even in the
face of adversities,” asserted Bernhard Schule Shipmanagement COO,
Rajaish Bajpaee. “As a ship management centre, it still enjoys leadership status and will continue to do so in the foreseeable future due to a
variety of reasons such as the talent pool concentration, increasing talent migration from China to Hong Kong, productivity, world class
infrastructure (international airport, port, banking, telecommunications), minimal bureaucracy and most importantly, its proximity to the
biggest shipping cluster in the world by virtue of its unique geographical location close to China, India, Philippines, Singapore as well as to
ship owners, ship yards, suppliers, crew pools and shipping agencies.”
Commendation indeed, but what about the competition – Singapore,
Dubai and Mumbai? Do they pose a real threat? “It is difficult to imagine
Dubai posing much competition, although Hong Kong may be considered a bit more expensive in absolute costs –this is more than repaid if we
look at productivity and return on investment,” Rajaish Bajpaee added.
“As regards Singapore, yes, it does have the potential and serious
intent to be the shipmanagement centre. However, it is again unlikely to
happen at the expense of Hong Kong as I see that there is enough busi-
42
ness for two major centres to thrive on in Asia. Singapore matches
Hong Kong on many of the parameters, save the proximity and affinity
to China, which is already the most dominant demand driver for all
aspects of shipping. Singapore is now trying to focus more on shipping
investment funds, and provides greater incentives to companies.
“Singapore also is ‘willy-nilly’ becoming a specialist centre for
tanker and gas management, unlike Hong Kong which offers more
broad-based services. Unique location advantages have again played a
part in this – proximity to refineries and Malacca Straits through which
a big chunk of the oil products are shipped; proximity to Indonesia
which is among the top two countries in the world with abundant
reserves of gas; concentration of oil majors’ offices which facilitates
inspections, and oil refining as an economic activity in Singapore for
the last three decades,” he said.
HONG KONG
In the final analysis, it is not simply a matter of Hong Kong versus
Singapore – as the cake is getting bigger and bigger. It is widely acknowledged that the best centre will automatically be chosen by market forces
in the long run, and increasingly decision-makers will focus on not just
absolute costs but also productivity or output per dollar of cost.
“After having lived in Hong Kong and worked in the shipping industry for almost three decades, I have seen the vicissitudes of economic
changes, and my firm belief is that Hong Kong will continue to be the
dominant centre for ship management business for the foreseeable
future,” Mr Bajpaee added.
Wallem Group Managing Director Rob Grool believes that when it
comes down to competing for business, it is not only the business environment in which you operate but also the type of operation you are.
“There are several tiers of shipmanagement size which act as a differentiator, he claimed. “Then there is the business environment in which
you do your business and of course as a ship manager, what you really
need is a good staff infrastructure, to get the people that you need.
“You need excellent telecommunications and you need a good airport that you can fly into and out of to all destinations worldwide very
quickly and very regularly. Of course it’s got to be a place where you
can attract the necessary expat staff because in many of the shipmanagement centres, the operational and safety professionals and the
technical superintendents are expats so you have to have an environment where these people and their families like to live. Both
Singapore and Hong Kong are good but cost wise, the Singapore government has made it very clear that it wants to attract two million
more professional people to Singapore to make it a sustainable economy in the long run. That simply means that the cost of living is going
to go up,” he said.
He added: “The good thing about Hong Kong is that the currency is
REGIONAL FOCUS
Rob Grool, Managing Director, Wallem Group
pegged to the US dollar so we don’t suffer the same exchange rate problems: you get your fees in US dollars because all shipping business is
still in US dollars and our expenses are in US dollars. But in Singapore
you defiantly have an exchange differential. The bad thing of course is
that for the experts working here, it’s nice to get your salary is
US$/HK$, but the purchasing power of that salary outside Hong Kong
which is where your future’s probably going to be, is less. However
this is only a temporary phenomenon.”
Capt Charles Vanderperre, founder and chairman of Univan Ship
Management, had his own views on the cost issue. “There has been extensive inflation in operating expenses over the past two to three years – ➩
“The Hong Kong government doesn't offer the
maritime financial incentives that Singapore is
offering but you have very low personal income
tax and other obligations for your staff. So, their
net salary is good”
43
REGIONAL FOCUS
HONG KONG
“There has been extensive inflation in operating
expenses over the past two to three years – as a
result of structural changes in the industry,
supply/demand balances and dollar depreciation.
Every line item in a vessel's operating budget
has increased significantly”
Capt Charles Vanderperre, founder and chairman of Univan Ship Management
as a result of structural changes in the industry, supply/demand balances
and dollar depreciation. Every line item in a vessel's operating budget has
increased significantly – both in absolute terms and relative to owners'
expectations. The sole exception has been the management fee.”
But what of Hong Kong’s general attraction as a shipmanagement
centre? Charles Vanderperre again: “In absolute terms, the maritime
cluster continues to grow, primarily on the back of China’s growth.
Leading shipping companies continue to locate their Asian headquarters in Hong Kong. The Hong Kong registry has successfully increased
tonnage during the past year to over 38 million dwt, making it the sixth
largest registry in the world after Greece, Japan, Norway, the US and
China. Total tonnage registered in Hong Kong is significantly larger
than Singapore. Increasingly, the leading mainland companies are registering vessels in Hong Kong - in parallel with the blue chip mainland
companies listing their stock in Hong Kong.
“Short-term, this results in the loss of certain business which might
otherwise come to Hong Kong. Longer-term, we think that Hong Kong’s
commitment to quality is the right way to go. This strategy will attract the
larger higher quality, higher value vessels to Hong Kong. And the Hong
Kong Government continues to be supportive to the shipping industry.
“Singapore and Shanghai are gaining commercial ground. In the case
of Shanghai, it is a natural development alongside the huge growth in
China's domestic shipping industry and the increasing global importance of access to Chinese seafarers, in particular on bulk carriers. In
the case of Singapore, it is principally a function of strong, well crafted
and well executed government support, for example in the form of tonnage tax breaks. To address this challenge, the Hong Kong Government
needs to identify the strategic challenges of other centres and develop
and execute a proactive strategy in response," said Capt Vanderperre.
Rob Grool was quick to challenge the contention that unlike the
Singaporean government, Hong Kong was reluctant to give much of an
HONG KONG
incentive for business to come to the region. The answer to that, he
says, is a mixture of ‘yes’ and ‘no’. “They don’t offer the maritime
financial incentives that Singapore is offering but you have very low
personal income tax and other obligations for your staff. So, their net
salary is good. Yes, housing is expensive, but it is also expensive in
Singapore for expats but the overall cost of the package we can offer to
an expat is not much higher than any other place. The standard of living is high and the net salary that the guy gets is higher than in many
other comparable places,” he said.
Peter Cremers, Anglo Eastern Chief Executive Officer, dismissed the
thought of inter-cluster competition. “Do we want to compete with
Singapore? No, we don’t need to. Hong Kong is very much a place for
people who know Hong Kong and they know what’s available there and
what can be done.
“Operation in Hong Kong is competitive, it’s fast, it’s tax-free ship
owning. But then don’t come here if you want hand outs, that’s not the
way it is here. Hong Kong is a place that allows people to do their thing
and that is different from Singapore. It is an enormous place for off-
REGIONAL FOCUS
shore Chinese ship owning and that’s what Hong Kong is, it’s a flexible place. But at the end of the day don’t ask the government to do
roadshows which is what Singapore does. Maybe Singapore will decide
something else in five years time?
So how important is the China factor? There were concerns over
China’s ability to meet the demands of the seafarer supply sector
because of their ability to speak English. But the shipowning industry
is expanding there also.
“We’re competing with the owners’ right? So it’s still a difficult
place to work from in terms of crewing. Are there really many ➩
Public Domain
Ram Singh
Managing Director, Northstar Ship Management
“In our industry there was hardly
any advertising until the mid
1980s because being a very close
knit industry, people and their
companies were noticed and
stayed in the public eye through
their work and contribution. Only
thing that mattered was hard work
on ship and by the office staff.
“Since the early 1990s this has
changed. The top brass of the
management companies spent
most of their time and allocated large budgets for exposure through
the media. It was another matter that every one was repeating the
same thing without any practical action to deal with the real issue –
how to create systems to man ships with suitably qualified and
motivated workers to meet the requirement of modern ships, regulations and trade. Perhaps there is now some realisation because
there seems to be less clamour among the current leaders of our
industry to be the most visible and heard.” ■
45
REGIONAL FOCUS
HONG KONG
Arthur Bowring
Managing Director, Hong Kong Shipowners Association
“There are a lot of things going on in Hong Kong that I don’t know
about because one of the problems with Hong Kong, or what is great
about Hong Kong, is that they are not terribly good at telling people
what is happening. There are a lot of smaller operators in Hong Kong,
people that I don’t even know about, who are doing a massive amount
of business. And it is really all guns blazing because of the China factor. China is our hinterland and a larger number of Chinese companies
are turning up in Hong Kong because it’s the best way to get Chinese
cargoes and there is just an awful lot of business going on here.” ■
people available for third party managers to employ? I’m not sure
about that. Of course they produce a large number of cadets, most of
them ending up very quickly in shore jobs so we have slightly cooled
down our expectations in this regard.
“The Chinese crew is not going to be the number one crew for Anglo
Eastern in the years to come. Number one will be India, number two
Ukraine, and number three, the Philippines. And that seems to be the
focus moving forward.”
What about places like Myanmar and Indonesia?
“I think we should try to break the vicious circle of always trying to
find cheaper people. We need better people in the first place so I think
that with the salaries that are being paid now, the industry should look
at how it makes the job onboard ship more interesting for smart people
in competition with jobs offshore rather than focusing on where can I
find cheaper people. That mindset should finish.
“If you want a ship to operate like an airliner, you want no mistakes,
no pollution, no collisions, and you want the ship to run like clockwork,
you need the right people for that,” he said.
“Operation in Hong Kong is competitive, it’s
fast, it’s tax-free ship owning. But then don’t
come here if you want hand outs, that’s not the
way it is here. Hong Kong is a place that allows
people to do their thing and that is different
from Singapore”
That is a school of thought shared by many, that the shipping industry needs to start respecting its seaborne workforce. But that brings us
onto issues such as India where the bulk of today’s shipmanagement
recruitment is taking place and where some managers are looking to
consolidate their management operations.
“With the lifestyle in Mumbai changing and with people enjoying
higher salary levels in general than ever before, we see a trend among
Indian superintendents who to work from home rather than from traditional management centres like Hong Kong or Singapore. That drive
not to have to work from home is almost gone because of the changes
of lifestyle, so yes, it becomes an option whereby you are getting more
highly qualified people who are not desperate to move out of Mumbai,”
said Peter Cremers.
Anglo Eastern currently manages around 10 ships from its Mumbai
operation and by Peter Cremers’ own admission, it “hasn’t been developing as fast as we want but we are slowly starting to give our clients
an option we say, listen costs in Hong Kong and Singapore are what
they are and have to paid but there is of course a more competitive alternative and that is Mumbai”, he added. ■
46
TRADE ANALYSIS
DUN & BRADSTREET
C O U N T RY R I S K L I N E R E P O RT
HONG KONG (S.A.R.)
RISK FACTOR
As expected, real GDP growth slowed substantially in Hong Kong in Q2 2008. It
declined to 4.2% on a year-on-year (y/y)
basis, from 7.3% y/y in Q1 2008. The
respective y/y growth rate of both private
consumption and gross fixed capital formation in Q2 more than halved, with the
growth of the former falling to 3.1% from
7.9% in Q1, and that of the latter to 4.3%
from 9.9%. Hong Kong’s economy, despite
the tourist-driven retail sales and the surge
in housing market activity in early 2008, is
subject to the same pressures as other
regional markets. As in another regional
entrepot economy, Singapore, household
incomes have been strained by food price
inflation, and public investment was cut
back as fiscal supports for consumers were
ratcheted up. Indeed, government consumption expanded by 3.5% y/y in Q2, this prior
to the recent fiscal package to support poor
citizens, propping up GDP growth. We
believe that if the authorities had not capped
public housing rents this fiscal (AprilMarch) year, real GDP growth could have
been lower.
Services exports and private sector investment in machinery and IT grew by more
50
than 5% y/y in Q2, linked by the successful
financial sector in Hong Kong. However,
Hong Kong could feasibly move in just two
quarters from an over ten-year low in unemployment to a technical recession in
Q3, given that Q2 GDP already fell 1.4%
from Q1 2008 GDP in real, seasonallyadjusted terms. The unemployment rate fell
to 3.2% in Q2 from 3.3% in March-May
2008, but it is likely to rise, particularly
as sectors requiring more labour in Q2 2008
included trade (import-export), construction
and transportation, are all exposed to a
downturn.
The electorate gave an ambiguous response
in the September 2008 election to Hong
Kong’s legislative council, the part-elected
parliament for the Special Administrative
Region. In contrast to expectations that
Olympics-fuelled, pan-Chinese enthusiasm
might eliminate the pro-democracy opposition as a force in Hong Kong politics, opposition parties including the Democratic Party
(with eight seats) retained 23 seats out of the
30 seats decided by a popular vote, which
will enable them to veto bills in the 60-strong
chamber. However, the pro-Beijing
Democratic Alliance for the Betterment of
Hong Kong won seven seats and thanks to
appointed seats, is the largest party in the legislative council with 10 seats. Turnout fell to
45% from 55% in 2004. D&B believes that
the election shows that voter interest has
waned in a less politically charged environment, compared with 2003, when a swell of
support for full democracy saw large-scale
public protests; however, voters still appear
to support a strong opposition, even if a large
pro-Beijing constituency remains discernible.
The result also indicates that recent fiscal
changes, including freezing public service
charges, have not ensured unquestioning public support for the government.
USUAL TERMS
MINIMUM TERMS:
OA
The minimum advisable form of documentation or trading method under which D&B
advise customers to pursue any form of
export trade with stated country.
RECOMMENDED TERMS:
SD
D&B's recommended means of payment.
The use of recommended terms, which are
generally more stringent than minimum
terms, is appropriate when a customer's payment performance cannot be easily assessed
or when an exporter may wish to limit the
risk associated with a transaction made on
minimum terms.
USUAL TERMS:
30-90 days
Normal period of credit associated with
transactions with companies in the stated
country.
TRANSFER SITUATION
LOCAL DELAYS:
0-1 months
The time taken beyond agreed terms for a
customer to deposit money in their local
bank as payment for imports.
FX/BANK DELAYS:
0-1 months
The average time between the placement of
payment by the importer in the local banking
system and the receipt of funds by the
exporter. Such delays may be dependent on
foreign exchange controls, foreign exchange
availability and the efficiency of the local
banking system
Trade & Commercial
Environment
According to a recent survey, over twothirds of Hong Kong-owned exporters in the
Pearl River Delta believe that producer
prices have risen by over 10% in the past
year. Over half of such firms hold that over
one-fifth of Hong-Kong owned factories in
the Delta have closed. The survey data confirm the general picture that Hong Kong
exporters are no longer enjoying benefits
from having relocated to the Delta in neighbouring Guangdong province. Mainland
China’s interior provinces are now developing their own supply chains independent of
Hong Kong’s, and, as a result, Guangdong
can no longer tap the labour surplus of its
poorer neighbouring provinces in inland
China. This, in turn, has reduced market
opportunities and substantially increased
labour costs.
DUN & BRADSTREET
This ‘DB’ Rating Indicates: Low risk
Low degree of uncertainty associated with expected returns. However, country-wide factors may
result in higher volatility of returns at a future date. Trend: Deteriorating
The country's overall risk profile is deteriorating owing to adverse political, commercial, economic
and/or external developments
ECONOMIC INDICATORS
2006
2007e
2008f
2009f
7.1
7.0
6.3
4.1
4.5
1.0
2.0
2.0
6.5
4.8
Inflation
annual ave %
Govt balance
% GDP
3.2
4.0
7.4
0.5
1.5
5.6
4.8
4.0
3.5
3.8
11.4
12.1
12.9
10.0
9.8
Unemployment
%
C/A balance
% GDP
Local Currency
Week 1
Week 2
Week 3
Week 4
Week 5
Apr 08
7.791
7.789
7.794
7.792
May 08
7.795
7.797
7.800
7.803
The ‘DB’ risk indicator provides a comparative, cross-border assessment of the risk of doing
business in a country. Essentially, the indicator seeks to encapsulate the risk that countrywide factors pose to the predictability of export payments and investment returns over a time
horizon of two years. The ‘DB’ risk indicator comprises a composite index of four over-arching
country risk categories:
Political risk - internal and external security situation, policy competency and consistency, and other such factors that determine whether a country fosters an enabling business environment;
Commercial risk -the sanctity of contract, judicial competence, regulatory transparency, degree of systemic corruption, and other such factors that determine whether the
business environment facilitates the conduct of commercial transactions;
Macroeconomic risk - the inflation rate, government balance, money supply growth
and all such macroeconomic factors that determine whether a country is able to deliver
sustainable economic growth to provide further expansion in business opportunities.
