50 Lucrative Lucre - Ship Management International

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL 3

50 Lucrative Lucre …a ratings to riches storyAre Filipino Captains really earning four times the salary of their Prime Minister and if so,how is this new found wealth affecting their lives?

COVER STORY

SHIPMANAGEMENT FEATURES

16 How I WorkSMI talks to two industryachievers and asks the question: How do you keep up with the rigours of the shipping industry?

21 Training for the task aheadAs Chief Executive Officer ofV.Ships’ Shipmanagement division, Bob Bishop is chargedwith steering an industry juggernaut. He spoke to SeanMoloney about the challengesahead

24 On My MindOle Stene is Managing Director of Aboitiz Jebsen Bulk Transport Corporation and Chief Operating Officer of Jebsen Management AS. He is also the newly appointedPresident of InterManager

T H E M A G A Z I N E O F T H E W O R L D ’ S S H I P M A N A G E M E N T C O M M U N I T Y ISSUE 4 NOV/DEC 2006

NOTEBOOK

6 STRAIGHT TALK

9 Pedersen swaps Thome for TESMASvein Pedersen has joined Eitzen Maritime Services as President for EMS Ship Management

10 V.Ships to triple seafarer pool Company unveils plans to boost crew numbers to 60,000

10 Phew! What a relief!Professionalism and operational integrity is alive and well in the V.Ships camp even if it does means losing an owners' fleet

11 No ‘free lunch’ for IMOThe bunkering industry has reacted angrily to IMO’s decision to phase out residual fuels in an attempt to tackle the growingproblem of ship emissions

13 Executive stressWasting office time!

13 Dot com intrigue on the P&I frontInsurers remain non-plussed over P&I internet-based alternative

13 Suez Canal to expandEgypt is planning to spend $1bn to expandthe Suez Canal by 2010, but analysts arequestioning its economic viability

14 Box vessel calls top the restContainer shipping proves its 10 year dominance

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SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 20064

TRADE ANALYSIS

LIFESTYLE

REGIONAL FOCUS

MARKET SECTOR

BUSINESS VIEWPOINT

SPOTLIGHT

83 European and Asian newbuilding roundup

29 Teekay Shipping

LETTERS

20 Mailbox

92 On the catwalkThe Murcielago LP640 was already the fastest Lamborghini everbuilt. Now it has been given a professional make-over just in time forChristmas…

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

BUSINESS OF SHIPPING

30 Burning objectivesSulphur emissions are a hot topic, but the debate is set to continuewith increased scientific understanding and new ideas providing morequestions than answers

76 AdHocDigitally Exposed!Papalexis: getting intellectualGun tottin' trainers end up inchoppy waterSounding offISSA glitz in Singapore

88 Solid outlook for bulkmarket optimistsAnalysis by Jarle Hammer, Shipping Adviser at Hammer MaritimeStrategies

26 Agents - Swimming against the tideThe perennial issues of falling income due to downward pressure onagency fees and increasing workload, due to the agent’s enhanced rolein the exchange of information between the ship and shore, continue toimpact on the health of the port agency industry

58 Dun & Bradstreet Country Riskline Report for SINGAPORE

72 Stripping-out one product from anotherWith implementation of the revised MARPOL Annex II and IBC Codejust weeks away, owners, operators, managers and charterers of prod-ucts and chemical carriers should have got their act together by now

LIVE

80 Objects of desire Things that make you go oooh!

38 Cyprus - Striding for growthThe admonishment of Turkey by Brussels in early November for failing to lift its ban on Cyprus-flagged ships was largely expected butwill have been greeted with nothing more than passing interest in thecorridors of power in Nicosia and the shipping offices in Limassol

60 Hong Kong/SingaporeA force to be reckoned withDespite soaring office rents and risingwages it is still business as usual for theshipmanagement industry in Hong Kong.And any attempt by Singapore to establisha position of strength in the tanker manage-ment market will only go to underline thestrength of the region in helping to dominate this market sector

68 Anglo-Eastern - Singularly focussedWhile there are definite advantages to being large, it doesn't meancompanies like Anglo-Eastern are immune to the problems affectingthe industry

84 Bridge Systems - Offering the navigator a helping handAdvances for bridge watchkeepers' technological and practical needs

NEWBUILDING

Hair Oil - Mopping-up!

DISPATCHES

50 Lucrative Lucre … a ratings to riches storyAre Filipino Captains really earning four times the salary of theirPrime Minister and if so, how is this new found wealth affectingtheir lives?

54 A new kind of warfare By Emmanuel VordonisNew ships are coming onto the market: owners are taking deliv-ery of huge fleets and in order for the ships to be staffed we’regoing to get into warfare on prices and wage increases

56 A day in the mind of a PSC inspectorPort state control detentions can put a black mark on a ship operator's profit as well as its reputation. But are inspections reallysomething to be feared? Andy Pierce joined a vessel inspection tofind out what today's inspectors are really looking for

BOOK REVIEW

82 What I’m readingWith Douglas Lang, MD, Anglo-Eastern (UK) plus reviews ofEngland’s Mistress and Box Boats: The Story of Container Ships

The Shipping BusinessMagazine today’s owners andmanagers have been waiting for

Inever really thought that size mattered!Indeed, there are those stalwarts who believethat small really is beautiful because it pro-motes greater understanding of what you

have and what you can give. It is preferable to theexistence of larger shipmanagement combinesthey say, because there is never any compromiseover personal service. The Customer is King andwe should be there 24/7, at the drop of a hat, totell him that in whatever way he wants telling.

The business ethics, I agree with. The cus-tomer is always right and as a service industrythird party managers should be mindful not onlyof his needs but of the needs of the customers heis trying to satisfy. But for the size issue: I am notso sure.

Because while I am constantly reminded aboutthe need for personal service within the industryand the downsides associated with the conse-quences of consolidation through mergers andacquisitions, the whole industry is besotted withexpansion. There is a determined effort by someof the smaller and medium-sized third party man-agers to take advantage of the growth in popular-ity of their sector and grow their fleets exponen-tially. It is as if they are proud to be known assmall enough to care and deliver but only as longas they are at the vanguard of a drive for growth.I suppose it's not really being a small fish in asmall sea but being a medium sized fish in anocean.

Oslo-based Barber Ship Management wentpublic in the summer by claiming it wanted a20% share of the global third party shipmanage-ment market by 2011. And a handful of compa-nies we have spoken to at random, haveannounced restructuring plans that are part of ageneral strategy to at least double their managedfleets within this period. So the race is on and,while the stakes might not be that high, therewards are certainly worth investing for.

But on the flip side, and there is always a flipside, how can we really expect the industry to

cope with this extra business. After all, the scep-tics amongst us could be excused for clinging tothe notion that one of the main reasons shipown-ers are interested in third party managers isbecause they believe they have the resources toman and crew their ever expanding fleets.

But they don't! We all know the problems fac-ing the crewing sector and if owners think a thirdparty ship manager can man his vessels with amonth's notice, without having to rob Peter to payPaul, then he is largely mistaken. Many of thelargest and most respected ship managers haveadmitted such and have even turned down busi-ness because they can't cope at such short notice.

So it is clear that crewing remains at the heartof the expansionary thrust driving this industryforward. But any quality third party managerworth his salt knows this and will have surelytaken it onboard as part of his overall strategy forgrowth. V.Ships have. They claim in this maga-zine that they have a strategy to near triple theirseafarer pool to 60,000 by 2010 and they havehired a head hunter to help them achieve thisgoal. It would seem that the gloves are off in thefight for predominance.

Whatever it says for the machinations betweenthe major players as far as the growth of managedfleets and managed crewing pools is concerned,remains to be seen. What is clear is that the sea-farer is now clearly king! Lets hope he doesn’t letthis new found attraction and interest mask thereasons why he really joined this fine industry.

Sean Moloney

STRAIGHT TALK

6 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006

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Long Live the King!

Welcome to Ship Management International

9NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL

NOTEBOOKSHIPMANAGEMENT NEWS AND REPORTS FROM AROUND THE WORLD

The Singaporean shipmanagement communityhas lost one of its staunchest leaders followingthe resignation of Svein Pedersen as ManagingDirector of Thome Ship Management.

Confusion surrounded the reasons behindhis decision to leave which was swift in itsnature but SMI can confirm that he has joinedEitzen Maritime Services as President for EMSShip Management, a group more commonlyknown as TESMA.

TESMA's decision to snap up Pedersen issomething of a shrewd move as he is viewed as

a quality and well-connected operator in theshipmanagement sector. One other very largeship management competitor was known to beinterested in contacting him after hearing of hisdecision to leave Thome, SMI can reveal.

Pedersen will join TESMA during the firstquarter of next year and will move toCopenhagen with the task of spearheading itsdrive to strengthen its position within the third

party shipmanagement market. He will stream-line the operation of six offices in Europe, onein India and one in Singapore. TESMA is theworld's third biggest chemical vessel ownerwith approximately 80 chemical carriers inaddition to LPG and approx 30 vessels on thirdparty ship management. A total of 120 vesselsare managed with an additional 200 vessels oncrew management.

He will report to Annette Malm Justad whotook over as CEO of Eitzen Maritime Servicesfrom April 1st this year.

She told SMI that growth was very muchpart of TESMA’s reorganisational plans at themoment and that it wanted to “maintain astronger position in the third party managementsector.” She did not rule out TESMA acquiringone of its competitors as part of its drive forgrowth. “We want to be part of the consolida-tion move,” she said.

Svein Pedersen believes in the personal sideof shipmanagement and deems it important tobe approachable. He recently told SMI: “Ibelieve in people and the empowerment of peo-ple, that’s very important for me. There are somany different aspects to this industry andthere is a need for so much focus so if youbelieve you can do it all by yourself then I thinkyou have to rethink.” ■

Pedersen swaps Thome for TESMA

SMI can confirm that SveinPedersen has joined EitzenMaritime Services as Presidentfor EMS Ship Management, agroup that is more commonlyknown as TESMA. He will bemoving to Denmark as a result

TESMA is the world's thirdbiggest chemical vessel ownerwith approximately 80 chemicalcarriers in addition to LPG andapprox 30 vessels on third partyship management. A total of 120vessels are managed with anadditional 200 vessels on crewmanagement

NOTEBOOK


The sigh of relief emanating fromV.Ships' Avenue de Fontvieille HQmust have been as loud as thewhoops and hollers coming from the

board rooms of the Monaco ship manager'soil major clients: professionalism and opera-tional integrity is alive and well in theV.Ships camp even if it does means losing anowners' fleet.

High costs and disputes over technicalissues were reported to be behind the deci-sion by Italian ship owner Enrico Bogazzi todrop V.Ships as manager of around 50 ves-sels, almost exactly a year after the arrange-ment began. However, it appears the splitmay have been forced through an allegedreluctance by V.Ships to reduce the level ofmanagement service it offered.

Mr Bogazzi has a very close relationshipwith V.Ships supremo Tullio Biggi: indeedthey went to school together and have seen each other's careers flourish since. So itwas hardly surprising that V.Ships ended upmanaging the Bogazzi fleet.

While the divorce was very amicable,Enrico Bogazzi was reported as saying, iron-ically, “we were not happy. Probably.”

“V.Ships is a verysophisticated companyand we have very old scrapvessels. But it wasn’t justabout price. It was veryexpensive, but technicallywe also had some argu-ments,” he told the press.

This was a point echoedby a source very close to the deal who toldSMI: “It takes two to tango and putting theinitial enthusiasm aside, you can't upgradethings that are scrap, for nothing. You need acommitment to finish the project.”

Sources close to Bogazzi say the first 10ships under crew and technical managementwere handed back to Bogazzi in September.The process will continue at around 10 shipsper month for practical purposes, with expec-tations that the entire fleet will be broughtback under Bogazzi's management by the endof the year.

V.Ships President Roberto Giorgi said thetwo companies had “different strategies andpriorities”, while declining further commenton the reasons behind Bogazzi’s decision.

He also sought to downplay the loss of

the sizeable Bogazzi fleet as part of the normal course of business, adding that“every year we have 150-160 ships comingin and a churn of about 100 ships for variousreasons.” He claimed that even with the loss of Bogazzi, the company’s roughly 900-vessel fleet was still 43 ships up on last year.

Still on the V.Ships front, the much publi-cised decision by major investor CloseBrothers to realise its gains in the Monaco-based ship manager is unlikely to be conclud-ed until next Spring, we hear. And there willbe reluctance from other shareholders deter-mined to 'stay for the ride' to accept any newinvestor with less than acceptable motives.Likely interested parties? Another equityinvestor! Let's see! ■

Phew! What a relief!

V.Ships to triple seafarer pool by 2010V.Ships has nailed its crew development plansfirmly to the expansionary mast by announc-ing a strategy to near triple its global seafarerpool within the next three years and it hashired a head hunter to spearhead this growth.

The world’s largest ship manager currentlyboasts a seafarer pool of 23,500 but confirmedit has set a target of 60,000 seafarers by 2010,to be achieved by recruiting from inside aswell as outside the industry.

Bob Bishop, V.Ships ShipmanagementChief Executive Officer, told SMI: “One ofthe things we did last year was to employ ahead hunter and just as you have head hunters

for accountancy, why wouldn’t you apply thesame facilities and procedures for crew. Theirsole job is to increase the number of seafarersavailable to V Ships.

He dismissed any accusation that V.Shipsmay ultimately be adding to the poachingproblem gripping the industry.

“If you look at the issue of poaching I don’tthink that can ever be seriously levelled atV.Ships. We have masters who have been withus for a number of years but who have beenpoached by companies prepared to upset thewhole process across the industry for theirown short-term needs. And this is in actual

fact, making the problem evenworse going forward, becauseincreasingly you are seeing the sea-farers earn more than PrimeMinisters of their country,” he said.

V.Ships will also add to itsgrowing seafarer pool by tradition-al means. “We are going to sourcethem from the usual sorts of placesthat you would expect, but alsosome new ones,” said Bob Bishop.

“We have opened five new crew

management offices this year, and we haveopened up in areas that we weren’t in beforesuch as Myanmar, so it’s more of the same interms of the locations, but it is more focusedwithin those locations. This is where therecruitment drive is helping.”

He added: “I think people are attracted towork for V.Ships for all the reasons we wellunderstand ourselves. But if you just take theLNG sector alone, 160 plus ships are poised tocome into the market, so consider the sea staffthat will be required for these ships.

“Sadly a lot of people haven’t given seriousthought to this, they have just assumed theywill be there. Given the volume required, weare one of the few companies which can offerthe security of supply because there is aninevitable flow of people from dry cargo totankers, to LPG and from LPG to LNG. Andone can bury one’s head in the sand and pre-tend it won’t happen and that people will stayin their sectors, but the guy standing on thetanker sees what the LPG master is getting,who in turn sees what the LNG master is get-ting and guess where they want to go,” hestressed. ■

NOTEBOOK

The bunkering industry has reacted angrily to an IMO decision to press forward with theidea to phase out residual fuels in an attempt totackle the growing problem of ship emissions.

Don Gregory, Chairman of the InternationalBunker Industry Association, argued that in thecomplex world surrounding emissions “therewas no such thing as a free lunch”, and stressedthat technology may offer a better alternative.

“We do recognise with reducing emissionsthat one way to help is to have a lower sulphurfuel. But it isn’t the only solution and you canget better results by doing it in different ways.Would you close down coal fired power stations just because they have sulphur in them and they produce soot? No, you say theyshould have a stack treatment system to catchthe soot and wash out the sulphur,” he reasoned.

The move to adopt distillates in favour ofresidual fuel was one of four proposalsapproved by the Bulk Liquids and Gasses(BLG) Subcommittee as IMO seeks to updateMarpol Annex VI regulations.

Don Gregory said it would not be possiblefor refineries to convert all of the existingresidual fuels to distillates, stressing such a move could aid global warming and have

serious health implications.“From a greenhouse gas point of view it has

serious implications,” he said. “Running ondiesel fuel will produce more fine particulates,and it is generally agreed by the experts that it isthe fine particles that get ingested into your lungsand cause cancer. It’s the fine particles that causethe majority of the damage and if we go over todiesel we will be producing more of them.”

Despite the criticism Intertanko - which putforward the proposal - believes it is making animportant contribution to the debate surround-ing the Annex VI update.

“Very little is controlled or regulated on thefuel that the ship is using,” said Dragos Rauta,Intertanko Technical Director. “We feel thatgreener fuel specifications can’t be ignored –it has to be part of the discussion.” ■

No ‘free lunch’ for IMO

“We do recognise with reducingemissions that one way to help is to have a lower sulphur fuel. But itisn’t the only solution and you canget better results by doing it in different ways”


NOTEBOOK

According to a survey by America Online andSalary.com, the average worker admits to frit-tering away 2.09 hours per eight-hour workingday doing nothing that could benefit hisemployer. And this does not include lunchtimes and scheduled tea breaks.

Top of the list at 44.7% of the time wasted issurfing the internet for personal gain, followedby socialising with co-workers at a worrying23.4%. The average worker feels it importantto spend at least nine minutes a day conductingpersonal business, while they will spend atleast half that amount just staring into space.

If you see your salesman speeding off in hiscar, mid-morning, don't worry, he is just exer-cising his personally-believed right to spend3.1% of his wasted time at work running per-sonal errands. As for planning his personal

social diary, employers should leave theirprized employee alone for two minutes a day torealise this need.

As for arriving late and going home early,that is the least of your problems.

Employees say they're not always to blamefor this wasted time. As many as 33.2% ofrespondents cited lack of work as their biggestreason for wasting time, while 23.4% said theywasted time at work because they believe theywere underpaid.

Sole employees even divulged other waysthey wasted their time at work, such as primp-ing in the bathroom mirror and having runningraces up the staircase with co-workers. Onerespondent said: “The hurried walk around theoffice is not only a great way to look like youare busy, but also a good cardio exercise.” ■

STRESSEXECUTIVE

The insurance market appeared confused andnon-plussed about an innovative new projectwhich it is claimed will revolutionise the marineinsurance market by among other things usingthe powers of the internet to capture some of themarket share currently dominated by the P&IClub establishment.

The joint Hull and P&I venture, which isunderstood to be nearing finalisation under thebanner of Vega Marine, is reported to be thebrainchild of Terje Adolfsen, a former insurancemanager with Bergsen Marine, and KareFranseth, who held a similar position withTorvald Klaveness.

When questioned by SMI, Terje Adolfsenadded to the confusion by confirming that VegaMarine had already been established and he wasinvolved in it but added: “We are working onvarious ideas in various directions in insuranceactivities but there is a very long way to go. I amnot denying anything but I cannot confirm any-thing either at this stage.”

Somewhat reassuringly, he did promise fur-ther information when something was 'for-malised'. Previous reports have suggested thepair have big ideas to use the internet to changethe face of existing hull insurance practices.

Bjørn Hildan Managing Director and CEO ofleading Norwegian company BluewaterInsurance revealed he was aware of market gos-sip regarding the new company and stressed hewas very interested to see how the pair intendedto employ the internet as a means of doing busi-ness. But as he opined, even in today’s technol-ogy-obsessed world previous attempts by hullinsurers to utilise the internet have been blightedwith technical and communication difficulties.

“I know the individuals concerned,” BjornHildan said. “They are both very professional

people with extensive market knowledge andexperience. If anybody can pull it off it is them.”

A fixed premium scheme offering wealthyoperators a reported $1bn cover is said to be thefundamental aim of the P&I branch of the busi-ness but only if they are prepared to risk bigdeductibles.

Clear details have yet to emerge, with keyplayers in the insurance market seemingly igno-rant to the plans of the Norwegian pair, butstressing a desire to know more.

The news will come as a blow to existingP&I players who are already under pressure fol-lowing accusations that smaller companies arepaying for the honour of sharing a Club withsome of the industry’s main players.

“Those ship owners who make up the Clubs’boards of directors, and so set the level ofincrease, appear to have a tendency to avoidpaying it themselves,” according to the annualP&I report of the brokering group Tysers.

“If each Club’s largest 20 members all paidthe premium required by their records, Clubswould return underwriting surpluses and gener-al increases of the magnitude seen in recentyears would be consigned to history,” the reportconcluded. ■

Dot com intrigue on the P&I front Suez Canal toexpandEGYPT is planning to spend $1bn to expandthe Suez Canal by 2010, but analysts arequestioning the economic viability of thisgrand project, latest news reports have sug-gested.

The Suez Canal Authority is contemplat-ing making this investment to attract moretanker and container traffic as vessels onlong haul are getting larger. Under the plansthe canal would be deepened by 10 ft to han-dle ships with a 72-ft draught and widenedby 17% to around 365 m.

“We want to deepen and widen the canaland create more bypasses to handle futurehuge tankers,” Admiral Ahmed Fadel, chair-man of the Suez Canal Authority reportedlytold Bloomberg.

It follows swiftly on the heels of the deci-sion by Panama to expand the size of thePanama Canal. Some 78% Panamaniansvoted in October to support a $5.25bn projectto build a third set of locks capable of han-dling 12,000 teu containerships, suezmaxtankers and capesize bulkers.

The Suez Canal Authority is keen toattract very large and ultra large crude carri-ers that carry Middle East crude to Europeand the US. But with more Middle Eastcrude cargoes going to Asia and the Sumedpipeline operating through Egypt carrying oilto the Mediterranean, there may not be thedemand from tanker markets for a widercanal, said analysts.

Others suggested the canal’s wideningcould benefit container shipping better,allowing larger ships to got through takingAsian cargo to Europe. ■

NOTEBOOK


Container shipping has been the star performerof the past decade with the increase in vesselcalls by container ships at the world's majorport destinations outstripping those of anyother vessel type, SMI can reveal.

According to data released from Lloyd'sMIU, there were 312,443 container ship callsthroughout the whole of last year against

152,305 in 1995. This compared with thetanker sector which was the second best per-former at 284,869 vessel calls, some 56,402calls more than was recorded a decade earlier.

The rise in passenger ship demand is also evi-dent with 121,919 vessel calls made in 2005against 74,399 in 1995. Dry cargo vessels alsoperformed well, rising by 40,732 vessel calls in

the 10 years to 161,904 in 2005, Lloyd's MIUsaid. Vessel calls by general cargo ships fell byjust over 18,000 during the 10 year period to424,442.

A total of 1.61m vessel calls were made inthe designated areas last year compared with1.23m 10 years ago, illustrating the growth intrade that has happened. ■

Vessel Calls By Area and Vessel Type 2005

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

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

312443 161804 39916 424442 98620 121919 29782 144156 284869

Vessel Calls By Area and vessel Type 1995

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

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

152305 121072 33959 442580 42379 74399 34985 109143 228467

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

Box vessel calls top the rest

HARRY GILBERTChairman, International Transport Intermediaries Club (ITIC), andformer CEO of The Wallem Group, Hong Kong

“I have the interaction and the interests, but I can work from home if I

wish. I can also work on my own interests, so it’s a good compromise

as far as I’m concerned.”

Restoring classic cars and motorbikes in the idyllic Cheshire country-side is quite literally a world apart from the municipal hustle and bustleof Hong Kong. And when Harry Gilbert retired from Wallem, a life inrural England seemed like a dream come true.

But after leaving the Wallem hot-seat, Harry soon missed the day-to-day contact with the industry he joined as a 16-year-old cadet. “When Iwas working full-time I didn’t think I would take up anything resem-bling full-time employment [after I retired]. But if you can only playgolf on a Saturday morning for all of your working life and then some-body says: ‘You can play golf seven days a week’, you get fed up withplaying golf after a couple of weeks,” he explained. “It isn’t quite aseasy to switch off as one imagines.”

Now, four years after returning home to England, Harry remains onthe board of Wallem UK. He is also chairman of ITIC and CEO of thediversified marine service company the Charente Group. “I think I havethe best of both worlds now,” he said. “I have the interaction and theinterests, but I can work from home if I wish. I can also work on myown interests, so it’s a good compromise as far as I’m concerned.”

However, Harry admits working from home creates its own chal-lenges. “You have to be very organised. You have to devote a certainamount of the day to the job. It’s very easy to get sidetracked and notdo that, but I find I’m spending quite a bit of time visiting variousoffices. My week is largely split between working a couple of days athome and visiting one of the offices. Although I could be away for theentire week if we have board and management meetings scheduled.”

Despite the challenge of balancing his various commitments, Harryis sure working from home helps him when making key decisions.“When I was with Wallem, I was responsible, on a day-to-day basis, forthe entire organisation. The pressures were more intense. Now, becauseI have this overarching responsibility, but not on a 'day-to-day sittingbehind the desk moving the paperwork backwards and forwards basis',

the pressure is certainly less. This gives [me] the opportunity to think alot more – to actually consider where the company should be going. Ihave the opportunity to take a distant, ‘helicopter view’ and make moremeasured and considered decisions,” he said.

Harry has a chief operating officer at Charente who runs the compa-ny on a day-to-day basis. However, his role is still hands-on andrequires him to travel in the UK and abroad. Fortunately, his businesstrips are less rushed than they once were allowing him to mix businesswith a little pleasure. “My family has now grown up and flown the nest,so my wife can often come with me. If I have a couple of days inLondon, she can come down with me and flex the credit card while I’mdoing what I need to do,” he joked.


workHow I

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

SHIPMANAGEMENT HOW I WORK

“It wasn’t too bad in Hong Kong, my wife could come with me, butoften I was in Taiwan for a day, then Tokyo the following day, and per-haps, Shanghai on the way back. Living out of a suitcase and checkinginto a hotel at five at night, and checking out again to catch a flight atfive in the morning doesn’t thrill my wife a great deal,” he continued.

Having spent his working life travelling the world - first onboardships and later as a leading ship management figure - Harry is wellplaced to comment on the issues facing the industry today. “Legislationcontinues to pile up. I am concerned for the seafarers themselves,because I feel disappointed at the potential amount of litigation that cancome down on the shoulders of the seafarer - nine times out of 10through no fault of their own. The move towards the criminalisation ofthe seafarer is a very, very bad one. It puts more and more pressure onpeople.

“I think people don’t look at seafaring as a long-term career any-more. They see it as a chance to make money for a few years and thenleave, which I think is causing its own problems in the industry.” Whenquestioned, he agreed that a lot of things had changed the perception ofa life at sea, “but obviously ships are not getting as much time in portas the used to, therefore the senior officers in particular don’t get theopportunity to have a break. There are many more inspections and thereis more work to do in port, in a shorter amount of time. The potentiallitigation against the seafarer is a problem that has to be taken into con-sideration. All of these pressures build up – especially in this day andage where going away from home, particularly when you have a wifeand family, is a difficult thing to do.”

