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THE MAGAZINE OF THE WORLD’S SHIPMANAGEMENT COMMUNITY
ISSUE 4 NOV/DEC 2006
COVER STORY
50 Lucrative Lucre …
a ratings to riches story
Are Filipino Captains really earning
four times the salary of their Prime Minister and if so,
how is this new found wealth affecting their lives?
6 STRAIGHT TALK
SHIPMANAGEMENT FEATURES
NOTEBOOK
9 Pedersen swaps Thome for
TESMA
Svein Pedersen has joined Eitzen
Maritime Services as President for
EMS Ship Management
10 V.Ships to triple seafarer pool
Company unveils plans to boost crew
numbers to 60,000
10 Phew! What a relief!
Professionalism and operational integrity
is alive and well in the V.Ships camp even
if it does means losing an owners' fleet
11 No ‘free lunch’ for IMO
16 How I Work
SMI talks to two industry
achievers and asks the
question: How do you keep
up with the rigours of the
shipping industry?
13 Executive stress
Wasting office time!
13 Dot com
intrigue
on the P&I front
16
21 Training for the
task ahead
As Chief Executive Officer of
V.Ships’ Shipmanagement
division, Bob Bishop is charged
with steering an industry
juggernaut. He spoke to Sean
Moloney about the challenges
ahead
Insurers remain
non-plussed
over P&I
internet-based
alternative
16
13 Suez Canal to expand
Egypt is planning to spend $1bn to expand
the Suez Canal by 2010, but analysts are
questioning its economic viability
The bunkering industry has reacted angrily
14 Box vessel calls top the rest
to IMO’s decision to phase out residual
fuels in an attempt to tackle the growing
Container shipping proves its 10 year
problem of ship emissions
dominance
24 On My Mind
21
Ole Stene is Managing
Director of Aboitiz Jebsen
Bulk Transport Corporation
and Chief Operating Officer
of Jebsen Management AS. He
is also the newly appointed
President of InterManager
24
NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL
3
LETTERS
DISPATCHES
20 Mailbox
50 Lucrative Lucre … a ratings to riches story
BUSINESS VIEWPOINT
26 Agents - Swimming against the tide
The perennial issues of falling income due to downward pressure on
agency fees and increasing workload, due to the agent’s enhanced role
in the exchange of information between the ship and shore, continue to
impact on the health of the port agency industry
Are Filipino Captains really earning four times the salary of their
Prime Minister and if so, how is this new found wealth affecting
their lives?
54 A new kind of warfare By Emmanuel Vordonis
New ships are coming onto the market: owners are taking delivery of huge fleets and in order for the ships to be staffed we’re
going to get into warfare on prices and wage increases
56 A day in the mind of a PSC inspector
SPOTLIGHT
29 Teekay Shipping
Port state control detentions can put a black mark on a ship
operator's profit as well as its reputation. But are inspections really
something to be feared? Andy Pierce joined a vessel inspection to
find out what today's inspectors are really looking for
BUSINESS OF SHIPPING
TRADE ANALYSIS
30 Burning objectives
Sulphur emissions are a hot topic, but the debate is set to continue
with increased scientific understanding and new ideas providing more
questions than answers
76 AdHoc
Digitally Exposed!
Papalexis: getting intellectual
Gun tottin' trainers end up in
choppy water
Sounding off
ISSA glitz in Singapore
Hair Oil - Mopping-up!
88 Solid outlook for bulkmarket optimists
Analysis by Jarle Hammer, Shipping Adviser at Hammer Maritime
Strategies
58 Dun & Bradstreet Country Riskline Report for SINGAPORE
72 Stripping-out one product from another
With implementation of the revised MARPOL Annex II and IBC Code
just weeks away, owners, operators, managers and charterers of products and chemical carriers should have got their act together by now
LIVE
80 Objects of desire Things that make you go oooh!
BOOK REVIEW
82 What I’m reading
With Douglas Lang, MD, Anglo-Eastern (UK) plus reviews of
England’s Mistress and Box Boats: The Story of Container Ships
REGIONAL FOCUS
38 Cyprus - Striding for growth
The admonishment of Turkey by Brussels in early November for
failing to lift its ban on Cyprus-flagged ships was largely expected but
will have been greeted with nothing more than passing interest in the
corridors of power in Nicosia and the shipping offices in Limassol
83 European and Asian newbuilding roundup
60 Hong Kong/Singapore
A force to be reckoned with
84 Bridge Systems - Offering the navigator a helping hand
Despite soaring office rents and rising
wages it is still business as usual for the
shipmanagement industry in Hong Kong.
And any attempt by Singapore to establish
a position of strength in the tanker management market will only go to underline the
strength of the region in helping to dominate this market sector
68 Anglo-Eastern - Singularly focussed
While there are definite advantages to being large, it doesn't mean
companies like Anglo-Eastern are immune to the problems affecting
the industry
4
NEWBUILDING
SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006
MARKET SECTOR
Advances for bridge watchkeepers' technological and practical needs
LIFESTYLE
92 On the catwalk
The Murcielago LP640 was already the fastest Lamborghini ever
built. Now it has been given a professional make-over just in time for
Christmas…
94 Skiing in style
Ski resorts the world over are heaving under the force of people but,
as Andy Pierce discovered, winter paradise is not too far away
STRAIGHT TALK
Welcome to
Ship Management International
November/December 2006
Issue No. 4
www.shipmanagementinternational.com
The Shipping Business
Magazine today’s owners and
managers have been waiting for
Published by
Elaborate Communications
Acorn Farm Business Centre
Cublington Road, Wing,
Leighton Buzzard, Bedfordshire LU7 0LB
United Kingdom
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Editorial
+44 (0) 1296 682356
Fax:
+44 (0) 1296 682156
Email: [email protected]/[email protected]
www.elabor8.co.uk
Ship Management International Editorial Board
Rajaish Bajpaee
(Eurasia Group of Companies)
Stephen Chapman
(InterManager)
Nigel Cleave
(EPIC)
Andreas Droussiotis
(Hanseatic Shipping Company)
Dirk Fry
(Columbia Ship Management)
Sean Moloney
(Elaborate Communications)
Svein Pedersen
(Thome Ship Management)
Editorial Director:
Sean Moloney
Assistant Editor:
Andy Pierce
Technical Editor:
David Tinsley
Advertisement Director: Jean Winfield
Sales Manager:
Mark Howe
Sales Support:
Martine Frost
Research Manager:
Roger Morley
Accounts:
Irene Morley
Design & Layout:
Phil Macaulay
Cover Photography:
Martin Bou Mansour
Editorial contributors:
The best and most informed writers currently serving
the global shipmanagement and shipowning industry.
ABC application approved March 2006
Ship Management International is published six times
a year and is entirely devoted to reporting on the
dynamic and diverse in-house and third party
shipmanagement industry.
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6
Long Live the King!
I
never really thought that size mattered!
Indeed, there are those stalwarts who believe
that small really is beautiful because it promotes greater understanding of what you
have and what you can give. It is preferable to the
existence of larger shipmanagement combines
they say, because there is never any compromise
over personal service. The Customer is King and
we should be there 24/7, at the drop of a hat, to
tell him that in whatever way he wants telling.
The business ethics, I agree with. The customer is always right and as a service industry
third party managers should be mindful not only
of his needs but of the needs of the customers he
is trying to satisfy. But for the size issue: I am not
so sure.
Because while I am constantly reminded about
the need for personal service within the industry
and the downsides associated with the consequences of consolidation through mergers and
acquisitions, the whole industry is besotted with
expansion. There is a determined effort by some
of the smaller and medium-sized third party managers to take advantage of the growth in popularity of their sector and grow their fleets exponentially. It is as if they are proud to be known as
small enough to care and deliver but only as long
as they are at the vanguard of a drive for growth.
I suppose it's not really being a small fish in a
small sea but being a medium sized fish in an
ocean.
Oslo-based Barber Ship Management went
public in the summer by claiming it wanted a
20% share of the global third party shipmanagement market by 2011. And a handful of companies we have spoken to at random, have
announced restructuring plans that are part of a
general strategy to at least double their managed
fleets within this period. So the race is on and,
while the stakes might not be that high, the
rewards are certainly worth investing for.
But on the flip side, and there is always a flip
side, how can we really expect the industry to
cope with this extra business. After all, the sceptics amongst us could be excused for clinging to
the notion that one of the main reasons shipowners are interested in third party managers is
because they believe they have the resources to
man and crew their ever expanding fleets.
But they don't! We all know the problems facing the crewing sector and if owners think a third
party ship manager can man his vessels with a
month's notice, without having to rob Peter to pay
Paul, then he is largely mistaken. Many of the
largest and most respected ship managers have
admitted such and have even turned down business because they can't cope at such short notice.
So it is clear that crewing remains at the heart
of the expansionary thrust driving this industry
forward. But any quality third party manager
worth his salt knows this and will have surely
taken it onboard as part of his overall strategy for
growth. V.Ships have. They claim in this magazine that they have a strategy to near triple their
seafarer pool to 60,000 by 2010 and they have
hired a head hunter to help them achieve this
goal. It would seem that the gloves are off in the
fight for predominance.
Whatever it says for the machinations between
the major players as far as the growth of managed
fleets and managed crewing pools is concerned,
remains to be seen. What is clear is that the seafarer is now clearly king! Lets hope he doesn’t let
this new found attraction and interest mask the
reasons why he really joined this fine industry.
Sean Moloney
NOTEBOOK
SHIPMANAGEMENT NEWS AND REPORTS FROM AROUND THE WORLD
Pedersen swaps Thome for TESMA
party shipmanagement market. He will streamline the operation of six offices in Europe, one
in India and one in Singapore. TESMA is the
world's third biggest chemical vessel owner
with approximately 80 chemical carriers in
addition to LPG and approx 30 vessels on third
party ship management. A total of 120 vessels
are managed with an additional 200 vessels on
crew management.
He will report to Annette Malm Justad who
took over as CEO of Eitzen Maritime Services
from April 1st this year.
The Singaporean shipmanagement community
has lost one of its staunchest leaders following
the resignation of Svein Pedersen as Managing
Director of Thome Ship Management.
Confusion surrounded the reasons behind
his decision to leave which was swift in its
nature but SMI can confirm that he has joined
Eitzen Maritime Services as President for EMS
Ship Management, a group more commonly
known as TESMA.
TESMA's decision to snap up Pedersen is
something of a shrewd move as he is viewed as
SMI can confirm that Svein
Pedersen has joined Eitzen
Maritime Services as President
for EMS Ship Management, a
group that is more commonly
known as TESMA. He will be
moving to Denmark as a result
a quality and well-connected operator in the
shipmanagement sector. One other very large
ship management competitor was known to be
interested in contacting him after hearing of his
decision to leave Thome, SMI can reveal.
Pedersen will join TESMA during the first
quarter of next year and will move to
Copenhagen with the task of spearheading its
drive to strengthen its position within the third
TESMA is the world's third
biggest chemical vessel owner
with approximately 80 chemical
carriers in addition to LPG and
approx 30 vessels on third party
ship management. A total of 120
vessels are managed with an
additional 200 vessels on crew
management
She told SMI that growth was very much
part of TESMA’s reorganisational plans at the
moment and that it wanted to “maintain a
stronger position in the third party management
sector.” She did not rule out TESMA acquiring
one of its competitors as part of its drive for
growth. “We want to be part of the consolidation move,” she said.
Svein Pedersen believes in the personal side
of shipmanagement and deems it important to
be approachable. He recently told SMI: “I
believe in people and the empowerment of people, that’s very important for me. There are so
many different aspects to this industry and
there is a need for so much focus so if you
believe you can do it all by yourself then I think
you have to rethink.” ■
9
NOTEBOOK
V.Ships to triple seafarer pool by 2010
V.Ships has nailed its crew development plans
firmly to the expansionary mast by announcing a strategy to near triple its global seafarer
pool within the next three years and it has
hired a head hunter to spearhead this growth.
The world’s largest ship manager currently
boasts a seafarer pool of 23,500 but confirmed
it has set a target of 60,000 seafarers by 2010,
to be achieved by recruiting from inside as
well as outside the industry.
Bob Bishop, V.Ships Shipmanagement
Chief Executive Officer, told SMI: “One of
the things we did last year was to employ a
head hunter and just as you have head hunters
for accountancy, why wouldn’t you apply the
same facilities and procedures for crew. Their
sole job is to increase the number of seafarers
available to V Ships.
He dismissed any accusation that V.Ships
may ultimately be adding to the poaching
problem gripping the industry.
“If you look at the issue of poaching I don’t
think that can ever be seriously levelled at
V.Ships. We have masters who have been with
us for a number of years but who have been
poached by companies prepared to upset the
whole process across the industry for their
own short-term needs. And this is in actual
fact, making the problem even
worse going forward, because
increasingly you are seeing the seafarers earn more than Prime
Ministers of their country,” he said.
V.Ships will also add to its
growing seafarer pool by traditional means. “We are going to source
them from the usual sorts of places
that you would expect, but also
some new ones,” said Bob Bishop.
“We have opened five new crew
management offices this year, and we have
opened up in areas that we weren’t in before
such as Myanmar, so it’s more of the same in
terms of the locations, but it is more focused
within those locations. This is where the
recruitment drive is helping.”
He added: “I think people are attracted to
work for V.Ships for all the reasons we well
understand ourselves. But if you just take the
LNG sector alone, 160 plus ships are poised to
come into the market, so consider the sea staff
that will be required for these ships.
“Sadly a lot of people haven’t given serious
thought to this, they have just assumed they
will be there. Given the volume required, we
are one of the few companies which can offer
the security of supply because there is an
inevitable flow of people from dry cargo to
tankers, to LPG and from LPG to LNG. And
one can bury one’s head in the sand and pretend it won’t happen and that people will stay
in their sectors, but the guy standing on the
tanker sees what the LPG master is getting,
who in turn sees what the LNG master is getting and guess where they want to go,” he
stressed. ■
Phew! What a relief!
T
he sigh of relief emanating from
V.Ships' Avenue de Fontvieille HQ
must have been as loud as the
whoops and hollers coming from the
board rooms of the Monaco ship manager's
oil major clients: professionalism and operational integrity is alive and well in the
V.Ships camp even if it does means losing an
owners' fleet.
High costs and disputes over technical
issues were reported to be behind the decision by Italian ship owner Enrico Bogazzi to
drop V.Ships as manager of around 50 vessels, almost exactly a year after the arrangement began. However, it appears the split
may have been forced through an alleged
reluctance by V.Ships to reduce the level of
management service it offered.
Mr Bogazzi has a very close relationship
with V.Ships supremo Tullio Biggi: indeed
they went to school together and have
seen each other's careers flourish since. So it
was hardly surprising that V.Ships ended up
managing the Bogazzi fleet.
While the divorce was very amicable,
Enrico Bogazzi was reported as saying, ironically, “we were not happy. Probably.”
10
“V.Ships is a very
sophisticated
company
and we have very old scrap
vessels. But it wasn’t just
about price. It was very
expensive, but technically
we also had some arguments,” he told the press.
This was a point echoed
by a source very close to the deal who told
SMI: “It takes two to tango and putting the
initial enthusiasm aside, you can't upgrade
things that are scrap, for nothing. You need a
commitment to finish the project.”
Sources close to Bogazzi say the first 10
ships under crew and technical management
were handed back to Bogazzi in September.
The process will continue at around 10 ships
per month for practical purposes, with expectations that the entire fleet will be brought
back under Bogazzi's management by the end
of the year.
V.Ships President Roberto Giorgi said the
two companies had “different strategies and
priorities”, while declining further comment
on the reasons behind Bogazzi’s decision.
He also sought to downplay the loss of
the sizeable Bogazzi fleet as part of the
normal course of business, adding that
“every year we have 150-160 ships coming
in and a churn of about 100 ships for various
reasons.” He claimed that even with the
loss of Bogazzi, the company’s roughly 900vessel fleet was still 43 ships up on last
year.
Still on the V.Ships front, the much publicised decision by major investor Close
Brothers to realise its gains in the Monacobased ship manager is unlikely to be concluded until next Spring, we hear. And there will
be reluctance from other shareholders determined to 'stay for the ride' to accept any new
investor with less than acceptable motives.
Likely interested parties? Another equity
investor! Let's see! ■
NOTEBOOK
No ‘free lunch’ for IMO
The bunkering industry has reacted angrily
to an IMO decision to press forward with the
idea to phase out residual fuels in an attempt to
tackle the growing problem of ship emissions.
Don Gregory, Chairman of the International
Bunker Industry Association, argued that in the
complex world surrounding emissions “there
was no such thing as a free lunch”, and stressed
that technology may offer a better alternative.
“We do recognise with reducing emissions
that one way to help is to have a lower sulphur
fuel. But it isn’t the only solution and you can
get better results by doing it in different ways.
Would you close down coal fired power
stations just because they have sulphur
in them and they produce soot? No, you say they
should have a stack treatment system to catch
the soot and wash out the sulphur,” he reasoned.
The move to adopt distillates in favour of
residual fuel was one of four proposals
approved by the Bulk Liquids and Gasses
(BLG) Subcommittee as IMO seeks to update
Marpol Annex VI regulations.
Don Gregory said it would not be possible
for refineries to convert all of the existing
residual fuels to distillates, stressing such
a move could aid global warming and have
“We do recognise with reducing
emissions that one way to help is
to have a lower sulphur fuel. But it
isn’t the only solution and you can
get better results by doing it in
different ways”
serious health implications.
“From a greenhouse gas point of view it has
serious implications,” he said. “Running on
diesel fuel will produce more fine particulates,
and it is generally agreed by the experts that it is
the fine particles that get ingested into your lungs
and cause cancer. It’s the fine particles that cause
the majority of the damage and if we go over to
diesel we will be producing more of them.”
Despite the criticism Intertanko - which put
forward the proposal - believes it is making an
important contribution to the debate surrounding the Annex VI update.
“Very little is controlled or regulated on the
fuel that the ship is using,” said Dragos Rauta,
Intertanko Technical Director. “We feel that
greener fuel specifications can’t be ignored –
it has to be part of the discussion.” ■
NOTEBOOK
EXECUTIVE
STRESS
According to a survey by America Online and
Salary.com, the average worker admits to frittering away 2.09 hours per eight-hour working
day doing nothing that could benefit his
employer. And this does not include lunch
times and scheduled tea breaks.
Top of the list at 44.7% of the time wasted is
surfing the internet for personal gain, followed
by socialising with co-workers at a worrying
23.4%. The average worker feels it important
to spend at least nine minutes a day conducting
personal business, while they will spend at
least half that amount just staring into space.
If you see your salesman speeding off in his
car, mid-morning, don't worry, he is just exercising his personally-believed right to spend
3.1% of his wasted time at work running personal errands. As for planning his personal
Dot com intrigue on the P&I front
The insurance market appeared confused and
non-plussed about an innovative new project
which it is claimed will revolutionise the marine
insurance market by among other things using
the powers of the internet to capture some of the
market share currently dominated by the P&I
Club establishment.
The joint Hull and P&I venture, which is
understood to be nearing finalisation under the
banner of Vega Marine, is reported to be the
brainchild of Terje Adolfsen, a former insurance
manager with Bergsen Marine, and Kare
Franseth, who held a similar position with
Torvald Klaveness.
When questioned by SMI, Terje Adolfsen
added to the confusion by confirming that Vega
Marine had already been established and he was
involved in it but added: “We are working on
various ideas in various directions in insurance
activities but there is a very long way to go. I am
not denying anything but I cannot confirm anything either at this stage.”
Somewhat reassuringly, he did promise further information when something was 'formalised'. Previous reports have suggested the
pair have big ideas to use the internet to change
the face of existing hull insurance practices.
Bjørn Hildan Managing Director and CEO of
leading Norwegian company Bluewater
Insurance revealed he was aware of market gossip regarding the new company and stressed he
was very interested to see how the pair intended
to employ the internet as a means of doing business. But as he opined, even in today’s technology-obsessed world previous attempts by hull
insurers to utilise the internet have been blighted
with technical and communication difficulties.
“I know the individuals concerned,” Bjorn
Hildan said. “They are both very professional
people with extensive market knowledge and
experience. If anybody can pull it off it is them.”
A fixed premium scheme offering wealthy
operators a reported $1bn cover is said to be the
fundamental aim of the P&I branch of the business but only if they are prepared to risk big
deductibles.
Clear details have yet to emerge, with key
players in the insurance market seemingly ignorant to the plans of the Norwegian pair, but
stressing a desire to know more.
The news will come as a blow to existing
P&I players who are already under pressure following accusations that smaller companies are
paying for the honour of sharing a Club with
some of the industry’s main players.
“Those ship owners who make up the Clubs’
boards of directors, and so set the level of
increase, appear to have a tendency to avoid
paying it themselves,” according to the annual
P&I report of the brokering group Tysers.
“If each Club’s largest 20 members all paid
the premium required by their records, Clubs
would return underwriting surpluses and general increases of the magnitude seen in recent
years would be consigned to history,” the report
concluded. ■
social diary, employers should leave their
prized employee alone for two minutes a day to
realise this need.
As for arriving late and going home early,
that is the least of your problems.
Employees say they're not always to blame
for this wasted time. As many as 33.2% of
respondents cited lack of work as their biggest
reason for wasting time, while 23.4% said they
wasted time at work because they believe they
were underpaid.
Sole employees even divulged other ways
they wasted their time at work, such as primping in the bathroom mirror and having running
races up the staircase with co-workers. One
respondent said: “The hurried walk around the
office is not only a great way to look like you
are busy, but also a good cardio exercise.” ■
Suez Canal to
expand
EGYPT is planning to spend $1bn to expand
the Suez Canal by 2010, but analysts are
questioning the economic viability of this
grand project, latest news reports have suggested.
The Suez Canal Authority is contemplating making this investment to attract more
tanker and container traffic as vessels on
long haul are getting larger. Under the plans
the canal would be deepened by 10 ft to handle ships with a 72-ft draught and widened
by 17% to around 365 m.
“We want to deepen and widen the canal
and create more bypasses to handle future
huge tankers,” Admiral Ahmed Fadel, chairman of the Suez Canal Authority reportedly
told Bloomberg.
It follows swiftly on the heels of the decision by Panama to expand the size of the
Panama Canal. Some 78% Panamanians
voted in October to support a $5.25bn project
to build a third set of locks capable of handling 12,000 teu containerships, suezmax
tankers and capesize bulkers.
The Suez Canal Authority is keen to
attract very large and ultra large crude carriers that carry Middle East crude to Europe
and the US. But with more Middle East
crude cargoes going to Asia and the Sumed
pipeline operating through Egypt carrying oil
to the Mediterranean, there may not be the
demand from tanker markets for a wider
canal, said analysts.
Others suggested the canal’s widening
could benefit container shipping better,
allowing larger ships to got through taking
Asian cargo to Europe. ■
13
NOTEBOOK
Box vessel calls top the rest
Container shipping has been the star performer
of the past decade with the increase in vessel
calls by container ships at the world's major
port destinations outstripping those of any
other vessel type, SMI can reveal.
According to data released from Lloyd's
MIU, there were 312,443 container ship calls
throughout the whole of last year against
152,305 in 1995. This compared with the
tanker sector which was the second best performer at 284,869 vessel calls, some 56,402
calls more than was recorded a decade earlier.
The rise in passenger ship demand is also evident with 121,919 vessel calls made in 2005
against 74,399 in 1995. Dry cargo vessels also
performed well, rising by 40,732 vessel calls in
the 10 years to 161,904 in 2005, Lloyd's MIU
said. Vessel calls by general cargo ships fell by
just over 18,000 during the 10 year period to
424,442.
A total of 1.61m vessel calls were made in
the designated areas last year compared with
1.23m 10 years ago, illustrating the growth in
trade that has happened. ■
Vessel Calls By Area and Vessel Type 2005
Area
Australasia
Cent. America/Caribbean
Far East
Indian Subcontinent
Med/BlackSea
North America
North Europe
South America
West Africa
Container
Dry Bulk
Gas Gen. Cargo
Other
Passenger
Reefer
RORO
Tanker
7062
11997
143773
23819
33107
21113
49011
18968
3593
10437
3189
48803
14900
22056
22103
22523
15228
2565
691
1400
10718
3162
7731
1349
12219
2179
467
6561
9752
117103
17333
91097
8138
160542
9813
4103
2897
6903
26512
3339
6487
6927
41465
2987
1103
2106
12541
10566
1551
47409
11530
33802
1887
527
650
2185
5993
1377
4018
1706
8098
3888
1867
4422
6780
20999
7083
31583
8468
59042
3335
2444
3730
8605
72305
29605
45669
27637
78541
14249
4528
312443
161804
39916
424442
98620
121919
29782
144156
284869
Gas Gen. Cargo
Other
Passenger
Reefer
RORO
Tanker
Vessel Calls By Area and vessel Type 1995
Area
Australasia
Cent. America/Caribbean
Far East
Indian Subcontinent
Med/BlackSea
North America
North Europe
South America
West Africa
Container
Dry Bulk
4394
5701
66493
10774
13335
15282
27578
7412
1336
8377
2621
34186
9662
15338
16945
21953
10130
1860
804
1466
8361
2063
6835
1030
11058
2173
169
6710
11161
93534
21862
82381
11189
194507
15427
5809
1302
4021
5754
1840
5417
3166
18948
1562
369
1171
9664
5673
2081
35873
4539
13658
1367
373
1064
3181
6954
2151
4156
2236
9631
4738
874
4899
7019
13619
5229
24637
7631
41053
3619
1437
3722
6931
45479
20770
41140
18668
75628
13218
2911
152305
121072
33959
442580
42379
74399
34985
109143
228467
Source: Lloyd'sMIU (www.lloydsmiu.com)
14
SHIPMANAGEMENT
HOW I WORK
How I
work
SMI talks to two industry achievers, and asks the question: How do they keep
up with the rigours of the shipping industry?
HARRY GILBERT
Chairman, International Transport Intermediaries Club (ITIC), and
former CEO of The Wallem Group, Hong Kong
“I have the interaction and the interests, but I can work from home if I
wish. I can also work on my own interests, so it’s a good compromise
as far as I’m concerned.”
Restoring classic cars and motorbikes in the idyllic Cheshire countryside is quite literally a world apart from the municipal hustle and bustle
of Hong Kong. And when Harry Gilbert retired from Wallem, a life in
rural England seemed like a dream come true.
But after leaving the Wallem hot-seat, Harry soon missed the day-today contact with the industry he joined as a 16-year-old cadet. “When I
was working full-time I didn’t think I would take up anything resembling full-time employment [after I retired]. But if you can only play
golf on a Saturday morning for all of your working life and then somebody says: ‘You can play golf seven days a week’, you get fed up with
playing golf after a couple of weeks,” he explained. “It isn’t quite as
easy to switch off as one imagines.”