External risk - the current account balance, capital flows, FX reserves, size of external
(Hong Kong dollar [HKD]: USD)
debt and all such factors that determine whether a country can generate enough FX to meet
its trade and foreign investment liabilities;
Jun 08
7.804
7.810
7.815
7.805
7.802
Jul 08
7.799
7.804
7.797
7.800
Aug 08
7.804
7.814
7.814
7.807
Sep 08
7.805
7.808
7.798
The DB risk indicator is divided into seven bands, ranging from DB1 through DB7. Each
band is subdivided into quartiles (a-d), with an 'a' designation representing slightly less risk
than a 'b' designation and so on. Only the DB7 indicator is not divided into quartiles
While the editors endeavour to ensure the accuracy of all information and data contained in this report,
neither they nor Dun & Bradstreet Limited accept responsibility for any loss or damage (whether direct or
indirect) whatsoever to the Customer or any third party resulting or arising therefrom.
7.86
7.84
Exchange Rates
7.82
(London, 15 Sep 08)
7.80
7.78
7.76
7.74
7.72
Apr 08
May 08
Jun 08
Jul 08
Aug 08
Sep 08
EUR
GBP
JPY*
USD
*(x 100)
Copyright
DB2a
THE ‘DB’ RISK INDICATOR
2005
Real GDP growth
%
TRADE ANALYSIS
11.8528
13.9247
7.2696
7.7977
Glossary
KEY
CIA
CLC
CWP
FX
LC
LT
MT
OA
SD
ST
Cash in advance
Confirmed Letter of Credit
Claims Waiting Period
Foreign Exchange
Letter of Credit
Long-term
Medium-term
Open Account
Sight Draft
Short-term
Copyright©2008, Dun & Bradstreet. All rights Reserved. This report is provided for your internal business only and may not be reproduced or re-distributed in any manner whether mechanical or electronic without the permission of D&B. Whilst D&B attempts to ensure that the information provided is accurate and complete, by reason of the immense quality of detailed matter dealt with in compiling the information and the fact that the data
are supplied from sources not controlled by D&B which cannot always be verified, as well as the possibility of negligence or mistake, D&B nor the publishers of Ship Management International do not guarantee the correctness or the effective delivery of the information and will not be held responsible for any errors therein or omissions therefrom. The analysis shown on this page is taken from D&B's monthly publication, International Risk &
Payment Review, which covers 132 countries around the world. To obtain the latest analysis, please contact D&B's Country Risk Services Group on 01494 422700 or visit www.dnbcountryrisk.com.
51
BUSINESS VIEWPOINT
BUNKERING/FUELS
Fighting the
fuel crisis
by Amy Kilpin
In a climate which is seeing the shipping industry flashing on
‘green alert’ as crude oil prices pollute the financial markets
and the natural environment, the bunkering sector is plugging
its barrels against a potential profit spill
E
nvironmental concern is burgeoning across the industry with
vigour, and this is placing the world’s major fuel companies
under intense pressure to come up with solutions in both reducing global vessel pollution, and in generating more cost-efficient
fuelling methods.
As margins shrink almost as fast as bank balances in a rapidly receding global economy, trying to keep afloat as industry pressure reaches
its pinnacle, is an arduous feat. With acquisitions, mergers and consolidation all threatening to pounce on smaller companies, it creates even
tougher times for the fuel market.
Bunker surcharges and greater restrictions on vessel emissions are
adding to the problems currently facing ship owners, managers and line
operators, as the many increasing threats to the bunkering industry
throw its future into question.
Adrian Tolson, Vice President at Chemoil, underlined the cost concerns of marine fuel and the resulting challenges presented to the
bunkering market. “Marine fuel costs are taking up around 60% to 65%
of shipping companies’ operating overheads, compared to less than half
that two years ago. With regulations in Europe and the US requiring the
use of expensive, lower emission fuels, companies are looking at how
to manage these costs,” he said.
“Increasing credit requirements are an inevitable effect of the current
situation, and this is impacting both ship operators and bunker suppliers.
In such a challenging market, there will inevitably be some kind of consolidation as smaller players may get shaken out of the market or look for
opportunities to merge with larger, more robust organisations,” he added.
Financial volatility in the industry is
accentuated by growing emphasis on the
environmental impact of shipping, and the
recently debated issues surrounding the
introduction of biofuel as an alternative
fuelling product are high on the agenda for
many of the industry’s major players
52
With fuel prices at record highs, it is imperative for companies to
implement cost effective schemes to both tackle the problem and to
avoid the diminishment of smaller operations, by offering innovative
alternatives amidst major market competition.
According to Mr Tolsen, leading shipping lines are “looking for
heavier fuels to burn out before switching to cleaner fuels in Sulphur
Emission Control Areas (SECAs). They are also exploring options such
as slow steaming and reviewing vessel design and emission-reducing
technologies. As they look to increase efficiency, operators increasingly want to work with suppliers who offer an efficient service and who
can keep bunkering down to a minimum,” he said.
Financial volatility in the industry is accentuated by growing emphasis on the environmental impact of shipping, and the recently debated
issues surrounding the introduction of biofuel as an alternative fuelling
product are high on the agenda for many of the industry’s major players. Whether or not it will prove a cost-effective and environmentallyefficient method in the long term, however, is still under much doubt.
Mr Tolsen said: “With the recent IMO approval of the revision to the
MARPOL Annex VI in April, the shipping industry needs to be prepared for a global sulphur cap of 3.5% in January 2012 and a future target of 0.5% being reviewed in 2018 for potential enforcement in 2020.
Proposed changes to MARPOL regulations will require the use of 1%
sulphur fuel oil in Sulphur Emission Control Areas (SECA). If this
comes into effect in 2010, then it is inevitable that we will see prices
rise steeply prior to the start of the new legislation in line with the surge
in demand versus availability.
“Also, as the US, particularly California, seeks to shortly implement
its own ECAs with potentially even more stringent sulphur caps, then
prices will again peak for LSFO and even distillate prior to this being
implemented. As CO2 and NOx emissions also gain attention, the industry will look for fuels and technology that effectively tackle these, either
individually or collectively.
As a result, however, the bunker fuel industry may need to brace itself
against potential future fluctuation in supply and demand, as according to
Mr Tolsen, “environmental legislation transcends national sovereignty
and once the reality of a dramatic global sulphur cap comes into play
around 2018, it is likely that demand will increase internationally.
BUNKERING/FUELS
BUSINESS VIEWPOINT
Therefore we could see rising uptake across Asia amongst those countries
that may not have already implemented an ECA by then,” he added.
Chemoil has made endeavours to invest in more economical methods
of fuelling, recently supplying leading container line Maersk in their
pilot scheme to switch all vessels to distillate within 24 nautical miles
of California, and reduce vessel-related emissions by 800 tonnes a year.
While the financial squeeze may have less affect on larger operators
such as Chemoil, there is still inherent concern over the unstable nature
of the market, and some companies are being forced to strengthen their
position to maintain market competitiveness through acquisitions and
mergers. Recent trials of new biofuels between energy companies and
operators have taken precedence, in efforts to satisfy increasing ecological awareness and to generate a proactive company approach in a challenging global market.
BP recently announced its $90m investment in US biofuels producer
Verenium Corporation, a manufacturer of cellulosic ethanol, a sugar
cane derivative. Such ventures into the production of environmentallyfriendly and renewable transport fuels are becoming a more prominent
“Current conditions make fuel testing a
necessity because the buyers want to be
sure they are getting their money's worth in
terms of the quality and quantity of fuel
delivered to their vessels”
Tore Morten Wetterhus, Managing Director of DNV Petroleum Services
solution as the industry continues to tighten its belt on shipping emissions. However, with industry legislation currently lacking, Mr Tolsen
paints an unclear picture for the future of biofuels.
He asserted that while biofuels might be a possible alternative for the
shipping industry, there are existing issues revolving its use in marine
applications that first need to be tackled. “There are currently no international standards that the marine industry can adhere to for such fuel
types. As such, the responsibility lies on ship owners, who need to
investigate and form conclusions about the quality of biofuel used in
their engines. Standardisation is difficult because the properties and
behaviour of the biofuel depends on the source of the fuel,” he said.
“There are also several concerns about the potential impacts and consequences surrounding its production and usage that makes such implementation controversial. Faced with issues such as these, biofuels have
not yet proven to be economically viable or environmentally friendly for
the shipping industry. Other solutions and alternatives, including focusing on cleaner fuel supplies such as LSFO and distillate or developing
and using new technologies to increase fuel efficiency and lower emissions, will probably continue to be the mainstay,” Mr Tolsen added.
Tore Morten Wetterhus, Managing Director of DNV Petroleum
Services, warned that because bunker fuels can account for up to 70%
of a vessel’s operating costs, astronomical oil prices have made a significant dent in ship operators’ financial performance.
He said that for independent bunker fuel suppliers, “soaring fuel
prices mean narrower profit margins and tighter credit lines. The smaller players tend to be hit much harder and as a result, some of them have
gone out of business. The current conditions also make fuel testing a
necessity because the buyers want to be sure they are getting their
money's worth in terms of the quality and quantity of fuel delivered to
their vessels.”
As a result of such financial strain, Mr Wetterhus underlined the need
for “ship operators to focus on energy efficiency initiatives in an
attempt to get the most out of their fuel purchases.” He indicated the
growing awareness for ship operators in optimising fuel efficiency and
improving their environmental performance through shore office planning and onboard fuel management, and suggested that “future fuel savings of up to 30% are realistic targets for some vessels.”
Although the EU has imposed a 0.1% sulphur limit on marine gas oil,
and the IMO MARPOL Annex VI and EU Directive have set progressively sterner restrictions on sulphur emissions, it might still not prove quite
enough to combat shipping’s rather negative image in the ‘green’ stakes.
“Since most ships are burning 'dirty fuels', this makes the shipping
industry an easy target for environmental activists, despite the fact that
shipping is by far the most energy efficient means of transporting
goods,” Mr Wetterhus said.
Future concern for the bunker fuel industry is prevalent not only in the
rigorous efforts being made by industry leaders to ‘clean up’ shipping and
adopt greener approaches to marine transport, but also in fighting its
already tarnished image in the face of strong environmental affairs.
Problems relating to the adoption of cleaner fuels, however, spread
extensively across the worldwide waters of an economic meltdown. Mr
Wetterhus underlined “the possibility that heavy bunker fuels will
become scarce, because if the high oil prices persist, more refineries
may be converted to produce gas and distillates only. ➩
53
BUNKERING/FUELS
Leonardo Sonzio, Project Manager, Wärtsilä
“It is not necessarily true that high oil and
fuel prices are generating high profit
margins. A current imbalance in the
demand and supply equation led by
increased demand is pushing up prices,
and the revenues are invested in sourcing
oil from more complicated fields”
“Although ships may burn more distillates to comply with future regulations, such cleaner fuels will likely cost at least twice as much as
today's heavy fuel oil. Should this scenario materialise, the competitive
edge of shipping will be negatively impacted, in turn affecting the
bunker market,” he added.
Leonardo Sonzio, Project Manager for engine supply company
Wärtsilä, highlighted the negative effects currently impacting on shipping companies as a direct result of the global fuel crisis. “The increase
in fuel prices is generating greater attention towards all possible means
to reduce shipping operating costs related to bunkering: ship owners
slow steaming their vessels and the overall efficiency of ships are the
main topics on the world’s shipping agenda.
BUSINESS VIEWPOINT
“Current fuel prices and increased environmental awareness are
boosting research into possible solutions to improve shipping’s energy
efficiency. Wärtsilä endeavours to comply with today’s requirements
from energy producers, represented by high efficiency power plants
capable of producing a wide variety of fuels, including biofuels (from
raw vegetable oils like palm oil, rapeseed oil and jatropha oil to refined
biodiesel),” he said.
“Today’s bunker prices depend mainly on crude oil prices, but it is
not necessarily true that high oil and fuel prices are generating high
profit margins. A current imbalance in the demand and supply equation
led by increased demand is pushing up prices, and the revenues are
invested in sourcing oil from more complicated fields. Crude oil extraction is getting more expensive and is under risk, leading to higher
upstream costs: costs are then transferred through the value chain to end
customers,” Mr Sonzio informed.
With biofuels being a highly-debated topic and gaining continued
exposure within the shipping industry, companies are left to their own
devices to come up with solutions and liaise with energy providers in
the production of alternative fuelling. However, most shipping companies and fuel experts are adopting a resoundingly ambiguous standpoint
on the subject, with little evidence to suggest that biofuels are a feasible long term substitute for regular fuelling methods.
DNV's Tore Morten Wetterhus indicated that there is much questioning surrounding the ethics and sustainability of such fuels, which are on
the whole expensive to produce: “For some biofuels, the energy and
resources required for their production are an important offset factor
against the perceived environmental benefits from consuming them,”
he said.
“Biofuels, if used by ships, would most likely be a component in
marine fuels, for example, a fuel extender, but current regulations ➩
Fuelled from the ‘fat of the land’
Bio diesel production in San Francisco is one step closer to reality,
now that the San Francisco Port Commission has approved Darling
International’s proposal to manufacture the carbon-free fuel at its
facility in the city’s southeast. Darling International will build a 7.5
million to 10m annual gallon capacity bio diesel production facility
near Pier 92, which could be in operation within a year.
"Biofuels made from potential food crops are far from ideal, and
those made from palm oil grown on plantations cleared out of the
rainforest are anathema," said San Francisco Mayor Newsom. "San
Francisco is setting the example by sourcing biodiesel locally, made
from the sustainable feedstock of recycled fat, grease and tallow.”
Darling International has operated a rendering facility on port
property since 1966 and is the port’s largest maritime exporter. The
plan is for Darling to upgrade its port facilities to convert fats
already produced at the facility into high quality biodiesel for use in
vehicles. The agreement with the port also includes Darling’s commitment to make site beautification and other environmental
improvements.
55
BUSINESS VIEWPOINT
BUNKERING/FUELS
Christian Lund from global fuel supplier StatoilHydro
“Although biofuels are free of sulphur,
hence eliminating any SO2 issue, the NOx
emission is not significantly affected – it
may in fact increase, but overall, climate
change gas reductions will be substantial”
do not permit the use of non-petroleum components. We also have to
consider the matter of compatibility between marine fuels and the biofuel components. From a technical perspective, current ship engine
technology caters for conventional marine fuel consumption and a
switch to biofuels would mean certain modifications need to be made to
the engines,” he added.
However, according to Mr Sonzio from Wärtsilä, a wide usage of
biofuels in shipping is unlikely to happen. He said: “Today’s global
production of biofuels (raw vegetable oils) is not sufficient to cover
the demand from the marine industry. Moreover, a wide usage of biofuels in shipping is not sustainable: for example, a simple calculation
shows that (assuming a maximum production yield of palm oil equal
to 6000 kg/hectare), the main engine of a panamax container vessel
would ‘consume’ approximately 18 hectares of palm oil in a single
day of navigation.”
Mr Sonzio indicated that “raw vegetable oils might be used in emission sensitive areas through governmental incentives, as these fuels are
significantly more expensive than traditional HFO and MDO,” however the use of biofuels as a main fuelling option for the shipping industry is not necessarily a viable option.
While Wärtsilä is working with suppliers to address vessel emissions, research into biofuels is still rather in its embryonic stages.
Environmental issues are just part of the problem while the bunker
industry is under heavy threat from the global fuel price boom, as
Christian Lund from global fuel supplier StatoilHydro suggested.
