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February/March 2017 volume 11 issue 1 Regulars 3 COMMENT 5 CONTRACTS & COMPLETIONS 9 ANALYSIS 10 LEGAL BRIEFING 38 BEST OF THE WEB 40 LAST WORD
Gas detection 13 Replace and save; drones and emissions 14 Monitors for MRVs do not exist; Sulphur cap and system selection 17 Inerting the space is an active choice; Key takeaways on portable units
Tank cleaning 19 Charterers need to accept rather than deflect tank cleaning responsibility. Lives are at stake 24 Miracle cure; Scanjet and Stena; Polarmarine sizes up retrofitting options
Pumps 26 Frequency converters give pumps power and purpose 27 Colfax and Leistriz show impressive range
Singapore 28 Korean and Chinese tanker interests drawn to Singapore 30 Owners and managers plan ahead
Chemical tankers 33 Markets: Oversupply risks should not be under estimated 37 Operations: A spill every 156 years; a double take on duplex steel
Next issue Main features include: crew; inert gas generators; power and propulsion; cargo control and monitoring Special reports: Greece, Cyprus Tanker type chemical tankers: classification, designs, operations, business, markets and trades
contents February/March 2017 volume 11 issue 1 Editor: Edwin Lampert t: +44 20 8370 7017 e: edwin.lampert@rivieramm.com Brand Manager – Sales: Paul Dowling t: +44 20 8370 7014 e: paul.dowling@rivieramm.com Sales Manager: Chris Tims t: +44 20 8370 7015 e: chris.tims@rivieramm.com Head of Sales – Asia: Kym Tan t: +65 6809 3098 e: kym.tan@rivieramm.com Production Manager: Sasha Tan t: +44 20 8370 1718 e: sasha.tan@rivieramm.com Subscriptions: Sally Church t: +44 20 8370 7018 e: sally.church@rivieramm.com Korean Representative: Chang Hwa Park Far East Marketing Inc t: +82 2730 1234 e: chpark@unitel.co.kr Japanese Representative: Kazuhiko Tanaka Shinano Co., Ltd. t: +81 335 894 667 e: kazujt@bunkoh.com Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Editorial Director: Steve Matthews Executive Editor: Paul Gunton Head of Production: Hamish Dickie Business Development Manager: Steve Edwards Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK
www.rivieramm.com ISSN 1753-7029 (Print) ISSN 2051-0578 (Online) ©2017 Riviera Maritime Media Ltd
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Tanker Shipping & Trade | February/March 2017
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COMMENT | 3
SOME VITAL REALITY ON TANKER SAFETY
H
ere’s the good news. Statistics just released by the International Tanker Oil Pollution Federation indicate that the downward trend in oil spills from tankers continues. The average number of large oil spills from tankers, i.e. greater than 700 tonnes, has progressively reduced and since 2010 averages 1.7 spills per year. The total amount of oil lost to the environment through tanker incidents in 2016 was approximately 6,000 tonnes, the majority of which can be attributed to one tanker incident in the Gulf of Mexico which resulted in a spill of more than 700 tonnes of gasoline and diesel. The ongoing reduction in the amount of oil spilt through accidents involving tankers is, as ITOPF points out, encouraging news for tanker operators and governments alike as they continue to work to improve standards of operations in seaborne oil transportation. Today, some 99.99 per cent of crude oil transported by sea arrives safely at its destination. These achievements are being rightly celebrated at an exhibition themed “50 years of government and industry working together to address the risk of oil pollution from ships” in London at IMO headquarters. It features a timeline from pre-1967 to the present day and showcases how improved safety of navigation, ship construction, training and risk reduction; preparedness and response have
contributed to the improved safety record. It also explains how a robust system of compensation and liability for ship-source oil spills is now in place and that appropriate funding mechanisms exist to finance an immediate and efficient response and compensate those affected. Against this backdrop we must however consider the wider safety picture. Looking back on the last six months, International Maritime Risk Rating Agency (IMRRA) screened 8,464 tankers representing 429,967,130 dwt. It identified 1,102 tankers that were operating with higher risk. Of the 8,464 vessels assessed, 162 were involved in an incident in the six-month period. International Maritime Risk Rating Agency (IMRRA)’s latest statistics show that in December there were 1,370 tankers operating with above average risk. This is a moderate reduction on the 1,595 tankers operating with above average risk recorded in November, which was a six-month high. The latest statistics reveal that yet again fire safety issues were the primary tanker deficiency recorded by port state control. December's statistics also showed that of the 1,579 tankers assessed most were 20,000-50,000 dwt and aged between 5-10 years. So what’s the bottom line? The tanker industry has made impressive gains in safety. A visit to the exhibition at IMO is testament to this fact. But there are no grounds for complacency.
