Stirring Maritime Comms: Russia’s Under the debating spotlight insurance might Indian Shipbuilding Bypassing the global downturn

How I Work: Hamburg Sud’s Julian Thomas

Regional Focus - Scandinavia: Northern star shines the light of a sparkling cluster

Stirring Maritime Comms: Russia’s Under the debating spotlight

insurance might Indian Shipbuilding Bypassing the global downturn

How I Work: Hamburg Sud’s Julian Thomas

Regional Focus - Scandinavia: Northern star shines the THE MAGAZINE OF THE WORLD’S SHIPMANAGEMENT COMMUNITY ISSUE 23 JAN/FEB 2010 light of a sparkling cluster

COVER STORY FIRST PERSON 12 Giuseppe Bottiglieri and Michele Bottiglieri DISPATCHES Roughly translated Torre del Greco means ‘Tower of the p52 Russian Insurance Greek’ but this Naples suburb is as best known for its prevalence of traditional family ship owners as Stirring Russia’s for its coral art and fine jewellery insurance might SHIPMANAGEMENT FEATURES

16 How I Work SMI talks to industry achievers and asks the question: How do you keep up with the rigours of the shipping industry? 27 Opinion Martin Stafford, CEO Marine Services Division, V.Ships “It is interesting if you look across the range of services we have as some were naturally formed businesses in their own right while others came out of departments operating within the shipman- agement side of the business" 81 Insider 6 STRAIGHT TALK - Learn your lessons well Andrea Costantini - Chief Financial Officer, Ishima NOTEBOOK 8 Szymanski looks to an era of 9 Ireland ‘out to attract’ more MARKET SECTOR greater consolidation and respect businesses to its shores’ Greater communication, best practice and 31 Crew Travel boosting the respect third party managers 10 IMMA launched to oversee Booking seats for a ship’s crew with 72 hours notice and receive from their principals are three of the seafarer health a brief to get the best price possible with the fewest key motivators for the new incoming A new trade association armed with a broad number of transits can be a task only suitable to those Secretary General of InterManager, the mandate to represent and promote the health and with the thickest skin and the toughest disposition trade association for the world’s third party medical interests of the world’s seafarers, port and in-house ship managers workers and cruise passengers as well as improve shipboard hygiene has been formed in London 66 Communications Round Table Owners and charterers should The shipping industry continues to struggle to shirk off the effects of the global recession. But what will be the liaise on vessel routeing Industry ‘not prepared’ for MLC knock-on effects for a maritime communication industry that is driving forward with new broadband solutions? Is 2010 a year to avoid or a year of hope? SHIP REPAIR NEWBUILDING 50 Ship Repair Despite the continuing financial downturn facing the global shipping industry, shiprepair yards, especially those in Singapore, appear bent on expansion. The most progressive expansion plan 61 Year-end work influx to order involves Jurong Shipyard Ltd (JSL), part of SembCorp Marine hungry yards

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 3 REGIONAL FOCUS ECOVISION

20 Scandinavia 87 EcoVision covers the wide-ranging and pressing environmental Scandinavia recently formed the backdrop of one of the single most aspects of shipping that impact on owners and managers with inform- globally critical issues of the contemporary age, as world leaders ative, dynamic and colourful depth, featuring the emerging designs, gathered together in Copenhagen for tense and earnest discussion technologies, innovations, legislations, schemes and issues shaping the about the collective fight against climate change future of the global shipping business with input from some of the world's most green-minded industry leaders 40 Gibraltar Considering it is barely visible on a map of the world, the country 88 Designing a revolution of Gibraltar holds a fairly prized position in the global maritime Climate change talks may be forcing the shipping industry into a industry, being one of the most important fuel valves on the pressurised can of responsibility as an imperative market policy for shipping arteries of the seas emissions reduction sits at the top of the agenda, but for shipping companies taking matters into their own hands, the future is looking 78 Ireland distinctively eco-shaped If the mood at the fourth annual Irish Maritime Development Office 90 Green Shoots (IMDO) Irish Ship Finance briefing, recently held in Dublin, was anything to go by, then 2010 could be as much a year of opportunity as a year of survival for the country’s shipping industry BUSINESS OF SHIPPING

DISPATCHES 62 Ad Hoc Containers as emergency housing Climbing high for Seafarers UK 56 Indian and Sri Lankan shipbuilding Sculpting a piece of history The shipbuilding industry in India is in a far healthier state than it was Beefing up customs barely six years ago. Notwithstanding the global economic downturn World’s first MLC 2006 certification and shipping recession that have adversely affected the order-books and Paper for diamond bottomlines of shipyards in South Korea, Japan and China over the last Hospital ship to the rescue in Haiti two years, most top shipbuilders in India appear to be sitting pretty with order-books crammed until fiscal 2012-13 IN A TAXI WITH... 82 DP World The greater the binge, it is said, the bigger the hangover. A dirham for 85 Jan Morten Eskilt, CEO OSM Group your thoughts, and with apologies to Horace: if the mountains laboured greatly, did they produce merely a ridiculous mouse? REVIEW TRADE ANALYSIS 96 Entertainment: DVDs: 37 Ice Class Shipping District 9, 2012, By the people- The election of Barack Obama Dining: Sketch, London Rejuvenation of the Russian icebreaker fleet is closely allied with the country's geopolitical agenda and new industrial verve founded on a Verre, Hilton Dubai Creek Hotel, Dubai belief in the core, long-term economic and strategic importance of its Events: Rio De Janeiro Carnival Arctic hydrocarbon and mineral reserves Books: The Ships Atlas - 13th Edition Madoff mens Rea and other people’s money 74 Ro-Ro Implemented during what may now be viewed as the halcyon days that preceded the global financial crisis and economic downturn, a LIVE succession of ro-ro and ro-pax newbuild projects coming to reali- sation and under way are distinguished by high capacities, in some 93 Objects of desire Things that make you go oooh! cases setting new benchmarks in payload intake LIFESTYLE BUSINESS VIEWPOINT 100 I want it... 28 Year of the Seafarer and I want it now! As we wave goodbye to a momentous decade for international Faced with a vanity fair of amenities, shipping, we open the door to a new one, and new it certainly will be. valued guests of Hotel Rey Juan Carlos Record highs and lows in shipping history have earmarked the 1 in Barcelona are offered a menu of ‘noughties’ as an era of change, and with 2010 officially designated by nine types of pillow, with varying the IMO as ‘Year of the Seafarer’, there are monumental challenges degrees of firmness and various fillings ahead for the shipping industry.

4 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010

STRAIGHT TALK

Welcome to Ship Management International

JANUARY/FEBRUARY 2010 Issue No. 23 www.shipmanagementinternational.com Learn your The Shipping Business Magazine today’s owners and managers have been waiting for Published by lessons well

Elaborate Communications Acorn Farm Business Centre, Cublington Road, According to Thomas Peters, the leading told reporters, “both for ship owners and Wing, Leighton Buzzard, Bedfordshire LU7 0LB American writer on business management managers, there are major consequences for the United Kingdom practices, the magic formula that successful MLC being implemented, and there are require- Sales/Accounts +44 (0) 1296 682241/682051 businesses have discovered is to treat their ments that they’ll need to have in place. There Editorial +44 (0) 1296 682356 customers like guests and their employees like are also major consequences for the flag and Fax: +44 (0) 1296 682156 Email: [email protected]/[email protected] people. His best known work – In Search of port states with regards to inspections and www.elabor8.co.uk Excellence – espoused the ethic of solving providing flag state administration.” business problems with as little business process As IMEC Secretary General Giles Ship Management International Editorial Board overhead as possible and empowering decision- Heimann, pointed out: “You can’t expect a guy Rajaish Bajpaee (Bernhard Schulte Shipmanagement) makers at multiple levels of a company. who’s probably been an engineer or a deck Guy Morel (InterManager) A sound business philosophy indeed, and officer and who is proficient in safety and so on, Nigel Cleave (Elias Marine Consultants) one that managers and owners boast at every to understand the complexities of crew contracts Andreas Droussiotis (Bernhard Schulte Shipmanagement) Dirk Fry (Columbia Shipmanagement) given opportunity. Our crews are our assets, overnight. Administrations need to act right now Sean Moloney (Elaborate Communications) they cry, and must be valued at every juncture. to ensure their inspectors are trained effectively But nearly three decades after the shipping to carry out these inspections.” Editorial Director: Sean Moloney Assistant Editor: Amy Kilpin industry started to look towards the importance Revision of the STCW Convention is also Editorial Support: Debra Munford of shipboard self management, how valued is nearing completion and a diplomatic conference Australia: Wendy Laursen the Master and Chief Engineer let alone their planned for June of this year will set the Ireland: Hugh Oram fellow officers or the massing hoards of Far approval process in train. Once the Convention Regular Contributor: Margie Collins Technical Editor: David Tinsley Eastern and FSU ratings that their principals and is adopted, the IMO has already planned a series Advertisement Director: Jean Winfield employers do little to really nurture let alone of seminars and workshops for developing Advertising Exec: Chloe King even try to learn their names. With a fleet of 500 countries to familiarise themselves with the new Research Manager: Roger Morley ships and a pool of 15,000 seafarers, name and amended provisions so that they are Accounts: Lorna Gould Design & Layout: David Marsh recollection can be a problem, I guess. But equipped to implement the convention. This will shouldn’t that be the responsibility of the fleet require much technical assistance largely facili- Editorial contributors: manager or the fleet superintendent? tated by the IMO's Integrated Technical The best and most informed writers currently serving Call me an old cynic but I do get a bit Cooperation Programme and which will need the global shipmanagement and shipowning industry. nervous when I hear of owners and managers additional donor support. But updating of model cranking down the margins of the ship suppliers courses will also have to be done. and the service providers so they can save the Some of the needs of the industry include Ship Management International is published six times a year and is entirely devoted to reporting on the odd buck. Cost control is important but ensuring special training to deal with the scourge of dynamic and diverse in-house and third party your ship is well staffed, well fed and well piracy and armed robbery, crucial aspects in shipmanagement industry. stocked has to be a pre-requisite of any today’s difficult times. But first and foremost, Subscriptions UK and ROW – 1 year: £120 ($180); employer valuing his employees. I am also the revised STCW rules will offer all relevant 2 years: £200 ($300). dismayed that every ship in the trading fleet is stakeholders, the proper instruments by which to Download a subscription form from still not kitted out with the latest broadband recruit, train and retain their sea-staff. At a time www.shipmanagementinternational.com or communication suite. The benefits are there for when the role of the seafarer is becoming even Send subscription enquiries and/or address all to see: enhanced maintenance and fuel cost more respected, this can only be a good thing. corrections to: benefits aside, we all know how difficult it But as the shipping industry embarks on a Elaborate Communications, Acorn Farm Business would be for us landlubbers to spend an hour, let highly uncertain year ahead, it still has a crew Centre, Cublington Road, Wing, Leighton Buzzard, Bedfordshire LU7 0LB, United Kingdom. alone a day, out of touch with our Facebook deficit situation spiralling out of control. As Tel: +44 (0)1296 682051/682241/682403 updates, our Blackberries and the other Microsoft boss Bill Gates once said, ‘your most trappings of our burgeoning virtual offices. unhappy customers are your greatest source of Printed in the UK by Warners Midland Plc. Although every effort Equally as worrying is the level of readiness learning’. Let’s hope this doesn’t extend to the has been made to ensure that the information contained in this publication is correct, Elaborate Communications accepts no the industry has ahead of a raft of new seafarer shipowners’ greatest asset. responsibility or liability for any inaccuracies that may occur or legislation that is about to descend on the industry. their consequences. The opinions expressed in this publication are Happy reading. not necessarily those of the publishers. All rights reserved. No part The Maritime Labour Convention is, of this publication may be reproduced whole, or in part, stored in according to the International Maritime a retrieval system or transmitted in any form or by any means without prior permission from Elaborate Communications. Employers’ Committee (IMEC), without doubt one of the most significant pieces of maritime labour legislation to hit the industry “for as long Approved and Supported by as we can remember”. But as IMEC recently Sean Moloney

6 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010

NOTEBOOK SHIPMANAGEMENT NEWS AND REPORTS FROM AROUND THE WORLD Szymanski looks to an era of greater consolidation and respect

Greater communication, best practice and boosting the respect third party managers receive from their principals are three of the key motivators for the new incoming Secretary General of InterManager, the trade association for the world’s third party and in-house ship managers. “I would like to work on consolidation within the industry and getting our forces together,” said Captain Kuba Szymanski, who takes over the InterManager secretariat helm on March 1st. “There are a lot of things we can improve if we start talking to each other, improve communication and stop reinventing the wheel. Why not get together and reap the benefits of being together. So yes consoli- dation is important and we can all benefit,” he added. Captain Szymanski moves from MOL Tankship Management where he has worked for the past two years. After joining InterManager in March, he will work alongside the outgoing General Secretary Guy Morel until his official retirement in June. Capt Szymanski’s title during this interim phase will be Secretary General Elect. Based on the Isle of Man, Capt Szymanski has a wealth of shipping industry experience both onboard and ashore. Polish-born, his previous experience includes management roles at Dorchester Maritime Ltd and MOL Tankship, and commands on LPG, Chemical Product and Gas Carriers. He holds an MBA from John Moores Liverpool University, an MSc in Marine Biology and Navigation from the University of Szczecin, as well as various professional diplomas. Married with one child, Capt Szymanski’s interests include skiing and sailing at compe- tition level, running marathons and walking. Guy Morel has held the role of InterManager General Secretary since 2007 and was a founder member and former president of the organisation’s predecessor, the International Ship Managers Association (ISMA). Mr Morel said: “After more than three years at InterManager, I feel that the organisation is now stronger and better positioned for a bright future. It is now time for me to pursue other personal projects and also to enjoy my family.” Looking forward to being joined by Capt Szymanski, Mr Morel added: “With his dual sea and shore experience, with his knowledge of shipmanagement, with his business management experience, and with his familiarity with Associative life, Kuba is bringing a unique mix of Roberto Giorgi, InterManager President said: “Of course we are skills and experience to InterManager. He will make a great Secretary very sad to see Guy go, but we think in Kuba Szymanski we have General, and our Executive Committee was unanimous in recom- found a worthy successor whose enthusiasm and expertise will take the mending him to the position. I look forward to our period of joint work.” organisation forward.” Owners and charterers should liaise on vessel routeing

Ship owners and charterers should liaise more closely with their ship to take when you consider issues such as traffic separation schemes, shipboard teams when calculating vessel voyage distances as they could SECA areas and other navigational factors,” he said. face increased operating costs associated with extra ‘unplanned’ days Captain Hall added: “To avoid protracted demurrage and deviation steaming or inadvertently entering expensive and time consuming claims it would be best if ship operators and charterers could establish Sulphur Emission Control Areas (SECA). an acceptable routeing for the ship. This may ultimately include the Captain Trevor Hall, Director of distance tables specialist input of weather routeing but an initial appreciation of the routeing AtoBviaC, said ship owners are not fully aware of what tools are options can be provided by using the flexibility of our distance tables.” available to them to make more effective time and money-saving vessel AtoBviaC, publisher of marine distance tables for the global shipping routeing decisions. industry, was formed in 2003 by a group of Master Mariners and software “While the route between two ports, appearing as a straight line on developers. Round voyage distances taken from tables developed by a chart, may look ideal, it may not necessarily be the realistic route for a AtoBviaC have been used in the 2010 Worldscale tanker flat rates.

8 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 NOTEBOOK

Ireland ‘out to attract’ more businesses to its shores

The Irish government is to use the global shipping recession to launch looking at their structures," she said. Ms Portas said Ireland was not an a campaign to attract any maritime businesses companies wishing to automatic choice because "there are lots of different reasons why use its favourable fiscal and employment regimes to cut their costs and people move". rationalise their operations. Recently XL Capital announced it was leaving the Cayman Islands Glenn Murphy, Director of the Irish Maritime Development Office, to domicile in Ireland. Previous to this were moves by companies with said the focus would be on those companies looking for “a stable base a strong maritime business link including TBS International, Willis to do business”. Group and Beazley Group. Zurich Financial Services recently Ireland is not noted internationally as a tax haven but beneficial announced it was transferring the majority of its general insurance double taxation agreements with countries like the US as well as a portfolios in Italy, Portugal and Spain to local branches of Zurich lowering human resource as well as operational cost base means it is an Insurance Ireland. attractive option for companies needing to weather this particular. Tax partner at KPMG, Stuart Secker told the Irish Times that overall Indeed, many experts believe Ireland will continue to attract firms regulatory environment, taxes, infrastructure, availability of skilled looking to relocate to another country. workers and language made Ireland attractive to companies considering Regulatory director with KPMG, Jane Portas, was quoted in the moving. When Willis said it was moving to Dublin it pointed to "a more Irish press as saying she expected more companies to consider locating stable environment" and said it would improve its ability to "maintain a in Ireland. "I think what you are going to see is a lot of companies competitive worldwide effective corporate tax rate".

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 9 NOTEBOOK

IMMA launched to oversee seafarer health A new trade association armed with a broad mandate to represent and Conversely, crew managers and ship owners are finding it hard to promote the health and medical interests of the world’s seafarers, port balance the demands for higher operational output from their seagoing workers and cruise passengers as well as improve shipboard hygiene workforce with the needs for a healthy and contented crew base. And has been launched in London. that is before we consider the insurance implications of rising health The International Maritime Medical Association (IMMA), as it is costs in a sector that suffers from a lack of understanding and known, will look after the medical interests of those involved in the empathetic regulatory structure. shipping industry worldwide and work to lobby politicians and regulators “IMMA has been formed to represent and tackle all of these who influence this important sector of the global shipping industry. issues from a practitioners’ as well as from an employers’ standpoint,” IMMA, which is a ‘not for profit organisation’, will operate out of he added. ■ the Baltic Exchange in London. It will not only represent the medical and health interests of the maritime sector globally, but also act as a legislative watchdog and lobby for change as and where necessary. It is the only trade association of its kind in the world. Armed with a mandate to highlight the health and medical issues of the world’s seafarers equally from an owners’ and managers’ perspective as well as through the eyes of the seafarer and the unions, IMMA will bring the views of the ship and crew manager and the seafarer to the forefront when influencing future regulation of this key area of the global shipping industry. It has established a permanent secretariat in The Baltic Exchange in London to support and promote the interests of its members. A fully- employed Secretary General has been recruited and a nine-strong board of directors bringing together expertise from the medical as well as shipowning, P&I, port agency and medical auditing spheres is being assembled. A website: www.maritime-medical.org has also been set up. Michael Van Hall, President of Gezellig, Inc. and formerly President of van Hall Health Inc. and Managing Director Maritime Sector at Health Systems International, Indiana, has been elected as the association’s first President. Full membership of IMMA is open to all stakeholders interested in seafarer and maritime health, fitness and medicine: notably port and shipboard doctors; port clinics; hospitals; medical and speciality medical groups such as dentists and orthopaedists; pharmacists and medical equipment and drug supply and testing companies; P&I Clubs; port agents and port operators as well as shipowning and shipman- agement shipping companies. IMMA will operate as the ‘Go-To’ place for advice and services on, for example, pre-employment medical examinations (PEME), nutrition/dietary, keeping a crew fit and healthy, immunisations, training of the ‘medical’ person onboard, telephone and web-based medical advice and advice and guidance relating to the operation of doctors and hospitals in the major ports of call. Michael van Hall said: “Seafarer health has become such a crucial issue as concern over the seafarer shortage problem impacts on length- ening sea-time, longer working hours and less relaxation time. Industry ‘not prepared’ for MLC

Alarming concern that the shipping industry is ‘not prepared for the be looking at implementation of the MLC during 2011. huge challenge’ of the fast-approaching implementation of the “Both for ship owners and managers, there are major consequences Maritime Labour Convention (MLC) has been raised by the for the MLC being implemented, and there are requirements that they’ll International Maritime Employers’ Committee (IMEC). need to have in place. There are also major consequences for the flag With insufficient preparation being the primary source for concern, and port states with regards to inspections and providing flag state IMEC has highlighted the potential problems regarding both flag state administration,” he warned. and port state guidelines for MLC inspections, given that the current He added: “Time is very, very short. It is a huge piece of interna- port state control inspection competencies will be completely different tional legislation, and it is a huge challenge. On top of MLC we’ve got to the regulations set out by the new Convention. the amendments to STCW coming out as well, which we’re all going to Giles Heimann, Secretary General of IMEC, said: “The MLC is be concerned with. There is deep concern that the MLC is coming without doubt one of the most significant pieces of maritime labour towards us, and we need to make sure we are prepared for it, because I legislation to hit the industry for as long as we can remember. don’t think we are at the moment. I don’t think the industry realises the Implementation is rapidly approaching, and I honestly believe we will size of the job we’ve got.”

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Giuseppe Bottiglieri and Michele Bottiglieri Drawing on Torre del Greco’s heritage

Roughly translated Torre del Greco means ‘Tower of the Greek’ but this Michele Bottiglieri Naples suburb is as best known for its prevalence of traditional family ship owners as for its coral art and fine jewellery. But as Giuseppe Bottiglieri, Chairman of Giuseppe Bottiglieri and his brother Michele Bottiglieri, himself President of Michele Bottiglieri Armatore, contend, if the region’s ship owners can weather the particular storm of the next 12 months then they can move on from strength to strength.

“The ship owners here are old companies and only one is in a little bit of trouble. All the other companies are going well. They are surviving this very big crisis but it is not simple to survive and move ahead. If 2010 passes by without affecting everyone then maybe the worst is over”

The key thing about ship owners from this region “is that they are very strong with very young ships,” smiles Giuseppe Bottiglieri. Joking aside, it is the fortitude and financial stability of the traditional family shipowning businesses that many believe will be the better performers through this tough crisis. “The ship owners here are old companies and only one is in a little bit of trouble. All the other companies are going well. They are surviving this very big crisis but it is not simple to survive and move ahead. If 2010 passes by without affecting everyone then maybe the worst is over,” he added. According to the Giuseppe Bottiglieri website, the Company’s shipping activities started in 1850 in Torre del Greco, Naples, with a small fleet of coral fishing boats. The first vessel registered in the Port Authority Register of Torre del Greco was the schooner Correale Secondo, which was launched on 29th March 1877. Thereafter the family built three ocean-going sailing ships, the Lucia, Sant' Andrea and Giovanni Bottiglieri (dating back to 1900), later on followed by the steam ships Totonno, Peppino Bottiglieri, Luciano and Lucia Bottiglieri. “The difference between what happened in 1982 to 1985 and now,” said Giuseppe Bottiglieri, “is that then we had an economic crisis where we were dealing with a very high interest rate of 20%. All the banks

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agreed to give us a moratorium on our loans if we paid the interest levels. They were happy to prolong the interest and not ask for the money back. Today it is different because the interest rates are so low and the crisis is driven by the financial sector. They need the money but will not offer any moratorium. The first obligation is that the banks need the money.”

“The normal Greek ship owner is very rich at the moment even if the market is down because he has assets and doesn’t have a big exposure. The problems are with the operators who have taken many ships on at very high rates”

“If 2010 proves OK, then the shipping market will be OK for a long time ahead,” added Michele Bottiglieri. Torre del Greco has tradi- tionally been a shipping area, and owners have been there for many years,” he said. He stressed: “The traditional ship owners are not in real trouble at the moment because they have emerging from a long period of a good freight market. The problem is with the operators who took many ships on charter at good rates. The normal Greek ship owner is very rich at the moment even if the market is down because he has assets and doesn’t have a big exposure. The problems are with the operators who have taken many ships on at very high rates.” As Michele Bottiglieri warned, it will be the asset players rather than the traditional owners who will struggle: “The real speculators will be the losers and the real ship owners will be the winners because their job is to run the ships not to buy and sell the ships as the speculators have done over the last two years.”

“Yes you have to have a long-term plan but do not go for more than one or two years. No more, otherwise you will prejudice everything. The banks must realise that we must make our efforts because we invested everything, especially in Naples”

According to his brother Giuseppe, the difficulty is understanding what is going on because there is so little information coming from the ships yards and little information from ship owners or from the classi- fication societies. “So really if we are to say how many ships will come, we don’t know. Most probably, the number will be less than feared, but how many ships will be delayed or how many will enter into service or Guiseppe Bottiglieri be cancelled, we don’t know. This information is very hard to get. No

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one knows what will happen, but maybe the situation won’t get any “...they must reduce capacity to transform the worse than it is now,” Giuseppe Bottiglieri told SMI. yards into something else, not just straight “The truth is that China is climbing alone in the market and China newbuildings. That may mean converting part to is driving well. In China they have learned their lessons and the government has banned all single hulled tankers from January 1st. scrapping operations, part to repairs, and I am Many yards will convert into demolition yards and the indications we sure they will continue to work as well” have given to the Chinese Ministry of Transportation is to help the shipyards not with money but with action to scrap all the tonnage. It must be remembered that 33% of the current dry cargo fleet is older than 24 years old and this is not good for the system,” he added.

“So really if we are to say how many ships will come, we don’t know. Most probably, the number will be less than feared, but how many ships will be delayed or how many will enter into service or be cancelled, we don’t know. This information is very hard to get. No one knows what will happen, but maybe the situation won’t get any worse than it is now”

Giuseppe Bottiglieri has been quite active on the newbuilding market, joining forces with a number of Neapolitan owners to order vessels in China. Indeed, in November, he attended the fourth ship launch of 2009 with the post-panamax bulker Bottiglieri Challenger taking to the For assistance with water at a windswept New Jiangsu Yangzijiang shipyard in China. The Medical Care Management Internationally 93,500 dwt vessel is one of a series of 10, two of which have already been delivered. Four more will join the fleet in 2010 and another four the [email protected] following year. The ships were purchased for around $45m each. Mr Bottiglieri was quoted in the press as saying that five of the

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final eight vessels had been booked on long-term charter and that he was relatively confident on the solidity of those arrangements. He also “I do not believe in the longer term any more. I expressed concern at the financial shadows hanging over the business play the spot market. At the moment it is the as the new year approached, particularly given the high prices at which many of next year’s deliveries were purchased and the subsequent drop Chinese who are moving the market. They are in vessel values. the drivers of the market but I think that the “When we made the choice to invest in our newbuildings, I did not rest of the world will soon start to follow them. imagine that one year later there would be such a strong market and That is why I believe that shipping will survive such an interest from so many people to invest in it,” he told SMI. Michele Bottiglieri added: “It was outside the realms of our imagination as it has done in the past” that this would happen. I remember that in 2008 there were many speculators ordering ships. Now all these people are defaulting on their commitments and leaving the ships in the yards. Now it is only the real Michele Bottiglieri added: “I agree. I am not of the opinion that it ship owners who are continuing to buy or order new ships. All the is wise to enter long term charters because you have nothing in your speculators are out of the picture at the moment. Normally they repre- favour because if they lose money they will not pay you. I do not sented more than 50% of the owning activity, supported by banks or believe in the longer term any more. I play the spot market. At the hedge funds.” moment it is the Chinese who are moving the market. They are the However, Giuseppe Bottiglieri has been best known in the press for drivers of the market but I think that the rest of the world will soon start promoting a $5bn scrap incentive that would pay owners and yards a to follow them. That is why I believe that shipping will survive as it has $500-per-ldt premium to demolish ageing panamaxes and capesizes. done in the past.” Modelled on Italy's successful scheme to phase out small, old tankers As Giuseppe added: “The lessons you take from this crisis is do not after the Erika disaster, Giuseppe Bottiglieri believes such a new trust and do not risk longer period for peanuts because you will reduce scheme could save the dry-bulk market from a generation of your rates and pray they will pay. Yes you have to have a long-term plan oversupply. Others believe yards themselves should be encouraged to but do not go for more than one or two years. No more, otherwise you diversify away from building new ships toward shiprepair and even will prejudice everything. The banks must realise that we must make environmentally friendly quayside scrapping. our efforts because we invested everything, especially in Naples. Michele Bottiglieri added: “It is good for a ship owner to buy his ships at a low price. That is the first step in any kind of market. Then “The truth is that China is climbing alone in the you start to discuss other things. But if you start with very high prices, market and China is driving well. In China they you will have complications throughout your life.” ■ have learned their lessons and the government has banned all single hulled tankers from January 1st. Many yards will convert into demolition yards and the indications we have given to the Chinese Ministry of Transportation is to help the shipyards not with money but with action to scrap all the tonnage”

“For owners to be confident in the market they need an attractive freight market and you need a market where you can earn some profit. So from one side you have to reduce shipbuilding prices but on the other side you need to compensate a little bit with the freight market and then in the breakeven you choose the proper price,” he said. “In Asia there is a difference in the prices offered between China, Japan and Korea and this is the main problem. When we proposed the demolition premium, the premium was $500 per ldt and this would be shared 50% with the owners and 50% with the yards. This would affect 300 capesizes and 300 panamaxes. This number of 600 ships equates to only $5bn but this means that not only China has to do this but it has to reach agreement with the other shipbuilding nations as well.” He added: “If shipbuilders are to survive, they must reduce capacity to transform the yards into something else, not just straight newbuildings. That may mean converting part to scrapping operations, part to repairs, and I am sure they will continue to work as well.” But is the scheme workable? Giuseppe Bottiglieri thinks yes. “It can work because in Italy in 2001 we introduced a demolition premium for tankers. Now the tanker fleet in Italy is very young because everyone renewed at the time. At the end we ordered our ships in Asia, but maybe we could order in Fincantieri if they have the space.” But as the shipowning brothers acknowledge, shipping will learn from this crisis: “The philosophy of today’s ship owners is changing because of the crisis. They will never go down the route of fixing their ships for very long periods because when the market reduces, the charterers call the owners and say the situation is bad and we have to adjust the contract otherwise we will go for bankruptcy. So what choice do you have? In my opinion I will never go for a long period charter. One year maximum then you play on the spot market.”

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workSMI talks to industry achievers and asks the question: How do you keep up with the rigours of the shipping industry? JULIAN THOMAS Managing Director for Hamburg Sud in Brasil and Alianca, and head of Hamburg Sud’s operations in the East Coast of South America.

“The aim is to try and get port costs reduced by around 30%, and it is a work in progress. With regard to the pilots we are in for the long haul. We are still in negotiations on this and we have support from some government circles and there is even a proposal for a new law”

Julian Thomas is the head of all Hamburg Sud operations in Brazil and in the East Coast of South America trades and he is one of the most dapperly dressed individuals you will find in Latin America… probably in most parts of the world come to think of it. Thomas seems to wear his trademark bow ties – mostly purchased in London’s upmarket Jermyn Street - all day and every day, accom- panied by smart, expensive three-piece suits, and crisply ironed shirts. You would assume that he was the quintessential Englishman born and bred....and you would be wrong, well at least half wrong. He was born in Germany and has dual citizenship, with a German father and an English mother (...more of that later) but he was bred more in the UK, with a classic education that included both Eton and Oxford. And it would also be very wrong to think of Thomas as someone purely of a highbrow or superficial appearance for, in South American When my father came to settle in England shipping terms, he is of very serious substance indeed and don’t let the he felt he needed to take up an English name Eton/Oxford axis fool you either, for he is, as many who work with him “ contend, very much a man of the people and not at all aloof. and he picked Thomas out of the hat Over the past 15 years Thomas has helped Hamburg Sud, and its Brazilian-flag subsidiary Alianca, become the Number One player in Working closely with Elias Gedeon, the Executive” Director of the North South trades, ahead of the giant Maersk Line, MSC and CMA Centronave, Thomas has – against a background of falling container CGM operations. volumes and freight rates – been taking up the cudgels this year to try His stature is such that he has been appointed as the President of and get exorbitant port costs reduced in the ‘expensive to operate in’ Centronave, which represents the interests of all the foreign flag South American country. shipowners in Brazil, including those mentioned above plus Evergreen, They have been focussing particularly on the high charges of the NYK Line, CSAV, K Line, China Shipping, Hapag Lloyd and Zim Line. Brazilian pilots, a monopoly operation that is responsible for more than In fact, according to this writer's sources, he has been instrumental 50% of all port costs in Brazil today: which average around Reais56,000 in moving Centronave away from its Rio de Janeiro base and to Sao ($31,700) per vessel call (for a vessel of an average of 5,000teu). Paulo, where it can be much more in touch with Brazil’s most eminent The bow tie proponent told SMI: “The aim is to try and get port shippers and also the country’s key port of Santos. Nearly all carriers costs reduced by around 30%, and it is a work in progress. With regard have already relocated to the megalopolis for the same reason. to the pilots we are in for the long haul. We are still in negotiations on

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this and we have support from some government circles and there is Hamburg Sud ever since,” he reminisced. “I just found shipping so even a proposal for a new law.” incredibly fascinating that I stayed on and I never did finish my MBA.” Thomas says that with cargo volumes falling earlier in the year He began by working for seven years in Brazil, then went to work (exports were down by up to 25% at one stage), and freight rates dipping for Ybarra Line (50% owned by Hamburg Sud back in those days), too, carriers have had to try and cut back costs wherever possible. which was operating in the ECSA to Mediterannean trades. Following that Thomas went to the US (1994 to 1997) to work for the German carrier on the Columbus Line brand before returning to Brazil in 1997 If the pilots association could arrange when he became Managing Director for Hamburg Sud, adding for us to be paid what they say we are Brazilian flag operation Alianca to his portfolio in 99 after it was “ bought from the Fisher family. Today he is the CEO for Hamburg Sud paid on this route instead of what we are and Alianca for the entire east coast South Amercia. Thomas takes a long-term view of things and has a good grounding actually being paid, then we would probably in history, especially Brazilian and Latin American history. be less vociferous in trying to get the port He notes, interestingly, that many things have not changed in Brazil for over a century. We were talking about the biography and film of costs down Baron Maua (Ireneu Evangelista de Souza) – who built the Brazilian railway network in the 1850s and also started up Brazil’s first major The pilots’ association” Conapra says that many pilots have agreed shipyard (Estaleiro Maua, which still exists today) with the help of the a pay freeze for this year, amounting to a reduction of 8% if you take Rothschild Bank in England – and Thomas reflected (and rued) on the inflation into account. But Thomas, as well briefed as ever, shoots back: fact that some things in Brazil haven’t changed much since then. “Actually the official rate of inflation was 4% last year and it is forecast “Many things are just as they were at the time of Baron Maua,” to be less for this year.” reflected Thomas, “in that Brazil is still dominated very much by a But the Hamburg Sud South American head showed his sense of centralised government. He was one of the greatest industrialists Brazil humour on the issue too. has ever had but he came a cropper because he could not get on with the Back on March 24, the pilots association took out a full-page advert Emperor and the bureaucracy. I think it is the huge influence of Central in A Tribuna, the Santos newspaper, and in it asserted that the German Government over everything in Brazil that is really what stops the carrier, CMA CGM, and all the others could easily afford the fees country progressing much faster than it should be.” because they charged Reais12,367.1 ($7,000) to shift a box from Santos The centralised bureaucracy used to be housed in Rio de Janeiro to Houston and with the pilots charges coming to just $6.1 per teu it was but nowadays it is in Brasilia and “contract law” is also a problem for a mere 0.007% of the overall freight cost to the exporter (which multinationals operating in Brazil. Conapra calculated at precisely Reais16,367.1). “There is no effective contract law,” suggests Thomas. “You can “I would propose,” smirked Thomas, “that if the pilots association put some clauses of your agreement, on paper but it cannot be enforced could arrange for us to be paid what they say we are paid on this route with the speed you might need if there is a breach of this agreement. In instead of what we are actually being paid, then we would probably be the US, however, if someone breaches a contract – and you are sure you less vociferous in trying to get the port costs down.” It is generally accepted that rates from Santos are currently less than a half of the rates quoted by Conapra in its “propaganda” advert. I think it is the huge influence of Central It also has to be said that Thomas shows his substance too when Government over everything in Brazil that is dealing with the press and when making some excellent, insightful “ presentations – often in impeccable, albeit slowly delivered Brazilian really what stops the country progressing Portuguese – both in Brazil and abroad. His analyses of the South American scene have illuminated many much faster than it should be a feature, news story or, indeed, conference, in the southern hemisphere. Thomas often pulls no punches and yet makes his points are in the right – then you can pursue it and, in ”a a short space of time, succinctly and in very polite fashion even when his adversaries are after you will probably get justice. blood (such as Fiesp, the powerful Brazilian shippers lobby). “People accept that in the US, but not here.” Thomas was targeted by Hamburg Sud as a high-flier very early on Interestingly, Thomas’s father Ulrich Hollaender fought for the his career with them, and today he is one of the most well-known British during WW2. His full English name is Michael Thomas and, figures in the South American maritime community. coincidentally, Julian’s sons support Arsenal, whose very own Michael He first worked for Hamburg Sud back in 1984, initially as an Thomas scored the winning goal against Liverpool in May, 1989, to intern for one year, just to get a feel for any business and to help him clinch a historic league and cup double victory for the North Londoners. towards his MBA. The Hamburg Sud head takes up the story of Ulrich: “When my However, that year changed his life. “Basically I have been with father came to settle in England he felt he needed to take up an English

