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the Baltic


March 2010

Ship finance under pressure T h e O f f i c i a l M a g a z i n e o f t h e B a lt i c E x c h a n g e

March 2010


BALTIC The Baltic is the official magazine of the Baltic Exchange Tel: +44 (0) 20 7623 5501 E-mail: Website:


W H Robinson


Lucy Budd The Baltic is published for the Baltic Exchange by Maritime Media (a division of Roxby Media Ltd) The Diary House, Rickett Street London SW6 1RU Tel: +44 (0) 20 7386 6100 Fax: +44 (0) 20 7381 8890 E-mail: The Baltic annual subscription rates £110 for UK, Europe or the world, sent airmail including P&P

Tel: +44 (0) 20 7386 6120 E-mail:

SALES manager

David Scott E-mail:


Keith Clark ISSN 0967-0394 This publication is printed on PEFC certified paper. PEFC Council is an independent, non-profit, non-governmental organisation which promotes sustainable forest management through independent third party forest certification.

The Baltic is published on behalf of the Baltic Exchange

the Baltic

and is supplied to members as part of their annual


membership package. However, the views expressed in The Baltic are not those of the Baltic Exchange, its directors, its officers or the publishers unless expressly stated to be such. The Baltic Exchange is the world’s premier and oldest international shipping market. Most of the world’s open market bulk cargo chartering is negotiated at some stage by Baltic members who represent leading international companies. Other activities include the world’s most important market for buying and selling ships, specialist freight by air and commodity dealing. The Baltic Exchange operates a

MARCH 2010

Ship finance under pressure

strict code of business ethics encapsulated in its motto ‘Our Word Our Bond’. The Baltic Exchange disclaims any responsibility for the advertisements contained in this magazine and has no legal responsibility to


MARCH 2010

deal with them. The responsibility rests solely with the publisher.

theBaltic March 2010


Contents Chairman’s statement 7 Mark Jackson Industry News  7

9 People, places, plcs Interview 13 Dorian Benson and Andrew Jamieson FFA


16 Market on the mend 18 Freight options Baltic briefing 22 A helping hand 23 Poppy appeal raises over £5,000


24 Greek wines 25 Baltic Air Charter Association 26 Arbitrary success 28 Sporting contacts   24

Logbook 30 The tanker race Baltic Comment 31 Michael Grey


State of the market 33 Tankers 35 S&P 38 Dry bulk



theBaltic March 2010


Contents 42 Heavylift 49 Towage & salvage 52 Shipmanagement, crewing and education   49

Oxford Analytica 60 Anti-piracy results are mixed Green Technology 63 Making a difference


IT 75 Marine software Ship Finance 84 Credit crunch hits home


87 Where’s the money? Geographical focus 88 Latin America 91 Middle East


Cargo focus 93 Iron ore Insurance 96 Insurance parlance


99 Insurance ITIC Legal news 101 Legally speaking 103 Commercial profiles 112 Events


theBaltic March 2010


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Chairman’s statement Mark Jackson

Chairman’s statement 2


from a shipowner. Will the owner take a single

Arbitrators Association (LMAA) cele-

voyage on delivery of the newbuild on the

brating its 50th anniversary and the

basis of positive sentiment from the forward

Baltic Exchange is delighted to be lend-

market? Will the noises from the forward market

ing the LMAA its full support at its anniversary

exert pressure on the owner to take a longer

conference and dinner in London this March.

term contract? Is there pressure from auditors,

The histories of the Baltic and the arbitrators

financial institutions and regulators who are using

are inextricably intertwined. The LMAA first

the forward curve to assess the risk or future

came into existence in 1960 at a “meeting of

PnL? This is particularly relevant to arbitrators

the Arbitrators on the Baltic Exchange Approved

and expert witnesses who are being asked to

List”, but its roots stretch back to the earliest

take a view on the physical market. Lawyers

days of the Baltic Exchange and its coffee house

hiring expert witnesses must ensure that their

origins. Rather than calling in the lawyers, dis-

experts understand the interconnection between

putes between shipowners and charterers had

the physical and forward markets in the dry bulk

often been settled informally by Baltic Exchange

and tanker sectors. Indeed, as members of the

brokers on the trading floor and failing that over

Baltic Exchange Panel of Experts recently heard

a good lunch.

at a meeting of the group in February, they are





not immune to costly litigation for any testimony

Today of course, the system of arbitration

or advice they provide.

has grown-up, developed and is a cornerstone

I would also remind readers that the Baltic

of shipowners and charterers to resolve their

and LMAA have established a mediation service

disputes outside of the courts and to refer to

which offers companies an alternative means


of the international shipping business. The ability

arbitrators by whose decision they agree to be bound, is fundamental to the smooth functioning of the international trading system. London’s arbitrators remain the shipping world’s most

Mark Jackson

of resolving disputes. Governed by the LMAA/ Baltic Exchange Mediation Terms (2009), the mediations may be conducted either physically in one location or in by video link or correspondence between the parties and the mediator. The great

popular by a considerable distance, with 3567 This is a relatively rare occurrence and means

advantage of using mediation is the way it can

The UK is the leading centre for maritime

that English Law is not evolving as quickly as it

be used to bring about a resolution by involving

dispute resolution through arbitration, with

should. If English Law is to avoid being stuck in a

issues which strictly speaking have no legal

English Law underpinning this. However, for the

rut and remain relevant to shipping practitioners,

relation to the dispute. The wider business

system to continue to be relevant to the shipping

then the a way must be found for arbitration

relationship often offers the opportunity to solve

market, English Law must continue to evolve.

cases to support the evolution of the law.

a narrow, specific problem. Mediation is of

appointments made in 2008.

With most shipping related disputes settled

The issues facing arbitrators have changed

course non-binding and inexpensive, so should

through arbitration rather than through the

over the past 50 years, not least in dealing with

often be worth trying before moving to arbitration

courts, this is potentially a problem. Under the

factors arising from the freight derivatives market,

or litigation. The Baltic website contains details

terms of the 1996 Arbitration Act, the findings

a market which has developed hugely in the past

of a mediation clause which we hope will

of arbitration tribunals do not develop the law in

decade. The Baltic Exchange’s forward curve,

be increasingly included in charterparties. See

the same way that the decisions of the courts

an essential daily service providing FFA brokers’ for further

do. Arbitration proceedings and awards are

view of the prices available for forward trading, is

details. These are just some of the challenges

deemed confidential and are seldom published.

increasingly being used by the shipping market

which I believe that London arbitrators will need

The only way for findings from arbitration cases

to gauge physical market perception. The

to face in the coming years, and ones which they

to make their way into law is for the arbitration to

forward market’s view represents a legitimate

are uniquely placed to face. I wish the LMAA

go to appeal before the courts on a point of law.

view of the behaviour which could be expected

every future success.

theBaltic March 2010


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People, places, plcs

Industry news Copenhagen Accord

shipping is a uniquely international industry that

the reduction of CO2 emissions by the global

The shipping industry has responded with

can only work efficiently when operating within

shipping sector as a whole.”

disappointment to the most recent rounds

a framework of uniform global regulation that

A similar response came from the UK

of climate change talks in Copenhagen,

applies equally to all ships regardless of flag.

Chamber of Shipping, which said that the UK

which failed to address the role of shipping

‘Common But Differentiated Responsibility’, at

shipping industry, which “has led the way in

in combating climate change. One point in

least at ship or company level, will “simply not

terms of practical solutions with its advocacy

particular which may cause difficulties in future

work” according to the Chamber. It argues

of a cap-and-trade system as the only way to

was that COP15 did not give IMO the mandate

that shipping companies would simply migrate

guarantee reductions”, remains firmly committed

to oversee the industry’s response to the need

their fleets to developing countries. Around


to cut greenhouse gas emissions., potentially

65% of the world fleet is already registered with

“Although shipping is the most carbon-efficient

leaving the door open to unilateral regulation

“Non-Annex I” nations under the existing Kyoto

mode of transport, with about 500 times less

from outside the industry.

Protocol. The shipping industry is still firmly

carbon impact than air freight per tonne mile,

IMO secretary-general Efthimios Mitropoulos

committed, the Chamber says, to helping IMO

it is such a large industry – carrying about 80%

said: ‘Like many others who have made

develop a global solution for shipping on CO2 at

of world trade – that its emissions are close to

comments on the outcome of COP 15, I have

the next meeting of the IMO Marine Environment

3% of the global total,” said Mark Brownrigg,

viewed the end result of the Copenhagen

Protection Committee in March 2010. “But,”

director-general of the Chamber of Shipping.

Conference with mixed feelings: with concern

it warned, “it is vital for all governments to

“We had hoped that the UNFCCC would at least

that the target initially pursued, following the

understand that, in the absence of a global

empower the International Maritime Organization

2007 Bali Conference, of a legally binding

package agreed by IMO, there is a serious

to set some clear targets and agree a process by

instrument, was not achieved; with measured

risk that some countries will develop unilateral

which the Kyoto Protocol principle of ‘Common

satisfaction that, through the Accord tabled

measures to regulate at national or regional

But Differentiated Responsibility’ could be

at the end of the deliberations, a step in the

level the CO2 emissions of ships trading

reconciled with the important need for global

right direction was taken enabling progress to

internationally. Such unilateral measures would

rules on CO2 reductions for the carriage of

be made towards a legally binding instrument;

result in serious market distortions and – most

world trade.”

and with hope that, following new rounds of

importantly – be far less effective in ensuring





consultations to be held post-Copenhagen, the required consensus on action needed to be taken to save the planet will be reached at the next Conference – possibly in Mexico one year from now.’ He emphasised that COP15 has given the industry more time to make “real progress in our work. At the same time it creates an increased obligation on IMO to intensify its efforts so that it may be able to present, to COP 16/17, concrete results as evidence not only of its determination to play its part in the world efforts to stem climate change and global warming, but also of its continued capability to serve the environment, as it has successfully done over the years”. The International Chamber of Shipping said it was disappointed that the text of the “Copenhagen Accord” is silent on the treatment of international shipping in the delivery of further CO2 emission reductions. The ICS argues that

Copenhagen – The location for COP15

theBaltic March 2010


People, places, plcs Norway

since 2008 have yet to be tested in the courts.

with a fleet in service of 64 vessels and a

A case brought by three shipowners against the

It now looks as if the industry will have a further

renewal programme consisting of about 20

Norwegian government’s demand for 10 years

wait for clarity on the matter.

vessels on order. MOL has been a shareholder

of retrospective tax has been successful. Farstad




in Gearbulk since 1991. According to an and

MOL spokesman, the increased shareholding


of MOL reflects the long-standing partner

rules passed by the Norwegian Parliament in

Singapore Exchange (SGX) will start trading

relationship between the shareholders. It also

December 2007, concerning transition from the

fuel oil 380-centistoke futures contract (FO 380

demonstrates the firm future commitment of

then existing to the new tonnage tax system,

Contract) on Monday 22 February 2010. The

MOL to Gearbulk.

broke section 97 of the Norwegian Constitution.

new contract is based on Residual Marine Grade

The Supreme Court awarded in favour of the

380 ISO8217, primarily bunker fuel supplied

shipping companies that the retroactive tax

to ships. Physical delivery will be via Free-

American Shipping Company

imposed in 2007 for the years 1996-2006

On-Board or inter-tank transfer at Exchange-

American Shipping Company, ASA (AMSC)

was in breach of the Norwegian Constitution.

designated Singapore oil installations. The

has appointed Gregory J. Matecki as its new

“This confirms that retroactive taxation is not

minimum tradable contract size is 100 metric

president and ceo. He succeeds Rob Kurz, who

legal. Further, the verdict provides the basis

tonnes per lot and the minimum deliverable

recently resigned from the company. Matecki

for predictable conditions for shipping activities

size is 2,000 metric tonnes or 20 lots. Market

was previously the company’s chief financial

based in Norway,” said Farstad Shipping in a

markers and liquidity providers will be available

officer, and will continue to hold that position.


for this contract.

Rieber Shipping claimed that the transitional

“During the past year and a half, Greg has

The effect for Odfjell will be an increase in

The trading session for the new contract

been a key member of our executive team and

the equity of about $110 million, including

starts from Singapore time 9.30am to 6.30pm

has been instrumental in the management of our

refund of about $27 million already paid taxes

(Tsession) followed by 7.30pm to 1.00am (T+1

business. We look forward to Greg continuing to

and interest. “In an industry hard pressed by

session). The extended trading hours provides

establish American Shipping Company as the

recessionary times this was most welcome

participants, such as shipping companies,

premier owner and lessor of Jones Act product

news,” said Odfjell.

bunker suppliers and oil trading companies,

tankers,” stated Robert Caruso, chairman of

For Farstad, the payable tax claim – which

an efficient and transparent pricing mechanism

the board. AMSC currently has a series of 10

corresponds to the increase in equity – was

for the Singapore fuel oil market from Asia

tankers on order. When the current series of 10

some $107.6 million, while Rieber Shipping

open to Europe close, and is in line with recent

tankers is completed in 2011, AMSC will own

expects its equity capital to increase by some

moves from SGX to extend trading times on

the most modern product tanker fleet in the

$21 million.

certain products to provide greater international

United States.

availability. Chong Lit Cheong, chief executive officer

EU focuses on liner shipping

of International Enterprise Singapore said:

Dubai Port World

The EU Commission announced in January

“Singapore has been one of the leading physical

DP World has confirmed that it will continue to

that it would be launching a formal antitrust

commodities trading hub in Asia Pacific, in

fund the London Gateway project, a £1.5 billion

investigation into the Baltic Feedermax pooling

particular for the oil trading sector. The launch

development to create Europe’s biggest deep-

scheme proposed by Germany’s Anchor

of SGX’s FO 380 contract will undoubtedly

sea container port and logistics park on the north

Steuerberatungsgesellschaft (Anchor).

further strengthen our value proposition to the

bank of the River Thames near Thurrock in Essex.

The Commission said that it would particularly

global oil trading community. We are supportive

There had been doubts over the future of the

examine whether the scheme, whereby owners

of such market initiatives as they provide long-

project after DP World’s parent company, Dubai

would collectively cover laying-up costs, would

term solutions for risk management and greater

World Corp., requested a freeze on some $26

have “the explicit aim of reducing the available

pricing transparency.”

billion of debt payments while it restructures the

capacity of feeder vessels in Europe, which in

Lam Yi Young, chief executive of Maritime

group. On a visit to the port construction site,

turn could increase the rates of chartering feeder

and Port of Authority of Singapore (MPA) said:

Prime Minister Gordon Brown said: “The London


“SGX’s fuel oil futures contract will encourage

Gateway is a significant foreign investment into the

However, it emphasised that opening

greater participation in Singapore’s marine fuel

UK. It is a massive vote of confidence in the UK’s

antitrust proceedings was no evidence of an

market from both local and international shipping

economic recovery and in this region. UK Trade &

infringement. No date was set for the conclusion

and bunkering communities. This complements

Investment and other government departments

of the inquiry.

Singapore’s position as a top bunkering port and

have worked closely with DP World over a number

Anchor subsequently announced that it had

is in line with MPA’s effort to develop a conducive

of years to make this project possible. I am

been unable to secure financial backing for the

and progressive environment for the bunkering

delighted with the decision to locate this world-

scheme, which would not now go ahead. It cited


class project here in the UK. It will help bring the

the EU enquiry as a factor, but said that it was

largest deep-sea vessels here and improve the

one of a number of circumstances contributing

efficiency of the UK’s freight distribution, creating


thousands of jobs, future growth and economic

This would have been the first investigation

Mitsui O.S.K. Lines (MOL) announced at the

prosperity.” According to an independent survey

into the liner industry since lost its exemption

beginning of the year that it has increased its

commissioned by DP World, the development will

from general EU anti-competition rules in 2006.

investment share in Gearbulk Holding Limited

generate 36,000 jobs in total, including 12,000 jobs

Specific maritime guidelines on co-operation

(“Gearbulk”) from 40% to 49%. Gearbulk is the

in logistics and construction that will be created in

and pooling agreements have been available

world’s leading open hatch shipping company,

the short term.


theBaltic March 2010

to the decision.

People, places, plcs In a separate development DP World is

service and help us promote the importance of

planning a premium listing on the London

sharing knowledge through training and other

Stock Exchange in the second quarter of 2010.

events, such as seminars and conferences.”

The company publicly cites its dissatisfaction with its market valuation and sees the move

The register also plans to open an office in Singapore early in 2010.

brokers increased slightly, from 5.6 to 5.7. Once again, the survey revealed a continuing level of concern over the newbuilding orderbook. “There are too many ships already in operation, and even more to come, so there will be very

offering access to investors, improved liquidity

little scope to increase freight rates,” said one

and a higher share price. “The listing will give

respondent, echoing the thoughts of a number

us more exposure to international markets.

Shipping confidence up

of others who responded to the survey. Other

As far as investors are concerned,the listing

Overall confidence levels in the shipping

comments included: “There is only enough cash

in London will provide regional investors with

industry have stabilised, according to the

to fund half the orderbook, so something has to

confidence,” said Mohammad Alhashimy of

latest Shipping Confidence survey by Moore

give”; and, “The massive orderbook is a great

DP World’s PR team.

Stephens, although a sustainable recovery in

cause for concern”. One respondent said that

the markets still appears to be some way off.

the key to the massive orderbook crisis was for

The depression in freight rates seems likely to

“the banks not to finance any more projects and


persist amid continued concerns about the level

for shipyards to agree to delays in delivery dates”.

International Register of Shipping has opened

of newbuildings set to enter the market over the

an office in Norway. The office in Bergen will be

next two years.

For the fourth successive survey, respondents identified demand trends as the most important

run by Noralf Lekva and Kjell Jensen, a master

On a scale of 1 to 10, the average confidence

factor likely to affect their business performance

mariner. Both have extensive experience in

level expressed by respondents in November

over the coming year, followed by competition

the maritime industry, including shipowning,

2009 in the markets in which they operate was

and the cost and availability of finance.

brokering and management.

5.7, the same as in the previous survey in August

Julian Padilla, chairman of the International

2009, which itself was the highest level recorded

Register of Shipping, says it is important to have

for 12 months. But this is still significantly down

a presence in Norway, one of the world’s leading

on the 6.8 recorded in the first Moore Stephens

shipping nations. “We are committed to building

survey, in May 2008.

closer relationships with our shipowners and the

Charterers showed the most significant drop

maritime centres of excellence. This will ensure

in confidence over the latest three-month period,

we can offer the highest possible standards of

down from 5.8 to 5.6, while confidence among

Improve your operational efciency Our experience and competence enables us to offer ships agency services at a global standard, adapted to local requirements. Our focus is to help you get your vessels in and out of port quickly and efciently.

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Market maturity comes a step closer The Baltic talks to the new chairmen of the FFABA


potentially more valuable for the market.

orian Benson and Andrew Jamieson of GFI and ACM GFI have been

Benson points out that the buy-in on a full

elected the new chairmen of the

VLCC means an enormous cash exposure,

Forward Freight Agreement Brokers’

particularly at times when rates are very high,

Association (FFABA), representing the dry and

precluding many trades. “Smaller clip sizes

wet markets respectively. After a year which saw

bring in more trade – the flip side is that if you’re

profound changes for both the shipping industry

using FFAs primarily as a risk management tool,

and the derivatives industry as a whole, there

there is an element of frustration if you can’t get

are new challenges to be tackled, but many of

coverage for the whole ship.” Introducing larger

the most important questions remain the same.

clip sizes gives potential for a two-tier market, which Benson feels could be misleading. Jamieson, however, is more optimistic: “I think

Dry – the switch to clearing

we could almost get used to a two-tier market. I

According to Benson, the main change to the

like the idea that people can flip around and buy

market last year was the avoidance of OTC risk,

smaller amounts.”

and the consequent move towards a fully cleared market. “It has been well documented that there were issues with certain counterparties, but

FFABA focus

I don’t think that there was an issue with the

Despite a difficult time in 2009, the issues which

market itself. There is still confidence that FFAs

face the FFABA have not really changed, Benson

are the best tool for risk management.”

says. Instead, the FFABA will largely focus on

As a result of the move towards clearing,

maintaining and developing the status quo. This

OTC counterparty risk is “almost an irrelevance

will mean:

now,” says Benson. However, along with that

• Maintaining the efficiency and professionalism

comes the need for a constant monitoring of

Dorian Benson

clearing, to make sure that it is both professional

of the market. “Brokers are an absolutely integral part of the FFA market, and the

and efficient. So far, Benson emphasises, there

players who were “willing to take a punt on the

have been no issues with the clearing houses,

market”, 2009 saw players using the market for

but, with new players constantly rumoured to be

risk management, rather than for speculation.

• Monitoring the efficiency of the Baltic indices.

joining the market, including LME, Nymex and

In addition, says Jamieseon, the new dynamic

• Developing the high potential for Asian

CME, the FFABA “needs to remain in a constant

in storage economics, with larger tankers being

customers. While there has not been a huge

process of adaptation’ to these changes.”

chartered as floating storage, brought in a

influx of new counterparties over the last year,

whole different side to the market. Overall,

there has been increased involvement from

he says, the markets stood up to the test of

producers on the Chinese side in particular,

a difficult year.

partially in response to the introduction of iron

Wet – market profile changes

professionalism of the brokers is a reflection of that market.”

ore swaps. There may be some regulatory

On the tanker side, Jamieson says that the FFA

issues to be addressed as a result.

market suffered hugely from the lack of volatility in the physical market last year. While volumes

Clip sizes

were overall probably the same, the pattern of

One issue which has been raised is the need

trading was very different. Whereas previously

for bigger clip sizes in the tanker market, but

there had been a large number of smaller

Jamieson says that he thinks smaller sizes are

theBaltic March 2010

• Ensure screen trading continues to be a positive for the market.


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Corporate viewpoint LCH.Clearnet Ltd

LCH.Clearnet Ltd Reducing risk across the world’s freight routes

One million plus contracts cleared for the second year running

Driving efficiencies

Concerns about counterparty risk kept cleared

LCH.Clearnet is improving the

volumes at LCH.Clearnet high throughout

procedure for manual entry

2009, despite a record 50% drop in freight

of voice brokered trades.

volumes. With over one million contracts cleared


in 2009 and an 85% market share of dry

introduction of screen

cleared FFA trades, LCH.Clearnet remains the

trading for FFAs, which

Iron ore pro-

clear market leader. The year ahead looks

has been explored by

ducers, steel mills,

set to see even more focus upon the value of

the industry for some

centralised clearing as regulatory developments

time, LCH.Clearnet is

are discussed and users increasingly look to

working on demands for

minimise their counterparty risk.

straight through processing.

Market Share 2009

In a move which will make the end to

Growth opportunities Always looking to extend the

end processing of trading far quicker,




broad range of asset classes cleared,

OTC Other clearing houses



introduced clearing for OTC iron ore and fertilizer swaps in 2009.


LCH.Clearnet Ltd


and dry bulk shipping companies can now clear both iron


ore swaps and their dry

results in higher volumes and in

FFAs, benefitting from a

Robust risk management tackles regulatory concerns

the case of freight, small clip sizes

With a robust risk management framework, and

current traditional voice broking method.

35% margin reduction between

may well migrate to screen trading from the

the two markets. The iron ore contract is a monthly cash-settled swap, traded out to two

as the only clearing house to have managed

whole calendar years, using The Steel Index (TSI)

an OTC default, LCH.Clearnet has unequalled

iron ore reference price (62% Fe C+F) for settle-

Providing enhanced transparency

ment.This service has seen tremendous support

of markets. As regulators increasingly focus on reducing risk in OTC derivatives markets, the value

More information on the activity of the freight

a monthly basis. LCH.Clearnet is also a member

of clearing freight derivatives has been a topic of

market will soon be available, to both members and

of the Iron Ore and Steel Derivatives Association

much discussion. With over 10 years’ experience

brokers, as LCH.Clearnet provides daily volumes

(IOSDA) which seeks to promote the market

of clearing OTC derivatives, LCH.Clearnet is well

and market data via its website. Providing up-to-

together with brokers and market participants.

placed to deliver increased transparency and

date statistics will enhance transparency, allowing

security to the freight marketplace.

users to keep track of volatility and facilitating

experience for reducing risk across a wide span

from market participants, with volumes growing on

calculation of their market share. 200,000






200,000 75,000 50,000



Isabella Kurek-Smith


Director, Head of Energy & Freight Markets




+44 20 7426 7460






























Volume (lots)

250,000 100,000

Max OI (lots)



Maximum Open Interest

theBaltic March 2010



Market on the mend 2009 was a better year than predicted for the FFA sector, says Neville Smith


f the FFA market were to be awarded marks

C5 and C7 iron ore routes, a potentially huge

out of 10 for its performance in 2009, it would

source of fresh liquidity when teamed with the

receive a better grade than was widely pre-

iron ore swap. “These routes have the potential to be

dicted at the start of the year. True, volumes in the dominant dry market

much more heavily traded as principals look to

took a big hit, falling 45% to 1.1 million lots

manage the freight exposure within iron ore. The

worth around $34.8 billion, but 2009 was far

drop-off in liquidity has been a big challenge but

from a disaster.

a cleared C3-C5 market is a chance to kick-

Rather, the fall was magnified by the

start volumes on routes which represent such a

exceptional market in 2008. Firm demand from

big component of the physical ore price,” says

China for bulk commodities buoyed the physical

FIS managing director John Banaszkiewicz.

market and supported paper, helping the iron ore swap find its feet as a result. In the tanker market, volumes held up too, though at lower

Tanker volatility rises

volatility levels, making it a harder year in terms

The positive mood extends to tankers, with GFI-

of managing risk versus return.

ACM’s Andrew Jamieson noting an increase in

Last year was also the one where clearing

volatility in the early part of 2010. The drivers

became entrenched, as risk management slid

for this, he says, are the fall in the Worldscale

back onto the traders’ agenda. The majority of

flat rate and a physical market, “where brokers

trades are now cleared.

know they can negotiate a deal and where

The dry market also found itself scratching a

deals are moving by several Worldscale points

familiar itch, but got little nearer to treating the

at a time”.

cause. The announcement by the London Metal

Tanker traders work to strict risk management

Exchange that it sought to launch an exchange-

routines and the dry market followed suit last

traded FFA market, rekindled the debate that

year, fully embracing clearing and paying for

many hoped had gone away – whether the dry

The Baltic Exchange is monitoring

the privilege. Clarksons’ Alex Gray notes the

market should embrace an electronic, screen-


cost of trading is a potential stumbling block

traded future. It was far from dull. And 2010 promises to be just as gripping – perhaps more so – as these trends evolve and the issues raised work

to increased volumes but says the market is levels, perhaps to two million lots or above, albeit at lower values.

finding solutions. “We are seeing deals where counterparts

SSY’s Duncan Dunn says that with smaller

fix a contract of affreightment and are happy

lot sizes emerging: “Smaller counterparties can

to exchange paper because the physical deal

cover their exposure and this is a welcome

offsets the credit risk. It’s not a solution for

evolution. At the same time the market has good

the entire market but it’s a workable hybrid for

Dry market looks up

levels of capacity, with deals being structured


Dry FFA brokers are united in seeing an

out to 2020.”

themselves through.

encouraging trend to volumes in the last quarter

FIS is similarly bullish, predicting lot levels

of 2009 and January 2010. This has led SSY

above two million and a potential market value of

Looking forward

and FIS among others to suggest that volumes

$60-$70 billion. The broker has also succeeded

Whether or how screen trading will find traction

this year could bounce back to near 2008

in encouraging capesize traders to fix on the

in the dry market looks set to be a defining issue


theBaltic March 2010

FFA this year. Jeremy Penn confirms that attempts to

has longer term plans which discuss “trading

Clarksons believes “the sky is the limit” in terms

provide a third-party “aggregator” screen by the

venues” for swaps and options. The Baltic is

of potential counterparts.

Baltic proved technically difficult and not much

monitoring the Brussels process but says the

Clarksons spent two years working with

desired by users.

market has no clear picture yet of what the

the Shanghai Shipping Exchange on its index

changes might mean.

methodology. A panel of 15 carriers and 15

The market’s reaction to the LME proposals has been lukewarm at best except among a

“What I hope is that regulation doesn’t make

service providers has been established to

handful of traders, but there is a feeling that the

it harder for the FFA market to develop,” says

draw up route assessments. The broker is in

momentum for change is building again.

Jeremy Penn. “I’m a believer in the evolution of

discussion with clearing houses and hopes to

“Talking in terms of a solution suggests

markets and enterprise. Increased transparency

be able to offer the product on a cleared basis

something is broken and this market is not

is something we should sort out ourselves

from the second quarter of 2010.

broken. There are four screens today and

rather than having someone else tell us how it

probably more will emerge in 2010,” says Alex

should work.”

This year could see tanker FFAs start to deliver on their long-held promise of a market

Gray. “There is a temptation for people to say

New products have become the watchword

to rival their bigger dry bulk sibling. A shot of

that brokers don’t want screens, but all the

of the freight derivatives market, but with dry

volatility in the physical market over the turn of

screens out there are broker screens, so it’s not

bulk, tanker and commodity markets maturing

the year has given hope that new Time Charter

an argument I agree with.”

there remained one unconquered frontier.

Equivalent (TCE) contracts will be ready to ride a fresh wave of liquidity.

Andrew Jamieson says the dry market could

Attempts to design a container swap had

demonstrate maturity by accepting that screens

been going on for years until Clarkson Securities

Baltic Exchange chief executive Jeremy

have their place. “It’s a great tool which gives

surprised the market with the launch of the

Penn says he is optimistic that 2010 is the year

you a firm market, shows transparency and

Container Freight Swap Agreement (CFSA) in

that trading in TCEs “really starts to happen”,

shows you are in the game, even if most of the

early January.

once the final wrinkles in the methodology are

Designed to take advantage of China’s

work goes on behind screen.”

ironed out.


massive container export volumes, the swap

“We have perhaps tended to focus on the

argument, that for a screen to be successful it

mirrors established freight derivatives by offering

difficulties but we are very close to resolving

should be dominant, is spurious too. A screen

a dollars per day contract per 20ft equivalent

the problems. We’ll go on working through the

could be successful if it had 30% of the market

unit on the most liquid routes out of Shanghai.

issues until there are no issues,” he says.





representing the liquid trades in near dates while

This is a departure from previous attempts to

GFI-ACM’s Andrew Jamieson, who is chair

the more difficult longer dated business is done

develop a paper market in boxship charter rates,

of the wet FFABA says the work will continue.

by phone, he suggests.

a deliberate policy, according to Clarksons’ Alex

A meeting in February will attempt to decide

There is perhaps only one dark cloud on

Gray. “Boxship charters are long term and

whether to continue with TCE development,

the horizon. 2010 is supposed to be a year

there’s no spot market like in dry or tanker FFAs

switch to a dollars-per-tonne alternative or try to

of regulatory change for the FFA market,

and even when an index was produced we

develop a happy medium.

with proposals to monitor derivatives trading

couldn’t see who it was useful to.”

“There are few people willing to price the

emerging from the European Commission

Instead, the aim of the CFSA is to provide

deferred market at present,” he says. “Unless we

and the US Commodity Futures Trading

a product that is useful to owners, operators,

get the methodology right and get transparency


exporters and importers, as well as to financial

on bunkers, then it’s never going to be liquid

In outline, the EU at least wants to promote

institutions keen for an instrument that allows

because the users are not hedging risk, they are

clearing as a means of standardisation and

them to trade a highly liquid underlying market.

taking on another risk.”

A container ship derivative has recently been launched

theBaltic March 2010



Freight Options Ola Strand Andersen, managing director, Imarex Asia on a useful

risk if traded via a clearing house. As liquidity increases, freight options will get more atten-


ible, easy to unwind and carry no counterparty


ideal for this purpose because they are flex-


disputes and mitigate risks. Freight options are


than ever to find ways that eliminate contractual


contracts. Consequently, it is more important


many counterparties were not honouring their

Net Payout

rates in 2008 created serious challenges as


overshadowed by defaults and law-

suits. World recession and the collapse in freight


of trust and good faith have been

$30,000 $28,000 $26,000 $24,000 $22,000 $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0


face of the shipping industry. Principles



ecent events have forever changed the


tool in a complex world

tion from the shipping community due to their Underlying Market

dynamic nature and practical application in hedging strategies. It is essential for companies exposed to

buyer of a put option, a protection from rates

a profit split up to a certain threshold level. The

deep-sea shipping to analyse the inherent

collapsing, and at the very least ensure rates are

owner intuitively prefers the latter alternative, but

optionality attached to any contract. In the

covering break-even cost of operating a vessel.

has to consider the relative value between the

freight market, this can be divided into physical

To be in possession of this right, an options

two alternatives.

and synthetic. Physical optionality is manifested

premium or “insurance premium” has to be

Let’s assume the reliable charterer offers

by contractual fine-tuning, such as duration of

paid. This premium is determined by the market

a rate of $20,000 per day whilst the other

a timecharter, redelivery window, counterparty

and reflects the perceived probability of rate

proposed profit sharing agreement guarantees

vetting and percentage fleet coverage. Synthetic

fluctuations at a point in time. Freight options

the owner a minimum of $18,000, but a split

optionality on the other hand can be represented

are what we define as Asian or Average options,

that is dependent on the spot shipping rates.

by freight options and can be used to support

because they are settled against the average

If the spot turns out to be between $18,000

the strategy and manage the risk profile of a

of a future period, eg a month, quarter or year.

and $30,000 the profit is split 50% between the


Whilst options can be concluded bilaterally

owner and the charterer. The owner reaches

between two counterparties, the majority are

his maximum threshold at $30,000, hence will

now traded cleared.

not be gaining any additional profit if the market

Options – the basics

turns out to be stronger. Since the owner will

An option is the right but not the obligation

only gain 50% of the upside, they have the

to buy or sell something in the future at a

Profit sharing

potential to gain another $6,000 in addition

predefined level called the strike price or exercise

To illustrate the benefits of freight options,

to the floor of $18,000. This is equivalent to

price. Freight options can simply be regarded as

imagine an owner interested in timechartering

$24,000 per day. The chart above illustrates the

insurance on freight rates, whereupon one pays

out a vessel for one year, being approached by

two alternatives. Net payout received (vertical

an agreed price to be insured against adverse

two charterers with the following alternatives:

axis) versus the spot market (horizontal axis).

rate movements. For example, a trader that

one charterer with a good reputation in the

The black line shows alternative one for the

knows that their profit margin will be significantly

market offers a flat daily hire rate for the year,

owner, a flat payout of $20,000 regardless of spot

reduced or even negative if the cost of shipping

whilst the smaller and less known charterer

market movements. The red line illustrates the

rises, could consider buying a protection against

offers a seemingly attractive profit sharing

second alternative, a profit sharing agreement

higher rates, or what is named a call option.

agreement where the owner will receive a lower

between the owner and the charterer.

On the contrary, a shipowner will be a natural


minimum rate but will be able to participate with

theBaltic March 2010

An owner, naturally interested in the best

Extending a timecharter contract A charterer might take a ship for one year at a given rate, and at the same time offer the owner a lump sum of money for the option to extend the timecharter for another year. Both the owner and the charterer agree to a date where the charterer must decide whether he will declare the option, and thereby keep the ship. This is in effect an owner selling a “call option” since the potential to participate in a stronger market










is exchanged with the benefit of colleting a $4,000

$30,000 $28,000 $26,000 $24,000 $22,000 $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0


Net Payout


Underlying Market

premium. There is little doubt that the charterer will extend the contract if the market is strong. Similarly, the ship will be redelivered if rates subside. Whether this is a prudent strategy is a separate discussion to the relative value of

deal possible, should look at freight options to

occur, and the physical exposure for the owner

entering into such agreement on the physical

value any profit sharing strategy. The seemingly

changes, the option strategy can be easily

side as opposed to what value can be realised

good profit sharing alternative turns out to

unwound in the market.

from selling a cleared freight option. By doing the

be less attractive, because it is undervalued

The blue line shows payoff if a vessel is

latter, the trade rightfully demands a margin to

relative to what could be obtained using freight

timechartered out at $20,000 and profit sharing

be posted with the clearing house. Nevertheless,

options. In the example below, it is assumed the

is replicated with options. For an additional

it is an attractive alternative as the additional

owner charters out their vessel at the flat rate of

$750 per day invested, the owner will have a

premium received could easily outweigh the cost

$20,000 and replicates the profit sharing payoff

significantly higher payout if the spot market is

of margin financing.

by buying a “call spread” (simultaneous purchase


It is important to realise that all physical

and sale of two call options with different strikes).