Fortunately for Harry Gilbert, ‘retirement’ has allowed him timeaway from shipping to dedicate to the other love of his life – restoringclassic cars and motorbikes. One of his first jobs when he returned toEngland was to build a workshop in his garden, complete with a small

office to store technical drawings. “I have got a 1954 MG TF which isin need of restoration. But about 18 months ago I brought an AC Cobrareplica, which I’m generally refurbishing and am busy transplanting anew engine and gear box into. That’s the winter project in the hope ofgetting it on the road again for next spring,” Harry explained.

“It’s nice to be able to pick those interests up and put them downagain. This is what I like about the mixture of work and retirement.After a few days working underneath a car, to put a suit on again andtravel up to Liverpool makes a pleasant change.”

CAPTAIN CHARLES VANDERPERRE Founder and Chairman, Univan Ship Management

“Some people like to play golf or other sports, but I like the office.

I like the job. This keeps me young even though I’m 84.”

Captain Charles Vanderperre recently fuelled speculation that he wasset to retire when he revealed he had sold a 50% stake in his companyto the Clipper Group. Now those same tongues are set to be wagging onoverdrive following his announcement that current Univan ChiefAccountant Mr AS Maniyar has been chosen as heir to the UnivanCrown.

However, Captain Vanderperre has ruled out the prospect of retire-ment, and is determined to continue in his current position as one of theship management industry’s most colourful characters. Ship manage-ments’ very own Godfather still has no plans to voluntarily step-down.

“There will be no change to what I do at the moment,” CaptainVanderperre said when questioned whether his role would change inwake of the Clipper deal. “There are no plans to retire – work is mypleasure. I have a friend in Holland who was asked when she was plan-ning to retire. She said: ‘it depends on God’. But it also depends on peo-ple who work with you and their motivation.”

This is not a surprising stance for a man who leaves home at 6:45 inthe morning and walks the 45 minute journey to work, six days a week,and only allows himself an extra 30 minutes in bed on a Sunday beforeheading to the office.

“I like the job, it keeps me young – it’s as simple as that,” CaptainVanderperre explained. “If you are active all your life and you retire,then I should say frankly, you die. There is a banker in Belgium whosaid: ‘The older I get the more work becomes the most important thingin my life – even more important than love.’ As long as you can walkand talk there is a job for you somewhere, I believe.

“I started Univan in 1973 when I was already in my 50s. At that ➩

SHIPMANAGEMENTHOW I WORK


Life essentialsCar(s): A 1954 MG TF, an AC Cobra (Replica) and

seven classic motorcycles “in need of tender loving care”

House(s): Family home in Cheshire, UK

Fact: During his time at Denholm, Harry went from Chief Engineer to Chief Executive in 11 years

“about 18 months ago I brought an ACCobra replica, which I’m generally refurbishing and am busy transplanting a new engine and gear box into. That’s the winter project”

time I was too old. You don’t start a company as a 51-year-old, you starta company when you are much younger – 40 or 45. But it has been inexistence now for nearly 33 years, and I’m still quite busy keepingyoung.

“Some people like to play golf or other sports, but I like the office. Ilike the job. This keeps me young even though I’m 84. I come into theoffice every morning at 7:30am and I’m still around at 8:00pm. Atlunch time I take a one hour rest. I have a sofa in the office where I canget some peace.”

However, Captain Vanderperre is concerned that there are very fewyoung people who share his enthusiasm for the shipping industry.“Sadly, less people are attracted into shipping these days as young peo-ple want more of a social life. There are many jobs available ashore. Anengineer can work in the refinery very easily, because a refinery isalmost the same as a ship. There is a boiler, some pumps and so on. Sothe chief engineer can become a superintendent at a refinery. There aremany opportunities ashore and the young people prefer a family life togoing away.

“It is more and more difficult to get good crew. Even today, afterusing Indian nationals for so long, we are having difficulties recruiting.There are so many jobs available and the loyalty is not there anymore.For a few hundred dollars they go from one manager to another.

“There is a big problem with crew poaching and I think it is the mis-take of the owners. Mr Cockcroft is in charge of the ITF and eventhough he is very powerful, he is one man and he can’t impose every-thing he wants. There are 5,000 owners and they will never agree,”Captain Vanderperre stressed.

“Staff are the most important component of a successful company. Ithink if you have 600 ships in your management you can’t know all ofthe people, and it is the people who define the company. In my opinion,the ideal size is of a ship management company is 60 ships – no more”(Univan presently controls 41 ships). “You can then keep in contact

with all your masters and it becomes like a family concern. But if thereare 600 ships, it becomes like a factory.

“When you have 60 ships in my opinion you can still keep control.But if you have 600, even if you have a brilliant memory you can’tremember all of the people – it is not possible. And you have 600Captains and 600 Chief Engineers and so on. If you have that manypeople you have no time to discuss with them what is on the tableevery day.” ■


SHIPMANAGEMENTHOW I WORK

Capt CharlesVanderperre’s treasured1974 Rolls is used mostly for companybusiness and is almostas old as the companyhe founded

Life essentialsCar(s): A 1974 yellow Rolls Royce, used for company

business, and a 1994 BMW 325 for 'Sunday driving'

House(s): A flat over-looking Victoria Harbour, Hong Kong

Fact: Captain Vanderperre started a charity foundation undertaking charity work in Thailand

“Staff are the most important componentof a successful company. I think if you have600 ships in your management you can’tknow all of the people, and it is the peoplewho define the company”

SIR. In relation to your edition of September/October of 2006 (Issue 3),regarding the news on page 51 “Not what it says on the tin”. As anowner of a chemical blender company located in Brazil - a “third worldcountry” - I must declare my unpleasantness against this text. My com-pany, as an ISO 9001:2000 certified company, has controlled and doc-umented processes to ensure that what it produces is exactly what isAGREED and REQUESTED by the Customer (major chemical compa-nies world-wide). Our company prays for the quality and takes it to thesame level that serious “first world” companies do. We use equipmentof the latest technology to blend the chemicals, maybe better than theone that is made at the “main” plant.

This way it is not right to generalise all third world blenders due to afew cowboy companies. I believe that the responsibility for this problemlies with the “first world” chemical companies who are giving opportuni-ty for the cowboys to work. The best solution to avoid this type of worryis for these companies, at the time of signing contracts with any blenderfrom the “third world”, to perform a local inspection on the facilities andassure that they will be dealing with a trustful company. I would like tohave my view forwarded to your magazine readers; this type of irrespon-sible text can directly affect serious companies like ours.

Fabio RodriguesDSF Services and Ship Supplier, Santos, Brazil

Editor's replyThe intention of the article was to raise awareness surrounding theexistence of so-called cowboy blenders and not to label all third worldcompanies as cowboys. As you quite rightly say, something needs to bedone to ensure high standards are met by all.

LETTERS


SIR. Like industry awards, I’m not a big fan of round table discus-sions. Somehow they appear very stilted and not particularly insight-ful. However, I must congratulate Sean Moloney of ShipManagement International for changing my opinion. In your last edi-tion (September/ October) you presented the findings of a recent dis-cussion between some of the leading lights of the younger Greekshipping generation. The write up of the discussion between messrsPistiolis (Top), Vafias (Stealth), Molaris (Quintana), Varouxakis

(FreeSeas) and Kassiotis (Omega), who have successfully used thepublic equity markets to build up a fleet of over 100 ships betweenthem, is certainly worth a read.

The topics covered were familiar ones but nonetheless interesting,particularly given the polite interplay between the ‘players’. The rel-ative merits of young versus old ships, the appetite for risk amongequity investors and the increasingly regulated markets all get an air-ing in a frank manner.

Certainly no punches are pulled when the subject of outsourcing isintroduced.. The opinions aired are mixed, ranging from some gener-al concerns about handing over an older vessel to a third party man-ager and reservations about using a generalist manager like V.Shipsas opposed to a smaller specialist, to the benefits which companieslike Frontline enjoy from outsourcing. These include the manager’sability to find crew now that traditional sources have dried up, theneed to import expertise and the flexibility it can bring strategically.

What does come across stronger than anything else is the confi-dence of this new generation which has made an important mark inshipping in such a small space of time. Certainly, these guys havestrong opinions and whether you agree with them or not they areworth listening to.

Malcolm WillingaleGroup Services Director, V.Holdings

POWERFUL INTERPLAY

MAILBOX

NOT WHAT IT SAYS ON THE TIN?

Ihave always been fascinated with people in authority. Notbecause I crave such status, although my friends would prob-ably disagree, but I find them interesting. I suppose under-standing how they got to where they are and how they runtheir lives to ensure they maintain their positions in the peck-

ing order is what really fascinates. One thing is for sure, the trappingsand symbols of power and authority do nothing for me. I am not theslightest bit interested in owning a Ferrari or a racehorse. Quite theopposite, give me a car that gets me from A to B and a good round ofgolf and I am happy.

Bob Bishop is a little like me – only a little, mind. He likes to golf andhe likes to drive an old car too – old estate car, although he is probablynot too happy talking about it. With two children and two dogs to ferryaround he can be excused for harking back to his old cargo officer days.He is also single minded and focused – after all, he completed the gru-elling shipping industry-sponsored bike race 'Tour Pour La Mer' last yeardespite only jumping on a bike previously for fun! As far as being a person of authority, as Chief Executive Officer of V.Ships’

Shipmanagement division he cer-tainly commands a great deal ofrespect.

“I trained regularly for the raceand I have continued bike ridingsince. Although I have boughtmyself something rather moreexpensive than I was riding regu-larly before I went on the bike ride.So I do try and continue to cyclealthough Glasgow in the autumn is

not conducive to nipping out on your bike before going to work.”Smiling, he continues: “I’m lucky as there is a cycle track on an old

converted railway line about half a mile from my house so I can have agood blast up and down there if I want to and as a result, I do feel moreinvigorated when I then get into the office. But putting on your cyclinggear just after getting out of bed can be a little tough sometimes,” he said.

I first really got to know Bob Bishop when he left his post as MarineDirector of Intertanko to join the Glasgow-based shipmanagement teamat Acomarit under the stewardship of Peter Cooney. He soon became acrucial member of the enlarged ship management team when Acomaritmerged with V.Ships and now heads up V.Ship’s shipmanagement oper-ations, albeit still from his Glasgow base.

He is a staunch believer in the effectiveness of third party shipman-agement and believes the sector has a strong future ahead even if thereare only really a few managers actually managing ships in a qualityway. His words, not mine.

“I think third party ship management is becoming increasinglyattractive for large ship owners, for a number of reasons. One: The reg-ulatory regime that ship operators now operate in means that they can

put themselves slightly at arms length. The second factor is crewing. Ifyou have 50 ships in a newbuilding programme you probably haven’tgot the crew to man them.

“I think if owners are managing all their ships in-house, just as theymight have a crew problem, they will have a shore staff problem too.And, depending where they are located, that can be quite costly.Because of these reasons, we are now starting to see significant out-sourcing by people who wouldn’t have generally considered third partymanagement in the past,” he opined.

Ask any owner to name a third party ship manager and they willprobably say V. Ships because it is acknowledged by most as the mar-ket leader in terms of size and influence. And with an interest in 900ships the company is a force to be reckoned with. But, as Bob Bishopcontends, while it is large it does have a significant client base with60% of its clients owning between one and three ships.

“Don’t forget that there really are very few independent ship man-agers like V.Ships around. I think this is an important issue for some-body considering outsourcing, because we all know that a manager thatis not truly independent will put the best crew on his own ships.”

Quality is a buzz word in the shipmanagement industry at themoment and companies like V.Ships are tending to veer towards a sec-tor of the market that is embracing high quality. But, according to BobBishop, there is a practical reason for this.

“By and large the more problematic ships tend to have other prob-lems associated with them like lack of funding which means that theyrequire more management time in dealing with suppliers etc. Whereasin many ways, it is an easier proposition to manage quality tonnage ina quality way,” he added.

Bob does raise a finger against those who believe that old vessels,purely because of their age, can fall into this category of problematical ➩

SHIPMANAGEMENTFOCUS


Training for the task ahead

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

By Sean Moloney

vessels when it comes to their effective management. “Just because you have an old ship doesn’t mean you will automati-

cally have management problems with it. There is absolutely nothingwrong with an older vessel that gets the attention it deserves. The prob-lem is when people feel the vessel is no longer worthwhile and that’sdispiriting, both to the crew and the people managing the vessels.

“I think, in actual fact, that’s where ship managers have a skill setthat may not be so readily found in an owners’ office. I think we arevery used to dealing with more elderly and problematic vessels; wehave the skills to do that. So in going forward, we are not necessarilylooking for a fleet of less than five-years-old, we are looking across therange, but what we are looking for are clients who share our vision ofoperating at the quality end of the market,” he said.

As the drive for quality in the industry intensifies, there are many inthe industry who believe this will accelerate the attraction of the quali-ty third party manager. After all, a quality reputation can mean the dif-ference between successful oil major vettings or poor port state controldetentions records.

Bob Bishop continued: “If you take tankers: wet, LPG and all the restof it, I think there is a drive towards quality operation which has just goneup a gear as TMSA has come in, or as the cogence of quality and robustship management is better understood by the likes of EMSA. Gettingapproval for a vessel means you have to be right on top of your game.

“We are getting audited all the time. We have even got an office setaside for the auditors. We are being audited by oil majors, we are beingaudited by class, we are getting audited by flag states, we are gettingaudited by owners’ financial people, so there is always somebody inauditing us.

“There are two things I would say about regulation: one is that theIMO has meetings 25 weeks a year, 160+ nations come to London and

determine the regulations. They are not about to give that up. They havealmost exhausted all the possibilities they have for the technical regula-tion of ships, so increasingly we are seeing attention moving into thesoft side starting with the ISM Code and the ISPS Code,” he added.This will increasingly lead to more regulation coming into the manage-ment office.

By far the biggest issue affecting the shipping industry at the momentis crewing and companies like V.Ships are looked upon as the maindriving forces behind increasing the seafarer pool through more focusedrecruitment, better retention and even more training.

“One of the advantages of V.Ships size is that we can give a careerstructure to people. We actively tell people that if they want to come towork for us, we can give them a career for life because, if you are fedup of going to sea, there is always an office somewhere where you cansettle down to a shore-based job. Equally, we can attract people who areambitious and enthusiastic. [We have] promotion prospects that are justnot available in a smaller organisation. So, on that basis we can keeppeople that might otherwise be gone,” he stressed.

V.Ships currently boasts a seafarer-pool of 23,500 seafarers butaccording to Bob Bishop the company has set itself a target of increas-ing this to 60,000 by 2010 – a daunting task by anyone’s standards. Thisnear tripling of its ship-based workforce will be achieved by the tradi-tional recruitment and training methods as well as normal human

SHIPMANAGEMENT FOCUS


By far the biggest issue affecting the shipping indus-try at the moment is crewing and companies likeV.Ships are looked upon as the main driving forcesbehind increasing the seafarer pool through morefocused recruitment, better retention and even more training

resource practices of advertising and recruiting for existing talent with-in the industry.

“One of the things we did last year was to employ a head hunter andjust as you have head hunters for accountancy, why wouldn’t you applythe same facilities and procedures for crew. Their sole job is to increasethe number of seafarers available to V Ships,” he said.

But is this not adding to the whole issue of poaching? “If you look at the issue of poaching I don’t think that can ever be

seriously levelled at V.Ships. We have masters who have been with usfor a number of years who have been poached by companies who areprepared to upset the whole process across the industry for their ownshort-term needs. And this is in actual fact making the problem even

worse going forward, because increasingly you are seeing the seafarersearn more than Prime Minister of their country,” said Bob Bishop.

“With that sort of salary differential they don’t need to stay at sea forvery long, they can come ashore and buy a hotel. So they are lost to theindustry and these people who are playing the high salaries, coinciden-tally, don’t appear to have the regime to develop their own sea staff.

“At V.Ships we hold the power and the means to encourage our sea-farers to stay. It’s not just about money, although we need to be there orthere abouts; there are other features like job security, which is also veryimportant,” he added.

According to Bob Bishop, V.Ships takes its training responsibilitiesvery seriously. “We have 765 cadets currently being trained and wewant to increase this number to 1,000 then eventually 2,000. So there is a huge influx of people coming into the industry but that alone doesn’t get us to our goal of 60,000 seafarers. That is why we haveemployed these people out there to encourage people to take up available positions.”

Having spent two hours talking to Bob Bishop I realised that perhapsthe reason why people like him are respected is because they are able toset themselves tough targets and have the presence and determination tomake them happen. ■

SHIPMANAGEMENTFOCUS

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

You have just started a two-year-term as InterManagerPresident. What is your strategy for the association and howwould you like to see it develop under your leadership?The strategic goal of InterManager is quite clear: to make it the unques-tioned and unchallenged representative body or reference for allinvolved in the quality operation, management and crewing of ships.We want to make InterManager an association so powerful as to havethe ability to influence the decisions that are relevant to the industry, itsstandards and the conditions of work for the people it employs.

We are opening InterManager to ALL people involved in the opera-tion, management and crewing of ships, meaning shipowners/operators,in-house managers as well as third party managers, i.e. technical man-agers as well as crewing managers, because the issues facing the shipoperators is the same. The strategy over the next two years will be tobuild the powerbase of InterManager and to involve it in all issues ofrelevance to the profession. We will achieve this through the systemat-ic increase of its membership of the association. All people of good willand quality will be welcomed, because the more members we have thebetter we can defend our association.

This systematic search for new members will require some resource,but with the full support of our members, we will reach our goals. Butat the same time we have to make sure we serve our members' needs byunderstanding their needs and responding to them. This will beachieved through systematic discussions with them about issues such ascrew shortages, the image of the industry and lobbying relevant partiesto defend whatever shipmanagement cases need defending.

What is the big issue facing the industry at the moment?KPIs as we know are an important issue facing ship managers today andInterManager has been, and will continue to be, at the vanguard of thisdrive for a pan-industry set of measurable KPIs for the industry. But I

don't want InterManager to be totally synonymous with KPIs or viceversa as there are a number of other important issues we need tobecome involved in.

A huge challenge for the future is the recruitment and competence ofcadets and crew coming into the industry. We do know from statistics -depending on how much you believe in statistics – that there is a lack oftrained officers qualified to meet the national fleet and if we do not dosomething there will be a huge undersupply of officers in the future. It isclear that there needs to be much closer co-operation between the crewmanager, the ship manager and the ship owner on this issue.

But is the shipping industry undergoing change?I believe it is, in the sense that it’s more likely a supply chain manage-ment scenario where the ship is part of a delivery chain, a productionchain. If part of the chain breaks down that will hurt the whole supplychain and that means that the crew and we as managers have to under-stand what the requirement is from the ship owners when it comes tocompetence of the crew. The master manages the running of the shipbut how can he be a manager or director of a ship if he doesn’t under-stand how each individual ship owner prefers to do business. The crewonboard has to understand what will happen if I don’t manage the shipthe way my customer, the owner, wants me to.


SHIPMANAGEMENT ON MY MIND

The strategy over the next two years willbe to build the powerbase of InterManagerand to involve it in all issues of relevancefor the profession. We will achieve thisthrough the systematic increase of itsmembership of the association

ONMYMINDOle B. SteneOle Stene is Managing Director of Aboitiz JebsenBulk Transport Corporation and Chief OperatingOfficer of Jebsen Management AS. He is also thenewly appointed President of InterManager, the tradeAssociation for in-house and third party ship man-agers. A graduate of the University of Bergen LawSchool, he also holds a commercial degree from theAnt. Johannessen Handelsskole in Bergen as well asa postgraduate degree in building and construction.He lists Alternate Member of Germanischer Lloyd'sAsian Committee; Member of Lloyd's Register's AsiaShipowners' Committee; ex-member of the SkuldCommittee and ex-member of the Board of BergenHull Club among the past and present positions hehas held

So do you think that the onboard management team has tofully embrace the needs, wishes and desires of the owner andof his customer?I think we have to accept that the most important people in a shippingcompany are the crew. I don’t think we should forget that we are sup-porting staff. The guys onboard a ship are meeting the problems,they’re meeting the customers first and they’re meeting a lot of chal-lenges that they have to solve there and then.

We are there to support them so we have to build up self confidencein the officers so they have the support and understand what they haveto do to solve this problem there and then and not to forget to ask ques-tions. So in addition to the technical competences of the officers, we are

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

Are you concerned that the level of competency onboardships is not up to the standard it should be?Well that’s what you see in a lot of trades now because together withthe ship owners we have not been clever enough to foresee therequirements coming through with respect to training and competen-cy. Ships today are worth $80m or $100m+. If you build a factoryashore for that kind of money you will be dead sure that the peopleyou are employing will be trained to be able to manage the factorywell. But because we have this strange scenario in shipping where youhave the signing on/signing off system for seaborne staff we are deal-ing with a different set of challenges. We have to focus on buildingup loyality and developing closer co-operation between us as suppli-ers of services together with our customers, the ship owners, to reallyget the people to understand where they affect the system. ■

SEPTEMBER/OCTOBER 2006 ISSUE 3 SHIP MANAGEMENT INTERNATIONAL 25

SHIPMANAGEMENTON MY MIND

“Are you concerned that the level of competencyonboard ships is not up to the standard it should be?”

“Well that’s what you see in a lot of trades now because together with the shipowners we have not been clever enough to foresee the requirements comingthrough with respect to training and competency.”aQ

The guys onboard a ship are meetingthe problems, they’re meeting the cus-tomersfirst and they’re meeting a lot ofchallenges that they have to solve thereand then. We are here to support them


The perennial issues of falling income due todownward pressure on agency fees and increas-ing workload, due to the agent’s enhanced rolein the exchange of information between the shipand shore, continue to impact on the health of

the port agency industry. So significant is the situation, believes Jonathan

Williams, General Secretary of The Federation ofNational Associations of Ship Brokers and Agents(FONASBA), that intense competition within the indus-try is forcing agents to offer ever-lower fees in order tosecure business and so rates are being driven furtherdown. “Fees have now reached the levels at which agentsfind it increasingly difficult to provide the required levelof resources, to maintain infrastructure and to provide forthe future,” he said.

“The future of the agency industry is also threatenedby the extremely low profile of the industry, the anti-social hours that agency staff are required to keep andcompetition from other industries,” he warned.

With the introduction of the ISPS Code, the Europeanship-generated waste disposal directive and the US 24hour Advance Cargo Declaration Rule, as well as otherproposed measures, most of which are security related,agents are becoming ever more involved in the exchangeof information between the ship and shore. Significantamounts of data now require to be requested, collected,collated and passed on to the correct recipients with a high degree of accu-racy and in most cases within very tight deadlines. The agency communi-ty has absorbed and carries out these additional tasks with equanimity butit is a further service that the agent is required to provide to his principalsbut in most cases does not get paid for.

The issue of fees and remuneration was a point recently echoed byPeter Titchener, Secretary General of the Multiport Ship AgenciesNetwork, who was quoted as claiming that all agents continue to seedownward pressure on fees and commissions, despite the boom in ship-ping that has been enjoyed in all sectors.

There is also a trend, he claimed, for principals in the liner business toset up their own regional and local offices. “We are seeing instances wherethey begin to regret the extent of such offices when they realise they havetaken on direct fixed costs, whereas had they used a regional office work-ing with independent agents they would have had variable costs, and inmost cases, better local market knowledge,” he was reported as saying.

Jonathan Williams cited the container industry as central in the grow-ing issue of consolidation in the agency sector.

“Almost inevitably when two container lines merge, there is a corre-sponding consolidation of agents and in many cases one agent loses out.The merits of dedicated, usually line-owned, agents compared to inde-pendent agents have been argued for many years and there is no set answerto which is best.

“While a dedicated agent will only work for one line, the independentagent, who relies for his income on a commission from the line, may bemore active in seeking, and more competitive in securing, business thanan inhouse agent securing business from the line itself. This process tends,however to by cyclical. In a number of cases lines, burdened with all thecosts of running their own operations, have closed their own offices andhave returned to using an independent agent,” he stressed.

The problems this creates can be significant with key staff being headhunted by shipping lines and locally-based members of the workforcelosing their jobs. The choice between a line opening up its own agencynetwork or using independent agents is influenced by a number of factorsthat are individual to its own requirements, the size of its business or the area in which it is operating so there are plusses and minuses on both sides.

According to Christer Sjodoff, Regional Director of the global agencyoperation Gulf Agency Company, the sector is very fragmented. We areamong the top three agents in the world when it comes to vessel calls andwe handle between 33,000 and 35,000 port calls a year. The top threeagents put together probably only account for between 6%-8% of the totalnumber of port calls in the world. So the biggest competitors are not among the top three, the biggest competitors are actually the smallerplayers,” her added.

“But serious ship owners will want to deal with an agent who has good

BUSINESS VIEWPOINT AGENTS


Swimmingagainst the tide

With the introduction of the ISPS Code, the European ship-generated waste disposal directive and the US 24 hourAdvance Cargo Declaration Rule, as well as other proposedmeasures, most of which are security related, agents arebecoming ever more involved in the exchange of informationbetween the ship and shore

cover; who has the right assurances in place and who employ well trainedstaff alongside quality systems,” emphasised Christer Sjodoff.

“Our strategy as a major player in the agency market is to provideadded value services for the ships berth side and custom clearance whichmeans not only clearing the ship in and out but clearing the cargo in andout. Again I think we can take it all a lot further but we have to talk a lotmore to the owners, operators, managers and port authorities to see howwe can do more for them than we do today,” he said.

Ivo Verheyen, Managing Director of GAC's Singapore office, agreedthat a lot of the shipping lines were looking at their own agency set ups.As they set up regional offices there was a tendency to pull their ownagency operations in-house, he stressed.

“We are protected from that here in Singapore as we have a very strongfocus on supply services that are related to the needs of the owner, such asship supplies to crew changes to delivery of spare parts and bringingsuperintendents on board etc,” he added.

“Because Singapore is a transit point, there are a lot of ships coming by

not for cargo operations but for the other owner-related matters: that iswhy we see synergies between our logistics set up and our role as a ship-ping agent,” he added.