ARE KOREAN YARDS A THREAT TO STABILITY? In the second quarter of 2015, South Korea’s Big Three, Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries, racked up a combined operating loss of 4.75 trillion won (~US$4 billion). This was the worst quarter in the history of the Korean shipbuilding industry. The sector has since taken steps to reduce capacity and last year Samsung Heavy Industries, STX Offshore & Shipbuilding, DSME and Hyundai Heavy Industries embarked on programmes of ‘self-restructuring.’ While this is commendable there are a couple of warning sirens on the horizon. First, it is unclear what steps SPP and Sudong, among others are taking to reduce capacity. They too have not been immune from prevailing economic winds. Second, as Bob Burke of Ridgebury Tankers pointed out to me in an interview at the end of January, reduction in shipyard capacity is one thing. However, if the yards continue to focus on the tanker segment and owners are offered inducements to order then the capacity issue actually intensifies for our industry. TST
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Tanker Shipping & Trade | February/March 2017
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CONTRACTS & COMPLETION | 5
VLCCS AND GREEK OWNERS ARE LEADING NEW ORDERS Reductions in yard capacity do not necessarily mean reductions in tanker building capacity
TANKERS ON ORDER Aframax 208 vessels
22,604,851 dwt
by Barry Luthwaite
Handymax 215 vessels
10,384,274 dwt
Handysize 138 vessels
3,797,426 dwt
S
hipbuilders remain desperate for new business. As the dry trading drought continues, their only salvation is coming from tankers. There have been more bankruptcies of smaller yards. Samjin Shipbuilding has officially been wound up, condemning 11 small chemical tankers, one containership and six bulk carriers to oblivion. Though still few in numbers, these incidents of ‘en bloc’ vessels failing are a worry. Wet traders remain firmly in the driving seat and often receive their newbuildings early, as bulk tonnage is cancelled. Quite when the deep shipbuilding recession will end is anybody’s guess as banks lose patience and state support dwindles. Although freight rates have weakened, most tanker owners remain optimistic for 2017 as voyages still bring in profits. Shipbuilders are almost begging tanker owners to place more newbuilding business. If you are an owner you can only but rub your hands with glee at the present time as prices fall even lower for certain types. DHT Holdings, currently
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the subject of a takeover bid by John Fredriksen, selected Hyundai Samho for two VLCCs for delivery in July and September 2018. The relatively early delivery dates suggested resales, but DHT has confirmed they were ordered outright. Unit price is put at only US$85 million, including upgrades that take account of forthcoming environmental legislation. Brokers have described the price as the “lowest” since 2013 in real terms. DHT is valued at US$475 million, but any merger with Mr Fredriksen’s Frontline would result in a combined fleet of 40 VLCCs among other crude carriers. After a quiet spell, VLCCs have come to life since the turn of the year. Hyundai has produced a new basic design, for which a letter of intent (LOI) was signed committing two units to an undisclosed owner. The LOI, if firmed, is thought to be linked to Greek interests, with speculation that Minerva Marine or Eastern Mediterranean Maritime is in the frame. The price quoted is as low as US$79 million but potential add-ons could push
Medium chemical 41 vessels 707,341 dwt Medium products 23 vessels 410,850 dwt Medium tanker 25 vessels 388,953 dwt Panamax 50 vessels
3,655,372 dwt
Small chemical 28 vessels 185,690 dwt Small products 51 vessels 329,281 dwt Small tanker 92 vessels
487,182 dwt
Suezmax 125 vessels
19,683,100 dwt
VLCC 115 vessels
36,229,176 dwt
Grand total 1,111 vessels
98,863,496 dwt
Tanker Shipping & Trade | February/March 2017
6 | CONTRACTS & COMPLETION
this above US$80 million. VLCCs recently delivered cost US$90-92 million. Lower prices have certainly sparked VLCC interest, with subsequent orders in the last two months numbering nine (including the LOI referred to earlier). There is gathering evidence of a price war emerging between China and South Korea. New Shipping agreed in principle to take two plus an optional two VLCCs from Jinhai Heavy Industries for as little as US$70 million apiece, and Marmaras Navigation took over two cancelled LOI slots from the same builder (price was not forthcoming). With the dearth of business, in other sectors there is a bitter battle shaping up. Owners adopt a low-risk strategy but cannot be certain that they will get their ships judged on recent history. Japanese builders face the prospect of more domestic VLCC business as contract of affreightments become due for long-term renewal. Major owners are well advanced in their negotiations, with Nippon Yusen Kaisha likely to be the first to strike with three VLCC commitments. The trio is likely to be ordered from Japan Marine United’s Ariake site. Japanese prices are higher than those of their two main rivals (South Korea and China), but have tumbled from US$97 million to US$82 million in just two years. The buoyant state of the wet trading sectors is reflected in the latest statistics. Increasing deliveries and a relative slowdown in ordering has led to a current order backlog for all tankers of 1,111 vessels aggregating 98,863,496 dwt. These numbers are down from respective figures of 1,197 units totalling 107,941,879 dwt only two months earlier. Contracting since the beginning of 2016 totalled 28,361,959 dwt covering 406 vessels up to the
start of February 2017. Within this total, 28 units were ordered in 2017. If 2016 is taken as a whole, business stood up well but fell in unit terms to 378, representing the lowest total for the last four years With the bulk sector set to resume business in 2017 after a oneyear drought, will this mark the start of a sharp decline in tanker transactions? Business in unit terms between 2013 and 2016 was 460, 423, 477 and 378 respectively. After running neck and neck deliveries since the beginning of 2016 has now overtaken new contracting, with 427 vessels aggregating 37,757,554 dwt commissioned against new business in the same period of 406 tankers totalling 28,361,959 dwt. For investment, Greek owners are way ahead of everybody else. They are committed to 196 vessels, which will commission 26,045,929 dwt into their mercantile marine by 2019. Scrapping remains at an unspectacular level, given that prices are not encouraging. Secondhand values have risen to attractive levels, inducing further-trading buyers. This impacts new construction decisions. Newbuilding resales are doing brisk business as a number of units are offered. The VLCC resale price is around US$81 million. This level has been falling steadily for a long time as evidenced by Olympic Shipping’s purchase of the final two in an original eight-ship VLCC series nearing completion at Hyundai for Metrostar Management, Greece. A previous sale to Kyklades Maritime at US$8384 million failed. Four owners are known to be negotiating purchase of resales at bargain prices. Evidence points to increasing incidents of vessels reverting to builder’s account status as owners get tough over delays and banks increase pressure for repayment of loans.