Now, four years after returning home to England, Harry remains on
the board of Wallem UK. He is also chairman of ITIC and CEO of the
diversified marine service company the Charente Group. “I think I have
the best of both worlds now,” he said. “I have the interaction and the
interests, but I can work from home if I wish. I can also work on my
own interests, so it’s a good compromise as far as I’m concerned.”
However, Harry admits working from home creates its own challenges. “You have to be very organised. You have to devote a certain
amount of the day to the job. It’s very easy to get sidetracked and not
do that, but I find I’m spending quite a bit of time visiting various
offices. My week is largely split between working a couple of days at
home and visiting one of the offices. Although I could be away for the
entire week if we have board and management meetings scheduled.”
Despite the challenge of balancing his various commitments, Harry
is sure working from home helps him when making key decisions.
“When I was with Wallem, I was responsible, on a day-to-day basis, for
the entire organisation. The pressures were more intense. Now, because
I have this overarching responsibility, but not on a 'day-to-day sitting
behind the desk moving the paperwork backwards and forwards basis',
16
the pressure is certainly less. This gives [me] the opportunity to think a
lot more – to actually consider where the company should be going. I
have the opportunity to take a distant, ‘helicopter view’ and make more
measured and considered decisions,” he said.
Harry has a chief operating officer at Charente who runs the company on a day-to-day basis. However, his role is still hands-on and
requires him to travel in the UK and abroad. Fortunately, his business
trips are less rushed than they once were allowing him to mix business
with a little pleasure. “My family has now grown up and flown the nest,
so my wife can often come with me. If I have a couple of days in
London, she can come down with me and flex the credit card while I’m
doing what I need to do,” he joked.
HOW I WORK
“
about 18 months ago I brought an AC
Cobra replica, which I’m generally
refurbishing and am busy transplanting
a new engine and gear box into. That’s
the winter project
”
“It wasn’t too bad in Hong Kong, my wife could come with me, but
often I was in Taiwan for a day, then Tokyo the following day, and perhaps, Shanghai on the way back. Living out of a suitcase and checking
into a hotel at five at night, and checking out again to catch a flight at
five in the morning doesn’t thrill my wife a great deal,” he continued.
Having spent his working life travelling the world - first onboard
ships and later as a leading ship management figure - Harry is well
placed to comment on the issues facing the industry today. “Legislation
continues to pile up. I am concerned for the seafarers themselves,
because I feel disappointed at the potential amount of litigation that can
come down on the shoulders of the seafarer - nine times out of 10
through no fault of their own. The move towards the criminalisation of
the seafarer is a very, very bad one. It puts more and more pressure on
people.
“I think people don’t look at seafaring as a long-term career anymore. They see it as a chance to make money for a few years and then
leave, which I think is causing its own problems in the industry.” When
questioned, he agreed that a lot of things had changed the perception of
a life at sea, “but obviously ships are not getting as much time in port
as the used to, therefore the senior officers in particular don’t get the
opportunity to have a break. There are many more inspections and there
is more work to do in port, in a shorter amount of time. The potential
litigation against the seafarer is a problem that has to be taken into consideration. All of these pressures build up – especially in this day and
age where going away from home, particularly when you have a wife
and family, is a difficult thing to do.”
Fortunately for Harry Gilbert, ‘retirement’ has allowed him time
away from shipping to dedicate to the other love of his life – restoring
classic cars and motorbikes. One of his first jobs when he returned to
England was to build a workshop in his garden, complete with a small
Life essentials
Car(s):
A 1954 MG TF, an AC Cobra (Replica) and
seven classic motorcycles “in need of tender
loving care”
House(s): Family home in Cheshire, UK
Fact:
During his time at Denholm, Harry went from
Chief Engineer to Chief Executive in 11 years
SHIPMANAGEMENT
office to store technical drawings. “I have got a 1954 MG TF which is
in need of restoration. But about 18 months ago I brought an AC Cobra
replica, which I’m generally refurbishing and am busy transplanting a
new engine and gear box into. That’s the winter project in the hope of
getting it on the road again for next spring,” Harry explained.
“It’s nice to be able to pick those interests up and put them down
again. This is what I like about the mixture of work and retirement.
After a few days working underneath a car, to put a suit on again and
travel up to Liverpool makes a pleasant change.”
CAPTAIN CHARLES VANDERPERRE
Founder and Chairman, Univan Ship Management
“Some people like to play golf or other sports, but I like the office.
I like the job. This keeps me young even though I’m 84.”
Captain Charles Vanderperre recently fuelled speculation that he was
set to retire when he revealed he had sold a 50% stake in his company
to the Clipper Group. Now those same tongues are set to be wagging on
overdrive following his announcement that current Univan Chief
Accountant Mr AS Maniyar has been chosen as heir to the Univan
Crown.
However, Captain Vanderperre has ruled out the prospect of retirement, and is determined to continue in his current position as one of the
ship management industry’s most colourful characters. Ship managements’ very own Godfather still has no plans to voluntarily step-down.
“There will be no change to what I do at the moment,” Captain
Vanderperre said when questioned whether his role would change in
wake of the Clipper deal. “There are no plans to retire – work is my
pleasure. I have a friend in Holland who was asked when she was planning to retire. She said: ‘it depends on God’. But it also depends on people who work with you and their motivation.”
This is not a surprising stance for a man who leaves home at 6:45 in
the morning and walks the 45 minute journey to work, six days a week,
and only allows himself an extra 30 minutes in bed on a Sunday before
heading to the office.
“I like the job, it keeps me young – it’s as simple as that,” Captain
Vanderperre explained. “If you are active all your life and you retire,
then I should say frankly, you die. There is a banker in Belgium who
said: ‘The older I get the more work becomes the most important thing
in my life – even more important than love.’ As long as you can walk
and talk there is a job for you somewhere, I believe.
“I started Univan in 1973 when I was already in my 50s. At that ➩
17
HOW I WORK
SHIPMANAGEMENT
“
Staff are the most important component
of a successful company. I think if you have
600 ships in your management you can’t
know all of the people, and it is the people
who define the company
”
time I was too old. You don’t start a company as a 51-year-old, you start
a company when you are much younger – 40 or 45. But it has been in
existence now for nearly 33 years, and I’m still quite busy keeping
young.
“Some people like to play golf or other sports, but I like the office. I
like the job. This keeps me young even though I’m 84. I come into the
office every morning at 7:30am and I’m still around at 8:00pm. At
lunch time I take a one hour rest. I have a sofa in the office where I can
get some peace.”
However, Captain Vanderperre is concerned that there are very few
young people who share his enthusiasm for the shipping industry.
“Sadly, less people are attracted into shipping these days as young people want more of a social life. There are many jobs available ashore. An
engineer can work in the refinery very easily, because a refinery is
almost the same as a ship. There is a boiler, some pumps and so on. So
the chief engineer can become a superintendent at a refinery. There are
many opportunities ashore and the young people prefer a family life to
going away.
“It is more and more difficult to get good crew. Even today, after
using Indian nationals for so long, we are having difficulties recruiting.
There are so many jobs available and the loyalty is not there anymore.
For a few hundred dollars they go from one manager to another.
“There is a big problem with crew poaching and I think it is the mistake of the owners. Mr Cockcroft is in charge of the ITF and even
though he is very powerful, he is one man and he can’t impose everything he wants. There are 5,000 owners and they will never agree,”
Captain Vanderperre stressed.
“Staff are the most important component of a successful company. I
think if you have 600 ships in your management you can’t know all of
the people, and it is the people who define the company. In my opinion,
the ideal size is of a ship management company is 60 ships – no more”
(Univan presently controls 41 ships). “You can then keep in contact
with all your masters and it becomes like a family concern. But if there
are 600 ships, it becomes like a factory.
“When you have 60 ships in my opinion you can still keep control.
But if you have 600, even if you have a brilliant memory you can’t
remember all of the people – it is not possible. And you have 600
Captains and 600 Chief Engineers and so on. If you have that many
people you have no time to discuss with them what is on the table
every day.” ■
Life essentials
Car(s):
A 1974 yellow Rolls Royce, used for company
business, and a 1994 BMW 325 for 'Sunday
driving'
House(s): A flat over-looking Victoria Harbour, Hong Kong
Fact:
Captain Vanderperre started a charity
foundation undertaking charity work in Thailand
Capt Charles
Vanderperre’s treasured
1974 Rolls is used
mostly for company
business and is almost
as old as the company
he founded
19
LETTERS
MAILBOX
POWERFUL INTERPLAY
SIR. Like industry awards, I’m not a big fan of round table discussions. Somehow they appear very stilted and not particularly insightful. However, I must congratulate Sean Moloney of Ship
Management International for changing my opinion. In your last edition (September/ October) you presented the findings of a recent discussion between some of the leading lights of the younger Greek
shipping generation. The write up of the discussion between messrs
Pistiolis (Top), Vafias (Stealth), Molaris (Quintana), Varouxakis
(FreeSeas) and Kassiotis (Omega), who have successfully used the
public equity markets to build up a fleet of over 100 ships between
them, is certainly worth a read.
The topics covered were familiar ones but nonetheless interesting,
particularly given the polite interplay between the ‘players’. The relative merits of young versus old ships, the appetite for risk among
equity investors and the increasingly regulated markets all get an airing in a frank manner.
Certainly no punches are pulled when the subject of outsourcing is
introduced.. The opinions aired are mixed, ranging from some general concerns about handing over an older vessel to a third party manager and reservations about using a generalist manager like V.Ships
as opposed to a smaller specialist, to the benefits which companies
like Frontline enjoy from outsourcing. These include the manager’s
ability to find crew now that traditional sources have dried up, the
need to import expertise and the flexibility it can bring strategically.
What does come across stronger than anything else is the confidence of this new generation which has made an important mark in
shipping in such a small space of time. Certainly, these guys have
strong opinions and whether you agree with them or not they are
worth listening to.
Malcolm Willingale
Group Services Director, V.Holdings
NOT WHAT IT SAYS ON THE TIN?
SIR. In relation to your edition of September/October of 2006 (Issue 3),
regarding the news on page 51 “Not what it says on the tin”. As an
owner of a chemical blender company located in Brazil - a “third world
country” - I must declare my unpleasantness against this text. My company, as an ISO 9001:2000 certified company, has controlled and documented processes to ensure that what it produces is exactly what is
AGREED and REQUESTED by the Customer (major chemical companies world-wide). Our company prays for the quality and takes it to the
same level that serious “first world” companies do. We use equipment
of the latest technology to blend the chemicals, maybe better than the
one that is made at the “main” plant.
This way it is not right to generalise all third world blenders due to a
few cowboy companies. I believe that the responsibility for this problem
lies with the “first world” chemical companies who are giving opportunity for the cowboys to work. The best solution to avoid this type of worry
is for these companies, at the time of signing contracts with any blender
from the “third world”, to perform a local inspection on the facilities and
assure that they will be dealing with a trustful company. I would like to
have my view forwarded to your magazine readers; this type of irresponsible text can directly affect serious companies like ours.
Fabio Rodrigues
DSF Services and Ship Supplier, Santos, Brazil
20
Editor's reply
The intention of the article was to raise awareness surrounding the
existence of so-called cowboy blenders and not to label all third world
companies as cowboys. As you quite rightly say, something needs to be
done to ensure high standards are met by all.
FOCUS
SHIPMANAGEMENT
Training for the task ahead
By Sean Moloney
have always been fascinated with people in authority. Not
because I crave such status, although my friends would probably disagree, but I find them interesting. I suppose understanding how they got to where they are and how they run
their lives to ensure they maintain their positions in the pecking order is what really fascinates. One thing is for sure, the trappings
and symbols of power and authority do nothing for me. I am not the
slightest bit interested in owning a Ferrari or a racehorse. Quite the
opposite, give me a car that gets me from A to B and a good round of
golf and I am happy.
Bob Bishop is a little like me – only a little, mind. He likes to golf and
he likes to drive an old car too – old estate car, although he is probably
not too happy talking about it. With two children and two dogs to ferry
around he can be excused for harking back to his old cargo officer days.
He is also single minded and focused – after all, he completed the gruelling shipping industry-sponsored bike race 'Tour Pour La Mer' last year
despite only jumping on a bike previously for fun! As far as being a
person of authority, as Chief Executive Officer of V.Ships’
I
Ask any owner to name a third party ship manager
and they will probably say V. Ships because it is
acknowledged by most as the market leader in terms
of size and influence. And with 900 ships reputed
to be under its full or partial management, the
company is a force to be reckoned with
Shipmanagement division he certainly commands a great deal of
respect.
“I trained regularly for the race
and I have continued bike riding
since. Although I have bought
myself something rather more
expensive than I was riding regularly before I went on the bike ride.
So I do try and continue to cycle
although Glasgow in the autumn is
not conducive to nipping out on your bike before going to work.”
Smiling, he continues: “I’m lucky as there is a cycle track on an old
converted railway line about half a mile from my house so I can have a
good blast up and down there if I want to and as a result, I do feel more
invigorated when I then get into the office. But putting on your cycling
gear just after getting out of bed can be a little tough sometimes,” he said.
I first really got to know Bob Bishop when he left his post as Marine
Director of Intertanko to join the Glasgow-based shipmanagement team
at Acomarit under the stewardship of Peter Cooney. He soon became a
crucial member of the enlarged ship management team when Acomarit
merged with V.Ships and now heads up V.Ship’s shipmanagement operations, albeit still from his Glasgow base.
He is a staunch believer in the effectiveness of third party shipmanagement and believes the sector has a strong future ahead even if there
are only really a few managers actually managing ships in a quality
way. His words, not mine.
“I think third party ship management is becoming increasingly
attractive for large ship owners, for a number of reasons. One: The regulatory regime that ship operators now operate in means that they can
put themselves slightly at arms length. The second factor is crewing. If
you have 50 ships in a newbuilding programme you probably haven’t
got the crew to man them.
“I think if owners are managing all their ships in-house, just as they
might have a crew problem, they will have a shore staff problem too.
And, depending where they are located, that can be quite costly.
Because of these reasons, we are now starting to see significant outsourcing by people who wouldn’t have generally considered third party
management in the past,” he opined.
Ask any owner to name a third party ship manager and they will
probably say V. Ships because it is acknowledged by most as the market leader in terms of size and influence. And with an interest in 900
ships the company is a force to be reckoned with. But, as Bob Bishop
contends, while it is large it does have a significant client base with
60% of its clients owning between one and three ships.
“Don’t forget that there really are very few independent ship managers like V.Ships around. I think this is an important issue for somebody considering outsourcing, because we all know that a manager that
is not truly independent will put the best crew on his own ships.”
Quality is a buzz word in the shipmanagement industry at the
moment and companies like V.Ships are tending to veer towards a sector of the market that is embracing high quality. But, according to Bob
Bishop, there is a practical reason for this.
“By and large the more problematic ships tend to have other problems associated with them like lack of funding which means that they
require more management time in dealing with suppliers etc. Whereas
in many ways, it is an easier proposition to manage quality tonnage in
a quality way,” he added.
Bob does raise a finger against those who believe that old vessels,
purely because of their age, can fall into this category of problematical ➩
21
SHIPMANAGEMENT
FOCUS
By far the biggest issue affecting the shipping industry at the moment is crewing and companies like
V.Ships are looked upon as the main driving forces
behind increasing the seafarer pool through more
focused recruitment, better retention and even
more training
vessels when it comes to their effective management.
“Just because you have an old ship doesn’t mean you will automatically have management problems with it. There is absolutely nothing
wrong with an older vessel that gets the attention it deserves. The problem is when people feel the vessel is no longer worthwhile and that’s
dispiriting, both to the crew and the people managing the vessels.
“I think, in actual fact, that’s where ship managers have a skill set
that may not be so readily found in an owners’ office. I think we are
very used to dealing with more elderly and problematic vessels; we
have the skills to do that. So in going forward, we are not necessarily
looking for a fleet of less than five-years-old, we are looking across the
range, but what we are looking for are clients who share our vision of
operating at the quality end of the market,” he said.
As the drive for quality in the industry intensifies, there are many in
the industry who believe this will accelerate the attraction of the quality third party manager. After all, a quality reputation can mean the difference between successful oil major vettings or poor port state control
detentions records.
Bob Bishop continued: “If you take tankers: wet, LPG and all the rest
of it, I think there is a drive towards quality operation which has just gone
up a gear as TMSA has come in, or as the cogence of quality and robust
ship management is better understood by the likes of EMSA. Getting
approval for a vessel means you have to be right on top of your game.
“We are getting audited all the time. We have even got an office set
aside for the auditors. We are being audited by oil majors, we are being
audited by class, we are getting audited by flag states, we are getting
audited by owners’ financial people, so there is always somebody in
auditing us.
“There are two things I would say about regulation: one is that the
IMO has meetings 25 weeks a year, 160+ nations come to London and
22
determine the regulations. They are not about to give that up. They have
almost exhausted all the possibilities they have for the technical regulation of ships, so increasingly we are seeing attention moving into the
soft side starting with the ISM Code and the ISPS Code,” he added.
This will increasingly lead to more regulation coming into the management office.
By far the biggest issue affecting the shipping industry at the moment
is crewing and companies like V.Ships are looked upon as the main
driving forces behind increasing the seafarer pool through more focused
recruitment, better retention and even more training.
“One of the advantages of V.Ships size is that we can give a career
structure to people. We actively tell people that if they want to come to
work for us, we can give them a career for life because, if you are fed
up of going to sea, there is always an office somewhere where you can
settle down to a shore-based job. Equally, we can attract people who are
ambitious and enthusiastic. [We have] promotion prospects that are just
not available in a smaller organisation. So, on that basis we can keep
people that might otherwise be gone,” he stressed.
V.Ships currently boasts a seafarer-pool of 23,500 seafarers but
according to Bob Bishop the company has set itself a target of increasing this to 60,000 by 2010 – a daunting task by anyone’s standards. This
near tripling of its ship-based workforce will be achieved by the traditional recruitment and training methods as well as normal human
FOCUS
SHIPMANAGEMENT
If you take tankers: wet, LPG and all the rest of it,
I think that there is a drive towards quality
operation which has just gone up a gear as TMSA
has come in, or as the cogence of quality and
robust ship management is better understood by
the likes of EMSA
resource practices of advertising and recruiting for existing talent within the industry.
“One of the things we did last year was to employ a head hunter and
just as you have head hunters for accountancy, why wouldn’t you apply
the same facilities and procedures for crew. Their sole job is to increase
the number of seafarers available to V Ships,” he said.
But is this not adding to the whole issue of poaching?
“If you look at the issue of poaching I don’t think that can ever be
seriously levelled at V.Ships. We have masters who have been with us
for a number of years who have been poached by companies who are
prepared to upset the whole process across the industry for their own
short-term needs. And this is in actual fact making the problem even
worse going forward, because increasingly you are seeing the seafarers
earn more than Prime Minister of their country,” said Bob Bishop.
“With that sort of salary differential they don’t need to stay at sea for
very long, they can come ashore and buy a hotel. So they are lost to the
industry and these people who are playing the high salaries, coincidentally, don’t appear to have the regime to develop their own sea staff.
“At V.Ships we hold the power and the means to encourage our seafarers to stay. It’s not just about money, although we need to be there or
there abouts; there are other features like job security, which is also very
important,” he added.
According to Bob Bishop, V.Ships takes its training responsibilities
very seriously. “We have 765 cadets currently being trained and we
want to increase this number to 1,000 then eventually 2,000. So there
is a huge influx of people coming into the industry but that alone
doesn’t get us to our goal of 60,000 seafarers. That is why we have
employed these people out there to encourage people to take up
available positions.”
Having spent two hours talking to Bob Bishop I realised that perhaps
the reason why people like him are respected is because they are able to
set themselves tough targets and have the presence and determination to
make them happen. ■
SHIPMANAGEMENT
ON MY MIND
ONMYMIND
Ole B. Stene
Ole Stene is Managing Director of Aboitiz Jebsen
Bulk Transport Corporation and Chief Operating
Officer of Jebsen Management AS. He is also the
newly appointed President of InterManager, the trade
Association for in-house and third party ship managers. A graduate of the University of Bergen Law
School, he also holds a commercial degree from the
Ant. Johannessen Handelsskole in Bergen as well as
a postgraduate degree in building and construction.
He lists Alternate Member of Germanischer Lloyd's
Asian Committee; Member of Lloyd's Register's Asia
Shipowners' Committee; ex-member of the Skuld
Committee and ex-member of the Board of Bergen
Hull Club among the past and present positions he
has held
You have just started a two-year-term as InterManager
President. What is your strategy for the association and how
would you like to see it develop under your leadership?
The strategic goal of InterManager is quite clear: to make it the unquestioned and unchallenged representative body or reference for all
involved in the quality operation, management and crewing of ships.
We want to make InterManager an association so powerful as to have
the ability to influence the decisions that are relevant to the industry, its
standards and the conditions of work for the people it employs.
We are opening InterManager to ALL people involved in the operation, management and crewing of ships, meaning shipowners/operators,
in-house managers as well as third party managers, i.e. technical managers as well as crewing managers, because the issues facing the ship
operators is the same. The strategy over the next two years will be to
build the powerbase of InterManager and to involve it in all issues of
relevance to the profession. We will achieve this through the systematic increase of its membership of the association. All people of good will
and quality will be welcomed, because the more members we have the
better we can defend our association.
This systematic search for new members will require some resource,
but with the full support of our members, we will reach our goals. But
at the same time we have to make sure we serve our members' needs by
understanding their needs and responding to them. This will be
achieved through systematic discussions with them about issues such as
crew shortages, the image of the industry and lobbying relevant parties
to defend whatever shipmanagement cases need defending.
What is the big issue facing the industry at the moment?
KPIs as we know are an important issue facing ship managers today and
InterManager has been, and will continue to be, at the vanguard of this
drive for a pan-industry set of measurable KPIs for the industry. But I
24
The strategy over the next two years will
be to build the powerbase of InterManager
and to involve it in all issues of relevance
for the profession. We will achieve this
through the systematic increase of its
membership of the association
don't want InterManager to be totally synonymous with KPIs or vice
versa as there are a number of other important issues we need to
become involved in.
A huge challenge for the future is the recruitment and competence of
cadets and crew coming into the industry. We do know from statistics depending on how much you believe in statistics – that there is a lack of
trained officers qualified to meet the national fleet and if we do not do
something there will be a huge undersupply of officers in the future. It is
clear that there needs to be much closer co-operation between the crew
manager, the ship manager and the ship owner on this issue.
But is the shipping industry undergoing change?
I believe it is, in the sense that it’s more likely a supply chain management scenario where the ship is part of a delivery chain, a production
chain. If part of the chain breaks down that will hurt the whole supply
chain and that means that the crew and we as managers have to understand what the requirement is from the ship owners when it comes to
competence of the crew. The master manages the running of the ship
but how can he be a manager or director of a ship if he doesn’t understand how each individual ship owner prefers to do business. The crew
onboard has to understand what will happen if I don’t manage the ship
the way my customer, the owner, wants me to.
ON MY MIND
Qa
SHIPMANAGEMENT
“Are you concerned that the level of competency
onboard ships is not up to the standard it should be?”
“Well that’s what you see in a lot of trades now because together with the ship
owners we have not been clever enough to foresee the requirements coming
through with respect to training and competency.”
beginning to require difference competencies than were there before
such as leadership and management skills.
Are you concerned that the level of competency onboard
ships is not up to the standard it should be?
So do you think that the onboard management team has to
fully embrace the needs, wishes and desires of the owner and
of his customer?
I think we have to accept that the most important people in a shipping
company are the crew. I don’t think we should forget that we are supporting staff. The guys onboard a ship are meeting the problems,
they’re meeting the customers first and they’re meeting a lot of challenges that they have to solve there and then.
We are there to support them so we have to build up self confidence
in the officers so they have the support and understand what they have
to do to solve this problem there and then and not to forget to ask questions. So in addition to the technical competences of the officers, we are
Well that’s what you see in a lot of trades now because together with
the ship owners we have not been clever enough to foresee the
requirements coming through with respect to training and competency. Ships today are worth $80m or $100m+. If you build a factory
ashore for that kind of money you will be dead sure that the people
you are employing will be trained to be able to manage the factory
well. But because we have this strange scenario in shipping where you
have the signing on/signing off system for seaborne staff we are dealing with a different set of challenges. We have to focus on building
up loyality and developing closer co-operation between us as suppliers of services together with our customers, the ship owners, to really
get the people to understand where they affect the system. ■
The guys onboard a ship are meeting
the problems, they’re meeting the customersfirst and they’re meeting a lot of
challenges that they have to solve there
and then. We are here to support them
SEPTEMBER/OCTOBER 2006
NOVEMBER/DECEMBER
2006ISSUE
ISSUE34 SHIP
SHIPMANAGEMENT
MANAGEMENTINTERNATIONAL
INTERNATIONAL
25
BUSINESS VIEWPOINT
AGENTS
Swimming
against the tide
T
he perennial issues of falling income due to
downward pressure on agency fees and increasing workload, due to the agent’s enhanced role
in the exchange of information between the ship
and shore, continue to impact on the health of
the port agency industry.
So significant is the situation, believes Jonathan
Williams, General Secretary of The Federation of
National Associations of Ship Brokers and Agents
(FONASBA), that intense competition within the industry is forcing agents to offer ever-lower fees in order to
secure business and so rates are being driven further
down. “Fees have now reached the levels at which agents
find it increasingly difficult to provide the required level
of resources, to maintain infrastructure and to provide for
the future,” he said.
“The future of the agency industry is also threatened
by the extremely low profile of the industry, the antiWith the introduction of the ISPS Code, the European
social hours that agency staff are required to keep and
competition from other industries,” he warned.
ship-generated waste disposal directive and the US 24 hour
With the introduction of the ISPS Code, the European
Advance Cargo Declaration Rule, as well as other proposed
ship-generated waste disposal directive and the US 24
measures, most of which are security related, agents are
hour Advance Cargo Declaration Rule, as well as other
becoming ever more involved in the exchange of information
proposed measures, most of which are security related,
between the ship and shore
agents are becoming ever more involved in the exchange
of information between the ship and shore. Significant
amounts of data now require to be requested, collected,
collated and passed on to the correct recipients with a high degree of accu“While a dedicated agent will only work for one line, the independent
racy and in most cases within very tight deadlines. The agency communiagent, who relies for his income on a commission from the line, may be
ty has absorbed and carries out these additional tasks with equanimity but
more active in seeking, and more competitive in securing, business than
it is a further service that the agent is required to provide to his principals
an inhouse agent securing business from the line itself. This process tends,
but in most cases does not get paid for.
however to by cyclical. In a number of cases lines, burdened with all the
The issue of fees and remuneration was a point recently echoed by
costs of running their own operations, have closed their own offices and
Peter Titchener, Secretary General of the Multiport Ship Agencies
have returned to using an independent agent,” he stressed.