He said: “Although biofuels are free of sulphur, hence eliminating
any SO2 issue, the NOx emission is not significantly affected – it may
in fact increase, but overall, climate change gas reductions will be substantial. The economic impact, however, depends on two variables,
namely the price of oil versus the price of biofuel, but this may vary
between different types of biofuels, as the quantity of energy produced
per unit consumed can differ significantly.”
Although most of the world’s major industry leaders are seeking
ways to minimize fuel consumption, reduce NOx and CO2 emissions,
and substitute consumption of non-renewable energy to renewable
alternatives, very little has been achieved in way of a permanent scheme
to tackle such issues. The majority of companies endeavouring to combat environmental issues are currently undergoing trials for new engine
products, vessel designs and fuel components, with the hope that future
implementation of alternative fuelling methods will become a permanent fixture within the shipping industry under official IMO legislation.
“StatoilHydro acknowledges that shipping emissions are a major
challenge and that a coordinated and powerful effort by governments,
businesses and individuals is required to combat climate change,” Mr
Lund emphasised.
“We continuously aim to minimize the negative impacts on the environment, both with respect to production, distribution and consumption.
With respect to fuel on a general basis, there is a definitive aim to develop products which will improve combustion and therefore reduce emissions of environmentally damaging gases. StatoilHydro is also focusing
strongly on the innovation of alternatives within the category of biofuels and other types of energy,” he added.
With fuel-saving initiatives on the agenda for most ship owners and
operators within the industry, it is just a question of when such new and
efficient methods are to be permanently adopted. Recent estimations
suggest that there are over a hundred different types of technology
under development or discussion in the aim to reduce emissions and
increase fuel efficiency. Exponential fuel and transport costs coupled
with a drive towards environmental efficiency will certainly shape the
unpredictable future of the bunkering industry.
However, as the world economy drives the industry into deeper
waters of financial concern, the bunker fuel market is faced with a monumental challenge in maintaining vigilance to ecological liability, and
to continue to balance the fine monetary line between supply and
demand amidst an epic fuel crisis. ■
Recent estimations suggest that there are over a hundred different types of technology
under development or discussion in the aim to reduce emissions and increase fuel
efficiency. Exponential fuel and transport costs coupled with a drive towards environmental
efficiency will certainly shape the unpredictable future of the bunkering industry
56
DISPATCHES
SHIP MANAGEMENT
JAPAN
DISPATCHES
SHIPPING
BUSINES S
REPORTS
FROM
AROUND
THE
WORLD
New gas shipment solutions
broaden the fleet's reach
Although cost pressures and overruns have hit a number of liquefied natural gas
projects, overall capital expenditure looks set to reach new heights over the next few
years against the backcloth of rising energy demand. A record level of investment in
technology-intensive ships coupled with increased shipbuilding efficiency is giving an
enormous boost to long-haul transportation capacity. David Tinsley reports.
nergy analyst Douglas-Westwood has
calculated that $106 billion is projected to be spent on export terminals,
LNG carriers and import terminals as a
whole in the five-year period between
2008 and 2012. Asia accounts for 43% of the
forecast global expenditure.
Notwithstanding the scale of the current
orderbook, Ocean Shipping Consultants (OCS)
recently warned that the shipbuilding programme for the LNGC fleet will need to be
expanded significantly if it is to keep pace with
global demand growth over the longer-term.
OCS has forecast a requirement for a total vessel
capacity of 106 million cubic metres by 2030,
compared with the 33m cu m encapsulated by
the current fleet. This is predicated on an anticipated rise in world LNG demand from the 226bn
cu m level of 2007 to 640bn cu m by 2020, and
close to 790bn cu m by 2030, representing a
compound annual growth rate of 5.6%.
In terms of vessel numbers, requisite fleet
strength would be more than 700 vessels, compared with approximately 260 LNG carriers at
present.
LNG transportation by sea has a first-class
record for safety and reliability, but the sector's
changing structure and rapid growth in fleet size
has implications for its risk profile. Until recently, LNG carriers were almost exclusively tied to
specific projects and dedicated trade routes,
invariably on a long-term basis and not uncommonly for the whole of a vessel's service life,
and global fleet control was vested in a relatively small number of players. While long-term
contracts covering dedicated lines of supply will
continue to characterise this distinct field of
E
58
shipping activity, a more extensive and complex
operating and owning pattern is unfolding.
The emergence of a spot market for LNG carriers, and the attendant move to design and equip
vessels to confer the requisite trading flexibility,
together with the entry to the sector by many
newcomers to gas tanker ownership and operation, present new challenges bearing on perceived risk.
The boom in LNG carrier demand and investment has spurred considerable new technical
endeavour among designers, shipbuilders,
research organisations, technology specialists
and classification societies, and this will
undoubtedly help mitigate any increase in risks.
Nonetheless, there is an acknowledged need for
the closest attention to issues of training and
“LNG transportation
by sea has a
first-class record for
safety and reliability,
but the sector's
changing structure
and rapid growth
in fleet size has
implications for
its risk profile”
GAS
recruitment in the light of the considerable
expansion in the fleet and demands for operational flexibility, and given the investments in
new vessel technologies and much increased
unit size.
With a 40 year-plus track record in seaborne
LNG transportation and a major stake in the
world fleet through ownership, part-ownership,
management and chartering involvements,
Shell has taken measures to better ensure the
requisite resources of seafarers for the future.
One of its most recent initiatives has been to
start recruiting US mariners to serve the group's
increasing portfolio of managed LNG vessels.
Shell already employs over 500 officers with
LNG experience, and has officer and cadet
training programmes in hand in support both of
its own fleet and partners in various LNG-producing countries.
Shell's management activities in the LNGC
category were augmented in November 2006 by
an agreement to provide a full range of maritime
services, including vessel operational management, staff recruitment and training, for the
extensive newbuild fleet of Qatar Gas Transport
Company (Nakilat). The deal encompasses 25
vessels in the 210,000cu m to 266,000cu m
range, ordered from South Korean yards for
completion up to 2010. A key element of the
agreement is the contribution to the development of Nakilat's shipping expertise, in support
of its aspiration to become a fully integrated
shipping company.
The huge scale of Qatar's commitment to
LNG carrier capacity that will support and nurture the Gulf state's energy export trade has a
fundamental bearing on the extent of the global
orderbook and on the upward shift in average
vessel size.
Towards the end of last year, the first ships of
the Q-Flex generation emerged from their South
Korean yards of build, while recent months have
seen the operational debut of the record-breaking Q-Max design. The Qatari programme
entails a total of 54 newbuilds, comprising 31 QFlex LNG carriers in the 210,000-216,000cu m
range and 14 Q-Max ships of 260,000266,000cu m, plus nine LNG tankers in what is
now regarded as the 'conventional' size category,
at under 200,000cu m capacity.
Up to 11 of the Q-Flex vessels and all 14 of
the Q-Max breed will be 100% owned by Qatar
Gas Transport Company(Nakilat), while the
other 29 newbuilds have been contracted for
ownership through joint ventures involving
Nakilat. All the tonnage has been booked with
the Korean shipbuilding industry and is destined
for a total of four LNG ventures, namely
DISPATCHES
Qatargas (Qatar Liquefied Gas Company) II,
RasGas (Ras Laffan Liquefied Natural Gas
Company) III, Qatargas III and Qatargas IV.
The Q-Flex and Q-Max membrane-type ships
from Hyundai, Samsung and Daewoo employ
unrivalled economies of scale, to radically lower
unit transportation costs, and are technically distinguished by the adoption of twin, two-stroke
diesel engines for propulsion, in conjunction
with onboard cargo reliquefaction plant. The
powering arrangements represent an alternative
to less thermally efficient steam turbine machinery, the formerly dominant propulsion mode in
the LNGC category, and the new ships' reliquefaction system ensures full cargo delivery at the
discharge port by returning 'boil-off' to the cargo
tanks during the voyage.
The emerging fleet will feed distant markets
with LNG produced from Qatar's North Field,
the world's largest non-associated gas field,
reckoned to hold approximately 15% of the
world's total proven reserves. Qatargas and
RasGas, the gas export arms of state-owned
Qatar Petroleum, are building the largest-ever
natural gas liquefaction plants at the interfaces.
The first Q-Flex cargo was loaded at Ras Laffan
by the Al Gattara and conveyed to Tohoku
Electric Power Co's Higashi Niigata terminal in
Japan during December 2007. Another of the ➩
“British Emerald, the first of BP Shipping's new generation of LNG
carrier made her debut last year, encapsulating an innovative design
offering a high degree of trading flexibility at lower unit operating
costs and reduced environmental impact”
59
DISPATCHES
GAS
“The huge scale of Qatar's commitment to LNG carrier capacity that
will support and nurture the Gulf state's energy export trade has a
fundamental bearing on the extent of the global orderbook and on the
upward shift in average vessel size”
class, the 216,000cu m Al Ghaffara, brought the
first Q-Flex consignment to the USA, through
Louisiana's Sabine Pass LNG terminal, in June
this year.
The Doha-based engineering team which
brought the Q-Flex and Q-Max technical project
to realisation, was marshalled by Qatargas and
ExxonMobil. The innovative nature of the
designs lies in the way in which existing technologies have been combined to maximise cargo
delivery size with the highest levels of safety
and reliability. Classification society American
Bureau of Shipping gave perspective to the project: "To fully appreciate the achievement, consider that LNG carriage is possibly the most conservative and risk-averse shipping sector and, at
the time the ships were conceived, no LNG
tanker at sea had a capacity over 138,000cu m."
To achieve the requisite economies of scale,
the technical team looked for a dimensional reference point to the VLCCs which regularly lift
condensate from Ras Laffan. In settling on a
length overall of 345m, breadth of some 54m,
and draught of 12m, the ensuing concept was
60
dubbed the Qatarmax (Q-Max), as the
largest LNG carrier that could access the
port. The smaller version, the Q-Flex, has
more options with regard to ports and terminals.
British Emerald, the first of BP
Shipping's new generation of LNG carrier made her debut last year, encapsulating an innovative design offering a
high degree of trading flexibility at
lower unit operating costs and reduced
environmental impact compared with
conventional, steam turbine-powered
LNG tankers. Intended primarily to
serve markets in the Atlantic Basin, the
155,000cu m British Emerald leads a
series of four contracted by the UKbased operator from Hyundai. At the
time of her handover, she represented an
industry milestone as the first Koreanbuilt LNG carrier incorporating dualfuel diesel-electric propulsion.
The power plant in the new BP gas
tanker is based on four Wartsila engine-
GAS
DISPATCHES
“In February 2007, the first
commercial ship-to-ship transfer of
a full cargo of LNG took place at
Scapa Flow, in the Orkney Islands.
The cargo was transhipped from
Excelerate's 138,000cu m LNG
carrier Excalibur to its LNGRV
Excelsior”
driven generating sets and Converteam electric
propulsion system. The prime movers can be run
either on the boil-off gas emanating from the
LNG cargo, or on diesel fuel. The four genset
aggregates are based on two 12-cylinder
Wartsila 50DF engines, individually rated at
11,400kW, and two nine-cylinder 50DF units,
producing 8,550kW apiece. Electrical energy is
fed to a pair of 14.8MW synchronous propulsion
motors.
The configuration enables various operating
modes to be matched in the most efficient way,
catering to fully-laden powering needs, in-harbour loads, and in-ballast voyaging, while the
overall power concentration provides for a speed
of 20 knots. BP claims the vessel will burn about
40 tonnes per day less than a conventional LNGC
of similar size, which would consume about 180t
per day. The four-engine arrangement and distribution of machinery in two separate engine
rooms confers a high degree of redundancy.
Added dimension has been given to LNG
seaborne trade through the initiative of Texasbased Excelerate Energy in commercialising
the regasification of LNG aboard speciallyequipped ships.
The regasification vessels use Excelerate
Energy's proprietary Energy Bridge technology,
which allows the LNG cargo to be revaporised
onboard to allow direct feeding into the natural
gas pipeline infrastructure ashore, obviating the
need for conventional terminal facilities.
Discharge can also be made in conventional
manner, as gas by way of shoreside terminal, or
alternatively as gas via an offshore buoy system, while the concept additionally lends
itself to ship-to-ship transfers. In the latter
case, the LNG RV provides a shuttle service
between the transfer location and market
delivery point, where the regasification capability is applied.
Excelerate currently employs four LNG
RVs, three of 138,000cu m and one of
150,900cu m, plus a 138,000cu m conventional LNG carrier. A further four ships of
150,900cu m incorporating regasification
plant are on order. Antwerp shipowner Exmar
manages the Excelerate Energy Bridge fleet,
and has an equity interest in two of the existing regasification ships plus all four newbuilds, which are scheduled to enter service
from the Daewoo yard between May 2009 and
June 2010. An option is held on a ninth ship
under a programme which saw the operational
debut of the first vessel in the series, the
138,000cu m Excelsior, in 2005.
In February 2007, the first commercial
ship-to-ship transfer of a full cargo of LNG
took place at Scapa Flow, in the Orkney
Islands. The cargo was transhipped from
Excelerate's 138,000cu m LNG carrier
Excalibur to its LNGRV Excelsior, which then
sailed south to inaugurate the Teesside
GasPort by discharging the first regasified
LNG directly into the UK natural gas grid,
starting on 17 February 2007. Never before
had LNG been regasified onboard ship within
a port, and then delivered straight into a
pipeline for entry to the national transmission
system. ➩
61
GAS
DISPATCHES
“More than one-third
of global gas reserves
are said to be
stranded by virtue of
their location or field
size, without
commercially viable
access to world
markets”
Earlier this year, German international
power utility RWE entered into an agreement
to purchase a 50% stake in Excelerate Energy
from owner George B.Kaiser. The move heralds RWE's entry into the gas tanker business
and gives it a shareholding in LNG import
facilities in the UK and USA.
Hoegh LNG of Norway is the second company to have embraced onboard LNG regasification. Two LNG shuttle regasification vessels(SRVs) of 145,000cu m have been ordered
from Samsung by Hoegh LNG on behalf of a
50/50 joint venture established by the
Norwegian owner-operator with Mitsui OSK
Lines of Japan.
The vessels are due to be delivered in 2009
and 2010, and will be deployed in the trade to
the Neptune LNG deepwater terminal, to be
sited about 35km off Boston, in Massachusetts
Bay. An option exists for a third ship. Through
the incorporation of onboard cargo vaporisers,
the use of LNG SRVs dispenses with the need
for a shoreside receiving and regasification
terminal. The ships will moor at one of two
unloading buoys connected to a subsea
pipeline by a flexible riser.
The number of active players in the buoyant LNG construction sector is comparatively
limited, with Korean yards' commanding the
biggest market share, notwithstanding a still
relatively prolific Japanese involvement. The
first Chinese-built LNG carrier recently made
her debut, and it is clear that China will in
time provide international buyers with new
possibilities as to the sourcing of such tonnage. The initial drive into the LNGC sector
by Chinese shipbuilders has been domestically-based, and the country's move to make
LNG an import part of its future energy programme can be expected to generate a substantial volume of orders in the coming years.
This in turn will create a stronger platform
from which to launch a more concerted bid
into the export market. South Korean builders
followed a similar course years ago.
China's gas consumption has been increasing at a rate of around 20% per annum in
“Interest in both compressed natural gas
(CNG) carriers and floating LNG terminal
concepts has been growing, as a consequence
of industry's increased determination to
exploit smaller or 'stranded' gas reserves”
recent years, and it is
reported that the government is aiming to increase
the gas share of the country's total energy production to 8% by 2010, about
double the present volume.
Interest in both compressed
natural
gas
(CNG) carriers and floating LNG terminal concepts has been growing,
as a consequence of industry's increased
determination to exploit smaller or 'stranded'
gas reserves. Rising energy prices coupled
with technological advances, which enhance
the cost competitiveness of tapping such
resources, have triggered fresh examination of
new design proposals and shipping solutions.
More than one-third of global gas reserves
are said to be stranded by virtue of their location or field size, without commercial viable
access to world markets. CNG has been proposed as an effective method of transporting
stranded gas for some years, and a number of
such projects are reported to be on the verge of
commercialisation.
Compressing natural gas is a way of transporting the fuel without the need for liquefaction and regasification. By obviating the costs,
complexities and build times associated with
the conventional natural gas delivery chain, it
is claimed that CNG offers important benefits
in bringing natural gas fuel supplies on-stream
rapidly and efficiently.