Tanker Shipping & Trade | February/March 2017
Wider-beam Panama Canal transit is still attracting so-called neo-Panamax and Aframax types. This steady flow of LR1 and LR2 units is set to continue. A total of 208 LR2s are committed, while only 50 LR1s apply. There is much more interest in the latter as a useful hybrid capacity between 50,000 dwt MR2 Handymaxes and LR2 Aframaxes. Concerns have been raised over the high numbers of MR2s added to the global orderbook. Most owners, though, are taking advantage of wider beam measurements. Looking at the crude sector, there is a fear of overtonnaging. Currently 62 VLCCs and 81 Suezmaxes are set for delivery in 2017, although there will be some slippage, particularly in China. Forty of each are due to commission in 2018, with
a further 13 VLCCs and four Suezmaxes in 2019. Shipbuilding is set for a bumpy ride in the months ahead. Japan is the shining light, but the US dollar is strengthening against the yen, which will raise prices for raw materials. The resurgence of the Japanese tanker fleet, particularly in chemicals and products, is boosting employment. More orders can be expected in 2017. South Korea and China are sharing a series of tanker orders from Iran, with more expected. Will Zodiac Maritime will go ahead with eight Aframax tankers? It remains to be seen TST Source for all figures in these tables: BRL Shipping Consultants. Data as at 3 February 2017
TANKERS CONTRACTED SINCE JANUARY 2016 AFRAMAX 56 vessels 6,094,388 dwt
PANAMAX 9 vessels 655,990 dwt
HANDYMAX 91 vessels 4,432,243 dwt
SMALL CHEMICAL 18 vessels 118,290 dwt
HANDYSIZE 50 vessels 1,387,846 dwt
SMALL PRODUCTS 19 vessels 102,718 dwt
MEDIUM CHEMICAL 24 vessels 377,000 dwt
SMALL TANKER 48 vessels 285,211 dwt
MEDIUM PRODUCTS 17 vessels 291,850 dwt
SUEZMAX 40 vessels 6,304,590 dwt
MEDIUM TANKER 8 vessels 124,100 dwt
VLCC 26 vessels 8,187,733 dwt
GRAND TOTAL 406 vessels 28,361,959 dwt
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ANALYSIS | 9
How OPEC production cuts impact the VLCC fleet Ballast indexes provide valuable insight into fleet utilisation by Ian Sadler
B
etween September and December 2016, VLCC earnings enjoyed an almost uninterrupted upward progression before starting to erode in midDecember. Given the elapsed time between fixing and lifting dates, this decline was consistent with the agreement by OPEC to cut production by 1.2 million b/d from 1 January. The deal is an attempt to reduce the massive overhang of global oil stocks and to boost oil prices, which were mired below $50/bbl. The improvement in VLCC and other tanker earnings occurred in the brief window between the date OPEC agreed the accord in late September, and when it came into force. The rate surge coincided with the normal seasonal improvement in demand, but it was also underpinned by a surge in OPEC production (which reached a new record of 34.5 million b/d in November) ahead of the enforcement date, as producers strove to make short-term gains from the oil price bounce afforded by the positive sentiment generated by the deal. Using AIS movement data, it is possible to work out in detail how the OPEC deal in combination with other factors impacted the disposition of the VLCC fleet over the last few months. It also informs us how the market might develop. One of the most telling indicators is the ballast index. As OPEC production gained momentum during the fourth quarter of 2016, the number of VLCCs in ballast fell from 210 units in mid-September to a low of 170 units at the start of December. This meant a reduction in the number of vessels arriving in the load regions, which helped strengthen freight rates. During this period of improving rates,
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there was an increase in the number of VLCCs heading to West Africa, which coincided with a gradual recovery in Nigerian exports, hit repeatedly in 2016 by the actions of militants. OPEC production started to contract from mid-December, with output falling by 500,000 b/d from November levels to 34 million b/d. Saudi Arabia is set to bear 40 per cent of the cuts. Saudi Aramco will cut supplies to nonstrategic Asia-Pacific buyers by 7-8 per cent from February. In mid-January it was reported that Iraq had cut back production by 6 per cent in line with the OPEC agreement. Venezuela and Kuwait reiterated their support for the deal, while UAE production will fall in MarchApril as a result of field maintenance. Oman is telling all its Asia-Pacific buyers to expect a 5 per cent reduction in term liftings. This article’s supporting graphic provides two VLCC ballast indices, one for vessels in ballast to the Middle East, and the other for vessels in ballast to West Africa. Since the start of December, there has been a gradual upward progression in both indices. This progression is expected to continue over the next few months
as OPEC production cuts start to bite. With VLCC rates likely to weaken further, there has been an increase in the number of VLCCs in repair. In early November, this figure had risen to 15 vessels, although it fell back to 11 by late January. The flat outlook for crude oil production coupled with potential restrictions on US crude oil imports, high VLCC delivery levels and the added cost burden required to meet directives under the Ballast Water Management Convention (which comes into force in September), will make 2017 a very challenging year for VLCC owners. AIS movement data will underline its importance as a key tool that helps owners keep on top of the latest developments in the VLCC sector in the year ahead. TST The above is an extract from an upcoming quarterly report on the outlook for the tanker market by Richardson Lawrie Associates Ltd (RLA), a firm of international maritime economists and business consultants. More information can be found at www.richardsonlawrie.com.
