Cooperation Towards Cleaner Emissions

Cooperation towards cleaner emissions

A process design for the cooperation of the port authorities of Singapore and Rotterdam to reduce bunker emissions

Final Report November, 2008

M. G. Minnée

Master Thesis, SPM 5910 Systems Engineering Policy Analysis and Management, TU Delft

The picture on the front page shows the bunkering of the ‘Emma Maersk’ by the ‘VT Vlissingen’. Source: Port of Rotterdam Authority

Cooperation towards cleaner emissions

A process design for the cooperation of the port authorities of Singapore and Rotterdam to reduce bunker emissions

Final Report November, 2008 Master Thesis, SPM 5910 Systems Engineering Policy Analysis and Management, TU Delft

Name: M. G. Minnée Student number: 1102230 Email: [email protected]

Graduation Committee: Dr. ir. R.M. Stikkelman TPM faculty Dr. A.F. Correljé TPM faculty M. Prinssen MSHE Port of Rotterdam Authority Dr. ir. P.M. Herder TPM faculty (substituting Prof. M. Weijnen)

Acknowledgements______

This report is the result of a research done to finalize my master’s degree in Systems Engineering, Policy Analysis and Management (SEPAM). The result could not have been realized without the help of several people:

I would like to thank all those who contributed to the quality of my work: Rob Stikkelman for his guidance and keeping me ‘on the right track’ during the entire period and Paulien Herder and Aad Correljé for their input, ideas and reviews during meetings. I would like to thank Port of Rotterdam Authority (PORA) for the opportunity to work on this specific subject, for the experience of working at an office and for their support for my visit to Singapore. In particular I would like to thank Maurits Prinssen for his help and guidance throughout the entire period. It has been a pleasure sitting across the table from you.

My gratitude also goes out to the Maritime and Port Authority of Singapore (MPA) and the Nanyang Technological University (NTU) for the facilities they provided me with during my stay in Singapore. Although my stay in Singapore was relatively short, it was very fruitful. This could not have been without the help of many people: mr. Tan Soon Keat for providing a place to work at the NTU during the last two weeks of my stay; Annoek van den Wijngaart for her help and mediation with the MPA in advance and during my stay in Singapore; mr. Maserati for getting me in contact with many of his colleagues and mr. Yow for organizing a working place during the first week of my stay, for showing a large interest in my research and for arranging several interviews during my stay.

This research would not have been the same without the help of all those who contributed to the substance of my research. From the Port of Rotterdam Authority, Mr. Backers, Mr. Sebus and Mr. Stadhouders were willing to help me several times; I would like to thank them for their time and effort. Furthermore, I would like to thank all interviewees for their help and the information they provided: In the Netherlands; Mr. Kolpa (Ministry of V&W), Mr. Brutel de la Rivière (KVNR) and Mr. Nobel (Shell); In Singapore; Mr. K. Alam, Mr. Tan, Capt. Solomon George, Mr. Goh Teik Poh (all from APL), Mr. Z. Alam, Mrs. Hoh, Mr. Leong (all from MPA) and Mr. Sivanandam and Mr. Prodduturi (both from SPC).

On a more personal note, I would like to thank all my friends and family for their support; in particular Daisy and Marlies who took the effort of reading and improving my report. I specifically like to thank my parents and my housemates; thank you for your patience, laughs and support during the entire period.

Malou Minnée November, 2008

III

Executive Summary______

Most of the environmental efforts in transportation have concentrated on the transport on land. Transport at sea however was often forgotten. In April 2008 international agreements (adopted in October 2008) were made by International Maritime Organisation (IMO) to reduce the percentages of polluting substances in emissions caused by the use of bunker oil. The port authorities of Rotterdam and Singapore have indicated that this reduction is a good start but more can be done. Both authorities have agreed to investigate the possibilities to handle the problem of dealing with the emission regulations in the future together [Stikkelman, 2007]. Cooperation could lead to a situation that is beneficial compared to individual approaches of emission reduction. This leads to the following research question: What are the benefits and drawbacks for the Port Authorities of Singapore and Rotterdam if they cooperate in taking measures to reduce emissions due to bunker oil and what should the cooperation process look like?

In order to answer this research question a comprehensive analysis was made that focuses on the technical system, the economical system and the stakeholder network in which bunker oil is situated in the Netherlands and in Singapore. As a result of this analysis, the design space in terms of solutions and trade- offs was determined in which the possible cooperation between both ports can take place. Theory and the analyses mentioned above served as input for the process design.

Assuming that there would be benefits from cooperation, a ‘quick and dirty’ scan of the organisational structure was made to determine what the cooperation process should look like. This turned out to be a process, based on the theory of process management. However, the theory of process management does not incorporate the management of possible cultural differences, whereas these might be expected between such different countries. The idea of using process management which was based on a quick scan of the overall organisational structure led to several questions such as: “Will Singaporeans accept and work with process management?” Information from the analyses provided answers to these questions.

The technical analysis showed that the bunkering systems in Singapore and Rotterdam do not differ on many parts. Singapore has more standardizations and formalizations for the bunker procedures and the bunker quality than Rotterdam does. Quality and quantity measures are done manually in Singapore while being fully automated in Rotterdam. These differences however, have little influence on the discussion whether or not cooperation is beneficial: they do not provide extra benefit but do not provide disadvantages as well. The analysis also showed that most damage by emissions is done in the coastal areas; therefore, this is the most interesting area to look at when defining a measures or regulation.

In the economical analysis a general analysis was made of the bunker market. It was determined that cooperation of both ports will lead to an increase in the world market share. This means an overall reduction in competition between the two ports will take place in case of cooperation on emission reduction. In addition, the main factors were identified that have influence on the price of bunker oil on each other. The economical analysis also comprises a list of decision factors that determines the preference of ship-owners on which ports to bunker. Part of these decision factors are the economic factors. It was shown that a possible increase in costs (due to possible new regulations in Singapore and Rotterdam) would not necessarily mean that the ports would lose customers to other ports. This benefit from cooperation is however only present on the specific shipping route between Singapore and Rotterdam. Emission reduction measures on other routes do not have this extra benefit from cooperation. In general, extra costs on bunkering can also lead to effects outside the bunker market: ships might decide to call other ports not only for their bunker but also for their cargo. The analyses provide input for a list of techniques and policies that can reduce emissions, all with their own level of effectiveness. The fact that few of these have actually been implemented in practice is a result of the negative side-effects these solutions or measures have. The fact that there are so many stakeholders who have an interest in this issue does not contribute to quick and transparent decision-making on this topic. What is seen as the perfect solution for one stakeholder can be the worst solution for another. For this reason, no set of alternatives has yet been chosen to continue decision-making with. All options are still open. Most of the trade-offs between solutions and their negative effects are mentioned in chapter 7.

An inventory was made of all parties with an interest in this subject and has resulted in a long list of stakeholders. Some of these stakeholders are very dedicated to this subject or are critical for the cooperation process since they have the authority to implement regulations on this subject. The Port of Rotterdam Authority does not have the authority to do so, which means they need the cooperation of other authorities. The Dutch authority to implement regulations dealing with emissions from vessels is spread over several stakeholders; this is in contrast with the centralized authority in Singapore. This is the first of several differences between Singapore and Rotterdam. Other cultural differences that were identified were the amount of branch and environmental organisations in the Netherlands compared to those in Singapore (none). The Singaporeans are very loyal to their superiors. These differences have no influence on whether or not cooperation between both ports leads to an extra benefit, but it does have its effect on the decision-making process: The Port of Rotterdam Authority finds itself in a network of stakeholders, all with significant powers and resources, while the Maritime and Port Authority of Singapore finds itself in a hierarchical system and is theoretically able to decide things by itself. The overall system, both Rotterdam and Singapore are in, can still be described as a network. According to the theory, process management can be successful in network systems. The hierarchical characteristics of Singapore’s organisational system however need to be incorporated in the decision- making process. The focus on the emissions in the coastal zones was made during the technical analysis. However, the stakeholder analysis confirms this demarcation. The stakeholders from Singapore and Rotterdam do not have authority over areas other than the port and the coastal areas.

On the whole, it can be concluded that cooperation between the port authorities of Singapore and Rotterdam has extra benefits compared to a situation without cooperation. However, more stakeholders need to be involved and it has to be noted that the benefits are mainly on the shipping route between Singapore and Rotterdam.

The analyses have also provided insight into the culture and the systems in which the initiators (port authorities of Rotterdam and Singapore) are situated. These findings provide us with answers to the questions raised earlier during the theoretical phase. It can be concluded that process management can be used in the overall decision-making system. Both theory and practice indicate that the Singaporean culture does not reject the core values of project management, which means that they are likely to accept and work with it. However, adjustments need to be made to incorporate the high level of centralization (high power distance) in the Singaporean system. Furthermore, some cultural differences in ways of communication imply a specific attention to the way things are communicated during the decision-making process. This will put extra pressure on the skills and competences of the participants. Staffing will become a more important issue.

All results from the analyses lead to the conclusion that a process design needs to be made. This process design represents a first draft of how the cooperation process between Singapore and Rotterdam should be formed. The basic structure of this draft of a process design consists of 6 rounds, preceded by an introductory round. In this round stakeholders are invited to discuss their perceptions of the problem. This should lead to a shared problem perception. • The first round includes a covenant that needs to be signed by several stakeholders to increase the speed during the remainder of the process. This covenant consists of a number of agreements between the stakeholders about the basic structure of the process, the communication during the process and the involvement of specific stakeholders, the most important agreements: The process is managed by two process managers, one from Singapore (MPA) and one from Rotterdam (Harbour Master Division). Stakeholders that should participate in each round are: Harbour Master Division, Port of Rotterdam Authority, Ministry of V&W, Maritime and Port Authority of Singapore, VNPI and KVNR. All communication should be executed in English. • In the second round further process agreements will be made about the structure of the process. Not all stakeholders will be involved during each round. There will be specific moments at which all stakeholders are invited to participate in the decision-making. During the decision-making there will be two groups (existing out of the stakeholders mentioned above): a project group and a steering group. The project group does all the operational work. The steering group consists of people that have commitment power and can speed up the process. Especially the ministry of V&W is able to steer the project hierarchically when necessary. • The third round focuses on the dilemma sharing. Chapter 7 of this report can serve as input for this discussion.

• In the fourth round performance criteria need to be formed. Stakeholders other than those named above should be involved in this round (e.g. NOVE, SSA, etc). After this round a review moment should be introduced. This is needed to check whether the criteria cover all aspects: technical, economical and political. Furthermore, it should be determined whether a criterion is a hard requirement or a wish. This is needed to evaluate the alternatives developed in round 5. • The fifth round addresses the formulation of alternatives that can be implemented by all stakeholders to reduce the emissions. Chapter 6 of this report can serve as input for this round. • The sixth round exists of the decision moment. An alternative from round five will be chosen based on the criteria that are formulated in round four. In this round other stakeholders are invited again to participate.

Before this process design is executed it is important to realize that the IMO agreements made last April have resulted in the fact that there is no sense of urgency at this point in time. This sense of urgency should be created first before the process is started. This can for instance be done by repeatedly placing this topic on the agenda during meetings or by stressing on existing and new studies that prove the need for reduction of emissions. Furthermore, this process design needs to be tested and discussed with the participating stakeholders before any round is started.

List of Abbreviations______

BLG Sub committee of IMO; Bulk Liquid Gases BP British Petroleum CONCAWE (European oil branch organisation) EC European Commission ECA Emission Control Areas (follow up of SECA, incl. NOx emissions)

ECSA European Community of ship-owners’ Associations EPA / DCMR Environmental Protection Agency Rijnmond ESPO European Sea Ports Organisations EU European Union EUROPIA European Petroleum Industry Association

FOEI Friends of the Earth International HFO Heavy Fuel Oil IAPH International Association of Ports and Harbors IBIA International Bunker Industry Association ICS International Chamber of Shipping

IMO International Maritime Organisation IPIECA International Petroleum Industry Environment Conservation Association IPTA International Parcel Tankers Association ITOPF International Tanker Owners Pollution Federation KVNR Royal Association of Dutch ship-owners

MEPC Sub committee of IMO; Marine Environment Protection Committee MARPOL 73/78 International Convention for the Prevention of Pollution From Ships Ministry of V&W Ministry of Transport, Water Management and Public Works Ministry of VROM Ministry of Public Health, Spatial Planning and Environment MPA Maritime and Port Authority of Singapore

NEA National Environmental Agency (Singapore) NOVE (Dutch branch organisation for independent bunker companies) OCIMF Oil companies International Marine Forum OIESC Oil Industry Environment Steering Committee PM Particulate Matter

PORA Port of Rotterdam Authority S Sulphur SECA Sulphur Emission control Areas SRC Singapore Refining Company Private Limited SSA Singapore Shipping Association

UPEI Union Pétrolière Indépendente Européene (branch organisation) VNPI Vereniging Nederlandse Petroleum Industrie VRC The Association of Rotterdam Shipbrokers and Agents

VII

Table of Contents______

Acknowledgements ...... III Executive Summary ...... IV List of Abbreviations ...... VII Table of Contents ...... VIII

Part I Introduction

1 Problem Description ...... 2 1.1 Introduction ...... 2 1.2 Problem Description ...... 4 1.3 Research Questions ...... 5 1.4 Research Approach ...... 6 1.4.1 Research methods ...... 6 1.4.2 Structure of report ...... 7

2 Theoretical Framework ...... 9 2.1 Organisational Structure and Suitable Management ...... 9 2.1.1 “Quick and dirty” scan of organisational structure ...... 9 2.1.2 Determination of type of management or tool to use ...... 10 2.2 Process Management ...... 12 2.2.1 Core elements of process design ...... 12 2.2.2 Process design ...... 13 2.2.3 Results of process management ...... 15 2.2.4 Risks of process management ...... 15 2.3 Conflict with Process Management ...... 15 2.4 Cultural Management ...... 16 2.4.1 Importance of cultural differences ...... 16 2.4.2 Cultural dimensions ...... 16 2.5 Process Management and Cultural Management Combined ...... 19 2.5.1 Process management from a Dutch perspective ...... 19 2.5.2 Process management from an opposite perspective ...... 20 2.5.3 Process management with multiple cultures participating ...... 21 2.6 Theoretical Expectations of Cultural Differences ...... 25 2.7 Conclusions ...... 26

Part II Analysis

3 Technical Analysis ...... 28 3.1 System Overview ...... 28 3.1.1 Import ...... 28 3.1.2 Refinery & quality level of oil ...... 30 3.1.3 Storage & barges ...... 32 3.1.4 Shipping ...... 32 3.2 Emissions ...... 33 3.2.1 Origin of emissions ...... 33 3.2.2 Damage on environment and public health ...... 34 3.2.3 Location of damage caused by emissions ...... 35 3.3 Shipping Routes ...... 36 3.4 Final Notes ...... 37

4 Economical Analysis ...... 39 4.1 Competition in Bunker Market ...... 39 4.1.1 Rotterdam ...... 39 4.1.2 Singapore ...... 40

VIII

4.1.3 General ...... 41 4.2 Future Developments in Bunker Market ...... 42 4.2.1 Growth in bunker demand ...... 42 4.2.2 Dynamics in market of heavy fuel oil (HFO) ...... 43 4.3 Decision Factors for Bunker Purchase ...... 45 4.3.1 Non-economic decision factors ...... 46 4.3.2 Economic decision factors ...... 46 4.3.3 Decision factors: combined ...... 48 4.4 Costs of Shipping Routes ...... 48 4.4.1 Ship of reference ...... 49 4.4.2 Impression of costs ...... 49 4.5 Final Notes ...... 50

5 Stakeholder Analysis ...... 52 5.1 Stakeholder Analysis ...... 52 5.1.1 Level of aggregation ...... 52 5.1.2 Analysis of stakeholders ...... 52 5.1.3 Distribution of authority ...... 53 5.2 Predictive Analysis of Dynamics of the Stakeholders ...... 53 5.3 Cultural Differences in Management ...... 56 5.3.1 Practice ...... 56 5.4 Implications for the Process Design ...... 59 5.4.1 Roles of stakeholders ...... 59 5.5 Final Notes ...... 60

6 Solution Space: Measures for Reduction of Emissions ...... 61 6.1 Technical Instruments ...... 61 6.1.1 Pre-treatment ...... 61 6.1.2 Primary methods ...... 61 6.1.3 Secondary methods ...... 62 6.1.4 Operational / Quantity of fuel measures ...... 62 6.2 Possible Results of Technical Measures ...... 63 6.3 Policy Measures ...... 65 6.3.1 Measures steering towards and focussing on a emission reducing technique ...... 65 6.3.2 Differentiated ports/fairway dues ...... 65 6.3.3 Distance-related emission charges ...... 66 6.3.4 Taxation ...... 66 6.3.5 Emission trading ...... 66 6.4 Solution Space for Policy Measures ...... 66 6.4.1 An illustrative example ...... 67 6.5 Final Notes ...... 68

7 Solution Space: Trade-Offs ...... 69 7.1 Potential Substantive Trade-Offs in Solutions ...... 69 7.1.1 Sulphur emissions (for example) vs. CO2 emissions ...... 69 7.1.2 Low sulphur fuels vs. Implementation problems ...... 69 7.1.3 Shipping vs. Other modalities ...... 70 7.1.4 Reduction of emissions vs. Costs ...... 70 7.1.5 New regulations vs. Current law ...... 70 7.1.6 Invitation of neighbouring countries vs. Competitive position ...... 71 7.1.7 Focussing on specific route vs. Competitive position ...... 71 7.2 Trade-Offs for Process Design ...... 71 7.2.1 Technical approach vs. Consensus ...... 71 7.2.2 Active involvement of stakeholders vs. Excluding stakeholders (Carefulness vs. Speed) ...... 72 7.2.3 Creating prospects of gain vs. Not creating prospects of gain (Carefulness vs. Speed) ...... 72 7.3 Final Notes ...... 73

Part III Results

8 From Analysis to Process Design ...... 75 8.1 Combining Theory and Analyses ...... 75

8.2 Implications for the Process Design ...... 76

9 Process Design ...... 78 9.1 Start Up ...... 78 9.1.1 Objective and general approach of process design ...... 78 9.1.2 Timing ...... 79 9.1.3 The process architect ...... 80 9.1.4 The process manager(s) ...... 80 9.3 First Round: Preliminary Covenant ...... 83 9.4 Project Group and Steering Group ...... 86 9.5 Second Round: Process Structure and Basic Process Rules ...... 88 9.6 Structure of Process ...... 90 9.7 Final Notes ...... 94

10 Conclusions and Recommendations ...... 95 10.1 Conclusions ...... 95 10.2 Recommendations ...... 98

11 Reflection ...... 100 11.1 Reflection on Theoretical Approach ...... 100 11.1.1 Process management ...... 100 11.1.2 Cultural management ...... 100 11.2 Reflection on Analytical Phase ...... 101 11.3 Reflection on Process Design ...... 102 11.3.1 Potential threats and solutions for this process design ...... 102 11.3.2 Applicability of this process design in another context ...... 103

12 References ...... 105 12.1 Literature ...... 105 12.2 Websites ...... 107 11.3 Experts ...... 110

Appendix A: Interviews ...... 111 Appendix B: Technical Analysis ...... 136 Appendix C: Stakeholder Analysis ...... 140

Part I

Introduction

1 Problem Description______

In this chapter the problem will be explained that will be dealt with in this report. First, an introduction of the current situation is given (§ 1.1). This will result in a problem description (§ 1.2), which leads to the research questions (§ 1.3). These questions lead to a research approach which is presented in § 1.4.

1.1 Introduction

For quite a few years, limiting environmental damage due to air pollution has been an issue in political debates around the world. Regulations to decrease the amount of emissions have become stricter and stricter for the transport on land but relatively limited attention has been paid to the pollution due to sea transport. J.J. Corbett et al. prove that this is something that should not be have been neglected as it can have big consequences. They come to the following conclusion:

“Under current regulation and with the expected growth in shipping activity, we estimate that annual mortalities could increase by 40% by 2012” [Corbett et al. 2007 p. 8512].

This air pollution is caused by the fuel that ships use to sail around the world. In the world of sea shipping, at this moment, two types of fuel oil are used; distillate oils and residual oils. A collective term used for these fuel oils aboard ships is bunker oil. Both are products from processing crude oil in refineries. When crude oil enters the refinery, it can be processed into different sorts of refined products (distillates). On the other hand, there are also residual products from the refinery process such as asphalt and residual oil. When residual oil is mixed with a small amount of distillate, it becomes Heavy Fuel Oil (HFO), which is suitable for, among other things, marine engines [Donkers and Leemans, 2007, p. 6]. Especially this latter type may have a relatively high percentage of sulphur in it, which is a polluting substance: on average 2,7% instead of 0,5% in distillate. [Wilde et al., 2007, p. 14].

State of the art

2,7% S 0,5%-0,1% S (Residual oil) (Distillate oil)

Figure 1, Current average sulphur percentages in oil

The current regulations considering air pollution from ships are based on the International Convention for the Prevention of Pollution from Ships. This came about in 1973 and was modified by the protocol of 1978 [IMO, 1998]. Annex VI of MARPOL 73/78 is concerned with the prevention of air pollution from ships. The EU regulation for this issue is predominantly based on MARPOL Annex VI [EC, 2005]. In addition to MARPOL, the EU directive prescribes that, from 2010, during their stay in a port, ships are permitted to use fuels that have a maximum of 0,1% m/m sulphur. The Netherlands have implemented these EU regulations about the content of sulphur in fuel [Ministerie van Verkeer en Waterstaat, 1983]. At this moment, MARPOL Annex VI states that the sulphur content should not exceed 4,5% by mass and should not exceed 1,5% by mass in SECA (SOx Emission Control Areas) areas. These areas are at this moment the North Sea and the Baltic Sea [IMO, 1998]. Singapore commits itself to the international regulations. Therefore, the current regulations in Singapore are the same as the IMO regulations. Singapore does not have a SECA area.

Figure 2, Current regulations considering sulphur percentage in bunker oil.

In July 2007, the IMO (International Maritime Organisation) has taken the initiative to revise MARPOL Annex VI. This resulted in a meeting April 2008 in which one alternative was chosen that is set up to reduce emissions from vessels. This alternative still needs to be approved in October 2008 in order to be implemented. The alternative that was agreed upon is considered to be better than most stakeholders expected. The future regulations on sulphur content that will be implemented after approval in October 2008 are stated in table 1. SECA areas will in future be named ECA areas, as the focus on control of emissions will be broader than just on sulphur content. The new regulations also include NOx emissions (see table 2). These include new emission requirements beginning from March 2010, new NOx emission standards for new engines and NOx requirements for existing pre-2000 engines [Dieselnet, 2008]. The future regulations imply the use of distillate around the world from 2020 onwards.

The future regulations that were proposed by the IMO have their consequences for all the actors involved in the bunker world. E.g. they can imply changes on board ships to handle three types of fuel, each with their own quality (port, ECA, ocean). In addition, refineries might need to adapt their processes as well. Reducing the sulphur percentage in residual oil below 0,5% is technically possible but needs more processes within refineries than currently needed to meet the norms and standards. At present the refineries do not have the capacity to do so. This means that the refinery industry needs to make large investments in order to deliver the required quality of the fuels.

Table 1, Future IMO regulations of Sulphur in ECA areas and global [Dieselnet, 2008] Emission Control Area demands on Sulphur content Period Maximum Sulphur content in fuel oil (% m/m) Now till 1st of March 2010 1,50 1st of March 2010 till 1st of January 2015 1,00 From 1st of January 2015 0,10 Global demands Sulphur content Period Maximum Sulphur content in fuel oil (% m/m) Now till 1st of January 2012 4,50 1st of January 2012 till 1st of January 2020 3,50 From 1st of January 20201 0,50

Table 2, Global IMO regulations for NOx [Dieselnet, 2008] NOx Limit, g/kWh Date n < 130 130 ≤ n < 2000 n ≥ 2000 2000 17.0 45 x n^-0.2 9.8 2011 14.4 44 x n^-0.23 7.7 2016 3.4 9 x n^-0.2 1.96

1 With a possibility of extension until 1-1-2025 or later after a review in 2018. This is especially done to deal with possible availability problems of fuel oil that meets these standards.

1.2 Problem Description

At present, the port of Rotterdam (406 million tonnes in 2007 [Port of Rotterdam Authority 2007a]) and the port of Singapore (483 million tonnes in 2007 [Maritime and Port Authority of Singapore 2008a]) belong to the top 3 biggest ports in the world. These two ports represent the two biggest ports in bunker oil. The total throughputs of bunker in the ports of Singapore (31,5 million tonnes bunker oil in 2007 [Maritime and Port Authority of Singapore 2008b]) and Rotterdam (13,6 million tonnes bunker oil in 2007 [Port of Rotterdam Authority, 2007c]) combined form a little more than 12% of the total marine fuels that is bunkered around the world (see § 5.1.3).It is therefore likely that any new policy of these ports concerning bunker oil is of influence to the bunker market around the world.

The port of Rotterdam and the port of Singapore are of enormous importance for the cities as it is an important factor in the national economy and as it provides a lot of work in the region. Therefore it is essential that both ports remain successful and do not lose customers to other ports. In the port of Rotterdam alone, there are about 1500 people working directly related to bunker oil [Port of Rotterdam Authority 2007b]. On top of that, there are many others working indirectly in this sector as well. Obviously, the same applies for the port of Singapore as the bunker oil forms a large share of the ports’ throughput as well.

In the Netherlands, the Dutch government and the municipality of Rotterdam want to minimize the total amount of emissions in the port. However, the port is still growing and increasing amounts of ships are coming to the port. Taking in consideration the plans of the port to expend to “Maasvlakte 2” which leads to even more ships in the port, this will collide with the goals of the government and the municipality to limit the amount of emissions. When the amount of emissions per ship is reduced, an increase in the amount of ships would therefore not lead to an increase in the total amount of emissions. In addition, the overall policy of the port authority itself is to focus more and more on Corporate Social Responsibility. For these reasons, the Port of Rotterdam Authority (PORA) is interested in measures or regulations to limit emissions.

The Port of Rotterdam Authority and the Maritime and Port Authority of Singapore [Alam Z., 2008] were pleased to see that the IMO meeting of April resulted in a relative progressive agreement. However, there is more that can be done. Not all polluting substances are covered in the IMO agreements and even with the future IMO regulations there will be enough emissions that should be reduced. These latter facts in combination with the considerations of the PORA to be more environmental conscious, leads to an ambition of the PORA to implement strict environmental measures or policies, especially in the bunker industry.

Unfortunately it takes a lot of time and effort to organise and execute decision-making with all stakeholders in the world. By not including all these stakeholders in this ambition, a lot of time, costs and effort could be saved. Choosing this fast path of decision-making of regulations, without the rest of the world having the exact same regulations, can have a huge effect on the bunker market. In the competitive environment that bunker is in, chances are that the bunker oil in Rotterdam, in contrary to one of the objectives of the regulations, will not be refined to a cleaner product, because the adjustments to the refining processes are to expensive. It might turn out to be cheaper to transport the residual oil to another port, for instance Singapore or Fujairah, to be sold and used there.

Just like the PORA, the MPA of Singapore is currently interested to reduce emissions [Stikkelman, 2007] and just like in Rotterdam the port will struggle with the same difficulties when implementing stricter regulations in the port than in the rest of the world. As stated above, together both ports share about 12% of the total bunker market in the world. If both ports try to cooperate in their strategy to reduce emissions, there might be more opportunities to handle reduction of emission without negative shifting in the bunker market.

1.3 Research Questions

In a recent meeting between the Maritime and Port Authority of Singapore (MPA) and the Port of Rotterdam Authority (PORA), both authorities have agreed to investigate the possibilities to handle the problem of dealing with the emission regulations in the future together [Stikkelman, 2007].

The common goal that they have formed is to reduce the emissions from vessels that came about due to the use of bunker oil. Although several studies have examined the impact of different fuel sorts on the environment and a quick scan has been made to see the economical consequences on prohibiting residual oils in Rotterdam [Wilde et al., 2007], no research has been done to see if the port authorities of Singapore and Rotterdam can help each other in protecting their bunker market shares while implementing emission regulations. Cooperation could lead to a situation that is beneficial compared to individual approaches of emission reduction. The Port of Rotterdam Authority has initiated this research project to take a closer look at this.

The goal of this study, requested by the Port of Rotterdam Authority, will be to find out what the benefits and drawbacks are for the port authorities of Rotterdam and Singapore if they cooperate in taking measures to reduce emissions due to bunker oil and how this cooperation should be executed.

This research goal leads to the research question and sub-questions as presented below. The sub- questions provide a framework which will help to find an answer to the overall research question:

Research question: What are the benefits and drawbacks for the Port Authorities of Singapore and Rotterdam if they cooperate in taking measures to reduce emissions due to bunker oil and what should the cooperation process look like?

A technical, economical and stakeholder analysis provide insight in the benefits or drawbacks that cooperation between the stakeholders might include. Furthermore, these three analyses cover all aspects of the system needed for a process analysis. This leads to the following sub-questions:

Sub-questions: 1) Technical analysis a. Which differences are present in the technical system between Singapore and Rotterdam? b. Which technical measures can be taken to reduce the emissions from bunker oil?

2) Economic analysis a. What factors determine the choice of ship-owners to bunker in a specific port? b. What is the economic space Singapore and Rotterdam have, apart and together, due to implementation of measures for bunker oil, before market shares are lost?

3) Stakeholder analysis a. Which stakeholders play a critical role within the bunker market in the ports of Singapore and Rotterdam and are dedicated to participate in the discussion about the problem of lowering emissions due to bunker oil? b. What is the scope of authority that the stakeholders have?

4) Theoretical framework a. Which theory suits the cooperation process? b. Will Singaporeans accept and work with this approach? c. Will this approach lead to a successful decision in both Rotterdam as well as Singapore?

1.4 Research Approach

In this paragraph the research approach will be set out. First of all, the research methods will be stated. These methods will provide the information that is needed to complete the research. Next, the structure of the report is presented in order to provide the reader insight in the build up of this research. This will give a good impression of how the research is structured.

1.4.1 Research methods To be able to provide suitable answers to the research questions, different methods of research can be used. For each research question a specific research method is identified in order to get useful information. These research methods, each specified for each individual sub-question, are shown in table 3.

Table 3, Research methods Sub- Question Activity Research Methods 1 Technical analysis Literature, Interviews 2 Economical analysis Literature, Interviews 3 Stakeholder analysis Literature, Interviews 4 Design of Process Literature

1) In the technical analysis the emission problem (due to bunker oil) will be looked at from a technical perspective. First, all activities will be identified that bunker oil will go through from arriving in the port to being bunkered onto a sea-going ship. This can be different for both ports. This can influence the power of the port authorities to implement measures and can influence the type of measures that can be taken. This process of bunker oil within a port will be identified with the help of literature and interviews in each port. Secondly, all specific substances that can cause emissions need to be identified. This can be done with a literature research. Thirdly, the technical possibilities to handle these pollutants are analysed. This will be done mainly with a literature research and partly by interviews with stakeholders. Each stakeholder has their own interests and their own ideas and technical solutions about how to handle these problems. Although the future regulations, as agreed upon during an IMO meeting, are focussed on shifting from residual oil to distillate, it is important to recognise that there are other, possibly new technical solutions that might be very interesting. Companies can propose different and more creative options which can turn out to be very helpful. A shipping company might come up with other ideas than a refinery.

2) The economical analysis will focus on the bunker market and the position that the port of Singapore and the port of Rotterdam have in this market. As both ports do not want to lose market share due to regulations, it is important to see what the factors are for ship-owners to decide to bunker in one port or another. Working together on this issue keeps the level playing field between them the same. Since both ports together have about 12% of the market it is interesting to look at their chances at an economic level when they cooperate. The analysis will try to identify the height of different costs in order to show the scope of the increase that the bunker oil price in both ports can make before market share is lost. Literature, desk research and interviews will provide the necessary information.

3) The stakeholder analysis will be executed with the use of interviews in both Singapore and Rotterdam. Also thorough desk research will contribute to this analysis: On the internet, in publications and in reports, information can be found on which actors are involved in the bunker market in the ports of Rotterdam and Singapore. Some of these actors are relatively large and have united and therefore have more means to influence the decision-making process than others and some actors are more dedicated to the subject than others. Interviews with several actors can determine which stakeholders are critical for the developments in the bunker market in both ports and critical for this research. Some of the critical actors have specific responsibilities and authority they can use to deal with this issue. Other stakeholders have other resources they can use to steer the decision-making in their wanted direction. To determine the scope of powers and resources that stakeholders have in their own country desk research is needed.

4) The way that cooperation between the two ports will take place, should be identified. The theory will provide a certain idea to approach this cooperation. The characteristics of the system will provide specific information which needs to be incorporated in the type of cooperation that the theory suggests. It is important to see that both authorities will have to deal with a lot of stakeholders, each with their own interests, while each others interest might not match entirely. This might lead to difficult situations. Literature will help to deal with this.

1.4.2 Structure of report The structure of the report is visualized in figure 3. This figure provides the reader with insight in the steps and structure within this research. The numbers at the bottom left of each block refer to the chapter in this research.

The overall structure of this report can be defined as following: After the introduction of the problem and when the research questions have been made, a theoretical framework will be constructed. This framework deals with management theories that are likely to fit this case. This assumption is based on a quick scan of the system in which this problem takes place. The problem description and the introduction serve as input for this quick scan and therefore it might have some inconsistencies with the actual real situation. Therefore an analysis is needed of this specific issue (cooperation between Singapore and Rotterdam to reduce the emissions from vessels due to bunker oil) to provide input for the theoretical framework. The analysis and the conclusions and the –adjusted or fine-tuned– theoretical framework eventually lead to a suitable process design specifically made for this problem.

The analytical phase exits out of several items. As mentioned earlier, the research needs to be approached from multiple sides in order to cover all important aspects. This means the research should respect the following aspects; Technical system, stakeholders and economical system. This leads to a solution space that exists out of possible solutions and trade-offs. The entire analytical phase is visualized in figure 3 by a blue frame. In the technical analysis, the complete technical system is analyzed; from the import of crude and bunker oil, to the actual bunkering of oil by a sea-going vessel. This will be done by comparing the systems in both ports. The different substances in bunker oil that lead to polluting emissions will be identified and the sources of these emissions will be named. This will lead to an overall insight in the technical system and can identify possible differences between the technical systems in Rotterdam and Singapore. These differences can have (negative) implications for the cooperation and can result in criteria for the final solution. In the stakeholder analysis, all actors who have an interest in this problem or in the bunker market will be identified. It will be clarified which stakeholder is responsible for, and has authority over, which stakeholders. The specific interests of all stakeholders will be defined and they will be identified as dedicated or non-dedicated actors as well as critical or non-critical actors. Furthermore, the scope of authorities of each stakeholder will be defined. The economical analysis will focus on the bunker market. Which factors determine whether a ship- owner chooses one port or another? The economic factors will have some extra attention since these are likely to become more important in the future. Bunker oil might be bought in other ports if the price in the port of Rotterdam or the port of Singapore will rise too high due to emission reducing measures. The port authorities of Singapore and Rotterdam want to prevent these possible market shifts and want to protect their market share. By cooperating there might be more space to increase the oil price then if the ports would take measures alone. It is important to realize that these will not be executed one after the other. There is interaction between these analyses: All analyses influence each other and provide information for the other analyses. This is indicated in the figure by the light blue frame. These three analyses lead to -and serve as- input for the solution space. This space is determined by the solutions that are possible as well as by the possible problems and trade-offs that might be encountered.

The analytical pahse and the theoretical framework form the input for a process design. In this design, an indication will be provided of how the process of cooperation should be formed in the future. This will eventually lead to conclusions and recommendations.

Figure 3, Structure of report

2 Theoretical Framework______

Finding a way or measure in which emissions from vessels due to bunker oil can be reduced by Singapore and Rotterdam together, requires thorough analysis of the entire system. Not only the technical aspects need to be identified, also the stakeholders need to be analysed. Since decision-making involves a lot of stakeholders with each their own specific interests, it is important to see how decision-making can be done considering this issue. A ‘quick and dirty’ scan of the characteristics of the stakeholder system can lead to a management theory which will help to find a way for decision-making. During the analysis, practice can show if this quick scan of the stakeholder system was correct, if the theory needs adjustments and if there is in fact a benefit in the cooperation of the two port authorities.

In this chapter a ‘quick and dirty’ scan of the characteristics of organisational structure of the system will be executed (§ 2.1.1). The characteristics of this structure will determine which type of management seems to be most appropriate to use to deal with the decision-making (see § 2.1.2). The reasons for choosing this type of management -process management- will be mentioned and the theory of process management will be presented (§ 2.2). Next, a possible problem with process management will be identified: The lack of attention for cultural differences in process management will be mentioned in § 2.3. The importance of cultural management will be stated in § 2.4.1 and some theory of cultural management will be presented in § 2.4.2. In paragraph 2.5 the theories of process management will be combined. This will lead to some theoretical expectations on the differences in culture between Singapore and Rotterdam and their impact on the process design (§ 2.6). This will finally lead to some conclusions for the rest of the research (§ 2.7).

2.1 Organisational Structure and Suitable Management To find a theoretical framework to deal with the research at hand, a quick and dirty scan needs to be made of the system in which the decision-making will take place. This will provide a first clue on the difficulties that will occur during the decision-making and will provide the possibility to find a type of management that deals with these difficulties.

2.1.1 “Quick and dirty” scan of organisational structure As was mentioned in chapter 1, the goal of this research is to find out what the benefits are of cooperation between the port authorities of Singapore and Rotterdam to reduce emissions from vessels. This goal already shows that there will be two stakeholders involved (the two port authorities) from two different countries. However, these will not be the only stakeholders that want to be involved. The introduction and problem description from chapter 1 indicate many more actors that have an interesting this issue: Ship-owners will be affected by any decision, due to, for instance, a change in bunker oil quality. Refineries will have an interest as measures might determine a change in their processes which will lead to investments. People living in the area of the port and coast will have an interest since they might get health issues due to emission or, on the other hand, might lose their job due to new regulations. Within the Netherlands there are more stakeholders that have authority to make rules, regulations and have decision power: e.g. the Ministry of Transport, Water Management and Public Works, the Port of Rotterdam Authority (PORA) and the municipality. In Singapore, there are multiple authorities too: The Maritime and Port Authority (MPA), the National Environmental Agency (NEA) and the Ministry of Environment and Water Resources. On an international level there are also possible actors; one could think of the European Commission (EC) or the International Maritime Organisation (IMO) So far, it can be concluded that the decision-making will take place in a multi-actor system.

Decision-making in a multi-actor system is difficult due to all different interests and stakes. The fact that two countries participate in one decision-making process leads to a situation in which the stakeholders are also dependent of each other. In order to reach a cooperative decision, one should be aware of the interest the other country has in this issue. Furthermore, the port authority is dependent of the actors within its port. Ship-owners might call another port when decisions are made that they do not like. In addition, these stakeholders from within one port might have useful information that is needed to reach a successful decision.

This interdependency leads the conclusion that hierarchical steering seems very difficult, if not impossible. The port authorities need information from actors within the port. These actors are likely to be aware of this fact and they might behave strategically in order to protect their own interests. Another point that should be mentioned is the role of dynamics in this system. Technologies can change, regulations can change and therefore perceptions of stakeholders can change over time.

So far, the characteristics of the entire organisational structure of decision-making in Singapore and Rotterdam correspond with the characteristics of a network; this will be explained below. The different characteristics of hierarchies and networks are shown in figure 4.

Figure 4, Characteristics of hierarchy and network [De Bruijn and Ten Heuvelhof 2004, p. 30]

Networks are typified by variety: a variety of actors, interests, means of power, etc [De Bruijn and ten Heuvelhof, 2004, p. 30-32]. As mentioned, many stakeholders have an interest in this issue. Different actors within one network will have different perceptions of the “reality”. The situation in which this emission problem takes place is a good example of this. Information about the damage that one substance can cause might seem very objective to one actor but can be contestable by another actor. In addition, the actors within this network are interdependent [De Bruijn and ten Heuvelhof, 2004, p. 30-32]. This means that orders of one actor might not be accepted. Even though one actor can consider itself higher in rank at one time, it is still dependable on other actors and at a certain moment in time another actor might be in control of a situation and can possibly lead itself by acts of the other actors in the past. This is also the case within this problem. For example, the port authorities can not demand specific wishes from each other since they will cooperate on several other levels and issues as well. Within a network it is impossible to steer other actors [De Bruijn and ten Heuvelhof, 2004, p. 30-32]. In contrary to a hierarchy, in a network actors turn out not to respond to steering signals or resist against them. Furthermore, the actors are situated in a dynamical structure [De Bruijn and ten Heuvelhof, 2004, p. 30-32]. The positions of the actors can change; an actor that used to have a minor role in the network can turn out to be highly important. The result can be that orders can not be used anymore and negotiations with this actor have to be started.

The characteristics of a network apply to the characteristics of the setting in which the port authorities will try to find a solution for the emissions problem. The problem should therefore be addressed in a way that takes these characteristics in consideration.

2.1.2 Determination of type of management or tool to use Decision-making can be a difficult thing when dealing with many stakeholders and many interests. There are several types of management or tools to deal with this issue. As could be seen in figure 4, a hierarchy and therefore hierarchical steering seems to be the opposite of a network. It is therefore easy to conclude that hierarchical steering does not seem to be the best way to deal with this problem. Project management is one of the most used and analysed types of management around the world. However, in this system this might not be the wisest type of management to use as well: As project management often means a rather strict planning of activities, it will be very difficult to incorporate the dynamics that the systems has. Furthermore, the interdependency of stakeholders is not addressed in this type of management. Stakeholders can feel as if their interests are not protected and will withhold from decision-making. Due to the interdependencies, this is an unwanted situation.

There are several tools that could help to deal with these problems. A well-known tool to deal with multi- actor decision-making is a multi-criteria analysis. This is a technique that can be used to choose the most favourite alternative (in this case a measure or regulation). It can help to rank alternatives and to narrow

down the number of alternatives. Furthermore, a multi-criteria analysis provides the decision-maker with the possibility to weight the scores of one criterion higher than another. There are, however, a few difficulties with this approach as well: In this particular case, a multi- criteria analysis would not satisfy; the interdependencies of the stakeholders will have an effect on the decision-making which will make it difficult for one stakeholder to make a decision, even if criteria of all stakeholders were incorporated. Strategic behaviour can cause stakeholders to object to a reasonable solution. E.g. a stakeholder might object in order to prevent another stakeholder having his interest protected. In addition, stakeholders might withdraw from decision-making and might keep back useful information if the process does not seem to go in the right direction. Furthermore, the system in which this decision needs to be made is dynamic. As mentioned, only last April new international regulations were agreed upon. This means that during the process, perceptions, interests and even criteria of stakeholders might change. A multi-criteria analysis is not able to incorporate these ongoing dynamics and changes.

Another tool that can be used to deal with some of the issues in multi-actor decision-making is a group decision game. A game in which the real world is imitated can lead to the understanding of each others interests during the decision-making. The problem perspectives of each stakeholder might become apparent for each other which can lead to more support. Stakeholders might be more willing to stay in the decision-making process. A problem with this tool is that the simulation is a snapshot of the situation at one specific moment in time. The dynamics of the system are not incorporated. When a perspective changes other stakeholders might not be able to change as well.

Process management is a type of management that focuses on all aspects of the characteristics of a network: Process management leads to support (‘draagvlak’), which is needed for successful decision- making. Often, there are many actors involved in the decision-making. These actors frequently have the power to obstruct; they are for instance able to slow down the decision-making process. If the support of these actors is needed for the decision-making, it is important that they are involved in the process of formulating the problem and the problem solutions [translated from Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 38]. E.g. the refineries do not have authority to chose one solution or another; however, it does have knowledge and information about refinery processes, investment costs in refineries and production costs. If they are not involved in the decision-making, they can obstruct this process by providing incomplete information and thereby delaying the process. Involving them in the process of formulating the problem and finding a solution will lead to a necessary degree of consensus. Process management leads to a reduction of substantive uncertainty. It is of high importance when dealing with unstructured problems to collect all available information. Often, involved actors have different information and all information is necessary to solve the problem as adequate as possible. To be able to use all different resources, all relevant actors need to be involved in the decision-making process [translated from Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 39]. The example of refineries can be used here again; Due to strategic behaviour, it could be that refineries do not provide all information about for instance the possible ways to reduce sulphur content. In this case, the final solution might not have been the best overall solution. Process management leads to an enrichment of problem definitions and problem solutions. Many actors often have different opinions and perceptions of problems and solutions. The confrontation between these actors can lead to acceptance of each others interests in the issue and can lead to a situation of more understanding. This can contribute to creating consensus [translated from Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 40]. Again, the example of refineries: when refineries are involved in the decision-making process, they will see the interests that ship-owners or bunker suppliers have and might change their opinion about their most favourite solution. Process management incorporates the dynamics of a network. As stated earlier, within networks there is a lot of dynamics. This offers the actors that are unwilling to cooperate a possibility not to cooperate with a chosen solution while referring to new information and new solutions. This can be avoided by involving all relevant actors in the decision-making process to find a solution. Within a process approach, the dynamics are incorporated and actors can learn from each other and will be confronted with new information and different opinions. In a process design in this case these dynamics can be incorporated by making the relevant actors commit themselves to the process instead of making them commit to the substance. Stakeholders with high interests are more likely to stay involved in the process in that case [Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 41-42].

A process design also produces a transparency in the decision-making process. The involved actors always know at which stage within the decision-making process they are [translated from Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 42]. Furthermore, a design process is only focussed on the process that leads to a new situation. The content of the change is however still unknown. Actors are in general quite resistant for changes. By focussing on the process and not on the content, the resistance is likely to decrease [translated from Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 42]. The objectives of the process design are part of this. If the objective of the process design is to minimize the sulphur content in a refinery, the focus is too much on the content. Refineries would be very resistant to cooperate with this process. While if the process objective is to find a solution for emissions from vessels, the final solution can still be anything. Process management focuses on the process of decision-making, in which the solution is not yet clear. This is an approach which the same refineries would like, since they can still disagree with the solution.

These arguments lead to the conclusion that, based on a quick scan of the characteristics of the system, process management seems to be the best way to tackle the decision-making in this issue in this organisational system.

2.2 Process Management

In this paragraph the theory of process management will be explained in short. As mentioned in the previous paragraph, this type of management specifically deals with decision-making in a system that has the characteristics of a network. For instance project management does not deal with interdependencies between stakeholders. There is a series of tasks that need to be done in order to reach a successful end. The many different stakeholders are not provided with a specific role within the decision-making and the dynamics in the system are not acknowledged. Process management on the other hand deals with these issues (see § 2.1.2). Since the system structure of this case can be defined as a network, it is wise to use process management. In this research the theory of process management as is described by De Bruijn, Ten Heuvelhof and In’t Veld [2002a] will be used; they distinct themselves from others by providing the reader a plan of activities which could be used to develop a process design. They focus on the strong points of this type of management, without neglecting any pitfalls. Since part of the objective of this research is to define how possible cooperation between Singapore and Rotterdam should take place, this list of activities in process management is very useful.

2.2.1 Core elements of process design In order for a process design to be successful, several things need to be taken into account. If this is not done, the decision-making process can turn into long endless discussions which can lead to decisions that have no substance. There are four demands that need to be fulfilled within a process design [Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 53]. In order for a process to be successful, these four elements need to be taken care off. These elements result in design principles that deliver design criteria.

Openness. The first core element is openness. Process management implies that the initiator can not decide on its own, but has to take an open attitude towards other stakeholders. Other stakeholders will be able to steer the decision-making in a direction that includes their interests. Subjects that are important for these stakeholders can be placed on the agenda [translated from Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 53]. If this is not done, stakeholders like ship-owners will try to obstruct good decision-making by using strategic behaviour (e.g. not providing all available information). By making the process transparent, these ship-owners will know how the process is formed, when decisions will be taken and how their interests are being protected.

Protection of core values. Openness is not always attractive for all stakeholders that are invited to join the decision-making process. There is a risk that the stakeholders will not have ways or power to realize their interests. The result can be that by the end of the process, these stakeholders are not happy with the end- result. By that time, it is very hard for them to back-up from the process. The second category of design principles is based on the idea that stakeholders that commit to the process should have sufficient protection for its core values. They must be sure that, whatever the end-result of the process might be, the core values of the stakeholder are not damaged. The decision-making process should be a safe environment [translated from Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 54]. An example of this could

be the participation of refineries in the decision-making process: before the process even has started, the threat of not having their core values protected can lead to the decision not to participate. The use of exit options during the process could give the refineries a reduction of risk and reduces barriers to participate.

Speed. The first two core elements provide little guarantee for a good decision-making process. When one decides to implement a process with open decision-making and protection of core values, there is a big chance that negotiations will take place, but decisions will never be reached. There is a possibility that only long, seemingly endless processes will form that do not result in clear, understandable results. The third category of design principles deals with the speed and progress of the decision-making [translated from Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 54]. One of the design principles that is formed to safeguard the speed of the process, is to have participants that have commitment power. This means that the participating representatives of the stakeholders have high positions within their own organisations. This helps to speed up the process as they are able to commit their organisation to a design or decision. If this is not the case, negotiations within the organisation need to take place. This will take time and effort, which slows down the decision-making process.

Substance. The stakeholders that participate in an open process will have to get sufficient protection of their position, while at the same time there has to be a guarantee that the decision-making has sufficient speed and progress. This progress should also live up to the demand of substantive quality. The stakeholders could, for instance, forced by the sharp conflicts of interest, come to a decision that is substantively poor or incorrect. Therefore, it is important that the process has enough substantive elements [translated from Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 54-55].