Proposed CNG carrier designs incorporate
coiled or multi-pipe containment, or a composite tank arrangement. However, since
gases have limited compressibility, comparatively large, heavy containment is required to
achieve competitive cargo volumes in relation
to LNG tankers. Practicalities dictate that the
most viable opportunities for CNG lie in
short- or medium-haul situations entailing
voyages of less than 2,500 miles, as well as
for stranded gas field exploitation where the
reservoir size is uneconomical for large-scale
liquefaction plants. ■
63
DISPATCHES
RUSSIAN WATERWAYS
Caspian profits as
Russian waterways
open up
Russia is preparing to give western shipping companies unrestricted access to its
62,000-mile strategic United Deep Inland Waterway System and the resulting profit
opportunities will be enormous, writes Thomas Orzág-Land, from Budapest.
he European Union has been persistently pressing Russia for years to
repeal a law inherited from Joseph
Stalin’s time barring western shipping from river/sea navigation
through the system. The network of rivers,
canals and waterways linking the Black Sea,
the Caspian, the Baltic and the White Seas as
well as the Arctic Ocean is now being revived
as part of a scheme to drag the ageing, fragmented and corruption-ridden national freight
transport infrastructure into the 21st Century.
A sweeping shipping industry investment
and modernisation programme is already
underway to prepare the Russian companies
and crews for the western challenge. The law
reform – a prerequisite to Russia joining the
World Trade Organization – may well accelerate next year. It will end an artificial and expensive division in a carefully constructed waterway system under the care of the Geneva-based
United Nations Economic Commission for
Europe, comprising a network of inland and
coastal shipping lanes reaching from the
Atlantic to the Ural mountains and spreading
well beyond the continent.
Potentially, the most lucrative segment of
the Russian waterway system is the Volga-Don
canal as this is the only shipping connection
linking the hydrocarbon-rich Caspian basin
with the oceans and the world markets. It will
provide access for western shipping to Russian
T
64
as well as Azeri, Iranian, Kazakh and Turkmen
ports. The entire system is now being used for
the transport of only 20 million passengers and
152m tonnes of cargo a year, says the Ministry
of Transport in Moscow, down from 300m
tonnes at the end of Soviet administration two
decades ago.
Up to 70% of the Russia’s river/sea fleet plying the inland waterway system is officially
considered either obsolete or in need of major
repairs. The shipping canals are also badly neglected. For example, in the absence of regular
dredging between 1999 and 2006, the key
Volga-Baltic shipping canal has silted up and
its navigational depths reduced from 13ft to
10ft. Nowadays, the system is “deep” only in
name. An inquiry conducted by the Russian
journal Finansovije Izvestija warned some time
ago: “A quarter of the entire system has been
dangerously silted up. Several key trade routes
such as the upper reaches of the strategic Dvina
River, are simply not navigable. Dams erected
without ship locks have closed whole sections
of the network to shipping. Many waterways
are too narrow or shallow to accommodate
modern ships and barges.” All of which should
change under the current programme. But the
consequent shocks in store for the Russian
shipping industry may well prove considerable.
Prime Minister Vladimir Putin has timed his
official announcement of imminent reforms in
an apparent effort to allay Western fears of a
new Cold War in the wake of Russia’s invasion
of Georgia and the prolonged occupation of its
vulnerable, post-Soviet neighbour’s strategic
Black Sea ports.
Speaking late in August after a Cabinet meeting in Moscow devoted to inland transport, Putin
declared: “As we open our internal waterways to
vessels sailing under foreign flags, we will be
guided by our own economic interests as well as
the national security considerations.
“Potentially, the most lucrative segment
of the Russian waterway system is the
Volga-Don canal as this is the only shipping
connection linking the hydrocarbon-rich
Caspian basin with the oceans and the
world markets”
RUSSIAN WATERWAYS
“We are naturally prepared to create the
most favourable regime for our own privately
owned shipping companies,” he went on. “But
we shall also expect a forceful response from
the shipping industry. That should include
greater investment by the private sector, leading to improved freight transport volumes.”
A month earlier, Putin paid a high-profile visit
to the southern city of Rostov to inspect the
newly rebuilt Kochetovsky ship lock on the
Volga-Don canal. He stated then that the entire
waterway system must be upgraded to meet
international standards through extensive dredging and the reconstruction of locks and loading
facilities to accommodate modern shipping.
But Russian industry analysts are sceptical
about the projected pace of the development
plan. They note that Kochetovsky on the VolgaDon canal was only one of a few modern locks
inaugurated in the last three decades while
some 700 others through the country have
remained neglected.
They note that the entire inland waterway
system needs modern ports, berths, cranes and
other cargo handling equipment as well as passenger terminals properly integrated with the
inland road and rail networks. As it is, the
Russian canal system – which is more extensive than the national railway network – is fit
only for handling less than 3% of the domestic
freight transport business.
The investment and growth opportunities for
modernising the inland shipping sector are
therefore staggering.
Characteristically, the Putin administration
has carefully skirted around a global estimate
of the financial investment planned for project.
But its spokesmen have placed enough pointers
in public discussion to allow for authoritative
guessing. Deputy Prime Minister Sergei Ivanov
has already set out to raise international investment for expanding the Volga-Don canal, the
cost of which he put at 125bn rubles (£2.74bn).
But he has refrained from stating whether this
would be part of a 234.7bn ruble investment
publicly committed by the government to
upgrading the waterways.
The key 63.1 mile waterway linking the
Volga and the Don Rivers was created at untold
human cost shortly after the Second World War.
It was dug by tens of thousands of slave labourers – prisoners of war as well as “dissident”
Russian citizens – in three years and six months
in murderous conditions under Soviet authority. The canal provides the only existing shipping access between the Caspian and Black
seas, ultimately leading to the Atlantic via the
Mediterranean.
Ivanov is promoting the Volga-Don redevelopment programme by holding out the
prospect that an improved traffic flow along
that modernised the shipping route between the
two great rivers would “turn”, as he put it,
The Volga and the
Don together make
up one of the world’s
principal waterways.
It provides a strategic
link between the
Caspian production
fiends and the EU’s
key 9th International
Transport Corridor
hydrocarbon-rich “Azerbaijan, Kazakhstan and
Turkmenistan into maritime trading powers”.
However, the big oil and gas exporters on
the landlocked Caspian favour alternative proposals for a canal dug across the North
Caucasian mountains to give them a direct
shipping route to the Black Sea.
A modern application of the inland waterway system offers economic solutions to many
of Russia’s pressing transport needs, claims a
landmark industry analysis issued by the
Organization for Economic Cooperation and
Development (OECD) in Paris, the industrialised countries’ think-tank. The study, Report
on the Current State of Combined Transport in
Europe, says that “inland waterway vessels can
easily accommodate containers mounted up to
four layers high. Since such vessels are not usually subjected to heavy swells and waves, the
container stacks need not even be stowed in a
secure cellular structure. This type of transport
can thus be provided fairly cheaply.”
In the experience of western European ship-
Gate No.1 at the Volga-Don canal
DISPATCHES
ping companies, the OECD study claims that an
inland waterway vessel can carry some 120
units, the capacity of two block trains. And by
combining several vessels in a single convoy,
capacity can even be increased to more than 200
units for a single propulsion unit – under the
command of a single Captain. This transport
mode is particularly competitive because of the
relatively low infrastructure charges involved.
For such reasons, the European
Commission, the administrative directorate of
the EU in Brussels, has contributed to several
pilot projects since the collapse of Soviet
power leading to the present modernization
programme. These have included advanced
investigations on increasing river/ship transport on the Volga and upgrading the cargo handling capacity of such important river ports as
Volgograd and Astrakhan.
The London-based European Bank for
Reconstruction and Development has also
made substantial investment in inland waterway transport both in Russia and neighbouring
Ukraine, a fellow former Soviet-dominated
country that opened up its river/sea navigation
system to EU vessels in 1994.
Russia’s river/sea dry carrier and tanker fleet
of about 1,400 vessels operating out of the
restricted national waterway system has been
serving ports as far as Western Europe, Iran,
North Africa and the Arctic. Most of them have
a carrying capacity of up to 5,000 tonnes. These
ships gained easy access after the implosion of
Soviet power to the lucrative West European
inland waterway network centred on the Rhine
and Danube rivers and branching out throughout
the industrial heartlands of the continent.
These are versatile vessels with crews and
equipment licensed to sail in the very different
conditions prevailing in the inland waterways
and the open seas. They are therefore more
expensive than conventional ships. But they
earn their keep by saving their owners the transhipment cost at seaports as well as the associated risks to cargo. Such savings can be significant in the case of containerised, fragile goods
in transit commanding relatively high transshipment costs, which are now on the increase
in Russia.
Even after the collapse of Soviet power, the
Russian government renewed Stalin’s 1936
Article V of the Inland Waterways Act barring
foreign flags from the strategic shipping channels. Specific restrictions were imposed on the
Volga-Don canal in 1994 permitting on a caseby-case basis limited passage for foreign ships
paying exorbitant transit fees. Even so, this
remains a lucrative run for ships exporting
western energy extraction and transport infrastructure to the developing hydrocarbon production fields of the Caspian basin.
Improvements in shipping conditions permitting, the Russian industry can now ➩
65
DISPATCHES
RUSSIAN WATERWAYS
Up to 70% of the Russia’s river/sea fleet
plying the inland waterway system is
officially considered either obsolete or in
need of major repairs. The shipping canals
are also badly neglected
66
expect fierce competition from its western
rivals operating far larger, modern vessels.
During July, Putin told a conference of Russian
shipping company executives at Rostov-onDon that the government was prepared to
invest unspecified “huge funds” to assist the
industry through the reform period.
He proposed the establishment of a specialist shipping industry development bank to provide easy access to investment capital at attractive rates for staff training and the modernization and purchase of ships and equipment. And
he hinted at generous forthcoming government
subsidies to moderate further, the cost of loan
and lease arrangements.
He also assured his audience of measures to
stimulate commercial shipbuilding by Russian
shipyards. This is a long-standing problem, as
the Russian yards developed largely to meet the
Kremlin’s defence need perceptions have insufficient capacity for building commercial inland
navigation and river/sea vessels.
A decree recently issued by Putin has now
established a state shipbuilding concern specifically to strike a balance between civilian and
military production needs. Ivanov has elaborated that one of the priorities of the new United
Shipbuilding Corporation would be to “overcome the persistent shortage of capacity for
civilian shipbuilding” in order to enable
domestic ship owners to meet the approaching
Western challenge.
United Shipbuilding is a state-owned jointstock company with substantial shipbuilding,
maintenance and repair facilities devoted to
utilise military facilities specifically for civilian
use. The decree directs the company “to promote new technologies and developments” in
the service of the shipping industry.
It is also to “develop, design, manufacture,
supply, maintain, upgrade, repair and recycle
military as well as civilian shipping and facilities for the exploitation of the continental
shelf in the interest of the government and
other clients,“ the decree states, “including
foreign clients”. The three major, main subsidiary enterprises of United Shipbuilding are
RUSSIAN WATERWAYS
located at Severodvinsk in the North, St
Petersburg in the West and Vladivostok in the
Far East of Russia.
The Volga and the Don together make up one
of the world’s principal waterways. It provides
a strategic link between the Caspian production
fiends and the EU’s key 9th International
Transport Corridor. The 2,300-mile “Mother
Volga” river that disgorges into the Caspian is
the longest in Europe. The Don that empties
into the Sea of Azov in the North-east of the
Black Sea is the fourth largest.
They are among the most polluted waters in
the world still bearing the environmental
wounds inflected on them by the wanton management practices of the bygone Soviet industries abusing the river system as dumping
grounds for untreated toxic chemicals and
radioactive wastes.
Digging a canal to link the two rivers was first
proposed in the 16th century by Turkish engineers reporting to the Ottoman throne. The idea
was taken up but never realized by Peter the
Great. Stalin built the canal, but he died before
its completion. The composer Sergei Prokofiev
immortalized the effort in the tone poem The
Meeting of the Volga and the Don Rivers composed for its inauguration in 1952.
This waterway is widely expected to be the
first in the entire Russian canal system to attract
serious foreign development finance for modernization. But the Soviet-built canal is too narrow to accommodate big oil tankers, and the
Kremlin is keen to maximize profits. It has
therefore floated proposals for entirely rebuilding the shipping canal in a project to be financed
by capital raised in part by the Caspian hydrocarbon producers. They have, however, opted
for a far bigger alternative project.
Speaking at an international economic forum
in St Petersburg, President Nursultan Nazarbaev
of Kazakhstan recently invited Russia to join an
international construction project to link the
Caspian with the Black Sea by a 405-mile canal
across the Caucasus. This waterway would be
eight times longer than the Panama Canal and
The composer
Sergei Prokofiev
immortalised the
effort to build the
canal in the tone
poem The Meeting of
the Volga and the
Don Rivers
composed for its
inauguration in 1952
DISPATCHES
four times the length of Suez – but 625 miles
shorter than the existing shipping route along the
Volga and the Don.
The proposed canal would accommodate
river/sea ships of up to 10,000 tonne carrying
capacity taking perhaps 9-12 days to reach the
mouth of the Danube across the Black Sea. The
facility would cost an estimated 147.65bn rubles
and take up to a decade to build. It would be dug
in a virtually straight line across rough terrain,
but the task is less daunting than it sounds as the
project would utilise a string of navigable reservoirs built during the Soviet era.
The proposal has won the backing of
Nazarbaev’s Caspian neighbours. But as the
waterway would cross Russian territory, the
final word over its construction rests with
Moscow.
The Kazakh president has recently observed:
“We hear that some of our Russian colleagues
think we would like to bypass Russian territory.
We will not bypass anybody. We want to create
a shipping lane to free the flow of Kazakh
exports. I say to our Russian neighbours: let us
build the canal together!”
But a free flow of Caspian hydrocarbon
exports to the EU and beyond would be detrimental to Russia’s perception of its commercial
as well as geo-political interests. Indeed, all the
disadvantages in international relations provoked by Russia’s recent invasion of Georgia
were justified, in the pragmatic assessment of
the Kremlin, by its success in disrupting the flow
of commerce past the only Black Sea ports
through which Caspian hydrocarbons could still
be shipped beyond Russia’s control to the hungry energy markets of the West. ■
Thomas Orzág-Land is an author and award-winning
foreign correspondent.
67
GREECE
DISPATCHES
The basic training, recruitment and employment of senior crew members for the Greek
merchant marine is a challenging as well as a long standing effort. Indeed, the Greek
government has undertaken, for some years now, a programme to introduce basic seafarer
training in publicly administered schools but the ship owners and crew managers believe this
may still be a case of too little, too late, writes Nick Constantopoulos, in Athens.
Is Greek manning facing
crisis point?
o start with, the needs of an ever
expanding commercial fleet and the
diverse requirements of the new vessels rapidly streaming out of the shipyards and entering into service have
placed considerable strains on the system. The
10 or so marine academies are failing to attract
larger numbers of candidates and the attention
and care paid by the instructors do not always
amount to what a modern diversified world
shipping industry requires.
Housed in 10 different locations around
Greece, the ADSEN (Higher Public Schools of
Merchant Marine) accept about 1,300 new students every year – 700 for Captains’ positions
and about 580 for Chief Engineers’. But the
number of students graduating from these
schools is according to estimates of the industry,
much smaller – about one fifth of the entrants.
The four semester courses are interspersed
with onboard practical training at sea and the
successful cadets return back to the school for
T
the final tests which will quality them for third
rank mates or engineers.
Although the quality of students entering the
schools is rather good – drawn from children of
maritime families, island people as well as
Greeks anxious for a challenging and well paid
job – the number of graduates is still woefully
below the actual needs of the industry.
The Ministry of Merchant Marine and the
Aegean in charge of the basic training and professional qualification of all the crews, claims
the publicity campaigns and incentives offered
to these students are more than adequate to draw
a large number of well qualified officers to be.
The professional associations (PEPEN for
captains and PEMEN for engineers) as well as
the Union of Greek Shipowners, however,
think differently.
The Panhellenic Association of Merchant
Marine Captains (PEPEN), a strong albeit politically affiliated trade union, believes that the
demands of the shipping industry have become
too pressing with the needs of most of the large
size fleet owners or managers not actually covered by the public school graduates.