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name and he picked Thomas out of the hat. After the end of the war he went to work for the Control Commission in Germany.” During his years back in Germany Thomas senior helped set up the free German press. And keeping up with the army tradition Julian Thomas chose to complete his national service in the German army. “I did it partly because i thought it was my duty,” explained Thomas, “and also to improve my German.” Thomas had just graduated, in 1982, in modern languages (including Portuguese) from Oxford University and then put in a two- year stint in the German army. Outside of work and his family, Thomas has a passion for classic cars and motorcycles and of course bow ties, an interest in which was initiated when he “inherited a batch of them” from his father.. He owns a Bentley S3 and two BMW motorcycles, including an R100R(1,000 cc). He is even planning to go touring on it so one day we might see something like the Motorcycle Diaries of Ernesto “Che” Guevara (who travelled around South America on a Norton while a medical student) or a latter-day version such as Ewan McGregor, the actor, completed. Maybe even with a special bow tie under the leather attire! To keep fit Thomas likes to go jogging and is also partial to the odd stint of mountain biking, mostly near his “mountain retreat pad” which is in the mountainous state of Minas Gerais, close to the fashionable mountain resort of Campos do Jordao. As a footnote in trying to decide whether Thomas feels more German or English, or even Brazilian, I asked him who he supports when it comes to football. He said he usually supports England over Germany, but sometimes when in England he supports Germany, and he is not sure why. “And then something very interesting happened in that area the other year during the World Cup,” explained Thomas. “It was England Those companies trading internationally v Brazil and all my family were supporting Brazil so I began by supporting England, but then when England went ahead I began have been in business a long time and are supporting Brazil, as it didn’t seem right that Brazil should lose. “still family businesses, and we did not see “I guess it means that my loyalties are obviously very divided. I guess it means too that I am not that nationalistic, I have been around many of them overstretch themselves during for too long and lived in so many different places.” that period of growth ..... and bought so many bow ties along the roads! ” the IMDO acts as a crucial conduit between industry and government – GLENN MURPHY promoting the Irish domestic and international shipping industry where possible and assisting the development of Irish shipping and the Irish Director, Irish Maritime Development Office shipping services and seafarer training. It has a legislative mandate to advise the Minister for Transport on the development and the co- “You have got to look for the positives and while all the ordination of policy in the shipping and shipping services sectors, in companies have cut back – lo-lo operators for instance have order as to protect and create employment. It is also charged with had to take 25-29% of capacity out of the market last year advising the government on development and co-ordination of policy and 20% in the last six months of 2008 – all the operators relating to the Ports and Ports services sector. who have been in the Irish market over the last ten years are And according to Glenn Murphy, the job facing the Irish still in business” government and the IMDO following over 15 years of near double digit growth is immense. The Irish economy is an open economy, he told It is refreshing to come across a government official (or in this case SMI, and so is dependent on what happens globally – whether intra- an official from a government quango) who actually knows what he is European or Asian or the US, an important market for Irish exports. talking about. Glenn Murphy has spent the last nine years as a Director “We have two shipping company segments in Ireland –coastal of the influential Irish Maritime Development Office (IMDO) but companies who are involved in the day-to-day movement of goods into believes his 14 years as a ship broker beforehand, prepared him well for and out of the Irish economy – the direct service providers – and we what is not a job where targets are set on an hourly or indeed, daily basis. have a second cluster of companies involved in international trade. But they have both been hit by the current crisis. From a national perspective, companies that have been dealing with the Irish economy From a national perspective, companies have had a very severe contraction in volumes across all sectors that have been dealing with the Irish whether it is ro-ro or lo-lo or bulk and that comes against a backdrop “ of nearly 15 years of year-on-year growth sometimes double digit year economy have had a very severe contraction on year,” he said. in volumes across all sectors But third quarter shipping and port statistics recently published by the Irish Maritime Development Office suggest that the rate and pace of ” the decline in shipping traffic volume continued to ease. But despite According to its website, the Irish Maritime Development Office this, the sector has recorded its 7th consecutive quarter of traffic volume (IMDO) is Ireland's first national dedicated development, promotional decline. Lift-on/lift-off (lo/lo) traffic fell by 20% in the third quarter to and marketing agency for the shipping services sector. Use of the 268,357teu which resulted in more than 50,000 fewer laden units being ‘quango’ soubriquet is possibly misplaced as the IMDO is part of the carried over this quarter compared to the same period in 2008. Two Marine Institute, which is a state agency responsible for researching the thirds of laden volumes were previously made up of imports, in potential of Ireland's vast marine resources. But in its Director’s words, particular from Asia. Lo/lo container volumes slumped over the past 18

18 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 months due to an abrupt correction in consumer demand and slowdown in the domestic construction sector. Seasonal factors related to Christmas demand resulted in a slight rise in imports, by 5% in September from August. Exports were also up 22% month on month between September and August. These seasonal factors were absent in 2008 when volumes continued to fall at an accelerated rate of decline from the middle of the year. The IMDO has since forecast a total decline of 23% in lo/lo volumes to the year end. Roll-on/roll-off (ro/ro) traffic, which is largely weighted towards shipping services to and from the UK, fell by 8% between July and September with 385,259 units being handled. Volumes on the direct continental ro/ro routes increased by 64% to 8,044 units in the third quarter of 2009. Overall in the ro/ro sector, 35,000 less freight units were carried on all routes when compared to same quarter in 2008, with a total of 152,000 units less for the first nine months of the year. As far as the dry sector was concerned, dry bulk volumes declined by 34% in quarter three 2009. The dry bulk markets have seen heavy volume erosion since the volume peaks recorded in mid 2007. Since this point there is now 4 million tons less of dry bulk cargoes being shipped through Irish Ports. However there has been some notable volume recovery during the period July to September. Improved global demand for alumina and ores has boosted volume throughput during the last quarter, this was also helped by modest domestic increases in agricultural fertilizers and grains. The breakbulk sector that is predominantly weighted in transport of construction related materials remained subdued with a further 45% decline in volumes during the 3rd quarter. Tanker volumes declined by 22% in the third quarter 2009 when compared to the same period in 2008. According to the IMDO, the main shipping routes have continued to make short run adjustments to the supply of shipping capacity in 2009 while there has also been some notable structural route consolidation in the market by some operators. IMDO estimates that total available capacity has been reduced by a further 13% in the third quarter, which has been imple- mented by a reduction of frequency on certain routes and reduction in vessel sizes. While being realistic about the financial situation, Glenn Murphy is optimistic about the way ahead: “You have got to look for the positives and while all the companies have cut back – lo- lo operators for instance have had to take 25%-29% of capacity out of the market last year and 20% in the last six months of 2008 – all the operators who have been in the Irish market over the last ten years are still in business. The fundamentals of the companies still operating in the sector are still the same, so from a cost overhead point of view, the companies have got themselves well positioned to deal with slower or thinner volumes in 2010 and are probably in a good position to ride out the downturn. We expect the economy will come out of technical recession in 2010 but we are unlikely to see any real volume growth till 2011 and 2012 – so we are a number of years away from those peaks again,” he added.

We expect the economy will come out “of technical recession in 2010 but we are unlikely to see any real volume growth till 2011 and 2012 – so we are a number of years away from those peaks ” “Those companies trading internationally have been in business a long time and are still family businesses, and we did not see many of them overstretch themselves during that period of growth in the same way as in other parts of Europe. So in terms of tonnage overcapacity sitting on the books of Irish companies, that will not be such a major problem. The downside will be that they will be competing in markets that will be suffering from too much capacity,” he stressed. ■ REGIONAL FOCUS SCANDINAVIA

Northern star

of a sparkling cluster By Amy Kilpin

Scandinavia recently formed the backdrop of one of the single most ($38bn) in 2008, with 2009 figures at around DKr130bn – similar levels globally critical issues of the contemporary age, as world leaders to 2005, according to the Danish Shipowners’ Association. gathered together in Copenhagen for tense and earnest discussion about Many of Denmark’s major ship owners have placed funding at the the collective fight against climate change. foundation of their promises, backing projects focused on improve- As host country to the international debate over greenhouse gas ments in vessel efficiency and supporting the political agenda that has emissions, Danish ship owners have been hot on the heels of design and inspired greater investment into green technologies. Maersk, Torm and innovation, flying the green flag high and seizing the opportunity for Norden stand resolutely behind the proposal from the Danish the shipping industry to gain some positive exposure. government for a form of bunker contribution to be used to collect Currently the third largest country in the world in terms of operating funds to help alleviate global warming. fleet, Denmark’s shipping companies generated a turnover of DKr190bn The scheme, submitted to the International Maritime Organization

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(IMO) earlier in the year, relies on the accuracy of the bunker delivery notes when vessels load fuel, and this is used to collect a fee which is placed into an international greenhouse gas fund, something which the Danish Maritime Authority is keen to distinguish from a tax or levy, which would feed into national governments. Revenues collected into the fund are to be used for mitigation and adaptation activities, and the bunker contribution fund fulfils the nine fundamentals that the IMO set for a market-based instrument, primarily being its applicability to all ships and being binding and global in scope. Such a proposal bridges the separate sets of principles propounded by the IMO and the UN Framework Convention on Climate Change, according to Gitte Mondrup, Special Advisor for Maritime Policy at the Danish Maritime Authority. With many Danish shipping companies partaking in the Greenship of the Future project, the direct approach at countering shipping’s environmental impact is one of the most forceful and positive ventures currently underway, and unequivocally highlights the industry’s action in taking climate change seriously.

“There is no doubt that the shipping industry has had too little focus on how they present, promote and prescribe shipping’s environmental effect”

Split into three main themes: machinery, propulsion and operations, the project carries three objectives, fundamentally to reduce CO2 emissions by 30% and of SOx and NOx by 90% each. A wealth of designs, technologies, and pilot tests have been taking place among the project partners, with Maersk, Lauritzen, MAN Diesel, Norden, Clipper, Torm and Aalborg Industries forming just some of the major investors. Yet while the right attitude has been adopted, Scandinavia, alongside the rest of the world, is still struggling to fight its way out of the global economic depression, and the question over whether Lars Hoglund Denmark will be able to maintain its forward-thinking reputation for a cleaner shipping industry remains to be seen. Claiming that conversely, the financial crisis has had a positive effect on the Danish fleet as it continues to grow approximately 3% to “We are disappointed there are not the 5% per year, Jan Fritz Hansen, Executive Vice President of the Danish same rules as across Europe, the Shipowners’ Association, underlined how half of the world fleet is on parliament is more than 90% promoting us order at yards and had the economy not been hit, there would be a crisis of oversupply. to have a tonnage tax like in the European The Danish Shipowners’ Association is confident that its cluster of Union state aid guidelines. But the finance ship owners will survive the crisis, however, in spite of the difficulties that may persist in the short to medium term: “We have over 100 department does not listen” owners and expect most of them to come through this crisis. Some will come through strengthened and able to gain market share,” he said. Raising another key challenge for international shipping, Mr Hansen With a considerably favourable tonnage tax system, Denmark is stressed how state ownership is a looming concern. “Post-crisis, a much placed in a similar shipowning bracket as Singapore; one of its chief larger proportion of international shipping is likely to become state- sources of competition, and the country is determined to hold onto its owned, and with many large ship owners already being part state-owned, reputation. In the effort to save on fuel costs while reducing emissions, private operators will struggle to stay in the market share,” he warned. many Danish ship owners are shifting gear to slow steaming, something China and South Korea have already been looking to take state that will place them at an advantage over some of their less green- ownership of vessels, while the European Union’s confused stand on minded global competitors. the state support being offered by Germany and France has caused a Torm has underlined the changing attitude across the industry and source of apprehension. Should the Asian market take to monopolising taken optimistic steps towards achieving end results focused on unwanted tonnage and effectively discarding freight rates, Mr Hansen environmental achievement. “There is no doubt that the shipping indicated there were special levies and other measures that the industry has had too little focus on how they present, promote and European countries could look to implement. prescribe shipping’s environmental effect,” said Mikael Skov, CEO. But the internal problem in Europe was a more pressing issue, as “Shipping has not explained its own responsibilities to the environment while larger countries such as Germany and France had substantial enough enough, and that’s something we have to work harder on, because I public capital to hand out cash or other methods of support to owners, smaller countries such as Denmark would simply not have the reserves. think shipping is a little bit on the backburner.” “If the crisis continues for a number of years, there will be more With 140 vessels to its name, Torm has had to adopt methods for and more owners looking for help. It will not solve anything if a big the keepsake of the country’s green image and to cut down its own European company goes bankrupt and a Chinese company takes over emissions contribution. “Something we’re trying to promote is vessel the tonnage,” he said, expressing doubt over whether any of the speeds – if you travel to a destination and there’s no space for a few European states would continue to give support under these conditions days, why not slow down and save on emissions for the sakes of the and the fairness in supporting only a few now. environment, why not slow steam and save on fuel costs, maintenance

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SCANDINAVIA REGIONAL FOCUS

issue,” Mr Skov outlined concern that in spite of shipping’s lethargic approach to climate change, “no-one wants to put $100 million or billion into CO2 reduction because it’s not a big problem – we need to get the economy back on track first, so who cares about the environment?” A flippant underlining of the fickle nature of some ship owners, the ethos perforating the industry is that of logic – emissions reductions and fuel savings go hand in hand. It is not only in an owner or operator’s best interest to financially address fuel saving methods, but with global leaders clamping down on shipping’s GHG contributions, from a reputation and image perspective, it would be prudent for leading shipping companies to be seen to do the ‘right thing’.

“If the crisis continues for a number of years, there will be more and more owners looking for help. It will not solve anything if a big European company goes bankrupt and a Chinese company takes over the tonnage”

This is where Scandinavia stands strong – in its ability to take action, and another Danish company, Norden, has initiated a scheme of its own to entice owners to tackle the great emissions debate. Søren Huscher, CEO of Norient Product Pool, a joint effort 50% owned by Norden Tankers with 60 vessels currently under its belt, unveiled a venture to fortify its commitment to the environment and remain in the ‘green’ league of Copenhagen shipping companies. “We are working closely with BP in terms of the Virtual Arrival Hakan Friberg scheme they are working on with a number of owners, and we invented something called NORS reimbursement scheme where we would offer

clients to go at a reduced speed to save CO2 emissions, and then split the cost of bunkers saved over that voyage,” he revealed. “Whatever happens we need to have “The Virtual Arrival is an anticipated arrival based on full speed in competitive rules, otherwise we are out, it order for lay time to commence at what would have been the arrival of is important the government takes these the ship going at full speed. There’s also an internal environmental steps now, talks to the industry and takes performance system about to be fully implemented on all ships. It’s a performance monitoring system where we can basically monitor only a short time to do this” anything concerning the voyage, from terminals, to masters and performance of the ship itself in terms of speed and consumption, and how the master is actually relating to the voyage – is he obeying the costs and CO2 emissions because the engines are running slower. It’s a 500 year old habit and it’s going to take a long time,” Mr Skov said. exact speed and doing the optimal in terms of consumption on the main He added: “We are moving beyond what is required generally from engine,” he added. official and governmental regulations, and there’s no doubt about it, we Defying the negative press surrounding shipping’s contribution to will get some sort of adjustment to the CO2. The CO2 we generate is in climate change, Danish companies are certainly taking the situation direct relation to the amount of bunker fuel we use, and any tonne of seriously, and it is an issue of such proportion that cannot be ignored, fuel we can save will obviously help the CO2 emissions count as well.” echoing a recent comment made by Torben Janholt, President & CEO Warning that “the thing about the oil levy is that there is a funding of J. Lauritzen. “The shipping industry needs to deal with the

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 23 REGIONAL FOCUS SCANDINAVIA

challenges we have in the environment, there’s no other solution. You read all these stories about shipping being the worst producer of “No-one wants to put $100 million or billion emissions, how it’s horrible and it pollutes – fossil fuels are not going 2 out of fashion, and while we might like to use a lot of other things in into CO reduction because it’s not a big order to decrease the CO2, on ships we will still burn fossil fuels.” problem – we need to get the economy Having said that, he admitted how “newbuildings will definitely back on track first, so who cares about the come out with a much lower CO outlet and it is something being 2 environment?” invested in every day.” Awareness is the key thing here, and with many Scandinavian companies having been bestowed with environmental awards for clean ship designs or green initiatives, it is the shape of to poor supply, destined for both commercial use via pipelines and as future things to come. fuel for the country’s ferries. Sweden recently became the only third European country to sign Swedish naval architects FKAB recently announced development the IMO’s water ballast convention in preservation of the marine of a vessel suitable for regional distribution. The L1 is a 1,900 cu m environment, however, the convention will only enter into force a year capacity vessel that can be used as an LNG bunker vessel once the after 30 states representing 35% of the world’s tonnage have ratified it. region’s ferries turn to using LNG, a distinct possibility once the sulphur Currently, 18 countries representing 15.4% of the world’s tonnage have fuel limits tighten to 0.1% in a few years time. The L2 is a 16,500 cu m signed up. “It is important we protect our marine environment and LNG vessel designed primarily for regional distribution of LNG. prevent further species establishing themselves in the Baltic and North Sea,” stressed Åsa Torstensson, Sweden’s Infrastructure Minister on The company believes this method will reduce fuel cost when signing the convention. operating the vessel, and with a design incorporating a slender hull and Sweden’s effort to contribute to global emissions reductions has a heat recovery system to increase vessel efficiency, as well as a fuel been hard felt for some of its companies, yet resiliently, they continue tank for marine gas oil for the duel fuel engine to maintain flexibility to invest; something which has recently seen Stena Bulk having to and have an emergency back-up system, the feasible application of compensate for as it makes significant cuts in its employment structure. LNG as an alternative method is fast becoming a reality. Yet Stena’s E-MAXair concept, focused on dramatic reduction of In spite of these efforts, Sweden is not looking lucky in the flag bunker consumption and emissions output through LNG-run engines, game. While its environmental reputation remains intact, its flag has optimised hull design and slow rotating propellors, speaks for itself. been diminishing consistently over the years, and despite the With its engines running on LNG rather than diesel, the company Scandinavian maritime cluster retaining its renowned strength and claims the Stena E-MAXair produces 35% to 40% less CO2 than a versatility, political issues add strain to the situation. conventional vessel of a similar size, as well as 90% less NOx and zero The fast-depletion of vessels on the Swedish register and SOx emissions. LNG has been causing a hot topic of debate in Sweden government indifference to a tonnage tax scheme has led many owners to lately, as the government debates development of an LNG network due look elsewhere. As of the end of the year, there were approximately 240 SCANDINAVIA REGIONAL FOCUS

vessels listed on the register, but the Swedish Shipowners’ Association asserted that more than 20 are in the process of changing flag to a more “Shipping has not explained its own favourable European tax system, with a further 400 vessels owned by Swedish companies which are registered with other flags. responsibilities to the environment enough, “We are disappointed there are not the same rules as across and that’s something we have to work Europe,” said Lars Höglund, Chairman of the Swedish Shipowners’ harder on, because I think shipping is a Association and Managing Director of Furutank, a small family-run tanker operator on the West Swedish island of Donsö. “The parliament little bit on the backburner” is more than 90% promoting us to have a tonnage tax like in the European Union state aid guidelines. But the finance department does political drama has taken place, the Norwegian flag has maintained its not listen,” he added. ship register during the downturn and things are looking up. This has at last led the Swedish government to commission a report A tumultuous entry into the global financial crisis led the due for release in spring 2010 which aims to analyse the maritime Scandinavian shipping sector to a knife-edge, and the survivability of cluster in Sweden with respect to its importance for the country’s many of its companies was thrown into doubt. However with a year economy, to assess the competitiveness of the Swedish cluster behind itself to allow for financial restructuring and economic compared with clusters in other relevant countries, and to look at the strategies, the nation is pulling itself together to prepare for an possible privatisation of any state-owned vessels. imminent upturn. Famously admitting to having problems with its covenants, Camillo Eitzen approached its three banks to arrange a restructuring, “Awareness is the key thing here, and with and despite a failed voluntary bid from Indonesia’s Berlian Laju many Scandinavian companies having Tankers (BLT) to take over the Oslo-listed company, it has persisted been bestowed with environmental awards ahead, with Eitzen Chemical also having drawn up new finance in the for clean ship designs or green initiatives, tough market. A.P Moller Maersk recently sold Norfolkline to Danish DFDS it is the shape of future things to come” ferry group for a €347m ($496m) share and cash deal, and despite a €540m ($785m) loss in the first half of 2009, a deficit mostly due to a loss to the container division of $961m, the Danish giant has since Swedish Shipowners’ Association Managing Director, Håkan raised $1.8bn in share issues and has made some alterations on the Friberg, has not underestimated the urgency of this issue in upholding operational side of its fleet to stay afloat. Sweden’s flag durability: “Whatever happens we need to have compet- Meanwhile, Norwegian ship design and construction has also been itive rules, otherwise we are out,” he said. “It is important the government takes these steps now, talks to the industry and takes only generating pace. The illustrious Viking Lady which claims to be the a short time to do this.” world’s most environmentally-friendly ship was proudly on display during The Danish and Norwegian international ship registers have, COP15. Using fuel cell and combustion engine technology powered by conversely, not fared badly, despite the notorious tonnage tax issue LNG, the Eidesvik Offshore owned vessel was visited by a host of global acting as a deterrent for some of Norway’s ship owners, who switched climate leaders, including entrepreneur Sir Richard Branson. flag state to avoid some crippling back tax payments. The Norwegian Part of the FellowSHIP project, which aims to demonstrate that government’s new tax regime in 2007 involved a claim for unpaid taxes existing environmentally sound technologies can be adapted for marine of up to NKr15bn ($2.6bn) to be paid by over 140 Norwegian companies usage, the offshore support vessel involved collaboration with that were in the previous scheme, which ran from 1996 for 11 years. engineering designer Wärtsilä and classification society DNV. The Owners have been given 10 years to pay the unpaid tax, but BW vessel is professed to create virtually zero NOx and SOx emissions as Gas, Farstad Shipping and Bergshav Shipping took the matter to the well as a sizeable reduction in CO2 output, and is first in line of a host courts in two separate actions in 2008 claiming the decision was uncon- of new generation commercial ships which will demonstrate such stitutional, the result of which is due to surface very soon. Although a cutting-edge technology to promote environmental responsibility. A dearth of newbuilding activity due to the financial crisis, off the back of a previously intensive stint for Far East Asian shipyards, had left European yards with something of a lull, so a new order at STX Europe has won back the faith in the European shipbuilding sector. Norwegian owner Island Offshore placed a NKr800m ($137m) for two platform supply vessels in anticipation of a revival in demand. Due to be outfitted in its Brevik facilities in Norway, STX Europe is aiming for delivery for the fourth quarter of 2011 and the first quarter of 2012. Analysts expect a sharp rise in energy demand by 2011 as global oil consumption heightens to new levels, and with exploration and production kicking off in the North Sea, Scandinavia will be one of the first maritime clusters in line to benefit. Although to some extent varying sectors of Scandinavia’s maritime integrity have been doubted, it’s often a case of one step forward and two steps back. While the economic setbacks have resulted in financial imprisonment for some companies, cutting off the umbilical cord of opportunity and development, the environmental mindset has polished up a somewhat tarnished reputation for shipping. The region’s efforts in the build up to the Copenhagen climate summit have in some way led the world to believe in shipping as an environmentally-feasible form of transport, and with new technologies, developments, research, design, schemes and projects to boast about, the green-thinking attitude and positive outlook for Scandinavian companies will ensure its endurance as a nation of great maritime standing. ■

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 25

SHIPMANAGEMENT

Calculating the sum of the separate parts

“In terms of profitability, the Marine Services Division is a signif- icant contributor to the success of the company and I think we see faster growth in some of our businesses than perhaps the traditional shipman- agement business. The travel business has grown pretty well over the last year and we expect to see further external growth in what is a highly competitive business and to deliver that we have invested in people and back office systems. IATA membership was important to secure and we are a fully fledged travel business worldwide. We have our own offices in the regions where we have the largest crew sources because we have to provide a 24/7 travel service as well as the corporate travel aspects. On the travel side the majority of its profits come from internal clients. Our technical business is looking at 70% of income from external clients. But it grows in parallel.” In today’s climate, shipmanagement companies are seeing their margins being squeezed. Is this a good opportunity for V.Ships to grow its ‘non-core’ businesses? “We strongly believe that part of us being here is to support our core business. It is important that whatever we are providing to our core companies can be provided as a high value service. We always work on a competitive basis and compete for our business internally, sometimes harder than we do for external business. That level of transparency is certainly there. We don’t win all of the internal business by any means Martin Stafford but there will be instances where we work together with the shipman- agement team, that the client won’t get better value for money. CEO Marine Services Division, V.Ships “We believe 2010 will be tough in some sectors. Newbuilding is quiet at the moment. We were confident coming into 2009 and had a lot “It is interesting if you look across the range of services we have as some of booked business and have a lot of booked business for 2010 but not were naturally formed businesses in their own right while others came out a lot over the horizon in 2011. So in 2009 we saw a number of projects of departments operating within the shipmanagement side of the business. we were involved with in the offshore sector, shelved for a while, not “We have looked at those services we provide for our ship owners necessarily cancelled. and where there is an opportunity to provide that service to the same “On the seaTec area, the biggest downturn is that there is not a lot standard and the same quality at a competitive price to emphasise the coming through on the newbuilding side. Not at this stage but we won overall value delivery we bring to ship owners, then that is something a few contracts for newbuilding support in China. On the agency side, we would look to provide internally. Our SeaTec business is a good it is difficult to say what will happen as most of our activities are example of this where we had a relatively small maritime consultancy focused in the Far East and we have had some impact on changing trade business which was carrying out mostly ship inspection work, but then patterns and the decline in trade to China. So if that starts to open up we grew to add an engineering capability. At that time most of the should see an increase in calls. The bulk and container sectors have had engineering capability was of a fairly traditional nature in terms of the biggest downturn. We are forming more partnerships with people engineering superintendency, so there are examples such as dry docking rather than go head to head with them in competition.” which have a peak loading in the shipmanagement business so from a As you say, 2011 is looking less full of orders? Is that a worry? “It business sense it makes good sense to be able to provide that internally can be a worry but we have been there before. I am not too concerned, from our resource. “When we started we maybe didn’t have a huge track record, but because we have a selection of businesses that are counter cyclical – we when we brought the people in they brought in their own track record have a core business and if that is strong in shipmanagement there is no and expertise. Provided we could give them the tools there was no reason to have any fears elsewhere. In terms of the travel sector, I am reason why we could not undertake projects of that nature. In those not too concerned about that especially as we have set ambitious growth early days it was interesting to see that our portfolio of clients grew targets. We are also one of the leading marine consultancy businesses in more from an external base than internally – the leverage we got from the UK. We have a good track record and we are not complacent. The having that client base enabled us to pick up blue chip clients, like Far East is still somewhere where we are investing in. When we start to Exxon, Shell, BP to grow from smaller projects to the larger more see an upturn on the shipbuilding side, there will be a need for people sustainable projects. to step in and reactivate the projects.” ■

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 27 BUSINESS VIEWPOINT YEAR OF THE SEAFARER Signing on the dotted line... of seafarers’ livelihoods

As we wave goodbye to a momentous decade for international shipping, we open the door to a new one, and new it certainly will be. “Hardly recognised as a peril Record highs and lows in shipping history have earmarked the ‘noughties’ as an era of change, and with 2010 officially designated by free career under conventional the IMO as ‘Year of the Seafarer’, there are monumental challenges ahead for the shipping industry. circumstances, the stoical The very recognition that the next year is granted in honour of seafarers lays claim to the acute hardships, dangers and challenges that they have faced in recent years, and with even greater obstacles and issues seafaring community has been to contend with in the future, organisations, associations and bodies are lobbying together to support the international seafaring network. exposed to high-risk piracy Extraordinarily defined by an unprecedented boom in shipping markets followed by one of the world’s worst economic collapses in hijackings, potential foreign maritime history, supplemented by a ravaging surge in piracy and terrorism, a disturbing seafarer criminalisation issue and mass climate arrest over vessel pollution change impact, the closing decade has certainly pushed the shipping industry high into the headlines. Such a palaver has not only devastated the industry, but it has also left many seafarers in an even more negative charges, and the threat of light, on shaky financial ground, or at worst, without a job. In acknowledging the plight of today’s seafarers, Efthimios undermining drug smugglers” Mitropoulos, Secretary-General of the IMO, emphasised how “1.5 million seafarers serve the daily needs of more then 6.5 billion citizens livelihood of the national seafaring community, the Year of the Seafarer of the world! It is a fact that goes unnoticed or is taken for granted by is a milestone doorway opening into a new decade; one which hopes most, but one that should be trumpeted loud and clear.” can step up the mark to compromise for the disconcerting years ahead Hardly recognised as a peril-free career under conventional for shipping as it continues to struggle out of the jaws of recession. circumstances, the stoical seafaring community has been exposed to Seafaring union Nautilus International is striving to revive public high-risk piracy hijackings, potential foreign arrest over vessel and political awareness of the British Merchant Navy and to secure pollution charges, and the threat of undermining drug smugglers. This measures that will help the nation’s seafarers compete on a level playing is all topped off nicely with a security clampdown in the wake of 9/11 field with the rest of the world. In a proactive approach to ensure and the Mumbai bombing terrorist attacks, which, under the attention is made, it is lobbying the government to give extra support for International Port Facility and Security Codes (ISPS), has denied seafarer training and employment through a Downing Street petition. seafarers shore leave in many port destinations. Timed to coincide with the revision of the STCW Convention, the Then there’s the wages issue, something which also generated initiative, launched at the IMO headquarters, has seen its objectives for some heated maritime discussion as the boom, alongside a mass the year ahead taken to the extremes of sincerity by the bulk of the shortage of officers, caused wages to initially skyrocket, sharply industry. General Secretary Mark Dickinson announced how Nautilus followed by pay freezes and wage cuts as the depths of the recession will do all it can to support the Year of the Seafarer campaign – and to took grip, even resulting in the abandonment of seafarers in foreign ensure that it leaves a lasting legacy for members. Measures to ports in worst case scenarios. safeguard seafarers’ rights, protect against criminalisation, and to As authorities and bodies work hard to continually safeguard the combat fatigue are essential, he stressed.

28 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 YEAR OF THE SEAFARER BUSINESS VIEWPOINT

Jon Whitlow, Head of the International Transport Workers’ more effort and commitment from everybody, the IMO included, to try Federation seafarers’ section, revealed that the ITF would mark the to find a solution not just on criminalisation but also on piracy. What we initiative by establishing a new Academy for Seafarers’ Rights. “The need is to have one way to fight piracy rather than different approaches last few years have been difficult for seafarers and the morale of the from different countries,” he said. profession has fallen as a result,” he said. “It is important to note that Calling for international legislation to harmonise the approach ship seafarers expect that the IMO Year of the Seafarer will prove to be more owners and managers can take to protect their crews and ships from than kind words. Concrete measures to address the real problems pirate attacks, he added: “We need to define international legislation so seafarers face are essential.” that all ship owners are able to access the same tactics rather than some In a bid to fully realise its intentions, Nautilus International also being forbidden by their individual nations’ laws,” in a more stream- recently took part in a UK shipping industry delegation which met lined approach to the industry-wide problem. Prime Minister Gordon Brown to call for urgent government action to safeguard the country’s maritime skills base, joined by representatives “In 2010 and 2011 there will from the RMT union and the Chamber of Shipping, together with MPs Gwyn Prosser and John McDonnell, for discussions on the industry’s joint proposals for improving the support for seafarer training. be much more effort and If implemented, the proposed package to boost maritime training in the UK could cost up to £13m ($20.8m) a year, to include funding commitment from everybody, support for trainees seeking second and third certificates of competency and the training of ratings to count against the training commitment of the IMO included, to try to UK tonnage tax. There is much riding on the hope that the face-to-face contact will revive the prospects for proposals that seem to have been find a solution not just on sidelined since they were first submitted as long ago as March 2007. All sides of the industry united in warning Mr Brown that the long- awaited action is essential if the UK is to build on the tonnage tax criminalisation but also on measures and to secure the skills and experience it needs not only for shipping but for the wider maritime infrastructure. The delegation were piracy. What we need is to encouragingly informed that the proposals would undergo discussion with ministers and were promised a response within a month. have one way to fight piracy” Chamber of Shipping Director-General Mark Brownrigg, said: “We hope that Gordon Brown, leader of the British government, will Predicting that “2010 will be a tougher year for many shipping through the tonnage tax which saved British Shipping from near companies,” Mr Giorgi raised additional concern over owners’ and terminal decline, take this opportunity to safeguard the UK’s maritime operators’ balance sheets and cash reserves, warning that such skills base for the future.” prolonged financial instability could prove problematic as more and Adding that the “message to the PM is clear,” Nautilus General more major lines introduce substantial employment cuts to compensate Secretary, Mark Dickinson, said: “We understand the financial for the imbalance. constraints facing the government, but shipping is an essential industry Shocking yet hardly surprising reports of leading shipping for an island nation. The small cost of the improved training measures companies making substantial workforce cutbacks have formed a trend that we are seeking will pay dividends in helping to maintain our throughout 2009, and with little respite on the horizon as we step tenta- maritime services and industries by protecting the supply of experi- tively into 2010, the industry will be doing everything it can muster to save itself from financial drought, even if seafarers’ jobs are at stake. enced seafarers.” Maersk Line announced recently that it was seeking more than 280 Commenting after the meeting, Mr Dickinson revealed that the voluntary officer redundancies from the UK and Denmark in a bid to Prime Minister received the parties “in a very positive way and asked slash costs across the company, with the frank admission that it needed some very penetrating questions about the package. He indicated that to stem the surplus of officers out of work, as a direct consequence of funding might be available through the government’s initiatives on the increasing amount of vessels being laid up. This move, however, apprenticeships and job creation, and while he could not make any was off the back of an already massive cutback as 7,000 largely shore- promises, he would get us an answer quickly. side redundancies were made across its global operations within the “We underlined the point that the cost of inaction on this critical past 18 months. issue for an island nation will be far, far greater than the cost of action,” With the majority of its nearest competitors in a similar situation he added. Often cited as an ‘invisible industry’, raising awareness of the economically, United European Car Carriers (EUCC) has also given seafaring effort is a feat of epic proportion, and despite the IMO some European officers the choice between a 25% pay cut or massively Secretary-General’s view that they are at the “sharp end” of the reduced leave, as it joined Hapag-Lloyd as the second big name industry, the seafaring role is staggeringly over-looked. European shipping concern to seek lower payroll costs in response to A well-remembered decade for not only its economic status, but the current economic downturn: the German boxship giant has also for incidents such as the Prestige in 2002, Tasman Spirit in 2003 demanded pay cuts of between 5% to 20% across the board, to include and Hebei Spirit in 2007, the industry has invested a significant amount its seafarers. The worry is if such cutbacks do not help to alleviate the of concern in the campaign against criminalisation and the fate of bottom line for some shipping companies, more and more seafarers will detained seafarers. The need for the ‘fair treatment’ campaign to be getting the axe. continue given the politically-sensitive nature of shipping and On a positive note, another key development during 2010 will be seafarers’ potential exposure to different jurisdictions is only prolifer- work to update the BIMCO/ISF assessment of global supply and ating into a darker issue. demand for merchant seafarers. An interim survey, conducted in 2008 revealed that 50% of companies reported a ‘serious’ shortage of Commended for its unprecedented support over the unfair crimi- national officers; a predicament expected to only worsen when the nalisation of the Hebei Spirit officers, InterManager, the international shipping markets start to recover and a drip-feed of newbuild deliveries trade association of ship managers, has also pledged its support for the swell the global fleet to almost double its current level. Year of the Seafarer in bringing these critical issues to light and for its With a dearth of employment as qualified and skilled seafarers lose representation of over 125,000 crew members. their jobs, and with less shipping companies willing to invest in solid “Heartened” by the support received from throughout the shipping employment and ongoing training of these crew members, the proverbial world as it fought for the release of the unjustly-jailed officers, really will hit the fan for an already-troubled shipping industry. Never is InterManager President Roberto Giorgi announced that “2010 will be a the time better to hail 2010 as the Year of the Seafarer, where the very important year because of the Year of the Seafarer,” adding that, industry will do everything in its power to rally together in support to “now, our campaign will be even stronger and I am sure we can count save this dying breed before it is classified as extinct.■ on even greater support from the industry.” To sign the Downing Street petition for extra government support of With the implementation of the new Maritime Labour Convention seafarer training and employment, visit in 2011, Mr Giorgi believes that “in 2010 and 2011 there will be much http://petitions.number10.gov.uk/Seafarers.