Network, who was quoted as claiming that all agents continue to see
The problems this creates can be significant with key staff being
downward pressure on fees and commissions, despite the boom in shipheadhunted by shipping lines and locally-based members of the workforce
ping that has been enjoyed in all sectors.
losing their jobs. The choice between a line opening up its own agency
There is also a trend, he claimed, for principals in the liner business to
network or using independent agents is influenced by a number of factors
set up their own regional and local offices. “We are seeing instances where
that are individual to its own requirements, the size of its business or
they begin to regret the extent of such offices when they realise they have
the area in which it is operating so there are plusses and minuses on
taken on direct fixed costs, whereas had they used a regional office workboth sides.
ing with independent agents they would have had variable costs, and in
According to Christer Sjodoff, Regional Director of the global agency
most cases, better local market knowledge,” he was reported as saying.
operation Gulf Agency Company, the sector is very fragmented. We are
Jonathan Williams cited the container industry as central in the growamong the top three agents in the world when it comes to vessel calls and
ing issue of consolidation in the agency sector.
we handle between 33,000 and 35,000 port calls a year. The top three
“Almost inevitably when two container lines merge, there is a correagents put together probably only account for between 6%-8% of the total
sponding consolidation of agents and in many cases one agent loses out.
number of port calls in the world. So the biggest competitors are
The merits of dedicated, usually line-owned, agents compared to indenot among the top three, the biggest competitors are actually the smaller
pendent agents have been argued for many years and there is no set answer
players,” her added.
to which is best.
“But serious ship owners will want to deal with an agent who has good
26
AGENTS
BUSINESS VIEWPOINT
not for cargo operations but for the other owner-related matters: that is
why we see synergies between our logistics set up and our role as a shipping agent,” he added.
“When you look at the make up of our operating income you’ll find that
45% of that is today made up from logistic business, 11% is what we term
as marine services, the operation of crew boats, supply boats, tugs, barges
and then the balance is 44% made up of ship agency services,” said Chris
Steibelt, Director of Logistics at GAC marine Logistics.
“As a shipping agency part of the function is to clear spares and put
them on board the vessel. As we received what we felt were very poorly
managed freight movements we said we should have a logistics capability. We questioned why we weren't harnessing that capability and putting it
together with our ship agency business to offer our clients a single point
of contact for getting the spares from the origin through to delivered on
board the vessel,” he said. ■
“Because Singapore is a transit point, there are
a lot of ships coming by not for cargo operations
but for the other owner-related matters: that is
why we see synergies between our logistics set
up and our role as a shipping agent”
Ivo Verheyen
cover; who has the right assurances in place and who employ well trained
staff alongside quality systems,” emphasised Christer Sjodoff.
“Our strategy as a major player in the agency market is to provide
added value services for the ships berth side and custom clearance which
means not only clearing the ship in and out but clearing the cargo in and
out. Again I think we can take it all a lot further but we have to talk a lot
more to the owners, operators, managers and port authorities to see how
we can do more for them than we do today,” he said.
Ivo Verheyen, Managing Director of GAC's Singapore office, agreed
that a lot of the shipping lines were looking at their own agency set ups.
As they set up regional offices there was a tendency to pull their own
agency operations in-house, he stressed.
“We are protected from that here in Singapore as we have a very strong
focus on supply services that are related to the needs of the owner, such as
ship supplies to crew changes to delivery of spare parts and bringing
superintendents on board etc,” he added.
“Because Singapore is a transit point, there are a lot of ships coming by
“Serious ship owners will want to deal with
an agent who has good cover; who has the
right assurances in place and who employ
well trained staff alongside quality systems”
Christer Sjodoff
27
Teekay Shipping
R
ecognised as an international leader in energy shipping,
Teekay has recently expanded into the LNG sector and
undertaken a major relocation programme to establish a platform for future growth.
The fresh activity, which was encouraged by customer feedback,
saw three of the company’s conventional ship teams move in order to
encourage interaction between the teams and their customers; and
help the company establish a stronger presence in regions with large
pools of skilled marine personnel.
The multi-functional teams, who are responsible for the day-to-day
running of Teekay’s conventional vessels, are viewed as the heart of
Teekay’s operations. Three ship teams have relocated to Glasgow,
Houston and Singapore. The Glasgow team overseas the fleet in the
Atlantic and the Mediterranean, Houston is responsible for the fleet in
the US Gulf and Singapore manages the fleet in the Indo-Pacific region.
David Robinson, Vice President, Fleet Operations said: “This is the
start of a new era for us. We have evolved into a global player in several different markets. In addition to bringing ship teams closer to
their fleet and to customers, the regionalisation is a key component of
Teekay’s growth strategy. By taking our ship teams into different
regions we continue to establish ourselves as a global organisation
with a regional, customer focused operating bases.”
This year has certainly been an active one for Teekay, which has
been involved in the energy sector since it was established in 1973.
In February 2006 it announced an agreement with PGS Production
AS, a subsidiary of Petroleum Geo-Services ASA, to develop solutions through floating production storage and offloading units.
Teekay Shipping transports more than 10% of the world’s seaborne
oil and boasts a fleet of more than 145 tankers. The recent move into
the lucrative LNG sector came through the company’s publicly-listed
subsidiary, Teekay LNG Partners L.P.
With offices in 17 countries, and employing more than 5,100
seaborne and shore-based staff, Teekay provides a comprehensive set
of services to the world’s oil and gas companies. It is the world leader
in the shuttle tanker business, has one of the largest aframax and
suezmax fleets, and has an emerging product carrier division. ■
FRANKLYSPEAKING
John Adams
Managing Director, Teekay Marine Services
What do you think is the answer to the industry’s crewing
problems?
I think companies need to have a vision. We need to have a five
year, or more likely a ten year plan, looking at the business in the
longer term. We have to continue to invest in training and monitor the demographics of the industry – being sure to focus on
where we are currently recruiting while assessing where that may
be in the future and investing accordingly.
What role can third party managers play in tackling the
problem?
I think there are a lot of reputable ship managers and they still
have a role to play for those owners who wish to outsource that
part of their operation. But I can only speak for Teekay and we
are owners and operators. We prefer to manage that risk internally, in terms of an operational risk, and manage all of the human
resource risks as well.
Why do you prefer to keep things in-house instead of
using a third party manager?
It’s what we call the Operational Leadership Programme and this
has helped build our brand – our reputation – to where it is today.
I should explain to you that there are four business units at
Teekay. One is focused on gas, one on shuttle tankers and offshore services and one on conventional tankers. The other business unit is what we call Teekay Marine Services. We regard
Teekay Marine Services as the engine room of the company and
one of its key responsibilities is retaining our high standards. By
doing this we know what standards of performance we need, we
know what the customers expect and therefore we have to manage that in-house.
29
Burning
Objectives
L
ooking down on the industrial outline of the dock, the effects of
sulphur emissions scar the sky. A yellow haze hangs in the warm
morning air, casting a suffocating blanket across the roof tops of
the town towards the ocean. But this is not a view of a third world
metropolis, it is an every day occurrence in ports around the
Baltic, the North Sea and other parts of the industrialised world as a direct
result of sulphur emissions from ships.
The inhalation of sulphur affects the human respiratory system, and it is
well known that sulphur emissions cause acid rain. “Sulphur is in the
atmosphere in very limited quantities. It has a very high greenhouse factor,
so a small quantity of sulphur is significant to the greenhouse effect,”
explained Vinchenzo Grecco, Technical Manager for the Marine Division
of Greenpeace. “Ships burn hundreds of tonnes of residual fuel per day and
some of this stuff is liquid asphalt, basically.”
The need for the industry to address sulphur emissions was highlighted
by Dr Johann Jungclaus of the Max-Planck-Instutut Für Mererologie. He
said: “We have to make an effort to reduce emissions. An 80% reduction
in emissions would be required to halt global warming at two degrees from
now. Ships contribute a lot of sulphur and nitrous oxide and these particles
create changes in local climate.
“The thing you have to understand with sulphur emissions is they are
essentially regional problems,” added Robert Ashdown, Manager of
Offshore and Environmental Affairs at the International Chamber of
Shipping. “There are some very specific areas in the world that happen to
have a sulphur problem. What we need to do is bring the sulphur limits
down in these places, as we have with SECAs (Sulphur Emissions Control
Areas) in the Baltic and the North Sea.”
However, while tackling the problem on a regional scale appears to be
scientifically sound, having different sulphur limits around the world causes many practical difficulties for ship owners and managers. And the problems are set to get worse as states prepare to follow California’s lead and
introduce strict local limits on sulphur emissions which go beyond the
1.5% maximum sulphur content of marine bunker fuel oil required to operate in existing SECAs.
“Different sulphur limits in different ports are potentially problematic as
ships may have to carry three different fuel types, requiring separate tanks
and piping, and the potential for human errors during fuel quality changes
might also present a potential safety hazard,” explained Jean-Claude
Sainlos, Director, Marine Environment Division, IMO Secretariat. And
with the EU set to introduce 0.1% sulphur emissions at berth in 2010, the
situation will only get worse, with some predicting as many as five or six
fuel types will be required on a single vessel in the near future.
30
Sulphur emissions are a
hot topic, but the debate
is set to continue with
increased scientific
understanding and new
ideas providing more
questions than answers
EMISSIONS
A simple solution?
One solution may be to tackle sulphur emissions at the root cause.
“Right now, I think the industry is tackling the issue in a lopsided way.
The oil companies are interested in selling all the sediment and sludge
that comes out of the refinery. They are trying to sell oil to the marine
industry that is almost like tar,” said Rajaish Bajpaee, President and
Group Managing Director of Eurasia. “Emissions are a by-product of
the kind of fuel that you burn and the sulphur content is determined by
the quality of the fuel. The equipment onboard has to be modified to
meet emissions standards, so we are dealing with the end outcome. But
with a uniform standard on fuel I think the problem would be solved
forever.”
The cost differential between fuel oil and marine diesel currently
makes it almost impossible for a company to run ships on low sulphur
fuels at all times, as Wilh. Wilhelmsen discovered when they ran a single vessel only on marine diesel for a three year period. “Of course we
achieved lots of good things,” said Lena Blomqvist, the company’s Vice
President for the Environment. “We reduced emissions drastically. We
also decreased maintenance and reduced the use of lubrication oil.
Everything was fantastic, but the costs grew too big for us to continue.”
However, Mr Bajpaee believes that if all ships were forced to use a
single low sulphur fuel then there is every chance of sustained success.
“The legislation should come from a global body like the IMO, which
will first have the effect of ensuring that we have a global standard for
the marine industry. This would bring the emissions within the tolerance levels, which is not only what the industry requires but also what
society requires as a matter of protecting our environment. It would also
have the impact of [creating] a level playing field between different
states, different regional bodies, different countries and the companies
coming from those countries. If there is a global standard for marine
fuels then there is no competition,” he said.
The use of a single type of distillate
fuel should simplify the monitoring
and regulation of fuel oil quality,
and I am certain that such a move
would be wholeheartedly welcomed
by ships’ crews and officers
worldwide
Mr Bajpaee’s proposal follows a recent suggestion by Intertanko that
residual fuels should be phased out over the next few years in order to
curb sulphur emissions. Intertanko's wish, which was first announced
by its Technical Director Dragos Rauta at a conference, is now one of
the final four proposals to be reviewed by the IMO as it seeks to revise
Marpol Annex VI by the end of next year.
The IMO’s Jean-Claude Sainlos described the idea as very exciting
and praised Intertanko for its contribution to a lively debate which
aimed to produce the best possible outcome. “The target is, in principle,
obtainable but requires brave decisions. It may represent the only
‘catch-all’ solution to significantly reduce the levels of most of the
harmful emissions contained in ships’ exhausts. It is certainly feasible
for ships.” Jean-Claude Sainlos said.
“The question is whether the petroleum industry is ready to invest in
enhanced refinery capacity, and whether charterers of the world’s fleet
are ready and able to pass the bill on to the consumers? The use of a single type of distillate fuel should simplify the monitoring and regulation
of fuel oil quality, and I am certain that such a move would be ➩
31
EMISSIONS
wholeheartedly welcomed by ships’ crews and officers worldwide, as it
would make their jobs safer, easier and cleaner.
“I regard the proposal as one of the most important in the work on
reduction of air pollution from ships and it really shows that the shipping industry takes its corporate responsibility for the environment seriously. There is no doubt this could be a stepping stone toward the objective of minimising the negative effects that shipping may have on the
global environment,” he added.
Despite the IMO’s enthusiasm, there are many who feel the refineries would be unable to meet the increased demand for low sulphur
fuels. “None of it has been thought through by Intertanko. They are
good at their headline grabbing news,” said Don Gregory, Chairman
of the International Bunker Industry Association (IBIA) and
Environment and Sustainability Director of BP Marine. “It’s definitely not realistic at all. It won’t happen. It certainly doesn’t have the
support of the vast majority of stakeholders in the shipping industry
and, to be honest, it certainly hasn’t been thought through properly by
Intertanko in terms of the implications for the economics, the supply,
or the environmental benefits.
The International Chamber of Shipping is equally skeptical about the
proposal. “The refinery capacity is possibly the biggest obstacle. But
there are an awful lot of modifications required for ships if they are to
stop burning residual fuels, and that’s certainly not possible by 2010,”
Robert Ashdown stressed. “And also, by burning high sulphur fuels what
the shipping industry does very effectively is get rid of the waste products
from the refinery process. If ships don’t burn sulphur fuel the problem
doesn’t simply disappear, it has to be disposed of in another form.
“What you also have to consider is that if you take the sulphur out of
fuel, Ok, you will reduce sulphur emissions, but the process will not
necessarily help global warming. The energy process that is used to
remove sulphur from residual fuels is such a high intensity operation
that you will raise emissions from the refinery by 10% to 20% ➩
Not so fast
Reducing the operational speed of ships could allow owners to save
money off their fuel bills and cut emissions simultaneously, a leading
classification society has claimed.
The relationship between fuel efficiency and emissions varies
between pollutants, but the relationship between fuel consumption and
sulphur emissions is directly proportional.
In the California Long Beach area a scheme is already in place to
offer financial incentives for vessels to slow down with the intention of
reducing emissions, and some believe that such schemes could be
effective elsewhere.
Lloyd’s Register is promoting the concept of energy efficiency,
whereby the mounting fuel prices and environmental concerns can be
overcome by energy management techniques.
Employing voyage management and speed management principals
it is estimated fuel consumption can be reduced by 10%. Although
such measures are not suitable for compliance with existing SECA regulations, which place a strict limit on the maximum sulphur content of
fuel, the potential exists for owners to save money and increase their
environmental credentials, Dr Zabi Bazari, Principal Engineer, Marine
Consultancy Service, Lloyd’s Register EMEA explained.
The scheme is largely aimed at the passenger vessel sector, but Dr
Bazari believes similar success could be achieved in the cargo industry
if ships are managed in a very efficient way. “They can reduce the time
spent in port, at anchorage or being idle for what ever reason and use
that time in order to keep the ship sailing, but at a slightly reduced
speed,” he said.
Could slowing down be the answer to tackling emissions?
Johan Roos
Sustainability Director, Stenna Line
“Speed is of the essence. The slower you go the less emissions you
release per mile. But you have to consider the feasibility of actually
slowing down. Somewhere along the line there is a client who is paying
you to deliver the goods at a certain time. When you trade in more complicated markets where you have lorries, airfreight and ships, speed is a
very important part of the system. If you cut speed and try to find a market for say half the speed we operate today then none of the other transport industries would employ us. Cutting speed is not possible today,
even though objectively it would be beneficial to the environment.”
Jean-Claude Sainlos
Director, Marine Environment Division, IMO Secretariat
“Disregarding for a moment the financial and capacity issues related
to building more and/or bigger ships, harmful emissions do increase
with speed and slow steaming could dramatically reduce the total
emissions. We have seen the introduction of voluntary speed reduction programs along coastlines – or for ships arriving and leaving
certain ports – and the decreases in air emissions achieved, with relative modest speed reductions, are considerable. It is an interesting
idea but I think it probably needs a lot more detailed academic
research.”
Lena Blomqvist
Wilh. Wilhemsen – Vice President for the Environment
“When the size of our vessels started to increase, we realised we
were not using so much more fuel than for the smaller ships. Of course
that means that the emissions such as sulphur reduce. That is a really
good thing.
“If you can use larger ships doing the same transport work then
eventually you do the same transport work with one ship less.
Eventually you would reduce everything related to fuel.”
33
EMISSIONS
Could sail-assisted propulsion
be the answer to high fuel
consumption?
in terms of greenhouse gases. What you will effectively do is turn a
regional sulphur problem into a global Co2 problem. Yes, diesel is more
environmentally friendly, but you have to look at it holistically. The
idea that just by stripping sulphur out you are going to make all emissions decrease is a fallacy,” Robert Ashdown added.
A radical approach
With the IMO and other stakeholders apparently raising more questions
than answers as they bid to meet sulphur emissions targets, there is a
growing feeling in some circles that there is a need to move away from
the rigid structure and thinking and embrace more radical and flexible
solutions. Ship Emissions Abatement and Trading (SEAaT), a cross
industry group consisting of ship owners, brokers, technology companies and fuel suppliers, was formed specifically to tackle the issue of
ship emissions. “We want to have an array of options to choose from,
depending where in the world we are operating and what the current situation is there,” explained Johan Roos, Stena Line Sustainability
Director and member of the SEAaT Executive Committee.
SEAaT proposes that ship to ship emissions transfer, measuring
emissions compliance across a fleet of ships rather than on an individual basis, will not only prove more economical for ship owners, but also
speed up the development of technology to tackle emissions problems.
“In a very simple way it is about the innovation of new technology ➩
35
EMISSIONS
and getting this technology onboard ship as quickly as possible. You
need money for that and the support can be given by trading - money
brings innovation” said Cor Noble, SEAaT Secretary General.
In the scheme ships are placed in a compliance group under the
supervision of an independent superintendent. The ships report sailing
behaviour, location and emissions levels to the superintendent on a
daily basis. The emissions of each ship are monitored by a tamper-proof
black-box in the stack, with some ships operating well below the SECA
limit and others in the group above it. “The manager has to balance the
whole group, because they have to collectively be below the sulphur
emissions limit set by the government. The strength of this proposal is
that it can be audited very clearly,” Cor Noble explained. “Of course
there must be an exchange of money as the polluter doesn’t get a free
ride - he has to help others be cleaner. So there is a transfer of money
by certificates trading, and in a trading environment it doesn’t take long
before an instrument gets a price.”
The results of an 11-month pilot study, involving seven companies
and 58 ships, show that the ship to ship emissions transfer scheme has
commercial potential. “The report suggested total savings of about 10%
in total operating costs under certain conditions,” Cor Noble revealed.
“During the study the total savings through emissions trade equated to
$10m compared to what would have been saved using only low sulphur
fuels.”
Not content with this initial success, Johan Roos hopes to expand the
scheme beyond the shipping industry by considering shipping as a
logistics and transport system. “We want to interlink the emissions
from shipping into the buyer, the industry if you will. We are advocates of a trading system where we are allowed to trade emissions
with land-based industry. That would really be the leaver to give the
industry the momentum to make substantial change. Command and
control and the 1.5% limit doesn't give ship operators the incentive to
do anything but comply exactly with 1.5000%. We want to see a system of flexibility where the absolute benefit is to operators who do
more, and we see emissions trading as the way out – at least for
European shipping,” he said.
This pan-industry initiative and lateral thinking may represent the
best means of tackling sulphur emissions and clearing the skies above
ports around the world. “Based on its inherent strength with initiatives
rather than constraints, emission trading has proven itself in other sectors,” said Dan Sten Olsson, CEO of Stena Line. “Stena is a strong
advocate of the development of a new framework that allows for ship
owners and land based industries to jointly find solutions that are efficient. Our ultimate goal is to leave no footprints in the wake of our vessels, but in order to do that, we need non discriminatory tools that
reward those who care.” ■
We are advocates of a trading
system where we are allowed to trade
emissions with land based industry.
That would really be the leaver to
give the industry the momentum to
make substantial change
37
Department of Merchant Shipping
REGIONAL FOCUS
CYPRUS
Striving for growth
CYPRUS
Country Profile
Geographic
coordinates
35 00 N, 33 00 E
Area
total: 9,250 sq km (of which 3,355 sq km are in north Cyprus);
land: 9,240 sq km; water: 10 sq km
Climate
Temperate; Mediterranean with hot, dry summers and cool winters
Elevation extremes
lowest point: Mediterranean Sea 0 m; highest point: Mount
Olympus 1,951 m
Population
784,301 (July 2006 est.)
Economic Overview
The Republic of Cyprus has a market economy dominated by the
service sector, which accounts for 76% of GDP. Tourism and financial services are the most important sectors; erratic growth rates
over the past decade reflect the economy's reliance on tourism,
which often fluctuates with political instability in the region and
economic conditions in Western Europe. Nevertheless, the economy grew a healthy 3.7% per year in 2004 and 2005, well above the
EU average. Cyprus joined the European Exchange Rate
Mechanism (ERM2) in May 2005. The government has initiated an
aggressive austerity program, which has cut the budget deficit to
below 3% but continued fiscal discipline is necessary if Cyprus is
to meet its goal of adopting the euro on 1 January 2008.
38
he admonishment of Turkey by Brussels in early November
for failing to lift its ban on Cyprus-flagged ships was largely expected but will have been greeted with nothing more
than passing interest in the corridors of power in Nicosia
and the shipping offices in Limassol.
While Turkey's resistance to lifting its ban may threaten its future
membership of the European Union, the fact that no progress has been
made on dismantling the long-standing blockade preventing Cyprusflagged ships, and vessels of other flags which have called in Cyprus,
from calling in Turkey means it is business as usual for the Cyprus shipping industry as it works hard to stop the flow of vessels away from its
register and its shores as one of the world's predominant bases for third
party ship management.
According to Thomas Kazakos, Secretary General of the Cyprus
Shipping Council, the 120 member organisation set up to promote the
interests of Cyprus Shipping and further the reputation of the Cyprus
flag, the Turkish ban is not “a Cyprus/Turkey Turkey/Cyprus country
problem but an EU shipping issue, not to say international issue”.
For Cypriot companies the ban represents a restriction of trade, he
added, but the key issue is that is creates unfair competition within the
European Union. “Cyprus is now the third largest fleet in Europe and
the continents biggest ship management centre, so by depriving Cypriot
shipping companies the same opportunities to trade and work within the
European Union let alone having to deal with the violation of basic
principles within the established EU laws, consumer products at the end
of the day will be higher because they won’t be able to get a competitive package which otherwise Cyprus would have been able to offer,”
he added.
“We have streamlined and harmonised our legislation in line with the
standards of the European Union, therefore we do not ask for any pref-
T
CYPRUS
REGIONAL FOCUS
erential treatment but what we ask is to be treated the same as everybody else because this embargo operates as an anticompetitive measure
for Cyprus,” Mr Kazakos said.
Serghios Serghiou, Director at the Department of Merchant
Shipping, is more philosophical about the situation. “The Cyprus shipping sector experienced a spectacular growth over the last two decades
with the shipmanagement sector and the Cyprus Ship Registry flourishing,” he added.
“However, over the last three or four years the growth of the Cyprus
Ship Registry has shown a slight downturn; partly due to the measures
taken by the Cyprus Government to improve the quality of the Cyprus
fleet and partly due to the Turkish embargo.”
Seghiou is clear that listing of the Turkish ban will positively affect
Cyprus shipping.
“The illegal and discriminatory restrictive measures imposed by the
Turkish Government on the Cyprus shipping industry since 1987 affects
not only the Register of Cyprus Ships, but also the port industry, the
shipmanagement sector, the professional services and generally the
maritime cluster.
“The Cyprus Government prepares factual reports with supporting
evidence for each case where these restrictive measures are imposed
and these are submitted to the European Commission as proof of
Turkey´s violation of its Customs Union Treaty with the EU. Also the
local shipping community works hard through international organisations such as the International Chamber of Shipping, International
Shipping Federation and the European Community Shipowners'
Association (ECSA) to keep up the pressure on Turkey to lift the measures.”
He went on: “The lifting of the Turkish embargo will create
favourable conditions for the expansion of the Cyprus Registry and the
re-establishment of the island as a transhipment hub in the Eastern
Mediterranean. It will also restore free trade and fair competition and
will be a positive step for the improvement of relations between the two
countries.”
But the Department of Merchant Shipping and the Cyprus Shipping
Council have their work cut out arresting the recent negative trend in
the number of vessels registered in the Cyprus flag. This is partly due
to the stricter registration rules, the withdrawal of the single hull tankers
and the policy that the government of Cyprus has implemented in order
to prevent the registration of substandard ships and to improve the
FRANKLYSPEAKING
Cyprus is a major centre for third
party shipmanagement – it has been
for many years: indeed, many of the
world's major players have their
headquarters on the island
image of its fleet. However, as already mentioned, the loss of vessels
from the flag is mainly attributed to the continuing Turkish restrictive
measures on Cyprus flag vessels.
Furthermore, a significant decrease of fishing vessels has also been
observed, as a result of the EU policy to protect the marine environment
/fish stocks by restricting the number of fishing vessels registered and
operating in the EU area and compensating fishing companies for withdrawing and scrapping fishing vessels. .
Cyprus is a major centre for third party shipmanagement – it has
been for many years: indeed, many of the world's major players have
their headquarters on the island. But active marketing by national flags
such as in the UK and Germany through tonnage tax incentives and by
competing shipmanagement bases such as Singapore, hoping to attract
shipmanagement expertise through the lure of tax advantages, has seen
Cyprus is stabilising rather than increasing the number of vessels managed from its shores. And it is a worrying trend, if not publicly for ➩
Capt Peter Bond
General Manager, Interorient Navigation
“I have no problems in attracting cadets:
we’ve got 70 at the moment and we’re taking
on another 70 or 80 next year so getting people to go to sea from the Philippines for example, is not a problem. The problem we have
right now is over the next two or three years
we are going to need 1,000 seafarers. Three
years ago we didn’t know we were going to
have the growth we’ve had. If we’d have
known that three or five years ago, we’d have
started a bigger cadet programme and now
we’d have at least junior officers coming
onstream. So we have a problem right now in
all of us finding these people that we need that
actually don’t exist because that 10% shortage
is there.
“We’re offering incentives like everybody
else but we don’t have any miracle cure for
this issue and it’s going to get a lot worse in
the next two or three years while this growth
is going on.” ■
39
CYPRUS
the government, but for the defenders of Cyprus's claim to be a major
maritime centre.
A scathing report by Germany auditing office the
Bundesrechnungshof into the tax revenue losses imposed by the country's tonnage tax system could not have come at a better time for the
shipping folk on the sun soaked Mediterranean isle of Cyprus.
Because if the Bundesrechnungshof gets its way, not only would the
system that allows tax-free status of fees paid to some partners of oneship companies in return for managing the vessel be ended, but the
German economy will begin to realise again the tax revenues lost over
the years because of the system, estimated at €1bn ($1.28bn) for 2004
(the last available year on record).
More importantly for Cyprus, abolition of the scheme would help to
plug the hole in the management pipe that has seen more and more vessels move away from Cyprus to more attractive tonnage tax locations
like Germany.