Captain George Vlahos, president of
PENEN, insists that the state does offer a systematic and continuous supply of high level,
education and training, but the shortage of well
trained and experienced senior officers is still
tremendous. World wide, Mr Vlahos calculates
there is a shortage of about 20,000 senior officers, and Greek owned shipping represents a
large percentage in this. This shortage includes
1,900 captains and 2,200 chief engineers only
for the Greek owned shipping sector.
The Union of Greek Shipowners (UGS), on
the other hand, recognises that the gap is rather
larger, and that the number of graduates is not
going to satisfy the increasing needs of the
many and diversified Greek owners. But at the
same time it insists that the State and the professional associations are doing their best to
improve the situation. ➩
69
DISPATCHES
GREECE
There has been a
remarkable shortage
of Greek officers
needed to cover the
manning of the
available vessels due
to the low supply of
trained seafarers from
the merchant marine
academies
Evangelos Pistiolis, CEO of Top Ships
Photis Psarras, education officer in charge of
crewing at the UGS, believes that alternating
education with onboard training works rather
well and that about 60% to 65% of the students
entering the ADSEN schools do graduate. But
the needs of the Greek ship owners, at least for
senior officers, may be too high and the rate of
supply of graduates is unlikely to reach the levels of demand.
On the other hand, the Greek state has not
adopted new training and education schemes in
the field of maritime education, like special
GREECE
schools, maritime academies or even seminars
only for senior staff or even the dual system
applied in Norway. But the UGS is overall optimistic that the needs will be covered in a gradual and selective way over the years to come.
In fact, with more than 3,500 vessels of all
categories under Greek ownership and more
than 1,050 new ships due to enter service in the
immediate future, the requirements of the Greek
ship owners may be skyrocketing and out of proportion. A slight shift of the Greek ownership
from large oil tankers to more classical bulk carriers, container ships and other categories of vessels does not seem to have helped the situation.
But what are the views of the shipping
industry? The large ship owners appear to shun
the Greek state education and the public academy graduates, while medium and smaller size
fleets have to provide for all their immediate
and medium term needs in a variety of ways.
According to Evangelos Pistiolis, CEO of
Top Ships, there has been a remarkable shortage of Greek officers needed to cover the manning of the available vessels due to the low supply of trained seafarers from the merchant
marine academies.
“The turn of the industry to other sources of
energy is now guiding the shipping companies
to acquire and operate LPG and LNG vessels,
which need to be manned with specialised sea-
farers capable of working on these types of vessels. New requirements and new regulations in
shipping have also forced the companies to satisfy their needs with most qualified seafarers
and this threatens the quality of the onboard
Greek officers,” said Mr Pistiolis.
“For all the above reasons, the companies
themselves should invest in their most valuable
assets, the seagoing personnel, and should press
the government and the merchant marine
academies to provide the shipping industry with
DISPATCHES
more deck and engine seamen,” he concludes.
Captain Aggelos Koutsoumbas, crew manager of Danaos Management Consultants and
Danaos Crew, both companies based in Pireaus
and members of the larger holding company
Danaos Shipping, asserts that the future of the
Greek shipping officers is quite bleak. The
quality of the senior crews is already low and it
is anticipated to become even worse.
Just because the STCW requirements for
senior crews are demanding and far reaching ➩
DISPATCHES
GREECE
as far as educational and practical training levels are concerned, Greek ship owners and ship
operators need to comply with real international standards and at the same time face up to this
crew shortage. What Capt. Koutsoumbas
believes may be part of the solution is greater
incentives to young people, both boys and girls,
who want to make the sea their life-time profession. Such incentives can include both fiscal
exemptions, increase of wages, but also a motivation to stay with the profession for rather
longer periods.
Danaos shipping owns and operates about
seven bulk carriers and six tankers and their
new building commitments are expanding considerably. According to Mr Koutsoumbas, every
crew manager can take his own decisions about
the rotation of the crews, the level of wages
offered and the amount of training and retrain-
72
“The shortage of
seafarers has forced
Greek wages to rise
which, in turn, has
forced shipping
companies to search
for other nationality
seafarers keen to go
to sea for the same
wage levels”
ing which is needed for new vessels officers.
So the system of four months on and two
months ashore or five months on and one
month ashore is a very attractive approach
which has been utilised with Baltic, Ukranian
and Polish officers. This is forbidden under
Greek legislation which requires a six month
onboard employment contract, a fact which can
keep the same crews onboard for longer periods of time.
On the other hand, the supply of foreign
crews both from Eastern Europe and Asia is an
attractive proposition for the Greek ship owners which they do not seem to forget.
Captain Koutsoumas, an old hand in the
seagoing family, seems to believe that 29 to 30
is the ideal age for Greek officer cadets to be
recruited, trained and employed and that the
mix of incentives and motivations that can be
offered to them should strive to keep them with
the company as long as possible.
A different approach is offered by
Enterprise Shipping and Trading, a sizeable
Greek company controlled by Restis Group
interests. The enterprise which currently owns
and operates 14 tankers but which has an additional four newbuildings due for delivery during 2008, utilises another employment model.
As the requirements for oceangoing tankers,
LNG and LPG carriers are quite high, the
company has a policy to recruit senior officers
from recognised academies in Poland,
Ukraine and Russia. With a solid background
of training and practical experience from the
previously state owned fleets, these officers
can satisfy the needs of the company and constitute the bulk of its manpower.
Ioannis Georgalas, crew manager of EST,
says the retention rate of the senior crews is
between a very satisfactory 95% to 96%. Of
course, ETS employs a bevy of measures for its
in house training and maintains training reports
for each one of its members.
“At the same time, new tools like third party
opinion surveys, EFQM quality management
techniques and other sophisticated means are
being employed by the company to keep and
upgrade their first choice loyal personnel,” said
Mr Georgalas.
According to Top Ships’ Pistiolis, the
shortage of seafarers “has forced Greek wages
to rise which, in turn, has forced shipping companies to search for other nationality seafarers
keen to go to sea for the same wage levels.”
What needs to be done to retain a credible
and usable Greek seafaring force are “social
motivations, the enhancement of the Masters
and Chief engineers status in the community,
constant education, rotation schemes for inout sea service intervals, extra benefits to seafarers and their families and an improvement
of relationships between seagoing and officebased personnel.” All these stand true. ■
TRADE ANALYSIS
OFFSHORE
Concentrating
on the silver
lining
Accelerated and fast expanding offshore
exploration activities fuelled by the high
global oil price has prompted a burgeoning
world offshore supply and anchor handling
tug orderbook but according to operators
and managers, this is wreaking havoc on the
supply of crew for these sophisticated vessels.
Indeed, according to one major player in the
marketplace, crew salaries in the offshore
sector are double that of the merchant
sector and getting worse.
74
Finding and keeping good crew in an offshore market which is very
competitive, is very difficult, claimed Kjell Gauksheim, Chief
Operating Officer for Nordic Maritime. “And actually, if you look at the
wages being paid in the merchant fleet compared to the offshore fleet,
I have some friends in the merchant market who are telling me what a
captain costs, it’s half of what we are paying for our tiny little boats.”
“With all the vessels coming out of the shipyards, I don’t know
where we’re going to get the people from, it’s as simple as that. It’s a
big worry because the quality criteria from the oil companies is high
and getting higher. As more and more vessels are built, more and more
crews are required. You have to train them and keep them and get them
up to standard. So it’s a big challenge,” he said.
This was a concern echoed by Capt Ashley Robinson, Master
Mariner and Group General Manager of Amsbach Marine. “If you take
the vessel we operate, she is a four point mooring vessel, which is quite
a specialised field so finding the right personnel competent enough to
operate these vessels is not easy. We have a 60 tonne crane and even
finding people who are competent to operate this type of equipment is
difficult. We tend to use a mixture of Indonesians and Filipinos which
works very well. We have an Indonesian master on one of our vessels
and a Filipino and are experiencing no problems regarding their command of English. You have to be selective and go through two or three
before you get the right one,” he said.
An added dimension is being able to attract seafarers from other vessels sectors that themselves are suffering from acute shortages with the
resultant escalation in wage scales being seen.
Kjell Gauksheim again: “The crews have quite a good life as well. If
you are on a brand new bulk carrier or tanker, the tendency is to want
to stay there. It’s an easy life, you go from A to B and you change port.
OFFSHORE
Offshore is quite tough, so I understand the wages going up because
they see that the charter rates are going up because the oil price is going
up. The crew want to benefit that it as well.
Nordic's prime areas of operations are the Middle East, India,
China, Southeast Asia, Australasia and Russia. Its fleet operational
and management experience includes specialised vessels such as seismic survey vessels, chase boats, PSV/AHTS vessels, crew boats, diving support vessels as well as offshore construction vessels. Nordic
has expanded from management services into ship ownership and
complete project management including building and supervision of
specialised offshore vessels.
So where is the best recruitment ground for offshore crews? “We go
everywhere but most of them are from the western world. For example,
at the moment we are crewing up on the seismic side and because we
need very specialised crew they are very hard to find. So you just have
to be competitive in the marketplace.
“We use English, Norwegians, Australians and Russians, as long as
they speak good English. The Russians are very good. We have three
Russian vessels on management here so we have quite good connections with the Russian market. We have a Chinese client for our own
seismic vessel and they have also a lot of Chinese and Russians on
board which we can see they are working very well.
“Mostly our marine crew is taken in from the Philippines and Russia
and as long as they speak good English we are being quite successful with
the Russians. We are not being quite so successful with the Philippines
because of the competition for good Filipino crews. But they are a very
happy crew to have on board. They’re very easy going and they speak
good English and they do what they are told to do,” he said.
Nordic Maritime recently secured a $30m conversion and sale contract with PetroVietnam Exploration Production Corporation (PVEP
Corporation), the subsidiary of Vietnam Oil and Gas Group
TRADE ANALYSIS
(PetroVietnam), based in Hanoi. Under the deal, Nordic Maritime
agreed to provide complete project management and supervision for the
conversion works, including all technical specifications, of a fishing
trawler, MV Pavlovsk, into a 2D seismic research vessel. The conversion work started on May 2nd at Cochin Shipyard, India, and was
expected to be delivered by mid-September.
Growth of the Far Eastern offshore sector has been particularly
explosive, especially in the waters off Vietnam and supply companies
like Gaylin International, which supplies high end steel and fibre ropes
and cables to the shipping and offshore markets are starting to see the
benefits paying off.
“We had a very good year last year, a record year, and this year we
forecast will be 30% to 40% higher,” said Desmond Teo, Managing
Director of Gaylin International. “Growth in the offshore market is creating all this turnover and we are very busy. Because of this growth, we
need more space so I am looking to rebuild the old office and we need
another quarter of a million sq feet and we are looking for a waterfront
location,” he added.
“Mostly our marine crew
is taken in from the
Philippines and Russia
and as long as they
speak good English we
are being quite
successful with the
Russians. We are not
being quite so successful
with the Philippines
because of the
competition for good
Filipino crews”
Kjell Gauksheim, CEO, Nordic Maritime
Jaya Holdings, a leading player in offshore
support vessels, sale and chartering sector, has
also seen growth associated with the booming
offshore sector.
Founded in 1981 with a single vessel, the
business has grown rapidly with the additions
of more vessels including offshore support vessels through the 19080s and 1990s. It diversified into shipbuilding in 1993 with the purchase of an existing shipyard in Singapore
(Jaya Shipbuilding and Engineering) and the
development of a new shipyard in the
Indonesian Island of Batam. The Jaya Group
today owns and operates a fleet of 29 ➩
75
TRADE ANALYSIS
OFFSHORE
“Growth in the offshore market
is creating all this turnover and
we are very busy. Because of
this growth, we need more
space so I am looking to rebuild
the old office and we need
another quarter of a million sq
feet and we are looking for a
waterfront location”
Desmond Teo, Managing Director of Gaylin International
76
offshore support vessels (OSV's), which are chartered out
to a wide network of clients in the Asean and Middle-East
offshore oil and gas enviornments. The Group is also an
established builder of offshore support vessels which it
uses for it own chartering fleet as well as for sale to outright purchasers. Currently it has a new building programme which will see over 70 vessels being completed
progressively over its next three financial years.
Such is the growth levels that it has just announced
the acquisition of a Chinese shipyard to immediately
boost its shipbuilding capacity and plan for its next
phase of growth. Jaya has signed an Equity Interest
Transfer Agreement with Nantong Hengsheng Shipyard
through its 100% owned subsidiary, Jaya Offshore
OFFSHORE
TRADE ANALYSIS
(H.K.) Limited, to acquire the entire issued share capital of Nantong
Dongjiang Shipyard for approximately S$7.3 million in cash. An
advance payment of 20% will be made into an escrow account, to be
released upon the successful completion of the equity transfer and the
balance will be payable over various stages and milestones. The
Acquisition is financed through the Nantong Shipyard has an experienced management team and workforce of approximately 100 workers. The Group intends to further develop the shipyard in phases
which is estimated to take between three to four years to complete.
When fully developed, the Group’s total in-house shipbuilding capacity is expected to be at least double that of its current capacity.
Chan Mun Lye, Chief Executive Officer of Jaya said: ”Nantong
Shipyard will immediately boost our shipbuilding capacity to meet our
The Jaya Group today owns and
operates a fleet of 29 offshore support
vessels (OSV's), which are chartered
out to a wide network of clients in the
Asean and Middle-East offshore oil and
gas enviornments. The Group is also
an established builder of offshore
support vessels which it uses for its
own chartering fleet as well as for
sale to outright purchasers
Jaya Shipyard
clients’ growing demand for offshore support vessels to serve the currently booming offshore oil and gas industry. I am particularly impressed
with the 800 metre long shoreline which is 1.8 times longer than the combined shorelines of our existing Singapore and Batam shipyards.
“Nantong Shipyard has a skilled workforce and with good management and control, Iam confident it will deliver quality vessels on a timely basis and within budget.
China is attractive as a cost efficient and competitive shipbuilding
centre. With the addition of this third shipyard, I expect the Group to
reap the benefits arising from the better economy of scale in our shipbuilding operations,” he added. ■
SHIP REPAIR
ShipRepair
More conversion contracts for Singapore
Singapore’s Keppel Shipyard, part of Keppel Offshore & Marine
Group, has signed three contracts amounting to Sing$110m for the
upgrading, modification and conversion of three vessels from as
many customers.
The first contract is from Malaysia’s Bumi Armada Berhad, for the
upgrading and conversion of a tanker into a Floating Production
Storage and Offloading (FPSO) unit. The scope of work includes the
fabrication, installation and integration of a 12-point spread mooring
system, riser balcony, topside facilities and upgrade of accommodation and auxiliary support systems. When completed in the first half
2009, the FPSO Armada Perdana will have a storage capacity of 1m
barrels of oil and be capable of processing 40,000 bbls of oil/day.
The second contract is for the jumboisation of a dredger from
Holland’s Boskalis Westminster Shipping, part of Royal Boskalis
Westminster. This project is to enhance the dredging capabilities of
the trailing suction hopper dredger (TSHD), Queen of the
Netherlands, and will be Keppel’s second such jumboisation project with Boskalis. When completed in the first quarter of 2009, the
vessel’s hopper capacity will be increased from 23,347 m3 to
35,500 m3, making it one of the largest of its kind in the world.
The third contract is from Norway’s BW Offshore for the
upgrading and modification of an FPSO for the TUPI field in
Brazil. To be converted according to Petrobras’ requirements, the
FPSO BW Peace will be renamed BW Cidade De Saõ Vicente. She
will be the first FPSO to enter the gigantic TUPI deepwater field
outside Rio de Janeiro. BW Cidade De Saõ Vicente will be the third
FPSO awarded to Keppel Shipyard by BW Offshore. This fast track
FPSO project is expected to be completed by the end of 2008.
Meanwhile, Jurong Shipyard (JSL), part of Sembcorp Marine,
has successfully completed the conversion of Dhirubhai-1 Floating
Production Storage and Offloading (FPSO) unit for Aker
Contracting FP AS, a subsidiary of Norway’s Aker Floating
Production ASA. Dhirubhai-1 is the first Floating FPSO vessel in
Aker Floating Production’s new offshore production fleet.
The conversion of Dhirubhai-1 from the 188,967 dwt tanker
Polar Alaska encompassed the installation of an internal turret,
three units of 5 MW steam turbine generators, three units of 5 MV
gas turbine generators, process facilities for oil production, crude
separation and gas compression.
