50 Lucrative Lucre … a Ratings to Riches Story

THE MAGAZINE OF THE WORLD’S SHIPMANAGEMENT COMMUNITY ISSUE 4 NOV/DEC 2006

COVER STORY

50 Lucrative Lucre … a ratings to riches story

Are Filipino Captains really earning four times the salary of their Prime Minister and if so, how is this new found wealth affecting their lives?

6 STRAIGHT TALK SHIPMANAGEMENT FEATURES

NOTEBOOK 16 How I Work SMI talks to two industry 9 Pedersen swaps Thome for 13 Executive stress achievers and asks the question: How do you keep TESMA Wasting office time! up with the rigours of the Svein Pedersen has joined Eitzen shipping industry? 16 Maritime Services as President for 13 Dot com EMS Ship Management intrigue 21 Training for the on the P&I front task ahead 10 V.Ships to triple seafarer pool Insurers remain As Chief Executive Officer of non-plussed V.Ships’ Shipmanagement Company unveils plans to boost crew 16 numbers to 60,000 over P&I division, Bob Bishop is charged with steering an industry internet-based juggernaut. He spoke to Sean 10 Phew! What a relief! alternative Moloney about the challenges Professionalism and operational integrity ahead is alive and well in the V.Ships camp even 13 Suez Canal to expand if it does means losing an owners' fleet Egypt is planning to spend $1bn to expand 24 On My Mind 21 the Suez Canal by 2010, but analysts are Ole Stene is Managing 11 No ‘free lunch’ for IMO questioning its economic viability Director of Aboitiz Jebsen Bulk Transport Corporation The bunkering industry has reacted angrily 14 Box vessel calls top the rest and Chief Operating Officer to IMO’s decision to phase out residual of Jebsen Management AS. He fuels in an attempt to tackle the growing Container shipping proves its 10 year is also the newly appointed problem of ship emissions dominance President of InterManager 24

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 3 LETTERS DISPATCHES

20 Mailbox 50 Lucrative Lucre … a ratings to riches story Are Filipino Captains really earning four times the salary of their BUSINESS VIEWPOINT Prime Minister and if so, how is this new found wealth affecting their lives? Agents 26 - Swimming against the tide 54 A new kind of warfare By Emmanuel Vordonis The perennial issues of falling income due to downward pressure on New ships are coming onto the market: owners are taking deliv- agency fees and increasing workload, due to the agent’s enhanced role ery of huge fleets and in order for the ships to be staffed we’re in the exchange of information between the ship and shore, continue to going to get into warfare on prices and wage increases impact on the health of the port agency industry 56 A day in the mind of a PSC inspector Port state control detentions can put a black mark on a ship SPOTLIGHT operator's profit as well as its reputation. But are inspections really something to be feared? Andy Pierce joined a vessel inspection to 29 Teekay Shipping find out what today's inspectors are really looking for

BUSINESS OF SHIPPING TRADE ANALYSIS 30 Burning objectives Sulphur emissions are a hot topic, but the debate is set to continue 58 Dun & Bradstreet Country Riskline Report for SINGAPORE with increased scientific understanding and new ideas providing more questions than answers 72 Stripping-out one product from another With implementation of the revised MARPOL Annex II and IBC Code 76 AdHoc just weeks away, owners, operators, managers and charterers of prod- Digitally Exposed! ucts and chemical carriers should have got their act together by now Papalexis: getting intellectual Gun tottin' trainers end up in LIVE choppy water Sounding off 80 Objects of desire Things that make you go oooh! ISSA glitz in Singapore Hair Oil - Mopping-up! BOOK REVIEW 88 Solid outlook for bulkmarket optimists Analysis by Jarle Hammer, Shipping Adviser at Hammer Maritime 82 What I’m reading Strategies With Douglas Lang, MD, Anglo-Eastern (UK) plus reviews of England’s Mistress and Box Boats: The Story of Container Ships REGIONAL FOCUS NEWBUILDING 38 Cyprus - Striding for growth The admonishment of Turkey by Brussels in early November for 83 European and Asian newbuilding roundup failing to lift its ban on Cyprus-flagged ships was largely expected but will have been greeted with nothing more than passing interest in the corridors of power in Nicosia and the shipping offices in Limassol MARKET SECTOR

60 Hong Kong/Singapore 84 Bridge Systems - Offering the navigator a helping hand A force to be reckoned with Advances for bridge watchkeepers' technological and practical needs Despite soaring office rents and rising wages it is still business as usual for the LIFESTYLE shipmanagement industry in Hong Kong. And any attempt by Singapore to establish a position of strength in the tanker manage- 92 On the catwalk ment market will only go to underline the The Murcielago LP640 was already the fastest Lamborghini ever strength of the region in helping to dominate this market sector built. Now it has been given a professional make-over just in time for Christmas… 68 Anglo-Eastern - Singularly focussed While there are definite advantages to being large, it doesn't mean 94 Skiing in style companies like Anglo-Eastern are immune to the problems affecting Ski resorts the world over are heaving under the force of people but, the industry as Andy Pierce discovered, winter paradise is not too far away

4 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006

STRAIGHT TALK

Welcome to Ship Management International

November/December 2006 Issue No. 4

www.shipmanagementinternational.com The Shipping Business Magazine today’s owners and managers have been waiting for

Published by

Elaborate Communications Acorn Farm Business Centre Cublington Road, Wing, Leighton Buzzard, Bedfordshire LU7 0LB United Kingdom

Sales/Accounts +44 (0) 1296 682241/682051 Editorial +44 (0) 1296 682356 Long Live the King! Fax: +44 (0) 1296 682156 Email: [email protected]/[email protected] www.elabor8.co.uk never really thought that size mattered! cope with this extra business. After all, the scep- Ship Management International Editorial Board Indeed, there are those stalwarts who believe tics amongst us could be excused for clinging to Rajaish Bajpaee (Eurasia Group of Companies) that small really is beautiful because it pro- the notion that one of the main reasons shipown- Stephen Chapman (InterManager) I motes greater understanding of what you ers are interested in third party managers is Nigel Cleave (EPIC) have and what you can give. It is preferable to the because they believe they have the resources to Andreas Droussiotis (Hanseatic Shipping Company) existence of larger shipmanagement combines man and crew their ever expanding fleets. Dirk Fry (Columbia Ship Management) they say, because there is never any compromise But they don't! We all know the problems fac- Sean Moloney (Elaborate Communications) over personal service. The Customer is King and ing the crewing sector and if owners think a third Svein Pedersen (Thome Ship Management) we should be there 24/7, at the drop of a hat, to party ship manager can man his vessels with a Editorial Director: Sean Moloney tell him that in whatever way he wants telling. month's notice, without having to rob Peter to pay Assistant Editor: Andy Pierce The business ethics, I agree with. The cus- Paul, then he is largely mistaken. Many of the Technical Editor: David Tinsley tomer is always right and as a service industry largest and most respected ship managers have Advertisement Director: Jean Winfield third party managers should be mindful not only admitted such and have even turned down busi- Sales Manager: Mark Howe of his needs but of the needs of the customers he ness because they can't cope at such short notice. Sales Support: Martine Frost Research Manager: Roger Morley is trying to satisfy. But for the size issue: I am not So it is clear that crewing remains at the heart Accounts: Irene Morley so sure. of the expansionary thrust driving this industry Design & Layout: Phil Macaulay Because while I am constantly reminded about forward. But any quality third party manager Cover Photography: Martin Bou Mansour the need for personal service within the industry worth his salt knows this and will have surely Editorial contributors: and the downsides associated with the conse- taken it onboard as part of his overall strategy for The best and most informed writers currently serving quences of consolidation through mergers and growth. V.Ships have. They claim in this maga- the global shipmanagement and shipowning industry. acquisitions, the whole industry is besotted with zine that they have a strategy to near triple their ABC application approved March 2006 expansion. There is a determined effort by some seafarer pool to 60,000 by 2010 and they have Ship Management International is published six times of the smaller and medium-sized third party man- hired a head hunter to help them achieve this a year and is entirely devoted to reporting on the dynamic and diverse in-house and third party agers to take advantage of the growth in popular- goal. It would seem that the gloves are off in the shipmanagement industry. ity of their sector and grow their fleets exponen- fight for predominance. Subscriptions UK and ROW – 1 year: £85 ($153); 2 years: £160 ($288). tially. It is as if they are proud to be known as Whatever it says for the machinations between Download a subscription form from small enough to care and deliver but only as long the major players as far as the growth of managed www.shipmanagementinternational.com or as they are at the vanguard of a drive for growth. fleets and managed crewing pools is concerned, Send subscription enquiries and/or address I suppose it's not really being a small fish in a remains to be seen. What is clear is that the sea- corrections to: small sea but being a medium sized fish in an farer is now clearly king! Lets hope he doesn’t let Elaborate Communications, Acorn Farm Business ocean. this new found attraction and interest mask the Centre, Cublington Road, Wing, Leighton Buzzard, Bedfordshire LU7 0LB, United Kingdom. Oslo-based Barber Ship Management went reasons why he really joined this fine industry. Tel: +44 (0)1296 682051/682241/682403 public in the summer by claiming it wanted a

Printed in the UK by Cambrian Printers. Although every effort has 20% share of the global third party shipmanage- been made to ensure that the information contained in this publi- ment market by 2011. And a handful of compa- cation is correct, Elaborate Communications accepts no responsibility or liability for any inaccuracies that may occur or their con- nies we have spoken to at random, have sequences. The opinions expressed in this publication are not nec- announced restructuring plans that are part of a Sean Moloney essarily those of the publishers. All rights reserved. No part of this publication may be reproduced whole, or in part, stored in a general strategy to at least double their managed retrieval system or transmitted in any form or by any means without prior permission from Elaborate Communications. fleets within this period. So the race is on and, while the stakes might not be that high, the rewards are certainly worth investing for. But on the flip side, and there is always a flip Approved and Supported by side, how can we really expect the industry to

6 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006

NOTEBOOK SHIPMANAGEMENT NEWS AND REPORTS FROM AROUND THE WORLD

Pedersen swaps Thome for TESMA

party shipmanagement market. He will stream- line the operation of six offices in Europe, one in India and one in Singapore. TESMA is the world's third biggest chemical vessel owner with approximately 80 chemical carriers in addition to LPG and approx 30 vessels on third party ship management. A total of 120 vessels are managed with an additional 200 vessels on crew management. He will report to Annette Malm Justad who took over as CEO of Eitzen Maritime Services from April 1st this year. TESMA is the world's third biggest chemical vessel owner with approximately 80 chemical carriers in addition to LPG and approx 30 vessels on third party ship management. A total of 120 The Singaporean shipmanagement community a quality and well-connected operator in the vessels are managed with an has lost one of its staunchest leaders following shipmanagement sector. One other very large additional 200 vessels on crew the resignation of Svein Pedersen as Managing ship management competitor was known to be management Director of Thome Ship Management. interested in contacting him after hearing of his Confusion surrounded the reasons behind decision to leave Thome, SMI can reveal. She told SMI that growth was very much his decision to leave which was swift in its Pedersen will join TESMA during the first part of TESMA’s reorganisational plans at the nature but SMI can confirm that he has joined quarter of next year and will move to moment and that it wanted to “maintain a Eitzen Maritime Services as President for EMS Copenhagen with the task of spearheading its stronger position in the third party management Ship Management, a group more commonly drive to strengthen its position within the third sector.” She did not rule out TESMA acquiring known as TESMA. one of its competitors as part of its drive for TESMA's decision to snap up Pedersen is growth. “We want to be part of the consolida- something of a shrewd move as he is viewed as tion move,” she said. Svein Pedersen believes in the personal side SMI can confirm that Svein of shipmanagement and deems it important to Pedersen has joined Eitzen be approachable. He recently told SMI: “I Maritime Services as President believe in people and the empowerment of people, that’s very important for me. There are so for EMS Ship Management, a many different aspects to this industry and group that is more commonly there is a need for so much focus so if you known as TESMA. He will be believe you can do it all by yourself then I think moving to Denmark as a result you have to rethink.” ■

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 9 NOTEBOOK

V.Ships to triple seafarer pool by 2010

V.Ships has nailed its crew development plans for accountancy, why wouldn’t you apply the management offices this year, and we have firmly to the expansionary mast by announc- same facilities and procedures for crew. Their opened up in areas that we weren’t in before ing a strategy to near triple its global seafarer sole job is to increase the number of seafarers such as Myanmar, so it’s more of the same in pool within the next three years and it has available to V Ships. terms of the locations, but it is more focused hired a head hunter to spearhead this growth. He dismissed any accusation that V.Ships within those locations. This is where the The world’s largest ship manager currently may ultimately be adding to the poaching recruitment drive is helping.” boasts a seafarer pool of 23,500 but confirmed problem gripping the industry. He added: “I think people are attracted to it has set a target of 60,000 seafarers by 2010, “If you look at the issue of poaching I don’t work for V.Ships for all the reasons we well to be achieved by recruiting from inside as think that can ever be seriously levelled at understand ourselves. But if you just take the well as outside the industry. V.Ships. We have masters who have been with LNG sector alone, 160 plus ships are poised to Bob Bishop, V.Ships Shipmanagement us for a number of years but who have been come into the market, so consider the sea staff Chief Executive Officer, told SMI: “One of poached by companies prepared to upset the that will be required for these ships. the things we did last year was to employ a whole process across the industry for their “Sadly a lot of people haven’t given serious head hunter and just as you have head hunters own short-term needs. And this is in actual thought to this, they have just assumed they fact, making the problem even will be there. Given the volume required, we worse going forward, because are one of the few companies which can offer increasingly you are seeing the sea- the security of supply because there is an farers earn more than Prime inevitable flow of people from dry cargo to Ministers of their country,” he said. tankers, to LPG and from LPG to LNG. And V.Ships will also add to its one can bury one’s head in the sand and pre- growing seafarer pool by tradition- tend it won’t happen and that people will stay al means. “We are going to source in their sectors, but the guy standing on the them from the usual sorts of places tanker sees what the LPG master is getting, that you would expect, but also who in turn sees what the LNG master is get- some new ones,” said Bob Bishop. ting and guess where they want to go,” he “We have opened five new crew stressed. ■ Phew! What a relief! he sigh of relief emanating from “V.Ships is a very V.Ships' Avenue de Fontvieille HQ sophisticated company must have been as loud as the and we have very old scrap T whoops and hollers coming from the vessels. But it wasn’t just board rooms of the Monaco ship manager's about price. It was very oil major clients: professionalism and opera- expensive, but technically tional integrity is alive and well in the we also had some argu- V.Ships camp even if it does means losing an ments,” he told the press. owners' fleet. This was a point echoed High costs and disputes over technical by a source very close to the deal who told the sizeable Bogazzi fleet as part of the issues were reported to be behind the deci- SMI: “It takes two to tango and putting the normal course of business, adding that sion by Italian ship owner Enrico Bogazzi to initial enthusiasm aside, you can't upgrade “every year we have 150-160 ships coming drop V.Ships as manager of around 50 ves- things that are scrap, for nothing. You need a in and a churn of about 100 ships for various sels, almost exactly a year after the arrange- commitment to finish the project.” reasons.” He claimed that even with the ment began. However, it appears the split Sources close to Bogazzi say the first 10 loss of Bogazzi, the company’s roughly 900- may have been forced through an alleged ships under crew and technical management vessel fleet was still 43 ships up on last reluctance by V.Ships to reduce the level of were handed back to Bogazzi in September. year. management service it offered. The process will continue at around 10 ships Still on the V.Ships front, the much publi- Mr Bogazzi has a very close relationship per month for practical purposes, with expec- cised decision by major investor Close with V.Ships supremo Tullio Biggi: indeed tations that the entire fleet will be brought Brothers to realise its gains in the Monaco- they went to school together and have back under Bogazzi's management by the end based ship manager is unlikely to be conclud- seen each other's careers flourish since. So it of the year. ed until next Spring, we hear. And there will was hardly surprising that V.Ships ended up V.Ships President Roberto Giorgi said the be reluctance from other shareholders deter- managing the Bogazzi fleet. two companies had “different strategies and mined to 'stay for the ride' to accept any new While the divorce was very amicable, priorities”, while declining further comment investor with less than acceptable motives. Enrico Bogazzi was reported as saying, iron- on the reasons behind Bogazzi’s decision. Likely interested parties? Another equity ically, “we were not happy. Probably.” He also sought to downplay the loss of investor! Let's see! ■

10 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 NOTEBOOK

No ‘free lunch’ for IMO

The bunkering industry has reacted angrily to an IMO decision to press forward with the idea to phase out residual fuels in an attempt to tackle the growing problem of ship emissions. Don Gregory, Chairman of the International Bunker Industry Association, argued that in the complex world surrounding emissions “there was no such thing as a free lunch”, and stressed that technology may offer a better alternative. “We do recognise with reducing emissions that one way to help is to have a lower sulphur fuel. But it isn’t the only solution and you can “We do recognise with reducing emissions that one way to help is get better results by doing it in different ways. to have a lower sulphur fuel. But it Would you close down coal fired power isn’t the only solution and you can stations just because they have sulphur get better results by doing it in in them and they produce soot? No, you say they different ways” should have a stack treatment system to catch the soot and wash out the sulphur,” he reasoned. The move to adopt distillates in favour of serious health implications. Despite the criticism Intertanko - which put residual fuel was one of four proposals “From a greenhouse gas point of view it has forward the proposal - believes it is making an approved by the Bulk Liquids and Gasses serious implications,” he said. “Running on important contribution to the debate surround- (BLG) Subcommittee as IMO seeks to update diesel fuel will produce more fine particulates, ing the Annex VI update. Marpol Annex VI regulations. and it is generally agreed by the experts that it is “Very little is controlled or regulated on the Don Gregory said it would not be possible the fine particles that get ingested into your lungs fuel that the ship is using,” said Dragos Rauta, for refineries to convert all of the existing and cause cancer. It’s the fine particles that cause Intertanko Technical Director. “We feel that residual fuels to distillates, stressing such the majority of the damage and if we go over to greener fuel specifications can’t be ignored – a move could aid global warming and have diesel we will be producing more of them.” it has to be part of the discussion.” ■

NOTEBOOK

According to a survey by America Online and social diary, employers should leave their EXECUTIVE Salary.com, the average worker admits to frit- prized employee alone for two minutes a day to tering away 2.09 hours per eight-hour working realise this need. day doing nothing that could benefit his As for arriving late and going home early, STRESS employer. And this does not include lunch that is the least of your problems. times and scheduled tea breaks. Employees say they're not always to blame Top of the list at 44.7% of the time wasted is for this wasted time. As many as 33.2% of surfing the internet for personal gain, followed respondents cited lack of work as their biggest by socialising with co-workers at a worrying reason for wasting time, while 23.4% said they 23.4%. The average worker feels it important wasted time at work because they believe they to spend at least nine minutes a day conducting were underpaid. personal business, while they will spend at Sole employees even divulged other ways least half that amount just staring into space. they wasted their time at work, such as primp- If you see your salesman speeding off in his ing in the bathroom mirror and having running car, mid-morning, don't worry, he is just exer- races up the staircase with co-workers. One cising his personally-believed right to spend respondent said: “The hurried walk around the 3.1% of his wasted time at work running per- office is not only a great way to look like you sonal errands. As for planning his personal are busy, but also a good cardio exercise.” ■

Dot com intrigue on the P&I front Suez Canal to

The insurance market appeared confused and expand non-plussed about an innovative new project EGYPT is planning to spend $1bn to expand which it is claimed will revolutionise the marine the Suez Canal by 2010, but analysts are insurance market by among other things using questioning the economic viability of this the powers of the internet to capture some of the grand project, latest news reports have sug- market share currently dominated by the P&I gested. Club establishment. The Suez Canal Authority is contemplat- The joint Hull and P&I venture, which is ing making this investment to attract more understood to be nearing finalisation under the tanker and container traffic as vessels on banner of Vega Marine, is reported to be the long haul are getting larger. Under the plans brainchild of Terje Adolfsen, a former insurance the canal would be deepened by 10 ft to han- manager with Bergsen Marine, and Kare dle ships with a 72-ft draught and widened Franseth, who held a similar position with people with extensive market knowledge and by 17% to around 365 m. Torvald Klaveness. experience. If anybody can pull it off it is them.” “We want to deepen and widen the canal When questioned by SMI, Terje Adolfsen A fixed premium scheme offering wealthy and create more bypasses to handle future added to the confusion by confirming that Vega operators a reported $1bn cover is said to be the huge tankers,” Admiral Ahmed Fadel, chair- Marine had already been established and he was fundamental aim of the P&I branch of the busi- man of the Suez Canal Authority reportedly involved in it but added: “We are working on ness but only if they are prepared to risk big told Bloomberg. various ideas in various directions in insurance deductibles. It follows swiftly on the heels of the deci- activities but there is a very long way to go. I am Clear details have yet to emerge, with key sion by Panama to expand the size of the not denying anything but I cannot confirm any- players in the insurance market seemingly igno- Panama Canal. Some 78% Panamanians thing either at this stage.” rant to the plans of the Norwegian pair, but voted in October to support a $5.25bn project Somewhat reassuringly, he did promise fur- stressing a desire to know more. to build a third set of locks capable of han- ther information when something was 'for- The news will come as a blow to existing dling 12,000 teu containerships, suezmax malised'. Previous reports have suggested the P&I players who are already under pressure fol- tankers and capesize bulkers. pair have big ideas to use the internet to change lowing accusations that smaller companies are The Suez Canal Authority is keen to the face of existing hull insurance practices. paying for the honour of sharing a Club with attract very large and ultra large crude carri- Bjørn Hildan Managing Director and CEO of some of the industry’s main players. ers that carry Middle East crude to Europe leading Norwegian company Bluewater “Those ship owners who make up the Clubs’ and the US. But with more Middle East Insurance revealed he was aware of market gos- boards of directors, and so set the level of crude cargoes going to Asia and the Sumed sip regarding the new company and stressed he increase, appear to have a tendency to avoid pipeline operating through Egypt carrying oil was very interested to see how the pair intended paying it themselves,” according to the annual to the Mediterranean, there may not be the to employ the internet as a means of doing busi- P&I report of the brokering group Tysers. demand from tanker markets for a wider ness. But as he opined, even in today’s technol- “If each Club’s largest 20 members all paid canal, said analysts. ogy-obsessed world previous attempts by hull the premium required by their records, Clubs Others suggested the canal’s widening insurers to utilise the internet have been blighted would return underwriting surpluses and gener- could benefit container shipping better, with technical and communication difficulties. al increases of the magnitude seen in recent allowing larger ships to got through taking “I know the individuals concerned,” Bjorn years would be consigned to history,” the report Asian cargo to Europe. ■ Hildan said. “They are both very professional concluded. ■

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 13 NOTEBOOK

Box vessel calls top the rest

Container shipping has been the star performer 152,305 in 1995. This compared with the the 10 years to 161,904 in 2005, Lloyd's MIU of the past decade with the increase in vessel tanker sector which was the second best per- said. Vessel calls by general cargo ships fell by calls by container ships at the world's major former at 284,869 vessel calls, some 56,402 just over 18,000 during the 10 year period to port destinations outstripping those of any calls more than was recorded a decade earlier. 424,442. other vessel type, SMI can reveal. The rise in passenger ship demand is also evi- A total of 1.61m vessel calls were made in According to data released from Lloyd's dent with 121,919 vessel calls made in 2005 the designated areas last year compared with MIU, there were 312,443 container ship calls against 74,399 in 1995. Dry cargo vessels also 1.23m 10 years ago, illustrating the growth in throughout the whole of last year against performed well, rising by 40,732 vessel calls in trade that has happened. ■

Vessel Calls By Area and Vessel Type 2005

Area Container Dry Bulk Gas Gen. Cargo Other Passenger Reefer RORO Tanker

Australasia 7062 10437 691 6561 2897 2106 650 4422 3730 Cent. America/Caribbean 11997 3189 1400 9752 6903 12541 2185 6780 8605 Far East 143773 48803 10718 117103 26512 10566 5993 20999 72305 Indian Subcontinent 23819 14900 3162 17333 3339 1551 1377 7083 29605 Med/BlackSea 33107 22056 7731 91097 6487 47409 4018 31583 45669 North America 21113 22103 1349 8138 6927 11530 1706 8468 27637 North Europe 49011 22523 12219 160542 41465 33802 8098 59042 78541 South America 18968 15228 2179 9813 2987 1887 3888 3335 14249 West Africa 3593 2565 467 4103 1103 527 1867 2444 4528

312443 161804 39916 424442 98620 121919 29782 144156 284869

Vessel Calls By Area and vessel Type 1995

Area Container Dry Bulk Gas Gen. Cargo Other Passenger Reefer RORO Tanker

Australasia 4394 8377 804 6710 1302 1171 1064 4899 3722 Cent. America/Caribbean 5701 2621 1466 11161 4021 9664 3181 7019 6931 Far East 66493 34186 8361 93534 5754 5673 6954 13619 45479 Indian Subcontinent 10774 9662 2063 21862 1840 2081 2151 5229 20770 Med/BlackSea 13335 15338 6835 82381 5417 35873 4156 24637 41140 North America 15282 16945 1030 11189 3166 4539 2236 7631 18668 North Europe 27578 21953 11058 194507 18948 13658 9631 41053 75628 South America 7412 10130 2173 15427 1562 1367 4738 3619 13218 West Africa 1336 1860 169 5809 369 373 874 1437 2911

152305 121072 33959 442580 42379 74399 34985 109143 228467

Source: Lloyd'sMIU (www.lloydsmiu.com)

14 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006

SHIPMANAGEMENT HOW I WORK How I

SMI talks to two industry achievers, and asks the question: How do they keep workup with the rigours of the shipping industry?

HARRY GILBERT Chairman, International Transport Intermediaries Club (ITIC), and former CEO of The Wallem Group, Hong Kong

“I have the interaction and the interests, but I can work from home if I wish. I can also work on my own interests, so it’s a good compromise as far as I’m concerned.”