It is important to remember that the example

optionalities have a value and are often directly

At approximately $750 extra per day, the owner

above is only one of many possible strategies

linked to shipping rates. Freight options can

is able to receive an additional $3,250 per day

that the owner can choose from. Adjusting

be used as a supplement, a valuation tool

if the market turns out to be stronger. This is

for volumes would, for instance, reduce the

or as a substitute for many types of contract

clearly a viable alternative to the initial strategy.

additional cost but at the same time decrease

arrangements in the physical market. Although

Firstly, the owner will incur less counterparty

the payoff if physical rates remain strong. In

not applicable to all circumstances, any

risk by timechartering out the vessel to a more

other words, it would bring the strategy more

company related to ocean freight should explore

reputable charterer. Secondly, a cleared option

in tune with the charterer proposing the profit

how freight options can assist in improving

will completely remove the risk of default and

sharing, but still with a preferential payoff.

decision making and overall risk management.

thirdly, if any unforeseen circumstances do

Freight options can help guarantee smooth sailing in a troubled market

theBaltic March 2010


Corporate viewpoint SuperDerivatives

SuperDerivatives Effective management of freight risk using derivatives – a user guide ­– by Leor Jivotovsky, SuperDerivatives


he shipping industry is one of the lead-

inherent part of the commodity value chain.

the contract period, as determined by reference

ing indicators of the state of the global

Managing freight market risk remains a

to the relevant index, the seller of the FFA is

economy. Trading volumes of forward

significant issue for the shipping industry but

required to pay the buyer an amount equal to

freight agreement contracts, or FFAs,

also for the banks and corporates with an

the difference between the contract rate and

interest in this evolving market.

the settlement rate multiplied by the number

experienced seven years of rapid growth as the economy boomed, with a peak in 2008 when

One method of managing this risk is through

of days specified in the contract. Conversely, if

2.1bn tonnes of freight in FFA contracts worth

the purchase and sale of FFAs, the value of

the contract rate is greater than the settlement

$155 billion were traded.

which is derived from the value of an underlying

rate the buyer is required to pay the seller the


settlement sum.

The tanker and dry freight markets have experienced record highs and lows over the

In the shipping industry, the underlying asset

FFAs can be bilateral between two principals

past 18 months, reflecting the wider economic

is the freight rate for a specific physical trade

or can be cleared. A bilateral transaction exposes

downturn, yet as the financial markets recover,

route, based on a daily assessment provided by

the counterparties to a risk on non-performance

an upswing of trade in FFAs is widely considered

the Baltic Exchange.

throughout the life of the transaction. As

These freight derivatives serve as a means

a way to reduce or eliminate counterparty

Already, a marginal uptick in world trade in

of hedging exposure to freight market risk by

credit risk, participants have overwhelmingly

the last six months has been driving shipping

providing for the purchase and sale of a freight

embraced clearing mechanisms for freight

activity, with the dry bulk market proving more

along a named voyage route or timecharter over

products, Clearing mechanisms have been

resilient than many expected in 2009, especially

a specified period of time.

provided by NOS, Singapore Exchange (SGX),

to be imminent.

Using a simple example of a buyer of an

CME Clearport and others for the standard

Fundamental supply and demand drivers

FFA swap, a formula determines the settlement

freight products such as swaps and options.

such as vessel supply, vessel construction,

amount for the transaction at expiration. On

Clearing mechanisms replicate the structure in

export growth, oil flows, refinery utilisation, and

settlement, if the contract rate at which the

place at a regulated futures exchange in that

demand for bulk raw materials contribute to

buyer entered into the swap is less than the

participants trade standardised products, must

establishing global freight rates. Shipping is an

average of the rates for the contract route over

post margins, and report their positions and

towards the end of the year.

abide by position limits in place. The freight derivatives market began with the trading of voyage rates for dry cargo routes in the early 1990s and later was expanded to include wet tanker routes. Forward Freight Agreements were originally used almost exclusively by participants in the shipping industry, such as shipowners and charterers, to hedge against fluctuations in freight rates. Banks stepped in to offer greater intermediation and provide hedging services to the shipping community. Financial hedging allows for an efficient management of freight exposure and cash flow. Participants can flexibly react to spot market volatility using financial contracts rather than timecharters. Trading in and out of contracts prior to settlement is also possible. Since then, the attractiveness of trading freight has greatly evolved. The advent of


theBaltic March 2010

Corporate viewpoint SuperDerivatives clearing has created greater transparency and promoted liquidity, while market volatility has remained very high. These factors have attracted a large number of non-traditional players to this market. Today, participants include shipowners, refiners, physical traders, banks, brokers, hedge funds, and asset managers. The result of increased participation is that the total volume of financial trading today is a multiple of the underlying physical market. There is more extensive use of risk management techniques




standardised or bespoke. The market now actively trades swaps, route spreads, time spreads, Asian options, and strips on both dry and wet freight. As the level of sophistication and customer need increases, new products and structures will eventually be developed. In light of these developments and to reflect

produces prices that are observed in the market.

structure, allowing them to more effectively

the growing market, SD realised that participants

In freight, the industry has not embraced just

hedge any exposures that may affect their

active in the markets require sophisticated

one model, creating associated model risk when

capacity to do business.

pricing, analytics and risk management tools

pricing options.

Western Bulk, one of the world’s largest

to support their freight trading operations. Tools

To support market participants through these

shipping companies with a 60-strong commercial

were needed for supporting hedging or trading

trading conditions, SD has added dry and wet

fleet, has signed up for the service to strengthen

decisions, to collect reliable market data, and

cargo FFAs and options on FFAs on a very wide

its ability to set a market-accurate future price for

accurately and efficiently calculate the values of

range of ocean routes to its commodities and

carrying commodities at sea.

financial instruments.

energy solution, giving users access to real-time

International shipping company Gearbulk

Valuing shipping derivatives also has its set

independent pricing, risk management, mark to

recently joined the growing list of shipping

of challenges. The market is still relatively young

market valuations, pre-trade analysis tools and

companies using SD’s data to gain an accurate

when compared to the more established energy

extensive portfolio management capabilities


and metals markets.

These cover both wet and dry freight





derivatives pricing and management.

Although clearing and settlement have

derivatives, designed to provide coal, ore, oil

Gearbulk hedges its exposure to bunker

provided much needed price transparency,

and other commodity producers, timecharterers,

fuel costs for its fleet of vessels and chose SD’s

the intra-day market is still relatively opaque.

shipowners and financial institutions with an

commodities solution, SD-CM, for its ability to

Price discovery is provided by shipping brokers

in-depth understanding of market trends and

provide extremely accurate independent price

but quotes oftentimes contain wide bid-offer

potential trading opportunities.

checks for fuel markets before going to market.

spreads to reflect the uncertainty of where the market is trading.

SD’s freight derivatives service enables

Ilias Angelidis, treasury analyst, Gearbulk,

shipping firms to access accurate pricing and

comments: “After surveying the market for a

Second freight is volatile. Spot volatility and

manage risk in the volatile shipping market to

solution to accurately price our fuel exposure,

option implied volatility for freight can easily

benchmark and manage their exposures to

we went with SD for its residual fuel oil coverage

be trading above 100% consistently. Compare

freight costs.

and its scalable pricing system supported by

this with 10% annualised implied volatility in the

SD provides the widest coverage of

robust risk analytic tools. Our ability to price and

foreign exchange market; 100% implied volatility

commodity and energy derivatives on a real-

manage our positions across the life cycle has

is akin to saying that the market believes that

time basis, from vanilla to the most advanced

improved dramatically since deploying it.”

within a given time frame, in this case one year,

structures, across a huge range of underlying

SD aims to develop its presence in the

freight rates can double or head to 0.

assets. The addition of FFAs builds on the

shipping industry further by providing members

company’s existing presence in commodity

of the Baltic Exchange with risk management


and valuation services.

Volatility reflects the fundamentals of the market. Demand for freight is inelastic and in the short run there are limitations on how much

Overall coverage of commodities derivatives

Through its technology, it directly provides

supply can increase in order to catch up with

includes over 65 options and structures across

additional market transparency which ultimately


more than 105 underlying assets, including

leads to better information and to better

With this in mind, obtaining accurate volatility

precious metals, base metals, oil and refined

decision making. Finally, it raises awareness and

quotes is challenging as options volume are

products, natural gas, electricity, emissions and

education about the shipping market to get new

more thinly traded than swaps and wide bid-

agricultural markets and freight.

players into the market.

offer spreads are prevalent.

This ensures shipping companies have

Third, choosing the appropriate financial

access to accurate, independent and real-

models to value options is also key. The

time pricing for almost any commodity and

appropriate model is ultimately the one that

commodity-related products and instrument or

theBaltic March 2010


Baltic briefing

A helping hand Richard Butler explains the role and history of the Baltic Charitable Society


and who might be reluctant to ask.

enevolent societies can provide an

or related backgrounds, who at some point in

extremely useful and encouraging sup-

their lives have joined the Society and who now

The main source of income for the Society’s

plement to any help that the state is

have financial, medical or any other problems.

activities comes from its investment portfolio,

able to give. Such funds were often set

The Society has recently been able to provide

but donations and occasional legacies from

up by trust deed many years ago and devoted

help with heating bills to older members over the

the wills of grateful and generous old members

to helping members of a particular trade or

cold snap in January. It has given practical and

are regularly received and are always welcome.

industry. The Baltic Exchange Charitable Society,

financial support to a member going into a care

Membership subscriptions can also be a steady

for shipping and related occupations, came

home. It has helped with the prompt provision of

source of income and the Society is keen to

into existence as a result of the gradual merg-

mobility aids; with help in adapting a home and

welcome new members. With a remarkably low

ing together of the Baltic Exchange Benevolent

with funeral expenses and physiotherapy outside

one-off subscription of £50 for life membership,

Society (founded 1912), the Cereals and Baltic

the National Health Service.

it is hoped that all employees of Baltic member

Friendly Society (1906) and the Oil and Oilseeds

The Society also provides many older

companies join the society to support its work,

Feedingstuffs Trades Benevolent Association

members, long since retired, with a way of

and, of course, to qualify for assistance should

(1971). Its objects have long been to help a wide

keeping in touch with the Baltic, and also with

some disaster ever strike or serious need arise.

range of families with shipping and commodity

a source of advice on problems they encounter,

You never know what’s round the corner.

related backgrounds.

in moving house, or in making arrangements for

Details about applying for either membership

The Society continues to do what it has

power of attorney. There may be many we do

or assistance can be obtained from Richard

always done. Governed by a committee of

not hear about who need advice or support of


trustees who are all current or recently retired

some sort, and we always ask members to let

members of the Baltic Exchange, it is actively

the Society know if ever they hear of a colleague

Tel: +44 (0)20 7283 6090

assisting a wide range of people from shipping

or ex-colleague who might need some help –


Mediation clause for charterparties C ompanies wishing to include a provision for

claim or difference arises under or in connection

Mediation Procedure as published on the Baltic

mediation procedures within their charter-

with this Agreement (a “Dispute”), then the

Exchange website.”

parties may use the following wording:

Parties will attempt to settle the Dispute by

“Without prejudice to any other right or

mediation in accordance with the mediation

remedy under this Agreement, if any dispute,

procedure set out in the Baltic Exchange

New spring menus at the Baltic W

The full clause can be found in the mediation

section of

ith spring around the corner, the Baltic

used our rooms for shipping related functions

A stone’s throw away from Liverpool Street

Exchange has updated its menus for

and meetings, whilst a range of small and large

station and smartly appointed, the Baltic

functions and meetings. Housed on the first,

firms have taken advantage of our modern

Exchange has in-house catering provided by

second and ground floors of 38 St Mary Axe, the

facilities in the heart of the City of London.”

Balls Brothers who can cater for a wide range of functions.

Baltic Exchange has a number of rooms which

He adds: “With prices starting from as low

can be hired for meetings, dinners and seminars.

as £50 per head for a full day’s meeting and a

See for

“We’ve played host to a wide range of

30% room hire discount available to members,

further details including photographs, room

companies in the past few months,” says venue

the Baltic Exchange makes a good choice for

dimensions and prices.

manager Cris Eccleston. “Member firms such as

anyone looking to run a professional event or

SSY, Howe Robinson, Bimco and Bunge have



theBaltic March 2010

Baltic briefing

Poppy appeal raises over £5,000 O

Diving around the UK T

he Baltic’s Sub-Aqua Club has announced a diverse programme of dives for 2010. With over a dozen dives around the British Isles including dives in Kerry, Kimmeridge,

Plymouth, the Farne Islands and Bognor Regis, membership of the club is open to any Baltic Exchange member. For further details, see

nce again Baltic member Derek Prentis MBE spent November tirelessly rattling his

collection box and managed to raise £5,355 for the 2009 Poppy Appeal. Derek Prentis has been a member of the Baltic Exchange since 1952 and is the honorary appeal organiser of the Royal British Legion’s Baltic Exchange branch.

Chairman’s Cocktail Party: 19 May T

ickets are now available for the Baltic Exchange Chairman’s Cocktail Party which is being held on 19 May at Christ Church Spitalfields (London). Always a highlight of the Baltic Exchange calendar,

subsidised tickets are priced at £35 + VAT for members and their guests. To book your place, please contact Cris Eccleston.

Greenwich, CT meeting: 24 March T

he Baltic is holding a meeting for its North American members and others in Stamford

for the Connecticut Maritime Association conference on 24 March. The meeting offers members an opportunity to discuss recent Baltic Exchange developments, including new routes and vessel descriptions. The meeting takes place at the Delamar Hotel, Greenwich from


New Baltic Exchange companies The Baltic is delighted to welcome the following companies into membership EnBW Trading GmbH

Houston Refining LP

Nom (UK) Ltd


Cosmos Shipbroking (HK) Ltd

S A G L Gault

CLSA Asia-Pacific Markets

12.30. Lunch will be provided. To confirm your attendance, please contact Janet Sykes. E-mail:

Sadly departed The Baltic is sad to report the passing of the following

Joint Baltic ASBA party T

Baltic Exchange members:

Sir Charles Alexander

Ron Rider

Sir Charles had been a member of the

Mr Rider was first elected to the Baltic in 1983

Baltic for many years, representing Houlder

representing Howard Houlder & Partners until

Brothers & Co Ltd before becoming a retired

he became a retired member in 1988.

he Baltic Exchange and the Association

member in 1980. He also served as a Baltic

of Shipbrokers & Agents (USA) will once

Director between 1964 and 1968.

again be holding a party during the Connecticut

Jens Gran Mr Gran was first elected to the Baltic in

Maritime Association week this March. This

Tony Crawford

1974. His memberships included Marmaras

is always a popular party, so members are

Mr Crawford was first elected to the Baltic

Shipbrokers and J Gran & Partners

advised to book as soon as possible. The event

Exchange in 1976. During his membership

takes place on Monday 22 March, at 65 Bank

he represented Worldtrade Shipbroking Ltd,

Leslie Slow

Street, Stamford 1830-2130. A limited number

Silver Line and V.Ships.

Mr Slow was first elected to the Baltic in 1947.

of tickets are available for Baltic members.

Between 1972 and 1982 he represented E A

Please contact Janet Sykes.

Gibson Shipbrokers until he was elected a retired member.


theBaltic March 2010


Baltic briefing

Greek wines Greece: Yesteryears of Retsina and oxidised, indifferent wines. Today, an exciting world of modernity, rediscovered indigenous varieties and an optimistic future


sk people today about Greek wine

to promote indigenous varieties and it was he

and they will still almost certainly say

who rescued the virtually extinct Malagousia, a

“Retsina (‘ugh’)” and those of a certain

delicious peachy, aromatic white variety now so

age will recall “Demestica”. This down-

fashionable and much sought-after.

beat view was upheld by eminent wine writers

Predominant white varieties to look for are

up to the early 1990s. However, EU membership

the important Sauvignon-like Assyrtiko, with

brought financial winds of change to the Greek

mineral, crisp citrus fruits – best from Santorini

wine industry, allied with new-thinking wine mak-

where the vines are nest-like to the ground to

ers heading off to France and, the ultimate

absorb any moisture and to avoid the strong

paradox, the New World, to see how things have

winds. Moschofilero is a pink-skinned aromatic

progressed since the time of Dionysus the god of

variety which excels in the Peloponnese & Ionian

wine, some 6,500 years ago.

Islands. Cephalonia’s pride is Robola, where

A few years ago, after tasting some clarets

the limestone-rich soil gives intensely flavoured

together, Matheos Los gave me a bottle of

bone-dry wines. Unique to central Crete; Vilana is

Syrah from the north of Greece and a fine bottle

a lovely fresh wine with gentle spice. Savatiano,

it was, emphasising that Syrah and other such

understated, aromatic and floral is the variety for

‘noble’ French varieties – Cabernet-Sauvignon,

‘Retsina of Attica’.

Merlot, Chardonnay & Sauvignon blanc – are

Red varieties to seek out are cultivated

successfully produced. However, it is with the

mainly in Nemea. The Peloponnes Agiorghitiko

indigenous varieties that Greek winemakers are

(‘St George’) is the most adaptable of varieties,

rightly excelling.

yielding exciting young wines, fresh ‘roses’, soft

In the mid 60s John Carras, a shipowner well known to many Baltic members, created

reds, yet its tannin-rich skins have the ability to make quality reds worthy of ageing.

David Hughes

Domaine Porto Carras at Halkidiki in the

Xinomavro (‘black acid’) is the opposite of

north. The winery, under oenologist Evangelos

Agiorghitiko. Predominately grown in Macedonia,

Oh, and finally, at the Gaia winery, instead

Gerovassilious, orchestrated the owner’s wishes

Goumenissa & Naoussa, it is difficult to cultivate,

of the Savitiano grape, Karatsalous and

needing light, water-retaining soils. However, it

Parakevopoulos have chosen the noble Roditis,

can produce wine of amazing depth, complexity

thus giving a subtle, delicious wine with citrus

and character and its tomato/dried plum style

aromas with just a hint of pine – a complete joy.

has often been likened to Italy’s famous Barolo.

The wine? Retsina … just goes to show you!

Goumenissa Central Macedonia



Mavrodaphne is associated with a pale, tawny-

Ionian Islands





Samos Nemea



red style of sweet fortified wines grown in the

David Hughes was a shipbroker from 1961

Peloponnese and when blended with Corinthian

to 1983 when he “moved from shipping to

resin produces the well-known Mavrodaphne of

sipping” – opening a wine bar-restaurant in Old


Spitalfields in 1984. After 25 years, the business

One of the world’s greatest sweet wines is

sold, and he is now a wine consultant. A retired

made on the island of Samos where local Muscat

member of The Baltic Exchange, he conducts

produces rich, mellifluous wines. There’s also a

corporate, company and private wine tastings

delicious dry orange-flower aroma option called

and is available for information and supply of

‘Samena’. Both are well worth searching out.


Greek wines are generally not cheap and, in truth, need to be better marketed for they have

Map of Greece

much to offer.


theBaltic March 2010

Baltic briefing

The view from above News from the Baltic Air Charter Association


nnus Horribilis’ is the phrase which

of Scottish company Globespan, which was

seem to go one better. This latter case will

aptly describes 2009 for the whole

a tour company and also an airline. Hundreds

involve a heavy cost to airports, and therefore to

aviation industry, be they manufactur-

of passengers were left stranded just before

airline fares, but will hopefully be effective, until

ers, airlines, airports or the ancillary

Christmas 2009 and the resultant fall-out of this

the next time!

companies who rely on these for their business.

and other difficulties has not done the travel

The year started with the first part of the world’s worst financial crisis, which seriously hit the aviation market. Production of goods from

industry any favours. How such tour companies will fare in 2010 is anyone’s guess.

Threats to the airline industry are of course not a new phenomenon. The first aircraft hijack took place on 21 February 1931 in Peru. Byron Rickards, flying a Ford Trimotor, was approached

the main manufacturing areas such as the EU,

by a band of revolutionaries. He refused to fly

China and USA was dropping month by month,

them anywhere and the stand-off lasted 10 days

which had an adverse effect on air freight.

Rise in alliances

when he was told that the revolution had been

Passenger figures were down because of falls

As airlines around the world struggle with the

successful and he could go in return for giving

in incomes plus the gradual upward trend again

global turndown, there has been a rise in

one group member a lift to Lima. Between 1948

of fuel prices and, in November 2009, by the

airline alliances as carriers cling together for

and 1957 there were 15 hijackings all over the

increase in Airport Departure Tax levied by the

survival. KLM and Air France merged their

world; between 1958 and 1967, this climbed

UK government. This latter was originally hailed

operations, although they each retain their own

to 48. In 1969 there were 82. By this time

as a tax to alleviate climate change, but the

name and identity. They claim a cost saving of

governments around the world agreed certain

authorities belatedly agreed that it was just a tax.

£110 million by rationalisation of fleets, better

airport measures for screening passengers, and

Whilst the low cost airlines in Europe did have

use of equipment and the synergies from their

the rest is history.

reasonable passenger loads, they also suffered

respective route structures.

The airline industry, in general, remains mired

from increased costs and did all they could

In November 2009, BA and Iberia announced

in recession, despite better economic hopes for

by charging for ‘extras’ such as hold baggage

that they would merge and operate as a single

the USA and EU. This recession is forcing the

and other incidental extras. One airline even

entity. BA is strong on the North Atlantic and Far

pace of change in the industry, but remaining

suggested that it might charge passengers for

East routes while Iberia’s strength is on routes to

national controls on ownership, and the likely

using their toilets on board!

South American destinations.

pressure to protect national jobs will continue

The result of the success of the low cost

Lufthansa has now bought BMI (with its large

carriers was that scheduled airlines had to

percentage of Heathrow slots) and also Austrian

compete in price with them and thus the

Airlines and the ailing Alitalia.

to impede the speedy emergence of truly global airlines.

revenue of the latter was considerably lower

BACA Lunch

than forecast. Due to the turndown in traffic and gloomy


To end on a happier note, BACA celebrated

forecasts for future growth, many airlines

The word heard most in 2009 was ‘Security.’

scaled down their aircraft purchases with either

Every security scare increased security at

London’s Guildhall in October 2009 where a

cancellation of orders or a deferment in delivery

airports worldwide and this effect was magnified

record number of 322 members and guests

until the future looked brighter.

by the media showing pictures of long queues

enjoyed a celebratory lunch.

its 60th anniversary by hosting a lunch at

The business sector of the industry was also

at airports with consequent aircraft delays. The

hit with less demand for executive travel. One

latest was the – fortunately failed – alleged

US company, which had been expanding its

attempt by a Nigerian passenger on an American

the interests of

operations at what seemed an alarming rate,

aircraft about to land in Detroit from Amsterdam.

commercial aviation

announced in January that it was laying off

It appears that this man was carrying a device

companies, particularly

495 pilots and cancelling a large order for new

which could not be detected by the current

in the aircharter

business jets.

x-rays made on passengers. This has now led

industries and markets. Membership is around

Passenger charter traffic generally worldwide

to airports round the world having to invest in

135 companies, including airbrokers, charter

has suffered severely as has the movement of

very expensive new detection equipment which

air cargo. The downturn in passenger traffic

hopefully will be effective. But every time there

airlines, airports, business aircraft operators,

was not helped by the failure of several UK

is an incident and airports upgrade their search

tour companies, culminating in the collapse

machinery, the worldwide terrorist movements

theBaltic March 2010

BACA represents

freight forwarders, consultants and others. See for further details.


Baltic briefing

Arbitrary success As the LMAA celebrates its 50th anniversary, John Maskell looks back on a lifetime’s involvement with the Association


y earliest introduction to the LMAA

Early days

judicially was expected to advocate the case on

came in 1965 when, as an articled

Arbitration had always taken place, usually

behalf of their appointor, especially if the case

clerk in Norton Rose Botterell &

between brokers on the Baltic Exchange. If there

went to an umpire. The arbitrators would meet,

Roche, I was taken to an arbitra-

was a dispute the shipowner would appoint

often in the evening, with a stack of cases where

tion in the Institute of Chartered Shipbrokers’

his broker and the charterer his; they would

the two were involved and they would sit down

Chamber at the back of the Baltic Exchange.

meet (probably over a drink or three) to see if

and work through them methodically, reaching

This introduction was one of the factors that led

they could resolve the problem. If they failed,

joint decisions in most cases and then issuing

me into the maritime field rather than commercial

they would call in a third for a good lunch who

short awards.

law, which I told my interviewing panel when

would make the decision and the two originally

applying for articles.

appointed arbitrators would act as advocates

My second introduction came a few weeks

for their respective appointors. What caused

Changing the system

later when somebody came to the office and

the change to the system we recognise today?

There were one or two problems with this

asked for a copy of the London Rules. These

I would suggest that it was the existence of the

system. In one case, one of the arbitrators – an

Rules were the precursor of the present Terms

full time arbitrator. Of the original members of

engaging personality, but not beyond a little

and had been drafted by Noel Davies (a former

the LMAA, most were part timers who also ran

skulduggery – suddenly introduced an argument

partner of Norton Rose) for the then members

their own broking companies; this was certainly

that had never been mentioned before and

of the newly formed LMAA. I cannot, therefore

true of such people as Clifford Clark and Ralph

also some documents that had never been

claim to be in at the birth of the LMAA, but came

Kingsley, but there was an embryonic core of

disclosed. I am not certain whether the decision

on the scene soon after. From then on the story

dedicated arbitrators such as John Chesterman,

went in my clients’ favour or not, but I was a little

of the LMAA is well known to me.

an ex-broker and Dick Clyde, a retired solicitor.

perturbed at the way things were done.

It is difficult to remember how much the

Later, the famous Cedric Barclay, a shipowner of

On another occasion, there was a case being

maritime field of law has changed in the last

Turkish extraction and Donald Davies, a mariner

dealt with on documents alone. There were two

50 years. London had always been a leading,

turned barrister and later P&I Club representative

points. On the first, I had advised my clients that

if not the leading maritime centre, but even

also offered their services on a full time basis.

they were rock solid, but the second was much

allowing for this, the Commercial Court sat as

For my first year or so in the maritime world,

more arguable. It was with immense surprise

and when required with one dedicated judge

if I had a charterparty dispute I would prepare

that I learned I had lost on the first, but won the

dealing with commercial summons on Friday

something equivalent to a brief for Counsel and

second. When I saw the reasons, I saw that,

morning. Compare that with the Court’s high

send it off to the arbitrator whom I had appointed.

once again, evidence had been accepted at the

spot with at least eight dedicated judges in the

My opposite number would do likewise and we

hearing that was factually wrong, and that my

1990s. This explosion of work was in part due

would then wait until we were told the decision

clients had not been afforded the opportunity to

to the existence of the Special Case (a particular

was ready. No appointment fee was paid.

present the true facts.

procedure of appeal in arbitration) and to the fact

There were no interlocutory charges. A simple

It was clear that the old system was not

that more people seemed to want their disputes

award was issued, without reasons in many

working as well as it should and I decided to

decided by arbitrators. How was it that this new

cases or with privileged reasons. The arbitrator’s

advocate some cases myself. I was not alone

body was able to contribute so much?

fees were subsumed within the costs of the

in this, as gradually a number of solicitors also

award. Most parties regarded the arbitrator as

decided that they were quite capable of handling

“their” arbitrator who, although expected to act

the smaller disputes. I suspect we were all a little


theBaltic March 2010

Baltic briefing nervous of how the arbitrators would react, but

the CSSR, France, USA, and Germany and

less rigid approach to the banning of appeals,

we need not have worried. All of them made us

many others. The only notable absentees were

is a personal choice, but there is no doubt

feel very welcome and I think that some were

the Chinese, which was a pity given the support

that the increasingly professional approach of

indeed relieved. Our inexperience was accepted

they have given recently. It was a prototype of

the LMAA over the past 50 years has led to

and we were gently but firmly guided into the

the very successful Congresses that took place

courts interfering less in arbitrations. Indeed,

right way of doing things.

over the next few years.

the number of retired judges who have joined the LMAA as full members is a testament to the fact that there has been a sea change from

The social side

Capacity troubles

the somewhat informal approach of the early

It was at one early hearing that I saw what the

As the increase in the workload of maritime

founders of the LMAA. Fifty years ago I suspect

arbitration lunch really meant. Normally the lunch

solicitors developed in the late 1960s and

no retired judge would have even considered

took place at the Baltic Exchange and would

the early 1970s, it was clear that there were

applying for full membership.

often consist of what was called “the arbitrators’

insufficient arbitrators, and the increasingly

lunch”. Potted shrimps, smoked salmon and

professional approach that was being adopted

some wine, Piesporter, if Dick Clyde was buying,

meant that it was becoming increasingly difficult

Looking back

with some cheese and biscuits to follow was

to be a part-time arbitrator. It was also a

I have said a little about some of the personalities

the least one was offered. The lunch period

major complaint that some of the fashionable

of the early days. I think that with the death of

might exceed an hour, but not by much, and I

arbitrators were too busy and delays were

Clifford Clark last year, all the founder members

would still maintain that many of them did have

becoming so lengthy as to be scandalous.

are no longer alive. Many of my contemporaries

a useful function. All arbitrators insisted that

This problem was only solved in 1984 by the

will have different memories of those early

the parties sat together at one table and it was

introduction of cancellation fees, later changed

members and I suspect in these politically

surprising how many cases were settled before

to booking fees, which diminished the size of

correct times some of the attitudes of some

conclusion, especially if the clients were present.

the log jam.

of the members would cause eyebrows to be

Commercial men who had spent the previous

raised. They were without doubt their own men.

two years snarling at each other, either directly

They obviously managed to make more right

or through their lawyers, often found that they

A Special Case?

decisions in every sense than wrong ones or the

had interests in common and once they had

The other area of complaint was the misuse

Association would have folded years ago.

started talking, they often followed through to

of the Special Case. This was a procedure by

This is very much a personal recollection, but

a settlement.

which one could appeal an arbitration award

I look back with fondness to those days when I

Interestingly, I am not certain cases lasted

on a point of law. As more and more lawyers

was starting out, very green and with very little

any longer in those days and in many cases

became involved in arbitration as opposed to

practical experience of the maritime world. Little

were somewhat shorter than those which I

brokers, more and more parties realised they

did I know that I would end up as a full member

have seen in my arbitral career, where the prime

could avoid the fatal day when they had to

of the Association and performing the tasks

object of many lawyers seems to be to keep the

satisfy an award, by asking for the award to be

which my illustrious predecessors did. In spite

time sheets filled and the bean counters in the

stated in the form of a Special Case. This meant

of criticisms of the Association that occur from

accounts’ departments happy. Of course, there

that the tribunal made findings of fact that were

time to time, it has survived for 50 years and

were clients who could not see the purpose of

unappealable and then posed the question to

is still a major force in the arbitral world. The

such feasts and there must have been cases

the Court as to whether, on the facts found,

people mentioned herein have all contributed in

of abuse, but they were much maligned and

A or B was correct. There has been a marked

no small way to the success of the LMAA and

frequently achieved much at comparatively little

shift in attitudes to arbitrators by the Courts over

their successors in a very different world have


the past 50 years. Notwithstanding the fact that

adapted to a very different form of arbitration

The other social event was the Annual Dinner.

Lord Denning often used to attend the Annual

from the one I saw when I started. Many others

There were only about 15 active members and

Dinner and say how marvellous arbitrators were,

will have their own stories and memories and will

after some years it was felt that this was too

his judicial pronouncements did not always

look back to those lovely days when maritime

much of an imposition on the full membership.

back up those views. A clear example of this

law was fun and the timesheet was not the be

A new category of LMAA membership, the

occurred in the early 1970s when some of the

all and end all of life.

supporting member, was born, primarily to

arbitrators decided that the way to stop the

ensure that the cost of the Annual Dinner was

abuse of the Special Case procedure was to

To mark its 50th anniversary, the LMAA

more evenly spread, but it had the beneficial

require the defendant party asking for this to

will host a major conference at the newly

effect of widening the influence of the LMAA,

provide security for the claim. This view was

renovated Old Museum in Guildhall, London

and supporting members have had an increasing

supported by Kerr J. but was overruled by

on 18 March. The conference will be followed

status in liaising with the full membership over

Lord Denning in the Court of Appeal and so

by a celebration dinner (incorporating the

matters such as new Terms and cost issues.

the abuse went on until the procedure was

LMAA Annual Dinner) in Guildhall’s Great

Finally, on the semi-social side, it would be

abolished in the 1979 Act. The 1996 Act has


impossible to cover the events of the early years

caused an even greater change in the attitude

of the LMAA without dealing with the creation of

that the judiciary has adopted to arbitrators,

ICMA. Although the original delegates state that

since it is very difficult for arbitrators’ decisions

it was created in Moscow, for most of us the first

to be appealed. Whether one wants marginally

real Congress was in Athens in 1974. It was well

incorrect law to go unchallenged for the sake

attended by delegates from all over the world,

of certainty or whether one wants a somewhat

theBaltic March 2010


Baltic briefing

Sporting contacts There are many sports clubs associated with the Exchange and in most cases they are open to both members and staff of member companies Baltic Association Football Club

Lawn Tennis Club

Sub-Aqua Club

Mr S Calafti

Mr N D F Hubbard

Lorraine Burns

Anglo Greek Chartering

Galbraith’s Ltd

The Baltic Exchange

The Baltic Exchange

Bridgegate House

38 St Mary Axe, London EC3A 8BH

38 St Mary Axe, London EC3A 8BH

124-126 Borough High Street,

Tel: +44 (0) 20 7369 1638

Tel: +44 (0) 20 7283 9621

London SE1 1BL


Tel: +44 (0) 20 7378 6363

Cricket Club

Young Baltic Association

Jamie Freeland

Sailing Association

Bill Lines

AM Nomikos

Simon Cox

The Baltic Exchange

4th Floor

Howe Robinson Shipbrokers

38 St Mary Axe, London EC3A 8BH

40 Grosvenor Gardens, London SW1W 0EB

77 Mansell Street, London E1 8AF

Tel: +44 (0) 20 7369 1653

Tel: +44 (0) 20 7457 8421


Golfing Society

Tel: +44 (0) 20 7488 3444

Chris Cox, c/o Frank Symons Ltd Devonshire House 146 Bishopsgate, London EC2M Tel: +44 (0) 20 7377 5423 E-mail:

Key Baltic Exchange contacts Management

Head of Finance

Membership Manager

Tel: +44 (0) 20 7283 9300

Duncan Bain

Jackie Harrison

Fax: +44 (0) 20 7369 1622/1623

Tel: +44 (0) 20 7369 1627

Tel: +44 (0) 20 7369 1633

VPN 171 2000




Government Broker

Marketing, Events and Room Hire

Chief Executive

Pat Swayne

Crispin Eccleston

Jeremy Penn

Tel: +44 (0) 20 7369 1668

Tel: +44 (0) 20 7369 1654

Tel: +44 (0) 20 7369 1624

Fax: +44 (0) 20 7623 6644




PA to Chairman and Chief Executive

Dispute Resolution

Willy Lyth

Barrie Wooderson

Tel: 020 7369 1625

Jill Bradford

Tel: +44 (0) 20 7369 1674


Tel: +44 (0) 20 7369 1621

Fax: +44 (0) 20 7623 6644



Baltic Exchange Charitable Society


8 Eu Tong Sen Street

Bill Lines

#17-87 The Central

Richard Butler

Tel: +44 (0) 20 7369 1653

Singapore 059818

Tel: +44 (0) 20 7283 6090


Tel: +65 6377 0654

Freight Market Department

The Baltic Exchange (Singapore) Philip Williams



Baltic website:


theBaltic March 2010


The tanker race Ambrose Greenway looks at some of the larger Greek tankers that dominated the post-war period


reek shipowners had traditionally operated in the dry cargo tramp trades but this position began to change after WWII when their atten-

tion was drawn to the increasing demand for Middle East crude oil to feed the hungry industries of North America and Europe, where many new refineries were under construction. Up to that time the tanker market had been the preserve of the major oil companies, who not only operated considerable fleets of their own but also chartered in ships from independent Scandinavian owners, mainly Norwegian. However, the dominance of that country was soon to come under increasing threat once many Greek owners started to

Atlantic Emperor

order new tankers. Many of these were already well established but leading the field were two

part of shipping legend but would also deliver a

starting with four ships of 18,000 dwt, of which

new entrants from non-shipping backgrounds,

sharp shock to the oil majors.

Onassis’ Olympic Games was the first, followed by Atlantic Prince, Atlantic Princess for Stavros

Aristotle Onassis and Stavros Niarchos, whose

The first orders for new Greek tankers were

intense rivalry and ultimate financial success

placed with Bethlehem Steel for delivery between

Livanos and World Peace for Niarchos. The

would not only make them household names and

1948 and 1950. These comprised two series

second comprised five larger 28,000 dwt units, all for Onassis and illustrated here by Olympic Star completed at Sparrows Point in October 1949. It is worth recording that four months after the delivery of the final ship, Olympic Thunder in May 1950, the 16,325 dwt London Pride, first of a number of smaller Greek motor tankers, was completed on the Tees for London & Overseas Freighters. Olympic Star went to breakers in Taiwan in 1973. Concurrent with the above orders, Newport News Shipbuilding & Drydock Co completed 11 27,000 dwt ships to an Esso design of which the fifth was completed as Livanos’ 27,000 dwt Atlantic Emperor, shown here transiting Suez in ballast. She was broken up in Taiwan in 1972.