As a director of the Department of Merchant Shipping, it is Serghios
Serghiou's job to be upbeat about the strength of Cyprus as a maritime
centre, so it is hardly surprising he is a little dismissive of the impact
the tonnage tax regimes in other parts of Europe has had on Cyprus.
“Even though the pressure coming from Germany and the UK in
respect of the tax incentives offered by those countries is increasing,
Cyprus remains a dominant shipmanagement centre. The success of
Cyprus as one of the leading maritime centres is not exclusively attributed to the favourable tax regime but to other advantages as well. The
low set up and operating costs for companies, the generally lower office
rents and construction costs, compared to other European countries, the
availability of competent local employees, the high level of professionalism in the legal and accounting sectors, the excellent banking services and the existence of double tax treaties with more than 40 countries
are important factors, which positively affect the decision of a ship
manager. A successful businessman examines all parameters before taking a decision.”
Nigel Cleave, ex-Group Managing Director of Dobson Fleet
Management and now Chief Executive Officer of Epic Ship
Management (ESM), is convinced it takes more than a mere tax incentive to erode an industry that has taken years to establish.
He told SMI: “I firmly believe that the traditional ship managers on
the island are here to stay, despite the competition from emerging countries such as Singapore. In the case of Epic Ship Management, we have
offices in both countries. A vast infrastructure has been built up over the
past 30 years with a large experienced local support staff contributing
greatly to the success of the Cyprus shipmanagement community.”
This was a view echoed by Andreas Droussiotis, Chief Executive
Officer of Hanseatic Shipping and President of the Cyprus Shipping
Council who went even further by suggesting that Cyprus was extending its influence in the third party shipmanagement sector.
“Cyprus' position in the shipmanagement industry remains as strong
REGIONAL FOCUS
Cyprus’ position remains strong as a shipmanagement centre. The key reason is that
there are a large number of educated,
well-trained, English speaking staff here.
In CSM's case, 80% of our staff are
Cypriots and they are certainly critical to
the success of our business
as ever. In actual fact the companies are becoming bigger with the extra
tonnage they are taking on,” he said.
He added: “Cyprus is undoubtedly the biggest third party management centre internationally if you consider the number of vessels and
the tonnage managed and controlled from its shores.”
According to Droussiotis, 2,200 ships of 40 million dwt are managed
or operated from Cyprus. “This on its own is far bigger than any of the
large ship registries and nearly three times the size of the Cyprus flag.
It is not only the German/UK and Singapore systems that are trying to
attract extra business or rather retain the vessels under their flag. It is
happening all over. We have not lost much from here due to the new tax
systems established in Europe and Asia.”
But can the Cyprus government do more? Of course, every government can always do more,” said Dirk Fry. Managing Director of ➩
CYPRUS
Columbia Shipmanagement, “but in comparison to many other countries we cannot
complain about being ignored,” he said.
Conceding that the Cyprus government
has been helpful in at least listening to the
industry’s views, Andreas Droussiotis
stressed that the government machinery
can be slow in moving. “We continuously
exercise our right for constructive criticism and succeed in convincing the government how things should be handled on
various issues. We even managed to maintain our competitiveness even after our
accession to the European Union but we
want to continually improve and believe
me we have a very open communication
with all ministries involved, be it
Communications and Works, Interior,
Labour and Social Insurance. Even the
president of the Republic shows a very
keen interest in the shipping industry,” he
added.
Capt Peter Bond, General Manager of
the Cyprus-based ship owner/ship manager and crew manager Interiorient, believes
the number of ships that are managed in
Cyprus certainly has reduced over the past
2,200 ships of 40 million dwt are
managed or operated from Cyprus.
This in its own is far bigger than
any of the large ship registries
and nearly three times the size of
the Cyprus flag
REGIONAL FOCUS
recent years because of the tonnage tax
system operated in Germany. If the
Germany government was to change
tomorrow and the tonnage tax scheme was
to be scrapped or changed in a big way
those ships would be back here the next
day because we’ve all still got our offices
here and that’s the way it would go.
“From our own company's point of view
we are a genuine bone fide Cypriot-owned
owner/operator so yes we have a Hamburg
office with ships involved there but we have
a big structure here, a new office soon over
the road and this is our headquarters. We’ve
got another five offices around the world.
So whatever happens to the other shipmanagement companies will not really have any
impact upon ourselves,” he added.
But is there a slow reduction in the
number of vessels being managed for the
island largely because of the tonnage tax
benefits that exist elsewhere?
“If you look at the newbuilding orderbooks, you will see see there’s an awful lot
of ships being built for Cypriot interests so
all those ships are going to remain in
Cyprus and that’s going to be adding ➩
43
REGIONAL FOCUS
CYPRUS
While the Turkish embargo may have been
a factor in the decline of tonnage
registered in Cyprus in recent years, so
has the effort to improve the safety record
of the flag been a positive development.
Indeed, EU membership has been the
necessary incentive for Cyprus to get
its house in order
to the number of ships that are managed from here,” he stressed.
While the Turkish embargo may have been a factor in the decline of
tonnage registered in Cyprus in recent years, so has the effort to
improve the safety record of the flag been a positive development.
Indeed, EU membership has been the necessary incentive for Cyprus to
get its house in order. This year saw the flag promoted to the Paris
MOU on the Port State Control White List, a promotion greeted with
some satisfaction on the island. It will, in many people's eyes, have consolidated the island's credentials as a quality shipping hub.
“Cyprus' position remains strong as a shipmanagement centre,”
added Dirk Fry. “The key reason is that there are a large number of educated, well-trained, English speaking staff here. In CSM's case, 80% of
our staff are Cypriots and they are certainly critical to the success of our
business. Very few other shipping locations have such an abundance of
talented shipping people. Of course, other locations are looking to make
themselves more attractive, but to create the pool of experienced shipping staff is not so easy.
“As to tonnage tax schemes etc, the Cyprus scheme is a positive ben-
You don’t see so many third party ship
managers grabbing for business: we all
have our own main clients and we tend to
stick with them. It is about working more
closely and cooperating with the owners
rather than just offering them a cheaper
option for managing their ships
efit and should be kept. For overseas schemes, such as the German tonnage tax, there is no doubt they have had an impact in that companies
such as ours have had to move tonnage to alternative locations, in our
case our Hamburg office, but we see this as additional business with
minimal disruption to our Cyprus operations,” he stressed.
But how strong is business at the moment considering the pressures
being faced by companies on the island and where are enquiries coming from? “Enquiries continue to flow in, particularly for tanker management,” replied Dirk Fry. We are looking at a number of projects in
Greece and North Europe and our business in the Far East is growing.
Interestingly also, the number of projects coming out of the former
Soviet Union countries is growing. We also see our newbuilding supervision services expanding, particularly for ships being built in China
where we have a strong organisation covering many yards. We have
now built or are in the process of building more that 200 ships since
1984.”
Captain Peter Waller, Group Managing Director of Dobson Fleet
Management, emphasised that while it was essentially business as usual
for Cyprus-based ship managers, working practices of the main players
on the island was changing. “You don’t see so many third party ship
managers grabbing for business: we all have our own main clients and
we tend to stick with them,” he stressed. “It is about working more
closely and cooperating with the owners rather than just offering them
a cheaper option for managing their ships.” He told SMI. Even if this
means coming together with your owners regularly through
manager/client forums to discuss and identify what needs to be done
and how best to achieve it. ➩
44
REGIONAL FOCUS
CYPRUS
If you get more ships on management you
have to make sure that you have the
resources and the Schulte Group as you
know share a number of manning agencies. With the market growing the way it
is, it is wise to increase that number
Aart Broek, General Manager at Navigo Shipmanagers, remains convinced that the biggest problem facing ship managers on the island is
not the tonnage tax issue or the Turkish ban but the crew shortage problems in the industry as a whole. But if you look after your people they
will generally remain loyal to the company they have working for. “Of
course you have to watch the salaries don’t get out of hand but people
will generally remain loyal if you treat them well.
Navigo has identified the crew supply side as its core business and
has outsourced its technical management activities to its sister company Atlantic Marine. Indeed, Aart Broek and his team would like to double the number of vessels they manage from 50 to 100 and create more
manning agencies for its parent company, the Schulte Group.
“The priority is just to increase the business,” he said. “If you get
more ships on management you have to make sure that you have the
resources, and the Schulte Group as you know share a number of manning agencies. With the market growing the way it is, it is wise to
increase that number.”
Eastern Europe and the Far East are obvious choices for developing
manning resource but specialists like Navigo are looking further afield
to new locations like South Africa. “I’ve not set myself a target with
specific vessel numbers, because it starts with the buying of the vessel
but the aim especially is to grow, to have a solid base. Ideally I do not
want to have clients who are larger than 10% of my turnover. Its not
good for me and its not good for the client.”
This is in stark contrast to Columbia which has refused to eschew the
benefits of offering full management services. As Dirk Fry stressed:
“Crewing is becoming more of an issue for the industry, of that there is
no doubt. We are not immune from the problems being faced. We are
certainly meeting our current requirements but our focus is now even
more on full management rather than crewing-only contracts.” ➩
47
CYPRUS
REGIONAL FOCUS
Crew competence and training is essential, agrees Robert Thompson,
Fleet Director and Deputy Managing Director of Unicom Management
Services. The company is introducing loyalty schemes for its seafarers.
Unicom employs over 4,000 Russian and Ukraine seafarers for its
managed fleet. Its crewing offices in St. Petersburg, Novorossiysk,
Odessa, Vladivostok and Riga are fully accredited under ISO Standards
and managed by ex-Unicom seafarers. To ensure the highest professional standards are maintained on board, the training of officers and crew
is continually under review. The company has recently diversified into
third party management which after ten years as sole managers for JSC
Sovcomflot is a major step forward, which it claims is already paying
dividends in both third party crew and technical management.
“It’s just training, training and training isn’t
it. We have to continue training. We’re looking at our own centres. We’re opening our
own office in St. Petersburg possibly next
year, so given that we have that sort of space
it may be possible and may be feasible to start
our own training centre within that building.
We’re certainly looking at other alternatives,”
said Mr Thompson.
So how important is Cyprus as a shipmanagement centre?
“Well infrastructure wise it’s still cheaper
to have an office in Cyprus. There is plenty of
local support regarding accounts and administrative staff but not so much for the technical
side. If we can get the tax issue sorted and the
immigration policy sorted then I don’t see any
reason for people to leave,” he concluded. ■
To ensure the highest professional
standards are maintained on board,
the training of officers and crew is
continually under review. Unicom has
recently diversified into third party
management which after ten years as
sole managers for JSC Sovcomflot this
is a major step forward
DISPATCHES
SHIPPING
BUSINES S
REPORTS
FROM
AROUND
THE
WORLD
Seafarer Conundrum
Lucrative Lucre … a ratings to riches story
Seafarer wages are spiralling out of control, so say the owners and managers who have to
foot the increasing wage bills. But are Filipino Captains really earning four times the
salary of their Prime Minister and if so, how is this new found wealth affecting their lives?
We went to the Philippines to find out.
C
aptain Julio Arcenal, 53, has not
always been a ship's master.
Prior to pursuing his seagoing
career through the Manila-based
C. F. Sharp Crew Management,
he worked as a bank security
guard to finance his way through his degree
course before graduating with a Bachelor of
Science Degree in Marine Transportation. His
family were farmers in Lucban, Quezon, a
province 92 km South of Manila, making his
progression up the maritime ladder that much
more impressive.
50
His decision to go to sea in 1975 as a deck
cadet was influenced, he says, by the 'lucrative
income' on offer and by a desire to 'see the
world for free'.
“A seagoing career is highly regarded in the
Philippines because of the high income compared to other professions,” he explained candidly. “In my case, when I started as a deck
cadet onboard ship, I was receiving a monthly
wage of $350. As a Master Mariner I am getting $6,000 to $7,500 per month depending on
the company I work for.”
Such a salary, which is way above the
Philippine national average, provides Captain
Arcenal with what he describes as a “high standard of living which is much better than most
people in the Philippines.” This is no doubt
great news for his wife and four children: three
daughters and one son in particular, who has
followed him to sea.
Captain Arcenal said: “I recently signed a
new contract to be Master of a bunkering vessel operating out of Gibraltar on a salary
of $6,000 per month. When I first became
Master in 1985, my salary was $2,500.”
A salary, he claims, compares very favour-
CREWING
“I have enormous
respect for every one
of my officers and
crew members as
well as other people
involved in this type
of job”
ably with other wage levels in his country.
Ratings onboard ocean-going vessels can
receive around $1,300 per month while a similarly qualified position ashore, perhaps a
labourer, will typically command a monthly
salary of only $250. “My new contract is worth
some six times the $1,000 per month a local
Port Captain can earn. Coastal Masters earn a
monthly salary of only $1,600,” he said.
Graduating from the Philippines Maritime
Institute, Captain Arcenal’s march up the ranks
has been matched by his progress up the social
ladder. He now has two homes – a three-story
property in his home-town of San Pedro,
Laguna and a two-story family house in Manila
– and drives a brand new 10-seater Izuzu
Crosswind XUVi. “Lucban, Quezon has a good
climate just like the weather in Baguio City, the
summer capital of the Philippines, with lush,
green forest and no pollution, Captain Arcenal
explained. “San Pedro is a nice place also, near
Laguna de Bay lake.”
The tropical paradise of home must seem
like a far cry from the bridge of the Saudi
Arabian product carrier where Captain Arcenal
spent time after gaining his masters certificate,
but it is his long experience at sea that he
believes has given him the lifestyle and status
he holds today.
However, despite his wealth, Captain Arcenal
has retained a level of modesty and maintains a
good relationship with those who serve under his
command. “I have enormous respect for every
one of my officers and crew members as well as
other people involved in this type of job,” he
said. “I enjoy my job immensely, particularly
manoeuvring when we
dock or undock.”
The Philippines is
presently the world's
largest supplier of seafarers, providing some 20%,
but is not producing senior
officers in the numbers
needed. However, it does
have the potential to do so
as long as the calls from
local crewing agents for
ship owners and managers
to work with them and
invest in training are heeded.
The manpower supply industry in the
Philippines is a mature one with the infrastructure already in place. It does have problems but
with the present national economic situation it
is likely to be a supplier for a long time to
come. During times of political upheaval the
supply situation does experience slight hiccups.
For owners it could be the most economic solution to the shortages in the short, medium and
long terms.
Many companies are training Filipino cadets
through the ranks to Master, but there are still
some sections of the shipping industry that are
showing a distinct aversion to not only promoting Filipino seafarers, but refusing to use
Filipino masters.
An industry-wide shortage of qualified and
competent officers onboard ship has created a
poaching pandemic with allegations of owners
and managers outbidding each other by offering higher salaries to attract the right personnel
to man their ships.
Senior ship management figures cite the
sourcing of quality crew as the biggest challenge facing the industry. Indeed, Rajaish ➩
An industry-wide
shortage of qualified
and competent
officers onboard ship
has created a
poaching pandemic
with allegations of
owners and managers
outbidding each
other by offering
higher salaries to
attract the right
personnel to man
their ships
DISPATCHES
ONTHERECORD
Dr Peter Swift
INTERTANKO Managing Director
“Tanker owners are especially concerned
over the unfair and unjust treatment that seafarers regularly face – not only with unjustified detentions after accidents, but in routinely being denied shore leave and access to
and across terminals. They are particularly
incensed by the increasing tendency to criminalisation, especially in the case of accidental pollution. INTERTANKO members,
together with INTERCARGO members and
a few other like-minded organisations, have
demonstrated their commitment to stand up
for their staff (afloat and ashore) and to challenge the European Directive that would
criminalise accidental spills not only in
coastal waters but on the high seas.
“The tanker industry understands it has a
social responsibility to ensure the quality of
the governance structures of its industry and
has outlined various approaches that are
being taken to assist the development of
effective, fit-for-purpose legislation and regulations which have been properly considered and assessed and which, if adopted,
would be implemented promptly and uniformly. In parallel, the industry is seeking to
implement self-regulation through the introduction of guidelines, policies and procedures built around industry best practices.
While owners recognise their responsibilities, many similarly hope that governments
and their agencies would live up to theirs.
“The Poseidon Challenge is a further example of the tanker industry taking the initiative in bringing partners together and committing to continuous improvement.” ■
51
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CREWING
DISPATCHES
The effects of the imbalance in the demand and supply of qualified
senior officers is even more acute in sectors like LNG where some
Captains are commanding salaries approaching $300,000 per year.
As officers’ wage levels increase there is a fear in the industry that
the amount of time they spend at sea will drop and the shortage
dilemma will increase even further
Bajpaee Eurasia President and Group
Managing Director, recently warned that the
acute shortage of crew supply was being driven
by an increase in world tonnage, the criminalisation of seafarers and the worsening image of
shipping. Current estimates indicate that more
than 4,700 vessels will be built between the end
of 2006 and 2010, some 50% of which will
replace existing tonnage, which equates to
about 2,400 additional vessels requiring 10,000
extra officers and 60,000 more ratings. The fact
that today's ships are getting bigger and need
less crew numbers onboard is maybe stopping
this figure from being higher still.
Core to this decline in seafarer number being
arrested is more improved recruitment and training, but as SMI recently reported this is not happening and poaching of qualified personnel is
becoming more of a problem.
Indeed, the mass-newbuilding activity being
undertaken by the big Japanese and European
ship owners has intensified the problem of crew
poaching. As previously reported, Mitsui, NYK
and K. Line are openly set to introduce just short
of 400 ships to the world fleet by 2010 - with
some experts suggesting the actual number of
ships being delivered could be closer to and
potentially exceed 600. If you also consider the
newbuilding activities of the main European
ship owners then the potential seafarer shortage
situation becomes even more acute.
In reality, each new vessel entering the market will require between 15 and 20 officers, a
figure the existing training facilities will
struggle to meet, it is claimed. “If you just
look at the four senior officers onboard and try
to figure out the number of newbuildings
coming out coupled with the very limited
scrapping going on, the mathematics will not
work. From now until 2010 there is no way
you can recruit and train the number of new
officers that we are talking about here,” a
respected manager warned.
The effects of the imbalance in the demand
and supply of qualified senior officers is even
more acute in sectors like LNG where some
Captains are commanding salaries approaching
$300,000 per year. As officers' wage levels
increase there is a fear in the industry that the
amount of time they spend at sea will drop and
the shortage dilemma will increase even further.
As Capt Arcenal himself admits long periods at
sea can be a little tedious even with the attraction
of the higher wages in place.
And the lure of the sea is further diminished
by the ever increasing level of paper work which
Captains and other officers are required to
undertake. “Since the implementation of ISM
you must follow the Safety Management System
onboard to meet the standard safety procedures
all the time and that entails too much paper
work,” Captain Arcenal said.
Money has clearly been an incentive for
Captain Arcenal's only son to follow him into
the profession. He is now a licensed Third Mate
and is connected with the All Ocean Shipping
Company, having graduated from the Philippine
Merchant Marine Academy in 2003.
“I had no problem recommending a seagoing
career to my children,” Captain Arcenal admitted. “My only son followed in my footsteps as a
seaman because of the lucrative income as well
as seeing the world for free. I would very definitely recommend a career at sea.”
While money has allowed the family to enjoy
extra status and comfort at home, living conditions for Filipino seafarers have also improved at
sea. Captain Arcenal believes increased training
standards have been a catalyst for this improvement. “Maritime Schools required additional subjects in the curricula to better equip students for
the courses they are taking. In addition, upgrading SOLAS training was required by the
Professional Regulation Commission prior to the
issuance of an endorsement and Certificate of
Compliance (COC),” he said.
“There has been a very big improvement in
conditions for all Filipino seafarers. Conditions
for Filipino officers are better now than they
have ever been because of the improved working condition as well as the lucrative salary
being offered by agents and principals abroad,”
Captain Arcenal explained.■
The lure of the sea is further
diminished by ever increasing paper
work which Captains and other
officers are required to undertake.
“Since the implementation of ISM
you must follow the Safety
Management System on board to
meet the standard safety procedures
all the time and that entails too
much paperwork”
53
DISPATCHES
CREWING
Seafarer Conundrum
A new kind of warfare By Emmanuel Vordonis
New ships are coming
onto the market:
owners are taking
delivery of huge
fleets and in order
for the ships to be
staffed we’re going to
get into warfare on
prices and wage
increases to attract
the seafarers
T
hird Party shipmanagement companies have grown in presence
over the past few years and they
have earned the respect of the market. If you see two ships competing
for the same cargo: one of them run
by a more traditional owner and the other operated by a reputable third party manager, they
can both compete equally for the cargo. This
means that because the market recognises that
ship managers are here, then they are here to
stay because they have created that trust, which
is very important.
But the nature of responsibility in the shipping industry is changing. You can have a situation where the wife of one of your captains
54
receives a call at home from a ship manager
saying: “Why is your husband still working for
that small ship owner? He has been there for 20
years – is he not bored? Tell him to join us – we
can give him 50% more salary. We have 100
ships, 1,000s of opportunities, many principals,
many systems, great training initiatives: why
doesn’t he come and join us?”
You can also have the situation where a
young banker goes to New York and delivers
such strong presentations to the US investors
that he convinces them to give him $1bn which
he uses to buy 30 ships. He then says to the ship
manager: “Hey, I know you are good but I'm a
banker and I've got 30 ships which are going to
be delivered two a month. Get me the best
crews there are in six months time and get them
from anybody at any price!” What can the ship
manager do?
The only option available is to go out into
the market and to pinch and steal people from
everywhere. That’s an immediate solution and
we have to recognise that we have an open
market. We cannot be romantic about the situation but have to confront the real situation. New
ships are coming onto the market: owners are
taking delivery of huge fleets and in order for
the ships to be staffed we’re going to get into
warfare on prices and wage increases to attract
the seafarers.
So the question I want to pose is - where
does this lead us? Because while we talk about
training and solid recruitment for the future,
what are we doing for the next six months or
the next year? And the ships are coming now.
Lets look at the facts. Salaries in Norway can
be $10K, $12K, $14K, $16K per month, mainly because of the cost of living. But seafarers in
the Philippines earning $4K-$5K per month are
bringing home three times more than their
Prime Minister. In Bulgaria a Professor at the
university will earn $600 per month while a
captain who used to get up to $6K per month is
seeing his salary jump to $10K or $12K per
month. What is the impact of this on the local
communities or to the brain of the Captain or
the Chief Mate, to his wife and his children
when just overnight he has doubled his salary?
That’s one issue.
Another issue to consider is that demand is
high now and we have gone through a long
period of high income. High income together
CREWING
with extremely expensive investment. The ship
we used to buy for $35m is now $90m. Is it the
real cost of the ship? Absolutely not! There is
a demand for ships and there’s a high price for
ships. The cost of the ships is still determined
by the cost of the Chinese welders earning
$200 or $300 per month but the market will pay
more because of market forces.
The problem is more acute in those companies that have undertaken the responsibility to
manage large fleets. Global ship managers
based in Glasgow, Singapore or in Kiev can file
a computer request for a second engineer. This
request floats through the internet to the
recruiting offices in Odessa, or in Vietnam or
Bombay and they begin bidding.
People are being traded through the internet
like commodities and does this make them
happy? I think not.
Our experience in my company is that out of
the people who left and then returned, they
came back because they said they were happy
here. They knew the systems, they knew the
people and they knew the chief engineer and
the captain and they were familiar and happy
with the structure of cross-national co-operation. By moving to another ship, they had to go
into this new United Nations environment and
had to pass once again through the process of
cultural cohesiveness and they were not happy.
They had to change their habits of eating, they
had to adapt to changes in the way they were
treated onboard ship.
The historical arrogance of the European’s
has been reversed and I have heard of instances
where Bavarian and Greek seafarers who have
served on an Indian-controlled ship have experienced extreme arrogance from the Indian
Captain to the extent that they were treated as
second rate citizens. Why? Because it’s time
for people to mingle and understand the difference of their cultures and work together as a
group and as equals. It takes time and problem
can arise when you take this experiment of
mixing nationalities without taking the time to
co-exist and co-operate. So this is one side of
the problem which I call the changing nature of
our responsibility. It’s great that ship managers
- and I put myself into this group, have worked
hard to create trust.
We have to think of ways to solve the shorter immediate problem of meeting this demand
for highly competent seafarers and how we
help them to mingle and co-operate. It's as
important a challenge as that of recruiting and
training seafarers for the next decade ■
DISPATCHES
It’s time for people
to mingle and
understand the
difference of their
cultures and work
together as a group
and as equals. It
takes time and
problems can arise
when you take this
experiment of mixing
nationalities without
taking the time to
co-exist and
cooperate
55
DISPATCHES
PSC
A day in the mind of a port
state control inspector
Port state control detentions can put a black mark on a ship operator's profit as well as its reputation. But
are inspections really something to be feared? Andy Pierce joined a vessel inspection to find out what
today's inspectors are really looking for
A
fter 20 years at sea serving on
bulk carriers, oil tankers and a
host of other vessels, Port State
Control Inspector Captain Phil
Thompson has one thing in his
sights – Arthur Scargill. “I’d like
to see him hung drawn and quartered,” Phil
tells SMI as we drive towards the UK port of
Immingham on a cold October morning. A
broad smile spreads across his face – he is joking, of course. I have known the man for less
than an hour and, despite his chatty nature and
good humour, it is clear he takes the demise of
British industry, specifically shipping, very
much to heart.
Shipping is in Captain Phil’s blood. He talks
with passion and understanding about the
industry he has served throughout his working
life. Port state control inspectors certainly
aren’t your average civil servants. “Surveyors
come from three sources: Sea Captains, Naval
Architects and Chief Engineers,” explains
Gwen Evans, Surveyor in Charge at the
Maritime and Coastguard Agency's (MCA)
Hull Marine Office (Beverley). “Everybody
has had a previous life.”
The vessel Captain Phil and colleague Ian
Harvey are due to inspect is the Hong Kong
flagged, 87,863 ton bulk carrier, Unique
Alliance. It has a low target factor (a computer
generated number derived from ship type, age,
size, class, inspection history and the date of its
last inspection), but it has been targeted today
as it is set to leave the Paris MOU for Brazil.
“We are actually providing a service for the
ship,” former Chief Engineer Ian tells me. “It
operates a lot in South America and if it goes
out there and isn’t inspected within a 12 month
window its target factor will be say 21, not one,
so it will be targeted straight away.”
As we board the ship, the team still has very
limited information and little idea of what we
might find. “No inspection is the same and we
can’t cover everything, it’s just not possible”
Captain Phil says. “We will just take a look
around and get a feel and look, initially, at the
general cleanliness of the vessel. We look at the
galley and observe the standard of food and
hygiene - that can be a good benchmark - it cer-
56
tainly helps us to identify trends. On the bridge
I start with the magnetic compass, look at chart
corrections, bridge and navigation records to
get a general feel and see if anything catches
my eye. Sometimes you can spot something,
and then just by asking questions, it can lead to
a whole lot of problems.”