Restoring classic cars and motorbikes in the idyllic Cheshire country- side is quite literally a world apart from the municipal hustle and bustle of Hong Kong. And when Harry Gilbert retired from Wallem, a life in rural England seemed like a dream come true. But after leaving the Wallem hot-seat, Harry soon missed the day-today contact with the industry he joined as a 16-year-old cadet. “When I was working full-time I didn’t think I would take up anything resem- bling full-time employment [after I retired]. But if you can only play golf on a Saturday morning for all of your working life and then somebody says: ‘You can play golf seven days a week’, you get fed up with playing golf after a couple of weeks,” he explained. “It isn’t quite as easy to switch off as one imagines.” Now, four years after returning home to England, Harry remains on the board of Wallem UK. He is also chairman of ITIC and CEO of the diversified marine service company the Charente Group. “I think I have the best of both worlds now,” he said. “I have the interaction and the interests, but I can work from home if I wish. I can also work on my own interests, so it’s a good compromise as far as I’m concerned.” However, Harry admits working from home creates its own challenges. “You have to be very organised. You have to devote a certain the pressure is certainly less. This gives [me] the opportunity to think a amount of the day to the job. It’s very easy to get sidetracked and not lot more – to actually consider where the company should be going. I do that, but I find I’m spending quite a bit of time visiting various have the opportunity to take a distant, ‘helicopter view’ and make more offices. My week is largely split between working a couple of days at measured and considered decisions,” he said. home and visiting one of the offices. Although I could be away for the Harry has a chief operating officer at Charente who runs the compa- entire week if we have board and management meetings scheduled.” ny on a day-to-day basis. However, his role is still hands-on and Despite the challenge of balancing his various commitments, Harry requires him to travel in the UK and abroad. Fortunately, his business is sure working from home helps him when making key decisions. trips are less rushed than they once were allowing him to mix business “When I was with Wallem, I was responsible, on a day-to-day basis, for with a little pleasure. “My family has now grown up and flown the nest, the entire organisation. The pressures were more intense. Now, because so my wife can often come with me. If I have a couple of days in I have this overarching responsibility, but not on a 'day-to-day sitting London, she can come down with me and flex the credit card while I’m behind the desk moving the paperwork backwards and forwards basis', doing what I need to do,” he joked.

16 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 HOW I WORK SHIPMANAGEMENT

office to store technical drawings. “I have got a 1954 MG TF which is in need of restoration. But about 18 months ago I brought an AC Cobra about 18 months ago I brought an AC replica, which I’m generally refurbishing and am busy transplanting a Cobra“ replica, which I’m generally new engine and gear box into. That’s the winter project in the hope of refurbishing and am busy transplanting getting it on the road again for next spring,” Harry explained. “It’s nice to be able to pick those interests up and put them down a new engine and gear box into. That’s again. This is what I like about the mixture of work and retirement. the winter project After a few days working underneath a car, to put a suit on again and ” travel up to Liverpool makes a pleasant change.”

“It wasn’t too bad in Hong Kong, my wife could come with me, but often I was in Taiwan for a day, then Tokyo the following day, and perhaps, Shanghai on the way back. Living out of a suitcase and checking into a hotel at five at night, and checking out again to catch a flight at five in the morning doesn’t thrill my wife a great deal,” he continued. Having spent his working life travelling the world - first onboard ships and later as a leading ship management figure - Harry is well placed to comment on the issues facing the industry today. “Legislation continues to pile up. I am concerned for the seafarers themselves, CAPTAIN CHARLES VANDERPERRE because I feel disappointed at the potential amount of litigation that can Founder and Chairman, Univan Ship Management come down on the shoulders of the seafarer - nine times out of 10 through no fault of their own. The move towards the criminalisation of “Some people like to play golf or other sports, but I like the office. the seafarer is a very, very bad one. It puts more and more pressure on I like the job. This keeps me young even though I’m 84.” people. “I think people don’t look at seafaring as a long-term career any- Captain Charles Vanderperre recently fuelled speculation that he was more. They see it as a chance to make money for a few years and then set to retire when he revealed he had sold a 50% stake in his company leave, which I think is causing its own problems in the industry.” When to the Clipper Group. Now those same tongues are set to be wagging on questioned, he agreed that a lot of things had changed the perception of overdrive following his announcement that current Univan Chief a life at sea, “but obviously ships are not getting as much time in port Accountant Mr AS Maniyar has been chosen as heir to the Univan as the used to, therefore the senior officers in particular don’t get the Crown. opportunity to have a break. There are many more inspections and there However, Captain Vanderperre has ruled out the prospect of retire- is more work to do in port, in a shorter amount of time. The potential ment, and is determined to continue in his current position as one of the litigation against the seafarer is a problem that has to be taken into con- ship management industry’s most colourful characters. Ship manage- sideration. All of these pressures build up – especially in this day and ments’ very own Godfather still has no plans to voluntarily step-down. age where going away from home, particularly when you have a wife “There will be no change to what I do at the moment,” Captain and family, is a difficult thing to do.” Vanderperre said when questioned whether his role would change in Fortunately for Harry Gilbert, ‘retirement’ has allowed him time wake of the Clipper deal. “There are no plans to retire – work is my away from shipping to dedicate to the other love of his life – restoring pleasure. I have a friend in Holland who was asked when she was plan- classic cars and motorbikes. One of his first jobs when he returned to ning to retire. She said: ‘it depends on God’. But it also depends on peo- England was to build a workshop in his garden, complete with a small ple who work with you and their motivation.” This is not a surprising stance for a man who leaves home at 6:45 in the morning and walks the 45 minute journey to work, six days a week, Life essentials and only allows himself an extra 30 minutes in bed on a Sunday before heading to the office. Car(s): A 1954 MG TF, an AC Cobra (Replica) and “I like the job, it keeps me young – it’s as simple as that,” Captain seven classic motorcycles “in need of tender Vanderperre explained. “If you are active all your life and you retire, loving care” then I should say frankly, you die. There is a banker in Belgium who House(s): Family home in Cheshire, UK said: ‘The older I get the more work becomes the most important thing Fact: During his time at Denholm, Harry went from in my life – even more important than love.’ As long as you can walk Chief Engineer to Chief Executive in 11 years and talk there is a job for you somewhere, I believe. “I started Univan in 1973 when I was already in my 50s. At that ➩

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 17

HOW I WORK SHIPMANAGEMENT

Staff are the most important component of“ a successful company. I think if you have 600 ships in your management you can’t know all of the people, and it is the people who define the company” time I was too old. You don’t start a company as a 51-year-old, you start a company when you are much younger – 40 or 45. But it has been in existence now for nearly 33 years, and I’m still quite busy keeping young. “Some people like to play golf or other sports, but I like the office. I like the job. This keeps me young even though I’m 84. I come into the with all your masters and it becomes like a family concern. But if there office every morning at 7:30am and I’m still around at 8:00pm. At are 600 ships, it becomes like a factory. lunch time I take a one hour rest. I have a sofa in the office where I can “When you have 60 ships in my opinion you can still keep control. get some peace.” But if you have 600, even if you have a brilliant memory you can’t However, Captain Vanderperre is concerned that there are very few remember all of the people – it is not possible. And you have 600 young people who share his enthusiasm for the shipping industry. Captains and 600 Chief Engineers and so on. If you have that many “Sadly, less people are attracted into shipping these days as young peo- people you have no time to discuss with them what is on the table ple want more of a social life. There are many jobs available ashore. An every day.” ■ engineer can work in the refinery very easily, because a refinery is almost the same as a ship. There is a boiler, some pumps and so on. So the chief engineer can become a superintendent at a refinery. There are Life essentials many opportunities ashore and the young people prefer a family life to going away. Car(s): A 1974 yellow Rolls Royce, used for company “It is more and more difficult to get good crew. Even today, after business, and a 1994 BMW 325 for 'Sunday driving' using Indian nationals for so long, we are having difficulties recruiting. There are so many jobs available and the loyalty is not there anymore. House(s): A flat over-looking Victoria Harbour, Hong Kong For a few hundred dollars they go from one manager to another. Fact: Captain Vanderperre started a charity “There is a big problem with crew poaching and I think it is the mis- foundation undertaking charity work in Thailand take of the owners. Mr Cockcroft is in charge of the ITF and even though he is very powerful, he is one man and he can’t impose everything he wants. There are 5,000 owners and they will never agree,” Captain Vanderperre stressed. “Staff are the most important component of a successful company. I think if you have 600 ships in your management you can’t know all of the people, and it is the people who define the company. In my opinion, the ideal size is of a ship management company is 60 ships – no more” (Univan presently controls 41 ships). “You can then keep in contact

Capt Charles Vanderperre’s treasured 1974 Rolls is used mostly for company business and is almost as old as the company he founded

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 19 LETTERS MAILBOX

POWERFUL INTERPLAY

SIR. Like industry awards, I’m not a big fan of round table discus- (FreeSeas) and Kassiotis (Omega), who have successfully used the sions. Somehow they appear very stilted and not particularly insight- public equity markets to build up a fleet of over 100 ships between ful. However, I must congratulate Sean Moloney of Ship them, is certainly worth a read. Management International for changing my opinion. In your last edi- The topics covered were familiar ones but nonetheless interesting, tion (September/ October) you presented the findings of a recent dis- particularly given the polite interplay between the ‘players’. The rel- cussion between some of the leading lights of the younger Greek ative merits of young versus old ships, the appetite for risk among shipping generation. The write up of the discussion between messrs equity investors and the increasingly regulated markets all get an air- Pistiolis (Top), Vafias (Stealth), Molaris (Quintana), Varouxakis ing in a frank manner. Certainly no punches are pulled when the subject of outsourcing is introduced.. The opinions aired are mixed, ranging from some general concerns about handing over an older vessel to a third party manager and reservations about using a generalist manager like V.Ships as opposed to a smaller specialist, to the benefits which companies like Frontline enjoy from outsourcing. These include the manager’s ability to find crew now that traditional sources have dried up, the need to import expertise and the flexibility it can bring strategically. What does come across stronger than anything else is the confidence of this new generation which has made an important mark in shipping in such a small space of time. Certainly, these guys have strong opinions and whether you agree with them or not they are worth listening to.

Malcolm Willingale Group Services Director, V.Holdings

NOT WHAT IT SAYS ON THE TIN?

SIR. In relation to your edition of September/October of 2006 (Issue 3), regarding the news on page 51 “Not what it says on the tin”. As an owner of a chemical blender company located in Brazil - a “third world country” - I must declare my unpleasantness against this text. My company, as an ISO 9001:2000 certified company, has controlled and doc- umented processes to ensure that what it produces is exactly what is AGREED and REQUESTED by the Customer (major chemical companies world-wide). Our company prays for the quality and takes it to the same level that serious “first world” companies do. We use equipment of the latest technology to blend the chemicals, maybe better than the one that is made at the “main” plant. This way it is not right to generalise all third world blenders due to a few cowboy companies. I believe that the responsibility for this problem lies with the “first world” chemical companies who are giving opportunity for the cowboys to work. The best solution to avoid this type of worry is for these companies, at the time of signing contracts with any blender from the “third world”, to perform a local inspection on the facilities and assure that they will be dealing with a trustful company. I would like to Editor's reply have my view forwarded to your magazine readers; this type of irrespon- The intention of the article was to raise awareness surrounding the sible text can directly affect serious companies like ours. existence of so-called cowboy blenders and not to label all third world companies as cowboys. As you quite rightly say, something needs to be Fabio Rodrigues done to ensure high standards are met by all. DSF Services and Ship Supplier, Santos, Brazil

20 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 FOCUS SHIPMANAGEMENT Training for the task ahead By Sean Moloney

have always been fascinated with people in authority. Not because I crave such status, although my friends would probably disagree, but I find them interesting. I suppose understanding how they got to where they are and how they run their lives to ensure they maintain their positions in the peck- Iing order is what really fascinates. One thing is for sure, the trappings and symbols of power and authority do nothing for me. I am not the slightest bit interested in owning a Ferrari or a racehorse. Quite the opposite, give me a car that gets me from A to B and a good round of golf and I am happy. Bob Bishop is a little like me – only a little, mind. He likes to golf and he likes to drive an old car too – old estate car, although he is probably not too happy talking about it. With two children and two dogs to ferry around he can be excused for harking back to his old cargo officer days. He is also single minded and focused – after all, he completed the gru- elling shipping industry-sponsored bike race 'Tour Pour La Mer' last year despite only jumping on a bike previously for fun! As far as being a person of authority, as Chief Executive Officer of V.Ships’

Ask any owner to name a third party ship manager and they will probably say V. Ships because it is acknowledged by most as the market leader in terms of size and influence. And with 900 ships reputed to be under its full or partial management, the company is a force to be reckoned with

Shipmanagement division he cer- put themselves slightly at arms length. The second factor is crewing. If tainly commands a great deal of you have 50 ships in a newbuilding programme you probably haven’t respect. got the crew to man them. “I trained regularly for the race “I think if owners are managing all their ships in-house, just as they and I have continued bike riding might have a crew problem, they will have a shore staff problem too. since. Although I have bought And, depending where they are located, that can be quite costly. myself something rather more Because of these reasons, we are now starting to see significant out- expensive than I was riding regu- sourcing by people who wouldn’t have generally considered third party larly before I went on the bike ride. management in the past,” he opined. So I do try and continue to cycle Ask any owner to name a third party ship manager and they will although Glasgow in the autumn is probably say V. Ships because it is acknowledged by most as the mar- not conducive to nipping out on your bike before going to work.” ket leader in terms of size and influence. And with an interest in 900 Smiling, he continues: “I’m lucky as there is a cycle track on an old ships the company is a force to be reckoned with. But, as Bob Bishop converted railway line about half a mile from my house so I can have a contends, while it is large it does have a significant client base with good blast up and down there if I want to and as a result, I do feel more 60% of its clients owning between one and three ships. invigorated when I then get into the office. But putting on your cycling “Don’t forget that there really are very few independent ship man- gear just after getting out of bed can be a little tough sometimes,” he said. agers like V.Ships around. I think this is an important issue for some- I first really got to know Bob Bishop when he left his post as Marine body considering outsourcing, because we all know that a manager that Director of Intertanko to join the Glasgow-based shipmanagement team is not truly independent will put the best crew on his own ships.” at Acomarit under the stewardship of Peter Cooney. He soon became a Quality is a buzz word in the shipmanagement industry at the crucial member of the enlarged ship management team when Acomarit moment and companies like V.Ships are tending to veer towards a sec- merged with V.Ships and now heads up V.Ship’s shipmanagement oper- tor of the market that is embracing high quality. But, according to Bob ations, albeit still from his Glasgow base. Bishop, there is a practical reason for this. He is a staunch believer in the effectiveness of third party shipman- “By and large the more problematic ships tend to have other prob- agement and believes the sector has a strong future ahead even if there lems associated with them like lack of funding which means that they are only really a few managers actually managing ships in a quality require more management time in dealing with suppliers etc. Whereas way. His words, not mine. in many ways, it is an easier proposition to manage quality tonnage in “I think third party ship management is becoming increasingly a quality way,” he added. attractive for large ship owners, for a number of reasons. One: The reg- Bob does raise a finger against those who believe that old vessels, ulatory regime that ship operators now operate in means that they can purely because of their age, can fall into this category of problematical ➩

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 21 SHIPMANAGEMENT FOCUS

By far the biggest issue affecting the shipping indus- determine the regulations. They are not about to give that up. They have try at the moment is crewing and companies like almost exhausted all the possibilities they have for the technical regula- V.Ships are looked upon as the main driving forces tion of ships, so increasingly we are seeing attention moving into the behind increasing the seafarer pool through more soft side starting with the ISM Code and the ISPS Code,” he added. This will increasingly lead to more regulation coming into the manage- focused recruitment, better retention and even ment office. more training By far the biggest issue affecting the shipping industry at the moment is crewing and companies like V.Ships are looked upon as the main vessels when it comes to their effective management. driving forces behind increasing the seafarer pool through more focused “Just because you have an old ship doesn’t mean you will automati- recruitment, better retention and even more training. cally have management problems with it. There is absolutely nothing “One of the advantages of V.Ships size is that we can give a career wrong with an older vessel that gets the attention it deserves. The prob- structure to people. We actively tell people that if they want to come to lem is when people feel the vessel is no longer worthwhile and that’s work for us, we can give them a career for life because, if you are fed dispiriting, both to the crew and the people managing the vessels. up of going to sea, there is always an office somewhere where you can “I think, in actual fact, that’s where ship managers have a skill set settle down to a shore-based job. Equally, we can attract people who are that may not be so readily found in an owners’ office. I think we are ambitious and enthusiastic. [We have] promotion prospects that are just very used to dealing with more elderly and problematic vessels; we not available in a smaller organisation. So, on that basis we can keep have the skills to do that. So in going forward, we are not necessarily people that might otherwise be gone,” he stressed. looking for a fleet of less than five-years-old, we are looking across the V.Ships currently boasts a seafarer-pool of 23,500 seafarers but range, but what we are looking for are clients who share our vision of according to Bob Bishop the company has set itself a target of increas- operating at the quality end of the market,” he said. ing this to 60,000 by 2010 – a daunting task by anyone’s standards. This As the drive for quality in the industry intensifies, there are many in near tripling of its ship-based workforce will be achieved by the tradi- the industry who believe this will accelerate the attraction of the quali- tional recruitment and training methods as well as normal human ty third party manager. After all, a quality reputation can mean the difference between successful oil major vettings or poor port state control detentions records. Bob Bishop continued: “If you take tankers: wet, LPG and all the rest of it, I think there is a drive towards quality operation which has just gone up a gear as TMSA has come in, or as the cogence of quality and robust ship management is better understood by the likes of EMSA. Getting approval for a vessel means you have to be right on top of your game. “We are getting audited all the time. We have even got an office set aside for the auditors. We are being audited by oil majors, we are being audited by class, we are getting audited by flag states, we are getting audited by owners’ financial people, so there is always somebody in auditing us. “There are two things I would say about regulation: one is that the IMO has meetings 25 weeks a year, 160+ nations come to London and

22 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 FOCUS SHIPMANAGEMENT

If you take tankers: wet, LPG and all the rest of it, I think that there is a drive towards quality operation which has just gone up a gear as TMSA has come in, or as the cogence of quality and robust ship management is better understood by the likes of EMSA

worse going forward, because increasingly you are seeing the seafarers earn more than Prime Minister of their country,” said Bob Bishop. “With that sort of salary differential they don’t need to stay at sea for very long, they can come ashore and buy a hotel. So they are lost to the industry and these people who are playing the high salaries, coinciden- tally, don’t appear to have the regime to develop their own sea staff. “At V.Ships we hold the power and the means to encourage our seafarers to stay. It’s not just about money, although we need to be there or there abouts; there are other features like job security, which is also very resource practices of advertising and recruiting for existing talent with- important,” he added. in the industry. According to Bob Bishop, V.Ships takes its training responsibilities “One of the things we did last year was to employ a head hunter and very seriously. “We have 765 cadets currently being trained and we just as you have head hunters for accountancy, why wouldn’t you apply want to increase this number to 1,000 then eventually 2,000. So there the same facilities and procedures for crew. Their sole job is to increase is a huge influx of people coming into the industry but that alone the number of seafarers available to V Ships,” he said. doesn’t get us to our goal of 60,000 seafarers. That is why we have But is this not adding to the whole issue of poaching? employed these people out there to encourage people to take up “If you look at the issue of poaching I don’t think that can ever be available positions.” seriously levelled at V.Ships. We have masters who have been with us Having spent two hours talking to Bob Bishop I realised that perhaps for a number of years who have been poached by companies who are the reason why people like him are respected is because they are able to prepared to upset the whole process across the industry for their own set themselves tough targets and have the presence and determination to short-term needs. And this is in actual fact making the problem even make them happen. ■ SHIPMANAGEMENT ON MY MIND ONMYMIND Ole B. Stene

Ole Stene is Managing Director of Aboitiz Jebsen Bulk Transport Corporation and Chief Operating Officer of Jebsen Management AS. He is also the newly appointed President of InterManager, the trade Association for in-house and third party ship managers. A graduate of the University of Bergen Law School, he also holds a commercial degree from the Ant. Johannessen Handelsskole in Bergen as well as a postgraduate degree in building and construction. He lists Alternate Member of Germanischer Lloyd's Asian Committee; Member of Lloyd's Register's Asia Shipowners' Committee; ex-member of the Skuld Committee and ex-member of the Board of Bergen Hull Club among the past and present positions he has held

You have just started a two-year-term as InterManager The strategy over the next two years will President. What is your strategy for the association and how would you like to see it develop under your leadership? be to build the powerbase of InterManager The strategic goal of InterManager is quite clear: to make it the unques- and to involve it in all issues of relevance tioned and unchallenged representative body or reference for all for the profession. We will achieve this involved in the quality operation, management and crewing of ships. We want to make InterManager an association so powerful as to have through the systematic increase of its the ability to influence the decisions that are relevant to the industry, its membership of the association standards and the conditions of work for the people it employs. We are opening InterManager to ALL people involved in the opera- don't want InterManager to be totally synonymous with KPIs or vice tion, management and crewing of ships, meaning shipowners/operators, versa as there are a number of other important issues we need to in-house managers as well as third party managers, i.e. technical man- become involved in. agers as well as crewing managers, because the issues facing the ship A huge challenge for the future is the recruitment and competence of operators is the same. The strategy over the next two years will be to cadets and crew coming into the industry. We do know from statistics - build the powerbase of InterManager and to involve it in all issues of depending on how much you believe in statistics – that there is a lack of relevance to the profession. We will achieve this through the systemat- trained officers qualified to meet the national fleet and if we do not do ic increase of its membership of the association. All people of good will something there will be a huge undersupply of officers in the future. It is and quality will be welcomed, because the more members we have the clear that there needs to be much closer co-operation between the crew better we can defend our association. manager, the ship manager and the ship owner on this issue. This systematic search for new members will require some resource, but with the full support of our members, we will reach our goals. But But is the shipping industry undergoing change? at the same time we have to make sure we serve our members' needs by I believe it is, in the sense that it’s more likely a supply chain manage- understanding their needs and responding to them. This will be ment scenario where the ship is part of a delivery chain, a production achieved through systematic discussions with them about issues such as chain. If part of the chain breaks down that will hurt the whole supply crew shortages, the image of the industry and lobbying relevant parties chain and that means that the crew and we as managers have to under- to defend whatever shipmanagement cases need defending. stand what the requirement is from the ship owners when it comes to competence of the crew. The master manages the running of the ship What is the big issue facing the industry at the moment? but how can he be a manager or director of a ship if he doesn’t under- KPIs as we know are an important issue facing ship managers today and stand how each individual ship owner prefers to do business. The crew InterManager has been, and will continue to be, at the vanguard of this onboard has to understand what will happen if I don’t manage the ship drive for a pan-industry set of measurable KPIs for the industry. But I the way my customer, the owner, wants me to.

24 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 ON MY MIND SHIPMANAGEMENT

“Are you concerned that the level of competency onboard ships is not up to the standard it should be?” “Well that’s what you see in a lot of trades now because together with the ship owners we have not been clever enough to foresee the requirements coming Qa through with respect to training and competency.”

beginning to require difference competencies than were there before such as leadership and management skills.