“When you look at the make up of our operating income you’ll find that45% of that is today made up from logistic business, 11% is what we termas marine services, the operation of crew boats, supply boats, tugs, bargesand then the balance is 44% made up of ship agency services,” said ChrisSteibelt, Director of Logistics at GAC marine Logistics.

“As a shipping agency part of the function is to clear spares and putthem on board the vessel. As we received what we felt were very poorlymanaged freight movements we said we should have a logistics capabili-ty. We questioned why we weren't harnessing that capability and putting ittogether with our ship agency business to offer our clients a single pointof contact for getting the spares from the origin through to delivered onboard the vessel,” he said. ■

BUSINESS VIEWPOINTAGENTS


“Because Singapore is a transit point, there area lot of ships coming by not for cargo operations

but for the other owner-related matters: that iswhy we see synergies between our logistics set

up and our role as a shipping agent”

“Serious ship owners will want to deal withan agent who has good cover; who has theright assurances in place and who employwell trained staff alongside quality systems”

Ivo Verheyen

Christer Sjodoff


Teekay Shipping

Managing Director, Teekay Marine Services

What do you think is the answer to the industry’s crewingproblems?

I think companies need to have a vision. We need to have a fiveyear, or more likely a ten year plan, looking at the business in thelonger term. We have to continue to invest in training and moni-tor the demographics of the industry – being sure to focus onwhere we are currently recruiting while assessing where that maybe in the future and investing accordingly.

What role can third party managers play in tackling theproblem?

I think there are a lot of reputable ship managers and they stillhave a role to play for those owners who wish to outsource thatpart of their operation. But I can only speak for Teekay and weare owners and operators. We prefer to manage that risk internal-ly, in terms of an operational risk, and manage all of the humanresource risks as well.

Why do you prefer to keep things in-house instead ofusing a third party manager?

It’s what we call the Operational Leadership Programme and thishas helped build our brand – our reputation – to where it is today.I should explain to you that there are four business units atTeekay. One is focused on gas, one on shuttle tankers and off-shore services and one on conventional tankers. The other busi-ness unit is what we call Teekay Marine Services. We regardTeekay Marine Services as the engine room of the company andone of its key responsibilities is retaining our high standards. Bydoing this we know what standards of performance we need, weknow what the customers expect and therefore we have to man-age that in-house.

John Adams

FRANKLYSPEAKINGRecognised as an international leader in energy shipping,Teekay has recently expanded into the LNG sector andundertaken a major relocation programme to establish a plat-form for future growth.

The fresh activity, which was encouraged by customer feedback,saw three of the company’s conventional ship teams move in order toencourage interaction between the teams and their customers; andhelp the company establish a stronger presence in regions with largepools of skilled marine personnel.

The multi-functional teams, who are responsible for the day-to-dayrunning of Teekay’s conventional vessels, are viewed as the heart ofTeekay’s operations. Three ship teams have relocated to Glasgow,Houston and Singapore. The Glasgow team overseas the fleet in theAtlantic and the Mediterranean, Houston is responsible for the fleet inthe US Gulf and Singapore manages the fleet in the Indo-Pacific region.

David Robinson, Vice President, Fleet Operations said: “This is thestart of a new era for us. We have evolved into a global player in sev-eral different markets. In addition to bringing ship teams closer totheir fleet and to customers, the regionalisation is a key component ofTeekay’s growth strategy. By taking our ship teams into differentregions we continue to establish ourselves as a global organisationwith a regional, customer focused operating bases.”

This year has certainly been an active one for Teekay, which hasbeen involved in the energy sector since it was established in 1973.In February 2006 it announced an agreement with PGS ProductionAS, a subsidiary of Petroleum Geo-Services ASA, to develop solu-tions through floating production storage and offloading units.

Teekay Shipping transports more than 10% of the world’s seaborneoil and boasts a fleet of more than 145 tankers. The recent move intothe lucrative LNG sector came through the company’s publicly-listedsubsidiary, Teekay LNG Partners L.P.

With offices in 17 countries, and employing more than 5,100seaborne and shore-based staff, Teekay provides a comprehensive setof services to the world’s oil and gas companies. It is the world leaderin the shuttle tanker business, has one of the largest aframax andsuezmax fleets, and has an emerging product carrier division. ■

Looking down on the industrial outline of the dock, the effects ofsulphur emissions scar the sky. A yellow haze hangs in the warmmorning air, casting a suffocating blanket across the roof tops ofthe town towards the ocean. But this is not a view of a third worldmetropolis, it is an every day occurrence in ports around the

Baltic, the North Sea and other parts of the industrialised world as a directresult of sulphur emissions from ships.

The inhalation of sulphur affects the human respiratory system, and it iswell known that sulphur emissions cause acid rain. “Sulphur is in theatmosphere in very limited quantities. It has a very high greenhouse factor,so a small quantity of sulphur is significant to the greenhouse effect,”explained Vinchenzo Grecco, Technical Manager for the Marine Divisionof Greenpeace. “Ships burn hundreds of tonnes of residual fuel per day andsome of this stuff is liquid asphalt, basically.”

The need for the industry to address sulphur emissions was highlightedby Dr Johann Jungclaus of the Max-Planck-Instutut Für Mererologie. Hesaid: “We have to make an effort to reduce emissions. An 80% reductionin emissions would be required to halt global warming at two degrees fromnow. Ships contribute a lot of sulphur and nitrous oxide and these particlescreate changes in local climate.

“The thing you have to understand with sulphur emissions is they areessentially regional problems,” added Robert Ashdown, Manager ofOffshore and Environmental Affairs at the International Chamber ofShipping. “There are some very specific areas in the world that happen tohave a sulphur problem. What we need to do is bring the sulphur limitsdown in these places, as we have with SECAs (Sulphur Emissions ControlAreas) in the Baltic and the North Sea.”

However, while tackling the problem on a regional scale appears to bescientifically sound, having different sulphur limits around the world caus-es many practical difficulties for ship owners and managers. And the prob-lems are set to get worse as states prepare to follow California’s lead andintroduce strict local limits on sulphur emissions which go beyond the1.5% maximum sulphur content of marine bunker fuel oil required to oper-ate in existing SECAs.

“Different sulphur limits in different ports are potentially problematic asships may have to carry three different fuel types, requiring separate tanksand piping, and the potential for human errors during fuel quality changesmight also present a potential safety hazard,” explained Jean-ClaudeSainlos, Director, Marine Environment Division, IMO Secretariat. Andwith the EU set to introduce 0.1% sulphur emissions at berth in 2010, thesituation will only get worse, with some predicting as many as five or sixfuel types will be required on a single vessel in the near future.


Sulphur emissions are ahot topic, but the debateis set to continue withincreased scientificunderstanding and newideas providing morequestions than answers

Burning Objectives

A simple solution?One solution may be to tackle sulphur emissions at the root cause.“Right now, I think the industry is tackling the issue in a lopsided way.The oil companies are interested in selling all the sediment and sludgethat comes out of the refinery. They are trying to sell oil to the marineindustry that is almost like tar,” said Rajaish Bajpaee, President andGroup Managing Director of Eurasia. “Emissions are a by-product ofthe kind of fuel that you burn and the sulphur content is determined bythe quality of the fuel. The equipment onboard has to be modified tomeet emissions standards, so we are dealing with the end outcome. Butwith a uniform standard on fuel I think the problem would be solvedforever.”

The cost differential between fuel oil and marine diesel currentlymakes it almost impossible for a company to run ships on low sulphurfuels at all times, as Wilh. Wilhelmsen discovered when they ran a sin-gle vessel only on marine diesel for a three year period. “Of course weachieved lots of good things,” said Lena Blomqvist, the company’s VicePresident for the Environment. “We reduced emissions drastically. Wealso decreased maintenance and reduced the use of lubrication oil.Everything was fantastic, but the costs grew too big for us to continue.”

However, Mr Bajpaee believes that if all ships were forced to use asingle low sulphur fuel then there is every chance of sustained success.“The legislation should come from a global body like the IMO, whichwill first have the effect of ensuring that we have a global standard forthe marine industry. This would bring the emissions within the toler-ance levels, which is not only what the industry requires but also whatsociety requires as a matter of protecting our environment. It would alsohave the impact of [creating] a level playing field between differentstates, different regional bodies, different countries and the companiescoming from those countries. If there is a global standard for marinefuels then there is no competition,” he said.

Mr Bajpaee’s proposal follows a recent suggestion by Intertanko thatresidual fuels should be phased out over the next few years in order tocurb sulphur emissions. Intertanko's wish, which was first announcedby its Technical Director Dragos Rauta at a conference, is now one ofthe final four proposals to be reviewed by the IMO as it seeks to reviseMarpol Annex VI by the end of next year.

The IMO’s Jean-Claude Sainlos described the idea as very excitingand praised Intertanko for its contribution to a lively debate whichaimed to produce the best possible outcome. “The target is, in principle,obtainable but requires brave decisions. It may represent the only‘catch-all’ solution to significantly reduce the levels of most of theharmful emissions contained in ships’ exhausts. It is certainly feasiblefor ships.” Jean-Claude Sainlos said.

“The question is whether the petroleum industry is ready to invest inenhanced refinery capacity, and whether charterers of the world’s fleetare ready and able to pass the bill on to the consumers? The use of a sin-gle type of distillate fuel should simplify the monitoring and regulationof fuel oil quality, and I am certain that such a move would be ➩

BUSINESS OF SHIPPING EMISSIONS


The use of a single type of distillatefuel should simplify the monitoringand regulation of fuel oil quality,and I am certain that such a movewould be wholeheartedly welcomedby ships’ crews and officersworldwide

wholeheartedly welcomed by ships’ crews and officers worldwide, as itwould make their jobs safer, easier and cleaner.

“I regard the proposal as one of the most important in the work onreduction of air pollution from ships and it really shows that the ship-ping industry takes its corporate responsibility for the environment seri-ously. There is no doubt this could be a stepping stone toward the objec-tive of minimising the negative effects that shipping may have on theglobal environment,” he added.

Despite the IMO’s enthusiasm, there are many who feel the refiner-ies would be unable to meet the increased demand for low sulphurfuels. “None of it has been thought through by Intertanko. They aregood at their headline grabbing news,” said Don Gregory, Chairmanof the International Bunker Industry Association (IBIA) andEnvironment and Sustainability Director of BP Marine. “It’s definite-ly not realistic at all. It won’t happen. It certainly doesn’t have thesupport of the vast majority of stakeholders in the shipping industry

and, to be honest, it certainly hasn’t been thought through properly byIntertanko in terms of the implications for the economics, the supply,or the environmental benefits.

The International Chamber of Shipping is equally skeptical about theproposal. “The refinery capacity is possibly the biggest obstacle. Butthere are an awful lot of modifications required for ships if they are tostop burning residual fuels, and that’s certainly not possible by 2010,”Robert Ashdown stressed. “And also, by burning high sulphur fuels whatthe shipping industry does very effectively is get rid of the waste productsfrom the refinery process. If ships don’t burn sulphur fuel the problemdoesn’t simply disappear, it has to be disposed of in another form.

“What you also have to consider is that if you take the sulphur out offuel, Ok, you will reduce sulphur emissions, but the process will notnecessarily help global warming. The energy process that is used toremove sulphur from residual fuels is such a high intensity operationthat you will raise emissions from the refinery by 10% to 20% ➩



Johan Roos

Sustainability Director, Stenna Line“Speed is of the essence. The slower you go the less emissions yourelease per mile. But you have to consider the feasibility of actuallyslowing down. Somewhere along the line there is a client who is payingyou to deliver the goods at a certain time. When you trade in more com-plicated markets where you have lorries, airfreight and ships, speed is avery important part of the system. If you cut speed and try to find a mar-ket for say half the speed we operate today then none of the other trans-port industries would employ us. Cutting speed is not possible today,even though objectively it would be beneficial to the environment.”

Jean-Claude Sainlos

Director, Marine Environment Division, IMO Secretariat“Disregarding for a moment the financial and capacity issues relatedto building more and/or bigger ships, harmful emissions do increase

with speed and slow steaming could dramatically reduce the totalemissions. We have seen the introduction of voluntary speed reduc-tion programs along coastlines – or for ships arriving and leavingcertain ports – and the decreases in air emissions achieved, with rel-ative modest speed reductions, are considerable. It is an interestingidea but I think it probably needs a lot more detailed academicresearch.”

Lena Blomqvist

Wilh. Wilhemsen – Vice President for the Environment“When the size of our vessels started to increase, we realised we were not using so much more fuel than for the smaller ships. Of course that means that the emissions such as sulphur reduce. That is a reallygood thing.

“If you can use larger ships doing the same transport work theneventually you do the same transport work with one ship less.Eventually you would reduce everything related to fuel.”

Not so fastReducing the operational speed of ships could allow owners to savemoney off their fuel bills and cut emissions simultaneously, a leadingclassification society has claimed.

The relationship between fuel efficiency and emissions variesbetween pollutants, but the relationship between fuel consumption andsulphur emissions is directly proportional.

In the California Long Beach area a scheme is already in place tooffer financial incentives for vessels to slow down with the intention ofreducing emissions, and some believe that such schemes could beeffective elsewhere.

Lloyd’s Register is promoting the concept of energy efficiency,whereby the mounting fuel prices and environmental concerns can beovercome by energy management techniques.

Employing voyage management and speed management principalsit is estimated fuel consumption can be reduced by 10%. Althoughsuch measures are not suitable for compliance with existing SECA reg-ulations, which place a strict limit on the maximum sulphur content offuel, the potential exists for owners to save money and increase theirenvironmental credentials, Dr Zabi Bazari, Principal Engineer, MarineConsultancy Service, Lloyd’s Register EMEA explained.

The scheme is largely aimed at the passenger vessel sector, but DrBazari believes similar success could be achieved in the cargo industryif ships are managed in a very efficient way. “They can reduce the timespent in port, at anchorage or being idle for what ever reason and usethat time in order to keep the ship sailing, but at a slightly reducedspeed,” he said.

Could slowing down be the answer to tackling emissions?

in terms of greenhouse gases. What you will effectively do is turn aregional sulphur problem into a global Co2 problem. Yes, diesel is moreenvironmentally friendly, but you have to look at it holistically. Theidea that just by stripping sulphur out you are going to make all emis-sions decrease is a fallacy,” Robert Ashdown added.

A radical approachWith the IMO and other stakeholders apparently raising more questionsthan answers as they bid to meet sulphur emissions targets, there is agrowing feeling in some circles that there is a need to move away fromthe rigid structure and thinking and embrace more radical and flexiblesolutions. Ship Emissions Abatement and Trading (SEAaT), a crossindustry group consisting of ship owners, brokers, technology compa-nies and fuel suppliers, was formed specifically to tackle the issue ofship emissions. “We want to have an array of options to choose from,depending where in the world we are operating and what the current sit-uation is there,” explained Johan Roos, Stena Line SustainabilityDirector and member of the SEAaT Executive Committee.

SEAaT proposes that ship to ship emissions transfer, measuringemissions compliance across a fleet of ships rather than on an individ-ual basis, will not only prove more economical for ship owners, but alsospeed up the development of technology to tackle emissions problems.“In a very simple way it is about the innovation of new technology ➩



Could sail-assisted propulsionbe the answer to high fuelconsumption?

and getting this technology onboard ship as quickly as possible. Youneed money for that and the support can be given by trading - moneybrings innovation” said Cor Noble, SEAaT Secretary General.

In the scheme ships are placed in a compliance group under thesupervision of an independent superintendent. The ships report sailingbehaviour, location and emissions levels to the superintendent on adaily basis. The emissions of each ship are monitored by a tamper-proofblack-box in the stack, with some ships operating well below the SECAlimit and others in the group above it. “The manager has to balance thewhole group, because they have to collectively be below the sulphuremissions limit set by the government. The strength of this proposal isthat it can be audited very clearly,” Cor Noble explained. “Of coursethere must be an exchange of money as the polluter doesn’t get a freeride - he has to help others be cleaner. So there is a transfer of moneyby certificates trading, and in a trading environment it doesn’t take longbefore an instrument gets a price.”

The results of an 11-month pilot study, involving seven companiesand 58 ships, show that the ship to ship emissions transfer scheme hascommercial potential. “The report suggested total savings of about 10%in total operating costs under certain conditions,” Cor Noble revealed.“During the study the total savings through emissions trade equated to$10m compared to what would have been saved using only low sulphurfuels.”

Not content with this initial success, Johan Roos hopes to expand thescheme beyond the shipping industry by considering shipping as alogistics and transport system. “We want to interlink the emissionsfrom shipping into the buyer, the industry if you will. We are advo-cates of a trading system where we are allowed to trade emissions

with land-based industry. That would really be the leaver to give theindustry the momentum to make substantial change. Command andcontrol and the 1.5% limit doesn't give ship operators the incentive todo anything but comply exactly with 1.5000%. We want to see a sys-tem of flexibility where the absolute benefit is to operators who domore, and we see emissions trading as the way out – at least forEuropean shipping,” he said.

This pan-industry initiative and lateral thinking may represent thebest means of tackling sulphur emissions and clearing the skies aboveports around the world. “Based on its inherent strength with initiativesrather than constraints, emission trading has proven itself in other sec-tors,” said Dan Sten Olsson, CEO of Stena Line. “Stena is a strongadvocate of the development of a new framework that allows for shipowners and land based industries to jointly find solutions that are effi-cient. Our ultimate goal is to leave no footprints in the wake of our ves-sels, but in order to do that, we need non discriminatory tools thatreward those who care.” ■



We are advocates of a tradingsystem where we are allowed to tradeemissions with land based industry.That would really be the leaver togive the industry the momentum tomake substantial change

The admonishment of Turkey by Brussels in early Novemberfor failing to lift its ban on Cyprus-flagged ships was large-ly expected but will have been greeted with nothing morethan passing interest in the corridors of power in Nicosia

and the shipping offices in Limassol.While Turkey's resistance to lifting its ban may threaten its future

membership of the European Union, the fact that no progress has beenmade on dismantling the long-standing blockade preventing Cyprus-flagged ships, and vessels of other flags which have called in Cyprus,from calling in Turkey means it is business as usual for the Cyprus ship-ping industry as it works hard to stop the flow of vessels away from itsregister and its shores as one of the world's predominant bases for thirdparty ship management.

According to Thomas Kazakos, Secretary General of the CyprusShipping Council, the 120 member organisation set up to promote theinterests of Cyprus Shipping and further the reputation of the Cyprusflag, the Turkish ban is not “a Cyprus/Turkey Turkey/Cyprus countryproblem but an EU shipping issue, not to say international issue”.

For Cypriot companies the ban represents a restriction of trade, headded, but the key issue is that is creates unfair competition within theEuropean Union. “Cyprus is now the third largest fleet in Europe andthe continents biggest ship management centre, so by depriving Cypriotshipping companies the same opportunities to trade and work within theEuropean Union let alone having to deal with the violation of basicprinciples within the established EU laws, consumer products at the endof the day will be higher because they won’t be able to get a competi-tive package which otherwise Cyprus would have been able to offer,”he added.

“We have streamlined and harmonised our legislation in line with thestandards of the European Union, therefore we do not ask for any pref-

REGIONAL FOCUS CYPRUS


Striving for growth

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CYPRUSCountry ProfileGeographic coordinates35 00 N, 33 00 E

Area total: 9,250 sq km (of which 3,355 sq km are in north Cyprus);land: 9,240 sq km; water: 10 sq km

Climate Temperate; Mediterranean with hot, dry summers and cool winters

Elevation extremeslowest point: Mediterranean Sea 0 m; highest point: MountOlympus 1,951 m

Population784,301 (July 2006 est.)

Economic OverviewThe Republic of Cyprus has a market economy dominated by theservice sector, which accounts for 76% of GDP. Tourism and finan-cial services are the most important sectors; erratic growth ratesover the past decade reflect the economy's reliance on tourism,which often fluctuates with political instability in the region andeconomic conditions in Western Europe. Nevertheless, the econo-my grew a healthy 3.7% per year in 2004 and 2005, well above theEU average. Cyprus joined the European Exchange RateMechanism (ERM2) in May 2005. The government has initiated anaggressive austerity program, which has cut the budget deficit tobelow 3% but continued fiscal discipline is necessary if Cyprus isto meet its goal of adopting the euro on 1 January 2008.

erential treatment but what we ask is to be treated the same as every-body else because this embargo operates as an anticompetitive measurefor Cyprus,” Mr Kazakos said.

Serghios Serghiou, Director at the Department of MerchantShipping, is more philosophical about the situation. “The Cyprus ship-ping sector experienced a spectacular growth over the last two decadeswith the shipmanagement sector and the Cyprus Ship Registry flourish-ing,” he added.

“However, over the last three or four years the growth of the CyprusShip Registry has shown a slight downturn; partly due to the measurestaken by the Cyprus Government to improve the quality of the Cyprusfleet and partly due to the Turkish embargo.”

Seghiou is clear that listing of the Turkish ban will positively affectCyprus shipping.

“The illegal and discriminatory restrictive measures imposed by theTurkish Government on the Cyprus shipping industry since 1987 affectsnot only the Register of Cyprus Ships, but also the port industry, theshipmanagement sector, the professional services and generally themaritime cluster.

“The Cyprus Government prepares factual reports with supportingevidence for each case where these restrictive measures are imposedand these are submitted to the European Commission as proof ofTurkey´s violation of its Customs Union Treaty with the EU. Also thelocal shipping community works hard through international organisa-tions such as the International Chamber of Shipping, InternationalShipping Federation and the European Community Shipowners'Association (ECSA) to keep up the pressure on Turkey to lift the meas-ures.”

He went on: “The lifting of the Turkish embargo will createfavourable conditions for the expansion of the Cyprus Registry and there-establishment of the island as a transhipment hub in the EasternMediterranean. It will also restore free trade and fair competition andwill be a positive step for the improvement of relations between the twocountries.”

But the Department of Merchant Shipping and the Cyprus ShippingCouncil have their work cut out arresting the recent negative trend inthe number of vessels registered in the Cyprus flag. This is partly dueto the stricter registration rules, the withdrawal of the single hull tankersand the policy that the government of Cyprus has implemented in orderto prevent the registration of substandard ships and to improve the

image of its fleet. However, as already mentioned, the loss of vesselsfrom the flag is mainly attributed to the continuing Turkish restrictivemeasures on Cyprus flag vessels.

Furthermore, a significant decrease of fishing vessels has also beenobserved, as a result of the EU policy to protect the marine environment/fish stocks by restricting the number of fishing vessels registered andoperating in the EU area and compensating fishing companies for with-drawing and scrapping fishing vessels. .

Cyprus is a major centre for third party shipmanagement – it hasbeen for many years: indeed, many of the world's major players havetheir headquarters on the island. But active marketing by national flagssuch as in the UK and Germany through tonnage tax incentives and bycompeting shipmanagement bases such as Singapore, hoping to attractshipmanagement expertise through the lure of tax advantages, has seenCyprus is stabilising rather than increasing the number of vessels man-aged from its shores. And it is a worrying trend, if not publicly for ➩

REGIONAL FOCUSCYPRUS


Capt Peter BondGeneral Manager, Interorient Navigation

“I have no problems in attracting cadets:we’ve got 70 at the moment and we’re takingon another 70 or 80 next year so getting peo-ple to go to sea from the Philippines for exam-ple, is not a problem. The problem we haveright now is over the next two or three yearswe are going to need 1,000 seafarers. Threeyears ago we didn’t know we were going tohave the growth we’ve had. If we’d have

known that three or five years ago, we’d havestarted a bigger cadet programme and nowwe’d have at least junior officers comingonstream. So we have a problem right now inall of us finding these people that we need thatactually don’t exist because that 10% shortageis there.

“We’re offering incentives like everybodyelse but we don’t have any miracle cure forthis issue and it’s going to get a lot worse inthe next two or three years while this growthis going on.” ■

FRANKLYSPEAKING

Cyprus is a major centre for thirdparty shipmanagement – it has beenfor many years: indeed, many of theworld's major players have their headquarters on the island

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the government, but for the defenders of Cyprus's claim to be a majormaritime centre.

A scathing report by Germany auditing office theBundesrechnungshof into the tax revenue losses imposed by the coun-try's tonnage tax system could not have come at a better time for theshipping folk on the sun soaked Mediterranean isle of Cyprus.

Because if the Bundesrechnungshof gets its way, not only would thesystem that allows tax-free status of fees paid to some partners of one-ship companies in return for managing the vessel be ended, but theGerman economy will begin to realise again the tax revenues lost overthe years because of the system, estimated at €1bn ($1.28bn) for 2004(the last available year on record).

More importantly for Cyprus, abolition of the scheme would help toplug the hole in the management pipe that has seen more and more ves-sels move away from Cyprus to more attractive tonnage tax locationslike Germany.

As a director of the Department of Merchant Shipping, it is SerghiosSerghiou's job to be upbeat about the strength of Cyprus as a maritimecentre, so it is hardly surprising he is a little dismissive of the impactthe tonnage tax regimes in other parts of Europe has had on Cyprus.

“Even though the pressure coming from Germany and the UK inrespect of the tax incentives offered by those countries is increasing,Cyprus remains a dominant shipmanagement centre. The success ofCyprus as one of the leading maritime centres is not exclusively attrib-uted to the favourable tax regime but to other advantages as well. Thelow set up and operating costs for companies, the generally lower officerents and construction costs, compared to other European countries, theavailability of competent local employees, the high level of profession-alism in the legal and accounting sectors, the excellent banking servic-es and the existence of double tax treaties with more than 40 countriesare important factors, which positively affect the decision of a shipmanager. A successful businessman examines all parameters before tak-ing a decision.”

Nigel Cleave, ex-Group Managing Director of Dobson FleetManagement and now Chief Executive Officer of Epic ShipManagement (ESM), is convinced it takes more than a mere tax incen-tive to erode an industry that has taken years to establish.

He told SMI: “I firmly believe that the traditional ship managers onthe island are here to stay, despite the competition from emerging coun-tries such as Singapore. In the case of Epic Ship Management, we haveoffices in both countries. A vast infrastructure has been built up over thepast 30 years with a large experienced local support staff contributinggreatly to the success of the Cyprus shipmanagement community.”

This was a view echoed by Andreas Droussiotis, Chief ExecutiveOfficer of Hanseatic Shipping and President of the Cyprus ShippingCouncil who went even further by suggesting that Cyprus was extend-ing its influence in the third party shipmanagement sector.