Openness 1. All relevant parties should be involved in the desicion-making process. 2. Substantive choices should be transformed into the process agreements. 3. Both the process and its management should be transparent. Protection of Core 4. Parties’ key interests should be protected. Values 5. Parties should commit themselves to the process rather than to the result. 6. Parties may postpone their commitments to decisions made. 7. The process should offer participants an exit option.

Speed 8. The process should create prospects of gain as well as incentives for cooperative behaviour. 9. The participants in the process should have commitment power. 10. The process should have an environment, which is used to speed it up. 11. Conflicts should be transferred to the periphery of the process. 12. Command and control can be used as an incentive to speed up the process.

Substance 13. The process should prevent the process-drives-out-content mechanism; the roles of experts and stakeholders are both handled and unbundled. 14. The process should move from substantive variety to selection.

Figure 5, Design principles [Bruijn, de, ten Heuvelhof and In’t Veld, 2002b, p. 47].

A process design should do justice to all four core elements to make it successful. However, these elements can become trade offs: When many stakeholders are involved in the decision-making and each one can negotiate about their interests and the core values of all these stakeholders should be protected, this will effect the speed in which the process will take place. On the other hand, if the core values are not protected, it is unattractive for stakeholders to commit themselves to the process. The design principles mentioned in figure 5 help to form the process design while doing justice to all four core elements.

2.2.2 Process design The theory of process management provides a list of activities that a process architect can use to develop a process design (see figure 6). Although the arrows give the impression that the activities need to be followed in a certain order, this is not necessary. Sometimes it might even be wise to leave an activity out.

This depends on the substantive complexity and the level of conflicts of the stakeholders interests. Furthermore, not all activities need to be made explicit.

Figure 6, Activities for the purpose of constructing a process design [Bruijn, de, ten Heuvelhof and In’t Veld, 2002b, p. 62].

Referring to this research, the problem definition has been made under the authority of the PORA (see chapter 1). The stakeholder analysis will be done thoroughly. All parties that are involved in this problem, in one way or another, are identified. Their resources will be recognized and their level of dedication to this subject will be stated. This leads to new insights, which will lead to both substantive and process dilemmas. A technical and economical analysis will help identify the substantive issues stakeholders deal with. The conflicts in their interests will form dilemmas. As de Bruijn, ten Heuvelhof and In’t Veld [2002b, p. 69] state: “There are a number of strategies a process architect can use to deal with dilemmas. A number of these strategies will either remove or counteract the dilemma: a choice has either become unnecessary or may be postponed”. Therefore, dilemma sharing is another important activity within process management. After this, the process can be designed; the agenda can be made, the rules of the game can be defined. When this is done, the process design needs to be tested and the right representatives of each stakeholder should be identified. After this last activity, it should be possible to execute the process design.

2.2.3 Results of process management The process will lead to consensus among the stakeholders. A process approach can for instance lead to consensus due to an open and honest process. However, there are so many actors involved with opposite interests that this can not always be expected [Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 42-43]: In this case, commitment of all actors to a specific result is a good result of the process. An actor might commit to a result without agreeing on content because it has learned during the process that another, better, alternative is not possible. Furthermore, a process approach can lead to tolerance. This means that the actors are not agreeing to the chosen solution and will not contribute but will tolerate the solution. It will not block or obstruct the execution of the solution.

2.2.4 Risks of process management There are a number of risks and pitfalls with process management: An important risk can for instance be that process management is only a term that is used to describe the decision-making while in practise classical types of management are still used (e.g. project management or command and control). People are used to these classical types of management and the inexperience with process management can make it easier to revert to these more classical methods. This can lead to situations in which the decision-making process is in practice only a formality and deals with discussions about a decision that has already been made. At that moment, process management is more a communicative tool to explain a decision rather than a method for substantial decision-making [De Bruijn et al.,2002, p. 36]. Another possible result of this risk is that the process is designed too tight and too little room (time) is left for negotiations and discussions; one of the important points of process management. On the other hand, another important risk is that process management is used to extensively. This can slow down the process and can lead to a decision without substance [De Bruijn et al.,2002, p. 37]. Process management often means the incorporation of opinions of many stakeholders to create support for a decision. However, this can be a great opportunity for a stakeholder to delay, obstruct or hamper the decision-making. Therefore, the total absence of command and control is not wanted. Furthermore, process management can lead to decisions without substance. The stakeholders all will add their interests and their criteria to the discussion. A compromise of all these criteria can lead to a decision without substance.

2.3 Conflict with Process Management

As has been discussed in the previous paragraphs, process management could be a very good way of dealing with the difficulties of the objective to find a way to successful cooperation of the ports of Singapore and Rotterdam in reducing emissions from vessels due to bunker oil. It deals with all the characteristics that a network has, which are the same as the characteristics of the organisational structure of this issue. There are many stakeholders involved, many interdependencies between stakeholders; within a port and between the two ports, and this all takes place in a dynamic environment. New emission reduction technologies can be introduced to the market and new information can come about. This leaves us with the impression that hierarchical steering is not an option. Process management seems to be the way to deal with this case.

Important to recognise is that this type of management -process management- that is described in this theoretical framework is developed and described by Dutch writers. This is a type of management that is used in Western countries, all with a Dutch culture. The objective of this research is to find a way of cooperation between the Port of Rotterdam Authority and the Maritime and Port Authority of Singapore. The Singaporeans, however, have a different culture, different management styles and different ways to deal with issues. It is possible that process management is unwanted or possibly even unnecessary to use in Singapore, due to their cultural characteristics. As Hofstede [1984, p. 81] states: “The nature of management skills is such that they are culturally specific: a management technique or philosophy that is appropriate in one national culture is not necessarily appropriate in another”. Another problem with process management that can be identified is the fact that the cultural differences between Rotterdam and Singapore could lead to problems during the decision-making process. Apart from the management type that might not be suited, cultural differences can lead to more problems: Language barriers, different forms of government etc. The theory of process management does not mention its (non-)applicability in intercultural situations. Problems that might occur due to these differences are not mentioned and no solutions for these

problems have been named. Therefore, the conclusion could be drawn that the theory of cultural management could form an addition to process management.

The sub-questions of the theoretical framework from chapter 1 can therefore be specified to process management. The following questions need to be answered in order to reach a successful process design: • Can process management alone be used in this research in both countries? • Will Singaporeans accept and work with process management? • Will a process design lead to a successful decision in both Rotterdam as well as Singapore?

2.4 Cultural Management

2.4.1 Importance of cultural differences Due to the increasing level of infrastructure that is present today, the world seems to be getting smaller and smaller. A vessel can sail to East Asia in 3 weeks, flying to the other side of the world takes us less than 2 days and talking to someone on the other side of the world is only a click away. Furthermore, there are more and more supranational organisations that come about (e.g. The United Nations, the European Union, etc.). These developments can give the impression that differences between management around the world might disappear. However, one should also recognise that even within existing countries, regional differences are still very important. E.g. the Flemish speak a different language (Dutch) than the people from the Walloon province do (French), even though both live in Belgium. In the past year, this country has struggled with a request of the Flemish for more autonomous government. The belief some people used to have in unavoidable convergence of management around the world has gone. “It slowly became clear that national and even regional cultures do matter for management. The national and regional differences are not disappearing, they are here to stay” [Hofstede, 1983, p. 41].

So if cultures are not disappearing and here to stay: What is ‘culture’ and why is it so important to identify the differences in culture? Culture can be defined in many ways and from many perspectives; in fact, Kroeber, Kluckhohn, Untereiner and Meyer [1952] have listed 161 different definitions of culture. Hofstede [1983, p. 42] uses the definition: “Culture is collective mental programming: it is that part of our conditioning that we share with other members of our nation, region or group but not with members of other nations or groups”. There are several reasons why identifying differences in cultures is important. Hofstede [1983] identifies three reasons why nationality is important. Firstly, there is a political reason. Nations are political units, each with their own types of government and legal or educational systems. Formal and informal ways to deal with issues are determined by a nationality. Secondly, there is a sociological reason why nationality is important. “Nationality has a symbolic value to citizens. (…) National and regional differences are felt by people and therefore are a reality” [Hofstede, 1983, p. 42]. The last reason why nationality is important is the psychological value of it. Our thinking is determined by our culture. How we have been brought up, our educational experiences; all have contributed to our perspective on things, including our perspective on how to manage. Using the phrase that “management is always about people” [Hofstede, 2007, p. 412], this explains why a management style could work in one country but can not work in another country. “What works in China –and worked two centuries ago- does not have to work in Russia, neither in Tolstoys days nor today. (…) Universal solutions to management problems do not exist: they would presuppose one universal type of human being in one universal type of society” [Hofstede, 2007, p. 415]. A simple example to illustrate the importance of using knowledge of cultural differences could be the personal experience of the author: A small but significant difference in culture between Singapore and Rotterdam is the use of business cards. Whereas in Rotterdam these are used mainly for contact details, in Singapore there is a respect issue attached to these cards. In Singapore, business cards are given and accepted by people using both hands. This could be a simple thing to do, also by the representatives from the port of Rotterdam. However, if this is not known by those representatives it could lead to a miscommunication as it could be seen as disrespectful and give the decision-making process a false start.

2.4.2 Cultural dimensions Hofstede is one of the first people who has taken a closer look at cultural differences on management. He has done several studies in order to identify and classify specific features within a culture. With the use of a

survey among ten thousands of employees of IBM in 40 countries, he identified five “value” dimensions on which countries differ: power distance, uncertainty avoidance, individualism/ collectivism and masculinity/ femininity [Hofstede, 1980] and long term orientation [Hofstede, 1991]. His findings have been confirmed by later studies among other companies and are cited thousands of times [Schneider and Barsoux, 1997, p. 90]. His value dimensions are therefore interesting to use in the reference of this research.

“Power distance indicates the extent to which a society accepts the unequal distribution of power in institutions and organizations. Uncertainty avoidance refers to a society’s discomfort with uncertainty, preferring predictability and stability. Individualism/ collectivism reflects the extent to which people prefer to take care of themselves and their immediate families, remaining emotionally independent from groups, organizations, and other collectivities. And the masculinity/ femininity dimension reveals the bias towards either ‘masculine’ values of assertiveness, competitiveness and materialism or towards ‘feminine’ values of nurturing, and the quality of life and relationships.” [Schneider and Barsoux, 1997, p. 87]. A fifth dimension is called long term orientation [Hofstede, 1991]. As the name indicates, this dimension makes a difference between the short- and long term oriented societies. This dimension was later added to the dimensions and is only very relevant in Asian countries.

Hofstede [1980] has indexed and ranked about fifty countries on four of these specific dimensions. These numbers of these rankings have been published, but in this research only the relevant (The Netherlands and Singapore) will be named (see figure 7). Despite its relevance for Asian countries, the fifth dimension is not mentioned in this figure. The reason for this is that many authors who have used Hofstede’s cultural dimensions seem to leave out this fifth dimension as it is hard to relate to from a Western perspective. As a Dutch writer, using this dimension could lead to misinterpretations. Even Hofstede’s interpretation of the values of this dimension has been critiqued [Fang, 2003]. Therefore, this dimension will not be used in the rest of this research. It is recommended that in the future this dimension will be added by, or with help of, someone with an Asian perspective.

Uncertainty Country Individualism Power distance avoidance Masculinity Index RankIndex Rank Index Rank Index Rank

Netherlands 80 46 - 47 38 14 53 18 14 3

Singapore 20 13 - 14 74 40 8148 24

Figure 7, Hofstede’s rankings of Singapore and Netherlands [Hofstede, 1991].

The about fifty countries mentioned earlier were all indexed and ranked on the first four dimensions. When placing all countries in a figure with one dimension on each axis, cultural maps are made. These maps show that there are clusters of countries with relatively similar features and characteristics. Figure 8 shows the cultural map which includes the uncertainty avoidance and the power distance. This indicates not only whether a culture is fond of formalized procedures and rules but also whether a culture accepts strict hierarchy or not.

The many observations of different countries and cultures have led to the identification of cultural profiles as shown in figure 9. This figure has the same axes as figure 8 has, but shows the types of characteristics of each cultural profile. This list of characteristics of each cultural profile can be used to recognize specific characteristics in Singapore and the Netherlands on these two dimensions. In each quadrant several countries were placed, each with their own characteristics, which have led to the cultural profiles. Although both countries have been placed in a quadrant, this does not necessarily mean that all identified characteristics of a profile reflect the culture of Singapore or the Netherlands. It can give a good overall impression and during the stakeholder analysis some specific characteristics might be recognized. Furthermore, Singapore might be situated in the middle of its quadrant; the Netherlands are situated close to the crossing of all quadrants. This might indicate that the Dutch culture can also include characteristics of other quadrants. In general, the Netherlands are in the “Village market” quadrant and Singapore is in the “Family or tribe” quadrant.

Figure 8, Cultural map. Singapore (SIN) and the Netherlands (NET) are indicated with an arrow [Schneider and Barsoux, 1997, p. 91].

Figure 9, Cultural profiles [Schneider and Barsoux, 1997, p. 93].

2.5 Process Management and Cultural Management Combined

In this paragraph the theory of process management will be analysed with the help of the theory of cultural management. In § 2.2, four core elements of a process design within process management were identified. These elements are required to be met in the process design in order for this design to be successful. In case these core elements are affected by the cultural differences and the core elements can no longer be fulfilled, unsuccessful decision-making can become reality.

To see if cultural differences have influence on these core elements of process management, the cultural dimensions of Hofstede (see § 2.4.2) will be used. This means that each core element from process management is analysed for all four cultural dimensions. This results in a matrix presented in table 4. Each column represents a core element of process management. Each row represents one of the cultural dimensions from the cultural management theory from Hofstede. The cross sections are filled with comments from cultural management theory reflecting on the process management theories. The comments indicate where and how problems between these elements and dimensions can occur. Also possible opportunities that arise due to cultural characteristics are named. The intersections provide us with insights of the combination of one dimension of culture on a specific core element. As can be seen in this matrix, some of the intersections have not been filled. This means that cultures on both ends of the scale of one dimension do not behave different from each other on this particular core element.

The cultural dimensions all represent a scale; e.g. a society can be very individualistic on the one hand or very collectivistic on the other hand. These are two extremes, in reality most societies are somewhere in between. In this matrix the dimensions are considered to be very far apart from each other on the scales in order to get the biggest differences and to identify all the problems that might be possible with process management. It should be noticed that process management does not fit specific ends of scales of the cultural dimensions. All dimensions of process management will fall somewhere in between on all scales too. This means that, for instance, it is not possible to say that process management is extremely individualistic, extremely low in power distance, very high on uncertainty avoidance and very masculine. What can be said is the following: The theory of process management is developed and used in Western countries. In fact, the specific theory that is used in this research was developed in the Netherlands by Dutch writers (see 2.5.1). Therefore, the cultural perspective that was used to develop this process management theory was Dutch. It is interesting to see how the Netherlands are scaled on the dimensions since it can show if the theory of process management has already incorporated any pitfalls that the Dutch culture might have with process management.

2.5.1 Process management from a Dutch perspective The Dutch cultural dimensions were identified in figure 7. The Netherlands scored high on individualism; the Netherlands was among the top 5 countries on being individualistic. In power distance, the Netherlands was ranked 14th out of 50. This means the Netherlands is relatively low on power distance. On uncertainty avoidance, the Netherlands are ranked 18th. This is definitely on the side of ‘low on uncertainty avoidance’; however, the Netherlands is definitely not at the end of the scale. On Masculinity, the Netherlands rank 3rd, this means that the Netherlands are rather feminine. Only 2 other countries are more feminine. Looking at the matrix with the perspective of a Dutch manager, with Dutch cultural perspectives, using the identified Dutch heights on the dimensions, some things are notable. These things are expected to confirm the ideas that process management deals with the cultural characteristics of the Netherlands, as it was designed by Dutch writers. If indeed, cultural management confirms the theory of process management, we can be sure that the application of cultural management on process management can be used.

Openness The core element openness is possible to maintain in the Netherlands since in individualistic societies or countries openness and being direct is considered a virtue. Furthermore, being low on power distance means that people consider themselves equal to each other; this leads to a situation in which all stakeholders are able to speak up (design principle 1). Next, the Netherlands are low on uncertainty avoidance which implicates a lack of need for standardization and formalization. Process agreements (design principle 2) are therefore likely to be accepted. Endless rewriting of these agreements seems to be unnecessary.

A possible problem that might occur in the Netherlands with openness is strategic behaviour of the participating stakeholder. According to De Bruijn et al. [2002, p. 26], this is something that might lead to unexpected changes in the process, but as long as stakeholders negotiate during the process, the damage will be minimized and these changes could possibly even be used in the advantage of the process. They state that process management, in contrary to e.g. project management, is more likely to succeed with strategic behaviour.

Protection of core values. This core element can be maintained in the Netherlands. In fact, individualistic societies focus on self interest, which means that the core values are even more important to the stakeholders. The fact that the Dutch culture has low uncertainty avoidance results in a situation that makes it, from a cultural point, easier for the stakeholders to commit themselves to the process, instead of committing to a result.

Speed. The core element ‘speed’ is difficult to keep in process management. The Dutch culture has some influence on this, since it has an individualistic perspective; self interest is the basis for negotiations. This leads to long and strong discussions between stakeholders. A feminine society has strong empathy for relationships; it might be difficult to make strong decisions in such a cultural environment. The problems with speed in general have been identified by the writers of the process management theory. To deal with the possible problems, five design principles have been found in order to make sure that speed will be maintained during the decision-making. Although these have not been made specifically to deal with the Dutch culture, in practise the tardiness of the process due to Dutch cultural characteristics will therefore be minimised.

Substance issues are a result of problems in the other three core elements, and not a result of Dutch cultural conflicts with process management. Too many stakeholders can cause a long and endless decision-making process. All these negotiations can result in an agreement which is supported by every stakeholder, but does not lead to the necessary change that was the initial objective. Again, these problems have been recognised by the writers of the theory of process management. The two design principles should prevent these things from happening.

As becomes clear, process management indeed fits in the Dutch culture. The biggest problems that seem to arise during decision-making are recognised and have been taken care of in one way or another. Although this does not guarantee a successful decision, in theory all possible hurdles have been identified and have been dealt with.

2.5.2 Process management from an opposite perspective To identify some of the cultural problems with the theory of process management, one could look at process management from a non-Dutch perspective. By looking at each core element of process management from a cultural perspective that is completely opposite from the Dutch perspective difficulties will be identified. Opposite cultural characteristics will in this case be defined as: Very collectivistic, very high on power distance, high uncertainty avoidance and very masculine.

Openness. Due to the collectivist characteristics, openness can become a problem; collectivist societies are very focussed on the preservation of harmony within the society. Conflicts will be avoided and relationships between people are of highest importance. This can have the consequence that stakeholders are not completely honest with each other, in order to keep the harmony. This might lead to unsatisfying results. Next, in a culture with high power distance, it is not realistic that all relevant stakeholders will be involved in the decision-making process. The high authority will not be open to negotiate with stakeholders on equal levels.

Protection of core values. If not all relevant stakeholders are incorporated in the decision-making process, the key interests of these stakeholders will not be protected. It is essential for process management that all core values of all stakeholders are protected: If not, stakeholders will not agree with and commit to the end result. Any result from this process will therefore not succeed in the way that process management had in mind.

Speed problems are much lower when dealing with countries with high power distance. If the person joining the process is high enough in the hierarchy of his organisation, he will be able to make statements on behalf of his organisation. Furthermore, if there is one ultimate leader, it will be easier for him to use command and control to push a specific decision.

The substance of the result might not be agreed with by all stakeholders and not every stakeholder might like to commit to the result, but societies with high power distance are not likely to fall into the process- drives-out-content trap. The right person with authority is likely to intervene at one point and will make sure that the substance will be taken off at one point.

It is clear that almost all large problems that arise during the use of process management by a different culture originate from the cultural dimension ‘power distance’. This is not unexpected, since process management focuses on decision-making in network structures and high power distance is closely related with hierarchy. This means that when the characteristics of an overall system reflect high power distance, process management should not be used, as there are other types of management that are more efficient and effective to use.

2.5.3 Process management with multiple cultures participating In the situation that stakeholders come from two or more different cultures, a whole new set of problems are notable. Most of these problems are a result of the fact that the way of thinking of both cultures collide with each other.

Openness. In collectivist societies, harmony is preferred over openness, while in individualist countries openness and directness in work relations are considered a virtue. The different perspectives can lead to miscommunications when collectivist societies keep information behind in order to preserve the harmony. Furthermore, in cultures with high power distance, a superior can behave like a father. Paternalistic behaviour can lead to situations in which not all relevant stakeholders are involved in the decision-making process. In masculine societies a good manager is seen as a ‘macho’. In these societies, this is seen as a strong leader with “superhuman qualities” [Hofstede 1984, p. 98]. In feminine societies these ‘macho’s’ could be seen as “ridiculous braggarts” [Hofstede 1984, p. 98]. These accompanying irritations could lead to a reduction of openness in the decision-making process. In addition, different perspectives on competitiveness and solidarity can cause a difference in perspectives on which stakeholders are relevant for the process. This is all in contrast with openness. On the other hand, in societies with low uncertainty avoidance the need for transparency of the process and process agreements is not as high and important than in high uncertainty avoiding societies. This makes it easier to start a decision-making process. The core element of openness already takes care of this difference.

Protection of core values. If not all stakeholders are involved due to power distance, their key interests might not be protected. In societies low on uncertainty avoidance “people are more pragmatic, even opportunistic and comfortable in negotiations where the outcome is not a priori clear” [Hofstede, 1984, p. 93]. Therefore parties are more likely to feel comfortable to commit themselves to the process instead of committing to the result. The opposite counts for stakeholders high on uncertainty avoidance; they might not be willing to commit to something other than the result. In societies with low uncertainty avoidance the need for exit options is less present as in high uncertainty avoiding societies to protect the core values of companies. However, this is already a core element of process management which should not be neglected.

Speed. A person relatively high in the hierarchy has more commitment power, which can lead to fast decision-making. Using Command and Control is easy in societies with high power distance to speed up the process. However, decision-making outside process management could be even faster. In societies with low uncertainty avoidance there is less need for standardization and formalization than in societies with high uncertainty avoidance. This could mean that decisions in early round do not necessarily need to be written down immediately. However, when dealing with more than 1 country, it is highly recommended to formalize every decision, since miscommunications are possible due to e.g. language problems. In individualist societies, self-interest is the first basis of all negotiations: this means every single stakeholder wants to be involved, which can lead to conflicts and trade-offs; this can lead to a long process of decision-making. These can be avoided by creating prospects of gain. This problem is dealt with in the design principles of this core element.

Substance. In collectivist societies harmony is considered preferable over openness. This could lead to lack of substance in the process. On the other hand, high power distance can lead to more Command and Control. This could prevent process-drives-out-substance situations. “Masculinity stands for a stress on performance and its

opposite, femininity, for stress on relationships” [Hofstede, 1984, p. 97]. This also means that masculine societies are more likely to reach a selection of a solution with substance.

Table 4, Matrix with cultural dimensions set out to the core elements of process management. The intersections provide insight on possible problems or possibilities. Openness Protection of Core Values Speed / Progress Substance

Individualism - • “In individualist countries openness • In individualist societies, self-interest is the first • In collectivist societies harmony is Collectivism and directness in work relations is basis of all negotiations: this considered preferable over often considered a virtue. Conflict means every single stakeholder openness. This could lead to lack of resolution is preferred over conflict wants to be involved, which can substance in the process. suppression” [Hofstede, 1984, p. lead to conflicts and dilemmas; 88]. In collectivist societies, this can lead to a long process of harmony is preferred over decision-making. These can be openness. avoided by creating prospects of • Individualist societies work on ideas gain. based on self-interest and self- actualisation. This could lead to strategic behaviour. • In collectivist societies, much attention should be paid to the relationships among the people involved Power • In societies with high power • If not all stakeholders are involved due to power • “Respect for hierarchy means that the • High power distance can lead to Distance distance, a good superior is distance, their key interests might not be subordinate will wait for the superior’s direct or more Command and Control. This expected to behave like a father. protected. This will harm a successful decision. indirect message as to what the objectives and could prevent process-drives-out- Paternalistic behaviour can lead to the appraisal should be” [Hofstede, 1984, p. substance situations. situations in which not all relevant 91].Choosing a person relatively high in the stakeholders are involved in the hierarchy have more commitment power which decision-making process. can lead to fast decision-making. • Command and Control is easy to use in societies with high power distance to speed up the process. However, decision-making outside process management could be even faster.

Uncertainty • In societies with low uncertainty • In societies with low uncertainty avoidance the • In societies with low uncertainty avoidance there Avoidance avoidance the need for need for exit options is less present as in high is less need for standardization and transparency of the process and uncertainty avoiding societies to protect the core formalization than in societies with high process agreements is not as high values of companies. However, this is a core uncertainty avoidance. This could mean that and important than in high element of process management and should not decisions in early round do not necessarily need uncertainty avoiding societies. This be neglected. to be written down immediately. However, when makes it easier to start a decision- • Ιn societies low on uncertainty dealing with more than 1 country, it is highly making process. avoidance “People are more pragmatic, even recommended to formalize every decision, since opportunistic and comfortable in negotiations miscommunications are possible due to e.g. where the outcome is not a priori clear” language problems. [Hofstede, 1984, p. 93]. Therefore parties are more likely to feel comfortable to commit themselves to the process instead of committing to the result. Masculinity - • Different perspectives on • “Masculinity stands for a stress on performance • “Masculinity stands for a stress on Femininity competitiveness and solidarity can and its opposite, femininity, for stress on performance and its opposite. cause a difference in perspectives relationships” [Hofstede, 1984, p. 97]. In process Femininity for stress on on which stakeholders are management, masculinity can lead to more relationships” [Hofstede, 1984, p. relevant for the process. conflicts within the process and therefore 97]. This also means that masculine • In masculine societies a good reduce speed. On the other hand, a strong, societies are more likely to reach a manager is seen as a ‘macho’. In masculine manager can force specific ideas selection of a solution with these societies, this is seen as a through in decision-making, which could be substance. strong leader with “superhuman faster. qualities” [Hofstede 1984, p. 98]. In • Femininity focuses on relationships, which could feminine societies these ‘macho’s’ lead to endless conversations and negotiations. could be seen as “ridiculous braggarts” [Hofstede 1984, p. 98]. These accompanying irritations could lead to a reduction of openness in the decision-making process.

2.6 Theoretical Expectations of Cultural Differences

As figure 8 and 9 show, according to Hofstede’s findings, Singapore and the Netherlands differ on all four dimensions. In § 2.5.3 an analysis was provided of the possible problems when dealing with multiple cultures. This leads to some theoretical expectations of cultural differences between Singapore and the Netherlands.

In Singapore power distance is indexed higher than in the Netherlands. In general, this difference in power distance means that Singapore has a hierarchical system compared to the Netherlands. The theory on power distance gives some characteristics of this difference: E.g. Countries low on power distance can have a norm that a good superior will consult his or her subordinate. In a country high on power distance a good superior is expected to behave like a father (paternalism). Furthermore, in countries high on power distance one expects that power differences are made visible in status. “Status differences contribute to the superior’s authority and to the subordinate’s respect for it” [Hofstede, 1984, p. 90]. In large power distance countries “respect for hierarchy means that the subordinate will wait for the superior’s direct or indirect message as to what the objectives and the appraisal should be” [Hofstede, 1984, p. 91]. In hierarchical structures however, process management might be unnecessary and could possibly lead to tardiness of decision-making. Management types like command and control might be more suitable. Therefore, it can be said that process management likely to be unsuited for the Singaporean organisational structure. Process management is used in organisational structures that have the characteristics of a network since other types of management have not always been successful in these organisational structures. The overall structure of decision-making still has the characteristics of a network and process management is therefore still an interesting option. On the dimension of uncertainty avoidance Singapore scores lowest of all countries that have been ranked. The Netherlands score a little lower than average. On the whole, the differences in this dimension indicate whether or not there is a need for rules, formalization, standardization and ritualization of procedures and behaviour. In countries low on uncertainty avoidance “people are more pragmatic, even opportunistic, and comfortable in negotiations where the outcome is not a priori clear” [Hofstede, 1984, p. 93]. Both Singapore and Rotterdam can be considered low on uncertainty avoidance. This is relevant for this research, as process management implies the use of a process design to come to a decision. The final outcome is not yet known, but will be found during the process and will be formed with the help of negotiations. The index of Singapore and the Netherlands on uncertainty avoidance therefore provide some confidence to use process management. Looking at the dimension of individualism, The Netherlands are indexed high while Singapore is indexed relatively low. Generally speaking, countries with high scores on individualism work on ideas based on self-interest and self-actualization. “In a more collectivist culture, people will rather have a supreme need for actualizing their in-group which may in fact require giving all self-effacement” [Hofstede, 1984, p. 87]. Furthermore, “in individualist countries openness and directness in work relations is often considered a virtue. Conflict resolution is preferred over conflict suppression” [Hofstede, 1984, p. 88]. “In collectivist cultures (…) there is generally an extensive set of expectations of how people should behave towards each other. Violating these expectations would threaten the so-important social framework. Therefore maintenance of the proper forms and of harmony is usually considered preferable over openness where openness could lead to disharmony. In order to preserve harmony, the truth may have to be strained a bit” [Hofstede, 1984, p. 89]. Using process management in a collectivist culture -which Singapore is according to its ranking- could lead to problems in communication. In order to reach a successful decision, process management needs the stakeholders to share their information. There is a risk that persons will commit to a decision just to preserve the harmony, this leads to the threat of the process driving out the content. This is not an undefeatable problem. People from individualist countries, such as the Netherlands, should be aware of this situation. This could lead to an extra task for the process manager; he “should learn the art of indirect communication” as practised by some collectivist people [Hofstede, 1984, p. 89]. The difference in ranking of Singapore and the Netherlands on masculinity and femininity is present, but not extremely big. Singapore is indexed average, while the Netherlands is indexed as a rather feminine country. One characteristic of this difference is the acceptability of a ‘macho’ manager. Whereas in some cultures this “masculine, aggressive hero, with superhuman qualities” might be looked up to, in feminine countries this person would be seen as “a ridiculous braggart who cannot be taken serious” [Hofstede, 1984, p. 98]. As Singapore is more masculine, it should be careful whom to send to negotiation rounds during the process; the person should not fit the complete description of a ‘macho’. On the other hand, the Dutch stakeholders should be careful not to use management styles that are too modest as they

can be not functional in more masculine countries as Singapore. However, this problem seems to be small; the differences in this dimension are not that big.

2.7 Conclusions

The theory of process management of De Bruijn et al. [2002] is based on a Dutch perspective. This Dutch perspective can bring about problems when dealing with other cultures. Using the general characteristics of the dimensions for Singapore and the Netherlands, some theoretical difficulties were identified that might happen when process management is used in decision-making for stakeholders from Singapore and the Netherlands. This leads to the following conclusions:

In a society high on power distance, process management is often not the ideal way to approach the problem. High power distance societies and their structure in which decision-making will take place can be described as a hierarchy. Process management is not developed for this type of structure. Dealing with stakeholders from both structures with low and high power distances can lead to slowing down of the system that high power distance countries have and can lead to misconceptions between all stakeholders on where and what should be decided, how, when and with whom. In case of stakeholders that are high and low on power distance, the stakeholders low on power distance should understand that process management might not be suitable to the organisational structure of the other country. They should deal with the decision-making on their own way. On the other hand, countries high on decision-making should realise that command and control can not be used everywhere and decision-making will take more time because of that. Based on a quick scan of the organisational structure, the overall system in which Singapore and Rotterdam operate can be described as a network. Process management is therefore very suitable to form a cooperation process. However, Singapore itself seems to be hierarchically organised (see § 2.6). This means that process management might not be the most suitable type of management to apply within Singapore. The overall process design should address this. Another notable problem of the Dutch perspective on process management is the lack of attention to communication issues. As mentioned in § 2.5 and § 2.6, different cultural perspectives can result in many misunderstandings and miscommunications. In case both stakeholders also speak different languages, these miscommunications can only become bigger. Communication and respect for each others opinions should therefore be highly valued when dealing with stakeholders with cultural differences. This leads to the conclusion that ‘communication’ should be addressed during the design of the process.

The quick scan in this chapter has indicated that the characteristics of the overall system fit the characteristics of an organisational structure of a network. Process management is therefore the most suitable type of management for decision-making.

A scan of the theoretical differences in the cultures of Singapore and the Netherlands has led to the identification of some differences. However, the characteristics of the dimensions from Hofstede’s theory are general characteristics; not all have to apply to Singapore and The Netherlands. The analytical phase of this research will therefore be used to find out if the theoretical expectations were correct and to find the answers on the questions as stated in § 2.3. Especially the stakeholder analysis will serve as input for these answers. The answers will be provided in chapter 8. To produce a successful process design more information is needed. The activities that are suggested by De Bruijn et al. [2002b] are listed in figure 6. As mentioned in paragraph 2.2.2, this list of activities indicates that an actor scan needs to be done, in order to identify all stakeholders, their opinions, their resources and dedication to this issue (see chapter 5). Technical (chapter 3) and economical analyses (chapter 4) are needed to form input for substantive trade-offs and process trade-offs (chapter 7). The conflicts in the interests of the different stakeholders on specific subjects will form trade-offs. Furthermore, all three analyses (technical, economical and stakeholder) will result in information on benefits and drawbacks for cooperation.

Part II

Analysis

3 Technical Analysis______

The purpose of this chapter is to provide the reader with information and insight in the bunkering system in both Singapore and Rotterdam. Differences between both technical systems can lead to difficulties in cooperation and can therefore affect the process design. This chapter will give an overview of the technical aspects of this project. The steps that crude oil roughly needs to go through in order to eventually be used/burned as bunker oil and become emissions will be named (§ 3.1). The damage that these emissions cause and the location of this damage will be identified (§ 3.2). The shipping routes that are involved in this project will be named (§ 3.3).

3.1 System Overview

In order to understand decisions and opinions of different actors it is necessary to look at the bunker system in the broad sense of the word. This means that not only the bunker oil in the ship itself is interesting but also a small overview of the oils’ way to the refinery, the refinery itself and the processes within the port to get the oil to the ship need to be included. This provides an insight in the total physical system as well as it helps to define the stakeholders present in the system. It will help to identify differences in the systems of Rotterdam and Singapore. In appendix B a visual impression is given of how the crude oil eventually leads to emissions from vessels. There are two ways to get bunker oil into both ports. First of all, crude oil is imported from different locations where it is mined. The crude oil is then brought to the refineries within the port where the crude oil has to undergo several processes before it turns into fuel oil and bunker oil. The second way of getting bunker oil into the port is by importing it as it is already in its final state. The bunker oil is then stored within the port before it is transported to the vessel that needs it. This transport is mainly done by bunker ships. The bunker oil is then bunkered into the vessel. When the vessel is bunkered (and cargo has been loaded), the vessel can sail to its next destination. The bunker oil will then be burned by the engine of the ship. This leads to emissions. As can be seen, a delineation has been made by not including the exploration of crude oil. The reason for this is that the exploration process itself does not have an effect on the quality of the oil and therefore has no influence on the amount and the type of emissions that are emitted by vessels. The location of the exploration is highly important since it partly determines the quality of the oil.

3.1.1 Import Rotterdam The first step in the process is to get fuel oil into the port. In Rotterdam this is done in two different ways. First of all, crude oil is imported. The crude oil in the port of Rotterdam basically comes from three different locations. About 1/3 of the crude oil originates from the North Sea, 1/3 originates from the Middle East and 1/3 originates from Russia2. This crude oil needs to be processed in order to become fuel oil and useful for ships. The origin of the crude oil determines the quality of the oil that arrives in the port for a large part. The oil coming from Russia is for example of less quality that the oil from the Middle East. Despite this, the quality of crude oil can also differ from within one origin. This means that some crude oil needs to go through longer and more extensive processes before it eventually reaches a level of quality so it can be used on ships as bunker oil (See § 3.1.2 for more information about the refinery process). The other way of getting fuel oil to the port is by importing fuel oil itself to Rotterdam. The crude oil has already been processed into fuel oil on another location. It is then transported in its end-state to the port. This means that it does not need to undergo processes other than possible blending before it is being used. Table 5 shows the amount of bunker sales in the Port of Rotterdam divided by type of oil.

2 Source: Ronald Backers, Port of Rotterdam Authority

Table 5, Bunker sales in Rotterdam [Port of Rotterdam Authority, 2005, 2006 and 2007] Year Total Gas oil HFO Diesel oil Lubricant 2005 13.144.155 337.159 12.554.326 101.491 151.180 2006 13.611.640 299.151 13.085.277 88.024 139.009 2007 13.580.519 267.651 13.067.116 102.928 142.825

Not all fuel oil that comes to Rotterdam will eventually be bunkered by a ship. A large share of the fuel oil is exported. As is illustrated in table 6 about half of the fuel oil in the Netherlands is exported and a little less than half of the fuel oil is actually used as bunker. The amount of import and export of fuel oil of different qualities differs among quite a few countries (see Appendix B). The production illustrated in table 6 represents the amount of Gas/Diesel or Residual oil that is produced in the Netherlands. As can be seen, for gas/diesel this is the main share of the total. For residual oil, this is only little more than 1/3 of the total input.

Table 6, Oil statistics of the Netherlands, 2005 [International Energy Agency, 2008a] Unit - 1000 tonnes Gas/Diesel Residual Fuel Oil Production 21122 12394 From Other Sources 0 0 Imports 9650 22395 Exports -21061 -17069 International Marine Bunkers -1934 -15350 Stock Changes -546 -248 Domestic Supply -7231 -2122

Singapore Like Rotterdam, Singapore does not have oil reserves itself. This means that the crude oil, as well as the fuel oil, needs to be imported. Just as in Rotterdam, the oil is imported from different places around the world. The bunker oil is mainly imported from places as Europe, the Middle East and South Korea [Sivanandam S. P. and Prodduturi C., 2008]. The imported oil is processed in large refineries in Singapore to a number of levels of quality. Table 7 provides insight in the distribution of the amounts of the different quality levels of oil in Singapore (see § 3.1.2 for types of quality). These oils will eventually be blended to a specific quality of oil that is requested by the vessel.

Table 7, Bunker sales in Singapore (in 1000 tonnes) [Maritime and Port Authority of Singapore, 2008b] Year Total MGO MDO MFO 180 cst MFO 380 cst MFO 500 cst + Others 2005 25.479,10 1.441,90 103,8 2.997,60 17.935,50 2.623,50 386,80 2006 28.379,10 1.514,90 50,1 3.002,50 20.359,80 3.041,90 409,80 2007 31.546,00 1.502,00 21,1 2.964,90 22.722,00 3.983,30 352,60

In Singapore, most of the bunker oil is imported and a large share, especially gas and diesel, is again exported (see table 8). Still, a very large share of the residual oil is used as bunker.

Table 8, Oil statistics of Singapore, 2005 [International Energy Agency, 2008b] Unit - 1000 tonnes Gas/Diesel Residual Fuel Oil Production 14474 9798 From Other Sources 0 0 Imports 3860 30414 Exports -14679 -12036 International Marine Bunkers -1546 -23933 Stock Changes -786 806 Domestic Supply -1323 -5049

3.1.2 Refinery & quality level of oil The crude oil that is imported to the port of Rotterdam is stored or is brought to the refineries in the port. In these refineries the crude oil will go through different process in order to become different products of different qualities. Depending on the quality of the crude oil, more or less amounts of high quality fuels can be distilled.

Figure 10, Explanation of the term “high-quality oils”.

Figure 11 presents a simplified view of how the products are received in each step in the refinery process. During the first distillation different types and qualities of fuel are distilled. The fuels named higher in the column are the ones that are called high-quality oils. The share with the lowest quality of oil will form the input for the secondary distillation column. Again, different quality levels of oil are derived and, again, the residual will form the input for a third process. This third process is different for each refinery but will lead to a set of fuel types as well. The lowest quality fuel oils that result from this process form the fuel oils that are presently used, among other things, as bunker [Universal Oil Products, 2004]. Depending on the quality of the crude oil that enters the refinery the share of each product that exits the processes are bigger or smaller. After each next process in the refinery, the shares of the products will change and the shares of the products lower in the distillation column will become bigger.

Figure 11, Simplified representation of Refinery process output.

As stated earlier, bunker or bunker oil is a collective term for all types of fuel that sea going vessels sail on. There are many types of fuel, yet there are a few which are used more commonly. The names of these types of oils are often reduced to abbreviations which might lead to a lack of clarity. Therefore a short clarification based on Donkers and Leemans [2007] is given:

• MGO (Marine Gasoil): A distillate ‘clear’ fuel. This is mostly used in light marine engines. This fuel type resembles diesel fuel as used in cars. • MDO (Marine diesel oil): A mixture of Marine gas oil and a residual fuel oil product with a relative high percentage of marine gas oil.

• IFO (Intermediate fuel oil): A mixture of distillate oil and a residual fuel oil product containing a relative high percentage of distillate. • HFO (Heavy fuel oil): A mixture of distillate oil and a residual fuel product, containing a (very) low percentage of distillate oil.

The first two, MGO and MDO, are distillates and come from a higher level of the distillate column, while the other two are residual oils and come from the residual of the refinery process. IFO can be divided in to a number of more specific levels of quality. These are indicated with a number after the letters ‘IFO’. The numbers in the names refer to the fuel viscosity at 50°C. IFO 180 indicates that the viscosity of the fuel is 180 cst at 50°C and IFO 380 fuel will have a viscosity of 380 cst at 50°C [Bunkerworld, 2008a]. There are more IFO fuels, all with their own viscosity. However, IFO 380 is the most commonly used bunker oil. This is also the type of fuel which is referred to when dealing with bunker prices [Lubesworld, 2008]. Note: The name HFO is commonly used as the collective term for all residual oils. Furthermore, sometimes the names MFO 180, MFO 380 etc. are used. These refer to the same quality level as IFO 180 and IFO 380.

Distillate Residual Oils

Marine Diesel Oil (MDO) HFO Marine Gasoil (MGO) IFO 180 IFO380 Etc.

Figure 12, Types of bunker oil

The composition of bunker oil often differs. This is a result of the fact that bunker oil is a product of refinery activities of crude oil from different locations with different qualifications. In each crude oil is a percentage of natural contamination present. This percentage determines the level of contamination of the refinery products and the combustion gasses (see § 3.2.1). Since crude oil is derived from different places, they each have their own level of contamination with their own specific pollutants [Kasifa, 2001]. HFO contains high concentrations of impurities like Sulphur and (heavy) metals. This means that emitted combustion gases will contain correspondingly high concentrations of pollutants. Distillates (e.g. MDO) have an unambiguously composition, contain fewer pollutants and thus emit fewer polluting substances [Kasifa, 2001].

At this moment the different bunker oils are blended in order to get bunker with the sulphur content as is requested by the regulations. At this moment the world average S% in HFO is 2,7% [Wilde et al., 2008, p. 14]. This sulphur content meets the regulations at this point for the open oceans. Furthermore, there is still enough Low Sulphur Fuel Oil present in the world reserves to blend with the High Sulphur Fuel Oil to reach the 1,5% S for the ECA areas. The new future regulations, as they are stated by IMO in MARPOL Annex VI (to be approved in October 2008), will be difficult to maintain the current system. As mentioned in table 1 future regulations state that the sulphur content needs to be lowered to 0,1% in ECA areas and eventually to 0,5% S globally. However, some technical difficulties will arise. First of all, it is likely that there will not be enough LS Fuel Oil available to blend the oils to reach the demanded sulphur content levels. Secondly, the stability of the HFO will be very poor when the HFO is blended below 1% S as Mr. Hulskotte (2007), Mr. Sivanandam and Mr. Prodduturi [2008] say. In order to deal with these problems, refineries will need to make investments in a fourth process that will deal with the residual oils. According to Mr. Sivanandam and Mr. Prodduturi this can be done in two different ways. First of all, an installation can be build that will take sulphur out of the oil. This leads to a HFO with the demanded sulphur levels. However, another possibility is to make a 4th generation cracker. This will completely crack the oil. This means that all oil will be converted into distillates and no residual oil will be left over. The high quality products that will be produced in this 4th generation cracker, will generate more profit than HFO after desulphurisation. At this moment the investments for both new installations seem to be equal. Some people therefore expect that refineries will invest in a 4th generation cracker rather than a desulphurisation installation.

3.1.3 Storage & barges When the bunker oil is produced or imported it will be stored in storage facilities in the port. Later, the oil will be collected from this storage and loaded on to a barge or a tanker. A barge will transport the bunker oil within a port to the vessel that needs bunker oil as a fuel. A tanker will export the oil to other countries. Before the barge collects the oil, a variety of traders and brokers can have bought and sold the oil. This happens due to price changes on the oil market. The bunker oil that is requested by a vessel is often not a standard level of quality. The requested quality needs to be made by blending several standard qualities of bunker oil. The fuel oil that is eventually bunkered into the vessel needs to meet certain levels of quality and standards. These qualities levels are set by the IMO and the local governments. Both Rotterdam and Singapore have developed standards and quality checks to ensure the quality of the bunker oil. In the port of Rotterdam, there is the ‘bunker checklist’. Samples are taken from the bunker that is delivered and can be sent to a laboratory to check if the delivered oil meets the quality that is requested for. This helps in case of disputes. Other than this checklist, there are no regulations or measures about quality. Bunkering can be done at the same time as the (off) loading of cargo. This means no time has to be lost during the port visit due to bunkering. In the port of Singapore there are standards that deal with the bunker processes in the port. These are called CP 60, CP 77 and SS 524. There are bunker surveyors that are licensed by the MPA, who are independent actors that supervise the bunkering process. These regulations are needed because, in contrary to the situation in Rotterdam, most of the barging procedures are not yet computerized. “In Singapore quantity measures are manually calculated. This can lead to differences in measured quantities that are delivered by the barge during a bunkering operation” [Hoh and Leong, 2008]. However, the manual calculations do not lead to delays for the ships. Cargo and bunker can be (off) loaded onto the vessel at the same time. Usually, in Rotterdam, the barge goes to the storage to collect the specifically requested blend of bunker oil and then brings it to the vessel that has requested. Only on occasion, the blending is done on board and multiple vessels can be provided with one barge. In Singapore, the barges use the so-called milking system. This means that one barge supplies multiple vessels before going back to the oil storage facilities to fill the barge again [Hoh and Leong, 2008]. This difference is bunkering systems between Rotterdam and Singapore could be explained by the amount of bunker oil that is bunkered at once. It is possible that in Singapore there are more small ships that bunker than in Rotterdam. The amounts bunkered could therefore be smaller than in Rotterdam and multiple bunker sessions will be possible. The sizes of barges in one port or another are not of influence to this, because they are approximately the same. Det Norske Veritas Petroleum Services (DNVPS) issues bunker alerts which are published by Intertanko in their bunker quality reports [Intertanko, 2008a]. In a way, these bunker alerts guarantee the quality of bunker provided over the world. Since bunker suppliers and ports do not want to be known as bad suppliers, they will keep their product up to the required level.

3.1.4 Shipping A vessel has multiple tanks on board. The reason for this is twofold: One; it is a safety measure, and two; the vessel needs different types of fuel on board. Most of the fuel is used and burned at sea. This is needed to generate power to sail across the oceans. Another tank is needed to feed the generator that is used as power supply in the ports. These are needed to supply the vessel itself from power e.g. the bridge and the personal spaces of the crew. Furthermore, ships have generators on board that supply power to cooling installations that keep the cargo cool if necessary in the ports as well as at sea. There are many types of vessels related to the type of cargo they transport that sail across the oceans. These have different characteristics. One of these differences is the amount of fuel these types of vessels consume. Also the amount of emissions can be related to a type of vessel. In his presentation, Mr. Gunner [2007] sums the CO2, SOx, NOx and PM10 emissions according to a number of vessel types (figure 12). His research covers all ships of 400 gt and above.

As shown in figure 13, container ships are responsible for approximately 25% of the SOx and NOx emissions that are produced by all vessels. Also PM10 and CO2 are produced for a large part by these type of vessels. It is estimated that container ships are responsible for about 25% of the use of bunker oil of vessels as used in the research of Gunner [2007]. In Rotterdam, the container throughput in 2007 was about 26% of the total throughput [Port of Rotterdam Authority, 2008a]. In the port of Singapore, containers will take a large share of the bunker throughput as well, since 60% of all throughput is containerized cargo [Maritime and Port Authority of Singapore, 2008a].

These figures make container shipping interesting for this research as they form a large share of the total figures in both ports and are responsible for 25% of at least four important pollutants of the all shipping emissions.

Figure 13, Types of ships and their SOx, NOx, PM10 and CO2 emissions [Gunner 2007].

3.2 Emissions

The overall goal of the port authorities of Singapore and Rotterdam is to reduce the emissions from vessels due to the use of bunker oil. Therefore it is needed to see which substances are polluting, where the origin of these polluting substances is and what or where its damage takes place. This can help to determine system boundaries for the cooperation process.

3.2.1 Origin of emissions The emissions are a result of several different reasons. Most of the emissions are a direct result of the presence of the substance in the bunker oil. Combustion of the oil will directly lead to the discharge of these substances as an emission. As stated in paragraph 3.1.2, the quality of the oil and thus the amount of specific substances in the oil are a result of its origin. Therefore, the amount of pollutant substances in oil in Singapore will differ from the amount of pollutants in Rotterdam. Singapore has a list which provides average amounts of substances in the bunker oil (see Appendix B). However, not all emissions are a direct result of the combustion. Some emissions are determined by other factors, such as the combustion temperatures or the type of engine. Table 9 shows the source of some types of emissions. This gives an indication to what level the fuel itself can be adjusted to make sure less substances will be emitted. For instance NOx turns out to be merely a result of the combustion temperatures and is not a direct result of the presence of Nitrate in the fuel.