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 29

CREW TRAVEL MARKET SECTOR

Navigating the booking conundrum

Booking seats for a ship’s crew with 72 hours notice and a brief to get “Travel is perceived by some of the managers as a the best price possible with the fewest number of transits can be a task only suitable to those with the thickest skin and the toughest dispo- bit of an irritant and if you don’t do it well it can be sition. After all, you not only need to have the best airline contacts and a disaster” booking systems in place to ensure the deals you are being offered are the best available, but you need to have developed the intuition and But when you weave into this complicated algorithm the added stamina to know when you are onto a winner and when it just may be conundrum of an airline industry intent on cutting its own flight and best to move onto the next ticketing and airline option. seat capacity and seat and class composition to drive its own costs down

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 31 V.Ships Marine Travel

V.Ships Marine Travel, providing quality marine travel services to its managed fleet as well as third party clients.

• VSMT’s IATA licence enables it to deal direct with all major airlines and secure the best rates available • Internet based requisition system offering comprehensive electronic solution to booking, invoicing and check in • VSMT’s head office is in Monaco but fully trained, multilingual regional travel coordinators are based in Glasgow, Manila, Mumbai, Miami and Cyprus • 24 hour service, 7 days a week, 365 days a year • Tickets are fully flexible and can therefore be amended and re routed, without incurring financial penalties related to cancellations • Full MIS report portfolio, offering pre-trip data and crisis management

We pledge to endeavour to obtain the lowest most effective available fare. Our aim is always to provide the safest and most economical transfer of marine personnel to ensure the smooth and efficient running of all our client’s vessels.

Around the world, around the clock

Contact: Joe Pitcher +44 (20) 7332 8522 I email [email protected] I www.vsmts.com I VSMT is a member of the VGroup CREW TRAVEL MARKET SECTOR

and maximise whatever returns it can make, you But opportunities do exist in the owner and have the makings of a West End drama let alone a management sectors and while larger numbers of marine travel sector intent on coming out of this vessels may be in lay-up and the crew travel sector particular financial recession stronger and fitter. could be said to be facing tough times ahead, there But these crew travel types are a tough bunch is still a significant crew shortage situation which and are convinced that the job they can do is more means that ship owners and managers still need the efficient and more thorough than any in-house crew and the crew still needs to be moved around. travel agency employee can muster. As Tim Davey, Crew rotations are being altered by managers keen President and owner of Global Marine Travel, told to keep travel costs down, and seafarers are SMI, some in-house travel agencies may find it spending longer periods at sea but according to tough to maintain the same level of service offered John Harding, Managing Director V.Ships Marine by the outsourced marine travel operators. Travel Services, the third party shipmanagement market is a key market to exploit, especially when “We have to expect a tightening up you consider that many smaller managers lack the of the number of crew deployed and resources and systems to offer a viable and effective crew travel operation. “Travel is expect contracts to be extended to perceived by some of the managers as a bit of an reduce the number of movements irritant and if you don’t do it well it can be a needed on the vessels” disaster. Shipmanagement companies offload and “As far as outsourcing outsource given the opportunity, so we feel that “As far as outsourcing versus in-house is being able to deal with other managers and handle versus in-house is concerned, there are always benchmarking exercises the travel element for them cheaply and efficiently concerned, there are going on in shipping companies. As an outsource is a good hook. always benchmarking company I am in favour of outsourcing as we give “No one says it will be easy, but the big more attention to detail than a normal in-house advantage we have as an independent travel exercises going on in employee would do. We want to keep a contract and agency is that because we are part of the V.Group, shipping companies. As an will keep service levels high. We keep an open book our overheads are very low. And because we have relationship and share airline contracts with the that experience with the whole crew management outsource company I am in clients. We also have an agreed fee upfront so it is manpower bit, and getting the guy to the ship, it is favour of outsourcing as we all a very ‘see-through’ operation. It is hard to an easier service for us to sell really,” he said. give more attention to detail maintain this same level of service with your in- V.Ships Marine Travel Services is an house employees; they just don’t care but we care aggressive player in the market and by its own than a normal in-house about not losing a contract,” he said. admission is bucking the market trend by seeing its employee would do” MARKET SECTOR CREW TRAVEL

with currency fluctuations also built in. So we are trying to factor in all of that to reduce the final invoice cost. It is a big job especially with three days lead time. Without the right systems in place it is impossible to secure the lowest costs available, in the different currencies and with different conditions attached,” he added. Patrick Twohy, Griffin Key Account Manager, said of the extra demands from the managers: “They are asking for more advice and alternatives. In the past booking a ticket from London to Singapore was straight forward as a few carriers would immediately spring to mind because they operate on that route. But now we are trying to offer alter- natives where Middle East carriers, for instance, can come into play. So ship managers are asking us for alternatives: this could be for a direct service or for the fewest number of transits.” “There are less flights and the ”The underlying factor is not changing and that is the price of the flights that are going are more fare. But there is a lot more,” said John Harding, Managing Director V.Ships Marine Travel Services. “The biggest drivers other than price full than they used to be so are the systems you employ. We have spent a lot of time and effort getting marine seats at marine developing systems to make the booking operation an awful lot easier. fares is harder. Also the amount It is a seamless service right from the first request to someone boarding the plane. We have developed our systems and they integrate with our of tax and security related to the invoicing system. In the V.Group we also have pre-approval of invoices tickets is also an issue” so that area is speeded up.” But is the amount of outsourcing of the travel component increasing? Not according to Brian Potter, Managing Director of Clyde Travel Management. In fact, he thinks it may be going a little more the other way. “A lot of managers and owners have a lack of trust with some of the bigger suppliers and fear that they are being charged too much. If you quote a flight price for £200, the owner goes onto the internet and buys a non-marine ticket for £180. You then have to explain the procedures time and time again that the £180 is not refundable etc. So sometimes with the bigger guys there is a lack of trust. What is happening is an increasing move towards more of an open book policy and greater transparency between suppliers and clients.” Indeed, Gareth Humphreys, Financial Director of Cyprus-based Marine Wings, is realistic about what 2010 may hold for the shipping as well as marine travel markets. “If you look at box levels through the US West Coast ports there is an increase in throughout but you need to ask if this is a genuine reflection of what is happening or an inventory rebound. I would be more on the blip side than on the real recovery in own growth curve moving rapidly up. “V.Group is growing and V.Ships the markets side. We have clients who have one ship in three laid up so and travel are fundamental to that growth. We have just had a fantastic if rates do go up, people will start taking ships out again and this will year and probably what I am saying is not what you would expect or crash the rates. I cannot see any real recovery for a long time. what the others are saying. We believe we have the right product and have started to aggressively market ourselves even outside the group. I “So we have got to ensure we are booking the have just recruited a sales manager so we see the curve continuing onwards and upwards,” he added. cheapest fare with the seat availability. Because of So have the demands from the owners and managers changed as our global network we are looking to select the they strive to meet lower cost deadlines and work to keep the heads of cheapest fare from anywhere in any market, with themselves and their principals above water? According to Griffin Marine Travel, a major player in the market, a currency fluctuations also built in. So we are trying to lot comes down to the relationship that exists with the client and the trans- factor in all of that to reduce the final invoice cost” parent flow of information between travel service supplier and client. “Really it is down to the close contact you have,” said Andy “In the crew travel market, each individual owner or manager is Macfarlane, Supplier Relations Director at Griffin. “We are getting flying less crew. It is not in a sense dramatic as far as we are concerned feedback all the time and we have systems we are developing almost in but I don’t see where the recovery is coming from. I imagine this year conjunction with our client’s needs which makes us more efficient. will be flat and hope it won’t go down any further. People won’t fly “We always have to book the best buy. Our clients are under crew unless they have crew to fly. One has to compete as hard as one pressure with budgets and are looking to cut costs. It is difficult from can, that is clear. Competition means many things, attention to service our perspective because we are selling a product that comes from a third and reducing one’s margins but if people have no requirement to move party which is the airline. So we have got to ensure we are booking the crew there is nothing that competition can do,” he said. cheapest fare with the seat availability. Because of our global network But as it has been said, it is the limiting of capacity by the airlines that we are looking to select the cheapest fare from anywhere in any market, is causing at least one major headache moving forward for the travel sector.

34 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 CREW TRAVEL MARKET SECTOR

“There is a concern over capacity on the flights,” said Mr Potter. “In the crew travel market, each individual owner “There are less flights and the flights that are going are more full than they used to be so getting marine seats at marine fares is harder. Also or manager is flying less crew. It is not in a sense the amount of tax and security related to the tickets is also an issue. dramatic as far as we are concerned but I don’t Anyone who is passing through the UK is already paying additional taxes for air passenger duty and the UK is the highest taxed air fares for see where the recovery is coming from. I imagine anywhere in the world and that is a concern,” he said. this year will be flat and hope it won’t go down Flight availability is a problem but the situation has arisen because any further” of a general drop in demand fuelled by the economic situation, added Andy Macfarlane. “And then even with what capacity is left, the Pat Twohy added: “The majority of crew members also travel airlines are introducing special fares anything up to six months ahead. economy class and you also have to take into account the number of This is good news for anyone wanting to go on holiday in six months economy seats available on a given aircraft. Many airlines are reducing time but while the airline load factors may be high their seat yields are the size of their aircraft from 747 to 777 for example, so there are fewer low. The problem the marine travel sector faces is that given our late seats to start with onboard. On top of that they are bringing in the booking options, there may not be the number of seats we need on a Premier Economy product so the physical number of economy seats spread of carriers.” that the general crew is travelling on is also reducing. There are more

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JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 35 MyView Pippa Strasser-Ganderton, Director of Global Sales and Account Management, Instone International

“In terms of our side of the business and that goes together with our clients and potential clients organising their businesses with the correct management structures in place, there are definitely oppor- tunities on the outsourcing side of things. We have seen some of those over the past year where we have won a couple of contracts where the clients are global or have become global organisations and they have seen the advantages of working with a global travel management company that can cover their requirements in all corners of the world and provide them with truly global data rather than piecing a picture together from a number of different sources. “We have come from an era recently where there were a number of shipping companies who believed they were big enough to have their own in-house travel set up, then when it gets to cost cutting they suddenly realised that travel wasn’t a money maker or was even a loss maker because not having the size to get the best deals. They decide it is better to outsource and give it to the experts. The management of crew and crew travel are areas where you can definitely get a better deal by outsourcing to experts “It is a concern when airlines look at reducing schedule frequencies on key routes because it cuts down the number of seats in one go and we have to ensure our relationship with the suppliers is good and that they recognise the importance of the niche market. There are also opportunities at times of financial crisis in securing good deals with the airlines because they then remember the marine and offshore side of the business is a constant. Opportunities are there with the right partners of course. Because our offices are very good at looking when the inventory comes back into the pool, they can jump on that and cater related to their relationships with the airlines on a local as well as international level.” products available with four different cabins instead of three. And as Andy said, the word special fares are basically public fares but they become available six months ahead of and in many instances are booked in classes used for Marine fares, which reduces the number of seats available when we reach our 72 hour marine window.” How do you overcome this? Is it down to the relationship you have with the carriers; are they becoming more understanding of the marine travel sector? “We have to expect a tightening up of the number of crew deployed and expect contracts to be extended to reduce the number of movements needed on the vessels. That compounded with the airlines having a good look at their routes and in some case withdrawing the number of seats from certain routes, is all compacting in a negative way on our industry,” replied Global Marine Travel’s Tim Davey. “It also depends on the carrier,” replied Andy Macfarlane, “and how well they manage their capacity. If they have 20+ seats left for arguments sake, but they are looking to maximise their yield from those 20 seats, within the 72 hours window and in the booking classes we need they might put five of those in. Within 48 hours they might move all of them in. so it depends how efficient the carrier is in managing that capacity. But having said that there is definitely more interest from the carriers towards the marine travel sector. In the last year we have seen carriers we haven’t seen for years because they haven’t been interested in marine and all of a sudden they see this as a niche market they can rely on. So there is more interest for sure. With the larger carriers there has always been the interest and they have been trying to fine tune their product. So the airline alliances together with the mega carriers are more proactive now on marine and are seeking advice from the marine agents as to how they can improve their products. “With some of the airlines, the systems are so automated. Then you are relying on a relationship that when you need space they can to intervene on your behalf to get those seats. Because of the number of offices we have and the number of airlines we have marine fares contracts with, we have a broader base to work from, which is a heck of an advantage,” he said. ■ ICE CLASS SHIPPING TRADE ANALYSIS Investments in fleets and research to tap high North potential

Rejuvenation of the Russian icebreaker fleet is closely allied with the programme aimed at bringing a new generation of nuclear icebreakers country's geopolitical agenda and new industrial verve founded on a into service from 2015 onwards. Moreover, additional newbuild belief in the core, long-term economic and strategic importance of its commitments are expected to be made to diesel-electric icebreakers. Arctic hydrocarbon and mineral reserves, writes David Tinsley. A new, multipurpose nuclear icebreaker type under development to After years of ebbing potency and lack of investment, the specialist Russian Maritime Register (RS) class has been shaped by the capacity needed to support the development of offshore resources and requirement to support convoys and render individual vessel assistance in trading connections in the hostile environment of the Russian Arctic is the western part of the Russian Arctic, with the added capability of now being modernised across a broad front. The turning point was the operating in relatively shallow areas of the Yenisey River and Gulf of Ob. commissioning in 2007 of the world's most powerful nuclear The Russian Arctic also provides another outlet for the country's icebreaker, the 50 Let Pobedy (50 Years of Victory). The vessel's nuclear know-how, in the shape of floating nuclear power stations. RS is completion had been long delayed, due largely to Russia's economic involved in the construction survey of the first such plant. Floating and financial crisis of the mid 1990s. However, her eventual delivery powerhouses of this type can be used in the Arctic and potentially other has considerably augmented the country's means of ensuring year- remote regions, affording a self-contained, uninterrupted source of round navigation in the western Arctic, as well as its scope in accessing power to sustain the extraction, production and transfer of hydrocarbons. natural resources in the country's remote, ice-covered northern waters. A new class of home-grown, diesel-electric Russian icebreaker took Constructed by Baltiyskiy Zavod, 50 Let Pobedy is equipped with first form in December 2008 with the delivery of the 10,000t two nuclear power plants each generating 75,000shp, and is capable of displacement Moskva from Baltiyskiy Zavod's St Petersburg yard. breaking ice of up to 2.8m thickness. Moskva made her debut providing icebreaking assistance to winter In addition to providing a vital new tool to support merchant shipping in the Gulf of Finland, and was followed into service during shipping and offshore endeavours in the frozen north, the project has 2009 by her sistership Sankt-Petersburg. The two vessels were contracted also re-energised Russian shipbuilding and ice vessel technology. The by the Russian state-owned company RosMorPort, and display multi- industry has subsequently delivered two further icebreakers, which have functional qualities, with the key task of providing icebreaking escort to given extra dimension to home-grown capabilities by embodying diesel- large tankers, complemented by capabilities in rescue and salvage. electric propulsion systems, and technical work has been initiated on a Pivotal to the performance criteria and design parameters was the

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 37 TRADE ANALYSIS ICE CLASS SHIPPING

requirement to serve tanker traffic operating to and from the eastern Baltic port of Primorsk, a vital interface for Russia's oil trade. Moskva was the first icebreaker with a diesel-electric power plant to have been built in Russia for 34 years. During the intervening period, all Russia's non-nuclear icebreakers were constructed abroad, mainly in Finland. The development of Russian Arctic oil exports from the Varandey terminal, a major new outlet in the Barents Sea, has stimulated investment in two versatile icebreaking vessels. Constructed for Lukoil by Keppel Singmarine, the 4,400gt Toboy and 7,300gt Varandey provide access through the ice for tankers lifting oil from the terminal to markets in Europe and the USA. The Toboy has been designed as a multipurpose icebreaking supply vessel, which can force through ice of up to 1.5m thickness, while the would at least equal that of 2009. Furthermore, it is intended to offer second ship, Varandey, classed as a multipurpose icebreaker/tug, can freight space from Europe to Murmansk as well as to Dudinka. break ice of 1.7m and has an open water speed of 15 knots. There is currently a great deal of research collaboration under way The ice-resistant Varandey fixed offshore terminal, serving wells within the industry in fields relating to Arctic maritime operations. The in the Timan-Pechora region of northern Russia, is also the interface for principal medium for the various endeavours is the Joint Industry Sovcomflot's new trio of 70,000dwt Arctic shuttle tankers. These Project (JIP) form of cooperation, which allows complementary purpose-designed, diesel-electric vessels, of the Vasily Dinkov class, experience and knowledge sharing between research institutes, maintain independent operation throughout the Arctic seaway, known operators, contractors, producers and equipment specialists. Det Norske as the Northern Sea Route, without the need for icebreaker assistance. Veritas, which is active in this area, reported that JIPs are addressing a Constructed by Samsung Heavy Industries, and run by SCF-Unicom, range of issues, from specific equipment winterisation to material the ships signify a vital new stage in the development of Arctic shipping response at low temperatures, and human operator competencies and and the Russian fleet. The charterer is field developer training requirements. Naryanmorneftegaz, a joint venture between Lukoil and Ice accretion on decks and superstructures, which presents a ConocoPhillips. substantial threat to vessels in cold climate regions, is the subject of one of the JIP initiatives, MAR-ICE. The remit of the partners in MAR-ICE is to provide predictive tools and mitigation measures to combat atmos- “New investment in advanced tonnage to support pheric and sea spray icing in application to offshore-related operations Russian industrial endeavours within the Arctic in the High North. Circle is expressed in the five specialised The growth of shipping activity in ice-covered or ice-prone waters and developments in ship size, together with concerns over levels of container-moduled carriers of 14,500dwt ice-going experience and knowledge in some quarters of the industry, purpose-built for year-round operation on the spurred a technological endeavour aimed at making ice navigation safer. The three-year research project set in train by DNV has led to the Northern Sea Route” development of an ice load monitoring system to provide bridge personnel with real-time information about the ice loads on the hull From 2011, crude oil will also be shipped from the Prirazlomnoye structure. This comprehensive, decision support tool for transiting ice field in the Pechora Sea to a floating storage and offloading (FSO) unit was tested over two winter seasons aboard the Norwegian coast guard off Murmansk, or direct to refineries in northern Europe and potentially vessel Svalbard during the course of her regular deployment in Arctic elsewhere. Two 70,000dwt diesel-electric shuttle tankers conceived for ice conditions. year-round servicing of the Prirazlomonoye traffic were ordered from Supported by the Norwegian Research Council, the ice load Admiralty Shipyards in St Petersburg. Operation of the pair has been monitoring project was led by DNV and drew in partners from across assigned to SCF-Unicom on 25-year timecharters agreed between the industry, including fleet operator Teekay, energy group shipower Sovcomflot and Sevmorneftegaz, now known as StatoilHydro, hull stress monitoring specialist Light Structures, the Gazpromneftshelf. Norwegian Meteorological Institute, electronic chart supplier C- New investment in advanced tonnage to support Russian industrial Map/Jeppesen, and the Norwegian Coastguard. endeavours within the Arctic Circle is expressed in the five specialised American Bureau of Shipping has raised its game in the field of container-moduled carriers of 14,500dwt purpose-built for year-round Arctic maritime technology through the recent creation of the ABS operation on the Northern Sea Route. Harsh Environment Technology Center, located on the campus of the The diesel-electric Norilskiy Nickel class is pivotal to metal Memorial University of Newfoundland. Applied research will be producer MMC Norilsk Nickel's strategy of improving the efficiency conducted to study vessels and offshore units operated in ice-covered and dependability of primary transportation lifelines supporting the waters and low temperature environments. The facility's remit also group's traffic between Dudinka, on the river Yenisey, and Murmansk, embraces operations in severe wave and wind climates. Marine transport for onward movement to export markets. Carrying up to 650 containers in the Arctic regions of the North American continent, most of which lies used for the company's consignments of metals, the new generation of in Canadian-controlled waters, will command particular attention. Arctic traders is self-reliant in navigating ice of up to 1.5m thickness. Shipping is crucial to the delivery of supplies to northern and eastern The development of the company's Arctic fleet has been attended by Canadian communities and to the support of mining operations within and new initiatives involving direct shipments into key European ports, just outside the Arctic Circle, as well as to oil and gas exploration in the coupled with measures to secure better utilisation of return voyage Beaufort Sea. Montreal-based Fednav's pioneering role in ice-going bulk capacity into western Siberia. Towards the end of November, the industrial cargo transportation has found new expression in recent years, including group opened Norilsk Nickel Logistics in Rotterdam. One of the office's its investment in a 32,000dwt bulker for the year-round shipment of nickel first tasks was to organise cargo processing and loading of equipment concentrates from the harsh environs of northern Labrador. destined for the polar division in Dudinka, by way of the Talnakh, one of An envisaged Canadian Arctic shipping requirement arising from the new series of Northern Sea Route traders. Talnakh had arrived in Baffinland Iron Mines Corporation's plan to mine high-grade iron ore Rotterdam with products from the group's Dudinka complex. on Baffin Island, Nunavut Territory, has led to sample shipments to By mid December 2009, nine direct voyages had been made by Europe and to design studies for a fleet of polar class ore carriers of up Norilskiy Nickel-class vessels to Rotterdam and Hamburg, bringing a to 190,000dwt carrying capacity. total 137,000t of export metals. The same ships backhauled some 2,500t Meanwhile, Desgagnes Transarctik, which has been operating in of equipment from Europe to the Norilsk Industrial Region. Sergey the eastern Canadian Arctic for over 40 years, has recently invested in Buzov, Deputy General Director and head of the transport and logistics new multipurpose vessel capacity to serve general cargo traffic to unit, anticipated that the number of direct voyages to Europe in 2010 communities throughout Nunavik and Nunavut. ■

38 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010

REGIONAL FOCUS GIBRALTAR

SolidBy Amy Kilpin foundations for new Rock formations

Considering it is barely visible on a map of the world, the country of Heavily laden with history, Gibraltar’s political situation has long Gibraltar holds a fairly prized position in the global maritime industry, been fraught with friction, with underlying tensions about territorial being one of the most important fuel valves on the shipping arteries of waters stemming from Spain’s sovereignty claim over Gibraltar. Yet the seas. Since climate is so high on the agenda these days, if we took while the physical proximity between Spain and Gibraltar is miniscule, the economic storm as a metaphorical reality and in its wake it the political chasm that gapes wide open between the two countries is produced a rainbow spanning the entire globe, Gibraltar would be gradually being bridged, brick by tentative brick. For the aptly named ‘Rock’, greater governmental cordiality is sitting there at the end of it, like a shiny pot of gold. proving productive for its maritime economy in many ways, and while While it is no secret that primary bunkering hubs such as Gibraltar, its foundations are of ancient stature, it is undergoing a fairly dramatic Singapore and Panama have been sopping up shipping’s cash flow transformation. Authorities in Gibraltar, the UK and Spain have vowed while the rest of the world is suffering from mass financial dehydration, to work together in this sphere, a move primarily designed to improve Gibraltar has been hitting the jackpot in a number of different dimen- coordination between the ports of Gibraltar and Algeciras in the wake sions. Small and firm has never carried so much meaning. of major casualties such as the New Flame and the Fedra.

40 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 GIBRALTAR REGIONAL FOCUS

The year of 2009 was a pivotal one, as the decade opens into a new era for the previously dissonant adjoining countries. Last summer saw the Spanish Foreign Minister, Miguel Angel Moratinos, visit Gibraltar – the first time a serving Spanish foreign minister visited the Rock – in an affable governmental meeting to discuss future cooperative efforts between the two countries. Foundation-laying at its heartiest, this momentous measure has set the tone for political fraternisation of a more musical kind, as the country builds up a chorus of improvements to its maritime network. As an initial landmark step, the recent launching ceremony of a ferry route linking Gibraltar to the port of Algeciras reopened a historic connection that has been off limits for 40 years. “We have managed to repair a 40-year parenthesis,” said Luis Felipe Fernandez de la Peña, Director-General for Europe and North America at the Spanish Ministry for Foreign Affairs. Realisation that alliances are fundamental to the smooth operation of vessels in a bay so small is also bolstered by the perpetually increasing traffic in the Straits – a volume not likely to contract. Alan Cubbin, Maritime Administrator of the Gibraltar Ship Registry, recognised the political implications of the act in securing an amenable stance for Gibraltar and Spain. “The new ferry between Algeciras and Gibraltar was a big step. We did joint work together on the ship and inspections together; it was an agreed position, and that was a big step forward in my view,” he said. “In the declaration from the trilateral forum where the three ministers met here last year, a huge part of it covers the marine industry. It talks about cooperation and these are the fruits of it. You’ve got to have cooperation right across the base here, and so far it’s working very well indeed and it is bringing a lot of different parts of the industry together,” he added. Another upshot of this buffed up working relationship between the two countries is the updating of Gibraltar’s port. Again, on a political level, the previously government-owned and managed port has formed its own entity via a Port Authority, bestowing greater freedom, flexi- bility and financial independence on the port in implementing key future developments and changes. “Now being standalone, we’re not competing with other depart- ments within the government circle, because finance is a finite resource,” revealed Captain Peter Hall, Captain of the Port of Gibraltar. “This enables us to make decisions more timely, access finance for projects from third parties, and deliver the infrastructure much more readily to meet the needs of the maritime community,” he added. In fusing together severed relations between Spain and Gibraltar, the Port Authority has also upped the political ante through extensive investment of a Vessel Tracking System (VTS). This technological revolution for the Port of Gibraltar will streamline operations in the bay in coordination with the Port of Algeciras, in the combined effort for both ports to improve emergency response and pollution control incidents. Through radar, CCTV coverage and an AIS receiver that will provide coverage of a 60 miles radius around the Rock, into the Mediterranean and out into the Atlantic, the new system “enables a whole seamless picture between the two port operations and thereby improves safety, communications, and in general works with greater cooperation and sharing of information,” according to Captain Hall. Highlighting that the “political situation with Spain is much more fluent than it has been,” Gibraltar’s Minister for Transport, Joe Holliday, added that the “the relationship with the port of Algeciras is a very good one, and now we’re trying to establish the idea of being able to assist each other further when there is an incident either in our waters or Spanish waters. “We are now formulating different policies in order to address this, and are trying to be more effective by having cooperation between us – rather than being at loggerheads like we have in the past. We’re also “In the declaration from the trilateral forum looking at ways which we can demarcate shipping lanes in and out of where the three ministers met here last both ports in order to ensure that we avoid any possible collisions or year, a huge part of it covers the marine accidents that have occurred in the past as a result of our proximity, and the fact that we do handle quite a large number of vessels both in industry. It talks about cooperation and Gibraltar and Algeciras. Coordinating our own resources and equipment these are the fruits of it. You’ve got to have means that if there is an incident we can respond jointly to it,” he said. cooperation right across the base here, Across the bay, the neighbouring competitor of the Port of Algeciras is not only working together with Gibraltar but it is also and so far it’s working very well indeed” working on its own efforts, with a record €131m ($188.3m) investment in new infrastructure this year. The move is part of a wider effort to not

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 41

GIBRALTAR REGIONAL FOCUS

only absorb the increasing traffic in the region but also to counter tougher competition as a result of growing port capacity in the Straits. Coating a new shade of interest Algeciras Port Authority Chairman, Manuel Morón, said: “The challenges this year will come from mounting competition that is All the hype of sturdy growth in Gibraltar has not denied it some affecting container and ro-ro traffic in the strait. Weak freight markets green credentials, and it is about time some hard-working smaller and overcapacity in the Strait, which will continue to increase in the businesses came to light in the country’s contribution to the global coming years as new infrastructure comes into operation, has inten- maritime industry. sified competition between terminals.” Gib-based Brunel Marine Coating Systems is a lesser-known Such investments are being rooted down at a time when Morocco manufacturer of the most environmentally-friendly and high is pushing ahead with development of the Tangier Mediterranean port performance coatings available on the global marketplace, and complex and ancillary free trade zones on the African shore of the having been established in Gibraltar since 2000, is complying with Strait. Building infrastructure to accommodate a range of trades from a changing industry. containers to oil and passenger shipping services, much of the Indicating how the company has “carried out some coatings in Moroccan port is already operational. Gibraltar at the local dockyard, but with a worldwide customer base As the climate warms up for further competition, the port of of ship owners,” Soren Valbro, Director, stressed how “the whole Gibraltar has no holds barred in generating revenue. Many ports have coatings industry is moving away from using pesticides, under IMO suffered tremendously with dramatically reduced throughput and rule, and in general everyone is much more aware of the polluting weakened activity, but Gibraltar has been triumphing with record effect from shipping.” figures as it stays glued to the hot seat of one of the world’s most Promoting the non-polluting coating capacity of the product, famous bunkering sites. which contains no biocides or solvents, Mr Valbro added how the In terms of bunker volumes, Gibraltar handled 4.6m in 2009 company is “helped by the way the world is turning more and more compared to 4.1m in 2008, equating to a 12% increase, with bunker towards environmentally friendly products.” Supplementing this, with vessel calls from 2008 to 2009 having seen an increase of 14.5%; quite fuel saving capabilities of 4% to 6% and less financial commitment to a feat in the space of just 12 months, especially since it correlated with the re-application of the product, there is a dual-stranded incentive global economic meltdown. working out of the Rock’s green-minded company. A government initiative to boost Gibraltar’s tourism has also seen “We are a relatively small company up against some very big passenger calls increase by 7% year on year from 2008 to 2009 figures, boys in the field of international coatings suppliers, but we have a with a 13% increase in passengers. The cruise industry for 2009 brought proven track record of this product,” he said. “We don’t have results in 238 cruise ships into Gibraltar, with a total of 348,000 passengers, that are based on lab tests or simulated conditions, we have tested compared to 222 cruise ships and 309,000 passengers the previous year. our product on real ships in real trading conditions. The first ships The number of ships calling at Gibraltar in total was 7,818 in 2009 were coated in Gibraltar 2000 and were docking after about five and against 6,982 in 2008, so the actual effects represent over 800 more a half years in 2006, and the coating we had applied all that time ago vessels. Yet with concerns raised in the past over Gibraltar’s physical was in as good as new condition.”

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limitations in terms of its port capacity, the scope for such sustained growth may be short-lived if the Straits see a continued boom in traffic, and the port may eventually hit the ceiling of its vessel service capability. Keeping track of change Keeping in line with the positive gradient, however, 2009 also saw a As the small Rock of Gibraltar defeats its size in the challenges and major turn-up for Gibraltar as authority was given to open up the east side improvements it is continuing to conquer, keeping administrative of the Rock – which was famously peppered with a vast number of laid-up track has been nothing short of a feat itself, and the Gibraltar vessels the previous year – for vessel services and operations. In supple- Maritime Services Handbook, responsible for publicising these mentation, any lay-ups are also now subject to new charges, providing an changes and developments, is undergoing a transformation itself. ancillary income for the port on top of increased business scope. Dr Diane Sloma, Managing Editor of the Handbook, revealed “This is benefiting the port from the point of view of revenue, and that “from this year, the handbooks will be totally available online, at least it now enables us to police the east side in a more effective as well as in traditional handbook format, in response to a changing way,” said Joe Holliday, Minister for Transport. Any vessel operations era. Anyone under 45 wants to be able to access the information on or services are to be conducted in a controlled manner due to the greater the internet. The handbook is also growing in terms of information exposure to adverse weather conditions on the east side, which poten- because international legislation is becoming heavier, and going tially poses an environmental risk if not properly controlled. online should give it a boost.” Commenting on the increased activity in the bunkering trade and Adding that “there are tremendous changes being made to the the resulting congestion in Gibraltar’s port, John Bassadone Jr, tax registration,” as the company tax rate in Gibraltar is to drop to Managing Director of Peninsula Petroleum, said that “opening the east 10% in order to attract business investment in the country, Dr Sloma side will be key to the development of Gibraltar’s maritime trade. We stressed how “the changes in tax legislation affect companies who bunker all over the world, and it’s very normal for a ship to be supplied register ships in Gibraltar,” and the documentation of these alter- in a place like the east side of Gibraltar, obviously weather-permitting. ations is vital for keeping tabs on Gibraltar’s maritime industry. We’ve been very spoilt in having the bay where it’s nice and protected, but I don’t see it as a complicated thing to have the east side open and efficiently managed.” handle ships faster and more efficiently and also to open up a greater sea Through a period of trials, both developments have waged huge area to service those vessels in, so I think we can certainly look at achieving benefits for the Port and for Gibraltar’s maritime economy at large. 50% extra capacity in terms of opening up the east side, and without too With the new VTS system in place plus the east side of the Rock much of a problem with the planned physicality of the port,” he added. offering greater flexibility and capacity, there is confidence that Phenomenal port investment in the Straits region is well-prepared Gibraltar’s maritime trade has not topped out just yet, and there’s pre-empting of increasing traffic volumes, yet Gibraltar’s shipping certainly more business lying in wait. companies and authorities remain unconcerned about the competitive “2009 has increased operationally by 10%, and we have accommo- edge that ports are hedging for. With record figures and room to grow, dated that without a great deal of effort,” the Port Authority’s Captain Hall, there is no issue for the sturdy Rock, especially as the ports are predom- said. “The investment in the VTS technology is a two-pronged strategy to inantly competing for different sectors of the shipping market.