“Cyprus' position in the shipmanagement industry remains as strong

as ever. In actual fact the companies are becoming bigger with the extratonnage they are taking on,” he said.

He added: “Cyprus is undoubtedly the biggest third party manage-ment centre internationally if you consider the number of vessels andthe tonnage managed and controlled from its shores.”

According to Droussiotis, 2,200 ships of 40 million dwt are managedor operated from Cyprus. “This on its own is far bigger than any of thelarge ship registries and nearly three times the size of the Cyprus flag.It is not only the German/UK and Singapore systems that are trying toattract extra business or rather retain the vessels under their flag. It ishappening all over. We have not lost much from here due to the new taxsystems established in Europe and Asia.”

But can the Cyprus government do more? Of course, every govern-ment can always do more,” said Dirk Fry. Managing Director of ➩


Cyprus’ position remains strong as a ship-management centre. The key reason is thatthere are a large number of educated,well-trained, English speaking staff here.In CSM's case, 80% of our staff areCypriots and they are certainly critical tothe success of our business

Columbia Shipmanagement, “but in com-parison to many other countries we cannotcomplain about being ignored,” he said.

Conceding that the Cyprus governmenthas been helpful in at least listening to theindustry’s views, Andreas Droussiotisstressed that the government machinerycan be slow in moving. “We continuouslyexercise our right for constructive criti-cism and succeed in convincing the gov-ernment how things should be handled onvarious issues. We even managed to main-tain our competitiveness even after ouraccession to the European Union but wewant to continually improve and believeme we have a very open communicationwith all ministries involved, be itCommunications and Works, Interior,Labour and Social Insurance. Even thepresident of the Republic shows a verykeen interest in the shipping industry,” headded.

Capt Peter Bond, General Manager ofthe Cyprus-based ship owner/ship manag-er and crew manager Interiorient, believesthe number of ships that are managed inCyprus certainly has reduced over the past

recent years because of the tonnage taxsystem operated in Germany. If theGermany government was to changetomorrow and the tonnage tax scheme wasto be scrapped or changed in a big waythose ships would be back here the nextday because we’ve all still got our officeshere and that’s the way it would go.

“From our own company's point of viewwe are a genuine bone fide Cypriot-ownedowner/operator so yes we have a Hamburgoffice with ships involved there but we havea big structure here, a new office soon overthe road and this is our headquarters. We’vegot another five offices around the world.So whatever happens to the other shipman-agement companies will not really have anyimpact upon ourselves,” he added.

But is there a slow reduction in thenumber of vessels being managed for theisland largely because of the tonnage taxbenefits that exist elsewhere?

“If you look at the newbuilding order-books, you will see see there’s an awful lotof ships being built for Cypriot interests soall those ships are going to remain inCyprus and that’s going to be adding ➩


43NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL

2,200 ships of 40 million dwt aremanaged or operated from Cyprus.This in its own is far bigger thanany of the large ship registries

and nearly three times the size ofthe Cyprus flag

to the number of ships that are managed from here,” he stressed.While the Turkish embargo may have been a factor in the decline of

tonnage registered in Cyprus in recent years, so has the effort toimprove the safety record of the flag been a positive development.Indeed, EU membership has been the necessary incentive for Cyprus toget its house in order. This year saw the flag promoted to the ParisMOU on the Port State Control White List, a promotion greeted withsome satisfaction on the island. It will, in many people's eyes, have con-solidated the island's credentials as a quality shipping hub.

“Cyprus' position remains strong as a shipmanagement centre,”added Dirk Fry. “The key reason is that there are a large number of edu-cated, well-trained, English speaking staff here. In CSM's case, 80% ofour staff are Cypriots and they are certainly critical to the success of ourbusiness. Very few other shipping locations have such an abundance oftalented shipping people. Of course, other locations are looking to makethemselves more attractive, but to create the pool of experienced ship-ping staff is not so easy.

“As to tonnage tax schemes etc, the Cyprus scheme is a positive ben-

efit and should be kept. For overseas schemes, such as the German ton-nage tax, there is no doubt they have had an impact in that companiessuch as ours have had to move tonnage to alternative locations, in ourcase our Hamburg office, but we see this as additional business withminimal disruption to our Cyprus operations,” he stressed.

But how strong is business at the moment considering the pressuresbeing faced by companies on the island and where are enquiries com-ing from? “Enquiries continue to flow in, particularly for tanker man-agement,” replied Dirk Fry. We are looking at a number of projects inGreece and North Europe and our business in the Far East is growing.Interestingly also, the number of projects coming out of the formerSoviet Union countries is growing. We also see our newbuilding super-vision services expanding, particularly for ships being built in Chinawhere we have a strong organisation covering many yards. We havenow built or are in the process of building more that 200 ships since1984.”

Captain Peter Waller, Group Managing Director of Dobson FleetManagement, emphasised that while it was essentially business as usualfor Cyprus-based ship managers, working practices of the main playerson the island was changing. “You don’t see so many third party shipmanagers grabbing for business: we all have our own main clients andwe tend to stick with them,” he stressed. “It is about working moreclosely and cooperating with the owners rather than just offering thema cheaper option for managing their ships.” He told SMI. Even if thismeans coming together with your owners regularly throughmanager/client forums to discuss and identify what needs to be doneand how best to achieve it. ➩



While the Turkish embargo may have beena factor in the decline of tonnage registered in Cyprus in recent years, sohas the effort to improve the safety recordof the flag been a positive development.Indeed, EU membership has been the necessary incentive for Cyprus to get its house in order

You don’t see so many third party shipmanagers grabbing for business: we allhave our own main clients and we tend tostick with them. It is about working moreclosely and cooperating with the ownersrather than just offering them a cheaperoption for managing their ships

Aart Broek, General Manager at Navigo Shipmanagers, remains con-vinced that the biggest problem facing ship managers on the island isnot the tonnage tax issue or the Turkish ban but the crew shortage prob-lems in the industry as a whole. But if you look after your people theywill generally remain loyal to the company they have working for. “Ofcourse you have to watch the salaries don’t get out of hand but peoplewill generally remain loyal if you treat them well.

Navigo has identified the crew supply side as its core business andhas outsourced its technical management activities to its sister compa-ny Atlantic Marine. Indeed, Aart Broek and his team would like to dou-ble the number of vessels they manage from 50 to 100 and create moremanning agencies for its parent company, the Schulte Group.

“The priority is just to increase the business,” he said. “If you getmore ships on management you have to make sure that you have theresources, and the Schulte Group as you know share a number of man-ning agencies. With the market growing the way it is, it is wise toincrease that number.”

Eastern Europe and the Far East are obvious choices for developingmanning resource but specialists like Navigo are looking further afieldto new locations like South Africa. “I’ve not set myself a target withspecific vessel numbers, because it starts with the buying of the vesselbut the aim especially is to grow, to have a solid base. Ideally I do notwant to have clients who are larger than 10% of my turnover. Its notgood for me and its not good for the client.”

This is in stark contrast to Columbia which has refused to eschew thebenefits of offering full management services. As Dirk Fry stressed:“Crewing is becoming more of an issue for the industry, of that there isno doubt. We are not immune from the problems being faced. We arecertainly meeting our current requirements but our focus is now evenmore on full management rather than crewing-only contracts.” ➩



If you get more ships on management youhave to make sure that you have theresources and the Schulte Group as youknow share a number of manning agen-cies. With the market growing the way itis, it is wise to increase that number

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Crew competence and training is essential, agrees Robert Thompson,Fleet Director and Deputy Managing Director of Unicom ManagementServices. The company is introducing loyalty schemes for its seafarers.

Unicom employs over 4,000 Russian and Ukraine seafarers for itsmanaged fleet. Its crewing offices in St. Petersburg, Novorossiysk,Odessa, Vladivostok and Riga are fully accredited under ISO Standardsand managed by ex-Unicom seafarers. To ensure the highest profession-al standards are maintained on board, the training of officers and crewis continually under review. The company has recently diversified intothird party management which after ten years as sole managers for JSCSovcomflot is a major step forward, which it claims is already payingdividends in both third party crew and technical management.

“It’s just training, training and training isn’tit. We have to continue training. We’re look-ing at our own centres. We’re opening ourown office in St. Petersburg possibly nextyear, so given that we have that sort of spaceit may be possible and may be feasible to startour own training centre within that building.We’re certainly looking at other alternatives,”said Mr Thompson.

So how important is Cyprus as a shipman-agement centre?

“Well infrastructure wise it’s still cheaperto have an office in Cyprus. There is plenty oflocal support regarding accounts and adminis-trative staff but not so much for the technicalside. If we can get the tax issue sorted and theimmigration policy sorted then I don’t see anyreason for people to leave,” he concluded. ■


To ensure the highest professional standards are maintained on board, the training of officers and crew is continually under review. Unicom hasrecently diversified into third party management which after ten years as sole managers for JSC Sovcomflot this is a major step forward

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Captain Julio Arcenal, 53, has notalways been a ship's master.Prior to pursuing his seagoingcareer through the Manila-basedC. F. Sharp Crew Management,he worked as a bank security

guard to finance his way through his degreecourse before graduating with a Bachelor ofScience Degree in Marine Transportation. Hisfamily were farmers in Lucban, Quezon, aprovince 92 km South of Manila, making hisprogression up the maritime ladder that muchmore impressive.

His decision to go to sea in 1975 as a deckcadet was influenced, he says, by the 'lucrativeincome' on offer and by a desire to 'see theworld for free'.

“A seagoing career is highly regarded in thePhilippines because of the high income com-pared to other professions,” he explained can-didly. “In my case, when I started as a deckcadet onboard ship, I was receiving a monthlywage of $350. As a Master Mariner I am get-ting $6,000 to $7,500 per month depending onthe company I work for.”

Such a salary, which is way above the

Philippine national average, provides CaptainArcenal with what he describes as a “high stan-dard of living which is much better than mostpeople in the Philippines.” This is no doubtgreat news for his wife and four children: threedaughters and one son in particular, who hasfollowed him to sea.

Captain Arcenal said: “I recently signed anew contract to be Master of a bunkering ves-sel operating out of Gibraltar on a salary of $6,000 per month. When I first becameMaster in 1985, my salary was $2,500.” A salary, he claims, compares very favour-


DISPATCHESDISPATCHESS H I P P I N G B U S I N E S S R E P O R T S F R O M A R O U N D T H E W O R L D

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

ably with other wage levels in his country.Ratings onboard ocean-going vessels can

receive around $1,300 per month while a simi-larly qualified position ashore, perhaps alabourer, will typically command a monthlysalary of only $250. “My new contract is worthsome six times the $1,000 per month a localPort Captain can earn. Coastal Masters earn amonthly salary of only $1,600,” he said.

Graduating from the Philippines MaritimeInstitute, Captain Arcenal’s march up the rankshas been matched by his progress up the socialladder. He now has two homes – a three-storyproperty in his home-town of San Pedro,Laguna and a two-story family house in Manila– and drives a brand new 10-seater IzuzuCrosswind XUVi. “Lucban, Quezon has a goodclimate just like the weather in Baguio City, thesummer capital of the Philippines, with lush,green forest and no pollution, Captain Arcenalexplained. “San Pedro is a nice place also, nearLaguna de Bay lake.”

The tropical paradise of home must seemlike a far cry from the bridge of the SaudiArabian product carrier where Captain Arcenalspent time after gaining his masters certificate,but it is his long experience at sea that hebelieves has given him the lifestyle and statushe holds today.

However, despite his wealth, Captain Arcenalhas retained a level of modesty and maintains agood relationship with those who serve under hiscommand. “I have enormous respect for everyone of my officers and crew members as well asother people involved in this type of job,” hesaid. “I enjoy my job immensely, particularly

manoeuvring when wedock or undock.”

The Philippines ispresently the world'slargest supplier of seafar-ers, providing some 20%,but is not producing seniorofficers in the numbersneeded. However, it doeshave the potential to do soas long as the calls fromlocal crewing agents forship owners and managersto work with them and

invest in training are heeded. The manpower supply industry in the

Philippines is a mature one with the infrastruc-ture already in place. It does have problems butwith the present national economic situation itis likely to be a supplier for a long time tocome. During times of political upheaval thesupply situation does experience slight hiccups.For owners it could be the most economic solu-tion to the shortages in the short, medium andlong terms.

Many companies are training Filipino cadetsthrough the ranks to Master, but there are stillsome sections of the shipping industry that areshowing a distinct aversion to not only promot-ing Filipino seafarers, but refusing to useFilipino masters.

An industry-wide shortage of qualified andcompetent officers onboard ship has created apoaching pandemic with allegations of ownersand managers outbidding each other by offer-ing higher salaries to attract the right personnelto man their ships.

Senior ship management figures cite thesourcing of quality crew as the biggest chal-lenge facing the industry. Indeed, Rajaish ➩


DISPATCHESCREWING

Dr Peter SwiftINTERTANKO Managing Director

“Tanker owners are especially concernedover the unfair and unjust treatment that sea-farers regularly face – not only with unjusti-fied detentions after accidents, but in rou-tinely being denied shore leave and access toand across terminals. They are particularlyincensed by the increasing tendency to crim-inalisation, especially in the case of acciden-tal pollution. INTERTANKO members,together with INTERCARGO members anda few other like-minded organisations, havedemonstrated their commitment to stand upfor their staff (afloat and ashore) and to chal-lenge the European Directive that wouldcriminalise accidental spills not only incoastal waters but on the high seas. “The tanker industry understands it has asocial responsibility to ensure the quality ofthe governance structures of its industry andhas outlined various approaches that arebeing taken to assist the development ofeffective, fit-for-purpose legislation and reg-ulations which have been properly consid-ered and assessed and which, if adopted,would be implemented promptly and uni-formly. In parallel, the industry is seeking toimplement self-regulation through the intro-duction of guidelines, policies and proce-dures built around industry best practices.While owners recognise their responsibili-ties, many similarly hope that governmentsand their agencies would live up to theirs.“The Poseidon Challenge is a further exam-ple of the tanker industry taking the initia-tive in bringing partners together and com-mitting to continuous improvement.” ■

ONTHERECORD

“I have enormousrespect for every oneof my officers andcrew members aswell as other peopleinvolved in this typeof job”

An industry-wideshortage of qualifiedand competent officers onboard shiphas created a poaching pandemicwith allegations ofowners and managersoutbidding eachother by offeringhigher salaries toattract the right personnel to mantheir ships

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Bajpaee Eurasia President and GroupManaging Director, recently warned that theacute shortage of crew supply was being drivenby an increase in world tonnage, the criminali-sation of seafarers and the worsening image ofshipping. Current estimates indicate that morethan 4,700 vessels will be built between the endof 2006 and 2010, some 50% of which willreplace existing tonnage, which equates toabout 2,400 additional vessels requiring 10,000extra officers and 60,000 more ratings. The factthat today's ships are getting bigger and needless crew numbers onboard is maybe stoppingthis figure from being higher still.

Core to this decline in seafarer number beingarrested is more improved recruitment and train-ing, but as SMI recently reported this is not hap-pening and poaching of qualified personnel isbecoming more of a problem.

Indeed, the mass-newbuilding activity beingundertaken by the big Japanese and Europeanship owners has intensified the problem of crewpoaching. As previously reported, Mitsui, NYKand K. Line are openly set to introduce just shortof 400 ships to the world fleet by 2010 - withsome experts suggesting the actual number ofships being delivered could be closer to andpotentially exceed 600. If you also consider thenewbuilding activities of the main Europeanship owners then the potential seafarer shortagesituation becomes even more acute.

In reality, each new vessel entering the mar-ket will require between 15 and 20 officers, afigure the existing training facilities willstruggle to meet, it is claimed. “If you justlook at the four senior officers onboard and tryto figure out the number of newbuildingscoming out coupled with the very limitedscrapping going on, the mathematics will notwork. From now until 2010 there is no wayyou can recruit and train the number of newofficers that we are talking about here,” arespected manager warned.

The effects of the imbalance in the demandand supply of qualified senior officers is evenmore acute in sectors like LNG where someCaptains are commanding salaries approaching$300,000 per year. As officers' wage levelsincrease there is a fear in the industry that theamount of time they spend at sea will drop andthe shortage dilemma will increase even further.As Capt Arcenal himself admits long periods atsea can be a little tedious even with the attractionof the higher wages in place.

And the lure of the sea is further diminishedby the ever increasing level of paper work whichCaptains and other officers are required toundertake. “Since the implementation of ISMyou must follow the Safety Management Systemonboard to meet the standard safety proceduresall the time and that entails too much paperwork,” Captain Arcenal said.

Money has clearly been an incentive forCaptain Arcenal's only son to follow him intothe profession. He is now a licensed Third Mateand is connected with the All Ocean ShippingCompany, having graduated from the PhilippineMerchant Marine Academy in 2003.

“I had no problem recommending a seagoingcareer to my children,” Captain Arcenal admit-ted. “My only son followed in my footsteps as aseaman because of the lucrative income as wellas seeing the world for free. I would very defi-nitely recommend a career at sea.”

While money has allowed the family to enjoyextra status and comfort at home, living condi-tions for Filipino seafarers have also improved atsea. Captain Arcenal believes increased trainingstandards have been a catalyst for this improve-ment. “Maritime Schools required additional sub-jects in the curricula to better equip students forthe courses they are taking. In addition, upgrad-ing SOLAS training was required by theProfessional Regulation Commission prior to theissuance of an endorsement and Certificate ofCompliance (COC),” he said.

“There has been a very big improvement inconditions for all Filipino seafarers. Conditionsfor Filipino officers are better now than theyhave ever been because of the improved work-ing condition as well as the lucrative salarybeing offered by agents and principals abroad,”Captain Arcenal explained.■

DISPATCHESCREWING


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

The lure of the sea is furtherdiminished by ever increasing paperwork which Captains and otherofficers are required to undertake.“Since the implementation of ISMyou must follow the SafetyManagement System on board tomeet the standard safety proceduresall the time and that entails too much paperwork”

Third Party shipmanagement com-panies have grown in presenceover the past few years and theyhave earned the respect of the mar-ket. If you see two ships competingfor the same cargo: one of them run

by a more traditional owner and the other oper-ated by a reputable third party manager, theycan both compete equally for the cargo. Thismeans that because the market recognises thatship managers are here, then they are here tostay because they have created that trust, whichis very important.

But the nature of responsibility in the ship-ping industry is changing. You can have a situ-ation where the wife of one of your captains

receives a call at home from a ship managersaying: “Why is your husband still working forthat small ship owner? He has been there for 20years – is he not bored? Tell him to join us – wecan give him 50% more salary. We have 100ships, 1,000s of opportunities, many principals,many systems, great training initiatives: whydoesn’t he come and join us?”

You can also have the situation where ayoung banker goes to New York and deliverssuch strong presentations to the US investorsthat he convinces them to give him $1bn whichhe uses to buy 30 ships. He then says to the shipmanager: “Hey, I know you are good but I'm abanker and I've got 30 ships which are going tobe delivered two a month. Get me the best

crews there are in six months time and get themfrom anybody at any price!” What can the shipmanager do?

The only option available is to go out intothe market and to pinch and steal people fromeverywhere. That’s an immediate solution andwe have to recognise that we have an openmarket. We cannot be romantic about the situa-tion but have to confront the real situation. Newships are coming onto the market: owners aretaking delivery of huge fleets and in order forthe ships to be staffed we’re going to get intowarfare on prices and wage increases to attractthe seafarers.

So the question I want to pose is - wheredoes this lead us? Because while we talk abouttraining and solid recruitment for the future,what are we doing for the next six months orthe next year? And the ships are coming now.

Lets look at the facts. Salaries in Norway canbe $10K, $12K, $14K, $16K per month, main-ly because of the cost of living. But seafarers inthe Philippines earning $4K-$5K per month arebringing home three times more than theirPrime Minister. In Bulgaria a Professor at theuniversity will earn $600 per month while acaptain who used to get up to $6K per month isseeing his salary jump to $10K or $12K permonth. What is the impact of this on the localcommunities or to the brain of the Captain orthe Chief Mate, to his wife and his childrenwhen just overnight he has doubled his salary?That’s one issue.

Another issue to consider is that demand ishigh now and we have gone through a longperiod of high income. High income together


DISPATCHES CREWING

Seafarer ConundrumA new kind of warfare By Emmanuel Vordonis

New ships are comingonto the market:owners are takingdelivery of hugefleets and in orderfor the ships to bestaffed we’re going toget into warfare onprices and wageincreases to attractthe seafarers

with extremely expensive investment. The shipwe used to buy for $35m is now $90m. Is it thereal cost of the ship? Absolutely not! There isa demand for ships and there’s a high price forships. The cost of the ships is still determinedby the cost of the Chinese welders earning$200 or $300 per month but the market will paymore because of market forces.

The problem is more acute in those compa-nies that have undertaken the responsibility tomanage large fleets. Global ship managersbased in Glasgow, Singapore or in Kiev can filea computer request for a second engineer. Thisrequest floats through the internet to therecruiting offices in Odessa, or in Vietnam orBombay and they begin bidding.

People are being traded through the internetlike commodities and does this make themhappy? I think not.

Our experience in my company is that out ofthe people who left and then returned, theycame back because they said they were happyhere. They knew the systems, they knew thepeople and they knew the chief engineer andthe captain and they were familiar and happywith the structure of cross-national co-opera-tion. By moving to another ship, they had to gointo this new United Nations environment and

had to pass once again through the process ofcultural cohesiveness and they were not happy.They had to change their habits of eating, theyhad to adapt to changes in the way they weretreated onboard ship.

The historical arrogance of the European’shas been reversed and I have heard of instanceswhere Bavarian and Greek seafarers who haveserved on an Indian-controlled ship have expe-rienced extreme arrogance from the IndianCaptain to the extent that they were treated assecond rate citizens. Why? Because it’s timefor people to mingle and understand the differ-ence of their cultures and work together as agroup and as equals. It takes time and problemcan arise when you take this experiment ofmixing nationalities without taking the time toco-exist and co-operate. So this is one side ofthe problem which I call the changing nature ofour responsibility. It’s great that ship managers- and I put myself into this group, have workedhard to create trust.

We have to think of ways to solve the short-er immediate problem of meeting this demandfor highly competent seafarers and how wehelp them to mingle and co-operate. It's asimportant a challenge as that of recruiting andtraining seafarers for the next decade ■


It’s time for peopleto mingle andunderstand thedifference of theircultures and worktogether as a groupand as equals. Ittakes time andproblems can arisewhen you take thisexperiment of mixingnationalities withouttaking the time toco-exist andcooperate

DISPATCHESCREWING

After 20 years at sea serving onbulk carriers, oil tankers and ahost of other vessels, Port StateControl Inspector Captain PhilThompson has one thing in hissights – Arthur Scargill. “I’d like

to see him hung drawn and quartered,” Philtells SMI as we drive towards the UK port ofImmingham on a cold October morning. Abroad smile spreads across his face – he is jok-ing, of course. I have known the man for lessthan an hour and, despite his chatty nature andgood humour, it is clear he takes the demise ofBritish industry, specifically shipping, verymuch to heart.

Shipping is in Captain Phil’s blood. He talkswith passion and understanding about theindustry he has served throughout his workinglife. Port state control inspectors certainlyaren’t your average civil servants. “Surveyorscome from three sources: Sea Captains, NavalArchitects and Chief Engineers,” explainsGwen Evans, Surveyor in Charge at theMaritime and Coastguard Agency's (MCA)Hull Marine Office (Beverley). “Everybodyhas had a previous life.”

The vessel Captain Phil and colleague IanHarvey are due to inspect is the Hong Kongflagged, 87,863 ton bulk carrier, UniqueAlliance. It has a low target factor (a computergenerated number derived from ship type, age,size, class, inspection history and the date of itslast inspection), but it has been targeted todayas it is set to leave the Paris MOU for Brazil.“We are actually providing a service for theship,” former Chief Engineer Ian tells me. “Itoperates a lot in South America and if it goesout there and isn’t inspected within a 12 monthwindow its target factor will be say 21, not one,so it will be targeted straight away.”

As we board the ship, the team still has verylimited information and little idea of what wemight find. “No inspection is the same and wecan’t cover everything, it’s just not possible”Captain Phil says. “We will just take a lookaround and get a feel and look, initially, at thegeneral cleanliness of the vessel. We look at thegalley and observe the standard of food andhygiene - that can be a good benchmark - it cer-

tainly helps us to identify trends. On the bridgeI start with the magnetic compass, look at chartcorrections, bridge and navigation records toget a general feel and see if anything catchesmy eye. Sometimes you can spot something,and then just by asking questions, it can lead toa whole lot of problems.”

As we are greeted by the crew, I’m awarethese early exchanges are critical. With someinspections, problems can start the moment theinspectors board the ship, with the crew mak-ing every effort not to cooperate. These diffi-culties, which are often accentuated by lan-guage barriers, will never benefit the crew. Anyresistance or attempts to disrupt the inspectionwill only ever result in the port state controlteam digging deeper. “If wehave a problem communi-cating with them, you won-der how good their commu-nication is with each other.This can certainly affect theinspection,” Ian admits.

Fortunately for us, the 18strong, all Indian crewonboard the UniqueAlliance is willing to coop-erate and have an excellentcommand of English.However, judging by theslightly fearful look in their

DISPATCHES PSC


A day in the mind of a portstate control inspectorPort state control detentions can put a black mark on a ship operator's profit as well as its reputation. Butare inspections really something to be feared? Andy Pierce joined a vessel inspection to find out whattoday's inspectors are really looking for

As we board theship, the team stillhas very limitedinformation and lit-tle idea of what wemight find. “Noinspection is thesame and we can’tcover everything, it’sjust not possible”

eyes, their initial readiness to help is perhapsdriven by their fear of making a mistake.During a thorough inspection of certificates inthe officer's lounge, the Master Captain Vaz,explains what may have caused this anxietyamongst his crew. “Some countries use portstate control as a tool to make a quick buck. Inthe third world, where everybody needs money,they come onto the ship and find 25 to 30faults. Then the owner and the master are ontheir knees, and both sides will want to keepeach other happy – it is a chain,” he says.

Fortunately, communication today is a two-way process, and things are going to plan. “Weare all professional members of the marineindustry,” Captain Phil says. “We have got tobe reasonable and practical as we know we are

dealing with professional seafarers. We have torespect that this is their home. When we find aproblem, it is not a solution to quote rules andregulations and walk away. We need to adopt avery pragmatic approach. This is where knowl-edge and experience comes in.”