Some people think that there is a link between the amount of sulphur in the fuel and the amount of emissions. Mr. Kolpa [2008] states that Particulate Matter (PM) can be divided into two groups: Primary and secondary PM. The last one means that PM is formed after being emitted. The SOx and NOx molecules will bind together in the air due to chemical reactions. Reducing the amount of sulphur could therefore lead to a reduction of (secondary) PM. Mr. Alam [Alam Z., 2008] states that the PM can be removed through the reduction of SOx. Since PM is the most important factor that, according to him, needs to be reduced, an overwhelming majority supports the new low sulphur regulations. On top of that, Hulskotte [2007, p.10] has recognized the connection between SOx and PM

Table 9, Emissions and its source [DeMers and Walters, 1999, p. 3-4]. Emission Source SOx Function of fuel oil sulphur content CO2 Function of combustion CO Function of the air excess ratio and combustion temperature and air/fuel HC Very engine dependant but a function of the amount of fuel and lub oil left unburned during combustion. Smoke/ Originates from unburned fuel, ash content in fuel and lub oil. Particulates NOx Function of peak combustion temperatures, oxygen content and residence time. . Note: A remark that needs to be made is that removing specific substances, such as sulphur, from the fuel will lead to extra CO2 emissions in the refineries. The emissions on board of a vessel will decrease, but the refineries will emit more CO2.

3.2.2 Damage on environment and public health Due to the burning of the bunker, different substances are emitted into the air. The emissions that are emitted by vessels can be divided into three different types of substances [Kasifa, 2001, p. 3]:

• Greenhouse gases are accountable for climate change as they strengthen the greenhouse effect. Besides many ecological consequences, climate change also has social and economical consequences. Out of all emissions caused by shipping, CO2, the most common greenhouse gas, has the largest share [Kasifa, 2001, p. 3]. • Acidifying substances play a role in local and regional environmental problems, like acidification and eutrophication. The most important acidifying substances in shipping emissions are NOx and SOx [Kasifa, 2001, p. 3]. • Other substances emitted include soot particles, (PAHs and heavy metals) and particles from chemical reactions in the atmosphere (ozone and particulate matter). These particles may cause toxic, carcinogenic and other damage to humans and nature on local and regional levels [Kasifa, 2001, p. 3].

Several studies have been done to identify the influence of emissions from bunker oil on the environment and on the public health. Not only Kasifa [2001] describes the environmental and health effects of bunker emissions. Also Donkers and Leemans [2007] contribute to this by systematically describing the influence of marine bunker quality on environment and safety. They list the substances with negative ship safety effects, the substances with working safety hazards and the substances with environmental effects. Several of the environmental effects are listed in table 10. They conclude that, despite several regulations in MARPOL and ISO, there is still a potential large number of chemicals in bunker fuels that is hazardous for human health. They conclude that the most important environmental damaging substances in bunker fuels are SOx, NOx and PM. The Environmental Protection Agency of the United States has listed the environmental damages of the 6 most common air pollutants. Three of them are also the most important pollutants in the ship emissions; NOx, SOx and PM [U.S. Environmental Protection Agency, 2008]. Their findings are incorporated in table 10 as well.

Note: The environmental damage and the health issues mentioned in this paragraph mainly reflect issues that will occur on land. The effects on the ocean are not specifically mentioned, but it is expected that the influences of the emissions on the ocean will be very small. The sum of emissions that will hit the ocean water will be irrelevant.

Table 10, Pollutants from bunker and their environmental /health problems Air Pollutant from Main environmental/ health problem bunkers Sulphur oxides Acidification; Respiratory problems due to gaseous SO2 and sulphate (SOx) particles; Plant and water damage; It can lead to aesthetic damage (faster decay of building materials); Visibility impairment Nitrogen oxides Smog, ground level ozone; Acid rain and global warming; NOx reacts with (NOx) other substances which lead to particles, this leads to health problems like heart and lung diseases and irritation of respiratory system and eyes; The water quality can deteriorate and toxic chemicals can be formed. Particulate Matter Problems with respiratory system; Heart and lung diseases and increased (PM) mortality; Visibility reduction; Aesthetic damage; Environmental damage due to e.g. changing the nutrient balance in coastal waters Policyclic Aromatic Carcinogenic, heart disease and damage to immune system Hydrocarbons (PAH)

3.2.3 Location of damage caused by emissions For a long time it was believed that the substances that are emitted by vessels had little influence on the human health or environment since they occur far at sea. The substances would not travel that far and therefore the particles would not reach land. However, a study, done for the IMO [MARINTEK, 2000, p.48], has shown that 85% of all shipping activities take place in the Northern Hemisphere. Especially in Northern Europe, the west and east coast of the United States and the North Pacific the density of ship traffic is very high (see figure 14). Furthermore, an important fact is that about 70% of all shipping activities take place within 400 km of the coast. This means that 70% of all ship emissions take place within 400 km of land. Due to streams of air and onshore wind, these particles are able to reach the shore and cause damage to the coastal areas including the people living there. This explains the logic behind the ECA area and the objectives and goals of different governments to implement ECA areas. In ECA areas regulations are much stricter than the regulations that are globally effective (see table 1). Because most of the shipping activities take place in the coastal areas, most of the shipping activities are affected by these regulations. Furthermore, ECA areas also lead to the fact that the vessels will emit fewer pollutants in the coastal areas. All in all, this leads to fewer pollutants in the coastal zones. As was mentioned in the § 3.2.2, most of the damage is done to the environment on land and to the public health. The influence of the ECA areas is therefore expected to be big.

Figure 14, Estimated traffic density based on data from 1996 [MARINTEK, 2000, p. 48]

3.3 Shipping Routes

There is a lot of traffic on the oceans. For this research it is interesting to look at the shipping routes between Asia and Europe and in particular between the ports of Singapore and Rotterdam. As this is a busy route between both ports and this is most likely the route which provides most economic benefits for cooperation (see chapter 4)

Most of the time, container ships do not specifically sail between these two ports, but they call several ports in the region. E.g. the Asia – Europe Express of APL calls the following ports in the following order: Kwangyang - Pusan - Kaohsiung - Hong Kong - Singapore - Rotterdam - Hamburg – Thamesport [APL, 2008]. This has implications for the possible measures and regulations that can be taken. These regulations can lead to situations in which vessels need adjustments during their routes. This can lead to extra costs for the ship-owner during the route. This can lead to a situation in which costs will be become higher for vessels to call Singapore or Rotterdam: this is economically unwanted and should therefore be prevented.

A vessel travelling between Singapore and Rotterdam can use two different routes: The short one, no. 1 in figure 15, uses the Suez channel and the longer one, no.2 in figure 15, sails all the way around Africa. The first route is shorter in length but the Suez channel limits the size of the vessels that can use this route. Larger vessels will need to use the route rounding Africa. The channel allows ships up to 15 meters of draft to pass, and improvements are planned to increase this to 22 m [Solar Navigator, 2007]. The two different routes can lead to different competitors in bunkering. This will be elaborated in chapter 4. Although both routes are technically possible, the second one is not used that often. A short inventory of used shipping routes leads to the conclusion that almost all of the vessels will use the Suez Channel when sailing from Europe to (Far East) Asia [APL, 2008 and A.P. Moller – Maersk Group, 2008].

Figure 15, Shipping routes of vessels sailing between Europe and Asia. The red dots indicate ports that could be serious competitors.

3.4 Final Notes

Generally speaking, the technical system in which the emissions take place is the same for Singapore and Rotterdam. The only difference that is present is found in the use of bunker barges. In Rotterdam these are full automatic, while in Singapore measures are still calculated manually. These differences have little influence on the question whether or not cooperation is beneficial or not since barges only transport the bunker. They are not able to influence the amount of emissions due to the use of this bunker oil. However, the substance of the discussion during the decision-making process might be affected by these differences, as the decision should fit in both bunkering systems.

Furthermore, one needs to recognise the differences in the amount of existing regulations and standards that both ports have. Singapore has quite a few standards for quality and bunker procedures; these need to be incorporated in the final decision. The fact that the port of Rotterdam does not have any quality standards or regulations for bunker oil is an example of the Netherlands being low on uncertainty avoidance as was mentioned in § 2.4.2. There is no physical or emotional need from within the Netherlands by the stakeholder with authority (e.g. Ministry of V&W) to regulate this system in rules and regulations; the quality will be maintained by the fact that a bunker alert from Intertanko will do too much damage to a supplier to make big risks in supplying low quality bunker. Although Singapore has, relatively, a lot of bunkering standards, this does not necessarily mean that Singapore is high on uncertainty avoidance. These standards have not been there for a long time. Unlike in Rotterdam so far, the standards in Singapore have been the result of a repetition of bunker alerts in the port of Singapore. A bad bunker reputation in the port of Singapore was not wanted and the MPA has intervened by implementing these standards.

Delineation Most of the damage on the environment and human health, affects factors in the coastal areas (§ 3.2.2). Apart from general environmental issues, the emissions have –as to what we know now- only a small influence on the ocean itself. As 70% of all shipping activities take place in the coastal zone (§ 3.2.3) and this is also the zone with the highest possibility of being harmed by the emissions of the shipping activities, this zone is most interesting to deal with in the cooperation process. From a technical point of view, it is therefore suggested that the cooperation process of reducing emissions focuses on solutions in this area (ports and coastal area).

This chapter serves as a starting point for the analysis of the solution space. Many technical solutions have been developed; these are mentioned in chapter 6. Furthermore, this chapter serves as input for the

substantive dilemmas/ trade-offs in chapter 7. The delineation can serve directly as input for the process design. In this following chapter, the economical system will be analysed.

4 Economical Analysis______

In this chapter the economical side of this problem will be analysed. In § 4.1 the bunker market will be analysed. The future developments in the bunker market will be named in § 4.2. Next, in § 4.3 the decision factors will be identified that determine whether a ship-owners chooses for bunker in one port or another. The main purpose of this chapter is to determine possible economical benefits for cooperation between Singapore and Rotterdam. The analysis should lead to insight in the bunker market.

4.1 Competition in Bunker Market

In this paragraph the bunker market will be analysed for both ports apart, and together. The beneficial characteristics of the port of Singapore and Rotterdam will be named and their competitors will be identified. Furthermore, the combined market on the shipping route between Singapore and Rotterdam will be analysed.

4.1.1 Rotterdam Rotterdam is one of the four biggest bunker ports in the world: Singapore, Rotterdam, Fujairah and Houston. The four biggest bunker ports are located far apart from each other over the world. In Rotterdam the total throughput of bunker oil was 13,6 million tonnes bunker oil in 2007 [Port of Rotterdam Authority, 2007c]. This means that the Port of Rotterdam is also the biggest bunker port in Europe. This is a result of some specific characteristics of the Port of Rotterdam. These characteristics have made the port of Rotterdam into the biggest bunkering port of Europe. In figure 16, some of these characteristics of Rotterdam are listed. Each one will be explained.

Figure 16, Beneficial characteristics of the Port of Rotterdam. 1 [Wilde et al., 2007] 2 [Brutel de la Rivière, 2008] 3 [Kolpa, 2008]

The port of Rotterdam is a deep water port. This means that the port is deep enough to handle all types of ships. Rotterdam is the only port in North West Europe (the Hamburg – La Havre range) that is capable of handling the deepest ships. These vessels will therefore always bunker in the port of Rotterdam if needed. As stated in chapter 3, the crude oil in Rotterdam is imported from three different origins; The Northsea, The Middle East and Russia. The port of Rotterdam has a good geographical location in relation to Russia. Since the Port of Rotterdam is one of the closest bunker seaports to Russia, the oil is transported to Rotterdam. This means that, relatively speaking, a lot of bunker oil is imported in Rotterdam. The refineries in the port of Rotterdam have a large production capacity (see Appendix C). This attracts the oil to the port and this means that there already is a lot of oil available in the port of Rotterdam. On top of that, as showed in table 6, the refineries in the Netherlands (4 out of 5 are located in the port of Rotterdam) produce bunker oil. This means that there are a lot of possibilities for the supply of bunker oil. The port of Rotterdam is the biggest port of Europe. Almost all ship-owners prefer to bunker in the same port as the port where they need to be anyway. The ship can be bunkered at the same time of the loading and unloading of cargo on vessels. This indicates that no time is lost during the stay of a vessel in the port. Ships that need to be in the port of Rotterdam due to their cargo are likely to bunker in the port as

well. Since the port of Rotterdam is the biggest port of Europe, this leads to a corresponding demand for bunker oil. Between the exploration of oil at its origin and the import of oil in Rotterdam are relatively a little amount of actors present: This little distributive trade means that compared to other ports, the oil is not traded that much from one actor to another before it reaches the port: each actor that trades the same barrel of oil adds extra costs to that barrel and therefore increases the price of the oil. Only a few actors deal with the oil. This keeps the oil market of Rotterdam transparent and the price of the oil relatively low. All the characteristics named above contribute to the fact that the bunker oil is relatively cheap in Rotterdam (see table 11). This is a beneficial characteristic in itself, since it will attract more ship-owners to come to the port of Rotterdam to bunker. Until now, these characteristics have kept the port of Rotterdam in its leading position on the European bunker market. It does not necessarily mean that the port will keep its leading position. The most important (local) competitors on the bunker market for Rotterdam are ports in Europe that have similar characteristics as the port of Rotterdam: a large throughput of cargo, large/ many refineries and/or geographically close to the Russian import. In the future, Antwerp could be such a port. It is the second biggest port of Europe, which means that the cargo throughput is quite large. Furthermore, the difference in distance to Russia between Rotterdam and Antwerp is negligible. On top of that, Antwerp also has a relatively large petrochemical cluster including refineries. However, most of the import of oil in Antwerp is done by ships from the port of Rotterdam and by the Rotterdam-Antwerp Pipeline [Port of Antwerp, 2008]. This means that Antwerp –to some extent- depends on the port of Rotterdam for its import. In addition, this petrochemical cluster is specifically focussed on chemical products and not so much on the production of different types of oil. This can change in the future which makes Antwerp a port to take in consideration as competitor. Other local ports that could be competitors on the bunker market could be the ports in the Baltic States, which are very close to the ‘Russian’ oil and therefore have cheaper bunker oil than Rotterdam. Wilhelmshaven in Germany is an oil port in Europe but does not have refineries to produce bunker oil itself.

Table 11, Bunker prices on 12-08-2008 [Bunkerworld, 2008b] Bunkerprices, August 12th, 2008 IFO 380 IFO180 MDO MGO Singapore 624.00 634.50 991.00 1005.50 Houston 655.50 743.00 1107.50 Rotterdam 571.50 601.50 919.00 1006.50 Fujairah 658.00 688.00 1345.00 1299.50

4.1.2 Singapore Singapore is the biggest bunker port in the world. The total throughputs of bunker in the port of Singapore was 31,5 million tonnes in 2007 [Maritime and Port Authority of Singapore, 2008c]. This could not have been the case if it were not for some port characteristics that make Singapore am excellent bunker port. Just like the port of Rotterdam, the port of Singapore has some characteristics that are very beneficial for the ports bunker market.

Figure 17, Beneficial characteristics of the Port of Singapore. 1 [Alam Z., 2008] 2 [Hoh and Leong, 2008] 3 [Sivanandam and Prodduturi, 2008]

The location of the port of Singapore is very strategic. It is the first port in south East Asia that is situated on the fastest route between Europe and the rest of East Asia. The port has developed itself into a ‘hub’ port.

Ships coming from Europe will enter the port to be reloaded with the specific freight for specific ports in East Asia. Cargo coming from East Asia will be unloaded in Singapore to be reloaded onto a vessel that will sail to Europe. Due to its strategic location, a large share of the residual oil that is imported to East Asia will pass through Singapore (see table 7 and 12).

Table 12, Oil statistics of South East Asia, 2005 [International Energy Agency, 2008c] Unit - 1000 tonnes Gas/Diesel Residual Fuel Oil Production 173139 62990 From Other Sources 0 0 Imports 31644 69337 Exports -25525 -23395 International Marine Bunkers -4025 -39566 Stock Changes 152 994 Domestic Supply -175385 -70360

Furthermore, Singapore is the busiest port in the world. Just as in Rotterdam, time is an important factor for ship-owners. The vessels can be bunkered at the same time as cargo can be loaded and unloaded. Vessels that need to be in the port of Singapore for its cargo will prefer to bunker in this port as well. Singapore has a lot of production capacity in the refineries in the port (see appendix C). Although most of the bunker is imported (see table 7), the port does have the capability of producing bunker itself. The bunker price is relatively low compared to other ports in the region. Even though the price of bunker oil is higher than in Rotterdam, Singapore still has a relatively low priced bunker. This attracts ship- owners to move to this port. Some Singaporean experts refer to the bunkering standards of Singapore that guarantee a certain level of quality. By standardizing the bunker quality and the bunkering procedures, the ship-owners and bunker suppliers have little risk on disputes between each other. In the past the port of Singapore had had to deal with some disputes on bunker quality. These standards have minimized this. The port of Rotterdam also has standards and measures to minimize disputes and to guarantee the level of quality.

Like in Rotterdam, Singapore has to deal with potential local competitors. Ports in Malaysia and Indonesia can have the same strategic location benefits as Singapore has. Although these ports do not have the same size as the port of Singapore at this point, some of these ports are growing rapidly. A good example could be the port of Tanjung Pelepas in Malaysia. This port has only started operating in 1999, but has taken two of Singapore’s’ biggest container shipping clients [Wikipedia, 2008a]. As stated above, ship-owners prefer to bunker in the port were they already need to be, so the shift of shipping companies to other ports is also of concern for the bunker market of the Singaporean port. An important thing to recognize is the fact that the countries surrounding Singapore are developing countries. These countries are interested in other things than Singapore. Environmental issues within the port are not approached in the same way as in Singapore. As M. Sivanandam and Mr. Prodduturi say: “This means for example becoming an ECA area is simply too expensive for these types of countries. The economy is their main priority.” This has implications for the policies or measures that Singapore might take to reduce the bunker emissions: The surrounding countries of Singapore are not likely to join the policies or measures that Singapore will take. If the measures or policies lead to a price difference in bunker in favour of neighbouring ports (e.g. Tanjung Pelepas), the competition will increase. In that case, Singapore has to be very careful not to lose business to these ports. This is a dilemma Singapore has to deal with.

4.1.3 General The total world market of marine bunker fuels has to be estimated since not all ports publicly hold record of their bunker throughput. Ensys and Navigistics [EnSys Energy & Systems Inc. and Navigistics Consulting 2007, p. 15] estimated that the total world bunker market in 2007 was about 357,9 million tonnes while IMO [IMO, Sub Committee on Bulk Liquids and Gases, 2007] projected 369 million tonnes. These estimations are not too far apart and thus seem to be reliable. When adding the bunker volumes of Rotterdam (13,6 million tonnes [Port of Rotterdam Authority, 2007c]) and Singapore (31,5 million tonnes [Maritime and Port Authority of Singapore 2008b]) they have a total of 45,1 million tonnes of throughput. A quick calculation results in the conclusion that together, both ports form between 12,6% and 12,2% of the world bunker market.

This combined market share of 12% is significant. Without cooperation, the port of Rotterdam would have 4% of the total world bunker market. The competition without new, cooperative bunker regulations would be 8% bigger for the port of Rotterdam. The same counts for the port of Singapore; without cooperation it would have 8% of the world bunker market. Together the ports have over 12%. Operating alone leads to a reduction of 4% of the competition for the port of Singapore. Furthermore, both ports being part of the largest ports in the world, together they can have significant influence on ship-owners and other stakeholders. Together, they have more power to make a statement towards the rest of the world. These specific benefits will become bigger when more ports are involved.

Together, Singapore and Rotterdam have competitors that are situated along the route between these two ports. During interviews several ports were named by the interviewees: Fujairah [Hoh and Leong, 2008], Salalah [Brutel de la Rivière, 2008]. Furthermore, one could even think of Durban as a possible competitor. This depends on the shipping route that is used to sail between Singapore and Rotterdam. As was mentioned in chapter 3, there are two routes that can be used. The short one uses the Suez channel and the longer one sails all the way around Africa (see figure 15). The difference is in the limitations of the Suez channel on the size of the vessels. The most commonly used route, indicated with no. 1 in figure 15, goes through the Suez channel and passes Salalah and Fujairah relatively close. These two ports can be seen as true competitors for the ports of Rotterdam and Singapore for bunkering on this route. At this moment Fujairah is one of the four biggest bunkering ports in the world. There is enough bunker oil available and, situated in the Middle East, it is close to the exploration of the crude oil, which means there are less transport costs for the bunker. Salalah is an upcoming port. For now, this port is focussed on container terminals, but in the future this focus can lead to an increase in bunker throughput. Since ship-owners like to bunker in port they already call, an increase in containerships will lead to an increase in bunker demand. These two ports are competitors of each other as well. The site of the port of Salalah claims: “It is estimated that a carrier operating on the Europe to Asia route, calling on Salalah rather than the Gulf, represents a 3.5-day reduction in sailing times” [Port of Salalah, 2008]. This makes Salalah a port to consider in the future. Durban will only be a competitor for Singapore and Rotterdam for vessels that sail around Africa. These are limited in number. Therefore, Durban is considered only a very small competitor.

In the previous paragraphs several characteristics of the ports of Singapore and Rotterdam were mentioned that were beneficial for their bunker market. These are mainly based on some general factors that could be used by the shipping companies to determine which port they are going to call. All factors together form the deciding factors of a bunker purchase by ship-owners. These factors will be evaluated in § 4.3. Their influence on possible measures and regulations that can be taken will be elaborated.

4.2 Future Developments in Bunker Market

It is interesting to see what the future holds for the bunker market will be. Growth of the bunker demand can, for instance, lead to extra emissions and a need for extra refinery capacity. Furthermore, the price of oil will change in the future; the question is: How much will it change?

4.2.1 Growth in bunker demand According to EnSys, the total world bunker demand in 2020 is estimated at 495 million tonnes [EnSys Energy & Systems Inc. and Navigistics Consulting, 2007, p. 15]. The IMO expects a demand of 486 millions tonnes [IMO, Sub Committee on Bulk Liquids and Gases, 2007, p. 5]. This is a growth rate of over 2% per year. However, there are a few comments that need to be made while referring to these two estimations: Both estimations were made by the end of 2007. The MARPOL Annex VI regulations (to be approved in October) were not yet made during the production of these estimations and therefore they have not been incorporated in these estimations. Incorporating these future regulations in the calculations could lead to a change in expected bunker demand. The new regulations should lead to a relative decline in the use of residual oil and a relative increase in the use of distillate. The proportions of both types of bunker oil will change. However, less distillate oil than residual oil is needed to produce the same amount of energy. The proportion shift can therefore lead to a total bunker demand growth which is smaller than the expected demand growth as estimated by EnSys en IMO.

4.2.2 Dynamics in market of heavy fuel oil (HFO) It is hard to determine or predict the increase or decrease in demand of heavy fuel oil. The price of heavy fuel oil is a large factor in determining the demand. There are two possible approaches for the price of bunker oil to form: cost based or market based. Both types will be shortly explained in this paragraph.

Cost based pricing One way to try to predict the bunker price is by looking at the costs needed to produce bunker oil. These costs exist out of several factors. First of all: the price of crude oil. The price of crude oil determines the initial costs before the production process of bunker oil has started. However, it is very difficult to predict the crude oil prices in the future. On way to try to predict the crude oil prices is by looking at the oil prices in history and trying to extrapolate these figures into the future. In figure 18, the crude oil prices of the last century are presented. This clearly shows that the price can increase and decrease very rapidly in a relative short amount of time.

Figure 18, Crude oil prices since 1861 [BP, 2008a].

Basically, there are two main conclusions that can be drawn when looking at this figure. First of all, the average oil prices are increasing. After a long period of relative little change in oil price (1880-1969), the last 40 years show an increase in the average oil price. There was a peak in price in 1973 building up to 1980. At this moment the price of crude oil is relatively high again, but it is unclear if we have reached another peak or if the peak has not yet been reached. Based on historical data, one could expect the price of oil to decrease eventually. When it will decrease and how much it will increase, however, remains uncertain. Another conclusion that can be drawn from the figure is the effect from world events on the oil price. Events such as wars, discoveries of new oil fields and financial crises are of large influence on the oil price. The demand for oil is very big but the supply is provided by a small amount of sources. When one of these sources is hit by a world event, this can have great influence on the worldwide oil price. A good example could be Middle East: This is one of the most important sources of oil in the world. The figure shows that during the invasion of Iraq, the price of crude oil went up very fast. The Iranian revolution around 1979 on the other hand resulted in a price decrease, since the oil supply was now easier. Unfortunately, it is very hard, if not impossible, to predict these kinds of world events in the future, especially on the long term. As these events have quite a lot of influence on the oil price, it is very hard to predict the crude oil price in the future.

Another factor that leads to a change in the bunker oil price is the production costs of the refinery. Furthermore, as mentioned in 5.1.1, the price of bunker oil can become higher when there are more actors that trade in the bunker oil. Each actor that deals in oil (crude or bunker) adds costs to the bunker oil.

All factors determine the amount of costs that are made for all actors before it is sold to a ship-owner. These costs determine the price if one follows the cost based principle. However, bunker oil is a rather interesting product as it is not produced on purpose. Bunker oil is a side product that comes into being due to the production of high-quality oil products. Basically, bunker oil is a mixture of the residual oils after the production of high-quality oil products of the refineries. This means that the costs of producing bunker oil are in fact the costs of producing high-quality products. For that reason it is safe to say that the price of bunker oil is not likely to be determined by its productions costs or therefore by its costs in general alone. The production of bunker oil will never stop due to the fact that the production costs of bunker oil are too high since these costs are already covered by the sale of another product. Therefore, we take a closer look on the bunker oil price based on the market.

Market based pricing By market based pricing is meant that the price of bunker oil is determined by the supply and demand of this product.

In contrary to many other situations and other products, the supply of HFO is not so much determined by the demand for HFO, but by the demand for another product. As mentioned, HFO is a by-product of the production of high-quality oils. Because of this, the supply of HFO is not determined by market processes on the HFO market but by the market processes on the markets for high-quality oils. Changes in the demand for HFO will therefore have immediate effect on the price.

The demand of HFO within one country is determined by several actors. These actors can be generalized and divided into three groups: the ship-owners (marine bunkers), the actors within its country (domestic supply) and the foreign actors (export). In the Netherlands, as can be seen in table 6, the domestic supply is very small. Most of the HFO is either exported or used/sold as bunker oil. The demand for HFO in the Netherlands is situated in the ports as this is the place where bunker is exported or bunkered. In Singapore (see table 7), the demand for HFO is also mainly determined by the export and the bunker demand. Especially the bunker demand forms a large share in Singapore. These findings have implications for the price: if the bunker demand is high, the price will go up, since the supply of HFO will remain the same (depending on the market of high-quality oils). Since bunker is responsible for a large share of the total HFO demand, the demand of bunker has a direct influence on the price. When the demand for bunker decreases, the price will decrease as well. HFO is a residual product which contains several pollutants (as mentioned in chapter 3). Not selling HFO means that they are stuck with a product and this will only cost them. This will make the HFO producers (refineries) lower their prices.

The refineries will want to sell this HFO with the highest possible profit. When the profit on HFO becomes smaller and the difference in profit between HFO and the high-quality oil products becomes bigger, it will become more and more interesting for the refineries to invest in extra processes to turn HFO in high-quality oils. This implies that when the demand for HFO becomes smaller, there will be more incentives for a refinery to invest. When (new) regulations are implemented for bunker oil which results in a reduction in the demand for HFO, this indirectly might result in investments in refineries due to market processes. Important to realize is that in other countries around the world, these regulations on bunker might not exist. Furthermore, the HFO is used for other purposes than bunker only: e.g. HFO can be used in power plants. If the local bunker price in Rotterdam decreases due to new regulations (e.g. tax on bunkering of HFO), this might affect the local bunker demand. Since bunker oil represents a large share of the total use of HFO in the Netherlands this leaves the refineries with a lot of HFO. The sell this product, it might be needed for the refineries to lower their HFO price. At that moment, it might be very interesting for the actors from other countries to import this relatively cheap HFO. The exported HFO might than be used as bunker oil in other countries without the regulation. Furthermore, this means that instead of having an incentive for investments in the (local) refineries, there is an incentive to export HFO. This results in a loss of bunker sales (although compensated by extra demand of HFO) and a shift in location of emissions.

In figure 19 an impression is given of the main factors that play a role within the bunker market in the port of Rotterdam. When replacing all names of Rotterdam by Singapore, this figure can also be used for the HFO market in Singapore. One should recognize that one factor can have more influence on another factor that another. E.g. a decrease in demand of HFO export in Rotterdam will have more impact on the price of HFO than a decrease in domestic demand since HFO export represents a much larger share of the total demand.

Figure 19, Main factors in the HFO market in Rotterdam and their influence on each other.

The fact that these things have an influence on the market can affect the behaviour of stakeholders when new regulations are implemented. For example, ship-owners will try to lower their costs by purchasing bunker oil for the cheapest price. When HFO prices go up in Rotterdam due to new regulations, these ship- owners can move to other ports (this is elaborated in § 4.3 and see also chapter 6). This will reduce the demand for HFO in the first port. As explained, this can lead to a reduction in the price of HFO. It is very difficult to determine how much change in price and demand will occur due to new regulations and the market processes. Furthermore, in this paragraph only the main influences on the market are discussed. It is also possible that other (smaller) factors have an influence on the market. This would be an interesting study.

4.3 Decision Factors for Bunker Purchase

As mentioned in § 4.1, there are several factors that have an influence on the decision of a ship-owner before purchase is done. Some of these factors imply a very rational decision: a ship-owner will decide

purely on financial reasons whether or not to purchase bunker oil in one port or another. On the other hand, this research has led to the conclusion that other factors, such as the quality of oil, also have a big impact on the choice of where to purchase bunker. Paragraph 4.3.1 will focus on these non-economic decision factors, while § 4.3.2 will elaborate on the financial factors. All these factors together determine the demand for bunker in one port (see § 4.2).

4.3.1 Non-economic decision factors There are several reasons for a ship-owner to purchase bunker at a different port than the port where bunker oil is cheapest. The most obvious reason would be the shipping route of the vessel. It is possible that the ship-owner prefers to bunker just in the ports where it needs to be anyway due to its cargo. This can be preferred not only due to the time it will save by doing so (at thereby reducing costs, as time is money), but also because it takes less effort: There is an ease in sailing only to the ports needed, as they will only deal with the ports that are needed for its cargo. Another, non-economic decision factor is bunker quality: It is very important for a vessel to get the specifically requested quality level of bunker oil since its engines are tuned up to this exact level of quality. When the requested quality is not delivered, the ship engines might suffer damage and will not produce the same amount of power as it would have with the correct level of quality. The scheduled shipping route will not be met, since the ship is not able to sail as fast as it could have. Furthermore, it is possible that the port does not supply the vessel with the exact amount of bunker oil that it had requested for. When a port has a reputation of many disputes concerning bunker quality and quantity, this might be a reason for the shipping company to change the port of bunkering.

4.3.2 Economic decision factors There are several factors that have influence on the costs of bunkering and therefore on the location where bunkering is cheapest. Rationally, the shipping companies should choose the cheapest place to bunker, when all contributing factors are identified. This paragraph will identify these factors and will try to show how this cheapest place can be calculated. The eventual goal for ship-owners is to find the cheapest way to sail from port A to port B. In this case: to find the cheapest way to sail from Rotterdam to Singapore. For a shipping company to decide which port is the cheapest shipping route, several cost elements (port tariffs and bunker costs) need to be identified for each port. This is best clarified with a simplification of the reality: Suppose a vessel only needs to load and unload cargo in Rotterdam and Singapore. As written in § 3.3, in reality this is not the case, but for now, this is assumed. In that case, the vessel only needs to be in the ports of Singapore and Rotterdam. Normally, bunkering will be done in one of these ports, since they will visit these ports anyway. However, it is possible that it turns out to be cheaper to sail to a 3rd port specifically to bunker over there. This is not the case at this moment, but could be a possibility in the future. This is explained with the illustrations in figure 20a and b. In these illustrations, Fujairah is used as an example of the 3rd port. This could have been any other port.

In figure 20 the costs of each port are identified using several elements. The maximum total price of Rotterdam exists out of the bunkering costs (A) and the port costs (D). The maximum total price of the port of Singapore also depends on the bunkering costs (C) and the port costs (F). The costs for a vessel to bunker in Fujairah exist of bunkering costs (B), port costs (E) and costs of the extra kilometres and time it takes to sail to Fujairah (G). The lengths of the blocks in figure 20 represent the height of the costs but do not reflect actual costs. They are only used to illustrate the basic idea. In figure 20b, the total costs of the shipping routes are illustrated. When a vessel sails on the route from Rotterdam to Singapore (route R – S) the total costs of this route will be: A (or C) + D + F. On the other hand, when a vessel decides to call Fujairah to bunker over there, the total costs of the route from Rotterdam via Fujairah to Singapore (route R – F – S) will be B + D + E + F + G. The port costs of Singapore and Rotterdam need to be added up to these costs as well, since the vessel will need to call these two ports anyhow due to its cargo. The figures illustrate that there are more elements of costs when a vessel calls Fujairah or any other 3rd port in order to bunker. It is therefore likely that calling a 3rd port is more expensive than not calling a 3rd port to bunker.

Figure 20a and b, Illustrative maximum costs per port and per shipping route. Dark blue: bunker costs, yellow: port costs, green: costs for extra kilometres of sailing.

To calculate the heights of the individual elements, the factors that influence the costs of these elements are important. These factors can be different from port to port. The contributing factors and their relation on the total costs of a port need some clarification. The price of bunker oil in a specific port is one of the most important factors. It determines the costs of bunker purchase itself. The price of bunker differs from port to port [Bunkerworld, 2008b]. For instance, the bunker price in Rotterdam is generally lower than the bunker price in Singapore. The total price of bunkering in one port therefore depends on the price of bunker in that specific port multiplied with the amount of tonnes the ships want to bunker. The port costs depend on several factors. “The comparison of port tariffs between ports is a difficult task owing to many factors such as the diversity of tariff systems; differences in legal charges, regulations and other miscellaneous factors; confidentiality of tariff data in dedicated terminals; and the reality that tariff levels are often determined based upon individual negotiations between the port authority and users” [Unescap, 2004, p. 34]. Apart from these port tariff differences, the total port costs can differ among each other due to pilotage and rental of port equipment. Focussing on the port tariffs only, leaving out other port costs like pilotage, a few factors of determining port costs can be identified: In Rotterdam the tariffs are based on the size of the vessel (GT) that arrives in the port and the amount of cargo (MT) that is loaded or discharged. Furthermore, there is a difference made in tariffs based on the type of vessel [Port of Rotterdam Authority, 2008b].Tankers will pay much more than containerships will. On the other hand, in Singapore the amount of cargo is irrelevant to calculate the port dues. In Singapore the port dues are based on the size of the vessel and the time the ship spends in the port [Maritime and Port Authority of Singapore, 2008d]. An important remark to these port costs is the fact that most ports use a special, reduced, tariff for vessels that enter the port only for bunkering. E.g. In Fujairah, these bunker tariffs are solely based on the size of the vessel (GT) [Port of Fujairah, 2008]. It is hard to determine the factors, if there are any, which influence the other costs that are made in a port (pilotage, etc). The extra costs of calling the so-called 3rd port just for bunkering include the total port costs of the extra port, and the extra costs to sail to this 3rd port. All these contributing factors can be placed in a diagram which will visualize the relation between all factors on the shipping routes with or without a visit to a 3rd port (see figure 21).

Figure 21, Relation between specific factors and the costs of bunkering on a specific route.

4.3.3 Decision factors: combined The factors that have been found in the previous two paragraphs can be listed. The non-economic factors as well as the economic factors are mentioned in figure 22. It should be noted that the economic factors have been based on the port tariffs that have been drawn up by Singapore, Rotterdam and Fujairah. Although this list will include all of the major deciding factors, it is possible that a small factor has been left out.

Figure 22, Factors that determine the place of bunkering of a ship.

4.4 Costs of Shipping Routes

It is interesting to see what the height of the costs of each costs element, mentioned in § 4.3.2, are. In this paragraph the costs of these elements are roughly calculated to give an impression of these costs. First, a ship of reference is determined; next an impression of the costs will be presented.

4.4.1 Ship of reference In this paragraph the assumptions and delineations will be explained of the numbers and amounts that will be used in calculations later on. First, the entities that need to be quantified should be identified. This has been done in figure 21. Most of the sizes of these factors depend on the characteristics of the vessel that is used in the calculations. Therefore, a vessel of reference should be identified.

First of all, the type of vessel needs to be determined. Since the type of vessel not only determines the height of the port dues in some ports (e.g. Rotterdam) but also determines the size of the vessel and the amount of cargo it can transport, it is needed to decide on a type of vessel: As mentioned in chapter 3, containerships are, on average, responsible for 25% of all emissions. This type of vessel is therefore, by far, the most polluting type of vessels. For that reason, this is the type of vessel which can contribute most to reducing emissions. Therefore, containerships are the most interesting type of vessel to look at. Furthermore, a demarcation has been made by focusing on deep sea vessels. In contrary to short sea vessels, deep sea vessels cross deep seas. These are the type of vessels that are used to sail between Singapore and Rotterdam.

The Port of Rotterdam Authority keeps record of all vessels that call the port [Business Objects]. This data collection has been used to determine the following factors: • Size of vessel (GT) • Amount of Cargo (Mts) • Amount of bunker wanted (mT)

In the first two quarters of 2008, the average size of a deep sea containership was 58.561 GT. These vessels have an average throughput of 24.436 Mts per call. Not all of these deep sea container vessels actually bunker in the port of Rotterdam. The deep sea containerships that have bunkered in Rotterdam in these first two quarters of 2008, have bunkered on average 2133 Mts heavy fuel oil. These figures have been placed in a clear overview shown in figure 23.

Ship of reference

Type of vessel: Deep sea container Size of vessel: 58.561 GT Amount of cargo: 24.436 Mts Time in port: 1,5 Days Amount of bunker wanted: 2133 Mts

Figure 23, Ship of reference to be used in calculations for port dues.

4.4.2 Impression of costs The characteristics of the ship of reference can be used to determine the height of the different costs elements (Port costs, bunker costs). The specific numbers can be used as input for spreadsheet calculations to find corresponding costs.

Port Tariffs Container ships in Scheduled Service LC1 rate 0,464 per GT of the Seagoing Vessel This rate is used when the amount of Cargo is loaded or discharged is equal to or greater than 51,6% of the GT of the Seagoing Vessel

LC2 rate 0,230 per GT of the Seagoing Vessel + 0,454 per metric ton of Cargo loaded or discharged This rate is used when the amount of Cargo loaded or discharged is less than 51,6% of the GT of the Seagoing Vessel

Figure 24, Port Tariff of Port of Rotterdam Authority [Port of Rotterdam Authority, 2008b]

The port costs can be spit into two factors: the port dues and the other port costs as pilotage etc. As mentioned in § 4.3.2, it is difficult to calculate the total costs and to compare these. Using the port tariffs of the Port of Rotterdam Authority (figure 24), one can calculate port dues corresponding to the ship of reference. This leads to the following calculations and results:

Fist of all, the specific tariff that need to be used should be determined. This depends on the amount of cargo (Mts) and the size of the vessel (GT). This brings us to:

24.436 (Mts) / 58.561 (GT) = 41,7%

This is less than 51,6%, which means the LC2 rate needs to be used to determine the port dues. These rates lead to the following calculations and port dues:

0,230 * 24.436 (MTS) + 0,454 * 58.561 (GT) = € 24.562,97

These port dues of the port of Rotterdam seem to be correct, since Business Objects calculates an average of port dues of deep sea containerships of € 23.842. This is relatively close to each other. Rotterdam is known as a port with relatively high port dues. The port dues of Singapore and Fujairah are therefore likely to be lower. The total port costs are much higher than the port dues by itself. Unescap [2004, p. 40] estimates the total port costs of Singapore in 2004, using a smaller ship of reference and using the port tariffs handled at that time, on US$ 157.459. Using the exchange rate of 10-9-08 [Yahoo Finance, 2008], this would imply total port costs of Singapore of € 111.260. This is clearly much higher than the port dues alone.

The bunkering costs differ heavily in time (corresponding with the change in the bunker prices). When the prices of Heavy Fuel Oil go up, bunkering costs go up accordingly. Obviously, when a ship-owner decides to bunker in a port, he will not only need to pay the fuel, but will also have to deal with extra costs which are charged by the bunker supplier. Compared to the fuel costs, these extra costs will be relatively low. Using the fuel prices as presented in table 11, the bunker costs for the ship of reference would be (corresponding to each port):

Rotterdam: € 861.352,11 Singapore: € 940.478,95 Fujairah: € 991.722,99

Clearly, the costs of fuel for one ship are very high and are responsible for an extremely big part of the entire costs of a trip.

4.5 Final Notes

Comparing the deciding factors as presented in figure 22 with the beneficial characteristics of the ports of Rotterdam and Singapore as they were mentioned earlier in this chapter, there are several things that can be noticed. First of all, most of the beneficial characteristics mentioned earlier can be linked to the deciding factors. The geographical strategic locations of both ports determine the fact that a lot of vessels will need to go to these ports already. Also the low bunker price is a very clear reason for ship-owners to choose for a specific port to bunker. Another thing that can be noticed is that the deciding factors can be divided into deciding factors that can be influenced by ports and deciding factors that can hardly be influenced by ports: It is relatively easy for a port to develop a program or standard that guarantees the quality of bunker oil. Also the time a vessel spends in a port can be influenced by the port itself. If the planning is done well and equipment on quay is fast and of high quality, the time spent in a port will be minimal. Furthermore, with the help of for instance port tariffs, the port can try to persuade a ship-owner to use larger vessels that have more cargo and need more bunker oil. On the other hand, the price of bunker oil is hard to influence. This price is caused by the effects of the market. The height of these costs is hard to determine, because they differ per call, per type of cargo, per amount of cargo, etc.

Until now, the shipping companies have not shown to have a specific preference for the economic factors. This could also be, because both economic as non-economic factors may have led to the same port for

bunker purchase. However, with the increasing prices of oil, the costs of shipping are getting higher and higher. It is therefore very likely that in the future, shipping companies will focus more and more on the total costs of bunkering. It would be interesting to see if there is a way to quantify the preferences of the ship-owners. If you could determine the specific values a ship-owner has towards a decision making factor it is possible to define the room for implementation of measures more specifically. This could for instance be done by questionnaires in which the ship-owner has to put values on each decision factor. The results of these questionnaires can be statistically analysed.

The analysis of the HFO price showed insight in possible market processes. These processes can become very important during implementation of new regulations. However, it is difficult to determine to which extent price differences will influence the market. These market processes should be studied more extensively.

This economical analysis serves as input for the determination of the solution space. It provides us with insight in the feasibility of some of the solutions provided in chapter 6, and it serves as input for the trade- offs presented in chapter 7.

5 Stakeholder Analysis______

In this chapter the stakeholders within this research will be identified. The stakeholders in Singapore and in Rotterdam will be analyzed in § 5.1. The level of aggregation and the role that the stakeholders can fulfil with regard to resources and their involvement will be analyzed. With this information the predictive analysis of dynamics of the stakeholders in § 5.2 can be done. This shows how their position can change due to changes in the process. Paragraph 5.3 provides an overview of several cultural differences in management between Singapore and Rotterdam that might be of influence for the process. The findings of the first three paragraphs help to characterize the process environment in § 5.4. The results of this chapter will form an input for the process design.

5.1 Stakeholder Analysis

In the stakeholder analysis a number of steps are carried out to find the most important stakeholders involved or affected by the research questions. The complete stakeholder analysis can be found in Appendix C. All stakeholders are identified that have significant authorative responsibilities, and all stakeholders are identified that can influence the problem due to the use of other resources. Furthermore stakeholders that are influenced by the research questions are identified. This helps to identify the essential stakeholders that are already involved in the research and to identify the stakeholders that need to be involved in the future in the decision-making process. This complete analysis helps to map the multiformity in the issues of this research.

5.1.1 Level of aggregation Although the research will be executed in a network that exists out of stakeholders from Singapore, Rotterdam and the international arena, these three networks within one overall network are analyzed apart from each other. Since the research will be conducted by two ports operating in a different country, with different characteristics, a distinction has been made between both countries and an international level. This is done to provide a good view on the different characteristics of the two countries. The focus of this stakeholder analysis has been on the stakeholders in Singapore and Rotterdam and not on the stakeholders at an international level. The reason for this is because the goal of this research is to find out if more can be done to reduce emissions if the ports of Singapore and Rotterdam cooperate. The applied level of aggregation is therefore, in Singapore as well as in Rotterdam, the national level. In Rotterdam this includes European stakeholders such as the European Commission since they can have direct influence on the national situation. In Singapore there is no difference between the national level and the regional level as Singapore is a city-state. In the Netherlands, there is a difference between these two levels. However, the port of Rotterdam is of high importance to the economy of the entire country and, depending on the type of regulation, the stakeholders at national level are of large importance to this research. Therefore, the aggregation level in the Netherlands is also at national level.

5.1.2 Analysis of stakeholders With the help of two formal charts, one for each country, the relations and interdependencies between stakeholders are identified. These charts help to identify interdependencies within a network. It is difficult for a stakeholder to fully realize these by himself. For example the interdependent relation between the Port of Rotterdam Authority, the Harbour Master Division and the Royal Association of Dutch Ship-owners (KNVR): The Harbour Master Division is responsible for the port act and therefore has authority to implement regulations or measures in the port. On the other hand, the united ship-owners have the knowledge of ships and know to what extent solutions will actually succeed. Furthermore, they can obstruct decision-making by for instance, organizing a debate, organizing a (written) protest or by linking other problems to the discussion. The Harbour Master Division needs ship-owners to keep coming to the port of Rotterdam and not to move to another port. The Port of Rotterdam Authority is the stakeholder who initiated the research and who has the contact with both the Harbour Master Division and the KVNR. The Harbour Master Division and the Port Authority need the information of the ship-owners and their cooperation in order to reach successful decision-making.

Furthermore an inventory of the problem perceptions, interests, goals, gaps, and means to steer and reach consensus about a solution is made. Although similar stakeholders in Singapore and Rotterdam seem to have the same interests and goals small differences can be identified. For instance, the goals of the Dutch parliament do not clash with the objectives of this research since the current Dutch parliament is quite “green” and therefore interested in beneficial policies for the environment. Singapore, on the other hand, is a country mainly focused on economics. Although the environment is of interest, economics are more firmly represented. Even though there is an overlap in interest, this might lead to a difference in approach of this research between the Rotterdam and Singapore. These problem perceptions, interests, goals and gaps help to identify their resources and determine the importance of the stakeholders for the decision-making process. Appendix C, step 7, 8 and 9 show the substitutability, dependency and whether or not the stakeholder is critical. This is a first clear indication of whether or not a stakeholder should be included at first in the process. With this analysis the dependence of all the stakeholders is given. At last the stakeholders are determined that fulfil dedicated or non-dedicated roles and if stakeholders are critical or non-critical for the decision-making process. This gives insight in the positions that the stakeholders will fulfil at the start of the process design. Now that all the positions are known it is possible to predict how these roles will change during the process. These changing roles can be translated into specific actions during the process design: because the stakeholder analysis is a static analysis, the dynamic aspect will be added with help of the predictive analysis.

5.1.3 Distribution of authority The authority over the port of Rotterdam concerning the issue at hand is divided over several actors. The Harbour Master Division, the municipality and EPA all have their own specific authorities. Formerly, the Port of Rotterdam Authority and the Harbour Master Division used to be one company, but due to privatisation this was split up in two different organisations. The Harbour Master Division is a public organisation and responsible for the port-act. It is responsible for and has authority over the control over the waterways into the various harbours of the port of Rotterdam. In addition, the Harbour Master Division functions as Port Security Authority. The authority of municipality of Rotterdam focuses on the land based activities, while the EPA has authority over the refineries. On top of that, the ministry has the overall authority to make sure everything is done in a proper way. Due to the many branch organisations, each with significant powers to influence the process, and due to the many stakeholders with authority, all stakeholders are dependent of each other. These interdependencies turn the structure of the decision-making process in to a network.

Note: The Port of Rotterdam Authority does not have any specific authority that can be used on this issue. To realise any of its objectives it is necessary for them to cooperate with stakeholders that do have authority on this subject. Luckily, the Port authority has close relations with the stakeholders that do have the authority to implement regulations or measures. Especially the relation between the authority and the harbour master division is very close. They still operate in the same building and the authority provides the harbour master division with personnel. This provides the PORA with relatively a lot of influence. For more information on the (other) roles of the Port of Rotterdam Authority see Appendix C, step 1.

In Singapore these interdependencies are not present in the same amount. There is only one branch organisation (the SSA) and one steering committee (OEISC) that have significant power to influence the process. The power distribution is relatively clear in Singapore: There is a clear line, top-down, that indicates the power distribution. This structure is best described as a hierarchy. This is also clearly visible in Appendix C, step 6. In step 6 the formal relationships are drawn. As can be seen, the figure of Rotterdam looks quite complex, whereas the formal relationships of Singapore seem much more clear.