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downturn in the marketplace than other maritime clusters. In spite of that, we do find ourselves now competing differently from a year or two years ago as we find ourselves competing on a wider geographic scope,” said Joe Corvelli, CEO. “All of the business coming into the bay and the Straits is oppor- tunity, however, because it’s providing more volume. The develop- ments in Morocco and Algeciras are bringing more container trade, container vessels and more high value clientele into the area which should give us a better opportunity to serve these kind of owners and their ship repair needs,” he added. On competitive terms, Gibraltar’s flag register has also continued to grow over the course of the past 12 months, again, challenging the economic milieu inflicted on the greater part of international shipping. Recognised for its small yet tightly packed register, the Gibraltar register flies a highly-regarded flag with a strong reputation, and has availed from a record year of vessel numbers. Apparently “very pleased that the register has continued to grow,” Maritime Administrator Alan Cubbin, said: “I was personally quite surprised, because I thought last year was going to be a very difficult year. We’ve got a lot of German owners and I thought we’d get a lot of cancel- lations, but to date we’ve had very few. We’ve done much better than we Capt Hall thought we would and it has continued to grow at a remarkable rate, and it looks like it’s certainly going to continue for at least six to nine months.” The number of commercial ships registered in Gibraltar has “The whole market has the ability to grow surpassed 300, representing more than 10% growth over the last year, in its own right just by attracting more and the total gross tonnage of the Gibraltar commercial fleet now exceeds 2.2m gt, accounting for an increase of more than 25% customers – there’s a lot more shipping compared with 2008 figures. In addition, there are 12 vessels under trade to be absorbed by all major ports in construction, demonstrating a continued interest in newbuild registra- the area, with potential for growth without tions as 2010 gets underway. Attractive to owners because of its European Ensign status, Mr reducing market share” Cubbin told SMI that the register has had a total of 10 ships transfer to the Gibraltar flag in the past year that were previously registered outside Europe, for cabotage purposes under the EU regime. With a compara- Captain Hall said: “There’s something like 110,000 ships going tively low tonnage tax regime to add to the mix, the country has a lot through the Straits of Gibraltar. Gibraltar has approximately 10% of more going for it in economic terms than many other state flags. that market share, Algeciras (with respect to bunkering and agency Gibraltar is not only entrenched in geophysical prominence, but its services) is in the order of a handful of per cent, and Tangiers doesn’t appeal also lies in wait like a ready-sprung snare. As a notoriously have anything like that; it’s just a fledgling. So the whole market has the popular arrest port, Gibraltar has seen some weaker shipping companies ability to grow in its own right just by attracting more customers – drop like flies into the jaws of its jurisdiction, as a constant flow of vessel there’s a lot more shipping trade to be absorbed by all major ports in the arrests have kept the port indelibly busy over the past 12 months. area, with potential for growth without reducing market share.” John Restano, Partner in the Litigation Department at Gibraltar law There is definitely a collective view on the investments and devel- firm Hassans, said: “Given the downturn in the economy, what we opments taking place through the Straits, as the vast majority of expected has actually materialised in that there have been quite a Gibraltar’s shipping companies are well aware of the region’s interna- number of ship arrests in Gibraltar. It had been quite a few years since tional status as a major highway of the sea. Newly re-named ship repair this number of ship arrests and it’s all kicked off again – 2009 is when yard Gibdock (previously Cammell Laird) has probably fared it all really started to happen.” marginally worse than many other of the country’s maritime sectors, Priding itself on its advantageous reputation for a quick turnaround however increased promotion of the region is setting a new standard of in arrest cases, backed by an inherently and historically sturdy court juris- business for all parties involved. diction, Gibraltar has been the beneficiary of ship arrests flowing into the “Locally, there is certainly strong local investment into the port for many years, but only in the past year has this come to light with maritime industry, and in the Straits and in the bay here we see less vengeful enthusiasm. Although considered to be at the tail end of the

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GIBRALTAR REGIONAL FOCUS

now and I would assume that it will continue into 2010. I think we’re likely to see an increase in arrests.” Common failure for ship owners to meet their mortgage terms may see newbuild deliveries undergo refinancing or amendments made to the loan documentation, as this year unfolds further pecuniary challenges, but Gibraltar will only thrive more off this fodder. “Generally the arrests are providing business to the port and the agents, and it is of benefit to the court system as well in terms of fees generated from the transactions and from the sale of the vessels here,” Mr Ramagge revealed. Not only celebrating the success of its current operations, Gibraltar’s economy, which as a whole has grown by approximately 6% in the past year, is receiving a turbo-boost of income. Esteemed for its strategic location and its legal system, Gibraltar will, in many cases, be the port of choice for arrests due to its compact and efficient infrastructure and transport system, which is also undergoing some vast alterations. Capt Hall Oblivious eyes may open wide in disbelief as yet another devel- opment in progress on the Rock adds sway to the argument for its victo- rious maritime economy, and that is the new airport. Gibraltar could “The relationship with the port of Algeciras enter an award category of ‘first times’ as once again, a historic first, it is a very good one, and now we’re trying to is due to boast an enhanced-use international airport with its bordering acquaintance, Spain. establish the idea of being able to assist Overly due an update, Gibraltar’s current tired, ageing airport will each other further when there is an incident see a brand new terminal that will bring an international gateway into either in our waters or Spanish waters” and out of Gibraltar, and for shipping companies, this is definitely good news. According to the Rock’s oldest ship agency and services company, M. H. Bland, which celebrates its 200th birthday this year, financial crisis, lawyers predict the flow of arrests might well stretch on. the airport development is the icing on the cake for the country. Revealing that “since June 2009, there has been a marked increase “The new terminal is just putting another piece in the jigsaw to both in enquiries and in the physical arrest of vessels in Gibraltar,” complete it, whether it’s for crew members flying regionally or around James Ramagge, Partner at Triay & Triay, added: “It obviously shows Europe, or the shipment of cargo or spare parts. Although we don’t have that the market has turned and that type of work is coming to the fore the airlines coming into Gib at the moment, as they once said in a film

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‘if you build it, they come’, and this can only do good in the long term,” Deputy Chairman George Gaggero told SMI. Well set up in the Straits region, the company operates a triangu- lated business model, with branches in Gibraltar, Algeciras and Ceuta. As the region really takes off, the company has its hopes held even higher, especially since, as Mr Gaggero underlined, “the tension between Spain and Gibraltar is thawing, and generally the atmosphere is improving which can only benefit the maritime industry.” As the region matures and expands as a maritime cluster, the company is confident of more tricks in the pipeline: “The port of La Linea, the cross-border town, has recently invested in a yacht marina, and they’re looking off the back of that to see what they can do as far as cruise liners or even commercial maritime services could offer. In fact, a recent report commissioned by the Chamber of Commerce stated that ‘the Gibraltar economy was responsible for approximately 12.2% of the total GDP in the Campo de Gibraltar in 2007,’ the name given to the Spanish local region/economic zone around Gibraltar,” he said. With the new airport in place, new trading potential could open up the whole region and feed into Gibraltar’s economy, fortifying the Rock’s maritime endeavours and strengthening the entire cluster into nuclear bomb-like proportions. The situation may presently stand on a speculative level as Gibraltar hopes to obtain more international signif- icance with the opening of an aviation gateway, but for all involved, the transportation issue is a distinct area of interest. Explaining how “the ultimate aim of the local government is to improve connections in and out of Gibraltar so they are expanding the airport to be able to handle a lot more traffic,” Chris Linares, Operations Manager for Inchcape Shipping Services (Gibraltar), indicated that the “The tension between Spain and Gibraltar manoeuvre will be a consequential step for the country. is thawing, and generally the atmosphere He said: “Many of the crew changes that take place and indeed some of the spares that come into Gibraltar have to be routed via is improving which can only benefit the Malaga, because it’s simply not possible to either find flights for the maritime industry” crew into Gibraltar, or find aircraft that have the ability to carry airfreight in to the degree that the ships are looking for, by way of dimensions and weight, etc. So when the airport expands, this will be of with new international status, this will allow a greater flexibility across direct benefit to the shipping trade.” the board: “If shipping companies come here for crew changes then On a logistical level, the changes sweeping across the Rock are they’ll get spares as well, if they come for fuel then they’ll get crew bound to incur positive notes throughout the entire shipping trade, and changes as well because of the proximity of the airport, so everything once again, much of this physical development comes back to the is connected in one way or another,” Mr Gabay said. political state of affairs between Gibraltar and Spain. Without this Underlining how “the new airport is in practice being shared with acquiescence, much of the country’s economic maturity would not be our neighbours for the first time ever,” Mr Gabay summarises the ethos given the opportunity to incubate. collectively consuming the whole of Gibraltar’s maritime industry - that “Politically we have come to an agreement where we are quite happy the metaphorical handshake between Gibraltar and Spain has to share the airport with Spain, and because of this Spain will show a lot remedially repaired long-standing political damage as the dawn of a more interest in it,” opined Danny Gabay, Managing Director of port new decade rises upon the global shipping trade. service agency Redwood International. “The airport is quite old and it’s If there was ever the need for a vital tincture to have a curative totally inadequate for our needs. At the moment it is literally saturated as effect on governmental antagonism, it is now, as Gibraltar garners soon as we get two flights in, the infrastructure is totally insufficient, and warmth from the embers of an economic fire which burned itself out. this has put off new companies from flying in,” he added. Yet as the country’s maritime trade rides on a statistical high, the As many crew are not EU nationals, there are frequently problems reinforced relations with its neighbouring companion will only assist with immigration when crew changes are affected in Gibraltar, however the region in turning the corner of a new and well-lit future. ■

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SHIP REPAIR One of the graving docks under construction at the new N/KOM yard in Ras Laffan

Repair facilities bank on expansionBy Alan Thorpe

espite the continuing financial downturn facing the global shipping • Centralised and efficient layout to minimise logistical resource industry, shiprepair yards, especially those in Singapore, appear movement and redundancy through effective and efficient deployment Dbent on expansion. The most progressive expansion plan involves of resources (including labour). Jurong Shipyard Ltd (JSL), part of SembCorp Marine. • Integrated facilities and utilities together with state-of-the-art production This plan comprises the construction of a 206 hectare New Yard technology to ensure lower production costs. They also increase the flexi- facility to be situated at Tuas View Extension in the west of Singapore, bility in the cross-deployment and multi-tasking of workers, leading to located along the major sea lanes in the Singapore Straits. The New improved workforce productivity and quality of work. Yard will enable the Group to provide its customers with enhanced • Integrated capabilities to handle complex and sizable tasks efficiently services, faster turnaround time and more cost-competitive solutions. through enhanced production systems and processes. Featuring a revolutionary, work-effective and efficient concept and layout, it will provide a centralised and integrated ‘one-stop solution’ Meanwhile, a 30 plus 30 year Lease Agreement for the Phase 1’s hub for ship repair and conversion, shipbuilding, rig building and 73.3 hectares of land has been signed with Jurong Town Council (JTC) offshore engineering & construction. The New Yard equipped with new with site development beginning during December 2009. The entire site technologies and optimised layout will be well-positioned to face the is expected to be developed over a period of 16 years and in three challenges from shipyards in the region. phases. The construction of Phase 1, which comprises 73.3 hectares of It is designed to serve a wide range of vessels including VLCCs, land, will take approximately four years commencing December 2009. new generations of mega containerships, LNG carriers and passenger The remaining two phases is expected to be developed over a period of ships. It will be geared to meet the requirements of vessels to comply 12 years. Upon achieving commercial operations for Phase 1, with greater operational synergy, production efficiency and critical mass. Sembcorp Marine’s operations in Pulau Samulun (JSL’s current shipyards) will be relocated to the New Yard. The preliminary projection of the development costs of Phase 1 of The salient features of the New Yard the New Yard is estimated to be around S$750m. It will be funded through a combination of debt and internal funds generated from opera- will include: tions of existing shipyards. Sembcorp Marine Group has secured committed banking facilities amounting to S$700m comprising • Optimised docking and berthing facilities, with an improved dock and S$300m Term Loan and S$400m Revolving Credit Facilities with quay ratio, to ensure effective utilisation and faster turnaround in various banks. repairs and upgrading of ships, rigs and floaters. Total dock capacity During December Sembcorp Marine announced that it awarded the will increase by 62% from 1,897,500 dwt to 3,075,000 dwt with the turnkey construction contract for Phase I of the New Yard Development number of docks remaining at 11 docks. project to Zhen Hua (S) Engineering Pte Ltd for a total contract value

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This plan comprises the construction of SKL will be developed in three phases over the next five years, involving a total investment of some $375m. Phase 1 (2010 – 2011) will a 206 hectare New Yard facility to be enable the facility to provide riser/equipment repairs, afloat repairs and module fabrication. Phase 2 (2011 –2013) will comprise the building of situated at Tuas View Extension in the a suitable drydocking facility (as yet the size of this facility is undecided) to allow the yard to provide a full drydocking and repair west of Singapore, located along the service for both the offshore and conventional shipping industries. This major sea lanes in the Singapore Straits. Phase of the facility’s development will also see the yard move into the newbuilding industry, especially for the offshore industry. Phase 3 The New Yard will enable the Group to (from 2014 onwards), will see the existing facilities expanded further. provide its customers with enhanced N/KOM to open in 2010 services, faster turnaround time and The first item on the agenda when talking to Yong Chee Min, Chief more cost-competitive solutions Executive of Qatar’s Nakilat-Keppel Offshore & Marine (N/KOM) is that the yard will operate in all sectors of the shiprepair industry and not of S$443.25m. The contract is part of the S$750m projected costs for just LNG tanker repairs. However, the yard is a joint venture between Phase I of the New Yard Development and relates to a land area of 73.3 Qatar’s Nakilat, the world’s largest transporter of natural gas, and ha located at Tuas View Extension on the west of Singapore. This Singapore’s Keppel Offshore & Marine, most probably the world’s turnkey construction contract is for the design and construction of the largest shipyard company operating in both the shiprepair and offshore proposed four VLCC drydocks, wharves, quays, piers and other oil and gas markets. ancillary works for the New Yard Phase I Development project. Phase One of the yard’s development, which includes two graving Construction work began during November 2009 with completion docks of 350,000 dwt (360 m x 66 m) and 450,000 dwt (400 m x 80 m) scheduled for May 2013. is due to open for business during the middle of this year (2010). To Meanwhile, Singapore’s Sembawang Shipyard, a wholly-owned start with the yard, which is located on a 43 hectare site in the port of subsidiary of Sembcorp Marine, has signed an agreement with India’s Ras Laffan, some 80 kms north of Doha, the capital of Qatar, is for 80 Kakinada Seaports to form a joint venture (JV) company, Sembmarine Kakinada Ltd (SKL), to establish and operate a repair/newbuilding drydocking projects to be carried out each year. facility catering for India’s expanding offshore oil and gas industry and Qatar Petroleum, which is also part of Nakilat, is currently taking for merchant vessels trading or operating in Indian waters. delivery of many LNG tankers building in Far East newbuilding yards SKL is strategically located on the East Coast of India between – the final fleet total being around the 90 ship mark, with 54 of these Vishakhapatnam and Chennai Port. The East Coast of India is one of the ships owned by Qatar Petroleum. Other partners in the joint venture to world’s key oil and gas exploration areas. The investment in this facility export natural gas from Qatar includes Shell, OSG, K Line, NYK, is a strategic fit and is in line with Sembcorp Marine’s Indian hub Teekay, Pronav and Marngas. In total, Nakilat’s LNG fleet will include strategy to cater to the growing needs of customers operating in India. 54 LNG carriers comprised of 9 Conventional vessels (145,000 - Well supported by the Indian government and the oil and gas industry, 154,000 cubic metres), 31 Q-Flex vessels (210,000 - 216,000 cu m) and SKL will boost the business of Sembcorp Marine and further promote 14 Q-Max vessels (263,000 - 266,000 cu m). the Kakinada Port area. Yong insists that repairs to these ships will be open to a competitive Sembcorp Marine, through Sembawang Shipyard, will hold 19.9% tender basis. However, most in the industry expect that these vessels share of the JV’s initial investment of US$50m, with an option to will go to the new shipyard. N/KOM already has targeted specialised increase to 40% over the forthcoming one/two years. SKL will operate LNG tanker repair teams from its Singapore yards to operate in Qatar this new marine and offshore facility within the vicinity of Kakinada when the yard opens. Keppel will use its GTT technical assistance Seaports, the development to take part in stages. SKL will initially agreement in Singapore for the membrane ships which drydock in provide riser/equipment repairs, afloat repairs and modules fabrication. Qatar. It is expected that the Qatar fleet of LNG tankers will drydock in Within three to five years, SKL will become a one-stop integrated Qatar (western-bound) and Keppel Singapore (eastern-bound). offshore service facility catering to offshore vessels and merchant ships The yard already has a workforce of some 1,000 blue collar workers, including the repairs and servicing of offshore vessels and ships, the which will increase to around 5,000 by the time the yard is fully construction of offshore vessels and ships, as well as riser/equipment completed. Future plans also include the building of a floating dock repairs and modules fabrication. SKL will start operations immediately suitable for the Q Max LNG tankers and a panamax (40 m wide) floating by using the available pier at the Kakinada port. dock. Specialised cryogenic workshops are already under construction. ■

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 51 DISPATCHES RUSSIAN INSURANCE DISPATCHES SHIPPING BUSINESS REPORTS FROM AROUND THE WORLD A high flierBy James Brewer in Russian circles

52 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 RUSSIAN INSURANCE DISPATCHES

ussian insurer Rosgosstrakh has spent the Prime Minister Vladimir Putin signed an the response area “allow us to be confident in last decade of its 88-year history under- order which allowed Rosgosstrakh to issue long-term fixed premium P&I business at Rgoing radical modernisation of its origi- additional shares to expand its shareholder Rosgosstrakh.” nally state-inspired infrastructure. capital, although because of the financial The company is candid in explaining it Now it is aiming for new achievements, including crisis and increased state spending to support has faced some major claims in recent times, that of being Russia’s prime marine insurer. industry, the government decided not to “which we successfully settled.” Notably, Even more, the group which these days is a participate in this additional issuance. Private between 2007 to 2009 these included $2.7m household name thanks in part to its sponsorship of shareholders are however keen to strengthen related to the Giovanna, a total loss; $2.1m the national football championship, is aiming to the financial stability of the company and are for main engine damage to the Professor become known as a skilful and eminent ready to finance or fund the buyback of the Goryunov; $800,000 after ice-damage and commercial player in the field of protection and additional shares to be issued. This means sinking of the Kapitan Vrungel; $570,000 for indemnity insurance, an accomplishment that has that the government’s stake will reduce to main engine damage to the New Harvest; and eluded many brave aspirants over the years. 13.1% while retaining a controlling voice $560,000 for the Andros Warrior which was With a P&I focus on ships of modest size through the golden share. As part of the involved in a collision. (normally a maximum of 7,000 gt for tankers process, some shares will be placed with and 12,500 gt for other categories), Rosgosstrakh employees. Rosgosstrakh will present a credible alter- In marine, the company describes its ...85% of all premiums native for tonnage of the type indemnified by mission as seeking to be “an insurer of first are collected by the top Shipowners Club, British Marine and other choice for Russian and former Soviet Union leading providers, because it will seek on a ship owners,” and it is already on its way to 10 Russian marine selective basis international as well as this ambition, helped by its rating of A++ domestic business. from the national rating agency Expert RA. A underwriters, whereas While much of its growing marine pro-active approach has seen the marine hull business has Russian roots, the company has portfolio rising so that it now counts more these firms pay 90% of increasingly developed a pitch for a wider than 1,200 vessels, including ships under clientele, exemplified by the hosting of its first construction and yachts. The P&I book all claims social get-together for the London broking, amounts to 250 at present, a figure that will survey and legal market in December 2009. Its almost certainly climb substantially. The idea In common with most other insurers, marine specialists are ready to compete vigor- is to keep the balance of Russian and foreign Rosgosstrakh is now seeing a reduction in the ously with the club sector which is usually insured interest at 50/50 in hull, although the number and amount of claims, mostly the result reckoned to command 90% of the entire preponderance in P&I is domestic. For the of the economic downturn: with fewer market and thereby to provide considerable moment, 85% of the P&I book is Russian commodities traded, less valuable commodities security, albeit with a lock-in system making it flag, which will be no great surprise given the carried, lay-ups, scrapping, and fewer active hard for ship owners to escape without paying legacy of a huge emphasis during the Soviet ships making it easier to employ better qualified a release call which ensures they have met all era in maintaining a fleet under close control. crew. Its loss ratio has been comfortably their mutual dues and more. An example of overseas clients gained acceptable, by international standards. recently is Tehran-headquartered IRISL. Russian marine market figures for 2009 New London friends have been made in have yet to be officially released, but prelim- In terms of premium the past couple of years, but Rosgosstrakh inary estimates are that premium collected and its underwriters already had a fine will have been around $155m, and claims received, the reputation in that choosy market, with its paid in the region of $95m. This would be a reinsurance being placed by Willis, the better performance than the already Rosgosstrakh group world’s third largest brokerage and one with reasonable 2008 estimate of $147m collected leads the Russian substantial Russian marine expertise. in premium and $100m disbursed in claims. Its hull treaty reinsurance contract is led Premiums could well rise by a further 5% to sector, with nearly by heavyweight Munich Re, with other inter- 7.5% in 2010. national reinsurers and Lloyd’s syndicates on It should be noted that 85% of all $2.25bn, followed by the slip. It includes a self-retention of premiums are collected by the top 10 Russian $750,000, with capacity of up to $12.5m, and marine underwriters, whereas these firms pay Ingosstrakh with extra capacity is available on a facultative 90% of all claims. basis. For P&I, the company has a $500,000 Rosgosstrakh in 2009 collected more $1.7bn, Sogaz with retention and the leader is Aspen Re for the than $10m under hull and P&I categories, a lower layer (up to $7.5m) and QBE for the total which was almost double that of the $1.5bn and Reso upper layer (in excess of $7.5m up to $25m). previous year result. Back in 2004, In terms of premium received, the Rosgosstakh was 13th largest participant in Garantia with $1.2bn Rosgosstrakh group leads the Russian sector, the Russian marine market, and the ascent has with nearly $2.25bn, followed by Ingosstrakh been rapid: to 10th position in 2005, fourth in As a business group, Rosgosstrakh is the with $1.7bn, Sogaz with $1.5bn and Reso 2008, and third in 2009. leading carrier in the Russian insurance Garantia with $1.2bn. Currently behind the number one, market, claiming more than 25 million Many companies elsewhere have lasted Ingosstrakh, and number two Military individual and corporate clients in activities only a few seasons in fixed premium P&I, Insurance Co, in the Russian marine league as varied as motor and marine, and pets and overwhelmed by claims and the extremely table, Rosgosstrakh is targeting the lead petroleum, and it seems to have made a fine reserving skills needed. When asked position, with a forecast that its premium smooth transition since 2001 from its heritage whether Rosgosstrakh is in this for the long income for hull and P&I could jump as much of Gosstrakh, the Soviet state insurance haul, Olga Lazovskaya, a Director in the P&I as fivefold, to around $50m by 2015. monopoly. Since mid-2003, a consortium of department, replies with an emphatic “YES! Experts at Rosgosstrakh doubt whether Russian private investors has had a We are for the long-term in this market.” She any additional P&I competitors will make a controlling stake in the company, having says that the marine team’s knowledge of this splash in the market. Said Ms Lazovskaya: acquired almost 75% shares in several open business, and its recognition of how much the “The number of fixed premium P&I facilities privatisation auctions. The federal speciality is client-orientated, of the critical will not substantially increase. This is very government retains the balance including a need for services to be provided, and of the specific business which requires a certain golden share. need for the right shipping industry people in knowledge, understanding and tolerance.

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“Rosgosstrakh is in an ideal position club and follow how his insurance costs with its long history, strong financial increased through that time, the figures will Preliminary estimates background, professional staff and under- be enormous. The cost of P&I insurance for are that premium standing among top management of the the same ship owner, placed with a fixed importance of marine insurance. premium provider, will be [significantly] collected will have “Especially valuable is the ability of less. Profit-driven commercial underwriters Rosgosstrakh to provide a ‘one-stop- take greater care over their risk assessment been around $155m, package’ (hull and machinery, and P&I and underwriting, and at the same time they together) for ship owners, which very few have the possibility to balance any red ink and claims paid in the companies in the world can offer. As far as with profitable technical results from their the Russian market is concerned, it is very other lines of business. This enables them to region of $95m. This unlikely that new P&I players will appear.” avoid putting the financial burden onto their Ms Lazovskaya says that the good clients.” would be a better announcement by several member associa- She seeks to assuage any stability tions of the International Group of P&I Clubs concerns among those moving away from performance than the of general increases of up to 5% for the mutuality by saying that it is commonly already reasonable February 2010 renewal season will encourage overlooked that the financial strength of the shipowning interests to explore the alter- commercial underwriters which offer both hull 2008 estimate of native to mutuality. and P&I cover is greater than the combined reserves of the International Group clubs. $147m collected in Adding to the status of Rosgosstrakh is “If you take a ship its role as co-founder in 2009 of the Russian premium and $100m owner with a clean or Union of Marine Insurers. Through the creation of this marine union, the top Russian disbursed in claims acceptable loss record, underwriters are seeking to ensure first-class standards and quality of operation in their other techniques are being employed, and an placed for, say, 10 market in order to attract the highest quality English version will soon be ready. tonnage worldwide. No-one believes that the future will be years with an Nikita Minin, Director of the transport plain sailing for either mutual or fixed- insurance department at Rosgosstrakh, said premium insurers. Steamship Mutual, one of International Group that to improve service the company has the currently more successful clubs within the employed highly experienced claims International Group, noted in a recent update: club and follow how handlers from shipping companies with “After the storm that was 2008, the financial his insurance costs considerable practical knowledge and legal and shipping world are still trying to under- and insurance background. stand how best to plan for the future. We do increased through that He added that the company has imple- not know how effectively and over what mented a unique electronic system named Guru timescale the problems associated with the time, the figures will be which tracks the circulation of documents for collapse of the banking sector will be each claim, akin to the Lloyd’s system. addressed and resolved, but against such an enormous” Another step to reinforce the standing of uncertain backdrop the club is focused on Rosgosstrakh has been completion of the ensuring that the underwriting result is sound While 5% might sound reasonable in consolidation of companies within the group. and that the investment strategy is prudent.” today’s circumstances, it has to be remem- This has involved the blending of 590 As to Rosgosstrakh, there will be a keen bered that this is on top of the hefty rises that insurance agencies, 1,700 insurance field sense of competition with Ingosstrakh, from the clubs have been levying over the last few offices, and over 280 claims handling centres which it recruited a section of the marine years, and several have debited owners with into a single insurance company, making it the team (including Ms Kochkina, a former shock extra calls to compensate for volatile biggest in Russia. A comprehensive new Managing Director of Ingosstrakh marine underwriting and investment performance. website, www.rgs.ru, is described as unique to hull and P&I division ) just over a year ago. Rosgosstrakh consultant Janna Kochkina the Russian market, with Rosgosstrakh people That team operated a profitable portfolio at asserted: “If you take a ship owner with a telling the audience about insurance products Ingosstrakh, which with its 37-year record in clean or acceptable loss record, placed for, and the company in general. A member area the P&I arena in Russia, will be eager to say, 10 years with an International Group for existing and potential clients, blogs, and show it has maintained its prowess. ■

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54 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010

DISPATCHES INDIAN AND SRI LANKAN SHIPBUILDING

Indian shipbuilders bypass the global downturn

he shipbuilding industry in India is in a Indian yards had benefited enormously owner-sponsored re-sales of incomplete far healthier state than it was barely six in the period 2004 to 2007 from an order vessels at yard level, Indian yards have Tyears ago. Notwithstanding the global overflow due to non-availability of building remained relatively unscathed. Even as the economic downturn and shipping recession that slots in East Asian shipyards, but were top Japanese and South Korean yards have have adversely affected the order-books and expected to be hit by the financial meltdown only now recommenced marketing bottomlines of shipyards in South Korea, Japan in developed countries that made ship finance shipbuilding slots beyond 2011, Indian yards and China over the last two years, most top much less easily available than before. have few worries until 2013. shipbuilders in India appear to be sitting pretty Nevertheless, while yards in China in It must be underscored, however, that the with order-books crammed until fiscal 2012- particular have been hit with a spate of Indian statistics are set on a small base. The 13, writes Shirish Nadkarni in Mumbai. cancellations of orders and options, and Indian industry’s share of the global

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shipbuilding market is just over 1%, and the governments of most Asian countries had Shipping Ministry’s goal of taking it to 3% by fully supported their fledgling shipyards with 2012, and to 5% by 2015, appears to be a pipe subsidies in the initial years when they began dream as the country’s competitiveness has competing at world level; the Indian been on the wane. government needs to do likewise.” “Since we first sell a ship and then During the subsidy regime, the turnover manufacture it, we would like to have clarity of Indian shipyards had increased from on the exact cost structure,” said V. Kumar, Rs10.17bn in 2002 to Rs36.57bn in 2008. Secretary- General of the Shipyards The industry has petitioned the government Association of India and Joint Managing to extend the subsidy to allow it to compete Director of the country’s second largest with international shipyards. private sector shipbuilder Bharati Shipyard. The synergy of operating from six Bharati has remained largely unaffected locations – Ghodbunder, Ratnagiri, Dabhol, by the worldwide shipping recession, and Goa, Mangalore and Kolkata – on both coast- continues to flaunt a healthy order book of lines of India has allowed Bharati Shipyard the Rs50.94 billion ($1.06bn). This includes a flexibility of constructing a large number of recent order of Rs2.81bn ($58.5m) order from vessels within a limited time period. The yard India’s Defence Ministry for the supply of 15 has also initiated the process for obtaining interceptor boats for the Indian Coast Guard. certification under ISO 14001 and OHSAS. “Although fiscal 2008-09 was an The company is currently in the process “...of course, nobody extremely challenging year for the of expanding and modernising its production shipbuilding industry due to the worldwide facilities. It has plans to expand nationally, can predict what will recession that saw massive cancellations build larger vessels over 200 metres in length across the globe, we did not face a single and oil exploration rigs, the first of which is happen; but looking order cancellation,” said Bharati’s Joint under construction at its Dabhol facility. Managing Director P. C. Kapoor. Bharati is also attempting to push up at our clientele, and “In fact, during the year gone by, we both turnover and profitability with its new our track record of actually bagged orders worth Rs6.99bn. We shiprepair facility on the recently-acquired could possibly have done even better if there floating dock of Swan Hunter Shipyard of the maintaining had been some clarity on the subject of the UK. The dock has the capability to build shipbuilding subsidy, and we had not been aircraft carriers, navy vessels, rigs and carry relationships, we think left groping in the dark.” out shiprepair. Its machinery was upgraded As per the scheme launched by the recently; and it is being commissioned at we should sail through government in 2002, shipyards were to Dabhol in the Ratnagiri district of southern receive a 30% subsidy for all vessels sold to Maharashtra. this difficult phase foreign companies and for vessels over 80 Other machinery and equipment metres in length sold to the domestic market. acquired by Bharati from Swan Hunter without too many The scheme, which had initially been include a 150-tonne floating crane, fully- mooted for state-owned shipyards and was automated panel lines, quayside travelling worries or cancellations” subsequently extended to the private sector as gantry cranes of up to 180 tonnes capacity well, expired on August 14, 2007. Only ships and 30 overhead travelling cranes of up to 60 The takeover battle had seen the shares booked before that date have been deemed tonnes capacity. of Great Offshore more than double over six eligible for the subsidy, which incidentally “The floating dock is a good addition to months, from Rs280 to a high of Rs584 as the has not yet been disbursed. our existing facilities,” said Mr Kapoor. “But two bidders made offers and counter-offers. “We are due to receive an amount of at the moment, it will be not be used for new At the heart of the takeover war was the Rs2.77bn from the government before the construction. We will use it initially for our desire of the warring shipyards to increase end of the ongoing financial year,” said Mr repairs business; and later use it for launching their exposure to the offshore vessel Kapoor. “But we are not sure exactly when new ships. It should be an additional revenue building market. Though Indian yards did we will get this amount, and this causes us generator during the global economic not face cancellations during the economic problems in our cash flow. slowdown, when new orders could be hard to downturn, fresh orders did dry up, particu- “Also, we had based our pricing after come by.” larly for bulk carriers. factoring in the subsidy. Without the cushion Bharati has made an additional The offshore sector, however, offers of the subsidy, we will not be competitive at investment in offshore services provider good potential for the foreseeable future. The international level, particularly with the steep Great Offshore, picking up a 43% equity offshore services industry has fixed long- rise in input costs in recent months. The stake and effective management control in term charter hire contracts with explorer- the Mumbai-based shipowner (formerly a producers like Oil and Natural Gas subsidiary of Great Eastern Shipping Corporation (ONGC), Reliance Industries, “...we actually bagged Company) through creeping acquisition and Gujarat State Petroleum Corporation (GSPC) open offers on the Bombay Stock Exchange. and others; and hence has stable cash flow. orders worth Rs6.99bn. Victory came at the end of an acrimo- Anchor-handling tugs and rigs constitute nious battle, waged over several months with around 50% of the offshore supply vessels. We could possibly have ABG Shipyard, for control of Great Offshore. This segment has a huge replacement demand. The tug-of-war began in May 2009, with both Great Offshore alone has a fleet of over done even better if there yards making rival offers for the purchase of 40 floating assets, including offshore support had been some clarity equity shares from the market, raising the vessels, drilling vessels, anchor-handling tugs ante with each succeeding week. and construction barges. A number of these on the subject of the Bharati’s bid of Rs590 ($12.60) per Rs10 vessels will come up for replacement within face value equity share was to have been the next three to five years. This could offer shipbuilding subsidy, thrown open on December 23, 2009, when sizeable captive business if a shipyard were ABG unexpectedly threw in the towel, and to get control of the company. and we had not been sold its entire collected holding of 3.08 “This, for us, is a strategic long-term million shares, constituting 8.27% of the investment, and a significant step towards left groping in the dark” company’s equity, in the open market. realising our aspiration of having a strong