Are you concerned that the level of competency onboard ships is not up to the standard it should be? Well that’s what you see in a lot of trades now because together with the ship owners we have not been clever enough to foresee the requirements coming through with respect to training and competency. Ships today are worth $80m or $100m+. If you build a factory ashore for that kind of money you will be dead sure that the people you are employing will be trained to be able to manage the factory well. But because we have this strange scenario in shipping where you have the signing on/signing off system for seaborne staff we are deal- So do you think that the onboard management team has to ing with a different set of challenges. We have to focus on building fully embrace the needs, wishes and desires of the owner and up loyality and developing closer co-operation between us as suppli- of his customer? ers of services together with our customers, the ship owners, to really I think we have to accept that the most important people in a shipping get the people to understand where they affect the system. ■ company are the crew. I don’t think we should forget that we are supporting staff. The guys onboard a ship are meeting the problems, The guys onboard a ship are meeting they’re meeting the customers first and they’re meeting a lot of challenges that they have to solve there and then. the problems, they’re meeting the cus- We are there to support them so we have to build up self confidence tomersfirst and they’re meeting a lot of in the officers so they have the support and understand what they have to do to solve this problem there and then and not to forget to ask ques- challenges that they have to solve there tions. So in addition to the technical competences of the officers, we are and then. We are here to support them

SEPTEMBER/OCTOBERNOVEMBER/DECEMBER 2006 2006 ISSUE ISSUE 3 4 SHIPSHIPMANAGEMENTMANAGEMENTINTERNATIONALINTERNATIONAL 25 BUSINESS VIEWPOINT AGENTS Swimming against the tide

he perennial issues of falling income due to downward pressure on agency fees and increasing workload, due to the agent’s enhanced role in the exchange of information between the ship T and shore, continue to impact on the health of the port agency industry. So significant is the situation, believes Jonathan Williams, General Secretary of The Federation of National Associations of Ship Brokers and Agents (FONASBA), that intense competition within the industry is forcing agents to offer ever-lower fees in order to secure business and so rates are being driven further down. “Fees have now reached the levels at which agents find it increasingly difficult to provide the required level of resources, to maintain infrastructure and to provide for the future,” he said. “The future of the agency industry is also threatened by the extremely low profile of the industry, the anti- social hours that agency staff are required to keep and With the introduction of the ISPS Code, the European competition from other industries,” he warned. ship-generated waste disposal directive and the US 24 hour With the introduction of the ISPS Code, the European Advance Cargo Declaration Rule, as well as other proposed ship-generated waste disposal directive and the US 24 measures, most of which are security related, agents are hour Advance Cargo Declaration Rule, as well as other proposed measures, most of which are security related, becoming ever more involved in the exchange of information agents are becoming ever more involved in the exchange between the ship and shore of information between the ship and shore. Significant amounts of data now require to be requested, collected, collated and passed on to the correct recipients with a high degree of accu- “While a dedicated agent will only work for one line, the independent racy and in most cases within very tight deadlines. The agency communi- agent, who relies for his income on a commission from the line, may be ty has absorbed and carries out these additional tasks with equanimity but more active in seeking, and more competitive in securing, business than it is a further service that the agent is required to provide to his principals an inhouse agent securing business from the line itself. This process tends, but in most cases does not get paid for. however to by cyclical. In a number of cases lines, burdened with all the The issue of fees and remuneration was a point recently echoed by costs of running their own operations, have closed their own offices and Peter Titchener, Secretary General of the Multiport Ship Agencies have returned to using an independent agent,” he stressed. Network, who was quoted as claiming that all agents continue to see The problems this creates can be significant with key staff being downward pressure on fees and commissions, despite the boom in ship- headhunted by shipping lines and locally-based members of the workforce ping that has been enjoyed in all sectors. losing their jobs. The choice between a line opening up its own agency There is also a trend, he claimed, for principals in the liner business to network or using independent agents is influenced by a number of factors set up their own regional and local offices. “We are seeing instances where that are individual to its own requirements, the size of its business or they begin to regret the extent of such offices when they realise they have the area in which it is operating so there are plusses and minuses on taken on direct fixed costs, whereas had they used a regional office work- both sides. ing with independent agents they would have had variable costs, and in According to Christer Sjodoff, Regional Director of the global agency most cases, better local market knowledge,” he was reported as saying. operation Gulf Agency Company, the sector is very fragmented. We are Jonathan Williams cited the container industry as central in the grow- among the top three agents in the world when it comes to vessel calls and ing issue of consolidation in the agency sector. we handle between 33,000 and 35,000 port calls a year. The top three “Almost inevitably when two container lines merge, there is a corre- agents put together probably only account for between 6%-8% of the total sponding consolidation of agents and in many cases one agent loses out. number of port calls in the world. So the biggest competitors are The merits of dedicated, usually line-owned, agents compared to inde- not among the top three, the biggest competitors are actually the smaller pendent agents have been argued for many years and there is no set answer players,” her added. to which is best. “But serious ship owners will want to deal with an agent who has good

26 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 AGENTS BUSINESS VIEWPOINT

not for cargo operations but for the other owner-related matters: that is why we see synergies between our logistics set up and our role as a shipping agent,” he added. “When you look at the make up of our operating income you’ll find that 45% of that is today made up from logistic business, 11% is what we term as marine services, the operation of crew boats, supply boats, tugs, barges and then the balance is 44% made up of ship agency services,” said Chris Steibelt, Director of Logistics at GAC marine Logistics. “As a shipping agency part of the function is to clear spares and put them on board the vessel. As we received what we felt were very poorly managed freight movements we said we should have a logistics capability. We questioned why we weren't harnessing that capability and putting it together with our ship agency business to offer our clients a single point of contact for getting the spares from the origin through to delivered on board the vessel,” he said. ■

“Because Singapore is a transit point, there are a lot of ships coming by not for cargo operations but for the other owner-related matters: that is why we see synergies between our logistics set up and our role as a shipping agent” Ivo Verheyen cover; who has the right assurances in place and who employ well trained staff alongside quality systems,” emphasised Christer Sjodoff. “Our strategy as a major player in the agency market is to provide added value services for the ships berth side and custom clearance which means not only clearing the ship in and out but clearing the cargo in and out. Again I think we can take it all a lot further but we have to talk a lot more to the owners, operators, managers and port authorities to see how we can do more for them than we do today,” he said. Ivo Verheyen, Managing Director of GAC's Singapore office, agreed that a lot of the shipping lines were looking at their own agency set ups. “Serious ship owners will want to deal with As they set up regional offices there was a tendency to pull their own an agent who has good cover; who has the agency operations in-house, he stressed. “We are protected from that here in Singapore as we have a very strong right assurances in place and who employ focus on supply services that are related to the needs of the owner, such as well trained staff alongside quality systems” ship supplies to crew changes to delivery of spare parts and bringing superintendents on board etc,” he added. Christer Sjodoff “Because Singapore is a transit point, there are a lot of ships coming by

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 27

Teekay Shipping

ecognised as an international leader in energy shipping, Teekay has recently expanded into the LNG sector and undertaken a major relocation programme to establish a plat- FRANKLYSPEAKING R form for future growth. The fresh activity, which was encouraged by customer feedback, saw three of the company’s conventional ship teams move in order to encourage interaction between the teams and their customers; and help the company establish a stronger presence in regions with large pools of skilled marine personnel. The multi-functional teams, who are responsible for the day-to-day running of Teekay’s conventional vessels, are viewed as the heart of Teekay’s operations. Three ship teams have relocated to Glasgow, Houston and Singapore. The Glasgow team overseas the fleet in the Atlantic and the Mediterranean, Houston is responsible for the fleet in the US Gulf and Singapore manages the fleet in the Indo-Pacific region. David Robinson, Vice President, Fleet Operations said: “This is the start of a new era for us. We have evolved into a global player in several different markets. In addition to bringing ship teams closer to their fleet and to customers, the regionalisation is a key component of Teekay’s growth strategy. By taking our ship teams into different regions we continue to establish ourselves as a global organisation John Adams with a regional, customer focused operating bases.” Managing Director, Teekay Marine Services This year has certainly been an active one for Teekay, which has been involved in the energy sector since it was established in 1973. In February 2006 it announced an agreement with PGS Production What do you think is the answer to the industry’s crewing AS, a subsidiary of Petroleum Geo-Services ASA, to develop solu- problems? tions through floating production storage and offloading units. I think companies need to have a vision. We need to have a five Teekay Shipping transports more than 10% of the world’s seaborne year, or more likely a ten year plan, looking at the business in the oil and boasts a fleet of more than 145 tankers. The recent move into longer term. We have to continue to invest in training and moni- the lucrative LNG sector came through the company’s publicly-listed tor the demographics of the industry – being sure to focus on subsidiary, Teekay LNG Partners L.P. where we are currently recruiting while assessing where that may With offices in 17 countries, and employing more than 5,100 be in the future and investing accordingly. seaborne and shore-based staff, Teekay provides a comprehensive set of services to the world’s oil and gas companies. It is the world leader What role can third party managers play in tackling the in the shuttle tanker business, has one of the largest aframax and problem? suezmax fleets, and has an emerging product carrier division. ■ I think there are a lot of reputable ship managers and they still have a role to play for those owners who wish to outsource that part of their operation. But I can only speak for Teekay and we are owners and operators. We prefer to manage that risk internal- ly, in terms of an operational risk, and manage all of the human resource risks as well. Why do you prefer to keep things in-house instead of using a third party manager? It’s what we call the Operational Leadership Programme and this has helped build our brand – our reputation – to where it is today. I should explain to you that there are four business units at Teekay. One is focused on gas, one on shuttle tankers and offshore services and one on conventional tankers. The other business unit is what we call Teekay Marine Services. We regard Teekay Marine Services as the engine room of the company and one of its key responsibilities is retaining our high standards. By doing this we know what standards of performance we need, we know what the customers expect and therefore we have to manage that in-house.

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 29 Burning Objectives

ooking down on the industrial outline of the dock, the effects of sulphur emissions scar the sky. A yellow haze hangs in the warm Sulphur emissions are a morning air, casting a suffocating blanket across the roof tops of the town towards the ocean. But this is not a view of a third world hot topic, but the debate L metropolis, it is an every day occurrence in ports around the Baltic, the North Sea and other parts of the industrialised world as a direct is set to continue with result of sulphur emissions from ships. The inhalation of sulphur affects the human respiratory system, and it is well known that sulphur emissions cause acid rain. “Sulphur is in the increased scientific atmosphere in very limited quantities. It has a very high greenhouse factor, so a small quantity of sulphur is significant to the greenhouse effect,” understanding and new explained Vinchenzo Grecco, Technical Manager for the Marine Division of Greenpeace. “Ships burn hundreds of tonnes of residual fuel per day and ideas providing more some of this stuff is liquid asphalt, basically.” The need for the industry to address sulphur emissions was highlighted by Dr Johann Jungclaus of the Max-Planck-Instutut Für Mererologie. He questions than answers said: “We have to make an effort to reduce emissions. An 80% reduction in emissions would be required to halt global warming at two degrees from now. Ships contribute a lot of sulphur and nitrous oxide and these particles create changes in local climate. “The thing you have to understand with sulphur emissions is they are essentially regional problems,” added Robert Ashdown, Manager of Offshore and Environmental Affairs at the International Chamber of Shipping. “There are some very specific areas in the world that happen to have a sulphur problem. What we need to do is bring the sulphur limits down in these places, as we have with SECAs (Sulphur Emissions Control Areas) in the Baltic and the North Sea.” However, while tackling the problem on a regional scale appears to be scientifically sound, having different sulphur limits around the world caus- es many practical difficulties for ship owners and managers. And the problems are set to get worse as states prepare to follow California’s lead and introduce strict local limits on sulphur emissions which go beyond the 1.5% maximum sulphur content of marine bunker fuel oil required to operate in existing SECAs. “Different sulphur limits in different ports are potentially problematic as ships may have to carry three different fuel types, requiring separate tanks and piping, and the potential for human errors during fuel quality changes might also present a potential safety hazard,” explained Jean-Claude Sainlos, Director, Marine Environment Division, IMO Secretariat. And with the EU set to introduce 0.1% sulphur emissions at berth in 2010, the situation will only get worse, with some predicting as many as five or six fuel types will be required on a single vessel in the near future.

30 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 EMISSIONS BUSINESS OF SHIPPING

A simple solution? The use of a single type of distillate One solution may be to tackle sulphur emissions at the root cause. “Right now, I think the industry is tackling the issue in a lopsided way. fuel should simplify the monitoring The oil companies are interested in selling all the sediment and sludge that comes out of the refinery. They are trying to sell oil to the marine and regulation of fuel oil quality, industry that is almost like tar,” said Rajaish Bajpaee, President and and I am certain that such a move Group Managing Director of Eurasia. “Emissions are a by-product of the kind of fuel that you burn and the sulphur content is determined by would be wholeheartedly welcomed the quality of the fuel. The equipment onboard has to be modified to meet emissions standards, so we are dealing with the end outcome. But by ships’ crews and officers with a uniform standard on fuel I think the problem would be solved worldwide forever.” The cost differential between fuel oil and marine diesel currently makes it almost impossible for a company to run ships on low sulphur Mr Bajpaee’s proposal follows a recent suggestion by Intertanko that fuels at all times, as Wilh. Wilhelmsen discovered when they ran a sin- residual fuels should be phased out over the next few years in order to gle vessel only on marine diesel for a three year period. “Of course we curb sulphur emissions. Intertanko's wish, which was first announced achieved lots of good things,” said Lena Blomqvist, the company’s Vice by its Technical Director Dragos Rauta at a conference, is now one of President for the Environment. “We reduced emissions drastically. We the final four proposals to be reviewed by the IMO as it seeks to revise also decreased maintenance and reduced the use of lubrication oil. Marpol Annex VI by the end of next year. Everything was fantastic, but the costs grew too big for us to continue.” The IMO’s Jean-Claude Sainlos described the idea as very exciting However, Mr Bajpaee believes that if all ships were forced to use a and praised Intertanko for its contribution to a lively debate which single low sulphur fuel then there is every chance of sustained success. aimed to produce the best possible outcome. “The target is, in principle, “The legislation should come from a global body like the IMO, which obtainable but requires brave decisions. It may represent the only will first have the effect of ensuring that we have a global standard for ‘catch-all’ solution to significantly reduce the levels of most of the the marine industry. This would bring the emissions within the toler- harmful emissions contained in ships’ exhausts. It is certainly feasible ance levels, which is not only what the industry requires but also what for ships.” Jean-Claude Sainlos said. society requires as a matter of protecting our environment. It would also “The question is whether the petroleum industry is ready to invest in have the impact of [creating] a level playing field between different enhanced refinery capacity, and whether charterers of the world’s fleet states, different regional bodies, different countries and the companies are ready and able to pass the bill on to the consumers? The use of a sin- coming from those countries. If there is a global standard for marine gle type of distillate fuel should simplify the monitoring and regulation fuels then there is no competition,” he said. of fuel oil quality, and I am certain that such a move would be ➩

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EMISSIONS BUSINESS OF SHIPPING

wholeheartedly welcomed by ships’ crews and officers worldwide, as it and, to be honest, it certainly hasn’t been thought through properly by would make their jobs safer, easier and cleaner. Intertanko in terms of the implications for the economics, the supply, “I regard the proposal as one of the most important in the work on or the environmental benefits. reduction of air pollution from ships and it really shows that the ship- The International Chamber of Shipping is equally skeptical about the ping industry takes its corporate responsibility for the environment seri- proposal. “The refinery capacity is possibly the biggest obstacle. But ously. There is no doubt this could be a stepping stone toward the objec- there are an awful lot of modifications required for ships if they are to tive of minimising the negative effects that shipping may have on the stop burning residual fuels, and that’s certainly not possible by 2010,” global environment,” he added. Robert Ashdown stressed. “And also, by burning high sulphur fuels what Despite the IMO’s enthusiasm, there are many who feel the refiner- the shipping industry does very effectively is get rid of the waste products ies would be unable to meet the increased demand for low sulphur from the refinery process. If ships don’t burn sulphur fuel the problem fuels. “None of it has been thought through by Intertanko. They are doesn’t simply disappear, it has to be disposed of in another form. good at their headline grabbing news,” said Don Gregory, Chairman “What you also have to consider is that if you take the sulphur out of of the International Bunker Industry Association (IBIA) and fuel, Ok, you will reduce sulphur emissions, but the process will not Environment and Sustainability Director of BP Marine. “It’s definite- necessarily help global warming. The energy process that is used to ly not realistic at all. It won’t happen. It certainly doesn’t have the remove sulphur from residual fuels is such a high intensity operation support of the vast majority of stakeholders in the shipping industry that you will raise emissions from the refinery by 10% to 20% ➩

Not so fast

Reducing the operational speed of ships could allow owners to save Employing voyage management and speed management principals money off their fuel bills and cut emissions simultaneously, a leading it is estimated fuel consumption can be reduced by 10%. Although classification society has claimed. such measures are not suitable for compliance with existing SECA reg- The relationship between fuel efficiency and emissions varies ulations, which place a strict limit on the maximum sulphur content of between pollutants, but the relationship between fuel consumption and fuel, the potential exists for owners to save money and increase their sulphur emissions is directly proportional. environmental credentials, Dr Zabi Bazari, Principal Engineer, Marine In the California Long Beach area a scheme is already in place to Consultancy Service, Lloyd’s Register EMEA explained. offer financial incentives for vessels to slow down with the intention of The scheme is largely aimed at the passenger vessel sector, but Dr reducing emissions, and some believe that such schemes could be Bazari believes similar success could be achieved in the cargo industry effective elsewhere. if ships are managed in a very efficient way. “They can reduce the time Lloyd’s Register is promoting the concept of energy efficiency, spent in port, at anchorage or being idle for what ever reason and use whereby the mounting fuel prices and environmental concerns can be that time in order to keep the ship sailing, but at a slightly reduced overcome by energy management techniques. speed,” he said.

Could slowing down be the answer to tackling emissions?

Johan Roos with speed and slow steaming could dramatically reduce the total emissions. We have seen the introduction of voluntary speed reduc- Sustainability Director, Stenna Line tion programs along coastlines – or for ships arriving and leaving “Speed is of the essence. The slower you go the less emissions you certain ports – and the decreases in air emissions achieved, with rel- release per mile. But you have to consider the feasibility of actually ative modest speed reductions, are considerable. It is an interesting slowing down. Somewhere along the line there is a client who is paying idea but I think it probably needs a lot more detailed academic you to deliver the goods at a certain time. When you trade in more com- research.” plicated markets where you have lorries, airfreight and ships, speed is a very important part of the system. If you cut speed and try to find a mar- Lena Blomqvist ket for say half the speed we operate today then none of the other transport industries would employ us. Cutting speed is not possible today, Wilh. Wilhemsen – Vice President for the Environment even though objectively it would be beneficial to the environment.” “When the size of our vessels started to increase, we realised we were not using so much more fuel than for the smaller ships. Of course Jean-Claude Sainlos that means that the emissions such as sulphur reduce. That is a really good thing. Director, Marine Environment Division, IMO Secretariat “If you can use larger ships doing the same transport work then “Disregarding for a moment the financial and capacity issues related eventually you do the same transport work with one ship less. to building more and/or bigger ships, harmful emissions do increase Eventually you would reduce everything related to fuel.”

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Could sail-assisted propulsion be the answer to high fuel consumption? in terms of greenhouse gases. What you will effectively do is turn a regional sulphur problem into a global Co2 problem. Yes, diesel is more environmentally friendly, but you have to look at it holistically. The idea that just by stripping sulphur out you are going to make all emissions decrease is a fallacy,” Robert Ashdown added.

A radical approach With the IMO and other stakeholders apparently raising more questions than answers as they bid to meet sulphur emissions targets, there is a growing feeling in some circles that there is a need to move away from the rigid structure and thinking and embrace more radical and flexible solutions. Ship Emissions Abatement and Trading (SEAaT), a cross industry group consisting of ship owners, brokers, technology companies and fuel suppliers, was formed specifically to tackle the issue of ship emissions. “We want to have an array of options to choose from, depending where in the world we are operating and what the current situation is there,” explained Johan Roos, Stena Line Sustainability Director and member of the SEAaT Executive Committee. SEAaT proposes that ship to ship emissions transfer, measuring emissions compliance across a fleet of ships rather than on an individual basis, will not only prove more economical for ship owners, but also speed up the development of technology to tackle emissions problems. “In a very simple way it is about the innovation of new technology ➩

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and getting this technology onboard ship as quickly as possible. You with land-based industry. That would really be the leaver to give the need money for that and the support can be given by trading - money industry the momentum to make substantial change. Command and brings innovation” said Cor Noble, SEAaT Secretary General. control and the 1.5% limit doesn't give ship operators the incentive to In the scheme ships are placed in a compliance group under the do anything but comply exactly with 1.5000%. We want to see a sys- supervision of an independent superintendent. The ships report sailing tem of flexibility where the absolute benefit is to operators who do behaviour, location and emissions levels to the superintendent on a more, and we see emissions trading as the way out – at least for daily basis. The emissions of each ship are monitored by a tamper-proof European shipping,” he said. black-box in the stack, with some ships operating well below the SECA This pan-industry initiative and lateral thinking may represent the limit and others in the group above it. “The manager has to balance the best means of tackling sulphur emissions and clearing the skies above whole group, because they have to collectively be below the sulphur ports around the world. “Based on its inherent strength with initiatives emissions limit set by the government. The strength of this proposal is rather than constraints, emission trading has proven itself in other sec- that it can be audited very clearly,” Cor Noble explained. “Of course tors,” said Dan Sten Olsson, CEO of Stena Line. “Stena is a strong there must be an exchange of money as the polluter doesn’t get a free advocate of the development of a new framework that allows for ship ride - he has to help others be cleaner. So there is a transfer of money owners and land based industries to jointly find solutions that are effi- by certificates trading, and in a trading environment it doesn’t take long cient. Our ultimate goal is to leave no footprints in the wake of our ves- before an instrument gets a price.” sels, but in order to do that, we need non discriminatory tools that The results of an 11-month pilot study, involving seven companies reward those who care.” ■ and 58 ships, show that the ship to ship emissions transfer scheme has commercial potential. “The report suggested total savings of about 10% in total operating costs under certain conditions,” Cor Noble revealed. We are advocates of a trading “During the study the total savings through emissions trade equated to system where we are allowed to trade $10m compared to what would have been saved using only low sulphur fuels.” emissions with land based industry. Not content with this initial success, Johan Roos hopes to expand the scheme beyond the shipping industry by considering shipping as a That would really be the leaver to logistics and transport system. “We want to interlink the emissions give the industry the momentum to from shipping into the buyer, the industry if you will. We are advocates of a trading system where we are allowed to trade emissions make substantial change

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 37 REGIONAL FOCUS CYPRUS

Striving for growth Department of Merchant Shipping

he admonishment of Turkey by Brussels in early November CYPRUS for failing to lift its ban on Cyprus-flagged ships was largely expected but will have been greeted with nothing more Country Profile T than passing interest in the corridors of power in Nicosia and the shipping offices in Limassol. Geographic While Turkey's resistance to lifting its ban may threaten its future coordinates membership of the European Union, the fact that no progress has been 35 00 N, 33 00 E made on dismantling the long-standing blockade preventing Cyprus- Area flagged ships, and vessels of other flags which have called in Cyprus, total: 9,250 sq km (of which 3,355 sq km are in north Cyprus); from calling in Turkey means it is business as usual for the Cyprus ship- land: 9,240 sq km; water: 10 sq km ping industry as it works hard to stop the flow of vessels away from its Climate register and its shores as one of the world's predominant bases for third Temperate; Mediterranean with hot, dry summers and cool winters party ship management. According to Thomas Kazakos, Secretary General of the Cyprus Elevation extremes lowest point: Mediterranean Sea 0 m; highest point: Mount Shipping Council, the 120 member organisation set up to promote the Olympus 1,951 m interests of Cyprus Shipping and further the reputation of the Cyprus flag, the Turkish ban is not “a Cyprus/Turkey Turkey/Cyprus country Population 784,301 (July 2006 est.) problem but an EU shipping issue, not to say international issue”. For Cypriot companies the ban represents a restriction of trade, he Economic Overview added, but the key issue is that is creates unfair competition within the The Republic of Cyprus has a market economy dominated by the service sector, which accounts for 76% of GDP. Tourism and finan- European Union. “Cyprus is now the third largest fleet in Europe and cial services are the most important sectors; erratic growth rates the continents biggest ship management centre, so by depriving Cypriot over the past decade reflect the economy's reliance on tourism, shipping companies the same opportunities to trade and work within the which often fluctuates with political instability in the region and European Union let alone having to deal with the violation of basic economic conditions in Western Europe. Nevertheless, the economy grew a healthy 3.7% per year in 2004 and 2005, well above the principles within the established EU laws, consumer products at the end EU average. Cyprus joined the European Exchange Rate of the day will be higher because they won’t be able to get a competi- Mechanism (ERM2) in May 2005. The government has initiated an tive package which otherwise Cyprus would have been able to offer,” aggressive austerity program, which has cut the budget deficit to below 3% but continued fiscal discipline is necessary if Cyprus is he added. to meet its goal of adopting the euro on 1 January 2008. “We have streamlined and harmonised our legislation in line with the standards of the European Union, therefore we do not ask for any pref-

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Cyprus is a major centre for third party shipmanagement – it has been for many years: indeed, many of the world's major players have their headquarters on the island Department of Merchant Shipping erential treatment but what we ask is to be treated the same as everybody else because this embargo operates as an anticompetitive measure for Cyprus,” Mr Kazakos said. Serghios Serghiou, Director at the Department of Merchant Shipping, is more philosophical about the situation. “The Cyprus shipping sector experienced a spectacular growth over the last two decades with the shipmanagement sector and the Cyprus Ship Registry flourish- ing,” he added. “However, over the last three or four years the growth of the Cyprus Ship Registry has shown a slight downturn; partly due to the measures taken by the Cyprus Government to improve the quality of the Cyprus fleet and partly due to the Turkish embargo.” Seghiou is clear that listing of the Turkish ban will positively affect Cyprus shipping. “The illegal and discriminatory restrictive measures imposed by the Turkish Government on the Cyprus shipping industry since 1987 affects not only the Register of Cyprus Ships, but also the port industry, the shipmanagement sector, the professional services and generally the maritime cluster. “The Cyprus Government prepares factual reports with supporting evidence for each case where these restrictive measures are imposed and these are submitted to the European Commission as proof of Turkey´s violation of its Customs Union Treaty with the EU. Also the local shipping community works hard through international organisations such as the International Chamber of Shipping, International image of its fleet. However, as already mentioned, the loss of vessels Shipping Federation and the European Community Shipowners' from the flag is mainly attributed to the continuing Turkish restrictive Association (ECSA) to keep up the pressure on Turkey to lift the meas- measures on Cyprus flag vessels. ures.” Furthermore, a significant decrease of fishing vessels has also been He went on: “The lifting of the Turkish embargo will create observed, as a result of the EU policy to protect the marine environment favourable conditions for the expansion of the Cyprus Registry and the /fish stocks by restricting the number of fishing vessels registered and re-establishment of the island as a transhipment hub in the Eastern operating in the EU area and compensating fishing companies for with- Mediterranean. It will also restore free trade and fair competition and drawing and scrapping fishing vessels. . will be a positive step for the improvement of relations between the two Cyprus is a major centre for third party shipmanagement – it has countries.” been for many years: indeed, many of the world's major players have But the Department of Merchant Shipping and the Cyprus Shipping their headquarters on the island. But active marketing by national flags Council have their work cut out arresting the recent negative trend in such as in the UK and Germany through tonnage tax incentives and by the number of vessels registered in the Cyprus flag. This is partly due competing shipmanagement bases such as Singapore, hoping to attract to the stricter registration rules, the withdrawal of the single hull tankers shipmanagement expertise through the lure of tax advantages, has seen and the policy that the government of Cyprus has implemented in order Cyprus is stabilising rather than increasing the number of vessels man- to prevent the registration of substandard ships and to improve the aged from its shores. And it is a worrying trend, if not publicly for ➩

Capt Peter Bond known that three or five years ago, we’d have FRANKLYSPEAKING General Manager, Interorient Navigation started a bigger cadet programme and now we’d have at least junior officers coming “I have no problems in attracting cadets: onstream. So we have a problem right now in we’ve got 70 at the moment and we’re taking all of us finding these people that we need that on another 70 or 80 next year so getting peo- actually don’t exist because that 10% shortage ple to go to sea from the Philippines for exam- is there. ple, is not a problem. The problem we have “We’re offering incentives like everybody right now is over the next two or three years else but we don’t have any miracle cure for we are going to need 1,000 seafarers. Three this issue and it’s going to get a lot worse in years ago we didn’t know we were going to the next two or three years while this growth have the growth we’ve had. If we’d have is going on.” ■