VLCC Ballast Indices 120 110 100 90 80 70 60 50 6
6
01
04
/1
2 2/
6
01
2 2/
/1
11
W Africa Index
6
01
18
/1
2 2/
7 01
01
2 2/
/1
25
Linear (M East Index)
/0
2 1/
01
7 01
2 1/
/0
08
M East Index
7 01
17
/ 15
01
0 /2
2 1/
/0
22
Linear (W East Index)
Tanker Shipping & Trade | February/March 2017
10 | LEGAL BRIEFING
Unlimited liability puts charterers, owners and insurers on notice
E
very shipowner and marine insurer knows that shipowners are entitled to limit their liability for marine claims. In Bahamas Oil Refining Company International v Owners of The Cape Bari, the Privy Council has held that parties to a contract are able to waive their right to limit their liability. On 25 May 2012, the vessel Cape Bari collided with sea berth no. 10 at Freeport, Grand Bahama. The berth was owned by the Bahamas Oil Refining Company International (BORCO), which claimed damages of US$22 million. The owners claimed that they were entitled to limit their liability to approximately US$16.9 million under the Bahamian Merchant Shipping (Maritime Claims Limitation of Liability) Act 1989, which incorporated into Bahamian law the Convention on Limitation of Liability for Maritime Claims 1976. On the shipowners’ application, the High Court made an order for the constitution of a limitation fund in the amount of US$16,995,487. BORCO applied to the Court to set aside that order, arguing that shipowners had waived their right to limit their liability under the Conditions of Use, a contract between BORCO and the shipowners that had been signed by the master shortly before the berthing operation. At first instance, the Judge held that owners were not entitled to limit their liability, as they had contracted out of their right to do so. The shipowners appealed, and the Court of Appeal of the Bahamas held that the shipowners were entitled to limit their liability. They held that under the Limitation Convention 1976 it was not permissible to contract out of the right to limit liability, even by entering into a contract of indemnity. BORCO appealed to the Privy Council. The Privy Council held that it is permissible for owners of a vessel to contract out of or waive their statutory right of limitation under the 1976 Convention or the 1989 Act. There is nothing in
ALEX DAVIS: “Charterers too may be affected”
Tanker Shipping & Trade | February/March 2017
the language of the Convention or the Act which prohibits owners from doing so. It might be possible to exclude the right without express reference to the Convention, but the right must be clearly excluded, whether expressly or by necessary implication. The contract is treated as if the statutory right of owners to limit liability was written into the contract. If there is a provision that clearly contradicts those rights, such that the two provisions cannot be read together, the statutory right must have been excluded. On the true construction of the Conditions of Use, the indemnity provision in question did not clearly exclude the owners’ right to limit their liability. So the owners were able to limit their liability. The decision is of considerable significance to the shipping industry, especially given that the 1976 Convention has been very widely adopted. The finding that it is possible to contract out of the 1976 Convention does not come as a complete surprise, as some commentators had suggested that this was the case. But previous discussion had turned on the effect of The Satanita, a case decided in 1897 under the then existing limitation regime. The present case confirms the position under the 1976 Convention. It is common for shipowners to have to agree to the terms of use of a particular port, and masters will often not be in a position to refuse to sign such terms. If their wording is effective to waive the right to limit liability, owners and insurers may find themselves facing unexpectedly high liabilities resulting from any incidents in port. Charterers, too, may be affected, for example where shipowners seek an indemnity from them in respect of losses incurred in using a particular port. All parties need to be aware of the risk. TST This article was authored by Alex Davis and Nick Barber. Both are partners at London headquartered law firm Stephenson Harwood
NICK BARBER: “The decision is of considerable significance”
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GAS DETECTION | 13
Replace and save money, tanker owners told Tanker owners with gas detectors that cannot be calibrated on board can save money by replacing them reports Paul Gunton
I
t can make economic sense for tanker owners to replace their portable gas detectors with new ones that can be calibrated on board, believes Nicole Edson, head of global sales at Martek Marine. Even if their existing units are still relatively new, the cost savings of having the crew calibrate the detectors show a return on the investment within a year, Ms Edson told Tanker Shipping & Trade. Since 1 July 2016, ships have had to carry portable gas detectors under Solas regulation XI-1/7 that was approved by IMO’s Maritime Safety Committee in May 2014. But some flag states – such as Singapore, where Ms Edson is based – introduced it early. The regulation requires ships to carry a means of calibrating detectors but not every detector is suitable for onboard calibration. This is particularly true on tankers, which generally carried gas detectors before the Solas regulation, when the norm was to send them ashore either six-monthly or annually to be calibrated. For some detector manufacturers, this calibration may have provided an ongoing revenue stream, Ms Edson suggested. Not only are there cost savings: because the crew is experienced in using the detectors by having calibrations done on board, “you are trusting that it’s done the right way.”
DRONES TO MONITOR EXHAUST EMISSIONS Martek Marine has gained a position on a European Maritime Safety Agency (EMSA) research project covering remotely piloted aircraft systems (RPAS) for monitoring ship emissions and marine pollution. In November 2016, a number of framework contracts to develop RPASs for maritime applications and Martek Marine will develop an RPAS that can
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Martek Marine was among the first to provide onboard calibration equipment, as described in this report a year ago. It now has about 2,500 ship sets on ships of all types, including on most ships operated by the large Hong Kong-based ship manager, Anglo Eastern Univan. Other companies have since entered this market and it is now seen as normal to calibrate on board. With the tanker sector now a mature market for gas detectors, Martek Marine, replacement business represent a large share of its supplies. Gas sensors last about two years, she said, so a trigger point for replacing detectors is often when those need renewing and costs begin to rise. “It makes sense to reinvest and start saving money sooner,” Ms Edson said. Especially with oil prices low and shipping income depressed, “we want to help owners save money.” The company offers a range of portable detectors, including its Marine 4 – which uses a catalytic detector and can detect and monitor four gasses simultaneously – and Tankscape, which uses infrared sensing and can be used to monitor confined spaces and interted regions. But “some very exciting products” are planned for release this year, Ms Edson hinted. No details were available, but they will use “new technology that will further save companies money.” TST Martek Marine’s Tankscape uses infrared sensing technology
sample gases from a vessel’s emissions plume by using electro-optical, infrared imaging and gas emission sensors. It will also carry a gas analyser that measures SOx, NOx and CO 2 levels to determine possible breaches of EU law regarding the sulphur content of a ship’s fuel. Each RPAS will have a range of 50km from the ground station.