As we are greeted by the crew, I’m aware
these early exchanges are critical. With some
inspections, problems can start the moment the
inspectors board the ship, with the crew making every effort not to cooperate. These difficulties, which are often accentuated by language barriers, will never benefit the crew. Any
resistance or attempts to disrupt the inspection
will only ever result in the port state control
team digging deeper. “If we
have a problem communicating with them, you wonder how good their communication is with each other.
This can certainly affect the
inspection,” Ian admits.
Fortunately for us, the 18
strong, all Indian crew
onboard
the
Unique
Alliance is willing to cooperate and have an excellent
command of English.
However, judging by the
slightly fearful look in their
As we board the
ship, the team still
has very limited
information and little idea of what we
might find. “No
inspection is the
same and we can’t
cover everything, it’s
just not possible”
PSC
“The whole reason
for port state control
is to create a level
playing field. We
don’t want to
penalise good ships we want to improve
bad ones”
eyes, their initial readiness to help is perhaps
driven by their fear of making a mistake.
During a thorough inspection of certificates in
the officer's lounge, the Master Captain Vaz,
explains what may have caused this anxiety
amongst his crew. “Some countries use port
state control as a tool to make a quick buck. In
the third world, where everybody needs money,
they come onto the ship and find 25 to 30
faults. Then the owner and the master are on
their knees, and both sides will want to keep
each other happy – it is a chain,” he says.
Fortunately, communication today is a twoway process, and things are going to plan. “We
are all professional members of the marine
industry,” Captain Phil says. “We have got to
be reasonable and practical as we know we are
SPEAKINGTHETRUTH
“Although in the past the Paris MOU had
no official status within the International
Maritime Organisation, the achievements of
this regional agreement on port state control
have certainly had an impact on rule-making in the IMO.
“Not only has the alarming statistical
information on sub-standard ships been an
incentive to finally discuss the implementation of international regulations by flag
states in a special sub-committee, but the
success of the Paris MOU has also promoted the establishment of other regional
agreements on port state control.”
Andri Bruijn, Assistant Secretary,
Paris MOU on Port State Control
dealing with professional seafarers. We have to
respect that this is their home. When we find a
problem, it is not a solution to quote rules and
regulations and walk away. We need to adopt a
very pragmatic approach. This is where knowledge and experience comes in.”
As Captain Phil and Ian tour the ship their
experience certainly comes into play.
Everything from the life boats and the oxygen
tanks to grease nipples, rubbish bins and the
temperature of the hot tap draws their critical
eye. But they are not looking or expecting to
find major defects. A single missing lifebuoy or
a self-igniting light that isn’t working might
represent a trend of poor safety standards or
sloppiness – an avenue for investigation.
Captain Phil in particular has a fixation with
“good housekeeping”, believing it to be a fundamental part of setting good standards
onboard. A rope strewn across the deck results
in a quick dressing down for the officer responsible, but, I am assured: “We’re not getting at
the crew – it’s ensuring good seamanship – it’s
for their own benefit.” Particularly after the
Chief Officer admitted that his noticeable limp
was due to a recent slip, trip and fall.
Following their initial concern the crew
appears to appreciate that the surveyors are not
trying to trick them. It’s interesting to watch
Captain Phil and Ian’s relationships with the
crew develop throughout the day. The crew is
subjected to a torrent of questions and their
ability to respond appears to earn them the
respect of Ian and Captain Phil. The growing
banter onboard is a mark of the respect that
evolves between all parties. “If the ship is in
good condition then there is no need to bullshit,” the second officer says. “If the ship is in
a bad condition then it is, ‘Sir, come this way,
or Sir, come that way’, to distract [the surveyor] and keep our secrets. But there is no need
here – this is the best ship I have sailed upon.”
The crews’ ability to think on their feet certainly shows when they have the presence of
mind to update the Fire Safety Plan with a new
crew list, which Captain Phil had found to be
out of date during the initial certificates inspection. This sort of foresight will certainly do
them no harm in the minds of the surveyors.
DISPATCHES
However, despite the best efforts of the crew,
problems do occur on even the best equipped
vessels. Captain Phil has recently come across
a number of vessels with embarkation and pilot
ladders certificated in the Far East, but do not
comply with the requirements of IMO or
SOLAS. “It’s not the fault of the crew, it’s the
fault of the authorities,” I am told.
When the inspection is complete the team
sits down with the Captain to discuss what they
have found. As expected they have no need to
detain the vessel, but the feedback session still
takes around an hour to complete. Yet at the
end of a long day Captain Phil still sees the
value of the exercise. “We shouldn’t be here to
demotivate people, we should strive to motivate them,” he says. “The whole reason for port
state control is to create a level playing field.
We don’t want to penalise good ships - we want
to improve bad ones.” Arthur Scargill still has
more to fear from Captain Phil than a good ship
owner it would seem.
Many thanks to the MCA, the staff at the Hull
Marine Office (Beverley) and Captain Vaz and
Thapuyal crew of the Unique Alliance. ■
SMI's Top Tips
to avoid detention
•
•
•
•
•
•
•
•
•
•
•
•
Cooperate with port state surveyors
Good housekeeping indicates an
interest in your own environment
Keep good basic standards – it will
stop inspectors digging deeper
Have procedures in place and stick
to them (be compliant with your
ISM & SMS)
If you make ANY engineering
changes onboard, be sure to notify
class and flag
Keep up-to-date certificates and
records
Ensure that the ship complies with
relevant conventions
Keep maintenance records up to date
Effective communications between all
crew members
Know how to safely operate your
equipment
Good relationships with shore
personnel
Ensure a safe and habitable working
environment for all crew onboard
57
TRADE ANALYSIS
DUN & BRADSTREET
C O U N T RY R I S K L I N E R E P O RT
Singapore
RISK FACTOR
The short-term economic risk outlook remains
favourable in Singapore. For shippers with
credit risk horizons of 90 days or fewer, the
outlook is particularly favourable thanks to the
recent expansion of economic activity which
has pushed the capacity utilisation rate of
Singaporean industries to multi-year highs, in
a welcome development. However, assuming
our global forecasts are realised, the coming
moderation or correction in global growth
holds out the possibility of the Singaporean
economy plateauing at the current high activity levels or returning to the more muted
demand conditions of 2004, slightly increasing
credit risk as 2007 progresses.
The Ministry of Trade and Industry recorded
a 7.2% year-on-year (y/y) rise in real GDP in
Q3 and a 5.7% annualised increase on Q2.
This was a little below market expectations but
demonstrated a vigorous expansion in the past
quarter. Domestic demand, which tends to lag
the external trend in Singapore, rose 8.0% y/y
compared with its growth of 4.9% in Q2 2006,
as private consumption firmed. This is likely
to have been due to a tightening employment
market. Total employment rose 41,600 in Q3
2006, an increase almost as large as the 45,000
increase of Q1 2006. Manufacturing, services
and construction each saw gains in employment, with services adding 24,600 jobs, while
58
the construction sector, which until quite
recently had been beleaguered, added 5,500.
This helped to reduce unemployment to 3.2%
and 2.4% for residents and total population
respectively, compared with 3.8% and 2.9% in
Q3 2005. Meanwhile, total population was up
3.3% y/y in June 2006; Singapore is attracting
more labour immigration, presumably from its
usual sources for labour such as Bangladesh
and the Philippines. These indicators all support a positive outlook.
However, leading indicators present a more
mixed picture. Q3 real GDP growth was supported by 10% y/y growth in external demand;
if external demand growth fell far into singledigit territory, domestic demand growth would
have to be well above 8% to keep the current
level of economic growth. Non-oil domestic
export growth appears to be moderating to low
single-digit levels, growing by just 3.8% y/y in
October 2006. Moreover, non-oil retained
imports of intermediate goods contracted for a
third consecutive month in October 2006, by
16% y/y, reflecting declining imports for the
IT industry, while semiconductor inventories
are up, and should curb industrial output in Q4
2006 and Q1 2007. Meanwhile, the composite
leading indicator showed its first quarter-onquarter dip for seven quarters in Q3 2006. In
this context, much will now depend on the
short-term trend of demand in the US, Japan
and China. In the first two markets, forecasts
for 2007 are being reduced; consequently, our
forecast for real GDP growth for Singapore in
2007 remains cautious.
USUAL TERMS
MINIMUM TERMS:
OPEN ACCOUNT
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:
Sight Draft
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:
30-60 days
Normal period of credit associated with transactions with companies in the stated country.
Payments performance in Q3 2006 improved
on its level in Q2, with prompt payment
reported in 55.6% of cases, rising from 54.3%
in Q2. Payments made more than 30 days over
terms fell by just 1.1 percentage points to
32.8%. Two 'later' categories (90 and 120 days
over terms) remained stable at close to 3% and
10% respectively, a small minority of total
payment experiences.
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 month
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.
IMPORT COVER:
5.9 months
The amount of foreign exchange a country has
in relation to the average monthly value of
imported goods and services. Only liquid foreign exchange reserves from which a country
can service its import requirements are included in this calculation.
With a current account surplus that is worth
one-quarter of GDP, Singapore is a net
exporter of capital and accumulator of FX
reserves. Both its net creditor status and stock
of FX reserves grant it virtual immunity from
balance of payments pressures suffered by
external liquidity poor markets in the region
such as Indonesia. This is the more remarkable
for Singapore being such a geographically limited market.
DUN & BRADSTREET
This ‘DB’ Rating Indicates: Low risk
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 – Stable. The country's overall risk
outlook has not changed appreciably, even though some minor changes to its political, commercial,
macroeconomic, and/or external risk environment may have occurred
ECONOMIC INDICATORS*
2004
2005
2006f
2007f
2.9
8.7
6.4
6.9
4.2
0.5
1.7
0.4
1.2
0.2
Inflation
annual ave %
Govt balance
% GDP*
-4.8
-1.4
0.2
0.2
0.0
15.1
17.0
14.0
13.5
8.9
29.2
26.1
22.9
25.5
26.0
C/A balance
% GDP
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 trans-
Export Growth
%
DB2a
THE ‘DB’ RISK INDICATOR
2003
Real GDP growth
%
TRADE ANALYSIS
*Government balance figures are for fiscal years (April-March).
Payments Performance
parency, 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 and a commensurate expansion in business opportunities;
External risk - the current account balance, capital flows, foreign exchange reserves, size
of external debt and all such factors that determine whether a country can generate enough
foreign exchange to meet its trade and foreign investment liabilities.
(% of payments made 30 or more days over terms)
Q1 05
44.5
Q2 05
40.7
Q3 05
38.5
Q4 05
35.6
Q1 06
34.8
Q2 06
33.9
Q3 06
32.8
The DB risk indicator is divided into seven bands, ranging from DB1 (lowest risk) through
DB7 (highest risk). 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.
Local Currency (Singapore dollar [SGD]: USD)
Exchange Rates
1.64
(London, 28 Aug 06)
1.6
Euro
GBP
JPY*
USD
1.56
1.52
*(x 100)
Jun 06
Jul 06
Aug 06
Sep 06
Oct 06
Nov 06
2.9494
1.323
1.5569
1.9971
Glossary
KEY
CLC
CWP
FX
L/C
LT
MT
OA
SD
ST
Confirmed Letter of Credit
Claims Waiting Period
Foreign Exchange
Letter of Credit
Long-term
Medium-term
Open Account
Sight Draft
Short-term
Copyright
Copyright © 2006, Dun & Bradstreet. All rights Reserved. While the editors endeavour to ensure the accuracy of all information and data contained in this report, neither they or 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. 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.
REGIONAL FOCUS
HONG KONG/SINGAPORE
A force to be
reckoned with
espite soaring office rents and rising wages it is still
business as usual for the shipmanagement industry in
Hong Kong. And any attempt by Singapore to establish
a position of strength in the tanker management market
will only go to underline the strength of the region in
helping to dominate this growing market sector.
That was the general consensus of opinion of the shipmanagement
incumbents on either side of the South China Sea divide.
“Hong Kong has remained a prominent management centre for a
long time and I don’t see anything changing here in that respect because
all the advantages Hong Kong had before, continues to remain, noted
Kishore Rajvanshy, Managing Director of Fleet Management.
“These include the proximity with China, the good banking infrastructure, support facilities like brokers and insurance: all these support
services which are required for the operation of a ship,” he said.
As for local shore-based staff, they are here, very experienced and
very industrious. “So nothing has changed which would make Hong
Kong less attractive as compared to Cyprus or Singapore. The only difference between Singapore and Hong Kong is that the Singapore government is very aggressive and is trying very hard to double up
Singapore as a shipping hub and is giving lots of incentives to the companies who want to become established there, particularly in shipping,”
the Fleet boss stressed.
Singapore has always been a close rival to Hong Kong and according to Rajvanshy, the Singaporean government feels an element of contentment when a company from Hong Kong moves there. But where is
Hong Kong getting its driving force from?
D
60
“The countries providing maximum growth potential for the region
are Japan and China whose ship owners are opting more and more for
third party management. This is an understandable phenomenon in
Japan because the ships are becoming more complicated: the fleet size
of the country's owners is growing and the capacity to manage them out
of their offices in Japan especially by the smaller ship owning companies, is becoming more limited. There are people in Japan who have
been managing ships traditionally for years but they are getting old and
new people are not just coming in, there is little new blood coming into
the ship management industry in Japan. So they have no option but to
seek outside help from Hong Kong and Singapore,” said Kishore
Rajvanshy.
He went on: “Yes China as well, where the biggest potential is from
the crew side. The numbers of Chinese crew onboard foreign-managed
ships is growing very fast.”
Rajvanshy cited his company's own case where Fleet started to use
Chinese crew on its ships about three years ago and he admitted the
company was sceptical about the likely success of the first vessel we
took with a full Chinese. So sceptical that it put a superintendent
onboard the ship with the Chinese crew until such time as it was confident and comfortable with the crew onboard. “Three years later we have
increased the number of ships with full Chinese crew from one to 22
ships,” he said.
Why the sceptism? Well to begin with it was a fear of the unknown,
he said. “We had no idea what their temperament was, how capable
they were and how much could be relied on as far as their education and
training was concerned. Language and communication was also a little
HONG KONG/SINGAPORE
“The only difference between Singapore
and Hong Kong is that the Singapore
government is very aggressive and is trying
very hard to double up Singapore as a
shipping hub and is giving lots of incentives
to the companies who want to become
established there” Kishore Rajvanshy
REGIONAL FOCUS
bit of a challenge. A combination of all these question marks gave us
really a lot of concern as to whether these guys would be able to run the
ships or not and that’s why we had to go very slowly,” he added
According to the Fleet Management boss, experience has allayed
many of the concerns to the extent that the Chinese crews are now
praised for the ease to which they can be integrated into the onboard
management process. “They tend to accept everything which is told to
them by a charterer or by the operator,” said Kishore Rajvanshy.
But what about the language problems? “It’s getting better, certainly
it’s getting better. There is a lot of focus in China on improving the language spoken by the crew and that is showing some result.”
Ram N. Singh, Managing Director of the relatively newly formed
Northstar Ship Management is more philosophical about the interplay
between Hong Kong and Singapore as ship management centres.
He told SMI: “From our point of view, Hong Kong and Singapore
have always been major ship management centres. Hong Kong was
stronger because there were major ship owners here from where the
ship managers evolved.
“Whereas in Singapore, those ship management companies that were
set up there were essentially branches of existing businesses. In recent
years many important factors have come into play: incentives have been
given by the Singapore government to encourage companies to the
island and there is the passport issue: people live there can become
Singaporeans. And now the education facility in Singapore for people
of Indian origin and children of Indian origin, is better than Hong ➩
Kong so there are many Indians who prefer to work in Singapore.
“The last and a very important point is also the cost. Singapore is
still more economical than Hong Kong in terms of say rent of office,
home, general cost. Singapore certainly is becoming more, let us say,
attractive to the ship management industry than Hong Kong,” he added.
Are you saying that while Hong Kong will always have a major shipmanagement presence, more and more ships will start to be managed
out of Singapore? ➩
“Singapore is more economical
than Hong Kong in terms of say
rent of office, home, general cost.
Singapore certainly is becoming
more, let us say, attractive to the
ship management industry than
Hong Kong”
61
HONG KONG/SINGAPORE
“Yes Hong Kong is a major centre for shipowning, it is continuing
and it will continue but third party management ships, outside ships, are
slowly drifting towards Singapore because of the cost of living, the
environment, the Indian superintendent, the foreign superintendent. I
would say overall the environment in Hong Kong has been very good
except that the cost of the property which is something which I don’t
know how far the government can really influence,” he emphasised.
Mr Singh continued: “Shipmanagement, whether it’s small or large,
is concerned with the same identical requirements. The requirement of
one ship will also need to be met in the same way as a requirement of a
hundred ships or two hundred ships.”
“We have to have a certain minimum number of ships in order to be
financially viable to be able to continue as a self sustaining venture. So
unless somebody feels confident of getting that number in a very short
period, quickly, I don’t think people will venture into starting up new
ship management operations today. I would not have ventured unless I
had this assurance of this core customer so that is a requirement.”
Eurasia Group President and Group Managing Director Rajaish
Bajpaee is one ship manager who has experience in both centres and
sees strengths coming from both. “Both have the right mix of ingredients or requirements for shipmanagement which are strong airline connections, strong communications and banking and finance with the free
movement of cash in and out. They also have a very competitive workforce in terms of maritime knowledge and there is also a familiarity
with English. With Singapore coming out with favourable tax incentives, both have strong maritime clusters – brokers, lawyers, ship financiers and banks,” he said.
“The difference is that one is evolving with more of a market dynamic while the other is evolving more through the economic support of its
REGIONAL FOCUS
“Shipmanagement, whether it’s small or
large, is concerned with the same identical
requirements. The requirement of one ship
will also need to be met in the same way as
a requirement of a hundred ships or two
hundred ships” Ram N. Singh
government. That is the only distinction I can draw. Hong Kong is driven by how business is shaped by market forces and the government only
provides the right environment,. Singapore has a very strong direction
and support form the government in shaping its future,” he told SMI.
According to Anglo-Eastern Chief Executive Officer Peter Cremers,
Hong Kong still has the fundamental assets needed to be a quality shipmanagement centre.
“The fundamental asset is easy access for funds, people: it is centrally located, smack in the middle between India and Japan with our
clients close by and our crew supply nearby also. It’s still a very good
location. The locality has a lot of dedicated staff, that has not changed
and people are still hard working which may not happen at the same
level in Singapore so it’s still a very comfortable place to do this job and
people like to work here,” he said confidently. ➩
63
FAR EAST
REGIONAL FOCUS
“I could say tomorrow, let’s move
Anglo-Eastern to Timbuktu because
it’s a lot cheaper but without superintendents it’s going to be very diffi“If I am a couple of minutes late
Captain
Vandeperre
said
cult. So it is still a place where peopicking you up don't worry,” reasClipper would take over the manple like to work and live and it’s
sured Andy Wu, Univan head of
agement of the firm with a 75%
travel. “She is a grand old lady and
stake when the moment comes for
central and it’s practical. The one
can sometimes get a little bit
him to hang up his hat. The
disadvantage Hong Kong has is the
moody”.
remaining 25% would remain in
cost so with office rents and flat
The journey from Hong Kong
trust to fund Captain Vandeperre’s
rents going berserk that is a probIsland to Chep Lap Kok Airport on
philanthropic work in Thailand
lem, the cost of operating in Hong
Lantau is smooth, very smooth.
where he has donated a considerKong is a problem. But I always
Especially as I am travelling in the
able amount of his fortune to
share the view that the cheapest
back of a yellow Roll Royce. Not
schools, hospitals and temples.
place to do business is not always
just any yellow Roll Royce but one
He has, however, appointed a
the best place.
particular 30 year old Rolls Royce
successor in his Chief Accountant
“Singapore is slightly different.
that has become a symbol of ship
A.S. Maniyar who is beginning to
management presence on Hong
take over the reins.
Singapore is definitely more unproKong for the past two decades.
“Actually the question is, the
ductive than Hong Kong there is no
It is the property of Univan Chairman Charles
Captain has been running the company and everydoubt about it. There is the enorVanderperre who bought it nearly a quarter of a cenbody is worried that their ships are worth millions
mous influence of the ship so I’m
tury ago primarily as a PR stunt but it has remained
so everybody is wanting to know who is going to
not so sure there is the availability
an essential part of the Univan family ever since.
run the company should something happen to the
of people. It’s very competitive but
Vanderperre is shy about his epithet as the father
Captain, I believe that nothing will happen because
the availability of people is a little
of modern day shipmanagement. After all, he has
he is very strong and going strong I can assure
more critical.”
acted as a guiding force to the majority of today's
you,” said Mr Maniyar.
This is not a view shared by
top shipmanagers and at 85, or 86 if you accept the
“I personally do not foresee any major change in
Singapore-based Thome
Ship
Chinese assertion that you are one the day you are
the day to day management of Univan. The compaborn, he is still refusing to let the Univan reins go.
ny will be controlled by Clipper but all the principles
Management which is a firm believer
Vandeperre founded Hong Kong’s Univan
and the people running the company will still continthat Singapore is the right location to
Shipmanagement in 1973, after he had founded
ue to do so. I don’t foresee any major change.
manage vessels, certainly as far as
Wallem’s shipmanagement arm but he took the
“Every ship management company is generally
Japanese owners are concerned.
shipmanagement sector by surprise when he
run in the same style more or less, and if you want
A spokesman told SMI: “We are
announced in October that long-time client the
to remain in the business you have to follow the
looking at expanding into more
Clipper Group of Denmark had taken a 50% stake in
accepted practice. The captain is a pioneer in ship
offices, whether that will be through
Univan. “I’m getting old,” he was reported as saying.
management, he’s the one who started this conopening our own offices or to joint
“It’s important that the firm does not go with me.
cept in Hong Kong and everybody is following that
venture companies I’m not sure but
Clipper is a highly competent shipping outfit. The
so why should we change our own strategy?,” he
as we have announced earlier we
company will be in good hands.”
stressed. ■
have already made ready for managing vessels from the Philippines. Of course the company is growing, we
China coupled with its strong ship repair, engineering and offshore
are now managing close to 70 vessels in total and that’s getting close to
strength might have seemed enough to grow the shipping sector on the
the limit of what we should do from our office.”
island. But the Singaporean government has laid out the welcome mat
He added: “We are growing in Europe, we are growing in Japan but
in the form of tax incentives for those foreign companies slow to accept
Singapore is the right location to manage vessels by Japanese owners
the invitation.
definitely but for European and more specifically Scandinavian owners,
According to Jeremy Hayley-Bell, Managing Director of Eastern
maybe we should look closer to Europe.”
Product Carriers, since the formation of EPIC, the Singapore
Singapore's location close to the major trading giants of India and
Government has come forward with a number of tax initiatives ➩
Travelling in style, by Sean Moloney
65
REGIONAL FOCUS
FAR EAST
that have successfully attracted many owners and operators to either
establish a presence in Singapore or expand their existing presence there.
“As these tax initiatives have been directed at both ownership and shipmanagement companies, this has resulted in many Far Eastern owners
moving their base of operations to a more tax friendly environment. The
movement of tonnage to Singapore is, for the moment, probably having
only a marginal effect on management centres such as Cyprus and Hong
Kong mostly due to the large number of vessels delivering into the market requiring management services,” he stressed.
Mr Hayley-Ball continued: “The increased demand for shore-based
staff cannot be satisfied by the local market. Nevertheless, the
Singapore Government has duly recognised this and is allowing the
recruitment from overseas of superintendents and other specialist senior staff. Junior staff are available although in many cases they come
from a non shipping background and have to be trained.”
“The movement of tonnage to Singapore
is, for the moment, probably having only
a marginal effect on management centres
such as Cyprus and Hong Kong mostly
due to the large number of vessels
delivering into the market requiring
management services” Mr Hayley-Ball
Singapore's predominance as a
shipmanagement centre is matched
by its strength as a shipping
services location, boasting one of
the largest port groups in the world,
major ship repair and engineering
centres and ship supply companies
now stamping their mark on world
shipping
Keppel FELS, a wholly-owned subsidiary of
Keppel Offshore & Marine Limited (Keppel
O&M) and a major participant in the
Singaporean ship and rig building sector, has
delivered its first jackup drilling rig ahead of
time to Qatar’s national drilling company,
Gulf Drilling International.
Built to Keppel’s proprietary KFELS B
Class design, the first rig will be named AlKhor, after one of Qatar’s historical cities
which has contributed to the development of
Liquefied Natural Gas (LNG) in the country
in recent years.
Al-Khor has been built to GDI’s specifications for operations in water depths of up to
300 feet and drilling depth of down to 30,000
feet. The rig can accommodate up to 110 men
and is readily upgradeable for higher drilling
capabilities in water depths of up to 400 feet.
When delivered, it will contribute to the
development of Qatar's Liquefied Natural Gas
(LNG) industry, as the State strives towards
being the world’s largest exporter of LNG by
2012.”
The offshore sector is key to Singapore's
future prosperity with a number of its yards
servicing the needs of vessels employed in the
surrounding oilfields especially those off
Vietnam.
66
Smaller more specialised ship repair yards
like Kwong Soon Engineering are looking
forward to good times ahead on the back of
the strength of the offshore market boosted by
the world oil price. As one major player said:
“The market is so buoyant at the moment that
everybody is getting a piece of the cake and
the situation is likely to continue for at least
another six or seven years.”
Singapore's strength as a shipping centre
has also benefited companies like Gaylin
International which as a major supplier of
wire rope to the world's shipping industry has
seen its fortunes accelerate thanks to a growth
in the offshore sector.
According to Desmond Teo, the ebullient
Gaylin Managing Director and Chief
Executive Officer, the strength of the offshore
market in the early days benefited the compa-
ny as it started to grow, albeit gradually.
“In those days we really did anything and
everything – general trading to dealing in the
wire rope business mainly for the offshore
market. The company manufactures, stocks
and supplies a wide range of products from
wire ropes and fittings, cable-laid heavy lifiting slings and grommets, high performance
polypropylene and nylon ropes, deep-sea
mooring ropes, mooring chains and highholding power anchors, chain slings and fittings, industrial hoses, clamps, valves, grinding and lapping compounds, lubricants, technical stores and food products to ships, and
others.
Gaylin also provides a number of related
services like testing and certification of lifting
devices, spooling facilities for winch wire and
anchor line, maintenance and lubrication of
wire ropes and fittings, and others.
“Ship owners come to us because of fast
delivery and the quality and you know that we
carry stock not only one wire rope, big size
wire, five metre, two inch. We don’t carry
just one or two reels but hundreds in every
size. Sometimes they will order eight reels by
tomorrow or the next week. But if I had to get
it from a manufacturer I would have to wait
five months so I always buy in advance
because I know I can sell these items.”