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CYPRUS REGIONAL FOCUS

the government, but for the defenders of Cyprus's claim to be a major maritime centre. A scathing report by Germany auditing office the Bundesrechnungshof into the tax revenue losses imposed by the country's tonnage tax system could not have come at a better time for the shipping folk on the sun soaked Mediterranean isle of Cyprus. Because if the Bundesrechnungshof gets its way, not only would the system that allows tax-free status of fees paid to some partners of one- ship companies in return for managing the vessel be ended, but the German economy will begin to realise again the tax revenues lost over the years because of the system, estimated at €1bn ($1.28bn) for 2004 (the last available year on record). More importantly for Cyprus, abolition of the scheme would help to plug the hole in the management pipe that has seen more and more vessels move away from Cyprus to more attractive tonnage tax locations like Germany. As a director of the Department of Merchant Shipping, it is Serghios Serghiou's job to be upbeat about the strength of Cyprus as a maritime centre, so it is hardly surprising he is a little dismissive of the impact the tonnage tax regimes in other parts of Europe has had on Cyprus. “Even though the pressure coming from Germany and the UK in respect of the tax incentives offered by those countries is increasing, Cyprus remains a dominant shipmanagement centre. The success of Cyprus as one of the leading maritime centres is not exclusively attrib- Cyprus’ position remains strong as a ship- uted to the favourable tax regime but to other advantages as well. The low set up and operating costs for companies, the generally lower office management centre. The key reason is that rents and construction costs, compared to other European countries, the there are a large number of educated, availability of competent local employees, the high level of professionalism in the legal and accounting sectors, the excellent banking servic- well-trained, English speaking staff here. es and the existence of double tax treaties with more than 40 countries In CSM's case, 80% of our staff are are important factors, which positively affect the decision of a ship Cypriots and they are certainly critical to manager. A successful businessman examines all parameters before taking a decision.” the success of our business Nigel Cleave, ex-Group Managing Director of Dobson Fleet Management and now Chief Executive Officer of Epic Ship as ever. In actual fact the companies are becoming bigger with the extra Management (ESM), is convinced it takes more than a mere tax incen- tonnage they are taking on,” he said. tive to erode an industry that has taken years to establish. He added: “Cyprus is undoubtedly the biggest third party manage- He told SMI: “I firmly believe that the traditional ship managers on ment centre internationally if you consider the number of vessels and the island are here to stay, despite the competition from emerging coun- the tonnage managed and controlled from its shores.” tries such as Singapore. In the case of Epic Ship Management, we have According to Droussiotis, 2,200 ships of 40 million dwt are managed offices in both countries. A vast infrastructure has been built up over the or operated from Cyprus. “This on its own is far bigger than any of the past 30 years with a large experienced local support staff contributing large ship registries and nearly three times the size of the Cyprus flag. greatly to the success of the Cyprus shipmanagement community.” It is not only the German/UK and Singapore systems that are trying to This was a view echoed by Andreas Droussiotis, Chief Executive attract extra business or rather retain the vessels under their flag. It is Officer of Hanseatic Shipping and President of the Cyprus Shipping happening all over. We have not lost much from here due to the new tax Council who went even further by suggesting that Cyprus was extend- systems established in Europe and Asia.” ing its influence in the third party shipmanagement sector. But can the Cyprus government do more? Of course, every govern- “Cyprus' position in the shipmanagement industry remains as strong ment can always do more,” said Dirk Fry. Managing Director of ➩

CYPRUS REGIONAL FOCUS

Columbia Shipmanagement, “but in com- recent years because of the tonnage tax parison to many other countries we cannot system operated in Germany. If the complain about being ignored,” he said. Germany government was to change Conceding that the Cyprus government tomorrow and the tonnage tax scheme was has been helpful in at least listening to the to be scrapped or changed in a big way industry’s views, Andreas Droussiotis those ships would be back here the next stressed that the government machinery day because we’ve all still got our offices can be slow in moving. “We continuously here and that’s the way it would go. exercise our right for constructive criti- “From our own company's point of view cism and succeed in convincing the gov- we are a genuine bone fide Cypriot-owned ernment how things should be handled on owner/operator so yes we have a Hamburg various issues. We even managed to main- office with ships involved there but we have tain our competitiveness even after our a big structure here, a new office soon over accession to the European Union but we the road and this is our headquarters. We’ve want to continually improve and believe got another five offices around the world. me we have a very open communication So whatever happens to the other shipman- with all ministries involved, be it agement companies will not really have any Communications and Works, Interior, impact upon ourselves,” he added. Labour and Social Insurance. Even the But is there a slow reduction in the president of the Republic shows a very 2,200 ships of 40 million dwt are number of vessels being managed for the keen interest in the shipping industry,” he managed or operated from Cyprus. island largely because of the tonnage tax added. benefits that exist elsewhere? Capt Peter Bond, General Manager of This in its own is far bigger than “If you look at the newbuilding order- the Cyprus-based ship owner/ship manag- any of the large ship registries books, you will see see there’s an awful lot er and crew manager Interiorient, believes and nearly three times the size of of ships being built for Cypriot interests so the number of ships that are managed in all those ships are going to remain in Cyprus certainly has reduced over the past the Cyprus flag Cyprus and that’s going to be adding ➩

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 43 REGIONAL FOCUS CYPRUS

While the Turkish embargo may have been a factor in the decline of tonnage registered in Cyprus in recent years, so has the effort to improve the safety record of the flag been a positive development. Indeed, EU membership has been the necessary incentive for Cyprus to get its house in order to the number of ships that are managed from here,” he stressed. While the Turkish embargo may have been a factor in the decline of tonnage registered in Cyprus in recent years, so has the effort to improve the safety record of the flag been a positive development. Indeed, EU membership has been the necessary incentive for Cyprus to get its house in order. This year saw the flag promoted to the Paris MOU on the Port State Control White List, a promotion greeted with some satisfaction on the island. It will, in many people's eyes, have con- solidated the island's credentials as a quality shipping hub. “Cyprus' position remains strong as a shipmanagement centre,” added Dirk Fry. “The key reason is that there are a large number of educated, well-trained, English speaking staff here. In CSM's case, 80% of our staff are Cypriots and they are certainly critical to the success of our You don’t see so many third party ship business. Very few other shipping locations have such an abundance of managers grabbing for business: we all talented shipping people. Of course, other locations are looking to make themselves more attractive, but to create the pool of experienced ship- have our own main clients and we tend to ping staff is not so easy. stick with them. It is about working more “As to tonnage tax schemes etc, the Cyprus scheme is a positive ben- closely and cooperating with the owners rather than just offering them a cheaper option for managing their ships

efit and should be kept. For overseas schemes, such as the German tonnage tax, there is no doubt they have had an impact in that companies such as ours have had to move tonnage to alternative locations, in our case our Hamburg office, but we see this as additional business with minimal disruption to our Cyprus operations,” he stressed. But how strong is business at the moment considering the pressures being faced by companies on the island and where are enquiries coming from? “Enquiries continue to flow in, particularly for tanker management,” replied Dirk Fry. We are looking at a number of projects in Greece and North Europe and our business in the Far East is growing. Interestingly also, the number of projects coming out of the former Soviet Union countries is growing. We also see our newbuilding supervision services expanding, particularly for ships being built in China where we have a strong organisation covering many yards. We have now built or are in the process of building more that 200 ships since 1984.” Captain Peter Waller, Group Managing Director of Dobson Fleet Management, emphasised that while it was essentially business as usual for Cyprus-based ship managers, working practices of the main players on the island was changing. “You don’t see so many third party ship managers grabbing for business: we all have our own main clients and we tend to stick with them,” he stressed. “It is about working more closely and cooperating with the owners rather than just offering them a cheaper option for managing their ships.” He told SMI. Even if this means coming together with your owners regularly through manager/client forums to discuss and identify what needs to be done and how best to achieve it. ➩

44 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006

CYPRUS REGIONAL FOCUS Department of Merchant Shipping

If you get more ships on management you Aart Broek, General Manager at Navigo Shipmanagers, remains convinced that the biggest problem facing ship managers on the island is have to make sure that you have the not the tonnage tax issue or the Turkish ban but the crew shortage prob- resources and the Schulte Group as you lems in the industry as a whole. But if you look after your people they will generally remain loyal to the company they have working for. “Of know share a number of manning agen- course you have to watch the salaries don’t get out of hand but people cies. With the market growing the way it will generally remain loyal if you treat them well. is, it is wise to increase that number Navigo has identified the crew supply side as its core business and has outsourced its technical management activities to its sister company Atlantic Marine. Indeed, Aart Broek and his team would like to double the number of vessels they manage from 50 to 100 and create more manning agencies for its parent company, the Schulte Group. “The priority is just to increase the business,” he said. “If you get more ships on management you have to make sure that you have the resources, and the Schulte Group as you know share a number of manning agencies. With the market growing the way it is, it is wise to increase that number.” Eastern Europe and the Far East are obvious choices for developing manning resource but specialists like Navigo are looking further afield to new locations like South Africa. “I’ve not set myself a target with specific vessel numbers, because it starts with the buying of the vessel but the aim especially is to grow, to have a solid base. Ideally I do not want to have clients who are larger than 10% of my turnover. Its not good for me and its not good for the client.” This is in stark contrast to Columbia which has refused to eschew the benefits of offering full management services. As Dirk Fry stressed: “Crewing is becoming more of an issue for the industry, of that there is no doubt. We are not immune from the problems being faced. We are certainly meeting our current requirements but our focus is now even more on full management rather than crewing-only contracts.” ➩

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 47 REGIONAL FOCUS CYPRUS

“It’s just training, training and training isn’t it. We have to continue training. We’re looking at our own centres. We’re opening our own office in St. Petersburg possibly next year, so given that we have that sort of space it may be possible and may be feasible to start our own training centre within that building. Department of Merchant Shipping We’re certainly looking at other alternatives,” said Mr Thompson. So how important is Cyprus as a shipmanagement centre? “Well infrastructure wise it’s still cheaper to have an office in Cyprus. There is plenty of local support regarding accounts and adminis- trative staff but not so much for the technical side. If we can get the tax issue sorted and the immigration policy sorted then I don’t see any reason for people to leave,” he concluded. ■

Crew competence and training is essential, agrees Robert Thompson, Fleet Director and Deputy Managing Director of Unicom Management To ensure the highest professional Services. The company is introducing loyalty schemes for its seafarers. standards are maintained on board, Unicom employs over 4,000 Russian and Ukraine seafarers for its managed fleet. Its crewing offices in St. Petersburg, Novorossiysk, the training of officers and crew is Odessa, Vladivostok and Riga are fully accredited under ISO Standards continually under review. Unicom has and managed by ex-Unicom seafarers. To ensure the highest profession- recently diversified into third party al standards are maintained on board, the training of officers and crew is continually under review. The company has recently diversified into management which after ten years as third party management which after ten years as sole managers for JSC sole managers for JSC Sovcomflot this Sovcomflot is a major step forward, which it claims is already paying dividends in both third party crew and technical management. is a major step forward

DISPATCHES SHIPPING BUSINESS REPORTS FROM AROUND THE WORLD

Seafarer Conundrum Lucrative Lucre … a ratings to riches story

Seafarer wages are spiralling out of control, so say the owners and managers who have to foot the increasing wage bills. But are Filipino Captains really earning four times the salary of their Prime Minister and if so, how is this new found wealth affecting their lives? We went to the Philippines to find out.

aptain Julio Arcenal, 53, has not His decision to go to sea in 1975 as a deck Philippine national average, provides Captain always been a ship's master. cadet was influenced, he says, by the 'lucrative Arcenal with what he describes as a “high stan- Prior to pursuing his seagoing income' on offer and by a desire to 'see the dard of living which is much better than most career through the Manila-based world for free'. people in the Philippines.” This is no doubt C. F. Sharp Crew Management, “A seagoing career is highly regarded in the great news for his wife and four children: three C he worked as a bank security Philippines because of the high income com- daughters and one son in particular, who has guard to finance his way through his degree pared to other professions,” he explained can- followed him to sea. course before graduating with a Bachelor of didly. “In my case, when I started as a deck Captain Arcenal said: “I recently signed a Science Degree in Marine Transportation. His cadet onboard ship, I was receiving a monthly new contract to be Master of a bunkering ves- family were farmers in Lucban, Quezon, a wage of $350. As a Master Mariner I am get- sel operating out of Gibraltar on a salary province 92 km South of Manila, making his ting $6,000 to $7,500 per month depending on of $6,000 per month. When I first became progression up the maritime ladder that much the company I work for.” Master in 1985, my salary was $2,500.” more impressive. Such a salary, which is way above the A salary, he claims, compares very favour-

50 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 CREWING DISPATCHES

manoeuvring when we dock or undock.” The Philippines is presently the world's largest supplier of seafarers, providing some 20%, but is not producing senior officers in the numbers needed. However, it does have the potential to do so as long as the calls from local crewing agents for ship owners and managers to work with them and invest in training are heeded. “I have enormous The manpower supply industry in the respect for every one Philippines is a mature one with the infrastructure already in place. It does have problems but of my officers and with the present national economic situation it crew members as is likely to be a supplier for a long time to come. During times of political upheaval the ONTHERECORD well as other people supply situation does experience slight hiccups. For owners it could be the most economic solu- involved in this type tion to the shortages in the short, medium and Dr Peter Swift of job” long terms. INTERTANKO Managing Director Many companies are training Filipino cadets through the ranks to Master, but there are still “Tanker owners are especially concerned ably with other wage levels in his country. some sections of the shipping industry that are over the unfair and unjust treatment that sea- Ratings onboard ocean-going vessels can showing a distinct aversion to not only promot- farers regularly face – not only with unjusti- receive around $1,300 per month while a simi- ing Filipino seafarers, but refusing to use fied detentions after accidents, but in rou- larly qualified position ashore, perhaps a Filipino masters. tinely being denied shore leave and access to labourer, will typically command a monthly An industry-wide shortage of qualified and and across terminals. They are particularly salary of only $250. “My new contract is worth competent officers onboard ship has created a incensed by the increasing tendency to crim- some six times the $1,000 per month a local poaching pandemic with allegations of owners inalisation, especially in the case of acciden- Port Captain can earn. Coastal Masters earn a and managers outbidding each other by offer- tal pollution. INTERTANKO members, monthly salary of only $1,600,” he said. ing higher salaries to attract the right personnel together with INTERCARGO members and Graduating from the Philippines Maritime to man their ships. a few other like-minded organisations, have Institute, Captain Arcenal’s march up the ranks Senior ship management figures cite the demonstrated their commitment to stand up has been matched by his progress up the social sourcing of quality crew as the biggest chal- for their staff (afloat and ashore) and to chal- ladder. He now has two homes – a three-story lenge facing the industry. Indeed, Rajaish ➩ lenge the European Directive that would property in his home-town of San Pedro, criminalise accidental spills not only in Laguna and a two-story family house in Manila coastal waters but on the high seas. – and drives a brand new 10-seater Izuzu An industry-wide “The tanker industry understands it has a Crosswind XUVi. “Lucban, Quezon has a good shortage of qualified social responsibility to ensure the quality of climate just like the weather in Baguio City, the the governance structures of its industry and summer capital of the Philippines, with lush, and competent has outlined various approaches that are green forest and no pollution, Captain Arcenal being taken to assist the development of explained. “San Pedro is a nice place also, near officers onboard ship effective, fit-for-purpose legislation and reg- Laguna de Bay lake.” has created a ulations which have been properly consid- The tropical paradise of home must seem ered and assessed and which, if adopted, like a far cry from the bridge of the Saudi poaching pandemic would be implemented promptly and uni- Arabian product carrier where Captain Arcenal with allegations of formly. In parallel, the industry is seeking to spent time after gaining his masters certificate, implement self-regulation through the intro- but it is his long experience at sea that he owners and managers duction of guidelines, policies and proce- believes has given him the lifestyle and status outbidding each dures built around industry best practices. he holds today. While owners recognise their responsibili- However, despite his wealth, Captain Arcenal other by offering ties, many similarly hope that governments has retained a level of modesty and maintains a higher salaries to and their agencies would live up to theirs. good relationship with those who serve under his “The Poseidon Challenge is a further exam- command. “I have enormous respect for every attract the right ple of the tanker industry taking the initia- one of my officers and crew members as well as personnel to man tive in bringing partners together and com- other people involved in this type of job,” he mitting to continuous improvement.” ■ said. “I enjoy my job immensely, particularly their ships

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 51 Don’t miss your next copy of SUBSCRIBE TODAY!

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The effects of the imbalance in the demand and supply of qualified senior officers is even more acute in sectors like LNG where some Captains are commanding salaries approaching $300,000 per year. As officers’ wage levels increase there is a fear in the industry that the amount of time they spend at sea will drop and the shortage dilemma will increase even further

Bajpaee Eurasia President and Group In reality, each new vessel entering the mar- Money has clearly been an incentive for Managing Director, recently warned that the ket will require between 15 and 20 officers, a Captain Arcenal's only son to follow him into acute shortage of crew supply was being driven figure the existing training facilities will the profession. He is now a licensed Third Mate by an increase in world tonnage, the criminali- struggle to meet, it is claimed. “If you just and is connected with the All Ocean Shipping sation of seafarers and the worsening image of look at the four senior officers onboard and try Company, having graduated from the Philippine shipping. Current estimates indicate that more to figure out the number of newbuildings Merchant Marine Academy in 2003. than 4,700 vessels will be built between the end coming out coupled with the very limited “I had no problem recommending a seagoing of 2006 and 2010, some 50% of which will scrapping going on, the mathematics will not career to my children,” Captain Arcenal admit- replace existing tonnage, which equates to work. From now until 2010 there is no way ted. “My only son followed in my footsteps as a about 2,400 additional vessels requiring 10,000 you can recruit and train the number of new seaman because of the lucrative income as well extra officers and 60,000 more ratings. The fact officers that we are talking about here,” a as seeing the world for free. I would very defi- that today's ships are getting bigger and need respected manager warned. nitely recommend a career at sea.” less crew numbers onboard is maybe stopping The effects of the imbalance in the demand While money has allowed the family to enjoy this figure from being higher still. and supply of qualified senior officers is even extra status and comfort at home, living condi- Core to this decline in seafarer number being more acute in sectors like LNG where some tions for Filipino seafarers have also improved at arrested is more improved recruitment and train- Captains are commanding salaries approaching sea. Captain Arcenal believes increased training ing, but as SMI recently reported this is not hap- $300,000 per year. As officers' wage levels standards have been a catalyst for this improve- pening and poaching of qualified personnel is increase there is a fear in the industry that the ment. “Maritime Schools required additional sub- becoming more of a problem. amount of time they spend at sea will drop and jects in the curricula to better equip students for Indeed, the mass-newbuilding activity being the shortage dilemma will increase even further. the courses they are taking. In addition, upgrad- undertaken by the big Japanese and European As Capt Arcenal himself admits long periods at ing SOLAS training was required by the ship owners has intensified the problem of crew sea can be a little tedious even with the attraction Professional Regulation Commission prior to the poaching. As previously reported, Mitsui, NYK of the higher wages in place. issuance of an endorsement and Certificate of and K. Line are openly set to introduce just short And the lure of the sea is further diminished Compliance (COC),” he said. of 400 ships to the world fleet by 2010 - with by the ever increasing level of paper work which “There has been a very big improvement in some experts suggesting the actual number of Captains and other officers are required to conditions for all Filipino seafarers. Conditions ships being delivered could be closer to and undertake. “Since the implementation of ISM for Filipino officers are better now than they potentially exceed 600. If you also consider the you must follow the Safety Management System have ever been because of the improved work- newbuilding activities of the main European onboard to meet the standard safety procedures ing condition as well as the lucrative salary ship owners then the potential seafarer shortage all the time and that entails too much paper being offered by agents and principals abroad,” situation becomes even more acute. work,” Captain Arcenal said. Captain Arcenal explained.■

The lure of the sea is further diminished by ever increasing paper work which Captains and other officers are required to undertake. “Since the implementation of ISM you must follow the Safety Management System on board to meet the standard safety procedures all the time and that entails too much paperwork”

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 53 DISPATCHES CREWING

Seafarer Conundrum A new kind of warfare By Emmanuel Vordonis

New ships are coming onto the market: owners are taking delivery of huge fleets and in order for the ships to be staffed we’re going to get into warfare on prices and wage increases to attract the seafarers

crews there are in six months time and get them from anybody at any price!” What can the ship manager do? The only option available is to go out into the market and to pinch and steal people from everywhere. That’s an immediate solution and we have to recognise that we have an open market. We cannot be romantic about the situation but have to confront the real situation. New ships are coming onto the market: owners are taking delivery of huge fleets and in order for the ships to be staffed we’re going to get into warfare on prices and wage increases to attract the seafarers. So the question I want to pose is - where does this lead us? Because while we talk about training and solid recruitment for the future, what are we doing for the next six months or the next year? And the ships are coming now. Lets look at the facts. Salaries in Norway can hird Party shipmanagement com- receives a call at home from a ship manager be $10K, $12K, $14K, $16K per month, main- panies have grown in presence saying: “Why is your husband still working for ly because of the cost of living. But seafarers in over the past few years and they that small ship owner? He has been there for 20 the Philippines earning $4K-$5K per month are have earned the respect of the mar- years – is he not bored? Tell him to join us – we bringing home three times more than their ket. If you see two ships competing can give him 50% more salary. We have 100 Prime Minister. In Bulgaria a Professor at the T for the same cargo: one of them run ships, 1,000s of opportunities, many principals, university will earn $600 per month while a by a more traditional owner and the other oper- many systems, great training initiatives: why captain who used to get up to $6K per month is ated by a reputable third party manager, they doesn’t he come and join us?” seeing his salary jump to $10K or $12K per can both compete equally for the cargo. This You can also have the situation where a month. What is the impact of this on the local means that because the market recognises that young banker goes to New York and delivers communities or to the brain of the Captain or ship managers are here, then they are here to such strong presentations to the US investors the Chief Mate, to his wife and his children stay because they have created that trust, which that he convinces them to give him $1bn which when just overnight he has doubled his salary? is very important. he uses to buy 30 ships. He then says to the ship That’s one issue. But the nature of responsibility in the ship- manager: “Hey, I know you are good but I'm a Another issue to consider is that demand is ping industry is changing. You can have a situ- banker and I've got 30 ships which are going to high now and we have gone through a long ation where the wife of one of your captains be delivered two a month. Get me the best period of high income. High income together

54 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 CREWING DISPATCHES with extremely expensive investment. The ship had to pass once again through the process of It’s time for people we used to buy for $35m is now $90m. Is it the cultural cohesiveness and they were not happy. real cost of the ship? Absolutely not! There is They had to change their habits of eating, they to mingle and a demand for ships and there’s a high price for had to adapt to changes in the way they were ships. The cost of the ships is still determined treated onboard ship. understand the by the cost of the Chinese welders earning The historical arrogance of the European’s difference of their $200 or $300 per month but the market will pay has been reversed and I have heard of instances more because of market forces. where Bavarian and Greek seafarers who have cultures and work The problem is more acute in those compa- served on an Indian-controlled ship have expe- together as a group nies that have undertaken the responsibility to rienced extreme arrogance from the Indian manage large fleets. Global ship managers Captain to the extent that they were treated as and as equals. It based in Glasgow, Singapore or in Kiev can file second rate citizens. Why? Because it’s time takes time and a computer request for a second engineer. This for people to mingle and understand the differ- request floats through the internet to the ence of their cultures and work together as a problems can arise recruiting offices in Odessa, or in Vietnam or group and as equals. It takes time and problem when you take this Bombay and they begin bidding. can arise when you take this experiment of People are being traded through the internet mixing nationalities without taking the time to experiment of mixing like commodities and does this make them co-exist and co-operate. So this is one side of nationalities without happy? I think not. the problem which I call the changing nature of Our experience in my company is that out of our responsibility. It’s great that ship managers taking the time to the people who left and then returned, they - and I put myself into this group, have worked came back because they said they were happy hard to create trust. co-exist and here. They knew the systems, they knew the We have to think of ways to solve the short- cooperate people and they knew the chief engineer and er immediate problem of meeting this demand the captain and they were familiar and happy for highly competent seafarers and how we with the structure of cross-national co-opera- help them to mingle and co-operate. It's as tion. By moving to another ship, they had to go important a challenge as that of recruiting and into this new United Nations environment and training seafarers for the next decade ■

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 55 DISPATCHES PSC A day in the mind of a port state control inspector

Port state control detentions can put a black mark on a ship operator's profit as well as its reputation. But are inspections really something to be feared? Andy Pierce joined a vessel inspection to find out what today's inspectors are really looking for

fter 20 years at sea serving on bulk carriers, oil tankers and a host of other vessels, Port State Control Inspector Captain Phil Thompson has one thing in his A sights – Arthur Scargill. “I’d like to see him hung drawn and quartered,” Phil tells SMI as we drive towards the UK port of Immingham on a cold October morning. A broad smile spreads across his face – he is jok- ing, of course. I have known the man for less than an hour and, despite his chatty nature and good humour, it is clear he takes the demise of British industry, specifically shipping, very much to heart. Shipping is in Captain Phil’s blood. He talks with passion and understanding about the industry he has served throughout his working life. Port state control inspectors certainly tainly helps us to identify trends. On the bridge aren’t your average civil servants. “Surveyors I start with the magnetic compass, look at chart As we board the come from three sources: Sea Captains, Naval corrections, bridge and navigation records to ship, the team still Architects and Chief Engineers,” explains get a general feel and see if anything catches Gwen Evans, Surveyor in Charge at the my eye. Sometimes you can spot something, has very limited Maritime and Coastguard Agency's (MCA) and then just by asking questions, it can lead to information and lit- Hull Marine Office (Beverley). “Everybody a whole lot of problems.” has had a previous life.” As we are greeted by the crew, I’m aware tle idea of what we The vessel Captain Phil and colleague Ian these early exchanges are critical. With some Harvey are due to inspect is the Hong Kong inspections, problems can start the moment the might find. “No flagged, 87,863 ton bulk carrier, Unique inspectors board the ship, with the crew mak- inspection is the Alliance. It has a low target factor (a computer ing every effort not to cooperate. These diffi- generated number derived from ship type, age, culties, which are often accentuated by lan- same and we can’t size, class, inspection history and the date of its guage barriers, will never benefit the crew. Any cover everything, it’s last inspection), but it has been targeted today resistance or attempts to disrupt the inspection as it is set to leave the Paris MOU for Brazil. will only ever result in the port state control just not possible” “We are actually providing a service for the team digging deeper. “If we ship,” former Chief Engineer Ian tells me. “It have a problem communi- operates a lot in South America and if it goes cating with them, you won- out there and isn’t inspected within a 12 month der how good their commu- window its target factor will be say 21, not one, nication is with each other. so it will be targeted straight away.” This can certainly affect the As we board the ship, the team still has very inspection,” Ian admits. limited information and little idea of what we Fortunately for us, the 18 might find. “No inspection is the same and we strong, all Indian crew can’t cover everything, it’s just not possible” onboard the Unique Captain Phil says. “We will just take a look Alliance is willing to coop- around and get a feel and look, initially, at the erate and have an excellent general cleanliness of the vessel. We look at the command of English. galley and observe the standard of food and However, judging by the hygiene - that can be a good benchmark - it cer- slightly fearful look in their