As Captain Phil and Ian tour the ship theirexperience certainly comes into play.Everything from the life boats and the oxygentanks to grease nipples, rubbish bins and thetemperature of the hot tap draws their criticaleye. But they are not looking or expecting tofind major defects. A single missing lifebuoy ora self-igniting light that isn’t working mightrepresent a trend of poor safety standards orsloppiness – an avenue for investigation.

Captain Phil in particular has a fixation with“good housekeeping”, believing it to be a fun-damental part of setting good standardsonboard. A rope strewn across the deck resultsin a quick dressing down for the officer respon-sible, but, I am assured: “We’re not getting atthe crew – it’s ensuring good seamanship – it’sfor their own benefit.” Particularly after theChief Officer admitted that his noticeable limpwas due to a recent slip, trip and fall.

Following their initial concern the crewappears to appreciate that the surveyors are nottrying to trick them. It’s interesting to watchCaptain Phil and Ian’s relationships with thecrew develop throughout the day. The crew issubjected to a torrent of questions and theirability to respond appears to earn them therespect of Ian and Captain Phil. The growingbanter onboard is a mark of the respect thatevolves between all parties. “If the ship is ingood condition then there is no need to bull-shit,” the second officer says. “If the ship is ina bad condition then it is, ‘Sir, come this way,or Sir, come that way’, to distract [the survey-or] and keep our secrets. But there is no needhere – this is the best ship I have sailed upon.”

The crews’ ability to think on their feet cer-tainly shows when they have the presence ofmind to update the Fire Safety Plan with a newcrew list, which Captain Phil had found to beout of date during the initial certificates inspec-tion. This sort of foresight will certainly dothem no harm in the minds of the surveyors.

However, despite the best efforts of the crew,problems do occur on even the best equippedvessels. Captain Phil has recently come acrossa number of vessels with embarkation and pilotladders certificated in the Far East, but do notcomply with the requirements of IMO orSOLAS. “It’s not the fault of the crew, it’s thefault of the authorities,” I am told.

When the inspection is complete the teamsits down with the Captain to discuss what theyhave found. As expected they have no need todetain the vessel, but the feedback session stilltakes around an hour to complete. Yet at theend of a long day Captain Phil still sees thevalue of the exercise. “We shouldn’t be here todemotivate people, we should strive to moti-vate them,” he says. “The whole reason for portstate control is to create a level playing field.We don’t want to penalise good ships - we wantto improve bad ones.” Arthur Scargill still hasmore to fear from Captain Phil than a good shipowner it would seem.

Many thanks to the MCA, the staff at the HullMarine Office (Beverley) and Captain Vaz andThapuyal crew of the Unique Alliance. ■

“The whole reasonfor port state controlis to create a levelplaying field. Wedon’t want topenalise good ships -we want to improvebad ones”

SMI's Top Tips to avoid detention • Cooperate with port state surveyors• Good housekeeping indicates an

interest in your own environment• Keep good basic standards – it will

stop inspectors digging deeper• Have procedures in place and stick

to them (be compliant with your ISM & SMS)

• If you make ANY engineering changes onboard, be sure to notify class and flag

• Keep up-to-date certificates and records

• Ensure that the ship complies with relevant conventions

• Keep maintenance records up to date• Effective communications between all

crew members• Know how to safely operate your

equipment • Good relationships with shore

personnel• Ensure a safe and habitable working

environment for all crew onboard

SPEAKINGTHETRUTH

“Although in the past the Paris MOU hadno official status within the InternationalMaritime Organisation, the achievements ofthis regional agreement on port state controlhave certainly had an impact on rule-mak-ing in the IMO.

“Not only has the alarming statisticalinformation on sub-standard ships been anincentive to finally discuss the implementa-tion of international regulations by flagstates in a special sub-committee, but thesuccess of the Paris MOU has also promot-ed the establishment of other regionalagreements on port state control.”

Andri Bruijn, Assistant Secretary, Paris MOU on Port State Control

DISPATCHESPSC


58 SHIP MANAGEMENT INTERNATIONAL ISSUE 4 NOVEMBER/DECEMBER 2006

The short-term economic risk outlook remainsfavourable in Singapore. For shippers withcredit risk horizons of 90 days or fewer, theoutlook is particularly favourable thanks to therecent expansion of economic activity whichhas pushed the capacity utilisation rate ofSingaporean industries to multi-year highs, ina welcome development. However, assumingour global forecasts are realised, the comingmoderation or correction in global growthholds out the possibility of the Singaporeaneconomy plateauing at the current high activi-ty levels or returning to the more muteddemand conditions of 2004, slightly increasingcredit risk as 2007 progresses.

The Ministry of Trade and Industry recordeda 7.2% year-on-year (y/y) rise in real GDP inQ3 and a 5.7% annualised increase on Q2.This was a little below market expectations butdemonstrated a vigorous expansion in the pastquarter. Domestic demand, which tends to lagthe external trend in Singapore, rose 8.0% y/ycompared with its growth of 4.9% in Q2 2006,as private consumption firmed. This is likelyto have been due to a tightening employmentmarket. Total employment rose 41,600 in Q32006, an increase almost as large as the 45,000increase of Q1 2006. Manufacturing, servicesand construction each saw gains in employ-ment, with services adding 24,600 jobs, while

the construction sector, which until quiterecently had been beleaguered, added 5,500.This helped to reduce unemployment to 3.2%and 2.4% for residents and total populationrespectively, compared with 3.8% and 2.9% inQ3 2005. Meanwhile, total population was up3.3% y/y in June 2006; Singapore is attractingmore labour immigration, presumably from itsusual sources for labour such as Bangladeshand the Philippines. These indicators all sup-port a positive outlook.

However, leading indicators present a moremixed picture. Q3 real GDP growth was sup-ported by 10% y/y growth in external demand;if external demand growth fell far into single-digit territory, domestic demand growth wouldhave to be well above 8% to keep the currentlevel of economic growth. Non-oil domesticexport growth appears to be moderating to lowsingle-digit levels, growing by just 3.8% y/y inOctober 2006. Moreover, non-oil retainedimports of intermediate goods contracted for athird consecutive month in October 2006, by16% y/y, reflecting declining imports for theIT industry, while semiconductor inventoriesare up, and should curb industrial output in Q42006 and Q1 2007. Meanwhile, the compositeleading indicator showed its first quarter-on-quarter dip for seven quarters in Q3 2006. Inthis context, much will now depend on theshort-term trend of demand in the US, Japanand China. In the first two markets, forecastsfor 2007 are being reduced; consequently, ourforecast for real GDP growth for Singapore in2007 remains cautious.

MINIMUM TERMS: OPEN ACCOUNTThe minimum advisable form of documenta-tion or trading method under which D&Badvise customers to pursue any form of exporttrade with stated country.

RECOMMENDED TERMS: Sight Draft D&B’s recommended means of payment. Theuse of recommended terms, which are general-ly more stringent than minimum terms, isappropriate when a customer’s payment per-formance cannot be easily assessed or when anexporter may wish to limit the risk associatedwith a transaction made on minimum terms.

USUAL TERMS: 30-60 daysNormal period of credit associated with trans-actions with companies in the stated country.Payments performance in Q3 2006 improvedon its level in Q2, with prompt paymentreported in 55.6% of cases, rising from 54.3%in Q2. Payments made more than 30 days overterms fell by just 1.1 percentage points to32.8%. Two 'later' categories (90 and 120 daysover terms) remained stable at close to 3% and10% respectively, a small minority of totalpayment experiences.

LOCAL DELAYS: 0-1 monthsThe time taken beyond agreed terms for a cus-tomer to deposit money in their local bank aspayment for imports.

FX/BANK DELAYS: 0-1 monthThe average time between the placement ofpayment by the importer in the local bankingsystem and the receipt of funds by theexporter. Such delays may be dependent onforeign exchange controls, foreign exchangeavailability and the efficiency of the localbanking system.

IMPORT COVER: 5.9 monthsThe amount of foreign exchange a country hasin relation to the average monthly value ofimported goods and services. Only liquid for-eign exchange reserves from which a countrycan service its import requirements are includ-ed in this calculation.

With a current account surplus that is worthone-quarter of GDP, Singapore is a netexporter of capital and accumulator of FXreserves. Both its net creditor status and stockof FX reserves grant it virtual immunity frombalance of payments pressures suffered byexternal liquidity poor markets in the regionsuch as Indonesia. This is the more remarkablefor Singapore being such a geographically lim-ited market.

USUAL TERMS

TRANSFER SITUATION

TRADE ANALYSIS DUN & BRADSTREET

C O U N T RY R I S K L I N E R E P O RT

Singapore

RISK FACTOR

DB2aThis ‘DB’ Rating Indicates: Low risk

Risk – Low degree of uncertainty associated with expected returns. However, country-wide factorsmay result in higher volatility of returns at a future date. Trend – Stable. The country's overall risk

outlook has not changed appreciably, even though some minor changes to its political, commercial,macroeconomic, and/or external risk environment may have occurred

THE ‘DB’ RISK INDICATORThe ‘DB’ risk indicator provides a comparative, cross-border assessment of the risk of doingbusiness in a country. Essentially, the indicator seeks to encapsulate the risk that country-wide factors pose to the predictability of export payments and investment returns over a timehorizon of two years. The ‘DB’ risk indicator comprises a composite index of four over-archingcountry risk categories:

Political risk - internal and external security situation, policy competency and consis-tency, and other such factors that determine whether a country fosters an enabling busi-ness environment;

Commercial risk - the sanctity of contract, judicial competence, regulatory trans-parency, degree of systemic corruption, and other such factors that determine whether thebusiness environment facilitates the conduct of commercial transactions;

Macroeconomic risk - the inflation rate, government balance, money supply growthand all such macroeconomic factors that determine whether a country is able to deliver sus-tainable economic growth and a commensurate expansion in business opportunities;

External risk - the current account balance, capital flows, foreign exchange reserves, sizeof external debt and all such factors that determine whether a country can generate enoughforeign exchange to meet its trade and foreign investment liabilities.

The DB risk indicator is divided into seven bands, ranging from DB1 (lowest risk) throughDB7 (highest risk). Each band is subdivided into quartiles (a-d), with an a designation rep-resenting slightly less risk than a b designation and so on. Only the DB7 indicator is notdivided into quartiles.

ECONOMIC INDICATORS*

2003 2004 2005 2006f 2007fReal GDP growth% 2.9 8.7 6.4 6.9 4.2Inflationannual ave % 0.5 1.7 0.4 1.2 0.2Govt balance% GDP* -4.8 -1.4 0.2 0.2 0.0Export Growth% 15.1 17.0 14.0 13.5 8.9C/A balance% GDP 29.2 26.1 22.9 25.5 26.0

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

Payments Performance(% of payments made 30 or more days over terms)

Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 0644.5 40.7 38.5 35.6 34.8 33.9 32.8

GlossaryKEYCLC Confirmed Letter of CreditCWP Claims Waiting PeriodFX Foreign ExchangeL/C Letter of CreditLT Long-termMT Medium-termOA Open AccountSD Sight DraftST Short-term

1.52

Jun 06 Jul 06 Aug 06 Sep 06 Oct 06 Nov 06

1.56

1.6

1.64

EuroGBPJPY*USD*(x 100)

2.94941.3231.55691.9971

Exchange Rates(London, 28 Aug 06)

DUN & BRADSTREET TRADE ANALYSIS

*Government balance figures are for fiscal years (April-March).

Local Currency (Singapore dollar [SGD]: USD)

Despite soaring office rents and rising wages it is stillbusiness as usual for the shipmanagement industry inHong Kong. And any attempt by Singapore to establisha position of strength in the tanker management marketwill only go to underline the strength of the region in

helping to dominate this growing market sector.That was the general consensus of opinion of the shipmanagement

incumbents on either side of the South China Sea divide.“Hong Kong has remained a prominent management centre for a

long time and I don’t see anything changing here in that respect becauseall the advantages Hong Kong had before, continues to remain, notedKishore Rajvanshy, Managing Director of Fleet Management.

“These include the proximity with China, the good banking infra-structure, support facilities like brokers and insurance: all these supportservices which are required for the operation of a ship,” he said.

As for local shore-based staff, they are here, very experienced andvery industrious. “So nothing has changed which would make HongKong less attractive as compared to Cyprus or Singapore. The only dif-ference between Singapore and Hong Kong is that the Singapore gov-ernment is very aggressive and is trying very hard to double upSingapore as a shipping hub and is giving lots of incentives to the com-panies who want to become established there, particularly in shipping,”the Fleet boss stressed.

Singapore has always been a close rival to Hong Kong and accord-ing to Rajvanshy, the Singaporean government feels an element of con-tentment when a company from Hong Kong moves there. But where isHong Kong getting its driving force from?

“The countries providing maximum growth potential for the regionare Japan and China whose ship owners are opting more and more forthird party management. This is an understandable phenomenon inJapan because the ships are becoming more complicated: the fleet sizeof the country's owners is growing and the capacity to manage them outof their offices in Japan especially by the smaller ship owning compa-nies, is becoming more limited. There are people in Japan who havebeen managing ships traditionally for years but they are getting old andnew people are not just coming in, there is little new blood coming intothe ship management industry in Japan. So they have no option but toseek outside help from Hong Kong and Singapore,” said KishoreRajvanshy.

He went on: “Yes China as well, where the biggest potential is fromthe crew side. The numbers of Chinese crew onboard foreign-managedships is growing very fast.”

Rajvanshy cited his company's own case where Fleet started to useChinese crew on its ships about three years ago and he admitted thecompany was sceptical about the likely success of the first vessel wetook with a full Chinese. So sceptical that it put a superintendentonboard the ship with the Chinese crew until such time as it was confi-dent and comfortable with the crew onboard. “Three years later we haveincreased the number of ships with full Chinese crew from one to 22ships,” he said.

Why the sceptism? Well to begin with it was a fear of the unknown,he said. “We had no idea what their temperament was, how capablethey were and how much could be relied on as far as their education andtraining was concerned. Language and communication was also a little

REGIONAL FOCUS HONG KONG/SINGAPORE


A force to bereckoned with

bit of a challenge. A combination of all these question marks gave usreally a lot of concern as to whether these guys would be able to run theships or not and that’s why we had to go very slowly,” he added

According to the Fleet Management boss, experience has allayedmany of the concerns to the extent that the Chinese crews are nowpraised for the ease to which they can be integrated into the onboardmanagement process. “They tend to accept everything which is told tothem by a charterer or by the operator,” said Kishore Rajvanshy.

But what about the language problems? “It’s getting better, certainlyit’s getting better. There is a lot of focus in China on improving the lan-guage spoken by the crew and that is showing some result.”

Ram N. Singh, Managing Director of the relatively newly formedNorthstar Ship Management is more philosophical about the interplaybetween Hong Kong and Singapore as ship management centres.

He told SMI: “From our point of view, Hong Kong and Singaporehave always been major ship management centres. Hong Kong wasstronger because there were major ship owners here from where theship managers evolved.

“Whereas in Singapore, those ship management companies that wereset up there were essentially branches of existing businesses. In recentyears many important factors have come into play: incentives have beengiven by the Singapore government to encourage companies to theisland and there is the passport issue: people live there can becomeSingaporeans. And now the education facility in Singapore for peopleof Indian origin and children of Indian origin, is better than Hong ➩Kong so there are many Indians who prefer to work in Singapore.

“The last and a very important point is also the cost. Singapore isstill more economical than Hong Kong in terms of say rent of office,home, general cost. Singapore certainly is becoming more, let us say,attractive to the ship management industry than Hong Kong,” he added.

Are you saying that while Hong Kong will always have a major ship-management presence, more and more ships will start to be managedout of Singapore? ➩

REGIONAL FOCUSHONG KONG/SINGAPORE


“The only difference between Singapore and Hong Kong is that the Singapore government is very aggressive and is tryingvery hard to double up Singapore as a shipping hub and is giving lots of incentivesto the companies who want to becomeestablished there” Kishore Rajvanshy

“Singapore is more economicalthan Hong Kong in terms of sayrent of office, home, general cost.Singapore certainly is becomingmore, let us say, attractive to theship management industry thanHong Kong”

“Yes Hong Kong is a major centre for shipowning, it is continuingand it will continue but third party management ships, outside ships, areslowly drifting towards Singapore because of the cost of living, theenvironment, the Indian superintendent, the foreign superintendent. Iwould say overall the environment in Hong Kong has been very goodexcept that the cost of the property which is something which I don’tknow how far the government can really influence,” he emphasised.

Mr Singh continued: “Shipmanagement, whether it’s small or large,is concerned with the same identical requirements. The requirement ofone ship will also need to be met in the same way as a requirement of ahundred ships or two hundred ships.”

“We have to have a certain minimum number of ships in order to befinancially viable to be able to continue as a self sustaining venture. Sounless somebody feels confident of getting that number in a very shortperiod, quickly, I don’t think people will venture into starting up newship management operations today. I would not have ventured unless Ihad this assurance of this core customer so that is a requirement.”

Eurasia Group President and Group Managing Director RajaishBajpaee is one ship manager who has experience in both centres andsees strengths coming from both. “Both have the right mix of ingredi-ents or requirements for shipmanagement which are strong airline con-nections, strong communications and banking and finance with the freemovement of cash in and out. They also have a very competitive work-force in terms of maritime knowledge and there is also a familiaritywith English. With Singapore coming out with favourable tax incen-tives, both have strong maritime clusters – brokers, lawyers, ship finan-ciers and banks,” he said.

“The difference is that one is evolving with more of a market dynam-ic while the other is evolving more through the economic support of its

government. That is the only distinction I can draw. Hong Kong is driv-en by how business is shaped by market forces and the government onlyprovides the right environment,. Singapore has a very strong directionand support form the government in shaping its future,” he told SMI.

According to Anglo-Eastern Chief Executive Officer Peter Cremers,Hong Kong still has the fundamental assets needed to be a quality ship-management centre.

“The fundamental asset is easy access for funds, people: it is central-ly located, smack in the middle between India and Japan with ourclients close by and our crew supply nearby also. It’s still a very goodlocation. The locality has a lot of dedicated staff, that has not changedand people are still hard working which may not happen at the samelevel in Singapore so it’s still a very comfortable place to do this job andpeople like to work here,” he said confidently. ➩

REGIONAL FOCUSHONG KONG/SINGAPORE


“Shipmanagement, whether it’s small orlarge, is concerned with the same identicalrequirements. The requirement of one shipwill also need to be met in the same way asa requirement of a hundred ships or twohundred ships” Ram N. Singh

“I could say tomorrow, let’s moveAnglo-Eastern to Timbuktu becauseit’s a lot cheaper but without super-intendents it’s going to be very diffi-cult. So it is still a place where peo-ple like to work and live and it’scentral and it’s practical. The onedisadvantage Hong Kong has is thecost so with office rents and flatrents going berserk that is a prob-lem, the cost of operating in HongKong is a problem. But I alwaysshare the view that the cheapestplace to do business is not alwaysthe best place.

“Singapore is slightly different.Singapore is definitely more unpro-ductive than Hong Kong there is nodoubt about it. There is the enor-mous influence of the ship so I’mnot so sure there is the availabilityof people. It’s very competitive butthe availability of people is a littlemore critical.”

This is not a view shared bySingapore-based Thome ShipManagement which is a firm believerthat Singapore is the right location tomanage vessels, certainly as far asJapanese owners are concerned.

A spokesman told SMI: “We arelooking at expanding into moreoffices, whether that will be throughopening our own offices or to jointventure companies I’m not sure butas we have announced earlier wehave already made ready for manag-ing vessels from the Philippines. Of course the company is growing, weare now managing close to 70 vessels in total and that’s getting close tothe limit of what we should do from our office.”

He added: “We are growing in Europe, we are growing in Japan butSingapore is the right location to manage vessels by Japanese ownersdefinitely but for European and more specifically Scandinavian owners,maybe we should look closer to Europe.”

Singapore's location close to the major trading giants of India and

China coupled with its strong ship repair, engineering and offshorestrength might have seemed enough to grow the shipping sector on theisland. But the Singaporean government has laid out the welcome matin the form of tax incentives for those foreign companies slow to acceptthe invitation.

According to Jeremy Hayley-Bell, Managing Director of EasternProduct Carriers, since the formation of EPIC, the SingaporeGovernment has come forward with a number of tax initiatives ➩

REGIONAL FOCUSFAR EAST


“If I am a couple of minutes latepicking you up don't worry,” reas-sured Andy Wu, Univan head oftravel. “She is a grand old lady andcan sometimes get a little bitmoody”.

The journey from Hong KongIsland to Chep Lap Kok Airport onLantau is smooth, very smooth.Especially as I am travelling in theback of a yellow Roll Royce. Notjust any yellow Roll Royce but oneparticular 30 year old Rolls Roycethat has become a symbol of shipmanagement presence on HongKong for the past two decades.

It is the property of Univan Chairman CharlesVanderperre who bought it nearly a quarter of a cen-tury ago primarily as a PR stunt but it has remainedan essential part of the Univan family ever since.

Vanderperre is shy about his epithet as the fatherof modern day shipmanagement. After all, he hasacted as a guiding force to the majority of today'stop shipmanagers and at 85, or 86 if you accept theChinese assertion that you are one the day you areborn, he is still refusing to let the Univan reins go.

Vandeperre founded Hong Kong’s UnivanShipmanagement in 1973, after he had foundedWallem’s shipmanagement arm but he took theshipmanagement sector by surprise when heannounced in October that long-time client theClipper Group of Denmark had taken a 50% stake inUnivan. “I’m getting old,” he was reported as saying.“It’s important that the firm does not go with me.Clipper is a highly competent shipping outfit. Thecompany will be in good hands.”

Captain Vandeperre saidClipper would take over the man-agement of the firm with a 75%stake when the moment comes forhim to hang up his hat. Theremaining 25% would remain intrust to fund Captain Vandeperre’sphilanthropic work in Thailandwhere he has donated a consider-able amount of his fortune toschools, hospitals and temples.

He has, however, appointed asuccessor in his Chief AccountantA.S. Maniyar who is beginning totake over the reins.

“Actually the question is, theCaptain has been running the company and every-body is worried that their ships are worth millionsso everybody is wanting to know who is going torun the company should something happen to theCaptain, I believe that nothing will happen becausehe is very strong and going strong I can assureyou,” said Mr Maniyar.

“I personally do not foresee any major change inthe day to day management of Univan. The compa-ny will be controlled by Clipper but all the principlesand the people running the company will still contin-ue to do so. I don’t foresee any major change.

“Every ship management company is generallyrun in the same style more or less, and if you wantto remain in the business you have to follow theaccepted practice. The captain is a pioneer in shipmanagement, he’s the one who started this con-cept in Hong Kong and everybody is following thatso why should we change our own strategy?,” hestressed. ■

Travelling in style, by Sean Moloney

that have successfully attracted many owners and operators to eitherestablish a presence in Singapore or expand their existing presence there.“As these tax initiatives have been directed at both ownership and ship-management companies, this has resulted in many Far Eastern ownersmoving their base of operations to a more tax friendly environment. Themovement of tonnage to Singapore is, for the moment, probably havingonly a marginal effect on management centres such as Cyprus and HongKong mostly due to the large number of vessels delivering into the mar-ket requiring management services,” he stressed.

Mr Hayley-Ball continued: “The increased demand for shore-basedstaff cannot be satisfied by the local market. Nevertheless, theSingapore Government has duly recognised this and is allowing therecruitment from overseas of superintendents and other specialist sen-ior staff. Junior staff are available although in many cases they comefrom a non shipping background and have to be trained.”

REGIONAL FOCUS FAR EAST


Singapore's predominance as ashipmanagement centre is matchedby its strength as a shipping services location, boasting one ofthe largest port groups in the world,major ship repair and engineeringcentres and ship supply companiesnow stamping their mark on worldshipping

Keppel FELS, a wholly-owned subsidiary ofKeppel Offshore & Marine Limited (KeppelO&M) and a major participant in theSingaporean ship and rig building sector, hasdelivered its first jackup drilling rig ahead oftime to Qatar’s national drilling company,Gulf Drilling International.

Built to Keppel’s proprietary KFELS BClass design, the first rig will be named Al-Khor, after one of Qatar’s historical citieswhich has contributed to the development ofLiquefied Natural Gas (LNG) in the countryin recent years.

Al-Khor has been built to GDI’s specifica-tions for operations in water depths of up to300 feet and drilling depth of down to 30,000feet. The rig can accommodate up to 110 menand is readily upgradeable for higher drillingcapabilities in water depths of up to 400 feet.When delivered, it will contribute to thedevelopment of Qatar's Liquefied Natural Gas(LNG) industry, as the State strives towardsbeing the world’s largest exporter of LNG by2012.”

The offshore sector is key to Singapore'sfuture prosperity with a number of its yardsservicing the needs of vessels employed in thesurrounding oilfields especially those offVietnam.

Smaller more specialised ship repair yardslike Kwong Soon Engineering are lookingforward to good times ahead on the back ofthe strength of the offshore market boosted bythe world oil price. As one major player said:“The market is so buoyant at the moment thateverybody is getting a piece of the cake andthe situation is likely to continue for at leastanother six or seven years.”

Singapore's strength as a shipping centrehas also benefited companies like GaylinInternational which as a major supplier ofwire rope to the world's shipping industry hasseen its fortunes accelerate thanks to a growthin the offshore sector.

According to Desmond Teo, the ebullientGaylin Managing Director and ChiefExecutive Officer, the strength of the offshoremarket in the early days benefited the compa-

ny as it started to grow, albeit gradually.“In those days we really did anything and

everything – general trading to dealing in thewire rope business mainly for the offshoremarket. The company manufactures, stocksand supplies a wide range of products fromwire ropes and fittings, cable-laid heavy lifit-ing slings and grommets, high performancepolypropylene and nylon ropes, deep-seamooring ropes, mooring chains and high-holding power anchors, chain slings and fit-tings, industrial hoses, clamps, valves, grind-ing and lapping compounds, lubricants, tech-nical stores and food products to ships, andothers.

Gaylin also provides a number of relatedservices like testing and certification of liftingdevices, spooling facilities for winch wire andanchor line, maintenance and lubrication ofwire ropes and fittings, and others.