5.2 Predictive Analysis of Dynamics of the Stakeholders

A stakeholder analysis is a static tool. It gives a clear impression of the stakeholders and their goals and tools at the beginning of the decision-making process. However, during this decision-making process things can change and therefore perceptions and interests can change. This paragraph focuses on the dynamic part and shows how stakeholders might change their interests and perceptions. This can also be seen in Table 13 which classifies the stakeholders in groups: some stakeholders are followed by question-marks.

This indicates a possible future shift of this stakeholder to another position ((non-)dedicated of (non-) critical). In this paragraph, a description will be given of how the roles of some of the stakeholders can change.

Table 13, Dedicated vs. Non-dedicated actors. To make a clear distinction between Dutch (or Dutch related) organizations companies and Singapore’ organisations and companies letters have been placed after each organisation. The Netherlands: NL, Singapore: SGP. Dedicated Actors Non-dedicated Actors

Critical Actor Non-critical actor Critical actor Non-critical actor

Same • Port of • North Sea • Ministry of V&W • Dutch Parliament perceptions, Rotterdam Foundation (NL) (NL) • Ministry of VROM goals and Authority (NL) • National (NL) interests • Maritime and Environmental • European Port Authority of Agency (SGP) Commission Singapore • Ministry of • Province of South- (SGP) Environment Holland (NL) and Water • Local citizens? (NL Resources and SGP) (SGP) • ESPO (NL) • EPA (NL) • Municipality of Rotterdam (NL) • Harbour Master Division (NL) Different • VPNI?(NL) • Refinery • Deltalinqs (NL) perceptions, • SSA?(SGP) companies (non- • Ministry of Trade goals and united) (SGP) and Industry interests • Ship-owners (non- (SGP) united) (SGP) • EUROPIA (NL) • Bunker suppliers • UPEI (NL) and traders (non- • CONCAWE (NL) united) (SGP) • Ministry of Foreign • KVNR?(NL) Affairs (NL) • Ministry of Foreign Affairs (SGP) • NOVE? (NL) • VRC (NL)

Local Citizens: The local citizens are at this point positioned as a non-critical actor and non-dedicated with the same perceptions as both port authorities. This is based on the expectation that citizens benefit by a better air quality due to new measures. Citizens will like the fact that emissions will be reduced which will result in a cleaner environment and a better public health. Since they agree with the goals of the port authorities, they are not really interested in participating in the process. The citizens will feel as if their goals are looked after by other stakeholders. However, if the results of the decision-making process seem to go into a direction which will cost these citizens their job or loss of income, their position towards the decision- making process might change. Their opinions might change and they will have conflicting perceptions and goals within this research. The environmental improvements are not visible which will make it difficult for citizens to realize any benefit from the measures. They are likely to have a preference for keeping their job or income instead of having environmental measures. There is a cultural difference that plays a role in this. Singaporeans have faith and trust in the governmental agencies. They expect the government to make good decisions [Alam K., 2008]. The Dutch citizens however very often question the decisions made by the governmental agencies (see also § 5.3.1: public opinion). Whereas the Singaporeans will hardly ever organise protests in any form, this is not uncommon in the Netherlands. The local Dutch citizens are therefore more likely to obtain conflicting perceptions and goals and are expected to become a dedicated actor faster than Singaporean citizens.

When the citizens become dedicated actors, they can use (written) protests and media to get their message out. Furthermore, they have the power to vote for another party during the next (national) elections. This can lead to unwanted situations for the political parties in the current cabinet. In order to prevent citizens from becoming dedicated actors and possibly even critical actors, the decision-making process should include a way to emphasize the benefits for the public health and environment and minimize economical loss for citizens.

European and South East Asian stakeholders (ESPO, EUROPIA, CONCAWE, UPEI, ECSA): The European organisations are not critical and dedicated actors at first since the objective of this research is to find possibilities to cooperate between the ports of Singapore and Rotterdam. This means only the members of these organizations that are seated in Rotterdam are affected by the possible decisions. Most of these stakeholders are already represented by Dutch branch organisations. However, it is a possibility that in order to reach a satisfying solution, international cooperation is required. This might be possible within the European Union and in the South East Asian region or even globally. In this case, the European and South East Asian stakeholders become dedicated players. Since they represent a large number of stakeholders, they will have a strong voice. In case of conflicting goals and interests, this can lead to difficulties to find possible outcomes for the cooperation between these regions. This will make them become critical actors as well. The IMO has an international hierarchical position which will make them automatically a critical stakeholder (depending on the level of aggregation).

VNPI: Most of the refineries and oil companies in the Netherlands are located in Rotterdam. Therefore, the oil companies in the Netherlands will be directly affected by the possible outcomes of this research and the decision-making process. This leads to the fact that the Dutch oil companies (united in VNPI) will be dedicated to this subject and will stay dedicated during the entire decision-making process. The main goal of a commercial company such as an oil company is to maximize profit. The future regulations and measures, which are the result of the decision-making process, might lead to extra investments in the refinery and less sales. This is conflicting with the objectives of the company. Since all oil companies are united in this national branch organisation and are committed to this subject, they have a strong voice to represent them. Therefore during the process of developing a new regulation, this actor can step up and become more and more a critical actor by using all its resources. To prevent unnecessary, unwanted situations, the VNPI should be involved during the process of developing new regulations. Note: the dependent bunker companies are also represented by the VNPI. However, the main focus of the VNPI is the production of oil and not the supply of bunker to vessels.

NOVE: Just as the oil companies, the bunker companies can be directly affected by any new regulation (especially the bunker traders). A regulation that results in a decrease of demand due to price changes can result in less business for the bunker companies (see § 4.3.2). This would imply that they are dedicated to take part in any discussion on this issue. All independent bunker companies are united in NOVE. This makes NOVE quite a strong voice in this process. However, so far, not much research has been done or interest was shown by NOVE on this specific subject. At this point in time they do not seem to be dedicated to this problem. This can change in the future when the outcomes of this research or the decision-making process turn out to be in contradiction with their interests. At that time, the NOVE can become a dedicated actor and use its resources to hinder possible outcomes. In that case, this actor should be involved at one point during the process of developing a new regulation in order to prevent this actor to hinder the process at the end of the process.

KVNR: Like the VNPI and NOVE, the KVNR is a branch organisation. The KVNR represents the Dutch ship-owners. The Dutch ship-owners represent only a small part of the total amount of ships that call the port of Rotterdam. Most of them are short-sea ships. The KVNR is therefore of less importance for the port of Rotterdam in this particular issue, since the issue focuses on deep-sea ships. However, the KVNR has shown interest in this subject and for the same reasons as for the other branch organisations, this actor should be involved at one point during the process of developing a new regulation in order to prevent this actor to hinder the decision making process. ECSA, the European association for ship-owners, is neither dedicated nor critical for this issue at this point. However, since the KVNR mainly represents the short-sea ship-owners, the deep-sea ship-owners might feel neglected after a while; the ECSA can become a dedicated stakeholder at that moment.

SSA: The Singapore Shipping Association is an organisation that represents all type of stakeholders in the port. Like in Rotterdam, there are many actors directly affected by any new regulation that is formed during the decision-making process. Due to the fact that there are no branch organisations for each individual type

of stakeholder in Singapore, the SSA is of high importance for the stakeholders. This makes the SSA an important stakeholder. Whereas the individual companies can not become a critical actor themselves because they are just one of many, the SSA will become a critical actor because it represents so many stakeholders.

Note: The branch organisations representing stakeholders in the ports (VNPI, NOVE, KVNR and SSA) will only become critical stakeholders if they truly represent these stakeholders in this specific problem area to their utmost capabilities.

5.3 Cultural Differences in Management

There are a lot of similarities between the ports of Singapore and Rotterdam: both handle the same types of ships, both are large bunker ports and both belong to the largest ports of the world. Furthermore there are a lot of vessels that call both ports which means both must have similarities in the handling of port activities. Singapore and Rotterdam want to see if there are possibilities for a cooperation to reduce emissions from vessels due to bunker oil. To deal with this goal, both port authorities need to realize that they operate in a different country with a different culture. These different cultures can lead to different norms and values, different habits, a different type of management and different ways of approaching a problem. This difference does not necessarily imply that cooperation will fail. In contrary, one could learn from each other. By recognizing the differences between both cultures possible conflicts could be avoided and the process can be adjusted to the specific characteristics of each country/ city. This will lead to a final result that is more likely to suit both ports. During the interviews taken in Singapore and Rotterdam for the purpose of this research, several cultural differences in management were notable. However, it is hard to identify cultural differences: When is something a cultural difference in management and when is something just coincidentally different from each other? In order to support some of the findings during the interviews, theory is used that focuses on cultural differences in management. The theory identifies several expected cultural differences between Singapore and Rotterdam. These were identified in § 2.6 Some of the differences identified in theory were notable in practice as well; these will be described in § 5.3.1. Other differences that were notable between Singapore and Rotterdam are also described in this paragraph.

5.3.1 Practice In practice, some cultural differences might be very clear: Singaporeans will enter the MRT (public transport) as soon as the doors open; Dutch people will wait for the people to get of the train and then enter the train themselves; Englishmen on the other hand, will always queue when waiting for a bus and enter it one by one. Nevertheless, it is hard to recognize and describe cultural differences in management. As Hofstede [1983, p. 42] mentions: There is no commonly accepted language to describe such a complex thing as culture. The same problem is found when describing someone’s personality: one runs the risk of being subjective and superficial”. During this stakeholder analysis and during interviews with both Dutch and Singaporean managers several differences between both countries were identified. One should recognise that some of these differences are based on the personal observation of the author. Some of them have common characteristics as those described in the cultural profiles (see chapter 2). Other differences were identified that were not described in this cultural map and might not be mentioned under the name of ‘cultural difference’. However, these other differences can be of influence to the decision- making process later on. These are also mentioned in this paragraph. The differences mentioned in this paragraph are general differences between companies in Singapore and companies in Rotterdam and not differences between two specific companies.

Network vs. Hierarchy The first and most noticeable difference between both ports/ countries is the number of actors that play an important role. Rotterdam has far more stakeholders that are of importance for a positive end result than Singapore has. The use of branch organizations for each type of industry is quite common in the Netherlands, while hardly used in Singapore. When internet is explored, a number of branch organisations that supports and represents the oil companies are found [e.g. VNPI, 2006; EUROPIA, 2008 and CONCAWE, 2003a]. However, when Singaporean employees of SRC, Mr. S. P. Sivanandam and Mr. C. Prodduturi [2008], are asked to name their representing organisations, they only name one steering committee (OIESC). This is an example of the difference in number of branch organisations.

The SSA represents almost all types of industry in the port of Singapore. They do not focus on one specific type of industry. This is different from the branch organisations in Rotterdam. All the branch organisations in Rotterdam have their specific field of industry they represent. This increases the amount of stakeholders with each their own significant powers and resources to affect the process.

Furthermore, as mentioned earlier, the authority considering the issue at hand is distributed in the Netherlands. Multiple stakeholders have significant authority on this issue. In Singapore, the authority is distributed hierarchically (see also appendix C, step 6). Reflecting on the theory presented in chapter 2, these observations correspond with the overall characteristics of high power distance: The theory already predicted that the management culture in Singapore would be more hierarchical compared to the Netherlands. In the Netherlands, on the other hand there would be low power distance which indicated a decentralized system, more network-like. As it turns out, in practice, the decision-making is indeed more centralized and hierarchy-like in Singapore than in the Netherlands.

Port Authorities: Public vs. Private Another difference between Rotterdam and Singapore is the type of organisation and the accompanying authorities of the port authority in Rotterdam and Singapore. In Rotterdam, the port authority used to be a public organisation under the municipality of Rotterdam but this has changed in 2004 when it became a private organisation (although all shares are owned by the state and municipality). The port authority of Singapore is a public organisation which falls under the authority of the ministry of Transport. However, in this case, its relation with the ministry of Environment and Water Resources is more important since this ministry is responsible for environmental policies, including the port. The port authority of Rotterdam does not have the authority to implement regulations or measures in the port considering this subject. The authorities to do so are spread over several actors: EPA, the municipality of Rotterdam and the Harbour Master Division all have some authority. As mentioned earlier, this leads to a situation that is best described as a network. In Singapore, the port authority, as a result of their public status, does have some authority to implement new measures and regulations. It is difficult to relate this difference in organisational structure to culture, although a public port authority seems to fit a hierarchical system better than a private port authority might have. Again, this confirms the centralized character that Singapore has and the Netherlands does not have in the same amount. This reflects the theory of high power distance in Singapore and low power distance in the Netherlands.

Public Opinion: High vs. Low An important and very evident cultural difference is the dissimilarity in the way the citizens deal with governmental decisions and industrial activities that influence them. The Dutch citizens are used to unite when decisions are made that do not suit them. Petitions are written and autographs are collected to express disappointment and conflicting ideas with the policies that are formed. When asked, Dutch citizens often express their dissatisfaction with the government. Companies unite in order to make stronger voices towards authorities. The amount of branch organisations and environmental organisations in the Netherlands illustrate this strong opinionated spirit. In Singapore, it is almost the other way round. When asked, citizens are quite happy with the government and its decisions. Trust and faith in what the government decides is very high. As mr. Alam [Alam K., 2008] says: “The public opinion of Singapore inhabitants is represented by the Singapore government in a way that satisfies them. They do not complain or protest. (…) In Singapore, the strikes do not take place as the unions and the companies have a good cooperation with the government (…) which ensures unhampered productivity”. Singaporeans do have an opinion about governmental decisions, but are loyal to- and have trust in the government to make the right decision, whereas the Dutch citizens always seem to question decisions that are made and sometimes think they know better than the government or company. You could say that there is a pattern in the attitude of the governments and the public: When a government is paternalistic, the public will ease in to that. And when the public does not respond fierce towards decisions of authorities, this opens up opportunities for the authorities to behave paternalistic. The question is: what happened first? In Singapore, the government behaves in a relative paternalistic way, while this is not the case in Rotterdam. Again, this corresponds with characteristics that were identified in the theory of power distance (see § 2.4.2).

Environmental Organisations: Many vs. None One of the things that stand out during the stakeholder analysis is the fact that Singapore does not have an (independent) environmental organisation that is focussed on air emissions from vessels. In the Netherlands there are many environmental organisations that are interested in the port and its activities, including the air quality. One in particular (North Sea Foundation), is focussing on the air emissions from vessels at the North Sea and Dutch coastal areas. The reason for this difference is twofold: On the one hand, like explained in public opinion, Singaporeans have an enormous trust in their government to take care of everything, including the policies concerning emissions. Environmental organisations are therefore simply unnecessary. As mr. Alam (MPA) states: “Different to Europe or other countries, people in Singapore do not usually put pressure on the Government agencies through organisations like Greenpeace in Europe. This is a result of the Governing agencies and other stakeholders, e.g. industry, that react very fast to new needs of environmental acts: this means there is no need for the public to protest against (air) pollution” [Alam Z., 2008]. On the other hand, the Singaporeans do not really feel the need to invest in the environment. Mr. Alam [Alam K., 2008] indicates that Singapore is a very small country and emissions from the port and from the vessels are blown away quite fast. These emissions are a relatively small contribution to the air pollution in Singapore. The quality of air is mainly affected by smoke and ashes of forest fires in Indonesia that are blown into the direction of Singapore. The trust Singaporeans have in the authorities could also be explained as being loyal to these authorities. When looking back on the theory presented on this subject, “loyalty” has been recognized as one of the characteristics on the cultural map in which Singapore belongs (low uncertainty avoidance and high power distance). Just like the previous difference, public opinion, the difference in environmental organisations could also be a result of paternalistic behaviour of the government and the acceptance by the public.

Policies: Environment vs. Economy Generally speaking, Singapore is a state with an overall policy that is focussed primarily on the economy. Singapore’s economy has started to grow rapidly only for the past 50 years or so and the impacts of their economical policies are very clear. Welfare has increased and compared to neighbouring countries, Singapore has done extremely well. In contrast, in the Netherlands (and Europe) the results of air pollution are becoming clearer and more evident. This has an impact on the voting behaviour of citizens of the Netherlands. Therefore, the Dutch parliament and cabinet are relatively ‘green’. More and more policies tent to shift towards environmental friendlier situations. In Singapore, however, there are not the same experiences. As stated before, emissions are blown away from the island quite fast, and people do not experience that many problems with them. Note: This does not mean Singapore is resistant to work on environmental issues, but compared to the Netherlands, the need to do so is less apparent. Remember; both authorities have agreed to cooperate! These general perceptions and views on economy and environment leads to a minimal difference between the policies of the Dutch stakeholders and those form Singapore. As Mr. Alam [Alam Z., 2008] says; “The port of Singapore wants to maintain and enhance its position as number 1 bunkering port, but not at the expense of the environment”.

One interpretation of the difference of the Dutch opinion with this Singaporean opinion could be: Rotterdam: ‘Environment, but not at all costs’ Singapore: ‘Economy, but not at cost of the environment’

All findings of this paragraph mainly refer to one specific difference in culture that was already expected in the theoretical phase: there is a difference in power distance between both countries. The organisational structure within the Netherlands is best described as a network; the decentralized distribution of authorities, the amount of branch organisations, the amount of environmental organisations and the space for an opinionated public all lead to the conclusion that this is best described as a network. This means a cultural dimension that is low on power distance. Singapore on the other hand has an organisational structure that is best described by a hierarchy: the authority is centralized and there are not so many other stakeholder that have authority of resources to influence the decision-making. This leads to the conclusions of Singapore being relatively high on power distance.

5.4 Implications for the Process Design

The findings of the previous paragraphs have implications for the process design. The many stakeholders in Rotterdam are associated with a lot of meetings and informal gatherings, in order to get things done. This is a very crucial point for the process design, because this means that there is less room for substance in the process design. The procedures and meetings drive out the substance. The procedures and the number of stakeholders involved also indicate that the process might be slowed down. To reach consensus and to deal with objections in the different voting periods of the procedures (e.g. determination of compensation) makes that the process takes up a lot of time. Looking at the different critical actors, some behaviour or possible behaviour can be distinguished. It is important to identify this (strategic) behaviour because the means of stakeholders to influence the design can be different. Especially in a network situation, thus Rotterdam, this is very important. The different roles and resources of the stakeholders affect the process of implementing a regulation or measure. For an effective design of the decision-making process, the ways that these different roles, resources and cultural differences can influence the process will be analysed.

5.4.1 Roles of stakeholders When you look at the resources of the stakeholders, you can see that the ministry of V&W and the Harbour Master Division have a lot of resources to realize a successful solution. Knowledge, contacts and decision are their most interesting resources. This means that they will play a key-role in the process; they are the productive parties. On the other hand, in Singapore there are not as many stakeholders, which makes in easier to speed up the process to reach consensus without losing substance. The National Environmental Agency and the Maritime and Port Authority of Singapore are the stakeholders with the most important resources.

Port of Rotterdam Authority The Port of Rotterdam Authority has taken the initiative to deal with emissions due to the use of bunker oil by vessels in cooperation with Singapore. It has very important resources such as knowledge about the local situation, knowledge about the port activities and good contact with the stakeholders within the port. This can be used as an input for the process. Even though the port authority does not have authority by law, it does have a lot of influence on the decisions made. The port authority has good contacts, a lot of knowledge and has taken the initiative to this research. There is a strong connection with the Harbour Master Division and a good relation with the ministry of V&W. Still, it is not entirely clear who is responsible for future regulations or measures in this specific subject: Depending on the scope and the aggregation level of the regulation or measure, regional or national, on land or at sea, the different authorities have more or less power to implement a regulation. In practise, when the regulation is of influence for all of the Netherlands, the port authority will need to cooperate more with the ministry of V&W. When a regulation is of influence only in the port of Rotterdam area, the port authority is likely to have to cooperate with the ministry of V&W, the Harbour Master Division or the municipality of Rotterdam or a combination of these stakeholders. This also depends on where the regulations are affective; on land, in the port, or at sea.

When the ministry feels responsible for the new regulations and measures, these regulations will be implemented in the entire country instead of being implemented in the port of Rotterdam only. This will lead to many more stakeholders that would like to participate in the process than with a regional regulation. This can lead to extra complications and slow down the decision-making process. Even though the Port of Rotterdam Authority remains one of the most important stakeholders (due to its contacts), the increase of stakeholders would mean less influence on the process results. Furthermore it would reduce the opportunity for the Port of Rotterdam Authority to combine or integrate other problems and regulations to this process. For a clear understanding of all the possibilities to implement regulations on a national or regional level, communication between the ministry of V&W and the Port of Rotterdam Authority is necessary. Both parties must respect the core values of each other in this communication process. The ministry of V&W has to understand the interest of the Port of Rotterdam Authority which is the implementation of regulations in cooperation with the MPA of Singapore that also meets the wishes and requirements of the local stakeholders. On the other hand, the port authority must understand the certifying role of the Ministry of V&W in case the regulation has a national character. Transparency means that the course of the process is clear to both parties. It must be clear to the port authority how its interest will be protected in the process and in the design of the ministry of V&W. Together they will have to decide which process rules will apply.

Maritime and Port Authority of Singapore (MPA) Just as the port authority of Rotterdam has the port authority of Singapore taken the initiative to deal with the emissions due to bunker oil in cooperation with the port of Rotterdam. Since the MPA is a governmental organisation it falls directly under the supervision of the National Environmental Agency which is responsible for new regulations and policies. This makes them a critical stakeholder. Therefore, the MPA needs the National Environmental Agency to be interested and involved in this process. The dependency of the research on the NEA requires some arrangements which will ensure cooperative behaviour. The NEA needs to transform from a non-dedicated stakeholder into a dedicated stakeholder. This problem can be addressed through making the process attractive by incorporating prospects of gain.

Dutch branch organizations All branch organizations in the Netherlands have –to some extent- hindrance power, or even blocking power, because they represent a large part of the stakeholders in the port of Rotterdam. They are responsible for a large part of the revenue of the port. It is important to include these stakeholders in the decision-making process, because they can harm the implementation process when they feel neglected or very unsatisfied. Furthermore, if they are not able to hinder this specific process they might end up hindering other processes. That is an unwanted situation as it can lead to failure of that process or it forces the decision-making process to start over. Some of these branch organisations have been identified as critical and dedicated for this process; these branch organisations should have a role in the process design. Others are not dedicated and less critical for the process and therefore have less influence on the process. Especially the VNPI, the branch organization for oil companies in the Netherlands, has a high degree of hindrance power as it has specific knowledge of the processes of oil production and its costs. This is important information when dealing with the topic at hand. The best way to deal with the VNPI and the other branch organizations is by creating prospects of gain as well as incentives for cooperative behaviour. This will speed up the progress and make the process attractive for these stakeholders.

5.5 Final Notes

The distribution of authority differs between the Netherlands and Singapore. In the Netherlands, the authority is distributed over several stakeholders, while in Singapore the authority is distributed hierarchically. The analysis has shown that the authority of one of the initiators for this research (Port of Rotterdam Authority) does not meet the needed authority to implement a solution for the issue at hand solely. It depends on several other stakeholders.

This chapter has identified the stakeholders that play a critical or dedicated role at this time or are likely to play this role in the future (see § 5.2). This analysis leads to the conclusion that several stakeholders need to be involved in the decision-making process. The critical stakeholders, especially those with authority need to be involved in the process. Particularly due to the decentralized authority in the Netherlands, this implies the involvement of quite some stakeholders (Harbour Master Division, Municipality of Rotterdam, EPA, Ministry of V&W, National Environmental Agency and Maritime and Port Authority). The critical or non-critical stakeholders that are dedicated to this issue might become very powerful if their interest is not recognized. Therefore it is recommended to involve these stakeholders at least at one point during the process (e.g. VNPI, KVNR, and North Sea Foundation).

Delineation The stakeholder analysis was limited to the stakeholders within Singapore and the Netherlands. Therefore, the authority of these stakeholders does not reach further than the national law and regulations. These regulations can only have influence on the local environment. As was mentioned in chapter 3, the port and the coastal areas are the most important areas from a technical point of view to reduce emissions. By focussing on these areas in the process design, the authorities of Singapore and the Netherlands will have enough authority to deal with the issue without including different countries or international organisations, each with their specific additional stakeholders.

This stakeholder analysis serves as input for the determination of the solution space. It provides us with insight in some of the process trade-offs that will be mentioned in chapter 7. Furthermore, it helps to adjust the theoretical framework that was proposed in chapter 2 (see chapter 8) and it will assist to form a process design that deals with the characteristics of this case (see chapter 9).

6 Solution Space: Measures for Reduction of Emissions___

In this chapter all realistic instruments for the reduction of emissions will be mentioned. A summary of all technical measures are named in § 6.1. The political measures that can be taken to reduce the emissions are pointed out in § 6.2. The purpose of this listing is to provide insight in the type of measures that are currently available and the effect they can have. Furthermore, this chapter should serve as input for the process design.

6.1 Technical Instruments

As the emissions of ships originate from different sources, emissions can be reduced by different techniques and methods. These vary from using an alternative fuel to removing emissions at the end-of - pipe. These techniques can be divided into three different groups [DeMers and Walters, 1999]:

• Pre-treatment: Lowering S-content or alternative fuels • Primary methods: Modifications in the functioning of the engine system • Secondary methods: Exhaust gas cleaning such as scrubbing, SCR, plasma, etc

6.1.1 Pre-treatment The first group of technical instruments that can reduce emissions is called pre-treatment. This group includes all possible measures that use alternative or cleaner fuels, which are already on the fuel market. These include marine diesel oil, natural gas and low-sulphur fuels. Other alternative fuels or energy sources, which emit fewer substances, might not yet be commercially available, due to economic or technical reasons but could be an interesting option in the future. Examples of these alternative energy sources can be nuclear energy and solar energy. Wind energy is at this point in time already used in limited amounts. Another alternative fuel is shore side electricity. In the port of Rotterdam, a 2-year pilot has been started to see if this method is feasible. At this point only inland ships can take part in this pilot. Shore side electricity is an alternative for the use of fuel on board during a stay in a port. The purpose is to reduce the use of generators, with its accompanying emissions, in the port.

As mentioned in § 3.2.1, not all emissions are a result of their presents in the fuel oil. Some are a result of other factors. E.g. It seems to be unable to remove the N-content (nitrogen) from the oil in a practical manner or method. As stated above, the N-content in emissions is, most of all, a result of the temperatures of the combustion. Therefore, this paragraph focuses on the removal of S-content in the fuel oil. Lowering or even completely removing the S-content (sulphur) in the oil is technically possible. However, high investments by refineries are needed. As pointed out in chapter 3, there are two different possibilities to reduce the S% in the bunker oil. Since completely cracking of the oil will lead to products of higher quality, this possibility is likely to be (economically) preferred over desulphurization. A big advantage of reducing the S% is the fact that the amount of Particulate Matter (PM) will be reduced as well. As mentioned earlier, after all substances are emitted, SOx and NOx will react form PM (see § 3.2.1). Therefore, a direct link can be made between the reduction of the S-content in HFO and the emission of Particulate Matter (PM).

6.1.2 Primary methods Internal engine adjustments and engine process modifications can also help to lower the emissions. NOx emissions, which are determined by engine design and the combustion process itself, can be reduced by changing input factors to the engine, such as air temperature, air pressure and length of stay in the engine. Specific engine adjustments can reduce the formation of NOx. Furthermore emissions can be reduced by using alternative engines. Using dual engines and gas engines, instead of the current engines, may lead to very low emissions. Wahlström et. al. have made a clear outline of possible engine adjustments to reduce emissions [Wahlström, Karvosenoja and Porvari, 2006, § 5.2 - 5.3]. Here, these possible adjustments will only be named:

Reduction by internal engine adjustments: • Combustion optimization • Fuel injection optimization • Common rail technology • Turbo-charging and charge-air after-cooling • Miller cycle • Lubrication technology • Combinations of internal engine measures

Reduction by engine process modifications: • Water injection • Selective non-catalytic reduction • Exhaust gas recirculation

6.1.3 Secondary methods The secondary method deals with emissions that are already formed during the combustion process. These are intercepted before they reach open air and will be taken through a follow-up treatment. These are also called the end-of-pipe techniques. These measures can be helpful to reduce NOx, particulate matter and SO2. Again, Wahlström et. al. [2006, § 5.4] have made a clear list of possible after treatment technologies:

After-treatment technologies • Seawater scrubbing • Selective catalytic reduction • Particulate filters • Oxidation reactor

6.1.4 Operational / Quantity of fuel measures A ship consumes a lot of bunker oil during its voyage. Not only the quality of the fuel that is burned on a vessel is important, but also the quantity of the fuel that is burned is relevant for the amount of emissions that occur. The amount of fuel that is burned during a voyage depends on multiple factors; the used speed, the amount of load on a ship, the design of a ship, etc. One of these factors is speed. There is a theory that identifies an exponential relation between the speed of a vessel and the usage of fuel. In fact, at the moment, due to high oil prices, there are container shipping companies that are experimenting by slowing down the speed of their vessels, in order to reduce the use of fuel. It will be interesting to see if this leads to a reduction of fuel usage indeed. It might be necessary to increase in the number of vessels because of this experiment and that could lead to the use of extra fuel. Besides the speed, the route that a ship has to sail is also relevant. A closer look at different routes might help. “Varying weather, current and depth conditions during a voyage affect the ship speed. Through routing techniques and/or fuel savings may, however, be gained. For such optimisations, a reliable weather and current forecast will be needed” [MARINTEK, 2000, p. 91]. Although routing has been under serious attention of the shipping companies, changing the order of the ports that are due can lead to a reduction in distance. In addition, there are several canals which provide short-cuts (e.g. Suez and Panama Canal) which put limits on the size of the vessel that can sail on that route. Using smaller vessels could in that case lead to a large reduction of distance that needs to be travelled. These revisions of routes might be more interesting at this point in time due to the rise of the oil price. There are port related options to reduce fuel use and lower CO2 emissions: “Currently, the largest restrictions are related to limitations on ship draught, length and beam, congestion and other limitations on quick port turn-around. Implementation requires infrastructure development. Measures in this category are typically; larger capacity, fewer restrictions on ship draught, beam or length, 24/7 port operation, quicker loading and discharging, more efficient port clearance and slot time allocation” [IMO, Marine Environment Protection Committee, 2008, p. 2 ] Furthermore, other solutions for reducing the use of fuel can be thought of. Technical improvements off- and onboard of the vessel could help. Since the resistance of the vessel to the water plays a highly important factor, a better ship design should reduce the use of fuel. The streamline of the vessels need to be optimized. New developed coating of the vessel could also help to reduce the resistance. On board, newly designed engines could not only help to lower to emissions directly, but could also help to reduce the amount of fuel used. These engines could optimize the combustion of fuel and

therefore reduce the use of fuel. Research has indicated that optimal hull maintenance and propeller maintenance can also lead to a reduction of fuel usage [MARINTEK, 2000]. On top of these solutions, more innovative solutions could help to reduce the amount of fuel. As mentioned earlier, wind energy could be a solution. The use of large sails seems to be a promising future option. There are companies already experimenting and working with these sails [SkySails, 2006].

Figure 25, Example of an innovative way of reducing the use of fuel [SkySails, 2006].

MARINTEK [2000] identifies most of the operational measures that have already been named. On top of that, it names several other operational measures that could lead to the reduction of fuel (and CO2). However, the results of these measures seem to very small. Although some have already been named, a list is provided with the names of these measures.

Operational planning / Speed selection • Improved fleet planning • "Just in time" routing • Weather routing Miscellaneous measures • Constant RPM • Optimal trim • Minimum ballast • Optimal propeller pitch • Optimal rudder Reduced time in port • Optimal cargo handling • Optimal berthing, mooring and anchoring

6.2 Possible Results of Technical Measures

All the technical possibilities tot reduce emissions have their own efficiency. Some measures reduce the emissions barely. Other measures reduce specific emissions up to 90%. In this paragraph an impression is given of the reduction efficiency of most of the measures that are named earlier in this report.

Figure 26 indicates some of the pre-treatment, primary and secondary measures that can be executed. As can be seen, several options have a very high efficiency for one or more types of pollution. These truly deserve consideration for implementation from the technical point of view. Important to recognise is the fact that some of these measures seem to be very effective, but have other characteristics which make them difficult, if not impossible, to implement. A good example could be the Sea Water Scrubbing (SRC). Figure 26 shows that SRC is a very efficient method to reduce sulphur (75%) and particulate matter (25%). This seems to be very promising, but ship-owners are not very interested in this option. As Mr. Brutel said: "Scrubbers are not an option. They are very expensive to purchase and do not work properly when the engine uses less than 40% of its power. This is actually a common efficiency in and around the ports. These are the exact locations where the wish for a cleaner air is the highest. Scrubbers leave you with another rest product: washing water. This results into more load on board of the ship that could have been used for cargo" [Brutel de la Rivière, 2008].

Measure % emissions reduction (-) / increase (+) per vessel

SO2 NOx PM VOC Basic internal engine modifications (IEM for 2-stroke 0% -20% 0% 0% slow speed only

Advanced internal engine modifications 0% -30% 0% 0% Direct water injection 0% -50% 0% 0% Humid air motors 0% -70% 0% 0% Exhaust gas recirculation -93% -35% >63% ± Selective catalytic reduction (2,7% residual oil) 0% -90% 0% 0% Sea water scrubbing -75% 0% -25% ± Fuel switching 2,7 > 1,5% S residual oil fuel -44% ± -18% ± Fuel switching 2,7 > 0,1% S residual oil fuel -81% ± -20% ± Low S marine diesel 0,5 > 0,1% S -80% ± ± ±

Figure 26, Emission control technologies and their reduction efficiencies compared to the pre- MARPOL 2000 conditions [Cofala et. al., 2007 p.18].

In figure 27 the fuel saving potential is pointed out. In case of a new ship, the optimised hull shape and the choice of the propeller are of interest; in case of an existing ship, the maintenance of the hull and the propeller is interesting. The amount of fuel use is, in this case, directly related to the amount of CO2 that is emitted [MARTINEK, 2000, p. 74 and 77]. As can be seen, these measures are most effective on new ships. Especially a combination of both measures leads to a high reduction of fuel use and CO2 emissions.

Figure 27, Measures and their fuel / CO2 saving potential [MARTINEK, 2000, p. 74 and 77].

Figure 28 shows the operational measurements and their respective potential of fuel saving. Especially the first three, all dealing with travel distance and speed, seem to be quite rewarding to implement. The second group of measures that are indicated in this figure do not seem to be that successful. However, when looking at the combined potential, this can lead to a reduction up to 5%. This can be interesting. Again, it should be noticed that all these solutions are technical viable solutions. This does not mean that these solutions are practically the best options to implement. The costs of implementing these measures might be very high. Furthermore, the carrying out and the maintenance of these measures might require a lot of time of the personnel which leads to extra costs and extra effort and time that is not available.

Measure Fuel saving Combined potential potential

Improved fleet planning 5 - 40% “Just in time” routing 1 - 5% 1 - 40% Weather routing 2 - 4% Constant RPM 0 - 2% Optimal trim 0 - 1% Minimum ballast 0 - 1% 0 - 5% Optimal propeller pitch 0 - 2% Optimal rudder 0 - 0,3% Optimal cargo handling 1 - 5% 1 - 7% Optimal berthing, mooring and anchoring 1 - 2%

Figure 28, Possible operational measures and their potential fuel savings [MARTINEK, 2000, p. 94].

6.3 Policy Measures

There are many possible policies that can be used to reduce emissions from vessels. Most of these policies can be categorized in a few types of policies. These types will be described below and some of them will be illustrated with an example. This paragraph is based on a summary provided by [Ortmanns, 2007].

6.3.1 Measures steering towards and focussing on a emission reducing technique These type of policies speak for themselves. Once a successful technology is found to reduce emissions and negative side effects are limited, a government or authority can decide to implement measures or regulations that stimulate the use of one or more specific technologies. The problem with this idea is that there are a lot of different stakeholders involved in the issue of reducing emissions, each with its own goals, objectives and interests. While a technology can be considered very good by one stakeholder, another stakeholder might not like it at all. Therefore, at this point, choosing one technology does not seem likely to succeed.

6.3.2 Differentiated ports/fairway dues This type of policy contains all options in which port tariffs are adjusted to the type and amount of emissions a vessel produces. This means that vessels which produce a lot of emissions will pay more port dues than vessel which produce relatively little emissions. These policies on port dues can be made specifically for one pollutant (e.g. CO2) or could include multiple pollutants (e.g. CO2, SOx and NOx). The policies could be voluntary. Environmental indexing is an example of these types of policies. The idea behind an environmental index is to find a system that rewards shipping companies that have stricter emission limits than currently needed by law. This stimulates ship- owners to invest in cleaner vessels. On the other hand, these differentiated port dues could also be mandatory. Ship-owners need to pay extra for the emission that they emit. A few ports have already implemented this system, or have considered these policies. For instance, in Sweden there are differentiated port dues since 1998 [Ljunggren, 2002]. This type of policies, especially the voluntary ones, will have more influence if the policies are implemented in more ports in order to create a common system. In case the ports of Rotterdam and Singapore would like to consider a policy like this together, it would be wise to focus the policy on the vessels that sail to both ports. If the vessels only benefit in one port, the incentive to change might be too weak.

6.3.3 Distance-related emission charges When implementing distance related emission charges, the charges are based on the distance the ship has travelled before entering the port. E.g. the distance travelled in the North Sea before entering the port of Rotterdam. The profit that is made with the extra charges should be used on environmental issues involving these emissions. The problem with these type of measures is the fact that ships might sail extra kilometres to reduce the charges. If other ports are not participating in this system, ships might sail to one of these ports first in order to shorten the shipping distance before entering the port with the charges. This leads to extra kilometres of sailing and therefore it can lead to extra emissions. That is not the intention of the proposed measure. Again, these measures only work when a group of ports cooperate in these policies. E.g. all ports in Europe. It will be difficult to implement a successful policy with distance-related emission charges just in Singapore and Rotterdam, because the vessels are likely to call other port first to avoid these charges. In fact, this can lead to complete shift of ports that are called.

6.3.4 Taxation The use of taxation on emissions is another strategy to reduce emissions. Although now replaced by a fund, Norway used to have a tax on NOx emissions [Rodseth and Arnesen, 2007]. This tax was based on a certain amount of Euros per kg NOx. The collected tax can be used for other the financing of other techniques to reduce emissions or possibly the reduction of other environmental issues. These taxes should include all vessels, regardless of the vessel’s nationality. If not, there is a possibility that vessels will shift to another flag in order to avoid these taxes. A difficult aspect of using taxation on emissions is the fact that these only reach the national coastal areas. The emissions emitted just outside these areas can still lead to environmental and health problems on land. Furthermore, it is difficult to expand this type of policy internationally. Another way of using taxation is by putting tax on bunkering. A specific tax on Heavy Fuel Oil could lead to a decrease in bunkering of HFO and an increase in bunkering of distillate. This is a cleaner type of fuel, which leads to fewer emissions.

6.3.5 Emission trading Emission trading is another option to reduce the emissions from vessels. This can be done in different ways. A cap is set for a given year and a given sea area (a total number of emission allowances, each of which provides its owner with the right to emit a unit of emissions). Having this cap, a system of crediting could be developed which would allow vessels to receive reduction credits when emissions are reduced. These credits can be sold at a market. A trading system on voluntary basis gives the opportunity to all ships in a specific region to sell their emission credits [Ortmanns, 2007]. Also land based companies could get involved in such a system. The companies could implement emission reducing techniques on a voluntary base to get more credits. In 2005, the European Commission started with operating an Emission Trading Scheme (EU ETS) [European Commission, 2008]. This trading scheme focuses on the greenhouse gases. Elaborating this system on other types of polluting substances could be a possible solution. There are some difficulties implementing a system like this: Who decides the limit on total emissions? Who has the authority to set individual caps? Furthermore, one could wonder how big the region should be before this trading system would actually work. It might be difficult for Rotterdam and Singapore to develop such a system in cooperation with each other.

6.4 Solution Space for Policy Measures

It is very hard, if not impossible, to quantify the amount of reduction of emissions a policy will cause. Therefore, this paragraph does not define the possible results, but approaches the policy measures from a different side: the financial side. In this paragraph only the economic deciding factors of the deciding factors that were identified in chapter 4 will be taken into account. The focus will be on the financial ‘space’ for implementation of measures for Singapore and Rotterdam together. Since the objective of this report is to find out if there is an extra benefit from cooperation between these two ports, it is necessary to look at measures that are implemented in both ports. If reduction measures are implemented in one port (e.g. Rotterdam), the costs of this port will increase and the ship-owner will decide to bunker in the other port (Singapore) or in a 3rd port. Introducing a

measure in both ports at the same time would increase the costs in both ports and would keep the level playing field between these two ports at the same height. The level playing field between these two ports and another 3rd port will however still change. This unchanged level playing field between Singapore and Rotterdam is an extra benefit for these ports in case of cooperation. This will be illustrated in the § 6.4.1.

6.4.1 An illustrative example In chapter 4 the deciding factors were identified that contribute to the fact if a ship-owner chooses one port or another to bunker. In figure 22, these deciding factors were named. These deciding factors consist of factors that are non-economic and factors that are purely based on financial reasons. Also in chapter 4, it was shown that there are several elements out of which the entire costs of a trip of a ship exist. If these costs become higher in Singapore and Rotterdam due to the implementation of the same measures, the total costs of a trip that includes these ports will become higher.

An example would be to pay tax on bunkering polluting HFO bunker. This tax would add another element to the total costs of a shipping route. In figure 29a and b, this element (tax) is pointed out with the colour red. This bunker tax needs to be included in the total price of the shipping route between Rotterdam and Singapore and will lead to an increase in the price of this route. As figure 29 shows, if this tax (H) is very high, the total costs of bunkering in Rotterdam or Singapore can become higher than the total costs of bunkering in Fujairah. It is interesting to see the amount of room there is for the ports of Rotterdam and Singapore to increase these measurement costs (bunker tax) before ship-owners will move to another port. Focussing on the economic deciding factors, it is possible to make some calculations and identify the height of costs that is being delft with. In this paragraph some calculations will be made in order to give an impression of the size of costs as well as the size of costs the new measures could financially imply. It is interesting to see where the break-even point is between one route and another route, as it determines the height of the taxes that could be implemented before ship-owners move to another port for bunkering (all solely based on costs).

G F E I F H H G D F E D D B B C A A

S m re S – a h o – d ra p F r i a R – te ja g e t u n t R o F i u te R S o u R o R

Figure 29a and b, Illustrative maximum costs per port and per shipping route. Dark blue: bunker costs, yellow: port dues, green: costs for extra kilometres of sailing, red: tax on bunkering.

There are several things that need to be considered when thinking of this example. In this example only the competition on bunkering in a third port on this route has been taken in consideration. However, on other routes competition will become stronger due these extra costs as well. The level playing field between

Rotterdam and Singapore is the only one that remains the same. Both ports will have to deal with more competition of other ports. Furthermore, when using another example, other situations and other financial spaces for implementation will be applicable. E.g. when the policy is to differentiate port dues according to the type of fuel used, this will not lead to an extra cost element (red block in figure 29) but it will lead to different sizes of the port cost elements in Singapore and Rotterdam (D and F). Both routes as indicated in figure 29b will change in price. Depending on the type of fuel that is used, both routes will become more expensive or cheaper. This does not lead to a possible change in the place of bunkering since the port costs in Singapore and Rotterdam remain. However, this does increase the chance of ship-owners to shift to another port for its cargo: if the ship uses fuel which emits a lot of polluting emissions it might be cheaper to move to another port to discharge its cargo.

6.5 Final Notes

The willingness to cooperate of the port authorities of Singapore and Rotterdam to work on reduction of emissions does not eliminate the economic criteria these ports authorities have. The port authorities still want to introduce measures without loss of market share. The cooperation can broaden the space for costs due to measures and regulations since cooperation can make sure that the level playing field among the two ports does not change. It has been mentioned that economic factors are not the only deciding factors for a ship-owner and that the costs of a measure have implications that go beyond the bunker market. The same remarks are also present when the ports develop measures alone. Therefore, cooperation still has an extra economic benefit and wider space for measures compared to dealing with the port alone.

This chapter can serve as input for the discussion during the decision-making process. The possible ways to reduce emissions that are mentioned in this chapter are not complete: although they cover the currently existing solutions, there is always a new measure thinkable in the future: technology evolves and new inventions are made every day. One of those inventions might be very applicable to this issue. The solutions provided in this chapter are there to illustrate the measures and technologies that have been thought of until now. The fact that few have actually been implemented in practice is a result of the trade-offs that these solutions or measures have. The fact that there are so many stakeholders who have an interest in this issue does not contribute to quick and transparent decision-making on this topic. These problems will be elaborated in chapter 7.

As mentioned, there are many solutions and many interests involved in this issue. What is seen as the perfect solution for one stakeholder can be the worst solution for another (see chapter 7). For this reason, no set of alternatives have yet been chosen to continue decision-making with. All options are still open. Solutions that seem to be totally unfit at this point can turn out to be better than expected. In combination with other solutions some solutions that did not seem to have potential at first might turn out to be the best option. A selection of alternatives at this point would rule out these possibilities and could lead to discomfort for some stakeholders before the decision-making process has even started.

This chapter will serve as input for the next chapter; the trade-offs that will occur in decision-making. As mentioned, some of the solutions can have negative side-effects as well. Furthermore, this chapter will be used as input for the process design presented in chapter 9.

7 Solution Space: Trade-Offs______

In this chapter the trade-offs that the objective of reducing emissions from vessels brings about will be identified. In § 7.1 substantive trade-offs will be recognized that can occur during the decision-making process. Paragraph 7.2 focuses on the trade-offs for the process design. The purpose of this chapter is to identify the possible difficulties that might occur during the decision-phase.

7.1 Potential Substantive Trade-Offs in Solutions

In the previous chapter, the possible solutions have been identified. Many of these solutions mentioned are solutions for one or more of the stakeholders and not for all stakeholders. Some of these solutions can actually lead to situations that collide with the main objectives of the problem owners. This can be described as a trade-off. In the theory of process management these trade-offs are often referred to as dilemmas [Bruijn, de, ten Heuvelhof and In’t Veld, 2002b, p.68]. These potential conflicts are identified in this paragraph. These are potential trade-offs between a solution on the one hand, and a negative side-effect on the other hand. These trade-offs can have implications for the suitability of the technical and policy measures that were identified in chapter 6. The identification of these trade-offs can be very helpful in the process; instead of focussing on their own interests, stakeholders can focus on avoiding these trade-offs or focus on solutions for these trade-offs. Each subparagraph identifies one of these potential trade-offs.

7.1.1 Sulphur emissions (for example) vs. CO2 emissions As mentioned in chapter 3, emissions can have unwanted impacts on the environment (e.g. acidification) and human health (e.g. respiratory problems). One of the focuses of the groups working on reduction of emissions of vessels has therefore been to reduce some of these polluting substances in the bunker oil. For example the reduction of Sulphur content in bunker oil has a direct relation with the amount of sulphur emissions. Technically, it is possible to remove sulphur content from bunker oil. Extra cracking installations or a sulphur removal installation can provide the solution to reduce the sulphur emissions from vessels (see chapter 3). However, these processes reduction of sulphur content (or other substances) will take extra energy and will lead to extra CO2 emissions in the refineries. On top of that, one of the characteristics of Sulphur in particular is that it reflects sunlight and thereby reduces the greenhouse effect. This means that when Sulphur is removed from the bunker oil, the greenhouse effect is getting bigger even more; more CO2 is emitted and greenhouse-effect reducing substances are removed. Not all substances that can be removed in the refinery have a greenhouse reducing effect like sulphur, however, all extra process needed to remove substances from oil result in extra CO2 emissions. This leads to an increase of the greenhouse-effect. This is in conflict with the initial objectives for this research. The greenhouse-effect is an environmental problem. The objective of this research to reduce emissions by vessels due to bunker oil might be met due to this solution, but results in another environmental issue. This is not the intention of the original objective.

7.1.2 Low sulphur fuels vs. Implementation problems This paragraph deals with the reduction of sulphur emissions. These emissions are best reduced by removal of sulphur substance in the oil. This can be done in two ways: by blending high-sulphur fuel with low-sulphur fuels or by a removal process of sulphur in the refinery. The results are low sulphur fuels. Combustion of these low-sulphur fuels lead to less sulphur emissions. However, these two ways of obtaining low-sulphur fuel can have side effects that are not beneficial. First of all, fuel oils that are blended, especially below 1%, can become instable. The quality of the bunker oil can therefore become lower. As mentioned in chapter 4, the quality of bunker oil is one of the reasons for a ship-owner to bunker in one port or another. The instability of bunker oil is consequently highly unwanted. Furthermore, sulphur is a lubricant. If sulphur is removed from the fuel problems might occur due to the lack of this lubricant. Engines need this to operate well without being damaged. Removal of this substance requires the adding of another lubricant.

7.1.3 Shipping vs. Other modalities The measures for reduction of emissions from vessels due to bunker oil can cost a lot. The prices of shipping will increase consequently. When the price of shipping gets too high, competition can arise. Apart from stronger competition of other ports, high shipping costs can lead to a search for other modalities. Trucks, trains and other modalities can become cheaper to use than shipping and therefore more interesting for transporters. The risk of a modality shift is only a risk for local operating vessels (short sea). This does not only lead to a decline in shipping activities, which is highly unwanted by several port stakeholders, but it can also be in conflict with the objectives of the cooperative decision-making process. Shifting of modalities also means shifting of emissions from vessels to emissions from these other modalities. The total amount of emissions of these other modalities can be higher than those from shipping. Looking at emissions per tonnes of product per km transported, shipping has been named one of the cleanest modalities. Therefore it can turn out that the costs of reducing emissions eventually lead to an increase in emissions. Since the original objective was to reduce emissions, this is not wanted. It should be noticed that a shift in modalities also means a shift in types of emissions. Other types of modalities produce other types of emissions than vessels since they use other types of fuel. E.g. A train uses energy which leads to a relative larger share of CO2 emissions. Depending on which modality takes over the business from the vessel, the share of different emissions change.