Olympic Star

theBaltic March 2010



Tina Onassis

World Gratitude

Named after his wife, Onassis’ supertanker

Niarchos split his orders between American

followed by others, including Costas Lemos who

Tina Onassis was delivered by Howaldtswerke,

and a number of European yards. Completed

took delivery of the conventional-looking 38,600

Hamburg towards the end of 1953. At just over

in March 1954, World Gratitude was the first of

dwt Chrysanthi L from Kawasaki Dockyard in

46,000 dwt, she was the largest tanker in the

a quartet of 32,600 dwt ships built in Kiel by

June 1955. The similar-sized Largo, completed

world until eclipsed by Ludwig’s ore-oil carrier

Howaldtswerke. Photographed leaving the Bitter

by the same yard 17 months later, was the

Sinclair Petrolore in 1955 and set new standards

Lakes in the Suez Canal during her first year of

first large Greek tanker with all accommodation

of elegance, both externally and internally. Seen

operation, she was lengthened and deepened

aft, a concept pioneered by Johnson Lines’

passing Kabrit signal station northbound in the

10 years later, deadweight capacity being raised

Oceanus two years earlier, and one which Lemos

Suez Canal, she fell prey to the oil price hike in

to 44,650 tons, and her sisters were treated

continued with a number of subsequent tankers

the 1970s and was scrapped in Taiwan in 1975.

likewise. She was broken up in Scotland in 1974

and ore/oil carriers. Seen here calling at Las

A slightly larger sister Al-Malik Saud Al Awal

and two of her sisters were later converted to

Palmas for bunkers, she was laid up in Piraeus in

was registered in Saudi Arabia as part of a deal

storage tanks.

1976 and demolished in Taiwan two years later.

negotiated by Onassis to transport Saudi crude.

John Carras was the first Greek owner to

Aware of the advantages of economies of

This so annoyed the major oil companies that

order tankers in Japan and his example was soon

scale, Niarchos and Onassis had vied with each

they blacklisted his ships but he had the last

other for ownership of the largest Greek tanker

laugh when the Suez Crisis closed the canal in

throughout most of the 1950s but in 1959 the

1956 and his unemployed tonnage was quickly

former’s 71,300 dwt Princess Sophie put the

snapped up, earning him millions in a matter of

matter beyond doubt. By then, however, the


question was academic as the overall title had

Photographed outbound off Cowes IOW after

passed to the 100,000 dwt Universe Apollo

delivering her cargo of crude to Esso’s Fawley

owned by that other great independent tanker

refinery, the 29,400 dwt John PG was one

owner D K Ludwig. Launched by Queen Frederica

of five turbine-driven sisters delivered to the

at Bethlehem’s Quincy yard on 15 November

Goulandris family’s New York subsidiary Orion

1959 and completed the following March with

Shipping & Trading by Bethlehem Sparrows Point

Niarchos’ traditional grey hull, Princess Sophie

in 1953/54. The lead ship of the series was Gulf

was designed to carry oil from the Middle East

Oil’s Las Piedras and Livanos also received the

to the US West Coast. She was switched from

Eugenie Livanos. John PG went to Taiwanese

Greek to Liberian registry in 1974 and was broken

breakers in 1974 after just 20 years in service.

John PG


up in Taiwan in 1977.


Princess Sophie

theBaltic March 2010

Baltic comment Michael Grey

Ship valuation science or art? H

ow long is a piece of string? If you

among people of his profession, with people

can answer this, without turning to

who specialise in undertaking specialist and very

sarcasm or philosophy, maybe you

expensive casting repairs following the voyages

could give me a value on a 1991

these ships undertake with intensity and enthusiasm, ready to offer instant quotations.

suezmax, with three careful owners. I have enormous admiration for those quick-

There is a similar pessimism lurking in the

witted brokers who work in the sale and purchase

heart of the master mariner, who, being well-

world, but have had a lifelong blockage in any

read and with a retentive memory, recalls the

understanding of how they can provide a precise

enormity of the salvage award after the ship

value for a ship. I thought of this recently, when I

had been washed up on a particularly rocky

read that a major shipbroker was going to return

coast, albeit under a different name, some years

to the ship valuation business after sensibly

previously. The marine surveyor, who is also

opting to stay well away from this cesspool and

interested in the latent structural strains of this

destroyer of reputations, after the 2008 crash

earlier contretemps, is more concerned with the

had broken everyone’s dreams.

state of the ballast tank interiors, having had a

“Value? It is what we believe somebody

Michael Grey

beer the night before with a chum who works for the vessel’s classification society. He knows that

might pay for it.” Now there is an honest person speaking, in contrast to those who suggest it

answer with a shrewd assessment of how much

for some owners, beauty might be in the eye of

is a determination of a price plucked out of the

the owner will be prepared to pay.

the beholder, but such may be but skin-deep.

ether, assisted by druidical incantations over the

The owner may want the ship for a number

So perhaps anyone who is bold enough to

entrails of a goat, backed up with differential

of different reasons. He may have the promise of

give a valuation on something as complex as

calculus, rounded off with a couple of neat, but

business for it, which will give him a reasonable

a large ship, deserves a medal for his or her

totally incomprehensible phrases about liability

return, but the urgency of the case may have a

courage in the face of considerable odds. Of

collected from the company lawyer.

tremendous influence on his assessment of the

course, in an environment as volatile as the

People used to say that when a Greek

ship’s “value”, being the price he is prepared to

shipping market, where memories are short

looked at a ship, he regarded it in different way

pay. He may (although unlikely in the present

and hope springs eternal, the chances are

to any other man. I wouldn’t dispute this at all,

state of the market) want this ship at any price,

that the value of a ship one week will be barely

but suggest that the nationality of the onlooker

or, on the other hand, he might believe he can

recognisable the next. Stability in this business

was secondary to his occupation. A shipbroker,

get it cheap, and hold it as an asset until some

is probably unknown, which if nothing else, is

a shipowner, a marine engineer and a master

mug wants it more than he does.

a tremendous face-saver, after the new chief

mariner, along with a surveyor may stand on the

The other spectators on the quayside are

engineer staggers up the ladder and informs

quayside, looking at my 1991 suezmax, placidly

more likely to weight their answers with more

the new master that the engine is shot to bits,

swinging around its anchor in the roadstead.

technical considerations, and however much the

an e-mail from the expected charterer’s broker

How much is it worth? The bank manager, who

owner might wish to hoist his houseflag on the

reveals that he has changed his mind, and Port

has been entreated to lend money on this ocean

mast of the unsuspecting vessel, he would be

State Control telephone to say that the ship has

greyhound, wants to know, and you need to

well advised to listen to their specialist take on

been detained.

provide answers, not philosophical statements.

the notion of value.

The trouble is that your bankers and

But each of these professionals is likely to give

The marine engineer may well hazard a

accountants insist that the value of your ship,

you an answer different by millions of dollars

guess that the consumption figures offered by

and your fleet, and even your “goodwill” (how

to the others. To a certain extent this will be

the seller are rich in artifice and imagination.

ephemeral is that?) is ascertained on a regular

decided by knowledge and experience. The

He has yet to set his eyes upon the well-used

basis. It may not be art, it is difficult to define as

broker looks at the sort of money that has been

engine and auxiliaries that propel the vessel, but

science. Would science-fiction be an appropriate

paid recently for other ships of that vintage, and

he knows that it is driven by a type of machinery

category in which to place this curious business

what is also on the market, but also weights his

that has enjoyed a somewhat dubious reputation

of valuation?

theBaltic March 2010


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State of the market Tanker Update

Too soon to celebrate? An optimistic beginning to the year for the tanker market – but there could still be hard times ahead


s the world economy seems to be

other tankers were ordered in the first month

heading for recovery, tanker own-

of 2010; again all sub-aframax size. There

ers and analysts expect to see oil

was, however, considerable activity on the

consumption – and therefore tanker

S&P market, with Platou commenting that:

demand – on the rise throughout 2010 and

“we have seen more activity than in a very long

2011, although demand is not expected to

time and new benchmarks are set in many

return to pre-slump levels until at least 2012. An

segments”. This was probably due to the pick-

unusually cold winter in Northern Europe and

up in freight rates over the course of the month,

the USA has boosted demands for heating oil

the brokerage said.

and briefly sent tanker rates soaring in January.

Demolition prices rose sharply at the end

However, given projected overcapacity and high

of 2009, from $275 per tonne in November to

delivery levels over the next few years, this

$315 per tonne in January in the Far East, and

does little to brighten what is still a fairly gloomy

from $330 to $400 in the Indian subcontinent.


With 0.69 million dwt removed from the tanker market in January – one VLCC and 12 smaller tankers – it seems owners are taking advantage

Challenging and volatile

of the high prices.

In its annual tanker outlook, published at the end of January, McQuilling suggested that while the shipping market is still in the downward stage of

Building for the future?

its cycle, it was likely to reach the bottom “a bit

The suezmax sector was attracting a lot of

faster and [at] a lower minimum than in previous

attention towards the end of last year, following

cycles”, and warned that excess tonnage supply

reports just before Christmas that Almi had

would continue to challenge a recovery in freight

placed an order for 10 suezmaxes with Hyundai.

rates, even as oil demand picks up, with a net

The deal was said to be worth some $650

increase in tonnage across all sectors. “2010

million, with the tankers due for delivery between

and beyond will most certainly be challenging and volatile,” the company warned.

2011 and 2013. sector dodging the overcapacity bullet by means

Stena Bulk confirmed that it is to order

of cancellations. Some 54.6 million dwt is slated

two suezmaxes from Samsung shipyard. The

for delivery in 2010, of which 21 million dwt are

two 158,700 dwt vessels will be the largest

On schedule?

VLCCs, and 15.8 million dwt are smaller tankers,

tankers in Stena Bulk’s fleet when delivered in

While some 18% of the tanker tonnage scheduled

ie below aframax size.

2011. The order also included a option for two

for delivery in 2009 was not, in fact, delivered,

sister vessels. Both vessels will be employed

there is none of the uncertainty surrounding bulk

in the Stena Sonangol suezmax pool, run in

carrier contracts and newbuildings. According

S&P picks up

partnership with the state-owned Angolan oil

to Platou, most of the non-deliveries were the

Platou reports two orders for VLCCs placed

company Sonangol. The pool consists of around

result of negotiated postponement, with delivery

in January this year – possibly owners taking

15 tankers, which will be expanded to about 25

in 2010 and 2011. There is thus little hope of the

advantage of lower building prices. Just five

large tankers over a three-year period.

theBaltic March 2010


State of the market S&P

All change Basil M Karatzas, managing director for projects & finance with Compass Maritime Services, looks at vessel valuation methodology in a changing world


he history of the maritime industry is a

of a new owner. Placing an appropriate value

present market value is related to the cost of

long and illustrious one, and strongly

on vessels is an academic exercise, but, in this

“replacing” or having the vessel “rebuilt” and

correlated with the developments of

case, it is also a practical matter. Given i) lenders

“restored” to its present state. This method is

the human race. The progress of the

unwilling to underwrite nothing less than very

mostly applicable to vessels that are purpose-

maritime industry, the primal disseminator of

strong credits, ii) the cost of equity increasing, iii)

built, transact fairly infrequently and where there

information and undisputable mass conduit of

an orderbook level that is projected to multiply

is a lack of sufficient commercial information.

international trade since historical times, has

the size of the fleet of certain types of vessels in

The principal critique of this method is that it

been based both on the technological innova-

the coming years, and iv) a projected demand

is retroactive (historical) and assumes that just

tions of shipbuilding and naval architecture over

for cargo transport rather imperiled in the near

because a vessel cost a certain amount to build,

the centuries (ie building bigger, safer, more

and intermediate future, placing the “right” value

a buyer would actually pay a similar price. On the

economical and specialised vessels) but also on

on vessels might hold the key to clearing the

other hand, the replacement cost method, with

the establishment of sound commercial prac-

excesses of a burst bubble and starting the

all its embedded imperfections, indicates that

tices, not least of them the progress of financial

new cycle on a more even keel. If world trade

the market value of an asset cannot substantially


is to continue increasing in the decades to

vary from what it would cost to replace it. If there

come, shipowners will have to be compensated

is a major dislocation in the secondary market in

sufficiently for the risk of their investments, and

terms of pricing, a similar vessel can always be

Accelerating change

financiers will have to be ensured that they

“built” anew, or so the logic goes.

While naval architecture and marine engineering

will receive their principal repayments with fair

have progressed over the last couple of decades

compensation throughout the business cycle.

Market Comparable Approach

to the extent that now they are taken for granted,

This means that placing a value on vessels is

The Market Approach is the most popular

the magnitude, and possibly the significance, of

becoming a crucial but nevertheless sensitive

valuation method. Put simply it is based on the

events in the commercial aspect of the maritime


most recent similar transaction, or ideally set of

industry in the last few years has dwarfed those

transactions. The strongest argument in favour

of previous business cycles.

of this valuation methodology is that what a

What is value?

buyer paid for the acquisition of a similar asset is

the growth of world trade and the subsequent

When referring to the “value” of an asset, a

simple and “tangible”; no more or less than the

monumental increases in freight rates, and

vessel in this case, the generally accepted

price last time a similar asset was transacted.

in turn vessel asset prices and the multiplier

definition of the value refers to the price at

Although such a method (also known as “last

effect on vessel orderbook, has bequeathed

which a “willing buyer” and “willing seller” at

done” method) is as pure as it gets, the devil

us recently with commercial, financial, legal,

an “arm’s length” transaction “cognisant of all

is in the details. What if the previous deal had

and to a certain extent, regulatory issues that

relevant facts” and under “no compulsion to act”

happened six months ago, in which case,

require urgent but fair and practicable answers.

would agree to exchange the vessel alone in a

freight, financial and asset markets may have

For instance, the outstanding vessel orderbook

prompt manner. This definition is normally called

changed substantially? What if the previous

has a nominal contract value of as high as $500

the “Fair Market Value” (FMV) of the vessel.

transaction was for a vessel of the same class,

billion, by some estimates, while only part of

Although there are several variations on this to

but 10 years older? There is a great degradation

this orderbook has in place sufficient equity

accommodate for certain intricacies, there are

of asset pricing within the same asset class

and debt commitments for contract fulfillment.

three main valuation methods that have been

by vessel age, and thus a “significantly” newer

With anaemic freight markets and possibly still

academically arrived at, but also have sustained

or older vessel would not exhibit the same

dysfunctional financial markets, there is great

the test of the commercial applicability:

desirability. What if the seller was keen to accept

In particular, since the beginning of 2004,

uncertainty over the true value of still-to-be-

a lower payment for a prompt transaction if they

financed contracts, vessels under construction,

Replacement Cost

were in financial dire straits? The definition of

and also vessels already on the water in search

The guiding principle of this method is that the

Fair Market Value quoted above clearly states a

theBaltic March 2010


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State of the market S&P transaction under “no compulsion” and a seller

Tanker Vessel Type

experiencing financial difficulties is keener to take compulsory action. Despite the shortcomings of this valuation approach, it is difficult sometimes to argue otherwise when there is an example of a similar transaction that happened recently. The Baltic Exchange Sale & Purchase Assessment (BSPA), published weekly, is strictly based on the market comparable approach for

Dry Bulk Type

AFRAMAX Tanker (105,000 dwt)

VLCC (300,000 dwt)

PANAMAX Bulker (70,000 dwt)

CAPESIZE Bulker (170,000 dwt)

Market Approach (FMV)





Replacement Cost





Income Approach





Valuation Method

Note: Values in US$ millions for vessel delivered in January 2010. Author's estimates, without prejudice

five-year old vessels in both the tanker and dry bulk markets. For the benefit of full disclosure,

“Hamburg Rules”, specific guidelines provided

raw material, and iron ore in particular. In other

our company, Compass Maritime Services, is

by the Hamburg Shipbrokers’ Association for

words, if the average freight rate for capesize

a panel member of the BSPA. Additionally, as

applying the income approach method.

vessels over a newbuilding’s economic life were

a rule of thumb, standard loan agreements with

to equal the average of the last 10 years, then

Loan-to-Value (LTV) clauses usually stipulate

capesize vessels are strongly undervalued by

that the Market Comparable Approach is to be

Comparing like with like?

the replacement cost and market comparable

utilised for determining the value of the vessels

For terms of comparison, the above table


for loan purposes.

provides the author’s assessment, with no

There is usually no definite and easy

prejudice, of the value for four types of prompt

agreement of the value of an asset or a vessel

Income Approach

resale vessels in both the tanker and dry bulk

in advance of originating a project. It usually

From a financial perspective, if one were to

sectors, based on each valuation method.

takes the liquidation of the investment after

acquire an asset as an investment, what would

For the Income Approach, standard industry

the projected investment horizon to definitely

be a fair price to pay in order to acquire the

assumptions were utilised in terms of operating

determine whether the price paid for the vessel

asset, a vessel in this case? Apparently, no more



was close enough to her intrinsic value. Similarly,

than the expected cash flows the investment

financing with 15% discount rate was applied;

there cannot be complete agreement on the true

(vessel) would generate, properly adjusted to

as a proxy of future freight rates, the average

value of a vessel, especially in such illiquid and

reflect the amount of risk undertaken, the cost

one-year timecharter for each type of vessel for

uncertain times as these. Value is intrinsic and

of financing and the opportunity cost. The

the (approximately) past 10 years was utilised.

ultimately is a measure of whether an investment

importance of this method is that a “rational”

Each methodology renders a fairly similar result

has achieved its projected profitability and

investor would seek intrinsic “value” instead

for each type of vessel, with the exception of


the current market “price” of the vessel, a clear

capesize vessels. The sizeable aberration for this

subtlety in terminology that has made fortunes

value is a reflection of the historically high freight


for investors in many an industry besides

rates of the last 10 years, which included the


the shipping industry. As with each valuation

super-cycle and China’s insatiable appetite for

Tel: +713-545-5990




methodology, the income approach is also subject to limitations and interpretations. How much profit a vessel would generate over its remaining life depends on many factors such as freight rates and the financial cost of owning the asset. For a buyer, the implicit assumption is that freight rates would be sufficiently high (otherwise, they would steer clear of the acquisition); however, it is also a case of getting the future “strength” of the freight market fairly accurate since another, more optimistic, buyer would offer and acquire the vessel at a higher price. Similarly, the cost of owning and operating the vessel entails fine assumptions on the availability and competitiveness of financing and vessel operating expenses. It’s apparent, then, that although the Income Approach is academically the most rigorous among the three valuation methods, it requires an in-depth understanding and projection of a series of inputs both on the revenue and the expense side of future income statements. And such inputs, when projected over the vessel’s total economic life, can have a material impact on the value of the vessel. There are several variations on the Income Approach Method, the most notable being the

One vessel, three values?

theBaltic March 2010





arch 2010

Vanishing act Missing bulkers continues to puzzle analysts


t the beginning of 2010, it looked as

particular looked to be entering a new slump,

advantage of the drop in both second-hand

though optimism was gradually return-

with the Baltic Cape Index (BCI) closing on 12

and newbuilding prices, and that move now

ing to the dry market, with reviving

February at 3259 points, posing a loss of -215

seems to be underway. Angelicoussis is said

ore and grain trades again pushing

points or -6.19% below the previous week’s

to be in talks to add a further two capesizes

prices upwards in late 2008. Port congestion,

closing at 3474 points. With the Chinese New

to its existing order book, which comprises at

responsible for at least some of the astonishing

Year responsible for a quiet couple of weeks

least 12 further capesizes. The rate of fall of

leaps in the market back in early 2008, again

at the beginning of the month, however, it was

newbuild prices has been slowing, and may now

played a role in briefly pushing the BCI to above

hoped that activity – and rates – would pick up

be stabilising, prompting more owners to return

8,000 in mid-November. According to Arctic

towards the end of February.

to the market.

Securities, nearly one in five of the world cape-

While this is scarcely a surge of orders,

size fleet, equivalent to 4 million dwt, was caught

according to Platou orders were placed for three

in delays off Australia and Brazil in early January.

Bargain hunting?

capesizes, four panamax and post-panamax

By February, rates in all sectors had been in a

Against this background, some owners are

bulker and 36 handysizes during January, a

continuous slide since the beginning of the year,

cautiously beginning to return to placing orders.

total of 2.3 million tonnes, but it shows that the

indicating that market recovery will continue to

Brokers have long predicted that there would

revival of interest in ordering towards the end of

be a long and slow process. Capesize rates in

be a move by established shipowners to take

last year is continuing. Other owners are looking

Baltic Exchange capesize index 8,000 7,500


7,000 6,500 6,000 5,500 5,000 4,500 4,000


Capesize rates peaked in November, but have been steadily declining


theBaltic March 2010











State of the market Dry bulk

8,000 7,500 7,000

State of the market Dry bulk 6,500


6,000 5,500 5,000 4,500 4,000

to acquire resale newbuldings – Navios recently

phenomenon further, but are confident that the

cycle, coinciding with the market peaks of 2007

acquired a capesize newbuilding on resale, its

actual number of contracts that has been or will

and 2008, rather than earlier strong rates in

seventh in the past year.

be cancelled is significantly higher,” said Platou

2003-4. As a result, the first major deliveries

analyst Jorn Bakkelund, writing in Platou’s

occurred just as the market was crashing. He,

monthly report.

too, emphasises the uncertainty of how much of

How much to come?

Piraeus-based broker N Cotzias Shipping

3,500 3,000


the order book will actually be delivered.

took a more cautious view, estimating that,

Arctic Securities took a particularly gloomy

to which the current order book has been

despite the high degree of delay, only about 10%

view of the situation, announcing in January – at

delayed or cancelled. According to estimates

of the overall dry bulk order book has actually

the same time that it highlighted the effects of

from Platou, 40% of the dry bulk order book due

been cancelled. He puts the total cancelled

port congestion on the cape fleet – that it was

for delivery in 2009 was not delivered according

tonnage at 434 vessels, or 27 million tonnes,

downgrading stock across the entire dry bulk

to schedule (similar delays were seen in the

and says that private resale deals account for

sector to ‘sell’ ahead of what it described as

container market). In Korea, 25% of vessels due

much of the rest of the tonnage. According

a ‘tsunami’ of newbuildings. “Current market

for delivery in 2009 were not, in fact, delivered.

to Cotzias, the pain will be felt mostly in the

momentum can continue boosting dry bulk

Further uncertainty is caused by no-one being

supramax market, which faces a prospect of up

equities in the short run. In our view, however,

quite sure whether these are attributable to

to 116% surplus tonnage by 2015. Despite this,

even the most optimistic longer term market

yard delay, negotiated postponement – in which

however, Cotzias points out increased second-

scenario is reflected in the share prices,” said

case the market faces the prospect of an

hand prices in the supramax market, with an

Arctic analyst Martin Sommerseth Jaer, quoted

unexpected peak at some point in the future – or

almost 7% increase in prices for similar vessels

in Lloyd’s List. “We consider the risk as being on


in just two months time. The capesize fleet is

the downside and hence downgrade the entire

expected to peak at 90% surplus.

sector to sell.”

16 million dwt – 27% – was unaccounted for

Whether this degree of pessimism is

and “a major share of this was most likely

warranted is unclear, but 2010 will still be a year

cancelled”. Platou further estimates that at least

Cautious outlook

10% of the tonnage due for delivery in January

Taking the long view, Martin Stopford of

2010 was not handed over, and only about

Clarksons Research points out that much of the

half of that was confirmed as cancelled. “We

problem was caused by the bulk ordering boom

have unsuccessfully strived to document this

occurring relatively late in the recent shipping

where the dry sector will step very carefully.

Grieg Star Shipping is providing high quality transportation and logistic services for a number of industries for both bulk and breakbulk cargoes. The Star fleet includes more than 40 ships, totalling 1,8 million deadweight tons. Long term commitment, specialized vessels for breakbulk cargoes and efficient and damage free cargo handling are essential to fulfil the high quality demands of our customers. The Star organization is highly skilled and experienced. With 18 offices world wide we provide our customers with excellent service when and where required.

C. Sundts gate 17/19, P.O. Box 1088 Sentrum, N-5809 Bergen, Norway, Telephone: +47 55 23 96 00, E-mail:,

theBaltic March 2010

23/11/2009 BCI

theBaltic March 2010

What no-one is sure of, however, is the extent

Of its own order book, Platou says some







State of the Market BIMCO update

Documentary matters A round-up of the most recent developments; dealing with piracy, stowaways, pooling agreements and more


t BIMCO’s Documentary Committee

98 revisions have been made with the aim of

on the timecharter edition. The key difference

meeting in Copenhagen in November

producing a consistent set of documents by

between the two clauses is that while the

the revision of one of BIMCO’s most

using, where possible, the same principles,

vessel is under the orders and directions of the

widely used forms, SHIPMAN 98, was


charterers under a timecharter and therefore

approved. In addition, new version of the stand-





should bear any costs related to piracy, it was


ard crew management agreements, CREWMAN

Revision work on all three agreements

felt that in a consecutive voyage/COA scenario

A and B were adopted, along with a number of

has been done in close consultation with the

it would be more equitable if costs were shared

new standard clauses. BIMCO’s documentary

industry and BIMCO owes particular thanks to

between the owners and the charterers.

work programme remains as extensive as ever

the Cyprus Shipping Chamber for their important

with ongoing projects including the development

input throughout the revision process.

The significant difference between the single voyage charter version and the two other

of a standard pooling agreement for the tramp


clauses is that the owners are not entitled to

sector; a revision of its standard wreck removal

2009, accompanied by explanatory notes, will

invoke this clause if the piracy risk existed at the

service agreements; a green recycling contract;

be published in the February edition of the

time of the fixture.

and work on devising standard clauses for slow

BIMCO Bulletin.

All three clauses were published in special circulars in November 2009 and are available to

steaming, marine risk assessment, and bunkers.

download free of charge from BIMCO’s website

Piracy Clauses



In November 2009 BIMCO published a

The revision of SHIPMAN 98 has been ongoing

revised piracy clause for timecharters and two

for two years and was initiated to take account

additional piracy clauses – one for single voyage

of the changes in shipmanagement practice and

charterparties and one for consecutive voyage

the law to bring this important document up

charterparties and COAs.

AMS/AES Clauses – automated manifest provisions for the US and Canada

to date. The revision has focused on bringing

Generally, the publication of the first piracy

A revised AMS (Automated Manifest System)

greater clarity to the agreement and great

clause for time charterparties in March 2009 was

clause was also adopted at the Documentary

care has been taken not to change the basic

well received by the industry. However, BIMCO

Meeting in November, taking into account new

principles of the agreements.

also received criticism from some quarters that

and harmonised US and Canadian legislation.

Among the key changes are the inclusion

the clause was not as well balanced as it could

The intention is that the clause can be used for

of references to the ISPS Code and greater

be. BIMCO decided to do an early revision

trade throughout North America.

clarity in respect of the relationship between

concurrent with drafting two more clauses for

To comply with the newly implemented

the management agreements and the ISM/

voyage charterparties. A measure of a successful

export rules equivalent to AMS – the Automated

ISPS Codes. The drafters have exercised great

BIMCO clause is that it comes into widespread

Export System (AES) – a draft AES Clause for

care in the amendments to the co-assurance

and common usage in the industry. Primarily

Voyage and Time Charterparties has also been

arrangements and the final review of the

due to the provision in the clause that the vessel

drafted and approved.

insurance provisions in SHIPMAN has been

would remain on hire in the event it was detained

done with the main focus on the issue of the

by pirates, the clause was considered to be

shipmanager’s potential liability for the owner’s

potentially more favourable to owners to gain

P&I Club release calls.

widespread usage by all parties.

Parallel amendments to streamline the






CREWMAN agreements with the SHIPMAN

charterparties and COAs is closely modelled


theBaltic March 2010

Liberty and Deviation Clause for Voyage Charterparties This






in November, has been developed in close

State of the Market BIMCO update cooperation with the International Group of

technical, commercial and legal backgrounds

WRECKFIXED 99. Whilst the BIMCO wreck

P&I Clubs as it concerns important issues in

to ensure that every aspect of the challenging

removal forms are very well established and

relation to what may or may not be a reasonable

task is properly considered and thought through.

used worldwide, the need for amendment

deviation under the terms of Clubs’ cover. The

The aim is to examine the technical and legal

has arisen chiefly in the light of the technical

clause also addresses a charterer’s request for

complexities of implementing such provisions

difficulties and high costs of removing bunkers

a deviation under a voyage charter and what

in charterparties. The needs of the liner sector

prior to other salvage work (such as cargo and

indemnities and insurances should be in place

differ from those of dry cargo and tanker, but

wreck removal).

to cover such an event.

there are nevertheless common elements that

The revision of these forms will be done with

can be embraced by a common clause. The

a view to addressing the above issues but whilst

group will also develop a charterparty clause

retaining their current appeal.

Revised Stowaways Clause for Time Charterparties

suitable for the Virtual Arrival Project initiated

This clause has been one of BIMCO’s standard

terminals by agreeing to adjust the vessel’s

New projects

clauses for many years but an update which

speed en route to the discharge port to match

A new subcommittee has been formed to look

provides a more clearly worded division of

the anticipated berth date.

at the development of a new green recycling

by BP which seeks to reduce waiting time at

The clauses will be designed to reflect the

contract for the sale of vessels for recycling in

fact that there may well be sound commercial

the light of the impending coming into force of

reasons to reduce speed, such as reducing

the IMO Recycling Convention. The contract

bunker consumption/fuel costs and, possibly,

will take into account the new provisions of the

Bunker clauses

to increase demand for tonnage. It will also

Convention such as the Inventory of Hazardous

Work is underway to draft a “suite” of bunker

consider issues such as due dispatch, deviation

Materials, Ship Recycling Plan and certification.

related clauses for use in time charterparties.

and vessel performance warranties. Not least,

The intention is to develop a contract so that

The project will in many ways consolidate various

consideration will be given to the use of slow

it can be used commercially both before (during

clauses produced by BIMCO in recent years for

steaming as part of company environmental

the transitional period) and after the Convention

this purpose and will provide a useful basket of

policies to help reduce CO2 emissions.

comes into force.

obligations and responsibilities was approved at the last Documentary Committee meeting.

Work is also expected to begin shortly on

up-to-date provisions covering this increasingly

the development of a standard lay-up contract.

regulated area.

Marine Vessel Risk Assessment Clause Pooling Agreement

A specialist working group has been reviewing

A specialist working group has started work

the issue to determine how BIMCO may assist

Publication of online forms and documents

on the challenging task of drafting a standard

the industry with the development of a balanced


pooling agreement for the tramp sector. The

and generic risk assessment clause for the dry

BIMCHEMVOY 2008, which was published in the

intention is to draft a generic agreement that will

cargo sector. BIMCO feels that it is appropriate

BIMCO Bulletin October 2009, is now available

provide a useful template for those contemplating

to develop a standard charterparty clause for

on idea, together with BIMCHEMVOYBILL and a

entering into pooling arrangements. The working

marine risk assessments that clearly establishes

set of Explanatory Notes. The Explanatory Notes

group is working closely with expert competition

a fair balance between the expectations, rights

to BIMCHEMVOY 2008 provide a clause-by-

lawyers to ensure that the provisions adhere

and obligations of the owners and the charterers.

clause comparison with ASBATANKVOY, which

to competition laws and that recently issued

Drafting is in progress on a clause for time

is the form currently used by the trade, as well

guidelines on pooling agreements by the

charterparties and one for COAs

as a comparison with the recently released





Another reason for attending to this issue

ASBACHEMTANKVOY, which is a minor tailored

Work is at a preliminary stage during which

is the fact that there seems to be some

amendment of the ASBATANKVOY form for the

a suitable structure for the agreement will be

misconception on the market as to how exactly

chemical sector.

agreed. This could take the form of an agency

operators such as RightShip operate their vessel

Sample copies of the above new contract, as

agreement or a limited company arrangement or

assessment system. There is a need to underline

well as the explanatory notes, will be available to

an agreement which offered each method as an

that a vessel risk assessment company provides

download free of charge from BIMCO’s website.

option (as many of the core clauses to such an

a dynamic vetting system and that a so-called

agreement will be common to both structures).

European Commission are closely followed.

“approval” is valid only for the point in time in

Susanne Købler Carstens

It is hoped to have a first draft of a standard

which it is requested for a specific nominated

Documentary Affairs Officer

pooling agreement ready to be reviewed by

task, ie, a vessel being nominated for a particular


the Documentary Committee when it meets in

voyage. If the owners have agreed to maintain

Brussels in May.

approval during the period of a time charterparty it can cause significant problems for the owners to face a lowering of the vessel’s rating as this

Slow Steaming Clause

could lead to breach of contract.

Work has begun on this highly topical but complex issue by a group of industry experts. The objective is to draft a set of standard slow/

Wreck Removal Agreements

economical steaming clauses for use by the

Drafting work continues on the revision

general industry. The experts are drawn from


theBaltic March 2010


Heavylift Update

Competition intensifies The heat is on


hile several sectors in the mari-

D-vessels� (D4 type) this year, with the first to be

Flexibility key for cranes

time industry continue to struggle

delivered in mid August. The others will follow

In a few months time, Seaway Heavy Lifting will

and try to pull back from orders,

in six-week intervals. Under construction at the

take delivery of its $460 million second heavylift

many of those in the heavylift

Ouhua yard in China, all five newbuilds are fitted

crane vessel, the HLV Oleg Strashnov. With an

sector are demonstrating their faith in the long-

with two 400 tonne and one 120 tonne crane.

engineering office in Zoetermeer, the Netherlands,

term prospects by pressing on with orders. 2010

BigLift also has two vessels, the Happy Sky and

Seaway Heavy Lifting is originally a Norwegian/

will see a number of newbuild heavylift vessels

Happy Star, being built at Hazira in India. These

Russian firm, founded by Stolt-Nielsen-Seaway

arrive in the market and certainly the year is likely

two vessels will be equipped with two 900 tonne

A/S and PO Kaliningradmorneftegaz in 1991.

to see competition intensify.

cranes, representing a total lifting capacity of

Willem van der Velde, chief operating officer,

1,800 tonnes. These two will come into service

comments on the reasons why the company

in 2011.

decided to invest in a second heavylift vessel:

Amsterdam-based heavylift operator BigLift Shipping will take delivery of all five of its “Happy

One of the latest deliveries to the heavylift fleet


theBaltic March 2010

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Heavylift Update “The world’s crane vessel fleet is relatively

high sailing speeds. The vessel has a unique


old,” he points out. Even though the company’s

patented hull shape – the dual draught – that will

As newbuilds head into service, several new

first heavylift vessel, the Stanislav Yudin, was

allow it to sail at a speed of 14 knots. Uniquely,

arrivals have already joined the world’s heavylift

built in 1985 it is still actually quite modern, he

Seaway Heavy Lifting and MSCGusto have


stresses, with the average age of the fleet above

designed the vessel so it can be ballasted in

Beluga Shipping’s new flagship, the Beluga

25 years. There is a great deal of future potential

and out of the water depending on the motion

Houston, performed its maiden voyage in

in the market, he adds. “New platforms need


December last year, loading two reactors in

to be installed and many platforms built in the

Workability and flexibility were key factors

Yokohama, Japan. Destined for Aratu in Brazil,

1970s and 1980s will need to be removed in the

when deciding on the design, says Richard

each reactor weighed 485 tonnes and measured

coming decades.” The Stanislav Yudin has also

den Hollander, marketing manager, Middle

21 metres. Then in the next port of loading

been working flat-out but it has now reached

East & India. Oleg Strashnov has much faster

in South Korea, another three reactors were

its technical limits after going through several

mobilisation/demobilisation abilities compared


upgrades. Starting life with a 1,600 tonne crane

to competitors. And it has a special, hinged

Beluga Houston is the first representative

capacity, this was gradually increased to its

A-frame that is designed to fold so the vessel

of a new generation of multipurpose heavylift

present 2,500 tonne capability.

can easily transit under bridges and transit the

project carriers. The vessels have a maximum

Oleg Strashnov has been built at IHC

Suez Canal, the Bosphorus and Baltic easily.

lifting capacity of 1,400 tonnes and belong to

Merwede in the Netherlands. The new vessel

“Many of our competitors cannot do this and

the P1/P2-series of the Bremen-based shipping

takes the company into the market for very large

have to sail around the Cape in Africa,” stresses


structures because it will be fitted with a huge

den Hollander.

A total of 16 units of the two new P-types,

crane capacity of 5,000 tonnes in revolving

The hook height is also very high as it is able

with loading capacities of up to 20,000 tonnes,

mode and this is combined with a very fast

to reach 102 metres above sea level and the

will be in operation by 2011, meaning that

sailing speed.

auxiliary block can reach heights of 134 metres

Beluga will have the largest super heavylift fleet

As well as installation and decommissioning

above sea level. The new vessel has dynamic

in the world.

work, Seaway Heavy Lifting is also considering

positioning capability, as well as an eight-point

All of these vessels possess an extra deck for

kitting out the vessel with full pipe laying

mooring system, meaning it can either get very

cadets and at least two of the P-series vessels

capabilities. A semi-submersible was considered

close to a structure or stand-off at anchor. Den

will be equipped with the towing kite system

but the company was keen that the new vessel

Hollander says dynamic positioning capabilities

SkySails to increase efficiency and so they can

should be able to mobilise very quickly so chose

are important with oil and gas exploration going

be more environmentally friendly.

a “ship shape”, enabling the vessel to achieve

into deeper and deeper waters.