“Ship owners come to us because of fastdelivery and the quality and you know that wecarry stock not only one wire rope, big sizewire, five metre, two inch. We don’t carryjust one or two reels but hundreds in everysize. Sometimes they will order eight reels bytomorrow or the next week. But if I had to getit from a manufacturer I would have to waitfive months so I always buy in advancebecause I know I can sell these items.”

Marinehub, a Singapore-based competitorto Gaylin, agrees that demand is growingespecially for chain, wire rope and syntheticrope. According to David Low, ExecutiveDirector, China is the driving force behind thegrowth in demand for anchor chain. “As thedemand for new ships increases so does thedemand for anchor chains. Of course if there’sa typhoon or particularly deep sea then thedemand for chain will be even higher,” headded. ■

“The movement of tonnage to Singapore is, for the moment, probably having only a marginal effect on management centressuch as Cyprus and Hong Kong mostly due to the large number of vessels delivering into the market requiring management services” Mr Hayley-Ball

Peter Cremers looks relaxed. Reclining purposefully on an easychair in the reception area of his Hong Kong headquarters, heappears very much at ease with his position as the head of oneof the shipmanagement industry's most respected and revered

players. When I interviewed him last in Spring of 2003, he was as adamant

then, as he is now, that being one of the largest shipmanagement com-panies in the world does not automatically quality you to quicklyexpand your fleet. That his priority, so to speak, was not to be thebiggest but to be the best.

“Are we big? Yes we are big,” he reflected. “Does it affect the qual-ity of the work we do? I don’t think so. There are things which sizemakes easier. If you have a big crewing pool in Europe and in otherparts of the world then things are much easier. Does the V.Ships con-cept of 700 ships work? I don’t know. I may have some privatethoughts about it but I don’t know, let the market judge that, right?”

“If you ask V.Ships the same question, they will say: 'listen, we have15 offices or 10 shipmanagement centres and each of these centresmanage 60 ships, that equates to 600 ships. As long as they all work inthe same system, in theory, it should work, right?”

I quickly interrupt: “I suppose, what you are saying is that is similarto operating ten management companies managing 60 ships each?”

“From this office, we manage 120 ships. It's a lot but at the end of theday I have three fleet managers who, in a different world, would eachbe seen as the managing director of a small shipmanagement company.So I think it can be done in proper way. Whether you manage 200 shipsor 300 ships, I wouldn’t say that it has to be at the cost of quality,”Cremers added.

But one of most crucial factors linked into providing the quality thatthe industry demands today, is sourcing and employing the right crew.And when you hear of instances where ship managers have turneddown shipmanagement contracts because they don't have the availablecrew, then you really start to understand the predicament facing theindustry.

“We have postponed certain delivery times in the past because wecan’t manage. We have a plan. If we know we are getting so many shipsthis year or so many ships that year, that’s okay but if tomorrow - andit has happened before – somebody walked in here and said: ‘Peter, fiveships for end of November/early December’, it will be ‘no, physicallywe cannot. That room is not there anymore,” he warned.

REGIONAL FOCUS ANGLO-EASTERN


Anglo-Eastern Shipmanagement ison the rise. With a managed fleetexpected to top 220 by the end of

the year, up from only 95 vessel in2000 and 133 ships four years ago,

it is leading the Asian chargetowards larger fleets and greater

fleet diversification. But whilethere are definite advantages to

being large, it doesn't mean companies like Anglo-Eastern areimmune to the problems affecting

the industry. But as companyCEO Peter Cremers told Sean

Moloney, if an owner came into hisoffice tomorrow asking him to

crew manage five ships at the endof the next month, the answer

would be no, because it cannotphysically be done

Singularly focused

But what does the industry need todo today and for the next three years toensure it has competent seafarersaround?

“You can train people, you can beextremely careful in the way you man-age and you can supervise the ships asmuch as you like, but there’s very lit-tle you can do. We have the ships com-ing out of the yard, you have the peo-ple and the training but you need eight, nine, ten years before you havea suitably qualified Captain, so we are pushing large numbers of juniorofficers in the fleet. But at the end of the day that is not going to changethe situation immediately.

“We have been loyal to India for 15 or 20 years and that pays divi-dends, that’s number one. Number two, I think the owners are the firstones to be blamed because this industry from the moment we havesomething that works properly. The industry says: Oh, crews are cheap-er there’ and we all look elsewhere – what is happening is totally wrong.As an industry we should identify a good recruitment area, stay there,build it up and stop fishing around for cheaper deals - there are nocheaper deals any longer. The priority is getting the right people. Ifpeople still think they can do it cheaper somewhere else then it’s over,it’s finished. Be happy over the next couple of years if you have peo-ple on board your ship,” he said.

Peter Cremers is one of three owners of Anglo-Eastern alongsideMarcel Liedts and Richard Wong. Within that group his responsibilitiesare on the commercial side of the business and he has two main priori-ties: clients and staff. He is a naval architect by trade, so he does havethe ability to manoeuvre in the technical area, but leaves the majority ofit to Marcel Liedts, Group Managing Director and “technical wizard”.

Peter Cremers describes himself as both a 'doer' and a 'delegator'. “Iam very good at both,” he told SMI. “When a task requires the person-

al touch, say a specific request from a client, I am normally there, armdeep, getting it done. My colleagues say I am usually not to be messedwith in this scene as I am in 'Go' mode. On the flip side, when a jobrequires a number of people working together, I can take charge anddelegate to arrange the best possible team and supervise their progressaccordingly.”

As a leader in his industry why does he still eschew membership ofInterManager, the trade association for his sector and an organisationthat would benefit from his input?

“First of all, if you join an association you have to put in the time andthe effort. When you consider the way this company works, the growthit is experiencing and the fact that my priority today are importantissues such as the lack of people onboard then you will see why my per-sonal priorities are different. I can’t run around like other colleaguesbeing on every speaking panel.

“I don’t know how they run their business, that’s probably why weare different, but I can’t. I have my difference of opinion with my col-leagues on various issues and most of it I don’t think I want to makepublic.

“If I go to Intertanko, or Intercargo or Bimco, I believe I can betterdeliver the ship manager's viewpoint. In that respect it’s a much ➩

REGIONAL FOCUSANGLO-EASTERN


When you hear of instances where ship managers haveturned down shipmanagement contracts because theydon't have the available crew, then you really start tounderstand the predicament facing the industry

Most of the relationships we have withour owners are very close, we arealmost integrated into their business.We are not just somebody they use fortwo years

more effective tool in getting the down-to-earth practical experiences ofa ship manager out into the industry rather than sitting together as man-agers and talking. We participate very actively in Bimco, participatevery actively in Intercargo, at least the owners are sitting there right?They listen to you, they may not agree but if you really want to bringabout changes they are there,” he opined.

The shipmanagement industry is changing, we all know that. Thereis greater demand for third party management expertise and the rolequality managers can play in the development of soundly operatedfleets is beginning to be appreciated for what it is. But are managersforging closer, more permanent bonds with their principals?

“Most of the relationships we have with our owners are very close,we are almost integrated into their business. We are not just somebodythey use for two years. That is at least not the way that I want to work.We are integrated with most of our clients, that means you’re strivingfor the same goals, right? If I spent my time watching over my shoul-der fearful that a competitor may take my business then it’s not the wayI would like to work,” he stressed.

But do the owners want more of a relationship with you as a thirdparty manager?

“Yes, much more, much more. You choose a ship manager for a cer-tain reason and it has to do with cost, it has to do with people, it has to

do with market reputation. You go for them and you say this is what Iwant, this is what I want, give me it then you get on and do the job.

But what is your strategy to grow your business into other vessel sec-tors?

“Actually there is very little strategy. With the reputation we have,people tend to come to us so we don’t really have to push. LNG is atotal different angle, a total different angle and it’s a difficult one. Itremains today an extremely difficult niche for a little fellow like Anglo-Eastern to be in and to grow, it’s difficult, very difficult. Our strategyis just doing a good job,” he concluded. ■

REGIONAL FOCUS ANGLO-EASTERN


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

There is greater demand for third partymanagement expertise and the rolequality managers can play in thedevelopment of soundly operatedfleets is beginning to be appreciatedfor what it is

Peter Cremers on KPIs

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

“So I am in favour. I think we should not make this too scien-tific because by the time its is done, others may have some-thing more simple that works already, so we are constantlycomparing ourselves with anybody who wants to be com-pared with. I have nothing against this.”

The problem looming is that from January 1st, 2007,most of the products defined in Annex II will have to becarried in chemical tankers instead of products carriers.The chemical carriers/parcel tankers will need to carry aChemical Carrier Code Certificate of Fitness (CoF) and

will also have to comply with stricter oil stripping requirements.Basically, oil-like substances will no longer be allowed to be carriedunder MARPOL Annex II Regulation 14. From next year, they willhave to be carried in chemical tankers.

Norwegian class society DNV has gone on record as saying thatproducts tankers will lose many of their traditional cargoes to chemicalcarriers, due to the reclassification of chemical and product cargoes tobring them into line with the Globally Harmonised System for the clas-sification and handling of chemicals.

Intertanko has issued an explanatory document to its members giv-ing examples of cargo category changes. One, defined as ‘floaters’ or‘persistent floaters’, which includes the increasing trade in vegetableoils, has been re-assigned, meaning that the cargo must be carried inIMO Type II chemical carriers, instead of products tankers.

UK class society Lloyd’s Register (LR) warned that non-IBC Codetankers holding Noxious Liquid Substance (NLS) certificates will infuture find that the number of chemicals that they are allowed to carrywill have been reduced dramatically. LR said that owners and managersof such vessels should think about upgrading their vessels to chemicalcarriers.

LR also warned that upgrading a vessel to a chemical tanker wouldmean that the ISM Code will affect the vessel’s operation. For example,the crew will need to be chemically trained and the vessel’s flag stateregistration might also need updating.

Even if a vessel holds an NLS certificate, a stripping test will need tobe carried out before the turn of the year, if that vessel is to continue lift-ing the remaining NLS cargoes not affected by the changeover, LR said.

It should be noted that the existing Annex 1 International OilPollution Prevention (IOPP) Form B will not be replaced until it is re-issued at the time of the renewal survey and so, even though oil-likesubstances will still be listed after January 1st, they cannot be carried.Doing so will risk a port state control (PSC) detention, LR warned.

The class society said that it is very important to precisely define car-

goes in shipping documents and data sheets, since an incorrect defini-tion could lead to a ban on carrying the specified cargo, even if thecargo is listed on the NLS certificate, or the CoF under a different name.

LR also confirmed that in future vegetable oils need to be carried inchemical tankers, although there is a provision relaxing this require-ment for carrying certain vegetable oils. However, LR warned that thismay not prove to be a permanent move.

Bio diesel is becoming ever more popular as environmental pressureon energy gains momentum. Also the current high price of oil has con-centrated the minds on finding alternative forms of energy. There aretwo varieties of bio diesel – raw bio diesel and mixed bio diesel. Around10-15% is raw bio diesel and the remainder is ordinary diesel.

Raw bio diesel is a modified vegetable oil and thus can only be car-ried on a chemical tanker that meets IBC Code ship Type 2 require-ments. With flag administration agreement, mixed bio diesel can betreated as an Annex 1 oil.

As for cargo stripping, the new rules only allow for a residue of 75litres to remain in a tank or its associated piping falling within the newcargo categories. Given that this is a considerable reduction in somecases, some ships will need retrofitting with more sophisticated pump-ing systems, such as deepwell pumps.

In addition, underwater discharge systems for tank washing need tobe fitted to tankers carrying certain products whose keel was laid beforeJanuary 2007 and on all tankers built after that date, which comply withthe Chemical Code CoF.

TRADE ANALYSIS TANKERS


Stripping out one product from anotherWith implementation of the revised MARPOL Annex II and IBC Code justweeks away, owners, operators, managers and charterers of products andchemical carriers should have got their act together by now

UK class society Lloyd’s Register (LR)warned that non-IBC Code tankersholding Noxious Liquid Substance(NLS) certificates will in future findthat the number of chemicals that theyare allowed to carry will have beenreduced dramatically

We have already witnessed several smaller shipowners realigningtheir fleets by scrapping older tonnage and ordering, or purchasingnewer vessels - Danish owner Herning being the classic example.

It was originally thought that several vessels would enter dry dock tohave their tanks and associated piping, pumps etc converted. However,this doesn’t seem to have materialised to a great extent. There has and,indeed still will be, a steady influx of modern tonnage entering the mar-ket, which is already fitted, or can be more easily converted to a chem-ical tanker, to cater for the changeover. Like almost every other shiptype, products and chemical carrier ordering has been at an unprece-dented high level for a couple of years and shows no sign of abating.

LR gave an example of one company, which asked the class societyto evaluate some of its ships. Just two years old, Gulf Energy Maritime(GEM), headed up by Chief Executive Yusr Sultan Al Junaidy, current-ly has eight chemical/products tankers in service, plus four coated pana-

max tankers and nine 37,000 dwt– 47,000 dwt chemical/productstankers building at Hyundai Mipofor delivery between 2006 and2009. In addition to the newbuildings,GEM has options to build a fur-ther eight vessels.

Two 47,000 dwt chemical prod-ucts tankers – Gulf Esprit andGulf Elan - due to be deliveredduring the fourth quarter of thisyear, were assessed against a pos-sible upgrade from IBC Code

Type 3 vessel to an IBC Code Type 2 tanker by LR’s MarineConsultancy Services. The investigation hinged on whether an upgradewould give the tankers greater cargo carrying flexibility under the newrules.

LR found that the double hull arrangements did meet the require-ments of a Type 2 tanker. However, LR then looked at the viability forfurther conversion work during the course of the vessels’ lifespan. Thiswork included –• Approval of damage stability against the more onerous Type 2

requirements. • Approval of the trim and stability booklet according to the new load

conditions.• Minor cargo piping modifications to take account of the carriage of

toxic cargoes.

Another company which decided to act early on was Odfjell. Earlierthis year, the parcel tanker operator decided to convert five 40,000 dwtsister parcel tankers built at KSEC between 1986 and 1988.

The problem was that the vessels, although in very good condition,were not fitted with protection around their wing tanks, resulting in areduction to the number of cargoes they would be eligible to carry comeJanuary next year. Also two sets of pollution certificates needed to becarried onboard each ship, depending on whether the vessel was tradingas a products tanker, or as a chemical carrier.

Evaluation of the project to convert the Bow Cheetah, Bow Leopard,Bow Lion, Bow Panther and Bow Puma started back in August 2005.Involved in the project was a multi-disciplinary team, including inter-nal and external specialists, as well as the required presence of classsociety DNV, who would review and approve the design work.

Finally, the initial engineering design concept was approved lastFebruary and at the same time the Odfjell board gave the go ahead forthe vessels to be converted, resulting in a formal contract being signedwith Nantong on 15th February this year.

The upgrading involved the removal of the existing shell plating inway of the cargo section and replacing it with blocks of prefabricatedsteelwork to create double skin ballast tanks on both sides of the ves-sels. The width of the new double sides has been designed to exceed therequirements to facilitate operations and maintenance, while the ➩


Yusr Sultan Al Junaidy, Chief Executive, Gulf Energy Maritime

Like almost every other ship type,products and chemical carrierordering has been at an unpreced-ented high level for a couple of yearsand shows no sign of abating



Odfjell’s conversion of five parcel tankers involved the removalof the existing shell plating in way of the cargo section andreplacing it with blocks of prefabricated steelwork to createdouble skin ballast tanks on both sides of the vessels


Until January 1st next year, there are stillfive categories of chemical and products car-goes – A, B, C, D and Appendix III. The latteris a list of products, which do not comeunder the IBC Code.

The idea of the new rules is to simplify the cargo types into a three,plus one system of coding, that is, pollution categories X, Y and Z,plus OS. The last named stands for ‘Other Substances’, which arebasically eight harmless products.

As for the chemical carriers, they will be reclassified into threetypes:

Type 1 vessels offer the highest standard of protection and arerequired for the carriage of those cargoes deemed to have the great-est risk on the environment. The release of these products would havewide reaching affects beyond the immediate area of the vessel.

These cargoes must be carried in tanks located well inside the sidesof the vessels (B/5, or 11.5 m, whichever is less) and from the bottomof the vessels (B/15 and not less than 760 mm from the shell plating).

Furthermore, the ships must be able to survive a high level of pre-scribed damages.

Type 2 tankers offer what is called the mid-level standard of protec-tion, which is required for those cargoes deemed to be significanthazards, but whose release does not have wide reaching affects.

Cargo protection should be provided against low energy collisionsand groundings, which are associated with vessels in port. Cargoesto be carried by Type 2 ships must be shipped in tanks located pre-scribed distances away from the sides (B/15 or 6 m, whichever is less)and from bottom of the ships (760 mm from the shell plating).

Type 2 tankers must be able to survive a prescribed level of dam-age that is less than that required for Type 1 ships.

Type 3 tankers offer the lowest level of protection. They are designedto carry products of sufficient hazard to require a moderate degree ofcontainment to increase survival capability in a damaged condition.This prescribed level of damage is less than that for ship types 1 and2. In addition, the cargo tanks can be located at the sides and at thebottom of the ships.

Chemical tankers primarily transportorganic and inorganic chemicals.Odfjell estimated that the total globalvolume transported by chemicaltankers per year is around 60 milliontonnes

increased scantling will enhance the vessels’ strength. Each of the tankers was expected to spend around 50 days at the

Chinese shipyard, Odfjell said. Work also included general drydocking,blasting and painting each vessel’s hull. Necessary maintenance andreplacement of the cargo tank coatings affected by the conversion workwould also be attended to.

The first vessel – Bow Lion - actually spent 80 days at Nantong beforeleaving on July 8th. She sailed for South Korea and underwent tankcleaning, a BP vetting inspection and a CDI inspection while underway.

She loaded various grades of luboils and vegetable oils in SouthKorea and Malaysia, calling at Durban for her first double hull dis-charge. Bow Lion then sailed to Mossel Bay to load various grades ofalcohol for discharge in Rotterdam and Hamburg.

By last September, Bow Leopard, Bow Panther and Bow Puma wereall at the Chinese yard undergoing various stages of conversion.

Chemical tankers primarily transport organic and inorganic chemi-cals. Odfjell estimated that the total global volume transported bychemical tankers per year is around 60 million tonnes. In addition, thetransportation of vegetable oils, alcohols, molasses and lubricating oilsamounts to another 40-45m tonnes per year.

The major trade lanes are from the US and Europe to Asia, India, theMiddle East and South America. In addition, there is considerable bilat-eral trade between the US and Europe. Seagoing transport from theMiddle East Gulf to destinations both in the East and in the West isincreasing as new production capacity comes on stream in the MEG.Over the last few years, there has also been a large Asian productionincrease, and a considerable percentage is shipped overseas.

Volumes shipped regionally are also steadily increasing. As petro-chemical end-users require products to be delivered at shorter noticeand with less lead-time, the major petrochemical producers are buildingproduction complexes closer to their markets. Consequently, thedemand for modern quality carriers trading regionally is on the rise,Odfjell said.

Flexibility and inter-changeability of ships between routes and tradeshave always been important factors for Odfjell. Some of the ships areinvolved in a ‘round the world’ liner type trade, servicing ports inEurope, the US, Asia/Pacific and Africa.


Seagoing transport from the MiddleEast Gulf to destinations both in theEast and in the West is increasing asnew production capacity comes onstream in the MEG

AdHocBUSINESS OF SHIPPING AD HOC


It doesn’t take much to persuade the glitterati ofthe world's shipmanagement industry to let theirhair down and enjoy themselves, especially whenthey have just sat through a week-long shippingconference and were busy preparing themselvesfor the next day's InterManager AGM.

Stephen Chapman, outgoing InterManagerGeneral Secretary, chose the KaratelloRestaurant near the old Limassol Castle for theannual InterManager bash because of its quaintcharm and good food, and the guests were notdisappointed. The Castle was built by theByzantines around 1000 A.D and according tolegend, King Richard the Lionheart marriedQueen Berengaria of Navarre there in 1181 andcrowned her Queen of England.

Traditional Cypriot dancing was the order ofthe day and the guests were not fazed. Seeing

ship manager after ship manager linking armsand hands as they twirled each other around theimprovised dance floor showed that friendship,camaraderie and competitiveness continue to sitcomfortably in this fine industry.

But the appearance of V.Ships' PresidentRoberto Giorgi and past V.Ships' Director andnewly appointed InterManager GeneralSecretary Guy Morel together at the same table

AdHocDigitally Exposed!

left to right: Susana Germino and Bernard tan from ASP, Piyush Sharma from TESMA and Seagull's Roger Ringstad

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

Roberto Giorgi and Rajesh Bajpaee enjoying their meal

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

was interesting to see. The conversationmust have been interesting especiallywhen you consider the way V.Ships andInterManager have changed over theyears.

It was also a poignant evening forRajaish Bajpaee, President and Groupmanaging Director of Eurasia, as hebowed out from the InterManagerPresidency. Bajpaee has built up a solid

reputation during his three years asInterManager President and many willmiss his dedication and enthusiasm forthe association and everything it standsfor. His appointment as Chairman of theInterManager Advisory Board meanshis wisdom and contacts will not becompletely lost to an association that isnow beginning to move forward in theright way.

...or is it?

When we need someone tall, in comes Svein Sorlie to help out

He recently described himself

as the “last of the Mohicans”,

in the sense that his generation

started as cadets who climbed

up the ladder to become cap-

tains or engineers and reached

the companies’ boardrooms as

owners or operators. But

Emmanuel Papalexis pulls no

punches in discussing the intellectual

strengths and weaknesses of seaborne

staff.

The Chairman and Chief Executive

Officer of Athens-based Mare International

is as passionate and optimistic about ship-

ping as he has always been. However, he

hinted to delegates at the recent LSM Ship

Management Conference in Limassol about

his real concerns facing managers of ton-

nage in today's market.

He said: “The volumes of regulations

are getting thicker and thicker. I see no

problem (no matter how bureaucratic this

has become) for the shore management to

be trained, to absorb and to comply with

today's demands, but I'm very sceptical

whether the shipping industry as a whole

has understood and appreci-

ated the capacities of the

people onboard.

“The crew needs help and

we, from ashore, must help

in the right way. We have to

design and format their job

requirements in a way they

understand. In a way that

will not scare them,” he added.

Dismissing the view that 'draconian' leg-

islation such as the EU criminalisation of

accidental pollution was solely behind the

diminution of trained officers onboard ship,

Papalexis pointed to the failure of the ship-

ping industry to create a feeling of confi-

dence that going to sea is a life-long career

and a good one at that!

It has to be realised that shipping “is a

career which has a continuation,” he said.

“The continuation will bring them to shore

management to become port captains, port

engineers and surveyors. We need to

upgrade the profession of the mariner and to

make it socially acceptable. Parents have to

be convinced of that.” I think we will all

agree with him on that! ■

BUSINESS OF SHIPPINGAD HOC


Papalexis: getting intellectualGun tottin' trainers in choppy water

The US Coast Guard has come under fire from allangles after it revealed plans to set up a series of tar-get ranges in the Great Lakes.

Boaters and environmentalists argued thatmounting gas-powered machine guns on deck to beused for training purposes was perhaps not the bestidea in the world.

Objectors seemingly drew little comfort from thefact that the 34 target ranges were to be positionedat least five miles offshore, claiming that the famouschoppy waters of the lake would increase the risk ofdamage to passing boats – and planes! The USCG'sfailure to report the scheme to the general publicstrangely enough encouraged people to complain.

The USCG's defence that the seafarer's needed totrain in this way in order to create a realistic feel offiring from a moving vessel may not be enough tosway the ongoing public enquiry. ■

SOUNDINGOFFEmmanuel Vordonis

Executive DirectorThenamaris Ships Management

“The people we need to attract to sea are thosewho are in love with wanting to be seafarers. Weneed to attract the type of people who have thegene to want to be at sea and who will select awife who can also tolerate this lifestyle.”

Morse Code Grounded on the coast and armed with nothingbut a torch, a British fisherman had no choicebut to trawl his mind for Morse Code. He man-aged to contact the Hayling Island Coastguard,who responded by flashing the control towerlights before launching a lifeboat. The fisher-man, who had just transferred his modern safe-ty gear to his new boat, was rescued –unharmed. •••- - - •••

Charity, mateNot content with hunting out drug runners andapprehending illegal immigrants, the crew ofthe Coast Guard Cutter couldn’t resist anothergood deed. While moored in Cartegena,Columbia the crew volunteered to help restorea local school house with a student populationof 52. The 37-day Caribbean patrol also identi-fied potential drug smuggling vessels and dis-covered 15 Cuban migrants who had beenstranded at sea for 10 days.

An Epic ResultNigel Cleave, ex-Dobson Fleet Managementsupreme and Cyprus shipmanagement stalwart,has confounded speculation about his future byjoining Epic Ship Management as its all-con-trolling chief executive officer. Epic owns andmanages a fleet of over 40 vessels, whichincludes an impressive newbuilding pro-gramme focusing on the tanker industry and amanaged fleet of VLCC’s, product carriers,LPG tankers and chemical tankers. Nigel iskeen to play down Epic's role as a manager ofjust specialised tonnage in favour of growinghis new business from all sectors. LPG willcome under the Epic spotlight, we understand.

Tom Allan awarded top IMO PrizeThe prestigious International Maritime Prizefor 2005 has been presented to Dr. Tom Allan,former Chairman of the IMO Maritime SafetyCommittee (MSC) and PermanentRepresentative of the United Kingdom to IMO.

Efthimios E. Mitropoulos, Secretary-General of the International MaritimeOrganization, presented the prize to Dr. Allanduring a special ceremony held during the 97thsession of the IMO Council, which met atCentral Hall, Westminster, London. TheInternational Maritime Prize is awarded annu-ally by IMO to the individual or organizationjudged to have made the most significant con-tribution to the work and objectives of IMO.

ON THE UP

BUSINESS OF SHIPPING AD HOC


Hair OilDesperate times call for desperate measures,but ordering thousands of prisoners to shavetheir heads and chests to aid Manila’s responseto the Solar 1 oil spill is surely one hair-brained scheme too far.

Alas, one bright-spark ordered 15,000inmates – including 1,000 on death row – todonate their hair in a bizarre attempt to absorbmore than 200,000 liters of fuel.

In addition, 500 salons in Manila collectedclippings to aid the “stop the spill” drive.

The coastguard fixed tonnes of donated hairand assorted feathers to bamboo poles to act asbarriers along the coastline.