7.1.4 Reduction of emissions vs. Costs As shown in chapter 6, there are many technological instruments possible. However, most of these technological ideas require high investments from one or more stakeholders which makes it hard to reach consensus over one of those technologies. This makes it very hard to implement such a solution. A good example to illustrate this problem is the idea of using a so-called scrubber on board of ships to reduce the emissions. This is an end-of-pipe technology. The scrubber cleans the air that is emitted by leading these emissions through seawater. The technology of this system is developed and ready to be implemented. Nevertheless, the initial costs of these systems can be very high. Using this system would require each ship-owner to invest in a scrubber for each ship. While other stakeholders do not contribute to these costs and are in favour of this solution, the costs per ship could be very high for the ship-owners. In addition, the scrubbers take up a lot of space on the vessel, which leads to a decline of cargo that can be transported. This leads to a reduction in revenue for the vessels. Ship-owners will therefore protest to this scrubber, since it will only cost them. Just like other technical systems influencing the costs of shipping, implementing a scrubber can turn out to be unprofitable to transport cargo on vessels using this system: other modalities will take over. These scrubbers have an extra disadvantage: Apart from the costs, the scrubbers use clean sea water to clean the emitted air from a vessel. This sea-water becomes polluted. The question is: what to do with this polluted sea-water? Whereas in the current situation the polluting substances are emitted to the air, this technical solution will lead to the discharge of polluting substances in the sea.

The argument of costs as a negative aspect is not only applicable to the costs of shipping: e.g. required additional processes in the refineries can lead to extra costs as well.

7.1.5 New regulations vs. Current law The new regulations or measures that are introduced after the decision-making process can become in conflict with the current regulations. These conflicts can occur at national level, regional level (E.g. EU regulations) or international level. An example could be the fact that refineries produce more CO2 due to the reduction of SOx in the bunker oil (see § 7.1.1). It is possible that other regulations or agreements, such as the Kyoto Protocol or the EU ETS (see § 6.3.5) do not allow for this to happen. In addition, the Netherlands and its neighbouring countries are all Annex I (Kyoto Protocol) countries. Singapore and its neighbouring countries are not. Regulations or measures that make it more difficult to meet the regulations from Kyoto are likely to provide some difficulties in the Netherlands while Singapore might not have big problems with it. This means that it might be harder to reach consensus in the Netherlands on a solution/ regulation that has impact on the Kyoto Protocol. Another example could be that the implementation of a measure leads to the discharge of polluted water to the sea (e.g. through the use of scrubbers). There might already be a regulation that limits the discharge (of any substance) from vessels. These possible contradictions need to be checked and dealt with before implementation can become reality.

7.1.6 Invitation of neighbouring countries vs. Competitive position It is not unlikely that it might be interesting to invite the neighbouring countries of Singapore and the Netherlands on the long term to join them in fighting emissions from vessels. This will keep the level playing field among these ports the same, which is good for both their competitive position. However, there are a few things that have influence on the attractiveness and willingness of the neighbouring countries to be introduced to this decision-making process: The neighbouring countries of Singapore and The Netherlands differ quite a lot. One difference in the neighbouring countries is that the port of Rotterdam is situated in an ECA, while Singapore is not situated in an ECA. This shows that the neighbouring countries of the Netherlands have already implemented several relatively strict regulations dealing with emissions from vessels. In Singapore and its neighbouring countries this is not the case. Implementing regulations in Singapore and neighbouring countries that are even stricter than the ECA regulations is likely to lead to a lot of resistance, since this is an even bigger step to take for them. In addition, the sea-faring countries surrounding the Netherlands are welfare states, which have economies that are strong enough to deal with (possibly strong) environmental measures. The neighbouring countries of Singapore on the other hand are developing countries. These countries are not likely to join any policies or measures that Singapore and Rotterdam will take. Implementing regulations in Singapore will therefore enforce the competition between Singapore and these countries as the level playing field will change. This will make it very difficult to make an environmental statement towards these countries. Singapore needs to be aware of this fact.

7.1.7 Focussing on specific route vs. Competitive position The benefit of cooperation between Singapore and Rotterdam on reduction of emissions is mostly found on the shipping route between these two ports. There are multiple solutions possible to focus on this specific route. One could think of a reduced port tariff for vessels on this route that have implemented measures to reduce emissions. This leads to a stronger competitive position. On the other hand, this also means less income for the port authority. Focussing on the costs for this route, there is still space for extra costs due to possible new regulations (see chapter 4 and 6). However, implementing new regulations can also affect ship-owners that do not sail on this specific route (short-sea and deep-sea). On these routes no extra benefit is found for cooperation. With or without cooperation, these regulations will result in stronger competition with other ports. It is difficult to make a difference in the regulations for each shipping route.

7.2 Trade-Offs for Process Design

In paragraph 7.1 potential substantive trade-offs that can possibly occur have been named. These trade- offs were focussed on the specific problem at hand. This paragraph focuses on the identification of potential trade-offs for the process design. Just as for substantive trade-offs, identifying process trade-offs will offer opportunities for the different stakeholders through acknowledging that the different views they have are trade-offs. They will see that there is a need to focus on reconcilement on these trade-offs instead of fighting over ‘who is right or wrong’. Furthermore, it clarifies the choices that have to be made. These trade-offs are all less specific for the problem at hand and are more applicable in general. De Bruijn et al. [2002b, p. 71-73] provide some examples of these possible process trade-offs.

7.2.1 Technical approach vs. Consensus This trade-off can be seen as a trade-off of Speed. A very technical approach to find a solution for reduction of emissions can lead to fast decision-making. A technical approach can imply a decrease in the amount of time and costs that are concerned with the decision-making process. The difficulty with such an approach is that stakeholders can feel ignored. The solution might hamper their business and they can try to hinder the project. In the worst case, this can lead to a start over of the decision-making process which will take more time and results in extra costs. On the other hand, achieving consensus between all the stakeholders means creating support and ensuring that the project will become a success. This will increase the amount of time and the costs put into the process. On top of that, consensus building with a lot of stakeholders can lead to a situation in which

consensus on all points has become more important to these stakeholders than the substance of the agreements. Negotiated nonsense should be prevented. This trade-off is much more an issue in the Netherlands than in Singapore. There are a lot of stakeholders involved in this issue. However, in the Netherlands, the organisational structure of these stakeholders is much more focussed participation of the involved stakeholders. These actors are used to be involved in decision-making processes and will refuse to be left out. The organisational structure in Singapore is not so much of a network as Rotterdam is. This leads to a different approach for both ports in the process design (see chapter 9).

7.2.2 Active involvement of stakeholders vs. Excluding stakeholders (Carefulness vs. Speed) Again this trade-off can be addressed as one concerning Speed or Progress. When more and more stakeholders are involved in the decision-making process, more time is needed and more investments in meetings need to be made [De Bruijn et al., 2002b]. In chapter 4 was mentioned that the economical benefits will become bigger if more ports are involved and participate in the regulations-to-be-made. However, in chapter 5 it was determined that there is a cultural difference between both ports, especially on the dimension of power distance. Furthermore, the stakeholders in the Netherlands are more interested in environmental issues and the willingness to commit to this process might be a little bigger than in Singapore. This means that the system within Singapore leads to a situation in which the stakeholders of Singapore are managed hierarchically and are not directly needed to be incorporated in the decision-making process. This could increase the speed of the process. On the other hand, this leads to a decrease of substantive input from the Singaporean stakeholders. This means that the carefulness can be harmed by excluding Singaporean stakeholders. Furthermore, when identifying stakeholders that need to be involved it is important to recognize the possible participation of environmental actors in the design process. The participation of an environmental organisation can not only enhance the support for implementation (among for instance the public) but it also can improve the quality of the plans and implementation, whereby especially the North Sea Foundation could play an important role in Rotterdam. Both ideas will add complexity to the process because one has to consider when this possible participation has to take place, who specifically is invited, how this involvement can be financed and which legal rights the participants have. Above all these things, active involvement of more stakeholders will add complexity to the process, because more stakeholders must be convinced of the justice of the project and they will want to know if their interest will not be harmed. A quick and dirty decision making will cause less time and costs and simplifies the decision making process, because no time and effort has to be spend on the other stakeholders who do not have any authority in the project. Attention needs to be paid because the decision-making process may be easier, but the actual execution of the project can become more difficult because of resistance.

7.2.3 Creating prospects of gain vs. Not creating prospects of gain (Carefulness vs. Speed) To secure a cooperative attitude among the critical but non-dedicated stakeholders such as the ministry of V&W and the ministry of Environment and Water Resources, it is essential to create prospects of gain. Involving stakeholders such as the municipality of Rotterdam can lead to situations in which more issues are introduced to the process of decision-making. This can create more possibilities; a package deal could be made. By involving other issues that are important to these critical stakeholders they can shift from non- dedicated to dedicated stakeholders. The port authority can create a deal which states the combination of reducing emissions by vessels with a subject important to that stakeholder. These deals can lead to consensus. However, these prospects of gain can also lead to the opposite of consensus. If the costs of these prospects of gain are too high, other stakeholders will object to this. This will cost time and money which not wanted. A good balance should be made between creating these prospects of gain to get the level of involvement wanted and not investing too much.

7.3 Final Notes

In this chapter many substantive trade-offs and potential difficulties for the process have been identified. Together with the potential solutions that were presented in chapter 6, they form the solution space for the stakeholders. This space will be used as an input for the decision-making process.

With this chapter, the analytical phase comes to an end. In the next chapter, the theoretical analysis from chapter 2 will be combined with the findings from the analytical phase. Next, the first draft of the process design will be presented.

Part III

Results

8 From Analysis to Process Design______

In chapter 4 it was determined that, in fact, there is a significant advantage when the port of Singapore and the port of Rotterdam cooperate in dealing with emissions. Together a statement can be made to other countries and ports in order to reduce the polluting emissions. Furthermore, in § 6.5 it was concluded that there is an extra benefit when the two ports cooperate in the financial (and thus economical) area: there is more space for costs due to regulations without losing market share. This leads to the conclusion that cooperation of both ports should become reality. To do so, a solution needs to be chosen that will reduce the emissions and deals with the wishes of the stakeholders. This leads to the next question: How to design a process that results in the selection of such solution?

The purpose of this chapter is to unite the substantive findings from the analytical phase with the theoretical framework presented in chapter 2. The combination of theory with substantive findings will lead to several requirements and recommendations for the process design. In § 8.1 a reflection on the analytical phase will be provided which is followed by § 8.2, which states the implications of the findings on the process design.

8.1 Combining Theory and Analyses

During the analyses, several cultural differences have come up. Most of them reflected some of the expectations of the cultural differences as how they were described in § 2.6. Basically all cultural differences that were identified were mentioned and explained in § 5.3.1. They will only be mentioned briefly in this paragraph, with the purpose of recapturing the findings. They reflect the dimensions as stated by Hofstede. Therefore, the most evident characteristics that came up during the analysis will be mentioned per cultural dimension:

Individualism/collectivism. As mentioned in chapter 2, this dimension reflects the extent to which people prefer to take care of themselves and their immediate families, remaining emotionally independent from groups, organizations, and other collectivities. Although Hofstede predicted a large difference in this dimension between Singapore and the Netherlands (see figure 7), this difference has not been confirmed or rejected during the analytical phase.

Power distance. The theory predicted a difference in power distance between Singapore (relatively high on power distance) and the Netherlands (relatively low on power distance). In practise there is a clear difference in power distance between Singapore and the Netherlands. In Singapore there is a high power distance while in the Netherlands the power distance is relatively low. The most upfront example to illustrate this is the organisational structure (see chapter 5 and appendix C, step 6): Singapore’s organisational structure is centralized, while the authority in the Netherlands is decentralized and spread over several stakeholders (see § 5.1.3). The organisational structure of Singapore can be described as a hierarchy, while the structure of the Netherlands fits the description of a network. Furthermore, it was mentioned that the Singaporean public is loyal to the authorities. The public seems reserved in their critique on governmental decisions. This is a characteristic that corresponds with characteristics of high power distance. In the Netherlands, this loyalty towards the authorities is not present, at least not in the same amount. This indicates a lower power distance (see § 5.1.3). On top of that, the question was raised whether or not the behaviour of authorities in Singapore could be described as paternalistic. Again, paternalistic behaviour can be seen as a characteristic of high power distance. Since this question was not even raised for the Dutch authorities, this could be an indication for a difference in height of the power distance in both countries. These three findings confirm the fact that there is a significant difference in power distance.

Uncertainty avoidance. Theory predicted a difference in the dimension of uncertainty avoidance. However, both countries are ranked on the low on uncertainty side. The analytical phase showed that only in the technical analysis a remark was made about uncertainty avoidance. Both countries seem to be relatively low on uncertainty avoidance. However, this was only one example to confirm or reject the theory; this is too little to be sure that the confirmation or rejection is correct. The experiences in the case did not reject the theory firmly. In theory both countries seem to be not too far apart on uncertainty avoidance and are

ranked very low on uncertainty avoidance. This ranking seems to agree with process management. Therefore, this cultural dimension does not seem to produce too many problems.

Masculinity/ Feminity. The value characteristics that belong to this dimension were only reflected in the analytical phase in a general way. As mentioned in chapter 5, the author identified a stronger voice for competition in Singapore than in the Netherlands. Also the difference between a network and a hierarchy can contribute to this difference: in a network there is more need for a focus on relationships while in a hierarchy, this is less needed. Overall, this dimension was not firmly confirmed, but it was definitely not rejected as well.

The fact that not all differences in cultural dimensions between Singapore and the Netherlands have been identified is partly a result of the fact that these are very hard to identify. As mentioned in chapter 5, the author for example runs the risk of being subjective. Even though not all characteristics of each cultural dimension have been identified and confirmed during the analytical phase, one should be aware that Singapore and Rotterdam do differ on these dimensions. The conclusions made in § 2.7 should therefore be taken seriously in this case as well. Miscommunications and misunderstandings can easily become reality. Especially the difference on the dimension of ‘individualism – collectivism’ is relatively big and can lead to misperceptions between both countries.

8.2 Implications for the Process Design

The observations from paragraphs 8.1 and 8.2 lead to the inevitable conclusion that the design of the decision-making process should at least incorporate the differences in culture. In this paragraph the implications of these conclusions for the process design will be stated.

In chapter 2, three questions were raised that need to be answered to make these implications concrete. The questions were specifically focussed on the issue that is discussed in this research. The following questions were identified:

• Can process management alone be used in this research in both countries? • Will Singaporeans accept and work with process management? • Will a process design lead to a successful decision in both Rotterdam as well as Singapore?

The first question can be answered with a ‘no’. Process management is a type of management that is very suitable in the Dutch society. The organisational structure is described as a network and the Dutch cultural characteristics that were mentioned in theory as well as the ones that came up during the case confirm that process management is a good type of management to be used. The arguments in favour of using process management are applicable on the Dutch society. In Singapore, process management is not the preferable type of management. The characteristics of the Singaporean culture indicate that the power distance is relatively high. The experiences of the case have confirmed this. The organisational structure is hierarchical which means that process management is not the most suitable type of management to use. It is recommended to use a type of management that suits the hierarchical structure. Together, Singapore and Rotterdam form an organisational structure as well. This structure could again be described as a network: both ports are not able to steer each other hierarchically; there are many interdependencies between both ports and there is a lot of dynamics. Internally, Singapore remains a hierarchical structure. Process management could therefore be used in this case to reach a decision, but the characteristics of the Singaporean culture and organisational structure should not be neglected and should be incorporated in the process design; if this is not done, problems will occur (see § 2.5 and § 2.6). For the process design, this could for instance mean that it will be split up in to two pieces: a decision-making process in the Netherlands according to the theory of process management and a decision-making process in Singapore that suits the hierarchical structure better, such as for instance command and control techniques or project management.

Apart from the organisational structure that Singapore has, the Singaporeans themselves can also have cultural values and ideas that are in conflict with what process management requires from them. The

second question is difficult to answer. The answer depends on cultural differences that are less obvious to identify. In contrary to the observations with difference in power distance, these cultural differences are not very explicit or tangible. During the case no clear things were experienced that could imply rejection or embracement of process management by Singaporean managers. Therefore, theory will have to provide the answer to this question. Singapore is a rather collectivistic country. Singaporean managers could have problems with the openness and the directness that process management requires (see § 2.5 and § 2.6). Furthermore, relationships are very important for collectivistic countries. Singaporeans might therefore be surprised by the self-interest approach of the Dutch managers. On the other hand, Singapore is very low on uncertainty avoidance, which implicates that Singaporeans are not afraid to commit to a process without knowing the result that this process might deliver (see table 7). The level of masculinity is higher than the level of this cultural dimension that has defined process management. This might lead to more stress on the performance. This is not in conflict with process management. On a whole, it could be said that the people in Singapore are likely to accept process management if it was not for their organisational structure. They are very well capable of working with process management from a cultural perspective. Since the overall organisational structure of the cooperation between Singapore and Rotterdam can be described as a network and the people from both countries accept process management, this type of management could be used to manage the overall cooperation. However, it should be noticed that process management requires openness from its participants. Especially in situations where Singaporeans and Dutch people will have to cooperate and negotiate, this difference in approach should be known and dealt with by all participants. Therefore, in a process with these stakeholders, specific attention should be paid to the way both cultures communicate. Respect for each others way of communication is very important, particularly since language differences lead to faster miscommunications anyway. In the process design specific moments should be incorporated in order to work on the relationships of all of the stakeholders and all agreements should be written down and checked by both countries. Even though both countries do not have the need to formalize everything, this will prevent miscommunications and misunderstandings between both countries.

The third question that was stated can never be answered with 100% certainty. As De Bruijn, ten Heuvelhof and In’t Veld say: Following all activities, in combination with the correct use of the design principles does not necessarily lead to a successful process design [translated from Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 72]. A process design that deals with the case of this research will have to deal with this fact as well as with all the extra implications of the cultural differences.

In a situation that combines two or more opposite cultures, the differences in culture and perspectives can lead to many misunderstandings and irritations among the stakeholders. A ‘macho’ who is loved in one country, might be ridiculed in another. This means that competencies and skills of the participants become more and more important. Staffing is therefore even more important during international or intercultural decision-making. Grundey [2008, p. 114] suggests the international assignment model, which could minimize the cross-cultural gap for expatriates in a foreign culture. “A successfully adopted cross-cultural training model should help the employees to get acquainted with foreign values, rules, beliefs, working styles and adopt better to foreign environment”. A process design therefore should in corporate all recommendations as they were made earlier in this paragraph. Furthermore, it is highly recommended that the activity of ‘testing of the process design’ is taken seriously and is executed with care. All stakeholders should be aware of all steps taken in the process. If each recommendation is executed, the author has full confidence that the process design will lead to a successful decision.

9 Process Design______

The previous chapter has indicated that a process design is still needed to reach a successful decision. Several important recommendations have been done in order to make this process design also successful in the multi cultural environment in which this process will take place. The purpose of this chapter is to provide the initiator of this research (Port of Rotterdam Authority) with a draft version of a process design. This process design should lead to a successful decision. In this chapter the process design will be formed. In § 9.1 the start up of the process will be explained. Next, the introductory round will be explained. A first draft of a starting covenant will be presented (§ 9.3). In § 9.4 a steering group and the project group will defined. After that, the process structure and process rules will be described (§ 9.5). In § 9.6, a draft of the remaining rounds in the process will be presented. Lastly, some final notes will be presented.

9.1 Start Up

In this paragraph the objective and the general approach of the process design will be provided. Very important in this paragraph is the part about timing of the start of this decision-making process. Furthermore, the roles of the process architect and the process manager are defined along with the characteristics a process manager needs to have in this specific case.

9.1.1 Objective and general approach of process design The main objective of the process design is to reach a solution by agreement of all stakeholders. This solution should lead to a reduction of the polluting emissions by vessel caused through the use of bunker oil. The goal of the cooperation process should be fine-tuned during the first meetings of all stakeholders. However, the technical analysis (chapter 3) and the stakeholder analysis (chapter 5) have indicated that a demarcation can be made. The topic of discussion should be narrowed down to the reduction of emissions by vessels due to bunker oil in the port and the coastal areas (see agreement 1, § 9.3).

During the analytical phase differences between in culture between Singapore and the Netherlands were discovered. Especially the difference in power distance (hierarchy - network) became apparent. Chapter 8 showed that this difference requires a different approach for both countries to deal with the decision- making. Therefore the decision-making process is split up in to two different processes that are joined at several moments in time and by specific stakeholders (see § 9.2 - 9.6). The overall process design is presented in this chapter. This design focuses on the Dutch part of the process. The moments of interaction with the Singaporean stakeholders are also described in this process design. The Singaporean decision-making process is not described in this research. It is recommended that this process is developed by someone with extensive knowledge of the Singaporean system; preferably a Singaporean. (S)he will be able to design a process that will lead to the eventual decision-making in Singapore in the most efficient way, while doing justice to the cultural characteristics of Singapore. The approach of having two different simultaneous decision-making processes is different from what De Bruijn et al. [2002a] suggests to do. The incorporation of cultural management to this specific case has lead to the change in his approach as described above. While De Bruijn recommends incorporating all critical stakeholders, this is not done in this process design. Cultural management has provided the insight that in this case, incorporation of all critical Singaporean stakeholders will lead to problems (see § 8.1). Splitting the decision-making in to two processes will prevent these problems from happening.

Unfortunately, agreement by all stakeholders cannot always be the case, especially in a situation with many stakeholders with very opposite interests. If a complete consensus approach is applied, the process would slow down and might become seemingly endless. In fact, the slow process would provide opportunities for stakeholders to obstruct the decisions and the chance that consensus would be reached is small. Sometimes, to keep the speed in the process, the decision will have to be made by a hierarchical power. Therefore, elements for hierarchical control will also be included in this specific design: one stakeholder should be able to apply a command and control-strategy when necessary. However, the process should

remain transparent enough for the stakeholders to be willing to participate. This task is firstly achieved by constructing a process design by the process architect which meets these criteria.

It should be noticed that the process design should be a result of negotiations of involved stakeholders. The design presented in this chapter should therefore be seen as a first step in the set up of the process design.

Furthermore, the decision-making should take place in ‘Rounds’. As has been said, the network is dynamical. The stakeholders can behave strategically and are able to enter and exit the decision-making process. This causes that not all stakeholders will participate the whole time. When a decision seems to go a direction that is unwanted, the stakeholder will like to exit the process. The process has no isolated starting or exiting point. Discussions should therefore be organized in rounds instead of in phases. Every round has its own specific participants, its own policy arena, its own time schedule and its own process agreements. These agreements should be based on the four key requirements as stated below.

9.1.2 Timing To make sure that the process design becomes a success, the main stakeholders should feel a sense of urgency. The right timing of the formation of this process is therefore of upmost importance. The very successful agreements that were made during the IMO meeting in April 2008 have led to a feeling of satisfaction and fulfilment among the involved stakeholders. The stakeholders feel that the regulations that were formed during this meeting are a very big step in the right direction from the current situation. Although these agreements still need to be ratified, they have resulted in the fact that the need to deal with the emissions from sea-going vessels has been reduced if not been eliminated. The sense of urgency among all important stakeholders is therefore relatively low: Most stakeholders feel as if they have put a lot of effort into this agreement and have made several concessions to make this agreement as successful as it is. Initiating a new process on this subject could lead to irritations and a feel of ignorance towards their earlier efforts. The port authorities of Singapore and Rotterdam have initiated this research before these agreements by IMO were made. Despite this fact, the port authorities have decided to continue this research as there might be something extra for them to do. Furthermore, cooperation between both ports could lead to the realisation of better and higher goals of reducing emissions than that would be reached alone. However, these IMO agreements have led to a situation in which new regulations are less needed than was before. The sense of urgency is therefore not as high as it could have been.

Without a sense of urgency, the stakeholders will not be interested to participate in the negotiations to form process rules. The risk of starting a process design without a sense of urgency is that it will result in a very slow process: Stakeholders do not reach a process design or are not very careful with this process design. This leads to a risky situation. (…) Whoever organises an ill process too early or too thoughtless harms future processes in advance [translated from Bruijn, de, ten Heuvelhof and In’t Veld, 2002a, p. 71]. The stakeholders will have bad experiences with the process by then and will be resistant in cooperation in the process.

The timing of this process design is therefore very important. Since the agreements by IMO were made quite recently, the sense of urgency among stakeholders is low at this point in time. However, the system in which this issue plays a role is a dynamic system. Things can and will change in time. The sense of urgency might grow during the next few months or years. The port authorities of Singapore and Rotterdam can help to increase this feeling by: • Placing this topic repeatedly on the agenda during meetings with other critical stakeholders. Showing other stakeholders a continuous interest in this subject will slowly lead to an understanding that something needs to be done. This topic on the agenda can be stressed by focussing on studies that show the need for the attention on this subject: • Emphasising on existing studies and researches that show problems with the current or future regulations and need for extra measures or regulations: e.g. Is there enough low-sulphur fuel by 2020 to meet the IMO regulations (see table 1 and 2)? This can show a need for new complementary measures or regulations. • Making sure internal and external research that is carried out focuses on new aspects of the system. E.g. the substances that have not been taken into consideration in the new IMO regulations: CO2, metals etc. These are aspects that are hardly discussed until now. Studies showing their damage and harm to environment and human health can lead to the interest of other stakeholders. Especially external research by actors without an interest on this subject can lead to

new interest by stakeholders, since they appear to approach the issue from an objective point of view. • A few stakeholders might already be interested in this subject (e.g. North Sea Foundation). By involving these stakeholders in the discussion during meetings, a stronger voice can be made to the opponents.

Until a sense of urgency has arisen, it is wiser to focus on these points before starting the decision-making process. When the sense of urgency has grown, a serious attempt should be made to form a process design and to execute that process. It should be noted that this sense of urgency is especially needed in the port of Rotterdam. The hierarchical system of Singapore offers more potential for the Maritime and Port Authority of Singapore to ‘force’ this sense of urgency on its subordinates.

9.1.3 The process architect The process architect is the person/organisation who designs the decision-making process. The author of this report has been asked by the Port of Rotterdam Authority to make, besides a stakeholder, technical and economical analysis, an initial design for the decision-making process to find a satisfying, successful result that can be implemented. The fact that the author is not directly employed by the Port of Rotterdam Authority provides a relative objective point of view. This should lead to a process design which is accepted more easily. In this research a preliminary design of a process is presented. As mentioned earlier; a successful process design should be a result of negotiations of the main stakeholders. This chapter will therefore only present an initial design of the decision-making process. The most important stakeholders should discuss and/or adjust this proposal before committing to the process. These adjustments to the process design are executed during the initial round of the process and should be directed by the process managers.

9.1.4 The process manager(s) The responsibility of the process manager is to steer the decision-making, along the guidelines stipulated in the process design. Of course, derivations of the exact proposal are allowed and sometimes necessary to break a deadlock, but the process manager is in charge to keep the process focused on what is really important. In the theory presented by De Bruijn et al. [2002a] the process manager is always referred to as a single person. However, as mentioned in § 9.1.1, the decision-making process will be split into two different processes that have regular interaction. This means that there will be two different decision-making processes within one overall decision-making process. For that reason, the process needs two important process managers: One for the process in Singapore and one for the process within Rotterdam. Both managers need to have specific qualities, each according to their process. The fact that two process managers that are needed in this process is specific for this case due to the cultural differences. In the theory of process management by De Bruijn et al. [2002a] the use of multiple process managers is not mentioned.

The Singaporean process takes place in a hierarchical system. It is therefore proposed that the manager of the process within Singapore should be provided by the Maritime and Port Authority of Singapore. This is the stakeholder with relatively a lot of authority within the port on this specific topic. Almost all other stakeholders are dependent on this stakeholder and are directly subordinate to them. The MPA is in direct contact with all other stakeholders; this will provide them with a lot of information on the trade-offs within this issue as well as knowledge on how to solve it. Another understandable choice would have been the National Environmental agency. However, this stakeholder is not chosen since it is positioned further away from the stakeholders within the port. Furthermore, the MPA is likely to be accepted faster by the other stakeholders. The goal of the port authority is a combination of the goals of the stakeholders. As mentioned in § 8.2, staffing is very important in international decision-making. The specific person that will function as overall manager in Singapore needs to have several characteristics and competences in order to fulfil his task. (S)he will have to work in a hierarchical system in Singapore and, at the same time, (s)he will have to work in an overall system with process management. The name ‘process manager’ is therefore not entirely correct. The manager has a double role: process manager in decision- making system with Rotterdam, manager within hierarchy in Singapore. The required competences are a result of the theory that was presented in chapter 2 and evaluated in chapter 8. Some have been derived from the process management theory; some have been a result of cultural management. Since the process manager from the Singaporean process will have to interact with the Dutch process manager, cultural management should be incorporated as well. Characteristics needed to succeed in a hierarchy are not

specifically mentioned since the assumption is that managers with significant authority in Singapore already have these characteristics. This brings us to the following criteria of competences of the process manager from Singapore: • The process manager should have significant authority within the Maritime and Port Authority of Singapore (commitment power) • The process manager should have experience with international management (preferably with Netherlands/ Rotterdam) • The process manager should not be upset, intimidated or feel disrespected by direct and open communication of others • The process manager’s management style should not be very ‘macho’ • The process manager should have patience

In Rotterdam, the decision-making process will take place in a network. The authority is divided over several stakeholders. The ministry of V&W could be seen as the stakeholder with overall authority, but this party does not have the daily contact and interdependency with the stakeholders as other authoritive stakeholders have. Therefore it is proposed that the Dutch process manager is provided by the Harbour Master Division. This party has authority towards almost all stakeholders and has to deal with these stakeholders on many levels and issues. This stakeholder has a general objective that combines the objectives of the subordinate stakeholders. Therefore, it is likely that the stakeholders will accept this stakeholder as process manager. The disadvantage of a process manager from the Harbour Master Division is the fact that (s)he has dealt with similar issues and he or she might not be seen as politically neutral. On the other hand, previous involvement means (s)he has knowledge on the formal procedures and of the substance and can supply the group with more input to think about when making a decision. Just like the Singaporean manager does the specific person in Rotterdam need to have several characteristics and competences in order to be a successful process manager. Again, the required competences are a combination of characteristics from the theories that were presented in chapter 2 and chapter 8. Some have been derived from the process management theory; some have been a result of cultural management. Since the process manager from the Dutch process will have to interact with the Singaporean process manager, cultural management should be incorporated as well. A Dutch manager should therefore have the following competences in order to bring the process design to a successful end: • The process manager should have significant authority within the Harbour Master Division (commitment power) • The process manager should have experience with international management (preferably with Singapore) • The process manager should not be upset or feel disrespected by indirect communication and should know or learn the art of indirect communication [Hofstede, 1984, p. 89] • The process manager should not be too modest • The process manager should have patience

Now, the global design for the decision-making process will be described. As mentioned in § 9.1.1, the decision-making will take place in various rounds.

9.2 Introductory Round: Involvement of Stakeholders and Discussion of Perceptions

The objective of this round is to introduce all stakeholders with the problem at hand. Discussing each and every perception from all stakeholders on this issue, this should result in a shared problem definition for the decision-making process. The objective of this decision-making process should be similar to: “to reduce the emissions from vessels that come about due to the use of bunker oil”. The reason for this is that this was the initial goal of the port authorities of Singapore and Rotterdam for this process.

Suggested participants of introductory round: PORA, Harbour Master Division, Ministry of V&W, Municipality of Rotterdam, EPA, VNPI, KVNR, MPA, Ministry of Environment and Water Resources, NEA and SSA Each stakeholder should be represented by a specific person that has commitment power within its organisation. He or she should be able to speak about this subject on behalf of the entire organisation and he or she needs to have the knowledge about the possible difficulties that the stakeholder experiences on this subject. Suggested functions of people to join this discussion:

Head of the environmental department (e.g. for a port authority); Head of port/shipping division (e.g. for a governmental institution).

Time span: The amount of time spent on this round should not exceed more than one or two days This round is purely designed for introduction of all stakeholders to the different perspectives and different perceptions. As the representatives are expected to have knowledge on this issue, this round should not take up much time.

This introductory round should introduce all critical stakeholders with the problem. These critical stakeholders were identified in chapter 5, table 13. Every stakeholder should be able to elaborate on its perception of the problem (see Appendix C). The deliverable of this meeting is to come to a shared problem definition, so that there is a foundation for decision-making. It is important to start the decision-making with the critical stakeholders. If not all authoritive stakeholders are involved from the beginning, stakeholders (e.g. VNPI) might refrain from taking part in the beginning since they do not think the decision-making process is a serious attempt to deal with the problem. Later on, when this stakeholder realises its core values and objectives are negatively affected by the process, they will want to join after all and will therefore delay or obstruct the process. Although the KVNR was not identified as a critical, this stakeholder can become one. Involvement of this stakeholder adds the point of view from ship-owners and eliminates the the possible feeling of being ignored. This round should also include Singaporean stakeholders. The SSA needs to be involved in this introductory round, despite the hierarchical system in Singapore. The reason for this is to show the Dutch concerns and perceptions on this case. This will provide them with insight on the Dutch point of view. On the other hand, the Dutch stakeholders will be introduced to the Singaporean views and concerns. This will lead to extra perspectives and will minimize any possible misconceptions.

An essential element of the process design is to make sure all parties have a reason to commit to the decision-making process and to stay in this process. To make sure that the stakeholders participate in the process, a sense of urgency is required. As mentioned earlier, the stakeholders need to be convinced that the problem requires a solution. Therefore, to avoid questioning and discussion in later rounds about the need for further reduction of emissions from vessels, agreement on the need for a reduction of emissions is necessary. This agreement can be established by presenting the ongoing worldwide interest in the environmental issues. Also the total contribution of vessels to polluting emissions compared to other modalities should show the need for (more) change. Again, timing of introducing this issue is of greatest importance. Furthermore, the stakeholders need to keep interest in the process. This can be done by making the stakeholders aware of their potential gain. If they do not see any potential gain, the risk of stakeholders using the exit option is large. In the table 14 below, the parties which should be involved already in the introductory round are listed. Also, their perceived difficulties with the reduction of emissions from vessels are shown together with opportunities for all the stakeholders to discuss their concerns and problems. This leads to a feeling that their problems can be solved, which makes this process an attractive opportunity to address these issues and therefore join the decision-making process.

As can be noticed in the table, both Singaporean and Dutch stakeholders need to participate in this first round. This will lead to a shared problem definition but will also lead to an understanding of each others perspectives. The discussions and results of the first round should also include the agreement to use one single language in this process. The proposed language is English. Both Singapore and the Netherlands are relatively familiar with this language and with its specialist terminology. All results, agreements and remaining points of discussion should be written down and confirmed by all participating stakeholders. This will limit any misunderstandings or false impressions between these stakeholders.

Table 14, Stakeholders and their difficulties with possible solutions and their prospects of gain Stakeholders Difficulties Prospects of gain Harbour Master A new policy can negatively Reduction of emissions (image) Division influence the ports and national Being ahead of other ports economy Port of Rotterdam A new policy can negatively Reduction of emissions (image) Authority influence the ports economy Being ahead of other ports A new policy could lead to a decline of income Ministry of V&W A new policy could lead to costs Reduction of emissions (e.g. due to subsidies) Municipality of Possible loss of economical Reduction of emissions Rotterdam activity Cleaner and healthier environment for inhabitants EPA None Reduction of emissions Maritime and Port A new policy can negatively Reduction of emissions (image) Authority influence the ports and national Being ahead of other ports Singapore economy National None Reduction of emissions Environmental Agency SSA (Singapore High investments for specific Possibility to combine decision-making with Shipping stakeholders other subjects Association) Possibility to reduce investments or to share costs VNPI High investments Possibilities to combine decision-making with other subjects Possibility to reduce investments or to share costs KVNR High investments and short sea Possibilities to combine decision-making shipping companies can be with other subjects affected relatively more in a Possibility to reduce investments or to negative way by international share costs agreements Possibility for lower maintenance costs

9.3 First Round: Preliminary Covenant

In this first round, a starting covenant should be signed by critical stakeholders (see agreement 3). The starting covenant consists of a set of agreements. These agreements are based on the analysis in this research. The objective of these agreements is to guarantee speed of the process: After signing the covenant, no adjustments to these agreements are possible. The involved stakeholders will have to accept these agreements the way they are. They will be used as a starting point for the decision-making. Issues which are not mentioned in the agreements are still open for discussion in later rounds. As the covenant should serve as a guarantee for the speed of the entire process, it is important that this covenant is signed before the other rounds start. The agreements mentioned below are a draft version of what the starting covenant should be like.

• Agreement 1: Purpose of the process is to reach agreement on and start implementation of a measure or regulation to reduce the polluting substances that are emitted from vessels in ports and coastal areas due to the use of bunker oil.

• Agreement 2: The stakeholders are aware of the need to act. The emissions from vessels are responsible for an unacceptable large share of emissions that harms the environment and human health.

• Agreement 3: The stakeholders who need to sign this starting covenant are: Harbour Master Division, Port of Rotterdam Authority, Ministry of V&W, Maritime and Port Authority of Singapore, VNPI and KVNR (hereafter called: prime stakeholders). For elaboration on the choice for these prime stakeholders see below.

• Agreement 4: Other stakeholders can be invited to join the decision-making once this covenant is signed by the prime stakeholders.

• Agreement 5: Other stakeholders can only join the decision-making process if they agree with the objective of this process.

• Agreement 6: The stakeholders accept that the proposed structure of the process (see further on in this document) is used as a guideline throughout the decision-making. The global idea of rounds and topics within the rounds is fixed for this process. Details can still be changed during the second round.

• Agreement 7: A global timeline is shown below in figure 30. This timeline will serve as basis for the decision-making process. Iterations of rounds are possible. For elaboration on this agreement see below.

• Agreement 8a: A representative of the Harbour Master Division will fulfil the role of process manager in Rotterdam. This role will be appointed to someone who meets the requirements stated in 9.1.4. (S)he will use the process design as guideline to steer the decision-making, but will leave enough room for the stakeholders to insert their own input. This representative will also function as overall process manager. • Agreement 8b: A representative of the Maritime and Port Authority of Singapore (MPA) will fulfil the role of process manager in Singapore. This role will be appointed to someone who meets the requirements stated in 9.1.4. (S)he will use this process design as guideline to steer the decision-making in Singapore.

• Agreement 9: All stakeholders accept the roles of the representatives of the MPA and Harbour Master Division as process managers of the decision-making process.

• Agreement 10: In principle, decision-making is taking place based on consensus (see §.9.5).

• Agreement 11a: The authoritative role of the ministry of V&W within the Netherlands is acknowledged. This means that in case of deadlocks, the ministry of V&W can force a decision within 2 rounds to break such a deadlock. • Agreement 11b: The authoritative role of the National Environmental Agency within Singapore is acknowledged.

• Agreement 12: In the second round, an agreement on the process structure and process rules must be reached.

• Agreement 13: The interests and stakes of the stakeholders will be identified in order for decisions to be made.

• Agreement 14: All communication and information sharing within the process should be carried out in English.

• Agreement 15: After each decision or round a document needs to be made that states the decisions or remaining discussion points, including summaries of each stakeholder’s opinion. These need to be approved by all stakeholders in order to prevent misconceptions or misunderstandings.

• Agreement 16: The process managers function as contact person and are updated on each decision or change.

Elaboration on agreements: Agreement 1 deals with the objective of the entire decision-making process. This objective should be formed after all stakeholders from Singapore and Rotterdam have been able to show their perspective on the subject. The proposed objective is rather broad and leaves all options open for possible solutions. This will keep all stakeholders interested to participate in the process. However, in § 3.2.2 was mentioned which emissions were responsible for what damage and it turns out, this damage is done to humans and nature. Therefore, most of the damage is ‘felt’ in ports and coastal areas (§ 3.2.3). On top of that, the stakeholders from Singapore and the Netherlands do not have authority outside the coastal areas. All these findings indicate that the scope of the decision-making should be narrowed down to the land, the ports and the coastal areas of Singapore and the Netherlands. The decision-making should therefore result in a solution that answers the question: How should the polluting substances that are emitted by vessels in ports and in coastal areas due to the use of bunker oil be reduced?

In agreement 3, the prime stakeholders are identified. The reason for selecting these specific stakeholders is the following: As mentioned in chapter 5 and 8, there is a large difference in power distance between Singapore and Rotterdam. Singapore does not have a network structure and therefore it is not useful to keep all Singaporean stakeholders in the process. However, the overall structure of this decision-making is in a network situation. The MPA is a main actor in Singapore on this subject. It has authority over the stakeholders within the port and good contact with the environmental agency and the ministry. This makes the MPA the most important stakeholder from Singapore to keep involved on a daily base. In the Netherlands, all critical stakeholders are involved. Only the municipality of Rotterdam and the EPA have been left out. This is done to keep the process more controllable and transparent. At this point in time it is not clear if these stakeholders turn out to be critical. This depends on the policy or measure that will be implemented. When they become a critical stakeholder, it is needed that these two stakeholders are involved in the process or even become a prime stakeholder. These two stakeholders both have authority on some parts of the design space; however, this largely depends on the type of measure or policy that is introduced. They will join the decision-making process at specific moments (see §9.6) and will be included in the process when needed. Like any other stakeholder, these actors are able to sign the covenant as a show of dedication and willingness to this project. However, these stakeholders are not part of the group of “prime stakeholders”.

Required participants of first round: Prime stakeholders. The participating persons that represent their organisations should have commitment power: they need to be able to sign the covenant on behalf of the company/organisation. Since the introductory round and the first round are able to be combined, it is likely that the representatives of the prime stakeholders from the introductory round are the same as those from the first round: Head of the environmental department (e.g. for a port authority); Head of port/shipping division (e.g. for a governmental institution).

Time span: This round should not take longer than one or two days. The global process design presented in this research should provide enough confidence among the stakeholder for them to commit to these agreements. Although some of the agreements might cause some discussion, no substantive issues are discussed; therefore, the time spent on this round should be limited to a maximum of two days.

Agreement 7 deals with the global timeline of the process. This is illustrated in figure 30. The blue line indicates the course of time. Under this line a global indication of the needed time for these activities is presented. This indication seems very vague, but due to iterations and the different interest of stakeholders this time spent is hard to predict (see § 9.6 for elaboration on time span). The vertical lines indicate the starting points of each round. The thick, continuous lines indicate a moment in time at which all previous round need to be finished before the next rounds can be started. As can be seen, there are 3 moments like that (after round 1, after round 4 and before implementation). The order in which the rounds are presented indicates a sequence in which they (in theory) should take place. However, the dotted lines indicate the possibility of iteration. E.g.: More process rules can be formed while dilemmas are shared and criteria are set. The substance of each round will be explained in § 9.5 and § 9.6.

Figure 30, Global timeline of process design

Agreement 8b and 11b are based on their Dutch equivalents. The decision-making, however, is split in to two processes. The Singaporean process is not yet presented in this research as this should be developed by Singaporeans themselves (according to their cultural characteristics). The question therefore is whether these agreements are useful. Agreement 8b refers to a function that is needed to deal with cooperation in this process. The role (s)he fulfils in the Singaporean process is however not yet clear, since the Singaporean process is not presented here. Agreement 11b refers to a position of one of the stakeholders within its own country. In a network organisation it is important to acknowledge an authority that might be able to break deadlocks. The question is whether or not this function or role is needed in Singapore. In a hierarchy (Singapore) it might be unnecessary to specifically point out the authority as this is part of the system.

Agreement 14, 15 and 16 specifically focus on communication. To prevent any misunderstanding or misperceptions, it is wise to agree to these agreements. The analysis has lead to the belief that communication is very important in the international decision-making. In chapter 8 it was discussed how cultural characteristics can lead to differences and difficulties in the way stakeholders communicate. These agreements try to prevent these difficulties.

9.4 Project Group and Steering Group

After the introductory round and the first round, the stakeholders have to go ‘in-depth’ and will do the needed research, discuss the issues and explore the dilemmas and criteria. This can slow down the decision-making process. Therefore it is useful to make a division between a project group and a steering group. The project group will be able to focus on substance while the other group will put effort in keeping the process at speed.

Suggested participants of project group: Prime stakeholders (additional stakeholders in round 4 and 6) The purpose of this group is to take a look at the substance of this issue. The people representing their organisations in this group will need to have significant knowledge on this subject. They will need to deal with this issue and affiliated issues on a daily basis and the members of this group will meet regularly. Therefore, the suggested functions of the participants of this group are: project manager/policy advisor of the environmental department (e.g. for a port authority) or for instance the project manager of the port/shipping division (e.g. for a governmental institution). Several competences that are required for the representatives in the project group are: The participant should have a lot of knowledge on this subject; the specific persons should have an open attitude towards the decision-making; they should have patience and they should have good communicating skills.

Suggested participants of steering group: Prime stakeholders (additional stakeholders in round 4 and 6) The purpose of this group is to maintain the speed of the process (see below). To do so, the participating stakeholders need commitment power within its own organisation. The

representatives will meet only several times. The suggested type of functions of the participants of this group are for instance the head of the environmental department (e.g. for a port authority) and for instance the head of the port/shipping division (e.g. for a governmental institution). The representatives in the steering group are required to have several competences as well: The participant should have some knowledge on this subject; The person should have significant authority within its organisation or within towards the organisations it is representing (commitment power); (s)he should have experience in international projects; (s)he should have patience; (s)he should have good communicating skills.

The project group will focus on operational aspects and the substance on a daily basis. They will develop and elaborate on the dilemmas, criteria and the solutions. The steering group will be formed by representatives with significant authority (commitment power) within the same organisations as the ones participating in the project group. The steering group will not work full time on this matter, but will meet when needed. It is the responsibility of this steering group to focus on the effects of the project at a higher aggregation level. By doing so, it is able to speed up the process. Since the steering group meets in other problem arenas as well, it is able to involve other subjects to the discussion in order to speed up the process. In case of disputes, the steering group can incorporate other problem-arenas which will release the pressure of the dispute. The two groups will work in a sequential but iterative way; the results of the project group (including problems) will serve as input for the steering group. The steering group will then check on all criteria and earlier agreements. Next, it is the project group’s turn again. There will also be moments in which both groups will meet together, in order to get opinions in line with each other and make the most important and complex decisions together.

Figure 31, Project group and steering group. Both are formed out of the ‘prime’ stakeholders

It could be questioned whether or not any Singaporean stakeholders should be involved in the process on a daily basis. Looking at the core elements from process management, there are a few reasons from a process management point of view to keep Singaporean stakeholders in both groups: To safeguard the core element ‘openness’, all relevant stakeholders should be involved (figure 5, design principle 1). The process needs to be transparent for all of them. Not including Singaporean stakeholders would lead to incomprehension of decisions made by Dutch stakeholders. Furthermore, in order to safeguard the core values of each stakeholder, the stakeholders key interests should be protected (design principle 4). Not involving any Singaporean stakeholders in the project group would lead to a situation in which the key

interests are not protected. It is very likely that the Singaporean stakeholders will exit the decision-making process because of that. Combining the findings of both countries after being stated in separate work groups can lead to disputes and misunderstandings later on in the process. This could slow down the process and can lead to decisions without substance. On the other hand, cultural management shows another side to these arguments: Since high power distance was one of the main characteristics of the Singaporean culture, the division of a project group and a steering group could provide an ideal situation: the Singaporean stakeholders only participate in the steering group. This would mean separate processes for the stakeholders from the Netherlands and Singapore on the operational side. This leads to a situation in which Singaporean stakeholders can operate in their own organisational structure, while the Dutch operate in their specific structure (network; project group). This could in fact increase the speed of the process within each country: In the decision-making process of the Netherlands fewer stakeholders participate which speeds up the process. Furthermore, a hierarchical system in Singapore implies the use of command and control which speeds up their side of the decision-making. On top of this, separate project groups have a practical benefit as well, since these stakeholders are geographically situated on the other side of the world. Apart from the managerial perspectives there is another reason for involving at least one Singaporean stakeholder in the project group. They too do research and studies on this subjects and are busy to come to a satisfying solution that deals with the emissions. When leaving all Singaporean stakeholders out of the operational part of the decision-making this results in a lack of technical and substantive input for the decision-making.

In order to come to a good decision-making process, the arguments made above are combined. This leads to the conclusion that the MPA should be involved in not only the steering group but also the project group as the only Singaporean stakeholder. By doing so, the process developments will remain transparent for the Singaporeans: they know when specific rounds take place, they know what topics are discussed and they know when their interests are taken care off or not. This will safeguard the core element ‘openness’ which is crucial for a successful process design. It prevents the possibility of disputes later on in the decision-making as the MPA has been present all along the process, which could slow down the process. The interests of the Singaporean stakeholders are covered from an early stage. Furthermore, the Singaporean stakeholders will be able to have their own way of dealing with this issue: they will be able to form their own decision-making process and use their own management style to come to a solution. This meets the aspects and recommendations made due to cultural management. This increases the speed of the process in several ways (less participating stakeholders, use of command and control). On top of that, by introducing one stakeholder from Singapore to the operational side of this process as well, there is no loss of information that otherwise would have been lost. Technical innovations, new policy measures and new perspectives can be found in Singapore and can enter the discussion through the participation of the MPA. The MPA is the most suited stakeholder from the Singapore for this task since the MPA is in direct contact with its subordinates and has an objective that combines all its subordinates’ objectives. This will lead to direct incorporation of their ideas and perceptions. This means that the core values of their stakeholders will be protected. The MPA is therefore the most understandable choice: other Singaporean stakeholders will be able to trust this stakeholder and will feel comfortable that the technical input that these stakeholders provide can be passed through the MPA to the Dutch process participants.