Tanker Shipping & Trade | February/March 2017
14 | GAS DETECTION
EMISSION MONITORS FOR MRV ‘DO NOT EXIST’ Technology does not yet exist to implement the European Commission’s preferred method of measuring the mass of CO2 emitted by ships, as required by the EU’s Monitoring, Reporting and Verification (MRV) Regulation, according to the chief executive of its leading verification provider, Verifavia Shipping. Julien Dufour described to Tanker Shipping & Trade the four methods outlined in the regulations for calculating CO2 emissions, three of which keep track of fuel consumption in various ways. But the fourth method would rely on continuous emission monitoring systems, “which do not yet exist,” he said. But the European Commission views this method “as the most appropriate and accurate to calculate the mass of fuel consumed,” Mr Dufour said. Although instruments exist that can measure the proportion of various gasses – such as SOx and NOx – in exhaust gas, the MRV regulation requires the total mass of CO2 in the exhaust over
the course of a voyage. To obtain that, he pointed out, “you need not only the concentration but also the total volume of the exhaust gas between departure and arrival.” For the past two years, he said, Verifavia has spoken to many equipment manufacturers “and nobody told us they could do it.” However, “most of them say they hope to be able to do it soon,” he added, although even when the equipment becomes available, it will probably be expensive, he said. For that reason, he does not expect there to be much take-up of this option, even when equipment has been developed. Although it might offer more accurate data, it would not bring any added value, he suggested. “We might not encounter this method for a couple of years,” he added.
SULPHUR CAP FORCES CHOICES ON EMISSION MONITORING SYSTEMS
should be type-approved for. Before the EMS is installed, it should be tested, and Mr Brown recommended attending its factory acceptance test to see the system assembled and speak to its designers. This might “bring up some items that may not have been considered at the requirements stage,” he said. He also recommended preparing a detailed on-board test plan to check the system performs to specification. When installing the EMS, it is important to consider where the sample points and control panels will be sited. “Ensure that the probes do not become contaminated by scrubber washwater, sootblowing or turbocharger cleaning materials,” Mr Brown advised. Its control panel and analysis equipment must also be thoughtfully located so that its operators have easy access to each part of the system for maintenance. “Shipbuilders have different selection criteria to the shipowner,” Mr Brown observed, when he turned his attention to operating costs. Yards, he said, usually focus on capital cost and ease of installation, which
An EMS filter probe installed on the weather deck just above a scrubber outlet
• EU’s MRV Regulation will affect any ship of 500gt or more whose voyage includes at least one port of call in an EU member country. Ships will have to begin monitoring CO2 emissions in January 2018.
Choosing the right emissions monitoring system (EMS) is essential to be certain that a ship meets the global cap on sulphur emissions, believes Simon Brown, managing director of the emission monitoring specialist, Emsys Maritime. Mr Brown was chairman of IMO’s working group of experts that revised its NOx Technical Code as part of the MARPOL Annex VI revisions in 2007-9. In an article on the company’s website, he has outlined a number of what he views as essential factors when an EMS) for an exhaust gas scrubber, which starts with its specification. “Get your requirements correct at the start,” he said, which includes confirming what equipment it is monitoring – an engine or a boiler, for example – and what local regulations the EMS
Tanker Shipping & Trade | February/March 2017
JULIEN DUFOUR (Verifavia Shipping): “Nobody told us they could do it”
“may mean you end up with a system that is more expensive to operate,” he said. Then there is maintenance. It should be well documented and relatively straightforward, he said, so “complex analytical systems that need regular servicing by specialist technicians should not be considered.” His final advice is about training, but it is “probably the most important consideration of all,” he said. Because a ship’s crew is regularly changed, “a single training session at commissioning is not usually sufficient.” Although training is expensive and time-consuming, he said, “you cannot afford to ignore this most important aspect.” In summary, he warns of the risk of falling for “the inkjet printer strategy of low upfront cost but back-end loaded profit in the cartridges.” In his view, “a well specified system will be reliable and cost-effective [while] a poorly specified EMS can become a significant burden to the ship’s crew and end up costing more than the system capital outlay if you have to switch to MGO whilst waiting for parts or service.” TST
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GAS DETECTION | 17
INERTED SPACES NEED THE RIGHT GAS DETECTOR
Riken Keiki’s RX-8700 is designed to monitor inerted spaces on crude oil tankers
Checking the atmosphere in an inerted space on a tanker is a job that needs a particular type of meter, according to information provided to Tanker Shipping & Trade by Simon Phillips, sales and marketing manager for Weatherall Equipment & Instruments. Even the most common type of meter used to detect flammables can give “false readings and a false sense of security,” according to the company’s latest Application Bulletin, due to be published as this issue went to press. This problem arises from the very nature of an inert space: it has been purged with engine exhaust, nitrogen or another gas mix not containing oxygen, such as the headspace above a petroleum-based product or empty storage tanks to prevent the accumulation of a flammable vapour mixture. But catalytic sensors, which will sense combustible gases at their lower explosive limit, requires oxygen to function.
“If there is zero or a very low oxygen level present, the catalytic sensor will not work,” the bulletin warns. Sometimes a dilution fitting is used to blend some oxygen with the sample, but this method is prone to errors and if the fitting is forgotten or blocked, its operator will get false or inaccurate readings, it goes on. Its preferred solution is to use infrared (IR) hydrocarbon sensors. Unlike catalytic sensors, IR sensors do not need oxygen to work making them ideal for inert monitoring applications, the bulletin suggests. Weatherall is the UK distributor and service centre for the Japanese gas detector manufacturer Riken Keiki and its RX-8500/RX-8700 portable detectors use IR sensors and are “specifically designed for inert space monitoring,” the bulletin notes. The RX-8700 in particular is designed specifically for crude oil tankers, it says.