There are no reports on the effectiveness of“the Brazilian” dam, but sales of hats are saidto have increased dramatically.

The sinking of the 55-year old Solar 1 inAugust this year was regarded as thePhilippine's worst ever oil spill. Oil contami-

nated 62 kilometers of shoreline in the south-ern province of Guimaras.

Meanwhile, scientists seem to have toomuch time on their hands. While thosedetained at the pleasure of the state put theirbodies on the lines, the men in white coatsseem set to create more havoc in the name ofresearch.

At a recent meeting in Halifax, the world’sleading Arctic oil spill ‘experts’ unveiledplans to create a series of artificial spills - topractice on.

The spills, which are set to be created inCanada’s Beaufort Sea and in Arctic waters offthe Norwegian coast, are said to be a precau-tionary measure as the area prepares forincreased shipping traffic and oil productionactivity during the next few years.

SMI would love to bring you more details,however, we were busy kissing swans in aheroic attempt to stamp out Bird Flu. ■

Mum

bai T

imes ISSA glitz in Singapore

Singapore was rocking to the ship suppliers'tune when the International Ship SuppliersAssociation (ISSA) held its 51st annual con-vention in the port city, and fun was definite-ly had by all. In fact there was something spe-cial to celebrate, the silver jubilee of theevent's host – The Singapore Association ofShip Suppliers. But as if the ISSA membersneeded an excuse to enjoy the networking atthe ensuing Gala Dinner..

Just like the Olympics, the ISSA conven-tions become more glamorous every year and2006 in Singapore was no exception. Openingthe accompanying conference, Cheng WaiKeung, Group Chairman of Neptune OrientLines acknowledged the efforts of ISSA indeveloping industry knowledge and preparing

NOL Group Chairman Cheng Wai Keung greetsSingapore Association of Ship Suppliers' PresidentAbdul Hameed Hajah

Saving life for realGetting the chance to put your training into realpractice is something most members of theemergency services do every day. But it is morerewarding when the potential for saving achild's life is concerned.

Well one Cypriot family will be thanking theirlucky stars that Dr. Rob Verbist , seafarer physi-cian, spokesman for the International Committeefor Seafarer Welfare and Medical Advisor to thePort of Antwerp, was dining in the same restau-rant following the end of a recent shipmanage-ment conference in Limassol.

Seeing the family's 18 month-old child chok-ing on some food, he jumped up, grabbed thechild, turned it upside down and after a sharp tapto the child's back, dislodged the offending itemand returned the screaming baby to its mother.

The cries were the proof that the baby wasbreathing normally, he said. “We teach seafar-ers how to administer such lifesaving acts whenthey come to our centre in Belgium for train-ing,” he added. “But we only train for revivingadults. I am going to redress this and includechild lifesaving because you never know whenit will come in useful.”

Proof that there are still some heroes around.

Arctic climateIntroducing shipping to the Arctic as newroutes open up will accelerate the rate of gla-cier melting, marine scientists have claimed. Ina recent study into the effect of ship emissionson local climates Dr Johann H Jungclaus fromthe Max-Planck-Instutut Fur Meterologie,Germany revealed that aside from increasingozone concentrations in the largely unpollutedArctic regions, ship exhaust gases falling onthe ice as soot would accelerate the rate ofmelting.

Quintana reports $7.6m 3Q lossUS-listed Quintana Maritime has reported aloss of $7.6m for the third quarter of 2006largely due to a series of one-off charges. Thequarter was blighted by an unrealized loss of$11.9m related to an interest-rate swap and anon-cash write off of unamortized financingfees of $1.8m. Stripping out these charges theGreek bulker owner said net income wouldhave been $6.1m or $0.16 per diluted share.

Net revenues for the quarter were $25m, anincrease of 92% over the $13m of revenues inthe third quarter of 2005. During the quarter Quintana operated an aver-age of 13.4 ships, earning an average time char-ter equivalent (TCE) rate of $20,780 per shipper day. Quintana also picked up a further$1.1m during the quarter in late delivery pay-ments related to its acquisition of theMetrobulk fleet.

GOING DOWN

BUSINESS OF SHIPPINGAD HOC


leadership to face up to global challenges. Hetold delegates: “As some of you may be aware,earlier this year we established the NOLFellowship under the patronage of Singapore’slast Prime Minister Mr Goh Chok Tong. Thisprogramme is aimed at developing world-class,multi-disciplinary, applied research amongglobal institutes, to enhance knowledge andexpertise in the field of global transportationand logistics.”

Keynote speaker SS Teo, Managing Directorof Pacific International Lines and Chairman ofthe Singapore Maritime Foundation, said shipowners make “massive investments when tak-ing the decision to purchase or build vessels.For that investment to work, it must be able tooperate at maximum efficiency. The suppliers’community can play a vital role in achievingthat level of efficiency. It is therefore impera-tive that the ship suppliers play a vital part in

the wider support chain that owners use whenoperating their vessels.”

One of the more vociferous segments of theconvention was the ship owner and ship suppli-ers panel with hefty contributions delivered byMark Haslett, General Manager Procurement atWallem Shipmanagement; Clinton de Souza,Deputy Fleet Director of Bangkok's Thoresen& Company and Ivan Blazina, PurchasingManager of Thome Singapore.

Clinton de Souza, Deputy Fleet Director, Thoresen &Company, Bangkok

Mark Haslett, General Manager Procurement ofWallem Shipmanagement

S.S. Teo, Managing Director of Pacific International Lines

Michael Ciuffo, grandson of the late ISSA Presidentof Honour Dott Salvatore Ciuoffo, promises to carryon the family tradition of ship supply

Welly Samir, of Edwardo Marine Services of PortSaid, selects his Quality Certificate from ISSAPresident Wim van Noortwijk

Ivan Blazina, Purchasing Manager of ThomeSingapore


LIVE OBJECTS OF DESIRE


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

www.delfjet.com

Wireless wonderSedentary suits throughout theworld are running out of excusesafter Nike and Apple joinedforces with the Nikeplus project.A censor in the shoe talks wirelesslyto the iPod nano to givespeed, distance and calorieinformation, displayed onscreed. Exercise data can alsobe uploaded and comparedonline, so the entire world isyour training partner.

Nike & iPod Kit£20.00

www.nikeplus.com

Beauty and brainsThey dominate our lives and many seethem as their 'mistresses'. But oncehooked, it is difficult to do without yourBlackBerry. But watch out, moreenticement is on the horizon. Beneathits sleek and stylish exterior, theBlackBerry Pearl is a quad-bandGSM/GPRS and EDGE-enabled mobileapplication powerhouse delivering thefast performance of the latest generationBlackBerry handset platform. The builtin64MB flash memory is now expandablewith a MicroSD card, giving usersplenty more storage for music, pictures,videos, and data files.The BlackBerry Pearl deliversexceptional phone quality with supportfor polyphonic, MP3 and MIDI ringtones, and intuitive call managementfeatures such as smart dialing,conference calling, speed dialing andcall forwarding. Now that what I calltemptation.

BlackBerry Pearl£5,300

www.blackberry.com

NOVEMBER/DECEMBER 2006 ISSUE 4 SHIP MANAGEMENT INTERNATIONAL

LIVEOBJECTS OF DESIRE

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Places of desire

Va-va-voom – Personally speakingA Skype phone, a mouse, a car - with lights - how cool can it get!A funky ergonomic design cleverly hides an integrated microphone and speaker forhandsfree, headphones included if you want to go private. You can also blast your Mp3sout of the speaker for a virtual in-car entertainment experience.The VOIP Street Mouse is a high quality 800 dpi mouse which ensures easy navigationaround your PC, while giving you high-quality chat with your friends and family over the internet. It gives a whole new meaning to the words “car phone”!

Secluded and snow freeIf you think festive snow is overrated, The Rock Islands of Palau is the place foryou. Winter water temperatures of 27°C and never ending supply of tropical beach-es offer the perfect place to rest tired limbs. Revered by a select cult of divers andmarine biologist as a true gem of the Earth, it is claimed that no place on the planet offerssuch variety for underwater explorers as this piece of paradise in the Pacific, east of the

Philippines. Underwater visibility of up to 80 feet meansyou will never miss out on the mass of marine life or the sublime cavesand lagoons on offer. And for those who prefer a firmer footing, birdlifeacross the 300 individual Rock Islands is regarded as the richest in all ofMicronesia. The limestone forests of The Rock Islands’ are a haven for thePalau Ground Dove and the Blue-faced Parrot finch. Human developmentis largely limited to ‘rustic tourist facilities’ on the islands of Ulong,Ngeanges, Ngkesill, and Dmasech, with many of the other islands remain-ing untouched. So if you feel like treating yourself this Christmas, push theboat out and set sail for The Rock Islands. Just don’t forget to pack themistletoe.

VOIP Street Mouse£19.95

www.laughingdonkey.co.uk

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Human Traces, bySebastian Faulks, follows thelives of two young psychia-trists from their youth throughto old age. Set just prior to theFirst World War, when psychi-atry was in its infancy, theirlives follow the advances aswell as some of the major set-backs in the science.

Like many of Faulks’books it’s based in andaround Europe and although

you always have to be wary of novels that mix fact and fiction, itgives a feel for the early theories and how the status of those deliver-ing them could often hold sway over logic and good research.

History has always interested me, particularly the characters behindthe events – I have always found it interesting that we come acrosssimilar personalities no matter what period we look at. We seem des-

tined to make the same mistakes overand over again when a quick refer-ence back in time could help avoidthem. The dividing line betweendogged perseverance leading to greatachievements and blinding arrogancecausing disaster is often fine.

The other book was The LunarMen by Jenny Uglow. The lunar menwas a society of the late 18th early19th century where the great moversand shakers in the UK - includingErasmus Darwin, James Watt,Mathew Bolton - used to meet on the

date of the full moon to eat, drink and discuss all the matters thatinterested them.

I have read Jenny Uglow’s work before and the research that goesinto her books is quite phenomenal. When considering what thesepeople achieved and how manythere were it must have been ‘onehell of a dinner party’!

It’s a book that is very pertinentto Europe today because the protec-tionism of trade and technologybetween all countries of that timewas quite phenomenal. It gives youa sense of what really went onusing the actual diaries and papersof the Lunar Men: the politics ofthe time, the business practices andgeneral shenanigans. It’s refreshingand reassuring that nothing hasreally changed! ■


WHAT I’M READINGBy Douglas LangManaging Director, Anglo-Eastern (UK)

England’s MistressThe Infamous Life of Emma Hamilton

AuthorKate WilliamsPublisherBallantine BooksPrice: £20

In this absorbing, well-crafted biography, British historian, lecturer and TV consultant Kate Williams charts the rise of 18th-century England's most celebrated sex symbol, best knownas Admiral Nelson's mistress.

Setting the rags-to-riches story of Emma Hamilton (1765–1815) in social andhistorical context, Kate Williams vividly evokes her impoverished childhood andstruggle to survive in London as a servant, theatre maid and dancer. Kate Williamsdetails the debacle of Emma's life as a high-class courtesan, rescued while pregnantat age 16 by a calculating young aristocrat, Charles Greville, who transformedEmma into a trendsetting star by commissioning a fashionable artist to produceravishing portraits of her.

Creating a convincing psychological portrait of a seductive, ambitious Emma,the author entertains with an intimate portrayal of her subject's marriage to WilliamHamilton, British envoy to Naples (and Greville's much older uncle), who shockedhigh society by making her his wife. Describing Emma's stage-managed seductionof Nelson, and the pair's passionate affair (which was famously tolerated byWilliam Hamilton), culminating in a love child and a shared residence, kateWilliams conveys the fickle nature of Emma's acceptance by high society. Thebiography is well paced and pitch perfect, as competent in its storytelling as it is inits authoritative analysis of 18th-century class distinctions. ■

Box Boats: The Story of Container ShipsAuthor: Brian J CudahyPublisher: Fordham University PressPrice: £25.00

History and humor are seldom comfortablebed fellows, but Brian Cudahy manages tobring the two together to provide an enter-taining yet detailed account of container-ship evolution.

Starting with the story of pioneer andPan-Atlantic owner Malcom McLean, BoxBoats tells the rich and decorated story ofworld shipping, from freighter types to thefate of steamship lines and the creation ofungainly but innovative vessels.

From the moment the freighter Ideal Xfloated out of Port Newark, New Jerseybound for Houston with a cargo of crudemetal boxes, the world of shipping waschanged irrevocably. Those Fifty eight con-tainers were soon lost amongst millions ofothers as container shipping took the worldby storm.

But while Cudahy fulfills his brief and writes with flair about the deserted peersof New York and the rise of Maersk Sealand, one nagging question loiters in theshadows: Have I heard it all before? ■

Strong economic forcesdriving fleet investment

ROBUST growth in demand for Suezmaxtankers is predicted over the next five years,spurred by large-scale expansion of crude oilexports in three of the four primary markets. Anew report by London shipbroker and consultantGalbraith's puts the current orderbook forSuezmax newbuilds at just over 100 vessels, fol-lowing a surge of contracts during the third quar-ter of 2006.

To give perspective to outstanding invest-ment, Galbraith's calculated that the 103 tankersunder construction and on order represent some29% of the total fleet and 31% of the existingfleet trading in crude oil, excluding US domestictraffic. Although only a modest amount of ton-nage commanding deliveries from 2008onwards had been booked by mid 2006, the sit-uation changed fundamentally during the July-September quarter when shipyards booked firmcontracts for about 50 such vessels. SouthKorean and Chinese yards figured most promi-nently among the raft of orders entrusted byprincipals from a broad cross-section of owningcentres.

West African oil production is rising, andmajor growth in exports is anticipated from theBlack Sea and Mediterranean, including Libyaand Algeria. The trade out of the Middle EastGulf to both India and China will continue to

increase, driven by domestic demand and thedevelopment of substantial new refinery capaci-ty. The only major Suezmax market that isexpected to see falling requirements is the NorthSea, where production is in relatively steepdecline. However, the broking house reckonsthat this will generate an overall increase intanker demand, as refineries in north-westEurope and the US east coast look to source car-goes over longer distances from West Africa andthe Mediterranean/Black Sea.

Parcel tanker specialist Stolt-Nielsen has ini-tiated a further stage of tonnage replacement andfleet development by entrusting the Norwegianshipbuilding industry with a contract for a seriesof 43,000dwt newbuilds suited to the gamut ofdifficult-to-handle cargoes. The deal with AkerYards calls for delivery of four vessels betweenlate 2008 and the end of 2009 from the Floroyard, previously part of the Kleven group.

The four newbuilds, each equipped with 24stainless steel tanks and 15 coated tanks, will beof the same design as the two sophisticated par-cel tankers booked by Stolt-Nielsen from theformer Kleven Floro last year for completion in2007 and 2008. Kleven Floro and KlevenDesign became part of Aker Yards in August2006. The programme of six vessels has an over-all value of approximately $510m, putting per-ship cost in the region of $85m. The businessrelationship between ship owner and shipbuilderwill also be reinforced by October's announce-ment of the intended signing of a letter of intentregarding future cooperation between the twoorganisations, focusing on research, design anddevelopment.

On the strength of record newbuild activity, theglobal shipbuilding industry's expenditure onpropulsion systems is forecast to reach $9.2 bil-lion in 2006, and to attain still higher levels in2007 and 2008, according to Douglas-

Westwood's newly-published The World MarinePropulsion Report 2006-2010. Engine installa-tions in 2006 alone are expected to total 24.5 GW.

Although it is anticipated that yard output willstart to fall in 2009/2010, as the new tonnage isabsorbed by the market, the worldwide spend onpropulsion is projected to total $47.2 billion overthe 2006-2010 period, some 76% up on sales of$26.9 billion during the preceding five-yeartimeframe.

World economic growth is buoyant, and isexpected to remain strong in the medium term,boosted by the very strong growth of China.Global seaborne trade has increased, due in partto a boom in demand for oil and steel and othercommodities. “The commercial shipping indus-try has become more profitable than during theprevious decade, and confidence has grown,”said Douglas-Westwood Analyst, GeorgieMacFarlan. “The overall result has been a surgeof orders for vessels, and yards currently havefull orderbooks.”

Annual shipbuilding completions are likely tobe upwards of 50m gt for 2006, 2007 and 2008,with the compensated gross tonnage(cgt) figurefor this year and next set to exceed 34m in eachcase. “Due to the cost of newbuilds increasingover the period, the total value of shipbuildingoutput is expected to exceed $80 billion by2008, with over 2,300 vessel deliveries and near-ly 3,300 main engine installations,” said MrMacFarlan.

Since the high rate of contracting has led tolong lead times for ship deliveries, it is felt thatnewbuild output may only start falling at the endof the forecast period. By 2010, the figure couldbe at a level just above that of 2005, at 48m gt.However, increased newbuild costs should bol-ster propulsion market values, to just under $9.4billion in 2010, including an engine marketworth around $6.9 billion. ■

NEWBUILDING

NEWBUILDING


MARKET SECTOR BRIDGE SYSTEMS


Innovative UK-based designer and producer Kelvin Hughes hasgiven further expression to its inventive spirit with the recent roll-out of the world's first widescreen bridge system and revolution-ary SharpEye radar. Central to the development of the

MantaDigital widescreen bridge has been the objective of reducing thewatchkeeper's workload through enhanced displays and multi-function-al screens, encapsulating advances in functional integration andergonomic engineering. MantaDigital encapsulates SharpEye technolo-gy to maximise detection and tracking capability, while the S-bandSharpEye system is individually available for both newbuild and retro-fit projects.

SharpEye marks a step change in marine navigation, dispensing withthe conventional magnetron and high voltage modulator, and using a rad-ical approach with the transceiver to enable more information to beextracted from the radar returns before processing by the display. Theresult has been to allow detection techniques usually found only in sophis-ticated military systems to be available in commercial marine radars.

It is claimed that the new S-band radar will detect targets in clutter at amuch earlier stage than is the case with conventional radar. This isachieved through the adoption of a monostatic pulse, Doppler solid statetransceiver, which uses the Doppler effect to determine a target's veloci-ties. Received echoes are processed into velocity bands, enabling thewanted targets to be separated from precipitation- and sea-induced clutter.

Furthermore, the solid state power amplifier in SharpEye producessubstantially more energy than the magnetron system, raising detectionperformance.

“We are so confident of the reliability of this new technology that weare offering a lifetime guarantee in support of SharpEye technology,”

stated Kelvin Hughes' Managing Director Ron Nailer. SharpEye lendsitself to fitting to the company's existing Nucleus 3 and Manta systems,thereby extending the immediate, practical application scope of thedevelopment.

The widescreen bridge system uses the new MantaDigital commoncore processors, and will thereby meet upcoming, raised IMO standardsgoverning radar processing and tracking, due to come into force in2008. From the user's perspective, the major attraction will be the levelof multi-functionality offered by the equipment. The three displays arebased on the latest, widescreen flat panels, each of which can be set toshow radar, digital charts, conning information or the new and uniquedual PPI(plan position indicator) function.

Dual PPI provides an added safety benefit for the mariner by allowingthe operator to display different scales, orientations, motion modes andtrail modes from the same radar sensor on the same screen. For example,on the main PPI, the navigator could use the chart radar in many config-urations for anti-collision and general navigation tasks. On the secondPPI, on the same screen, the operator could have the range scale lookingfurther out so as to assess risk further down the planned track.

MantaDigital processors are now available for ECDIS (electronic chartdisplay and information system), VDR(voyage data recorder) and SVDR(simplified voyage data recorder). The new Kelvin Hughes chart radar isset to be released in 2007, ready for the new IMO standards. The radarprocessor can be linked to a network or modem for remote diagnostics.


Offering the navigatora helping handA dynamic approach to technological advance, firmly embedded in an appreciation of bridgewatchkeepers' practical needs, and set against the backcloth of rigorous competition and increasingregulatory edicts, characterises the marine electronics sector of the industry. With the advances intechnology comes the requirement for proper training in the functionality of the equipment andsystems, to which manufacturers and shipowners alike are responding.

The widescreen bridge system uses the newMantaDigital common core processors, and willthereby meet upcoming, raised IMO standardsgoverning radar processing and tracking, due tocome into force in 2008

Kelvin Hughes’MantaDigitalwidescreen bridge system

MARKET SECTORBRIDGE SYSTEMS

Market receptivity to SAM Electronics' forerunner series of ShipControl Centre (SCC) bridge systems generated sales of some 150 con-figurations, and the Hamburg company has now taken the concept astage further with a new design of SCC console. The bridge assemblyachieves new levels of integration between navigation and automation,and encapsulates the ergonomic thinking which has long been a hall-mark of SAM and its antecedents. The central importance attached toergonomics reflects practical considerations and understanding of theday-to-day demands on bridge personnel, and the core, intertwinedissues of operating efficiency and safety.

All navigation, communication, propulsion, and control and alarmmonitoring functions can be undertaken on standardised, 23-inch flatscreen monitors.

The touch-sensitive screens eliminate all mechanical switches andbuttons.

Key sub-assembly components are based on the Nacos 5 range ofNACOS navigation and command systems, including new-generation1100 Multipilot, Radarpilot, Trackpilot and Conningpilot, together withChartradar and Chartpilot ECDIS.

SAM Electronics is party to an EU-sponsored research endeavour,known as ADOPT ('Advanced decision support system for ship design,operation and training'), focused on optimising safety by developinga system that senses the environment for actualsituation data and predicts the ship's motionsaccordingly. It is intended to ensure optimaloperating performance, relying on a computer-based decision support tool to create an interfaceto be used aboard the ship.

One project initiative, involving SAMElectronics, is to seek to counter extreme, adversesea conditions, including so-called rogue waves,through predictive determination of wave heights,periods and duration by radar analysis, together withcombined motion and hull stress sensors. Wave meas-urement will be based on algorithms from the Germanfirm OceanWaves and on other algorithms provided forcomparison by study partners Det Norske Veritas andDenmark's Force Technology.

Once wave characteristics have been established, a nav-

igational decision support system can then be activated for selection ofa suitable speed and course so as to avoid dynamic rolling and othereffects. Under ADOPT, trial systems with different sensor arrangementsare to be fitted aboard one of DFDS Tor Line's modern, North Sea ro-ro trailerships, Tor Magnolia, and interfaced for display via the vessel'sNacos 45-4 integrated navigation system. ADOPT project coordinatorFlensburger Schiffbau Gesellschaft built the Tor Magnolia and SAMElectronics supplied the NACOS bridge system.

A true multi-function navigation console similar to those used in air-craft cockpits is core to Sperry Marine's new generation of bridge tech-nology, marketed under the VisionMaster FT label. The new productfamily represents a sea change in integrated multi-functionality, afford-ing buyers greater scope in employing the technology to the extent andin a way which most precisely suits their operations. “WithVisionMaster FT, the shipowner can select whatever level of sophisti-cation is needed, from a standard type-approved radar up to a completeintegrated bridge system(IBS), with a built-in upgrade path to addressfuture requirements,” said Sperry Marine Director J.Nolasco DaCunha.

The technology is also designed to take advantage of value-addedservices such as electronic chart downloads, automatic weather routing,remote diagnostics and performance monitoring, as broadband ship-to-shore satellite links become more widely available in the coming years.“Marine superintendents and other authorised shore-based users will beable to access the ship's systems through Sperry Marine's uniqueBridgeLink Web-based portal to access ship operational data, view per-formance data and remotely monitor the ship's navigation systems andsensors,” added Mr DaCunha.

Four levels of navigation functionality are offered throughVisionMaster, namely radar, chart radar, ECDIS, and proprietary,TotalWatch multi-function workstation. TotalWatch replaces tradition-al, stand-alone, single-function workstations with a multi-function nav-

igation console akin to that used in aircraft. The TotalWatchstation can display any VisionMaster FT mode, as well as

data from other shipboard systems such as machinery mon-itoring and alarms, and also CCTV. The master or officer

can create any combination of console displays for anysituation, whether it be inshore piloting, open-sea navi-

gation, docking or anchoring.Any combination of VisionMaster FTradars, chart radars, ECDIS and TotalWatchcan be employed to create a flexible, inte-

grated bridge system, in an ergonomic layout. TheECDIS features a split-screen capability, permittingtwo charts to be shown simultaneously, while a picture-in-picture window allows the user to view specific areasof a chart at different scales. The ECDIS can be integrat-ed with the radar and AIS(automatic identification sys-tem) for common target identification and overlay of dataon the ECDIS screen. ➩

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

VisionMaster FT Radar

It is understood that the new VisionMaster technology will beapplied to the next vessel in Royal Caribbean's 'Freedom' cruiseshipseries, due for delivery from Finland next year.

Northrop Grumman Corporation, of which Sperry Marine forms abusiness unit, opened a new shiphandling and bridge operation trainingsimulator in Hamburg this year. Courses provided at the 160 square-metre Sperry Marine training centre include classroom instruction withmultiple computer workstations and a complete, integrated bridge sys-tem(IBS), augmented by the ship simulator.

The new simulator system incorporates three projectors that providea full-motion seascape on a 4.2m-wide, 120-degree panoramic screen.

Bridge controls linked to the simulator provide realistic shiphandlingscenarios for various types of vessel under different sea conditions, andthe multi-console IBS mimics a ship's bridge.

The Hamburg training centre was chosen for the simulator due to thecity port's standing as a hub for the European shipbuilding and È mar-itime industries, and as a convenient central location with respect toEurope as a whole.

Meanwhile, Sperry Marine's training centre in the UK at NewMalden, the fountainhead of the absorbed Racal Decca range of radarand other equipment, has been tasked with ECDIS training for a promi-nent shortsea operator's officers. Progressive Irish company ArklowShipping entrusted Northrop Grumman with integrated bridge systems,featuring a 'paperless' navigation capability, for each of a series of4,500dwt dry cargo vessels contracted from a Spanish yard.

In addition to dual ECDIS consoles, Sperry Marine is supplying thecomplete suite of navigation electronics, including radars, autopilot andmanual steering, heading and speed sensors, and other associated sys-tems to the six newbuilds at Astilleros Murueta. The same suite of gearwas also ordered for a sextet of vessels of similar type under delivery


MARKET SECTOR BRIDGE SYSTEMS

Jumping on the all-in-one bandwagon isTransas with its Integrated Navigation System(INS). The Transas INS was designed in fullcompliance with IEC61924 standard and is thefirst in the world to be certified as INS class Cand type-approved by DNV.