Marinehub, a Singapore-based competitor
to Gaylin, agrees that demand is growing
especially for chain, wire rope and synthetic
rope. According to David Low, Executive
Director, China is the driving force behind the
growth in demand for anchor chain. “As the
demand for new ships increases so does the
demand for anchor chains. Of course if there’s
a typhoon or particularly deep sea then the
demand for chain will be even higher,” he
added. ■
REGIONAL FOCUS
ANGLO-EASTERN
Anglo-Eastern Shipmanagement is
on the rise. With a managed fleet
expected to top 220 by the end of
the year, up from only 95 vessel in
2000 and 133 ships four years ago,
it is leading the Asian charge
towards larger fleets and greater
fleet diversification. But while
there are definite advantages to
being large, it doesn't mean
companies like Anglo-Eastern are
immune to the problems affecting
the industry. But as company
CEO Peter Cremers told Sean
Moloney, if an owner came into his
office tomorrow asking him to
crew manage five ships at the end
of the next month, the answer
would be no, because it cannot
physically be done
Singularly focused
P
eter Cremers looks relaxed. Reclining purposefully on an easy
chair in the reception area of his Hong Kong headquarters, he
appears very much at ease with his position as the head of one
of the shipmanagement industry's most respected and revered
players.
When I interviewed him last in Spring of 2003, he was as adamant
then, as he is now, that being one of the largest shipmanagement companies in the world does not automatically quality you to quickly
expand your fleet. That his priority, so to speak, was not to be the
biggest but to be the best.
“Are we big? Yes we are big,” he reflected. “Does it affect the quality of the work we do? I don’t think so. There are things which size
makes easier. If you have a big crewing pool in Europe and in other
parts of the world then things are much easier. Does the V.Ships concept of 700 ships work? I don’t know. I may have some private
thoughts about it but I don’t know, let the market judge that, right?”
“If you ask V.Ships the same question, they will say: 'listen, we have
15 offices or 10 shipmanagement centres and each of these centres
manage 60 ships, that equates to 600 ships. As long as they all work in
the same system, in theory, it should work, right?”
68
I quickly interrupt: “I suppose, what you are saying is that is similar
to operating ten management companies managing 60 ships each?”
“From this office, we manage 120 ships. It's a lot but at the end of the
day I have three fleet managers who, in a different world, would each
be seen as the managing director of a small shipmanagement company.
So I think it can be done in proper way. Whether you manage 200 ships
or 300 ships, I wouldn’t say that it has to be at the cost of quality,”
Cremers added.
But one of most crucial factors linked into providing the quality that
the industry demands today, is sourcing and employing the right crew.
And when you hear of instances where ship managers have turned
down shipmanagement contracts because they don't have the available
crew, then you really start to understand the predicament facing the
industry.
“We have postponed certain delivery times in the past because we
can’t manage. We have a plan. If we know we are getting so many ships
this year or so many ships that year, that’s okay but if tomorrow - and
it has happened before – somebody walked in here and said: ‘Peter, five
ships for end of November/early December’, it will be ‘no, physically
we cannot. That room is not there anymore,” he warned.
ANGLO-EASTERN
REGIONAL FOCUS
al touch, say a specific request from a client, I am normally there, arm
deep, getting it done. My colleagues say I am usually not to be messed
with in this scene as I am in 'Go' mode. On the flip side, when a job
requires a number of people working together, I can take charge and
delegate to arrange the best possible team and supervise their progress
accordingly.”
As a leader in his industry why does he still eschew membership of
InterManager, the trade association for his sector and an organisation
that would benefit from his input?
“First of all, if you join an association you have to put in the time and
the effort. When you consider the way this company works, the growth
it is experiencing and the fact that my priority today are important
issues such as the lack of people onboard then you will see why my personal priorities are different. I can’t run around like other colleagues
being on every speaking panel.
“I don’t know how they run their business, that’s probably why we
are different, but I can’t. I have my difference of opinion with my colleagues on various issues and most of it I don’t think I want to make
public.
“If I go to Intertanko, or Intercargo or Bimco, I believe I can better
deliver the ship manager's viewpoint. In that respect it’s a much ➩
But what does the industry need to
do today and for the next three years to
ensure it has competent seafarers
around?
“You can train people, you can be
extremely careful in the way you manage and you can supervise the ships as
much as you like, but there’s very little you can do. We have the ships coming out of the yard, you have the people and the training but you need eight, nine, ten years before you have
a suitably qualified Captain, so we are pushing large numbers of junior
officers in the fleet. But at the end of the day that is not going to change
the situation immediately.
“We have been loyal to India for 15 or 20 years and that pays dividends, that’s number one. Number two, I think the owners are the first
ones to be blamed because this industry from the moment we have
something that works properly. The industry says: Oh, crews are cheaper there’ and we all look elsewhere – what is happening is totally wrong.
As an industry we should identify a good recruitment area, stay there,
build it up and stop fishing around for cheaper deals - there are no
cheaper deals any longer. The priority is getting the right people. If
people still think they can do it cheaper somewhere else then it’s over,
it’s finished. Be happy over the next couple of years if you have people on board your ship,” he said.
Peter Cremers is one of three owners of Anglo-Eastern alongside
Marcel Liedts and Richard Wong. Within that group his responsibilities
are on the commercial side of the business and he has two main priorities: clients and staff. He is a naval architect by trade, so he does have
the ability to manoeuvre in the technical area, but leaves the majority of
it to Marcel Liedts, Group Managing Director and “technical wizard”.
Peter Cremers describes himself as both a 'doer' and a 'delegator'. “I
am very good at both,” he told SMI. “When a task requires the person-
When you hear of instances where ship managers have
turned down shipmanagement contracts because they
don't have the available crew, then you really start to
understand the predicament facing the industry
Most of the relationships we have with
our owners are very close, we are
almost integrated into their business.
We are not just somebody they use for
two years
69
REGIONAL FOCUS
ANGLO-EASTERN
You choose a ship manager for a certain reason and it has to do with cost, it has to
do with people, it has to do with market reputation. You go for them and you say
this is what I want, give me it then you get on and do the job
Peter Cremers on KPIs
“If you think you do a good job then that statement has no
meaning unless you can measure it. So I have no problem, as
a matter of fact I think we should measure what we are doing
and compare it with others. I claim I’m good at something,
okay let’s prove it. So as a matter of principle I fully agree and
at some stage I would like to connect my remuneration with
my performance. If I do a good job I will get more money.
There is greater demand for third party
management expertise and the role
quality managers can play in the
development of soundly operated
fleets is beginning to be appreciated
for what it is
more effective tool in getting the down-to-earth practical experiences of
a ship manager out into the industry rather than sitting together as managers and talking. We participate very actively in Bimco, participate
very actively in Intercargo, at least the owners are sitting there right?
They listen to you, they may not agree but if you really want to bring
about changes they are there,” he opined.
The shipmanagement industry is changing, we all know that. There
is greater demand for third party management expertise and the role
quality managers can play in the development of soundly operated
fleets is beginning to be appreciated for what it is. But are managers
forging closer, more permanent bonds with their principals?
“Most of the relationships we have with our owners are very close,
we are almost integrated into their business. We are not just somebody
they use for two years. That is at least not the way that I want to work.
We are integrated with most of our clients, that means you’re striving
for the same goals, right? If I spent my time watching over my shoulder fearful that a competitor may take my business then it’s not the way
I would like to work,” he stressed.
But do the owners want more of a relationship with you as a third
party manager?
“Yes, much more, much more. You choose a ship manager for a certain reason and it has to do with cost, it has to do with people, it has to
70
“So I am in favour. I think we should not make this too scientific because by the time its is done, others may have something more simple that works already, so we are constantly
comparing ourselves with anybody who wants to be compared with. I have nothing against this.”
do with market reputation. You go for them and you say this is what I
want, this is what I want, give me it then you get on and do the job.
But what is your strategy to grow your business into other vessel sectors?
“Actually there is very little strategy. With the reputation we have,
people tend to come to us so we don’t really have to push. LNG is a
total different angle, a total different angle and it’s a difficult one. It
remains today an extremely difficult niche for a little fellow like AngloEastern to be in and to grow, it’s difficult, very difficult. Our strategy
is just doing a good job,” he concluded. ■
TRADE ANALYSIS
TANKERS
Stripping out one
product from another
With implementation of the revised MARPOL Annex II and IBC Code just
weeks away, owners, operators, managers and charterers of products and
chemical carriers should have got their act together by now
T
he problem looming is that from January 1st, 2007,
most of the products defined in Annex II will have to be
carried in chemical tankers instead of products carriers.
The chemical carriers/parcel tankers will need to carry a
Chemical Carrier Code Certificate of Fitness (CoF) and
will also have to comply with stricter oil stripping requirements.
Basically, oil-like substances will no longer be allowed to be carried
under MARPOL Annex II Regulation 14. From next year, they will
have to be carried in chemical tankers.
Norwegian class society DNV has gone on record as saying that
products tankers will lose many of their traditional cargoes to chemical
carriers, due to the reclassification of chemical and product cargoes to
bring them into line with the Globally Harmonised System for the classification and handling of chemicals.
Intertanko has issued an explanatory document to its members giving examples of cargo category changes. One, defined as ‘floaters’ or
‘persistent floaters’, which includes the increasing trade in vegetable
oils, has been re-assigned, meaning that the cargo must be carried in
IMO Type II chemical carriers, instead of products tankers.
UK class society Lloyd’s Register (LR) warned that non-IBC Code
tankers holding Noxious Liquid Substance (NLS) certificates will in
future find that the number of chemicals that they are allowed to carry
will have been reduced dramatically. LR said that owners and managers
of such vessels should think about upgrading their vessels to chemical
carriers.
LR also warned that upgrading a vessel to a chemical tanker would
mean that the ISM Code will affect the vessel’s operation. For example,
the crew will need to be chemically trained and the vessel’s flag state
registration might also need updating.
Even if a vessel holds an NLS certificate, a stripping test will need to
be carried out before the turn of the year, if that vessel is to continue lifting the remaining NLS cargoes not affected by the changeover, LR said.
It should be noted that the existing Annex 1 International Oil
Pollution Prevention (IOPP) Form B will not be replaced until it is reissued at the time of the renewal survey and so, even though oil-like
substances will still be listed after January 1st, they cannot be carried.
Doing so will risk a port state control (PSC) detention, LR warned.
The class society said that it is very important to precisely define car-
72
goes in shipping documents and data sheets, since an incorrect definition could lead to a ban on carrying the specified cargo, even if the
cargo is listed on the NLS certificate, or the CoF under a different name.
LR also confirmed that in future vegetable oils need to be carried in
chemical tankers, although there is a provision relaxing this requirement for carrying certain vegetable oils. However, LR warned that this
may not prove to be a permanent move.
Bio diesel is becoming ever more popular as environmental pressure
on energy gains momentum. Also the current high price of oil has concentrated the minds on finding alternative forms of energy. There are
two varieties of bio diesel – raw bio diesel and mixed bio diesel. Around
10-15% is raw bio diesel and the remainder is ordinary diesel.
UK class society Lloyd’s Register (LR)
warned that non-IBC Code tankers
holding Noxious Liquid Substance
(NLS) certificates will in future find
that the number of chemicals that they
are allowed to carry will have been
reduced dramatically
Raw bio diesel is a modified vegetable oil and thus can only be carried on a chemical tanker that meets IBC Code ship Type 2 requirements. With flag administration agreement, mixed bio diesel can be
treated as an Annex 1 oil.
As for cargo stripping, the new rules only allow for a residue of 75
litres to remain in a tank or its associated piping falling within the new
cargo categories. Given that this is a considerable reduction in some
cases, some ships will need retrofitting with more sophisticated pumping systems, such as deepwell pumps.
In addition, underwater discharge systems for tank washing need to
be fitted to tankers carrying certain products whose keel was laid before
January 2007 and on all tankers built after that date, which comply with
the Chemical Code CoF.
Like almost every other ship type,
products and chemical carrier
ordering has been at an unprecedented high level for a couple of years
and shows no sign of abating
We have already witnessed several smaller shipowners realigning
their fleets by scrapping older tonnage and ordering, or purchasing
newer vessels - Danish owner Herning being the classic example.
It was originally thought that several vessels would enter dry dock to
have their tanks and associated piping, pumps etc converted. However,
this doesn’t seem to have materialised to a great extent. There has and,
indeed still will be, a steady influx of modern tonnage entering the market, which is already fitted, or can be more easily converted to a chemical tanker, to cater for the changeover. Like almost every other ship
type, products and chemical carrier ordering has been at an unprecedented high level for a couple of years and shows no sign of abating.
LR gave an example of one company, which asked the class society
to evaluate some of its ships. Just two years old, Gulf Energy Maritime
(GEM), headed up by Chief Executive Yusr Sultan Al Junaidy, currently has eight chemical/products tankers in service, plus four coated panamax tankers and nine 37,000 dwt
– 47,000 dwt chemical/products
tankers building at Hyundai Mipo
for delivery between 2006 and
2009.
In
addition to the newbuildings,
GEM has options to build a further eight vessels.
Two 47,000 dwt chemical products tankers – Gulf Esprit and
Gulf Elan - due to be delivered
during the fourth quarter of this
year,
were assessed against a posYusr Sultan Al Junaidy, Chief
Executive, Gulf Energy Maritime
sible upgrade from IBC Code
Type 3 vessel to an IBC Code Type 2 tanker by LR’s Marine
Consultancy Services. The investigation hinged on whether an upgrade
would give the tankers greater cargo carrying flexibility under the new
rules.
LR found that the double hull arrangements did meet the requirements of a Type 2 tanker. However, LR then looked at the viability for
further conversion work during the course of the vessels’ lifespan. This
work included –
• Approval of damage stability against the more onerous Type 2
requirements.
• Approval of the trim and stability booklet according to the new load
conditions.
• Minor cargo piping modifications to take account of the carriage of
toxic cargoes.
Another company which decided to act early on was Odfjell. Earlier
this year, the parcel tanker operator decided to convert five 40,000 dwt
sister parcel tankers built at KSEC between 1986 and 1988.
The problem was that the vessels, although in very good condition,
were not fitted with protection around their wing tanks, resulting in a
reduction to the number of cargoes they would be eligible to carry come
January next year. Also two sets of pollution certificates needed to be
carried onboard each ship, depending on whether the vessel was trading
as a products tanker, or as a chemical carrier.
Evaluation of the project to convert the Bow Cheetah, Bow Leopard,
Bow Lion, Bow Panther and Bow Puma started back in August 2005.
Involved in the project was a multi-disciplinary team, including internal and external specialists, as well as the required presence of class
society DNV, who would review and approve the design work.
Finally, the initial engineering design concept was approved last
February and at the same time the Odfjell board gave the go ahead for
the vessels to be converted, resulting in a formal contract being signed
with Nantong on 15th February this year.
The upgrading involved the removal of the existing shell plating in
way of the cargo section and replacing it with blocks of prefabricated
steelwork to create double skin ballast tanks on both sides of the vessels. The width of the new double sides has been designed to exceed the
requirements to facilitate operations and maintenance, while the ➩
73
TRADE ANALYSIS
TANKERS
Odfjell’s conversion of five parcel tankers involved the removal
of the existing shell plating in way of the cargo section and
replacing it with blocks of prefabricated steelwork to create
double skin ballast tanks on both sides of the vessels
74
TANKERS
TRADE ANALYSIS
Chemical tankers primarily transport
organic and inorganic chemicals.
Odfjell estimated that the total global
volume transported by chemical
tankers per year is around 60 million
tonnes
Until January 1st next year, there are still
five categories of chemical and products cargoes – A, B, C, D and Appendix III. The latter
is a list of products, which do not come
under the IBC Code.
Seagoing transport from the Middle
East Gulf to destinations both in the
East and in the West is increasing as
new production capacity comes on
stream in the MEG
increased scantling will enhance the vessels’ strength.
Each of the tankers was expected to spend around 50 days at the
Chinese shipyard, Odfjell said. Work also included general drydocking,
blasting and painting each vessel’s hull. Necessary maintenance and
replacement of the cargo tank coatings affected by the conversion work
would also be attended to.
The first vessel – Bow Lion - actually spent 80 days at Nantong before
leaving on July 8th. She sailed for South Korea and underwent tank
cleaning, a BP vetting inspection and a CDI inspection while underway.
She loaded various grades of luboils and vegetable oils in South
Korea and Malaysia, calling at Durban for her first double hull discharge. Bow Lion then sailed to Mossel Bay to load various grades of
alcohol for discharge in Rotterdam and Hamburg.
By last September, Bow Leopard, Bow Panther and Bow Puma were
all at the Chinese yard undergoing various stages of conversion.
Chemical tankers primarily transport organic and inorganic chemicals. Odfjell estimated that the total global volume transported by
chemical tankers per year is around 60 million tonnes. In addition, the
transportation of vegetable oils, alcohols, molasses and lubricating oils
amounts to another 40-45m tonnes per year.
The major trade lanes are from the US and Europe to Asia, India, the
Middle East and South America. In addition, there is considerable bilateral trade between the US and Europe. Seagoing transport from the
Middle East Gulf to destinations both in the East and in the West is
increasing as new production capacity comes on stream in the MEG.
Over the last few years, there has also been a large Asian production
increase, and a considerable percentage is shipped overseas.
Volumes shipped regionally are also steadily increasing. As petrochemical end-users require products to be delivered at shorter notice
and with less lead-time, the major petrochemical producers are building
production complexes closer to their markets. Consequently, the
demand for modern quality carriers trading regionally is on the rise,
Odfjell said.
Flexibility and inter-changeability of ships between routes and trades
have always been important factors for Odfjell. Some of the ships are
involved in a ‘round the world’ liner type trade, servicing ports in
Europe, the US, Asia/Pacific and Africa.
The idea of the new rules is to simplify the cargo types into a three,
plus one system of coding, that is, pollution categories X, Y and Z,
plus OS. The last named stands for ‘Other Substances’, which are
basically eight harmless products.
As for the chemical carriers, they will be reclassified into three
types:
Type 1 vessels offer the highest standard of protection and are
required for the carriage of those cargoes deemed to have the greatest risk on the environment. The release of these products would have
wide reaching affects beyond the immediate area of the vessel.
These cargoes must be carried in tanks located well inside the sides
of the vessels (B/5, or 11.5 m, whichever is less) and from the bottom
of the vessels (B/15 and not less than 760 mm from the shell plating).
Furthermore, the ships must be able to survive a high level of prescribed damages.
Type 2 tankers offer what is called the mid-level standard of protection, which is required for those cargoes deemed to be significant
hazards, but whose release does not have wide reaching affects.
Cargo protection should be provided against low energy collisions
and groundings, which are associated with vessels in port. Cargoes
to be carried by Type 2 ships must be shipped in tanks located prescribed distances away from the sides (B/15 or 6 m, whichever is less)
and from bottom of the ships (760 mm from the shell plating).
Type 2 tankers must be able to survive a prescribed level of damage that is less than that required for Type 1 ships.
Type 3 tankers offer the lowest level of protection. They are designed
to carry products of sufficient hazard to require a moderate degree of
containment to increase survival capability in a damaged condition.
This prescribed level of damage is less than that for ship types 1 and
2. In addition, the cargo tanks can be located at the sides and at the
bottom of the ships.
75
AdHoc
BUSINESS OF SHIPPING AD HOC
AdHoc
Digitally Exposed!
It doesn’t take much to persuade the glitterati of
the world's shipmanagement industry to let their
hair down and enjoy themselves, especially when
they have just sat through a week-long shipping
conference and were busy preparing themselves
for the next day's InterManager AGM.
Stephen Chapman, outgoing InterManager
General Secretary, chose the Karatello
Restaurant near the old Limassol Castle for the
annual InterManager bash because of its quaint
charm and good food, and the guests were not
disappointed. The Castle was built by the
Byzantines around 1000 A.D and according to
legend, King Richard the Lionheart married
Queen Berengaria of Navarre there in 1181 and
crowned her Queen of England.
Traditional Cypriot dancing was the order of
the day and the guests were not fazed. Seeing
left to right: Dirk Fry
and
rlotte Kirk from ITIC
from Columbia Cha
na
ght: Susa
left to ri
from
nard tan
and Ber
Germino
oger
agull's R
A and Se
from TESM
a
m
ar
sh Sh
ASP, Piyu
Svein Sorlie
Wilh Wilhelmsen's
Roberto Gior
gi and Rajes
h Bajpaee en
joying
ship manager after ship manager linking arms
and hands as they twirled each other around the
improvised dance floor showed that friendship,
camaraderie and competitiveness continue to sit
comfortably in this fine industry.
But the appearance of V.Ships' President
Roberto Giorgi and past V.Ships' Director and
newly appointed InterManager General
Secretary Guy Morel together at the same table
The glass game - not as easy
76
as it looks....
their meal
Ringstad
AD HOC BUSINESS OF SHIPPING
...or is it?
was interesting to see. The conversation
must have been interesting especially
when you consider the way V.Ships and
InterManager have changed over the
years.
It was also a poignant evening for
Rajaish Bajpaee, President and Group
managing Director of Eurasia, as he
bowed out from the InterManager
Presidency. Bajpaee has built up a solid
reputation during his three years as
InterManager President and many will
miss his dedication and enthusiasm for
the association and everything it stands
for. His appointment as Chairman of the
InterManager Advisory Board means
his wisdom and contacts will not be
completely lost to an association that is
now beginning to move forward in the
right way.
When we need someone
tall,
to help out
Gun tottin' trainers
in choppy water
Papalexis: getting intellectual
He recently described himself
as the “last of the Mohicans”,
in the sense that his generation
started as cadets who climbed
up the ladder to become captains or engineers and reached
the companies’ boardrooms as
owners or operators. But
Emmanuel Papalexis pulls no
punches in discussing the intellectual
strengths and weaknesses of seaborne
staff.
The Chairman and Chief Executive
Officer of Athens-based Mare International
is as passionate and optimistic about shipping as he has always been. However, he
hinted to delegates at the recent LSM Ship
Management Conference in Limassol about
his real concerns facing managers of tonnage in today's market.
He said: “The volumes of regulations
are getting thicker and thicker. I see no
problem (no matter how bureaucratic this
has become) for the shore management to
be trained, to absorb and to comply with
today's demands, but I'm very sceptical
whether the shipping industry as a whole
in comes Svein Sorlie
has understood and appreciated the capacities of the
people onboard.
“The crew needs help and
we, from ashore, must help
in the right way. We have to
design and format their job
requirements in a way they
understand. In a way that
will not scare them,” he added.
Dismissing the view that 'draconian' legislation such as the EU criminalisation of
accidental pollution was solely behind the
diminution of trained officers onboard ship,
Papalexis pointed to the failure of the shipping industry to create a feeling of confidence that going to sea is a life-long career
and a good one at that!
It has to be realised that shipping “is a
career which has a continuation,” he said.
“The continuation will bring them to shore
management to become port captains, port
engineers and surveyors. We need to
upgrade the profession of the mariner and to
make it socially acceptable. Parents have to
be convinced of that.” I think we will all
agree with him on that! ■
The US Coast Guard has come under fire from all
angles after it revealed plans to set up a series of target ranges in the Great Lakes.
Boaters and environmentalists argued that
mounting gas-powered machine guns on deck to be
used for training purposes was perhaps not the best
idea in the world.
Objectors seemingly drew little comfort from the
fact that the 34 target ranges were to be positioned
at least five miles offshore, claiming that the famous
choppy waters of the lake would increase the risk of
damage to passing boats – and planes! The USCG's
failure to report the scheme to the general public
strangely enough encouraged people to complain.
The USCG's defence that the seafarer's needed to
train in this way in order to create a realistic feel of
firing from a moving vessel may not be enough to
sway the ongoing public enquiry. ■
SOUNDINGOFF
Emmanuel Vordonis
Executive Director
Thenamaris Ships Management
“The people we need to attract to sea are those
who are in love with wanting to be seafarers. We
need to attract the type of people who have the
gene to want to be at sea and who will select a
wife who can also tolerate this lifestyle.”
77
Mumbai Times
BUSINESS OF SHIPPING AD HOC
Hair Oil
Desperate times call for desperate measures,
but ordering thousands of prisoners to shave
their heads and chests to aid Manila’s response
to the Solar 1 oil spill is surely one hairbrained scheme too far.
Alas, one bright-spark ordered 15,000
inmates – including 1,000 on death row – to
donate their hair in a bizarre attempt to absorb
more than 200,000 liters of fuel.
In addition, 500 salons in Manila collected
clippings to aid the “stop the spill” drive.
The coastguard fixed tonnes of donated hair
and assorted feathers to bamboo poles to act as
barriers along the coastline.
There are no reports on the effectiveness of
“the Brazilian” dam, but sales of hats are said
to have increased dramatically.
The sinking of the 55-year old Solar 1 in
August this year was regarded as the
Philippine's worst ever oil spill. Oil contami-
nated 62 kilometers of shoreline in the southern province of Guimaras.
Meanwhile, scientists seem to have too
much time on their hands. While those
detained at the pleasure of the state put their
bodies on the lines, the men in white coats
seem set to create more havoc in the name of
research.
At a recent meeting in Halifax, the world’s
leading Arctic oil spill ‘experts’ unveiled
plans to create a series of artificial spills - to
practice on.
The spills, which are set to be created in
Canada’s Beaufort Sea and in Arctic waters off
the Norwegian coast, are said to be a precautionary measure as the area prepares for
increased shipping traffic and oil production
activity during the next few years.
SMI would love to bring you more details,
however, we were busy kissing swans in a
heroic attempt to stamp out Bird Flu. ■
ISSA glitz in Singapore
Singapore was rocking to the ship suppliers'
tune when the International Ship Suppliers
Association (ISSA) held its 51st annual convention in the port city, and fun was definitely had by all. In fact there was something special to celebrate, the silver jubilee of the
event's host – The Singapore Association of
Ship Suppliers. But as if the ISSA members
needed an excuse to enjoy the networking at
the ensuing Gala Dinner..
NOL Group Chairman Cheng Wai Keung greets
Singapore Association of Ship Suppliers' President
Abdul Hameed Hajah
Just like the Olympics, the ISSA conventions become more glamorous every year and
2006 in Singapore was no exception. Opening
the accompanying conference, Cheng Wai
Keung, Group Chairman of Neptune Orient
Lines acknowledged the efforts of ISSA in
developing industry knowledge and preparing
Tom Allan awarded top IMO Prize
ON THE UP
Morse Code
Grounded on the coast and armed with nothing
but a torch, a British fisherman had no choice
but to trawl his mind for Morse Code. He managed to contact the Hayling Island Coastguard,
who responded by flashing the control tower
lights before launching a lifeboat. The fisherman, who had just transferred his modern safety gear to his new boat, was rescued –
unharmed. ••• - - - •••
Charity, mate
Not content with hunting out drug runners and
apprehending illegal immigrants, the crew of
the Coast Guard Cutter couldn’t resist another
good deed. While moored in Cartegena,
Columbia the crew volunteered to help restore
a local school house with a student population
of 52. The 37-day Caribbean patrol also identified potential drug smuggling vessels and discovered 15 Cuban migrants who had been
stranded at sea for 10 days.