56 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 PSC DISPATCHES

dealing with professional seafarers. We have to However, despite the best efforts of the crew, “The whole reason respect that this is their home. When we find a problems do occur on even the best equipped for port state control problem, it is not a solution to quote rules and vessels. Captain Phil has recently come across regulations and walk away. We need to adopt a a number of vessels with embarkation and pilot is to create a level very pragmatic approach. This is where knowl- ladders certificated in the Far East, but do not playing field. We edge and experience comes in.” comply with the requirements of IMO or As Captain Phil and Ian tour the ship their SOLAS. “It’s not the fault of the crew, it’s the don’t want to experience certainly comes into play. fault of the authorities,” I am told. penalise good ships - Everything from the life boats and the oxygen When the inspection is complete the team tanks to grease nipples, rubbish bins and the sits down with the Captain to discuss what they we want to improve temperature of the hot tap draws their critical have found. As expected they have no need to bad ones” eye. But they are not looking or expecting to detain the vessel, but the feedback session still find major defects. A single missing lifebuoy or takes around an hour to complete. Yet at the eyes, their initial readiness to help is perhaps a self-igniting light that isn’t working might end of a long day Captain Phil still sees the driven by their fear of making a mistake. represent a trend of poor safety standards or value of the exercise. “We shouldn’t be here to During a thorough inspection of certificates in sloppiness – an avenue for investigation. demotivate people, we should strive to moti- the officer's lounge, the Master Captain Vaz, Captain Phil in particular has a fixation with vate them,” he says. “The whole reason for port explains what may have caused this anxiety “good housekeeping”, believing it to be a fun- state control is to create a level playing field. amongst his crew. “Some countries use port damental part of setting good standards We don’t want to penalise good ships - we want state control as a tool to make a quick buck. In onboard. A rope strewn across the deck results to improve bad ones.” Arthur Scargill still has the third world, where everybody needs money, in a quick dressing down for the officer respon- more to fear from Captain Phil than a good ship they come onto the ship and find 25 to 30 sible, but, I am assured: “We’re not getting at owner it would seem. faults. Then the owner and the master are on the crew – it’s ensuring good seamanship – it’s Many thanks to the MCA, the staff at the Hull their knees, and both sides will want to keep for their own benefit.” Particularly after the Marine Office (Beverley) and Captain Vaz and each other happy – it is a chain,” he says. Chief Officer admitted that his noticeable limp Thapuyal crew of the Unique Alliance. ■ Fortunately, communication today is a two- was due to a recent slip, trip and fall. way process, and things are going to plan. “We Following their initial concern the crew SMI's Top Tips are all professional members of the marine appears to appreciate that the surveyors are not to avoid detention industry,” Captain Phil says. “We have got to trying to trick them. It’s interesting to watch • Cooperate with port state surveyors be reasonable and practical as we know we are Captain Phil and Ian’s relationships with the • Good housekeeping indicates an crew develop throughout the day. The crew is interest in your own environment SPEAKINGTHETRUTH subjected to a torrent of questions and their • Keep good basic standards – it will ability to respond appears to earn them the stop inspectors digging deeper • Have procedures in place and stick respect of Ian and Captain Phil. The growing “Although in the past the Paris MOU had to them (be compliant with your no official status within the International banter onboard is a mark of the respect that ISM & SMS) Maritime Organisation, the achievements of evolves between all parties. “If the ship is in • If you make ANY engineering this regional agreement on port state control good condition then there is no need to bull- changes onboard, be sure to notify have certainly had an impact on rule-mak- shit,” the second officer says. “If the ship is in class and flag ing in the IMO. • Keep up-to-date certificates and a bad condition then it is, ‘Sir, come this way, “Not only has the alarming statistical records or Sir, come that way’, to distract [the survey- information on sub-standard ships been an • Ensure that the ship complies with incentive to finally discuss the implementa- or] and keep our secrets. But there is no need relevant conventions tion of international regulations by flag here – this is the best ship I have sailed upon.” • Keep maintenance records up to date • Effective communications between all states in a special sub-committee, but the The crews’ ability to think on their feet cer- crew members success of the Paris MOU has also promot- tainly shows when they have the presence of • Know how to safely operate your ed the establishment of other regional mind to update the Fire Safety Plan with a new equipment agreements on port state control.” crew list, which Captain Phil had found to be • Good relationships with shore out of date during the initial certificates inspec- personnel Andri Bruijn, Assistant Secretary, • Ensure a safe and habitable working Paris MOU on Port State Control tion. This sort of foresight will certainly do environment for all crew onboard them no harm in the minds of the surveyors.

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 57 TRADE ANALYSIS DUN & BRADSTREET

COUNTRY RISKLINE REPORT Singapore

the construction sector, which until quite USUAL TERMS: 30-60 days recently had been beleaguered, added 5,500. Normal period of credit associated with trans- This helped to reduce unemployment to 3.2% actions with companies in the stated country. and 2.4% for residents and total population Payments performance in Q3 2006 improved respectively, compared with 3.8% and 2.9% in on its level in Q2, with prompt payment Q3 2005. Meanwhile, total population was up reported in 55.6% of cases, rising from 54.3% 3.3% y/y in June 2006; Singapore is attracting in Q2. Payments made more than 30 days over more labour immigration, presumably from its terms fell by just 1.1 percentage points to usual sources for labour such as Bangladesh 32.8%. Two 'later' categories (90 and 120 days and the Philippines. These indicators all sup- over terms) remained stable at close to 3% and port a positive outlook. 10% respectively, a small minority of total However, leading indicators present a more payment experiences. mixed picture. Q3 real GDP growth was supported by 10% y/y growth in external demand; TRANSFER SITUATION if external demand growth fell far into single- digit territory, domestic demand growth would LOCAL DELAYS: 0-1 months have to be well above 8% to keep the current The time taken beyond agreed terms for a cus- level of economic growth. Non-oil domestic tomer to deposit money in their local bank as export growth appears to be moderating to low payment for imports. single-digit levels, growing by just 3.8% y/y in RISK FACTOR October 2006. Moreover, non-oil retained FX/BANK DELAYS: 0-1 month imports of intermediate goods contracted for a The average time between the placement of The short-term economic risk outlook remains third consecutive month in October 2006, by payment by the importer in the local banking favourable in Singapore. For shippers with 16% y/y, reflecting declining imports for the system and the receipt of funds by the credit risk horizons of 90 days or fewer, the IT industry, while semiconductor inventories exporter. Such delays may be dependent on outlook is particularly favourable thanks to the are up, and should curb industrial output in Q4 foreign exchange controls, foreign exchange recent expansion of economic activity which 2006 and Q1 2007. Meanwhile, the composite availability and the efficiency of the local has pushed the capacity utilisation rate of leading indicator showed its first quarter-on- banking system. Singaporean industries to multi-year highs, in quarter dip for seven quarters in Q3 2006. In a welcome development. However, assuming this context, much will now depend on the IMPORT COVER: 5.9 months our global forecasts are realised, the coming short-term trend of demand in the US, Japan The amount of foreign exchange a country has moderation or correction in global growth and China. In the first two markets, forecasts in relation to the average monthly value of holds out the possibility of the Singaporean for 2007 are being reduced; consequently, our imported goods and services. Only liquid for- economy plateauing at the current high activi- forecast for real GDP growth for Singapore in eign exchange reserves from which a country ty levels or returning to the more muted 2007 remains cautious. can service its import requirements are includ- demand conditions of 2004, slightly increasing ed in this calculation. credit risk as 2007 progresses. USUAL TERMS The Ministry of Trade and Industry recorded With a current account surplus that is worth a 7.2% year-on-year (y/y) rise in real GDP in MINIMUM TERMS: OPEN ACCOUNT one-quarter of GDP, Singapore is a net Q3 and a 5.7% annualised increase on Q2. The minimum advisable form of documenta- exporter of capital and accumulator of FX This was a little below market expectations but tion or trading method under which D&B reserves. Both its net creditor status and stock demonstrated a vigorous expansion in the past advise customers to pursue any form of export of FX reserves grant it virtual immunity from quarter. Domestic demand, which tends to lag trade with stated country. balance of payments pressures suffered by the external trend in Singapore, rose 8.0% y/y external liquidity poor markets in the region compared with its growth of 4.9% in Q2 2006, RECOMMENDED TERMS: Sight Draft such as Indonesia. This is the more remarkable as private consumption firmed. This is likely D&B’s recommended means of payment. The for Singapore being such a geographically lim- to have been due to a tightening employment use of recommended terms, which are general- ited market. market. Total employment rose 41,600 in Q3 ly more stringent than minimum terms, is 2006, an increase almost as large as the 45,000 appropriate when a customer’s payment per- increase of Q1 2006. Manufacturing, services formance cannot be easily assessed or when an and construction each saw gains in employ- exporter may wish to limit the risk associated ment, with services adding 24,600 jobs, while with a transaction made on minimum terms.

58 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 DUN & BRADSTREET TRADE ANALYSIS

This ‘DB’ Rating Indicates: Low risk Risk – Low degree of uncertainty associated with expected returns. However, country-wide factors may result in higher volatility of returns at a future date. Trend – Stable. The country's overall risk outlook has not changed appreciably, even though some minor changes to its political, commercial, macroeconomic, and/or external risk environment may have occurred DB2a

ECONOMIC INDICATORS* THE ‘DB’ RISK INDICATOR

2003 2004 2005 2006f 2007f The ‘DB’ risk indicator provides a comparative, cross-border assessment of the risk of doing Real GDP growth business in a country. Essentially, the indicator seeks to encapsulate the risk that country- wide factors pose to the predictability of export payments and investment returns over a time % 2.9 8.7 6.4 6.9 4.2 horizon of two years. The ‘DB’ risk indicator comprises a composite index of four over-arching Inflation country risk categories: annual ave % 0.5 1.7 0.4 1.2 0.2 Political risk - internal and external security situation, policy competency and consis- Govt balance tency, and other such factors that determine whether a country fosters an enabling business environment; % GDP* -4.8 -1.4 0.2 0.2 0.0 Export Growth Commercial risk - the sanctity of contract, judicial competence, regulatory trans- parency, degree of systemic corruption, and other such factors that determine whether the % 15.1 17.0 14.0 13.5 8.9 business environment facilitates the conduct of commercial transactions; C/A balance Macroeconomic risk - the inflation rate, government balance, money supply growth % GDP 29.2 26.1 22.9 25.5 26.0 and all such macroeconomic factors that determine whether a country is able to deliver sus- *Government balance figures are for fiscal years (April-March). tainable economic growth and a commensurate expansion in business opportunities;

External risk - the current account balance, capital flows, foreign exchange reserves, size Payments Performance of external debt and all such factors that determine whether a country can generate enough foreign exchange to meet its trade and foreign investment liabilities. (% of payments made 30 or more days over terms) The DB risk indicator is divided into seven bands, ranging from DB1 (lowest risk) through DB7 (highest risk). Each band is subdivided into quartiles (a-d), with an a designation rep- Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 resenting slightly less risk than a b designation and so on. Only the DB7 indicator is not 44.5 40.7 38.5 35.6 34.8 33.9 32.8 divided into quartiles.

Local Currency (Singapore dollar [SGD]: USD) Glossary 1.64 Exchange Rates KEY (London, 28 Aug 06) CLC Confirmed Letter of Credit 1.6 CWP Claims Waiting Period Euro 2.9494 FX Foreign Exchange 1.56 GBP 1.323 L/C Letter of Credit JPY* 1.5569 LT Long-term 1.52 MT Medium-term USD 1.9971 OA Open Account *(x 100) SD Sight Draft Jun 06 Jul 06 Aug 06 Sep 06 Oct 06 Nov 06 ST Short-term Copyright

Copyright © 2006, Dun & Bradstreet. All rights Reserved. While the editors endeavour to ensure the accuracy of all information and data contained in this report, neither they or Dun & Bradstreet Limited accept responsibility for any loss or damage (whether direct or indirect) whatsoever to the Customer or any third party resulting or arising therefrom. The analysis shown on this page is taken from D&B's monthly publication, International Risk & Payment Review, which covers 132 countries around the world. To obtain the latest analysis,, please contact D&B's Country Risk Services Group on 01494 422700 or visit www.dnbcountryrisk.com. REGIONAL FOCUS HONG KONG/SINGAPORE A force to be reckoned with

espite soaring office rents and rising wages it is still “The countries providing maximum growth potential for the region business as usual for the shipmanagement industry in are Japan and China whose ship owners are opting more and more for Hong Kong. And any attempt by Singapore to establish third party management. This is an understandable phenomenon in a position of strength in the tanker management market Japan because the ships are becoming more complicated: the fleet size will only go to underline the strength of the region in of the country's owners is growing and the capacity to manage them out helpingD to dominate this growing market sector. of their offices in Japan especially by the smaller ship owning compa- That was the general consensus of opinion of the shipmanagement nies, is becoming more limited. There are people in Japan who have incumbents on either side of the South China Sea divide. been managing ships traditionally for years but they are getting old and “Hong Kong has remained a prominent management centre for a new people are not just coming in, there is little new blood coming into long time and I don’t see anything changing here in that respect because the ship management industry in Japan. So they have no option but to all the advantages Hong Kong had before, continues to remain, noted seek outside help from Hong Kong and Singapore,” said Kishore Kishore Rajvanshy, Managing Director of Fleet Management. Rajvanshy. “These include the proximity with China, the good banking infra- He went on: “Yes China as well, where the biggest potential is from structure, support facilities like brokers and insurance: all these support the crew side. The numbers of Chinese crew onboard foreign-managed services which are required for the operation of a ship,” he said. ships is growing very fast.” As for local shore-based staff, they are here, very experienced and Rajvanshy cited his company's own case where Fleet started to use very industrious. “So nothing has changed which would make Hong Chinese crew on its ships about three years ago and he admitted the Kong less attractive as compared to Cyprus or Singapore. The only dif- company was sceptical about the likely success of the first vessel we ference between Singapore and Hong Kong is that the Singapore gov- took with a full Chinese. So sceptical that it put a superintendent ernment is very aggressive and is trying very hard to double up onboard the ship with the Chinese crew until such time as it was confi- Singapore as a shipping hub and is giving lots of incentives to the com- dent and comfortable with the crew onboard. “Three years later we have panies who want to become established there, particularly in shipping,” increased the number of ships with full Chinese crew from one to 22 the Fleet boss stressed. ships,” he said. Singapore has always been a close rival to Hong Kong and accord- Why the sceptism? Well to begin with it was a fear of the unknown, ing to Rajvanshy, the Singaporean government feels an element of con- he said. “We had no idea what their temperament was, how capable tentment when a company from Hong Kong moves there. But where is they were and how much could be relied on as far as their education and Hong Kong getting its driving force from? training was concerned. Language and communication was also a little

60 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 HONG KONG/SINGAPORE REGIONAL FOCUS

bit of a challenge. A combination of all these question marks gave us really a lot of concern as to whether these guys would be able to run the ships or not and that’s why we had to go very slowly,” he added According to the Fleet Management boss, experience has allayed many of the concerns to the extent that the Chinese crews are now praised for the ease to which they can be integrated into the onboard management process. “They tend to accept everything which is told to them by a charterer or by the operator,” said Kishore Rajvanshy. But what about the language problems? “It’s getting better, certainly it’s getting better. There is a lot of focus in China on improving the language spoken by the crew and that is showing some result.” Ram N. Singh, Managing Director of the relatively newly formed Northstar Ship Management is more philosophical about the interplay between Hong Kong and Singapore as ship management centres. He told SMI: “From our point of view, Hong Kong and Singapore have always been major ship management centres. Hong Kong was stronger because there were major ship owners here from where the ship managers evolved. “Whereas in Singapore, those ship management companies that were set up there were essentially branches of existing businesses. In recent years many important factors have come into play: incentives have been given by the Singapore government to encourage companies to the island and there is the passport issue: people live there can become “The only difference between Singapore Singaporeans. And now the education facility in Singapore for people and Hong Kong is that the Singapore of Indian origin and children of Indian origin, is better than Hong ➩ Kong so there are many Indians who prefer to work in Singapore. government is very aggressive and is trying “The last and a very important point is also the cost. Singapore is very hard to double up Singapore as a still more economical than Hong Kong in terms of say rent of office, shipping hub and is giving lots of incentives home, general cost. Singapore certainly is becoming more, let us say, attractive to the ship management industry than Hong Kong,” he added. to the companies who want to become Are you saying that while Hong Kong will always have a major ship- established there” Kishore Rajvanshy management presence, more and more ships will start to be managed out of Singapore? ➩

“Singapore is more economical than Hong Kong in terms of say rent of office, home, general cost. Singapore certainly is becoming more, let us say, attractive to the ship management industry than Hong Kong”

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 61

HONG KONG/SINGAPORE REGIONAL FOCUS

“Yes Hong Kong is a major centre for shipowning, it is continuing and it will continue but third party management ships, outside ships, are slowly drifting towards Singapore because of the cost of living, the environment, the Indian superintendent, the foreign superintendent. I would say overall the environment in Hong Kong has been very good except that the cost of the property which is something which I don’t know how far the government can really influence,” he emphasised. Mr Singh continued: “Shipmanagement, whether it’s small or large, is concerned with the same identical requirements. The requirement of one ship will also need to be met in the same way as a requirement of a hundred ships or two hundred ships.” “We have to have a certain minimum number of ships in order to be financially viable to be able to continue as a self sustaining venture. So unless somebody feels confident of getting that number in a very short period, quickly, I don’t think people will venture into starting up new ship management operations today. I would not have ventured unless I had this assurance of this core customer so that is a requirement.” Eurasia Group President and Group Managing Director Rajaish Bajpaee is one ship manager who has experience in both centres and sees strengths coming from both. “Both have the right mix of ingredi- ents or requirements for shipmanagement which are strong airline con- nections, strong communications and banking and finance with the free movement of cash in and out. They also have a very competitive work- “Shipmanagement, whether it’s small or force in terms of maritime knowledge and there is also a familiarity large, is concerned with the same identical with English. With Singapore coming out with favourable tax incentives, both have strong maritime clusters – brokers, lawyers, ship finan- requirements. The requirement of one ship ciers and banks,” he said. will also need to be met in the same way as “The difference is that one is evolving with more of a market dynamic while the other is evolving more through the economic support of its a requirement of a hundred ships or two hundred ships” Ram N. Singh

government. That is the only distinction I can draw. Hong Kong is driven by how business is shaped by market forces and the government only provides the right environment,. Singapore has a very strong direction and support form the government in shaping its future,” he told SMI. According to Anglo-Eastern Chief Executive Officer Peter Cremers, Hong Kong still has the fundamental assets needed to be a quality shipmanagement centre. “The fundamental asset is easy access for funds, people: it is central- ly located, smack in the middle between India and Japan with our clients close by and our crew supply nearby also. It’s still a very good location. The locality has a lot of dedicated staff, that has not changed and people are still hard working which may not happen at the same level in Singapore so it’s still a very comfortable place to do this job and people like to work here,” he said confidently. ➩

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 63

FAR EAST REGIONAL FOCUS

“I could say tomorrow, let’s move Anglo-Eastern to Timbuktu because by Sean Moloney it’s a lot cheaper but without super- Travelling in style, intendents it’s going to be very diffi- “If I am a couple of minutes late Captain Vandeperre said cult. So it is still a place where peo- picking you up don't worry,” reas- Clipper would take over the man- ple like to work and live and it’s sured Andy Wu, Univan head of agement of the firm with a 75% central and it’s practical. The one travel. “She is a grand old lady and stake when the moment comes for disadvantage Hong Kong has is the can sometimes get a little bit him to hang up his hat. The cost so with office rents and flat moody”. remaining 25% would remain in rents going berserk that is a prob- The journey from Hong Kong trust to fund Captain Vandeperre’s Island to Chep Lap Kok Airport on philanthropic work in Thailand lem, the cost of operating in Hong Lantau is smooth, very smooth. where he has donated a consider- Kong is a problem. But I always Especially as I am travelling in the able amount of his fortune to share the view that the cheapest back of a yellow Roll Royce. Not schools, hospitals and temples. place to do business is not always just any yellow Roll Royce but one He has, however, appointed a the best place. particular 30 year old Rolls Royce successor in his Chief Accountant “Singapore is slightly different. that has become a symbol of ship A.S. Maniyar who is beginning to Singapore is definitely more unpro- management presence on Hong take over the reins. ductive than Hong Kong there is no Kong for the past two decades. “Actually the question is, the doubt about it. There is the enor- It is the property of Univan Chairman Charles Captain has been running the company and every- mous influence of the ship so I’m Vanderperre who bought it nearly a quarter of a cen- body is worried that their ships are worth millions tury ago primarily as a PR stunt but it has remained so everybody is wanting to know who is going to not so sure there is the availability an essential part of the Univan family ever since. run the company should something happen to the of people. It’s very competitive but Vanderperre is shy about his epithet as the father Captain, I believe that nothing will happen because the availability of people is a little of modern day shipmanagement. After all, he has he is very strong and going strong I can assure more critical.” acted as a guiding force to the majority of today's you,” said Mr Maniyar. This is not a view shared by top shipmanagers and at 85, or 86 if you accept the “I personally do not foresee any major change in Singapore-based Thome Ship Chinese assertion that you are one the day you are the day to day management of Univan. The compa- Management which is a firm believer born, he is still refusing to let the Univan reins go. ny will be controlled by Clipper but all the principles that Singapore is the right location to Vandeperre founded Hong Kong’s Univan and the people running the company will still contin- manage vessels, certainly as far as Shipmanagement in 1973, after he had founded ue to do so. I don’t foresee any major change. Japanese owners are concerned. Wallem’s shipmanagement arm but he took the “Every ship management company is generally shipmanagement sector by surprise when he run in the same style more or less, and if you want A spokesman told SMI: “We are announced in October that long-time client the to remain in the business you have to follow the looking at expanding into more Clipper Group of Denmark had taken a 50% stake in accepted practice. The captain is a pioneer in ship offices, whether that will be through Univan. “I’m getting old,” he was reported as saying. management, he’s the one who started this con- opening our own offices or to joint “It’s important that the firm does not go with me. cept in Hong Kong and everybody is following that venture companies I’m not sure but Clipper is a highly competent shipping outfit. The so why should we change our own strategy?,” he as we have announced earlier we company will be in good hands.” stressed. ■ have already made ready for managing vessels from the Philippines. Of course the company is growing, we China coupled with its strong ship repair, engineering and offshore are now managing close to 70 vessels in total and that’s getting close to strength might have seemed enough to grow the shipping sector on the the limit of what we should do from our office.” island. But the Singaporean government has laid out the welcome mat He added: “We are growing in Europe, we are growing in Japan but in the form of tax incentives for those foreign companies slow to accept Singapore is the right location to manage vessels by Japanese owners the invitation. definitely but for European and more specifically Scandinavian owners, According to Jeremy Hayley-Bell, Managing Director of Eastern maybe we should look closer to Europe.” Product Carriers, since the formation of EPIC, the Singapore Singapore's location close to the major trading giants of India and Government has come forward with a number of tax initiatives ➩

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 65 REGIONAL FOCUS FAR EAST

that have successfully attracted many owners and operators to either establish a presence in Singapore or expand their existing presence there. “As these tax initiatives have been directed at both ownership and shipmanagement companies, this has resulted in many Far Eastern owners moving their base of operations to a more tax friendly environment. The movement of tonnage to Singapore is, for the moment, probably having only a marginal effect on management centres such as Cyprus and Hong Kong mostly due to the large number of vessels delivering into the market requiring management services,” he stressed. Mr Hayley-Ball continued: “The increased demand for shore-based staff cannot be satisfied by the local market. Nevertheless, the Singapore Government has duly recognised this and is allowing the recruitment from overseas of superintendents and other specialist senior staff. Junior staff are available although in many cases they come from a non shipping background and have to be trained.” “The movement of tonnage to Singapore is, for the moment, probably having only a marginal effect on management centres such as Cyprus and Hong Kong mostly due to the large number of vessels delivering into the market requiring management services” Mr Hayley-Ball

Singapore's predominance as a Smaller more specialised ship repair yards ny as it started to grow, albeit gradually. shipmanagement centre is matched like Kwong Soon Engineering are looking “In those days we really did anything and forward to good times ahead on the back of everything – general trading to dealing in the by its strength as a shipping the strength of the offshore market boosted by wire rope business mainly for the offshore services location, boasting one of the world oil price. As one major player said: market. The company manufactures, stocks the largest port groups in the world, “The market is so buoyant at the moment that and supplies a wide range of products from major ship repair and engineering everybody is getting a piece of the cake and wire ropes and fittings, cable-laid heavy lifit- the situation is likely to continue for at least ing slings and grommets, high performance centres and ship supply companies another six or seven years.” polypropylene and nylon ropes, deep-sea now stamping their mark on world mooring ropes, mooring chains and high- shipping holding power anchors, chain slings and fittings, industrial hoses, clamps, valves, grind- Keppel FELS, a wholly-owned subsidiary of ing and lapping compounds, lubricants, tech- Keppel Offshore & Marine Limited (Keppel nical stores and food products to ships, and O&M) and a major participant in the others. Singaporean ship and rig building sector, has Gaylin also provides a number of related delivered its first jackup drilling rig ahead of services like testing and certification of lifting time to Qatar’s national drilling company, devices, spooling facilities for winch wire and Gulf Drilling International. anchor line, maintenance and lubrication of Built to Keppel’s proprietary KFELS B wire ropes and fittings, and others. Class design, the first rig will be named Al- “Ship owners come to us because of fast Khor, after one of Qatar’s historical cities delivery and the quality and you know that we which has contributed to the development of carry stock not only one wire rope, big size Liquefied Natural Gas (LNG) in the country wire, five metre, two inch. We don’t carry in recent years. just one or two reels but hundreds in every Al-Khor has been built to GDI’s specifica- size. Sometimes they will order eight reels by tions for operations in water depths of up to tomorrow or the next week. But if I had to get 300 feet and drilling depth of down to 30,000 it from a manufacturer I would have to wait feet. The rig can accommodate up to 110 men five months so I always buy in advance and is readily upgradeable for higher drilling because I know I can sell these items.” capabilities in water depths of up to 400 feet. Marinehub, a Singapore-based competitor When delivered, it will contribute to the Singapore's strength as a shipping centre to Gaylin, agrees that demand is growing development of Qatar's Liquefied Natural Gas has also benefited companies like Gaylin especially for chain, wire rope and synthetic (LNG) industry, as the State strives towards International which as a major supplier of rope. According to David Low, Executive being the world’s largest exporter of LNG by wire rope to the world's shipping industry has Director, China is the driving force behind the 2012.” seen its fortunes accelerate thanks to a growth growth in demand for anchor chain. “As the The offshore sector is key to Singapore's in the offshore sector. demand for new ships increases so does the future prosperity with a number of its yards According to Desmond Teo, the ebullient demand for anchor chains. Of course if there’s servicing the needs of vessels employed in the Gaylin Managing Director and Chief a typhoon or particularly deep sea then the surrounding oilfields especially those off Executive Officer, the strength of the offshore demand for chain will be even higher,” he ■ Vietnam. market in the early days benefited the compa- added.