Another problem that might occur is that the representatives participating in the steering group can have a high function within the branch organisation, but do not necessarily have commitment power in the actual companies. However, when the representative has good contact with the stakeholders (s)he represents, the results of the decision-making process should incorporate the interests of those stakeholders as well. It is therefore recommended to the representatives of the branch organisations to regular contact with the stakeholders.

9.5 Second Round: Process Structure and Basic Process Rules

The signature of the starting covenant leads to the second round. In this second round additional agreements will be made. These agreements will focus on the process rules as well as on the process structure. Important is to keep a strong eye on the four core elements of process management while

forming these additional agreements. In contrast to the rather upfront defined character of round 1, the second round will focus on dialog between the parties.

Suggested participants of 2nd round: Prime stakeholders; Steering group Like in the introductory round and in the first round, each representative of the participating stakeholders should have commitment power within its own organisation. Agreements made by this person during this round should be kept by the entire organisation. For continuation of the agreements that are already made and for the speed of the process it is recommended that these persons are the same as the ones in previous rounds.

Time span: This round should not take longer than a few meetings stretched over a few months This round can be stretched over a longer time: as figure 30 indicates, round 3 and round 4 can be in progress at the same time. These latter two rounds will take up more time as these rounds contain substantive issues.

For the process structure, the global idea of rounds and the topics which are discussed in these rounds are already determined (as stated in Agreement 6 of the covenant). Only details of the process structure will be filled in in this round: what tactics are used to come to consensus (brainstorm, etc.), how much time is taken in each (sub)round until a voting or check for consensus is taking place, which topics in each round are emphasized, etc. This can be done by making additional agreements. Additional agreements can also be set for the process rules, for instance about the exit option (can a stakeholder like VNPI simply leave the process when it looks like they do not get enough compensation for their investments?), the requirements for a successful voting (simple majority, superior majority, 2/3rd majority, consensus), and the status of information sharing with the public and the media. If these agreements are not made, stakeholders might feel neglected.

A few examples of additional agreements which will have to be made by the group are: • The process needs to be executed by a project group (daily base) and a steering group (part time) (see § 9.4). • The decision-making process within Singapore, based on the Singaporean cultural characteristics, is made clear to all stakeholders. There is a difference in power distance between Singapore and Rotterdam. In the overall process this has been taken care of, by only involving the MPA for each single round. However, in Singapore itself stakeholders will need to reach decisions on this subject as well, in their own way, using their own suitable type of management. In this round their approach to this issue should be made clear to the Dutch participating stakeholders. This will provide transparency in the process design to all stakeholders. • The process needs to be specified for each participating stakeholder. The cultural differences between all stakeholders have been generalized for each country; however, there are also cultural differences between each single organisation. This can have influence on the way stakeholders communicate with other stakeholders. Identifying these differences will prevent misunderstandings, feelings of ignorance or belief of strategic behaviour by other stakeholders. • There should be one representative that communicates with the world outside this cooperation process. The benefits of having one representative that deals with the communication is that this person will form an extra check in the internal communication: different stakeholders provide input for the statements to the outside world, if these inputs differ, the conclusion can be drawn that the internal agreements are not entirely clear. This would not be discovered with multiple representatives for the communication. It is suggested that the person that should fulfil this function is working for the MPA, the Harbour Master Division or the PORA. The reason for this is that these three stakeholders are indirect contact with all stakeholders and their objectives and interests considering this subject represent most of the interests of the other stakeholders. Therefore, all stakeholders will feel more comfortable with this person from this stakeholder speaking on their behalf. • The voting rule used in the process is consensus between all prime stakeholders

Since the MPA is the only participating stakeholder from Singapore, it might feel as if the Singaporean interests are being overlooked. The fact that there are several Dutch stakeholders present should not lead to a situation in which the MPA and the other Singaporean stakeholder feel as if their interests are ignored or neglected. By choosing a voting rule that insists on agreement of all stakeholders and specifically including the agreement of the MPA, this issue will be prevented. • External experts may be consulted, provided that they are not employed by one of the stakeholders. However, the advice from the external experts is not binding. In situations of serious disagreements on specific information a study can be done to push a breakthrough in the impasse. To provide clarity on this subject an external expert should be consulted. This should lead to an objective study in which the arguing stakeholders have no influence on the results. The advice or information by the external experts does not have to be binding. It is a tool that can be used to provide objective clarity in incomplete information or in situations of disagreement. • After the criteria have been determined in round 4 and agreement has been reached, the next step will be formulating alternatives. Hereby the exit option is no longer available. At this point in time, the perceptions and dilemmas of all stakeholders are well known by all stakeholders. The criteria have been discussed and set which should indicate that all reasons for stakeholders to exit the process have been taken care of. Stakeholders should therefore feel comfortable to commit to the remainder of the process.

It should be noted that these agreements are illustrative and do not have to be exactly like this. Furthermore, they are not complete. More process rules and agreements need to be made. This will be done by the stakeholders during the execution of this decision-making process.

9.6 Structure of Process

In this paragraph the structure of the decision-making process will be described. This process structure is an example of how this structure could be formed. As mentioned in § 9.5, this will also be discussed in the second round. From the third round onwards, the process starts to get more substance. In the third round, the trade-offs of this issue are shared. The forth round should provide the stakeholders with a list of criteria. Next, a set of alternatives will be formulated. In the last round of the decision-making process one alternative will be chosen.

Table 15 provides an overview of each round with their objectives and deliverables. To give the process managers a clear understanding of the reason for having this round, the core element is provided in the table 15 as well. This will help them to see what is important for each round. The notes serve as extra information for this round. The next step after a decision has been reached is to implement the chosen alternative. Before this can be done, a final check needs to be made to see if the alternative is not in conflict with any national or international law.

The table states the rounds one after the other. This implies that the rounds are sequential, step by step activities, but this is not the case. As already shown in figure 30, some rounds can take place simultaneously. In this paragraph the idea of rounds will be more fine-tuned and adjusted. To do so, the rounds are visualised in figure 32. This figure visualizes the decision rounds from round 3 onwards. It shows the relation between the project group and the steering group, the participation of stakeholders outside the prime stakeholders and it indicates specific meeting moments. The rounds are indicated with dotted lines. However, this does not mean that a round needs to be finished before another can be started. Decision moments indicate moments at which the previous rounds need to be finished.

Table 15, Basic structure of process: Rounds and their objectives Round Core element Objective Notes in process management 2nd round: Speed Formulation of process Process structure and process structure and rules process rules 3rd round: Openness, Sharing of substantive The trade-offs mentioned in chapter 6 Dilemma substance dilemmas. can serve as input for this round. sharing Finding directions for This round should also lead to an solutions extra sense of urgency 4th round: Core values Formulation of a list of This incorporates the objectives of Criteria criteria that the solution each stakeholder Stakeholders setting needs to meet. outside the prime stakeholders will be invited to participate 5th round: Substance Formulation of different The list of solutions provided in Formulation of alternatives: These chapter 7 can serve as an input to Alternatives possible solutions need this round. to be concrete. Use can be made of brainstorm sessions, Decision Support Systems and discussions in order to formulate concrete alternatives 6th round: Openness, Selection of one Use of criteria from 4th round is Selection of core values alternative for required alternative implementation Stakeholders other than the prime stakeholders will be invited to participate

The 3rd round focuses on the problem definition. It is important that the trade-offs between different solutions that cause problems in the decision-making are recognised early in the process. Defining these trade-offs with stakeholders together will lead to a mutual understanding of the problems and will shift the discussion from hammering on its specific interests to discussing solutions (see round 5). This can save time, irritations and can provide lead to a shared feeling that action is needed. The steering group needs to take action when discussions turn into ‘yes-no’ discussions as this will slow down the process and will not contribute to substantive decision-making.

Suggested participants of 3rd round: Prime stakeholders; project and steering group In this round only the prime stakeholders should be involved in order to keep the speed in the process. More stakeholders would mean more opinions, more discussion, etc. To other stakeholders should be pointed out the possibility of joining the process and protecting their interests in the 4th round. The steering group will initially provide the project group with its task (based on agreement 1 from the covenant, specified for this round).

The 4th round will lead to the definition of the criteria on which the alternatives will be tested later on in the process. These are very important as they will define the boundaries of the system in which solutions can be found. Therefore chapter 6 can serve as an input for this round. The reason for the fourth round is to make sure that the stakeholders feel involved. This invitation has the purpose to protect the core values of all stakeholders and to guarantee wide support for the final chosen solution. Furthermore, these stakeholders might come up with new ideas due to their very specific knowledge. However, incorporating these stakeholders also means more objectives and criteria to deal with. Therefore, a review moment after the fourth round is in order. This is a specific meeting moment between the project group and the steering group. This meeting is needed in order to review the criteria that have been set. Since there are many stakeholders, there are many interests and wishes that can result in criteria. The review moment should provide a moment in which an accurate consideration of all criteria needs to be made to determine whether a criterion is a wish or a requirement. Furthermore, it should be checked if all types of requirements are covered: Technical, Economical and Political (due to existing regulations and laws).

Suggested participants of 4th round: Prime stakeholders; project and steering group and additional stakeholders In the fourth round stakeholders other than the prime stakeholders should be invited to participate. This is done to meet the core element of protection of core values by De Bruijn et al. [2002a]. All stakeholders will be invited to join, but in practice it is expected that mostly Dutch stakeholders will respond to this invitation. The reason for this is that the Singaporean stakeholders are expected to be dealt with in the Singaporean decision-making process, as made by the Singaporeans themselves. It is possible that the MPA (representing the Singaporeans) feels that the Singaporean core interests are not protected and they can feel overwhelmed by the amount of Dutch stakeholders. To prevent this feeling, the MPA can decide to invite other Singaporean stakeholders to this round or to bring a larger delegation. A tool that could be used to deal with this issue is an anonymous electronic group decision session. In this session all stakeholders have equal powers and discuss anonymously; this leads to a situation in which it is less easy to dismiss Singaporean interests.

Time span of 3rd and 4th round: A few (4-5) months (about 2 months per round) Most of the time spent in these rounds (R3 and R4) will be spent by the project group as these are the people that will go in-depth on the subjects. This time is needed for these rounds as perceptions and interests are discussed. As was shown in chapter 7, there are a number of trade- offs that need to be discussed and the stakeholder analysis (appendix C) has showed a list of values for each stakeholder. Stakeholders will have to determine for each part of subject how they feel about specific point and will need to discuss this with the other stakeholders. These discussions can take place face-to-face and sometimes e.g. by conference calls. The organisation of these meetings might slow the process down. Therefore, these rounds will take some time. It is suggested to try to limit each round to about 2 months. This can be done by strict planning of meetings between the stakeholders. However, since the process is formed by round and the second, third and fourth round can take place at the same time, it is difficult to provide the stakeholders with a strict planning of the substance of each discussion.

The previous rounds need to be finished before the remaining rounds can be started. The reason for this is that it is highly wanted that all stakeholders will stay in the process. A suggested process agreement in round 2 was to limit the exit option in decision-making after round 4. However, to be able to implement such a process rule, stakeholder will need to feel at ease with the process so far and they will demand that all their core values are already covered. This can only be the case if each dilemma has been discussed and if the criteria (matching the dilemmas and the core values) have been set.

In the 5th round alternatives will be formulated. The project group will start formulating alternatives and will sent these to the steering group. The red arrows indicate the expectation that iteration is needed in this round. It might be difficult to formulate serious alternatives without losing substance. The process manager needs to be aware of the fact that this round might slow down the entire process. The steering group and specific tools such as brainstorming can be used to give a new input to this round to keep the process at speed. The possibilities presented in chapter 6 can serve as an input for this round.

Suggested participants of 5th round: Prime stakeholders; project and steering group In this round only the prime stakeholders should be involved in order to keep the speed in the process. More stakeholders would mean more opinions, more discussion, etc. The stakeholders have to keep in mind the discussions and outcomes from the previous rounds.

The 6th round is the decision round. Again, stakeholders outside the group of the prime stakeholders are invited to join in the selection phase. The input of these other stakeholders can lead to situations in which it might be necessary to adjust or reformulate alternatives. This is indicated in the figure by the red arrows from the participation block in round 6 to the project group in round 5. When all alternatives have been discussed and a final selection has been made, it is possible to start the implementation process.

Suggested participants of 6th round: Prime stakeholders; project and steering group and additional stakeholders In this round the stakeholders need to make a selection between the alternatives. The opinion of all stakeholders is needed to make sure that their core values are protected and consensus is reached. However, if the 4th round was executed properly, this should not lead to

new, extensive discussions. The participation of these outside stakeholders can be seen as a safety net for these stakeholders. This will make it possible for them to commit to the process.

Time span of 5th and 6th round: Several months (5-6 months) Especially in these two rounds several iterations are expected. These are necessary to finally provide a suitable solution, but the rounds will therefore take relatively quite long. Alternatives that are suggested in round 5 serve as input for the decision-making in round 6. In this round, however, it might be felt that the alternatives do not meet the criteria that were set in round 4. This will than be provided as feedback and will lead to a possible adjustment of the alternative. This process can take several (5-6) months before a small amount of good alternatives are presented and one is selected.

Project group Round 3: Dilemma (form dilemmas) Dilemmas? Steering group sharing (give ok)

Participation of other Dilemmas Stakeholders

Objectives

Project group (form criteria) Criteria? Steering group Round 4: Setting (add criteria higher of criteria aggregational level) Criteria

Project group Review Steering group moment

Final Criteria

Round 5: Project group Steering group Formulation of (give ok) alternatives

Participation of other Stakeholders Alternatives Round 6: Selection of Steering group alternative Preference Preference Project group Preference

Decision moment

Figure 32, Visual presentation of process design

Note: Not all objectives or responsibilities of stakeholders are stated in this visualization. For instance, the task of the steering group to solve disputes and conflicts (as discussed before) is not mentioned in this figure. However, this is an important task. It is necessary for the process that they fulfil this task.

9.7 Final Notes

In this chapter a process design was presented for the Dutch stakeholders, while it was proposed that the Singaporeans design there own decision-making process. The MPA should serve as a bonding factor. However, as mentioned before, this process design should be a result of negotiations and discussion of the stakeholders. This has not been done yet. De Bruijn et al. [2002a] have listed the activities of developing a process design and testing of the process design is one of them. They suggest two methods to do so: the ‘prima facie’ test, a brainstorm session about the designed rules with several participants, or a simulation game which imitates the reality of the decision-making as much as possible. It is suggested that one of these methods is used to test this process design. Both could be combined with the introductory round.

The ministry of V&W has significant authority in the Netherlands. When needed, they are able to steer hierarchically to break deadlocks. This stakeholder, as well as the National Environmental Agency in Singapore can be involved in the process at any time to smoothen and fasten the process. The NEA has this role in the process within Singapore, while the ministry of V&W can break deadlocks in the process as designed in this research. The presence of these representatives will have a catalyzing effect on the decision-making: if stakeholders are too defensive/slow, these two stakeholders might act and make the decision for them. This threat will create an artificial sense of urgency for the stakeholders to keep the process running. As mentioned, external experts can be consulted during the process. These can provide an objective answer when stakeholders do not agree on information, or to verify and check calculations. Additionally, experts might be consulted to improve the decision-making process, for instance when tools like Group Decision Support Systems are used.

10 Conclusions and Recommendations______

In this chapter the conclusions (§ 10.1) will be presented on the basis of the research questions mentioned in chapter 1. Furthermore, the recommendations will presented in § 10.2.

10.1 Conclusions

As the quote from Corbett et al. [2007] in chapter 1 showed there are enough reasons that permit the fact that emissions from vessels are still a ‘hot topic’. This research was done in order to find answers to the research question and sub-questions. The main research question was:

What are the benefits for the Port Authorities of Singapore and Rotterdam if they cooperate in taking measures to reduce emissions due to bunker oil, and what should the cooperation process look like?

The answer to this question is divided into two parts. First, we determine what the benefits and drawbacks due to cooperation of both port authorities are. These will be explained below, but first, the main conclusions that answer this part of the question are presented in short points: • The technical analysis showed little difference in systems. This means only little chance on technical difficulties in cooperation. • The economical analysis showed a benefit due to cooperation; together the ports have a significant share of the world bunker market and have more power to make a statement. • The economical analysis showed another benefit: the level playing field between both ports remains the same which eliminates one main competitor. • The stakeholder analysis showed differences in organisational systems: this leads to difficulties in the cooperation process, what works for one country cannot be used in the other country. • The theory of process management showed that more stakeholders (due to cooperation) can slow down the decision-making process.

The technical analysis (chapter 3) proved that the bunkering systems (from import to usage) in Singapore and Rotterdam do not differ that much. There is a relatively small difference between both ports in the techniques used for bunkering of sea-going vessels. In Rotterdam these are full automatic, while in Singapore measures are still calculated manually. Furthermore, there is a difference in the paperwork considering the procedures to bunker and to check the quality of bunker oil. In Rotterdam there are almost no standardised procedures while in Singapore they have several standardizations and formalizations in this field. Therefore, technically speaking there are no beneficial reasons for Rotterdam and Singapore to cooperate in taking measures, but, more importantly there are also hardly no difficulties. The differences between both ports form points of attention or possibly some sort of criteria when selecting a method to deal with emissions. However, the differences in the technical systems are small which means that there is not a big problem or disadvantage when dealing with emissions in both ports.

The economical analysis (chapter 4) has proved to be the most important analysis to answer this first part of the main research question. In § 4.5 it was determined that, in fact, there is a significant advantage when the port of Singapore and the port of Rotterdam cooperate in dealing with emissions. The combined market share in bunker of the ports of Singapore and Rotterdam is a little more than 12%. Apart from each other, this market share would be less than 4% for the port of Rotterdam and a little over 8% for the Port of Singapore. These numbers indicate two specific things: First of all, together both ports have more power to make a statement towards the other bunker ports around the world. Showing these ports that more can be done to reduce emissions can give them the idea to do the same. Another advantage is that the level playing field on bunkering among Singapore and Rotterdam remains the same. For the port of Rotterdam this means that the competition for bunkering has been reduced by 8% on a world wide basis. For the port

of Singapore cooperation with Rotterdam results in a reduction of the world wide competition of 4%. These benefits will become bigger when more ports are involved. In addition, in § 6.5 it was concluded that there is an extra benefit when the two ports cooperate in the economical area: cooperation leads to more space for costs due to regulations without losing market share, since the level playing field between both ports remains the same. This extension of financial space for measures is solely applicable on the shipping route between Singapore and Rotterdam. Since ship- owners need to go to these ports anyway, bunkering costs can increase before ship-owners decide to sail to and bunker in another port. One should be aware that measures that increase the costs of bunkering can also influence other ship-owners that call Singapore and Rotterdam but do not specifically sail on this shipping route. There is no extra space or economic benefit in that case. One should notice that these benefits will become bigger when more ports are involved. Furthermore, economic factors do not cover all factors that influence the choice for a port to bunker. The shipping route (do they need to call the port for their cargo?) and quality of the bunker oil are important as well.

The stakeholder analysis (chapter 5) has lead to various insights in the stakeholder system. The distribution of authority differs between the Netherlands and Singapore. In the Netherlands, the authority is distributed over several stakeholders (network-like), while in Singapore the authority is distributed hierarchically. The analysis has shown that the authority of one of the initiators for this research (Port of Rotterdam Authority) is not the type of authority that is needed to implement a solution for the issue at hand. This leads to the conclusion that the Port Authority of Rotterdam will need the cooperation of other stakeholders in Rotterdam (Harbour Master Division, Municipality of Rotterdam, EPA, and Ministry of V&W) in order to realise its objectives. The cooperation between the port authorities of Rotterdam and Singapore is therefore also not enough to reach the objective of reducing emissions from vessels; involvement of more stakeholders in the Netherlands is required.

The theory of process management in chapter 2 in combination with the trade-off of § 7.2.2 showed that when more stakeholders are involved, the decision-making process can be slowed down. When cooperating in taking measures more stakeholders will need to be involved. Each stakeholder has its own interests and goals within the decision-making which can lead to long-lasting discussions. The more ports that would cooperate would therefore reduce the speed and will delay the implementation of measures or regulations. This could be a draw back for cooperation.

On the whole, it can be said that cooperation between the port authorities of Singapore and Rotterdam has economical benefits compared to no cooperation. However, the benefits are mainly on the shipping route between Singapore and Rotterdam. It is wise to continue in the cooperation process, as it will result in more financial (economic) space for possible ways of reduction of emissions. The cooperation, however, can only take place when more stakeholders (authorities) are involved.

Now that is concluded that cooperation has advantages over no cooperation, this cooperation should become reality. To do so, a manner needs to be found that will reduce the emissions and satisfies all the stakeholders. This leads to the second part of the main research question: How should the cooperation process look like? First it needs to be determined “which theory(s) should be used to form the cooperation process of this specific issue?” The answer is process management adjusted to the cultural characteristics of the participating countries. This means a specific focus on communication, staffing and a focus on the differences of power distance between both countries.

To tackle this question, first, before any analysis had been done, the assumption was made that the answer to “Is there an extra benefit in case of cooperation?” would be positive. By doing so, a ‘quick and dirty’ scan could be made of the characteristics of the organisational structure of the system in which the decision- making eventually will take place and a theory could be found that deals with the characteristics. These characteristics were based on a first impression made during the problem introduction. This resulted in the assumption that process management would be applicable. However, due to the international character of the decision-making, cultural management was added to that theory. Analyses of the system, specifically the stakeholder analysis, were needed to prove that the assumptions and chosen theory were right and served as input for the final process design.

There are several cultural differences between Singapore and Rotterdam (the Netherlands), the most noticeable one being the difference in power distance. The stakeholder analysis showed that, in fact, the organisational structure of the Netherlands is decentralized. There are more stakeholders that authority and other stakeholders have created significant power in the decision-making by uniting in branch

organisations. In Singapore this is not the case. In Singapore the authority is centralized. This means that the organisational structure in Singapore can be described as a hierarchy, while the Netherlands can be described as a network. This makes process management very suitable for the Dutch side of the decision- making but not for the Singaporean side. However, since Singapore and Rotterdam are interdependent, the overall system in which Singapore and Rotterdam need to reach a decision is still best described as a network. This makes process management still the best theory to deal with decision-making, although the characteristics of the Singaporean structure (and culture) still need to be handled. In chapter 8 it was determined that the analyses and the theory have shown that despite the hierarchical difference, the Singaporeans should have the competences to deal with process management from a cultural point of view. However, misinterpretations or miscommunications will be easily made due to different perspectives on the core elements of process management and the different approaches to the problems. Communication is therefore a very important issue during the decision-making. This leads to an extra focus on staffing, as the participants should be have the skills to communicate openly with each other, without cultural differences causing miscommunications.. This leads to the conclusions that process management can and should be used in the overall case, but that Singapore must be able to form its own process within its own county. No specific additions to the theory have been made. However, the Singaporean organisational structure should be kept in consideration all the time. Good communication and transparency of the process should have specific attention in the process design.

This leads to the question: “what should the cooperation process look like?” The answer is a process design for the Dutch stakeholders and a simultaneous process for the Singaporean stakeholders which is developed by the Singaporeans themselves.

The implementation of process management leads to a process design. This process design is presented in chapter 9. This design incorporates the findings of the analytical phase and the theoretical findings. The IMO agreements made last April have resulted in the fact that there is no sense of urgency at this point in time. This sense of urgency should be created first before the process is started.

The basic structure of this process design consists of 6 rounds, preceded by an introductory round. In this round stakeholders are invited to discuss their perceptions of the problem. This should lead to a shared problem perception. • The first round includes a covenant that needs to be signed by several stakeholders to increase the speed during the remainder of the process. This covenant consists of a number of agreements between the stakeholders about the basic structure of the process, the communication during the process and the involvement of specific stakeholders, the most important agreements: The technical analysis showed that the focus should be on the port and coastal areas to reduce most of the damage. Thus the objective of the decision-making has been narrowed down to reduce the polluting substances that are emitted from vessels in ports and coastal areas due to the use of bunker oil. Furthermore, the process is managed by two process managers, one from Singapore (MPA) and one from Rotterdam (Harbour Master Division). Stakeholders that should participate in each round are: Harbour Master Division, Port of Rotterdam Authority, Ministry of V&W, Maritime and Port Authority of Singapore, VNPI and KVNR. • In the second round further process agreements will be made about the structure of the process. Not all stakeholders will be involved during each round. There will be specific moments at which all stakeholders are invited to participate in the decision-making. From round 2 onwards, there will be two groups (existing out of the stakeholders mentioned above): a project group and a steering group. The project group does all the work. The steering group exists out of people that have commitment power and can speed up the process. Especially the ministry of V&W is able to steer the project hierarchically to break deadlocks. • The third round focuses on the dilemma sharing. Chapter 7 of this report can serve as input for this discussion. • In the fourth round performance criteria need to be formed. Stakeholders other than those named above should be involved in this round (e.g. NOVE, SSA, etc). After this round a review moment should be introduced. This is needed to check whether the criteria cover all aspects: technical, economical and political. Furthermore, it should be determined whether a criterion is a requirement or a wish. This is needed to evaluate the alternatives developed in round 5. Therefore all previous rounds need to be finished before the next round can be started. • The fifth round addresses the formulation of alternatives that can be implemented by all stakeholders to reduce the emissions. Chapter 6 of this report can serve as input for this round.

• The sixth round exists of the decision moment. An alternative from round five will be chosen based on the criteria that are formulated in round four. In this round other stakeholders are invited again to participate.

The analysis of the theory resulted in a recommendation to incorporate the difference between Singapore and Rotterdam in power distance. In practise this is rather hard to realize. Unfortunately, possible solutions to deal with this result in other problems. Stakeholders in Singapore might not understand why they are not incorporated while Dutch stakeholders are. Again, communication and transparency of the process should be the solution for this problem. For these stakeholders, the focus should be on the specific moments they are able to join the decision-making.

10.2 Recommendations

The conclusions from the previous paragraph lead to several recommendations.

General recommendations: • The cooperation between the port authorities of Singapore and Rotterdam should become reality as this will lead to advantages over not cooperating. However, cooperation between the port authorities of Singapore and Rotterdam should involve at least one of the Dutch stakeholders that have authority (Harbour Master Division, Municipality of Rotterdam, EPA, and Ministry of V&W) on this subject. This depends on the type of solution that is finally chosen. • The initiators of this research (PORA and MPA) should create a sense of urgency among the stakeholders. The decision-making process should not be started before the stakeholders have this sense of urgency. This sense can be created by placing this topic on agendas during meetings with stakeholders, by showing all stakeholders external researches that show the need for action, etc. • The decision-making process should, at least in the beginning, be done solely with stakeholders from Rotterdam and Singapore. Involvement of other ports will lead to delays in the start up of the process (more stakeholders need to have a sense of urgency) and to slowing down of the decision- making (due to more perceptions and core values of these extra stakeholders). • Good communication between the stakeholders and between Rotterdam and Singapore is very important to prevent misperceptions and misunderstandings. All communication should therefore take place in English and all decisions should be written down and shared with the stakeholders involved in the process at that time. • The participating stakeholders should realise that the cultural differences between Singapore and the Netherlands require a focus on the difference in power distance, a focus on communication and a focus on staffing during the decision-making.

Process recommendations: • The process design provided in this research is a first draft and should be tested and discussed with other stakeholders before being implemented. This can, for instance, be done with the help of a brainstorm session with stakeholders or by simulation of the process. • This research has been executed from a Dutch perspective. The decision-making process for the Singaporean side has not been incorporated in this research. However, the decision-making process for Singapore must be designed before the decision-making is eventually executed. This will enhance the transparency of the process for both countries and all stakeholders. • There should be two process managers, one from the Netherlands (Harbour Master Division) and one from Singapore (MPA). The Dutch process manager should also act as overall process manager. The appointed process managers should have the skills as described in § 9.1.4. This should lead to the staffing of process managers that offers some flexibility in the process structure during the decision-making, in order to cope with the dynamics. • In order to protect the speed and substance of the process, the design space (solutions and trade- offs) from this research should be used as a start for the discussion in the decision-making process. • The ministry of V&W has significant authority and can and should use their authority as a threat to break deadlocks in the process. This should keep the speed in the process. • The separation of a project- and steering group in the design will lead to faster and better decision- making. To avoid the threat of project members having hidden agendas, members of the project

group should minimize other projects running at the same time. This way the project group is fully dedicated to the project.

Recommendations for further research: • It would be interesting to see if there is a way to quantify the preferences of the ship-owners. If you could determine the specific values a ship-owner has towards a decision making factor it is possible to define the room for implementation of measures more specifically. This could for instance be done by questionnaires in which the ship-owner has to put values on each decision factor. The results of these questionnaires can be statistically analysed. However, it will be difficult to find ship-owners that will cooperate to such research. • A full research to the market processes of the bunker/HFO market could provide a very could base for determining the effect of a lot of policy measures to reduce emissions. In this research only the main factors have been identified, but if all factors and their influence on each other were identified, effects of measures could be calculated. • As mentioned earlier, this research was done from a Dutch perspective. It would be interesting to see what the results would be, if this research was executed by a Singaporean. The results of that research might lead to a different solution for the decision-making than presented in this report.

11 Reflection______

This chapter will provide a reflection on this research. This reflection has been divided into three paragraphs. First, a reflection will be given on the theoretical approach that is used in this research. Next, a reflection is provided on the analytical phase of this research. The third paragraph deals with the reflection on the process design as was presented in chapter 9. The applicability of this design in other contexts will also be mentioned.

11.1 Reflection on Theoretical Approach

In this research two theories were combined to reach a successful cooperation process between Singapore and Rotterdam to reduce emissions. Process management was used to develop a process design that meets all characteristics of the organisational structure and cultural management was used to address all cultural differences between both countries. I will reflect on these issues per theory and will determine whether or not this approach is applicable in other decision-makings as well.

11.1.1 Process management Early in this research, based on a ‘quick and dirty’ scan of the organisational structure, it was determined that process management was applicable for this issue. During the analytical phase several problems with process management were identified (e.g. high power distance in Singapore), however none were strong enough to reject the use of project management. Other types of management could have been used to deal with the cooperation between the port authorities of Singapore and Rotterdam. This research was executed with a Dutch perspective. If this research had been executed from a Singaporean point of view or from another culture, different types of management could have been used to deal with the international decision-making. Pillai [2005], for instance, argues why the cluster approach could be used for industry development strategies. While this research had a network structure as starting point for the analysis, his paper is written with a Singaporean perspective and has hierarchy as a starting point for his arguments.

In this research the theory of process management was used. Due to the quick scan of the organisational structure, process management as developed by De Bruijn et al. [2002a] was used to develop a decision- making process design. One should recognise that other writers have used or developed ideas on multi- actor decision-making as well and have formed theories that might have been applicable as well. As mentioned, most of these theories focus on tools that make it easier to reach a decision in multi- actor systems: Mayer and De Jong [2004] for instance, provide insight in the positive aspects of the use of gaming during decision-making. Many others focus on multi criteria decision support models in all kinds of situations; the most interesting of these researches however could be one from Solomon and Hughey [2007] which focuses on a decision support tool for international policy issues on emissions in aviation. These tools can be very helpful and can lead to decisions in case of deadlocks. However, what these tools and theories do not do, is to look at the entire process: they focus only on the part of the decision-making (see chapter 2). The theory of De Bruijn et al. looks at the entire process. By doing so, all characteristics of a network that needs to be taken care of to reach successful decision-making will be looked at. The use of process management by De Bruijn does not cause limitations on the use of the tools mentioned above. In fact, these tools can still be used during the decision-making process in case of deadlocks. In those cases, the theories complement each other very well.

11.1.2 Cultural management Different cultures can lead to other problems, issues or solutions. The addition of cultural management to the cooperation process has proved to be an added value for the process design. Due to the application of cultural management the focus on communication and staffing could be made during the design of the process. Furthermore, the application of cultural management lead to the conclusion that process management was not the most suitable type of management to use in Singapore. This has lead to the division into two decision-making processes.

In this research, the theory of Hofstede and his cultural dimensions have formed the base of the cultural management. However, more authors have developed theories on cross-cultural management. Like

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Hofstede, Hampden-Turner and Trompenaars [1993] have provided a way on determining the way people act. These dimensions or ideas of cultural values have not been mentioned in this research but could have served as alternative for the dimensions by Hofstede.

On the other hand, other perspectives on cultural management are available. Instead of having dimensions on which cultures can be ranked, authors often refer to the term ‘negotiated cultures’ when focussing on cross cultural management. A new culture can emerge based on ongoing communication, learning and gaining knowledge by global managers. However, “while it is unlikely we can predict organizational culture formation in complex cultural organizations, we can understand the process of cultural negotiation and as a result be better prepared to monitor and manage in culturally diverse settings” [Brannen and Salk, 2000, p. 451]. This perspective on cultural management has not been used in this research to evaluate process management. This could have led to interesting, new insights. On the other hand, it is already clear that this perspective will also lead to the conclusion that communication seems to be of highest importance for cross cultural management. Clausen [2007, p. 328] lists several challenges of intercultural communication towards a negotiated culture. She concludes: “In some situations cultural issues were pending and not resolved. In others, a cultural middle ground did emerge over time”. A model can be thought of that combines not only intercultural strategies, business strategies, but also communication strategies that are part of intercultural business communication [Varner, 2000]. This may help to implement corporate strategies more successfully.

In this research, the cultures were generalized over two countries; however, one should remember that not every person is the same. There can be differences in culture from company to company. As the aggregation level of this research was on the scale of the interaction between stakeholders, the internal culture of a stakeholder was left out of this research. The differences could however determine the speed at which decisions made at international level are approved, accepted and implemented within one company. Furthermore, as Hofstede [1983: 43] says: “In describing national cultures, common elements within each nation are referred to, but we should not generalize to every individual within that nation”. Even within a company cultural differences can exist, since each person is different. In general the conclusion can be made that cultural management is still and will remain interesting throughout the decision-making process.

11.2 Reflection on Analytical Phase

In this research, the benefits and the drawbacks of cooperation were defined and a process design for the cooperative decision-making. To identify the possible benefits or drawbacks three different analyses were done (technical, economical and stakeholder). I used several SEPAM methods to produce consistent and complete analyses. Many literature sources and interviews provided the information needed to complete these analyses. The analyses also formed the input for the process design. This design has been based on the list of activities as provided by De Bruijn et al. [2002a].

In my opinion, the analysis has formed a strong basis for the process design. The technical analysis has provided an overview of the systems in Singapore and Rotterdam. Only small differences were identified, which indicates the small possibility of drawbacks for cooperation. The economical analysis has provided an overview of the factors that have influence on the decision for ship-owners to move from one port to another to bunker as well as an overview on the influential factors on the HFO and bunker price. This analysis could be considered incomplete as not all factors and their influence on each other have been identified. However, the analysis was able to show the potential benefits and drawbacks for cooperation. In addition, it has provided a clear overview of the most important factors that could play a role when implementing a measure or regulation. This has provided enough information to identify possible dilemmas that can come up during the process design. Furthermore, it provides the stakeholders participating in the process basic knowledge for the influence of decision- making on their economical criteria. Therefore, in reference of this specific research, it was only necessary to have an indication of these factors. In the future, I would like to recommend to the participants of the project group to do more research on the factors that play a role within the HFO market and on the deciding factors of ship-owners to purchase bunker oil (see § 10.2), as it will provide the stakeholders with specific knowledge and will make them able to compare measures and regulations on their economical criteria.

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The stakeholder analysis (chapter 5) has provided insight in the number of actors that have an interest in the decision-making considering the subject of emission reduction from vessels. Furthermore, the authority distribution was identified and the cultural differences were examined. The results of this analysis proved to be of importance for the process design; the cultural differences that were identified during this chapter showed an especially large difference in power distance which ultimately lead to the division of the process design in to two decision-making processes, one for each country. As mentioned in chapter 5, identifying cultural differences is rather tricky as you run the risk of being subjective. This is one of the reasons why the final process design was only made for the Dutch side (including MPA for consistency) of the cooperation. Personally, I find it difficult to believe that a process design made by someone who is not from that country will be able to cover all aspects of that culture and will be able to deliver a good process design. This should be done by someone or with the help of someone who is actually from that country. Nevertheless, the analysis of the stakeholders and cultural differences has served as input for the process design. Furthermore, it has provided some difficulties or possible drawbacks for the cooperation. On top of that, the analysis has helped identify dilemmas that can be of influence in the decision-making.

In general it can be concluded, that even though the process design presented in this research does not present a specific process for the Singaporean stakeholders, I think more insight has been provided in the Dutch part of the cooperation process. Also more insight has been created in the benefits and drawbacks of cooperation between the port authorities of Singapore and Rotterdam. The list of possible solutions and dilemmas provide a good basis for discussion in specific rounds during the decision-making process, both in the Netherlands as well as in Singapore.

11.3 Reflection on Process Design

After a reflection on the theoretical approach and on the analytical phase of this research, this paragraph will elaborate on the process design itself. What are the potential weaknesses of this design and how can these weaknesses be corrected? Furthermore, an impression will be provided of the applicability of this process design in another context.

11.3.1 Potential threats and solutions for this process design Although I have suggested a process structure in my role as process architect, this proposed structure is not a static fact. The structure needs to be discussed and approved in the second round of the process. Furthermore, the process manager should be able to deal with the dynamics of the system in each round. Some of these dynamics have already been identified in § 5.2. Singing a starting covenant at the beginning of the process should limit the dynamics of the system. Unfortunately, this can not be eliminated entirely. The fact that only several stakeholders are now listed as ‘prime stakeholders’ and are involved in each round of the process can lead to friction or irritation with other stakeholders. These stakeholders might affect the process. Especially in Singapore, stakeholders might wonder why they are not included while Dutch stakeholders are. The process managers have an important role to avoid these irritations and to keep the process steady. He or she needs to have the skills to explain clearly the reasons for doing so (speed, cultural differences; very hard to explain) and to point out the appointed moments in which they are invited to participate in the process. Since this also largely depends on the specific person that fulfils this role, it is important that he or she is accepted by the stakeholders. If the competency of the process manager is questioned by many stakeholders, and its authority is no longer accepted by 2/3 of the group, a motion can be submitted in order to recruit a new process manager. However this can only be done as final means.

Another potential problem could be a hitch in the cooperation between the project group and the steering group. It is possible that a member of the steering group takes over a conflicting position from his or her colleague from the project group without relevant arguments to back this position up. To avoid this, a strict separation between these two groups should be respected. However, strict separation is hard to realize since there are many relations present within stakeholders itself between the project group and the steering group as well as many relations between members of the project group and the steering group in general. Therefore a strict separation is unlikely. For that reason the stakeholders need to be aware of this threat. Only when there is real suspicion that this problem might arise, members of the project group should inform the process manager.

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Also, a weakness in the design is the lack of a basic list of criteria and alternatives as input or start for the discussion. So, during the process, these criteria and alternatives have to be formulated from scratch. This does not necessarily have to be a bad thing, but it could frustrate the speed and the substance of the process. In order to prevent this, it is recommended to use chapter 7 as point of departure for round 3 and to use chapter 6 as a start of a discussion or direction of the 5th round. If necessary, the ministry of V&W can threaten or even use their hierarchical authority to force an agreement. Also, the process manager can choose to ask an external expert to solve the impasse.

In practise, it is hard to incorporate cultural management in the process design. The main recommendations considering cultural differences were to make sure communication is done well and to realise that there is a big difference in power distance, which indicates that other types of management are likely to be more efficient. The communication issue has been solved by making several process rules that focus on this: the language is determined and the fact that every decision needs to be written down and signed by all stakeholders deals with this. Obviously, this will be time-consuming and can slow the process down. The second round could be used to make these agreements more specific on different types of situation per group (project or steering). Furthermore, the process managers need to have several competences and characteristics that will make them able to work in both cultures. In order to deal with the power distance difference, the Singaporean stakeholders are now working in a separate, simultaneous decision-making process. Only one Singaporean stakeholder was placed in the group of ‘prime’ stakeholders. This brings the risk of stakeholders not understanding why they are not invited (as mentioned above). On the other hand it also brings the risk that Singaporean stakeholders will become impatient: a decision-making process in a process design will always take more time than a decision made in a hierarchical system. Singaporean stakeholders might not understand what is taking it so long. Therefore communication and total transparency of the process design should remain a priority throughout the entire process.

11.3.2 Applicability of this process design in another context The process design that has been presented in chapter 9 of this research was based on the theories of process management and cultural management applied on the case of decision-making with the cooperation of the stakeholders of the ports of Singapore and Rotterdam.

The use of process management is most successful in network structures. It is my personal experience that the process design often has a generic basis that can be applied in such network situations. De Bruijn et al. present a list of activities which should be, more or less, executed in order to reach successful decision- making. This list of activities is the generic form of a process design. This list of activities has also been used in this research to develop a process design. This means that the process design (for the Dutch stakeholders) will have a recognizable character for people familiar with process management.

Cultural management is applicable in almost any situation; there are cultural differences everywhere: between countries, between companies and between people. However, in this research cultural management has been used to adjust the process design so it will fit both (national) cultures participating in this decision-making. The use of cultural management in process management has proved to be an added value. The cultural dimensions were used to identify differences in both cultures and to see what possible problems they might result in. These problems could then be avoided by adjusting the process design. This has resulted in the focus on communication between stakeholders, the staffing of the participants and last but not least, the division of the process in two processes due to differences in power distance.

The adjustments have been made specifically for this cooperation, but some of the adjustments or points of attention can be applied to other situations of cooperation and other issues as well. The applicability of these adjustments to process design in other contexts depends on the specific adjustment. Especially the division between the decision-making processes for Singapore and Rotterdam is rather specific for this case. This is a solution for the problem of the difference in power distance between stakeholders within one country. Therefore this adjustment can only be used in situations in which one or more countries have a network structure while another country has a hierarchical structure and multiple actors from each country have an interest. The applicability of focussing on communication on the other hand could and should be applied in other process designs. Since there are always differences in cultures between countries, but also between organisations, misunderstandings and misperceptions are easily made. Process agreements focussing on these issues could prevent a lot of these problems.

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Cultural differences result in an extra pressure on the participants. In this particular process design this pressure is mainly visible by the process managers. These need to have skills that not only help them in the process design, but they also need to have skills that will make them able to deal with different cultures and intercultural communication. This focus on the skills and competences of the participants is rather general and could be applied to all situations with different cultures participating. As mentioned earlier, this is nearly always the case.

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12 References______

12.1 Literature

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12.2 Websites

APL (2008) Service Routes, Asia – Europe [online] available from [26-08-08] A.P. Moller – Maersk Group (2008) Schedules by Map, Maersk Line Service Network, Asia – Europe [online] available from [26-08- 08] Association of Rotterdam Shipbrokers and Agents (2008) About us, Profile [online] available from < http://www.shipagents.nl/index.php?option=com_content&task=view&id=34&Itemid=7> [20- 08-08] Barry Rogliano Salles (2006) Market Shares [online] available from < http://www.brs- paris.com/newsletters/liner_studies/no29/> [31-07-08] Bp (2008a) Statistical Review 2008, Oil Prices [online] available from [26-08- 08] Bp (2008b) Onze Raffinaderij [online] available from http://www.bp.com/sectiongenericarticle.do?categoryId=9018918&contentId=7034347> [15-10-08] Bunkerworld (2008a) Bunker Fuel Grades [online] available from [04-08-08] Bunkerworld (2008b) Fuel Prices [online] available from [12- 08-08] Bunkerworld (2008c) Rotterdam: The Companies [online] available from [07/07/2008] Bunkerworld (2008d) Port Area of Rotterdam, Bunker Suppliers [online] available from [07-07-2008] Bunkerworld (2008e) Port Area of Singapore, Bunker Suppliers [online] available from [08-07-08] CBS Stateline (2008) Internationale handel; energie aan- en afvoer naar land [online] available from [30-09-08] Centrum voor Onderzoek en Statistiek (2007) Kerncijfers Rotterdam 2007. Rotterdam: Lindquist Drukkerij: p.9 [online] available from [07-07-2008] CONCAWE (2003a) CONCAWE, About Us [online] available from [07-07-2008] CONCAWE (2003b) Homepage [online] available from [03-09-08]

DCMR Milieudienst Rijnmond (2008) DCMR Abroad [online] available from [07-07-2008] Deltalinqs (2007) Themes [online] available from [07- 07-2008] Dieselnet (2008) Emission Standards, International: IMO Marine Engine Regulations [online] available from [13-09-08] EUROPIA (2008) Homepage [online] available from [03-09-08] European Commission (2008) Emission Trading Scheme [online] available from [22-10-08] European Community Shipowners’ Association (2008) Index [online] available from [01-08-08]

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European Sea Ports Organization (2008) Mission Statement [online] available from [21-08-08] Exxon Mobil Corporation (2008) Our company, About Us, Singapore Rifery [online] avialable from [08-07-2008] Friends of the Earth International (2008) About Friends of the Earth International [online] available from [20-08-08] Government of Singapore (2006) Ministry of Transport, Organizational Structure [online] available from < http://www.mot.gov.sg/about/organisation.htm> [25-08-2008] Government of Singapore (2007) Ministry of Foreign Affairs, Mission [online] available from [08-07-2008] Government of Singapore (2008) Ministry of Trade and Industry, About Us [online] avialable from [08-07-2008] Harbour Master Division (2008) Port and Terminal Information [online] available from [19-08-08] Inspectie Verkeer en Waterstaat (2008) List of Suppliers in the Netherlands [online] available from [07-07-2008] International Association of Dry Cargo Shipowners (2007) Intercargo: What We Do [online] available from [08-07-2008]

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Ministry of Environment and Water Resources (2008) About MEWR, Our Vision and Mission [online] available from [08-07-2008] National Environment Agency (2002) About the NEA [online] available from [08-07-2008] NOVE (2008) NOVE, Mission Statement [online] available from [07- 07-2008] Oil Companies International Marine Forum (2008) Welcome to OCIMF [online] available from [10-09-08] Ortmanns S. (2007) Coalition Clean Baltic Annual Conference [11-05-07] Economic instruments for reducing air pollution from ships [online] available from [04-09-08] Parliament of Singapore (2007) Functions [online] available from [08-07-2008] Port of Antwerp (2008) Focus on the Port, Petrochemical Cluster [online] available from [13-08-08] Port of Fujairah (2008) Marine Services and Charges Fujairah: Port of Fujairah [online] available from [29-08-08] Port of Rotterdam Authority (2007a) Port of Rotterdam well exceeds expectations. Press Release 28- 12-2007 [online] available from: [19-03- 2008] Port of Rotterdam Authority (2008b) Harbour Rates Rotterdam: Port of Rotterdam Authority [online] available from [29-08- 08] Port of Rotterdam Authority (2008d) Company Profile, [online] available from [21-10-08] Port of Salalah (2008) An Introduction, Why Port of Salalah [online] available from [18-08-08] Rodseth M. and Arnesen J. O. (2007) NOx Tax in Norway [online] available from [28- 08-08] Singapore Refining Company Private Limited (2008) Welcome to Singapore Refining Company [online] available from [08-07-2008] Singapore Shipping Association (2003a) Shipping Directory [online] available from [08-07-08] Singapore Shipping Association (2003b) Our History [online] available from [08-07-08] Singapore Shipping Association (2003c) Our Mission Statements [online] available from [20-07-08] SkySails (2006) Turn Wind into Profit [online] available from [04-08-08]

Solar Navigator (2007) The Suez Canal [online] available from [25-08-08] Transport Guide Rotterdam (2008) Rederijen en Lijnagenten actief in Rotterdam [online] available from [07-07-2008] Unescap, United Nations Economic and Social Commission for Asia and the Pacific (2004) Comparison of Actual Port Tariff Levels [online] available from Universal Oil Products (2004) Refining Flow Diagram [online] available from [03-09-08] UPEI; Union of European Petroleum Independents (2008) UPEI is the umbrella organisation of the independent European oil trade [online] available from [07-07-2008] U.S. Environmental Protection Agency (2008) Six Common Air Pollutants [online] available from [07-08-08] Vereniging Nederlandse Petroleum Industrie (2006b) Home [online] available from [03-09-08] Wikipedia (2008a) Port of Tanjung Pelepas [online] available from [13-08-08]

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Wikipedia (2008b) List of oil refineries [online] available from [30-09-08] Yahoo Finance (2008) Currency Converter [online] available from [11- 09-08]

11.3 Experts

(see Appendix A)

Alam, K. (2008) Interview with APL, NO.1 [interviewed by M. Minnée] Singapore, 29 June 2008

Alam, Z. (2008) Interview with MPA, NO.1 [interviewed by M. Minnée] Singapore, 29 June 2008

Brutel de la Rivière, E.J. (2008) Interview with KVNR [interviewed by M. Minnée] Rotterdam, 24 April 2008

Hoh C. and Leong A. (2008) Interview with MPA, No. 2 [interviewed by M. Minnée] Singapore, 30 May 2008

Kolpa J.J. (2008) Interview with Ministerie van V&W [interviewed by M. Minnée] Den Haag, 28 April 2008

Sivanandam S. P. and Prodduturi C. (2008) Interview with SPC [interviewed by M. Minnée] Singapore, 13 June 2008

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Appendix A: Interviews______

In this appendix, summaries are provided of the interviews with stakeholders in the Netherlands and in Singapore. Some interviewees preferred to specifically follow the questions that were prepared, while other interviewees preferred to have a conversation. The texts that are provided are summaries of the conversations that took place. Although authorization was requested for the use of these interviews as reference for this research, these texts remain the personal impression of the interviewer and not the exact words that the interviewees used. Questions that were asked by the interviewer are indicated with a bold letter type. The interviews are placed in order of time.