The Dhirubhai-1 will undertake field production work for
Reliance Industries Limited at the MA D6 field offshore the east
coast of India. First oil is expected in the third quarter of this year.
The FPSO is designed to operate for 10 years without drydocking,
and is capable of processing 60,000 bbls of oil/day and 15m m3 of
gas/day, with a storage capacity of 1.3m bbls of oil, and a liquid
injection capacity of 80,000 bbls/day.
Conversion projects at Malaysia’s Malaysia Marine & Heavy
Engineering (MMHE), Pasir Gudang, include Global Process
System’s jack-up rig Nang Nuan 252, which will be converted to a
Mobile Oil Production Unit (MOPU), the 100,047 dwt tanker Orchid II, which will be converted to a FSO for MISC/Talisman –
78
The FPSO BW Peace, which is to be upgraded and modified by Keppel Shipyard
To be converted according to Petrobras’
requirements, the FPSO BW Peace will
be renamed BW Cidade De Saõ Vicente.
She will be the first FPSO to enter the
gigantic TUPI deepwater field outside
Rio de Janeiro
to be renamed FSO Orkid, and the 100,024 dwt tanker Cherry 11,
which will be converted to a FPSO for MISC – to be renamed Ruby.
Sembawang Shipyard Pte Ltd, also part of Sembcorp Marine,
recently secured a S$100m contract from Belgium’s Dredging,
Environmental and Marine Engineering (DEME) to construct a 19,000
tonnes DP2 fallpipe vessel for its subsidiary company, Tideway.
The contract involves the complete engineering on the basic
design package provided by the owners, construction of the vessel’s
hull, major outfitting of owner’s supplied machinery including
owner’s furnished equipment, systems outfitting and commissioning.
Upon completion, this new generation of environmentally friendly
designed fallpipe rock dumping vessel will be equipped with the DP2
capability to carry out precise rock placement works at a depth of no
less than 2,000 metres. Vessel will be classed with Lloyd’s Register
and will also comply with Lloyd’s Environment Protection Code
whereby NOx emissions will be largely minimized. The vessel is
scheduled to be delivered in January 2011 for deployment worldwide
and will be Tideway’s biggest fallpipe vessel.
Currently, Sembawang is completing the FPSO conversion of
Aoka Mizu for Bluewater Energey Services which is equipped with
DP1 capability and is working on the construction of a 5,000 tonnes
DP3 heavy lift crane vessel for Nordic Offshore, Norway.
SHIP REPAIR
New conversion contracts for DWD
A contract has been signed by Drydocks World Dubai (DWD) to
convert Golar LNG’s 1977-built, 95,879 grt LNG tanker Golar
Frost into a floating, storage and re-gasification unit (FSRU) for
Italy’s Saipem. The conversion project is set to start in June 2009.
The contract for the FSRU is for the LNG terminal of Livorno,
located 20 km off the coast of Tuscany, Italy, which has been
awarded to Saipem by OLT Offshore LNG Toscana. The FSRU
will have a storage capacity of 137,000 m3 of LNG and a production capacity of 3.75bn m3 of natural gas/year. This is DWD’s first
FSRU contract, the two previous FRSU conversion contracts,
both involving Golar LNG tankers, have been carried out by
Singapore’s Keppel Shipyard.
DWD has also signed a Letter of Intent (LOI) for the conversion of two double-hulled ULCCs to FSOs – the 441,655 dwt TI
Africa and the 441,893 dwt TI Asia - for owners OSG Ship
Management (UK) and Euronav respectively. The vessels will
service Qatar’s Al Shaheen oil field in the Arabian Gulf with a
capacity of 3m bbls of oil. TI Asia is set to arrive at the yard in
October 2008 and TI Africa in January 2009. The scope of work
broadly includes hull treatment, steel and piping renewal and
accommodation refurbishment.
Conversion work currently underway in DWD includes the
VLCC tanker to FPSO Gimboa for Saipem, which is nearing
completion at the yard. The FPSO will be moored at the
Gimboa field around 85 km off the coast of Angola. It will have
an oil storage capacity of 1.8m bbls and a production capacity
of 60,000 bpd.
The conversion of Chevron owned vessel Frade for SBM
IMODCO is one of the largest conversion jobs taken up by DWD.
The 236,000 dwt vessel will be used at the Frade field off Brazil
and will be able to operate at water depths of 1,065 m. The converted vessel will have a storage capacity of 1,500,000 bbls and a
processing system of size 120,000 bpd. The vessel is due for completion in the second half of 2008.
The panamax shuttle tanker Nordic Laurita is undergoing conversion to a Deep Producer 1 (DPP1) for Norway’s FPSOcean. It
is the first conversion of the type taken up by the yard. The vessel is scheduled for completion during the third quarter 2008. It
will be used for marginal offshore oilfield development and will
be operating primarily in deep water. Once complete, the vessel
will have a storage capacity of 400,000 barrels and a production
capacity of 60,000 bpd.
The FPSO Knock Allan is currently undergoing conversion at
DWD, from a trading tanker to a FPSO for the Olowi field offshore Gabon. Once operational, Knock Allan will be able to store
1m bbls of oil and produce 25,000 bpd. The vessel is scheduled
for completion during the second half of 2008. The power generation module was built at the yard.
A contract has been signed by Drydocks
World Dubai (DWD) to convert Golar
LNG’s 1977-built, 95,879 grt LNG tanker
Golar Frost into a floating, storage and
re-gasification unit (FSRU) for Italy’s
Saipem. The conversion project is set to
start in June 2009
The LNG tanker Golar Frost Frost, will be converted to a FSRU by DWD
79
BUSINESS OF SHIPPING AD HOC
AdHoc
AdHoc
Moving at the
slowest speed
Take a group of voyagers that come from all
walks of life – different backgrounds, cultures and countries, aged 16 to 70+ - a real
integration of ages, abilities and backgrounds. It is this combination that adds to
the success of each voyage and leads to
many lasting friendships onboard Lord
Nelson. Now imagine trying to win a race
under sail when the watchword for your
crew is just that: to move at the speed of the
slowest, writes Stephen Chapman.
Lord Nelson was entered in the 2008 Tall
Ships’ Race – a race that took me to sea
aboard the three-masted barque. Tall Ships’
Races are held every summer in European
waters. This year 69 vessels from 21 countries, crewed by some 2,000 young people
from over 30 countries worldwide, took part
in an event that combines four days of activities in each port with racing or cruising-incompany between ports. During the race
series, the young crews get the chance to
gain experience by sailing with their contemporaries from other countries while facing the physical and emotional challenges
that only the open sea can provide. For more
mature seafarers, it is an opportunity to build
a team and at the same time prove oneself in
often challenging situations.
So against that background I found myself
on board as one of 40 signed on as voyage
crew members facing eight days at sea from
the fjords of Bergen to the low lands of Den
Tall Ships’ Races are held
every summer in European
waters. This year 69 vessels
from 21 countries, crewed by
some 2,000 young people
from over 30 countries
worldwide took part
AD HOC
Helder, a distance across the North Sea of
over 1,200 miles. During the race, all ships
face the same challenge against the clock.
Lord Nelson however was designed and
built to face an additional challenge: to take
people to sea with physical disabilities.
Commissioned in 1986 the ship is operated
by a UK charity, the Jubilee Sailing Trust,
and is equipped with special facilities: flat,
wide decks to facilitate access for wheelchair users; lifts between decks for those
with limited mobility, guidance tracks on
deck to help blind and visually impaired
crew remain central and a speaking compass
with digital readout screen which enables
blind people to steer the ship.
With four wheel chair users at sea,
Duncan and David who would normally be
found ashore with a white stick tapping to
navigate pavements and road crossings, and
a couple of ‘wobblies’ – those unsteady on
their feet, the mission is to include everyone in all manoeuvres whenever safe to do
so. Disabled crew members work side by
side with able-bodied people (each disabled
crew member is ‘buddied’ by an able-bodied person). And so we move at the speed
of the slowest.
To win the race we knew that the skill of
Captain Neil Duncan, on first race command
and out to prove himself and his crew of able
and less able-bodied would be seafarers,
would be tested to the full. Hours of pondering over charts, weather faxes and tide
tables, the key was to make best use of the
elements. Close hauled, a barque can sail no
closer to the wind than 65 degrees. Add
some leeway and one is lucky to make a
track of 70 degrees off the wind. For a
square rigger the shortest time between two
positions is seldom a straight course.
Heavy weather gear issued, safety drills,
practice in bracing the yards and hands aloft
onto the yards for sail handling completed,
all was ready. Displaying their beauty in hull
After the first night we awoke
to the news that we were 16th
in class, and 31st overall. Our
course was south west and we
were bowling along in a
moderate North Easterly wind
forms and sails, the ships left Bergen in a
spectacular parade of sail – full rigged ships,
barques, barquentines, brigs, tops’,
schooners, ketches and sloops - for gathered
spectators lining the harbour and approaches
and made for the open sea. The Bergen rain
abated while the fleet sailed but contrary
winds in the harbour may have been an
omen for the days ahead. The breeze died
completely as the ships assembled in
evening light at the appointed starting position off Hellisøy. A voice on the VHF
announced: ‘All classes: start of the race
postponed for another hour’. Captain
Duncan had his ship well positioned and
when the start finally came, the ship was
second across the line with every inch of
useful canvas set.
The start was incredible. We were being
treated to true celebrity status as helicopters
with TV crews onboard circled the boat
catching glimpses of the action. We made an
incredible start. There were 19 ships in our
class A of tall ships, and around 60 ships racing in total including a number of yachts.
Now at sea, under sail alone for the next
eight days the crew were organised into four
watches of nine to 10 people each. The
watch pattern adopted changes daily with
two dog watches covering the afternoon 4 to
8 period. This rotation ensures that everyone
shares the long night watches. Keeping
watch on a sailing ship is no different to a
commercial vessel and the voyage crew take
turns in keeping a look out for other ➩
81
shipping, land and lights both day and night.
Security patrols below decks are made every
hour, the deck log completed and all watch
members learn to take the helm, understand
and execute helm orders and steer the ship
both by the gyro compass and ‘by the wind’
when the course is set sailing to windward.
The watch on deck is responsible under
the watch officer’s guidance to ensure the
sails are trimmed, set and handed according
to the constantly changing pattern of the
wind. A major shift in the wind calling for
the yards to be braced is a challenge for one
watch alone at night but can be executed by
bracing two yards at a time, instead of the
usual four, and by bracing first the fore mast
and then the main mast. Time off watch seldom allowed inactivity. The mornings are
occupied with cleaning ship – happy hour as
it is called when the ship is cleaned from
stem to stern. Everybody has a cleaning
chore – heads, brass, woodwork, windows,
decks - we had a lot of fun with this.
Sometimes talks from the experienced
crew on sail setting and sailing manoeuvres
but always on the alert for the call of ‘all
hands to bracing stations’ which summons
all watches to standby to brace the yards.
One man from each watch is always on mess
duty which involves assisting the cook in
preparing and serving meals, laying tables
and clearing away afterwards. The galley is
on the main deck and a lift assists in taking
food to the main mess below deck.
After the first night we awoke to the news
that we were 16th in class, and 31st overall.
Our course was south west and we were
82
To win the race we knew that
the skill of Captain Neil
Duncan, on first race
command and out to prove
himself and his crew of able
and less able-bodied would
be seafarers, would be
tested to the full
bowling along in a moderate North Easterly
wind, headed for a way point 10 miles off
Aberdeen. Closing the Scottish coast would
give us the opportunity to secure extra weather data from the internet that may not be
available to other ships. Our AIS showed us
in detail where some of the competition lay.
The first days saw steady progress with
the wind blowing force six from the WNW
and our finest hour came as we rounded the
way point with the coast of Scotland clearly
visible. Race control announced we were
12th in class. Mobile phones sprang into
action reporting progress to friends on shore.
That morning, I climbed the rigging and out
onto the main yard to fix the main sail that
was coming adrift from the yard. The wind
had caused the lashings, called robands, to
come untied. We came about expertly now
and settled onto a south easterly course as
the wind died away. The rest of the fleet
were experiencing the same weather conditions and as we headed off towards Den
Helder it was clear that tactics were the
answer to a successful race. During this leg
we sighted our first whale and dolphins. At
five in the morning while on watch, we were
accompanied by a school of dolphins that
played around the stern surfing on the waves
created by the boat.
As the wind strengthened again we
received an urgency call from the competing two-masted German schooner, Johann
Smidt about 12 miles astern. She had a
medical emergency on board and was in
need of doctor. We responded immediately
by stowing all the sails, turning smartly
around and motoring back to the assistance
of the casualty.
Lord Nelson was closest to the vessel
when the call went out. We were able to
assist as we carry both a doctor and a medical purser on board. After transferring to
Johann Smidt, Dr Simon Cunningham our
volunteer doctor took the decision to have
the casualty airlifted to hospital in
Newcastle.
After flying to the hospital with the seaman, Dr Cunningham was reunited the following day thanks to the Royal Air Force
who offered to transfer him back onto the
During the race, all ships face
the same challenge against the
clock. Lord Nelson however
was designed and built to
face an additional challenge:
to take people to sea with
physical disabilities
Watches came and went. As
the days wore on, the wind we
were expecting to veer to the
south west stayed resolutely in
the south east; we tacked again
and again. In a freshening
wind the fore royal – the top
most sail on the fore mast blew out with a rifle crack
sound and was left flogging
in the wind
ship via a hi-line transfer from a Sea King
rescue helicopter. Upon his return, a smiling
Dr Cunningham was promptly told to report
to his bracing station for a change of sail as
we set off to try and make up for lost time!
Watches came and went. As the days wore
on, the wind we were expecting to veer to the
south west stayed resolutely in the south east;
we tacked again and again. In a freshening
wind the fore royal – the top most sail on the
fore mast - blew out with a rifle crack sound
and was left flogging in the wind. The second
mate and bosun’s mate climbed aloft to
secure it. Sending a new sail aloft and attaching it to the furling gear was a task that would
need to await calmer weather conditions.
In our daily meetings with the Captain it
was becoming clearer that the race might be
called short in order to get the fleet to Den
Helder in time to meet an intricate berthing
schedule. We knew that the big full rigged
84
Norwegian ships Christian Radich and
Sørlandet were well ahead with the Russian
Mir, and even with the advantage of the complex handicap system and some compensation for the time lost in responding to the
medical emergency we would not catch them.
And so it was, we reached the northern edge
of the Dogger Bank, passing oil and gas production rigs and pounding into a short sea
close hauled – very uncomfortable for those
whose berths were in the foc’sl. The race
was called short, with us finishing in 16th
place, not a bad result for a ship that wasn’t
designed to be the quickest in the fleet.
Approaching Den Helder with engines on
full speed and stay sails adding a knot or so
to our progress, all hands were called aloft to
man the yards and stow sails for port entry.
This is an essential task as tall ships have a
lot of windage from masts and yards and
stowing the sails well helps to minimise this.
No one is forced to do anything but everybody wants to get in there and help.
I climbed to the main top and out along the
yard. Looking around I saw Duncan beside
me. I bit my tongue as I was about to ask,
‘What are you doing up here?’. The fact that
Duncan was unable to see did not matter. He
could feel and stowing a sail and lashing it to
the yard was quite within his capabilities.
I had to recall that disabled crewmembers
can take an active part in the running of the
ship if we move at the speed of the slowest.
I’ll be back next year. ■
AD HOC
Titanic restoration for
SS Nomadic
The Nomadic Preservation Society is calling
for financial assistance in the restoration of
the SS Nomadic, most famously known for ferrying people out to the Titanic on its one and
only voyage.
Built in 1911 alongside the Titanic at
Harland & Wolff in Belfast, the SS Nomadic
transported 147 passengers, including
renowned names such as Molly Brown and
Benjamin Guggenheim to the Titanic on its
famous departure, but this formed only the start
to her momentous history.
The vessel also served the British
Government as a troopship during the First
World War, and carried hundreds of French
troops across the channel at the fall of France
in World War Two.
After a rewarding 50 years as a tender vessel, with a resume that also includes the transportation of passengers to the Queen Mary in
the 1960’s and conversion into a floating
restaurant opposite the Eiffel Tower, she was
impounded by French authorities and offered
for scrap sale.