Stanislav Yudin installing a platform in India

theBaltic March 2010



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Heavylift Update Jumbo

caissons of 320 tonnes each, measuring 21 x

China, of which four will enter the Combi-Lift

Meanwhile, Jumbo Shipping’s latest newbuild,

10 x 11.50 m in Penglai, China destined for a

pool, while the remaining two will go on long-

HLV Jumbo Jubilee, completed its maiden

new mining project in Cape Preston, Australia.

term charter to another operator. Prospects

voyage after loading, transporting and installing

The four caissons, which were contracted on

for the vessels currently under construction

two 1,250 tonne shiploaders for FLSmidth.

a last in-first out voyage, were directly lowered

in China look “quite promising,” says Anders

Jumbo Jubilee, which is capable of 17 knots

into the water and installed onto a foundation

Poulsen, due to the high standard of the fleet

service speed, started its first voyage from its

beneath the water surface at Cape Preston by

and capabilities of the crew. “We have a couple

home port of Rotterdam and set sail for Vitória,

the ship’s own gear.

of letters of intent, and there are some quite

Brazil. Two shiploaders, with a processing

promising associations going on.” However,

capacity of 16,000 tonnes of iron ore an hour,

the effects of the worldwide slowdown became

were loaded relatively easily. But in Tubarão,

BBC Chartering

noticeable in the last two or three months of

where offloading and installation were due, there

At the beginning of 2010, BBC Chartering

2009, and 2010 is likely to be difficult for the

was more of a challenge.

predicted in its annual review and lookout that

industry as a whole, he says. Overcapacity will

Tubarão port is half open to the sea and is

2010 could be a difficult year for the industry.

be a serious issue. “Competition is very heavy

continuously subjected to swell which can vary

Whilst some 80% of the $1 billion plus projects

as some companies have been building too fast

between 0.20 metres and 1.10 metres. Jumbo’s

that had been stopped due to frozen credits have

just to get turnround,” Poulsen warns. “There is

Engineering Department analysed swell statistics

been released again, and oil and gas exploration

no reason to bring so much tonnage to market

of the last 10 years and used detailed weather

are driving a number of major infrastructure

– particularly given the need for the right crews

forecasts and computer analysis to predict

projects: “all these positive indicators are not

and people to run the technical department.”

behaviour. To leave nothing to chance, a Motion

changing the fact that we have to face a tough

Reference Unit was used to register actual ship

year. The existing tonnage is more than capable

movements. The shiploader was lifted on board,

to cover the present and medium term market

Building for the future

brought to Tubarão and installed safely on its

volumes,” said a spokesperson for the company.

Although all the heavylift operators expect


Despite this, BBC has itself embarked on what

increasing competition, many of them are

it describes as an “aggressive” newbuilding

showing their confidence in the future. As Van

programme, aimed at the long-term needs of

der Velde from Seaway Heavy Lifting says:

the market.

“We are building for the next 20-25 years.”

SAL SAL Shipping is another company that is looking

Den Hollander adds that the market for larger

to the future by ordering vessels with the

topsides and jackets is growing, so higher

capability to take on larger and more complex


capacity heavylift vessels are needed. The new

jobs. In July this year, the company placed orders

Combi-Lift, a JV between Denmark’s Poulsen

vessels means that less offshore hook-up work

with the Sietas shipyard for the construction of

Shipping and Germany’s Harren & Partner, took

is needed, so schedules can be met more easily.

two new-generation Type 183 heavylift vessels.

delivery in January of the Combi Dock IV, the

Arie Peterse, BigLift managing director, says

SAL claims that the newbuildings, slated for

final vessel in a series of four multipurpose

that 2010 and 2011 will certainly be years

delivery in December 2010 and March 2011, will

heavylift newbuildings with semi-submersible

where the market will become more competitive.

be the largest and most modern heavylift ships

capabilities. These vessels were ordered as a

However, he adds, “investments in newbuildings

in the world, with a combined lifting capacity of

joint venture between the two partners. Harren

are long term, BigLift is confident that there will

2,000 tonnes (2 x 1,000 tonnes) and a speed

has a further six pure heavylift vessels with

be a future for good, well run, heavylift vessels”.

of up to 20 knots. The vessels can trade with

a lifting capacity of 900 tonnes on order in

an open hatch and accommodate exceptionally large loads, giving the flexibility to cope with a wide range of tasks, including wind energy, offshore/oil and gas industries, industrial plants and other sectors. The vessels will be equipped with DP1, allowing them to take on sub-sea installation work. Over the course of 2009, SAL has opened two additional offices, one in Australia and one in Finland. The Australian office, in Fremantle, was opened in August, and is part of a wider strategic plan to accommodate the growing shipping demand from the resources sectors in Australasia, said director Berndt R. Olesen. “Many of our large clients, including BHP and Woodside, are based in Western Australia and with around $200 billion worth of oil and gas projects in the pipeline, the future of the Australian industry looks certain despite the downturn in international oil and gas production.” In September, SAL’s Maria loaded four

Oleg Strashnov – artist impression

theBaltic March 2010


Global leader in ocean towage

Hofpoort 16th Floor, 3032 AC Rotterdam Hofplein 20 The Netherlands

phone + 31 10 240 25 00 fax + 31 10 240 25 99


Towage & salvage

Changing the landscape Smit Boskalis merger makes headlines, but 2010 poses stiff challenges


n the towage and salvage sector, Dutch firm Smit Internationale was very much in the spotlight as nearly two years of courting by the giant dredging group Royal Boskalis have paid off as

a merger is announced. At the end of January, the two said that they had signed a protocol for a full merger. Based in Rotterdam, Smit is recognised as one of the top two in the business, so the move represents a considerable coup for Boskalis. The transaction will be realised through a public offer of E60 million in cash, ex-dividend, for all outstanding shares in Smit. Boskalis expects to launch the offer in the second half of February. The two companies have stated that all four divisions of Smit would be secured. Boskalis will declare the offer unconditional if more than 75% of the outstanding Smit shares are tendered. The two firms say the combination will create

Peter Berdowski

a world-class maritime service provider and that existing plans form the basis for further

Ben Vree, chief executive officer of Smit,

Financing of the formal offer will consist

expansion. Current activities will be supported

said: “We are very thrilled with the support

of a combination of senior debt and around

and the well-known Smit name will be retained.

from Boskalis for the Smit strategy and its

E300 million of equity/junior debt. Part of the

Smit will also continue to operate from its current

four divisions. We have a clear agreement

financing is expected to include the issuance of


regarding the continuity of Smit’s identity and

E200 million of new Boskalis shares.

Boskalis’ original target – Smit’s terminal activities – will be integrated with its own

its strategy, thereby securing the continuity of Smit’s activities.”

This deal has taken quite a time to emerge. Originally





associate company, Lamnalco. Here, the

The companies have stated that direct

announced an intended cash offer for Smit of

companies believe that there will be several

implications for the workforce will be limited

E62.50 per share that was rejected out of hand

synergies realised such as those concerning

because of the complementary nature of the

by Smit at the time. Boskalis later abandoned

procurement and crewing.

merger. Boskalis and Smit will make their best

this bid.

Peter Berdowski, chief executive officer

efforts to avoid any forced redundancies, the

In February of the same year, Boskalis had

of Boskalis, commented: “The merger fits

two firms stated. Vree will become a member of

already approached Smit with a view to acquiring

excellently with our strategy aimed at reinforcing

the board of the new combined group.

its terminals division. But Vree always remained


Boskalis and Smit are currently obtaining all

support the strategy of Smit, which aligns and

the necessary approvals from the competition

complements well with our strategy.”







theBaltic March 2010

adamant that the group should remain intact.


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Towage & salvage Newbuilds pose challenge

improvement yet, although some are mentioning

Offshore market stronger

Meanwhile, in the towage and salvage market,

that there are a few positive signs, he says. “My

Overall, Timmermans says, the company’s

uncertainty seems to prevail, with many unsure

personal feeling is that 2010 will be a challenging

offshore vessels do much better than the

about the impact of an influx of newbuilds. Most

year; however, the construction season in the

traditional ocean-going tugs. These can easily

believe that 2010 will be a challenging year.

North Sea, which usually starts around April,

move around in various market segments, like

could positively influence our markets.”

offshore, anchor handling and towing, while

Kotug chief executive officer Ard-Jan Kooren says: “2010 is not looking better than 2009.

However, he stresses that 2009 was not one

the traditional ocean-going tugs are restricted

I expect improvements by the end of 2010,

of the worst years ever, as many predicted. The

to ocean towage only, which make them less

beginning 2011.” Too many newbuildings are

trouble is that everyone compares 2009 with

flexible, he says.

coming into the market and the market is just

2007/2008 and these were exceptional years,

“Our two Shoalbusters/dredging support

not growing at the same pace, he stresses.

he says. “If you take 2002/2003 as a reference

vessels are doing reasonably OK and it seems

point, then 2009 does not look so terrible.”

that this market segment is stabilising.” The

Based in Rotterdam, Kotug itself has four newbuildings due to arrive, all of which are

ITC has enough work in its current portfolio,

80 tonne BP Rotortugs coming from Niigata

he adds, even though it is considerably down


on 2009 levels. “We have some quite nice long-






Shipbuilding and Trading (KST), holder of the Rotortug patent, has eight other deliveries of

term employment for a number of vessels.” The





major dredging companies seem to be picking up contracts again, he says. But at the same time, he adds that it is difficult to see which way the market is going and what impact the newbuilds will have.

the Rotortug for third parties. Kooren says

subcontracted by Titan Marine to assist on a

There are a lot of questions over developments

currently the company is focusing on employing

wreck removal job. A ro-ro vessel, the Vinca

in the coming months. “Will owners take delivery?

its vessels in a more flexible way. For instance,

Gorthon, which was carrying paper, sank in

Some orders seem to have been placed with the

Kotug is using its newbuild tugs coming from

1988 near Petten off the Dutch coast. Lying at

idea of selling vessels on before delivery, so

the yard in Japan to tow newbuild hulls and

the entrance of a traffic separation area, around

will these be delivered? Will yards take the risk

pontoons from the Far East to Europe.

30 metres down at the deepest point, the Dutch

and build them anyway? There is just a lot of

government is keen to see the wreck removed,

uncertainty,” says Timmermans.

Joop Timmermans, managing director of ITC, agrees that 2010 is not looking particularly buoyant so far but he says the year may pick up in the second half.

so contracted Titan. Work is set to start in March and expected to take around six months.

In general, there has been no sign of an

International Salvage Union announces new vice president


he International Salvage Union has

Shipbrokers (FICS); an associate member of the

announced that Mr Andreas Tsavliris has

Institute of Arbitrators (AIArb); a member of the Chartered Insurance Institute (CII) and a member

been elected as its Vice President.

President of the ISU, Mr Todd Busch, said:

of European Tugowners’ Association. He was

“I am delighted to welcome Andreas as the

also an underwriting member of Lloyds for over

ISU’s new Vice President. He brings energy and

30 years.

a wealth of knowledge and experience having

Mr Tsavliris said: “I am honoured to have

worked in the salvage industry for some 40

been chosen by the executive committee and

years. I look forward to working with him as we

members of the ISU to serve as Vice President.

tackle the many issues facing our industry.”

Salvage is in my blood and it is an industry I am

Mr Andreas Tsavliris is one of the principals

passionate about. We provide a vital service to

of Tsavliris Salvage. He joined the firm in 1970

the shipping industry and I want to make sure

and has worked in many different departments

that salvors and salvage are understood and

in the company. Mr Tsavliris has been a member

valued in the marine world. I look forward to

of the ISU Executive Committee since 2006.

working with Todd, the executive committee and

He is also a member of the executive board

the membership.”

of the Greek Shipowners’ Union in London (GSCC); a Fellow of the Institute of Chartered

Mr Andreas Tsavliris

theBaltic March 2010


Shipmanagement, crewing and education update

Improving service to seafarers IMO has declared 2010 the year of the seafarer. What does that mean in practical terms?

Does your international medical insurance go this far?


million seafarers serving the daily needs of more then 6.5 billion citizens of the world! It is a fact that goes unnoticed or is taken for granted by most, but one that should be trumpeted loud and clear,” said IMO secretary general Efthimios

Mitropoulos, in a statement to mark the beginning of what IMO has dubbed the Year of the Seafarer. In recognising the vital importance of the role played by the world’s seafarers in achieving safe, secure and efficient shipping on clean oceans, and the facilitation of more than 90% of the world’s trade, he said: “We also seek to reassure [seafarers], at the ‘sharp end’ of the industry, that we, who are responsible for the international regulatory regime and who

Evacuation to the nearest centre of medical expertise.

serve shipping from ashore, do understand the extreme pressures that you face and that, as a result, we approach our own tasks with a genuine sympathy for the work that you carry out.

The Cape of Good Hope or the Suez Canal. Wherever you are. You’re just a phone call away. Our 24/7 multilingual helpline is ready and waiting. To get you to the nearest medical centre. As soon as possible.

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Out of sight, out of mind?

52 Bup_Tanker_270x86_Col_TheBaltic_Spring10.indd 1

theBaltic March 2010 20/1/10 14:00:15

Shipmanagement, crewing and education update “Last, but mostly importantly, we want to convey to you a clear message that the entire shipping community understands and cares for you – as shown by the efforts we make to ensure that you are fairly treated when ships on which you serve become involved in accidents; are looked after when you are abandoned in ports; are not refused shore leave for security purposes; are protected when your work takes you into piracyinfested areas; and are not left unaided when you are in distress at sea.”


Training and education One of the major projects to be completed by IMO in the course of the year is the revision of the 1995 Standards of Training, Certification and Watchkeeping (STCW) Convention. This is currently the only comprehensive instrument that provides for universal training and certification for seafarers around the world. The main revisions are currently being finalised and the revised STCW Convention will be presented for approval to the IMO’s Diplomatic Conference in Manila in June. Once the Convention is adopted, the IMO plans to hold a series of seminars and workshops to familiarise seafarers with the new and amended standards. “The rapid march of technology and the changing demands of an industry striving to be ever more competitive has meant that the global rules governing the training and certification of today’s and tomorrow’s seafarers had to be revised. It is therefore apt that the revision of the 1995 STCW Convention and Code should be completed in a year when the efforts and the professionalism of the world’s seafarers are embraced worldwide,” said Rear Admiral Peter Brady, director general of the Maritime Authority of Jamaica and chairman of the STCW subcommittee. “The revised STCW rules will offer all relevant stakeholders the proper instruments by which to

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recruit, train and retain their sea staff. At a time when the role of the seafarer is becoming even more respected, this can only be a good thing.”

Increasing security For InterManager, one of the key issues to be addressed in the coming year will be the question of criminalisation: “Last year we were heartened by the support we received from throughout the shipping world as we fought for the release of the unjustly‐jailed officers from the Hebei Spirit. Now, in the Year of the Seafarer, our campaign will be even stronger and I am sure we can count on even greater support from the industry,” said InterManager president Roberto Giorgi. Increasing security for crews in the face of the piracy threat must also be a key concern for shipmanagers and international organisations alike, he continued. “I believe in 2010 and 2011 there will be much more effort and commitment from everybody, the IMO included, to try to find a solution not just on criminalisation but also on piracy. What we need is to have one way to fight piracy rather than different approaches from different countries,” Giorgi said, calling for international legislation to harmonise the approach shipowners and managers can take to protect their crews and ships from pirate attacks. “We need to define international legislation so that all shipowners are able to access the same tactics rather than some being forbidden by their individual nations’ laws,” he said.

Healthcare While criminalisation and piracy have become of increasing concern over recent years, other issues that have always been of concern to operators and seafarers alike are also getting more attention. A new trade association armed with a broad mandate to represent and promote the health and


medical interests of the world’s seafarers was launched in London at the beginning of January. The International Maritime Medical Association

theBaltic March 2010


Shipmanagement, crewing and education update well as from an employers’ standpoint,” he said.

(IMMA), will look after the medical interests

A fully-employed secretary general has been

of those involved in the shipping industry

recruited and a nine-strong board of directors

Full membership of IMMA is open to all

worldwide. It will work alongside, and draw

bringing together expertise from the medical

stakeholders interested in seafarer and maritime

on the medical expertise of, the International

as well as shipowning, P&I, port agency and

health, fitness and medicine, notably: port


medical auditing spheres is being assembled.

and shipboard doctors; port clinics; hospitals;





members’ association for maritime doctors and

Michael van Hall, president of Gezellig, Inc.

medical and speciality medical groups such

port clinics, to lobby politicians and regulators.

and formerly president of van Hall Health Inc.

as dentists and orthopaedists; pharmacists

With a mandate to highlight the health and

and managing director Maritime Sector at Health

and medical equipment and drug supply and

medical issues of the world’s seafarers equally

Systems International, Indiana, has been elected

testing companies; P&I Clubs; port agents and

from an owners’ and managers’ perspective, as

as the association’s first president. “Seafarer

port operators, as well as shipowning and

well as through the eyes of the seafarer and the

health has become such a crucial issue as

shipmanagement shipping companies.

unions, IMMA will bring the views of the ship and

concern over the seafarer shortage problem

In a reflection of the increasing concern

crew manager and the seafarer to the forefront

impacts on lengthening sea-time, longer working

about crew health, the American P&I Club

when influencing future regulation of this key

hours and less relaxation time. Conversely, crew

has expanded and further developed its Pre-

area of the global shipping industry. In addition

managers and shipowners are findi ng it hard


to acting as a lobbying organisation, IMMA

to balance the demands for higher operational

programme. The programme was previously

will also operate as a central point for advice

output from their seagoing workforce with the

only mandatory for seafarers originating from

and services on, for example, pre-employment

needs for a healthy and contented crew base.

India, Indonesia, Latvia, the Philippines, Poland,

medical examinations (PEME), nutrition/diet,

And that is before we consider the insurance

Romania, Russia and Ukraine. From February 20,

keeping a crew fit and healthy, immunisations,

implications of rising health costs in a sector

2010, however, PEME will also be mandatory for

training of the “medical” person on-board,

that suffers from a lack of understanding and

Bulgarian seafarers. EME facilities have been set

telephone and web-based medical advice, and

empathetic regulatory structure.

up in Varna to handle the expanded programme.

advice and guidance relating to the operation of doctors and hospitals in the major ports of call.

“IMMA has been formed to represent and tackle all of these issues from a practitioners’ as

IMO secretary general, Efthimious Mitropoulos, called for greater support for seafarers


theBaltic March 2010




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Shipmanagement, crewing and education update

A step further The shipping industry is embracing the MBA


t is well documented that the shipping industry

with the skills they will need to be managers.

adopted by the shipping industry as a popular

was hit harder than most during the recession

In some cases, people simply want to change

and credible means of attaining qualificiations.

last year, but it has been interesting to see how

their job role. Most courses aim to provide a

Until recently, however, a credible MBA option

the sector reacted during those difficult times.

well-rounded course of study that is relevant

has not existed. Middlesex University and

Despite all the doom and gloom, one area that

across the industry as a whole, although some

Lloyd’s Maritime Academy have now developed

has continued to develop is staff education.

provide greater levels of specialisation. Modules

the sector’s first MBA course delivered solely

Because of the global economic downturn,

may include management skills, accounting,

by distance learning – the MBA in Shipping

many people have, unfortunately, lost their jobs

global economics, maritime law, international

& Logistics. The programme consists of six

and found themselves in a situation where

marketing, brand establishment, logistics and

modules delivered over a two-year period.

they have the opportunity and the necessity to

supply chain management, risk management

update and renew their skills, and perhaps even

and leadership techniques, amongst others.

More than 4,500 industry executives from across the globe enquired about the first

gain new ones. In addition to that, employers

distance learning MBA, with 60% of successful

have increasingly been demanding evidence of

applicants being self-funded students. “This

high-level current qualifications and expertise,

Part time

clearly confirms the maritime sector’s strong

yet they continue to be reluctant to allow staff

Because of the level of experience required

demand for the best higher-education distance

time away from the workplace to study.

before embarking on an MBA, many of the

learning courses to develop skills for the future,

All of these factors combined have led

courses have been tailored to allow course

in a cost and time efficient manner,” says Gina

to an increase in applications for part time

participants to study without taking extended

Tucker, head of distance learning at Lloyd’s

and distance learning courses as employers

study leave, or even leaving their jobs. Most

Maritime Academy. “As a global industry, it

seek cost efficient ways to improve the skills

maritime MBAs are formed around this pattern.

has been vital for the maritime sector to adopt

of their staff, and industry executives try to

For example, the Shipping and Logistics MBA

distance learning programmes, to allow seafaring

‘recession proof’ their careers. Lloyd’s Maritime

offered at the Copenhagen Business School

staff the chance to study, minimise travel

Academy, for example, reports a 9% increase in

consists of eight week-long modules over two

expenses and maximise efficiency. And after

applications to distance learning courses over

years, taught in Copenhagen, Hamburg and

much deliberation, there is now a consensus in

the past year.

London, as well as an ongoing project. Likewise,

the industry that distance learning courses can

BI Norwegian School of Management offers

provide a credible, affordable, manageable route

an MBA in Shipping, Offshore and Finance

to gaining qualifications and boosting expertise.”

Why an MBA?

that is taught in six two-week courses over a

For many, particularly those who are looking

year and a half period. The course, which is

to move ashore, this may mean a business

run in conjunction with Nanyang Technological

qualification, such as an MBA, generally

University in Singapore, is split between the two

regarded as the most popular and highest

campuses. The course is “structured in such a

level business qualification available. There are

way that it should be taken as part of one’s job

different motivations for those in the maritime

in shipping,” the university says.

sector to take on the challenge of an MBA. Some people have been promoted to a managerial role but do not feel they have the necessary

At a distance

skills. Others want to be in a managerial role

For some professionals, however, it may not be

and feel that an advanced qualification will

possible to take eight to twelve weeks out of

help them achieve that, either by being more

the office, even over a two-year period. For this

sellable on the market or by equipping them

reason, distance learning has long since been

theBaltic March 2010


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Concateno Steering a course to health and safety


ne of the main driving forces behind

The changing market of drugs

The deterrent

the testing of vessels for drugs and

The market for new drugs is also constantly

A drug and alcohol policy needs rules, education

alcohol was the spillage of oil from the

evolving; different geographical regions have very

and a threat to ensure that people take notice

Exxon Valdez off the coast off Alaska in

noticeable preferences for their taste in recreational

of the policy. The “threat” can be provided by

1989. A number of issues became apparent after

drugs, such an example would be the increase

the constant reminder of a random drug testing

this disaster, resulting in Exxon putting together a

in Ketamine abuse, especially in the UK and the

programme. It is important that offshore locations

Charterparty Clause so any tankers chartering their

Far East. But Ketamine abuse has associated

are not seen as a “safe” location out of the reach

oil must test for drugs and alcohol. This instigated

bladder dysfunctions such as shrunken bladder

of drug testing.

an industry-wide shake-up to eliminate preventable

and ulcerative cystitis, leading to high frequency

The need to have a fully comprehensive drug

accidents by introducing the simple and effective

and urgency of urination, bladder pain, matter

and alcohol testing service from a single supplier

safeguard of drug and alcohol testing.

passing through the urinary tract, kidney damage

with a global outreach and adhering to the highest

and bladder cancer.

industry standards is essential in the maritime

The dangers of abuse

New drugs will lead to new problems; this


The impairment effects of alcohol and drugs are

can impact on the crew’s health as much as the

The advantage of using a single provider

well documented and can put your vessel, crew

dangers of being “under the influence” whilst on

ensures for all maritime drug and alcohol testing

and your company’s reputation at risk. All shipping


the security of supply and a consistency of service, and will result in reduced administration costs

companies need to ensure that their officers and crew are fit for duty, and this includes both their

Alcohol versus drugs

for you. To achieve these benefits, your supplier

awareness of the dangers of drug and alcohol

The signs of alcohol misuse are readily recognised.

must be an expert in global logistics such that

misuse and a process to help support and assist

In contrast, some effects of drugs, for example

sample collections can be carried out across an

compliance to shipping guidelines and regulations.

amphetamine’s apparently endless energy, can

international collection network in all major ports as

A drugs and alcohol policy that includes a test

initially appear beneficial, disguising the associated

well as in secondary ports. Collections need also to

programme does both – it helps raise awareness

elements of risk taking, depression and paranoia.

adhere to full chain of custody requirements so that

so that crew understand the seriousness of the issues and it also acts as a deterrent.


Alcohol comes in bulky or fragile containers,

samples are handled correctly, are never mixed and

difficult to hide. Illicit drugs for personal consumption

never lost, and therefore legally defensible. It is also

are lightweight and inconspicuous.

the responsibility of the provider to know regulatory

We have social rules governing the use of

frameworks affecting maritime drug and alcohol


alcohol. Drugs such as cannabis (marijuana),

testing and to adjust procedures accordingly.

comprehensive drug and alcohol testing policy with

amphetamine and cocaine are “outlaws” – the

Finally, the laboratories in which analysis is carried

having to adhere to local legislation on drugs and

users make their own rules and consequently

out will need to have the highest standards of

alcohol, and ensuring compliance with regulatory

push the barriers of safety to satisfy their own

accreditation to ensure that the test results you

bodies, such as:


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Drugs and alcohol usually get considered under

• ISM Code







the Health and Safety banner but there is also

Concateno’s 20 years of maritime experience and

• ExxonMobil

a security risk. The desire for these products

have made us the world’s largest single supplier of

“All seafarers must be able to respond at any

can place the purchaser in circumstances where

drug and alcohol testing services to the industry.

time to an emergency situation.” (Oil Companies

they may unintentionally, deliberately or through

International Marine Forum Guidelines for the

blackmail give away information that the dealer


control of drugs and alcohol onboard ship).

could sell on to interested parties. The complexity

Harbour Quay


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with criminal activities could attach enormous

London, E14 9PH

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ramifications to the purchase of a small amount of

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an illegal drug.

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for seafarers. This will also be brought into force in the near future.

As part of an overall security strategy it makes sense to ensure that personnel are not the weak


point in an organisation’s defences. An effective deterrent is required to convince them that the risks of even occasional drug use are not worth taking.

theBaltic March 2010


Oxford Analytica

Anti-piracy results are mixed A range of measures have been instituted to counter and contain piracy in Somalia – but success appears to be as far off as ever


espite a concerted international naval

December 2010. NATO has also sent vessels

On the legal front, the United States,

presence, the Horn of Africa has again

to the Horn. The first mission, code-named

United Kingdom and EU have all entered into

been identified as the most pirate-

Operation Allied Provider, was dispatched to

agreements with Kenya, whereby it will act as a

prone region anywhere in the world.

work with Atalanta in protecting vessels carrying

third party to prosecute individuals suspected of

In 2009, the International Maritime Bureau (IMB)

World Food Programme (WFP) aid to Somali

engaging in armed maritime crimes.

logged 116 actual and attempted attacks in

ports. The current deployment, Operation Ocean

The UN has been instrumental in moving to

the Gulf of Aden, compared with 92 in 2008,

Shield, commenced operations on August 17.

foster collective action against armed maritime

and 80 off Somalia, compared with 19 in

Apart from CTF-151, EU NAVFOR and NATO,

violence around the Horn. In January 2009,

2008. Altogether, the wider vicinity, including

a number of other states have sent frigates to

the Contact Group on Piracy off the Coast of

the southern Red Sea, accounted for 217 of the

protect or escort shipping off the Horn. About 14

Somalia (ICGPCS) was created to address the

406 incidents recorded throughout the world by

national navies are operating in the Gulf of Aden,

regional situation. The UN Security Council


with a collective deployment of about 30 ships.

(UNSC) has passed three resolutions germane

While the concentration of piracy remains greatest near Somali shores, incidents are now taking place as far as 500-1,000 nautical miles off Mogadishu. In a number of cases ships have been taken as far south as the Comoros, Madagascar and the Seychelles.

International response In an attempt to deal with the incidence of piracy off the Horn of Africa, the international community has instituted a far-reaching strategy aimed at containing the activities of Somalibased maritime gangs. In January 2009, the United States announced the formation of Combined Task Force (CTF)-151 to monitor a predefined Maritime Security Patrol Area (MPSA) in the Gulf of Aden. The aim is to have this form the basis of an international coalition anti-piracy naval flotilla, although at the time of writing only the United States, United Kingdom and Australia had provided naval assets. CTF151 complements the EU combined Naval Force (EU NAVFOR) Operation Atalanta that was deployed in December 2008 and is now led by Spain. Its current mandate runs to end-

Can a naval flotilla solve the piracy problem?


theBaltic March 2010

Oxford Analytica to piracy off the Horn (1816, 1846 and 1851),

about $1.3 million a month; in 2009, the

Root causes

which collectively sanction “cooperating” states

EU budgeted $450 million to help run the

Perhaps the most fundamental weakness of

to take all necessary measures that are deemed

Atalanta flotilla. Costs of this magnitude

the international strategy response is that it is

appropriate to suppress Somali-sourced piracy

bring into question the sustainability of the

premised on containing piracy where it emerges,

and armed robbery at sea.

current naval flotilla, especially if there is no

at sea, rather than addressing its roots on land.

discernible decline in attacks.

Frigates have little, if any, relevance to many

• The judicial agreements with Kenya pose

of the territorial “push” factors that give rise to

Successes and shortcomings

difficulties. The country’s court structure is

persistent armed maritime crime and violence

To a certain extent, the various measures

inefficient and, with over 800,000 cases still

off the Horn.

outlined above have met with some success. EU

pending, already stretched to its limit. As of

Insufficient attention is being devoted to

and NATO escort ships have helped to ensure

June 2009, of the 111 pirates sent to Kenya

ameliorating the underlying socio-economic

the safe delivery of World Food Programme

for trial, only 10 had been fully processed

drivers that give rise to piracy. In Somalia, these

relief supplies, while coalition forces have been

through the penal system.

include poverty, underdevelopment and lack of

instrumental in thwarting several attempted

• The ICGPCS has only met sporadically

governance. More targeted initiatives, including

hijackings in the Gulf of Aden. The IMB notes

and has yet to yield any significant action.

“soft” socio-economic objectives aimed at

that although total incidents have nearly doubled,

One reason for this is that the group’s

protecting local fishing grounds and supporting

actual hijackings by Somali pirates have not

deliberations have not embraced two main

those small-scale industries and cooperative

risen in proportion – from 42 in 2008 to 47 in

groups that are central to Horn piracy: the

businesses that do not rely on piracy’s “financial

2009. It attributes this to the naval presence

owner-operators of the small feeder-craft that

lifeline”, might help local coastal communities

and the “robust” response of ships’ captains.

make up the bulk of the victims in the Gulf of

play a prominent role in supporting pirates to

However, international anti-piracy initiatives fall

Aden, and the Somalis themselves.


• UNSC resolutions are likely to give rise

short in several respects: • The MPSA monitors roughly 2 million square

to equally difficult challenges, especially if

miles, and at least 20,000 vessels transit the

they are used to sanction military raids

Somali responses

region every year. To cover this expansive

and air strikes in Somalia itself. Pirates

The first 500 recruits to the nascent Somali



are largely indistinguishable from ordinary

Coast Guard graduated in September. Although

comprehensively would require a massive

fishermen within the wider local communities

a positive development, the force is completely

naval deployment – far more than the 30

with which they interact; military action would

dependent on international funds and with only

ships currently patrolling the Gulf of Aden.

probably result in civilian collateral damage

a dozen vessels at its disposal is nearly devoid

and an anti-Western backlash.

of assets.




• A related problem has to do with cost. The direct expense associated with deploying

The self-declared Republic of Somaliland

a single frigate to the Horn amounts to

has already demonstrated an ability to institute a durable and efficient onshore remedy against piracy. The neighbouring semi-autonomous region of Puntland has – under a new administration since early 2009 – attempted to garner international support for its own antipiracy force. Most pirate attacks are launched from bases in Puntland, and the financial and criminal networks through which ransoms flow have links into the Puntland administration. Although the international response to Horn piracy may be making it more difficult for the pirates to commit their crimes, attempted attacks have still risen rapidly, suggesting that if the purpose of the naval presence is to deter, it is not deterring enough.

Report by Oxford Analytica © 2010 Oxford Analytica E-mail:

Too soon to celebrate success

theBaltic March 2010


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Green technology

Making a difference Sometimes it’s not the grand gestures, but the detail in the day to day running of the ship that makes all the difference


hile the Copenhagen conference

Hull efficiency

company DK Group has developed a system

may have failed to produce any

Reducing the friction between the hull and

that does exactly this, by integrating an air cavity

clear guidance on the reduc-

the water is one of the most effective ways of

into the midship and box section of the vessel.

tion of emissions for shipping,

increasing the efficiency of a vessel. In the long

An air injection system pumps compressed air

scrutiny on the industry’s environmental record

term, improved hull design will be responsible

into the cavity through a system of automated

remains as close as ever. Environmental aware-

for the most change in this area. Given the

compressors and valves. This creates a layer of

ness is far more than the question of what is

lifespan of the average vessel, however, it is also

air between the vessel and the hull, designed

coming out of the ship’s funnel – although that

important to develop methods to improve the

both to minimise the hull/water contact area and

is, of course, important – and items as diverse

efficiency of existing hull forms. One of the most

minimise air consumption. An automatic control

as paint, fuel cells and satellites are playing a

effective ways of doing so is to encase the hull

system monitors the volume and pressure of

part in reducing the environmental impact of the

in a layer of air, or bubbles – a technique that

air and maintains the optimal air level in the air

industry as a whole.

has been known for some time, but that is not

cavity. According to figures from DK Group,

generally practical for large scale use. Danish

the system can reduce fuel consumption and

theBaltic March 2010


Viking Lady

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OFFICE: Eckhardt Marine GMBH 13 Ballindamm D-20095 Hamburg

Green technology related emissions by 15% for tankers and

icebreakers are still in operation today – the

bulkers, 7-9% on an LNG tanker and 7.5% on

concept has never become mainstream. “The

a containership.

steady increase in the price of fuel oil – and the probable introduction of either a carbonemissions trading scheme or a related tax – now

Paint and coatings

presents the possibility that nuclear propulsion

While the system can be retrofitted, new

could be more competitive,” the classification

developments in antifouling mean that simply

society said in a statement earlier this year. As

repainting a vessel with the right coating can

a result, Lloyd’s Register’s research programme

have a similar effect. MOL, for example, has

is revisiting the technical challenges of nuclear

made research into high-performance antifouling

propulsion for ships, as well as refuelling and

paints that improve vessels’ fuel efficiency,

waste-disposal issues.

one of the key elements of its CO2 reduction technology R&D initiative. According to research

Avoiding bad weather can cut emissions

carried out by MOL, the drag of seawater


Preventing alien invasion

50% to 80% of all resistance, including wind

and many of them are looking to reduce CO2

though ballast water discharge, while not

and wave resistance. By developing a super-

as well.” He estimates that owners can save

as high profile CO2 emissions, is one of the

slick antifouling paint for ship bottoms, MOL

between 5-10% on fuel costs with weather

most environmentally contentious issues in

hopes to reduce CO2 emissions by 8% to 12%

routing and reduce emissions on a California-

the shipping industry. According to the IMO

compared to conventional antifouling paints.

Asia route, although savings are not as large on

“Invasive aquatic species are one of the four

north-south routes.

greatest threats to the world’s oceans.” The

over the vessel’s wetted surface accounts for

Similar predictions are made by International

The spread of pollution and invasive species

Paint, which estimates that, over a five-year

German government estimates that invasive

period, a single VLCC currently coated with a

species such as the Chinese mitten crab have

self polishing copolymer antifouling could reap

Ship of the future?

caused up to R85 million damage in German

savings of 9,000 tonnes of fuel if coated with the

Fuel cells, a cleaner and more efficient way of

waters alone.

most modern generation of antifouling, reducing

producing energy from existing fuel sources,

The first stage of the Ballast Water

its CO2 emissions by 31,000 tonnes and saving

have often been predicted as the future of

Management Convention came into effect

around $3.6 million. In-service experience on a

electricity generation on land. That concept

last year. Under the Convention, vessels

range of vessels has shown savings of up to 9%

had now been expanded to ships. During the

constructed from 2009 onwards which have a

on fuel usage and emissions, the company said.

United Nations Climate Change Conference

ballast capacity of less than 5,000 cubic metres

in Copenhagen (COP15), the offshore supply

must be fitted with ballast water treatment

vessel Viking Lady was docked in central

systems. From 2012, new vessels with a ballast

Work with the weather

Copenhagen and shown off to the press and

capacity of 5,000 cubic metres or more must be

Even with the most efficient hull design possible,

COP15 delegates as the “only ship with a fuel

equipped with such systems.

it is still possible to reduce emissions even

cell integrated as part of its power generation”. It

There had been some debate about whether

further by choosing a route that works with the

was claimed that, compared to a traditional ship,

technology was sufficiently advanced to allow

weather, rather than against it. Similarly, the use

the Viking Lady’s advanced technology enabled

implementation of this convention. However,

of a “just in time” slow steaming route that takes

her to reduce harmful NOx emissions by 180

during MEPC 59 in London in July 2009, the

the best advantage of the time available to arrive

tonnes and CO2 emissions are reduced by 20%.