Name of interview Name of person A.1 Interview with KVNR Mr. E. J. Brutel de la Rivière A.2 Interview with Ministerie van V&W Drs. J. J. Kolpa A.3 Interview with APL, NO.1 Mr. K. Alam A.4 Interview with MPA NO. 1 Mr. Z. Alam A.5 Interview with MPA, NO. 2 Mrs. C. Hoh and Mr. A. Leong A.6 Interview with APL, NO. 2 Mr. K. Tan A.7 Interview with APL, NO. 3 Capt. Solomon George A.8 Interview with APL, NO. 4 Mr. Goh Teik Poh A.9 Interview with SPC Mr. S. P. Sivanandam and Mr. C. Prodduturi

Furthermore, questions were asked per email. This contact is also placed in this appendix.

Name of questionnaire Name of person A.10 APL Mr. K. Alam

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A.1 Interview with KVNR

KVNR (Royal Association of Netherlands’ Shipowners), Mr. E. J. Brutel de la Rivière M.Sc. Operational Affairs

Location: Wijnhaven 65b 3011 WJ Rotterdam The Netherlands Date & time: 24-04-2008, 15:00-16:30 Contact: [email protected]

1) What are the rights and obligations of the KVNR? The KVNR is an organisation that represents around 95% of all Dutch ship-owners. These are about 1500 ships of which 50% sail with a Dutch flag. The KVNR represents de opinion of all ship-owners, but does not negotiate deals or covenants. It can be seen as a lobbyist. To form a shared point of view on specific topics and issues, several meetings and sessions are held.

2) Is it possible to make a distinction between ship-owners that operate locally and sip-owners that operate internationally? Yes, it is definitely possible to make a distinction between short-sea and deep-sea ship-owners. The distinction depends on the size of the ship. The average distinction that is normally made is at 10.000 gt.

3) Which type of ship-owners has a larger share in your organisation? Short-sea or deep-sea? How does the KVNR deal with the different goals and objectives of these two types of ship-owners (for instance as a result of SECA areas)? Deep-sea ship-owners and ships are normally represented very well on an international level. For instance Denmark has a strong lobby for these types of ships because of the Danish company Maersk, which has a lot of these types of ships. Therefore, these types of ships do not need a lot of extra support. There are relatively quite a number of short-sea ship-owners in the Netherlands that still can use some support. For that reason, the KVNR mainly supports the short-sea ship-owners.

4) What are the most important interests of refineries considering reduction of emissions of seagoing vessels? What are the objectives of the ship-owners in the field of bunker oil? There are several interests that need to be considered in relation to the ship-owners when cleaner fuel oil is implemented. Costs of reconstruction or adjustments of a ship play an important role. Sulphur has the function to lubricate the engine. When the Sulphur is removed from the oil, the ship engines need to be adjusted in order to get the same suction power as before. On board of the ship, multiple tanks are needed to be able to deal with all the different sorts of fuel in different places. This is a big disadvantage for the ship-owners. Therefore the KVNR tries to make a strong lobby for worldwide agreements to prevent a patchwork of different regulations. The price of fuel is also important, but is of less relevance for ship-owners as they price difference is passed on to the client. Sometimes, the client actually pays the bunker oil itself. The most important thing is that the level playing field remains the same. In other words: the change in the type of fuel used must be equal for all ships and ship-owners. Otherwise, the client will shift to another company that uses cheaper fuel oil. It is a very important issue that the use of cleaner and more expensive fuel can lead to a modality switch on local level. When fuel oil for ships become very expensive, it might be cheaper to transport cargo in another way, e.g. overland using a truck or train. The questions that rise with this issue are: • What is the price that causes the shift of modality? • When is the shift of modalities still a social desired thing? E.g.: Can our roads deal with the increase of trucks? Does the new modality emit less damaging substances? Is this a better situation for the environment?

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Remark: There can be a shift of shipping and trade routes due to the implementation of low-sulphur areas. A good example would be the route that used to go from the Middle-East, through Rotterdam, Hamburg, Sint Petersburg to Moscow. This route has now shifted to the Black Sea. By doing so, the SECA area can be avoided and ships can sail on the cheaper type of fuel.

5) How do you expect the regulations to change in the future? The regulations will probably keep changing in the future. The technology will keep improving. A related factor with this is that the insights of people will also make progress.

6) How do you think ship-owners will respond to the new regulations of MARPOL Annex VI? The KVNR recommends its members to adjust its ships to the use of the new low-sulphur fuel. Scrubbers are not an option. These are very expensive to purchase and do not work properly when the engine uses less then 40% of its power. This is actually a common efficiency in and around ports. However, these are the exact locations where the wish for a cleaner air is the highest. Furthermore, scrubbers leave you with another rest product: washing water. This results into more load on board of the ship that could have been used for cargo. Scrubbers are therefore inefficient and very expensive.

7) What is the average lifetime of a vessel? A ship will ‘live’ around 25 till 30 years. During the construction, one should keep in mind the fuel regulations of the future and possible changes in these regulations that might take place.

8) In a document titled “Zwavelgehaltes in Scheepsbrandstoffen” [Vereniging Nederlandse Petroleum Industrie, 2006a], several statements are made. Are these correct? a) “The transition of heavy fuel oil to distillates, gas oil or diesel is a very expensive option considering the price differences with the heavy fuel oil. It is unlikely that this will happen for worldwide transports”. b) “Scrubbers on board: this process is still under development, but will be a cheaper possibility for ship-owners than low sulphur bunker. This depends on the amount of sea miles in SECA areas and on the stay in ports. This would also reduce the amount of particulate matter”. a) The level playing field should remain the same; other than that there is no problem (see above). Therefore this statement is not true. b) Not true, see Q2.

9) Do you expect that the new regulations lead to a lot of competition of other modalities? Are there solutions or measures that can prevent this shift? This is a clear problem. It is an important issue for the KVNR, but the question is how to deal with it? This will probably happen in cooperation with Denmark and Germany. Especially the Germans are dealing with this issue since the fact that they have a large fleet of short-sea ship-owners as well.

10) How does a bunker operation take place: How long before the actual bunkering takes place is the oil ordered? Is there a cycle or pattern in the ordering of bunker oil? No idea.

11) Do the ship-owners order the bunker oil for multiple ships at the same time? No idea. Basically, there is a lot of ‘tramp shipping’ among the short-sea shipping. This means that it is unknown where a ship will be the week after. Therefore, it will be difficult to order bunker more than a week in advance.

12) What are the advantages of the port of Rotterdam compared to other ports considering bunker oil? On a worldwide scale: There is relatively little distributive trade between the exploration of oil and the ship. This makes the oil market more transparent and it results in cheaper bunker oil. Even within Europe, Rotterdam has relatively cheap oil. Antwerp, for instance, has a lot more distributive trade.

Side note: Transportation costs form about 2% of the total price of a product. Fuel costs form about 1% of the total price of a product. Even if the fuel price doubles due to a shift from HFO to distillate, this is still a marginal difference.

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The availability of fuel will become an important problem. Low-sulphur fuel will become scarcer. The refineries will be able to blend low-sulphur oil with high-sulphur oil in order to reach the demands. However, these blends do not always have the requested quality on other levels. The blends can separate (like oil in water) which can lead to unpleasant consequences for the ships. The KVNR pleads for a quality standard that includes all levels of quality to prevent these things from happening. The IMO will pose a request to the ISO to develop such a standard.

The quality of bunker oil in Singapore is not always considered very good.

The import of products in Rotterdam originates mainly from Asia. Fully loaded ships sail from Asia in the direction of Rotterdam. In Rotterdam these full containers are replaced by empty containers that can sail back to Asia. A ship can only take a certain amount of bunker oil. Therefore it has to find a balance between the amount of cargo that is transported and the amount of bunker oil that is tanked. Since cargo provides revenue and bunker will only provide costs, the balance should be made carefully. The ship-owner would like to maximise its cargo and minimize its bunker in order to make the largest amount of profit. Since the loaded ships, with heavy cargo, come from Asia (Singapore), it is not logical for a ship-owner to fully tank its ship with bunker oil to sail up and down to Rotterdam. The price of bunker oil is cheaper in Rotterdam. So when leaving Rotterdam, it is logical to completely fill the tank, since there will be enough bunker oil left in the tank to sail back from Singapore to Rotterdam.

A third port is obviously also of importance. Salalah is on the route and very ‘upcoming’. This could be a potential competitor for the ports of Rotterdam and Singapore. On local scale, the ship-owners are not very likely to shift to other ports in Europe due to bunker prices. They bunker at the ports where they need to load cargo. To see where the turnaround point is between bunkering in Rotterdam, Singapore or a third port, the following 3 factors are important: • Price of fuel • Route-distance • Amount of cargo • Bunker quality

A ship-owner knows exactly what it will cost tob e in a port for one day, including costs to be piloted into the port. Knowing this can make it possible to calculate when to shift to another port for bunker oil.

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A.2 Interview with Ministerie van V&W Unauthorized version, interpretation of mrs. M. Minnee.

Ministerie van V&W (Ministry of Transport, Public works and Water Management), Drs. J. J. Kolpa Policy Advisor

Location: Plesmanweg 1-6 P.O. Box 20904 2500 EX The Hague The Netherlands Date & time: 28-04-2008, 14:00-15:30 Contact: [email protected]

The ministry of V&W, Directorate-General for Civil Aviation and Maritime Affairs (de nieuwe naam van ons Directoraat per 1 juni 2008) is responsible for the policy. The enforcing of the policy is done by the Transport and Water Management Inspectorate (Inspectie Verkeer en Waterstaat; IVW). The ministry focuses on emissions to the air. These can be divided in two categories: 1. Greenhouse gasses (mainly CO2) 2. NOx, SOx and particulate matter (the so-called “classical pollutants”). These have influence on the public health.

In the period till april 2008 the ministry focuses principally on the second type of emissions. Its policy is to have less sulphur in bunker oil with the help of regulations and policies. The revisions of MARPOL Annex VI are already a very good start. These revisions are now approved; they will be adopted in October 2008 and will be implemented after that. It is very likely that these next steps will be taken as there is a very large basis within IMO-member states to realize this.

The ministry has a lot of contacts with a variety of stakeholders and actors; Ship-owners, harbours (the Port of Rotterdam Authority and other harbours), North Sea Foundation, the petroleum industry (VNPI) and different consultants (e.g. TNO and ECN). The ministry focuses mainly on the national stakeholders and together with them it prepares a position in the IMO-negotiations. The European Union is already doing the same on a European level. They will communicate with the European branch organisations. E.g. ECSA is the European Community Ship-owners Association.

The ministry makes sure that there have been many meetings and consultations with the stakeholders. These meetings are carefully documented and there the stakeholders can present there their position. By doing so, the stakeholders will never blame the minister for being not been involved.

The Minister of Transport defines the policy of the Ministry; he has been advised by his public servants / policy advisors (ambtenaren). This advice has always been influenced by the positions of the stakeholders, and will be presented during the IMO meetings about the review of Marpol Annex VI. The results of this review were nearly similar to the position of the ministry. This was very good news for the ministry.

In the policy of the NL cabinet there is a balance between economics on the one side and the environment on the other side. The present cabinet is relatively ‘green’. Sustainable development and environmental interests are important issues of this cabinet. The position of the NL delegation to IMO is: to reduce the emissions of seagoing ships and to maintain the level playing field for the ship-owners, refineries and ports.

The MNP.nl (previously RIVM) has published a report on emissions of particulate matter and their effect to public health [Milieu en Natuur Planbureau, 2005]. Particulate Matter can be divided into primary and secondary PM. In case of secondary PM, the PM is created when SOx and NOx molecules coagulate.

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CO2– emissions of international shipping and aviation are no part of the Kyoto protocol. In the new Post 2012 Protocol, the Copenhagen Protocol, it is the NL position that these CO2-emissions are included. Possibilities to reduce the CO2-emissions of seagoing ships are: 1. Technical measures (e.g. design index, efficient engine, etc.) 2. Operational measures (e.g. slow steaming) 3. Market based measures (e.g. inclusion of shipping emissions in the European Emission Trading System ETS, differentiation of harbour dues, etc.)

At this moment, there is a program that stimulates research to see how the use of fuel can be reduced in the shipping industry.

After the review of Marpol Annex VI of April 2008, the Dutch government will not hint at further regulations on reduction of SOx, NOx and Particulate Matter in the near future. It will be difficult enough to implement and enforce the new regulations.

After the review of Marpol Annex VI of April 2008, mr. Kolpa does not expect new regulations on SOx, NOx and Particulate Matter emissions in the next 10 years. The cabinet has an ambitious environmental position, but also want to maintain the Level Playing Field. If this level playing field is changed, the competitors’ position of Rotterdam will be negatively influenced. On bunker fuel and engine standards, the European Union does not have the intention to present stricter regulations than those of the IMO (the reviewed Marpol Annex VI). This is mainly an effect of the good results that were achieved in the latest IMO meeting in April 2008.

The refineries in the East (Russia) do not have an up to date technology, therefore they produce relatively much residual oil. This residual oil is sent to Rotterdam. This is one of the mayor reasons why Rotterdam has a large supply of this heavy fuel oil (HFO).

The main benefits of the port of Rotterdam are: • Biggest port of Europe (so bunkering without loss of time; cargo is loaded at same time) • A lot of petrochemical activities in the port (so a lot of supply) • Good geographical location in combination with Russia

Mr. Kolpa expects that refineries will invest in new refinery processes. According to the report of ECN and because of the long term planning of the regulations that are made, the investments and the adjustments of the refineries should be possible [Wilde et al., 2007].

Shipping needs to be cleaner! The question is whether the price of oil will become so much higher that it will cause a shift in modalities. A report called STREAM from CE can be useful to look at the shift in modalities [Boer et al., 2008].

The NL government and the European Commission are focused on stimulating shortsea shipping). The main arguments are: • Traffic safety • Environment • Reduction of traffic jams

The local transport depends on more factors than the price only. For instance time is an important factor as well. Some types of cargo need to be at a specific place within a certain amount of time. Also road traffic has to deal with increases in the fuel price because of new regulations with desulphurization. The tighter standards for shipping fuels (in Marpol Annex VI) will lead to a higher price. Mr. Kolpa does not expect that this future rise of fuel prices will lead to a modality shift from ship transport to road transport.

It is possible that the situation will actually be the other way round. There are estimates that the amount of road traffic will at least double within the next 10 years. This could lead to a large increase in traffic jams. This could lead to a modality shift to, possibly, shipping!

The ministry has not received any complaints from ship-owners in reference to the new regulations of IMO. They are very relieved that they do not need to install new equipment on board of the ships apart from some adjustments to meet the NOx requirements.

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Rotterdams’ most important competitors are mainly the other ports in the Hamburg-Le Havre-range. Singapore is a hub towards ports in China and the rest of South East Asia and is no competitor of the port of Rotterdam At this point in time, ships are sailing at reduces speed to reduce the use of fuel. There is an exponential relation between the speed of a vessel and the use of fuel.

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A.3 Interview with APL, NO.1

APL, Mr. K. Alam Director Engineering Research & Energy Management, Technical Services

Location: 456 Alexandra Road #06-00 NOL building Singapore 119962 Date & time: 29-05-2008, 10:00-12:00 Contact: [email protected]

Introduction Mr, Alam does engineering research and is a marine engineer. He had a seagoing career and served as a chief engineer on board ships of APL. He has done his Bachelors degree in Australia and later got his Masters degree in Marine Technology at the University of Newcastle (UK).

APL is part of the NOL holding. NOL is a private company. Temasek holding holds 68% of all shares of NOL. Temasek is one of the biggest holding companies in the world.

APL and environment When promoting the reduction of fuel, mr. Alam claims there are 2 benefits from optimizing the fuel consumption. These are the reduction in the operation cost and the reduction of the emission from ships uptake.

APL is one of the more progressive companies among the shipping companies. They are the leader in environmental issues and R&D. APL is involved in many R&D projects and represents SSA (Singapore’s Shipping Association) in many occasions. APL does much research to see if there is a benefit by:

• Coating the ships with silicone and many other paints • Using additives to the fuel to reduce oil consumption • Using hardware within the fuel oil system (e.g. manipulating the hydro carbon chains of the fuel)

Unlike many other companies, within APL there is only one department that deals with procurement of fuel oil as well as with claim disputes from the chartered ship-owners and the suppliers. In other companies these are sometimes divided into two different departments. This can lead to interdepartmental conflicts.

Chartered ships and bunker oil Out of APL's 129 ships in the fleet, APL owns 46 of them. The rest are time chartered. “Time chartered” means that APL does not manage the ships other than supplying them with fuel. This is different to “Bare Boat chartered”, whereby APL would need to manage the boat as well.

Problems arise when there is a claim from a ship or a ship-owner on bad fuel. So quality of bunker and the supplier of bunker are very important.

Smaller vessels have more sensitive engines to bad quality of bunker than larger vessels.

Some ship owners want to unduly benefit from charterers and this can lead to difficult situations. E.g. a ship owner claims before chartering that the ship will sail 18 knots but knows it can not actually make that. When the ship turns out to have sailed with less speed, APL will make a claim, however, the ship owner will then say that APL has provided them with a poor quality of fuel which slowed them down and resulted into a damaged engine.

To deal with these problems, there is now a regulation book from the MPA called: CP 60. This book states that a sample should be taken from ships manifold, not from the supplier. The bottle is however provided by the barge and needs to be sealed after having taken a sample. This sample is not

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mandatory, but in general this will be done. Each ship owner and bunker supplier has his own agreements with APL.

It is harder to predict when you will need a small chartered vessel and when not, however, large vessels are needed on a regular basis, which leads to long term contracts. This makes the large vessels have long term charter commitments and they will therefore produce less claims than small vessels will. In order to prevent claims from small ships, APL wants to provide them with the highest quality of bunker oil.

Quality of bunker oil Mr. Alam has been actively trying to convince stakeholders around the world that bunker oil with a higher viscosity does not necessarily have a bad quality. He would like to see a shift from 380 cst (most commonly used level of quality at this moment) to 500 cst. The benefits are:

• Better for engine • Cheaper (difference of 2$ per ton)

The recommended injection viscosity of the fuel for the engines is 12-18 cst. The higher viscosity fuels are mostly marketed by oil majors and refineries. Even in blending, they would adhere to strict quality control of their product for compatibility of the constituents. Whereas, independent suppliers will mix and blend different qualities for the special needs of a ship, but compatibility of the mixing is often questioned.

There is relatively a small difference between the needed temperature to bring down the viscosity of 380 to 12-18 cst or to bring down 500 cst. to 12-18 cst. On top of that, heating on board of a ship is free of cost, since they will use the heat of the exhaust gas to generate steam and to heat the fuel. Only in barges the fuel needs to be heated to achieve the pumpability or transferability of the fuel.

Singapore and future ECA areas Originally, APL used to be an American Company. Even after merger with NOL, APL still maintains the American face in American ports. The west coast of the United States is very involved in environmental issues. This makes it necessary for APL to be quite progressive compared to some other shipping companies.

After the EU SECA, which will be known as ECA onwards, the first ECA that will come about will most likely be North-West America (California, Vancouver). Mr. Alam does not expect Singapore to become an ECA area in the near future. Singapore is a very small country with quite a lot of wind; all pollution is blown away. There is a strong competition with ports in Malaysia and an ECA would therefore be commercially not useful to do. Tokyo Bay will probably be the first ECA in East Asia. This is mainly a hub in its own country and therefore has not the competitive issues that Singapore has. Furthermore, it has an environmental awareness that is bigger than other East Asian countries or cities. E.g. Hong Kong is not interested in the air quality at this point.

The public opinion of Singapore inhabitants is represented by the Singapore government in a way that satisfies them. They do not complain or protest. This does not only count for environmental issues but also for all other concerns. In Singapore, the strikes do not take place as the unions and the companies have a good cooperation with the government, who form a tripartite bonding, which ensures unhampered productivity.

MARPOL regulations and APL As an alternative to increasing the quality of bunker oil, ships can also use end-of-pipe techniques to reduce the amount of polluting emissions. However, APL is not fond of this solution. Scrubbers have a very big footprint and are very expensive. In addition, it leaves us with another residual. What to do with the cleaning water?

MARPOL regulations and refineries In the debate of IMO (MARPOL Annex VI) the IPIECA stated that they were not going to produce the intermediate desulphurized marine Heavy Fuel Oil in near future. The problem is that the IMO can not regulate the refineries and tell them what to do.

The refineries have a fear of not being able to get rid off their residual. Other markets for their residual could be to compete with coal in power plants or to be used as asphalt.

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One could say that the economy will take care of the production of the MARPOL requested type of fuel. Due to new regulations the market will make sure there is a demand for this product. However, the technology to produce this product is not yet there. The question is; should the technology be there first, or should the demand for the product be there first?

Since the investments will be very big, refineries are hesitant to invest: it will take a few years before the large demands will come. In the meantime other, less costly ways of getting low Sulphur fuel might be developed. Already investing refineries will then have lost their investment. According to mr. Alam, investments should be made in R&D to find a cheaper way of reducing Sulphur in fuel or reducing SOx in the exhaust as a post treatment technology. In addition, there are arguments that, other than acid rain, SOx or sulphate contributes in the cooling down of the earth.

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A.4 Interview with MPA NO. 1

MPA, Mr. Z. Alam Assistant Director (Shipping Regulation & Development) Shipping Division

Location: 456 Alexandra Road #21-00 PSA building Singapore 119963 Date & time: 29th of May 2008, 14:30-16:30 Contact: [email protected]

Introduction: Mr. Alam is Assistant Director (Shipping Regulation & Development) Shipping Division. Furthermore he is the chairman of the IMO Sub-Committee Bulk Liquids and Gases. This is the IMO Sub-committee that focuses on reducing air pollution from ships.

Stakeholders: 1) Are there local environmental organizations that are interested with the emissions caused by vessels? a. And if so, how are their concerns expressed and handled? In Singapore Government agencies such Environment, Health and National Development Ministries, NPARKS, MPA, educational institutes, industry associations deal with environmental issues. Different to Europe or other countries, people in Singapore do not usually put pressure on the Government agencies through organizations like Greenpeace in Europe. This is a result of the Governing agencies and other stakeholders e.g. industry, institutions etc. that react very fast to new needs of environmental acts; this means there is no need for the public to protest against (air) pollution.

2) To what extent do you think air pollution in Singapore is a result of emissions from vessels? A study carried out by Singapore Environment agency on environment in the 1990s shows that at that time 3,7% of all SOx emissions in Singapore were a result of shipping. The balance came from shore industries. Singapore reported the study to IMO when current MARPOL Annex VI was negotiated in the 1990s. There has been done a more recent study on the emissions of SOx and NOx and other relevant air pollutants from ships and the results will be looked at in the near future. If it turns out that the contribution of vessels has grown by large, Singapore might take more steps locally to improve the situation. (e.g. considering designation of Singapore as a ECA , although this seems very unlikely at this time).

3) To what extent do you think inhabitants are aware of air pollution within Singapore? a. Does their awareness contribute to protests? Government agencies and their partners in the industry and institutions regularly brief the persons interested in environmental issues on local nad international developments and regulations through conferences, seminars and workshops. Singapore air quality standards are in line with WHO. There are no reports of adverse health effects due to poor air quality. Hence, members of public do not have concerns on cleanliness of air. Singapore is one of the few IMO Members which is a Party to all Annexes of the MARPOL Convention. It is also a Party to IMO Civil Liability for oil pollution damage and the 1992 Fund Convention. It has also accepted and implemented all major IMO Conventions on safety. This demonstrates Singapore’s commitment to maritime safety and marine environment protection. This could not have been achieved without whole hearted support from Singaporeans, local industry and institutions and political leaders.

4) How would you describe the interests of the Port of Singapore considering bunker policies; more economical or more environmental? There is a link between both. The port of Singapore wants to maintain and enhance its position as No. 1 bunkering port but not at the expense of the environment. Our policy to accept all relevant IMO Convention including 2001 IMO Bunker Convention, stringent local requirement to phase out single hulled bunker tankers and air pollution requirements demonstrate that the Port of Singapore is a firm believer in sustainable development. The port of Singapore is used by many multinational companies and international

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ships coming from all corners of the world. If we do not meet global standards and regulations on environment protection and supply quality of fuel at competitive price, this will make these stakeholders to move to another port and Singapore will not be able to maintain its position as a leading bunkering port.

5) What is the Port of Singapore’s opinion of the agreements of MARPOL Annex VI as they were made during the last IMO meeting? a. Are these agreements the same as the goals that the Port of Singapore had before entering that meeting? b. Do you wish some things were different in this agreement? If so, what would you like to change? The agreements that are made at the last IMO MEPC meeting in April 08 are satisfactory. Although there are still some question whether or not the 0.1% low sulphur distillate requirement in Emission Control Area will create any problem in marine diesel engines and whether there would be adequate supply of low sulphur fuel oil in 2020, it is expected that engine and engine lubricant manufacturers and refiners will be able to resolve these issues when this part of revised Annex VI enters into force. The date of 2020 with a review in 2018 on the availability of 0.5% sulphur fuel takes care of the concern of the refineries and gives them breathing space to slowly adjust to the new situation. Although review in 2018 may show that supply distillates is not adequate until 2025, refineries world wide are expected to take actions to the increase the supply of distillates gradually keeping 2020 target date in mind.

Bunker market:

1) What are, according to you, the strong points of the port of Singapore considering the bunker market? a. What are the benefits that Singapore has and surrounding countries do not have that make Singapore the largest bunker port in the world? b. Strategic location for ships. Singapore is situated along the shipping route between Europe/Middle East and Asian economic power houses e.g. Japan, China and Republic of Korea. c. Availability of all relevant shipping services and excellent communication facilities. Time is an important factor for ships. This is important for the port of Singapore. You could actually see the port of Singapore as a supermarket. It has all facilities a ship-owner of shipping company needs. Quality of the product that is provided is another very important factor. As said before, time is the most important factor. Singapore is the busiest port in the world, No.1 container port and ship repair centre. It is also a leading oil refining centre. If a ship is already in Singapore it will bunker here as well since it might take extra time to get bunker somewhere else. In addition, Singapore bureaucracy is very efficient. This means that a ship can call a supplier anytime, 24/7, to order bunker and will be able to get it. This is very customer friendly.

Side note: Nearly three quarter of all bunker supplied in Singapore is imported from outside and not produced in Singapore refineries.

Quality of the bunker and being in the port already (time) are the most important factors to bunker in one port or another. Price differences between two ports may not be so big that it will be more important than those characteristics and will make shipping companies shift to other ports.

2) How do you expect that the regulations and laws on bunker oil (and its emissions) will develop? a. Do you expect that regulations will stay the same (as made in MARPOL Annex VI) in the up coming years? b. Or do you expect stronger regulations, international, or local? c. Do you for instance expect SECA areas in South East Asia? In Singapore, we do not generally prescribe additional standards to the standards prescribed by international conventions. There are exceptions e.g. stringent phasing out rules for harbour bunker tankers. At the moment we are not thinking of designating Singapore as ECA. I am not aware of any proposal for ECA in Southeast Asia. Internationally MARPOL Annex VI is expected to amended from time to time to make the requirements more stringent. Singapore will give effect to the amendments as and when these come into force internationally.

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3) Do you expect that Singapore will take a leading role in new regulations for bunker oil? a. Or will Singapore wait for international agreements as the IMO? The MPA has no intention to introduce additional local requirements. As a Party to MARPOL, Singapore has obligation to give effect to revised Annex VI when it comes into force internationally. Singapore is one of the first few countries which accepted Annex VI and it has been playing active role in IMO meetings on the revision of Annex VI.

4) The current regulations are mainly focusing on SOx and NOx, do you expect regulations on others substances in the future as well? a. Which ones do you think will be important? CO2 will get more and more attention in the near future. Unlike the Netherlands Singapore is not a Annex I country under the Kyoto protocol (KP). A recent UN conference in Bali did not make much progress in giving direction to IMO on the control of Greenhouse Gas (GHG) emissions from ships. After many serious recent natural disasters such as hurricanes and typhoons as Katrina (New Orleans) and in Myanmar, the world experts are more convinced that global warming is becoming a serious threat, and we need to do something about the greenhouse gases. In June there will be a meeting in Oslo and in 2009 a meeting in Copenhagen which will deal with these issues.

5) When removing Sulphur from bunker oil, an increase in CO2 exists: How do you think this trade- off should be handled? There is still some debate on whether or not reduction of SOx and NOx leads to an increase of CO2. However, if this is the case, this has to be tackled separately. As PM is the most important factor that needs to be reduced, and since it can be done at the moment through reduction of SOx IMO’s move to lower SOx in marine fuel oils was supported by overwhelming majority in MEPC 57 although they were aware that it may lead to additional release of GHG.

6) How do expect refineries to deal with the new MARPOL regulation? a. Do you expect them to adjust their processes and desulphurize their residual oils, or do you expect them to adjust their processes to make distillate? b. Or do you think they will not adjust their process, but they will try to find other users of their residual oils? c. Are you afraid that refineries might move to other countries where regulations are less strict? Refineries will eventually invest in new processes to produce desurphurized fuel or distillate. The investment will be worth their money; the market forces will make sure that the demand for these products remains. However, the regulations should not be implemented too fast as there will be no capacity to produce distillate. Therefore, the time gaps in the revised MARPOL Annex VI plan are a good start. Now, refineries have time to adjust their processes.

7) What are according to you other interesting options to reduce emissions from vessels? a. What specific improvements in bunker quality should be investigated? b. Or what ways of reducing the use of oil should be investigated? i. Reducing speed of vessels, using a kite to reduce fuel use, etc The OSLO meeting will discuss various technical, operational and market based measures to control GHG emission from ships. These include vessel speed reduction, use of silicon paint for hull painting, traffic control, fleet management, cargo handling operations & energy efficiency, Global bunker levy + Fund to buy credits, Voluntary commitments between economic sectors and governments etc.

National Research Foundation (NRF) NRF has several projects of which one is called: “clean energy”

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A.5 Interview with MPA, NO. 2

MPA, Mrs. C. Hoh and Mr. A. Leong Manager (Business Development) Marine Services Department and Assistant Manager (bunkering) Marine Services Department

Location: 7B Keppel Road #20-07 Tanjong Pagar Complex Singapore 089055 Date & time: 30th of May 2008, 11:00-12:00 Contact: [email protected] [email protected]

Singapore remained the top bunkering port in the world with 31.55mil tonnes of bunkers being delivered in 2007.

The bunkers are currently transported to the ships by bunker barges. At the moment, only Shell are delivering bunkers to ships through the use of pipelines.

There are several fuel bunkering standards being developed with the industry and are implemented in the Port of Singapore: • CP 60 - lays down the procedures and requirements for the delivery of bunker by bunker tankers to vessels in the Singapore waters, which includes the documentation, equipment and verification during a bunkering operation, covering the pre-delivery, actual delivery and post delivery. • CP 77 - specifies the practical procedures for bunker surveying on board bunker tankers and vessels which covers the procedures, documentation and equipment required for a bunker surveying job. • SS 524 (SS 524: QMBS is an effective and efficient management system covering the entire bunker chain from procurement of cargo to delivery of bunkers: Accreditation scheme which states the financial requirements, compliance with SS524 as well as meeting a set of key performance indicators (operation issues). All licenses are issued on an annual basis. Singapore is one of the few ports with bunkering standards in place. Moving forward, CP60 and CP77 will be combined into one bunkering standard. The CP60 had been used as a basis by ISO to develop international best practices.

There are 75 accredited bunker suppliers and 73 licensed bunker craft operators. MPA also licensed bunker surveyors, who are independent parties engaged during a bunkering operation. There are approximately 200 licensed bunker surveyors in the Port of Singapore.

In Singapore quantity measurements are manually calculated. This can lead to differences in measured quantities that are delivered by the barge and that are received by the vessel due to human error. However, such manual calculation does not lead to delays of ships. One of the main reasons for delay may be due to pilotage delays and have a chain effect over subsequent orders for the barge companies. Barges will berth along side to deliver bunkers to the vessel. However, barges are not allowed alongside tankers when they are doing cargo operations in the refineries or oil storage terminals due to safety reasons.

Barges use the so-called “milking system”, which means one load multiple supplies. Barges will procure their cargoes from the oil terminals or refineries and deliver to several vessels before for the next procurement. Around 20% of the barges are double hulled.

There are a few characteristics why Singapore is the top bunkering port: • Geographical location • A lot of containerships that come to Singapore • Efficiency of this port: bunkering can be done at the same time as cargo operations

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• Competitive Pricing - Singapore bunker is able to provide competitive bunker prices given its petroleum trading hub status. There are incentives given to vessels that lift bunkers only such as easier port clearance procedures and up to 40% concession on port dues at our Special Bunkering Anchorages. • Having bunkering standards in place to provide quality and quantity assurance. • Avenue for bunker disputes is clear and legal framework is established.

When comparing bunker prices to other ports, one should take in to account all costs. Even though bunker itself might be cheaper in Rotterdam, port dues and pilotage costs can eventually lead to a situation in which total prices for a ship do not differ that much between both ports.

Fujairah is a competitor of Singapore for bunkering. Economics still remained important to the vessels. Should that the vessels sail to Fujairah to get cheaper bunker over there. Price differences must be substantial to be worth while for the extra day taken.

Singapore is faced with crew shortages. On average 10 crews are required to work on board a barge. With about 160 barges in the port, this means that at least 1600 people work in this field. Singapore has suffer with crew loss to the Dubai.

In Singapore, the average Sulphur content is 3%plus, within the global sulphur limit 4.5%.

For more information go to bunkering services under www.singaporemaritimeportal.com

Of all bunker oil bunkered in Singapore, around 30% is produced by Singapore’s refineries. The rest of all bunker is imported from everywhere around the world through the traders and brokers.

Approximately 40% of the bunker in Singapore goes to the containerships.

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A.6 Interview with APL, NO. 2

APL, Mr. K. Tan Manager – APL Bunker Operations

Location: 456 Alexandra Road #06-00 NOL Building Singapore 119962 Date & time: 3rd of June 2008, 9:00-10:00 Contact: [email protected]

The MPA has drawn up the CP 60; this is a code of practice for bunkering by bunker barges/tankers. Furthermore, there is CP 77; this code focuses more on the surveyors. These are independent people taking samples and measures of quantity and quality of the bunker oil.

In Singapore the two largest refineries are Exxon (at Jurong) and Shell (at Bukom Island). The largest stakeholder among storage tanks in Singapore is Universal Terminal.

APL Container Ships that come to the Port of Singapore will stay in for approximately < 24 hours for feeder vessels and sometimes < 48hrs for line haul vessels. A big vessel will take around 48 hrs, while feeder ships need less than a day. This is quite fast. In Rotterdam and US West Coast Ports, there is an average of 2 to 3 days port stay.

Our general basis premise of Bunker procurement is based on 3 reasons: • The right price • The right quality (dependant on different ship engine bunker diet – 380cst or 500cst , MGO • At the right time (availability)

Of this small list, price and quality ranks as the most important one.

Based on current fuel prices about 50 to 60% of complete shipping costs is caused by the bunker prices. Taking advantage of the Differences in bunker prices at different port calls on a ship’s routes are very important e.g. For the Atlantic shipping routes calling Singapore and Rotterdam - this means that APL will try to fill up the ships with bunker as much as possible in Rotterdam (where bunker is about USD 20-30 cheaper) and do not always fill the ship up full completely in Singapore. Still 40% of all ships of APL bunkers in Singapore, 30% bunkers in Rotterdam and the rest is bunkered in different ports around the world (e.g. NY, Hong Kong, Fujairah).

Smaller shipping liners have more difficulties with the supply of bunker as large companies like APL have.

With the current volatility of fuel prices going escalating upwards, there is a credit squeeze experience by the local bunker suppliers – in the past based on say USD 250 per mt the supplier can supplier to eg. 5 vessels but now at USD 500 – 600 per ton they can supply to only 2-3 vessels – and this is also dependant on the payment terms they have with their customers. This credit squeeze also makes their banks having a tighter control on the supplier’s credit lines.

This has actually led to a new trend within the bunker supply world. Banks are now getting involved and may become indirect bunker suppliers themselves.

Barges are quite big in Singapore. The MV Pearl Naomi can carry HFO up to 10.000 mton and the MV Leadership is up to 7.000 ton.

In Singapore all bunker gauging and measurements are predominately done manually. This may sometimes lead to differences in measurements and can cause disputes between supplier and vessel owner or shipping company. The increasing bunker price makes these quantity differences between both parties more important as the costs will get higher.

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Sometimes a “cappuccino effect” takes place. This happens when there is excessive air pumped with the oil when pumped into the vessel. This results in a sort of foam layer on top of the oil. This causes improper measurements and quantities can not be calculated well.

However , Marine Port Authorities vigilance and with the implementation of the CP60 and CP77 , such disputes and incidents are handled in a professional and transparent manner , improving bunker operations activities tremendously over the years - making Singapore the premier port for bunkering in the world .

In our APL Fuel Management system – Marine Fuel is ordered 14 days in advance. On Average a ship will always have 3 spare days of fuel on board when sailing to another port. This is a safety measure.

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A.7 Interview with APL, NO. 3

APL, Capt. Solomon George Director Global Security & Environment.

Location: 456 Alexandra Road #06-00 NOL Building Singapore 119962 Date & time: 3rd of June 2008, 10:00-11:00 Contact: [email protected]

Singapore has rectified the Kyoto Protocol but does not belong to the Annex I countries. (To be found on www.NIE.gov). Furthermore, Kyoto is only applicable on the shore side. In Singapore there is a Oil Pollution Act (more information on: www.mpa.gov.sg)

Capt. Solomon George is belongs to the global security and environment department. This used to be spread all over the world but is now merged into one department in Singapore which has complete oversight of all environmental issues.

There are 9 APL terminals in the world. There will come a terminal on Maasvlakte 2 which is a consortium including APL.

The largest problem now to face will be reducing CO2. A rule of thumb is that 1 ton of fuel you burn produces 3,11 ton of CO2. According to BIMCO, 369 million ton fuel oil is used globally. 286 of this was HFO and 83 was MDO. The expectations are that in the year 2020, 486 million ton fuel oil will be used. This might change due to distillate regulations in 2020.

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A.8 Interview with APL, NO. 4

APL, Mr. Goh Teik Poh Chief Human Resource Officer

Location: 456 Alexandra Road #06-00 NOL Building Singapore 119962 Date & time: 9th of June 2008, 9:30-10:15 Contact: [email protected]

Until recently Mr. Goh used to work at the department of global security & environment and therefore knows a lot about the current situation of APL and the IMO regulations. Furthermore he was a representative of SSA (Singapore Shipping Association) during IMO meetings.

According to mr. Goh, there are no dissimilarities between the goals of APL and the goals of the SSA when it comes to environmental policies as a result of bunker oil. There are some principles that the SSA wants when it comes to new regulations for bunker oil: • Do not destroy the environment • Holistic approach • Pragmatic; not immediate, but a well managed, stepped manner to low sulphur.

The most important thing when introducing new regulations to minimize emissions of ships is to have a responsible approach.

The IMO regulations as they were stated in April 2008 are a good outcome according to both APL as well as the SSA. Although shipping companies might have wanted a longer period for the introduction of distillate, one can understand that compromises had to be made. The result that is there now is very good.

The oil mayors do not seem very eager to produce distillate at this point. They do not like to invest in this product. Although a holistic approach should be used to find the ultimate solution, this is not always a workable idea. It is therefore great that all stakeholders have come to an agreement on what to do with sulphur, but it remains to be seen if this solution is better for the environment at all. Although the regulations make sure Sulphur will be reduced, the amount of greenhouse gasses will increase. This is something that still needs attention.

Luckily, summer 2008 an IMO meeting will take place in Oslo that will take a look at these greenhouse gases.

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A.9 Interview with SPC

SPC (Singapore Petroleum Company Limited), Mr. S. P. Sivanandam and Mr. C. Prodduturi Refining Analyst Manufacturing and Manager Refinery Planning

Location: 1 Maritime Square #10-10 HarbourFront Centre (Lobby B) Singapore 099253 Date & time: 13-06-2008, 15:30-17:00 Contact: [email protected] [email protected]

Singapore Petroleum Company Limited (SPC) holds a 50% interest in the Singapore Refining Company Pvt. Ltd (SRC). The other half is owned by Chevron Corporation. This refinery is medium complex. SPC has been a long time bunker supplier and is a reputed supplier of bunker fuel in Singapore. The bunker oil is imported from different places around the world, for instance: Europe, the Middle East and South Korea. The bunker residue that is imported may not be a final product so the price difference between sources to Singapore drives the imports. Blending to final specification and used as bunker fuel or export to regional locations is carried out from Singapore.

At this point the demand for low sulphur bunker oil is not high, but once the IMO regulations are mandated, this may lead to higher prices for bunker oil.

SPC complies with all of the regulatory limits and standards set by the local and Singapore adopted international regulative boards (e.g. the Singaporean government and International Maritime Organisation (IMO). There is a steering committee that addresses various environmental issues in the oil industry; this committee is called the ‘Oil Industry Environment Steering Committee’ (OIESC). Other oil producers as BP and Exxon, Shell, SPC, Chevron and SRC are also in this committee. This committee communicates with the government on issues related to environment regulations pertaining to the oil industry in Singapore. SPC participated in the IMO meetings indirectly through a common delegation from Singapore. This delegation included industry representatives (shipping and OIESC) and the Maritime and Port Authority of Singapore (MPA).

The MARPOL regulations as they were made in April 2008 are not very supportive for refineries from an economical point of view. They result in extra processing and capital investment costs. Furthermore, overall affect of CO2 emissions is not very clear and some studies indicate they may increase when the new regulations are implemented, so there is a discussion whether or not these agreements are really a benefit for the environment. The implementation of low sulphur bunker oil globally in 2020 as stated in these agreements either needs large investments or a lot of low sulphur oil to blend other high sulphur fuel oils with. However, when blending oil below 1.0% sulphur, a compatibility problem leads to the separation of the oil.

The fact that a global regulation is now formed is not an immediate big problem for the refinery to meet the requirements in 2012. However, SPC opinioned to have these regulations come on-stream to be more gradually. Looking at the problem from a refinery point of view, for instance implementing more SECA areas would have been interesting.

There are two possible ways to meet the MARPOL regulations from a producers’ point of view: Producing low sulphur bunker oil or complete cracking of residual oil. The former one needs desulfurizing residue, blending or processing low sulphur feedstock and the later option leads to quality gas oils and complete destruction of residue. Both options seem to be not the best option looking at possible profit.

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SPC does not expect any immediate additional local regulations in Singapore with respect to bunker fuels. Singapore keeps an eye on the environmental impacts and global issues related to GHG emissions and is acceded to Kyoto protocol as non annex 1 country. Any change in regulation has to be a global change, as for Singapore it mainly depends on regional economies for the products produced /traded. However, if the surrounding countries are not catching up with global regulations, the level playing field will change and this will impact on decisions within Singapore. The neighbouring countries are very close! The surrounding countries of Singapore are developing countries. This means for example becoming a SECA area is simply too expensive for these type of countries. The economy is their main priority. The chances of these countries implementing a SECA area will therefore be very small. These countries try to deal with the environment in other ways, e.g. stop cutting forests. For Singapore this means that implementing a SECA will lead to a situation that is economically uninteresting.

At this point it is difficult to say how the SPC will respond to the new MARPOL regulations. There is local demand for bunker oil. Practically all other products in Singapore are exported. SPC is working on a long term strategy. An internal study is being done to explore the economical options for the refinery to meet the regulations as they come in effect. It is a possibility that diesel may be used as bunker in the future. There are debates on issue that when producing low sulphur diesel oil/ destroying the residue and using gas oil as bunker oil more CO2 is emitted than when burning residue itself, so it may not be better for the environment.

Interesting future options could be to sail on bio diesel. These could meet the fuel oil regulations. These should come from non food, sustainable resources.

The market will definitely be influenced by the new regulations. Bunker prices may go up. The question remains: How much? Will it be affordable?

The strong points of Singapore as a bunker hub are: • Strategic location • Price of oil (low compared to other South East Asian countries) • Oil trading hub • Political stability • Infrastructure

Singapore is a manufacturing hub: crude is imported and products are exported. The oil manufacturing capacity is very big. This makes Singapore an important bunkering hub. Furthermore, the Middle East might be having difficulties with political issues.

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A.10 APL, Questionnaire with Mr. K. Alam (per Email) Director Engineering Research & Energy Management, Technical Services

Date & time: 01-06-2008 Contact: [email protected]

This appendix holds a questionnaire with Mr. Alam from APL. The questions were sent to Mr. Alam per email and answered by email. The questions are written in bold. The answers are written directly underneath the questions and have the colour blue to indicate that these are the exact answers that Mr. Alam has given

Policy related questions:

1) To what extent is APL concerned with the environment? a. Does APL take initiatives to improve the environment itself? APL is fully committed to improving the international shipping related environment. In addition to complying with the International rules and regulations of the environment, APL undertakes many proactive approaches to gear up for the future regulations. APL is also involved in many environmental R&D projects, which are beyond the regulatory demands.

2) What are the most important factors for APL to consider when one speaks about lowering emissions and new type of quality of bunker oil? E.g.: a. The price of bunker oil? The price of fuel is of concern. But then, all operators will need to comply with the regulation and hence it will be an even playing field. The cost of operation will be high and if it is possible to pass it to the shippers and the consumers, then the ship operators like APL will not be that seriously affected by the price hike. b. The possibility of having to change ships to adjust them to different types of fuel? Changing ships will not be necessary, as most of the modern engines are able to burn the grade of fuel being recommended by the legislation. Nevertheless, some extra system retrofitting could be necessary to accommodate burning very low sulphur fuel. c. The environment? APL is concerned about the environment. But then like a pragmatic operator, we would like to see that the ships are not unduly affected in their trade and schedule owing to the availability or suitability of the grade of fuel being recommended. In this 21st century, technology often is regarded as the solution maker. More R&D are required to address the emission issue, be it at the pretreatment of the fuel or post treatment of the emission. d. ?

3) How does APL try to protect its interests in environmental discussions with other stakeholders, such as the government or during IMO meetings? a. Lobbying? APL attends IMO meetings and get involved in the drafting groups and working groups. It protects its interest through the technical arguments in these groups. With Government i.e. MPA, APL is involved in a constant dialogue along with other ship operators and SSA. Regular meetings are organized by MPA in this regards. b. Branch organizations? APL is involved in the ISO 8217 working group and CIMAC ( Council of Internal Combustion Engines) WG. APL is also involved in SSA technical group and DNV( Det Norske Veritas) Technical forum.APL is also a member of CCWG ( Clean cargo Working Group). c. ?

4) What is APL’s opinion of the agreements of MARPOL Annex VI as they were made during the last IMO meeting? a. Do you wish some things were different in this agreement? If so, what would you have liked change?

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Latest MARPOL agreement was very balanced and pragmatic. APL has no problem with this. The problem, we may face, is with the unilateral legislation from USA and EU. USA intends to have earlier implementation of the MARPOL rules and implementing few rules beyond the MARPOL.

5) What is APL’s opinion on using distillate or Heavy Fuel Oil in the future? APL has no problem with regard to the usage of distillate, as it will be an even playing field among the operators. The price is of concern, if this can not be passed down to the shippers and the consumers.

6) How do you expect that the regulations and laws on bunker oil (and its emissions) will develop? a. Do you expect that regulations will stay the same (as made in MARPOL Annex VI) in the up coming years? MARPOL targeted up to the year 2020. The regulations on ECA will be the same at MARPOL. But the global cap of 0.5%S fuel, which will be reviewed in 2018 may face some hurdle, if the refineries are not willing to budge in. But then, MARPOL kept provision for further postponement of this to the year 2025. By then, we feel that technology will have a breathing space to address the concerned GHG issue in an economically effective way. If the price of fuel remains high, the technology of conservation of energy or alternative energy will show up more and more. This is blessing in disguise. The concern is that there will be many unilateral action from USA and EU and possibly others on top of the MARPOL set regulations. b. Do you expect stronger regulations, international, or local? Yes. USA is already mulling the idea of bringing forward ECA rules of 0.1%S and implementing Shore Power Provision etc. EU will follow suit. c. Do you for instance expect SECA areas in South East Asia? Not so soon. If it were to be done, it ought to be through the ASEAN instead of through the individual state.

7) The current regulations are mainly focusing on Sox, PM and NOx, do you expect regulations on others substances in the future as well? a. Which ones do you think will be important? Halon and VOC has already been addressed in addition to NOx and SOx. CO2 is the next hot issue. IMO will discuss about CO2 at length in OSLO in June, 2008. reducing CO2 would basically by indexing it and encouraging operator to slow steam to conserve energy. Bunker levy is one such tool, which can be applied, to discourage operators to speed up their vessels.

8) Do you expect that Singapore will take a leading role in new regulations for bunker oil? a. Or will Singapore wait for international agreements as the IMO? Singapore's interest of bunker fuel at IMO is more for the refineries interest than that of 'ship operators. The crudes in Singapore refineries come from middle east, which are know as SOUR CRUDE, because they are high in sulphur. Rotterdam Crudes come mostly from Russia, which are SWEET CRUDE, i.e. low in sulphur. Reducing sulphur in Singapore refineries will cost more as they would need to blend with more of higher fuel grade. It is here, Singapore will loose its competitive edge. Since IPIECA is also reluctant for aggressive reduction in sulphur, Singapore may align itself with IPIECA.