66 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006

REGIONAL FOCUS ANGLO-EASTERN

Anglo-Eastern Shipmanagement is on the rise. With a managed fleet expected to top 220 by the end of the year, up from only 95 vessel in 2000 and 133 ships four years ago, it is leading the Asian charge towards larger fleets and greater fleet diversification. But while there are definite advantages to being large, it doesn't mean companies like Anglo-Eastern are immune to the problems affecting the industry. But as company CEO Peter Cremers told Sean Moloney, if an owner came into his office tomorrow asking him to crew manage five ships at the end of the next month, the answer would be no, because it cannot physically be done

Singularly focused

eter Cremers looks relaxed. Reclining purposefully on an easy I quickly interrupt: “I suppose, what you are saying is that is similar chair in the reception area of his Hong Kong headquarters, he to operating ten management companies managing 60 ships each?” appears very much at ease with his position as the head of one “From this office, we manage 120 ships. It's a lot but at the end of the Pof the shipmanagement industry's most respected and revered day I have three fleet managers who, in a different world, would each players. be seen as the managing director of a small shipmanagement company. When I interviewed him last in Spring of 2003, he was as adamant So I think it can be done in proper way. Whether you manage 200 ships then, as he is now, that being one of the largest shipmanagement com- or 300 ships, I wouldn’t say that it has to be at the cost of quality,” panies in the world does not automatically quality you to quickly Cremers added. expand your fleet. That his priority, so to speak, was not to be the But one of most crucial factors linked into providing the quality that biggest but to be the best. the industry demands today, is sourcing and employing the right crew. “Are we big? Yes we are big,” he reflected. “Does it affect the qual- And when you hear of instances where ship managers have turned ity of the work we do? I don’t think so. There are things which size down shipmanagement contracts because they don't have the available makes easier. If you have a big crewing pool in Europe and in other crew, then you really start to understand the predicament facing the parts of the world then things are much easier. Does the V.Ships con- industry. cept of 700 ships work? I don’t know. I may have some private “We have postponed certain delivery times in the past because we thoughts about it but I don’t know, let the market judge that, right?” can’t manage. We have a plan. If we know we are getting so many ships “If you ask V.Ships the same question, they will say: 'listen, we have this year or so many ships that year, that’s okay but if tomorrow - and 15 offices or 10 shipmanagement centres and each of these centres it has happened before – somebody walked in here and said: ‘Peter, five manage 60 ships, that equates to 600 ships. As long as they all work in ships for end of November/early December’, it will be ‘no, physically the same system, in theory, it should work, right?” we cannot. That room is not there anymore,” he warned.

68 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 ANGLO-EASTERN REGIONAL FOCUS

al touch, say a specific request from a client, I am normally there, arm deep, getting it done. My colleagues say I am usually not to be messed with in this scene as I am in 'Go' mode. On the flip side, when a job requires a number of people working together, I can take charge and delegate to arrange the best possible team and supervise their progress accordingly.” As a leader in his industry why does he still eschew membership of InterManager, the trade association for his sector and an organisation that would benefit from his input? “First of all, if you join an association you have to put in the time and the effort. When you consider the way this company works, the growth it is experiencing and the fact that my priority today are important issues such as the lack of people onboard then you will see why my personal priorities are different. I can’t run around like other colleagues being on every speaking panel. “I don’t know how they run their business, that’s probably why we are different, but I can’t. I have my difference of opinion with my colleagues on various issues and most of it I don’t think I want to make public. “If I go to Intertanko, or Intercargo or Bimco, I believe I can better deliver the ship manager's viewpoint. In that respect it’s a much ➩ But what does the industry need to do today and for the next three years to ensure it has competent seafarers When you hear of instances where ship managers have around? “You can train people, you can be turned down shipmanagement contracts because they extremely careful in the way you man- don't have the available crew, then you really start to age and you can supervise the ships as much as you like, but there’s very lit- understand the predicament facing the industry tle you can do. We have the ships coming out of the yard, you have the people and the training but you need eight, nine, ten years before you have a suitably qualified Captain, so we are pushing large numbers of junior officers in the fleet. But at the end of the day that is not going to change the situation immediately. “We have been loyal to India for 15 or 20 years and that pays dividends, that’s number one. Number two, I think the owners are the first ones to be blamed because this industry from the moment we have something that works properly. The industry says: Oh, crews are cheaper there’ and we all look elsewhere – what is happening is totally wrong. As an industry we should identify a good recruitment area, stay there, build it up and stop fishing around for cheaper deals - there are no cheaper deals any longer. The priority is getting the right people. If people still think they can do it cheaper somewhere else then it’s over, it’s finished. Be happy over the next couple of years if you have people on board your ship,” he said. Peter Cremers is one of three owners of Anglo-Eastern alongside Marcel Liedts and Richard Wong. Within that group his responsibilities are on the commercial side of the business and he has two main priorities: clients and staff. He is a naval architect by trade, so he does have the ability to manoeuvre in the technical area, but leaves the majority of it to Marcel Liedts, Group Managing Director and “technical wizard”. Peter Cremers describes himself as both a 'doer' and a 'delegator'. “I am very good at both,” he told SMI. “When a task requires the person-

Most of the relationships we have with our owners are very close, we are almost integrated into their business. We are not just somebody they use for two years

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 69 REGIONAL FOCUS ANGLO-EASTERN

You choose a ship manager for a certain reason and it has to do with cost, it has to do with people, it has to do with market reputation. You go for them and you say this is what I want, give me it then you get on and do the job

Peter Cremers on KPIs

“If you think you do a good job then that statement has no meaning unless you can measure it. So I have no problem, as a matter of fact I think we should measure what we are doing and compare it with others. I claim I’m good at something, okay let’s prove it. So as a matter of principle I fully agree and at some stage I would like to connect my remuneration with my performance. If I do a good job I will get more money.

“So I am in favour. I think we should not make this too scien- There is greater demand for third party tific because by the time its is done, others may have some- management expertise and the role thing more simple that works already, so we are constantly comparing ourselves with anybody who wants to be com- quality managers can play in the pared with. I have nothing against this.” development of soundly operated fleets is beginning to be appreciated for what it is more effective tool in getting the down-to-earth practical experiences of a ship manager out into the industry rather than sitting together as managers and talking. We participate very actively in Bimco, participate very actively in Intercargo, at least the owners are sitting there right? They listen to you, they may not agree but if you really want to bring about changes they are there,” he opined. The shipmanagement industry is changing, we all know that. There is greater demand for third party management expertise and the role quality managers can play in the development of soundly operated fleets is beginning to be appreciated for what it is. But are managers forging closer, more permanent bonds with their principals? “Most of the relationships we have with our owners are very close, we are almost integrated into their business. We are not just somebody do with market reputation. You go for them and you say this is what I they use for two years. That is at least not the way that I want to work. want, this is what I want, give me it then you get on and do the job. We are integrated with most of our clients, that means you’re striving But what is your strategy to grow your business into other vessel sec- for the same goals, right? If I spent my time watching over my shoul- tors? der fearful that a competitor may take my business then it’s not the way “Actually there is very little strategy. With the reputation we have, I would like to work,” he stressed. people tend to come to us so we don’t really have to push. LNG is a But do the owners want more of a relationship with you as a third total different angle, a total different angle and it’s a difficult one. It party manager? remains today an extremely difficult niche for a little fellow like Anglo- “Yes, much more, much more. You choose a ship manager for a cer- Eastern to be in and to grow, it’s difficult, very difficult. Our strategy tain reason and it has to do with cost, it has to do with people, it has to is just doing a good job,” he concluded. ■

70 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006

TRADE ANALYSIS TANKERS

Stripping out one product from another

With implementation of the revised MARPOL Annex II and IBC Code just weeks away, owners, operators, managers and charterers of products and chemical carriers should have got their act together by now

he problem looming is that from January 1st, 2007, goes in shipping documents and data sheets, since an incorrect defini- most of the products defined in Annex II will have to be tion could lead to a ban on carrying the specified cargo, even if the carried in chemical tankers instead of products carriers. cargo is listed on the NLS certificate, or the CoF under a different name. The chemical carriers/parcel tankers will need to carry a LR also confirmed that in future vegetable oils need to be carried in Chemical Carrier Code Certificate of Fitness (CoF) and chemical tankers, although there is a provision relaxing this require- willT also have to comply with stricter oil stripping requirements. ment for carrying certain vegetable oils. However, LR warned that this Basically, oil-like substances will no longer be allowed to be carried may not prove to be a permanent move. under MARPOL Annex II Regulation 14. From next year, they will Bio diesel is becoming ever more popular as environmental pressure have to be carried in chemical tankers. on energy gains momentum. Also the current high price of oil has con- Norwegian class society DNV has gone on record as saying that centrated the minds on finding alternative forms of energy. There are products tankers will lose many of their traditional cargoes to chemical two varieties of bio diesel – raw bio diesel and mixed bio diesel. Around carriers, due to the reclassification of chemical and product cargoes to 10-15% is raw bio diesel and the remainder is ordinary diesel. bring them into line with the Globally Harmonised System for the classification and handling of chemicals. UK class society Lloyd’s Register (LR) Intertanko has issued an explanatory document to its members giving examples of cargo category changes. One, defined as ‘floaters’ or warned that non-IBC Code tankers ‘persistent floaters’, which includes the increasing trade in vegetable holding Noxious Liquid Substance oils, has been re-assigned, meaning that the cargo must be carried in IMO Type II chemical carriers, instead of products tankers. (NLS) certificates will in future find UK class society Lloyd’s Register (LR) warned that non-IBC Code that the number of chemicals that they tankers holding Noxious Liquid Substance (NLS) certificates will in future find that the number of chemicals that they are allowed to carry are allowed to carry will have been will have been reduced dramatically. LR said that owners and managers reduced dramatically of such vessels should think about upgrading their vessels to chemical carriers. LR also warned that upgrading a vessel to a chemical tanker would Raw bio diesel is a modified vegetable oil and thus can only be car- mean that the ISM Code will affect the vessel’s operation. For example, ried on a chemical tanker that meets IBC Code ship Type 2 require- the crew will need to be chemically trained and the vessel’s flag state ments. With flag administration agreement, mixed bio diesel can be registration might also need updating. treated as an Annex 1 oil. Even if a vessel holds an NLS certificate, a stripping test will need to As for cargo stripping, the new rules only allow for a residue of 75 be carried out before the turn of the year, if that vessel is to continue lift- litres to remain in a tank or its associated piping falling within the new ing the remaining NLS cargoes not affected by the changeover, LR said. cargo categories. Given that this is a considerable reduction in some It should be noted that the existing Annex 1 International Oil cases, some ships will need retrofitting with more sophisticated pump- Pollution Prevention (IOPP) Form B will not be replaced until it is re- ing systems, such as deepwell pumps. issued at the time of the renewal survey and so, even though oil-like In addition, underwater discharge systems for tank washing need to substances will still be listed after January 1st, they cannot be carried. be fitted to tankers carrying certain products whose keel was laid before Doing so will risk a port state control (PSC) detention, LR warned. January 2007 and on all tankers built after that date, which comply with The class society said that it is very important to precisely define car- the Chemical Code CoF.

72 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 Like almost every other ship type, Type 3 vessel to an IBC Code Type 2 tanker by LR’s Marine Consultancy Services. The investigation hinged on whether an upgrade products and chemical carrier would give the tankers greater cargo carrying flexibility under the new ordering has been at an unpreced- rules. LR found that the double hull arrangements did meet the require- ented high level for a couple of years ments of a Type 2 tanker. However, LR then looked at the viability for and shows no sign of abating further conversion work during the course of the vessels’ lifespan. This work included – • Approval of damage stability against the more onerous Type 2 We have already witnessed several smaller shipowners realigning requirements. their fleets by scrapping older tonnage and ordering, or purchasing • Approval of the trim and stability booklet according to the new load newer vessels - Danish owner Herning being the classic example. conditions. It was originally thought that several vessels would enter dry dock to • Minor cargo piping modifications to take account of the carriage of have their tanks and associated piping, pumps etc converted. However, toxic cargoes. this doesn’t seem to have materialised to a great extent. There has and, indeed still will be, a steady influx of modern tonnage entering the mar- Another company which decided to act early on was Odfjell. Earlier ket, which is already fitted, or can be more easily converted to a chem- this year, the parcel tanker operator decided to convert five 40,000 dwt ical tanker, to cater for the changeover. Like almost every other ship sister parcel tankers built at KSEC between 1986 and 1988. type, products and chemical carrier ordering has been at an unprece- The problem was that the vessels, although in very good condition, dented high level for a couple of years and shows no sign of abating. were not fitted with protection around their wing tanks, resulting in a LR gave an example of one company, which asked the class society reduction to the number of cargoes they would be eligible to carry come to evaluate some of its ships. Just two years old, Gulf Energy Maritime January next year. Also two sets of pollution certificates needed to be (GEM), headed up by Chief Executive Yusr Sultan Al Junaidy, current- carried onboard each ship, depending on whether the vessel was trading ly has eight chemical/products tankers in service, plus four coated pana- as a products tanker, or as a chemical carrier. max tankers and nine 37,000 dwt Evaluation of the project to convert the Bow Cheetah, Bow Leopard, – 47,000 dwt chemical/products Bow Lion, Bow Panther and Bow Puma started back in August 2005. tankers building at Hyundai Mipo Involved in the project was a multi-disciplinary team, including inter- for delivery between 2006 and nal and external specialists, as well as the required presence of class 2009. In society DNV, who would review and approve the design work. addition to the newbuildings, Finally, the initial engineering design concept was approved last GEM has options to build a fur- February and at the same time the Odfjell board gave the go ahead for ther eight vessels. the vessels to be converted, resulting in a formal contract being signed Two 47,000 dwt chemical prod- with Nantong on 15th February this year. ucts tankers – Gulf Esprit and The upgrading involved the removal of the existing shell plating in Gulf Elan - due to be delivered way of the cargo section and replacing it with blocks of prefabricated during the fourth quarter of this steelwork to create double skin ballast tanks on both sides of the ves- Yusr Sultan Al Junaidy, Chief year, were assessed against a pos- sels. The width of the new double sides has been designed to exceed the Executive, Gulf Energy Maritime sible upgrade from IBC Code requirements to facilitate operations and maintenance, while the ➩

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 73 TRADE ANALYSIS TANKERS

Odfjell’s conversion of five parcel tankers involved the removal of the existing shell plating in way of the cargo section and replacing it with blocks of prefabricated steelwork to create double skin ballast tanks on both sides of the vessels

74 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 TANKERS TRADE ANALYSIS

Chemical tankers primarily transport organic and inorganic chemicals. Odfjell estimated that the total global volume transported by chemical tankers per year is around 60 million tonnes

Until January 1st next year, there are still five categories of chemical and products cargoes – A, B, C, D and Appendix III. The latter is a list of products, which do not come under the IBC Code. Seagoing transport from the Middle The idea of the new rules is to simplify the cargo types into a three, East Gulf to destinations both in the plus one system of coding, that is, pollution categories X, Y and Z, plus OS. The last named stands for ‘Other Substances’, which are East and in the West is increasing as basically eight harmless products. new production capacity comes on As for the chemical carriers, they will be reclassified into three types: stream in the MEG Type 1 vessels offer the highest standard of protection and are required for the carriage of those cargoes deemed to have the great- increased scantling will enhance the vessels’ strength. est risk on the environment. The release of these products would have Each of the tankers was expected to spend around 50 days at the wide reaching affects beyond the immediate area of the vessel. Chinese shipyard, Odfjell said. Work also included general drydocking, These cargoes must be carried in tanks located well inside the sides blasting and painting each vessel’s hull. Necessary maintenance and of the vessels (B/5, or 11.5 m, whichever is less) and from the bottom replacement of the cargo tank coatings affected by the conversion work of the vessels (B/15 and not less than 760 mm from the shell plating). Furthermore, the ships must be able to survive a high level of pre- would also be attended to. scribed damages. The first vessel – Bow Lion - actually spent 80 days at Nantong before leaving on July 8th. She sailed for South Korea and underwent tank Type 2 tankers offer what is called the mid-level standard of protec- cleaning, a BP vetting inspection and a CDI inspection while underway. tion, which is required for those cargoes deemed to be significant She loaded various grades of luboils and vegetable oils in South hazards, but whose release does not have wide reaching affects. Korea and Malaysia, calling at Durban for her first double hull dis- Cargo protection should be provided against low energy collisions charge. Bow Lion then sailed to Mossel Bay to load various grades of and groundings, which are associated with vessels in port. Cargoes alcohol for discharge in Rotterdam and Hamburg. to be carried by Type 2 ships must be shipped in tanks located pre- By last September, Bow Leopard, Bow Panther and Bow Puma were scribed distances away from the sides (B/15 or 6 m, whichever is less) all at the Chinese yard undergoing various stages of conversion. and from bottom of the ships (760 mm from the shell plating). Type 2 tankers must be able to survive a prescribed level of dam- Chemical tankers primarily transport organic and inorganic chemi- age that is less than that required for Type 1 ships. cals. Odfjell estimated that the total global volume transported by chemical tankers per year is around 60 million tonnes. In addition, the Type 3 tankers offer the lowest level of protection. They are designed transportation of vegetable oils, alcohols, molasses and lubricating oils to carry products of sufficient hazard to require a moderate degree of amounts to another 40-45m tonnes per year. containment to increase survival capability in a damaged condition. The major trade lanes are from the US and Europe to Asia, India, the This prescribed level of damage is less than that for ship types 1 and Middle East and South America. In addition, there is considerable bilat- 2. In addition, the cargo tanks can be located at the sides and at the eral trade between the US and Europe. Seagoing transport from the bottom of the ships. Middle East Gulf to destinations both in the East and in the West is increasing as new production capacity comes on stream in the MEG. Over the last few years, there has also been a large Asian production increase, and a considerable percentage is shipped overseas. Volumes shipped regionally are also steadily increasing. As petrochemical end-users require products to be delivered at shorter notice and with less lead-time, the major petrochemical producers are building production complexes closer to their markets. Consequently, the demand for modern quality carriers trading regionally is on the rise, Odfjell said. Flexibility and inter-changeability of ships between routes and trades have always been important factors for Odfjell. Some of the ships are involved in a ‘round the world’ liner type trade, servicing ports in Europe, the US, Asia/Pacific and Africa.

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 75 BUSINESS OF SHIPPING AD HOC

AdAdHoc Hoc Digitally Exposed!

It doesn’t take much to persuade the glitterati of the world's shipmanagement industry to let their hair down and enjoy themselves, especially when they have just sat through a week-long shipping conference and were busy preparing themselves for the next day's InterManager AGM. Stephen Chapman, outgoing InterManager General Secretary, chose the Karatello Restaurant near the old Limassol Castle for the annual InterManager bash because of its quaint charm and good food, and the guests were not disappointed. The Castle was built by the Byzantines around 1000 A.D and according to

legend, King Richard the Lionheart married left to right: Susana Germino and Bernard tan from ASP, Piyush Sharma from TESMA and Seagull's Roger Ringstad Queen Berengaria of Navarre there in 1181 and crowned her Queen of England. Traditional Cypriot dancing was the order of the day and the guests were not fazed. Seeing

left to right: Dirk Fry from Columbia Charlotte Kirk from ITIC and Wilh Wilhelmsen's Svein Sorlie

Roberto Giorgi and Rajesh Bajpaee enjoying their meal

ship manager after ship manager linking arms and hands as they twirled each other around the improvised dance floor showed that friendship, camaraderie and competitiveness continue to sit comfortably in this fine industry. But the appearance of V.Ships' President Roberto Giorgi and past V.Ships' Director and newly appointed InterManager General Secretary Guy Morel together at the same table

The glass game - not as easy as it looks....

76 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 AD HOC BUSINESS OF SHIPPING

...or is it? was interesting to see. The conversation reputation during his three years as must have been interesting especially InterManager President and many will when you consider the way V.Ships and miss his dedication and enthusiasm for InterManager have changed over the the association and everything it stands years. for. His appointment as Chairman of the It was also a poignant evening for InterManager Advisory Board means Rajaish Bajpaee, President and Group his wisdom and contacts will not be managing Director of Eurasia, as he completely lost to an association that is When we need someone tall, in comes Svein Sorlie to help out bowed out from the InterManager now beginning to move forward in the Presidency. Bajpaee has built up a solid right way.

Gun tottin' trainers Papalexis: getting intellectual in choppy water He recently described himself has understood and appreci- The US Coast Guard has come under fire from all as the “last of the Mohicans”, ated the capacities of the angles after it revealed plans to set up a series of tar- in the sense that his generation people onboard. get ranges in the Great Lakes. started as cadets who climbed “The crew needs help and Boaters and environmentalists argued that up the ladder to become cap- we, from ashore, must help mounting gas-powered machine guns on deck to be used for training purposes was perhaps not the best tains or engineers and reached in the right way. We have to idea in the world. the companies’ boardrooms as design and format their job Objectors seemingly drew little comfort from the owners or operators. But requirements in a way they fact that the 34 target ranges were to be positioned Emmanuel Papalexis pulls no understand. In a way that at least five miles offshore, claiming that the famous punches in discussing the intellectual will not scare them,” he added. choppy waters of the lake would increase the risk of damage to passing boats – and planes! The USCG's strengths and weaknesses of seaborne Dismissing the view that 'draconian' leg- failure to report the scheme to the general public staff. islation such as the EU criminalisation of strangely enough encouraged people to complain. The Chairman and Chief Executive accidental pollution was solely behind the The USCG's defence that the seafarer's needed to Officer of Athens-based Mare International diminution of trained officers onboard ship, train in this way in order to create a realistic feel of is as passionate and optimistic about ship- Papalexis pointed to the failure of the ship- firing from a moving vessel may not be enough to sway the ongoing public enquiry. ■ ping as he has always been. However, he ping industry to create a feeling of confi- hinted to delegates at the recent LSM Ship dence that going to sea is a life-long career Management Conference in Limassol about and a good one at that! SOUNDINGOFF his real concerns facing managers of ton- It has to be realised that shipping “is a Emmanuel Vordonis nage in today's market. career which has a continuation,” he said. He said: “The volumes of regulations “The continuation will bring them to shore Executive Director are getting thicker and thicker. I see no management to become port captains, port Thenamaris Ships Management problem (no matter how bureaucratic this engineers and surveyors. We need to has become) for the shore management to upgrade the profession of the mariner and to “The people we need to attract to sea are those who are in love with wanting to be seafarers. We be trained, to absorb and to comply with make it socially acceptable. Parents have to need to attract the type of people who have the today's demands, but I'm very sceptical be convinced of that.” I think we will all gene to want to be at sea and who will select a whether the shipping industry as a whole agree with him on that! ■ wife who can also tolerate this lifestyle.”

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 77 BUSINESS OF SHIPPING AD HOC

nated 62 kilometers of shoreline in the south- ISSA glitz in Singapore ern province of Guimaras. Singapore was rocking to the ship suppliers' Meanwhile, scientists seem to have too tune when the International Ship Suppliers Mumbai Times much time on their hands. While those Association (ISSA) held its 51st annual con- detained at the pleasure of the state put their vention in the port city, and fun was definite- bodies on the lines, the men in white coats ly had by all. In fact there was something spe- seem set to create more havoc in the name of cial to celebrate, the silver jubilee of the research. event's host – The Singapore Association of At a recent meeting in Halifax, the world’s Ship Suppliers. But as if the ISSA members leading Arctic oil spill ‘experts’ unveiled needed an excuse to enjoy the networking at plans to create a series of artificial spills - to the ensuing Gala Dinner.. Hair Oil practice on. Desperate times call for desperate measures, The spills, which are set to be created in but ordering thousands of prisoners to shave Canada’s Beaufort Sea and in Arctic waters off their heads and chests to aid Manila’s response the Norwegian coast, are said to be a precau- to the Solar 1 oil spill is surely one hair- tionary measure as the area prepares for brained scheme too far. increased shipping traffic and oil production Alas, one bright-spark ordered 15,000 activity during the next few years. inmates – including 1,000 on death row – to SMI would love to bring you more details, donate their hair in a bizarre attempt to absorb however, we were busy kissing swans in a more than 200,000 liters of fuel. heroic attempt to stamp out Bird Flu. ■ In addition, 500 salons in Manila collected clippings to aid the “stop the spill” drive.