Sperry Marine’s VisionMaster System

from Barkmeijer Stroobos in theNetherlands. Arklow is in the vanguard ofthe movement to substitute paper chartswith ECDIS under the IMO equivalencyrules, and its watch officers are beingtrained at New Malden in the use ofECDIS and other apparatus.

Also jumping on the all-in-one band-wagon is Transas with its Integrated Navigation System (INS). TheTransas INS was designed in full compliance with IEC61924 standardand is the first in the world to be certified as INS class C and type-approved by DNV.

Transas’ INS has a number of benefits comparing to the stand-alonesystems. First of all it gives the user the better situation awareness. Inaddition, a new level of reliability is achieved by means of severalreservation levels. The display of an integrated system combinesnumerous layers of the information from different sources into one sit-uation display. The Navigational chart is presented together with radaroverlay, route information, targets, and own ship position, informationon ships maneuverability, providing a real-time picture for groundingand collision avoidance as well as decision making support.

In response to market trends and demands, German flat screen man-ufacturer Conrac has recently unveiled a new series of displays featur-ing widescreen 26-inch and 27-inch screens. The claimed, superiorimage performance of the radar/ECDIS displays, of the newwideECDIS MultiTask Monitor range, stems from the use of full HDpanels(of 1920 x 1200 pixels for the 26/27-inch models) in conjunctionwith Conrac's state-of-the-art electronics.

These are proposed as an alternative to currently utilised 23.1-inchdisplays, and cater to the client industry's requirement for larger

amounts of information to bedisplayed on screens, yet withfirst-class image presentationand clarity, easily discerniblefrom different viewing positions,and providing the mariner withan additional aid to decision-making under all conditions.

Kongsberg Maritime recently despatched the first of its new genera-tion of K-Bridge consoles under a contract embracing four very largeLNG carrier newbuilds ordered in South Korea by OverseasShipholding Group under the Qatargas II programme. The Norwegiancompany's scope of delivery covers the bridge, cargo, integratedautomation and integrated navigation systems for the gas carrier seriesunder construction by Samsung and Hyundai.

K-Bridge consists of a complete range of consoles, including rudderangle and steering control systems, as well as standalone X-band radar,speed log, echosounder, GMDSS and chart system. The integrated nav-igation system forms part of Kongsberg Maritime's K-Line producttechnology offering, which also encompasses automation(K-Chief),dynamic positioning and joystick(K-Pos), propeller and thruster con-trol(K-Thrust), tank gauging(K-Gauge) and safety(K-Safe). ■

MARKET SECTORBRIDGE SYSTEMS

K-Bridge consists of a complete range of consoles, including rudder angle and steeringcontrol systems, as well as standalone X-bandradar, speed log, echosounder, GMDSS andchart system.

The bulk market this autumn exceeded most people's expecta-tions. Despite absorbing a record vintage of new tonnage,the freight market improved substantially for all sizes of bulkcarriers. The big flock of early spring dry bulk pessimists

turned out to be wrong and many deplorable decisions have been madeby their followers in the meantime - and many good decisions by thosewho thought otherwise.

Addressing the Lloyd’s Shipping Economist's Norwegian ShipFinance Conference in Oslo in late March, I warned against the prevail-ing pessimism, reflected in extremely low futures quotations andadvised that 2007 could well provide a new window of opportunity inthe dry bulk market. One major reason was, and still is, a fairly modestorder book as far as deliveries for the next two to three years are con-cerned. Another reason was, and still is, the strong development in theworld economy, despite high oil prices.

In particular, the global steel market has become much better thanprevious strong forecasts. The International Iron and Steel Institute inOctober last year predicted a growth in world steel demand of 4% to4.5% in 2006, this was lifted to 7.3% in April and as much as 8.9% inOctober this year. For comparison, the International Energy Agencynow expects world oil demand to increase just 1.2% this year. The drybulk window opened earlier than the optimists believed and I think ithas not closed yet. Now is the time to consider tonnage positioning fora market that could turn out to remain more than healthy for anothercouple of years.

Looking at the dry bulk freight market from the end of March to thestart of November, the Baltic Dry Index rose as much as 64%, or closeto two thirds. The Capesize index was up 68%, the Panamax index up64%, and the Supramax index up 58%. Timecharter rates for 12 monthsincreased even more over the same period, from $34,000 to $60,000 perday for modern Capesize, from $17,000 to $30,000 for Panamax, and

from $16,000 to $27,250 for Supramax. Five-year-old vessels costmore than newbuilding prices and resales obtain significant premiums.This positive market development has been obtained without much helpfrom congestion problems in ports around the world, but substantialamounts of tonnage are tied up in the rapidly growing domestic tradealong the Chinese coast.

One should always watch the market fundamentals on the tonnagedemand and supply side before taking important market decisions.According to Fearnresearch, the research arm of NorwegianShipbrokers Fearnleys, total tonne-miles in dry bulk shipments are esti-mated to have increased 6.3% in 2005, following as much as an 8.4%growth in 2004. Present forecasts for 2006 stand at some 6.8% growth(up from 4.5% growth estimated in late March), and 2007 might wellshow a continued high growth of around 5%. These forecasts areincreasingly dependent on the pace in the Chinese steel industry. Thetrade in thermal coal is expected to continue to benefit from high oilprices and geopolitical conditions in the energy market, and the trade ingrain and soybeans is likely to show more growth than in recent years.Recently, the trades in steel products, cement and some minor dry bulkcommodities have shown stronger growth than expected.

For comparison, the world bulk carrier fleet rose 7.2% in 2005, aftera 6% growth in 2004. For this year, the bulk carrier fleet is now estimat-ed to have increased 7.4%, whereas the increase in 2007 is estimated ata modest 3.8% and just 3.2% growth is estimated in 2008. This settingpoints to an improved tonnage balance from next year, with some addi-tional upside potential in the dry bulk market. In my view, presentfuture market quotations for 2007, 2008, and 2009 still appear to besomewhat on the low side, although they have been lifted considerablysince the unsubstantiated pessimism prevailing in the market half a yearago. Actually, quotations for calendar 2007 have more than doubledfrom six months ago and quotations for calendar 2008 have beenincreased some 65% to 80%.

BUSINESS OF SHIPPING DRY BULK


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Markets for Large Vessels Bulk and Container‘000 US$/DAY TANK

By Jarle Hammer, Shipping Adviser at Hammer Maritime Strategies

Solid outlook for bulkmarket optimists

Economic expectations for 2006 have recently been revised slightlyupwards for Europe, Japan, China, India and South Korea. On the otherhand, GDP forecasts for 2007 have largely been revised somewhatdownwards in most leading countries, except for China. On average,GDP growth figures for 2007 will expectedly be roughly 0.5% to 1%lower than for 2006. Lower oil prices could contribute to somewhatlarger economic growth. Over the first ten months of this year, MorganStanley’s World Stock market index was up 13%, after an increase of8% through 2005. Industrial production has, in recent months, shownremarkable strength in several countries. Thus, the latest reported 12-month changes in industrial production show 16.1% in China, 10.6% inSouth Korea, 9.7% in India, and generally high growth in Asian coun-tries. Also industrialised countries show remarkably high growth ratesin industrial production in view of their position as established mainte-nance economies with rather modest economic growth for many years.The latest reported changes show +5.6% for the USA, +5.4% for theEuro area (as high as +7.3% for Germany), and +5.9% for Japan.

World crude steel production was up 5.8% in 2005. Pig iron produc-tion, requiring iron ore and coking coal, saw an increase of as much as8.3%. In the steel industry it has in recent years become very much aquestion of China versus the rest of the world, with periods of quiteopposite developments or very large differences in growth rates. Lately,however, the world outside has also enjoyed a positive development onthe steel side. During the first nine months of 2006, world crude steelproduction was up 9.3% from same period last year. China’s crude steelproduction was up 18.3% and the rest of the world was up 5.1%.Looking at production of pig iron, which is more relevant from a ship-ping point of view due to its use of iron ore and coking coal, world pro-duction in the nine months of this year was up 10.5%, with China up20.8% and the Rest-of-World up 3%.

The steel industry, and in particular China’s steel production, repre-sents the most important demand element in dry bulk shipping and itsets the pace in all dry bulk market segments. The steel industryaccounts for roughly 50% of the total demand for dry bulk tonnage.This includes shipments of iron ore and coking coal, manganese, fer-roalloys, limestone, iron and steel scrap, as well as the voluminoustrade in finished steel products. The role of China has increased dramat-ically in the last few years. China’s share of world pig iron output rosefrom about 36% in 2004 to 43% in 2005, and reached 48% inSeptember this year.

There is at present a strong increase in the average distance of ironore imports to China. During the first seven months of 2006, iron oreimports from Brazil rose 41% to almost 42 million tonnes, imports fromIndia were up 11% to 47m tonnes, and imports from Australia were up13% to 69m tonnes.

China has for several years been among the largest steel importingcountries in the world. However, in late 2004 it suddenly became a netexporter and is now, by far, the largest steel exporting country in theworld. In 3Q this year, China exported some 14.6m tonnes of steelproducts and semis, mostly to nearby countries, against export volumesof about 8.9m tonnes from Japan and 8.6m tonnes from Russia.Generally, it is better for the dry bulk market when China imports moresteel because of the trade it generates in both iron ore and coking coalimports to countries making that steel, as well as the shipments of steelproducts, compared to making more steel in China.

The fact that China is taking market shares from other countries inthe international steel market has quite some downward leverage ontonnage demand. It is important to be aware that the fantastic Chinesesteel boom can to some extent become a double-edged sword for thedry bulk market. The present substantial steel surplus in China couldalso reflect a slower growth in domestic demand.

China has also become a giant in the aluminium market. During thefirst nine months of this year, China’s primary aluminium productionwas up almost 18% from the corresponding period last year, against anincrease of just 2% for the rest of the world. This brought world produc-tion up almost 6%. China’s share of world primary aluminium produc-tion rose from about 24% in the first nine months last year to 27% inthe corresponding period this year. ➩

BUSINESS OF SHIPPINGDRY BULK


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REST OF WORLD CHINA STEEL PRICE HRC W. EUROPE

Markets for Large Vessels Bulk and ContainerSTEEL PRICE in US$/t12 Month Change in PCT 3-M AV.

In the steel industry it has in recent yearsbecome very much a question of Chinaversus the rest of the world, with periodsof quite opposite developments or verylarge differences in growth rates. Lately,however, the world outside has alsoenjoyed a positive development on thesteel side

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

A look at Chinese trade volumes shows that iron ore imports rose32% to 275m tonnes in 2005, up as much as 67m tonnes. During thefirst nine months of 2006, iron ore imports to China were up 24% andmight reach about 330m tonnes for the full year. Coal exports fromChina were down 15% to about 74m tonnes last year and a furtherreduction of 12% was seen over the first nine months this year. This isgood for the freight market because of the need for more long-haul coalimports to neighbouring countries. China’s coal imports, on the otherhand, rose 35% to about 25m tonnes in 2005 and a further increase of41% took place in the first nine months of this year. Annualised, thismeans Chinese coal exports of about 64m tonnes this year versus coalimports of 35m t.

It should be observed that only about 3% of China’s coal productionis exported. With China’s huge demand for new electricity it is notunlikely that China could turn into a net coal importer in a few yearsand that coal imports to China could become a major driving force inthe dry bulk market in the medium and somewhat longer term.

Statistics from Fearnresearch show that the world dry bulk trade vol-ume rose 6% from 2,514 m tonnes in 2004 to about 2,665m tonnes in2005, with about 2,820m tonnes expected in 2006, or up 5.7%. Coalshipments are expected to increase from 705m tonnes in 2005 to 735mtonnes in 2006. Iron ore will this year see a stronger increase, from670m tonnes in 2005 to about 735m tonnes, or the same as for coal, in2006. Grain shipments (including soybeans) show a more stable devel-opment from 242m tonnes in 2005 to 260m tonnes expected in 2006.The very heterogeneous group of other dry bulk commodities is esti-mated to increase from about 1,050 m tonnes in 2005 to 1,100 m tonnesin 2006. China’s cement exports have shown a remarkable growth fromless than 7 m tonnes in 2004 to almost 22 m tonnes in 2005 and possi-bly close to 40 m tonnes this year. Cement is clearly the present handy-size star commodity. How much this is a temporary phenomenon or ishard to say, but shipments of cheap commodities over long distances athigh freight rates are bound to face short-haul competition. Anotherquestion is why there is such a large surplus of cement in China; couldit herald a slower growth in domestic construction activity?

Containerisation of bulk cargoes has gained momentum in recentyears. After continued ordering frenzy, the present order book for con-tainer vessels stands at 53% of the existing fleet. With hardly any scrap-ping and a young container vessel fleet, it seems that the tonnage bal-ance is bound to deteriorate further over the next couple of years.Empty containers to be repositioned will remain the largest commoditygroup for many years to come. Therefore, a continued containerisationof some dry bulk trades seems likely, especially on the most imbalancedcontainer trade routes, such as in the Northern Pacific.

Turning to tonnage supply, it appears that new bulk carrier ordersdropped from 31m dwt in 2003 to 19m dwt in 2004, edged up to 20mdwt in 2005, and reached 17m dwt over the first ten months of 2006.Because of strong freight market conditions, bulk carrier demolitionsales decreased from 3.2m dwt in 2003 to just 0.6m dwt in 2004 and 1mdwt in 2005. After a modest scrapping wave caused by some negativemarket views in the early part of this year, dry bulk demolition saleshave dried up and reached 2.1m dwt over the first ten months. At thebeginning of November, the bulk carrier order book, according to

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Coal Exports12 Millions Tonnes 3M. Averages

It should be observed that only about 3%of China’s coal production is exported.With China’s huge demand for new elec-tricity it is not unlikely that China couldturn into a net coal importer in a few yearsand that coal imports to China couldbecome a major driving force in the drybulk market in the medium and somewhatlonger term

Fearnresearch, corresponded to 16.7% of the existing fleet, about thesame as at the beginning of the year. Others have reported a presentorder book share at up to 21%. Here, it should be said thatFearnresearch always presents conservative figures for order books,excluding options and rumours, and that their track record is good whenit comes to the correspondence between reported order book volumesand actual vessel delivery volumes. However, whether the bulk carrierorder book is actually at about 17% or at 21% of the existing dry bulkfleet does not materially affect the conclusions in this presentation. Theage profile of the bulk carrier fleet towards the end of this year showsthat as little as 2.2% will be over 30 years old and just 10.6% over 25years old. Hence, demolition of bulk carriers is still expected to play arather minor role for tonnage supply in the next few years.

A look at the order book by size groups in early November showsthat the Capesize (80,000 dwt+) order book corresponded to about 27%of the existing fleet, with strong concentration on Kamsarmax size of80,000 to 120,000 dwt and very large bulk carriers over 200,000 dwt.For the Panamax size (60,000 to 80,000 dwt), the share was about 9%,and for the still rather modest size group of Supramax (50,000 to 60,000dwt) as high as about 38 %. On the other hand, the order book forhandysize (10,000 to 50,000 dwt) was quite modest at only about 6%.

From a future tonnage balance point of view, as seen by the shipowners, the supply side appears to be most comfortable for the handy-size group. Actually, the fleet of bulk carriers below 50,000 dwt is like-ly to diminish slightly over the next couple of years. However, the rap-idly growing fleet of Supramax vessels will have a strong impact on thehandysize market and also contribute to a stronger link between theHandymax and the Panamax markets. For the total size range 10,000 to60,000 dwt, the order book in early November corresponded to 12.6%

of the existing fleet. Looking ahead, it appears from Imarex future quotations on 1

November, that expectations were generally very rather good, albeitgenerally showing significant declines over the next three years, aftersome short term strengthening. Thus, for Capesize, the calendar 2007quotation was down 20% from present level, calendar 2008 down 38%,and calendar 2009 down 47%. Similarly, for the same three calendaryears, Panamax quotations were down 14%, 35%, and 43%, and forSupramax down 10%, 34%, and 42%. This seems to be in some con-trast to the tonnage demand and supply scenario, but it should beobserved that the seemingly rather bleak 2009 quotations are stillroughly in line with break-even rates for tonnage acquired in today’smarket.

Fearnleys’ Monthly market report for October shows requiredtimecharter rates of some $17,500 per day for new Supramax vessels,based on 25 years lifetime and 10% return on total capital invested. Thisrate requirement is perhaps a bit on the high side, in view of the lowinterest rates in the present capital market and normally a somewhatlonger lifetime for such tonnage. For comparison, the actual 12 monthtimecharter rate for modern units of this size in early November was at$27,750. I’m inclined to believe that the Handymax/Supramax marketwill remain rather robust in the next few years and that we could seerates one to two years from now which could turn out to be significant-ly better than what appears in the present Imarex quotations. Similarconsiderations could be made for the other size groups.

The major downside risk is a slow-down in the growth of the Chinesesteel industry, but that slow-down shall has to be a strong one in orderto have a major negative impact on the dry bulk market in the short andmedium term. International conflicts and terrorism are also factors thatcan dampen or destroy the optimistic economic consensus scenarios. Intheir latest steel demand forecast, the International Iron and SteelInstitute says that steel demand growth in China could shrink from14.1% this year to 10.4% next year, to be followed by yearly averagesof 5.8% from 2007 to 2010 and 6.2% from 2010 to 2015. For the totalworld, IISI predicts a slowdown in the steel demand growth from 8.9%this year to 5.2% next year, with averages of 3.8% for 2007-2010 and4.2% for 2010-2015. Such medium and longer term growth rates shouldbe considered to be quite strong.

In the dry bulk market, prospects look amazingly solid with goodmomentum on the tonnage demand side and moderate fleet growth overthe next couple of years. My view is that the dry bulk market lookshealthier than the tanker and the container markets for the next coupleof years and that the present could be a good timing for tonnage posi-tioning for subsequent years in the dry bulk market. ■


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The major downside risk is a slow-down inthe growth of the Chinese steel industry,but that slow-down has to be a strong onein order to have a major negative impacton the dry bulk market in the short andmedium term. International conflicts andterrorism are also factors that can dampenor destroy the optimistic economic consensus scenarios

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LIFESTYLE LAMBORGHINI


The catwalks of Paris are used to the sight of flowing curvesand striking models that push the boundaries of style andinnovation and are guaranteed to induce a sharp intake ofbreath. But streamlined beauties flaunting the latest hotstyle may just be upstaged by the latest curvy head-turner

boasting beauty, poise and power. When Lamborghini launched its Murcielago LP640 Versace at the

2006 Paris Motor Show each and every man in the room only had eyesfor one voluptuous outline. The beauty before them was a work ofgenius – the combined efforts of Lamborghini and Versace’s leadingdesigners had created a vision no man could resist.

But you had better act fast if you want to be one of the lucky fewwho get to indulge his passion and take her for a spin. Lamborghini hasplans to keep this lady for the privileged few. Only ten will be madeand a flood of footballers and millionaire playboys are already en routeto the company’s factory near Bologna, Italy to get their hands on one.

At its heart the Murcielago LP640 Versace is a standard (if such aword could ever apply to a ‘Lambo’) Murcialago LP640 with somefancy makeup. But when makeup is applied by Versace you are facedwith an entirely different animal.

Opulent full grain nappa leather, featuring the unique Greek fretmotif emblem of Versace, lines the lower half of the dashboard, thedoors, the centre console and the seats to add style and comfort to thenotoriously noisy and basic interior of a standard Lamborghini.

And no designer car would be complete without an extensive list ofaccessories. The Versace’s ‘Precious Items’ division has created aChrono Matt Soft Touch watch, available in white or a glossy black,depending on whether you choose the Isis white car shown in Paris orthe Aldebaran black version unveiled at Milan fashion week. A ladieswatch is also available in glossy white ceramic set with diamonds.

For those wishing to mix getting down to business with a littlepleasure the Murcielago LP640 Versace also comes with a person-alised luggage set. The three piece set, comprising of his and hers suitcases and a matt black calfskin suit carrier, again features the Greekfret motif along with a white satin interior embroidered with theVersace Couture Limited Edition logo. But the greatest achievement is

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

LIFESTYLELAMBORGHINI

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While the jaw-droppingprice tag of €200,000 mayappear daunting, themoment the 6.5 litre, V12engine and ‘thrust’ launchcontrol system fire you to60mph in less than 3.5 seconds - all you need dois wait for your pulse tostop racing and reflect on money well spent

that the whole set has been designed to fit in the boot – an engineeringsuccess story in its own right.

The LP640 Versace’s exterior is fully decorated with all of theoptional extras from the serially produced Murcielago LP640.Specially designed black Hermera wheel rims, carbon finish and anengine hood with transparent glass ribbing give the car super-modellooks, while the e-gear sequential paddle-shift gear box enhances thesuper car performance and racing experience.

And while the jaw-dropping price tag of €200,000 may appeardaunting, the moment the 6.5 litre, V12 engine and ‘thrust’ launch con-trol system fire you to 60mph in less than 3.5 seconds - or to a knee-trembling top speed of 212mph - all you need do is wait for your pulseto stop racing and reflect on money well spent. ■

LIFESTYLE SKIING

A skier enjoys apowder day of skiing overlookingthe JordanelleReservoir


Deer Valley Resort

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Kissed with the pure white Utah snow, the Wasatch Mountains risemajestically into the blue winter sky above Deer Valley Park. The airis cold but refreshingly clear, and the hustle and bustle of urban lifeexists only as a distant memory. It is impossible to imagine that youare only 30 minutes from Salt Lake City International Airport.

Fortunately, despite the accessibility of the area and its high profile in thewake of the 2002 Winter Olympics (the Olympic Park is only four miles away);Deer Valley has escaped the curse of commercialism and budget holidays thatblight so many ski resorts today. Indeed, there is not a single hoodie-wearing,gap-year student in sight as you pull up at the main entrance to be greeted by avalet, charged with taking your skis from your car to the snow.

“Deer Valley has taken a five-star hotel model and applied it to a ski resort,”said Erin Grady, Communications Manager at the resort. “If you are looking fora great weekend, a family retreat or a romantic get-away it is a fantastic place tocome. We believe we offer something for everyone.”

Utah’s reputation for fluffy powder snow, coupled with a generous layout ofmostly north-facing slopes, ensures visitors are guaranteed high-quality skiingthat is ideal for family groups. “Each Mountain has been designed to cater for arange of abilities. If you are with a family and somebody wants to ski down ablack run and somebody else wants to take an easier route down, our hill hasbeen set up to accommodate that type of skiing. We also have fabulous gladeskiing - we are famous for that. But we have great terrain overall,” Erin Gradyexplained.

Each of the resorts 91 trails, spread across 1,825 acres, are protected by adaily limit on lift passes, so there is always plenty of space to explore the greatoutdoors, undisturbed. And even the most hedonistic hell-raisers will find some-thing to their liking. Deer Valley is an annual stop on the FIS Freestyle WorldCup Circuit, and in 2011 it will become the first American resort to host thefreestyle World Ski Championships, twice.

But it is not for skiing alone that Deer Valley has been rated as one of the topthree resorts in North America for the past nine years, by reader of SKI maga-zine. It is consistently rated as number one in terms of dining, guest service andmountain grooming.

“There is a lot to do besides skiing,” Erin Grady said. “The Stein EriksenLodge (a five-diamond hotel combining European elegance with mountain ➩

LIFESTYLESKIING

Skiing in styleSki resorts the world over are heaving under theforce of people but, as Andy Pierce discovered,winter paradise is not too far away

LIFESTYLE SKIING

architecture) has an amazing spa. You can also go bobsledding down atthe Olympic Park. Alternatively your can take a hot air balloon ride, godog sledging or visit the nearest town - Park City - which offers over100 bars and restaurants as well as genuinely unique boutiques and gal-leries.”

However, with Deer Valley’s reputation for both on mountain andnighttime dining, there is seldom any need to venture so far. “There aretwo restaurants that really stand out for a romantic evening,” ErinGrady suggested. “The Mariposa boasts a Spectator Award-winningwine list and is rated number one in the Zagat Restaurant guide forUtah. Then we have Fireside Dining (at the Empire Canyon Lodge)which is an Alpine style dining experience with beef, veal stew and‘roasties’, followed by chocolate and caramel fondue by the fire place.”

If you are not tempted by the prospect of first class food, then per-haps the resort’s five-star accommodation would be more to your lik-ing. “Deer Valley has very high end luxury properties - a lot of them areluxury condominiums that can be up to 8,000 square feet - which youcan rent for the evening. We also have several different ski-through,slope-side properties, that average 15,000 square feet plus,” Erin Gradyexplained. For those looking to invest in property, Dear Valley’s start-ing ‘condos’ cost in the region of $1m; while at the top end of the mar-ket properties can go for between $10m and $15m.

And the standard of property is set to rise still further. In October2005 Deer Valley was selected by readers’ of SKI as the perfect site tobuild the magazine’s first “Dream Home”. The ski-in/ski-out house,which is currently under construction, will boast 360-degree panoram-ic views of the Wasatch Mountains, Deer Valley’s ski slopes and thepicturesque Jordanelle Reservoir.

Stefanie Luciano, Vice President of marketing for Mountain SportsMedia, publishers of SKI magazine said: “All the elements incorporat-ed into the Dream Home really represent the sort of lifestyle people arestriving for in a ski vacation – a gathering place for family and friends– a wonderful kitchen for sharing warm winter meals – the hot tubs –the luxurious bedding and furniture – the spa area – the outside decksoverlooking gorgeous mountain views, its all about living the good lifeand appreciating it.”

When complete in 2007, the Dream Home will be available for rent forguests “seeking the ultimate ski experience”. Then all that will remain forthe lucky few who can afford a stay at the Dream Home will be to getthemselves a new hoodie and prepare to lose them selves in the knowl-edge that paradise is only 30 minutes from an international airport. ■

NEW DEVELOPMENTSThis summer $7m was invested in a new high-speed quad,which replaced Bald Mountain’s Sultan chairlift. The projectopened up an extra 1,000 vertical feet and 75 acres, includingexpanded glade skiing and a new intermediate run.

DON'T MISSFirst Tracks. Get first crack at Deer Valley’s famous corduroywith a guided 8am tour from the base of the Wasatch lift ($1,200for up to eight skiers). Make sure you book in advance.

LOCAL SECRETUnmarked, fluff-rich tree runs include Black Forest, betweenStein’s Way and Perseverance, and X-Files, at the far end of thetraverse, past the Daly Chutes.

The Daly Chutes at Empire Canyon

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