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foothold in all spheres of the offshore industry,” said Mr Kapoor. “We feel the investment will be of great benefit to both Colombo Dockyard’s focus on Bharati and Great Offshore.” While ABG Shipyard may have lost the battle to gain control of Great Offshore, it did shipbuilding pays rich dividends make a small fortune by selling the 8.2% of the offshore firm’s equity that it had acquired Identifying a lucrative niche to get a head start on the competition, and making optimal use of over the preceding six months from the the limited resources at hand, are two actions that Colombo Dockyard Limited (CDL) took in market at a much lower price. 2007 to ensure that it rode out the global economic recession of 2008 and part-2009. Again, in response to its own open offer Realising that the small size of the building dock would make it difficult to net orders for of Rs520 per share, made before it withdrew larger-sized ships bids, the state-run yard concentrated on marketing newbuild offshore supply from the race to acquire the offshore services vessels and tugs for which ready demand existed in the region. Ergo, CDL’s 2008 turnover of firm, it had managed to garner a substantial Lankan rupees (Lkr)10.93 billion ($96 million) was an impressive 27% improvement upon the 15.2% stake from the market by January 7. 2007 achievement of Lkr8.62 billion, even as the shipyard’s 2008 net profit of Lkr1.42 billion ABG could well demand a seat on the board was a 32% increase over the previous year. of Great Offshore -- a proceeding that could In 2009, accounts for which are being computed, revenues went up only marginally, but thrust an unwanted spoke in Bharat the net profit showed a quantum jump – which could mean that the yard will have ended 2009 Shipyard's wheel! in an extremely sound position. ABG's order book looks perhaps the “We only include the profit on a newbuilding in a particular financial year if the vessel healthiest of all Indian shipyards, being has been delivered in that year,” said CDL’s Managing Director Mangala Yapa, who recently packed all the way until 2013 with vessels completed 25 years with the shipyard; and remembers that, as a fresh young engineer, he had whose aggregate value is estimated at Rs114 built the lock gate of the yard’s 125,000 dwt drydock in 1984. billion ($2.44bn). “We delivered to India’s Greatship in the first half of the year 2009 two of the four anchor- “We have maintained our leadership handling and towing supply vessels that had been ordered by them. The profits on those two position among Indian yards; and have faced AHTSVs, as also on two more newbuildings – passenger ships for the Lakshadweep no cancellations,” said the ABG group’s Administration – have helped firm up our bottom line in 2009.” Managing Director Rishi Agarwal. “Going Mr Yapa admitted that, while the quotes for the AHTSVs were reasonably accurate, the forward, of course, nobody can predict what passenger ships were a first for CDL, and involved unforeseen expenses that cut down on the will happen; but looking at our clientele, and profit margin. our track record of maintaining relation- “Some learning and design issues on the passenger vessels did add to our costs, and we ships, we think we should sail through this did not have the same kind of profit levels on those two vessels, but we have done well for the difficult phase without too many worries or year,” he said. cancellations.” The CDL chief expresses satisfaction that shipbuilding has substantially improved the The group manufacturers all kinds of utilisation of the limited resources at the yard’s disposal – which, in turn, has helped the marine ships, including bulk carriers, deck shiprepair side to be more aggressive in its marketing. barges, interceptor boats, anchor handling “In the past, the shiprepair side was the predominant sector,” he said. “Either we had only supply ships, sub-sea multipurpose platform one vessel being delivered, or none; and shiprepair had to shoulder all the burden of showing support vessels, diving support ships, tugs profits. But now, slightly more than half our turnover comes from shipbuilding.” and rigs, for both commercial and Mr Yapa considers shiprepair to be a short-term business, with the yard needing to decide government interests. within a short time frame the rational price and the scope of work being done. Over the years since its inception in Surat, “On the other hand, shipbuilding is a long-term business, where one’s pricing is based on the ISO 9001-2000 certified yard has built and what the market can take at any given time, and the equipment and material purchases that delivered well over 100 vessels. Over the last have to be made,” he says. two years, 90% of the vessels it has built have “Fluctuations, like steel prices first going through the roof and then dropping through the been exported. The Commerce Ministry floor, have to be absorbed somewhere. Owners may think that shipbuilders make huge profits; showed recognition of its achievements by that is a misnomer. When the price of one component drops, something else goes up. And one awarding it the All-India trophy for outstanding also has to factor in inventory of material bought at a time when its price was much higher contribution to Engineering Exports. than at the moment,” he said “We are one of the world’s leading builders of offshore vessels, and among our top customers are Lamnalco of Cyprus, Maridive Offshore, Vroon Offshore, Deep Sea Supply and Marnavi,” said Mr Agarwal. “We have been competitive in the global market in terms of price, quality and timely delivery.” The yard has recently added a new item to its list of offerings – the bulk carrier, and will build basically the Supramax and Handysize bulkers – vessels in the 35,000 dwt and 54,000 dwt category. It has bagged orders for an impressive 38 vessels from just three customers. “Luckily, all these customers are finan- cially healthy and are also doing well opera- tionally,” said ABG’s Chief Financial Officer Dhananjay Datar. “Our bulk carrier order- book, which can be very vulnerable in today’s times, is pretty intact.” ABG’s largest customers on the bulk side are the Thailand-based Precious Shipping and Germany’s Vogemann, which is well known in the bulk shipping business as an extremely

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canny company that has been able to make company made a foray in the Indian capital and western coasts of India at an aggregate money even in the current worldwide market with an initial public offering to raise outlay of Rs10bn. financial crisis. The third major customer is about Rs5.50bn ($118 million). “We are in the process of acquiring land Essar Shipping & Logistics, also from The funds raised from the issue of Rs10 running up to 500 acres in each location,” said Cyprus, but with extensive Indian operations. equity shares at a premium of Rs45 each will TSL’s Chairman P K Balasubramanian. “The The company has also ventured into the be used to fund part of the shipyard’s new yards will make our turnover grow twelve- construction of jack-up rigs capable of Rs29.50bn expansion programme. The yard fold, from Rs4bn in 2007-2008, to around operating in 350 ft of water. Essar Oil has has already spent Rs21bn out of the tied-up Rs50bn by the year 2015. We are also looking placed orders for two of these rigs. funds of Rs25bn. at acquiring shipyards in Asian countries.” “In the offshore arena, we basically build The 662-metre long, 65-metre wide Among the state-run yards, Hindustan anchor handling tugs and towing supply drydock can be used to build two 74,500 dwt Shipyard at Visakhapatnam did some fancy vessels, and platform support vessels,” said Panamax dry bulk carriers and two smaller financial restructuring during the first half of Mr Datar. “We have about 14 ships being vessels simultaneously. Work on the dock had the first decade of the new millennium, and built for the Coast Guard and a passenger begun in April 2007, and was to have been appeared to have got over most of the ship for the Andaman & Nicobar completed in the final quarter of fiscal 2008-09. problems that had thrust it into the red after Administration. We are also building two ice- “This kind of delay is common to the 1995. However, the global economic mess class ships for one of our clients.” industry; and a six-month delay in times of blew a large hole in the yard’s finances all ABG Shipyard’s original facility at Surat global economic recession cannot be over again; and a decision was taken by has been operating for several years, but has considered surprising,” said N. India’s Shipping Ministry to move the recently been completely revamped in such a Ravichandran, Deputy Chairman of SKIL Visakhapatnam-based yard out of way that the fabrication capacity has been Infrastructure, co-promoters of the shipyard commercial shipbuilding, and into the fold of modernised and augmented, extra land along with Gurgaon-based Punj Lloyd. “The the Defence Ministry for the exclusive purchased and the requisite equipment put in first ship will go into the drydock soon.” construction of nuclear submarines for the place. In fact, whatever could be done to The yard has on hand 22 orders for Indian Navy. optimise production from Surat has been done. identical 74,500 dwt Panamax bulk carriers The other major state-run commercial ABG will, however, depend much more from international ship owners like Golden shipbuilder, Cochin Shipyard (CSL) has been heavily on the new shipyard in Dahej, which Ocean, Setaf SAS of France and Avgi making consistent profits in the past six years. It is much larger, with 165 acres and 1km of Maritime Services, part of the Kyrini group of has concentrated mainly on building vessels waterline. The company has ordered a sophis- Greece. India’s state-run explorer-producer used by the offshore industry, and has ticated shiplift from Norway’s TTS at a cost ONGC has ordered 12 offshore supply vessels. constructed a number of platform supply vessels of approximately Rs2.5bn, to be used for Small ship specialist, Chennai-based of the Rolls Royce UT-755-L design for global launching its newbuild vessels. It is Tebma Shipyards, believes the shipbuilding ship owners like Norwegian offshore service scheduled to arrive by December this year. boom has not run its course; and is planning supplier Deep Sea Supply and Hellespont “The lift’s biggest advantage is that it to set up two yards, one each on the eastern Steamship Corporation of Greece. ■ operates from the water, occupies no space on land, and can lift up to 30,000 tonnes,” says Mr Datar. “It is one of a kind, and nobody in this part of the world has it. It will be a common platform to launch rigs and the larger bulk carriers, as well. In fact, we have put in place at Dahej as many of the advancements that one can possibly achieve and implement.” A third private sector Indian shipyard which could have done as well as Bharati and ABG, but has hit a roadblock along the way, is the Gujarat-based Pipavav Shipyard, whose shipbuilding activities have been delayed by nearly a year, a proceeding that induced the resignation of its frustrated erstwhile CEO, Ray Stewart. Pipavav’s drydock, which is slated to be India’s largest and among the biggest in the world, has only just opened, even as the

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 59 SMI TV talks to Jan Morten Eskilt : Ship Management International Watch the shipping industry movers in action in high definition with the newly launched SMITV

Cutting edge video interviews at the click of a button www.shipmanagementinternational.com NEWBUILDING NEWBUILDCONTRACTS YEAR-END WORK While layoffs had to be implemented ferries, as well as civil engineering projects throughout Fincantieri's Italian shipyard involving premium residential complexes and INFLUX TO ORDER network due to the order drought, the group's town houses. Proactive work has seen the strategic plan to increase efforts in areas development of a number of concept designs, HUNGRY YARDS contiguous to its traditional main fields of work most recently a gas-fuelled passenger ship to an has also yielded some success. The recent eco-friendly blueprint. By David Tinsley contract for a 140 metre super-yacht will One of the southern European pioneers in complement naval and specialised tonnage ro-ro shipping, Genoa-based Ignazio Messina, production at the Muggiano yard near La Spezia. has assigned a major new stage of fleet After nearly two years of shrinking demand for European endeavours to attract new modernisation and development to Daewoo tonnage that has come to form the business business in core fields of commercial Shipbuilding & Marine Engineering. From its lifeblood for western Europe's shipbuilders, shipbuilding competence are matched by Mediterranean service origins, the Italian group Carnival Corporation gave a fillip to the oriental determination to break into those runs an extensive service network that includes industry by entrusting Fincantieri with an order remaining European strongholds. Samsung deepsea operations to southern Africa, and has for a 130,000gt cruise vessel. Heavy Industries' unerring aim to become a continually refined its capability for multi- The newbuild will accommodate 3,690 force in the cruise ship construction market was farious freight transportation using ro-ro passengers, and will be based on the design given new expression in November through its equipped vessels. employed for the September-delivered nomination for a US project involving an The nascent class entrusted to Daewoo Carnival Dream and second-of-class Carnival apartment-type cruise vessel. The South applies the characteristic Messina versatility, Magic, currently under construction at the Korean builder said that it would enter into a being suited to a very wide range of cargo, Monfalcone yard. Scheduled to enter service contract during the first half of 2010, with a including cars, vehicles and heavy equipment, during the spring of 2012, the third ship will view to effecting delivery in 2013. and a potentially high payload of containers. thereby ensure production continuity at Prospective owner Utopia is slanting the Four newbuilds commanding a total $300m Monfalcone. "This is a first, important signal vessel at a small and elite segment of the contract value are due to be delivered by the first from a market which is still going through a business, whereby cabins are sold to individuals quarter of 2013, and each will offer a car carrying difficult phase," said Fincantieri's Chief who can then enjoy long-term stays and capacity of nearly 1,500 units, and scope for Executive Officer Giuseppe Bono, who voyages encompassing special events some 3,000teu boxes on the upper deck areas. It conceded that it was hard to discern when the worldwide, such as the World Cup, Olympic is understood that Messina is already contem- sector might recover completely. Games and Cannes Festival. While a pure cruise plating further investments, in line with a ship of the size of the envisaged Utopia vessel programme of phasing-out older vessels. would accommodate 3,000 or more passengers, The surge in new orders secured by Daewoo the planned newbuild from Samsung will be during the final weeks of the year also included limited to 900. More akin to premium apart- $1.6bn-worth of export offshore work, comprising ments, each cabin will include two or three two drillships and a semi-submersible, plus two bedrooms, kitchen, living room and bar. special-purpose vessels for RWE Innogy of The long-term vision that underpins the Germany. The RWE pair, reckoned to be worth the business philosophy of the major Korean equivalent of nearly $300m in total, have been shipbuilders is clear from Samsung's 13 years designed to transport and install the largest of preparation and measured participation in offshore wind turbine plants. passenger ship construction. This process has Despite the very substantial order backlog included the early purchase, strip-down and in the suezmax category, several European conversion of a small cruise vessel, and a owners have recently demonstrated confidence number of contracts for high-grade ro-pax in the sector by awarding contracts to Korean yards, with Daewoo most prominent in this activity. Constituting one of the largest deals of the year, Almi Tankers announced that it would be expanding its fleet through the addition of 10 suezmax tankers of about 158,000dwt, to be built by Daewoo. The delivery schedule runs from December 2011 to November 2013, and the design and specification reflects an especially forward-looking approach to environmental requirements and the expecta- tions of charterers. Centrofin Management is reported to have implemented a project for three suezmax tankers, to be delivered during the first half of 2011, while Daewoo earlier secured a suezmax series to the account of Angolan state-owned oil company Sonangol, with completions programmed through 2012 and 2013. Although market analysts indicate that new commitments mean that the number of suezmax carriers under construction and on order worldwide has grown to more than 30% of ships in service, factors favouring new investment include the impending phase-out of the global fleet's remaining single-hull vessels. ■

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 61 BUSINESS OF SHIPPING

AdAdHocHoc Containers as emergency housing

Researchers have been investigating the prospect of utilising the surplus of disused shipping containers in the Caribbean as an easily mobilised source of emergency housing, which could potentially resolve some of the humanitarian issues following the Haiti earthquake disaster. Clemson University has been working on a design initiative known as the SEED project, originally inspired to meet the need for emergency housing left in the wake of hurricanes common to the US southeast and the Caribbean, and the SEED team see a potentially strong match for their proposed design with the immediate housing need unfolding in Haiti. Faculty members have researched the possibilities in the creative repurposing of shipping containers as a solution that is simple, relatively inexpensive and easily mobilised, and Clemson researchers are now looking for strategies to implement the SEED Project as quickly as possible, ideally having a modified container on site within three weeks. Pernille Christensen, a Research Associate in the Richard H. Pennell Center for Real Estate and a PhD student in planning, design

and the built environment; Associate Professor Doug Hecker; and Assistant Professor Martha Skinner of Clemson’s School of Architecture, collaborated on the SEED Project, working to develop a + method to convert the shipping containers into homes. “Because of the shipping container’s ‘unibody’ construction they + are also very good in seismic zones and exceed structural code in the US and any country in the world,” Professor Hecker said. “They have also been used in other countries as emergency shelters in the case of earthquakes. As the SEED Project develops this will certainly be an [email protected] area that we incorporate. With a few simple cuts at the port, a storage container can be turned into something that is liveable and opens to the site.” With the concept designed to work on creating homes rather than temporary shelters in a total rebuilding of the neighbourhood, the project hopes to lead to a healthier and safer community in places which are often in dire need of better housing anyway. Ms Skinner added: “The project also has a double mission: to address the local need of providing adequate housing for people in need while solving a global problem of recycling – giving purpose to empty containers that would otherwise be discarded.” ■

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Climbing high for Seafarers UK The shipping industry raised more than £115,000 for Seafarers UK during the 24 Peaks Challenge in Summer 2009, as 16 teams from shipping companies donned their walking boots and climbed a gruelling 24 summits in the Lake District, totalling 2,400 feet in just 24 hours. Claiming the top spot with the highest funds raised, ABP entered four teams which raised a total of more than £38,000, the leading team topping out with a staggering £17,000 for the UK’s leading maritime charity. Second place was claimed by the Thomas Miller team who raised £13,000, closely followed by Jotun Paints with £8,600 raised. Commodore Barry Bryant, Director General of Seafarers UK said: “We are very grateful indeed to ABP and all other teams which took up the challenge of climbing 24 Peaks over one weekend last year to raise money for the seafaring community. Their support will help us throw a lifeline to more seafarers in 2010 and they need our help more than ever in these hard times. We sincerely look forward to welcoming teams - new and regulars - to this year’s event when we hope to raise even more money for seafarers of all ages.” Peter Jones, ABP’s Chief Executive said: “ABP is proud to be recognised by Seafarers UK for its fundraising effort in the 24 Peaks Challenge last year. I would also like to thank our team members for working so hard to persuade friends and family, work colleagues, customers and suppliers to support our endeavours. Seafarers UK does excellent work in support of a wide range of maritime groups, and we’re delighted to have been involved in fund-raising for such a worthy cause.” Taking place over a weekend in July, other intrepid teams came from OSG Ship Management, Lloyd’s Register, MOL, The Maersk Company, Carisbrooke Shipping, Burgess Yachts and NYK Line. ■

Sculpting a piece of history Beefing up customs

Cunard Line recently offered the opportunity to create a major public sculpture for Smuggling activity is hardly a rarity in the shipping the new Queen Elizabeth vessel, due to make its maiden voyage this Autumn. industry, but a beefy find by Malaysian authorities Design instructions included the need for the new centrepiece to fit a tall, uncovered a profane amount of ketamine in a shipping narrow space in the middle of the grand staircase at the end of the ship’s Royal container which arrived from India. Arcade, and for it to be interesting from all angles while reflecting the Art Deco style Hidden in a consignment of vibhuti, a Hindu holy of the ship’s interior. ash made primarily of cow dung, the mass quantity of The designs submitted, to be judged and shortlisted by Cunard in cooporation ketamine was picked up and scented out by customs with the Telegraph Media Group, saw a plethora of dolphins and mermaids as the officials after another stock of the drug had recently most predictably popular motifs. been discovered in India on its way to Malaysia. Other ideas centred around soaring prows, billowing sails, ports of call, waves, A total of 150 kg of ketamine, used as a recre- diving figures, fish and sea horses, with Swarovski crystals, shimmering gold and ational drug, came in packets in a total of 250 boxes. silver or lights embedded in the sculptures as glamorous additions. Worth approximately $800,000, the supply was taken The chosen finalist design will see the physical sculpture made by professionals, by authorities from the shipping container in Port experienced in creating a lightweight work that can safely be installed onboard ship, Klang, however the boxship on which the consignment in consultation with the winning designer. ■ arrived from Chennai has remained undisclosed. ■

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World’s first MLC 2006 certification issued Although not expected to enter into force until at least the end of Thenamaris Ships Management onboard the Seacrown to verify that the 2011, the world’s first Maritime Labour Convention (MLC) certifi- product carrier was in compliance in all the 14 areas which the cation has been issued to Thenamaris Ships Management’s vessel, the Convention specifies must be inspected before certificates can be issued. Seacrown, following inspections by classification society DNV. “We feel that the convention rightly focuses on the most precious The International Labour Organisation’s (ILO) MLC 2006, to be asset of our shipping community – our seafarers,” highlighted Emmanuele a pillar in the international maritime regulatory framework in estab- Vordonis, Executive Director of Thenamaris. “We took the initiative to lishing a level playing field for seafarers’ working and living condi- work with DNV to ensure our shore-and vessel-based systems are tions, will not receive EU ratification until the end of 2010 with the consistent with the new rules well ahead of compliance deadlines.” expectation of entering into force in 2011. “We congratulate Thenamaris for achieving an industry first,” However, due to the major challenges posed by the new said Georg Smefjell, Head of DNV Maritime Management Systems Convention, ship owners are being urged to act now to adopt the and in charge of MLC. “And we encourage other ship owners to begin necessary protocol to obtain certification and comply with the new working towards compliance with MLC 2006 – make use of the time standards well ahead of the implementation deadline. available before entry into force and develop and implement effective Towards the latter part of last year, DNV’s MLC inspectors joined measures to ensure compliance.” ■

Paper for diamond Hanjin Shipping has marked its 60th anniversary, often signified by diamond, with the launch of a new 700 page book in two volumes; ‘Hanjin Shipping – History of 60 Years’, which took over two years to compile and will be used as a resource for various organisations involved in the shipping industry and academic institutions. Celebrating 60 years since the founding of its precursor, Korea Shipping Corporation, which merged with Hanjin Container Lines 33 years ago to form the company as it exists today, Hanjin Shipping debuted the book at the Lotte Hotel in Sogong-dong, central Seoul. Around 150 significant figures from related industries and the government were in attendance, including Chairman Choi Eun- young, Korea Maritime Research Institute Director Park Hyon-kyu of Vice Minister Choi Jang-hyun of the Ministry of Land, Transport and Maritime Affairs. Hospital ship to the rescue in Haiti “Hanjin Shipping has been growing together with the country’s economy, with the firm playing a significant role shipping neces- Hoping to provide at least an iota of comfort to thousands of sities to the public in the early days after the nation’s founding, wounded earthquake victims, the USNS Comfort hospital ship sailed acting as guardians of national security during the Korean War and into Port-au-Prince to provide vital medical support and extra becoming a bridge sending Korean products across the globe with capacity to the saturated medical services, as teams struggle to work the dawn of the export-oriented era,” Chairwoman Choi said in her overtime to treat afflicted patients. opening remarks at the event. With 1,000 beds, the ship’s medical amenities have provided essential reinforcements to the country’s limited and in some cases Korea Shipping Corporation was the Republic of Korea’s first makeshift facilities, and with a supplementary 900 medical staff and government-run company, founded in December 1949, and in 1988 12 operating theatres, it’s a floating rescue effort. it merged with Hanjin Container Lines, founded by Cho Choong- Every ward on the Comfort will be stretched to capacity, and as hoon in 1977, to create Hanjin Shipping. ■ initial injuries offset further diseases such as gangrene from infected wounds, amputations and surgery are becoming more prevalent methods of treatment in a bid to keep citizens alive. The seaborne rescue fleet was also expecting reinforcement from the Spanish ship Castilla, with 50 doctors and 450 troops, and by three other US-based Navy vessels diverted from a scheduled Middle East mission. Canadian warships were already in Haitian waters, and an Italian aircraft carrier, the Cavour, was also expected to join the flotilla with medical teams and engineers. ■

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MARKET SECTOR COMMUNICATIONS ROUND TABLE

The shipping industry continues to struggle to shirk off the effects of the global recession. But what will be the knock-on effects for a maritime communication industry that is driving forward with new broadband solutions? Is 2010 a year to avoid or a year of hope?

We asked 14 of the maritime communica- tions industry’s major players for their views and the results were surprising. Chaired by SMI Editorial Director Sean Moloney, the round table participants included Piers Cunningham, Director of Maritime Business at Inmarsat; Wouter Deknopper, Iridium's Director for Europe, Middle East and Asia; Asad Salameh, President of World-Link Communications; Ian Canning, VP Marketing and Product Management at Stratos; Peter Van de Venne, IT Director at Spliethoff; Andrew Faiola, Managing Sales Director, Europe and Middle East at Intelsat; Reinhold Lüppen, Director of Vizada Solutions; Neil Sayce, Managing Director Seacom Electronics; Soren Einshoj, Executive Vice President Strategy and Business Development at Marlink; Trevor Willoughby, Senior Key Account Director, Europe and Middle East, Intelsat; Peter Martin, CEO 7Ccell; Kartik Sinha, Maritime Market Manager, Inmarsat; Brent C. Bruun, Vice President, Business Development, KvH DiscussionRound Table If any of our readers have comments to make on the issues under discussion or the panellists’ replies then please email them to [email protected] and we will include them in future issues.

Sean Moloney having a hard time that is for sure, but if you want to focus on the The shipping industry is struggling to emerge from this global financial satellite communications industry, then I am not that sure we should be crisis. What are your concerns for the maritime communications sector concerned for the coming year. We should turn the current situation into over the next 12 months? an opportunity for ourselves and I think most of us have. If you split the industry into two, there are those that are newly established and who are Wouter Deknopper very vulnerable because they have invested a lot and may struggle to All indicators are that the shipping industry will face a tough economic get through the recession, but it is very common in any crisis to say that climate in 2010. Under these conditions, ship operators are aggres- if you can get through a downturn then you will be stronger when you sively looking for ways to trim operating costs. That includes satellite get to the other side. But there will be some who won’t. We saw a huge communication costs, which make up a significant portion of monthly growth in the number of players in recent years and obviously there are ship operating costs. So, I’d say we see opportunities rather than a lot out there with very weak foundations, very limited capital behind concerns for 2010. them, and for those there is an issue. But for the larger more focused players who have been there for a long time, I think the next 12 months Brent Bruun spells an opportunity for them. The question I think that needs to be In 2009 we saw decisions being deferred for financial reasons despite asked is how can we as an industry help the maritime community get the long-term cost savings and efficiencies a service like mini-VSAT more out of what we can offer? offers. Looking ahead to 2010, we are concerned that the delay/defer decision mindset will continue. Kartik Sinha We have concerns for our customer base because they have been having Søren Einshøj a tough time financially with the freight rates down. However, the bulk We should be concerned when it comes to our customers who are sector is starting to show signs of recovery on the Baltic Dry Index and

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handymax and handysize ships are doing quite well. Again you have to has changed with a desire for more flexible solutions. We are also split the world fleet into separate parts, not only by the cargo they carry offering financing models where owners and managers can transfer but the vessel size and the operating model where you have CapEx into OpEx, and that is appreciated. There are a lot of new tenders owner/managers or you may have financial interests running the fleets coming up where customers want to streamline broadband connections with third party managers. The big third party managers are still doing to be more competitive in the cargo market. OK because they have strong foundations and are not in breach of any loan covenants. So for us it is to see how best we can support them. Ian Canning Sat comms has never been that big a part of the cost of running a I would agree with all the comments made. The ship owners and the ship; it was always viewed as an area where costs could be reduced operators are the people feeling most of the pain at the moment but that further. Because owners and managers run on a zero cost budget, every is making them look at their operations to see how they can be more dollar has to be accounted for and you have to justify how and why you effective in the way they operate their ships. Increasingly, integrating are spending it and what the return is. Given that view, and because we the ship into their land-based operations and making it a more integral can offer ‘use as much as you want’ services that give variability in cost, part of their day-to-day business is what they are focused on and that people can use that to their advantage. So that option is there for those requires communications. CapEx has certainly changed dramatically companies in trouble. within the shipping industry over the last 12 months and therefore we have all had to get more creative in how we address that for our customers. But those of us that have a solid base and a capital infra- “...as existing ships are being tied into structure that allows us to support our customers are going to see the land-based networks, people are taking benefits of that in the years ahead. From an industry perspective, we will see consolidation of some of the smaller players; they will either go a hard look at broadband and at what it bankrupt or get consolidated by others and we will probably see that in some of the shipping companies but the core asset that is the ship, is still can actually do for them in terms of a very valuable asset and someone else will pick that up. overall cost savings, whether engine Peter Martin diagnostics, fuel management or Since the down turn in the shipping industry started about 14 months ago we found that most of the crew welfare projects have been stopped inventory control can be improved” or frozen in one way or the other. A major part of those projects was related to modern communication services based on broadband connec- tivity. Until mid-2008 even conservative ship owners were considering Sean Moloney the retrofit of multi regional Ku-Band systems backed up by Reinhold, let me bring you in. Do you think there is going to be a FleetBroadband, including mobile communication and internet access reduction in airtime usage with vessels in lay up and possibly less to support the communication needs of their crews which would have investment by ship owners in sat comms? been a major investment but also commitment. Today we see frozen projects or projects which are much different to the original plan, not Reinhold Lüppen including internet access or mobile communication at all as the basic I totally agree with Søren and Kartik. At Vizada, we increased our investment is reduced to less than 10 % leaving no room for it. maritime revenues by 7% last year and we gained market share but yes there are less vessels around and more customers are complaining of Sean Moloney lower revenues, however, the size of the pie is increasing and we are Are sat comms and broadband becoming a necessity onboard ship now seeing that it is important for our customers to streamline their opera- to the extent that they are recession-proof? tions, make it more efficient and sat comms will contribute as a result. The cost of sat comms is still below 1% of the overall vessel operating Ian Canning costs and even though freight rates are dropping, sat comm. costs are Yes, but we can’t be arrogant to the point that people will continue to use minimal. We see a lot of new tenders coming up that will be decided in and demand increased capability and we need to be aware of the 2010 where people want to streamline their operations to be more dynamic that our customers are working to, but yes, it provides competitive in the market and sat comms will benefit this move. For us efficiency and the broadband connections provide a lower cost per mega 2010 is a year where we are not especially bit of utilisation. We all owe it to our customers to ensure that applica- concerned. A year ago commit- tions they use ashore can be effectively extended onboard ship. That is ments were not a probably one of the challenges we all face because land-based applica- problem and yes tions are becoming increasingly bandwidth hungry and that doesn’t that aspect necessarily help an operator who has a narrow pipe out to a ship.

Andrew Faiola What we have seen over the last few years is growth in this market; the growth is perhaps a bit slower than might have been and we have maybe seen some projects get delayed but they are starting to get re- energised again and existing services have actually been increasing. That ties in with a lot of what Ian said, as existing ships are being

“We are seeing a trend now with technology where we are seeing hybrid antennae and the days of maybe the 2.4 metre C- Band and maybe a one metre Ku-Band on the one vessel may only be short-term”

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 67 tied into land-based networks, people are taking a hard look at broadband and at what it can actually do for them in terms of overall cost savings, whether engine diagnostics, fuel management or inventory control can be improved and it starts to become seen as a cost saving rather than just another cost element of running a ship.

Trevor Willoughby If you look at the last year, we have seen a number of new players such as equipment suppliers and vendors come into the market, so the drive is for the terminal costs to go down even further as these players enter the market which will help. We have seen a slowdown in the last six months or so but the applications for the vessels that are still out there are very bandwidth intensive.

Sean Moloney Søren, let me bring you in again: what are your customers demanding from you in terms of the applications and services available?

Søren Einshøj We all agree that we have opportunities ahead of us to help all our customers. From our perspective there will be a postponement of a year to 18 months in implementing let’s say more of the more costly investments. Those solutions will be a little delayed. But they are asking to invest less; to have cheap solutions; they would like to avoid having to get cash out of their pockets. Certainly at the lower end of the market they want help with the upfront investment but they do want larger capacity so there is no doubt that the onshore behaviour is pushing everybody, so all the main drivers are still there. In times of crisis, owners and operators need to be more efficient and they need the tools to be more efficient. If you look at it from the perspective of the cruise and ferry sector, it is probably more beneficial if they can get more revenue from the applications. So as long as they stay alive then this is a beautiful life.

Ian Canning The ship managers and owners are asking their communication providers to become more integral to their day-to-day operation so you have to be a lot more aware of the shore-based applications they are running; how can you integrate that onto the vessel?; what other value adds can you bring to them in terms of electronic chart updates and weather information and so on to drive their other costs down such as fuel, which by far is still the biggest single cost in operating a vessel. So I think there is more of a partnership being formed between the larger operators and their suppliers and that partnership does affect the capital investment they are trying not to make. Also, what can we do to help them with their crew?

“The ship managers and owners are asking their communication providers to become more integral to their day- to-day operation so you have to be a lot more aware of the shore-based applications they are running; how can you integrate that onto the vessel?”

Peter Martin 2010 will be a very difficult year for everybody involved in the shipping industry. 2009 showed that innovative solutions could not be established in the comms sector leading to the close down or restructuring of some operations. Again this is a slow down of innovation. If you are an established provider of basic connectivity you may be well off by also minimising your R&D work but improve your service level and concentrate on the competition.

Sean Moloney Reinhold, is your marketing strategy changing as far as the owners COMMUNICATIONS ROUND TABLE MARKET SECTOR

and managers are concerned? After all, the managers see a strong year be covered by one satellite area with one cheaper solution and then we ahead for themselves as owners look to streamline costs and outsource have vessels running all over the world and then we need a more open a lot of their management work. and flexible solution. If we take VSAT, it is a nice solution when it comes to surfing but it doesn’t have coverage everywhere if you use Reinhold Lüppen the Ku-Band. C-Band is too big and expensive. If the market is getting more competitive for owners then companies will look to further increase efficiencies and we have to adjust. Right Trevor Willoughby now we’re seeing that typical sat comms projects are being scaled We are seeing a trend now with technology where we are seeing hybrid down, and covering only the really necessary improvements in order to antennae and the days of maybe the 2.4 metre C-Band and maybe a one metre Ku-Band on the one vessel may only be short-term. The hybrid streamline operations. This is changing compared with 18 months ago antennae is coming down in size to maybe 1.8 m or 1.5 m so that starts when companies were embarking on big, all-inclusive projects. One to open up a wider addressable vessel market in respect of the real way of making operations more efficient today is by outsourcing estate that is available for these types of vessels. Also with more and expertise from the ship to shore, such as remote maintenance for bridge more terminal providers coming into the market, the net driver is equipment which requires satellite communications, and secondly to bringing the platform costs down. use crew welfare tools to be able to hire experienced crew. Our job is to make it as cheap and as easy as possible for the shipping company and the crew to manage. "If the market is getting more compet-

Peter Van de Venne itive for owners then companies will We are a ship owner so on one hand we are seeing an increase in look to further increase efficiencies and demand for more internet-based services; this shows up in charterers’ contracts and crew would always like to have internet onboard but we we have to adjust. Right now we’re have to ensure cost doesn’t get out of hand. We have a fleet of 75 vessels, and we are using all sorts of systems now from Iridium or Open seeing that typical sat comms projects Port or Mini M, Inmarsat B, Fleet 77, FleetBroadband and now also VSAT so we have some idea of what we can do. are being scaled down, and covering Obviously the market is difficult at the moment and we are not only the really necessary improvements looking at great increases in cost. What you see is that over time, costs slowly rise or remain the same but for the same amount you do more. in order to streamline operations" Maybe we are now at a jumping point where the time is right for the next step. We certainly see a lot of demand for more surfing on the internet, both for office-based employees and crew welfare. We also have the remote support which is great because applica- tions onboard are growing all the time because of regulations and the need for increased quality.

Søren Einshøj It shows the need for diversity and owners have a general need for communication and it is no longer one phone line to the vessel but a variety of communication lines and technologies and it has gone beyond the need for a consolidated player in the industry. There is a huge need for flexibility; it needs someone who is capable of advising, showing, helping and supporting in the bridge going from one phone connection to a multimedia need that is very cost efficient. The question is how can we be the best partner? We need to have some knowledge to bring to the table, to the extent of understanding the other industry you are dealing with. We need to be able to show what one technology can do, what it is good at and what it is bad at.

Ian Canning There is no such thing as one technology fitting all. All of us understand that it is in the manner of partnership that identification of what is right for this oppor- tunity and that might be the individual vessel and at times you might have multiple solutions on a single vessel to satisfy different charterer requirements.