A new lease of life was, however, granted
to the Nomadic when an internet campaign
led to the establishment of the Nomadic
Preservation Society. Raising over £40,000
in funds, and supplemented by a £100,000
grant from Department of Strategic
Development in Northern Island, the vessel
was saved from her doom and taken for
restoration in Belfast.
Lack of finance has since impeded the renovation of this physically deteriorating yet historically significant vessel, but the Society
hopes funding can be obtained via sponsors
and benefactors, prolonging the Nomadic’s
venerable and illustrious career. ■
Internal auditing too
isolated for UK insurers
Wipe the tears away
India’s onion-growers can put away their tissues as July exports of the vegetable more than
doubled despite an increase in the minimum
export price.
Shipments of the lachrymal vegetable
surged to 1.54 lakh tonnes, a two-fold rise
when compared to 61,629 tonnes in July 2007
despite a hiking of the export price by $575 a
tonne to discourage exports.
At the start of July, the National
Agricultural
Cooperative
Marketing
Federation (Nafed) increased the vegetable’s
export price by $25 to $180 a tonne. In the
middle of the month, it again revised it by $50
a tonne. As domestic prices increased, Nafed
again raised the MEP for this month to $250 a
tonne. ■
There she blows
After months of dispute
between the White House
and federal fisheries scientists, the US Department of
Commerce has proposed
limiting vessel speeds to 10 knots for those ships
moving within 20 nautical miles of the Atlantic
ports along migration routes of the endangered
right whale.
The recommendations, in an environmental
impact statement, reduced the geographic scope
of the protections that were proposed two years
ago but left the original
speed limits intact.
Release of the recommendation for seasonal restrictions on the speed of
commercial vessels heading in and out of ports
from New York to Savannah, Georgia, clears the
way for possible final adoption of these mandates. On average, about one to two right whales
died in collisions with seagoing ships annually
from 1997 to 2001. ■
The UK insurance industry’s internal audit
operations may be working in too much isolation, according to a survey by the accountancy
consultants Moore Stephens.
The survey showed that 28% of internal
audit departments fail to report to an audit
committee or to the board.
Only one in four firms benchmarked their
performance against those of their competitors,
and while 42% of respondents used feedback
from external advisers to assess the optimisation of their internal audit function, 30% were
either unconcerned or ignorant to it.
The report also uncovered a disparity between
the approval of audit strategies for underwriters
and brokers, and while underwriters received full
approval from the audit committee, only one in
five brokers received the same.
The survey also revealed that despite a currently unstable economic environment, investment and reinsurance security were not high on
the agenda for internal auditors. “Given the
current economic climate, potentially steep
reductions in investment portfolios and concerns over reinsurers’ credit ratings, it was surprising that underwriters did not consider
investments or reinsurance as a high internal
audit priority, with both areas scoring just three
%,” Moore Stephens said.
Simon Gallagher, head of the Moore
Stephens Insurance Industry Group said: “The
FSA sees internal audit practice as an integral
part of the insurance industry, from providing
assurance on risk management to helping to
establish effective control frameworks.”
He also underlined the need to “ensure that a
company's profitability and efficiency are not
being allowed to leak away through the holes
in its internal systems” and to recognise the
importance of internal audit monitoring as prudent quality control systems. ■
85
The Port of Medieval London
Author Gustav Milne
Publisher The History Press
Price: : £17.99
If you think the action-packed history of
pirates is strictly limited to a
Hollywood-moulded Caribbean setting,
think again. Ancient London and the
venerable River Thames have been the
stage-set of a prominent historic delve
into times of brutal piracy, and with
London being the principal port of call,
pestilence and war were rampant.
Through this fascinating illustrated guide, take a nosedive into the
fascinating segment of history surrounding London’s port and its vital
role in merchant shipping throughout Saxon and Viking times.
Chronological chapters lead the imagination through the port’s
archaeological past, with a vivid account of the type of ships characterised by the times, the imperative role of fishing in the London economy, and the dramatic transformation of the waterfront throughout the
10th and 12th centuries as the construction of warehouses, mills and
fisheries proliferated with the growth of trade.
A glimpse into medieval riverside engineering and ancient port regulation and custom provides a dramatic contrast with modern day port
construction and management, and coupled with photographs from
excavations and reconstruction drawings, this insightful guide offers a
worthwhile bout of reading escapism. ■
The Wisdom of Whores: Bureaucrats, Brothels and
the Business of Aids
Author Elizabeth Pisani
Publisher Granta
Price: £17.99
“In the Aids industry, we were all whores,” Elizabeth Pisani writes in
this masterful polemic, which investigates what has gone wrong in the
international fight against this deadly disease. To date, nearly 60 million
people have been infected with this preventable, fatal disease. Of these,
25m have already died. In the mid-1990s, the world was spending just
$250m a year on HIV in poor countries. In 2007, that spend had gone
up to $10bn a year. Two-thirds of people with HIV are Africans.
Pisani describes herself as a ‘cynical, wise-cracking, numbercrunching ex-journalist’, with a doctorate in epidemiology; she joined
the United Nations’ Joint Programme on HIV/Aids (UNAIDS) in
Geneva in 1996, writing reports on HIV and presenting figures in
‘their worst light’ in order to alarm the general public about the disease and to squeeze more funding for its prevention out of NGOs,
governments and donors. She counts herself among the many
‘whores’ who sold their expertise to donors who funded the work on
HIV. Her thesis: there has been and continues to be too much ideology and money pouring into the ‘Aids industry’.
This book is the result of her research in south-east Asia, collecting
blood samples and interviewing male and female prostitutes, transsexuals, ‘johns’ and pimps, in bars, prisons, dockyards and brothels.
“After researching HIV for a decade, I know that we have the information, the tools and the money required to eradicate Aids in most of the
world. But we’re not doing it, and that makes me very angry,” Pisani says.
86
She cites what she calls
the “3 monkeys’ approach to
HIV – we close our eyes to
people injecting drugs, to
people buying and selling
sex, to people getting plastered and
getting laid. We close our eyes, in short, to all
the things that do the most to spread HIV.” And the people who need the help most, in her view, are sex workers, people who inject drugs with contaminated needles, gay men, their lovers
and partners, anyone having unprotected sex.
In the slums of Indonesia, where some of her research was conducted, her interviews merely confirmed what she already knew – that Aids
is a disease principally spread by rough sex and by the sharing of dirty
needles. “In east Africa, HIV spread first among people who had lots of
partners, men and women who traded sex for money and favours. Had
condom use in commercial sex been pushed to very high levels at the
time – as happened in Thailand – the epidemic would have been contained,” Pisani asserts.
An example of the egregious waste of resources targeted at HIV/Aids
was the 2006 UNAIDS report, which came to 640 pages and cost some
£1.3m to produce. The report was given to delegates attending that
year’s International Aids Conference in Toronto. At the end of the conference, however, it was discovered that many delegates had dumped
their copies when, weighing at 2.1 kg, the report pushed their luggage
beyond the airlines’ baggage allowance!
Why should this book be of interest to anyone of us? At a time when
there are huge demands and pressures on international funding from
governments, NGOs, charitable trusts and wealthy donors, we should
be aware of the tragic and unnecessary waste of resources being funnelled to just one particular disease, resources that could also go to fund
research, prevention and treatment of, say, cancer, TB, malaria.
Pisani’s book recounts the denial and mismanagement surrounding
HIV education and prevention, which she claims should be focused on
smaller, vulnerable subgroups – those involved in high-risk sexual
behaviour, those injecting drugs – and that should be addressed by utilising clinics for sex workers, properly supervised needle exchanges, the
use of condoms, compulsory testing and treatment. ■
Port Royal
Author Peter Smalley
Publisher Century
Price: £7.99
Set against the colourful backdrop
of Jamaica’s Port Royal in 1788, this
follow-up novel, outlining the journey
of the HMS Expedient, reveals the further trials and tribulations experienced
on a transatlantic voyage of marine
espionage.
Naval hero Captain Rennie is once
again at the helm of a complex enemy
plot, charged with the responsibility of unravelling a bloody murder
scenario set amidst the political instability between the British Colonies
and pre-Revolutionary France.
Jamaica, an island jewel glistening in the middle of the Caribbean
Sea, is discovered to be a tumultuous society founded on the inconceiv-
BOOK REVIEW
able riches of slavery, and with its abundant plantations, becomes a distinctly strategic and economic target of the French.
With French spies already planning premeditated attacks for when
war breaks out, the plot thickens as Jamaica simultaneously reveals a
culture heavily threatened by sexual intrigue, scandal and acute fever.
Expect some bloody Hornblower-esque sea action at its finest, even
despite its tendency to fall a little short in the suspense stakes. ■
The Box: How the Shipping
Container Made the World
Smaller and the World
Economy Bigger
Safety and Health in Ports, ILO Code of Practice
“The container made shipping cheap,
and by doing so changed the shape of
the world economy….Sleepy harbours
such as Busan and Seattle moved into
the front ranks of the world’s ports,
and massive new ports were built in
places like Felixstowe, in England, and Tanjung Pelepas, in Malaysia,
where none had been before. Small towns, distant from the great population centres, could take advantage of their cheap land and low wages
to entice factories freed from the need to be near a port to enjoy cheap
transportation,” Marc Levinson writes in the introduction.
Author/Publisher
International Labour Office (ILO)
Price: £16.95
With a categorical number of portrelated accidents hitting daily news
feeds, the growing concern over safety practices for port workers is fast
becoming a talking point for industry
leaders, so investment into an informative handbook isn’t a bad idea.
This essential code of practice is
designed to replace the original ILO
Code of Practice on Safety and Health
in Dock Work (1977) and the ILO
Guide to Safety and Health in Dock Work (1976), and the comprehensive updated version is a must for all those involved in port management, operation, maintenance and development.
Supplemented with detailed technical illustrations and model examples of practice operations, the guide covers all aspects of port work
where goods are loaded or unloaded to or from shipping vessels. An
instructive necessity for the maintenance of health and safety in ports,
although probably not ideal bedtime reading material. ■
Aden: The Mythical Port of Yemen
Author Jose-Marie Bel
Publisher
Amyris, Maisonneuve & Larose
Price: £20
A cornucopia of literary and pictorial
images of Aden, this scholarly feast of
a publication provides an emphatic historical journey into the city’s ancient
development, enriched with pieces
from Rimbaud, Kipling and Haines,
among others.
The author’s introduction vividly
highlights his intention to “enable travellers, dreamers, those who are nostalgic ... to share the singular and thrilling history of this city ... and to rid
[Aden] and this region of the clichés that have so long been applied ...
and to unveil them as if they were playing a part in an illustrated fairy
tale ... This book is the expression of a love story.”
Aden has been a vital ancient trading port for thousands of years, and
supplemented by an intriguing
and comprehensive array of
engravings, drawings and early
photographs, this captivating
read endorsed with quotations
from an extensive number of
authors over the centuries,
offers aesthetic and historical
fascination at its finest. ■
Author Marc Levinson
Publisher Princeton University Press
Price: £8.95
So creates the beginning of a revolutionary enterprise on behalf of
the BBC as they launch a container ship around the world, tracking its
progress along major trading routes for the duration of an entire year.
Given the influential impact that this book has had, it must be worth a
perusal, at the very least.
From the history of shipping, to the revolution of containerisation,
and to the vastly expanding sizes of containers on order today; this
entertaining and persuasively written book covers the entirety of container shipping and its role as the lifeblood of the world economy with
vividly romanticised effect. ■
The Complete Guide to
European Cruises: A Cruise
Lover's Guide to Selecting the
Right Trip, with All the Best
Ports of Call
Author
Douglas Stallings and Vincent Penge
(Editors)
Publisher
Foder’s Travel Publications
Price: £11.98
The most recently published edition of the much-acclaimed cruise guide
in the fastest growing cruising region in the world, this book offers a visual and informative guide to 60 destination ports across Europe.
Cruising expert Linda Coffman takes the reader on a voyage to
Europe’s main sights and attractions, offering travellers insider advice
and guidance on planning the best European cruise itinerary.
A delightfully informative full colour photographic guide all available
at the turn of a page, and it comes with the added bonus of never having to move from your armchair, or should I say deckchair. ■
87
OBJECTS OF DESIRE
LIVE
Objects of desire
Singing in the Rain
Can’t live without your iPod music? Well here’s a way to have your
hi-tech gadget with you wherever you are and whatever the weather.
This clear, waterproof casing from Icebar protects your iPod Nano
when you’re sailing, surfing or simply showering. It can protect your
iPod from the worst of wet weather or while you’re at the beach.
Icebar comes with a shatterproof, waterproof casing with integral
speakers and is compatible with 1st, 2nd and 3rd generation Nanos. It
has stereo speakers, a phono socket for headphones, a pop-out stand
and even a lanyard to hang it up from – making it possible to take your
iPod with you virtually wherever you go.
In fact there’s even a float which attaches to the lanyard to keep your
iPod on the surface of the sea, the pool or even the bathwater!
Icebar V2 Waterproof Nano Speakers
£49.99 www.iwantoneofthose.com
Update your family history
Here’s a job for a winter’s afternoon. Curl up in front of a log fire
and spend a happy few hours with an old film. No we don’t
mean watching the Sound of Music again, but getting up to date
with your visual technology!
This handy Negatives Photo Film Scanner can transfer all your
old family snaps from 35mm negatives or slides and turn them
into jpegs.
The 5MP CMOS sensor with its 10bits per colour channel and a
scanning capacity of 1,829 DPI enables you to scan your old
photos at high resolution in a single pass and convert them to
jpeg or other digital formats.
The package includes USB cable and editing software and
Twain drivers for Photoshop use.
So don’t lose your family history (or your business one), just
transfer it to the modern age.
Ensure a great hotel view without paying a
premium!
Fancy a room with a view but don’t want to pay the premium for sea or mountain-facing accommodation? This new
WiFi digital picture frame could be your answer!
The wireless, eight inch frame has its own email address so
you can send your pictures to it from your laptop, wherever
you are, or even update it via Facebook.
It has 128mb of onboard memory and a slot that fits most
memory cards and produces beautiful colour rendition on
its 800 by 600 resolution, Panasonic-made screen.
Connect it to your wireless network and you can email your
latest or your favourite photos to it and display them
instantly.
So you can have the ocean, the countryside or even the
wife’s photo staring back at you wherever you go!
USB Negative Photo Film Scanner
8 inch WiFi Frame
£89.95 www.gadgets.co.uk
£199.00 www.iwantoneofthose.com
88
OBJECTS OF DESIRE
Wow Dude – you should have seen me!
Ever told a tale of daring-do over a pint in the pub and felt your
friends aren’t really appreciating the full drama of the situation?
Well here’s a way to ensure they relive every moment with you!
Oregon’s Scientific Digital Hands-Free Action Camera attaches
to a safety helmet enabling adrenaline junkies to record their
every move from a rider’s eye view.
So, whether you’re
mountain biking down
Mont Blanc, hanging
from a cliff-face on
Everest or “extreme”
lawn-mower racing
you can record your
every move.
The video camera has no
moving parts and comes in a
robust case. It attaches to your crash helmet or handlebars with
a special, secure mounting system and is waterproof to about 3
metres. It even includes some extra silicone grease so you can
keep the waterproof seal working at its best.
The battery-operated camera has three selectable resolutions.
Downloading your footage from the camera is easy too. It
comes with a set of AV leads to plug directly into your TV or
VCR and a USB lead to connect to any standard PC port.
The simple to use controls are great for wet, cold or muddy
hands and the built-in memory records up to 11 minutes –
though that can be extended by adding a standard SD memory
card up to 2GB capacity, giving up to two
hours recording time or even 13 hours
in super-long play mode –
see if your friends can
take that!
LIVE
Give it a Wurl
If you’d rather have your music
on a grander scale this is the
jukebox for you!
The Wurlitzer iPod and CD
jukebox incorporates a professional Philips CD player
and BOSE Accoustimass 3
speakers for excellent stereophonic sound quality,
a motor driven paging system
and infrared remote control.
This full-sized, nostalgic
design jukebox takes 100 CDs
and comes with a 60Gb iPod,
meaning it has 10,000 songs available at the push of a button – or, if you prefer to use it’s coin-mechanism, at the drop
of a euro!