IMO determined that sufficient type approved

at port just before the vessel is due rather than

The Viking Lady’s LNG-powered engines emit no

technologies are currently available for ships

the “hurry up and wait” approach, can save

smoke or sulphur.

constructed in 2010 that there is no need

large amounts of fuel. The IMO says that fuel

Classification society Det Norske Veritas’s

for changes to the existing resolution and,

savings of up to 2-4% can be made using this

chief operating officer Tor Svensen used the

therefore, no changes to Assembly Resolution

method. Rich Brown, VP of products at Applied

vessel as a venue for a press conference

A.1005(25) are needed.

Weather Technologies, which provides routing

announcing the results of a study which points

Tom Mackey, chairman of HydeMarine, said

services and develops BVS weather routing

to potential emission reductions of up to 25%

that “ships with smaller volumes of ballast water

software, describes weather routing as “one

for the existing merchant fleet, which could

will be the first ones who must comply with

of the industry’s best kept secrets,” saying that

translate into annual reductions of more than

coming regulations. These early adopters are

many owners are not aware of the savings that

250 million tonnes of CO2. He said that the

an indication that shipowners and yards now

can be made.

potential for emission reduction in newbuildings

recognise that the IMO BWM Convention will

is even higher.

soon be ratified and that newbuildings need to

One reason weather routing is likely to be

install IMO Type Approved BWT systems”.

particularly popular with shipoperators is that

Indications are that owners are aware of

it is a means of reducing fuel, emissions and costs at the same time, whereas most emission

Nuclear ships?

this need, with Hyde Marine receiving orders

reduction technologies are costly to implement.

Lloyd’s Register, more controversially, has been

for six ballast water treatment systems in a

In fact, it is likely to be the cost savings, as

looking at the feasibility of nuclear-powered

single week, for example. Of these, five were for

much as the emission savings, that are the

merchant ships. While several nuclear powered

newbuilding projects on offshore supply vessels

initial selling point, Brown says. “More and more

merchant ships have indeed been built and

and one deep-water survey vessel, and one for

companies are looking to control fuel costs –

operated in the past – and nuclear powered

retrofit on a marine research vessel.

theBaltic March 2010


Corporate viewpoint Eckhardt Marine GmbH

Responsible recycling N

o industry has been left untouched by


a growing pressure to demonstrate an

Eckhardt Marine’s commercial division enables

awareness and responsibility to the natu-

the company to hire and operate tugs if ships

ral environment. Many industrial sec-

have to be repositioned under tow or to

tors have been impacted deeply by “sustainable

commercially manage vessels for a period of

development” policies. The shipping industry is

time prior to demolition. This is usually achieved

no exception, where one of the main focuses has

through a sale and leaseback arrangement

been on ship recycling activities. These have suf-

with the previous owner or on Eckhardt’s own

fered from a considerable bad image and reputa-

account in the international freight market,

tion over the last decades, often being linked with

where the company has developed very close

low industrial standards, pollution and poor social

relationships with charterers that employ

safeguards for yard workers.

elderly ships.








The core activities and services provided by

organisations are addressing this issue and are

Eckhardt include:

working on an international convention for ship

• Sourcing

recycling. But international law-making is a long-




owners, brokers and insurance companies.

term process and the sudden drop in freight

• Sale and purchase of “end-of-life” ships on

rates has made it very obvious that solutions are

a regular basis, and second-hand ships for

needed now.

further trading for selected clients.

Who better than a company that has more

• Managing the towage and last voyages of

than a century’s involvement in this activity to

vessels, with or without cargoes, to different

face up to the future of ship recycling by offering

recycling destinations.

its experience and knowledge to meet the

• Establishing ad-hoc or long-term joint

immediate demands of the shipping industry?

ventures in every country where ships can be broken up.

An industry pioneer

• Development and introduction of new

Eckhardt Marine enjoyed the professional

rigs) totalling 1,500 vessels for a light-weight

recycling standards to meet “green recycling

backing and dedication of the traditional German

displacement (actual steel weight) of more than

objectives”. This effort has already been

industry as a subsidiary of Klöckner, VIAG/

12.5 million metric tons during the last 15 years.

successfully implemented in China and for a number of shipbreaking yards in India.

Deutsche Bank and ThyssenKrupp before management buy-out initiated by Briac Beilvert

Global network for tailoredservices

and Guenther Werle.

being taken over by FIS Holding GmbH via a

• The sale and purchase of all types of European navy vessel which are destined

Head office operations in Hamburg include a

for recycling and which are handled under

Having its roots in 1901 – the date of

trading team to acquire and place ‘end-of-life’

a “special notification procedure”. Eckhardt

inception of its former parent company –

vessels, a post-fixture department to handle

also follows up and reports on the recycling

Eckhardt Marine GmbH has experienced all

the detailed transactions following the trade,

and decontamination process to the relevant

periods of the ship recycling industry and has

and an administration team. Vessels sales can

a presence in all ship recycling countries where

be concluded in as little as two hours, although

• Trading of scrap products (heavy melting

it has a current involvement in all aspects and

others might take up to three weeks. Once

scrap, shredded scrap, billets and such like)

functions of ship recycling projects. In the past,

the sale is completed, the selling owner will

the company operated ship recycling yards in

generally arrange for the vessel to be delivered

• Conducting a sourcing programme to

Germany, the USA and Spain before becoming

to the recycling yard although, if required,

secure additional tonnage by purchasing

the most successful and reliable trading house

Eckhardt will organise the repositioning voyage

older vessels and chartering them back, via

in demolition tonnage, handling all types and

through its shipmanagement division. This

bareboat charters, for periods of two or three

sizes of floating structures (merchant ships,

team has a deep knowledge of rapidly taking

years, whilst also securing the ultimate sale

navy ships, submarines, barges, pontoons, oil

over elderly ships, including their technical

to the recycling market.


theBaltic March 2010


to recycling clients.

Corporate viewpoint Eckhardt Marine GmbH Track record and strong relationships

conditions and a rational organisation of the

and analysis of the hazardous materials during


the first boarding through to the dismantling of

Due to its unique background, Eckhardt

• Monitoring and advice to recycling yards

the ship’s last plate. Documented with pictures,

Marine GmbH is privileged to enjoy a network

for being compliant with ISO 30 000:2009

drawings, protocols of the work progress and

of long-standing direct relationships with

(Ship Recycling Management System) which

statements of compliance, this report gives

shipowners, selected brokers and recycling

is the new ISO standard for ship recycling

full details of the depollution and dismantling

yards. Continued good service, reliability and

facilities. This demonstrates how Eckhardt

process, quantities of waste removed and where

commitment to quality have enabled Eckhardt

Marine GmbH is fully compliant with the

and how they were ultimately disposed of.

Marine GmbH to offer a complete range of

Basel Convention and all existing technical

ship recycling services, from the processing of

guidelines (IMO, ILO etc). Early in this decade,

clients which include:

trading transactions to delivering environmental

the company became registered as a waste

• A guarantee for the complete and efficient

and engineering recycling solutions, in often

broker under the European Union notification

management of commercial and technical

complex legal and economic circumstances.

procedures and legislation for the control

green recycling processes in China and

Eckhardt Marine’s professionalism and

of trans-boundary movement of hazardous

reliability has allowed the company to foster

waste, including their disposal from both the

close relationships with a number of financial

disposing and receiving countries.

partners, including some of the major German






This brings a range of benefits to Eckhardt’s

India. • Continuous monitoring of the dismantling and recycling processes as well as the


subsequent depollution and disposal work. • Best-practice




commercial banks. This enables it to secure

yards, Eckhardt has been able to convince

sufficient debt financing to purchase “end-

several yards to enter exclusive cooperative

in accordance with the most modern

of-life” vessels from those environmentally

joint ventures in China and India, where

international and domestic standards at a



the company’s technical procedures can

maintaining and enhancing their public image.

be implemented under its own monitoring

• Reliable client orientated services which

These include most of the world’s oil majors

systems. All yards working with Eckhardt under

reduce the client’s exposure to liability and

and publicly traded shipowning companies,

the green recycling procedures are certified

damage to their reputation and company

and more generally all shipowning companies

under ISO14001 (Environmental Management


acknowledging accountability in the way their

System), OHSAS18001 (Occupational Health

Safe and responsible ship recycling is fast

vessels will be disposed of.

and Safety Management System), and many

moving up the corporate agenda for all shipping

also hold the ISO9001 Quality Management

companies. Eckhardt Marine has abundant

Still one step ahead: green recycling

System certificate.

knowledge, experience and competence to

Eckhardt Marine is in the process of

ensure that vessels are dismantled without

Eckhardt Marine has established a set of technical

practicing and implementing the new ISO30

causing undue harm to the environment and

procedures for the ecological and sound recycling

000 certification in cooperation with yards’

without endangering life. That should be the aim

of ships for owners that have a particular concern

management. These yards, specially selected

of everyone involved in the international ship-

for the disposal of their elderly ships, in compliance

by Eckhardt, differ from others as they:

operating sector.

with the Hong Kong International Convention for

• Are of new construction and functionality,

the Safe and Environmentally Sound Recycling of

meeting the standards of the western world.

Ships, 2009. Although this legal framework has

• Have a lay-out and technical infrastructure

successfully. Eckhardt Marine GmbH has been

not entered into force since its adoption on 19th

for the segregation and optimum sequence

able to exploit its genuine knowledge and deep

May 2009, Eckhardt Marine GmbH has already

of green recycling procedural steps.

experience of the ship recycling industry and is



adjusted the standard of its Green Recycling Scheme to comply with this convention. The technical procedures cover the following issues:

on board. • The analysis and examination of hazardous materials in accordance with MEPC (Maritime



a range of resources to meet social and quality standards to help preserve the environment. That is what sustainable development is all

management system.


of the workforce. • Provide appropriate accommodation and healthcare facilities for personnel. • Employ specially trained staff for safety procedures and accident avoidance. • Maintain





dependability and efficiency.

Environmental Protection Committee of IMO)

Contact: Briac Beilvert / Guenther Werle

A recycling plan

Managing Directors

• An appropriate removal and collection of

Eckhardt Marine monitors ship recycling projects

Eckhardt Marine GmbH

each type of hazardous waste for proper

in a very similar way to the supervisory process

Ballindamm 13

disposal or neutralisation in dedicated

employed for the construction of new ships.

D-20095 Hamburg, Germany

landfills or facilities.

Regular reports are made by Eckhardt Marine

Tel: +49 403281020

• A dismantling plan of the ship structure,

to the vessel owner, detailing the steps involved

Fax: +49 40335783

ensuring the implementation of safe labour

in the dismantling process from the inventory


179 (59) adopted 17/07/2009.


onward transportation in an advanced waste

code for the individual and collective safety

of the hazardous materials and substances


a prime example of a company bringing together

ships’ components made of hazardous

localisation, analysis and condition reporting


facilities for hazardous waste prior to

• Have strict adherence to a protective dress

these tasks encompasses identification,

Since 1999, Eckhardt Marine has handled more

• Have secure intermediate special storage

• A waste-management scheme for handling materials or substances. The scope of

competitive price.

theBaltic March 2010


Case Study: The Valles Group

The Valles Group Manages Fleet Safety and Efficiency with Applied Weather Technology’s BonVoyage (BVS) Software Background The Valles Group has been in the shipping business for nearly 100 years. Founded in Shanghai in the 1910s, Valles originally provided cargo liner services along the Yangtze River and Northern Coast of China. Over the years, the company has grown in size and scope and continues to expand its fleet. Now headquartered in Vancouver, Canada, today Valles owns and operates 12 vessels, including a fleet of two panama bulk carriers and ten Aframax tankers. Valles vessels are chartered by major companies including ExxonMobil, ENI, NYK and Chevron. Situation – A Need for Better Weather and Voyage Routing Information For many decades, captains piloting Valles vessels only had access to paper-based, non-graphical weather forecast reports, which made charting voyage routes, optimizing fuel efficiency, and staying abreast of shifting weather forecasts a challenge. As a result, some vessels incurred heavy weather damage and delays. In addition, every extra hour at sea due to inefficient routing added to fuel costs. With Valles’ commitment to providing safe and cost-effective shipping services, the company wanted more accurate weather and routing information. In 1999, Valles’ Director of Fleet Safety, Oscar Pinto, viewed a demonstration of AWT’s Bon Voyage System (BVS) and became convinced that he had found the right solution to the problem. Solution – Valles Group Deploys BVS Across Entire Fleet “I immediately recognized the value of BVS and realized that it would not only be a tremendously useful tool for our company, but would also change our entire industry,” said Pinto. “We initially tested BVS on two of our vessels.” BVS was extremely well received by the captains and crew of the test vessels. “They found that BVS’ graphical, colorful and simple interface made weather patterns much easier to see, simplifying voyage planning and routing. The ability to interact with data was a refreshing change and they all agreed that the system was very user-friendly.” The Valles team also appreciated the accurate, up-to-date BVS weather reports. Within a month, the company decided to deploy BVS across their entire fleet. “The 16-day forecasts and consistent updates give us the ability to map our routes safely and more cost-effectively,” Pinto explains. “BVS is much more than a weather forecaster; it’s a voyage planner. We view it as a useful resource to our business.” BVS is also installed on every new ship that Valles acquires.

“With BVS’ timely weather forecasts, our ship captains plan routes that use the winds and currents most favorably, thereby ensuring the quickest, safest and most costeffective routes. As a result, our fleets use less fuel, which reduces costs while making the least possible impact on the environment.” – Oscar Pinto, Director of Fleet Safety, The Valles Group

Results – Valles Group Saves Time and Money with BVS “With BVS’ timely weather forecasts, our ship captains plan routes that use the winds and currents most favorably, thereby ensuring the quickest, safest and most cost-effective routes. As a result, our fleets use less fuel, which reduces costs while making the least possible impact on the environment,” says Pinto. Pinto, a former captain whose leadership role with Valles now keeps him mostly shore side, also uses BVS’ powerful fleet management tool to monitor the positions and routes of Valles’ entire fleet to ensure vessels are operating efficiently and safely. “It gives us complete visibility into all of our shipping

activities going on around the world,” he says. “It provides us the big picture and helps us manage and monitor overall performance of our fleet.“

AWT Worldwide Headquarters 158 Commercial St. Sunnyvale, CA 94086 U.S.A. T: +1 408 731 8600 F: +1 408 731 8601

AWT New Jersey T: +1 609 275 5488 F: +1 609 750 9793

AWT Europe T: +44 1224 857920 F: +44 1224 582168

AWT Germany T: +49 4182 287132 F: +49 4182 287133

AWT Hong Kong T: +852 2865 0282 F: +852 2865 0228

AWT Shanghai T: +86 21 6103 4824

AWT Korea T: +82 2 739 3464 F: +82 2 739 3404

AWT QuWeather T: +82 2 737 7007 F: +82 2 737 8521

Copyright © 2010 Applied Weather Technology. All Rights Reserved.

Green Trend in Shipping: Reducing Fuel Costs and CO2 Emissions with Weather Routing Technology With pressure increasing on the shipping industry to curb CO2 emissions, many companies are exploring innovative new breakthroughs--everything from installing sails and scrubbers to building more fuel-efficient vessels. But what many organizations might not realize is that weather routing and voyage optimization technology available today can enable them to immediately reduce carbon emissions, at a relatively low cost compared to other measures. In this article, Skip Vaccarello, CEO of Applied Weather Technology (AWT), explains why weather routing and voyage optimization makes financial and environmental sense.

one voyage, for a service that typically costs $1,000 or less. For a company that has 70 ships in its fleet, it’s easy to see the return on investment. It makes financial and environmental sense. This is much more cost effective than alternatives that require ship modifications, additional equipment and significant capital outlay. Q: How does weather routing help companies save fuel on voyages?

Q: To what extent can companies reduce carbon emissions from shipping by using technology available today?

A: To ensure on-time arrivals, Captains often take a get-there-as-fastas-possible approach at the start of the voyage, and then slow down at the end. Accurate and effective weather routing diminishes the need for Captains to hurry up on the early portion of a voyage to create a cushion should they encounter foul weather. In fact, AWT data shows that with better weather routing and a clearer picture of likely sea conditions, Captains can smooth out their speed regimens and capture fuel savings in the process.

A: Det Norske Veritas (DNV) recently concluded that by using current technology alone, shipping could realize a 30 percent decrease in greenhouse gas emissions by 2030.

With BVS, they can plan courses designed to help them arrive on time and conserve fuel by traveling at more constant speeds, which benefits both the ships’ engines and the environment.

Among the technologies mentioned that could reduce carbon emissions were those that help companies identify more efficient routes—this is one of the biggest green trends in shipping today. AWT, which routes greater than 30,000 voyages per year, more than any other company, specializes in providing these technologies via our shore-based routing services and our BonVoyage (BVS) on-board software.

Q: What are the other main benefits of weather routing and voyage optimization?

Q: How much money, fuel and carbon emissions can companies save using ship routing and voyage optimization?

Q: What are the latest technological advances included in BVS?

A: Various studies by the International Maritime Organization (IMO) and its consultants from 2000 to 2009 have reported that significant gains in fuel and emission reduction can be achieved by weather routing. The range reported is 2 to 4 percent. In AWT studies, fleets have realized savings of 5 to 10 percent. We estimate that if every ship routed by AWT closely followed our recommended routes, our customers could achieve a combined fuel savings of approximately 450,000 metric tons of bunker oil per year. At current fuel rates, that translates to potential cost savings of over $180 million per year and reduction in CO2 emissions of approximately 1,400,000 metric tons annually, the equivalent of removing 320,000 cars from the road for a year. Q: Don’t companies have to spend a small fortune to significantly reduce carbon emissions? A: Actually with AWT’s voyage optimization software and routing services, companies can save money by reducing fuel consumption, which results in the reduction of carbon emissions. The cost of routing is very low compared to the amount of money that fleets can save via the reduction of fuel. It’s clear how they can achieve a significant return on their investment. Here’s one example: A ship might use as much as $500,000 of fuel to cross the Pacific. AWT can demonstrate how we can save between 5 and 10 percent of that fuel. That’s $25,000 to $50,000 saved on just

A: In addition to saving fuel, money and CO2, we find that fleet managers use our services and software to enhance safety and prevent heavy weather damage.

A: BVS recommends routes intended to minimize fuel consumption, fuel costs and CO2 emissions given the vessel’s target ETA. BVS is the only on-board software to offer 16-day forecasts updated four times daily. And BVS utilizes high resolution Naval Coastal Ocean Model (NCOM) current data, which allows ship Captains to view real-time analyses and forecasts of ocean current conditions at a quarter by quarter degree. This can contribute to fuel conservation by enabling Captains to make betterinformed decisions, particularly on coastal routes, about whether to sail with or avoid specific currents. In addition, resonance alerts warn Captains of the potential for severe motions. Q: Why should the shipping industry choose AWT over competitors? A: Exceptional service is one of the main reasons customers choose AWT. AWT is the largest company that exclusively specializes in providing the shipping industry with voyage optimization services and on-board software. Unlike competitors, AWT goes beyond delivering weather data by developing technology innovations in voyage optimization from its Silicon Valley headquarters. These innovations give Captains and fleet managers advanced yet easy-to-use tools for enhancing safety, reducing fuel and CO2. Q: How can companies get more information about how AWT can help them reduce carbon emissions and fuel costs, and enhance safety? A: To get more information, they can go to or call +1.408.731.8600.

Intersleek 900 ®

Better for the environment Better for your business Intersleek®900 is the latest generation foul release coating for vessels over 10 knots. Offering proven fuel savings of up to 9%* and corresponding reductions in greenhouse gas emissions. It’s biocide-free and has high volume solids, which means less paint, less waste disposal and lower VOC emissions at subsequent drydockings. Isn’t it time your most precious assets were under our protection? To find out more visit * Depending on application and in-service conditions

Corporate viewpoint International Paint Ltd

How a coating can cut carbon and cost I

nternational Paint Ltd is part of AkzoNobel, one of

This “Seatrade” Awards winning and Queen’s

Lines, proves the savings. “We had monitored the

the world’s leading industrial companies and the

Awards winning, biocide free, silicone based

Prem Pride’s fuel consumption closely,” explains

largest global coatings manufacturer.

technology works on a foul release basis by providing

Mercator Lines’ Mr Amit Agarwal, general manager.

According to a leading shipping operator,

a very smooth, slippery, low friction surface onto

“At corresponding engine speeds, the vessel was

“Coatings are an integral part of today’s vessel

which fouling organisms have difficulty attaching.

consuming up to 6% less fuel, depending on weather

operation, helping maximise ship performance and

Any which do attach, normally do so only weakly

conditions, after the application of Intersleek®900.

preserving assets”.

and can usually be easily removed. With proven

We originally calculated projected savings based on

Vessel fuel efficiency and environmental impact

average fuel savings of 4% and a corresponding

a bunker price of $450 and found we were saving

is an area where coatings have and will continue to

reduction in emissions, Intersleek®700 has become

nearly three tonnes of fuel a day. And whilst bunker

have a significant role. With an estimated 350 million

firmly established as the industry benchmark in

prices continue to climb, our payback period just

tonnes of fuel consumed annually by the world’s

silicone foul release technology.

gets shorter. The added advantages of no biocides,

fleet, there is an ever-increasing focus on shipping’s

In 2007, we introduced the next generation of

environmental footprint. At this level of consumption

foul release technology, Intersleek®900. This is a

the industry currently emits some 1.1 billion tonnes

new, unique patented biocide free fluoropolymer foul

The owner went on to apply the coating on

of CO2 and over 10 million tonnes of SO2 annually.

release coating. Fluoropolymer chemistry represents

a larger hull area on board the Prem Divya in

reduced drydocking times and lower CO2 emissions convinced us that this is the technology we need.”

The industry has tried to find viable means of

the very latest advances in foul release technology,

June 2008. Amit Agarwal said: “We continued to

energy saving for decades. One way to do this is

significantly improving upon the performance of the

closely monitor the performance of both vessels

through the use of antifouling coatings. Antifouling

best silicone based system, Intersleek®700.

in service. Whilst we continue to be happy with

coatings are used to improve the speed and energy

Exceptionally smooth with unprecedented

the performance of Intersleek®900 on the Prem

efficiency of ships by preventing organisms such as

low levels of average hull roughness combined

Pride, we fully expected an improvement on the

barnacles and weed sticking to the underwater hull,

with excellent foul release capabilities and good

Prem Divya, as we had increased the areas of the

restricting the ship’s movement through the water.

resistance to mechanical damage means that,

underwater hull coated to include the flat bottom.

If ships didn’t use antifouling coatings, fuel

for the very first time, all vessels above 10 knots

The detailed monitoring of the performance of

consumption could be increased by as much as

can now benefit from foul release technology, eg

the Prem Divya has confirmed that we are now

40% – with current fuel use consequently rising

bulk carriers, tankers, general cargo vessels and

achieving up to a 9% reduction in fuel consumption

by 140 million tonnes per year to a total of almost

feeder containers. Intersleek®900 also provides

under comparable conditions.” Fuel savings of this

500 million tonnes per year. It is estimated that

excellent performance on high speed/high activity

order add up to an environmental benefit equivalent

antifouling coatings provide the shipping industry

scheduled ships. The low surface roughness, good

to almost 11,000 tonnes less CO2 emitted, 100

with annual fuel savings of $70 billion and reduced

coefficient of friction and advanced surface energy

tonnes less SOx and 200 tonnes less NOx.

emissions of 450 million tonnes and 4.2 million

characteristics improves fuel efficiency and reduces

With an Intersleek®900 track record of over

tonnes respectively for CO2 and SO2 annually.

slime build-up on container vessels, reefers, LNG/

300 ships, conservative estimates indicate that the

LPG carriers, cruise liners, ro-ros and vehicle

technology is already delivering, in comparison to

International Paint has supported the shipping industry with pioneering antifouling technology


SPC antifoulings, reduced CO2 emissions of almost

In terms of reduced CO2 emissions and

600,000 tonnes per year. If every ship in the world

copolymer (SPC) antifouling in 1974. Since then, our

improved fuel efficiency, Intersleek®900 offers

was coated with Intersleek Foul Release technology

contribution to the fuel and emissions efficiency of

predicted savings of up to 9% in comparison to

the potential exists for additional, annual CO2

the global fleet has been hugely significant. In 1996

biocide containing SPC antifoulings. The potential

emission reductions of 90 million tonnes.

we introduced Intersleek®425, the first commercially

exists for even greater savings in comparison to

available biocide free foul release technology for

controlled depletion antifoulings.

since the introduction of the first self polishing

fast craft, and in 1999 introduced the revolutionary Intersleek®700 for deep sea, scheduled ships.

A recent example on an aframax tanker, the

For more information, visit:

Prem Pride, belonging to Mumbai-based Mercator

theBaltic March 2010




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First-tier functionality, right out of the box.

Marine software

Maximising profitability O

wners and operators are increas-

they can make the most of the potential that the

ingly seeing the potential of the right

products offer.

Triple Point itself is set to considerably expand its range of shipping-specific solutions, having

The last year has seen the introduction of

announced in January that it had acquired

several new products at AXS, in particular the

competitor, Softmar, a provider of software

While the shipping industry had a hard time

development of a series of tools for S&P brokers,

solutions for commercial chartering and vessel

last year, several service providers found that

This is now in place, and has already been sold

operations covering the broad ranges of

there was a silver lining. An increasing focus on

to six shipbrokers, including one Japanese client,

commercial activities for shipments of dry, tanker,

cost control was leading owners and operators

says Fletcher.

gas, and chemical cargos. The acquisition of

software to improve management of everything from finance to routes.

to focus on solutions that allowed them to make

Another major innovation over the last year

Softmar allows Triple Point to optimise freight

the most of the money and information available

has been the introduction of an online help

management in its core markets, including crude

to them. Providers of everything from routing

system. While dedicated support teams are

oil and petroleum products, chemicals, metals

software to chartering software and financial

available round the clock, it has cut down a great

and mining, agriculture, and food and beverage.

analysis tools have benefited as a result.

deal on calls to this desk, making it swifter and

“Supply chain management has historically

easier to resolve problems in the office without

been about transparency, automation, efficiency

outside help.

and cost reduction, all of which are necessary,

AXS Marine

There are also some ‘interesting projects’

but not sufficient to optimise profitability,” said

Global chartering software and database provider

going on in the tanker and dry sectors. “There

Peter F. Armstrong, president and ceo of Triple

AXSMarine recently opened an office in London

are lots of opportunities we have yet to explore,”

Point Technology. “With the need to manage

to expand its services to a wider range of clients.

says Fletcher. “It’s all about focus; if you try and

sharp commodity price volatility, supply chain

The new office, to be based at 60 Cannon

cover all the areas at once, you’re not going to

solutions must be market-based and provide

Street, will manage all of AXSMarine’s commercial

be as successful.”

analysis and risk management tools to best

activities for the EMEA markets. The office will be

determine when to source, how to move, whether

headed up by Hugo Rousse, who has relocated

to store, and when to hedge using financial

Triple Point/Softmar

derivatives. Through the acquisition of Softmar,

“From our experience in Singapore, we

As cost and risk management become an

Triple Point’s ability to provide market-based

realised that being based in the same city as your

increasingly urgent issue for shipowners, an

supply chain solutions, including freight rate risk

clients is a major advantage,” says Steve Fletcher,

increasing number are becoming aware of the

management, is unmatched.”

commercial director of AXS Marine. “We want to

need for specialist software to deal with these

All 45 Softmar employees from its chartering

be the go-to providers of databases and tools for

issues. In December, risk management specialist

and vessel operations business have joined Triple

the shipping industry, and the only way we can

Triple Point Technology announced that Chiquita

Point, and Softmar co-founder, Michael Lolk

do that is to have a team in place at the heart of

had purchased its suite of software for hedging its

Larsen, has been named Triple Point’s managing

that industry.

bunker fuel expenses.

director of chartering and vessel operations.

from AXSMarine’s Paris office.

“London is a very important shipping centre,

Chiquita’s core ships utilise some 300,000

Softmar’s other co-founder, David Marais, will

for example the majority of the world’s broking

metric tons of bunker fuel annually. A 1% move in

retain Softmar’s ship brokering business under a

houses are either headquartered here or have

the fuel rate would represent a $1.3 million impact

new and separate entity.

a presence here. Our London team will add

to its cost in the absence of hedging – in 2008,

that crucial hands-on element our clients

the average price volatility of bunker fuel was

organisation like Triple Point gives Softmar the

need, whether it is on-site training, contract

over 12%. According to Triple Point, Chiquita’s

immediate resources and reach to accomplish

discussions or just keeping them abreast of

move to using this software is part of an ongoing

its goals of continued growth and support of

latest developments or new products we may be

trend in which industries such as shipping are

existing and new clients,” said Mr Larsen. “This

launching,” he emphasised. Above all, Fletcher

moving towards the same sophisticated solutions

is an exciting time in the commodity and freight

says, AXSMarine wants to make sure that existing

that have previously been used by energy and

markets, and becoming part of Triple Point is the

clients are aware of what is available, and that

commodity trading companies.

perfect next step in Softmar’s maturation.”

theBaltic March 2010







Marine software AtoBviaC For effectively managing voyage costs and times, however, it is not only risk management software, but route management, that plays a vital part. Shipowners are relying more and more on realistic distance tables to calculate the most efficient routing, says Bill Morris, Director of AtoBviaC. “The industry needs to know what these distances are, to have confidence in their computation and to have immediate access to the calculation of new distances and routings whenever they are required,” he said. Unfortunately, many of the commercially available route management solutions are not accurate, he continues. Some suggest routes that, whilst feasible on paper, cut straight through traffic separation schemes, oil fields or dangerously shallow water. Others are not updated frequently enough to take changes into account. For example, the distance between Rotterdam and Port Said has increased by 3 Worldscale points due to changes in the navigational requirements. The key to AtoBviaC’s success has been the

Bill Morris, Director of AtoBviaC

emphasis on safely navigable routes that are continually updated. As of this year, that also

Using an accurate set of distance tables not

board ship. “In the past the industry has shown

means the introduction of a new feature that

only creates consistency between the back office

a reluctance to invest in quality software and to

allows users to select routes avoiding the Gulf of

and the bridge, but can help avoid performance

an extent this reluctance still exists,” he says.

Aden. The 2010 Worldscale tanker flat rates have

disputes between charterers and owners, points

“Our problem is competing with people whose

been calculated using round voyage distances

out Trevor Hall, also a director of AtoBviaC. Whilst

distances are impossible to achieve.”

taken from tables developed by AtoBviaC,

the software is currently primarily used ashore,

At a time when accuracy and accountability is

highlighting the trust the shipping industry has in

the company is trying to demonstrate to owners

increasingly important, perhaps that is an attitude

the accuracy of these tables.

and operators that it also has applications on

that has begun to change.

theBaltic March 2010


Corporate viewpoint SpecTec Group Holdings Ltd

SpecTec turns 25 years old And IT in shipping becomes an adult


pecTec turns 25 this year. It is a quarter of a century. When SpecTec was started, Microsoft had just released v.1 of Windows, and Internet, Google,

mobile phones, iPod were words not yet created. SpecTec was started with the vision of providing the Maritime world with a tool which would simplify coping with maintenance and purchasing of spares on board. It was as simple at this. In 1985, the Maritime world had very few rules: SOLAS, STCW 74, LL66, MARPOL 78 … that was basically it. Yet, the SpecTec people had created a software, called AMOS, which would help the crew in knowing how many spares they had on board, would tell them which maintenance was overdue, and later would allow them to easily create a requisition to be sent ashore and be processed to become a Purchase Order. The initial years were so tough that SpecTec risked bankruptcy many times; we were creating something completely new, with the challenge that AMOS had to work over satellite lines when e-mail did not exist, and we had to tell crews what a PC was, as in those times PCs were, simply told, an unknown element of life

SpecTec ceo, Giampiero Soncini

on board. Our first PC has a machine with an incredible 640Kb of RAM, and a whopping 20Mb

good dose of luck too.

more regulated, and we need to become more

hard dtisk, a storage far superior to whatever

Many companies were started roughly in the

serious and professional in the way we conduct

had been available until that time. Yet, no-one

same period, or even before: NSOS, Consult

our business. Shipping people are at times

really knew what to do with PCs. Compaq was

AS, Isherwood, NTC to name the few that come

too complacent of the “heroism” behind our

created by some IBM engineers because IBM

to mind. All these companies, and the ones

activity. We work endless hours, travel endless

thought that PCs were only toys and would have

which came after, Marinor, Rast, MMS, and

trips to the most unknown edges of the world

never succeeded in the “real” work world. It took

many more, have all shared the same sweat and

(Caripito ring a bell to anyone?) to cope with the

vision, guts, stamina, energy, and intelligence to

tears, and at SpecTec we respect all of them and

adventures of our work. But around us the world

create a company like SpecTec in 1985. And it

all the ones who worked with them.

has changed. Yes, a company will always need

has taken a tremendous amount of work and

But now times have changed enormously.

heroes to perform heroic tasks, but only when,

sacrifice to make it work for 25 years … and a

The shipping world is becoming more and

once every now and then, heroism is needed.


theBaltic March 2010

Corporate viewpoint SpecTec Group Holdings Ltd If this becomes a daily feature, then it simply

kept at ransom by some pathetic buggars to

and dearly. Too many think that software should

means that the company lacks the know-how

which the word “pirate” is an honour, simply

be cheap without understanding what it implies

and the organisational skills to work the way it

because our weak European Governments lack

to build good software which has to cope with


not the guts (they never had them), but the

all the complexities of shipping life. Let’s get

So it is not time anymore for people setting

interest in saving these people because, after

serious, guys.

up their IT company to provide the “ultimate”

all, they are simply some sailors, coming from

software for shipping, because there are simply

nowhere and disappearing into nowhere.

From the outside it is easy to see the good companies: they are efficiently organised. And

too many in the market, and simply too many

If shipping is treated this way, while we are

I see some of even the largest ones which are

have disappeared without a trace in the last 25

the blood and the veins of the world, it is simply

enormously inefficient; they know how much

years, leaving the users with empty pockets and

because we often (not always, often) fail: we fail

money they spend and maybe even where

useless software. It is time for consolidation,

to act like a serious industry, we fail to show

they spend it, but have no idea why they spend

for coordination of activities, specialisation of

data, records, analysis, structure, organisation;

it. This is what a product such as AMOS can

products, aggregation of forces. And it is time

we fail in becoming modern and efficient in the

do; there are two, three, maybe four software

for the shipowners and shipmanagers to get

way we work.

systems in the market which can do it as well.

serious about IT in shipping. If anyone expects to

Information Technology is not THE key to

The other companies should focus on service

buy something valuable when paying one or two

efficiency, it is only a tool. But it is a key element

and consultancy, and not in developing another

thousand dollars (or even less!!) for a software

in organisation nowadays. To the inefficient


which is supposed to control EVERY possible

people I often meet in my worldwide tours, I

click-and-it-does-all” software …

activity on a ship, this anyone should get out of

ask if they would fly on the planes of an airline

the industry and try to fix bicycles instead.

managed the way they manage their ships.

I hope that in my next 25 years in SpecTec (and maybe here some of my staff will faint …)

Shipping is a vital industry. It transports

So I take it upon myself to call the IT industry

I will see the changes which I have highlighted

99% of the oil worldwide, and probably 90% of

in shipping to become more serious, to follow the

above. We all need this. We all work hard in

any other goods. It has a very small amount of

changes which the shipping world is facing and

shipping, we all face the consequences of this

incidents compared to the goods it transports.

help it get a better image. And I call on shipping

hard work. It is time we got recognition from the

It is now much more organised and efficient,

companies also to pay more attention to IT as a

whole world for what we do and how we do it.

and much more regulated. Still, it is incredibly

vital tool to conduct business. Anywhere in the

But if we want this to happen, we have to

vilified in the eyes of public opinion. If a ship is

land-based industry world an IT manager who

invest in organisation, in transparency, in abiding

in distress, like the Prestige, it finds not a single

would propose the ceo of his company to build

by the rules of corporate governance seriously

port to welcome it to safety (10 years ago, like

the company’s own software rather than buying

and not hiding behind magic pipes. Otherwise

now). If drugs are found in a box of bananas

one of the many existing ERP systems would

there would be no difference between the pirates

out of 150,000 embarked on board, the Master,

be fired without mercy. In shipping, too many

attacking our ships, and us.