Peter Van de Venne We also have trade route issues where we may have a ship running from the Baltic to Europe which can

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“...land-based applications are becoming increasingly bandwidth hungry and that Piers Cunningham Director of Maritime Business, Inmarsat doesn’t necessarily help an operator who has a narrow pipe out to a ship” “The viability of remote maintenance with today’s generation of mobile satellite communications has escalated thanks to the higher bandwidth now available that allows larger volumes of The testing that owners go though varies lower, medium and higher data to be exchanged at least ten times faster between the VNC end and there are different technologies that suit there. It needs to be and the onboard PC. The option of on-demand Streaming IP portrayed as a business benefit that whatever that technology suits your ensures guaranteed bandwidth and a reliable connection particular fleet and what it will do for you. If the cost is predictable, throughout the remote-maintenance operation which is essential then how will that enhance my operation in the engine monitoring I for the good health of vessel and crew. need, the security and crew welfare I need. We are seeing a lot of “Increasingly management systems are using fleet-wide customers going through this testing phase to see how the technologies systems to track outstanding maintenance and defective items. today will benefit their operation. Satcom relays the results of vessel inspections in real time so that analysis can identify trends and common problems amongst Sean Moloney vessels. Operational costs can be reduced through condition- Peter, as a ship owner, what factors influence your sat comms based maintenance (CBM) by using FleetBroadband to conduct decisions? checks that previously would have needed a repair squad to fly out to the ship and potential vessel downtime. Some tanker Peter Van de Venne operators are currently exploring the outsourcing of engine Primarily it is cost. If the cost does not increase too much then I can add monitoring, including vibration monitoring, as a preventative functionality. On a vessel basis we were spending about $800 to $1,100 maintenance precaution. The move toward implementing pro- per month on an average Fleet 77 vessel. If we changed it to active condition based maintenance systems is widely accepted FleetBroadband we saw it slightly increasing because we were using as the future for maintenance strategies. As far as crew calling is the full duplex effects. We want to have better flow of information. It concerned, access to communications might once have been a was only one to two times dial in per day but it is nice that if you send luxury aboard ship but these days managers and owners are more a message now, it is delivered now. than aware that in order to attract and retain experienced crew of the highest calibre, they will need to provide them with voice, Wouter Deknopper SMS and email access almost by default. Our ‘off-peak’ crew I think that under the current economic conditions, cost will be a calling service has evolved since launch, growing from a few primary driver. That being said, ship owners will consider total life- hours access a day into ‘Super Quiet Time’ – 12 hours on cycle costs in their decision making analysis. They will take into weekdays and 24 hours a day during weekends and special consideration initial capital costs of acquiring and installing the promotions. This offering for users of Inmarsat B, Mini-M, and shipboard satellite equipment and ongoing maintenance requirements Fleet (33, 55 and 77) is 12 hours a day on weekdays and 24 hours for the antenna array, as well as monthly usage charges. Certainly we a day on weekends and special promotions. - Enhanced Super will be looking at an intensely competitive marketplace in the coming Quiet Time for FleetBroadband users, our latest service, applies year. No doubt, savvy ship owners will be shopping for deals. To a all year round, at any time of day or night.” certain extent, it all boils down (as it always has done) to relationships. Ship owners and managers prefer to do business with companies and people with whom they feel comfortable. That’s why our distribution partners around the world are so important.

Brent Bruun Cost as it applies to airtime services is critical. Subjective choice moves into the realm of company decisions about their preferences, amount of bandwidth, and desired options There’s also institutional inertia to overcome: what we have is good enough, what we’ve used in the past is satisfactory vs. a close look at new disruptive technology that is proven with regard to reliability, cost, and capabilities. New technology and new regulations are going to drive the need for broadband connec- tions (ECDIS electronic chart delivery, ShipDex electronic documen- tation for manuals, etc.). Some shipping companies are delaying fielding communications capabilities that are going to be required for their future success.

Ian Canning I know it is a challenge for all IT departments within shipping companies to try and associate the cost with the benefit because we as suppliers spend most of our time trying to identify where as an operation you can get benefits. But how does that then fit into a shipowning company and how can we help you better achieve that position?

Peter Van de Venne That is always a difficult one because suppliers are telling me you can save fuel or improve efficiencies etc but these can be difficult to determine. So our approach is that we believe in this type of technology and the first application for us was to have email onboard years ago. Then you start looking at what is the next step to take and to be honest, the IT remote support is more important in a way than the cameras looking into the engine rooms.

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Ian Canning But do you run future analysis in that you made this investment and did you see a positive return on that investment?

Peter Van de Venne No. That is impossible to do. The only thing we do is monitor the cost and we evaluate in a qualitative way, whether it is helping us. And to be honest, if you put VSAT onboard, the crew will never want you to take it away.

Wouter Deknopper While there is certainly increasing discussion of broadband, ship owners and managers will be cautious when it comes to spending on new technologies unless they can see a clear return on investment. A balance will have to be struck, weighing the benefits of higher bandwidth and the costs. We think many ship owners are looking for ‘rightband’ rather than ‘broadband’ connectivity – seeking the ‘sweet spot’ to meet their real-world data throughput requirements. In many cases, that may mean 32, 64 or 128 kbps. Many data files are not especially time sensitive and can be compressed and sent at slower data speeds.

“There is a huge need for flexibility; it needs someone who is capable of advising, showing, helping and supporting in the bridge going from one phone connection to a multimedia need Asad Salameh that is very cost efficient. The question President World-Link Communications is how can we be the best partner?” “I would rather be the optimist in the crowd and start by saying that 2010 will be a much better year. There are a number of indications that the shipping market will be recovering from its 2009 lows. Looking at an article from the Dow Jones for example, the excess supply in the tanker market is decreasing from 7.7% in 2009 to 3.8% in 2010 and to zero in 2011. In the largest economies US, UK and China retail trade has grown 18%- 35% between 2008 and 2009; the number of newbuildings delivered in 2009 was significantly lower than other years – as low as 10% of previous years. All major shipping industry indexes have also moved into positive territory from their lows in 2008/2009. “Also, the cold spell that is covering northern Europe this winter is more likely to increase demand on the oil trade. Therefore, I believe we will see some recovery in 2010 in the global economy, and shipping will benefit from this positive trend. Having said that, I believe that ship owners will continue to be very cost conscious about their operational costs and onboard communications is one of those costs that are carefully monitored. We have seen that the advent of FleetBroadband is being used by some ship owners as a tool to reduce communi- cation costs. The concern here is that until the ship owner feels some economic relief, he will not seek the full benefits of the technology. Limiting the scope of technology, will result in delayed savings, and delayed operational efficiencies.” “Today, ship owners and managers have access to the new FleetBroadband technology which is a communication cost reducing technology. The growth in data communication seen onboard in the past few years, can be offset by the cost efficiencies of broadband. For example we are able to cut the cost of communication on a vessel with a Satcom B system, by 80% when replacing the old equipment with a fleetBroadband and a VSAT system. “What we are seeing since mid 2009, is that the ship owners are realising that this technology can do more than just reduce the cost of an email for them – now the discussion is changing. It is no longer negotiations on the per unit price – but rather – how proposed solutions are being deployed for the best possible outcome.”

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Neil Sayce Managing Director, Seacom Electronics

Q. The shipping industry is struggling to emerge from this global and always will be a major consideration, both in the provision of the financial crisis. What are your concerns for the maritime communications system, and to the cost to the seafarer to use the system. And even sector over the next 12 months? when comparing completely different technologies, ie GSM against A. The dangers here lie with owners taking a short term view purely pre-paid cards, price comparisons are always made without due to reduce costs without recognising the true value of effective and regard to the complexity of the system. We believe that the standard efficient ship to shore communications. Often there is a good fit on a vessel will be to offer a range of services and the crewmember argument for system replacement or upgrade but in times like this, will decide which one suits him best for the particular circumstances. advice is not always taken up to save on CapEx/install costs. Having said that, the range of marine communications products available at Q. The emphasis in maritime communications is rapidly moving the moment enable a compelling case to be made and we feel the next towards broadband. How do you see broadband influencing the take- 12 months will be a very positive period. up of communications services by ship owners and managers?

Q. The IMO has identified 2010 as the year of the seafarer. Are you A. The dangers of Fleet Broadband without the necessary control are satisfied that the maritime communications services taken up by owners well documented, however, without doubt, when implemented and managers fully place the needs of the seafarer at the forefront? correctly this control enables more cost-effective communications, A. We should not lose sight of the fact that many ship owners are in even when looked at as simply a basic carrier for e-mail. In respect of survival mode and there are severe budget constraints. Having said Inmarsat /Iridium services, the case for upgrading to broadband from this, all research shows how important communications are to another standard is strong. From a crewing perspective, the objective seafarer welfare and owners should ignore this fact at their peril in a from an employer’s point of view must be that communications market still struggling to find and retain sufficient crew. services, or lack of them, do not become a barrier to a career at sea. Q. Will it be cost or subjective choice making that decides which Immediate, private and inexpensive communications is what they communications services and packages are taken up by ship owners want to offer the crew and broadband, whether it be on demand and managers? services or VSAT, opens up 'new' possibilities such as free phone A. Without doubt crew services and capabilities has moved up the access for land-based equivalent phone cards, WiFi voice applications ladder when assessing which communications system to fit. Cost has and of course internet access.

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Brent Bruun the old telecom days we always said that if we can confuse the customer We’ve discovered that once a vessel has access to expanded bandwidth with the price structure you are well off because he won’t understand and affordable service, they’ll always find a way to use it. No one ever and he would have to believe you. But today we have a huge variety of says, “no, I don’t need more bandwidth for my business.” There are technology solutions and how can the customer really see what he is always ways to use it for shipboard operations, business functions, crew getting beforehand? At the end of the day you have to measure it on support, etc. Ship managers need to realise that they don’t need to your EBITDA. The big challenge is how can we support our existing choose between cost cutting/vessel maintenance and crew calling/data customers make the right judgements? transfer anymore. It’s not an either/or proposition. An effective satcom choice provide benefits to all of those areas while remaining affordable. Kartik Sinha There’s also the opportunity to transfer some of the expense to the Our industry, maritime and sat comms, has to go down the route of people who will be using it (the crew) which is which we believe that symbiotic relationships ie what happens to our customers at the end of crew calling, etc., will continue to gain in popularity in 2010. Early the day impacts on all our bottom lines. So what they need and what adopters of broadband services are finding efficiencies in leveraging they are going to need in keeping abreast with all regulations, and then highly skilled technical support people in IT and engineering across coming up with solutions we may have learned from other customers many vessels, thereby reducing costs. which we can leverage across.

Kartik Sinha Trevor Willoughby Ship owners do want to reduce cost. But systems like FleetBroadband The applications and the bandwidths are still going to drive the applica- are basically plug and play and that is what customers are looking for. tions but the cost-effectiveness of how much more can you get through An owner wants a box that he can send off to the ship with an for the same cost is important. This will be a challenging year and may instruction manual. Also, he wants to benefit from the knock-on effects be one of monumental shift. ■ that are there such as fuel optimisation. Everyone understands that things are being taken forward and life is being made better at sea.

Reinhold Lüppen We are touching on a point here which is all about simplicity. Five years ago we had the email application and pre- paid calling cards for the crew which was quite easy and comparable. Today, every IT project is different so the implementation of the solutions to meet the needs are different; what applica- tions should be used and how often; what is the budget; what is the time frame; CapEx/OpEx; what flexibility is needed regarding applications which may come up in years to come? So the whole IT question has become more complex. Projects start with a rough idea, then they go to tender, we come back with our solution, then there is an adjustment. Most take two years while the tender is maybe only six months. So there is a lot of complexity mainly to avoid cost rises. It is hard to judge a return on investment so today people are more restrictive in their needs but they need flexibility.

Søren Einshøj I do believe that it is a question of what you pay and the performance you get. The big difficulty for many of our customers is to evaluate all these technologies to determine what performance criteria they actually receive. At the end of the day the owner has to be the one judging whether he gets the performance for the price he is paying. Do you Peter, have a specific criteria you work towards or do you have a minimum requirement?

Peter Van de Venne It is quite confusing I will admit with all the numbers that the providers are giving us.

Søren Einshøj This is a challenge for the industry. In

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is vital to future health and vigour

By David Tinsley

MAZARINE first of a new class of versatile, ConRo-type ro-ro freight vessel designed and built by Flensburger Schiffbau Gesellschaft

mplemented during what may now be viewed as the halcyon days newbuilds take ro-pax development an important stage further by that preceded the global financial crisis and economic downturn, a offering a trailer capacity equivalent to 5,500 linear metres and an Isuccession of ro-ro and ro-pax newbuild projects coming to reali- additional 700 lane-metres for cars, within a length of 240 m and sation and under way are distinguished by high capacities, in some breadth of 32 m. cases setting new benchmarks in payload intake. The strategic objec- tives of scale economies, increased productivity and competitiveness per freight unit that have driven these schemes have steadily gained in The development of ro-ro shipping as a pivotal relevance since the market faltered. element in integrated, through transport solutions, Size and modernity is one, but not the only, path to greater efficiency and the ever-more pressing, companion requirement for coupled with the cargo carrying flexibility encapsu- reduced environmental impact. Nonetheless, these new fleet invest- lated by the latest shortsea ro-ro freight vessel ments will undoubtedly put more pressure on the ro-ro business at large designs, has spurred a number of new initiatives to raise its game in terms of overall performance, ultimately benefiting the client market as a whole. There can be no doubt that sea transport's that benefit transport efficiency and business environmental credentials are gaining from the advances in design and competitiveness in equipment and machinery specification reflected in the new genera- tions of ro-ro vessel. The nature of shortsea ro-ro trades in particular, entailing frequent, After the uncertainties caused by the collapse of original contractor intensive operations within ports and harbours, and close to communities, Wadan Yards, September's agreement between Stena and the insolvency with many routes contiguous to coastlines, and operating in all weathers administrator for the shipbuilder enabled the construction programme in heavily-trafficked waters, subjects the sector to especially high to be recommenced. Nordic Yards, the new owner of the former Wadan environmental expectations over-and-above international regulations. facilities at Wismar and Rostock-Warnemuende, will produce the Stena Line's self-termed 'Superferry' category is set to reach new ferries as a subcontractor to the insolvency administrator. heights with the scheduled deliveries during 2010 of two 6,200 lane- On the main cross-Channel corridor, P&O Ferries' two 49,000gt ro- metre vessels. It is claimed that these will become the world's largest ro- pax newbuilds will bring an unprecedented unit scale to the pax vessels, and Stena's plans envisage introduction to the Dover/Calais route. Incorporating a design which has been optimised to Harwich/Hook of Holland route. Designated the RoPax 55-type, the the capabilities of existing berths on both sides of the Channel, the pair exemplify the march towards ever-greater scale economy and a project has been shaped in accordance with the company's strategy of technical approach aimed at 'future-proofing' new tonnage. The raising its market share in the shortsea freight sector, while enhancing

74 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 RO-RO TRADE ANALYSIS

service for tourist traffic. The two vessels will also have the distinction coupled with the efficiency gains that will be derived from the continued of being the first passenger-carrying ferries worldwide to comply with influx of new tonnage, along with the release or withdrawal of existing IMO's Safe Return to Port (SRTP) requirements. ships, give a more solid look to the ambitious construction programme. The combination of substantially increased size and ro-ro intake, Under the direction of Italian owner Grimaldi, Finnlines has hydrodynamically-efficient hull form and the adoption of MAN restructured and expanded its Baltic service network since June this common-rail engine technology represent a circumspect, future- year to foster new passenger and trade links between Finland and proofing approach intended to ensure unit competitiveness and business Germany, Poland and Russia, and between Poland and Germany, one expansion over the long-term. element of which is the pursuance of the Motorways of the Seas idea. The new ships from STX Europe's Rauma yard in Finland are A series of 3,250 lane-metre, ice class newbuilds in hand at China's intended as replacements for the 1987-built sisters Pride of Dover and Jinling Shipyard, and due to make its debut next year, is expected to Pride of Calais. They signal a virtual doubling in freight capacity per realise new unit cost efficiencies on the Finnlines system. sailing, carrying up to 180 freight vehicles, while additionally incorpo- Furthermore, Grimaldi Lines and Finnlines have commenced what rating a third ro-ro deck for 195 tourist vehicles. The maximum the companies describe as "the first consistent example of cooperation and passenger complement will be 2,000. The first of the newbuilds is due integration of their liner services" by creating a link to connect all the to be phased into operation in December 2010, with her consort Baltic destinations served by Finnlines to all the Mediterranean destina- expected in September 2011. Rapid turnaround and schedule-keeping tions covered by Grimaldi. The ensuing BalticEuroMed service offers a provisions are reflected not only in the ro-ro layout and access arrange- unique, reliable conveyor belt for ro-ro traffic around the whole of Europe. ments but also ship handling characteristics, including an ability to manoeuvre under own power in 50-knot winds. Each vessel is being built and equipped to meet Lloyd's Register's The 225 m design can load 3,060 linear metres of PSMR (Propulsion and Steering Machinery Redundancy) notation. The arrangements and provisions encompassed by the notation are intended to freight vehicles plus 215 cars, and is laid out for ensure that, in the event of equipment failure, the ship retains availability of 2,300 passengers. Maximum freight payload per propulsion power and manoeuvring capability to enable a safe return to port. sailing corresponds to about 187 trailers Ro-pax design evolution in terms of greater economies of scale, efficiency across the full operating cycle, and heightened onboard standards, albeit with a greater emphasis on speed, is also evident in For the ro-ro operators and owners at large, cost control is now a Grimaldi's new generation of 28-knot Cruise Roma-class vessels for the pre-eminent factor bearing on long-term viability, and every aspect of Mediterranean market. this discipline has to be taken into account in newbuild design and Cruise Olympia, the last of four vessels contracted from Fincantieri service developments for the future. In the meantime, many companies was launched during November at Castellammare di Stabia, in Naples Bay, and is due to enter the Adriatic traffic under Grimaldi's Minoan Lines' have been adjusting establishment levels and fleets to reduced demand. banner next June. Third-of-class Cruise Europa was recently phased into Further rationalisation and takeovers could be the pattern in the short- the Minoan Lines operation, following deliveries of Cruise Roma and term, against the backcloth of a substantial capacity influx and rejuve- Cruise Barcelona into Grimaldi's western Mediterranean network. nation of large sectors of the ro-ro fleet. Scrapping of older tonnage has The 225 m design can load 3,060 linear metres of freight vehicles gathered momentum over the past year. plus 215 cars, and is laid out for 2,300 passengers. Maximum freight A new stage in the consolidation of the ro-ro sector was signalled by payload per sailing corresponds to about 187 trailers, and the series DFDS' acquisition of Norfolkline from A.P.Moller-Maersk, sealed provides the Italian group with added means to apply the EU's during December. The takeover has expanded the fleet, service structure Motorways of the Sea concept, which it has championed from the outset. and market reach of DFDS, and has also resulted in Moller obtaining a Underlining the extent to which considerations of environmental stake in its compatriot. The purchase price of €346m was met through a protection have permeated the design, also pertinent to the case for trans- cash payment of €170m, plus an allocation of shares in DFDS equalling ferring goods transport from road to sea, latest delivery Cruise Europa 28.8% of the share capital. A.P.Moller-Maersk's holding was increased has 'Green Star' certification from Registro Italiano Navale(RINa). to nearly 31% by an additional purchase of shares. Grimaldi has proved adept at attracting European Investment Bank Ferry operator and logistics company Norfolkline has developed a (EIB) funding for the expansion of its fleet and route network, and the route network embracing the North Sea, English Channel and the Irish group has pursued vigorous fleet growth over recent years. Its Sea, the latter two areas being markets in which DFDS has hitherto not outstanding newbuild commitments still amount to around 25 ro-ro been involved in a ro-ro capacity. As a result of the assimilation of equipped vessels. Despite the climate of market uncertainty, broader Norfolkline, the DFDS group can now offer transport solutions trends in business development across a much expanded service network, spanning the whole of northern Europe, including Russia.

CRUISE BARCELONA, one of the new generation of fast, high-grade ro-pax ferries introduced to Mediterranean routes by Grimaldi Lines

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run during the lengthening of Flower-class vessels. The fourth newbuild, Tor Jutlandia, is expected to be ready in early 2010. Under the title of Project Lightship, DFDS has implemented an efficiency improvement programme aimed at adapting the group's costs to current market conditions, and encompassing crewing, management systems, maintenance, fuel consumption, procurement and supplies, and ship turnaround times. The target is a reduction of DKr100m per year in ships' operating costs from 2010 onwards. One measure implemented under Project Lightship has been to reduce two positions per ship in all Danish-flag vessels, and a cut of four in the complement of the group's Lithuanian ships in the Baltic. The development of ro-ro shipping as a pivotal element in integrated, through transport solutions, coupled with the cargo carrying flexibility encapsulated by the latest shortsea ro-ro freight vessel designs, has spurred a number of new initiatives that benefit transport efficiency and business competitiveness. For instance, Cobelfret's 2009-built Mazarine, encapsulating Flensburger's versatile ConRo concept, has been assigned to C2C Lines' Zeebrugge/Dublin run after her initial employment in the North Sea trade. C2C is a joint under- taking of Antwerp-based Cobelfret and Zeebrugge-headquartered European Containers(ECS), a 45ft intermodal container operator. The vessel's ability to accommodate up to 845teu containers, or a general ro-ro freight intake corresponding to 2,907 lane-meters, testifies Uncertainty over future environmental legislation in to her ConRo designation by German shipbuilder and designer Flensburger. Cobelfret had extended its contractual commitments at the IMO's Sulphur Emission Control Areas (SECAs) has Flensburg yard in 2007 by booking two freight carriers of the ConRo220 particular implications for shortsea operations, in type. Four newbuilds earlier ordered as 2,600 lane-metre vessels of the which the ro-ro mode plays a pivotal role. The 0.1% ConRo200 design were also switched to the ConRo220 configuration, making for a six-ship series, of which Mazarine is the first example. sulphur limit due to take effect in 2015 will bring The delivery of second-of-class Palatine towards the end of shipping within the English Channel, North Sea and October, and assignment to Cobelfret's Rotterdam/Killingholme route, enabled Mazarine to be redeployed on the C2C service. Baltic into its ambit Versatility in conjunction with scale, seen as vital accompaniments for long-term viability in a number of fields of ro-ro shipping, is also "Through this acquisition, we gain greater scale and come closer to encapsulated in one of the most recently signed newbuild projects, that of our vision of building a European sea-based transport network," stated Messina Lines' four-ship contract in South Korea. Messina is a Niels Smedegaard, Chief Executive Officer of DFDS. He said the longstanding master of multifarious freight transport on ro-ro equipped integration of the companies would generate considerable synergies and vessels, and the Italian company's new generation from Daewoo will should enhance the overall service offering to customers and improve have the capability to cater to very mixed payloads or to serve in predom- the group's earnings level once a market recovery sets in. inantly container or vehicle carrying deployments. Each ship's capacity At the beginning of 2009, a conditional deal paved the way to and configuration will suit 1,500 cars, for instance, while the upper deck Vesterhavet and freight forwarder DSV jointly owning Vesterhavet's provisions will allow as many as 3,000 TEU boxes to be loaded. 56% shareholding in DFDS. However, the agreement was cancelled in Headquartered in Genoa, Messina has steadily expanded its June, having been ruled out by the EU's competition authorities. DSV Mediterranean and African trade service network, and it is understood had bought DFDS' road transport division in 2000, and ranks as a major that the new series of ro-ro container vessels may be used to boost the customer of the carrier. southern Africa connections. Daewoo has undertaken to effect deliv- DFDS took the bold step of entering into contracts for the jumboi- eries by the first quarter of 2013, and it is understood that the owner is sation of three of its most modern ro-ro trailerships in August 2008. contemplating further orders in line with its tonnage renewal strategy. Although the gain of 25% or thereabouts in the vessels' carrying Uncertainty over future environmental legislation in IMO's capacity has therefore been realised at a time of relative market Sulphur Emission Control Areas (SECAs) has particular implications weakness and uncertainty, the technical design qualities of the tonnage for shortsea operations, in which the ro-ro mode plays a pivotal role. involved means that the higher payload potential has been achieved The 0.1% sulphur limit due to take effect in 2015 will bring shipping with scarcely any increase in energy consumption. The consequential within the English Channel, North Sea and Baltic into its ambit. In the reduction in unit operating costs and environmental impact per absence of an approved technical alternative, vessels will have to transport unit must be viewed as a solid investment for the long-term. switch to the use of marine gas oil, with its much higher costs relative Entailing an overall cost of DKr280m, the programme entrusted to to traditional bunker fuel. MWB Motorenwerke had as its centrepoint the fabrication and insertion DFDS decided to have a prototype exhaust gas scrubber, designed of a new 30m midbody section on each of the Flower-class ro-ros Tor to eliminate SOx (oxides of sulphur) emissions, installed in the Tor Begonia, Tor Freesia and Tor Ficaria. The elongation to 230m raised Ficaria during her sojourn at MWB's Bremerhaven yard for jumboi- freight intake to approximately 4,700 lane-metres, in keeping with sation. Developed by Aalborg Industries in cooperation with MAN recent years' trends and forward projections for the Diesel, the supplier of the ship's 20,000kW main engine, the device is Gothenburg/Immingham route, characterised by industrial cargo claimed to be the world's largest maritime scrubber plant. It is being movements and multifarious wheel-borne goods and trade vehicle tested and evaluated in the course of Tor Ficaria's regular sailing pattern traffic. "Concentrating the freight on fewer but larger ships is one of the between Gothenburg and Immingham. most effective ways of reducing costs and environmental impact," said At DFDS, Niels Smedegaard is enthusiastic about the project, and Peder Gellert Pedersen, DFDS Executive Vice-President responsible declared the company's interest in supporting the development of for ro-ro shipping. technologies that promote cleaner air and a better climate, particularly While the Flower-class from Flensburger Schiffbau-Gesellschaft as it has so many ships sailing in northern European coastal areas. "We was built to DFDS' own account, the company has entered into long- hope that the scrubber technology will not only meet the new environ- term charter commitments against a quartet of new ro-ro freight vessels mental legislation covering, among other things, SOx levels, but that it ordered from China's Jinling Shipyard by Macoma Shipping of the UK. will also go a lot further and greatly reduce particles, said Mr Third-of-class Tor Fionia entered service in 2009, initially bringing her Smedegaard, adding: "This is not only beneficial for the environment, 3,178 lane-metres of capacity to bear on the Immingham/Gothenburg it will also safeguard the future of maritime cargo transport.” ■

76 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010

REGIONAL FOCUS IRELAND

Ship finance forum in Dublin charts way ahead

78 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 IRELAND REGIONAL FOCUS

If the mood at the fourth annual Irish Maritime Development Office But he warned that owners will need to improve safety management (IMDO) Irish Ship Finance briefing, recently held in Dublin, was systems and improve crew welfare. Anthony Gregory concluded by anything to go by, then 2010 could be as much a year of opportunity as saying that the fast ongoing development of the offshore wind farm a year of survival for the country’s shipping industry, writes Hugh sector had certainly brought a wind of change in marine broking. Oram from Dublin. John Lynch, General Manager of Rosslare Europort, owned by Indeed, while there are notable trends moving forward, Andrew Irish Rail, said: "The conference was very interesting and I was partic- Gregory of Force 3 Offshore shipbrokers, described the many opportu- ularly interested in Andrew Gregory's presentation. Rosslare Europort nities for the shipping industry in the fast growing European offshore is already well-established in this market and we believe we have a lot wind farm sector. to offer in terms of new constructions of offshore wind farms in the Addressing the meeting in the Fitzwilliam Hotel, Dublin, Glenn Irish Sea". Murphy, IMDO director, said the panel of four speakers had between The final speaker was Jim Healy, from KPMG, Dublin, who said them over 100 years of experience in the shipping industry. The purpose that Ireland continued to offer tax benefits for ship owners and of the forum was to point ahead to new opportunities in the industry. managers. He gave the recent example of TBS Shipping, which had Indeed, Howard Knott, of Fleet Maritime, said: "The attendance recently decided to move its headquarters from Bermuda to Dublin, in spoke volumes about the gathering momentum of shipping sector order to avoid US President Obama's planned crackdown on tax havens. development in Ireland. The attendance of representatives from the Healy expects this trend to continue. Department of Transport, the government department responsible for all marine matters, was also indicative of a strong interest in the sector and its development," he said. “The attendance spoke volumes about the According to Anthony Gurnee from Seacove Shipping Partners, a gathering momentum of shipping sector company with $1.5 billion of assets under management and which is currently set to invest $200 million in shipping and offshore, in the development in Ireland. The attendance of current economic climate, investment opportunities abound and that representatives from the Department of there are signs of a demand recovery in the marketplace. Gurnee listed Transport, the government department 10 major banks that are currently supplying ship finance, including BNP, Calyon and Deutsche Bank, but said that they are only interested responsible for all marine matters, was in core clients. He also outlined the expensive rates for finance from also indicative of a strong interest in the non-bank sources and stressed that shipyard over-capacity will also sector and its development” remain a factor for at least the next decade. Mark Harrison of Clarkson Shipbrokers, said that for most of 2009 they have been as low as they could realistically go, but they should be He pointed out the advantages offered by Ireland, including 12.5% a bit better for 2010. He pointed out that smaller short sea vessels had corporation tax, an eight year tax depreciation, a favourable pro the advantage of delivering closer to customers, but that over the past business tax regime with no CFC rules, a good double taxation treaty 10 years, no significant construction of smaller cargo ships had taken network and flexible financing, all within the context of Ireland being place. However, plenty of newbuilding was expected in the 4,000dwt to an onshore EU location. 8,000dwt range. As a result, the fleet of ships with cargo capacities of Other plus points include a vital but intangible asset tax depreci- 2,000 to 3,000 tonnes was ageing and diminishing, a neglect which he ation. One recent improvement was the improved tax credits for R&D, feels should be rectified. But he added: "It is very difficult to make the which means that the net cost to owners of shipping and maritime R&D economic case for building small ships. Any new capacity is coming in in Ireland is now 62.5% of the actual cost. He said that activities in larger ships, but rates have now reached a plateau and the demand and R&D such as developing anti-fouling solutions, navigation and supply balance will see fleet oversupply in the near future," he said. logistics management, shipbuilding and design could all potentially The problem is that a 4,000 dwt to 4,500 dwt vessel can be built for qualify. "Companies relocating R&D activities could miss out on a about the same cost as a 3,000 dwt unit and with similar daily running massive opportunity if they do not consider Ireland", he commented. costs on both sizes, investors will obviously opt for the larger potential He also highlighted the favourable tonnage tax regime in Ireland. earning capacity. But he said that there has to be a cut off point below As an example, he highlighted a 2,000 tonne ship that if it's registered which we cannot ultimately lose the ability to move cargo. "In my in Ireland, pays tonnage tax of less than €1,000 a year. opinion, that size is about 3,000 tonnes". Healy noted that the Irish tonnage tax regime was very compet- If Mark Harrison was downbeat about immediate short sea itive. "There are no complicated rules regarding the financing of vessels prospects, Anthony Gregory was positively ecstatic about the devel- by way of leases. No training requirements are attached and Ireland was opment and investment opportunities for the shipping industry in the one of the first countries to include ship management activities within offshore wind farms sector. its regime". He said that the offshore wind farm market was currently in the One upcoming area of development, that's starting to be put into state that the North Sea oil and gas sector was at in the 1970s. "The practice in Ireland is Islamic financing, which could be very beneficial offshore wind farm market in the UK only began in 2000, in Blyth, but to the shipping industry. Some Islamic funds are already established in it's a potentially huge market, worth up to $130 billion by 2020". He Ireland, but some areas still need more work done on the new rules that said that round two of the UK offshore windfarm development plan are required. shows planned capacity of 7.2 GW. Overall, said Jim Healy, the future is bright. “Ireland provides While some European countries, like Denmark, Germany, the certainty and clarity, as well as a pro-business flexibility and a Netherlands and the UK, are forging ahead with wind farm installa- continuing competitive tax regime". tions, other countries like Ireland are lagging behind. In Ireland, only Commenting on his attendance at the event, Mark Young of Asia about 1% of electricity generated by just one offshore wind farm. Maritime Pacific (Hong Kong), said: "I found it very educational and But he expects the sector to forge ahead throughout Europe and to useful. For someone like me, who came from Hong Kong and create many more opportunities for the shipping sector. "There's a huge Shanghai, it gave me another angle to look at the present market and its need for purpose built vessels and the emphasis should be on designing possible future evolution". new types of vessels. We can't rely on using existing ship types: "The Brian John Maguire, Ireland Country Manager for Germanischer vessels needed by the sector include barges, DP 11 vessels, anchor Lloyd, headquartered in Hamburg, and who has a particular interest in handlers, multicats and crew boats". offshore wind farm and short sea coastal shipping developments, Gregory forecast that for ship owners, rates will remain strong, concluded by saying that the IMDO had once again provided a valuable having increased by about 50% since 2000, while for charterers, they resource to the entire Irish shipping industry, bringing together all the will be given the opportunity of building longer term relationships. stakeholders and outlining specifics of possible future developments. ■

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 79

Consolidating with an eye for expansion Andrea Costantini, Chief Financial Officer, Ishima

Ishima International Shipmanagement is a Singapore-based manager with consolidation as well as diversification on its mind. As the ravages of the worst ever global recession start to threaten many of the non-core service elements offered by the world’s ship managers, Ishima is confident that a slight readjustment of strategic direction back to its prime shipmanagement role could compliment a foray into other aligned areas such as ships’ agency. Whatever happens, one thing is clear, previously lucrative services such as newbuilding consultancy will be affected and managers will start to see pressure on the need to keep budgets in line and costs under control. “Over the last few years we have benefited a lot from our newbuilding work and we have also benefited from the cash flow derived from the newbuilding revenues,” Andrea Costantini, Ishima CFO, told SMI. However, he agrees that when it comes to the traditional shipmanagement operations, ship owners, particularly from the tanker sector, are under pressure financially and will be pressurising their third party managers to keep costs down to the bare minimum. Over-stepping the budget is a no-no, without doubt in today’s climate. “We foresee strong demands on managers to stick to the budget and to keep running costs below certain levels. We also believe it will be difficult for some managers to maintain the level of standards needed to keep asset values at the levels they should be. “As far as the newbuilding side is concerned, the first part of 2010 will probably still be good but then we will have to readjust our business model a little and go back to thinking about the core business that is the technical and crew management,” Mr Costantini said. “2010 will be good but 2011 will not be as good because of the newbuilding implica- tions, and companies will need to plan. Shipmanagement companies have to think about their core businesses and companies with 30 to 40 ships will have to rethink their economies of scale,” he added. the internal controls to ensure the client isn’t given unrealistic budgets. But how crucial a situation is the operating budget? Are owners Some less quality managers will play on that,” he added. putting more and more pressure on third party managers to reduce But how do you deal with the pressure when you have to keep your costs? The answer is an emphatic yes! But whereas a manager may costs down yet produce a high quality service? And what effect will it want to increase the vessel operating budget by the normal 7% to 9%, have on the viability of the third party management sector? Will you “the reply is always ‘no we cannot accept this renewed budget’. They have the less competitive ship managers closing down because they tell us we have to run the budget using 2009 figures and this puts press can’t keep up? on the technical side as well as on factors such as purchasing”. “Yes in the sense that sometimes, small is good. The optimal structure for a ship manager is not more than 34 ships and of course I “It will be the good ship managers who know of some competitors in Singapore. These companies with fewer ships can adopt less than ethical ways in order to survive. Unless they have the internal controls to ensure the are small niche managers belonging to an owner, I do not see too many managers coming up for sale because of the risk in buying these client isn’t given unrealistic budgets. Some companies. But some are doing pretty bad and sooner or later they will be acquired or shut down.” less quality managers will play on that” So, what about Ishimar? “We are more interested in diversifying and entering into the “At the end of the day, companies will have to accept the lower agency sector which can be attractive. In Singapore it is very difficult budgets but the challenging part will be how realistic will the reporting because a lot of companies are for sale but the day you are interested side be, because there will be some companies who will try to postpone there is no transparency about the price or the data. Even though you certain purchases or repairs. It will be the good ship managers who have read about potential buyers, there are not so many sellers,” he added. ■

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 81 DISPATCHES DP WORLD of thethe woIs e this nd By Margier Collinsld?

he greater the binge, it is said, the Dhabi’s loan to Dubai, to help it repay its bigger the hangover. A dirham for your “But for the credit bond and trade creditors, following a shock Tthoughts, and with apologies to announcement in November last year that its Horace: if the mountains laboured greatly, did crunch and the worst state-owned corporation, Dubai World, was they produce merely a ridiculous mouse? demanding a six-month standstill on its debt In the Islamic world’s most cosmopolitan recession in living of billions of pounds, sending an arctic shiver state, there are those who still remember memory, who knows down the international spine and markets Dubai as a pearl-fishing backwater. Oil, around the world into a tailspin. albeit in limited reserves, was discovered in how much faster, “When you start building a third island 1966, since when it became the region’s shaped like a palm tree, intending it to be as trading hub, luring immigrants from the Arab farther and higher this big and crowded as Manhattan, you are world, Persia and India. crying out for a sober voice to bark: Stop!” The United Arab Emirates (UAE) is not frenetic, high-wire said Jim Krane, author of ‘Dubai: The Story just a federation of different states; it is also a of the World’s Fastest City.’ seven-emirate alliance of tribal families. In acquisition and Shaped like a map of the world, ‘The Dubai, the Maktoums are the ruling family, World’ is just one among Dubai World’s eye- whose emir and paterfamilias, the unabashedly building trajectory watering grand projects – a cluster of 300 Anglophile Sheikh Mohammed bin Rashid al- man-made islands reclaimed from the sea, Maktoum, took over the reins of government in would have reached?” each one selling for between $15m and $50m, 2006, to preside over Dubai’s manic, over- by invitation only. The palm tree-shaped Palm Islands, comprising Jumeirah, Jebel Ali caffeinated growth and development. property and the maritime industry. Dubai, in and Deira, are commercial/ residential/ recre- short and impressive order, became the ational resort developments also built on Dubai – a desert Singapore UAE’s turbo-charged centre of capitalism, a reclaimed land, and being marketed as ‘the state on steroids, and every other tribe was eighth wonder of the world’. Vast ski domes free to bask in its reflected glory, including its Sheikh Mohammed, 62, almost single- have risen from the torrid desert, and Dubai handedly changed the face of British horse neighbour, the more sedate Abu Dhabi, which proudly boasts the world’s largest shopping racing by investing hundreds of millions of has 9% of the world’s oil reserves and holds mall; the world’s most expensive hotel (Burj pounds in the sport and industry; he owns the largest – at $700bn – sovereign wealth al-Arab); the biggest airport; and, its Godolphin stables and Newmarket farmland fund in the world. crowning glory – the world’s tallest building and paddocks, among other things. Abu Dhabi’s staggering wealth has – taller even than Taipei 101, the world’s Sheikh Mohammed lives large and does enabled it to bankroll half of the UAE’s previous titleholder. The recently launched not do small or picayune. Mindful that oil budget and its armed forces, and when Dubai $1.5bn Burj (‘tower’) Khalifa, a 2,716 ft reserves would dry up in the fullness of time, found itself inconvenienced by spectacular super skyscraper of apartments, shops, he nurtured a vaunting ambition and bold spots of bother, to throw it a lifeline and bail offices, hotels and restaurants , was named in vision to transform Dubai into a desert it out of trouble. “There is no Dubai and Abu honour of Dubai’s most important – if Singapore, an oasis under a searing sun where Dhabi,” Sheikh Mohammed said. “We are reluctant – lender and benefactor, Sheikh free trade can flourish, to attract international one. We will be there for each other when we Khalifa bin Zayed bin Sultan al-Nahyan, head businesses and big-time players in leisure, need it.” This declaration of unity –if not of the ruling family of Abu Dhabi and media and telecommunications, finance, harmony – has come at a price of $25bn: Abu president of the UAE.