The coastguard fixed tonnes of donated hair NOL Group Chairman Cheng Wai Keung greets and assorted feathers to bamboo poles to act as Singapore Association of Ship Suppliers' President Abdul Hameed Hajah barriers along the coastline. There are no reports on the effectiveness of Just like the Olympics, the ISSA conven- “the Brazilian” dam, but sales of hats are said tions become more glamorous every year and to have increased dramatically. 2006 in Singapore was no exception. Opening The sinking of the 55-year old Solar 1 in the accompanying conference, Cheng Wai August this year was regarded as the Keung, Group Chairman of Neptune Orient Philippine's worst ever oil spill. Oil contami- Lines acknowledged the efforts of ISSA in developing industry knowledge and preparing

Tom Allan awarded top IMO Prize The prestigious International Maritime Prize for 2005 has been presented to Dr. Tom Allan, ON THE UP former Chairman of the IMO Maritime Safety Committee (MSC) and Permanent Morse Code Representative of the United Kingdom to IMO. Grounded on the coast and armed with nothing Efthimios E. Mitropoulos, Secretary- but a torch, a British fisherman had no choice General of the International Maritime but to trawl his mind for Morse Code. He man- Organization, presented the prize to Dr. Allan aged to contact the Hayling Island Coastguard, during a special ceremony held during the 97th who responded by flashing the control tower session of the IMO Council, which met at lights before launching a lifeboat. The fisher- Central Hall, Westminster, London. The man, who had just transferred his modern safe- An Epic Result International Maritime Prize is awarded annu- ty gear to his new boat, was rescued – Nigel Cleave, ex-Dobson Fleet Management ally by IMO to the individual or organization unharmed. •••---••• supreme and Cyprus shipmanagement stalwart, judged to have made the most significant con- has confounded speculation about his future by tribution to the work and objectives of IMO. Charity, mate joining Epic Ship Management as its all-con- Not content with hunting out drug runners and trolling chief executive officer. Epic owns and apprehending illegal immigrants, the crew of manages a fleet of over 40 vessels, which the Coast Guard Cutter couldn’t resist another includes an impressive newbuilding pro- good deed. While moored in Cartegena, gramme focusing on the tanker industry and a Columbia the crew volunteered to help restore managed fleet of VLCC’s, product carriers, a local school house with a student population LPG tankers and chemical tankers. Nigel is of 52. The 37-day Caribbean patrol also identi- keen to play down Epic's role as a manager of fied potential drug smuggling vessels and dis- just specialised tonnage in favour of growing covered 15 Cuban migrants who had been his new business from all sectors. LPG will stranded at sea for 10 days. come under the Epic spotlight, we understand.

78 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 AD HOC BUSINESS OF SHIPPING

Welly Samir, of Edwardo Marine Services of Port Clinton de Souza, Deputy Fleet Director, Thoresen & Mark Haslett, General Manager Procurement of Said, selects his Quality Certificate from ISSA Company, Bangkok Wallem Shipmanagement President Wim van Noortwijk leadership to face up to global challenges. He Keynote speaker SS Teo, Managing Director the wider support chain that owners use when told delegates: “As some of you may be aware, of Pacific International Lines and Chairman of operating their vessels.” earlier this year we established the NOL the Singapore Maritime Foundation, said ship One of the more vociferous segments of the Fellowship under the patronage of Singapore’s owners make “massive investments when tak- convention was the ship owner and ship suppli- last Prime Minister Mr Goh Chok Tong. This ing the decision to purchase or build vessels. ers panel with hefty contributions delivered by programme is aimed at developing world-class, For that investment to work, it must be able to Mark Haslett, General Manager Procurement at multi-disciplinary, applied research among operate at maximum efficiency. The suppliers’ Wallem Shipmanagement; Clinton de Souza, global institutes, to enhance knowledge and community can play a vital role in achieving Deputy Fleet Director of Bangkok's Thoresen expertise in the field of global transportation that level of efficiency. It is therefore impera- & Company and Ivan Blazina, Purchasing and logistics.” tive that the ship suppliers play a vital part in Manager of Thome Singapore.

Michael Ciuffo, grandson of the late ISSA President Ivan Blazina, Purchasing Manager of Thome S.S. Teo, Managing Director of Pacific of Honour Dott Salvatore Ciuoffo, promises to carry Singapore International Lines on the family tradition of ship supply

Saving life for real Getting the chance to put your training into real GOING DOWN practice is something most members of the emergency services do every day. But it is more rewarding when the potential for saving a Arctic climate child's life is concerned. Introducing shipping to the Arctic as new Well one Cypriot family will be thanking their routes open up will accelerate the rate of gla- lucky stars that Dr. Rob Verbist , seafarer physi- cier melting, marine scientists have claimed. In cian, spokesman for the International Committee a recent study into the effect of ship emissions for Seafarer Welfare and Medical Advisor to the on local climates Dr Johann H Jungclaus from Port of Antwerp, was dining in the same restau- the Max-Planck-Instutut Fur Meterologie, rant following the end of a recent shipmanage- Germany revealed that aside from increasing ment conference in Limassol. ozone concentrations in the largely unpolluted Seeing the family's 18 month-old child chok- Arctic regions, ship exhaust gases falling on ing on some food, he jumped up, grabbed the the ice as soot would accelerate the rate of child, turned it upside down and after a sharp tap melting. to the child's back, dislodged the offending item and returned the screaming baby to its mother. Quintana reports $7.6m 3Q loss Net revenues for the quarter were $25m, an The cries were the proof that the baby was US-listed Quintana Maritime has reported a increase of 92% over the $13m of revenues in breathing normally, he said. “We teach seafar- loss of $7.6m for the third quarter of 2006 the third quarter of 2005. ers how to administer such lifesaving acts when largely due to a series of one-off charges. The During the quarter Quintana operated an aver- they come to our centre in Belgium for train- quarter was blighted by an unrealized loss of age of 13.4 ships, earning an average time char- ing,” he added. “But we only train for reviving $11.9m related to an interest-rate swap and a ter equivalent (TCE) rate of $20,780 per ship adults. I am going to redress this and include non-cash write off of unamortized financing per day. Quintana also picked up a further child lifesaving because you never know when fees of $1.8m. Stripping out these charges the $1.1m during the quarter in late delivery pay- it will come in useful.” Greek bulker owner said net income would ments related to its acquisition of the Proof that there are still some heroes around. have been $6.1m or $0.16 per diluted share. Metrobulk fleet.

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 79 LIVE OBJECTS OF DESIRE Objects of desire

Underworld The thought of ‘swimming with the fishies’ once struck fear into the heart of man. Now the marine adrenaline junky is free to explore the world beneath the waves with their own underwater jet ski. The Seabob’s 3.5kw motor can lead you to depths of 2.5m (40m with scuba tackle) while remaining easy to handle. The high-tech, sensor-driven craft is stocked by Harrods and is sure to take your breath away. Seabob £5,300 www.delfjet.com

Beauty and brains They dominate our lives and many see them as their 'mistresses'. But once hooked, it is difficult to do without your BlackBerry. But watch out, more enticement is on the horizon. Beneath its sleek and stylish exterior, the BlackBerry Pearl is a quad-band Wireless wonder GSM/GPRS and EDGE-enabled mobile Sedentary suits throughout the application powerhouse delivering the world are running out of excuses fast performance of the latest generation after Nike and Apple joined BlackBerry handset platform. The builtin forces with the Nikeplus project. 64MB flash memory is now expandable A censor in the shoe talks wirelessly with a MicroSD card, giving users to the iPod nano to give plenty more storage for music, pictures, speed, distance and calorie videos, and data files. information, displayed on The BlackBerry Pearl delivers screed. Exercise data can also exceptional phone quality with support be uploaded and compared for polyphonic, MP3 and MIDI ring online, so the entire world is tones, and intuitive call management your training partner. features such as smart dialing, conference calling, speed dialing and BlackBerry Pearl Nike & iPod Kit call forwarding. Now that what I call £5,300 £20.00 temptation. www.blackberry.com www.nikeplus.com

80 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 OBJECTS OF DESIRE LIVE

Va-va-voom – Personally speaking A Skype phone, a mouse, a car - with lights - how cool can it get! A funky ergonomic design cleverly hides an integrated microphone and speaker for handsfree, headphones included if you want to go private. You can also blast your Mp3s out of the speaker for a virtual in-car entertainment experience. The VOIP Street Mouse is a high quality 800 dpi mouse which ensures easy navigation VOIP Street Mouse around your PC, while giving you high-quality chat with your friends and family over the £19.95 internet. It gives a whole new meaning to the words “car phone”! www.laughingdonkey.co.uk

Places of desire

Secluded and snow free If you think festive snow is overrated, The Rock Islands of Palau is the place for you. Winter water temperatures of 27°C and never ending supply of tropical beach- es offer the perfect place to rest tired limbs. Revered by a select cult of divers and marine biologist as a true gem of the Earth, it is claimed that no place on the planet offers such variety for underwater explorers as this piece of paradise in the Pacific, east of the Philippines. Underwater visibility of up to 80 feet means you will never miss out on the mass of marine life or the sublime caves and lagoons on offer. And for those who prefer a firmer footing, birdlife across the 300 individual Rock Islands is regarded as the richest in all of Micronesia. The limestone forests of The Rock Islands’ are a haven for the Palau Ground Dove and the Blue-faced Parrot finch. Human development is largely limited to ‘rustic tourist facilities’ on the islands of Ulong, Ngeanges, Ngkesill, and Dmasech, with many of the other islands remaining untouched. So if you feel like treating yourself this Christmas, push the boat out and set sail for The Rock Islands. Just don’t forget to pack the

Scuba Schools International mistletoe.

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 81 England’s Mistress WHAT I’M READING The Infamous Life of By Douglas Lang Emma Hamilton Managing Director, Anglo-Eastern (UK) Author Kate Williams Human Traces, by Publisher Sebastian Faulks, follows the Ballantine Books lives of two young psychia- Price: £20 trists from their youth through to old age. Set just prior to the In this absorbing, well-crafted biography, First World War, when psychi- British historian, lecturer and TV consultant Kate Williams atry was in its infancy, their charts the rise of 18th-century England's most celebrated sex symbol, best known lives follow the advances as as Admiral Nelson's mistress. well as some of the major set- Setting the rags-to-riches story of Emma Hamilton (1765–1815) in social and backs in the science. historical context, Kate Williams vividly evokes her impoverished childhood and Like many of Faulks’ struggle to survive in London as a servant, theatre maid and dancer. Kate Williams books it’s based in and details the debacle of Emma's life as a high-class courtesan, rescued while pregnant around Europe and although at age 16 by a calculating young aristocrat, Charles Greville, who transformed you always have to be wary of novels that mix fact and fiction, it Emma into a trendsetting star by commissioning a fashionable artist to produce gives a feel for the early theories and how the status of those deliver- ravishing portraits of her. ing them could often hold sway over logic and good research. Creating a convincing psychological portrait of a seductive, ambitious Emma, History has always interested me, particularly the characters behind the author entertains with an intimate portrayal of her subject's marriage to William the events – I have always found it interesting that we come across Hamilton, British envoy to Naples (and Greville's much older uncle), who shocked similar personalities no matter what period we look at. We seem des- high society by making her his wife. Describing Emma's stage-managed seduction tined to make the same mistakes over of Nelson, and the pair's passionate affair (which was famously tolerated by and over again when a quick refer- William Hamilton), culminating in a love child and a shared residence, kate ence back in time could help avoid Williams conveys the fickle nature of Emma's acceptance by high society. The them. The dividing line between biography is well paced and pitch perfect, as competent in its storytelling as it is in dogged perseverance leading to great its authoritative analysis of 18th-century class distinctions. ■ achievements and blinding arrogance causing disaster is often fine. Box Boats: The Story of Container Ships The other book was The Lunar Author: Brian J Cudahy Men by Jenny Uglow. The lunar men Publisher: Fordham University Press was a society of the late 18th early Price: £25.00 19th century where the great movers and shakers in the UK - including History and humor are seldom comfortable Erasmus Darwin, James Watt, bed fellows, but Brian Cudahy manages to Mathew Bolton - used to meet on the bring the two together to provide an enter- date of the full moon to eat, drink and discuss all the matters that taining yet detailed account of container- interested them. ship evolution. I have read Jenny Uglow’s work before and the research that goes Starting with the story of pioneer and into her books is quite phenomenal. When considering what these Pan-Atlantic owner Malcom McLean, Box people achieved and how many Boats tells the rich and decorated story of there were it must have been ‘one world shipping, from freighter types to the hell of a dinner party’! fate of steamship lines and the creation of It’s a book that is very pertinent ungainly but innovative vessels. to Europe today because the protec- From the moment the freighter Ideal X tionism of trade and technology floated out of Port Newark, New Jersey between all countries of that time bound for Houston with a cargo of crude was quite phenomenal. It gives you metal boxes, the world of shipping was a sense of what really went on changed irrevocably. Those Fifty eight con- using the actual diaries and papers tainers were soon lost amongst millions of of the Lunar Men: the politics of others as container shipping took the world the time, the business practices and by storm. general shenanigans. It’s refreshing But while Cudahy fulfills his brief and writes with flair about the deserted peers and reassuring that nothing has of New York and the rise of Maersk Sealand, one nagging question loiters in the really changed! ■ shadows: Have I heard it all before? ■

82 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 NEWBUILDING NEWBUILDING Strong economic forces driving fleet investment

ROBUST growth in demand for Suezmax tankers is predicted over the next five years, spurred by large-scale expansion of crude oil exports in three of the four primary markets. A new report by London shipbroker and consultant Galbraith's puts the current orderbook for Suezmax newbuilds at just over 100 vessels, following a surge of contracts during the third quarter of 2006. To give perspective to outstanding investment, Galbraith's calculated that the 103 tankers increase, driven by domestic demand and the Westwood's newly-published The World Marine under construction and on order represent some development of substantial new refinery capaci- Propulsion Report 2006-2010. Engine installa- 29% of the total fleet and 31% of the existing ty. The only major Suezmax market that is tions in 2006 alone are expected to total 24.5 GW. fleet trading in crude oil, excluding US domestic expected to see falling requirements is the North Although it is anticipated that yard output will traffic. Although only a modest amount of ton- Sea, where production is in relatively steep start to fall in 2009/2010, as the new tonnage is nage commanding deliveries from 2008 decline. However, the broking house reckons absorbed by the market, the worldwide spend on onwards had been booked by mid 2006, the sit- that this will generate an overall increase in propulsion is projected to total $47.2 billion over uation changed fundamentally during the July- tanker demand, as refineries in north-west the 2006-2010 period, some 76% up on sales of September quarter when shipyards booked firm Europe and the US east coast look to source car- $26.9 billion during the preceding five-year contracts for about 50 such vessels. South goes over longer distances from West Africa and timeframe. Korean and Chinese yards figured most promi- the Mediterranean/Black Sea. World economic growth is buoyant, and is nently among the raft of orders entrusted by Parcel tanker specialist Stolt-Nielsen has ini- expected to remain strong in the medium term, principals from a broad cross-section of owning tiated a further stage of tonnage replacement and boosted by the very strong growth of China. centres. fleet development by entrusting the Norwegian Global seaborne trade has increased, due in part West African oil production is rising, and shipbuilding industry with a contract for a series to a boom in demand for oil and steel and other major growth in exports is anticipated from the of 43,000dwt newbuilds suited to the gamut of commodities. “The commercial shipping indus- Black Sea and Mediterranean, including Libya difficult-to-handle cargoes. The deal with Aker try has become more profitable than during the and Algeria. The trade out of the Middle East Yards calls for delivery of four vessels between previous decade, and confidence has grown,” Gulf to both India and China will continue to late 2008 and the end of 2009 from the Floro said Douglas-Westwood Analyst, Georgie yard, previously part of the Kleven group. MacFarlan. “The overall result has been a surge The four newbuilds, each equipped with 24 of orders for vessels, and yards currently have stainless steel tanks and 15 coated tanks, will be full orderbooks.” of the same design as the two sophisticated par- Annual shipbuilding completions are likely to cel tankers booked by Stolt-Nielsen from the be upwards of 50m gt for 2006, 2007 and 2008, former Kleven Floro last year for completion in with the compensated gross tonnage(cgt) figure 2007 and 2008. Kleven Floro and Kleven for this year and next set to exceed 34m in each Design became part of Aker Yards in August case. “Due to the cost of newbuilds increasing 2006. The programme of six vessels has an over- over the period, the total value of shipbuilding all value of approximately $510m, putting per- output is expected to exceed $80 billion by ship cost in the region of $85m. The business 2008, with over 2,300 vessel deliveries and near- relationship between ship owner and shipbuilder ly 3,300 main engine installations,” said Mr will also be reinforced by October's announce- MacFarlan. ment of the intended signing of a letter of intent Since the high rate of contracting has led to regarding future cooperation between the two long lead times for ship deliveries, it is felt that organisations, focusing on research, design and newbuild output may only start falling at the end development. of the forecast period. By 2010, the figure could On the strength of record newbuild activity, the be at a level just above that of 2005, at 48m gt. global shipbuilding industry's expenditure on However, increased newbuild costs should bol- propulsion systems is forecast to reach $9.2 bil- ster propulsion market values, to just under $9.4 lion in 2006, and to attain still higher levels in billion in 2010, including an engine market 2007 and 2008, according to Douglas- worth around $6.9 billion. ■

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 83 MARKET SECTOR BRIDGE SYSTEMS Offering the navigator a helping hand

A dynamic approach to technological advance, firmly embedded in an appreciation of bridge watchkeepers' practical needs, and set against the backcloth of rigorous competition and increasing regulatory edicts, characterises the marine electronics sector of the industry. With the advances in technology comes the requirement for proper training in the functionality of the equipment and systems, to which manufacturers and shipowners alike are responding.

nnovative UK-based designer and producer Kelvin Hughes has given further expression to its inventive spirit with the recent roll- out of the world's first widescreen bridge system and revolution- Iary SharpEye radar. Central to the development of the MantaDigital widescreen bridge has been the objective of reducing the watchkeeper's workload through enhanced displays and multi-functional screens, encapsulating advances in functional integration and ergonomic engineering. MantaDigital encapsulates SharpEye technology to maximise detection and tracking capability, while the S-band SharpEye system is individually available for both newbuild and retro- fit projects. SharpEye marks a step change in marine navigation, dispensing with the conventional magnetron and high voltage modulator, and using a radical approach with the transceiver to enable more information to be extracted from the radar returns before processing by the display. The The widescreen bridge system uses the new result has been to allow detection techniques usually found only in sophis- MantaDigital common core processors, and will ticated military systems to be available in commercial marine radars. thereby meet upcoming, raised IMO standards It is claimed that the new S-band radar will detect targets in clutter at a governing radar processing and tracking, due to much earlier stage than is the case with conventional radar. This is achieved through the adoption of a monostatic pulse, Doppler solid state come into force in 2008 transceiver, which uses the Doppler effect to determine a target's veloci- ties. Received echoes are processed into velocity bands, enabling the stated Kelvin Hughes' Managing Director Ron Nailer. SharpEye lends wanted targets to be separated from precipitation- and sea-induced clutter. itself to fitting to the company's existing Nucleus 3 and Manta systems, Furthermore, the solid state power amplifier in SharpEye produces thereby extending the immediate, practical application scope of the substantially more energy than the magnetron system, raising detection development. performance. The widescreen bridge system uses the new MantaDigital common “We are so confident of the reliability of this new technology that we core processors, and will thereby meet upcoming, raised IMO standards are offering a lifetime guarantee in support of SharpEye technology,” governing radar processing and tracking, due to come into force in 2008. From the user's perspective, the major attraction will be the level of multi-functionality offered by the equipment. The three displays are based on the latest, widescreen flat panels, each of which can be set to show radar, digital charts, conning information or the new and unique dual PPI(plan position indicator) function. Dual PPI provides an added safety benefit for the mariner by allowing the operator to display different scales, orientations, motion modes and trail modes from the same radar sensor on the same screen. For example, Kelvin Hughes’ on the main PPI, the navigator could use the chart radar in many config- MantaDigital urations for anti-collision and general navigation tasks. On the second widescreen bridge system PPI, on the same screen, the operator could have the range scale looking further out so as to assess risk further down the planned track. MantaDigital processors are now available for ECDIS (electronic chart display and information system), VDR(voyage data recorder) and SVDR (simplified voyage data recorder). The new Kelvin Hughes chart radar is set to be released in 2007, ready for the new IMO standards. The radar processor can be linked to a network or modem for remote diagnostics.

84 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 BRIDGE SYSTEMS MARKET SECTOR

It is understood that the new VisionMaster technology will be applied to the next vessel in Royal Caribbean's 'Freedom' cruiseship series, due for delivery from Finland next year

igational decision support system can then be activated for selection of a suitable speed and course so as to avoid dynamic rolling and other effects. Under ADOPT, trial systems with different sensor arrangements are to be fitted aboard one of DFDS Tor Line's modern, North Sea roro trailerships, Tor Magnolia, and interfaced for display via the vessel's Nacos 45-4 integrated navigation system. ADOPT project coordinator Flensburger Schiffbau Gesellschaft built the Tor Magnolia and SAM Electronics supplied the NACOS bridge system. A true multi-function navigation console similar to those used in aircraft cockpits is core to Sperry Marine's new generation of bridge tech- Market receptivity to SAM Electronics' forerunner series of Ship nology, marketed under the VisionMaster FT label. The new product Control Centre (SCC) bridge systems generated sales of some 150 con- family represents a sea change in integrated multi-functionality, afford- figurations, and the Hamburg company has now taken the concept a ing buyers greater scope in employing the technology to the extent and stage further with a new design of SCC console. The bridge assembly in a way which most precisely suits their operations. “With achieves new levels of integration between navigation and automation, VisionMaster FT, the shipowner can select whatever level of sophisti- and encapsulates the ergonomic thinking which has long been a hall- cation is needed, from a standard type-approved radar up to a complete mark of SAM and its antecedents. The central importance attached to integrated bridge system(IBS), with a built-in upgrade path to address ergonomics reflects practical considerations and understanding of the future requirements,” said Sperry Marine Director J.Nolasco DaCunha. day-to-day demands on bridge personnel, and the core, intertwined The technology is also designed to take advantage of value-added issues of operating efficiency and safety. services such as electronic chart downloads, automatic weather routing, All navigation, communication, propulsion, and control and alarm remote diagnostics and performance monitoring, as broadband ship-to- monitoring functions can be undertaken on standardised, 23-inch flat shore satellite links become more widely available in the coming years. screen monitors. “Marine superintendents and other authorised shore-based users will be The touch-sensitive screens eliminate all mechanical switches and able to access the ship's systems through Sperry Marine's unique buttons. BridgeLink Web-based portal to access ship operational data, view per- Key sub-assembly components are based on the Nacos 5 range of formance data and remotely monitor the ship's navigation systems and NACOS navigation and command systems, including new-generation sensors,” added Mr DaCunha. 1100 Multipilot, Radarpilot, Trackpilot and Conningpilot, together with Four levels of navigation functionality are offered through Chartradar and Chartpilot ECDIS. VisionMaster, namely radar, chart radar, ECDIS, and proprietary, SAM Electronics is party to an EU-sponsored research endeavour, TotalWatch multi-function workstation. TotalWatch replaces tradition- known as ADOPT ('Advanced decision support system for ship design, al, stand-alone, single-function workstations with a multi-function nav- operation and training'), focused on optimising safety by developing igation console akin to that used in aircraft. The TotalWatch a system that senses the environment for actual station can display any VisionMaster FT mode, as well as situation data and predicts the ship's motions data from other shipboard systems such as machinery mon- accordingly. It is intended to ensure optimal itoring and alarms, and also CCTV. The master or officer operating performance, relying on a computer- can create any combination of console displays for any based decision support tool to create an interface situation, whether it be inshore piloting, open-sea navi- to be used aboard the ship. gation, docking or anchoring. One project initiative, involving SAM Any combination of VisionMaster FT Electronics, is to seek to counter extreme, adverse radars, chart radars, ECDIS and TotalWatch sea conditions, including so-called rogue waves, can be employed to create a flexible, inte- through predictive determination of wave heights, grated bridge system, in an ergonomic layout. The periods and duration by radar analysis, together with ECDIS features a split-screen capability, permitting combined motion and hull stress sensors. Wave meas- two charts to be shown simultaneously, while a picture- urement will be based on algorithms from the German in-picture window allows the user to view specific areas firm OceanWaves and on other algorithms provided for of a chart at different scales. The ECDIS can be integrat- comparison by study partners Det Norske Veritas and ed with the radar and AIS(automatic identification sys- Denmark's Force Technology. VisionMaster tem) for common target identification and overlay of data Once wave characteristics have been established, a nav- FT Radar on the ECDIS screen. ➩ MARKET SECTOR BRIDGE SYSTEMS

Sperry Marine’s VisionMaster System

It is understood that the new VisionMaster technology will be Bridge controls linked to the simulator provide realistic shiphandling applied to the next vessel in Royal Caribbean's 'Freedom' cruiseship scenarios for various types of vessel under different sea conditions, and series, due for delivery from Finland next year. the multi-console IBS mimics a ship's bridge. Northrop Grumman Corporation, of which Sperry Marine forms a The Hamburg training centre was chosen for the simulator due to the business unit, opened a new shiphandling and bridge operation training city port's standing as a hub for the European shipbuilding and È mar- simulator in Hamburg this year. Courses provided at the 160 square- itime industries, and as a convenient central location with respect to metre Sperry Marine training centre include classroom instruction with Europe as a whole. multiple computer workstations and a complete, integrated bridge sys- Meanwhile, Sperry Marine's training centre in the UK at New tem(IBS), augmented by the ship simulator. Malden, the fountainhead of the absorbed Racal Decca range of radar The new simulator system incorporates three projectors that provide and other equipment, has been tasked with ECDIS training for a promi- a full-motion seascape on a 4.2m-wide, 120-degree panoramic screen. nent shortsea operator's officers. Progressive Irish company Arklow Shipping entrusted Northrop Grumman with integrated bridge systems, Jumping on the all-in-one bandwagon is featuring a 'paperless' navigation capability, for each of a series of Transas with its Integrated Navigation System 4,500dwt dry cargo vessels contracted from a Spanish yard. (INS). The Transas INS was designed in full In addition to dual ECDIS consoles, Sperry Marine is supplying the compliance with IEC61924 standard and is the complete suite of navigation electronics, including radars, autopilot and manual steering, heading and speed sensors, and other associated sys- first in the world to be certified as INS class C tems to the six newbuilds at Astilleros Murueta. The same suite of gear and type-approved by DNV. was also ordered for a sextet of vessels of similar type under delivery