Chief Officer and Bosun are arrested and kept

still think they can build better software without

in jail for one year until they become insane,

even realising what it means in terms of Cost of

without the shipping world staging a boycott

Ownership. Too many think that software which

Giampiero Soncini,

of the country which allows such a thing to

comes free of charge is a good deal, without

Chief Executive Officer

happen. And to date, close to 300 sailors are

understanding that the price will be paid later,

The SpecTec Group

SpecTec Managers at the Sandefjord meeting in 1993, a moment which defined the shape of SpecTec forever

theBaltic March 2010


Corporate viewpoint Triple Point Technology

Freight rate volatility churns like a raging sea Those caught off guard get a proper burial at sea


alk to an old sea salt and he’ll give you

markets, the level of complexity grows each day.

Point to provide not only an integrated solution

a list of superstitions as long as his

Having advanced systems to identify, measure,

for chartering and vessel operations, but the

beard about how to survive at sea. Any

and manage freight rate risk is increasingly

only commodity and trading risk management

number of factors can court disaster,

important, especially when measuring the

platform that pre-integrates chartering and vessel

including having flowers or a priest on board. On

impact of freight rate variability on cash flow

operations. This unmatched level of enterprise

the other hand, pour wine on the deck for good

performance. As the freight derivatives market

integration provides companies with the ability

luck during a long voyage or follow the adage,

grows in sophistication, so does the range of

to profitably manage a comprehensive Source-

“Sunday sail, never fail,” and you’re pretty much

strategies used.

to-Cash P/L and gain competitive advantage.

assured a smooth voyage.

Additionally, companies wishing to operate

Those of us conducting business, however,

with a complete picture of enterprise position

are well-served not to rely on superstitions

and exposure must manage freight market risk in

and gut feelings to navigate the volatile

tandem with the risks associated with chartering

sea. Controlling freight market risk is a key

and vessel operations. Principals with large

Triple Point’s integrated solution for chartering and vessel operations

component to managing enterprise risk and, in

fleets must keep tight control of tonnage and

Triple Point’s commercial operations solution,

turn, operating a profitable supply chain. The

cargo commitments and be prepared for likely

Softmar Chartering and VesselOps™, provides

most successful companies will be those best

changes in tonnage demands. An integrated

the leading software for owners, operators, and

prepared to identify risk and model its dynamics;

solution for chartering and vessel operations

charterers to comprehensively manage freight

measure and quantify the impact of risk across

provides real-time information exchange and

risk, chartering, and vessel operations on an

the enterprise and on financial results; and

enables companies to make better and more

integrated platform.

manage and mitigate risk with an integrated

proactive freight decisions.

platform that enables better and more proactive decision-making.

Chartering and VesselOps™ provides a

Yet industry surveys show that many

global view of vessel movements, availability

companies are still attempting to manage












existing and



spreadsheets. This creates information silos and

enables the commercial maritime community to

Integrating freight management with chartering and vessel operations

presents greater risk of human error.

make more informed and proactive decisions,

With roughly 90% of the world’s traded goods

information is the difference between sinking

by volume transported by sea, the ability for

and swimming.

In today’s volatile shipping markets, complete transparency and fast access to actionable

streamline day-to-day operations, and protect cash flow performance.

Freight Risk Management

shipowners, operators, and charterers to

The Freight Risk Management solution analyses

control the cost and risk of transporting freight

position, including vessels, Freight Forward

Triple Point Technology acquires Softmar

Agreements (FFAs), Contract of Affreightments

managing supply chain margins and enterprise risk.

– including freight rate volatility – is a key to

(COAs), cargo bookings, cargo relets, and

Triple Point’s recent acquisition of Softmar –

options. The advanced solution graphically

Whether you run a trading desk, are a risk

the premier provider of software solutions for

displays a consolidated view of total physical

manager, trade FFAs, or invest in the shipping

commercial maritime operations – enables Triple

and paper freight risk exposure, mark-to-market


theBaltic March 2010

Corporate viewpoint Triple Point Technology sion of when to hedge.

analysis, and long/short position. Additionally,

maintained manually or retrieved directly from

the solution provides a monthly breakdown of

the vessel reporting system. A profit and loss

A company’s ability to successfully manage

total days and value exposure, coupled with

summary is automatically maintained, showing

commodity and freight volatility – from source to

yearly and grand totals for the entire exposure

the variance between actual and estimated

cash – ultimately determines the profitability of

period selected. The system also manages

charges. The system displays a detailed

the supply chain.

bunker exposure by combining the exposure

breakdown of individual charges with one click.

“Softmar’s technology was developed for big

from physical contracts and bunker swaps.

Voyage results are updated in real time as new

shipowners, operators, and charterers. Because

Customers can calculate option premiums

information is entered.

its client list includes global and extensive ocean

specifically aimed at the Shipping Industry and

freight providers, the acquisition by Triple Point is

perform mark to market based on the next open

a boon to supply chains that need to monitor the


entire raw material, source-to-deliver process, including ocean freight.”

Freight derivatives, including FFAs, bunker swaps, and options, are primarily used

—AMR Research

by shipowners and operators, oil and trading companies, and grain

Only Triple Point preintegrates commercial operations with commodity management

houses as tools for managing freight rate volatility. The





enables traders to monitor portfolios in real time as


daily prices and forward

VesselOps into Triple Point’s

curves are updated. The





Chartering trading


and and


recalculates the forward

provides an all-encompassing

book value and provides

view of the enterprise. The

an expected P/L based

sophisticated suite of multi-

on forward expectations.

market commodity and risk

Customers are able to record



management solutions provides


a diverse set of industries with the

efficiently manage settlement.

advanced systems and risk-analysis models, including VaR, Greeks, and


stress tests, to manage overall exposure.

Chartering and VesselOps provides the

With a single click, a customer gains a

most comprehensive system to manage the

view of physical position, financial position, and

pre-fixture activities of a commercial operation,

combined exposure. Having the ability to turn

including voyage estimating, cargo manage-

layers of commodity trading and freight data into actionable information drives holistic portfolio

bination of cargoes, vessels, load, and discharge

The profitable supply chain – successfully managing the source-to-cash P/L

operations on a voyage and/or Time Charter

With the critical requirement to manage

areas of enterprise risk — market, operational,

(TC) relet basis. The solution is optimised for

sharp commodity price and freight volatility,


dry cargo, gas, tanker and parcel operations

supply chain solutions must be market-based

implementing Triple Point’s integrated platform

and handles consecutive voyages and voyage/

and provide business intelligence and risk

for commercial operations and commodity

TC combinations. Chartering and VesselOps

management tools at each touch point in the

management, companies are able to manage

allows unlimited numbers of ports and cargoes

supply chain. Companies wishing to succeed

enterprise risk holistically; a key requirement for

per voyage and displays all key information

require solutions to profitably determine: when

smooth sailing in rough times.

on a single screen. Unlike time-intensive and

and where to source raw materials; the cost of

error-prone spreadsheets, the advanced system

transporting them; whether to store; processing

automatically analyses the potential profit or loss

and conversion costs; and the marketing of

of market or controlled business before making


ment, and vessel management. Chartering and VesselOps analyses any com-

an agreement to transport cargo.

management and offers huge competitive advantage. Freight rate volatility affects all key credit,




Woven into each supply chain touch point is commodity volatility at the component level:

Vessel Operations

power to run plants, freight rate volatility and

Chartering and VesselOps effectively manages all

fuels to transport goods, emissions, foreign

post-fixture activities of a commercial operation

exchange, and packaging, to name a few – all of

and enables operators to keep track of day-

which must be carefully managed in a Source-

to-day operations: arrival, departure, loading,

to-Cash P/L to provide an enterprise-view of

Tel: +1 203 291 7979

discharging, bunkering, and disbursement

physical and financial exposure. Underlying all of


accounting. The operation’s schedule can be

these supply chain activities is the critical deci-

theBaltic March 2010


Corporate viewpoint AXSMarine

AXSMarine Work faster and more efficiently with information at your fingertips


ime is definitely money in today’s fast

we have a simple vision: allow each of our clients


moving shipping industry and being

to bring their own personalised order to a vast

research and more, let users run their day-to-

able to gather, assimilate and act on the

array of data,” says AXS Marine’s CEO, Fabrice

day businesses more effectively.

right information at the right time can be

Demichel. “Our products are designed to bring

The type and nature of decision-critical data

crucial to ensuring success over failure as well as

all information pertaining to a particular shipping

varies across the different sectors of shipping,

a healthy profit margin.

deal together in one place, organised in such a

and AXSMarine has specific tools covering the

way that an individual or group can quickly and

principal five: AXSDry, AXS-Alphaliner (container),

effectively reach a decision,” he adds.

AXSTanker, AXSS&P and AXSOffshore.

But in this internet age, the problem we all face is having access to too much information:




we need to know quickly, what is important and

With one click to connect to AXSMarine, users

AXSMarine now provides the required

what can be rejected. We can also find ourselves

access a complete catalogue of online analytical

expertise to shipping companies and shipbrokers

wasting time trying to locate and retrieve that

programmes such as voyage estimators, freight

to correctly configure MS Outlook/Exchange with

precise piece of data that we actually need.

matrices, distance calculators, vessel position

the correct common folder functionality and filing

That is where AXSMarine comes in. Its

or cargo order listings, commercial and sales

needs previously only made available in bespoke

services are designed to take advantage of what

advices, valuations, and market and statistical

messaging systems. In addition, AXSMarine

is now referred to as ‘Web 2.0’, the second

reports. These programmes can be tailored to

has developed a state-of-the-art address book

generation of internet-based communities which

the individual user’s requirements and have strict

(AXSAddressbook), far outweighing anything

aim to facilitate collaboration and information

data management “rules” imposed for privacy,

available from MS. They also deploy and develop

sharing between users.

enabling in the right instances, users to share

MS plug-ins for various parts of the AXSMarine

some or all of the data with colleagues and/or

product suite.

AXSMarine produces a complete set of interactive,



tools and databases for shipping industry

clients – or even with all AXSMarine subscribers. Stephen






professionals. AXSMarine’s online tools are

commercial director. He draws attention to a

AXSDry is a complete set of online tools and

secure, fast and easy to use, and the databases

principle that underlies AXSMarine’s product

databases designed for the dry bulk shipping

they source are always up to date. Because

developments: “It is essential that users have

industry. Hundreds of operators, brokers,

they are internet-based, they are available from

their own critical data at their fingertips and

charterers and financial institutions save time and

any computer, anywhere; there is nothing to

are able to manipulate this data as required.

make better decisions by easily interacting with

download or install.

AXSMarine’s ‘view-and-do’ interfaces make

data from the suite’s powerful assessment and


it simple to perform numerous searches

analysis tools. AXSDry enables its users to have

professionals can transform their massive

and calculations with changing variables; for

a complete view of the dry bulk shipping market

overload of raw data into useful, searchable

example, by creating standard assumptions in

— without having to sort through thousands of

information. As a result, they can work faster,

voyage calculations; vessel position and cargo

e-mails, or manage multiple programmes on their

manage more efficiently and make faster

search criteria can also be saved and reused

computer desktops. AXSDry offers subscribers

decisions. All of AXSMarine’s products enable

over and over.”

a wide variety of features, including Vessel




users to securely and selectively manage,

Manager, Cargo Manager, Voyage Calculator,

share, receive and publicise data with affiliates

How does it work?

FFA Manager, Fixtures, Distance Calculator,

or partners. Users decide which information

AXSMarine has teams of product specialists

Freight Matrices, Port Library and MOPS (Marine

to share, and with whom, by simply clicking

collecting raw data from reputable sources.

Operations Performance System).

on easy-to-recognise symbols. AXSMarine

AXSMarine subscribers also add their own

employs state-of-the-art security to provide the

information – always privately, and sometimes

AXSTracker facilitates the updating of incoming

highest integrity concerning the capture and

to share with other members. AXSMarine’s

tonnage e-mails without having to read them

maintenance of data.

purpose-designed algorithms transform this

all. Also available in an MS Outlook plug-in

All companies users’ privacy is guaranteed

raw data into databases of searchable and

is a facility where the original e-mail can be

at all times. Permanent availability is ensured

sortable information. These databases, when

saved and retrieved from the vessel database.

through rigorous redundancy and back-up

used and combined with their high-performance

In this way, a broker can transform thousands

routines. “In a complex and changing market,

online tools such as vessel searches, voyage

of positions into his own personal, searchable


theBaltic March 2010





Corporate viewpoint AXSMarine file. AXSDry’s MOPS was launched in January

may take advantage of AXSMarine’s reselling

brokers and charterers to stop making all their

2009. With it vessel operators can enter voyages

agreement with LR Fairplay. Data migration from

calculations by hand or Excel. Instead, they can

and issue access to their agents to their online

prior systems is also available.

now use AXSTanker’s calculators to perform secure and simple T/C and freight calculations,

Statement of Facts manager, thus finalising the port expenses directly in their own database


automatically linking in information from the

saving re-keying of critical information.

Developed together with two high profile

suite’s vessel, distance, port DA, draft, bunkers,

shipbrokers, AXSOffshore has taken AXSMarine

and indices databases.


further into the realms of a common platform

Many shipbroking, chartering and operating

which is database independent. Stephen J.

AXSMarine in Asia

organisations are considering, or have already

Fletcher explains: “In the offshore supply vessel

AXSMarine has been present in Asia since it

migrated to, an MS Outlook exchange messaging

industry there are many different kinds of vessels

opened an office in Singapore in early 2007.

platform. About 95% of required functionality,

which cannot simply be categorised like one

Incorporated in 2008, AXSMarine Pte. Ltd.

which has only been available in industry-specific

does dry bulk or tankers by size and dwt, or

manages product promotion and provides

message system offerings, is configurable off-

as container vessels are by size and teu intake.

dedicated user and technical support for

the-shelf within MS Outlook. The remaining

There are many specialised vessels and users


functions are supported by developing specific

need to be able to manage a subjective view of

region. Since January 2009, existing product

plug-ins. One previously unresolvable issue has

the vessel’s category.”

enhancement responsibilities have also been





been how to manage company-wide contacts

AXSOffshore comes with a pre-populated LR

migrated to the Singapore office. AXSMarine SA

in MS Outlook – which does not provide an off

Fairplay database but it is commonly known that

in Paris focuses on new product development

the shelf company address book. AXSMarine

this will only cover around 60% of the technical

and technologies. Stephen J. Fletcher relocated

has developed its AXSAddressbook to function

needs of the company, therefore AXSMarine

to Singapore in early 2008 and performs the

seamlessly with MS Outlook exchange server,

will add any required technical and commercial

company’s commercial directorship’s role from

completing the tool set to confidently move from

information prior to the client’s commencement.



technical staff during the 4th quarter of 2008

AXS-Alphaliner is an enhanced version of

and early 2009, forming a cohesive team of

Free Distance Table

Alphaliner, which joined forces with AXSMarine

eight people, adding to its team of 12 in Paris.

Bucking the market trend, AXSMarine is now

in 2005. AXSMarine’s powerful data sorting,

“Singapore is quickly becoming a hub for all

providing the industry with a free distance table

processing and sharing technologies transform

sectors of the shipping industry,” says Stephen.

from its public website. Stephen J. Fletcher

Alphaliner’s rich databases into true productivity

“We have established ourselves here to be

draws attention to the fact that there were a

tools. AXS-Alphaliner provides its subscribers

closer to our current and future customers in this

couple of ‘free’ alternatives available on the

with a unique picture of the liner industry,

exciting and fast-growing region.”

market which began charging last year. “Our

unparalleled in its accuracy. Members benefit

Seeing is believing for AXSMarine customers:

distance table has been integrated within our

from features such as Vessel Fixtures, Sales

contact the company to benefit from a free trial

products for more than five years and it has

& Orderbook, forward open Vessel Positions,

subscription to AXSDry, AXS-Alphaliner, AXSS&P,

never been our intention to charge for the

and Vessel Descriptions, as well as daily

AXSOffshore, AXSTanker or AXSAddressbook.

service,” he says. Over 6,000 individuals have

news updates, searchable news archives, a

subscribed to this free service since it was

weekly newsletter and a whole series of very

launched at the beginning of June 2008.

detailed market reports and statistics. AXS-

industry-specific messaging to an MS Outlook exchange environment.

AXSMarine added sales, support and

Alphaliner is now fast becoming the shipping


industry’s standard database from which supply

AXSS&P is the first AXSMarine product to

forecasting and predictions are made. Their

maintain the common platform theme, but

Alphaliner Monthly Monitor was launched in May

AXSMarine Headquarters

this time without providing a sharing capability

2009, providing a detailed statistical view of key

80 rue Taitbout

between different clients. Encompassing all of

container market indicators.

75009 Paris FRANCE

their standard search and database features and

Tel: +33 1 53 43 05 70

many more, AXSS&P allows users to override


technical specifications, add their own vessels,

AXSTanker is a set of up-to-date knowledge

AXSMarine Pte Ltd

incorporate their own proposal templates, and

databases and high performance interactive

10A Trengganu Street

importantly the system was designed with full

tools designed for the specific needs of

Singapore 058464

integration to MS Outlook, allowing users to add

competitive tanker brokers. Several hundred

Tel: +65 6225 3115

e-mails and attachments directly to vessels in

individual shipbrokers use the AXSTanker suite

the database.

to indicate the positions of some 8,000 ships,

AXSMarine Limited (London)

Conversely, users may retrieve e-mails and

update tonnage, prepare position lists, or consult

60 Cannon Street

attachments directly from the AXSS&P database

the tanker register, port database and distance


– ultimately reducing the need to search and

tables. The exclusive membership of tanker

Tel: +44 207 002 1089

search e-mail archives. Clients may choose

brokerages votes to approve the admission

which technical registry database(s) they wish

of any new applicant. The recent and much-


to subscribe to and AXSMarine will incorporate

lauded additions to AXSTanker are AXSTanker

MSN Messenger:


and Gas Calculators, which are tools allowing

Yahoo! Messenger ID: axstanker




theBaltic March 2010


Ship finance

Credit crunch hits home Trust was a commodity in short supply at the Ship Finance Forum in Amsterdam, reports Helen Hill


estoring trust between the maritime

only that it had a more modern fleet – the banks

done deals, leaving the yards in deep problems.

community and the banks was the

themselves had seen their credit profile change,

Yards were hurt and desperately worried about

theme of the recent annual Mare

yet the owners were the ones paying for it.

where the cash is going to come from and if

Forum Ship Finance Forum, but par-

owners will let orders slip, he stressed. And if

ticipants left with the distinct feeling that there is

they do renege on deals, who will pay for the

Yards fear default

work in progress? “Are European owners going

Tineke Netelenbos, president of the Royal

Clarksons managing director, Martin Stopford,

to prove trustworthy enough?” he asked.

Association of Netherlands Shipowners (KVNR)

gave a thought-provoking speech demonstrating

Stopford said generally, the tanker sector

and a former Dutch transport minister, pointed

there is also a distinct lack of trust when it comes

was not as bad as other sectors, partly because

out in her opening speech that “trust comes on

to the shipyards’ view of owners. Referring to

of the phase-out of the single hulls. But there

foot and leaves on horseback”. She called on

recent trips to Asia, he said there were real

was no doubt that the dry bulk and container

the Dutch government to consider a temporary

heartfelt worries that western owners would

sectors face massive over-supply.

suspension of loan repayments for struggling

walk away from what the yards thought were

still a long way to go.

shipowners, similar to measures put in place by the Italian government. Chiara de Poli, an Italian chemical tanker owner, operating out of the Netherlands, backed the idea. But the many Dutch banks present showed little enthusiasm. Banks said they prefer to look at cases on an individual basis rather than take a blanket approach to the matter. De Poli also made sure that bankers heard the message that the banks themselves seemed to show little trust in shipowners. She said there was a terrific amount of bureaucracy nowadays, with the company having to spend significant amounts of management time on unnecessary paperwork every three months, even though the owner is a well-established customer. Over-regulation of the banks was mentioned several times. Hugo Modderman of DVB Bank said that German banks could not do business because the regulator is taking up so much time with constant demands. George Gordomichailis, shipowner, said because of state intervention German banks were only in the business of saying “no” at the moment. He said while the owners’ risk profile had not really changed –

Lender confidence is at a low


theBaltic March 2010

Ship finance Over-supply takes hold

interest, he told delegates. The industry should

tough times ahead. Owners want more support

John D’Ancona of Howe Robinson said 2010

try to work together to solve this problem. “If

from banks but banks think shipping risk needs

would certainly be a year when the pain of over-

they do not, then the ‘Black Hole’ could last for

to be repriced.

supply is felt. Even if more scrapping takes place

five or more years...”

and if it happens at a younger age, this would

And banks believe they are facing more risky

Addressing the issue of trust, Hubbard said

markets and they have to be more wary about

that it is very difficult to do so after all the parties

who they lend to. Taco Van der Mast of NIBC

Nicholas Hubbard, managing director of

had let each other down so badly. “Can we

Bank, stressed that it was wrong to try and solve

Galbraith’s Ltd, presented a similarly gloomy

trust the judgement of the management of

problems caused by lack of equity by using

picture in the container sector. Describing the

liner companies, who almost all either over-

senior debt. He also pointed out that one reason

box market as a “right royal mess”, Hubbard

ordered themselves or provided the charters for

banks were being so prudent was because they

said there had been horrendous 15% fleet

shipowners to finance an extensive newbuilding

are essentially “shell-shocked”.

growth projected for 2008 – most of which was

order book?

not solve the problem, he warned.

Van der Mast also pointed out that owners

delivered. “This was the first wave of SLCC –

“Can we trust the banks that continued to

had made huge amounts of money in the

Stupidly Large Container Carriers!” he claimed.

finance this ever-increasing orderbook that was

boom years. What had happened to this? An

But if this overcapacity wasn’t bad enough, it

clearly based on an excessively optimistic cargo

uncomfortable silence fell on the room.

was then followed by a further 12.8% growth

growth profile?

A leading Dutch shipowner, Coco Vroon, said

in 2009, with 11.3% and 10.1% increases in

“Can we trust the shipowners, or should I

in his mind the gap of trust was within banks.

the fleet for the next two years, “at a time when

say primarily the shipmanagers, who could not

Personal relationships are still important in the

demand had fallen off a cliff”.

resist the opportunity to take the commissions

industry and owners and bankers in the room

If the market is to return to some form of

and management fees from contracting huge

said they trusted each other on a one-to-one

normality, cancellation is the only way forward,

numbers of newbuildings of ever-increasing

level. But as Vroon said, above them is a gap

he urged. This was obvious but so far the yards

sizes?”, Hubbard asked.

within the bank itself, with the boards no longer

had held firm unless the ordering party had gone

trusting the lenders at the coal face. For the

bust or owners had managed to get out on a

moment, trust certainly seems to have galloped

technicality, he said. It is in the shipowner’s, liner

An industry in shock?

off into the sunset, although everyone was

company’s and bank’s favour to cancel, and it

Trust is clearly lacking. Owners and bankers all

too polite to say so. It may be a while before

could be argued that it was also in the yard’s

recognise the problem and expect increasingly

it is back…

Not quite an SLCC?

theBaltic March 2010


Ship finance

Where’s the money? Ship finance is still available under certain circumstances – but there are no easy answers


an an owner get funds to finance

Traditional sources

bridge the newbuildings on order. We don’t see

a new ship in today’s market? The

Any light on the horizon for traditional bank

a queue of new banks wanting to enter shipping.

answer, according to Janos Koenig,

funding? “There is some easing of credit but far

Talk of Chinese banks stepping in is rife and

managing director of London-based

from enough to cater for the needs of the industry.

there have been a number of well publicised

financial consultants Eurofin, is yes. But it is

However, transactions that are supported by

transactions but whether the Chinese banks will

a highly qualified yes. “There are some banks

Export Credit Guarantees are still available,

actively support foreign owners who have no

lending some money to some owners,” he says.

but here, of course, the banks are taking

financing in place, or allow the shipyards to use

“Those owners who have committed facilities

State risk, not shipping risk,” explains Koenig.

their deposits and then support local shipowners

are getting funds, albeit either in a reduced

“Some new projects may attract financing from

to build up the Chinese fleet, is open to question.

quantity or at a higher price, because the loan

governmental or quasi governmental banks and

In the US there have been some well publicised

to value ratio is no longer what it was. This is

institutions, and there is evidence that Chinese

bond issues recently at very high coupons. And

perfectly normal and understandable behaviour

banks will provide funding to international owners

that will be the key, high returns will always find

by the banks. If you are looking for new money

where Chinese newbuildings are involved, but

some money, somewhere.”

then you need to be an established company

a good corporate and transparent structure,

Koenig explains that mezzanine financing

and an existing core and profitable client of a

solid financial status and good reputation are

could be useful and grow in today’s conditions.

good bank. Plus you need a lot of equity to

essential. Again in southeast Asia there is some

“Mezzanine financiers can obtain mezzanine

invest before the bank will part with anything,

anecdotal evidence that regional banks may be

returns for what has been considered as senior

and you need employment, a good corporate

able to fund regional projects. In other instances,

lending in the past,” he says. “In general, the

and transparent structure, solid financial status,



overall remuneration including fees, spreads,

a good reputation and a willingness to offer the

markets can fall within the lending parameters

and equity participation will have to produce

banks ancillary business such as swaps, bunker

of specialised institutions such as EBRD. And

yields in excess of 10% for the financier.”

hedging, M&A business or significant deposit

there are a few commercial banks that are still

Looking to the future, Koenig is not over-

balances to increase the returns. Balance sheet

liquid for special cases such as target sectors

optimistic in the short term. “For as far as we can

lending, if not dead, is a dying breed.”




in emerging markets, but these banks have the

see ahead credit will remain tight and there will

Koenig says for the relatively few deals being

pick of available transactions and the loan costs

simply not be enough money available anywhere

done today, loans are between 40% and 60%

are high. Overall, the total availability of funding

to meet the demand for all the new ships which

of today’s valuation. “Tenors are also shrinking,”

barely scratches the surface and falls short of

are still being built,” he says. “But who knows,

he continues. “We have seen tenors reduced

the known requirement by a very long way.”

Goldman Sachs sees world growth at 4% plus,

to below 10 years for newbuildings albeit with

and in a shorter time than we can see now, we

longer profiles. Margins in general are north of

may see much softer lending terms. In today’s

250 basis points and fees 100 plus, which does

Outside the box

fragile, volatile economic environment, where

not create huge overall problems in today’s low

What about new sources of funding, coming

counterparty risk has increased tremendously,

interest environment. As for the start-up owner,

in to fill the gap left by shipping banks with no

the ship financing landscape has changed

they can no longer get off the ground without a

credit? “There has been a lot of talk about new

dramatically. Shipowners and ship financiers

lot of equity.”

sources and peripherally they do play a part,”

alike need to think outside the box.”

says Koenig. “However, they can certainly not satisfy the demand for funding required to

theBaltic March 2010


Geographical focus Latin America

Stage set for recovery in 2010 Almost all Latin American economies have suffered as a result of the global recession, and this has adversely affected regional trade with the rest of the world. There are signs, however, that the coming year will see a sustained recovery in export and import cargo flows


ccording to the latest figures produced

The region’s mining and oil sectors fared the

Latin America and the Caribbean. The region’s

by the UN’s Economic Commission

worst, with the value of exports dropping by

economies are estimated to have contracted by

for Latin America and the Caribbean

over 42% in the first nine months of last year.

around by 1.8% last year compared to 2008,

(ECLAC), the total value of exports

Exports of manufactured goods, by contrast, fell

with GDP per capita falling by about 2.9%.

from Latin America and the Caribbean fell by

by around 25%, while livestock exports dipped

24% in 2009 compared to the previous year, as

by 18%.

Economic performance is mirrored by cargo throughput at the region’s main container ports.

a result of the global economic crisis, while the

According to figures from the Association of

value of exports from the region contracted by

American Port Authorities (AAPA), container

around 25%. Moreover, the region was hit by

Pace of recovery picks up

throughput at ports in Central and South

a slump both in export prices and volumes, a



America increased from 16.4 million TEU in

combination which, ECLAC says, has not hap-

recovery will be quicker than it expected just

2005 to 27.2 million TEU in 2008, a rise of 66%

pened since 1937.

a few months ago, and the commission now

in just five years. While final year statistics for

While these figures are alarming, ECLAC

projects that regional economic growth will

2009 are not available as yet, it is likely that

does see some positive trends. In particular,

be around at 4.1% over the coming year. The

they will show a double-digit rate of contraction

the organisation points out that exports and

commission anticipates positive growth rates

compared to 2008.

imports fell even more sharply, by 31 and 29%

for most countries, but suggests that Brazil will

As an indication of this negative trend,

respectively, in the first half of last year, indicating

experience the fastest rate of economic growth

the region’s biggest container port, Santos in

a relative recovery in the second half of 2009.

in 2010, at 5.5%, followed by Peru and Uruguay

Brazil, recently released 2009 figures and these

This trend, it suggests, is the basis for a much

(5%), Bolivia, Chile and Panama (4.5%) and

showed a drop in throughput of 16.8% to 2.23

better outlook in 2010.

Argentina (4%).

million TEU, from 2.67 million TEU in 2008. Other




According to ECLAC, the regional economic

While generally upbeat about prospects for

container ports in the region are likely to have

recovery in the latter part of last year was largely

2010, the commission expresses doubts about

experienced similar, and possibly even higher

due to a rise in commodity prices affecting

whether the recovery is sustainable in the longer

rates of downturn as a result of the slump in

exports of copper, zinc, oil, wheat and soya.

term, without structural changes to reduce

international trade.

Furthermore, Latin America benefitted from

dependence on external markets. “The worst

Indeed, the port authority of Buenos Aires

strong demand from China in the second half

of the crisis is behind us. The motors of growth

has reported that container volumes at its

of 2009 for a range of goods, including iron ore.

have been turned on again, but we don’t

terminals slumped by over 25% in the first 11

The economic downturn has hit trade across

know how long the fuel will last,” says ECLAC

months of last year to 0.83 million TEU, from

executive secretary, Alicia Bárcena.

1.12 million TEU in the equivalent period in

Latin America, but some countries have suffered more than others. For example, while exports

2008. Meanwhile, in the Peruvian port of Callao,

from Venezuela fell by around 42% in 2009, Chile

container traffic levels were down 12% in 2009

and Mexico experienced a 22% contraction, and

2009 - A grim year

at 1.08 million TEU compared to 1.12 million the

Central American countries outside of Mexico

The global economic crisis put an an end to

year before.

recorded only a 6% fall in exports.

six consecutive years of economic growth in


theBaltic March 2010

Geographical focus Latin America Investment prospects

Manila, which has interests in facilities in Suape,

TCP may soon face local competition, as

Longer term prospects for Latin American ports

Brazil; Guayaquil, Ecuador; and Buenaventura in

the Uruguayan government is now looking at

are rated highly, however, and container volumes

Colombia. The company has, moreover, recently

developing a second container terminal in the

are expected to recover strongly in 2010 in line

been named as the preferred bidder for a terminal

port and has indicated it will open a new tender

with economic growth. As a result, investment in

concession in the key Mexican port of Manzanillo.

this year. Potential bidders are expected to

regional port infrastructure seems unlikely to be

The new three berth facility will have a depth

include HPH of Hong Kong and APM Terminals.

derailed by the global crisis.

alongside of 16m and will be capable of handling

Not all investment projects in Latin American

about two million TEU a year, doubling the port’s

container ports involve global players, however.

existing throughput capacity.

In Valparaiso, for example, the local terminal

One of the biggest investors in Latin American ports at the present time is DP World, which is cutting back spending in some areas of the

operator, TPS, announced in January that it

world, but not in Latin America. The group

would be investing in capacity to accommodate

is, for example, making a major commitment

Lines expand capacity

larger vessels. This project, which will primarily

to Embraport, Empresa Brasileira de Terminais

The world’s second container shipping line,

involve dredging three of its berths from 12 to

Portuários, a terminal complex which is being

MSC, is also extending its container terminal

14 metres in depth, should be finished by April

developed near to Santos in Brazil, in partnership

portfolio through investment in Latin America.

2010. Since 2000, TPS has invested around

with a local company called Odebrecht.

The company has a 50% stake in the port of

$80 million in various projects which have helped

The first phase of Embraport is scheduled

Navegantes in Brazil, which was almost certainly

make Valparaiso one of the leading gateways for

to be completed in 2012, at which point the

the fastest growing container terminal in the

containers and general cargo on the west coast

terminal will have a throughput capacity of around

region last year, with throughput up 73% to

of Latin America.

one million TEU. When fully developed the new

413,000 TEU in 2009, and this facility is to be

terminal will be able to handle 1.8 million TEU

expanded to keep pace with demand.

annually, making it one of the biggest gateways for regional container traffic.

In addition, the MSC affiliate GTL-Europe

Bulk cargoes give Santos a lift

Terminal is backing a new development in Santos,

Last year the port of Santos in Brazil posted a

DP World is also investing heavily in the port

called Brasil Terminal Portuario (BTP). This is due

highly satisfactory cargo throughput result overall,

of Callao in Peru, where its new terminal at Muelle

to be operational in 2012 and will involve around

given the prevailing economic circumstances.

Sur is set to open in the first half of this year,

$680 investment in a terminal with a 1.1 million

The 82.8 million tonnes handled by the port, the

around 12 months ahead of schedule. Maersk

TEU annual capacity, which will be equipped with

biggest in Latin America, compares with 77.8

Line is reported to have been lined up to be the

12 super-post-panamax gantry cranes. Alongside

million tonnes in 2008, an increase of 2.2%.

terminal’s first key customer.

this, BTP is to develop a new liquid bulk terminal

DP World Callao will incorporate 650 metres

capable of handling 1.2 million tonnes a year.

This rise in cargo traffic was due to an unexpected upturn in both dry and liquid bulk

of quay and will be able to handle post-panamax

The development of container facilities in

traffic. Whereas the port authority was originally

vessels. The terminal will have an annual capacity

the Uruguayan port of Montevideo has largely

forecasting a 7% drop in dry bulk goods and

of around 850,000 TEU in the first phase, and a

been the preserve of TCP, a subsidiary of the

a 3% fall in liquids, the final 2009 year figures

maximum of around 1.4 million TEU in the second

Antwerp stevedore, Katoennatie. The company

showed an upturn of 12 and 10.6% respectively.


has recently opened up a new quay and taken

This was, however, offset by an 11.4% drop in

delivery of three new ship-to-shore container

general cargo traffic, much higher than initially



Another global terminal operator with a significant Latin American portfolio is ICTSI of

Movements of sugar represented one of the biggest dry bulk increases seen at Santos last year, with almost 14 million tonnes handled, 36% more than the year before. Shipments of maize were up 48%, to 3.5 million tonnes, and salt by over 19%, to 0.8 million tonnes. Wheat traffic was down, however, by over 11%, at 1.2 million tonnes. The port of Santos has completed a number of infrastructure projects over the past year, most notably dredging the depth of water in the main navigation channel to 15 metres to facilitate access by larger ships. Looking to the future, the port authority has recently announced that a joint venture between Louis Dreyfus and Cargill has been named as the preferred bidder for a new grain terminal concession, called Tegran. Final negotiations are now understood to be in progress with regards to this project, which would enhance the port’s dry bulk cargo handling capacity quite significantly, through the development of a 40,000m2 site in the port. Guayaquil, Ecuador

theBaltic March 2010


Port focus Middle East

Mixed messages from Middle East box ports A

s the well-documented financial prob-

optimism generated by a likely growth in imports

out that Jebel Ali handled significantly more

lems of the emirate of Dubai have

is underpinning ongoing investment in container

containers in the second half of last year than in

demonstrated, the Middle East is cer-

port infrastructure, although some planned

the first, indicating that a recovery is underway,

tainly not immune from the effects

projects have been put on hold, temporarily at

which bodes well for 2010.

of the global economic crisis. However, the


A second phase of expansion at the Jebel

performance of ports across the region suggests

Dubai’s Jebel Ali port remains the Middle

Ali container terminal was completed in the

that the impact on the region’s containerised

East’s biggest container gateway by some

first quarter of 2009, taking annual throughput

cargo flows has been uneven.

considerable distance, but last year experienced

capacity at the port to around 14 million TEU.

Longer term prospects for the Middle East

a downturn, after over 13 years of constant

As a result, Jebel Ali has more than enough

port sector are still rated highly though, especially

growth. Jebel Ali handled around 11 million TEU,

capacity for the immediate future and plans

with oil prices on the rise again. This trend will

6% down on 2008, which was perhaps a better

for further phases of development at the port

give a boost to consumer spending and also

performance than many analysts predicted.

have consequently been put on hold, pending a

government-backed infrastructure projects. The

Furthermore, the port operator, DP World, points

recovery in the market.