Available in black onyx or special-edition white, the technology-packed Wurlitzer also has a stereo amp, overload protection, and LED display, a microprocessor to control all its
functions, a background music function and connections for
a microphone or additional amplifier.
And you can store your 10,000 title songs and cover photos
in a leather-bound presentation book.
So what are you waiting for – let’s get the party started!
Wurlitzer iPod and CD Jukebox
£5,794.95 www.boysstuff.co.uk
Check this out,
mate!
Become a grandmaster of chess
with this stunning
renaissancedesigned chess set
from Italfama,
stocked by London
flagship store,
Harrods.
Made in Italy, these 14cm high, renaissance-themed pieces are
made of zinc and nickel and are brass plated.
Oregon Scientific
Digital Hands-Free
Action Camera
£89.95 www.gadgets.co.uk
Go on, spoil yourself!
Italfama Chess Set £249.00 www.harrods.com
89
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INSIDER
SHIPMANAGEMENT
The Asian Shipowners Forum was set up to
promote, develop and support the common
interests of the region’s ship owners. It also
has the added responsibility of promoting the
safe operation of ships, protection of the
environment and adherence to internationallyadopted standards and procedures. But it rose
to prominence last year when it chose
Singapore as the site of its permanent secretariat and chose as its first Secretary General,
Wang Cheng, a Chinese national.
“Member associations of the Asian Shipowners’ Forum own and operate around 50% of the world's cargo carrying fleet and in Singapore
alone, membership is as high as 345 member coimpanies. While the
ASF has been participating actively on international shipping issues,
it is also working towards a common stand on Asian and international matters in maritime transport, with the aim of promoting better
shipping services and conditions, particularly in the Asian region so
we can achieve equitable, adequate, efficient and economic carriage
of goods and passengers to, from and among the regions, and promote
the optimum growth of international trade.
“The ASF has been liaising and cooperating with the international
shipping community to exchange and present its views while at the
same time promoting its aims. In my personal opinion, I think it is a
pity if the global shipping
industry, when dealing with
the international shipping
affairs, does not include the
ASF in its activities.
“Being situated at different locations did not pose
any significant problems
for the association per se.
There were mutual understanding in our aim and objectives in terms
of issues such as protecting and safe guarding the interests of the various ship owners, protecting the environment, safe navigation and the
welfare of seafarers. We have five Standing Committees in the ASF:
Shipping Economics Review Committee, Ship Recycling Committee,
Seafarers Committee, Ship Navigation and Environmental
Committee, Ship Insurance and Liability Committee, where views
and opinions can be exchanged. Through this platform, the ASF will
come to a unanimous common understanding on any matters and
voice them to the international world. ■
FRANKLYSPEAKING
Q.The shipping markets have been strong for some time
but container rates, especially fom the Far East to Europe,
are at worrying levels. How will these market conditions
affect and mould the thinking of the region's shipowners?
A. “The Far East/Europe container liner service, compared
with others, is in a different situation. The markets have
been strong for such a long period and during this time the
situation has been changing in many aspects. Firstly, along
with the very strong market situation, the owners invested
large amounts in building new vessels. When these new
generation buildings were delivered, the best choice for
them was to put the huge container vessels into Far
East/Europe service, considering the freight rate level and
the cargo volumes in both directions. As a result, the
increased vessel space caused stiff competition.
“Secondly, the shipping market is very closely related to the
world economy and global trading. In any case if there is
an increase in world economic slowdown, it will definitely
affect world trade, thus affecting the shipping market, but its
effect will only be felt at a later date. Thirdly, ship owners
have to face the pressure of safe navigation, protecting the
environment, very high oil prices, increasing costs. They
also have to consider European Regulation 4056/86 adopted by the European Council (which abolishes liner conferences from October this year). The future markets in the
Far East and Europe are filled with challenges and opportunities. Ship owners will surely upgrade and add value to
their current services, bringing their management of information to a higher level and cutting down on costs. With
these, only then will they be able to cope with the changes
in the future market conditions.”
91
DEVIL’S HORSEMEN
LIFESTYLE
arideonthe
wildside,
withadifference
by Amy Kilpin
Photography by Sally Kilpin
ver fancied flying along upside down on a horse galloping at
breakneck speed; hanging on by the tip of your toes whilst
simultaneously performing a series of complicated acrobatics?
Or perhaps you might prefer to opt for cantering along a rugged
moorland on a balmy midsummer’s evening, cloak billowing behind
you against the majestic backdrop of an ancient stately home? Or how
about stepping back in time into a medieval banquet, fully armoured
with lance in hand in the celebrative ambience of a jousting festival?
All three might be appealing, but what exactly does such a multi-talented display of steel courage, raw skill and poised dramatics take? The
probability of it being fairly standard for a 22 year old girl from a picturesque village in the midst of rural England would seem remarkably
slim. But such daredevil stunt riding and action-packed theatrics are the
norm for Camilla Naprous, part of the illustrious and world-renowned
Devils Horsemen team.
Established over 35 years ago when Gerard Naprous, Camilla’s
father, came over from France with absolutely nothing, the equestrian
act has gradually expanded into a worldwide phenomenon, and with
international performances and shows carried out alongside blockbuster
film and TV productions, it’s a vastly impressive feat.
This fast-paced lifestyle is made possible with the valiant input of
around 80 horses, and with 250 carriages to maintain, it’s an extensive
undertaking. Not only are these accomplished horsemen content to
swing gymnastically off the side of a saddle while their horse swallows
up the ground beneath them at rapid pace, they also indulge in every
minor ingredient used in making The Devils Horsemen display such an
aesthetically satiating feast.
The word ‘multi-talented’ doesn’t even come close, as Herculean
efforts are made to accommodate for every single minutiae of the stunt
rider’s work. The super-human enterprises taken onboard at The Devils
Horsemen are beyond appreciation, until a glimpse into the clockworks
of the business operation is fully granted.
On 130 acres of land, the horses take precedence, with rows of stables at every turn and donkeys roaming free around the yard areas. But
lurking behind this facade is an intricate network of organisation and
hard work. The multifaceted venture also has its own teams of carriagebuilders, saddle masters, leatherworkers, and costume designers and
dressmakers on site – a veritable compound of productivity and essential considering the blockbuster film work that they do.
E
So how hard can it really be to stand up on the backs of two horses
hurtling rapidly along, swerving around tight corners with nothing but
a loose rein in each hand? Despite her slender frame, Camilla Naprous
exercises an unparalleled degree of core strength and valour, but for her,
it’s as natural as breathing.
“I grew up with my brother and my father performing on horseback,
so I’ve done it since I was absolutely tiny. I was standing on two galloping horses at Wembley arena when I was eight years old,” she said.
Such nonchalance makes it difficult for an outsider to put her role
into true perspective, especially given her inherently modest nature, yet
she exposes a similarly blasé attitude towards her liaisons with universal superstars.
“We performed a private show for Madonna’s birthday last year, with
only about 20 guests. She wanted something completely different and
requested a gypsy themed party, so we had to get everything specially
made for her. We even designed and made her costumes and supplied
specially-made carriages,” Camilla revealed.
Rubbing shoulders with the ultra-famous is commonplace for the
team as they fulfil a jet-set lifestyle in the film industry working alongside names most of us could only ever dream about.
Camilla said: “We’ve recently been filming Dorian Gray with Colin
Firth, and will soon be making King Lear with Anthony Hopkins,
Gwyneth Paltrow, Keira Knightley and Naomi Watts. It’s an all-star cast
so it will be amazing.
“The most famous person we’ve worked with would probably be
Angelina Jolie. I’ve also acted as a double for Natalie Portman and
Scarlett Johansson, who asked me to be her personal horsemaster. In
fact I don’t think there’s anyone I’m missing that I’d really want to
work with,” she added.
And with an upcoming show in Vienna alongside the world-recognised, legendary Spanish Riding School, the team’s international reputation is continuing to strengthen. It’s not all about shooting on prestigious film sets amongst the exclusive and elite, however, Camilla
revealed. “We have to work pretty much non-stop, there’s no time for
breaks – if you’ve booked a holiday and a job comes, you have to cancel it and take the work as it comes.
“We are travelling non stop at the moment, I’m a bit exhausted
and haven’t had a day off for about a month. It’s something
different every day and you’re always going from one job to the next ➩
93
LIFESTYLE
DEVIL’S HORSEMEN
– there can be some good jobs and some not so good jobs,” she added.
Not only is it more of a hard graft than at first apparent, it’s also an
inevitably costly enterprise maintaining such a large number of horses,
and with the costs of feed, bedding, staff and equipment rising, there is
heavy reliance on the film industry to supplement such sky high outgoings. The glistening black coat of the majestic horse featuring in advertisements for Lloyd’s TSB bank does not belie its momentous value.
Owned by legendary Sting at a mere cost of £80,000 such horses are but
one of the many costly components of the business.
“Equipment is probably one of the worst things because everything
has to continue being redone. If there’s a carriage working next week it
will probably require fixing and touching up before it even goes off,
because you simply can’t keep on top of everything. There’s so much
equipment here, so it’s an awful lot to supply and maintain. We could
offer 250 carriages and probably 200 horses, and yet they still demand
another one. But it’s part of the business and you have to find it for
them,” Camilla said.
Fitness must be absolutely paramount to the role, with such gruelling
schedules, horseback athleticism and construction work all thrown into
the mix as well. Surely such physical grind, coupled with the execution
of daredevil stunts at lightning speed, offers the ultimate recipe for accidents and injuries? For an observer, a performance with such bracing
speed, energy and precariousness is enough to cause self-harm through
sustained teeth-clenching. Not to mention how the riders must fare in a
94
Russian roulette game upon horseback.
“We’ve been so lucky – my brother has
only broken his leg, he got kicked when
trying to catch a horse. I had a few falling
off moments early on, but nothing serious.
I’ve actually only ever broken my toe,
how ridiculous is that!? All the silly stuff
that I do and I broke my toe when the
shower door hit it!,” Camilla revealed.
But it’s the risk factor that provides the
vital element of what is commonly known
as ‘job satisfaction’ – for Camilla, it’s less
satisfaction and more unadulterated
adrenaline.
“It is quite dangerous when galloping
flat out on a horse and hanging off by
your toes, but you get so much adrenaline
from it. The shows definitely give you a
real buzz, especially when performing in
the arenas. In a recent show in Denmark
with an audience of about 8,000 people,
we received a standing ovation. Everyone
was stamping their feet – it was very exciting,” Camilla revealed.
While daredevil stunt riding may get the blood pumping, even
the toughest nerves of steel are put to the test in such a spectacular
display of stamina. With a risk factor of incomprehensible heights, the
riders plummet themselves voluntarily into the very nucleus of the
danger zone.
Camilla admits to an unassuming degree of nerves, but regards it
with the characteristically casual attitude she lends to the sport: “I think
everyone gets nervous, but if you get to a point where you don’t get butterflies, you might as well give up. It’s one of those things where you’ve
always got to feel something – you have to get some adrenaline.
Otherwise you end up just going through the motions and it becomes a
bit boring. People can feel it from you so the audience are going to
know if you are just simply going through the motions.”
So aside from a substantial kick to the senses and some prerequisite
nerves, what else does the physically testing job demand in terms of
mental attitude? “Balls!” Camilla candidly declared.
“Other than that it depends really, we get so many people from different walks of life and everyone’s completely and utterly different. The
most important thing is that you have the right mentality towards it – a
lot of people don’t really make up to it because they don’t approach the
role realistically.
“People think it’s something that it’s not; they see all the glamour and
then realise it’s not so. You have to be able to give up a couple of years
DEVIL’S HORSEMEN
LIFESTYLE
“I grew up with my brother and my father performing on horseback, so I’ve
done it since I was absolutely tiny. I was standing on two galloping horses
at Wembley arena when I was eight years old”
“I think everyone gets nervous, but
if you get to a point where you don’t
get butterflies, you might as well
give up. It’s one of those things
where you’ve always got to feel
something”
to train because everyone starts with the basics. No one gets thrown
right in at the top, and it is important to build up respect from the rest
of the team and from my father. You have to start from the beginning
and do all the dirty work, and it involves a lot of hard work and commitment,” she added.
There’s also the added difficulty of making a break in the well-fortified stunt industry – not just anyone can declare ‘stuntsman’ status with
the juggling of ten swords or a meagre back flip through a ring of fire.
And it’s certainly not for the faint-hearted or the light-footed.
Camilla added: “In order to be a professional stunt person, you
have to get onto something known as the stunt register where six skills
are required, and you need to be at the very top in those six skill areas.
For example, for diving you need to be a dive master, in rock climbing you have to be at instructor level, in kickboxing you need to be a
black belt; and it’s the same with car racing – you can’t just be a racing driver, you’ve got to show that you’ve won a lot of races and
excelled in that field.”
Having already passed in horseriding, kickboxing and fighting,
Camilla is currently committed to rigorous training in diving, fencing
and rock climbing. It’s not a breeze, however: “Trying to juggle all of
that on the side is very difficult, especially because you’ve got to be at
top level in six different sports. Because a lot of people specialise (as I
do in horseriding, for instance), it is quite difficult to adapt yourself to
do totally different things. One thing is for certain, and that is I am not
a gymnast! I can do a shoulder stand on a horse no problem, but attempt
one on the ground and I fail miserably!” Camilla said.
Laborious dedication and strenuous activity it is, then, but there are
also some rather more unusual aspects to the job, involving the endlessly demanding requests placed upon the team by film directors and producers. Camilla gave the exposé on an incident during the production of
Tomb Raider II, where the team undertook an outlandish week-long
task painting a horse with toothbrushes so that it provided a perfect
colour match with Angelina Jolie’s dress.
“I’ve painted a lot of horses different colours, many bright pinks and
blues for weird jobs – we had to do one a fluorescent pink colour for a
period drama. There’s also been a lot of lycra suits on horses for numerous film shoots. We do get some odd requests – one was even for a horse
to mate a rodeo bull for Peter Kay’s Phoenix Nights,” Camilla said.
Despite the laughs and bizarre demands, a glamorous job title may
disguise a whole new spectrum of monotony, however idyllic it ➩
95
LIFESTYLE
DEVIL’S HORSEMEN
may outwardly appear. While the allure of Hollywood may gleam and
glitter on the surface, the reality of an enviable job title may appear
slightly more tarnished when digging deep, and a scratch beneath the
surface reveals a film of grime that doesn’t even take into account the
dirty work behind (forgive the pun) horse ownership.
“Early starts are the worst thing – we started work at 4am yesterday
morning, for instance. You could also end up standing in front of rain
machines all day on film sets, and it’s often long and a bit of a struggle.
People think filming and commercial work is glamorous but it’s a lot of
hard work and a lot of waiting around, as well as being under constant
direction from people,” Camilla indicated.
So we can all be rest assured that we’re in the same boat when it
comes to the rollercoaster nature of the working world, and the prestige
of the ritzy film industry is no different. But this role may tip the scales
in the ‘perk’ stakes, with opportunity to get up close and personal with
some of the world’s leading international film stars and jet-setting off
around the world to diverse and colourful film locations.
But what about the horses? Vaulting onto a galloping horse and hanging off at all angles might be one thing, but how exactly do you make a
horse rear up and pretend to attack? Gerard’s speciality, he reveals a barely perceptible signal to his horses when asking them to rear up and kick
out, hooves flying and mane billowing as they soar high above him in a
96
Working for the big screen might prove
a cut throat business, and combined
with the death-defying antics of stunt
riders, this is a job that stands alone
in the ‘thrills’ hall of fame
magnificent display of equine majesty worthy of the silver screen.
Camilla stressed that the requirements for a horse depend greatly,
however. “If we need an actor’s horse it will have to be extremely brave
and totally bombproof. If you’re putting a multi million pound actor on
it you need to know that when shooting a battle scene it won’t even
blink an eyelid; it will just carry on going without hesitation, or stop at
the slightest command. It’s also got to be quite pretty – you’re not going
to give Angelina Jolie an ugly horse! It is a definite factor, they do have
to have very good looking horses – you wouldn’t put them with an ugly
co-star, after all,” she said.
As tempting as it might be to pursue a life-risking ride on the wild
side, it’s definitely something most will be content to leave to the hands
of the professionals, or should I say, bearing in mind the ‘too close to
home’ danger factor, those lingering on the perilous edge of sanity. ■

How I SMI - Ship Management International

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