9) How do you expect that ship-owners will deal with the new MARPOL demands? a. Do you expect that they will use new types of quality in fuels, or do you expect a growth in the use of scrubbers (or other end-of-pipe solutions)?

Scrubber footprint is huge. It costs almost like US$4 to 5 million per ship. Disposal of by- product Gypsum at sea need to be sorted out. Operation cost of the scrubber is also very substantial. Until 2020, the operator will need to deal with only ECA regulation of switching fuel during coasting. Operators will mostly switch to the required distillate instead of scrubber for this. Nevertheless, there is an estimate that by 2020, there will be 10% of the world fleet, which would be equipped with scrubbers. When global CAP of 0.5%S fuel sets in the year 2020, the usage of scrubber or other emerging technology could be a viable option. This again will depend on the differential cost of the residual fuel and 0.5%S fuel and that of a scrubber or other technology.

10) How do expect refineries to deal with the new MARPOL regulation? a. Do you expect them to adjust their processes and desulpurize their residual oils, or do you expect them to adjust their processes to make distillate?

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Global CAP of 3.5%S will be met by the refiners by blending the residual fuel. Even upto 1.5%S fuel for SECA is produced by blending. To meet the demand of 0.5%S fuel, further cracking and desulphurisation will be needed.

11) What are, according to you, other interesting innovations or techniques to reduce emissions from vessels? a. What specific improvements in bunker quality should be investigated? IMO recently invited ISO to look into the fuel specification, which would be related to safety of the vessels and crews and also the emission. APL is involved in ISO WG. In ISO, the debate continues on such specification. In addition to the normal specification, ISO most likely will include a few additional spec, which would ensure better combustability of the fuel and less undue chemicals and ingredients in the fuel. b. Or what ways of reducing the use of oil should be investigated? i. Reducing speed of vessels, using a kite to reduce fuel use, etc Many technologies and operations are considered. Among the technologies, we use silicone paint to reduce the drag in the water, which results in reduced consumption. We used Propeller Boss Fin Cap to reduce propeller vortex and hence reduce fuel consumption. We are trying out emulsified fuel to reduce NOx. We do trim adjustment to reduce fuel consumption. We optimize routing of the vessels, so that the vessels cover the shortest distance and do slow steaming when necessary to arrive at the berth in time and avoid time in anchorage. We retrofitted special injectors to have better combustion and reduce NOx. We humidified air for the engines to reduce NOx. We carry out total fuel management to reduce fuel consumption. We go for hardware fitted to the hull and state of art technology in the new building to reduce fuel consumption.

Economical/ Technical Questions:

12) What are, according to you, the strong points of the port of Singapore considering the bunker market? a. What are the benefits that Singapore has and surrounding countries do not have that make Singapore the largest bunker port in the world? E.g.: i. Strategic location for cargo ships? By virtue of Singapore's position as the busiest port in the world, many ships call Singapore. It has 237connectivities every day. No ship is going to steam extra mileage to the nearby ports to lift bunker. The same applies to Rotterdam. ii. Maybe the only deep sea port in this area? There are other deep sea ports. But the port of call is very important. iii. Relatively low oil price compared to other ports in South East Asia? Yes, among the regional ports, Singapore bunker price is cheap. Availability of grades of oil is also very important. Singapore provides various grades of oil. But in low sulphur fuel, Singapore market share is low. Operators pick up LSF in SECA area, where the rule applies and the price is also cheaper there.

13) How does APL deal with SECA areas? APL lifts most of their LSF at Rotterdam, where the price is lower. The vessels change over to LSF prior to the entry of SECA until departs from the last port. There is no problem in this area.

14) How does APL decide where they are going to get their bunker? a. Is it purely based on price? Price, Quality and Service are the three issues concerns APL. Additionally, APL deals with the supplier companies, who are sound in their financial return. b. Is it related to a guaranteed level of quality of the bunker oil? Quality if oil is decided by the ISO specification. Even within ISO spec, one fuel could be better than the others. This is a minor issue. c. Is there a relation to the location of bunkering and how much load there is on the ship at that time? Yes. There is a relation. Loading of bunker needs to be limited, if the load of the ship is such that the draft of the vessel exceeds the depth of the port and the coast. On the other hand, The ship may need to take bunker even when she is heavily loaded with cargo in order to give it more stability, especially when the cargoes are not loaded intelligently, i.e. the lighter ones at the bottom and the heavier ones at top. The

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extra load of bunker also contributes to higher consumption because of extra displacement of the vessel. But then, the price difference or arbitrage among the bunker lifting ports often weighs more than the extra bunker consumption owing to the bunker load. d. Are there specific deals with certain ports to bunker over there? There is no deal with the ports. At times, there is deal with the bunker suppliers of the port based on the rationale already described. e. Is bunker ordered per ship or for all ships at once? It is per ship. But then, at times, we order a certain volume for special grade of 500cst fuel for a number of ships from 2 or 3 different suppliers of 1 or multiple ports for a month or so. It is then based against the market price. f. Is bunker ordered on a local/global base? It is local base. But then, most of the time, even the lifting at different ports are arranged through the branch office of the suppliers based in Singapore owing to the time difference and better understanding.

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Appendix B: Technical Analysis______

The SADT model in figure 33 is an activity model. It shows all activities and inputs that need to take place to reach a certain end-state. In this case that would be emissions that came about due to the use of bunker oil. The arrows each represent a different type of input in the activity scheme. The rectangle boxes in the figure specify the activities. These specify each activity that eventually leads to the end product. The inputs, the arrows from the left side, represent consumer goods that are needed by the activity. For instance crude oil is needed to be able to import it the port of Rotterdam or Singapore. The outputs exit the activity boxes from the right and form the products that are produced by the activity. The arrows that come from the bottom of the picture symbolize the means and tools that are needed to accomplish the activity. E.g.: to transport oil you need a tanker or a bunker ship. From the top-down, the arrows indicate the controls that represent the orders and instructions that influence the execution of an activity. In this figure, there are no arrows drawn towards specific activities. There are two ellipses with general remarks of the type of regulations and rules that can be expected to be there. Although both ports have regulations and rules in this sector on the same topics, the substance and execution of these rules and regulations differ. It is therefore difficult to specify these regulations. The ellipses are there to emphasize that there are regulations and standards in both ports.

The model represents a global overview of the activities that are needed to get from crude oil the emissions that are a result of the use of bunker oil on ships. This leads to insight in the entire process and provides a list of actors and stakeholders that are involved in this process. This list can form a first input for the stakeholder analysis. Each activity will be elaborated in the main text.

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Figure 33, Simplified process from import of oil (Crude Oil and HFO) to emissions.

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Table 16, Import and Export of fuel oil to different countries per sulphur percentage [CBS Stateline, 2008] Import, Export Fuel Oil to Different Countries per Sulphur Percentage (2007, tonnes/a) Import Export Fuel Oil <= 1%S Total of Countries 1 320 667 3 402 091 France 150 789 1 117 671

Germany 109 187 57 441

United Kingdom 329 179 482 231 Greece - 106 864 Belgium 87 087 690 438 Norway 108 003 57

Finland 9 938 142 590

Russia 126 075 - United States of America

- 595 294

Import Export Total of Countries 23 249 300 14 617 201 France 2 375 869 265 896 Germany 951 174 335 883 United Kingdom 1 794 860 487 347 Denmark 175 871 14 352 Greece - 133 590 Spain 181 178 66 879 Belgium 1 552 153 3 617 789 Sweden 284 412 8 000 Finland 127 018 66 935 Switzerland 67 240 154 883 Fuel Oil > 1%S Estonia 3 119 768 12 837 Russia 6 209 685 244 134 Slovenia 56 257 427 031 Liberia - 130 676

United States of America 1 224 238 2 118 105

Canada 20 855 229 782 Panama - 104 966 Aruba - 1 748 067 Colombia 640 306 -

Syria - 115 940

United Arab Emirates - 119 456 Singapore - 3 704 269

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Table 17, Bunker quality in Singapore, Average Tested Values, June 2008. [Maritime and Port Authority, 2008c]

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Appendix C: Stakeholder Analysis______

Demarcation stakeholders In this stakeholder analysis the stakeholder within Singapore and Rotterdam are identified. Although several international operating actors are interested in this subject, most of them are only mentioned in the first step of this analysis. This is done because the main research question focuses specifically on Singapore and Rotterdam. European organizations, especially the European Commission, are taken into account since they can directly influence Dutch policies.

This stakeholder analysis consists of 9 steps: • Step 1. Involved Stakeholders • Step 2. Which stakeholders have significant/authorative responsibilities concerning this problem? • Step 3. Which stakeholders have other resources at their disposal that can influence the problem? • Step 4. From which stakeholders can be expected that they want to be involved eventually? • Step 5. Which stakeholders will probably not participate in the decision-making, but will be affected by the problem/solution? • Step 6. Formal relations between stakeholders: Formal chart • Step 7. Inventory of problem perceptions, interests, goals, gap, cause, means of influence/potential solution • Step 8. Resources, substitutability, dependency, critical stakeholder? • Step 9. Dedicated vs. Non-dedicated actors

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Step 1: Involved stakeholders

Stakeholders Rotterdam

Problem Owner: Port of Rotterdam Authority (PORA) The PORA is a public corporation (N.V.). It both has public as well as private responsibilities. The roles of the Port of Rotterdam Authority are mentioned in figure 34. An important role of the Port of Rotterdam Authority is that it functions as a landlord. The goal of the Port of Rotterdam Authority within this subject is to lower the emissions of ships that exist due to the use of bunker oil, without losing market share.

Figure 34, Roles of the Port of Rotterdam Authority [Port of Rotterdam Authority, 2008d]

Governmental Organisations (Rotterdam) • Municipality of Rotterdam The task of the municipality of Rotterdam is to look after the people living in Rotterdam. This is done for the safety, health and social quality of living in Rotterdam. Furthermore, economical welfare is highly important. • Harbour Master Division The Harbour Master Division is responsible for the shipping activities in the port. “It is his responsibility to ensure a smooth, safe, environmentally friendly and secure shipping handling” [Harbour Master Division, 2008]. The Port of Rotterdam Authority supplies the Harbour Master Division with an office and staff. • Province of South-Holland The province of South-Holland consists of the provincial board (Provincial states, the deputy states and the commissioner of the Queen) and their employees. The province forms the middle board between the government and the municipalities. Tasks of the province are found in the areas of environment, education, public transport, roads, medical care, culture, nature and landscape, tourism and recreation and public safety. • Dutch parliament The Dutch parliament represents the total governmental organization of the Netherlands. They want to achieve high economic welfare, high prosperity and safety for the public. The parliament is, for a large part, directly elected by the Dutch citizens. • Ministry of V&W; Ministry of Transport, Water Management and Public Works (Ministerie van Verkeer en Waterstaat). This ministry wants high safety in the port itself but also for the rest of the Netherlands. The ministry is only responsible for the policies as made by the parliament. The execution of these policies is done by the shipping companies and the refineries themselves. This ministry is responsible for shipping. International agreements concerning shipping, such as those made by IMO, will be transformed into Dutch laws by this ministry. o Transport and Water Management Inspectorate (Inspectie Verkeer en Waterstaat)

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The executions of the policies made by the ministry of V&W are controlled by the Inspectie of Verkeer and Waterstaat (Transport and Water Management Inspectorate). • Ministry of Foreign Affairs This ministry protects the international relationships: the international systems of laws, peace and safety business acquaintances, developing cooperation and protecting the interests of the Netherlands. • Ministry of VROM (Public Health, Spatial Planning and Environment) This ministry wants high safety for living and working areas and tries to accomplish a sustainable development of the living area. International agreements concerning environmental issues, e.g. from the European Commission, are implemented in Dutch law by the ministry of VROM. • European Commission The European Commission’s goal is peace, welfare, freedom and safety and economical growth for its citizens.

Private Stakeholders (Rotterdam) The private stakeholders can be divided into several different groups. First of all, there are the refineries. In Rotterdam there are five of these, of which two are owned by the same company. Furthermore there are bunker suppliers, bunker traders and companies that are both bunker supplier and trader. Within these last three groups a distinction can be made between dependent and independent bunker companies.

• Union Pétrolière Indépendente Européenne (UPEI) "UPEI is the association of independent European oil traders from most of the member states of the EU. They are mainly small and medium enterprises (SME), but all are independent from major oil companies and are active in all states of the European Union. Members of UPEI are active in all fields of crude oil production: that is in importing, wholesaling, retailing, distribution, logistics and refining - and some in gas, electricity, and renewable energies" [UPEI; Union of European Petroleum Independents, 2008].

• Refinery operators in Rotterdam: o BP (400.000 barrels per day [BP, 2008b]) o Esso Nederland B.V. (ExxonMobil) (195.000 bpd [Wikipedia, 2008b]) o Kuwait Petroleum Nederland B.V. (80.000 bpd [Wikipedia, 2008b]) o Shell Nederland Raffinaderij B.V. (Royal Dutch Shell) (416.000 bpd [Wikipedia, 2008b]) o Vlissingen Refinery (Total/Dow) (160,000 bpd [Wikipedia, 2008b]) This refinery is not located in Rotterdam, but in Vlissingen, in the Netherlands.

• Vereniging Nederlandse Petroleum Industrie (VNPI) The VNPI represents nine petrol industry companies in the Netherlands. These companies refine crude oil and bring their products to the market and sell these. The VNPI takes care of its members on a national and European level. It interprets the consequences of the law and regulations for its members [Vereniging Nederlandse Petroleum Industrie, 2006b]. • EUROPIA (European Petroleum Industry Association) “EUROPIA is a non-profit organisation that represents the downstream sector (refining and marketing) of Europe’s oil industry. EUROPIA acts on behalf of its members to contribute to the development of better regulation in relevant areas of European policy, while promoting and enhancing the reputation of the oil industry” [EUROPIA, 2008]. • CONCAWE CONCAWE has as slogan: “The oil companies’ European association for environment, health and safety in refining and distribution” [CONCAWE, 2003b]. It was first established by leading oil companies to carry out research on environmental issues relevant to the oil industry.

• NOVE (Dutch organisation for the Energy Branch (independent bunker companies)) NOVE is the branche organisation for the Dutch independent suppliers and traders of oil and gas products. NOVE enhances the entrepreneurial spirit in order to stimulate a profitable and sustainable environment for fuel suppliers [NOVE, 2008]. None of the oil majors are members. • Bunker suppliers: The company names of bunker suppliers are not listed here since there are over 50 of them. However, the Inspectie Verkeer en Waterstaat provides a list with all bunker suppliers in the Netherlands [Inspectie Verkeer en Waterstaat, 2008]. This is required by MARPOL Annex VI. There are only a few companies in

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this list that do not operate in Rotterdam itself. Furthermore, Bunkerworld provides short descriptions of quite a few of these companies [Bunkerworld, 2008c]. • Bunker traders: Bunkerworld also provides a list of bunker suppliers but makes a distinction between companies that are only trading bunker, supplying bunker or are doing both [Bunkerworld, 2008d]. For an overview of bunker traders I refer to the list as provided by Bunkerworld as referred to under bunker suppliers. Although some of these companies are also involved in the supply of bunker oil. • Bunker suppliers AND traders: For a list of bunker traders I refer to the list as provided by Bunkerworld as referred to under bunker traders.

• Ship-owners: The shipping companies can be divided in to different groups. First of all the companies might have different type of ships. A distinction can be made between container ships, tankers, and other type of loads. Furthermore a distinction can be made between shipping companies that operate on local scale and shipping companies that operate globally. The latter type is placed under `International´. o Koninklijke Vereniging van Nederlandse Reders (KVNR)/ Royal Association of Dutch Shipowners (only in the Netherlands) The management of interests of the ship-owners focuses mainly on maintaining and improving the international competitive investment climate on economical, social and operational level. It serves the interests of both small and large companies at different levels. However, on the subject of bunker issues the KVNR focuses on the local ship-owners as they are not represented on an international level [Brutel de la Rivière, E.J., 2008]. o European Community of Shipowners’ Associations (ECSA) This is an European organisation that unites all European ship-owners associations. “Its aim is to promote the interests of European shipping so that the industry can best serve European and international trade and commerce in a competitive free enterprise environment to the benefit of shippers and consumers” [European Community Shipowners’ Association, 2008]. o Shipping companies in Rotterdam There are a large number of shipping companies that are active in the port of Rotterdam. These are listed by Transport Guide Rotterdam [Transport Guide Rotterdam, 2008].

• European Sea Ports Organization (ESPO) ESPO represents sea ports from the European Union as well as several other ports in Europe. “ESPO’s mission is to influence public policy in the EU in order to achieve a safe, efficient and environmentally sustainable European port sector, operating as a key element of a transport industry where free and undistorted market conditions prevail, as far as practicable” [European Sea Ports Organization, 2008].

• VRC (The Association of Rotterdam Shipbrokers and Agents) The principal aim of the VRC is “to monitor ships’ agents interest’s in every respect. Much of our work involves keeping the port of Rotterdam attractive for ships and cargo. This means ensuring a fair balance between price and quality” [Association of Rotterdam Shipbrokers and Agents, 2008].

Other Stakeholders (Rotterdam) • Local citizens: These are the people who inhabit the area and work there. They have a right to speak because they own or occupy land and buildings in the area and have the right to a safe living environment. Although represented by the Dutch parliament on a national level, the local inhabitants can become an important player when they do not agree with the decisions made. Informing media and organizing petitions could be some of their tools to make their opinions clear. The municipality of Rotterdam alone already counts for 588.718 citizens [Centrum voor Onderzoek en Statistiek, 2007].

• Stichting de Noordzee/ North Sea Foundation North Sea Foundation is an independent environmental organisation. It is mainly active in the following fields: Shipping, fishery, education and awakening, spatial planning and protected areas in the North Sea. Air pollution due to bunker oil is one of their interests.

• DCMR Milieudienst Rijnmond (EPA) "The DCMR Environmental Protection Agency is the regional environmental agency of the local and regional authorities operating in Rijnmond, the larger 'port of Rotterdam'-area in the Netherlands. The Air

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Quality Section is one of the expertise sections of the DCMR Rijnmond Environmental Agency. The expertise of the Air Quality Section is used among other things for assessing discharges (emissions) to ambient air from industry, traffic (road and water transport)" [DCMR Milieudienst Rijnmond, 2008]. DCRM is responsible for the environmental permits in the Rijnmond Area.

• Deltalinqs Deltalinqs protects the collective interests of the industrial and port companies in the mainport of Rotterdam. Their activities can be summarized in the main subjects: Economy & Accessibility, Knowledge & Labour Market and Environment & Safety. In a wider reference, they support the activities to strengthen the competitive position of the port of Rotterdam and the long lasting development of the port area. Furthermore is supports the political and social support for the activities of the affiliated companies. One of their focuses is the theme called environment and safety [Deltalinqs, 2007].

Stakeholders Singapore

Problem Owner: Maritime and Port Authority of Singapore (MPA) The MPA is a governmental organisation. It is a regulatory body which also has a promotional role and invests in research and development. Furthermore, the MPA safeguards Singapore's maritime/port interests in the international arena. Just like the Port authority of Rotterdam, the Maritime and Port Authority of Singapore wants to lower the emissions of ships due to the use of bunker oil, without losing market share.

Governmental Organisations • Singapore Parliament The Parliament represents the vote of the citizens of Singapore. “The functions of Parliament include making laws, controlling the state's finances and taking up a critical/inquisitorial role to check on the actions of the governing party and the Ministries” [Parliament of Singapore, 2007]. • Ministry of Environment and Water Resources This ministry focuses on the environment and everything that has to do with that. Main topics are clean water, clean land, clean air and public health. The goal of this ministry is “to deliver and sustain a clean and healthy environment and water resources for all in Singapore” [Ministry of Environment and Water Resources, 2008]. o National Environmental Agency The National Environmental Agency is formed under the Ministry of Environment and Water Resources [National Environment Agency, 2002]. It focuses on the implementation of environmental policies. The main focus of controlling emissions of this agency is on the emissions originated on land. The regulations on emissions originated on sea are made on international level after which the Singapore government implements these. • Ministry of Trade and Industry The objectives of this ministry are to have a globalised economy where Singapore is the key node in the global network; to be a creative and entrepreneurial nation and to have a diversified economy [Government of Singapore, 2008]. • Ministry of Transport The ministry of Transport has been divided into a number of divisions. “The Sea Transport division oversees the following three key policy areas: enhancing Singapore’s position as a premier hub port, developing Singapore into an International Maritime Centre (IMC), and protecting the security of our port and sea lanes” [Government of Singapore, 2006]. • Ministry of Foreign Affairs “The ministries mission is to advance and safeguard the interests of Singapore and Singaporeans through effective diplomacy” [Government of Singapore, 2007].

Private Stakeholders • Refinery operators: o ExxonMobil “This refinery has two operating sites: one on the mainland (referred to as Jurong) and another on Jurong Island (referred to as Pulau Ayer Chawan or PAC). The integrated refinery processes some 605,000 barrels

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of crude into fuels and feedstock for our own chemical plants and customers each day” [Exxon Mobil Corporation, 2008]. o Singapore Refining Company Private Limited (SRC) “SRC is a joint venture between Singapore Petroleum Company Limited on one part and Chevron (namely, Chevron Singapore Pte. Ltd. & Chevron Trading Pte. Ltd.) on the other. Located on Jurong Island, SRC operates a refinery that is capable of processing 285,000 barrels of crude oil per day” [Singapore Refining Company Private Limited, 2008]. o Shell Pulau Bukom Refinery (Royal Dutch Shell) 458,000 bpd [Wikipedia, 2008b] o OIESC (Oil Industry Environment Steering Committee) This is a steering committee that addresses various environmental issues in the oil industry. Representatives of oil producers such as BP, Exxon, Shell Chevron and SPC are in this committee [Sivanandam S.P. and Prodduturi, C., 2008]. Although it is a steering committee and not an individual organisation it still has more power to influence the other stakeholders than the refineries would have had, when operating alone.

• Bunker suppliers: The company names of bunker suppliers are not listed here since there are over 50 of them. However, the Maritime and Port Authority of Singapore provides a list with all bunker suppliers in Singapore [Maritime and Port Authority of Singapore, 2008]. This is required by MARPOL Annex VI. Some of these companies are not only suppliers but also traders. Bunkerworld makes a distinction between those companies (although that list is not entirely complete) [Bunkerworld, 2008e]. • Bunker traders: For a list of bunker traders I refer to the list as provided by Bunkerworld as referred to under bunker suppliers. • Bunker Suppliers AND Traders: For a list of bunker suppliers that also are active as traders I refer to the list as provided by Bunkerworld as referred to under bunker suppliers.

• Ship-owners: There are a large number of shipping companies that are active in the port of Singapore. There is not one organisation that protects only the interests of all the ship-owners. However, the SSA (see: Other Stakeholders) represents their interests among the other interests they protect.

Other Stakeholders • Singapore Shipping Association The Singapore Shipping Association is an organisation that protects and promotes the interests of companies in Singapore that are busy in the shipping industry. Ship agents, bunker suppliers and ship owners; all are member of this organisation [Singapore Shipping Association, 2003a]. This organisation was formed after a merger of different organisations including two ship-owner organisations [Singapore Shipping Association, 2003a]. Therefore, almost all shipping companies are a member of this organisation and are represented by them. “The Association will take the view of the shipping industry as a whole. It will play its role to promote the interests of shipping in Singapore, ASEAN, Asia and the world. To do so, the Association will co-operate with other shipping organisations” [Singapore Shipping Association, 2003a]. Refineries are not a member of this organisation since shipping is not their main business.

• Singapore citizens The citizens of Singapore are not known for their protests or actions against policies. Generally speaking, one could say Singaporeans are quite happy with all the policies and regulations of the government. Public protests are therefore unlikely to take place.

Stakeholders International

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Governmental Organisations • International Maritime Organisation (IMO) “The International Maritime Organization is a specialized agency of the United Nations which is responsible for measures to improve the safety and security of international shipping and to prevent marine pollution from ships”. Its slogan: “Safe, secure and efficient shipping on clean oceans” [International Maritime Organisation, 2002]. o MEPC This is the sub-committee of the IMO that takes care of marine environment protection. It is therefore involved with bunker emissions and accompanying policies and regulations. o BLG This is a sub-committee of IMO focussed in Bulk, Liquids and Gases. This committee is focussed on the technical aspects of the bunker emissions.

Private Stakeholders • International Bunker Industry Association (IBIA) The IBIA is an association that supports all type of companies involved in the bunker industry. It provides them with information, education and communication. Furthermore, it represents the industry in discussions with relevant governmental and non-governmental organizations [International Bunker Industry Association, 2007]. • International Chamber of Shipping (ICS) The ICS is an international trade association for merchant ship operators representing all sectors and trades. “The aim of ICS is to act as an advocate for the industry on issues of maritime affairs, shipping policy, legal and technical matters, including ship construction, operation, safety and management, and to develop best practice in the industry” [International Chamber of Shipping, 2008]. • International Association of Ports and Harbors (IAPH) “Its principle objective is to develop and foster good relations and cooperation among all ports and harbors in the world by proving a forum to exchange opinions and share experiences on the latest trends of port management and operations. IAPH strives to emphasize and promote the fact that ports form a vital link in the waterborne transportation and play such a vital role in today's global economy” [International Association of Ports and Harbors, 2006]. • Oil Companies International Marine Forum (OCIMF) “The Oil Companies International Marine Forum (OCIMF) is a voluntary association of oil companies having an interest in the shipment and terminalling of crude oil and oil products” [Oil Companies International Marine Forum, 2008]. • The International Petroleum Industry Environmental Conservation Association (IPIECA) “IPIECA is the single global association representing both the upstream and downstream oil and gas industry on key global environmental and social issues. IPIECA’s programme takes full account of international developments in these issues, serving as a forum for discussion and cooperation involving industry and international organisations. IPIECA aims to develop and promote scientifically-sound, cost-effective, practical, socially and economically acceptable solutions to global environmental and social issues pertaining to the oil and gas industry. IPIECA is not a lobbying organisation, but provides a forum for encouraging continuous improvement of industry performance” [The International Petroleum Industry Environmental Conservation Association, 2008].

Shipping Companies (Containers): There are many containers shipping companies that sail all over the world including Singapore and Rotterdam. E.g. the ten largest container companies in the world all operate between Singapore and the Netherlands [Port of Rotterdam Authority, 2008c]. These 10 largest container companies (world wide) are shown in table 18. The main objective of these companies is to make profit.

Table 18, The 10 largest container companies in the world [Barry Rogliano Salles, 2006]. Company TEU capacity Market Share Number of ships A.P. Moller-Maersk Group 1,665,272 18.2% 549 Mediterranean Shipping Company S.A. 865,89 8.6% 299 CMA CGM 507,954 5.6% 256 Evergreen Marine Corporation 477,911 5.2% 153 Hapag-Lloyd 412,344 4.5% 140

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China Shipping Container Lines 346,493 3.8% 111 American President Lines 331,437 3.6% 99 Hanjin-Senator 328,794 3.6% 145 COSCO 322,326 3.5% 118 NYK Line 302,213 3.3% 105

• Shipping Companies (Tankers): o Intertanko Intertanko is the “International Association of Independent Tanker Owners: ensuring that the oil is shipped safely, responsibly and competitively” [Intertanko, 2008b]. Intertanko was one of the stakeholders that were very active during the revision of MARPOL Annex VI. It has proposed one of the alternatives that was proposed and taken into consideration during the IMO meetings April 2008 when a decision was made. o International Parcel Tankers Association (IPTA) The IPTA serves as an industry representative on the main committees and working groups dealing with issues which affect the Chemical/Product tanker industry. It is an NGO “dedicated to serving the needs of the IMO classified chemical and product tanker fleets” [International ParcelTankers Association, 2008]. o International Tanker Owners Pollution Federation (ITOPF) “ITOPF is a not-for-profit organisation established on behalf of the world's ship-owners to promote an effective response to marine spills of oil, chemicals and other hazardous substances” [International Tanker Owners Pollution Federation, 2007]. They provide information and education on pollution, mainly focused on marine life.

• Shipping Companies (Dry Cargo): o International Association of Dry Cargo Shipowners (Intercargo) “It represents the interests of owners, operators and managers of dry cargo shipping and works closely with the other international associations to promote a safe, high quality, efficient and profitable industry” [International Association of Dry Cargo Shipowners, 2007].

Other stakeholders

• Friends of the Earth International (FOEI) Friends of the Earth International is the self-proclaimed world's largest grassroots environmental network, operating on every continent. They “challenge the current model of economic and corporate globalization, and promote solutions that will help to create environmentally sustainable and socially just societies” [Friends of the Earth International, 2008]. Interesting to see is that FOEI does have a Dutch division, but does not have a Singaporean division.

• Greenpeace This is an international operating environmental organisation. Although not specifically working on the bunker quality issue, the organisation is generally interested in everything that influences the quality of air by emitting pollutants.

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Step 2. Which stakeholders have significant/authorative responsibilities concerning this problem?

Rotterdam Problem owner • Port of Rotterdam Authority Governmental organizations • Municipality of Rotterdam • Harbour Master Division • Ministry of V&W • Ministry of VROM • Dutch Parliament • European Commission • EPA

Singapore Problem owner • Maritime and Port Authority Singapore Governmental organizations • Singaporean Parliament • Ministry of Environment and Water Resources • National Environmental Agency (NEA)

International • International Maritime Organisation (IMO) (specifically the sub-commission: MEPC)

Step 3. Which stakeholders have other resources at their disposal that can influence this problem?

Rotterdam Private stakeholders • Representative organisations in the Netherlands as for instance: o KVNR o NOVE o VNPI o VRC Other stakeholders • North Sea Foundation • Local citizens

Singapore Private stakeholders • Representative organisations as for instance: o Singapore Shipping Association (SSA) o OIESC Other stakeholders • Local citizens

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Step 4. From which stakeholders can be expected that they want to be involved eventually?

Rotterdam • Port of Rotterdam Authority • Ministry of V&W • VNPI • KVNR • NOVE • VRC • North Sea Foundation

Singapore • Maritime and Port Authority of Singapore • National Environmental Agency (NEA) • Singapore Shipping Association (SSA)

Step 5. Which stakeholders will probably not participate in the decision-making, but will be affected by the problem/ solution?

Rotterdam • NOVE? • VRC? • Local citizens (non-united)

Singapore • Local citizens (non-united) • Non-united private stakeholders

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Step 6. Formal relations between stakeholders

Figure 35, Formal Chart Rotterdam

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Notes: • Every relation in this figure (as in the whole stakeholder analysis) only refers to THIS specific case; not in general. This is because “in general” is not of much relevance here; and secondly it would decrease the overview if unimportant relations would be showed/analyzed. • The EPA (DCMR) is responsible for environmental permits in the Rijnmond area. Therefore, the refineries are subject to their authority. EPA itself fulfils this task under the authority of the Province of South Holland. On the other hand, the refineries need to meet the regulations made by the ministry of VROM considering the emissions trade. The VNPI is the branch organisation that represents the refineries during most of the meetings with other stakeholders. • The Port of Rotterdam Authority is a landlord but, despite the name, does not have authority in this particular issue. The Harbour Master Division does have authority in this issue since it is responsible for all shipping activities in the port. This includes safety and environment. Furthermore, the Harbour Master Division is responsible for the draw up of the port act. This port act then needs to be passed by the municipality. • The Ministry of V&W has hierarchical relations with all industries in the port that are involved in this problem (ship-owners, bunker companies and refineries). These relations are indicated in the figure via relations with several other actors. Some of the major actors also have direct contact with the ministry of V&W. E.g. Shell sometimes has direct contact with the ministry. For the clarity of this picture, these influential relationships are not indicated with arrows between the ministry and the industries. Only the influential relations with the branch organizations are indicated. • Although the port industries will have to comply with the regulations and measures as made by the ministry of V&W, Harbour Master Division or EPA, the port industries have a strong voice. Each type of industry involved in this problem has a branch organization that represents the interests of these stakeholders. • All European stakeholders are left out of this figure since the objective of this research is to find a way of cooperation between Rotterdam and Singapore and not to find a way of cooperation between Europe and Singapore. The European Commission is identified in this picture, despite its international character, since it has a direct hierarchical link with the ministry of V&W and the Dutch parliament.

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Singapore Singapore Parliament Citizens Ministry of Trade and Industry Legend: Ministry of One-sided arrow: hierarchical relation Environment Two-sided arrow: representation relation and Water Arrow with dotted line: supervision relation Ministry of Arrow with dashed line: influential relation Resources Transport

National Environmental Agency

Maritime and Singapore OIESC Port Authority of Shipping Singapore Association

Bunker Refinery Ship Bunker Bunker Supplier Operators Owners Suppliers Traders and Traders

Figure 36, Formal Chart Singapore

Notes: • Again; every relation in this figure (as in the whole stakeholder analysis) only refers to THIS specific case; not in general. This is because “in general” is not of much relevance here; and secondly it would decrease the overview if unimportant relations would be showed/analyzed. • Since Singapore is a country as well as a city, there is no difference between local citizens and citizens of the country Singapore. Therefore, Singapore citizens are indicated as being represented nationally by the Singaporean parliament. • Under ‘normal’ circumstances, the Maritime and Port Authority falls under the authority of the Ministry of Transport. However, in the case of environmental issues (like in this research) the ministry of Environment and Water Resources is the ministry that actually has the authority. • The Maritime and Port Authority of Singapore regulates and licenses port and marine services and facilities. Furthermore, it manages vessel traffic in the Singapore port. • The National Environmental Agency and the Maritime and Port Authority of Singapore can both develop measures and regulations that are obligatory for all actors in the port. It depends on the type of measure which one is the stakeholder implementing the measures.

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• The Singapore Shipping Association is an organization representing different types of companies in this area. It is the only branch organization and therefore supports a lot of stakeholders. By representing all these stakeholders, it has a lot of knowledge and therefore influence on the decision-making actors. • The port companies involved in this problem (as indicated by the five blocks on the bottom of this figure) do have direct contact with the Port Authority and have some influence on it. However, their relationships remain primarily hierarchical. Therefore, only this relation is indicated in the picture.

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Step 7. Inventory of problem perceptions, interests, goals, cause, means of influence/potential solution

Stakeholders Interests Goal Gap between Causes of this Means to steer and find/reach Rotterdam goal and gap consensus about solution expected situation Port of • High economic welfare • Maximizing throughput in port A new policy can The level playing • Can help managing the Rotterdam of port of Rotterdam of Rotterdam negatively field might change decision-making process Authority • Clean environment • Safeguarding the public’s influence the due to the • Lobbying to get an agreed plan • Good public health health and safety economy implementation of with all involved stakeholders • High safety of • Safeguarding environment in New regulations a new policy • Research about measures that living/working areas port and surroundings could lead to a reduce emissions due to the decline of income use of bunker oil (e.g. lower port • Access to the media dues) Harbour • Clean environment • Safeguarding safety and in port No gap, except The level playing • Can draw up a new port act Master • Good public health • Safeguarding environment in that a new policy field might change which includes new measures Division • High economic welfare port can negatively due to the and regulations • Safeguarding economic influence the implementation of • Research about possible activities in Rotterdam economy a new policy measures Municipality • High prosperity • Safeguarding the public’s No gap, except for The level playing • Needs to pass the port act of Rotterdam • High safety health possible loss of field might change before it is implemented, • High number of • Optimizing employment economical due to the therefore has authority over inhabitants possibilities activity implementation of content of this act. • Nice living environment • Safeguarding economic a new policy • Lobbying to get an agreed plan activities in Rotterdam with all involved stakeholders • Research about measures that reduce emissions due to the use of bunker oil Province of • Prosperity of area • Safeguarding the public’s No gap • Lobbying to get an agreed plan South- • High numbers of health with all involved stakeholders Holland inhabitants • Optimizing employment • High safety possibilities

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• Safeguarding economic activities in the province of South-Holland Dutch • High economic welfare • Safeguarding the public’s No gap; the • Lobbying in Europe in order to Parliament • High prosperity health and safety current parliament get more support for • Clean environment • Safeguarding environment and cabinet are environmental friendly policies • High public’s health • Safeguarding economic relatively ‘green’. and safety activities Ministry of • High safety • Maintain the position of A new policy can The level playing • Formal decision-maker V&W • High public health Rotterdam as the largest port of negatively field might change • Can manage the decision- • High economic welfare Europe influence the due to the making process • Safeguarding the level playing economy. implementation of • Lobbying to get an agreed plan field of Rotterdam New regulations a new policy with all involved stakeholders • Safeguarding the public health could cost the • Research about measures that and safety ministry (e.g. by reduce emissions due to the subsidies) use of bunker oil • Access to the media Ministry of • High safety of living/ • Safeguarding environment No gap • Lobbying to get an agreed plan VROM working areas • Optimizing the space with all involved stakeholders • Clean environment development policies • In charge of emission trading • Sustainable • Maintain an environment development of living friendly living place environment • Safeguarding public’s health Ministry of • Good economical • Maintaining the good relation No gap • Lobbying in internationally in Foreign relationship with with colleagues in Singapore order to get more support for Affairs Singapore • Maintaining/ developing a good environmental friendly policies • Good economical relation with colleagues around relationship with (other) the world foreign countries European • High economical • Safeguarding the economic No gap • Lobbying to get an agreed plan Commission growth Europe activities with all involved stakeholders • High public safety and • Safeguarding the public health • Research about measures that health in Europe and safety of Europeans reduce emissions due to the use of bunker oil Union • High economic welfare • Safeguarding continuation of New policies New policies • Lobbying to get an agreed plan

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Pétrolière • High safety economic activities might lead to new might require a with all involved stakeholders Indépendente • Continuity of sector • Operate at lowest possible (high) investments higher quality of Européenne costs or decline in oil or lead to a (UPEI) • Produce with highest possible demand for reduction of the profit bunker oil use of bunker oil Vereniging • High economic welfare • Safeguarding continuation of New policies New policies • Lobbying to get an agreed plan Nederlandse • Safety economic activities might lead to new might require a with all involved stakeholders Petroleum • Continuity of oil sector • Operate at lowest possible (high) investments higher quality of • Research about measures that Industrie in Netherlands costs or decline in oil or lead to a reduce emissions due to the (VNPI) • Produce with highest possible demand for reduction of the use of bunker oil profit bunker oil use of bunker oil • Access to the media EUROPIA • High economic welfare • Safeguarding continuation of New policies New policies • Lobbying to get an agreed plan • Safety economic activities might lead to new might require a with all involved stakeholders • Continuity of oil sector • Operate at lowest possible (high) investments higher quality of in Europe costs or decline in oil or lead to a • Produce with highest possible demand for reduction of the profit bunker oil use of bunker oil CONCAWE • High economic welfare • Safeguarding continuation of New policies New policies • Lobbying to get an agreed plan • High safety economic activities might lead to new might require a with all involved stakeholders • Clean environment • Implementing sustainable (high) investments higher quality of • Good health solutions for environment, or decline in oil or lead to a • Continuity of oil sector safety and health demand for reduction of the bunker oil use of bunker oil NOVE • High economic welfare • Safeguarding the bunker sector New policies New policies • Lobbying to get an agreed plan • High safety • Optimizing employment might lead to new might require a with all involved stakeholders • Continuity of bunker possibilities (high) investments higher quality of • Access to the media sector or decline in oil and higher demand for prices of oil, bunker oil furthermore it can lead to a reduction of the use of bunker oil Royal • High economic welfare • Safeguarding the position of Bunker can The level playing • Lobbying to get an agreed plan Association • High safety ship-owners (especially short- become more field might change with all involved stakeholders of Dutch • Continuity of the sector sea shipping companies) expensive locally due to the • Access to the media

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Shipowners implementation of (KVNR) a new policy EPSO • Sharing information • Develop good relations ad No gap • Research among ports cooperation among ports in Europe • Promote waterborne transportation VRC • Low fuel prices and • Ensuring a fair balance Small gap; an new New regulations • Lobbying to make a strong port dues between price and quality policy could lead can result in point for ship agents • High quality of cargo to a situation higher prices (fuel • Knowledge handling which is less prices and/or port • Access to the media beneficial for dues) Rotterdam in comparison to competitors Local • High employment rate • Safeguarding the living No gap • Protesting Citizens • Optimum safety (incl. conditions and the area • Access to the media health) to live in area • Economic prosperity North Sea • Clean and healthy • Safeguarding the environment No gap • Lobbying to get an agreed plan Foundation environment • Reducing the pollution caused with all involved stakeholders • Good public health by shipping activities • Research about damage that is done by different substances in emissions • Access to the media EPA (DCMR) • Clean and healthy • Safeguarding the environment No gap • Lobbying to get an agreed plan environment in with all involved stakeholders Rijnmond • Research • Access to the media Deltalinqs • High economic welfare • Safeguarding the environment A new policy can The level playing • Lobbying to get an agreed plan in port of Rotterdam • Safeguarding continuation of negatively field might change with all involved stakeholders • Clean and healthy economic activities in port of influence the due to the • Research environment in Rotterdam economy implementation of • Access to the media Rijnmond a new policy

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Stakeholders Interests Goal Gap between Causes of this Means to steer and find/reach Singapore goal and gap consensus about solution expected situation Maritime and • High economic welfare • Safeguarding economy in port A new policy can The level playing • Can help managing the Port Authority of Port of Singapore of Singapore negatively field might change decision-making process of Singapore • Clean environment • Safeguarding environment in influence the due to the • Lobbying to get an agreed plan • Good public health port and surroundings economy implementation of with all involved stakeholders • High safety of working • Safeguarding the public’s New regulations a new policy • Research about measures that areas health could lead to a reduce emissions due to the decline of income use of bunker oil (e.g. lower port dues) Singapore • High economic welfare • Safeguarding economic A new policy can The level playing • Lobbying in neighbouring Parliament • High prosperity activities negatively field might change countries and internationally in • Good public’s health • Safeguarding the public’s influence the due to the order to get more support for and safety health and safety economy implementation of environmental friendly policies a new policy Ministry of • Clean environment • Minimizing the air and sea No gap, except • Lobbying in neighbouring Environment • Good public’s health pollution that new countries and internationally in and Water and safety • Safeguarding the public’s regulations could order to get more support for Resources • High economic welfare health and safety cost the ministry environmental friendly policies • Safeguarding economic (e.g. by subsidies) activities National • Clean environment No gap • Formal decision-maker Environmental • Good public’s health • Minimizing the air and sea • Can manage the decision- Agency and high safety pollution making process • Safeguarding the public’s • Lobbying to get an agreed plan health and safety with all involved stakeholders • Research about measures that reduce emissions due to the use of bunker oil Ministry of • Maintain the position of A new policy can The level playing • Lobbying to get an agreed plan Trade and • High prosperity Singapore as the largest negatively field might change with all involved stakeholders

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Industry • High economic welfare bunker port of the world influence the due to the • Safeguarding the level playing economy implementation of field of Singapore a new policy Ministry of • Good economical • Maintaining the good relation No gap • Lobbying internationally in Foreign relationship with with colleagues in Netherlands order to get more support for Affairs Netherlands • Maintaining/ developing a good environmental friendly policies • Good economical relation with colleagues around relationship with (other) the world foreign countries Refinery • High economic welfare • Safeguarding continuation of New policies New policies • Lobbying to get an agreed plan operators • Continuity of oil sector economic activities might lead to new might require a with all involved stakeholders • High safety • Operate at lowest possible (high) investments higher quality of • Research about measures that costs or a decline in oil or lead to a reduce emissions due to the • Produce with highest possible demand for reduction of the use of bunker oil profit bunker oil use of bunker oil Bunker • High economic welfare • Safeguarding the bunker sector New policies New policies • Lobbying to get an agreed plan companies • Continuity of bunker • Optimizing employment might lead to new might require a with all involved stakeholders sector possibilities (high) investments higher quality of • High safety • Operate at lowest possible or a decline in oil and higher costs demand for prices of oil, • Produce with highest possible bunker oil furthermore it can profit lead to a reduction of the use of bunker oil Ship-owners • High economic welfare • Safeguarding the position of Bunker can locally The level playing • Lobbying to get an agreed plan • Continuity of the sector ship-owners (especially short- become more field might change with all involved stakeholders • High safety sea shipping companies) expensive which due to the • Operate at lowest possible will increase the implementation of costs costs a new policy • Produce with highest possible profit Singapore • High economic welfare • Safeguarding continuation of all New policies New policies • Lobbying to get an agreed plan Shipping • Continuity of oil sector economic activities in port of might lead to new might require a with all involved stakeholders Association in Singapore Singapore (high) investments higher quality of • Research about measures that • High safety in port or a decline in oil or lead to a reduce emissions due to the

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demand for reduction of the use of bunker oil bunker oil use of bunker oil • Access to the media

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Step 8. Resources, substitutability, dependency, critical stakeholder?

Stakeholders Important resources Degree of Degree of Critical Rotterdam substitutability dependency stakeholder? Port of • Knowledge about local Not substitutable High Yes Rotterdam situation Authority • Knowledge about port activities • Good contacts with all stakeholders Harbour • Realization power Not substitutable High Yes Master Division Municipality • Realization power Not substitutable Moderate Yes/No of Rotterdam Province of • Responsible for Not substitutable Low No South- environmental permits in port Holland Dutch • Hindrance power Not substitutable Low No Parliament • Approve of ministerial budgets Ministry of • Realization power Not substitutable High Yes V&W • Competence to develop policy regarding the reduction of emissions due to bunker oil • Stimulation through subsidies Ministry of • Competence to develop Not substitutable Low No VROM policy regarding the reduction of emissions due to bunker oil • Stimulation through subsidies Ministry of • Network of knowledge and Not substitutable Low No Foreign contacts in different countries Affairs European • Stimulation through subsidies Not substitutable Low No Commission Union • Knowledge about production Substitutable Low No Pétrolière process of bunker oil Indépendente • Hindrance power Européenne (UPEI) Vereniging • Knowledge about production Non substitutable Moderate – Yes/No Nederlandse process of bunker oil high Petroleum • Hindrance power Industrie (VNPI) EUROPIA • Knowledge about production Substitutable Low No process of bunker oil • Hindrance power CONCAWE • Knowledge about production Substitutable Low No process of bunker oil

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• Hindrance power NOVE • Knowledge about bunkering Non substitutable Moderate – Yes/No process high • Hindrance power Royal • Knowledge about ships and Non substitutable Moderate – Yes/No Association their engines high of Dutch • Hindrance power Shipowners (KVNR) ESPO • Hindrance power Substitutable Low No VRC • Hindrance power Non substitutable Moderate – No • Knowledge about prices in low competitive ports Local • Hindrance power Substitutable Low No Citizens • Media interference North Sea • Hindrance power Substitutable Moderate Yes/No Foundation • Knowledge about specific damage of each substance in emissions EPA (DCMR) • In charge of environmental Non Substitutable Moderate Yes/No permits in port • Knowledge about specific damage of each substance in emissions Deltalinqs • Knowledge about local Non substitutable Low No situation • Good contacts within port of Rotterdam

Stakeholders Important resources Degree of Degree of Critical Singapore substitutability dependency stakeholder? Maritime and • Knowledge about local Not substitutable High Yes Port situation Authority of • Knowledge about port Singapore activities • Realization power Singapore • Hindrance power Not substitutable Low No Parliament • Approve of ministerial budgets Ministry of • Competence to develop Not substitutable Moderate No Environment policy regarding the reduction and Water of emissions due to bunker Resources oil • Stimulation through subsidies National • Competence to develop Not substitutable High Yes Environment policy regarding the reduction al Agency of emissions due to bunker oil • Stimulation through subsidies • Realization power Ministry of • Realization power Not substitutable Moderate No Trade and • Competence to develop Industry policy regarding the reduction of emissions due to bunker

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oil • Stimulation through subsidies Ministry of • Network of knowledge and Non substitutable Low No Foreign contacts in different countries Affairs Refinery • Hindrance power Substitutable Low No operators • Knowledge of production process of bunker oil Bunker • Knowledge about bunkering Substitutable Low No companies process • Hindrance power Ship-owners • Knowledge about ships and Substitutable Low No their engines • Hindrance power Singapore • Knowledge about production Non substitutable Moderate – No/yes Shipping process of bunker oil high Association • Hindrance power

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Step 9. Dedicated versus non-dedicated actors

Dedicated Actors Non-dedicated Actors Non-critical Critical Actor Critical actor Non-critical actor actor Same • Port of • North Sea • Ministry of V&W • Dutch Parliament perceptions, Rotterdam Foundation (NL) • Ministry of VROM goals and Authority (NL) • National (NL) interests (NL) Environmental • European • Maritime Agency (SGP) Commission and Port • Ministry of • Province of South- Authority of Environment and Holland (NL) Singapore Water Resources • Local citizens? (NL (SGP) (SGP) and SGP) • EPA (NL) • ESPO (NL) • Municipality of Rotterdam (NL) • Harbour Master Division (NL) Different • VPNI?(NL) • Refinery • Deltalinqs (NL) perceptions, • SSA? companies • Ministry of Trade goals and (SGP) (non-united) and Industry (SGP) interests (SGP) • EUROPIA (NL) • Ship-owners • UPEI (NL) (non-united) • CONCAWE (NL) (SGP) • Ministry of Foreign • Bunker Affairs (NL) companies • Ministry of Foreign (non-united) Affairs (SGP) (SGP) • NOVE? (NL) • KVNR? (NL) • VRC (NL)

Note: To make a clear distinction between Dutch (or Dutch related) organizations companies and Singaporean organisations and companies, letters have been placed after each organisation. The Netherlands: NL, Singapore: SGP.

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