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‘The sun never sets on Dubai World’

At the height of the boom, Dubai World – whose website claims ‘The sun never sets on Dubai World’ – spent nearly $60bn acquiring property, port and terminal, hotel, retail and leisure assets, including a $3.6bn casino project in Vegas – funded largely by debt. But for the credit crunch and the worst recession in living memory, who knows how much faster, farther and higher this frenetic, high-wire acqui- sition and building trajectory would have reached? These debt- backed assets have now considerably reduced in value. With buyers and investors rubber-necking Dubai’s collapsed housing market for bargains, amid a landscape of half-built tower blocks, and with more than 400 construction projects, worth an estimated $300bn, cancelled or deferred, serious questions and doubts have arisen about Dubai’s ability to honour its colossal debt, the credibility and transparency of Dubai’s rulers and administrators in a system that conflates a trinity comprising the royal family, the government and state-owned businesses. “When you start building a third island shaped like a palm tree, intending it to be as big and crowded as Manhattan, you are crying out for a sober voice to bark: Stop!” Every cloud has a silver lining, and Dubai has plenty of mojo and juice left. As Dubai Holdings, the personal investment arm of Sheikh Mohammed, undertakes a painful programme of restruc- turing and deleveraging that splits the company into four discrete divisions – investments, free zones, property, leisure and hotels – DP World – its largely profitable ports and terminal operations (the fourth largest in the world) – has been ring-fenced from Dubai World’s debts, distancing itself from its parent’s problems, a move seen as a pre-emptive measure to protect it from creditors. Also ring- fenced, because they remain on a “stable financial footing”, were P&O Ferries, Jebel Ali Free Trade Zones and Istithmar Investment.

DP World’s exhilarating canter

Up until the beginning of 2009, DP World – which was listed in Nasdaq Dubai in 2007 following an IPO that raised $5bn with shares priced at $1.30 – was powering along at an exhilarating canter. In the last two years alone, it acquired a 90% share of Egypt’s Sokhana Port Development Company; entered into partnerships to develop and operate Saudi Arabia’s brand-new King Abdullah Economic City Sea Port and the container facilities at the Port of Aden; agreed to buy the controlling stake in Container Sociedad de Estiba, which holds the exclusive concession for Tarragona Container Terminal in Spain. DP World was also awarded concessions to operate two new terminals in Algeria – Algiers and Djen-Djen. With Patrick, it was appointed to operate two of the Port of Brisbane’s new container berths; a joint venture with Australian Flinders Ports awarded it a 30- year concession to run Adelaide Terminal. Elsewhere, in Senegal, DP World took over operations at the Port of Dakar’s main box facility. With Odebrecht, DP World acquired the majority stake at Empresa Brasileira de Terminais Portuarios in Santos, Brazil. DP World opened Doraleh, a new 1.2m- teu capacity terminal at Djibouti, and Saigon Premier Container Terminal in Vietnam. The new facility in Callao, Peru, represents the company’s largest investment to date on the west coast of South America. The first phase of its new Mina Khalifa Port in Abu Dhabi is expected to come on stream in 2012. As the global downturn firmly took hold, shipping lines retrenched, financial investors offloaded port assets and port companies experienced, for the first time in years, a disturbingly marked contraction in volumes. With the credit crunch severely restricting capital, making it difficult to fund infrastructure develop- ments, port and terminal operators, including DP World, deferred, cancelled, or “put under review” new or existing port projects.

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Scaling back projects “Customer confidence, whilst improving, “There is no Dubai and remains fragile with limited visibility for the In early 2009, DP World announced it was Abu Dhabi, we are one. medium term...we remain confident about the conducting a comprehensive review of its long-term outlook...but predicting trade trends worldwide operations; that measures were We will be there for in 2010 remains challenging,” Mohammed being taken “to scale back expansion projects Sharaf commented. and to cut costs in response to the global each other when we downturn in container volumes.” Citing Listing on London Stock Exchange increasingly challenging and worsening need it” conditions in the industry, Mohammed In a separate statement that shows stalwart collapse in world shipping.” Laing O’Rourke, Sharaf, Chief Executive of DP World, said: confidence, DP World recently announced it project contractors, denied there were “We have implemented a strategy to focus on will be seeking a premium listing on the funding problems. “Projects the size of minimising the impact on margins and London Stock Exchange in the second preserving cash, which includes reducing London Gateway will inevitably take a lot quarter of 2010, while continuing to trade in costs and taking a prudent approach to our longer than what was said at the beginning,” Dubai’s bourse. Its share price has fallen from working capital position.” said Chief Executive Ray O’Rourke. its initial $1.30 to $0.42 today. “DP World A highly charged and nervous industry The European Investment Bank was looking at ways to unlock value for that invested nearly $40bn in ports in recent announced, in November, that it was years faced reduced port-asset valuations approving a £300m loan for the project, and shareholders,” said Rami Sidani, Head of and the near-certainty of overcapacity. the East of England Regional Assembly made Investment, Schroders Middle East. “A dual Mohammed Sharaf’s comments also stoked £12.7m available to the project for the listing is a good idea; the company will be fears for the future of Maasvlakte 2, DP necessary deepening of the Thames Estuary, more visible to international investors.” World’s investment in the Rotterdam World to allow access to the world’s largest, Emma- Gateway Container Terminal, and its class container ships afloat. “Customer confidence, London Gateway project. In March 2009, he said: “London Gateway is under review, like DP World kick-starts construction of whilst improving, any other project, and we are looking at the London Gateway feasibility. When London Gateway was remains fragile with approved (in 2008), it was based on certain So it was hugely reassuring, and in Prime market conditions and certain market Minister Gordon Brown’s words, a ‘massive limited visibility for the growth forecasts.” vote of confidence in the UK’s economic recovery’ when DP World, on 5 January medium term...we “Dubai works because 2010, announced that it purchased the 400ha of land and Shell’s remaining interest for remain confident about the Gulf works and the £136m. “The board of DP World has reviewed a number of options for the London the long-term Gulf is not going to Gateway project in light of the current market outlook...” downturn and is pleased to announce it has stop working” decided to proceed with the construction of essential infrastructure that lays the And so, buffeted by financial storms, Designed to be DP World’s flagship maybe these problems are, as Sheikh development in the UK, London Gateway is foundation of the facility,” said the announcement. Its expected opening in 2011 Mohammed said, just a “passing cloud.” an ambitious engineering project, at a 750ha is likely to be delayed. After all, it is in our interest for this singular site (formerly belonging to Shell) in However, caveats: “DP World will Arab story of ambition and reach to succeed. Stanford-le-Hope, Essex, to construct a continue to review the development of the “The UAE should prompt optimism,” said a £1.5bn container terminal and logistics park port and park operations in line with market recent Times leader. “It at least represents an aimed at adding 3.5m teu to UK container demand,” Sultan Ahmed bin Sulayem, DP economic and political alternative – including capacity, and expected to handle containers at World chairman, said. “By starting the major a rate 50% faster than its UK rivals. When Islamic banking – to the systems of Riyadh elements of construction, we ensure and Tehran founded in their different ways on completed, it will be the UK’s first fully maximum flexibility to develop the project automated terminal, the first major new port theocratic absolutism. As such, it has an efficiently in line with market demand.” important role to play in integrating the infrastructure project for more than a gener- DP World’s trading statement issued on Muslim world into the global free-market ation. “London Gateway,” hailed its Chief 25 January said the 2009 throughput of 25.6m system.” Executive Simon Moore when the teu, at its wholly-owned operations, reflects government gave the scheme the go-ahead, an 8% drop, and declined by 6%, to 43.4m “Dubai works because the Gulf works “will be a port-centric logistics platform of a teu, in its 50 facilities around the world. and the Gulf is not going to stop working,” size and scale unique in the UK.” The company, which employs 30,000 said Simon Williams, HSBC’s Chief A Sunday Times article in November people worldwide, described 2009 as “the Economist in Dubai. 2009 stated: “Not clear when – or if – the most challenging year the container industry The ground has ineluctably shifted grand plan will become a reality...the project has experienced, with the first reported beneath Dubai, and maybe it has lost a little has been under review as DP World global decline in volumes since containeri- bit of its shine but, the end of the World? reassessed its investments in the light of sation began.” Don’t bet on it. ■

84 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 Jan Morten Eskilt, CEO OSM Group

There is a lot of uncertainty in the shipping market, what are your views on how 2010 will shape up? What are your fears and what are the opportunities? I think 2010 will be a very good time at least for the offshore shipmanagement industry. In periods when owners make good money they can afford the luxury of building large organisations but now pressure from shareholders and banks will force them to look to alternatives which may be more economical and smarter than the way they do it themselves. There is nothing wrong with family run businesses or the traditional shipping companies but they may not always be as financially efficient as they should be. Working ‘smarter’ can extend anywhere from where they do their purchasing, or pick their crew, to who is running your accounts. Most companies in Norway outsource normal office support functions because the cost of a secretary is close to that of a superintendent.

So do you see an increased level of shipmanagement outsourcing this year? We do, definitely. You can read all the sentiments but we are being asked to give quotations from shipowning companies who hardly ever talked to us three years ago. The last thing they wanted to do then was to ask another company to manage their ships and employ their crew. And again with all due respect, one of the problems that some of the Greek companies are finding is that they cannot employ local people who are willing to work as superin- tendents simply because they don’t exist. It is a combination of a competence issue as well as when shareholders and banks start to question why they are running their businesses in a certain way. Why is your OpEx $500 more than it should be? do it because we had to prove we were better. Tables may turn a bit because who would seafarers consider as long-term employers. We as managers are definitely regarded as long-term employers “we have the ability to move faster compared to a number of ship owners. A lot of them are into asset and while the financial crisis is playing and we are here to run the ships. hurting a number of owners, When the industry comes out of recession, will shipman- generally speaking, the ships are agement as a sector, be a stronger and fitter animal? I think so because we have the ability to move faster and while still there and a lot of them need the financial crisis is hurting a number of owners, generally speaking, the ships are still there and a lot of them need quality quality managers” managers. What we see is that the shipping world is becoming more and more transparent and whereas in the past certain owning areas Will this financial crisis force an improvement in the trust may have been closed to managers, now it may be more open bid. element between owners and managers because the That is because things are changing. The same is being seen in the management sector is inherently more professional now offshore sector. and has the time come for managers to be given the element of trust they deserve? What are owners asking from you as a manger? As a sector there is trust between the various shipowning Our main market is energy either in liquid form or offshore. The companies, not all of them, but if you look at which companies are first question we get is “are you approved by the oil majors and do approved by the oil majors for long term contracts you will see that you meet the officer matrix?” As managers we have a larger fleet so the larger managers are all approved. There are not that many we have the opportunity to conduct some hedging which for a small family-owned owners who are approved: approval is based on your ship owner with five ships is very difficult. Also we believe that crew profile and we are always focusing on the competency onboard crew loyalty is built over many years. In the Philippines we train 100 but it is also about the competency levels in-house: your marine cadets every year but 60%-70% of our seniors are as a result of our superintendents; your vetting departments; your ability to deliver cadet programme and it gives us a retention rate of above 95% for documentation at any time. And we as managers have been forced to these guys. You groom them from day one.

Ship Design: The future’s bright the future’s green

Green shoots A whale of a system High spec targets Green ship for Greenpeace Marseilles set for solar power Breaking through in Bangladesh Associated British Ports welcomes wind farms ECOVISION revolutionDesigning a By Amy Kilpin Climate change talks may be forcing the shipping industry into a lithium-ion battery system to help marine vessels reduce CO2 pressurised can of responsibility as an imperative market policy for emissions, SANYO supplied MOL with photovoltaic systems as verifi- emissions reduction sits at the top of the agenda, but for shipping cation test units for marine vessels in 2005 and 2008. The upcoming companies taking matters into their own hands, the future is looking project aims to establish a technology to use a system combining its distinctively eco-shaped. solar panels (Max. 200kW is planned) with its lithium-ion rechargeable Concept ships are being strung out like paper chains as designers batteries (Max. 3,000kW/h is planned). and manufacturers click the button of innovation to prepare for a legis- The system is hybrid with the diesel generators used for marine lation-heavy future focused on meeting green targets. From hull design vessels, and by generating electric power via the solar panels which is and engine modification, to hybrid energy sources and technology- then stored in the rechargeable batteries, electricity is available to ships assisted vessel optimisation systems; a revolution is happening. in port. Since the operation of diesel generators may be stopped while Emissions restrictions placed on shipping from an external feder- the vessels are in port, this system is capable of contributing to the reali- ation are only one solution in the bank of counter-measures against sation of zero CO2 emissions. A hybrid car carrier’ equipped with this climate change, and although many other tools and instruments are system is scheduled for completion in 2012. becoming available for both retrofit and newbuild vessels, it is the MOL President Akimitsu Ashida underlined how “the company has future generation of ships that will formulate the real answers in the taken steps to address the environmental issue and have pushed forward fight against climate change. with the development of a series of next-generation vessels to reduce The World Shipping Council recently proposed a new scheme to our environmental burden.” Confirming that the concepts of ISHIN-I the IMO and its member governments for the introduction of a Vessel (car carrier) and ISHIN-II (car ferry) “aim to reduce CO2 emissions by Efficiency System (VES) involving the mandatory application of vessel 50%,” President Ashida added: “These concepts are not some nebulous efficiency design standards for all newbuilds, which would be tiered idea about ‘ships of the future’, but are soundly based on advancing and with higher standards required over time as technology develops. refining existing technologies and are eminently feasible, and we are Existing vessels would also be subject to improved standards under presenting these eco-ships based on a realistic vision.” the proposal, but with less aggressive regulations given their limited ability to improve, and according to the World Shipping Council, any existing vessels which fail to meet the standard criteria would be charged on a fuel consumption basis. “These concepts are not some “The IMO achieved significant success recently in reaching a legally binding global agreement that will dramatically reduce NOx, nebulous idea about ‘ships of SOx and particulate matter emissions for ships around the world,” said Chris Koch, President and CEO of the World Shipping Council. “It is the future’, but are soundly appropriate for the IMO to build on that success and establish an inter- based on advancing and national regulatory system that can reduce carbon emissions as well.” With the “hope that the VES proposal will help the IMO develop a refining existing technologies specific regulatory regime that would ensure improved efficiency across the world's maritime fleet and reduce CO2 emissions,” the and are eminently feasible” efficiency plan is aimed not only for implementation across the current global fleet, but also the forthcoming breed of new vessels that contribute to shipping’s emissions output. It is this new progeny of vessels that will be the most flexible, Japan, as a global technology leader, has certainly been dipping adaptable and responsible in influencing shipping’s green image into the gene pool of green shipping, with its NYK Super Eco Ship through the next few decades, something which companies are looking 2030 design which targets the achievement of ‘zero emissions’ by 2050 into with confident investment in research and development projects. in corporation with MTI, its subsidiary technology institute, Elomatic, Yet on a seemingly unanimous level, companies have realised the a marine consulting company in Finland, and Garroni Progetti, a ship need to involve national and international bodies to endorse such designer in Italy. motives, with either legislative measures via the IMO, or with Vittorio Garroni of Garroni Progetti, described the project as “a government-backing to promote initiatives that will place shipping at dream for a marine designer,” adding that “another significant the forefront of environmental concern and responsiveness. innovation is the ship’s power generation. The sails are striking, even SANYO Electric recently announced its involvement with Mitsui though they deliver only a small part of the power requirement. The O.S.K. Lines (MOL) and Mitsubishi Heavy Industries in that it is to retractable solar cells that cover the container area likewise produce undertake research and development of a ‘Hybrid Car Carrier using only part of the required energy. However, as they are emission-free Natural Energy,’ an endeavour selected by Japan’s Ministry of Land, energy sources, they are highly significant in reducing the ships’ total Infrastructure, Transport and Tourism to be part of its ‘Project to emissions. Fuel cells that have been modularized into container-sized Develop Technologies for reduction of CO2 Emissions from New units are the ship’s main energy source.” ships’ for fiscal 2010. This is also a concept recently launched to the international Promoting a system incorporating a photovoltaic system and maritime media during the COP 15 climate change summit, as

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Eidesvik’s Viking Lady, formed through the FellowSHIP Project, the pays’ principle and give value to the external environmental benefits of consortium behind the design, has been hailed as the world’s most deploying renewable energy until the technologies are mature enough environmentally ship with use of fuel cell technology equating to a 50% for projects to be developed on purely commercial grounds.” reduction in CO2 emissions and zero emissions of NOx and SOx. He added: “To our knowledge, no such schemes have ever been Crunch time will be in April this year, when onboard testing and quali- devised for the shipping industry, a discrepancy largely caused by the fication of this new vessel technology be reported. IMO’s failure to keep abreast of the UNFCCC targets for CO2 reduction The grave sincerity of the problem has opened up a greater over this last decade.” Resounding words – however the company is awareness of shipping in the public eye, but the global significance of positive that it provides a solution not being addressed by existing climate change is underlining the need for shipping companies to commercial shipping enterprises, which are primarily creating alternative develop vessel technology designs in collaboration with authoritative concepts or solutions merely to ‘keep up’ with the rest of the industry. entities, something embryonic cargo ship firm, B9 Shipping, has sought B9 Shipping’s ethos goes beyond the rites of commercial gain as it by presenting itself to the UK government. homes in on a critical issue facing the global supply of energy and Having identified innovative, practical, low carbon, affordable, shipping’s role in the consumption, trade and transportation of fossil commercially viable, proven solutions to promote cleaner shipping, B9 fuels. Looking at the wider picture, the company’s new concept vessels Shipping is designed to assist small island economies adapt to and provide not only a commercial application for shipping to benefit the mitigate against climate change and to service the world market for zero environment, but also a solution which has well thought out sustain- emission small cargo ships, estimating that “the market for these ships ability and feasibility in global trade dynamics. exceeds 10,000 vessels over time.” “On the commercial side, the shipping industry is addicted to Collaborating with Rolls Royce, Graig Investments, Corus Steel, profligate consumption of fossil fuels with little or no regard for the International Paints, Southampton University’s Wolfson Unit and the longevity of supply,” opined Mr Surplus. “The peak in world conven- Met Office, B9 Shipping has inaugurated the development of the tional oil production is upon us, albeit temporarily masked by the global revolutionary new vessel, whereby approximately 60% of the thrust is economic slow down. This will lead to escalating bunker fuel prices and initiated from conventional soft sails and, in calm conditions or to wreak havoc with the 80% of world trade carried by sea. manoeuvre in port, a carbon neutral bio-methane engine is used. “When faced with these pressures the immediate reaction is to slow Presenting the solution to Prime Minister Gordon Brown in a down the world’s fleet because fuel consumption varies exponentially recent meeting at Downing Street, B9 Shipping was one of 100 with speed. This process has already begun. Next, ship owners will companies selected for ‘embracing the low-carbon economy’. Mr realise just how little there is in the way of alternatives to fossil fuels. Brown said: “Our transition to a low-carbon economy will be a key Then the environmental and commercial benefits of deploying driver of our future economic prosperity – B9 Shipping is at the renewable energies at sea will be given the recognition they deserve,” forefront of this transformation.” he added. The launch of B9’s first vessel in 2012 will coincide with the Designed to be simple to both build and operate, the objectives are opening of new biomass power stations across the UK, and its ships will be used to import bio material from the Baltic states. Anticipating that for the new vessels to support small island states to generate a rounded by 2020, 50 ships will be needed to bring the biomass industry into function for low-carbon shipping: “In light of events in Copenhagen compliance with the Renewable Energy Directive, the company is where it is clear that the small island communities need urgent support confident that the production of its new eco-friendly ships would mean and there is a struggle around the issue of bunker fuel, B9 Shipping the benefits of biomass would not be cancelled out by pollution caused want to underline how businesses can and are developing cohesive by transportation. global solutions to help ensure a smooth and rapid transition to a low Diane Gilpin, Director, said: “The International Energy Agency has carbon economy,” Mr Surplus said. estimated that biomass power generators will need up to 45m tonnes of Clear objectives across the board certainly place the shipping biomass a year. If the bio-material is transported into the UK using industry under the spotlight, as the formerly overlooked sector fossil fuel, this negates emissions saved in power generation. Our new generates greater international legislative input from governments and vessels offer a commercially competitive solution.” unions. While mainstream shipping lines may have individual initia- Revealing that although there are steps being taken towards adopting tives in place to cut fuel consumption and reduce their emissions measures to combat shipping’s contribution to climate change, David output, there is a collective regard for the environment which is taking Surplus, Managing Director, claimed that “the shipping industry has on a far more universal significance. largely failed to honour the commitment it made to the UNFCCC in Kyoto While the world is still yet to adopt an official legislation, whether 12 years ago to reduce GHG emissions from ships. Good progress has through the IMO or not, and the inevitability of the industry taking time been made with NOx and SOx emissions but CO2 has been effectively to adjust, adopt and implement any new regimes that do come into play, absent from IMO led proceedings. As a result, devising and implementing new concept ships and eco-designs are being surreptitiously introduced. CO2 reduction strategies to play catch-up will be more pressurised and we The certainty of shipping’s future is undeniable as globalisation know appeasement policies rarely survive the test of time.” continues to groove its complex network across the world, and while Acknowledging the value given to onshore renewable energy in temporal measures may provide ready-made mitigations to climate carbon trading and government backed commercial support mecha- change, it is the spawn of futuristic newbuilds that will really be singing nisms, Mr Surplus underlined how such schemes “adhere to the ‘polluter the revolutionary anthem. ■

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 89 ECOVISION GREEN SHOOTS

A whale of a system Associated Global satellite network Iridium British Ports Communications has been contracted to assist in the development of a new satellite data welcomes solution for a whale reporting programme which aims to reduce collisions between ships and whales in the western Mediterranean basin. wind farms Chrisar Software Technologies A new development of offshore wind (Chrisar), an IT company specialising in farms around Britain, known as Round 3, software systems engineering and signal has been welcomed by Britain’s biggest processing in the marine environment, ports group, Associated British Ports chose Applied Satellite Engineering (ASE) (ABP), as the plans spell good news for to use the Iridium short-burst data (SBD) the port industry’s involvement in such a modem with specialised software. large scale project. The program will allow watchstanders Designated for renewable electricity on participating ships to use the system to generation from nine locations within the record and transmit reports of whale coastal ring road around Britain, the sightings through the Iridium network to a unprecedented scale of the offshore wind central server, which will save it into a focus on marine mammal conservation. developments will require the estab- database and transmit warnings via Iridium Trials are underway on a small number of lishment of port facilities close to the to all subscribing ships whose tracks are ships, and large-scale dissemination is offshore zones, and the selected ports will likely to take them close to the mammals. planned for 2010. play a critical role in the construction and The Real-time Plotting of Cetaceans With the intention to expand the deployment of the turbines and as (REPCET) programme is being deployed in programme to encompass all types of ongoing bases for operations and mainte- the Pelagos Sanctuary for Marine vessels, Pascal Mayol, Souffleurs d’Ecume nance activities. Mammals, a conservation area in the north- Director, indicated that the project hopes to Ideally located to support the majority western Mediterranean Sea. An estimated significantly decrease the risk of collision of the consortia, discussions are also 3,000 to 5,000 sperm and fin whales live in and that a number of shipping sectors have currently taking place with several this region, and with a very high density of expressed interest in participating. industry players that could see ABP’s ports shipping traffic, including high-speed “We are, however, taking special care to form important maritime clusters ferries, there is an imminent danger to screen the applications for participation servicing the offshore wind industry in the whales on or near the surface of the ocean. through an ethical commission, to ensure the UK, which is posted to be worth £75 Collisions can both injure or kill the whale system is not used for harmful purposes, such billion and capable of supporting up to and also cause significant damage to the as unauthorised whaling,” Mr Mayol revealed. 70,000 jobs by 2020. ship and its passengers and crew. Patrick Shay, Vice President of Patrick Walters, ABP’s Commercial The pilot REPCET project is a collabo- Iridium’s data division, revealed that the Director, said: “Several of ABP’s ports are rative effort managed by Chrisar and company is “especially pleased to be able to in a prime position to serve some of the Souffleurs d’Ecume, a non-governmental play a role in protecting the vulnerable biggest proposed developments especially organisation specialising in applied whale populations from being injured or in the North Sea, Bristol Channel and in environmental engineering with a principal killed by seagoing traffic.” the Irish Sea. Now that the Crown Estate has announced the Round 3 winners we will be stepping up our discussions with the wide range of businesses wanting to establish operations at our ports.” Marseilles set for solar power ABP has already developed specialist port expertise through its involvement in a The Marseilles Fos port authority has 40,000 sq m surface total on nine sites in number of Round 1 and Round 2 offshore named two successful bidders under a call the centre and south of the area. wind projects, including the use of ABP’s to tender for the installation of rooftop Following negotiations on the ports at Barrow, Grimsby and Lowestoft solar power systems that by 2012 will contract details, work is scheduled to start in providing assembly sites and opera- generate more electricity than is consumed by next summer for completion by late tions and maintenance bases. in the Marseilles harbour area. 2011. The port has stressed that normal “It makes sense for the offshore wind One lot involves a surface total of activity must not be interrupted. industry to take advantage of ABP’s 65,000 square metres on 11 buildings in With solar panels on more than 100,000 existing port infrastructure, particularly as the north of the harbour – the largest being we are so close to the offshore zones,” a warehouse with a 23,000 sq m roof - and sq m of roof, the project is among the most important of its kind in the region. The added Mr Walters, and with the Round 3 has been awarded to a consortium of NUR offshore wind energy generation aiming combined power output of 15MWh (mega Energie, Agence Archi-tecture, SPIE Sud- to deliver 32gw, a quarter of the UK’s watts per hour) will exceed user require- Est and Solar Enviro Partners. total electricity needs, by 2020, it’s an ments and confirms the port’s strategy of The other lot has been awarded to admirably green undertaking. EDF Energies Nouvelles and relates to a seeking renewable energy solutions.

90 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 GREEN SHOOTS ECOVISION

High spec targets Breaking through in Bangladesh Singapore-based Ecospec Global A historically un-environmentally nation months. It also requested the government Technology has been setting the standards in the world of shipbreaking, Bangladesh’s to determine the terms and references for a for CSNOx emissions abatement littered beaches have been testament to the high-powered committee formed to technology by securing major contracts country’s lack of ecological directive. monitor the shipbreaking process in the with STX Heavy Industries and Dutch However, its government has been given country, involving visits to breaking yards shipping company ForestWaveNavigation. the push to clamp down on its tarnished to make valued assessments. Utilising its prowess through the reputation with a mass clean-up act. A survey carried out by the representative office in Europe, Ecospec The High Court has directed the environment department found the Scandinavia, the company has been government to submit a list, within three existence of 79 shipbreaking yards along contracted by ForestWaveNavigation to weeks, of scrap ships brought in to the Sitakunda coast in Chittagong, of incorporate its CSNOx technology for a Bangladesh territory without neutralisation which 61 are in operation. fleet of six newbuild vessels. and environmental certification as part of a At the court’s dismay over lack of Ecospec’s CSNOx is the market’s petition by Bangladesh Environmental initiative of the government to regulate most efficient abatement technology to Lawyers’ Association (BELA). environmental standards, the government reduce SOx, NOx and CO2 from the A previous eight-point rule on has vowed to start monitoring the industry exhaust gas emitted by ships, and it used shipbreaking was issued in March last ‘immediately’ in the wake of reports of COP15 as a platform to promote a cleaner year, in which the High Court ordered the rampant deforestation along the coast to era for shipping. Department of Shipping, which endorses make way for the breaking yards. A signing ceremony held at the import of ships, to ensure that no vessel National Museum of Copenhagen, enters the Bangladesh territory for supported by ABS (American Bureau of breaking without neutralisation, or pre- Shipping), also saw STX Heavy Industries cleaning, and certifications from the sign a technology and partnership Department of Environment (DoE). agreement with Ecospec, with the aim to Also having ordered the government integrate the CSNOx system into its plant to report to the court every month on the and engine construction projects. number of scrap ships arriving at the ports, and how much wastage they contain, the BELA petition revealed that the shipping department has continued to authorise import of ships containing hazardous materials into the country. In response to the country’s continuing problems in this area, the court has directed the government to finalise regulations for the ship breaking industry and a gazette notification within three

Green ship for Greenpeace Always relied upon to be at the forefront of reluctant to address shipping emissions for rather than for an existing ship to undergo environmental concern, Greenpeace is once fear of drawing attention to its own fossil- conversion or retrofit, by far the greatest again leading the way with a £14m flagship, fuel-powered fleet. impact on the environment found to be during a mega-yacht which will become the third Analysis revealed that it would be more the ship’s use rather than in the construction Rainbow Warrior as well as one of the ecologically efficient to construct a newbuild or eventual demolition phases. greenest ships afloat. Commissioned to German and Polish shipyards, the vessel is one of the largest-scale projects of its type in the last decade. At a massive 1,300 sq metres of sail supported on two A-frame masts, the ship will sport its own helipad, comfortably sleep 30 people, and even have room for a flotilla of inflatables. Although designed with both diesel and electric engines, these are expected to be in use for less than 10% of its time at sea, with the aim to drastically reduce emissions and to burn significantly less fuel through the assis- tance of wind propulsion. The decision to opt for sails rather than rely on fossil fuels was part of a deliberate challenge to the shipping industry to reduce its carbon and other polluting emissions, as Greenpeace has come under criticism in the past with the argument that it has been

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 91

OBJECTS OF DESIRE LIVE Objects of desire

Sail all the way to the bank

Belting it out One too many glasses of red or a rich dessert too far may cause devastating discomfort in the most inopportune circumstances, but thankfully, intellectual collaboration with top designers has After a fairly disastrous 2009, the newly-instated, vastly adopted generated a modish solution. money-saving ethics are a trend likely to continue, especially as To create immunity against the fearfully tightening the dawn of a New Year breaks through, and this stylish sailboat waistband, this device, coupled with a slight of hand, will subtly bank will certainly help nurture the savings. expand your waistband by a further two inches via a deft lever- Although you could probably buy a small boat for the price sliding action. of this exclusive model, it could certainly offer a sail with a silver Discreet train-track rasp encompassing 108 roller bearings lining if it facilitates a saving scheme, and in plush sterling silver, and some components being made of solid gold, the it is bound to rock the boat of finery. mechanism is all encased in a swish leather and titanium structure. With Swiss micro-mechanics more usually found in fine Sailboat bank watch making, it’s a timeless buckle-buster of the rarest kind. $2,456 Roland Iten Mark II www.tiffany.com $25,800 www.rolanditen.com A load of balls Addictive, boredom-busting puzzles will continue to transcend out of the Jurassic age above the likes of iPods, Blackberrys and Wii systems, and this simple-yet-effective gizmo is a fabulous new contender. If you could imagine a cross between Newton’s Cradle, Rubik’s Cube, Silly Putty and bubble wrap, then the M-Cube is it, but even then it’s in a league of its own. Consisting of 216 powerful rare earth magnets that can be shaped, squashed, sculpted, pulled apart and snapped together in unlimited ways, it allows endless opportunities for fiddle-addicts. As well as providing dual hemispherical brain stimulation, you can form countless shapes, create chains, invent games, leave messages on the fridge and use it as a stress reliever for manipulating, mangling, crushing, and re-arranging. Available in gold and silver finish, it’s certainly invaluable.