The red Sea Gateway terminal in Jeddah began cargo operations in December

theBaltic March 2010


Port focus Middle East Instead work continues on another UAE

container terminal expansion last year and now

project in which DP World has an involvement,

has an estimated annual throughput capacity

the development of a multipurpose port at

of 5.5 million TEU, which should be sufficient

Taweelah in Abu Dhabi. Progress on this facility,

for the short term at least. The next phase of

which includes a major new container terminal,

development at the container terminal, which will

rapidly, the UAE east coast port of Fujairah

had been delayed by technical issues but is now

involve the creation of three more berths, adding

is poised to raise its profile in the liquid bulk

reported to be on course to become operational

a further three million TEU of capacity, will not

sector through the development of new oil

in 2012.

now proceed until industry prospects are more

tanker handling facilities. Four additional oil

positive, the Port of Salalah has confirmed.

berths are under construction and are due

In contrast to DP World, the Sharjah-based terminal operator, Gulftainer has announced that

Salalah does, however, have a number

throughput at its UAE facilities – Khorfakkan

of non-container port projects in hand. For

Container Terminal (KCT) and Sharjah Container

example, Salalah Methanol Company is due to

Terminal (SCT) – increased by nearly 10% to 2.75

start operations soon and the port has plans

million TEU in 2009.

Fujairah ups bulk investment While its container business is shrinking

to be commissioned in June this year. These will total 1500m in length and will have an 18m draft, allowing the new berths to handle

to develop a new terminal specifically for the

loaded VLCCs. The throughput capacity of

This impressive performance in a difficult

company which should be operational by early

the four oil berths, which are each equipped

year, when many container terminals throughout

2012. In another key project, Tata Steel of India

with eight loading arms, will be around 25

the world saw substantial downturns, perhaps

plans to start exports of limestone through the

million tons a year.

reflects the fact that KCT in particular has the

port in 2011, and a dedicated loading facility is to

reputation of being one of the region’s fastest

be constructed on the new general cargo berth

and most productive terminals. This has led to

to handle this traffic.

a number of carriers increasing their use of the

One of the Middle East ports that has been

port for “hub and spoke” type transhipment

most affected by the recession is Jeddah in


Fujairah is also expanding its dry bulk handling capacity, largely to meet the requirements of its important aggregates trades. A second bulk loader should be

Saudi Arabia. Over the first nine months of 2009,

operational by June 2010 and this will have

Over the past year, Gulftainer has continued

container throughput at Jeddah was 2.28 million

double the loading capacity of the existing

to expand its terminals. KCT received six new

TEU, 9% down on the first three quarters of

loader in the port. Although Fujairah’s dry

ship-to-shore gantry cranes in 2009 and a 400m

2008, and the full year figures are expected to

bulk business was affected last year by the

long new berth, with a draft alongside of 16.5m,

show a similar level of contraction.

regional downturn in construction, the port

is now almost ready and will be able to handle container vessels up to 13,000 TEU size.

Considerable investment has recently been made in Jeddah, with DP World taking delivery

points out that its major markets are Qatar, Kuwait and Bahrain, all economies which are

At the Omani port of Salalah, container

of six new quayside gantry cranes for its Jeddah

volumes have also remained relatively buoyant.

South terminal in the last quarter of the year.

Throughput in the first half of last year was

Moreover, in December the new Red Sea

The main infrastructure development

around 7% up on the equivalent months of 2008,

Gateway Terminal, built on a greenfield site in

completed in 2009 in Fujairah was the

and this is reported to have been sustained in

Jeddah, handled its first vessels. The new facility

commissioning of 900m of new general

the second half of 2009 as well, as a number

has raised capacity in Jeddah by around 1.5

cargo berths. Since completion, these have

of new liner services were attracted to the port.

million TEU annually. Competition in the port

Local traffic from the adjoining free zone has also

is sure to increase as a result, and this may

been used for conventional general cargo

picked up strongly.

raise efficiency levels still further, strengthening

The Port of Salalah completed Phase II of a

Jeddah’s position as a Red Sea trade hub.

KCT has a reputation as one of the most efficient terminals in the region


theBaltic March 2010

expected to recover relatively quickly.

handling, but also to accommodate vessels requiring alongside repairs.

Cargo focus Iron ore

Iron ore trades in China’s hands? China remains crucial to the global iron ore trades, driving investment in new tonnage and port facilities. Market developments in 2010 may show whether it is the Chinese importers, or the world’s leading mining groups, that really call the shots


here is no doubting where the focal

play. If that happens, then, while seaborne iron

point of the world iron ore industry is

ore volumes are still likely to rise over the course

right now and will continue to be for

of the coming year, the increase may well be less

the foreseeable future. China is the

than many bulk shipowners are hoping for.

world’s economic powerhouse – a fact that has

If the big three mining groups, BHP Biliton,

been brought into even sharper relief by sluggish

Rio Tinto and Vale, do seek to use their market

economic recovery in the world’s developed

power to push up prices, China may also start

economies – and surging steel output from

to cultivate alternative sources of supply, to

the country’s steel plants is driving demand for

improve its relative bargaining power, including

imported iron ore.

Russia, Ukraine, South Africa, Chile and Canada.

According to data from Chinese Customs,

As these regions involve relatively long haul

China’s iron ore imports jumped by around 42%

ocean transportation, the impact of any sourcing

in 2009, to hit 628 million tons, compared with

changes on the bulk shipping market is not likely

444 million tons in 2008. The country’s biggest

to be too significant.

supplier of iron ore continues to be Australia, followed by Brazil and India.

Prices to rise?

Forecasts suggest Chinese steel output is likely to rise further this year, from a record 570

It has to be said that there is still a wide

million tons in 2009 to around 600 million tons

divergence of opinion within the market when

in 2010, and this trend will suck in more iron ore

it comes to likely iron ore price trends, and this

imports as well. However, the extent to which

reflects the volatility in the market over the past

this increased steel output will be translated into

year. In December The Steel Index (TSI) daily

higher seaborne iron ore volumes depends on a

iron ore reference price hit its highest level in

number of factors, most notably price.

12 months, reaching $107.40 per dry metric

At the time of going to press, sensitive

Capesize demand patterns are changing

discussions were reportedly underway between

tonne, having reached a low point of $76.10 in September.

the leading iron ore producers, including BHP

hike in benchmark prices compared with 2009.

Overall, the prevailing view within the market

Biliton, Rio Tinto and Vale SA of Brazil, and

(China was reportedly not being included in

is that iron ore prices will rise in 2010, having

Japanese steel companies. There is a suggestion

the initial talks after one of Rio Tinto’s Chinese

dropped back in 2009 as a result of the global

that an annual contract price agreed through

executives was arrested on “spying” charges.)

recession. The World Bank Commodity Price

these discussions may well be presented

Higher import prices might bring Chinese

Data Report in fact suggests that the average

to Chinese steel mills as a “fait accompli”,

domestic iron ore, which is of a lower quality to

iron ore price in 2010 could rise to its second

and  some analysts are  forecasting a substantial

that produced in Australia and Brazil, more into

highest level ever, behind only 2008.

theBaltic March 2010


to Key m ct ee opp ic t y or pr ou tun of r es fe ity sio llo na w ls

6th Annual


Shipping Summit Examining the latest opportunities and developments

International Conference and Seminar Tuesday 27th, Wednesday 28th and Thursday 29th April 2010 Helsinki Congress Paasitorni, Helsinki, Finland

£100 off for Baltic online readers, quote KT0111BOAD to claim

Event Highlights

New for 2010

• Implications of increasing Arctic development on security, sovereignty and the environment

• Two breakfast briefings focus on environmental developments and technical system designs

• Operational challenges: ice management, crew training and logistics

• Industry stakeholder panels analysing ice management and crew training

• Technical solutions and ship designs: • Speedy Business Card new designs and concepts for ice going Exchange ships, icebreakers and Arctic LNG • Choice of concurrent streams • Breakout sessions on key topics for for Arctic LNG, icebreakers and indepth discussion offshore

Pre-Conference Seminar Monday 26th April 2010

Understanding the Challenges of Arctic LNG Technical Innovations and Practical Solutions

Chairmen and speakers will include Keynote Speaker: Sergey Donskoy, Deputy Minister, Ministry of Natural Resources of the Russian Federation > Anders Backman, Rederi AB Transatlantic > Josep A. Casanovas, DG TREN, European Commission > Reidun Haahjem, GARD AS > Jan Fredrik Hammer, Beluga Projects (Norway) AS > Dr Mikhail Grigoriev, GECON > Professor Frédéric Lasserre, Laval University > Malcolm Lowings, Golder Associates > Wilhelm Magelssen, DNV > Mikko Niini, Aker Arctic Technology Inc > Capt David Snider, Martech Polar Consulting > Dr Kirsi Tikka, ABS > Professor Peter Wadhams, DAMTP, University of Cambridge

Sponsors and Exhibitors to date:

Supporting Organisations:

Registration Hotline: +44 (0)20 7017 5511 For more information and for the latest programme visit: Organised by:

This brochure has been produced using environmentally friendly paper sourced from sustainable forests and is chlorine free.

Cargo focus Iron ore It is against this background that there has been a significant increase in the use of iron ore

last October and will involve the movement of

tonnage will allow it to transport at least 70%, and

around 1.5 million tons of iron ore a year.

possibly up to 85% of Brazil’s iron ore exports. In

swaps (as reported in the last issue of The Baltic)

K Line has also signed two contracts with

a report last year the company suggested that,

as steel manufacturers, traders and mining

Rio Tinto, with a view to facilitating the latter’s

“Shipowners of capesize tonnage have to plan

companies seek to minimise their exposure to

increased iron ore exports to China. These

for a future where the iron ore trade from Brazil

price swings. TSI describes the growth in iron

involve an estimated shipment of three million

to China to a large degree is being industrialised

ore swaps using its index as “nothing short of

tons of iron ore a year through the charter of two

and has less impact on the spot market.”


capesize bulkers from 2011.

In September 2008 Vale had just three

One of the leading proponents of the iron ore

Rio Tinto has also entered into an arrangement

capesize bulkers in its fleet. Within the next two-

swap concept is London Commodity Brokers,

with NYK, this time with a 20-year contract

three years the company is forecast to control

which set up its London Dry Bulk (LDB) division

to transport iron ore from Western Australia

around 50 bulk carriers of various sizes. Vale’s

in 2008. This relatively new venture aims to

to China. Shipments will start in 2013 using a

emergence as a major provider of tonnage for

replicate London Commodity Brokers’ successful

250,000 dwt bulk carrier, and the anticipated

its own iron ore trades represents a big change

thermal coal trading model, which combines

annual volume is around 2.7 million tons. This

for the bulk shipping business, and will inevitably

both physical broking and swap products, in the

is the first long-term deal between NYK and Rio

have a significant impact on the short-term

iron ore sector.

TInto and also involves a three-year charter on a

charter market.

LDB’s Richard Herselman says: “Our focus is on developing the prompt physical iron ore

smaller 170,000 dwt bulk carrier that will start in April 2010.

Infrastructure expands

market, while broking an iron ore swap based

Last October another leading Japanese

on CIF China fines (62% FE). The two-pronged

carrier, MOL, signed an agreement with China’s

As well as having an effect on bulk carrier

approach has benefits, as the development of

Baosteel group aimed at strengthening their

investment patterns, China’s iron ore import

the physical iron ore market will add robustness

relationship, while in the same month becoming

needs are also behind some important port

to the swap market and facilitate liquidity in

the first overseas shipowner to sign a long-term

infrastructure developments. Iron ore shipments


iron ore transport contract with the Jiangsu

from Port Hedland in Australia are reported

The LDB approach appears to have already

Shagang Group of China. Under the terms of

to have increased by almost 23% in 2009

paid dividends, as the company claims to have

the latter deal, MOL will transport iron ore from

compared with 2008, and the port authority

taken up to 40% of the Singapore Exchange

Australia and Brazil for Jiangsu Shagang, under

has indicated that iron ore shipments could

(SGX) market in iron ore swaps based on the

a 10-year contract starting late 2011. A 207,000

double over the next three years, as BHP Billiton

TSI index. Mr Herselman adds: “The concept

dwt iron ore carrier is to be constructed at

expands its export activities. BHP itself is building

has generally been well received as companies

Japan’s Universal Shipbuilding Corporation for

two new iron ore berths in Port Hedland which

are looking for tools that can help them manage

the contract.

should be operational in 2011 as part of the

price risks. There are some parties in China

One of the biggest winners to emerge from

so-called RGP5 expansion project, while the

who do not want to see the development of

the burgeoning Chinese iron ore import trade,

port authority has plans to develop a further new

iron ore swaps, but markets evolve and we see

however, is South Korea’s STX Pan Ocean, which

facility, capable of handling 400 million tonnes a

the emergence of iron ore swaps in the Chinese

last September signed what is claimed to be the

year in the outer harbour after 2014.

iron ore trades as inevitable. Certainly if you look

largest consecutive voyage contract (CVC) with

Meanwhile, Vale has confirmed that it plans to

at the coal sector, no-one would want to go

Vale. This will see STX Pan Ocean transport iron

construct a fourth pier at the Ponta da Madeira

back to the days of fixed annual contracts only,

ore from Brazil to China in a 25-year contract

Seaport terminal in Brazil. Proposed investment

compared to the flexible trading arrangements

running from 2011 that is estimated to be worth

in the port is estimated at around $2.6 billion,

that are now in place, and in a few years time

around $5.84 billion.

making this probably the biggest current port

the iron ore market will be similarly won over,

infrastructure development in South America.

even in China.”

Vale also has plans to build distribution

Vale develops fleet

centres on Asia which will be run as “virtual

While signing contracts with operators like STX

mines”, enhancing its flexibility in servicing

Capesize forecast

Pan Ocean, and also with NYK and Star Bulk

markets that are long distances away from its

Whatever happens in 2010, there is no real doubt

Carriers in the past year, Vale’s main focus is

production facilities. In 2010 the company plans

that in the longer term China’s iron ore imports

on building up its own fleet of bulk carriers

to start construction of a distribution centre at

will continue to move upwards and the need to

to support the expansion of Brazilian iron ore

Teluk Rubia in Malaysia. This will include building

provide capacity to meet the country’s growing

exports to China.

a new terminal capable of handling vessels up

trade with Australia and Brazil in particular is

Vale has orders for 20 Very Large Ore Carriers

to 400,000 dwt and able to handle up to 30

increasingly underpinning demand for bulk

(VLOCs) in hand, including 12 400,000 dwt

million tons of iron ore a year in the initial phase,


“Chinamax” bulk carriers at Jiangsu Rongshen

with scope for expansion up to 90 million tons

Japanese owners are marketing hard in this

Heavy Industries in China, which are due to

in future. Operations are likely to start in 2013,

sector, as reflected by a number of significant

be delivered in 2011 and 2012. In addition,

Vale says.

deals which they have secured in recent months.

the company is reported to have purchased

In China, also, iron ore reception facilities

K Line, for example, has concluded a long-term

16 existing bulk carriers and oil tankers for

are being upgraded. As an example, the port of

iron ore transport agreement with the Anshan

conversion into ore carriers over the past 12

Qingdao has signalled its intention to build three

Iron and Steel group, based in Lioning Province,


new berths for iron ore traffic in the next two

to transport iron ore from Australia in capesize

The Norwegian broker Lorentzen & Stemoco

bulkers. The 10-year agreement commenced

has estimated that Vale’s investment in new

theBaltic March 2010

years. More Chinese ports are likely to follow suit.


Insurance news

Insurance parlance “Customary shortage” no excuse

carrier’s right in some jurisdiction to rely on

quality of bunker fuels are of vital concern. If

expressions such as ‘weight unknown’, or by

onboard fuel management goes wrong, there

The combined effects of a global economic

placing the ultimate responsibility for bill of lading

can be potential catastrophic consequences.

slowdown and rising commodity prices means

figures on the shipper – it is vital that shipowners

“Of equal concern is the impact on machinery

shipowners are increasingly at risk of claims being

ensure load-port draught and ullage surveys are

from the growing trend of slow steaming,

made against them for bulk cargo shortages,

as accurate as possible,” says Baker. “However,

now being strongly advocated by a number

even when they are within what is sometimes

as many mariners will note, determining the

of operators as the way ahead to combat

referred to as a “customary shortage”, according

quantity of bulk cargo loaded on board is more

high fuel prices until seaborne trade picks up.

to advice from the North of England P&I Club

of an art than a science.”

However, many large, high-speed diesel engines are designed to operate only at sustained high


service speeds.

“Cargo ‘loss’ due to physical changes such as evaporation can occur during a voyage,

IUMI faces up to slump

“In another area, underwriters, through

added to which are measurement errors at load

Marine underwriters are braced to tackle new

surveyors, need to monitor the standard of

and discharge ports,” says the Club’s head of

problems which are emerging as a result of

repairs carried out at yards which have been

loss prevention, Tony Baker. “Yet with reduced

the ongoing slump, said IUMI president Deirdre

equipped for new construction only but which

profit margins and larger and more expensive

Littlefield. While the surge of newbuildings is

are now desperate for work.

shipments, shipowners need to ensure mates’

one of the biggest challenges facing marine

“Laid-up ships is another worrying factor.

receipts and bills of lading are properly claused

insurers, others are a direct result of shipowners

Underwriters need to pay close attention to

– and have very good explanations and evidence

looking to cut operation costs. She identified

the various degrees of lay-up we are seeing,

for any differences between load and discharge

fuel management, along with ships entering or

including the conditions of cover for trading

figures – to avoid costly claims.”

emerging from lay-up, as two areas that could

for vessels which have been idle without being

The traditional notion of a “customary

cause particular problems. More than ever, the

deactivated, or just lying at anchor or drifting

shortage” first arose when cargo underwriters

IUMI president concluded, there is an acute

awaiting firm orders, often with minimum

applied a depreciation on their goods-in-

need for underwriters to focus clearly and

maintenance and prone to collisions or typhoon

transit policies and, though the figure was not

selectively on the risks presented to them, and


determined scientifically, it was used because

aim for a price that is realistic yet fair.

“Last, but by no means least, underwriters

it was convenient. Customs authorities around

She said: “Newbuild cancellations and

need to be careful as to whether onboard

the world compounded the misconception by

deferments are increasing, but a huge amount of

standards have dropped in the past year through

allowing other differences between received and

tonnage is still due to be delivered this year and

owners cutting corners to reduce operating

manifested quantities before imposing penalties.

next. Regrettably, we have not seen a significant

costs. The slump has helped the seafarer

“In reality, both US and English courts reject

leap in the scrapping rate of old ships, which is

shortage problem to some extent, but there is

almost beyond belief in the present crisis.

still an urgent need to recruit and train good

the idea of a customary allowance but accept there are a multitude of reasons why the quantity

“Understandably, owners and charterers

of bulk cargoes – both wet and dry – may be

are doing all they can to reduce costs. If

different,” says Baker. “It is generally possible

this means skimped maintenance and deferred

to defend small shortages due to physical

repairs, however, it’s bad news for insurers who

changes in the cargo during the voyage, but this

cover hull, cargo and liability risks. The situation

requires accurate records such as ventilation,

is compounded by the emergence of new

temperatures and bilge water removal during

problems. These are mainly technical but could

voyages as well as a detailed understanding of

lead to big headaches for underwriters.

what is accepted local industry practice.

“For example, fuel management is quickly

“While the law and Hague Visby Rules

developing into an urgent issue. The evermore

recognise the problem and afford the carrier

stringent requirements of MARPOL rules for

some leeway – for example, by upholding the

reducing emissions means that the type and


theBaltic March 2010

quality officers. Owners are under great pressure but training budgets should not be reduced.”

XL Insurance is a registered trademark of XL Capital Ltd and the global brand used by its insurance company subsidiaries. Ratings accurate as at 7 August 2009.

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Insurance ITIC

The devil is in the detail Andrew Jamieson of the International Transport Intermediaries Club explains why brokers should not assume that the main terms they have negotiated will automatically override those of the pro-forma charterparty


here is no point in reinventing the wheel.

case of the Lowlands Orchid, in which the

The owners argued that the exclusion of

In many negotiations, once the parties

negotiations for a voyage charter had culminated

“Super Holidays” was inconsistent with the

have agreed the main terms of the

in a fixture recap which included the following

phrase “SHINC” in the recap, but the court held

fixture, the remaining provisions will be


in favour of the charterers. The phrase “SHINC” in and

the recap was not in clear and direct conflict with


the words, “excluding Super holidays” in Clause

The parties may simply incorporate the terms of


63. The two provisions could “be read together

a printed form. More often, the parties have their


sensibly and in a commercially satisfactory way

own sets of standard clauses which they wish


with the former qualifying the latter”.

taken from a previous named charterparty. There are of course variations on this practice.








to apply to the printed form in addition to, or

The pro-forma was a previous charterparty

In the context of the agreement as a whole,

instead of, the terms of a previous fixture. There

used by the charterers in a fixture with a different

“SHINC” was qualified by a detailed set of

is obviously the risk that these clauses will clash.

owner. It contained the following provision:

provisions in the pro-forma, including those

ITIC dealt with a case where a charterparty

“Clause 63. Discharging Rate: 25,000 metric

providing that the rate of discharge only applied

form had been expressly altered to provide for

tons Sundays and Holidays included, excluding

per weather working day and that time did not

English law. Attached was a set of charterer’s

Super Holidays.” Other clauses in the pro-forma

count during shifting.

additional clauses that provided for US law.

provided that the rate of discharge only applied

The court reviewed some of the previous

The agreement was negotiated via a broker in

per weather working day and that time did not

cases in this area, including the 2008 case of

Norway and between owners and charterers,

count during shifting.

The Northgate, in which the recap allowed for the

both based in offshore jurisdictions. The problem

The charterparty was for a voyage to two

tender of a notice of readiness “whether in berth

was that there was a difference of $105,000,

named discharge ports. The vessel discharged

or not, whether in port or not…” (a clause that

depending on which law applied.

the balance of the cargo between 23 December

would include a ship at the outer anchorage).

It is generally understood by shipbrokers

and 28 December, 2007. The central issue in

The pro-forma provided that NoR could not be

that, where there is an inconsistency between

the arbitration which followed was whether time

tendered at the outer anchorage if there was

negotiated terms – such as the main terms in a

counted during the period of 24-27 December

room at the inner anchorage. The judge held that

recap and incorporated pro-forma or standard

24-27. The arbitrators therefore had to decide

there was no inconsistency, and the WIBON/

terms – the negotiated terms will prevail. But it is

whether, and to what extent, terms from Clause

WIPON provision in the recap could work where

important to remember that the circumstances in

63 of the pro-forma charterparty were part of the

there was no room at the inner anchorage.

which this rule applies are very limited.

contract. In essence, the issue was whether the

The lesson from these cases is that brokers

expression “excluding Super Holidays” should be

should not assume that the main terms they have

applied to the laytime calculation.

negotiated will automatically override those of

The court will give effect to the document as a whole. There is a danger in assuming that statements in the recap will automatically

If “excluding Super Holidays” did not apply,

the pro-forma charterparty. The priority given to

override provisions in the pro-forma covering

the owners were entitled to approximately

negotiated clauses is only in instances of clear,

the same topic. If two provisions can work

$142,000 in demurrage. If, however, the words

direct and irreconcilable conflict with the pro-

together, then that is how the court will interpret

did apply, then the charterers were entitled to

forma. The terms of fixture as a whole need to

the document. The rule giving preference to

$106,500 in despatch money. The arbitrators

be reviewed, otherwise the broker may find that

negotiated terms only applies if there is a clear

found, by a majority of 2-1, that the words

the devil is in the detail.

and direct conflict between the two terms.

“excluding Super Holidays” were part of the

This point was well illustrated by the recent

agreement. The owners appealed.

theBaltic March 2010


ACI’s 4th Maritime Risk Management Conference will address the most relevant risk management and safety issues currently faced by the maritime industry and examine how the industry is managing those risks to maintain onboard safety standards and drive profitability.

WHY YOU CANNOT MISS THIS EVENT Throughout the 2 days you will have the opportunity to hear industry peers and discover the hottest developments in ship management that includes: • • • • •

Understand better how to motivate crew to consistently carry out safer operations Determine how to restructure risk management strategies to deal with current perils Learn how best to deal with Safety Audits and Portside Inspections Recognise how changes to risk assessment practices due to the increased piracy threat will effect insurance policies Examine practical case studies regarding root cause analysis of shipping accidents

The current financial climate is forcing many to make cut backs but safety and risk management should retain the level of importance that keeps standards high and the frequency of accidents low whilst improving your long term profitability. By attending this conference you will understand the mechanism of risk management and know what is required to ensure consistently high safety standards and how to effectively manage modern risks in order to survive these times of economic strain.

28th – 29th January 2010 Conference

London, UK

What will you get from the 2010 event? Topic 1:

Topic 2:

Topic 3:




Topic 4:

Topic 5:

Topic 6:





Dr Gopinath Chandroth Inspector Of Marine Accidents Marine Accident Investigation Branch

Kuba Szymanski Risk Secretary General Elect InterManager Matt Dunlop Chief Operating Officer V.Ships

Captain Siva Ganesan Regional Manager For Fleet Operations AET Tankers UK Limited Karl Lumbers Loss Prevention Director Thomas Miller

…and many more…

Kuba Szymanski, General Manager, INTERMANAGER Nikitas Nikitakos, Head of the Department - Dept. Shipping Trade and Transport, University of the Aegean Karl Lumbers, Loss Prevention Director, Thomas Miller


Legal news

Legally speaking Odfjell “disappointed” by arbitration award

Wikborg Rein

Odfjell has expressed “serious disappointment”

law capability in the maritime sector with the

over the damages awarded to the company in

recruitment of three new partners to its London

a shipbuilding arbitration proceeding against

office. Simon Tatham has joined from Bentleys,

the Russian state-owned shipyard Sevmash.

Stokes and Lowless to lead the team, while

According to Odfjell, the company signed

Clare Calnan and Rob Jardine-Brown have been

contracts with Sevmash in 2004 for the delivery

recruited from Curtis, Davis Garrard.

Wikborg Rein has increased its global English

of 12 ships. The first ship should have been

The newly recruited partners join forces

delivered in September 2007. “By the time

with the existing Norwegian legal team based

we felt compelled to cancel the contracts, in

in London led by Henrik Hagberg, a partner

February 2008, by the shipyard’s own account

of Wikborg Rein who has wide experience of

the first ship was then delayed by 14 months,”

maritime law, international trade and marine

said a spokesman for the company.

insurance law. Hagberg says: “We are delighted to have recruited people of the quality of Simon,

The arbitration case was heard in Stockholm. Although Odfjell won its main point that Sevmash

Inline with its move to new offices within those of

Clare and Rob as part of our international

had been guilty of willful misconduct, damages

Reynolds Technological Inquiries at International

strategy to further strengthen the English law

were awarded at $43.76 million. “This figure is

House, 1, St. Katharine’s Way, London E1, the

capability that Wikborg Rein can offer, not only

but a fraction of the value of our lost bargain, and

Centre has just assumed a broader title: London

to Norwegian clients but also to international

of our trading losses,” Odfjell said. The cost of

Shipping Law Centre – Maritime Business

clients. By bringing into our London operation

the arbitration was apportioned 75% as against


an English law team experienced in litigation

The Centre hopes to be associated with and

and dispute resolution, we are responding to

to provide a London base for other maritime

client demand. This is a natural and important

institutions committed to the advancement of

development of the firm’s international shipping

Hill Dickinson

maritime education and research. “We blend

and offshore practice.”

Hill Dickinson has published a comparative

the specialist knowledge of judges, lawyers,

Wikborg Rein also plans to recruit further

guide to the clauses of the Hague, Hague-Visby,

commercial operators, academics, regulators,

English law expertise in Singapore, as part of its

Hamburg and Rotterdam Rules. The publication

insurers and ship professionals. By doing so,

expansion plans there.

is available for free download in pdf form from

we promote the talents which exist across our

industry,” said Dr Sheppard.


Simon Tatham concludes: “Wikborg Rein has had a London office since 1987 and is a leading

The Centre’s steering committee has been

player. We are convinced that the time is right

superseded by a council with more members

to develop an English law practice with London

London Shipping Law Centre

elected to represent the Centre’s widening

at its centre. This is a major step towards

The London Shipping Law Centre says that it

membership. Sir Anthony Colman is its new

providing a truly one-stop shop to the firm’s

will be placing even greater emphasis on its role

chairman in succession to Archie Bishop.

clients. That practice will integrate with the firm’s

in marine business, following its move to new

Inaugurated in 1997, the Centre has

English lawyers in Norway and Singapore to pool

premises in the City of London. According to

gained a reputation for addressing the legal,

resources and know-how, and in the process

founding director Aleka Mandaraka Sheppard,

regulatory, commercial and political issues

provide a unique international practice.”

the move to the City brings the Centre closer

affecting merchant shipping. It has contributed

to those using its services. The Centre is now

to multidisciplinary education and the pursuit

planning a membership drive to enlist more

of quality shipping, largely through educational

brokers, insurers, bankers and shipowners.

events and debates.

theBaltic March 2010


Corporate viewpoint ClassNK

ClassNK The technical appraisal of the environmental performance of ships


n response to increasingly strident demands for environmental protection from around the globe, the maritime industry has begun a number of important initiatives intended to help better

protect the environment. These include measures to prevent marine pollution from oil spills and discharges caused by disasters or ship casualties, measures to prevent atmospheric pollution from ship exhaust gasses, measures to prevent destruction of eco-systems, measure to prevent marine pollution from maritime paints, measures to conserve energy, and so on. Many of these efforts are driven by international conventions, the IMO and other international bodies. However, the actual implementation of these efforts is often a

Ships that perform similarly in sea trials can perform differently in real conditions

difficult and time-consuming task. At the same time, although maritime companies are increas-

water. While ships are evaluated during sea trials,

gained were compared with actual data taken

ingly developing their own environmental initiatives

these trials are conducted in calm ocean conditions,

from a ship in service. From this comparison, it

above and beyond existing regulations, questions

and ship performance can vary markedly from

was confirmed that the hybrid calculation method

remain as to how to best assess and certify such

these levels in real ocean conditions. As a result,

effectively reflects actual ocean conditions. This


two ships which have the same efficiency in calm

new performance evaluation method will finally

As a class society dedicated to not only

seas can have different performance profiles when

allow shipbuilders to conduct more realistic

preventing marine pollution, but supporting the

operating in actual winds and waves. At the same

performance evaluations for ships at the design

activities of the entire maritime industry, ClassNK

time, differences in weather, trading routes, and

stage. It will also further allow shipowners to make

works both independently and with other maritime

loading conditions make it difficult to compare

better-informed decisions about the ships they are

stakeholders to find the best solutions to these

performance once ships enter operation.

purchasing, and lead to more efficient ship designs.

challenges. This is part of ClassNK’s holistic

In order to develop a more realistic performance

ClassNK will release new guidelines on the

approach to supporting the maritime industry’s

evaluation for ship designs prior to construction,

application of this 10 Mode Performance Index

efforts to protect the environment. One of the many

ClassNK began working on a new 10 Mode

for Ships and will begin offering an appraisal

services currently being developed by the Society

Performance Index for Ships in cooperation with

certification service in accordance with the method

in this regard is the 10 Mode Performance Index for

the Japan Ship Technology Research Association,

later in 2010. While the initial guidelines will only

Ships. The aim of this work is to develop a method

the National Maritime Research Institute, and other

be applicable to containerships and vehicle

for assessing the environmental performance of

interested parties in the maritime industry. This

carriers, the performance evaluation method will

containerships and vehicle carriers and develop

new performance index takes its inspiration from

be expanded to other vessels in the future. In

guidelines on its application, accordingly, as

the automotive industry, which uses a multiple

this way, ClassNK hopes to support the design

summarised below.

mode (i.e., an environmental/operational condition)

and development of more environmentally friendly

system for determining fuel efficiency, as opposed


ClassNK’s 10 Mode Performance Index for Ships

to the single mode system (calm seas during sea trials) currently used by the maritime industry.

While ships can be made more environmentally

As part of this research, ClassNK together

friendly through the addition of equipment like

with other research partners developed a hybrid

ballast water treatment plants, the most dramatic

calculation method, which combines theoretical

ClassNK Head Office

improvements to emission levels and ship efficiency

calculations and practical tank tests, capable of

4-7 Kioi-cho, Chiyoda-ku, Tokyo

are likely to be made at the design stage. Research

replicating and evaluating a ship’s performance in

102-8567 Japan

on the propulsion performance of ships has been

sea conditions during the design stage. In order

Tel: +81-3-3230-1201

carried out in the past, but most of these studies

to ensure that the hybrid calculation method

Fax: +81-3-5226-2012

focused on performance improvements in still

accurately reflects actual conditions, the results



theBaltic March 2010

Commercial profiles

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For more information please call us on

• Ports and Terminals

+44 (0) 20 7933 7000


or visit

AXSMarine arnessing the ‘bespoke’ power of the internet


professionals includes modules such as Vessel

Position Lists, Tanker Registry, Distance Tables,

to enable clients to refine, collate and extract

Manager, Voyage Calculator, Cargo Manager,

and our high-performance Voyage Calculator.

the precise information needed to be ahead of the

Fixtures, Port Library, Distance Table, Indices,

game is what has driven leading global software

and MS Outlook plug-ins, all drawing upon


provider AXSMarine to develop some of the fin-

comprehensive and always up-to-date databases.

AXSOffshore is a fast and easy-to-use platform.

est proprietary chartering software and database

Users enter their own private data realtime in virtually

packages available for the global shipowning, brok-


all fields. Data entry plug-ins are available with

ing and chartering sectors.

AXS-Alphaliner combines the world-renowned

MS Outlook. Access Vessel Technical Databases

Speed and efficiency is crucial when it comes to

databases and information of Alphaliner with the

& Commercial Histories, Data-migration, Sales,

data assimilation, but as important, is knowing that

equally lauded data treating and data sorting

Valuation, Enquiry, Commercial Advice, Working

the data you receive exactly fits your requirements,

technologies of AXSMarine. Users benefit from

Us, Market Summary, Commitments, User-defined

when you need it.

Daily News, Weekly Newsletter, Market Reports,

similar vessels and Positions and Fixtures.

That is where AXSMarine comes in. Its services

Vessel Orderbook, Sales & Deliveries, Fixtures,

are designed to take advantage of what is now

Owner/Operator Details, Vessel Deployment,


referred to as ‘Web 2.0’, the second generation of

Services & Rotations, and Top 100.

AXSMarine now provides the required expertise

internet-based communities which aim to facilitate

to shipping companies and shipbrokers to

collaboration and information sharing between


correctly configure MS Outlook/Exchange with


AXSS&P (Sale & Purchase) is a fast and easy-to-

the correct common folder functionality and filing

AXSMarine produces a complete set of

use platform. Users enter their own private data

needs previously only made available in bespoke

interactive, internet-based decision-making tools

realtime in virtually all fields. Data entry plug-ins are

messaging systems. It has developed a state-of-

and databases for shipping industry professionals.

available with MS Outlook. Access Vessel Technical

the-art address book far outweighing anything

Its online tools are secure, fast and easy to use,

Databases & Commercial Histories, Data-migration,

available from MS.

and the databases they source are always up to

Sales, Valuation, Enquiry, Commercial Advice,

date. Because they are internet-based, they are

Working Us, Market Summary, Commitments and

available from any computer, anywhere; there is

User-defined similar vessels.

nothing to download or install.




In this exclusive service offering reserved for tanker

MSN Messenger:

Our complete offer for dry bulk shipping

brokers only, members benefits from Real-Time

Yahoo! Messenger ID: axstanker

theBaltic March 2010


Commercial profiles

SAL Schiffahrtskontor Altes Land GmbH & Co KG Full-service heavy lift shipping


ounded in 1980, SAL has emerged into one

newbuildings have been ordered with delivery

vessels. In the main office, SAL’s clients are

of the leading heavylift carriers in the world.

dates in 2010 and 2011. These vessels will

served not only by commercial and operational

In 2007, SAL entered a 50/50 joint venture with

maintain the unrivalled speed of 20 knots and

specialists but also by a professional engineering

the Japanese “K” Line group. The company’s

will be equipped with two cranes of 1,000 mt

team in charge of developing innovative and

main office is located in Steinkirchen, just out-

SWL each. The unprecedented lifting capacity of

custom-made transportation solutions. SAL’s

side Hamburg, Germany. In addition, SAL has

2,000 mt SWL, their crane outreach of 38 m as

own crewing agency in Manila is responsible for

developed an extensive international network

well as their ability to trade with an open hatch,

careful recruitment and continuous training of

of agencies and subsidiary offices in Japan,

make these vessels an important asset in the

qualified crew.

China, Great Britain, Italy, Australia and Finland.

heavylift market.

Including the crew onboard the vessels, SAL today employs a team of more than 500.

The newbuildings will further promote SAL’s dedication to a safe and environmentally

The SAL fleet currently encompasses 14

friendly setting on board. All recent and

modern heavylift vessels with a high service

upcoming newbuildings are equipped with an

speed of 20 knots each, featuring its own onboard

“environmental passport” which certifies that

cranes. The types of cargoes transported range

they comply with the highest environmental

from heavy machinery, floating cargo, windmills,

protection specifications. In addition, the ships

(power) plant equipment to cranes and (offshore)

are certified in accordance with ISO 14001 and

oil and gas equipment.