CROWCON TARGETS PORTABLE UNITS AT MARINE MARKET With the entry into force of IMO’s Solas regulation XI-1/7 on 1 July 2016, the gas detection specialist Crowcon has identified two of its portable units as suitable to enable ships to comply with its requirements: its Gas-Pro and T4 multi-gas detectors. The Gas-Pro can monitor up to five gases, including the four specified in the Solas regulation: oxygen, flammable gas, hydrogen sulphide and carbon monoxide. It has an integrated pump to sample and test the atmosphere inside an enclosed space prior to entry. Crowcon’s T4 detector monitors four gasses and, when used with a manual aspirator, “provides an excellent alternative solution for sampling atmospheres in
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enclosed spaces,” the company said in a statement. It is described as lightweight but robust and can withstand droptesting from up to 4m. They can both be tested and calibrated on board ship using Crowcon’s I-Test bump-test and calibration station. The company said that this needs minimal training and it provides an audit trail of the time and result of each safety check. The Gas-Pro and T4 units are certified to meet the EU’s Marine Equipment Directive, as are a number of other Crowcon detectors. TST
RIGHT: Crowcon’s T4 gas detector can help meet Solas XI-1/7
Tanker Shipping & Trade | February/March 2017
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TANK CLEANING | 19
CHARTERERS NEED TO STEP UP
ON TANK CLEANING
If the charterers set the specifications and the charterers employ the inspection companies to carry out the inspections, why is the vessel responsible for the quality of the loaded cargo? asks Guy Johnson*
GUY JOHNSON (L&I Maritime): “The responsibility is blurred, because the contamination is “invisible” at the time of loading”
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I
t is well recognised, understood and not disputed that in the eyes of the law, if a loaded cargo becomes contaminated on board any ocean bound vessel, it is the owner of the vessel that is legally responsible for reparations and where appropriate, compensation; always assuming that the cargo is “on-specification” at the point of delivery. One could then ask why so many cargo interests do not instruct as standard, representative samples of cargo to be drawn from the loading line and the manifold connection, where the ship and the shore essentially meet, at the start of loading? Safety concerns are the most common reason why such samples are not mandatory, but in their absence and in the event of a contamination claim on board, there can be no definitive proof that the contamination was derived from the loading terminal or the vessel and this makes an already murky area, even un-clearer. But putting the sampling issue aside, and assuming that the cargo is indeed on specification at the point of delivery, if the cargo subsequently deteriorates either during loading or during sea-passage and is deemed “off-specification” at the discharging terminal, as already noted, it is the vessel that is financially responsible for all associated delays, finding alternative storage, purification of the cargo and in some cases complete disposal. Cargo interests have the not insignificant burden of having to tell their customers that the cargo cannot be delivered on time and the onerous task of sourcing alternative product, which could seriously damage commercial relationships, particularly if a downstream chemical plant is forced to shut-down as a result. It should be very clear that from a cargo interests’ point of view, the choice of vessel for any particular cargo is absolutely crucial; with the most sensitive cargoes, which are most prone to contamination, being shipped in the most sophisticated vessels, generally with stainless steel cargo tanks. But stainless steel comes at a price and this may be the
source of a growing problem? In a market that has been depressed for many years and with a global excess of tonnage that essentially means there are far more ships than there are cargoes, there seems to be a growing tendency to choose the most “cost effective” solution, rather than the best solution. The author understands that stainless steel tonnage can cost a charterer US$1520 per MT of cargo more, than coated tonnage. Accepting that this figure is not definitive and is open to discussion, it still translates into a significantly higher cost for transporting a cargo in stainless steel. But if the integrity of the cargo is maintained, surely this is money well spent? Seemingly not, with more and more commercial interests considering coatings for the most sensitive cargoes, presumably in an attempt to maximise the income for the fixture. It is true that modern organic coatings are far more sophisticated than they were in the recent past, but cargo tank coatings can never be directly compared against stainless steel, regardless of how strict the preloading inspection requirements are; the logic being, if the pre-loading inspection is stricter, the coated vessel will somehow be “cleaner” or “more suitable” to load, even though a coated vessel is perhaps not the premium choice for the nominated cargo. This trend towards using coatings instead of stainless steel has undoubtedly perpetuated the epidemic of stricter and stricter wall wash specifications, prior to loading cargoes that only a few years ago would never have merited a wall wash inspection. The author has gone on record many times about this matter and how actually, hiding behind a wall wash inspection absolutely does not guarantee that a chemical cargo can be loaded successfully and without risk of contamination. Moreover, vessels are being forced to carry out unsafe practices, in their attempts to clean further and harder to achieve pre-loading inspections, enforced by cargo interests, that as noted provide no assurance that the cargo will
Tanker Shipping & Trade | February/March 2017
20 | TANK CLEANING
IF COMMERCIAL INTERESTS CAN SAVE US$20 PER MT OF CARGO BY SHIPPING CHEMICAL CARGOES IN COATED TONNAGE INSTEAD OF STAINLESS STEEL, THEN SURELY IT IS WORTH THE RISK?