78
An Epic Result
Nigel Cleave, ex-Dobson Fleet Management
supreme and Cyprus shipmanagement stalwart,
has confounded speculation about his future by
joining Epic Ship Management as its all-controlling chief executive officer. Epic owns and
manages a fleet of over 40 vessels, which
includes an impressive newbuilding programme focusing on the tanker industry and a
managed fleet of VLCC’s, product carriers,
LPG tankers and chemical tankers. Nigel is
keen to play down Epic's role as a manager of
just specialised tonnage in favour of growing
his new business from all sectors. LPG will
come under the Epic spotlight, we understand.
The prestigious International Maritime Prize
for 2005 has been presented to Dr. Tom Allan,
former Chairman of the IMO Maritime Safety
Committee
(MSC)
and
Permanent
Representative of the United Kingdom to IMO.
Efthimios E. Mitropoulos, SecretaryGeneral of the International Maritime
Organization, presented the prize to Dr. Allan
during a special ceremony held during the 97th
session of the IMO Council, which met at
Central Hall, Westminster, London. The
International Maritime Prize is awarded annually by IMO to the individual or organization
judged to have made the most significant contribution to the work and objectives of IMO.
AD HOC
Clinton de Souza, Deputy Fleet Director, Thoresen &
Company, Bangkok
Mark Haslett, General Manager Procurement of
Wallem Shipmanagement
Welly Samir, of Edwardo Marine Services of Port
Said, selects his Quality Certificate from ISSA
President Wim van Noortwijk
leadership to face up to global challenges. He
told delegates: “As some of you may be aware,
earlier this year we established the NOL
Fellowship under the patronage of Singapore’s
last Prime Minister Mr Goh Chok Tong. This
programme is aimed at developing world-class,
multi-disciplinary, applied research among
global institutes, to enhance knowledge and
expertise in the field of global transportation
and logistics.”
Keynote speaker SS Teo, Managing Director
of Pacific International Lines and Chairman of
the Singapore Maritime Foundation, said ship
owners make “massive investments when taking the decision to purchase or build vessels.
For that investment to work, it must be able to
operate at maximum efficiency. The suppliers’
community can play a vital role in achieving
that level of efficiency. It is therefore imperative that the ship suppliers play a vital part in
the wider support chain that owners use when
operating their vessels.”
One of the more vociferous segments of the
convention was the ship owner and ship suppliers panel with hefty contributions delivered by
Mark Haslett, General Manager Procurement at
Wallem Shipmanagement; Clinton de Souza,
Deputy Fleet Director of Bangkok's Thoresen
& Company and Ivan Blazina, Purchasing
Manager of Thome Singapore.
Ivan Blazina, Purchasing Manager of Thome
Singapore
S.S. Teo, Managing Director of Pacific
International Lines
Michael Ciuffo, grandson of the late ISSA President
of Honour Dott Salvatore Ciuoffo, promises to carry
on the family tradition of ship supply
Saving life for real
Getting the chance to put your training into real
practice is something most members of the
emergency services do every day. But it is more
rewarding when the potential for saving a
child's life is concerned.
Well one Cypriot family will be thanking their
lucky stars that Dr. Rob Verbist , seafarer physician, spokesman for the International Committee
for Seafarer Welfare and Medical Advisor to the
Port of Antwerp, was dining in the same restaurant following the end of a recent shipmanagement conference in Limassol.
Seeing the family's 18 month-old child choking on some food, he jumped up, grabbed the
child, turned it upside down and after a sharp tap
to the child's back, dislodged the offending item
and returned the screaming baby to its mother.
The cries were the proof that the baby was
breathing normally, he said. “We teach seafarers how to administer such lifesaving acts when
they come to our centre in Belgium for training,” he added. “But we only train for reviving
adults. I am going to redress this and include
child lifesaving because you never know when
it will come in useful.”
Proof that there are still some heroes around.
GOING DOWN
Arctic climate
Introducing shipping to the Arctic as new
routes open up will accelerate the rate of glacier melting, marine scientists have claimed. In
a recent study into the effect of ship emissions
on local climates Dr Johann H Jungclaus from
the Max-Planck-Instutut Fur Meterologie,
Germany revealed that aside from increasing
ozone concentrations in the largely unpolluted
Arctic regions, ship exhaust gases falling on
the ice as soot would accelerate the rate of
melting.
Quintana reports $7.6m 3Q loss
US-listed Quintana Maritime has reported a
loss of $7.6m for the third quarter of 2006
largely due to a series of one-off charges. The
quarter was blighted by an unrealized loss of
$11.9m related to an interest-rate swap and a
non-cash write off of unamortized financing
fees of $1.8m. Stripping out these charges the
Greek bulker owner said net income would
have been $6.1m or $0.16 per diluted share.
Net revenues for the quarter were $25m, an
increase of 92% over the $13m of revenues in
the third quarter of 2005.
During the quarter Quintana operated an average of 13.4 ships, earning an average time charter equivalent (TCE) rate of $20,780 per ship
per day. Quintana also picked up a further
$1.1m during the quarter in late delivery payments related to its acquisition of the
Metrobulk fleet.
79
OBJECTS OF DESIRE
LIVE
Objects of desire
Underworld
The thought of ‘swimming with the fishies’ once struck fear into the heart of
man. Now the marine adrenaline junky is free to explore the world beneath the
waves with their own underwater jet ski. The Seabob’s 3.5kw motor can lead
you to depths of 2.5m (40m with scuba tackle) while remaining easy to handle.
The high-tech, sensor-driven craft is stocked by Harrods and is sure to take
your breath away.
Seabob
£5,300
www.delfjet.com
Beauty and brains
They dominate our lives and many see
them as their 'mistresses'. But once
hooked, it is difficult to do without your
BlackBerry. But watch out, more
enticement is on the horizon. Beneath
its sleek and stylish exterior, the
BlackBerry Pearl is a quad-band
GSM/GPRS and EDGE-enabled mobile
application powerhouse delivering the
fast performance of the latest generation
BlackBerry handset platform. The builtin
64MB flash memory is now expandable
with a MicroSD card, giving users
plenty more storage for music, pictures,
videos, and data files.
The BlackBerry Pearl delivers
exceptional phone quality with support
for polyphonic, MP3 and MIDI ring
tones, and intuitive call management
features such as smart dialing,
conference calling, speed dialing and
call forwarding. Now that what I call
temptation.
80
Wireless wonder
Sedentary suits throughout the
world are running out of excuses
after Nike and Apple joined
forces with the Nikeplus project.
A censor in the shoe talks wirelessly
to the iPod nano to give
speed, distance and calorie
information, displayed on
screed. Exercise data can also
be uploaded and compared
online, so the entire world is
your training partner.
BlackBerry Pearl
Nike & iPod Kit
£5,300
www.blackberry.com
£20.00
www.nikeplus.com
OBJECTS OF DESIRE
LIVE
Va-va-voom – Personally speaking
A Skype phone, a mouse, a car - with lights - how cool can it get!
A funky ergonomic design cleverly hides an integrated microphone and speaker for
handsfree, headphones included if you want to go private. You can also blast your Mp3s
out of the speaker for a virtual in-car entertainment experience.
The VOIP Street Mouse is a high quality 800 dpi mouse which ensures easy navigation
around your PC, while giving you high-quality chat with your friends and family over the
internet. It gives a whole new meaning to the words “car phone”!
VOIP Street Mouse
£19.95
www.laughingdonkey.co.uk
Places of desire
Scuba Schools International
Secluded and snow free
If you think festive snow is overrated, The Rock Islands of Palau is the place for
you. Winter water temperatures of 27°C and never ending supply of tropical beaches offer the perfect place to rest tired limbs. Revered by a select cult of divers and
marine biologist as a true gem of the Earth, it is claimed that no place on the planet offers
such variety for underwater explorers as this piece of paradise in the Pacific, east of the
Philippines. Underwater visibility of up to 80 feet means
you will never miss out on the mass of marine life or the sublime caves
and lagoons on offer. And for those who prefer a firmer footing, birdlife
across the 300 individual Rock Islands is regarded as the richest in all of
Micronesia. The limestone forests of The Rock Islands’ are a haven for the
Palau Ground Dove and the Blue-faced Parrot finch. Human development
is largely limited to ‘rustic tourist facilities’ on the islands of Ulong,
Ngeanges, Ngkesill, and Dmasech, with many of the other islands remaining untouched. So if you feel like treating yourself this Christmas, push the
boat out and set sail for The Rock Islands. Just don’t forget to pack the
mistletoe.
81
WHAT I’M READING
By Douglas Lang
England’s Mistress
The Infamous Life of
Emma Hamilton
Managing Director, Anglo-Eastern (UK)
Human Traces, by
Sebastian Faulks, follows the
lives of two young psychiatrists from their youth through
to old age. Set just prior to the
First World War, when psychiatry was in its infancy, their
lives follow the advances as
well as some of the major setbacks in the science.
Like many of Faulks’
books it’s based in and
around Europe and although
you always have to be wary of novels that mix fact and fiction, it
gives a feel for the early theories and how the status of those delivering them could often hold sway over logic and good research.
History has always interested me, particularly the characters behind
the events – I have always found it interesting that we come across
similar personalities no matter what period we look at. We seem destined to make the same mistakes over
and over again when a quick reference back in time could help avoid
them. The dividing line between
dogged perseverance leading to great
achievements and blinding arrogance
causing disaster is often fine.
The other book was The Lunar
Men by Jenny Uglow. The lunar men
was a society of the late 18th early
19th century where the great movers
and shakers in the UK - including
Erasmus Darwin, James Watt,
Mathew Bolton - used to meet on the
date of the full moon to eat, drink and discuss all the matters that
interested them.
I have read Jenny Uglow’s work before and the research that goes
into her books is quite phenomenal. When considering what these
people achieved and how many
there were it must have been ‘one
hell of a dinner party’!
It’s a book that is very pertinent
to Europe today because the protectionism of trade and technology
between all countries of that time
was quite phenomenal. It gives you
a sense of what really went on
using the actual diaries and papers
of the Lunar Men: the politics of
the time, the business practices and
general shenanigans. It’s refreshing
and reassuring that nothing has
really changed! ■
82
Author
Kate Williams
Publisher
Ballantine Books
Price: £20
In this absorbing, well-crafted biography,
British historian, lecturer and TV consultant Kate Williams
charts the rise of 18th-century England's most celebrated sex symbol, best known
as Admiral Nelson's mistress.
Setting the rags-to-riches story of Emma Hamilton (1765–1815) in social and
historical context, Kate Williams vividly evokes her impoverished childhood and
struggle to survive in London as a servant, theatre maid and dancer. Kate Williams
details the debacle of Emma's life as a high-class courtesan, rescued while pregnant
at age 16 by a calculating young aristocrat, Charles Greville, who transformed
Emma into a trendsetting star by commissioning a fashionable artist to produce
ravishing portraits of her.
Creating a convincing psychological portrait of a seductive, ambitious Emma,
the author entertains with an intimate portrayal of her subject's marriage to William
Hamilton, British envoy to Naples (and Greville's much older uncle), who shocked
high society by making her his wife. Describing Emma's stage-managed seduction
of Nelson, and the pair's passionate affair (which was famously tolerated by
William Hamilton), culminating in a love child and a shared residence, kate
Williams conveys the fickle nature of Emma's acceptance by high society. The
biography is well paced and pitch perfect, as competent in its storytelling as it is in
its authoritative analysis of 18th-century class distinctions. ■
Box Boats: The Story of Container Ships
Author: Brian J Cudahy
Publisher: Fordham University Press
Price: £25.00
History and humor are seldom comfortable
bed fellows, but Brian Cudahy manages to
bring the two together to provide an entertaining yet detailed account of containership evolution.
Starting with the story of pioneer and
Pan-Atlantic owner Malcom McLean, Box
Boats tells the rich and decorated story of
world shipping, from freighter types to the
fate of steamship lines and the creation of
ungainly but innovative vessels.
From the moment the freighter Ideal X
floated out of Port Newark, New Jersey
bound for Houston with a cargo of crude
metal boxes, the world of shipping was
changed irrevocably. Those Fifty eight containers were soon lost amongst millions of
others as container shipping took the world
by storm.
But while Cudahy fulfills his brief and writes with flair about the deserted peers
of New York and the rise of Maersk Sealand, one nagging question loiters in the
shadows: Have I heard it all before? ■
NEWBUILDING
NEWBUILDING
Strong economic forces
driving fleet investment
ROBUST growth in demand for Suezmax
tankers is predicted over the next five years,
spurred by large-scale expansion of crude oil
exports in three of the four primary markets. A
new report by London shipbroker and consultant
Galbraith's puts the current orderbook for
Suezmax newbuilds at just over 100 vessels, following a surge of contracts during the third quarter of 2006.
To give perspective to outstanding investment, Galbraith's calculated that the 103 tankers
under construction and on order represent some
29% of the total fleet and 31% of the existing
fleet trading in crude oil, excluding US domestic
traffic. Although only a modest amount of tonnage commanding deliveries from 2008
onwards had been booked by mid 2006, the situation changed fundamentally during the JulySeptember quarter when shipyards booked firm
contracts for about 50 such vessels. South
Korean and Chinese yards figured most prominently among the raft of orders entrusted by
principals from a broad cross-section of owning
centres.
West African oil production is rising, and
major growth in exports is anticipated from the
Black Sea and Mediterranean, including Libya
and Algeria. The trade out of the Middle East
Gulf to both India and China will continue to
increase, driven by domestic demand and the
development of substantial new refinery capacity. The only major Suezmax market that is
expected to see falling requirements is the North
Sea, where production is in relatively steep
decline. However, the broking house reckons
that this will generate an overall increase in
tanker demand, as refineries in north-west
Europe and the US east coast look to source cargoes over longer distances from West Africa and
the Mediterranean/Black Sea.
Parcel tanker specialist Stolt-Nielsen has initiated a further stage of tonnage replacement and
fleet development by entrusting the Norwegian
shipbuilding industry with a contract for a series
of 43,000dwt newbuilds suited to the gamut of
difficult-to-handle cargoes. The deal with Aker
Yards calls for delivery of four vessels between
late 2008 and the end of 2009 from the Floro
yard, previously part of the Kleven group.
The four newbuilds, each equipped with 24
stainless steel tanks and 15 coated tanks, will be
of the same design as the two sophisticated parcel tankers booked by Stolt-Nielsen from the
former Kleven Floro last year for completion in
2007 and 2008. Kleven Floro and Kleven
Design became part of Aker Yards in August
2006. The programme of six vessels has an overall value of approximately $510m, putting pership cost in the region of $85m. The business
relationship between ship owner and shipbuilder
will also be reinforced by October's announcement of the intended signing of a letter of intent
regarding future cooperation between the two
organisations, focusing on research, design and
development.
On the strength of record newbuild activity, the
global shipbuilding industry's expenditure on
propulsion systems is forecast to reach $9.2 billion in 2006, and to attain still higher levels in
2007 and 2008, according to Douglas-
Westwood's newly-published The World Marine
Propulsion Report 2006-2010. Engine installations in 2006 alone are expected to total 24.5 GW.
Although it is anticipated that yard output will
start to fall in 2009/2010, as the new tonnage is
absorbed by the market, the worldwide spend on
propulsion is projected to total $47.2 billion over
the 2006-2010 period, some 76% up on sales of
$26.9 billion during the preceding five-year
timeframe.
World economic growth is buoyant, and is
expected to remain strong in the medium term,
boosted by the very strong growth of China.
Global seaborne trade has increased, due in part
to a boom in demand for oil and steel and other
commodities. “The commercial shipping industry has become more profitable than during the
previous decade, and confidence has grown,”
said Douglas-Westwood Analyst, Georgie
MacFarlan. “The overall result has been a surge
of orders for vessels, and yards currently have
full orderbooks.”
Annual shipbuilding completions are likely to
be upwards of 50m gt for 2006, 2007 and 2008,
with the compensated gross tonnage(cgt) figure
for this year and next set to exceed 34m in each
case. “Due to the cost of newbuilds increasing
over the period, the total value of shipbuilding
output is expected to exceed $80 billion by
2008, with over 2,300 vessel deliveries and nearly 3,300 main engine installations,” said Mr
MacFarlan.
Since the high rate of contracting has led to
long lead times for ship deliveries, it is felt that
newbuild output may only start falling at the end
of the forecast period. By 2010, the figure could
be at a level just above that of 2005, at 48m gt.
However, increased newbuild costs should bolster propulsion market values, to just under $9.4
billion in 2010, including an engine market
worth around $6.9 billion. ■
83
MARKET SECTOR
BRIDGE SYSTEMS
Offering the navigator
a helping hand
A dynamic approach to technological advance, firmly embedded in an appreciation of bridge
watchkeepers' practical needs, and set against the backcloth of rigorous competition and increasing
regulatory edicts, characterises the marine electronics sector of the industry. With the advances in
technology comes the requirement for proper training in the functionality of the equipment and
systems, to which manufacturers and shipowners alike are responding.
nnovative UK-based designer and producer Kelvin Hughes has
given further expression to its inventive spirit with the recent rollout of the world's first widescreen bridge system and revolutionary SharpEye radar. Central to the development of the
MantaDigital widescreen bridge has been the objective of reducing the
watchkeeper's workload through enhanced displays and multi-functional screens, encapsulating advances in functional integration and
ergonomic engineering. MantaDigital encapsulates SharpEye technology to maximise detection and tracking capability, while the S-band
SharpEye system is individually available for both newbuild and retrofit projects.
SharpEye marks a step change in marine navigation, dispensing with
the conventional magnetron and high voltage modulator, and using a radical approach with the transceiver to enable more information to be
extracted from the radar returns before processing by the display. The
result has been to allow detection techniques usually found only in sophisticated military systems to be available in commercial marine radars.
It is claimed that the new S-band radar will detect targets in clutter at a
much earlier stage than is the case with conventional radar. This is
achieved through the adoption of a monostatic pulse, Doppler solid state
transceiver, which uses the Doppler effect to determine a target's velocities. Received echoes are processed into velocity bands, enabling the
wanted targets to be separated from precipitation- and sea-induced clutter.
Furthermore, the solid state power amplifier in SharpEye produces
substantially more energy than the magnetron system, raising detection
performance.
“We are so confident of the reliability of this new technology that we
are offering a lifetime guarantee in support of SharpEye technology,”
I
Kelvin Hughes’
MantaDigital
widescreen
bridge system
84
The widescreen bridge system uses the new
MantaDigital common core processors, and will
thereby meet upcoming, raised IMO standards
governing radar processing and tracking, due to
come into force in 2008
stated Kelvin Hughes' Managing Director Ron Nailer. SharpEye lends
itself to fitting to the company's existing Nucleus 3 and Manta systems,
thereby extending the immediate, practical application scope of the
development.
The widescreen bridge system uses the new MantaDigital common
core processors, and will thereby meet upcoming, raised IMO standards
governing radar processing and tracking, due to come into force in
2008. From the user's perspective, the major attraction will be the level
of multi-functionality offered by the equipment. The three displays are
based on the latest, widescreen flat panels, each of which can be set to
show radar, digital charts, conning information or the new and unique
dual PPI(plan position indicator) function.
Dual PPI provides an added safety benefit for the mariner by allowing
the operator to display different scales, orientations, motion modes and
trail modes from the same radar sensor on the same screen. For example,
on the main PPI, the navigator could use the chart radar in many configurations for anti-collision and general navigation tasks. On the second
PPI, on the same screen, the operator could have the range scale looking
further out so as to assess risk further down the planned track.
MantaDigital processors are now available for ECDIS (electronic chart
display and information system), VDR(voyage data recorder) and SVDR
(simplified voyage data recorder). The new Kelvin Hughes chart radar is
set to be released in 2007, ready for the new IMO standards. The radar
processor can be linked to a network or modem for remote diagnostics.
BRIDGE SYSTEMS
MARKET SECTOR
It is understood that the new VisionMaster
technology will be applied to the next vessel in
Royal Caribbean's 'Freedom' cruiseship series,
due for delivery from Finland next year
Market receptivity to SAM Electronics' forerunner series of Ship
Control Centre (SCC) bridge systems generated sales of some 150 configurations, and the Hamburg company has now taken the concept a
stage further with a new design of SCC console. The bridge assembly
achieves new levels of integration between navigation and automation,
and encapsulates the ergonomic thinking which has long been a hallmark of SAM and its antecedents. The central importance attached to
ergonomics reflects practical considerations and understanding of the
day-to-day demands on bridge personnel, and the core, intertwined
issues of operating efficiency and safety.
All navigation, communication, propulsion, and control and alarm
monitoring functions can be undertaken on standardised, 23-inch flat
screen monitors.
The touch-sensitive screens eliminate all mechanical switches and
buttons.
Key sub-assembly components are based on the Nacos 5 range of
NACOS navigation and command systems, including new-generation
1100 Multipilot, Radarpilot, Trackpilot and Conningpilot, together with
Chartradar and Chartpilot ECDIS.
SAM Electronics is party to an EU-sponsored research endeavour,
known as ADOPT ('Advanced decision support system for ship design,
operation and training'), focused on optimising safety by developing
a system that senses the environment for actual
situation data and predicts the ship's motions
accordingly. It is intended to ensure optimal
operating performance, relying on a computerbased decision support tool to create an interface
to be used aboard the ship.
One project initiative, involving SAM
Electronics, is to seek to counter extreme, adverse
sea conditions, including so-called rogue waves,
through predictive determination of wave heights,
periods and duration by radar analysis, together with
combined motion and hull stress sensors. Wave measurement will be based on algorithms from the German
firm OceanWaves and on other algorithms provided for
comparison by study partners Det Norske Veritas and
Denmark's Force Technology.
Once wave characteristics have been established, a nav-
igational decision support system can then be activated for selection of
a suitable speed and course so as to avoid dynamic rolling and other
effects. Under ADOPT, trial systems with different sensor arrangements
are to be fitted aboard one of DFDS Tor Line's modern, North Sea roro trailerships, Tor Magnolia, and interfaced for display via the vessel's
Nacos 45-4 integrated navigation system. ADOPT project coordinator
Flensburger Schiffbau Gesellschaft built the Tor Magnolia and SAM
Electronics supplied the NACOS bridge system.
A true multi-function navigation console similar to those used in aircraft cockpits is core to Sperry Marine's new generation of bridge technology, marketed under the VisionMaster FT label. The new product
family represents a sea change in integrated multi-functionality, affording buyers greater scope in employing the technology to the extent and
in a way which most precisely suits their operations. “With
VisionMaster FT, the shipowner can select whatever level of sophistication is needed, from a standard type-approved radar up to a complete
integrated bridge system(IBS), with a built-in upgrade path to address
future requirements,” said Sperry Marine Director J.Nolasco DaCunha.
The technology is also designed to take advantage of value-added
services such as electronic chart downloads, automatic weather routing,
remote diagnostics and performance monitoring, as broadband ship-toshore satellite links become more widely available in the coming years.
“Marine superintendents and other authorised shore-based users will be
able to access the ship's systems through Sperry Marine's unique
BridgeLink Web-based portal to access ship operational data, view performance data and remotely monitor the ship's navigation systems and
sensors,” added Mr DaCunha.
Four levels of navigation functionality are offered through
VisionMaster, namely radar, chart radar, ECDIS, and proprietary,
TotalWatch multi-function workstation. TotalWatch replaces traditional, stand-alone, single-function workstations with a multi-function navigation console akin to that used in aircraft. The TotalWatch
station can display any VisionMaster FT mode, as well as
data from other shipboard systems such as machinery monitoring and alarms, and also CCTV. The master or officer
can create any combination of console displays for any
situation, whether it be inshore piloting, open-sea navigation, docking or anchoring.
Any combination of VisionMaster FT
radars, chart radars, ECDIS and TotalWatch
can be employed to create a flexible, integrated bridge system, in an ergonomic layout. The
ECDIS features a split-screen capability, permitting
two charts to be shown simultaneously, while a picturein-picture window allows the user to view specific areas
of a chart at different scales. The ECDIS can be integrated with the radar and AIS(automatic identification sysVisionMaster tem) for common target identification and overlay of data
FT Radar
on the ECDIS screen. ➩
MARKET SECTOR
BRIDGE SYSTEMS
Sperry Marine’s VisionMaster System
It is understood that the new VisionMaster technology will be
applied to the next vessel in Royal Caribbean's 'Freedom' cruiseship
series, due for delivery from Finland next year.
Northrop Grumman Corporation, of which Sperry Marine forms a
business unit, opened a new shiphandling and bridge operation training
simulator in Hamburg this year. Courses provided at the 160 squaremetre Sperry Marine training centre include classroom instruction with
multiple computer workstations and a complete, integrated bridge system(IBS), augmented by the ship simulator.
The new simulator system incorporates three projectors that provide
a full-motion seascape on a 4.2m-wide, 120-degree panoramic screen.
Jumping on the all-in-one bandwagon is
Transas with its Integrated Navigation System
(INS). The Transas INS was designed in full
compliance with IEC61924 standard and is the
first in the world to be certified as INS class C
and type-approved by DNV.
86
Bridge controls linked to the simulator provide realistic shiphandling
scenarios for various types of vessel under different sea conditions, and
the multi-console IBS mimics a ship's bridge.
The Hamburg training centre was chosen for the simulator due to the
city port's standing as a hub for the European shipbuilding and È maritime industries, and as a convenient central location with respect to
Europe as a whole.
Meanwhile, Sperry Marine's training centre in the UK at New
Malden, the fountainhead of the absorbed Racal Decca range of radar
and other equipment, has been tasked with ECDIS training for a prominent shortsea operator's officers. Progressive Irish company Arklow
Shipping entrusted Northrop Grumman with integrated bridge systems,
featuring a 'paperless' navigation capability, for each of a series of
4,500dwt dry cargo vessels contracted from a Spanish yard.
In addition to dual ECDIS consoles, Sperry Marine is supplying the
complete suite of navigation electronics, including radars, autopilot and
manual steering, heading and speed sensors, and other associated systems to the six newbuilds at Astilleros Murueta. The same suite of gear
was also ordered for a sextet of vessels of similar type under delivery
BRIDGE SYSTEMS
from Barkmeijer Stroobos in the
Netherlands. Arklow is in the vanguard of
the movement to substitute paper charts
with ECDIS under the IMO equivalency
rules, and its watch officers are being
trained at New Malden in the use of
ECDIS and other apparatus.
Also jumping on the all-in-one bandwagon is Transas with its Integrated Navigation System (INS). The
Transas INS was designed in full compliance with IEC61924 standard
and is the first in the world to be certified as INS class C and typeapproved by DNV.
Transas’ INS has a number of benefits comparing to the stand-alone
systems. First of all it gives the user the better situation awareness. In
addition, a new level of reliability is achieved by means of several
reservation levels. The display of an integrated system combines
numerous layers of the information from different sources into one situation display. The Navigational chart is presented together with radar
overlay, route information, targets, and own ship position, information
on ships maneuverability, providing a real-time picture for grounding
and collision avoidance as well as decision making support.