M-Cube $48.99 www.firebox.com

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 93 LIVE OBJECTS OF DESIRE

Artistic bloom

It’s commonplace to be judged by artistic displays of exclu- sivity adorning the walls of your home, and where artwork is concerned, it’s a subjective choice. Perfectly balancing the fine line between sculpture and painting is this sophisticated piece, the Nymphenburg Chrysanthemum. Painstakingly modelled by hand from wafer-thin porcelain, Japan’s national flower is bestowed a whole new degree of justice in a limited edition of just 25, all encased in ornamental wooden boxes. Contemporarily minimalistic yet retaining a traditionalism, the chrysanthemums are modelled exactly to nature with over 300 petals, each filament and each stem applied individually. The anachronistic patience and special training is a bespoke display of beauty worth the embellishment of any plain wall. Double act Chrysanthemum If you’re feeling over-worked, over-burdened and under pressure, and ever felt the futuristic inclination to be able to split $2,140 yourself in two, then your dreams may be answered with www.nymphenburg.com staggering new technology. Pioneering a new generation of human-replacement androids, one Japanese company has taken the concept to the next level by offering consumers the chance to buy a humanoid robot custom-built to look, move and sound just like themselves. To be built by Kokoro, the doppelgangers will be available at Japanese department stores Sogo, Seibu or Robinson’s. Designed to match the buyer’s face, body, hair, eyes and eyelashes, facial expressions and upper body movements will be modelled on those of the buyer, while recordings of the buyer’s voice will form the basis of the robot’s speech. Narcissistic indul- gence or future-paving ingeniousness? You decide.

Kokoro Actroid $223,000 www.kokoro-dreams.co.jp

Size matters

Digital storage has never been so easy, and up until now, it has never been this small. The world’s most miniscule flash drive ever is here, and at barely the size of a fingertip and less than 4mm thick, it’s virtually non-existent. With an almighty 32 gigabytes, this tiny USB stick has the capacity to store up to 16 full length ripped movies, 20 full days worth of music, more than 16,000 5 megapixel photos or 320 metres of shelved books; some feat for an infinitesimal device. Finished in polished chrome, it even looks good, and being shock and water resistant, the Pico flash drive is the ultimate ‘save-in-a-house-fire’ must-have. Just don’t lose it.

Pico USB Flash Drive $139.99 www.thinkgeek.com

94 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 www.shipmanagementinternational.comBOOKING FORM ONLINE NOW 5th International Ship Management Summit Shipping's New Era: WhoWho areare thethe newnew KingsKings ofof thethe Jungle?Jungle? Tuesday May 11th, 2010 at the Amathus Beach Hotel in Limassol Cyprus Pre-conference cocktail party Monday 10th 18.30-20.00 hosted by Videotel This one day shipowning & managing summit will plot how shipping will emerge out of this difficult recession and assess who the winners and losers will be. Speakers and delegates will be Presidents/CEOs of owning companies and managers as well as high level regulators and bankers

Confirmed speakers include: Dr Peter Swift, Intertanko - Chairman • Mariella Bottiglieri, Giuseppe Bottiglieri Shipping Company SpA • Jan Morten Eskilt, OSM Group Ltd • Michael Bodouroglou, Paragon Shipping • Robert Houston, MidEast Shipmanagement • Ted Petropoulos, Petrofin • Roberto Giorgi, President InterManager, V Ships • Capt Kuba Szymanski, Secretary General, InterManager • Jörg Molzahn, LISCR (Deutschland) GmbH • Plus others to be announced

Sanctioned & supported by:

Event Sponsored by:

For more details on the conference and/or sponsorship opportunities please contact the conference team: Tel +44 (0)1296 682061/682051 or fax +44 (0)1296 682156 or email: [email protected] SMI’s guide to the Arts, review Entertainment and the Media events

RIO DE JANEIRO CARNIVAL (MARDI GRAS) BRAZIL

Known around the world as the most elaborate, exotic street carnival extravaganza, Rio has mutated the tradi- tional religious festival known as Mardi Gras, French for ‘Fat Tuesday’ or what is commonly known as ‘Shrove Tuesday’ or ‘Pancake Day’ in Christian nations. Originally a time for feasting and using up any remaining cooking fat, dairy products and eggs before the abstemious 40 day fasting period of Lent sets underway the following day, Rio takes the celebrations to another plain of profligacy between the 12th and 16th of February this year. Having now become an illustrious competition between the various districts of the city, or ‘Samba Schools’, the carnival sees which top 14 can parade the loudest, most over-the-top series of floats carrying bands and accompanied alongside by dancers and performers. A multi-coloured phenomenon and global attraction, this should be on every life experience tick-list.

dining

SKETCH, WEST END, LONDON Frequented by the world’s most exclusive, this venue has an A-list celebrity résumé more extensive (or expensive?) than its cocktail list, which, by contemporary standards, is also pretty comprehensive, not to mention exotic. With an array of different rooms for varying functions, Sketch is an entertaining art gallery of the chicest kind. Deserving museum or exhibition status, the spaceship-esque circular bar with egg ‘pod’ toilet cubicles above transport you to another planet, let alone another place. The Gallery, the central dining area, is crisp, luxurious and white, coloured with edgy digital video art projected onto the walls. For flavour-seekers, the gastronomy is modern and simplistically light, from lobster bisque or chicory veloutê, to head and tongue of veal, organic salmon or deer fillet. Wading deeper into the swathes of exclusivity, the Lecture Room & Library is where the culmination of Pierre Gagnaire’s Paris expertise is showcased, the Michelin-starred menu being described as a ‘culinary journey’ of sophistication, elegance and refinery. Sketch is a movement of luxury-seekers and indulgence-dwellers; an à la mode necessity.

96 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 dining VERRE HILTON DUBAI CREEK HOTEL, DUBAI

Gordon Ramsay’s rampant success in the UK led him to invest in a Dubai-venture, and Verre has certainly not let him down. Enjoyed by the city’s business-class clients, the venue has gained a reputation for being one of the finest restaurants in Dubai. With understated contemporary minimalism, the sharp lines and clean palette of the restaurant are complimented by subtle backlit wall panels. Slick service and a flavour-ridden array of complimentary appetisers add to the requisite Ramsayan luxe. Mains include salmon with a fricassee of peas and horseradish or poached chicken on a bed of tagliatelle, with signature dishes such as ravioli of lobster, all typically embracing European magnificence in the midst of the mirage of Dubai. Although you could virtually bankrupt yourself ordering wine in Dubai, at Verre, you could speed up the process by indulging in the Latour 1982 for £2,924 or the Petrus 1975 for £4,723, but for the impeccably sedate ambience, it’s a business lunch venue worth its status. entertainment - DVD DISTRICT 9 Stripped down to its bare rudiments, this provocative science fiction drama is doused in a considerably generous dosing of explosive warfare, losing direction in the dust clouds billowed up in the wake of its trigger-happy, bomb-blowing tangent. Set in Johannesburg, South Africa, District 9 is a dishevelled shantytown inhabited by a race of stranded extrater- restrials, who, after having established themselves on planet Earth some years ago after initial acceptance from humans, are now subjected to hostility and extradition. While a simultaneous exploitation effort goes on in the scientific realm, a DNA-altering substance instigates the metamorphosis of a bureaucrat into one of the creatures. After being forced to go on the run to evade probing scientists, he unites with the extraterrestrials as they conspire in a surreptitious escape from Earth. Nuance is lost to numbing violence as seamless special-effects set the principal undertone of the film, but never- theless, a reality-distracter with a vague timbre of meaning. 2012 The past 12 months have been pretty epic in the cinematic empire, but if it’s a sordid sucking on the luminous Hollywood nectar of action you’re after, then this will definitely hit the apocalyptic spot. As a scientific discovery of shifting continental plates gives way to the harrowing realisation of the planet’s imminent destruction, there is, in typical American-hero style, one man who makes a desperate bid for global safety. While virtually the entire population is wiped out in a breathtaking eruption of visual effects, the ground swallows up entire countries in one lava-riddled gulp narrowly missing the conqueror of tectonic forces, who escapes on a helicopter in a sweeping display of sweat-inducing heroism and ‘just in time’ panic. Spattered with a few A-listers, it’s certainly watchable, but unfortunately if the visual feast were a cholesterol- clogging reality, the absolute glut of cheese would soon finish you off.

BY THE PEOPLE - THE ELECTION OF BARACK OBAMA A pivotal year for American history, the election and inauguration of Barack Obama in 2009 saw millions of people worldwide stop and pay attention to a new leader who, staggeringly, seemed to obtain respect and adulation almost instantaneously. Yet while global media coverage hasn’t since taken a breath in tracking his every word and movement, few have witnessed his unguarded moments prior to the first momentous greeting to the nation. This revealing footage documents his journey to the White House, with interviews and candid moments with family, senior campaign staff, volunteers, reporters, supporters and even opponents. An insightful and informative backdrop to Obama’s legacy.

books THE SHIPS ATLAS - 13TH EDITION Mapping out new improvements and updates, the most recognised comprehensive marine atlas available to the maritime industry recently released its 13th Edition with the inclusion of extensive enhancements, making the desktop companion even more indispensable. Shipping reference at its most stylish, The Ships Atlas, in colourful hardback, features the further addition of 600 ports, new detailed map insets of popular locations and extensive revisions to dry dock, and distance table information. The latest amendments on topical subjects are also depicted in themed maps, including Global Piracy Incidents, MARPOL 73/78 (including latest updates), Sensitive Sea Areas, International Load Lines and Areas, Standard Time Zones, International Navigating Conditions, World Political, Ocean Currents, Global Wind Patterns and Global Distribution of Major Diseases.

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 97 review

books by Margie Collins MADOFF MENS REA AND OTHER PEOPLE’S MONEY

MADOFF: THE MAN WHO STOLE admit to everything he was charged with, including securities fraud, mail fraud, wire fraud, money laundering, making false statements, and £65 BILLION perjury...even though investigators suspected that his wife, his brother By Erin Arvedlund and other relatives and top lieutenants helped to carry it out,” Arvedlund writes. Penguin £9.99 Before US Court Judge Denny Chin, in a Manhattan courthouse, on March 12, 2009, Madoff allocuted: “When I began my Ponzi scheme, I MADOFF WITH THE MONEY believed it would end shortly and I would be able to extricate myself and my clients from the scheme. I am here today to accept responsi- By Jerry Oppenheimer bility for my crimes by pleading guilty...I always knew this day would Wiley £16.99 come. I never invested the money. I deposited it into a Chase Manhattan bank.” In interviews with regulators and prosecutors, he said it was “amazing” he hadn’t been caught earlier. “I wish they caught me six BETRAYAL: THE LIFE AND LIES years ago, eight years ago,” he said. And then, schtum: he has since OF MADOFF remained as Trappist in his silence as a Cistercian monk. His guilty plea, and sentence, were abjectly scant comfort to his By Andrew Kirtzman countless victims – widows, oligarchs, pension funds, charitable HarperCollins £11.04 foundations, investment funds, the great and the good of American and European Jewish communities, his own surrogate fathers, closest friends, family members – who may have wanted to rend him, piece by MADOFF’S OTHER SECRET piece, as the extent of his crime and moral turpitude became known. By Sheryl Weinstein High-profile victims included Steven Spielberg, Kevin Bacon, the St Martin’s Press £11.44 property billionaire and publisher Mort Zuckerman, and Elie Wiesel, the Holocaust survivor and Nobel Peace Prize winner, who bitterly describes Madoff as “a liar, thief and a scoundrel.” Thanks to Madoff and his Ponzi scheme, reputations have been Charles Ponzi was an Italian immigrant who swindled unsuspecting traduced and sullied; lives ruined; homes and entire life savings lost; people out of more than $1m in the summer of 1920 by persuading businesses destroyed; several people had been driven to suicide. French them to invest in his company. In the classic pyramid business model, financier Rene Thierry Magon de la Villehuchet, who invested $1.4bn he paid out impressive returns, in the beginning, to a handful of people with Madoff, took sleeping pills and slashed his arm with a box cutter. – the early investors. But that income was derived from new investors. In his suicide note, he wrote: “If you ruin your friends, your clients, you Segue to the present day. In the annals of history, nothing like this have to face the consequences.” comes close to being the biggest, most heinous of frauds. As he, “May Satan grow a fourth mouth where Bernard L. Madoff Prisoner 61727-054, serves an implausible 150-year sentence as guest deserves to spend the rest of eternity,” a victim fulminated. “What of a US federal correctional facility in Butner, North Carolina, there is Hitler didn’t finish, he did!” These are just two of the tamer execrations. no proof, as Nietzche said, that the truth – when and if it is ever revealed For victims who face stupendous ruin, the aftermath has been – will be very interesting. You couldn’t apply oceans of perfume to this described as “a branch of living hell”; a new caste of people has very specific, particular midden. emerged out of the ashes of this financial conflagration – the formerly Erin Arvedlund, a business reporter who writes for The Wall Street astoundingly wealthy and the newly needy; the Madoffed poor. Journal, makes a very good attempt in ‘The Man Who Stole...’ to Bernard Lawrence Madoff, 71, was born in Queens, New York, to answer the questions: Where is the money? Why did investors – moguls Ralph and Sylvia, children of Jewish immigrants from Austria, Poland and titans of industry, heads of multi-billion-pound charitable founda- and Romania. He married Ruth, whose father Saul Alpern, Arvedlund tions and hedge funds, and wealthy celebrities – put all their financial believes, masterminded Madoff’s original fund-raising business model: eggs into one basket? Who helped him commit the fraud? Arvedlund promise 20% returns and bring in more and more investors. With the was one of the first to try to blow the whistle on Madoff when, in 2001, $5,000 he had saved up from his jobs as a lifeguard and installer of she wrote a probing article in Barron’s, an American financial weekly sprinkler systems, Madoff started his investment business and never for ‘independent-minded investors’. She could not understand, she said looked back. It was, effectively, a family business; his brother Peter was – and nor did her Wall Street contacts and sources – how he made the senior manager of the trading division; Ruth was bookkeeper; his sons money. Madoff was trading options and making big money consis- Mark and Andy, and his niece, also worked for the company. tently, successfully. In her largely unremarked upon ‘Don’t Ask Don’t Madoff promoted himself as one of the most powerful and Tell’ piece, she said she couldn’t comprehend the specious explanation respected men on Wall Street, who once served as chairman of the stock he gave of his financial-investment acumen. market NASDAQ. His investors were initially drawn from his father- “He pressured investors to never reveal they had money with him,” in-law’s friends and accounting clients. Soon after, members of country she wrote. “Bernie, as he was known to his investors, would manage clubs in the recreational playgrounds of the rich and famous in your money and promised a guaranteed 10%, even 12% or higher, Westchester, Aspen and Palm Beach were entrusting their money to annual return, as long as you didn’t ask any questions.” Her book Madoff. From there, an international clientele of movers and shakers, focuses on investors’ greed and gullibility and the financial regulators’ the socially and financially ambitious, with assets of billions of dollars egregious negligence. The $65bn cited in the book and news reports is under management, followed. People and foundations begged to part the sum which Madoff’s fictitious accounts had led his investors to with their money. Clients did very cursory or little – if any – due believe they had in the bank with him. diligence on Bernard L. Madoff Investment Securities. “Madoff had chosen to plead guilty and thus not to cooperate with People felt privileged to be admitted into Madoff’s exclusive and the government’s investigation or to indict anyone else in his crime...he famously secretive fund, even if the entry level was a multi-million-dollar was waiving his right to due process in a court of law. He would alone minimum. For nearly two decades, Madoff’s fund made usually

98 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 dependable 10% to 12% annual returns; investors received monthly state- An incredulous Squillari initially said: “It can’t be true. There must ments (printed on antiquated IBM computers, it was later disclosed). be some innocent explanation. It’s got to be a mistake...Quite a few “I set up appointments with senators, ambassadors, billionaires and people had to have been involved in the scheme. The scam was too international business leaders... lunches, dinners and board meetings massive and went on for too long for one person to manage it.” and benefits,” said Eleanor Squillari, Madoff’s secretary for over 25 In November 2009, 700 people packed into the New York years. “By 2005, Bernie and Ruth were on top of the world and had Sheraton, to buy a piece of history, as the auctioneers Gaston & begun spending money at a rate they never had before. They had four Sheehan conducted an auction of the Madoffs’ assets, which had been grand residences – the Manhattan [Upper East Side] penthouse, a seized by US marshals when their houses were confiscated. More than Montauk [Long Island], beach house, a $9.4m house in Palm Beach and a thousand people also bid online and by phone. The assets included a a three-bedroom apartment in a gated community in Cap d’Antibes Rolex Monoblocco (sold for $65,000) which, ironically, was also [South of France].” known as the ‘prisoner’s watch’ because Hans Wilsdorf, the owner of And live felicitously high on the hog they did, with a voracious Rolex, sold the watches on credit to British prisoners of war during appetite for luxe and volupte, rewarding themselves with head-spinning WWII, allowing them to pay for them when the war ended. Ruth’s sums of money requiring several commas. The Madoffs acquired Bull, Cartier diamond earrings ($140,000) and other pieces of jewellery a $7m yacht (in addition to the three they already owned); a $24m went. Madoff’s personalised New York Mets baseball jacket sold for Embraer Legacy jet; art and jewellery; Savile Row tailoring and $14,500. Among the 189 lots were office stationery, personalised Post- designer wardrobes. It notes ($100), duck decoys and shirts with the insignia of Madoff’s Squillari describes a generous side to her boss. “We all trusted yacht Bull. Some £600,000 – chump change, really – was raised for Bernie, confident that he would take care of us. If you got sick, your job victims. Some seasoned memorabilia buyers are said to be waiting for would be waiting for you when you came back. After an employee was locks of Madoff’s wavy hair to appear on auction sites, like eBay. It is killed in an accident, Bernie opened an educational fund for her grand- just a matter of time. children. If you were a long-time employee and had children in college, Ruth, 68, his wife of 50 years, cut a deal with prosecutors to keep they would come in and work in the summer and when they graduated, $2.5m in exchange for surrendering a claim to more than $80m of they could get a job at Madoff. If you got married, Bernie would pay assets. It was reported that she withdrew $15.5m from her Madoff the airfare for your honeymoon and in some instances he’d pay for the accounts in the weeks before their world imploded. Roundly vilified for whole honeymoon.” claiming innocence, she said: “Like everyone else, I feel betrayed and The company operated out of three floors of the iconic Lipstick confused. The man who committed this horrible fraud is not the man Building in central Manhattan: the 17th, from where the investment- whom I have known for all these years.” advisory business (the heart of the Ponzi scheme) operated; the 18th If Ruth had been unaware before now, that feeling of betrayal has and 19th, where the Madoffs worked, were prestige ‘show’ offices for recently been magnified, insult has been piled on her injury. Sheryl clients. His auditing firm, in the boonies outside New York City, Weinstein, former financial officer of Hadassah charitable foundation, consisted of two people working in a 13x18ft shoebox of an office. has revealed all – marital infidelities and amorous liaisons with Madoff Federal prosecutors have charged Madoff’s accountants with fraud; – in her book ‘Madoff’s Other Secret’. In his now notorious chat-up David Friehling was accused of ‘rubber stamping’ the accounts; he line, Madoff asked her: “Would you like to get together and discuss faces up to 105 years in jail. Two computer programmers were also investment strategies?” Her foundation invested some $40m in charged with assisting and abetting Madoff. If convicted of conspiracy, Madoff’s fund, including her own financial assets. On the morning after falsifying books and records, they each face 30 years in jail. When told their first sexual congress, Madoff greets her at breakfast, saying: “So they no longer wanted to lie for him, Madoff gave orders to pay the men now you know about me.” Weinstein writes: “I nearly choked on my “whatever they wanted to keep them happy”, including 25% pay rises and a $60,000 bonus for each of them. His chief lieutenant, Frank coffee. I knew exactly what he meant.” It turns out this “tuxedoed DiPascali, who ran the 17th floor business, has also been charged; he Taleban of Wall Street” has a very small penis. “We’re in our ‘60s,” she faces 125 years in prison. says, referring to herself and her husband. “This (her book) was the Madoff’s operation raised a few red flags; for years, there had been only thing I had to sell, and my only option.” doubts about his fund. Goldman Sachs, Credit Suisse and Societe- Madoff’s company had a London branch, in Mayfair, with share- Generale advised their private clients that Madoff was not on their list holder funds of £117m under management; this has recently been of broker dealers, they should steer well clear of him because there was formally placed into liquidation. Liquidators of the business reckon that no evidence to support that Madoff was investing any money. Harry the London office has potential liabilities of about £600m. American Markopolos, a fraud investigator, issued a letter to investors, in 2005, prosecutors claim that Madoff used the London office to “launder entitled ‘The World’s Biggest Hedge Fund is a Fraud’; he had been money as part of his Ponzi scheme” and that it was used as a “piggy warning the Securities and Exchange Commission (SEC) – the bank and conduit for Madoff to buy yachts and luxury cars for himself American financial regulator – for eight years that Madoff was running and his family.” Ruth received $2m in payments from Madoff UK less a Ponzi scheme. “I’ve found that whenever there is one cockroach in than a month before her husband confessed to his crime. plain sight, many more are lurking behind the corner out of plain view,” So, where is the money? he said. “The exact amount of actual money lost may never be known. The SEC did not spot the fraudulent scheme, in spite of numerous What we do know is that, for decades, Madoff looked his investors in red flags. From 1992 to 2008, the SEC was called in a number of times the eye with a smile, shook their hands and never showed any indication to investigate Madoff, but each time, they came up empty-handed. “If – let alone remorse – that he was robbing them blind...He stole people’s someone provides you with the wrong set of books, I don’t know how hard-earned savings, their futures, and their dreams by faking you find the real books,” Meagan Chung, SEC’s head of the New York investment returns under the cover of a legitimate Wall Street firm. And branch, said; she no longer works for the agency. when he was caught, there was little recourse for his victims, because When stock markets dived in the autumn of 2008, Madoff’s big by then, the money had disappeared. Such is the nature of the pyramid investors wanted out and demanded large redemptions of their funds. scheme,” wrote Arvedlund. If it’s too good to be true, it very likely is. He couldn’t honour the redemptions. On December 10, he confessed to Human beings prepared to be deluded and deceived; Olympian- his sons that the company was broke; his sons immediately reported sized hubris. Nothing, but nothing, stuns and stupefies like money – big him to the US Department of Justice. On December 11, he admitted to money. Maybe the account we’re all dying to read is the one Madoff FBI agents that his fund, into which some 13,500 investors and charities writes himself – if he ever surfaces again from the slimepool in which had put their money, was “one big lie.” he dunked himself. Beware: the fool may be parted with his money. ■

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I want it... and I want it NOW! (The Art and Craft of the Concierge)

aced with a vanity fair of amenities, valued guests of Hotel Rey Juan Carlos 1 in Barcelona are offered a menu of nine types of “We play a kind of mission Fpillow, with varying degrees of firmness and various fillings. San Francisco’s Pan Pacific will go one better and make bespoke pillows to control role at Concierge guests’ specifications. If you’re a repeat guest of the swanky Beverly Hills Hotel, you’re handed a gold key – with your initials inscribed – and my staff are trained to that will open any room of your choice. If you’re potty about your pet dogs, Caliente Tropics Resort in Palm Springs will arrange a ‘canine- commitment ceremony’ for your amorous mutts. In full bridal wear, anticipate every requirement” they will be wed and, to spare your blushes, given a honeymoon suite. Life, said Albert Einstein, should be made simple, but not simpler. From the Latin ‘conserves’ (fellow slave), concierge is French for Time-poor, world-weary but luxury-wise glamazons, oilygarchs, pukka ‘keeper of the keys’. In the Middle Ages, they managed the castles of sahibs, reigning pashas, trust-fund babes and other masters of the European aristocrats and nobles, kept keys to castle rooms and ensured universe usually require a small army of people – chauffeur, amanu- that guests’ whims and wishes were met to guarantee a pleasant stay. ensis, major-domo – to render their lives a depth of sublime ease and At the dawn of the age of travel, the craft of the concierge comfort. Or they can just reach out for the steady and steadying hand of continued to be refined and improved. On October 6th, 1929, Ferdinand a world-class concierge. Gillet, head concierge of Hotel Scribe, Paris, presided over a meeting of

100 SHIP MANAGEMENT INTERNATIONAL ISSUE 23 JANUARY/FEBRUARY 2010 Enjoy the lifestyle with LIFESTYLE

Photo courtesy of The Dorchester, London booking a midnight appointment with the dentist. “Les Clefs leads to a special pride in wearing the keys on my lapel,” said Maurice Dancer, head concierge of The Pierre, the ultra- deluxe hotel on Manhattan’s Upper East Side. “Membership expands the sphere of support worldwide and affords opportunities for devel- opment as a professional concierge.” Dancer, who supervises a team of four multilingual concierges, once helped a distraught guest track down a bag of antique golf clubs the guest left behind in the boot of a taxi. A guest staying at the Royal Suite of London’s swish Lanesborough Hotel told the concierge he was holding a business meeting over a game of golf, which he never played before. So as not to appear a complete innocent on the fairways, he asked for miniature practice courses to be set up in his bedroom, sitting room, dining room and study. The hotel gamely obliged.

Michael deCozar, head hall porter, The Ritz London “Anything from shoelaces, drawing pins to a battleship; no request is too great”

“Concierges are well known for achieving the impossible,” said Archie Natividad, 29, assistant chief concierge of The Ritz-Carlton, Singapore, which is popular with hard-to-please businessmen who log thousands of air miles every year. “A very important, not to mention very difficult, businessman was furious at being mistakenly booked in economy; he wanted to fly business. All flights out of Singapore were fully booked, but we found him one and got his ticket upgraded. His return flight was more problematic, so we arranged for a private jet to fly him instead. He was truly wowed.” “I guess I’m a diva in many ways. I can be difficult and a little rigid chefs concierges of the city’s grandest hotels, to form Les Clefs d’Or about what I want,” said uber-diva Mariah Carey, who usually travels and make their services more indispensable to guests. with a 15-person retinue. For maximum privacy, Carey books all the Les Clefs d’Or, representing 50 countries and with just over 3,000 penthouses in the hotel she stays in. At London’s Claridge’s, she asked concierges, is a prestigious global fraternity ‘based on friendship for a £10,000 gym to be installed next to her suite. During another between members, assisting international travellers and tourists.’ A Les London visit, she asked for – and got given – a red carpet, lined with Clefs concierge is identified by a pair of crossed golden keys pinned to white candles, to be rolled out for her 2am arrival at the Baglioni Hotel his or her lapel, symbolising a “guaranteed quality of service.” off London’s Hyde Park, where she booked 15 rooms at a cost of “Earning the pin is no easy task. For starters, concierges must have £20,000 a night. Wherever she stays, she insists on her rooms at least five years’ experience and be nominated by two members. Tests maintaining rainforest-level humidity and 20 humidifiers around her make sure a candidate is worthy of the keys. A member might anony- bed to protect her voice. mously call with a question on the origins of a statue in Buenos Aires At The Dorchester where she recently stayed, Britney Spears or make obscure demands...Finally, the applicant is subjected to a board demanded a suite that had never, ever before been smoked in; flowers review,” wrote Christian Wright in Conde-Nast Traveler. she herself could arrange and Marilyn Monroe DVDs. The tests are not for shrinking violets, as they cover a multitude of “Part Merlin/part Houdini” – the best concierge is well-steeped in questions about the city in which the concierge is based, international the repertoire of ingenious and immediate responses to requests, to give cuisines and wines, airlines, restaurants, street smarts, mores and guests what they themselves never knew they wanted. They are multi- cultural differences, hiring a private jet at three in the morning, or tasking fix-it artists and miracle workers who hoover up information –

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Enjoy the lifestyle with LIFESTYLE

restaurants, shops, museums that can be cajoled into after-hours viewing, 24-hour banks – and on whom nothing is lost; who save guests a world of trouble, especially the well-pampered, affluent ones who suffer from an acute poverty of time, so they can bask in a stupor of happiness instead. They accomplish the nearly impossible, to soften life’s edges, and sweep away the dust of everyday life. Michael deCozar, 52, head hall porter at The Ritz London, is the doyen of concierges in the UK, whose personal contacts are legendary. The multilingual deCozar, a 37-year veteran of the hotel, manages 21 guest service staff, who field some 1,000 requests and calls a day, and who can deliver, deCozar says, “anything from shoelaces, drawing pins to a battleship; no request is too great.” A VIP guest told deCozar he usually spent Christmas day at Brighton beach, with a dip in the sea. He asked Michael to deliver to his bath, at The Ritz, two barrels of Brighton seawater. A page boy was despatched to Brighton and returned, to the guest’s delight, with enough seawater to fill his bath on Christmas morning. An Englishman living in the South of France asked deCozar for an open-top double-decker London bus to be delivered to his home, to serve as a bar in his garden. “We play a kind of mission- control role at Concierge and my staff are trained to anticipate every requirement and to exceed all expectations,” said deCozar, “You have to have good general knowledge – of nationalities and their cultures, your city – and specific knowledge of events and venues. Our guests are multiracial, so an open mind helps. Imagination is required to meet difficult demands. Patience and resourcefulness are crucial. You need a Rolodex of first-rate international contacts,” said Daniel Camargo-Scholz, 35, of London’s Hampshire & Leicester Square Hotel. A guest who relocated from London to America asked the concierge of a Hyde Park hotel to fetch his Jack Russell terrier and fly the mutt, on business, to Los Angeles. Jack Nargill, head concierge at D.C.’s Hay-Adam, was asked to fill a rock star’s suite with thousands Andy Davies head concierge at The Dorchester of dollars’ worth of white flowers. Shujaat Khan of Capital Hilton, in D.C., well remembers a brand-new mum, still breastfeeding, who was attending a meeting at the hotel. With her baby back home, she didn’t “Once you’re a concierge, it’s want to waste her milk. She asked the concierge for a room she could pump in, and her milk stored in the freezer until it could be FedEx’d, in for life; it’s in your blood” dry ice, to her baby. Couldn’t get a table for love or money at New York’s Per Se shirt kept coming out of his trousers when he was rocking onstage. We restaurant where world-renowned Chef Thomas Keller rules the roost? arranged for housekeeping to sew one of his shirts onto his underpants Attend the Oscars or Vanity Fair’s drop-dead gorgeous party? Left your so that his signature look wouldn’t be ruined by his onstage antics. He favourite lipstick or toothpaste at home? Book rock stars for your shindig? tells us it’s now his favourite stage shirt; never lets him down!” Romance your mistress with impossible-to-buy bangles and baubles? These concierges are polished, charming thoroughbreds, with the Confirm holidays and boarding schools for your brats? Your tirelessly cunning of the devil himself; masters of the elliptical. With their gimlet efficient concierge is the go-to person to satisfy almost all of your wishes. eyes, sharp hearing and acute powers of observation, they are scholars of human nature, critically attuned to nuances of class and social tribes. “Our guests are multiracial, so Soigné (soignée), their personalities are leavened by humour, droll amusement and generous portions of heart. an open mind helps. Imagination Lifestyle-management companies are concierges that manage ‘crises of wealth’ – e.g., access to flashbulb-radiant celebrity events is required to meet difficult which make good fodder for tabloids and grist for gossip mills, legal demands. Patience and resource- advice, best wines, builders and a gallimaufry of other demands. Ten was set up by its founder and chief executive, 39-year-old Alex fulness are crucial” Cheatle, 12 years ago, to deliver personal services to demanding members. Ten’s hubs – San Francisco, London and Hong Kong – are “You need to be especially discreet, as not all requests can be made staffed by highly trained experts. “We have experts on sports events; public knowledge!” said Alex Collins, 29, of Radisson Edwardian we’ve just put together our team of sports and South African specialists Hampshire Hotel. “At the height of the terror attacks a few years ago, a for the World Cup,” said Cheatle. “We employ car-industry veterans lot of our guests were completely panicked; it was a difficult time, who buy cars for our members. We source Hermes’ Birkin bags, for helping them to locate and contact their families. At the other end of the spectrum, I was asked to arrange for Jude Law to attend a guest’s which the waiting list stretches years; our 30 destination experts birthday party.” organise holidays.” “On very short notice,” said Camargo-Scholz, “a Scandinavian Ten will organise anything for its thousands of private, as well as guest asked me to book him a private jet to take him to a football match corporate, members who don’t have the time, inclination or expertise to in Wales, followed by dinner and an overnight stay in Paris. I booked organise themselves. “Our members are global in reach, affluent, 35 to 55 all three – the plane, the restaurant and a well-known hotel.” years of age and often live in more than one location across the year. It’s “I would always go the extra mile for guests,” said Natividad. important that our multilingual staff know their trade so they can give “You get to make a lot of people happy, and that’s always a pleasure,” said Andy Davies, 43, head concierge of London’s landmark advice to members – whether it’s entry to an exclusive club, restaurant Dorchester Hotel. “Nothing is impossible. We had a rock star staying table, hotel upgrade – as is the ability to have a peer relationship with with us who had a particular sartorial look. He was complaining that his members,” said Cheatle, who read philosophy at Oxford University.

JANUARY/FEBRUARY 2010 ISSUE 23 SHIP MANAGEMENT INTERNATIONAL 103 LIFESTYLE Enjoy the lifestyle with Photo courtesy of The Ritz, London

Ten has invested some £10m in recent years to grow the business and has just hired its 250th employee. “We never discuss individual members; discretion is paramount,” said Cheatle. “There is almost nothing we can’t add value to.” Ten charges members £300 a month for Archie Natividad, Ritz Carlton Singapore their VIP service; £150 a month for dedicated service. Coutts and Barclays offer Ten’s services on a complimentary basis as part of a package of banking products. “All flights out of Singapore The concierge company Quintessentially built a panic room for a security-conscious Russian member, and a secret Batman cage-style were fully booked, but we office for another member. A car was delivered to the door of a New York penthouse and 800 metres of indoor karting track laid down in the found him one and got his basement of a country house. “There’s less time for personal life these days. Clients expect concierge to book dinner, organise a babysitter, ticket upgraded. His return arrange a facial,” said Lucy Russell of Quintessentially. Alan Noone, head concierge at London’s elegant Berkeley Hotel, who was asked to organise with comet-like speed a wedding, complete flight was more problematic, with circus animals, said: “Excellent concierge services are part of the 5-star deluxe experience and don’t come at an additional price.” That’s so we arranged for a private jet as may be, but while concierge services are free, tipping is still an expected practice, said James Little of The Peninsula Beverly Hills. The to fly him instead. He was National Concierge Association of America recommends $5 to $20 per service rendered, such as obtaining hard-to-come-by theatre tickets. A truly wowed” $20 tip at the start of your stay in a hotel, and a tip at the end, will go a colleges; some have risen through the ranks by dint of hard work and long way towards ensuring you get the best service and the most out of ambition, and some – with great connections – network at social levels so your concierge. For the truly savvy traveller, a thank-you note is de high you need extra oxygen. But in making their craft their special art – rigueur. Some celebrated concierges receive not only tips, but are also with a fire of civility and extreme courtesy – truly accomplished concierges lavished with generous gifts and invitations to guests’ homes around the create the illusion that, however outrageous your demand – anywhere, world, all expenses paid. anyhow, at anytime – it’s all in a day’s meticulously rendered work. “Once Some act intuitively, others have been schooled in hotel-industry you’re a concierge, it’s for life; it’s in your blood,” said Davies. ■

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