arrive on specification at the disport. So the question is this; if the charterers set the specifications and the charterers employ the inspection companies to carry out the inspections, why is the vessel responsible for the quality of the loaded cargo? The simple answer is that the preloading inspection is limited in its application and can only ever give an “indication” that a cargo tank is suitable for loading. If the vessel is unclean outside of the areas that have been inspected (typically the cargo lines or the upper bulkheads), and the cargo becomes contaminated as a result of this, then ultimately, this is the vessels’ responsibility. This is accepted, but surely stimulates investigation into more appropriate means of pre-loading inspections, that are relevant to the cargo lines and / or larger areas of the cargo tanks being inspected? But then what happens if the loaded cargo becomes contaminated, and the contamination was not outside the area that was inspected by the independent inspection company? In other words, the source of the contamination is exactly where the cargo tanks were inspected? Most commonly, this relates to cargo tank coatings and specifically the retention of previous cargo residues inside the paint film. Wall washing is certainly not guaranteed to pick up these residues, because the wall wash is flawed
Tanker Shipping & Trade | February/March 2017
in many ways, not least the extremely short contact time of the solvent on the cargo tank wall. Meaning a wall wash inspection could easily be accepted, but the coating could still contain previous cargo residues which could be transmitted into the next loaded cargo. But the question is this; is this an indication of insufficient tank cleaning on behalf of the vessel? Or indeed an indication of negligence? Absolutely not, because none of the tank cleaning guidelines that are in the public domain address how to specifically remove retained cargo residues, most likely because the solution is complex and very often requires the use of solvent cleaning which is widely prohibited. All of which means that if a vessel follows a recognised tank cleaning guide and successfully cleans to a standard that is accepted by an independent inspection company, it must be said that the vessel has indeed been cleaned diligently. The fact that a loaded cargo has become contaminated with previous cargo residues that were retained in the paint film and have subsequently become transmitted into the loaded cargo is now seemingly only the responsibility of the vessel. Why is this? Is it only the vessel that knows and understands the complexities of cargo retention into coatings? Surely if the cargo interests are transporting a cargo in a vessel
with coated cargo tanks, there is some responsibility to understand the characteristics and performance of the vessel they are chartering? The counter argument is always that if the cargo contains some / any contaminant at the discharge port that it did not contain at the load port, it can only have come from the vessel and therefore the vessel is the source of the contamination. Harsh? Definitely. Fair? Not really, but this is the reality. All the time, the question of dollars per ton is rumbling on .. If commercial interests can save US$20 per MT of cargo by shipping chemical cargoes in coated tonnage instead of stainless steel, then surely it is worth the risk? Imposing the strictest pre-loading inspection requirements apparently provides an additional level of security that seems to make the risk more manageable or even acceptable. But actually it doesn’t, and in the case where a previous cargo is known to be retained in the cargo tank coating, and the next cargo is sensitive to that previous cargo, the only way of ensuring the quality of the next loaded cargo is not to use this vessel. The responsibility is blurred, because the contamination is “invisible” at the time of loading. But from the vessels’ perspective, ignorance is not a defence. Yet it is interesting, that the ignorance of commercial interests
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perhaps is a defence? But what happens when the contamination is not invisible and actually clearly visible at the time of loading and more importantly at the time of inspection? The following is a brief synopsis of a real case: A charterer was transporting a cargo of 2 ethyl hexanoic acid (2EHA) from Europe to the United States. 2EHA is an organic acid with similar acidity to acetic acid and is therefore most suited to stainless steel tonnage. But a handful of organic coatings are reported to be resistant and should therefore be considered as acceptable. In this case the charterer fixed a vessel with an approved organic cargo tank coating. Only one cargo tank was to be loaded and the pre-loading inspection requirements were visual only (no wall wash). The previous cargo was vegetable oil based, and known to not be an absorber into the cargo tank coating, meaning if the tank was visually clean, there would be no risk of residual vegetable oil being retained in the coating. The vessel presented the cleaned cargo tank to the nominated load port inspector and the tank was accepted for loading. Loading commenced, was only briefly suspended pending successful first foot analysis, before being completed without incident. The vessel then sailed to the United States and some 20 days later arrived at the discharging port where the cargo was rejected because it was found to be discoloured and contained the presence of iron, neither of which had been present in any of the load port samples. A simple case of the cargo becoming contaminated en-route and the vessel’s owner assuming responsibility ... Upon closer examination, perhaps not? All of the routine areas were investigated and it was confirmed that the vessel had indeed cleaned diligently. The independent pre-loading inspection was then examined a little further and it was found that the visual inspection of the one nominated cargo tank had taken 45 minutes, which is an extraordinarily long time to visually inspect one cargo tank. This immediately raised a question regarding the suitability (or not) of the cargo tank prior to loading. The only reason it would take such a long time to visually inspect one cargo tank is because the inspector was not immediately satisfied and needed the time to consider options. But what were the options? Was the cargo tank visually clean or not? Was it suitable to load or not? This
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Wall washing is certainly not guaranteed to pick up these residues. One flaw is seen as the short contact time between solvent and cargo tank wall
is not a 45-minute process, but clearly it had taken 45 minutes. After the contaminated cargo was discharged and the cargo tank cleaned, it was inspected by the vessel’s P&I surveyor and found to have coating breakdown in the region of 5-10 per cent, with areas of exposed steel clearly and visibly apparent. These areas were almost certainly also present when the cargo tank was inspected prior to loading the 2EHA cargo. Consider the fact that an acid cargo had been loaded into a coated cargo tank with exposed steel and it is really not hard to understand why the 2EHA was contaminated with iron and had become discoloured. In this case, the charterers were also the cargo owners, and with hindsight one has to say that if anyone had known that 2EHA was prone to react with iron, it was them. Moreover, if anyone had known this shipment should have taken place in stainless steel it was also them. Comparatively, the vessel was less likely to understand the consequences of loading an acidic cargo into a cargo tank with exposed steel and indeed presented