In response to market trends and demands, German flat screen manufacturer Conrac has recently unveiled a new series of displays featuring widescreen 26-inch and 27-inch screens. The claimed, superior
image performance of the radar/ECDIS displays, of the new
wideECDIS MultiTask Monitor range, stems from the use of full HD
panels(of 1920 x 1200 pixels for the 26/27-inch models) in conjunction
with Conrac's state-of-the-art electronics.
These are proposed as an alternative to currently utilised 23.1-inch
displays, and cater to the client industry's requirement for larger
MARKET SECTOR
amounts of information to be
displayed on screens, yet with
first-class image presentation
and clarity, easily discernible
from different viewing positions,
and providing the mariner with
an additional aid to decisionmaking under all conditions.
K-Bridge consists of a complete range of
consoles, including rudder angle and steering
control systems, as well as standalone X-band
radar, speed log, echosounder, GMDSS and
chart system.
Kongsberg Maritime recently despatched the first of its new generation of K-Bridge consoles under a contract embracing four very large
LNG carrier newbuilds ordered in South Korea by Overseas
Shipholding Group under the Qatargas II programme. The Norwegian
company's scope of delivery covers the bridge, cargo, integrated
automation and integrated navigation systems for the gas carrier series
under construction by Samsung and Hyundai.
K-Bridge consists of a complete range of consoles, including rudder
angle and steering control systems, as well as standalone X-band radar,
speed log, echosounder, GMDSS and chart system. The integrated navigation system forms part of Kongsberg Maritime's K-Line product
technology offering, which also encompasses automation(K-Chief),
dynamic positioning and joystick(K-Pos), propeller and thruster control(K-Thrust), tank gauging(K-Gauge) and safety(K-Safe). ■
DRY BULK
Solid outlook for bulk
market optimists
By Jarle Hammer, Shipping Adviser at Hammer Maritime Strategies
he bulk market this autumn exceeded most people's expectations. Despite absorbing a record vintage of new tonnage,
the freight market improved substantially for all sizes of bulk
carriers. The big flock of early spring dry bulk pessimists
turned out to be wrong and many deplorable decisions have been made
by their followers in the meantime - and many good decisions by those
who thought otherwise.
Addressing the Lloyd’s Shipping Economist's Norwegian Ship
Finance Conference in Oslo in late March, I warned against the prevailing pessimism, reflected in extremely low futures quotations and
advised that 2007 could well provide a new window of opportunity in
the dry bulk market. One major reason was, and still is, a fairly modest
order book as far as deliveries for the next two to three years are concerned. Another reason was, and still is, the strong development in the
world economy, despite high oil prices.
In particular, the global steel market has become much better than
previous strong forecasts. The International Iron and Steel Institute in
October last year predicted a growth in world steel demand of 4% to
4.5% in 2006, this was lifted to 7.3% in April and as much as 8.9% in
October this year. For comparison, the International Energy Agency
now expects world oil demand to increase just 1.2% this year. The dry
bulk window opened earlier than the optimists believed and I think it
has not closed yet. Now is the time to consider tonnage positioning for
a market that could turn out to remain more than healthy for another
couple of years.
T
Market Development Handysize Bulk
50
Million $US
‘000 US$/DAY
35
30
40
25
30
from $16,000 to $27,250 for Supramax. Five-year-old vessels cost
more than newbuilding prices and resales obtain significant premiums.
This positive market development has been obtained without much help
from congestion problems in ports around the world, but substantial
amounts of tonnage are tied up in the rapidly growing domestic trade
along the Chinese coast.
One should always watch the market fundamentals on the tonnage
demand and supply side before taking important market decisions.
According to Fearnresearch, the research arm of Norwegian
Shipbrokers Fearnleys, total tonne-miles in dry bulk shipments are estimated to have increased 6.3% in 2005, following as much as an 8.4%
growth in 2004. Present forecasts for 2006 stand at some 6.8% growth
(up from 4.5% growth estimated in late March), and 2007 might well
show a continued high growth of around 5%. These forecasts are
increasingly dependent on the pace in the Chinese steel industry. The
trade in thermal coal is expected to continue to benefit from high oil
prices and geopolitical conditions in the energy market, and the trade in
grain and soybeans is likely to show more growth than in recent years.
Recently, the trades in steel products, cement and some minor dry bulk
commodities have shown stronger growth than expected.
For comparison, the world bulk carrier fleet rose 7.2% in 2005, after
a 6% growth in 2004. For this year, the bulk carrier fleet is now estimated to have increased 7.4%, whereas the increase in 2007 is estimated at
a modest 3.8% and just 3.2% growth is estimated in 2008. This setting
points to an improved tonnage balance from next year, with some additional upside potential in the dry bulk market. In my view, present
future market quotations for 2007, 2008, and 2009 still appear to be
somewhat on the low side, although they have been lifted considerably
since the unsubstantiated pessimism prevailing in the market half a year
ago. Actually, quotations for calendar 2007 have more than doubled
from six months ago and quotations for calendar 2008 have been
increased some 65% to 80%.
20
15
20
Markets for Large Vessels Bulk and Container
10
140
10
‘000 US$/DAY
TANK
280
5
0
96
96
DEMOLITION
96
96
15 YEARS
96
5 YEARS
96
96
96
T/C RATE 12 M 45’
96
96
96
NEWBUILDING
Looking at the dry bulk freight market from the end of March to the
start of November, the Baltic Dry Index rose as much as 64%, or close
to two thirds. The Capesize index was up 68%, the Panamax index up
64%, and the Supramax index up 58%. Timecharter rates for 12 months
increased even more over the same period, from $34,000 to $60,000 per
day for modern Capesize, from $17,000 to $30,000 for Panamax, and
88
120
240
100
200
80
160
60
120
40
80
20
40
0
0
0
99
00
CONT 2750 TEU
01
VLCC
02
03
CAPESIZE BULK
04
05
06
DRY BULK
In the steel industry it has in recent years
become very much a question of China
versus the rest of the world, with periods
of quite opposite developments or very
large differences in growth rates. Lately,
however, the world outside has also
enjoyed a positive development on the
steel side
Markets for Large Vessels Bulk and Container
STEEL PRICE in US$/t
12 Month Change in PCT 3-M AV.
50
45
700
600
40
35
500
30
400
25
20
300
15
200
10
5
100
0
Economic expectations for 2006 have recently been revised slightly
upwards for Europe, Japan, China, India and South Korea. On the other
hand, GDP forecasts for 2007 have largely been revised somewhat
downwards in most leading countries, except for China. On average,
GDP growth figures for 2007 will expectedly be roughly 0.5% to 1%
lower than for 2006. Lower oil prices could contribute to somewhat
larger economic growth. Over the first ten months of this year, Morgan
Stanley’s World Stock market index was up 13%, after an increase of
8% through 2005. Industrial production has, in recent months, shown
remarkable strength in several countries. Thus, the latest reported 12month changes in industrial production show 16.1% in China, 10.6% in
South Korea, 9.7% in India, and generally high growth in Asian countries. Also industrialised countries show remarkably high growth rates
in industrial production in view of their position as established maintenance economies with rather modest economic growth for many years.
The latest reported changes show +5.6% for the USA, +5.4% for the
Euro area (as high as +7.3% for Germany), and +5.9% for Japan.
World crude steel production was up 5.8% in 2005. Pig iron production, requiring iron ore and coking coal, saw an increase of as much as
8.3%. In the steel industry it has in recent years become very much a
question of China versus the rest of the world, with periods of quite
opposite developments or very large differences in growth rates. Lately,
however, the world outside has also enjoyed a positive development on
the steel side. During the first nine months of 2006, world crude steel
production was up 9.3% from same period last year. China’s crude steel
production was up 18.3% and the rest of the world was up 5.1%.
Looking at production of pig iron, which is more relevant from a shipping point of view due to its use of iron ore and coking coal, world production in the nine months of this year was up 10.5%, with China up
20.8% and the Rest-of-World up 3%.
-5
00
01
REST OF WORLD
02
CHINA
03
04
05
06
30
STEEL PRICE HRC W. EUROPE
The steel industry, and in particular China’s steel production, represents the most important demand element in dry bulk shipping and it
sets the pace in all dry bulk market segments. The steel industry
accounts for roughly 50% of the total demand for dry bulk tonnage.
This includes shipments of iron ore and coking coal, manganese, ferroalloys, limestone, iron and steel scrap, as well as the voluminous
trade in finished steel products. The role of China has increased dramatically in the last few years. China’s share of world pig iron output rose
from about 36% in 2004 to 43% in 2005, and reached 48% in
September this year.
There is at present a strong increase in the average distance of iron
ore imports to China. During the first seven months of 2006, iron ore
imports from Brazil rose 41% to almost 42 million tonnes, imports from
India were up 11% to 47m tonnes, and imports from Australia were up
13% to 69m tonnes.
China has for several years been among the largest steel importing
countries in the world. However, in late 2004 it suddenly became a net
exporter and is now, by far, the largest steel exporting country in the
world. In 3Q this year, China exported some 14.6m tonnes of steel
products and semis, mostly to nearby countries, against export volumes
of about 8.9m tonnes from Japan and 8.6m tonnes from Russia.
Generally, it is better for the dry bulk market when China imports more
steel because of the trade it generates in both iron ore and coking coal
imports to countries making that steel, as well as the shipments of steel
products, compared to making more steel in China.
The fact that China is taking market shares from other countries in
the international steel market has quite some downward leverage on
tonnage demand. It is important to be aware that the fantastic Chinese
steel boom can to some extent become a double-edged sword for the
dry bulk market. The present substantial steel surplus in China could
also reflect a slower growth in domestic demand.
China has also become a giant in the aluminium market. During the
first nine months of this year, China’s primary aluminium production
was up almost 18% from the corresponding period last year, against an
increase of just 2% for the rest of the world. This brought world production up almost 6%. China’s share of world primary aluminium production rose from about 24% in the first nine months last year to 27% in
the corresponding period this year. ➩
China has for several years been among
the largest steel importing countries in the
world. However, in late 2004 it suddenly
became a net exporter and is now, by far,
the largest steel exporting country in the
world
89
DRY BULK
Coal Exports
12 Millions Tonnes
3M. Averages
21
18
15
12
9
6
3
0
94
95
AUSTRALIA
96
97
98
99
USA (EX. Canada) CHINA
00
01
INDONESIA
02
03
04
05
06
INDONESIA
It should be observed that only about 3%
of China’s coal production is exported.
With China’s huge demand for new electricity it is not unlikely that China could
turn into a net coal importer in a few years
and that coal imports to China could
become a major driving force in the dry
bulk market in the medium and somewhat
longer term
A look at Chinese trade volumes shows that iron ore imports rose
32% to 275m tonnes in 2005, up as much as 67m tonnes. During the
first nine months of 2006, iron ore imports to China were up 24% and
might reach about 330m tonnes for the full year. Coal exports from
China were down 15% to about 74m tonnes last year and a further
reduction of 12% was seen over the first nine months this year. This is
good for the freight market because of the need for more long-haul coal
imports to neighbouring countries. China’s coal imports, on the other
hand, rose 35% to about 25m tonnes in 2005 and a further increase of
41% took place in the first nine months of this year. Annualised, this
means Chinese coal exports of about 64m tonnes this year versus coal
imports of 35m t.
90
It should be observed that only about 3% of China’s coal production
is exported. With China’s huge demand for new electricity it is not
unlikely that China could turn into a net coal importer in a few years
and that coal imports to China could become a major driving force in
the dry bulk market in the medium and somewhat longer term.
Statistics from Fearnresearch show that the world dry bulk trade volume rose 6% from 2,514 m tonnes in 2004 to about 2,665m tonnes in
2005, with about 2,820m tonnes expected in 2006, or up 5.7%. Coal
shipments are expected to increase from 705m tonnes in 2005 to 735m
tonnes in 2006. Iron ore will this year see a stronger increase, from
670m tonnes in 2005 to about 735m tonnes, or the same as for coal, in
2006. Grain shipments (including soybeans) show a more stable development from 242m tonnes in 2005 to 260m tonnes expected in 2006.
The very heterogeneous group of other dry bulk commodities is estimated to increase from about 1,050 m tonnes in 2005 to 1,100 m tonnes
in 2006. China’s cement exports have shown a remarkable growth from
less than 7 m tonnes in 2004 to almost 22 m tonnes in 2005 and possibly close to 40 m tonnes this year. Cement is clearly the present handysize star commodity. How much this is a temporary phenomenon or is
hard to say, but shipments of cheap commodities over long distances at
high freight rates are bound to face short-haul competition. Another
question is why there is such a large surplus of cement in China; could
it herald a slower growth in domestic construction activity?
Containerisation of bulk cargoes has gained momentum in recent
years. After continued ordering frenzy, the present order book for container vessels stands at 53% of the existing fleet. With hardly any scrapping and a young container vessel fleet, it seems that the tonnage balance is bound to deteriorate further over the next couple of years.
Empty containers to be repositioned will remain the largest commodity
group for many years to come. Therefore, a continued containerisation
of some dry bulk trades seems likely, especially on the most imbalanced
container trade routes, such as in the Northern Pacific.
Turning to tonnage supply, it appears that new bulk carrier orders
dropped from 31m dwt in 2003 to 19m dwt in 2004, edged up to 20m
dwt in 2005, and reached 17m dwt over the first ten months of 2006.
Because of strong freight market conditions, bulk carrier demolition
sales decreased from 3.2m dwt in 2003 to just 0.6m dwt in 2004 and 1m
dwt in 2005. After a modest scrapping wave caused by some negative
market views in the early part of this year, dry bulk demolition sales
have dried up and reached 2.1m dwt over the first ten months. At the
beginning of November, the bulk carrier order book, according to
DRY BULK
The major downside risk is a slow-down in
the growth of the Chinese steel industry,
but that slow-down has to be a strong one
in order to have a major negative impact
on the dry bulk market in the short and
medium term. International conflicts and
terrorism are also factors that can dampen
or destroy the optimistic economic
consensus scenarios
Fearnresearch, corresponded to 16.7% of the existing fleet, about the
same as at the beginning of the year. Others have reported a present
order book share at up to 21%. Here, it should be said that
Fearnresearch always presents conservative figures for order books,
excluding options and rumours, and that their track record is good when
it comes to the correspondence between reported order book volumes
and actual vessel delivery volumes. However, whether the bulk carrier
order book is actually at about 17% or at 21% of the existing dry bulk
fleet does not materially affect the conclusions in this presentation. The
age profile of the bulk carrier fleet towards the end of this year shows
that as little as 2.2% will be over 30 years old and just 10.6% over 25
years old. Hence, demolition of bulk carriers is still expected to play a
rather minor role for tonnage supply in the next few years.
A look at the order book by size groups in early November shows
that the Capesize (80,000 dwt+) order book corresponded to about 27%
of the existing fleet, with strong concentration on Kamsarmax size of
80,000 to 120,000 dwt and very large bulk carriers over 200,000 dwt.
For the Panamax size (60,000 to 80,000 dwt), the share was about 9%,
and for the still rather modest size group of Supramax (50,000 to 60,000
dwt) as high as about 38 %. On the other hand, the order book for
handysize (10,000 to 50,000 dwt) was quite modest at only about 6%.
From a future tonnage balance point of view, as seen by the ship
owners, the supply side appears to be most comfortable for the handysize group. Actually, the fleet of bulk carriers below 50,000 dwt is likely to diminish slightly over the next couple of years. However, the rapidly growing fleet of Supramax vessels will have a strong impact on the
handysize market and also contribute to a stronger link between the
Handymax and the Panamax markets. For the total size range 10,000 to
60,000 dwt, the order book in early November corresponded to 12.6%
Dry Bulk Market Orders and Demolition
5.0
Million DWT Bulk and Comb. 3m. av.
BDI
700
600
4.0
500
3.0
400
300
2.0
200
1.0
100
0
0
94
95
96
NEW ORDERS
97
98
99
DEMOLITION SALES
00
01
02
RATE INDEX
03
04
05
06
of the existing fleet.
Looking ahead, it appears from Imarex future quotations on 1
November, that expectations were generally very rather good, albeit
generally showing significant declines over the next three years, after
some short term strengthening. Thus, for Capesize, the calendar 2007
quotation was down 20% from present level, calendar 2008 down 38%,
and calendar 2009 down 47%. Similarly, for the same three calendar
years, Panamax quotations were down 14%, 35%, and 43%, and for
Supramax down 10%, 34%, and 42%. This seems to be in some contrast to the tonnage demand and supply scenario, but it should be
observed that the seemingly rather bleak 2009 quotations are still
roughly in line with break-even rates for tonnage acquired in today’s
market.
Fearnleys’ Monthly market report for October shows required
timecharter rates of some $17,500 per day for new Supramax vessels,
based on 25 years lifetime and 10% return on total capital invested. This
rate requirement is perhaps a bit on the high side, in view of the low
interest rates in the present capital market and normally a somewhat
longer lifetime for such tonnage. For comparison, the actual 12 month
timecharter rate for modern units of this size in early November was at
$27,750. I’m inclined to believe that the Handymax/Supramax market
will remain rather robust in the next few years and that we could see
rates one to two years from now which could turn out to be significantly better than what appears in the present Imarex quotations. Similar
considerations could be made for the other size groups.
The major downside risk is a slow-down in the growth of the Chinese
steel industry, but that slow-down shall has to be a strong one in order
to have a major negative impact on the dry bulk market in the short and
medium term. International conflicts and terrorism are also factors that
can dampen or destroy the optimistic economic consensus scenarios. In
their latest steel demand forecast, the International Iron and Steel
Institute says that steel demand growth in China could shrink from
14.1% this year to 10.4% next year, to be followed by yearly averages
of 5.8% from 2007 to 2010 and 6.2% from 2010 to 2015. For the total
world, IISI predicts a slowdown in the steel demand growth from 8.9%
this year to 5.2% next year, with averages of 3.8% for 2007-2010 and
4.2% for 2010-2015. Such medium and longer term growth rates should
be considered to be quite strong.
In the dry bulk market, prospects look amazingly solid with good
momentum on the tonnage demand side and moderate fleet growth over
the next couple of years. My view is that the dry bulk market looks
healthier than the tanker and the container markets for the next couple
of years and that the present could be a good timing for tonnage positioning for subsequent years in the dry bulk market. ■
91
LIFESTYLE
LAMBORGHINI
T
he catwalks of Paris are used to the sight of flowing curves
and striking models that push the boundaries of style and
innovation and are guaranteed to induce a sharp intake of
breath. But streamlined beauties flaunting the latest hot
style may just be upstaged by the latest curvy head-turner
boasting beauty, poise and power.
When Lamborghini launched its Murcielago LP640 Versace at the
2006 Paris Motor Show each and every man in the room only had eyes
for one voluptuous outline. The beauty before them was a work of
genius – the combined efforts of Lamborghini and Versace’s leading
designers had created a vision no man could resist.
But you had better act fast if you want to be one of the lucky few
who get to indulge his passion and take her for a spin. Lamborghini has
plans to keep this lady for the privileged few. Only ten will be made
and a flood of footballers and millionaire playboys are already en route
to the company’s factory near Bologna, Italy to get their hands on one.
At its heart the Murcielago LP640 Versace is a standard (if such a
word could ever apply to a ‘Lambo’) Murcialago LP640 with some
fancy makeup. But when makeup is applied by Versace you are faced
with an entirely different animal.
Opulent full grain nappa leather, featuring the unique Greek fret
motif emblem of Versace, lines the lower half of the dashboard, the
doors, the centre console and the seats to add style and comfort to the
notoriously noisy and basic interior of a standard Lamborghini.
And no designer car would be complete without an extensive list of
accessories. The Versace’s ‘Precious Items’ division has created a
Chrono Matt Soft Touch watch, available in white or a glossy black,
depending on whether you choose the Isis white car shown in Paris or
the Aldebaran black version unveiled at Milan fashion week. A ladies
watch is also available in glossy white ceramic set with diamonds.
For those wishing to mix getting down to business with a little
pleasure the Murcielago LP640 Versace also comes with a personalised luggage set. The three piece set, comprising of his and hers suit
cases and a matt black calfskin suit carrier, again features the Greek
fret motif along with a white satin interior embroidered with the
Versace Couture Limited Edition logo. But the greatest achievement is
The Murcielago LP640 was already the fastest Lamborghini ever built.
Now it has been given a professional make-over just in time for Christmas…
92
LAMBORGHINI
LIFESTYLE
While the jaw-dropping
price tag of €200,000 may
appear daunting, the
moment the 6.5 litre, V12
engine and ‘thrust’ launch
control system fire you to
60mph in less than 3.5
seconds - all you need do
is wait for your pulse to
stop racing and reflect
on money well spent
that the whole set has been designed to fit in the boot – an engineering
success story in its own right.
The LP640 Versace’s exterior is fully decorated with all of the
optional extras from the serially produced Murcielago LP640.
Specially designed black Hermera wheel rims, carbon finish and an
engine hood with transparent glass ribbing give the car super-model
looks, while the e-gear sequential paddle-shift gear box enhances the
super car performance and racing experience.
And while the jaw-dropping price tag of €200,000 may appear
daunting, the moment the 6.5 litre, V12 engine and ‘thrust’ launch control system fire you to 60mph in less than 3.5 seconds - or to a kneetrembling top speed of 212mph - all you need do is wait for your pulse
to stop racing and reflect on money well spent. ■
93
LIFESTYLE
SKIING
Deer Valley Resort
A skier enjoys a
powder day of
skiing overlooking
the Jordanelle
Reservoir
94
SKIING
LIFESTYLE
Skiing in style
Ski resorts the world over are heaving under the
force of people but, as Andy Pierce discovered,
winter paradise is not too far away
K
issed with the pure white Utah snow, the Wasatch Mountains rise
majestically into the blue winter sky above Deer Valley Park. The air
is cold but refreshingly clear, and the hustle and bustle of urban life
exists only as a distant memory. It is impossible to imagine that you
are only 30 minutes from Salt Lake City International Airport.
Fortunately, despite the accessibility of the area and its high profile in the
wake of the 2002 Winter Olympics (the Olympic Park is only four miles away);
Deer Valley has escaped the curse of commercialism and budget holidays that
blight so many ski resorts today. Indeed, there is not a single hoodie-wearing,
gap-year student in sight as you pull up at the main entrance to be greeted by a
valet, charged with taking your skis from your car to the snow.
“Deer Valley has taken a five-star hotel model and applied it to a ski resort,”
said Erin Grady, Communications Manager at the resort. “If you are looking for
a great weekend, a family retreat or a romantic get-away it is a fantastic place to
come. We believe we offer something for everyone.”
Utah’s reputation for fluffy powder snow, coupled with a generous layout of
mostly north-facing slopes, ensures visitors are guaranteed high-quality skiing
that is ideal for family groups. “Each Mountain has been designed to cater for a
range of abilities. If you are with a family and somebody wants to ski down a
black run and somebody else wants to take an easier route down, our hill has
been set up to accommodate that type of skiing. We also have fabulous glade
skiing - we are famous for that. But we have great terrain overall,” Erin Grady
explained.
Each of the resorts 91 trails, spread across 1,825 acres, are protected by a
daily limit on lift passes, so there is always plenty of space to explore the great
outdoors, undisturbed. And even the most hedonistic hell-raisers will find something to their liking. Deer Valley is an annual stop on the FIS Freestyle World
Cup Circuit, and in 2011 it will become the first American resort to host the
freestyle World Ski Championships, twice.
But it is not for skiing alone that Deer Valley has been rated as one of the top
three resorts in North America for the past nine years, by reader of SKI magazine. It is consistently rated as number one in terms of dining, guest service and
mountain grooming.
“There is a lot to do besides skiing,” Erin Grady said. “The Stein Eriksen
Lodge (a five-diamond hotel combining European elegance with mountain ➩
95
LIFESTYLE
SKIING
Deer Valley Resort
architecture) has an amazing spa. You can also go bobsledding down at
the Olympic Park. Alternatively your can take a hot air balloon ride, go
dog sledging or visit the nearest town - Park City - which offers over
100 bars and restaurants as well as genuinely unique boutiques and galleries.”
However, with Deer Valley’s reputation for both on mountain and
nighttime dining, there is seldom any need to venture so far. “There are
two restaurants that really stand out for a romantic evening,” Erin
Grady suggested. “The Mariposa boasts a Spectator Award-winning
wine list and is rated number one in the Zagat Restaurant guide for
Utah. Then we have Fireside Dining (at the Empire Canyon Lodge)
which is an Alpine style dining experience with beef, veal stew and
‘roasties’, followed by chocolate and caramel fondue by the fire place.”
If you are not tempted by the prospect of first class food, then perhaps the resort’s five-star accommodation would be more to your liking. “Deer Valley has very high end luxury properties - a lot of them are
luxury condominiums that can be up to 8,000 square feet - which you
can rent for the evening. We also have several different ski-through,
slope-side properties, that average 15,000 square feet plus,” Erin Grady
explained. For those looking to invest in property, Dear Valley’s starting ‘condos’ cost in the region of $1m; while at the top end of the market properties can go for between $10m and $15m.
The Daly Chutes at Empire Canyon
And the standard of property is set to rise still further. In October
2005 Deer Valley was selected by readers’ of SKI as the perfect site to
build the magazine’s first “Dream Home”. The ski-in/ski-out house,
which is currently under construction, will boast 360-degree panoramic views of the Wasatch Mountains, Deer Valley’s ski slopes and the
picturesque Jordanelle Reservoir.
Stefanie Luciano, Vice President of marketing for Mountain Sports
Media, publishers of SKI magazine said: “All the elements incorporated into the Dream Home really represent the sort of lifestyle people are
striving for in a ski vacation – a gathering place for family and friends
– a wonderful kitchen for sharing warm winter meals – the hot tubs –
the luxurious bedding and furniture – the spa area – the outside decks
overlooking gorgeous mountain views, its all about living the good life
and appreciating it.”
When complete in 2007, the Dream Home will be available for rent for
guests “seeking the ultimate ski experience”. Then all that will remain for
the lucky few who can afford a stay at the Dream Home will be to get
themselves a new hoodie and prepare to lose them selves in the knowledge that paradise is only 30 minutes from an international airport. ■
NEW DEVELOPMENTS
This summer $7m was invested in a new high-speed quad,
which replaced Bald Mountain’s Sultan chairlift. The project
opened up an extra 1,000 vertical feet and 75 acres, including
expanded glade skiing and a new intermediate run.
DON'T MISS
First Tracks. Get first crack at Deer Valley’s famous corduroy
with a guided 8am tour from the base of the Wasatch lift ($1,200
for up to eight skiers). Make sure you book in advance.
LOCAL SECRET
Unmarked, fluff-rich tree runs include Black Forest, between
Stein’s Way and Perseverance, and X-Files, at the far end of the
traverse, past the Daly Chutes.

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