OHSAS 18001. These technical and ecological

SAL Schiffahrtskontor Altes Land

As of 2008, a comprehensive newbuilding

preconditions ensure that the vessels are

GmbH & Co KG

program has been launched. In 2008 and 2009,

prepared for deployment in future markets,

Bürgerei 29

four vessels with a combined crane capacity of

which include offshore windparks, offshore oil

21720 Steinkirchen

1400 mt SWL have been delivered. Despite the

and gas industries, and industrial plants.

Tel: +49 (0) 41 428 1810

global financial crisis, which has also affected

Besides the technological hardware, SAL also

the heavylift sector, SAL decided to further invest

places a heavy emphasis on the development


in innovative shipbuilding. Therefore, two more

of its staff, both onshore and on board the


Fax: +49 (0) 41 4281 0281

Worldwide Project Consortium T

he Worldwide Project Consortium (WWPC) is

full range of project planning and forwarding

responsibility for a multi-million dollar mining or

the leading dedicated network for project cargo

support services:

industrial relocation; WWPC's combined expertise

freight forwarders; you will find the experts of the

• Project & logistic freight management

and worldwide resources can be brought to bear

WWPC all around the world, providing a full range

• International project forwarding by sea and air

to help you achieve your objectives. On time, on

of project planning and forwarding support services

• Door to door multimodal freight management

target, least risk, no problem.

for all kinds of large and difficult cargo, by land, sea

• Inland Transportation

and air, worldwide.

• Cargo consolidation

reputation in International Project Forwarding

• Customs Clearances

and Logistics Management services around

• Customs Tariff and By-Law advice and

the world, and the directors are pleased to

WWPC Ltd is a franchise company for project cargo movers and supplies supportive network functions to its members, who are all holders of


WWPC companies have gained a steadfast

advise that not a single complaint has ever been

their respective franchises. The group’s members

• Warehousing, Storage and Distribution

received in relation to the performance, conduct

are the best in their trade in their respective

• Cargo computer documentation, cargo

or activity of any WWPC office.

countries and geographical areas. The Worldwide Project Consortium has been founded to enhance the global presentation and

tracking, and EDI services • Supervision of heavylifts, outsized and hazardous cargo

WWPC offices gain admission on their knowledge and experience. Each formally undertakes to operate under a strict Code

activities of its members and that’s exactly what

• Chartering by sea and air

of Conduct and only the most dedicated,

the management of the WWPC is committed

• Planning and consulting services.

experienced and viable experts in project

to support and deliver. The WWPC also is a member of the Baltic Exchange.

WWPC offices are accustomed to success. Through the strength of our global presence, all

forwarding, with a proven track record, will be admitted to the WWPC.

A world of project-forwarding connections,

kinds of WWPC projects are being undertaken

know-how and resources; with WWPC you will

every day, everywhere, in all kinds of conditions.

World wide Project Consortium Ltd

find our experts around the world, providing a

Big task or small; one-off shipment or full turnkey


theBaltic March 2010

Commercial profiles


ounded in 1997, BASS is a leading provider

and add new suite modules, if desired, according

of fleet management software for shipowners,

to priority. The modules will be configured to fit

Ease of implementation, ease of use

their business processes.

Introducing a new system is a major challenge

shipmanagers, and operators of rigs, FPSOs and offshore units worldwide. More than 100 cus-

While customers can build up module by

to an organisation with no capacity set aside

tomers – including many of the world’s leading

module, data is entered into the BASSnet

for trial and error. With experience from large

shipping and offshore support companies – run

central database once so it can be reused

projects for industry players like CMA CGM,

fully integrated BASSnetTM Fleet Management

in one process after the other and ensure

NYK, “K” Line, Taiwan Maritime Transportation,

Systems on over 1,000 vessels around the globe

efficient workflow between the other modules for

Stolt Tankers, the Royal Norwegian Navy and

to ensure regulatory compliance, improve asset

applicable departments and units. This allows

the Wilh.Wilhelmsen group, BASS has a proven

management and enhance document control.

the entire organisation to share the same data –

track record for structured implementation. Once

and enables management to deal with problems

implemented, BASS has the structure to make

Linking strategy & operations

proactively, streamline work processes and

its software easy to master – including built-

Operational goals are always a part of company

identify best practices. The end result is improved

in program training tutorials and close to 100

strategy – but what about IT? Software should

transparency, process efficiency, profitability and

interactive tutorials on its website.

help to deliver efficient operations and provide the

operational reputation.

basis for making informed decisions. Additionally,


it should be built up with systems that integrate

BASSnet’s modular advantage


properly and share data.

The BASSnet integrated software suite covers

Europe/Americas: BASS AS

A full suite for fleet management and ship

all main areas of maritime operations through

Lysaker Torg 8,

operations, seamlessly integrated for safe and

its range of application modules – Maintenance,

P O Box 68 1324 Lysaker, Norway

secure data flow between vessels and onshore


Tel: +47 6710 5520

offices, BASSnet software give users a total

Management, Safety Management (SAFIR), Risk

Fax: +47 6710 5516

overview and control over their operations ashore

Management, Self Assessment (TMSA), Reviews

Asia/Pacific: BASS Sdn Bhd

and on board. The modular applications system

and Improvements, HR/Crew Management,

19th Floor, Menara Atlan, 161B Jalan Ampang,

allows customers to begin with the modules that

Payroll, Accounting and Report Generator.

50450 Kuala Lumpur, Malaysia



they need most and where the benefits are most

Tel: +603 2173 6488

obvious. Thereafter, they can continue as needed

Fax: +603 2173 6499

Concateno C

subject to a range of external and internal quality

oncateno is the leading drug and alcohol

There is local legislation on drugs and

testing organisation: a service provider with

alcohol, international agreements (eg OPA 90),

the facilities and expertise to genuinely deliver

maritime guidelines (eg ISM and ISPS Codes)

We also provide chemical testing, with a

test programmes to meet any requirement –

and Charterparty Clauses (eg ExxonMobil).

benzene exposure biomonitoring test. This

from point-of-care instant tests, through to

The expectation is that shipping companies

simple test can help you manage your health

state-of-the-art laboratory analysis for any bio-

should have random and emergency ‘for cause’

and safety procedures for staff that may be in

logical specimen, including urine, oral fluids

drug and alcohol testing in place, as well as

contact with this highly toxic chemical.

and hair.

testing during routine medicals. Concateno’s

Concateno’s 300 staff support more than





8,000 customers globally, and the group

Medscreen mobilises an international network of

performs approximately eight million tests

collecting officers to keep your random alcohol

annually. An integrated network of more than

and/or drug screening programmes on target,

500 sample collection officers, trained in-house

and our emergency test kits are designed for the

in chain-of-custody procedures, supports clients

occasions when our on-call drug/alcohol testing

around the world.

service cannot be deployed.

The maritime industry uniquely has to provide





assurance programmes.

Concateno levels


Harbour Quay

its own emergency services whilst at sea – “all

accreditation and quality assurance, and

100 Preston’s Road

seafarers must be able to respond at any time

working actively within the industry to improve


to an emergency situation” (Oil Companies

existing best practice, Concateno maintains

E14 9PH

International Marine Forum Guidelines for the

the international quality benchmark ISO 17025

Tel: +44(0)20 7712 8000

control of drugs and alcohol onboard ship). The

standards for drug testing (independently

Fax: +44(0)20 7712 8001

industry also has a high awareness of the threat

audited by UKAS), ISO9001:2000, Link-Up, and


of drug trafficking.

ISO13485:2003. In addition, the company is

theBaltic March 2010


Commercial profiles

Wilhelmsen Ships Service Worldwide ships agency Improving your operational efficiency

Performance consistency from port to port

The best of both worlds

Many worldwide operators still use a variety of

We have standardised our procedures to ensure

streamline operations and bring about economies

small local agents in different ports, leading to

that customers receive consistent service in all

of scale. However, many vessel operators want

duplication of effort, inefficient documentation and

2,200 ports where we operate around the world.

to continue to use local agents with personal

unreliable financial accountability.

In practical terms, this means that customers

knowledge of the port, fluency in the local language

Wilhelmsen Ships Service believes that there

only need to define their requirements once, and

and contacts with all local service providers.

is a better way of optimising the performance of

the service delivery will be performed in the same

Through our Service Agreements, we provide

ships agents. We have defined global operational

way and the same format in each port where

the best of both worlds. Because of our wide

standards that ensure a predictable quality level,

they operate. Especially when calling at new and

international spread, we are able to offer a cost-

wherever you operate in the world.

unfamiliar ports, it is essential to know which agent

effective global service to customers with multiple

can be trusted. The time saved on instructing and

port calls. However, every stopover is still treated

Dealing with dozens of local agents is time-consuming and unsystematic

monitoring new agents can be spent on more

as a special event by our local officers, who are

essential tasks.

able to use their unique knowledge to arrange

International companies who deal with a variety of

port service agreement is allocated a single point-

local agents often find themselves repeating their

of-contact to oversee their global business. The

instructions over and over again for every port call.

contact person coordinates all the customer’s

The agent in one port does not know what the


agent in the previous port did, and may have no

Service, anywhere in the world. The customers’

experience in handling the customer. The customer

requirements are registered into our operational

has to spend time instructing and following up

system, thereby becoming an integrated part of

each agent, to ensure that all requirements are fully

their business processes when working on a port

understood and will be catered for.

call for that particular customer.

Every customer who enters into a multiple





Dealing with one company on a worldwide basis can

hassle-free port calls.



LCH.Clearnet The world’s leading independent clearing house


ur experience as a clearing house goes back over a century, and today we clear

The benefits to trading parties are clear: • Significantly reduced counterparty risk.

loss to any other members. By




more asset classes than anyone else globally,

• Increased trading opportunities.

market, legal and liquidity risk, we ensure that

both exchange traded and over the counter

• Ability to net-off long and short positions.

margin cover is set at appropriate levels.

leading to:

dedicated team of over 50 risk managers, who

Driving all our risk management activities is a

(OTC). • Uniquely, we have over 10 years’ experience of clearing OTC. • We have a track-record of five defaults

• Reduced costs of trading.

share a wealth of experience and a convincing

• Enhanced liquidity.

record of successfully managed defaults – both exchange-traded and OTC.

successfully managed, and in fact we’re the only clearing house to have managed an OTC default. • Our standards of risk management are second to none. • Our technologies are very, very intelligent. • And we’re independent – so ‘conflict of interest’ issues don’t arise.

Risk management is at the heart of what we do We have an unequalled reputation for reducing risk across a wide span of markets globally. We’re committed to setting and maintaining the very highest standards, across all our services and all the asset classes we clear. Our robust risk management framework

Isabella Kurek-Smith

Why use a clearing house?

affords exceptional levels of protection to

Director, Head of Energy & Freight Markets

A clearing house acts as a go-between when

clearing members, as demonstrated by our


two parties trade. As guarantor of the trade, the

successful handling of the Lehman Brothers

Tel: +44 20 7426 7460

clearing house bears any monetary risk involved.

default well within the margin held, and without



theBaltic March 2010

Commercial profiles

Touw B&B Holding BV T

ouw B&B Holding BV is the mother company

The company’s general manager is Maup

• Organise in-house courses for governmental

of the following maritime service companies:

Hoppzak BSc CEng CMarEng MIMarEST

bodies, shipowners and managers, and

• D. Touw Expertise- en Ingenieursbureau

MCMS, who has been working in the company

salvage companies on the same subject.

BV, hull and machinery and marine liability

for over 32 years, and the company’s operational

• Offer a wide range of consultancy in the

surveyors and consultants.

manager is Leo van Houwelingen BSc.

same field.

• Marinco Survey BV, specialists in condition

Except for the traditional hull and machinery

Recently the two companies have published

surveys, appraisal, management consultancy.

and cargo survey, the company is growing

a book Pocket Salvage, a 178-page book with

• Binnendijk Bree BV, marine and aviation

in the fields of salvage consultancy and risk

all relevant conventions, contracts, guarantees


and various maritime information. This book can

cargo surveyors. • Touw Salvage Consultants, salvage and wreck removal consultants. • Touw Risk Consultants, risk management

The risk consultancy manager is Arnold

be ordered via the website

Warmerdam BSc MNI, and the salvage consultancy manager is Maup Hoppzak.

consultants acting for shipping companies,

Since 2008 Touw B&B Holding BV has been

underwriters, shipyards etc (a.o. JH 143 and

working closely together with Koffeman Consult

JH 115 surveys).

BV, a Rotterdam-based consultancy firm. The

The main office of Touw B&B Holding

managing director of this company is Geert

BV is located in Rotterdam and the aviation

Koffeman, former commercial director of SMIT

Touw B&B Holding BV

branch office is located at Schiphol Airport in


Waalhaven ZZ 10


In combination with Koffeman Consult, Touw

3088 HH Rotterdam

B&B Holding BV, and especially Touw Salvage

Tel: +31 (0) 10-2836666

working worldwide with in total 12 surveyors /

Consultants can:

Fax: +31 (0) 10-2836660

consultants, each specialists in their own field,

• Organise

The company was founded in 1908 and is

and eight staff members.





Management in Shipping.

Website: E-mail:

BI Norwegian School of Management Self-owned foundation

Accreditation and ranking

programmes and management programmes. BI

BI Norwegian School of Management is a self-

BI obtained the status of ‘Specialized University

offers special study provision within insurance,

owned foundation whose purpose is to conduct

Institution’ in 2008, after NOKUT (the Norwegian

commodity trading, banking and finance and

education and research at a high international level

Agency for Quality Assurance in Education) gave


within management, administration, economics

its approval on 27 February 2009. BI has been

and marketing.

EQUIS accredited since 1999 as one of only

International activities

110 business schools in the world. We are one

Collaboration agreements with 148 universities


of the 100 most recognised business schools of

and business schools in 40 countries around the

Its professional strength and relevance makes

a total of over 4,000 such colleges in the world

entire world, and many exchange students. Special

BI Norwegian School of Management a leading

(one of 35 in Europe) in the “Top Business School

MBA programme in China in collaboration with

business college in Europe.

Worldwide 2008” survey. We are amongst the 65

Fudan University School of Management. Chief

best suppliers of tailor-made in-house programmes

owners of the ISM University of Economics and


in the world and provide the 117th best MBA

Management in Lithuania with 2,000 students.

BI takes quality and independence as the basis for

programme in the world (2008) according to the

Strategic collaboration with Nanyang University

its optimum research, education and intermediation

Financial Times.

of Technology in Singapore, ESCP/EAP European School of Management in Paris, and University of

for students, the business community, the public sector and positive social development. We are

Education and research

an independent business school, which is future

BI has one of Norway’s leading academic

orientated, research based, business orientated,

environments within the core areas of financial

and international. We conduct our work with quality,

economics, strategic management, marketing,

integrity, relevance and the ability to adapt and

leadership and organisation, and innovation and

change. BI creates effective and highly professional

entrepreneurship. We offer bachelor programmes,

Study info: + 47 810 00 500

training by coordinating its resources across the

Executive MBA studies, eight master’s studies


organisation. Our managers and employees are

and five doctoral programmes, two bachelor

Address: Nydalsveien 37, 0484 Oslo

aware of ethical dilemmas and challenges, and

programmes, extensive continuing and further

Phone: + 47 06600/+47 4641 0000

take personal responsibility for handling these.

education, Internet studies, tailor-made in-house


theBaltic March 2010

California – Berkeley.


Commercial profiles

Combi Lift K/S C

ombi Lift’s main activities are worldwide ocean

Mission: Combi Lift’s mission is to put

transportation of heavylift and project cargoes,

customers and clients first, through meeting

and today Combi Lift is one of the world leaders

and exceeding their expectations. We do this

within this segment. The current fleet consists of 14

by providing tailor-made heavylift transportation

heavylift carriers, including four semi-submersible

solutions which are characterised by being safe,

dock vessels with the ability to load and discharge

innovative and reliable. Our mission also extends

cargoes by means of lifting, rolling or floating the

to our employees and our fleet, both aspects of

same. In addition to the existing fleet, Combi Lift

our business in which we will continue to invest

currently has a newbuilding programme for two


heavylift vessels which will be delivered during

Vision: Our vision is to position Combi Lift as a

2010. The main philosophy of Combi Lift is to combine the best expertise allowing us to lift the various

QHSEP Policy: On 5 September 2007 K/S

leading company in heavylift ocean transportation

projects with the highest standards and quality.

Combi Lift and Combi Lift (Germany) GmbH

and logistics, setting the highest standards through

were the first companies worldwide, within

sound business ethics, inspirational leadership and integrated QHSEP best practices.

Chartering & operation: The Chartering &

their segment, to obtain DNV certifications

Operation departments are situated in Korsoer;

for fully implementing all three Management

the two departments comprise a team of skilled

System Standards, both ashore and onboard

personnel. Combi Lift is able to provide customers

their vessels. In addition to the certification,

with a service that suits their requirements.

Combi Lift updated the OHSAS 18001 standard

Contact details :

certification from the 1999 standard to the new

Anders Poulsen - C.O.O.

Engineering: The Engineering & technical

2007 standard. Once again Combi Lift is the first

Combi Lift K/S

management is run by Combi Lift (Germany)

heavylift carrier in the world to obtain this updated

Batterivej 7-11

GmbH in Bremen. Working with an experienced

standard. Combi Lift views the ISO certifications

4220 Korsoer

staff of master mariners, naval architects

as a key to upholding and maintaining good


and welding experts, Combi Lift is able to

business practices. The company’s QHSEP

Tel: +45 5816 2030

provide tailor-made solutions that suit individual

policy ensures continuous improvement in

Fax: +45 5816 2025

customers’ demands and expectations.

its Quality, Health, Safety, Environment and


Pollution Prevention management activities.


Grieg Star Shipping AS G

rieg Star Shipping AS (Star) is in charge of

fleet grows. The most recent addition is a service

Both divisions enjoy the support of skilled

the worldwide marketing and operation of

from Chile to the Mediterranean with forest

operations managers and port captains located

products and project cargoes.

both in the headquarters and in the branch

the Grieg Group’s fleet of advanced open hatch

Star has designed and built cargo handling

offices. This allows for quick and accurate

equipment ranging from pulp frames capable

solutions to the often-complicated stowage.

Based in Bergen, Norway and with 16 offices

of loading 56 tons in one lift, to vacuum clamps

They also frequently attend to the load and

in strategic locations in Asia, Australia, USA,

for paper rolls with capacity upto 35 tons.

discharge to ensure safe and efficient operations.

Canada and Europe, Star’s open hatch division

These, as well as grabs and other special

In addition to the advanced ships and cargo

runs specialised ships in regularly scheduled

cargo handling gear, are serviced in their own

handling equipment, Star provides IT solutions

break bulk parcel trades. Export trades based

workshops in Vancouver and Rotterdam.

enabling shippers, forwarders and agents

vessels, as well as a fleet of conventional bulk carriers.

on North American forest products, aluminium

The Gothenburg-based subsidiary Atlanti­

and other break bulk cargoes to Asia, north

cargo AB uses available space on the regularly

and south Europe as a substantial part of their

scheduled open hatch vessels to move project


cargoes worldwide.

The design features of the open hatch ships

The Grieg group has just taken delivery of two

(removable tween decks, gantry cranes up

new state-of-the-art open hatch vessels, and two

to 68 mt, rain protection over unobstructed

more will be delivered during the spring of 2010.

to handle everything from documentation to customs papers.

holds, cell guides) allow for fast and safe

The Conventional Division of Star operates

handling of project cargoes, pipes, windmills,

a modern fleet of about 20 geared and grab-

Grieg Star Shipping AS

metals, newsprint, containers and bulk cargoes.

supplied conventional ships ranging from 25,000

C. Sundts gate 17/19

Shippers welcomed these features when Star

to 55,000 dwt trading worldwide, combining

P.O. Box 1088, 5809 Bergen

built up their successful trades from Asia and

contracts and tramping. The flexible ships carry

Tel: +47 55 23 96 00

Europe back to both coasts of North America.

a variety of cargoes such as coal, coke, alumina,

Fax:+47 55 23 25 30

fertilisers, ores etc.


New trades are evaluated and added as the


theBaltic March 2010

All Star-offices welcome your freight inquiries:

Commercial profiles


Wherever you are, we are


rom supertankers and super container-

the fastest most compact VSAT solution on the

are ideally placed to help them. An investment

ships to fishing vessels and yachts there are

market, H2OLiteSpeed providing 2MB voice,

in the new IP technology is about a canny

more than 2,000 ships which already rely on

data and web browsing for a fixed fee of under

marriage of hardware and software, and a

H2OSatellite’s complete maritime communica-

E500 per month.

communications partner who understands the innovative

requirement and offers the most innovative

Ltd the company has been in the vanguard of

products aren’t the whole story though. In

software can often save a company thousands

satellite communications software development.

an industry where the alternative is often a

by making their airtime work smarter not harder.

A full suite of packages covering everything from

faceless corporation, their personal, individually

For companies looking to gain real competitive

commercial messaging, spam, virus protection

tailored approach to customers’ needs and

advantage from their communications, a free

and crew messaging, to hardware sales, instal-

the 24/7 365 support commitment has led to

no obligation communications review from

lation and airtime are combined to offer a fully

strong and lasting personal relationships. The

H2OSatellite is the first step.

integrated, simple and cost-effective solution.

company has always been technology with

Enabling customers to communicate via any

a human face and wherever and whenever

transmission package available including major

customers need them, H2OSatellite are there.

satellite systems such as Inmarsat, Iridium and

Headquartered in the UK a comprehensive

Contact details :

VSAT and also GSM, broadband and ISDN, the

network of partners with offices worldwide


highly skilled and committed development team

allows H2OSatellite to service customers and

Global Technology House

work hand in hand with sales and customer care

vessels around the globe, all of whom receive

11 Padgate Business Park

to constantly refine and improve the H2OSatellite

the same first-class products and customer

Green Lane, Warrington

product range, ensuring that the company con-

service. Improving onboard communications,


tinues to offer customers industry leading returns

managing crew expectations and saving money

on their communications investment. Such inno-

is the ultimate challenge, but it can be met.

vation has seen H2OSatellite become the first in

Shipowners and managers are becoming more


the industry to offer new IP packages, including

aware that maritime communications is all about

Tel: +44 (0) 1925 818 918

crew web browsing, and in Europe to provide

optimisation, and companies like H2OSatellite

Fax: +44 (0) 1925 814 192

tions solution. Since 1998 as Global Technology




DREAMTECH Software Ltd D

REAMTECH is a leading software vendor of

shipbrokers conduct their work faster and more

COMPASSng. Data can be sent on-demand to

maritime messaging and shipbroking solu-


any mobile device providing the user with up-to-

tions. The flagship product of the company is

1.  The Sale & Purchase module provides

date access to vessels, cargoes and positions

COMPASSng, a powerful messaging software

two-way matching of vessels and inquiries,

as stored in the database in real time, anywhere

tool for shipping companies with extensions

including newbuildings and contract resales and

in the world.

for the shipbroking community. Designed with

helps you locate inspectable vessels worldwide.

DREAMTECH was founded in 1999 and

the continuing help of shipping professionals,

Brokers can quickly and easily update vessels

the company is expanding its business in the

COMPASSng is a diverse tool that is constantly

with any commercial advice received through

maritime sector worldwide. An ever growing list

evolving to suit the needs of the shipping market.


of shipping firms based in Europe, the USA and

The core functionality of COMPASSng

2.  The Chartering module enables the

is messaging which allows users to search

update and search of available vessel positions



and cargoes which helps the broker match

messages (e-mail, fax, telex, text messages).

open positions and quickly meet the needs

COMPASSng helps you create and manage

of their clients. Furthermore, COMPASSng

circular lists to distribute information to hundreds

provides a full set of chartering utilities such

of people at the touch of a button, using the fully

as voyage calculator, laytime calculator and a

integrated Address Book and Activity Planner.

comprehensive fixture book.




the Far East are already using COMPASSng.

Messaging power is further extended by means

3.  Integration with PABX for automation

of instant messengers, advanced HTML editors,

with the company address book and the user

115 26, Athens, Greece

spam handling and much more.

office phone.

Telephone: +30 210 6754150

COMPASSng also features specialized,

4.  Mobile Queries provide shipbrokers with

fully integrated modules, designed to help

innovative remote access to all data stored in

theBaltic March 2010

Head Office address: 5 Mesogeion Avenue,

E-mail: Web:


Commercial profiles

GFI Freight Summary of 2009

intertwined which has brought increased levels of

NOS. At GFI we remain committed to offering clients

Will Leslie: Given the relatively poor volatility

complexity to the physical market.

an enhanced and efficient method of trading and as such we are working towards introducing additional

in 2009, the market was surprisingly resilient in terms of volumes. Year on year Q1 & Q2 were

Drivers and challenges for 2010

functionality to EnergyMatch® Europe.

comparatively the same in 2009 as in 2008. It was

Terry Parmenter: The market has been wary of

Will Leslie: I feel liquidity will continue to improve in

not until September that markets started to slow

2010 for some time, with the anticipated volumes

a higher tanker rate environment. The combination

down. However, the increase in freight rate volatility

of new builds expected to deliver and the global

of a large number of tankers being on storage, a

from October fuelled improved interest, particularly

economy still not out of the depths of the previous

cold winter and delays of discharging into China,

from the financial community.

18 months. The developmental drive of the Far

combined with various other factors, have all

Whilst a strong market was priced into the 2010

East, in particular China, together with other regional

contributed to the positive start to the year. If

forward curves, the spike in January exceeded

factors such as climatic changes affecting crop

volatility remains in the market we are confident that

intitial expectations. In some instances, round

yields and the piracy issues in the Persian Gulf,

liquidity will be sustainable.

voyage returns (Time Charter Equivalent returns) for

will play a part in directing the trends; however,

Furthermore, quoting markets in $/day continues

certain routes surpassed the timecharter rates for

the relationship between the actual market and the

to be a hurdle still facing the market. Whilst the

similar vessel classes. This subsequently attracted

sentiment surrounding it will dictate how the year

market trades and is priced on $/day, which in the

significant hedging interest from the world’s larger

plays out.

current flat rate period isn’t a problem, potential

owners, particularly on crude routes.

Dorian Benson: I see 2010 being an interesting

issues arise during periods where the flat rate is

Dorian Benson: The increase in volatility during

and challenging time for the dry FFA market. Whilst

unknown. ACM/GFI along with other participants

2009 renewed interest from financial institutions

the market is backward dated, there has been

will be trying to bring a viable $/day product to the

keen to hedge and trade proprietary positions, and

some improvement in underlying rates, although

market, which I believe will bring further growth to

this, once again, allowed for interaction with traders

this needs to be taken in the context of the sharp

the market.

from within the shipping community. FFAs also

declines witnessed at the end of 2008.

remained integral in the field of risk management

With counterparty risk remaining an integral

for participants with exposure to freight market

factor in the market, there has been an inevitable


shift in focus of FFA trading from OTC onto cleared

Terry Parmenter: The physical freight market has

trades. This trend, which looks set to continue,

Wet Freight (FFAs):

experienced considerable change in recent years,

is viewed as a positive at GFI, as our hybrid

Dry Freight (FFAs):

coupled with increased utilisation of the FFA market.

commodity trading platform EnergyMatch® Europe

Dry Freight:

Shifts and trends in the two markets are significantly

has existing clearing links to both LCH.Clearnet and

* GFI Freight operates as a division of several subsidiaries of GFI Group, Inc.

Bupa International


upa International has 38 years’ expertise

them, speak 34 languages. This is all backed

and home transportations. They also have

in caring for the insurance needs of expats

up by direct settlement of bills where possible

extensive experience of diagnosing and treating

and their families around the globe. Covering

as well as a prompt turnaround of claims,

cancer, heart disorders and musculoskeletal

over 800,000 people in 190 countries, Bupa

with Bupa International processing over 15,000

conditions. Bupa International’s medical team

International is the largest international expatri-

claims a week.

is available around the clock to customers,

ate health insurer in the world, supplying quality

Understanding that not all expats are the

individual and group medical cover to people

same, and providing products tailored to suit the

who are in their home country or living abroad

needs of differing groups, is also key to Bupa

for six months or more. The company is part of

International’s success.

ensuring they receive immediate and correct treatment, when the need arises.

Industry leader

Bupa International offers tailored products for

In 2009, we were delighted to receive the Best

the oil and gas industry for example, covering

International Private Medical Insurance Provider

employees both offshore and onshore, as well as

award at the UK’s Health Insurance Awards, for

Expat understanding

a maritime policy, designed for crew employees

the ninth time since 1999.

Bupa International understands that expats want

who live and work aboard yachts, super yachts

peace of mind about their health while abroad –

or ocean-going vessels.

the leading international health and care group, Bupa.

and a health insurer they can rely on to provide

For more information, please visit or if you’re interested in

a high quality service and comprehensive

Medical expertise

Maritime group cover please call:

coverage. That is why it has developed an

Bupa International is also set apart by the

+44 (0) 1273 322 091.

unrivalled worldwide network of over 7,500

medical expertise it offers customers. Its

participating hospitals and a 24-hour helpline,

emergency medical team consists of highly-

open 365 days a year, which is manned by a

trained doctors who are experts in high altitude

team of experienced advisers who, between

diseases, tropical infections, patient evacuations


theBaltic March 2010

Commercial profiles

Fairmount Marine BV F

airmount’s main activities are long-distance ocean towage, salvage and heavy-lift trans-

portation. In order to meet the highest quality standards imposed by our worldwide clientele – an absolute requirement when it comes to the towage and installation of the largest and most valuable floating units in the world such as F(P) SOs, gravity base structures, semi-submersible and jack-up rigs – Fairmount Marine operates five long-distance towing vessels with anchorhandling capacities of no less than 205 tonnes bollard pull and an average age of less than two years. In addition to these five supertugs, we operate – together with our Japanese partner

in remote areas or areas where no large dry-

transportation, Fairmount Marine has positioned

Fukada Salvage & Marine Works Co., Ltd – a

dock is available.

itself in the premier league.

fleet of multipurpose offshore support vessels

Fairmount’s staff of professionals both onshore

and semi-submersible barges. Amongst them is

and offshore is entirely dedicated to providing

the biggest semi-submersible barge in the world,


the 50,000 dwt giant Gavea Lifter. These barges

solutions for demanding towage and transportation

are perfectly suited for the transport of jack-up

assignments, worldwide. Fairmount’s quality

rigs, modules, topsides and any other (general)

management system and safety, health and

heavy and oversized cargoes. Furthermore, in

environment protection measurements are second

addition to providing a means of transport, they

to none and form an integrated, vital part of all

tel: +31 10 240 2500

have proven to be a perfect platform for dry-

operations. Building on the legacy of Holland as


docking of semi-sub rigs, drillships and vessels

the cradle of ocean towage and special marine


P World is one of the largest marine terminal

closely with customers and business partners

to Asia. With a pipeline of expansion and

operators in the world, with 49 terminals and

to provide quality services today and tomorrow,

development projects in key growth markets, RECREATE LOGO AND PMS including India, China and the Middle East,



It is our goal and our duty to surpass clients’ expectations, every day.


DP World D

12 new developments across 31 countries. Its

when and where customers need them.

dedicated, experienced and professional team

In taking this customer-centric approach, DP

of nearly 30,000 people serves customers in

World is building on the established relationships

some of the most dynamic economies in the

and superior level of service demonstrated at


its flagship Jebel Ali facility in Dubai, which has

DP World aims to enhance customers’ supply chain efficiency by effectively managing container, bulk and other terminal cargo.

capacity is expected to rise to around 95 million TEU over the next 10 years.

been voted “Best Seaport in the Middle East” for 15 consecutive years. In 2009, DP World handled more than 43.4

The company constantly invests in terminal

million TEU (twenty-foot equivalent container

infrastructure, facilities and people, working

units) across its portfolio from the Americas

theBaltic March 2010



What’s on where A round-up of conferences, exhibitions and events in the shipping world March 3-4 Ship Management


March 9-10 London Chemical & Product Tankers Covering charter market, commercial, operational and regulatory issues, this top quality conference promises to be the sector’s leading forum. March 16-17 Athens 7th Greek Shipping & Ship Finance Conference 2010 This international Green Ship Technology conference, meeting the green technology challenges for sustainable shipping. March 16-18 China Maritime

Hong Kong

March 22-24 Conneticut CMA Shipping The CMA is the largest commercial shipping association in the US, which means that leaders of industry and government come to share their ideas, voice concerns, or explore answers to today’s new issues. March 23-24 London Offshore Support Vessel Summit A look at the issues that are currently dominating the market, including the best operational and technical practices. March 24-26 Singapore AP Maritime 2010 Asia Pacific Maritime (APM) is the one-stop market for the region’s maritime community, showcasing the latest in marine engineering and port technology.

April 11-23 Cambridge Anatomy of Shipping For those needing the big picture, whether through changing roles, entering the shipping industry for the first time or as a refresher. April 12-13 Beijing Coaltrans China A look at China’s changing coal markets, including demand growth, emerging technology, and the effect on global freight markets. April 13-14 Dubai 6th Maritime HR Crew & Development April 18-19 Dubai ShipTek 2010 A two-day international conference on shipping, marine and offshore industry and ShipTek Expo 2010. April 25-30 Singapore Singapore Maritime Week A week of conferences, dialogues, exhibitions and social events in celebration of all things maritime. April 26-27 New York Freight Derivatives and Shipping Risk Management Managing freight, bunker, interest and counterparty risk April 26-27 Singapore 2nd Annual Offshore Support The 2nd Annual Offshore Support Vessels Asia-Pacific conference examines the tough economic realities and developments in the OSV market and how they will impact the stakeholders.

March 25 New York Invest in Shipping International Forum

April 27-29 Helsinki Arctic Shipping summit 2010 A two-day conference highlighting the most crucial developments and updates in the field of Arctic Shipping.


theBaltic March 2010

April 28-29 New York Advanced Freight Modelling & Trading Trading strategies for FFA players April 28-29  Martech 2010


April 28-29 4th Maritime Risk Management


May 10-11 Hamburg Tradewinds: Marine Risk Forum The melting pot for ideas and interaction between shipowners, risk managers, underwriters, brokers and club managers. June 1 Oslo Tradewinds: Oslo Shipping Forum Designed and produced for shipping ceos from listed and private shipping companies, brokers, key investors in shipping, bankers and entrepreneurs. June 28-29 Singapore Freight Derivatives and Shipping Risk Management Managing freight, bunker, interest and counterparty risk July 1-2 Singapore Advanced Freight Modelling & Trading Trading strategies for FFA players August 24-27 Stavanger Offshore Northern Seas A look at the political, economic and technological issues surrounding the international oil and gas industry.


No.1 ENERGY & COMMODITY BROKER 2010 ENERGY RISK COMMODITY RANKINGS No.1 WET FREIGHT (FFA) BROKER 2009 ENERGY RISK COMMODITY RANKINGS No.1 COMMODITY BROKER 2008 ENERGY RISK COMMODITY RANKINGS GFI’s Freight division, together with ACM Shipping and McQuilling Brokerage, is renowned for offering tailored and value-added solutions. Global synergies between our wet FFA, dry FFA and physical freight desks and other commodity markets in which GFI operate enable us to provide valuable insight into these interrelated markets. We help market participants manage their freight exposure more effectively by providing customised hedging strategies.


GFI’s multi-commodity hybrid trading platform allows market participants to execute both wet and dry FFA transactions with speed and efficiency. Clearing links to LCH.Clearnet and NOS minimise the effects of counterparty exposure while providing transparency of market pricing.


GFI’s analytics tool FENICS ® Freight, coupled with GFI’s independent market data, provides an in-depth understanding of market movements and potential trading opportunities by facilitating price discovery, trends and route analysis.




LONDON +44 20 7422 1180 NEW YORK +1 212 968 2050 SINGAPORE +65 6820 2980

LONDON +44 20 7877 8090 SINGAPORE +65 6435 0469 CAPE TOWN +27 21 410 8876

LONDON +44 20 7877 8151 NEW YORK +212 968 2211 SINGAPORE +65 6435 0471 SHANGHAI +86 21 6859 6721

©GFI Group Inc. 2010. This advertisement has been approved by GFI Brokers Ltd, which is regulated by the FSA in the UK. GFI Securities LLC, a FINRA and NFA regulated firm.

Managing your counterparty risk NOS Clearing is the specialized clearing house for the freight industry. We are providing flexible solutions and products, first-class customer service and quick responses to customer and market needs. Clearing at NOS eliminates counterparty risk in derivatives trading and ensures you prompt and full payment of all amounts due under all contracts. NOS is established by the industry for the industry. Our innovative service, brought to you by our customer service teams and IT systems, will support, simplify and improve risk management functions, book keeping and back office activities. Offering a full range of derivatives contracts in all market segments, NOS offers both standardized and tailor-made futures and options for the dry and tanker market. These products create unique possibilities to effectively manage risk, through trading on exchanges as well as through OTC brokers. You may access our clearing services via a Direct Membership or via the global General Clearing Members.

Contact us today at: Tel: +47 23 25 93 01 • +65 64 13 00 47 Email:

The Baltic - Spring 2010  

The Baltic is the quarterly journal of the Baltic Exchange in London, the world's leading shipbroking representative body. The Baltic Exchan...

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