86 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 BRIDGE SYSTEMS MARKET SECTOR

from Barkmeijer Stroobos in the amounts of information to be Netherlands. Arklow is in the vanguard of displayed on screens, yet with the movement to substitute paper charts first-class image presentation with ECDIS under the IMO equivalency and clarity, easily discernible rules, and its watch officers are being from different viewing positions, trained at New Malden in the use of and providing the mariner with ECDIS and other apparatus. an additional aid to decision- Also jumping on the all-in-one band- making under all conditions. wagon is Transas with its Integrated Navigation System (INS). The Transas INS was designed in full compliance with IEC61924 standard K-Bridge consists of a complete range of and is the first in the world to be certified as INS class C and type- consoles, including rudder angle and steering approved by DNV. Transas’ INS has a number of benefits comparing to the stand-alone control systems, as well as standalone X-band systems. First of all it gives the user the better situation awareness. In radar, speed log, echosounder, GMDSS and addition, a new level of reliability is achieved by means of several chart system. reservation levels. The display of an integrated system combines numerous layers of the information from different sources into one sit- Kongsberg Maritime recently despatched the first of its new genera- uation display. The Navigational chart is presented together with radar tion of K-Bridge consoles under a contract embracing four very large overlay, route information, targets, and own ship position, information LNG carrier newbuilds ordered in South Korea by Overseas on ships maneuverability, providing a real-time picture for grounding Shipholding Group under the Qatargas II programme. The Norwegian and collision avoidance as well as decision making support. company's scope of delivery covers the bridge, cargo, integrated In response to market trends and demands, German flat screen man- automation and integrated navigation systems for the gas carrier series ufacturer Conrac has recently unveiled a new series of displays featur- under construction by Samsung and Hyundai. ing widescreen 26-inch and 27-inch screens. The claimed, superior K-Bridge consists of a complete range of consoles, including rudder image performance of the radar/ECDIS displays, of the new angle and steering control systems, as well as standalone X-band radar, wideECDIS MultiTask Monitor range, stems from the use of full HD speed log, echosounder, GMDSS and chart system. The integrated nav- panels(of 1920 x 1200 pixels for the 26/27-inch models) in conjunction igation system forms part of Kongsberg Maritime's K-Line product with Conrac's state-of-the-art electronics. technology offering, which also encompasses automation(K-Chief), These are proposed as an alternative to currently utilised 23.1-inch dynamic positioning and joystick(K-Pos), propeller and thruster con- displays, and cater to the client industry's requirement for larger trol(K-Thrust), tank gauging(K-Gauge) and safety(K-Safe). ■ BUSINESS OF SHIPPING DRY BULK

Solid outlook for bulk market optimists

By Jarle Hammer, Shipping Adviser at Hammer Maritime Strategies

he bulk market this autumn exceeded most people's expecta- from $16,000 to $27,250 for Supramax. Five-year-old vessels cost tions. Despite absorbing a record vintage of new tonnage, more than newbuilding prices and resales obtain significant premiums. the freight market improved substantially for all sizes of bulk This positive market development has been obtained without much help Tcarriers. The big flock of early spring dry bulk pessimists from congestion problems in ports around the world, but substantial turned out to be wrong and many deplorable decisions have been made amounts of tonnage are tied up in the rapidly growing domestic trade by their followers in the meantime - and many good decisions by those along the Chinese coast. who thought otherwise. One should always watch the market fundamentals on the tonnage Addressing the Lloyd’s Shipping Economist's Norwegian Ship demand and supply side before taking important market decisions. Finance Conference in Oslo in late March, I warned against the prevail- According to Fearnresearch, the research arm of Norwegian ing pessimism, reflected in extremely low futures quotations and Shipbrokers Fearnleys, total tonne-miles in dry bulk shipments are esti- advised that 2007 could well provide a new window of opportunity in mated to have increased 6.3% in 2005, following as much as an 8.4% the dry bulk market. One major reason was, and still is, a fairly modest growth in 2004. Present forecasts for 2006 stand at some 6.8% growth order book as far as deliveries for the next two to three years are con- (up from 4.5% growth estimated in late March), and 2007 might well cerned. Another reason was, and still is, the strong development in the show a continued high growth of around 5%. These forecasts are world economy, despite high oil prices. increasingly dependent on the pace in the Chinese steel industry. The In particular, the global steel market has become much better than trade in thermal coal is expected to continue to benefit from high oil previous strong forecasts. The International Iron and Steel Institute in prices and geopolitical conditions in the energy market, and the trade in October last year predicted a growth in world steel demand of 4% to grain and soybeans is likely to show more growth than in recent years. 4.5% in 2006, this was lifted to 7.3% in April and as much as 8.9% in Recently, the trades in steel products, cement and some minor dry bulk October this year. For comparison, the International Energy Agency commodities have shown stronger growth than expected. now expects world oil demand to increase just 1.2% this year. The dry For comparison, the world bulk carrier fleet rose 7.2% in 2005, after bulk window opened earlier than the optimists believed and I think it a 6% growth in 2004. For this year, the bulk carrier fleet is now estimat- has not closed yet. Now is the time to consider tonnage positioning for ed to have increased 7.4%, whereas the increase in 2007 is estimated at a market that could turn out to remain more than healthy for another a modest 3.8% and just 3.2% growth is estimated in 2008. This setting couple of years. points to an improved tonnage balance from next year, with some additional upside potential in the dry bulk market. In my view, present Market Development Handysize Bulk future market quotations for 2007, 2008, and 2009 still appear to be Million $US ‘000 US$/DAY somewhat on the low side, although they have been lifted considerably 50 35 since the unsubstantiated pessimism prevailing in the market half a year 30 ago. Actually, quotations for calendar 2007 have more than doubled 40 25 from six months ago and quotations for calendar 2008 have been

30 increased some 65% to 80%. 20

15 20 Markets for Large Vessels Bulk and Container 10 ‘000 US$/DAY TANK 140 280 10 5 120 240 0 0 96 96 96 96 96 96 96 96 96 96 96 100 200

DEMOLITION 15 YEARS 5 YEARS T/C RATE 12 M 45’ NEWBUILDING 80 160

60 120 Looking at the dry bulk freight market from the end of March to the start of November, the Baltic Dry Index rose as much as 64%, or close 40 80 to two thirds. The Capesize index was up 68%, the Panamax index up 20 40 64%, and the Supramax index up 58%. Timecharter rates for 12 months 0 0 increased even more over the same period, from $34,000 to $60,000 per 99 00 01 02 03 04 05 06 day for modern Capesize, from $17,000 to $30,000 for Panamax, and CONT 2750 TEU VLCC CAPESIZE BULK

88 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 DRY BULK BUSINESS OF SHIPPING

In the steel industry it has in recent years Markets for Large Vessels Bulk and Container 12 Month Change in PCT 3-M AV. STEEL PRICE in US$/t become very much a question of China 50 700 45 600 versus the rest of the world, with periods 40 of quite opposite developments or very 35 500 30 400 large differences in growth rates. Lately, 25 however, the world outside has also 20 300 15 enjoyed a positive development on the 10 200 5 steel side 100 0 -5 30 Economic expectations for 2006 have recently been revised slightly 00 01 02 03 04 05 06 upwards for Europe, Japan, China, India and South Korea. On the other REST OF WORLD CHINA STEEL PRICE HRC W. EUROPE hand, GDP forecasts for 2007 have largely been revised somewhat downwards in most leading countries, except for China. On average, The steel industry, and in particular China’s steel production, repre- GDP growth figures for 2007 will expectedly be roughly 0.5% to 1% sents the most important demand element in dry bulk shipping and it lower than for 2006. Lower oil prices could contribute to somewhat sets the pace in all dry bulk market segments. The steel industry larger economic growth. Over the first ten months of this year, Morgan accounts for roughly 50% of the total demand for dry bulk tonnage. Stanley’s World Stock market index was up 13%, after an increase of This includes shipments of iron ore and coking coal, manganese, fer- 8% through 2005. Industrial production has, in recent months, shown roalloys, limestone, iron and steel scrap, as well as the voluminous remarkable strength in several countries. Thus, the latest reported 12- trade in finished steel products. The role of China has increased dramat- month changes in industrial production show 16.1% in China, 10.6% in ically in the last few years. China’s share of world pig iron output rose South Korea, 9.7% in India, and generally high growth in Asian coun- from about 36% in 2004 to 43% in 2005, and reached 48% in tries. Also industrialised countries show remarkably high growth rates September this year. in industrial production in view of their position as established mainte- There is at present a strong increase in the average distance of iron nance economies with rather modest economic growth for many years. ore imports to China. During the first seven months of 2006, iron ore The latest reported changes show +5.6% for the USA, +5.4% for the imports from Brazil rose 41% to almost 42 million tonnes, imports from Euro area (as high as +7.3% for Germany), and +5.9% for Japan. India were up 11% to 47m tonnes, and imports from Australia were up World crude steel production was up 5.8% in 2005. Pig iron produc- 13% to 69m tonnes. tion, requiring iron ore and coking coal, saw an increase of as much as China has for several years been among the largest steel importing 8.3%. In the steel industry it has in recent years become very much a countries in the world. However, in late 2004 it suddenly became a net question of China versus the rest of the world, with periods of quite exporter and is now, by far, the largest steel exporting country in the opposite developments or very large differences in growth rates. Lately, world. In 3Q this year, China exported some 14.6m tonnes of steel however, the world outside has also enjoyed a positive development on products and semis, mostly to nearby countries, against export volumes the steel side. During the first nine months of 2006, world crude steel of about 8.9m tonnes from Japan and 8.6m tonnes from Russia. production was up 9.3% from same period last year. China’s crude steel Generally, it is better for the dry bulk market when China imports more production was up 18.3% and the rest of the world was up 5.1%. steel because of the trade it generates in both iron ore and coking coal Looking at production of pig iron, which is more relevant from a ship- imports to countries making that steel, as well as the shipments of steel ping point of view due to its use of iron ore and coking coal, world pro- products, compared to making more steel in China. duction in the nine months of this year was up 10.5%, with China up The fact that China is taking market shares from other countries in 20.8% and the Rest-of-World up 3%. the international steel market has quite some downward leverage on tonnage demand. It is important to be aware that the fantastic Chinese steel boom can to some extent become a double-edged sword for the dry bulk market. The present substantial steel surplus in China could also reflect a slower growth in domestic demand. China has also become a giant in the aluminium market. During the first nine months of this year, China’s primary aluminium production was up almost 18% from the corresponding period last year, against an increase of just 2% for the rest of the world. This brought world production up almost 6%. China’s share of world primary aluminium production rose from about 24% in the first nine months last year to 27% in the corresponding period this year. ➩

China has for several years been among the largest steel importing countries in the world. However, in late 2004 it suddenly became a net exporter and is now, by far, the largest steel exporting country in the world

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Coal Exports It should be observed that only about 3% of China’s coal production 12 Millions Tonnes 3M. Averages is exported. With China’s huge demand for new electricity it is not 21 unlikely that China could turn into a net coal importer in a few years 18 and that coal imports to China could become a major driving force in

15 the dry bulk market in the medium and somewhat longer term. Statistics from Fearnresearch show that the world dry bulk trade vol- 12 ume rose 6% from 2,514 m tonnes in 2004 to about 2,665m tonnes in 9 2005, with about 2,820m tonnes expected in 2006, or up 5.7%. Coal shipments are expected to increase from 705m tonnes in 2005 to 735m 6 tonnes in 2006. Iron ore will this year see a stronger increase, from 3 670m tonnes in 2005 to about 735m tonnes, or the same as for coal, in

0 2006. Grain shipments (including soybeans) show a more stable devel- 94 95 96 97 98 99 00 01 02 03 04 05 06 opment from 242m tonnes in 2005 to 260m tonnes expected in 2006. AUSTRALIA USA (EX. Canada) CHINA INDONESIA INDONESIA The very heterogeneous group of other dry bulk commodities is estimated to increase from about 1,050 m tonnes in 2005 to 1,100 m tonnes It should be observed that only about 3% in 2006. China’s cement exports have shown a remarkable growth from less than 7 m tonnes in 2004 to almost 22 m tonnes in 2005 and possi- of China’s coal production is exported. bly close to 40 m tonnes this year. Cement is clearly the present handy- With China’s huge demand for new elec- size star commodity. How much this is a temporary phenomenon or is hard to say, but shipments of cheap commodities over long distances at tricity it is not unlikely that China could high freight rates are bound to face short-haul competition. Another turn into a net coal importer in a few years question is why there is such a large surplus of cement in China; could and that coal imports to China could it herald a slower growth in domestic construction activity? Containerisation of bulk cargoes has gained momentum in recent become a major driving force in the dry years. After continued ordering frenzy, the present order book for con- bulk market in the medium and somewhat tainer vessels stands at 53% of the existing fleet. With hardly any scrapping and a young container vessel fleet, it seems that the tonnage bal- longer term ance is bound to deteriorate further over the next couple of years. Empty containers to be repositioned will remain the largest commodity A look at Chinese trade volumes shows that iron ore imports rose group for many years to come. Therefore, a continued containerisation 32% to 275m tonnes in 2005, up as much as 67m tonnes. During the of some dry bulk trades seems likely, especially on the most imbalanced first nine months of 2006, iron ore imports to China were up 24% and container trade routes, such as in the Northern Pacific. might reach about 330m tonnes for the full year. Coal exports from Turning to tonnage supply, it appears that new bulk carrier orders China were down 15% to about 74m tonnes last year and a further dropped from 31m dwt in 2003 to 19m dwt in 2004, edged up to 20m reduction of 12% was seen over the first nine months this year. This is dwt in 2005, and reached 17m dwt over the first ten months of 2006. good for the freight market because of the need for more long-haul coal Because of strong freight market conditions, bulk carrier demolition imports to neighbouring countries. China’s coal imports, on the other sales decreased from 3.2m dwt in 2003 to just 0.6m dwt in 2004 and 1m hand, rose 35% to about 25m tonnes in 2005 and a further increase of dwt in 2005. After a modest scrapping wave caused by some negative 41% took place in the first nine months of this year. Annualised, this market views in the early part of this year, dry bulk demolition sales means Chinese coal exports of about 64m tonnes this year versus coal have dried up and reached 2.1m dwt over the first ten months. At the imports of 35m t. beginning of November, the bulk carrier order book, according to

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The major downside risk is a slow-down in the growth of the Chinese steel industry, but that slow-down has to be a strong one in order to have a major negative impact on the dry bulk market in the short and medium term. International conflicts and terrorism are also factors that can dampen or destroy the optimistic economic consensus scenarios

Fearnresearch, corresponded to 16.7% of the existing fleet, about the of the existing fleet. same as at the beginning of the year. Others have reported a present Looking ahead, it appears from Imarex future quotations on 1 order book share at up to 21%. Here, it should be said that November, that expectations were generally very rather good, albeit Fearnresearch always presents conservative figures for order books, generally showing significant declines over the next three years, after excluding options and rumours, and that their track record is good when some short term strengthening. Thus, for Capesize, the calendar 2007 it comes to the correspondence between reported order book volumes quotation was down 20% from present level, calendar 2008 down 38%, and actual vessel delivery volumes. However, whether the bulk carrier and calendar 2009 down 47%. Similarly, for the same three calendar order book is actually at about 17% or at 21% of the existing dry bulk years, Panamax quotations were down 14%, 35%, and 43%, and for fleet does not materially affect the conclusions in this presentation. The Supramax down 10%, 34%, and 42%. This seems to be in some con- age profile of the bulk carrier fleet towards the end of this year shows trast to the tonnage demand and supply scenario, but it should be that as little as 2.2% will be over 30 years old and just 10.6% over 25 observed that the seemingly rather bleak 2009 quotations are still years old. Hence, demolition of bulk carriers is still expected to play a roughly in line with break-even rates for tonnage acquired in today’s rather minor role for tonnage supply in the next few years. market. A look at the order book by size groups in early November shows Fearnleys’ Monthly market report for October shows required that the Capesize (80,000 dwt+) order book corresponded to about 27% timecharter rates of some $17,500 per day for new Supramax vessels, of the existing fleet, with strong concentration on Kamsarmax size of based on 25 years lifetime and 10% return on total capital invested. This 80,000 to 120,000 dwt and very large bulk carriers over 200,000 dwt. rate requirement is perhaps a bit on the high side, in view of the low For the Panamax size (60,000 to 80,000 dwt), the share was about 9%, interest rates in the present capital market and normally a somewhat and for the still rather modest size group of Supramax (50,000 to 60,000 longer lifetime for such tonnage. For comparison, the actual 12 month dwt) as high as about 38 %. On the other hand, the order book for timecharter rate for modern units of this size in early November was at handysize (10,000 to 50,000 dwt) was quite modest at only about 6%. $27,750. I’m inclined to believe that the Handymax/Supramax market From a future tonnage balance point of view, as seen by the ship will remain rather robust in the next few years and that we could see owners, the supply side appears to be most comfortable for the handy- rates one to two years from now which could turn out to be significant- size group. Actually, the fleet of bulk carriers below 50,000 dwt is likely better than what appears in the present Imarex quotations. Similar ly to diminish slightly over the next couple of years. However, the rap- considerations could be made for the other size groups. idly growing fleet of Supramax vessels will have a strong impact on the The major downside risk is a slow-down in the growth of the Chinese handysize market and also contribute to a stronger link between the steel industry, but that slow-down shall has to be a strong one in order Handymax and the Panamax markets. For the total size range 10,000 to to have a major negative impact on the dry bulk market in the short and 60,000 dwt, the order book in early November corresponded to 12.6% medium term. International conflicts and terrorism are also factors that can dampen or destroy the optimistic economic consensus scenarios. In their latest steel demand forecast, the International Iron and Steel Orders and Demolition Dry Bulk Market Institute says that steel demand growth in China could shrink from Million DWT Bulk and Comb. 3m. av. BDI 5.0 700 14.1% this year to 10.4% next year, to be followed by yearly averages of 5.8% from 2007 to 2010 and 6.2% from 2010 to 2015. For the total 600 4.0 world, IISI predicts a slowdown in the steel demand growth from 8.9% 500 this year to 5.2% next year, with averages of 3.8% for 2007-2010 and 3.0 400 4.2% for 2010-2015. Such medium and longer term growth rates should be considered to be quite strong. 2.0 300 In the dry bulk market, prospects look amazingly solid with good 200 momentum on the tonnage demand side and moderate fleet growth over 1.0 the next couple of years. My view is that the dry bulk market looks 100 healthier than the tanker and the container markets for the next couple 0 0 of years and that the present could be a good timing for tonnage posi- 94 95 96 97 98 99 00 01 02 03 04 05 06 tioning for subsequent years in the dry bulk market. ■ NEW ORDERS DEMOLITION SALES RATE INDEX

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 91 LIFESTYLE LAMBORGHINI

he catwalks of Paris are used to the sight of flowing curves But you had better act fast if you want to be one of the lucky few and striking models that push the boundaries of style and who get to indulge his passion and take her for a spin. Lamborghini has innovation and are guaranteed to induce a sharp intake of plans to keep this lady for the privileged few. Only ten will be made breath. But streamlined beauties flaunting the latest hot and a flood of footballers and millionaire playboys are already en route T style may just be upstaged by the latest curvy head-turner to the company’s factory near Bologna, Italy to get their hands on one. boasting beauty, poise and power. At its heart the Murcielago LP640 Versace is a standard (if such a When Lamborghini launched its Murcielago LP640 Versace at the word could ever apply to a ‘Lambo’) Murcialago LP640 with some 2006 Paris Motor Show each and every man in the room only had eyes fancy makeup. But when makeup is applied by Versace you are faced for one voluptuous outline. The beauty before them was a work of with an entirely different animal. genius – the combined efforts of Lamborghini and Versace’s leading Opulent full grain nappa leather, featuring the unique Greek fret designers had created a vision no man could resist. motif emblem of Versace, lines the lower half of the dashboard, the doors, the centre console and the seats to add style and comfort to the notoriously noisy and basic interior of a standard Lamborghini. And no designer car would be complete without an extensive list of accessories. The Versace’s ‘Precious Items’ division has created a Chrono Matt Soft Touch watch, available in white or a glossy black, depending on whether you choose the Isis white car shown in Paris or the Aldebaran black version unveiled at Milan fashion week. A ladies watch is also available in glossy white ceramic set with diamonds. For those wishing to mix getting down to business with a little pleasure the Murcielago LP640 Versace also comes with a person- alised luggage set. The three piece set, comprising of his and hers suit cases and a matt black calfskin suit carrier, again features the Greek fret motif along with a white satin interior embroidered with the Versace Couture Limited Edition logo. But the greatest achievement is

The Murcielago LP640 was already the fastest Lamborghini ever built. Now it has been given a professional make-over just in time for Christmas…

92 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 LAMBORGHINI LIFESTYLE

While the jaw-dropping price tag of €200,000 may appear daunting, the moment the 6.5 litre, V12 engine and ‘thrust’ launch control system fire you to 60mph in less than 3.5 seconds - all you need do is wait for your pulse to stop racing and reflect on money well spent

that the whole set has been designed to fit in the boot – an engineering success story in its own right. The LP640 Versace’s exterior is fully decorated with all of the optional extras from the serially produced Murcielago LP640. Specially designed black Hermera wheel rims, carbon finish and an engine hood with transparent glass ribbing give the car super-model looks, while the e-gear sequential paddle-shift gear box enhances the super car performance and racing experience. And while the jaw-dropping price tag of €200,000 may appear daunting, the moment the 6.5 litre, V12 engine and ‘thrust’ launch control system fire you to 60mph in less than 3.5 seconds - or to a knee- trembling top speed of 212mph - all you need do is wait for your pulse to stop racing and reflect on money well spent. ■

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 93 LIFESTYLE SKIING

Deer Valley Resort

A skier enjoys a powder day of skiing overlooking the Jordanelle Reservoir

94 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006 SKIING LIFESTYLE

Skiing in style

Ski resorts the world over are heaving under the force of people but, as Andy Pierce discovered, winter paradise is not too far away

issed with the pure white Utah snow, the Wasatch Mountains rise majestically into the blue winter sky above Deer Valley Park. The air is cold but refreshingly clear, and the hustle and bustle of urban life exists only as a distant memory. It is impossible to imagine that you K are only 30 minutes from Salt Lake City International Airport. Fortunately, despite the accessibility of the area and its high profile in the wake of the 2002 Winter Olympics (the Olympic Park is only four miles away); Deer Valley has escaped the curse of commercialism and budget holidays that blight so many ski resorts today. Indeed, there is not a single hoodie-wearing, gap-year student in sight as you pull up at the main entrance to be greeted by a valet, charged with taking your skis from your car to the snow. “Deer Valley has taken a five-star hotel model and applied it to a ski resort,” said Erin Grady, Communications Manager at the resort. “If you are looking for a great weekend, a family retreat or a romantic get-away it is a fantastic place to come. We believe we offer something for everyone.” Utah’s reputation for fluffy powder snow, coupled with a generous layout of mostly north-facing slopes, ensures visitors are guaranteed high-quality skiing that is ideal for family groups. “Each Mountain has been designed to cater for a range of abilities. If you are with a family and somebody wants to ski down a black run and somebody else wants to take an easier route down, our hill has been set up to accommodate that type of skiing. We also have fabulous glade skiing - we are famous for that. But we have great terrain overall,” Erin Grady explained. Each of the resorts 91 trails, spread across 1,825 acres, are protected by a daily limit on lift passes, so there is always plenty of space to explore the great outdoors, undisturbed. And even the most hedonistic hell-raisers will find something to their liking. Deer Valley is an annual stop on the FIS Freestyle World Cup Circuit, and in 2011 it will become the first American resort to host the freestyle World Ski Championships, twice. But it is not for skiing alone that Deer Valley has been rated as one of the top three resorts in North America for the past nine years, by reader of SKI magazine. It is consistently rated as number one in terms of dining, guest service and mountain grooming. “There is a lot to do besides skiing,” Erin Grady said. “The Stein Eriksen Lodge (a five-diamond hotel combining European elegance with mountain ➩

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And the standard of property is set to rise still further. In October 2005 Deer Valley was selected by readers’ of SKI as the perfect site to build the magazine’s first “Dream Home”. The ski-in/ski-out house, which is currently under construction, will boast 360-degree panoramic views of the Wasatch Mountains, Deer Valley’s ski slopes and the picturesque Jordanelle Reservoir. Stefanie Luciano, Vice President of marketing for Mountain Sports Media, publishers of SKI magazine said: “All the elements incorporat- ed into the Dream Home really represent the sort of lifestyle people are striving for in a ski vacation – a gathering place for family and friends – a wonderful kitchen for sharing warm winter meals – the hot tubs – the luxurious bedding and furniture – the spa area – the outside decks overlooking gorgeous mountain views, its all about living the good life and appreciating it.” architecture) has an amazing spa. You can also go bobsledding down at When complete in 2007, the Dream Home will be available for rent for the Olympic Park. Alternatively your can take a hot air balloon ride, go guests “seeking the ultimate ski experience”. Then all that will remain for dog sledging or visit the nearest town - Park City - which offers over the lucky few who can afford a stay at the Dream Home will be to get 100 bars and restaurants as well as genuinely unique boutiques and gal- themselves a new hoodie and prepare to lose them selves in the knowl- leries.” edge that paradise is only 30 minutes from an international airport. ■ However, with Deer Valley’s reputation for both on mountain and nighttime dining, there is seldom any need to venture so far. “There are two restaurants that really stand out for a romantic evening,” Erin NEW DEVELOPMENTS Grady suggested. “The Mariposa boasts a Spectator Award-winning This summer $7m was invested in a new high-speed quad, wine list and is rated number one in the Zagat Restaurant guide for which replaced Bald Mountain’s Sultan chairlift. The project Utah. Then we have Fireside Dining (at the Empire Canyon Lodge) opened up an extra 1,000 vertical feet and 75 acres, including which is an Alpine style dining experience with beef, veal stew and expanded glade skiing and a new intermediate run. ‘roasties’, followed by chocolate and caramel fondue by the fire place.” If you are not tempted by the prospect of first class food, then per- DON'T MISS haps the resort’s five-star accommodation would be more to your lik- First Tracks. Get first crack at Deer Valley’s famous corduroy ing. “Deer Valley has very high end luxury properties - a lot of them are with a guided 8am tour from the base of the Wasatch lift ($1,200 luxury condominiums that can be up to 8,000 square feet - which you for up to eight skiers). Make sure you book in advance. can rent for the evening. We also have several different ski-through, slope-side properties, that average 15,000 square feet plus,” Erin Grady LOCAL SECRET explained. For those looking to invest in property, Dear Valley’s start- Unmarked, fluff-rich tree runs include Black Forest, between ing ‘condos’ cost in the region of $1m; while at the top end of the mar- Stein’s Way and Perseverance, and X-Files, at the far end of the ket properties can go for between $10m and $15m. traverse, past the Daly Chutes.

The Daly Chutes at Empire Canyon Deer Valley Resort Deer Valley