the tanks to a visually clean standard as requested. It should be recognised that visually clean does not mean that the coating has to be 100 per cent in-tact. If of course, the charterer had demanded that the cargo tank coating needed to be 100 per cent in-tact for this shipment, this cargo tank would never have been presented for loading. To summarise; the charterer / owner of a cargo of 2EHA fixed an organic coated ship to transport their own cargo from Europe to the United States. They instructed an independent inspection company to visually confirm that the cargo tank was “suitable” for loading, but did not think to mention that if there was coating breakdown the cargo was almost 100 per cent guaranteed to become contaminated. There was coating breakdown and the cargo did become contaminated. How can the vessel be solely responsible for this contamination? TST Guy Johnson is a director of L&I Maritime (UK) Ltd
Tanker Shipping & Trade | February/March 2017
24 | TANK CLEANING
MIRACLE FINDS CURES FOR TANK CLEANING QUESTIONS The latest version of the Miracle tank cleaning guide was released in November by its publisher, ChemServe in Germany. It includes some new features in both its offline and online tank cleaning guidance. Claus Bruhn, general manager at ChemServe, said the guide includes “a kind of cleaning Wiki” that gives answers to most questions about tank cleaning. It contains detailed explanations, definitions, tables and videos to help determine cleaning regimes appropriate to different cargoes. At its heart is a guide to suggest suitable cleaning recipes based on both the cargo to be cleaned out of a tank and the next cargo due to be loaded. But one of the new sections in this edition can suggest alternative cleaners if the recommended materials are not available. The modular guide can produce a tank
cleaning plan that includes all relevant information for cleaning from one cargo to another cargo will be retrieved and displayed in one report. Requirements from CDI, SIRE, ISGOTT and CTSG are taken into account. Among the updates added in the latest edition is the ability for users to record proprietary information, such as their own company’s cleaning procedures and cargo handling procedures. The main benefit for its users “is a significantly decreased probability of tank rejections,” Mr Bruhn told Tanker Shipping & Trade. “The annual cost for this guide is negligible compared with the cost of an unsuccessful tank cleaning.” • A demonstration of the online version of Miracle can be seen at https://miracle.chemserve.eu
SCANJET CONTINUES ITS SERIES FOR STENA A tenth 50,000 dwt chemical and product tanker in a series of 13 is due to be delivered to Stena of Sweden as this issue of Tanker Shipping and Trade is published in March. Each is fitted with a Scanjet tank cleaning system that allows four tanks to be washed simultaneously, a feature that has been incorporated to reduce the ships’ turnround time in port. Stena Impeccable, as the vessel will be named, will be followed by the remaining three at regular intervals, with the last scheduled to leave their Chinese builder Guangzhou Shipbuilding International (GSI) in early 2018. The ships’ design was developed by Stena Teknik and GSI.
RETROFITTED TANK CLEANING SYSTEM SAVES TIME AND MONEY Replacing a tank washing system can save considerable time and money, according to Mats Marklund, vice president, sales, at Polarmarine in Sweden. Speaking at Tanker Shipping & Trade’s annual conference in November 2016, he described a retrofit carried out on the 47,000 dwt crude tanker Oaktree that cut its owner’s fuel bill and saved many manhours for the crew. The ship had been fitted with 18 twinnozzle machines, 16 of them used for cargo tank cleaning. These were run for six hours during each of 10 annual cleaning operations. Operating them two at a time, this required 48 hours of tank washing. Polarmarine replaced these with its Polar Jet 30 (PJ30) Eco washing units, which could complete each washing in four hours, bringing the annual total down to 32 hours. With the boilers burning 0.333 m³/hr, this has saved 55m³ of fuel, reduced pump running time and cut manhours to operate them. It also reduced chemicals and slops. These savings are made possible by the Polar Jet Eco’s design, which takes account of a tank’s shape to spread the cleaning media evenly. Tank cleaning machines are mounted closer to the top of a tank than the bottom, which usually means that the top is over-cleaned. But by using what Mr Marklund described as “clever
Tanker Shipping & Trade | February/March 2017
geometry in the gear box,” Polarmarine’s units accelerate the nozzle rotation at the top of the cleaning cycle and slow it at the bottom, reducing cleaning time by 25 per cent, leading to the savings he described. Vessels that have Polarmarine’s standard PJ15 or PJ30 washing units can upgrade them to the Eco version by adding the gearbox without lifting the main pipe out of the tank. Polarmarine also offers its Washmaster software. This has been designed to monitor and report on tank cleaning processes as they take place and to generate post tank cleaning reports. TST
One of Polarmarine’s cleaning machines fitted to Oaktree, showing its innovative gearbox assembly
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26 | PUMPS
Frequency converters give pumps power and purpose Adding frequency converters to a pump’s control system can increase its output and support other ship systems, Paul Gunton reports
T
ankers that have to retrofit ballast water management systems (BWMSs) can face a strong challenge: pushing the water through a treatment system will need more pressure than normal ballasting operations. One solution is to add a booster pump, but that adds expense and hardware. An alternative is to add a frequency converter to the pump’s power supply system. This is what Wärtsilä Svanehøj has been offering since Wärtsilä entered the BWMS market, said Morten
Brandborg, sales director for deepwell cargo pump systems at Wärtsilä Svanehøj. By adjusting the supply frequency of the pump, it can be made to run faster and deliver the ballast at the pressure that suits the treatment system, he explained, with it reverting to its normal arrangement at other times. In most cases, no modifications are needed to the motor or pump, he said. The adjustments could be automated, Mr Brandborg said, by fitting a pressure sensor to control the frequency converter. But converters are generally
Tanker Shipping & Trade | February/March 2017
operated manually, with the frequency being switched on along with the BWMS, “they just turn up the speed to the level where they know it’s correct,” he explained. On newbuildings, including a frequency converter in the specification need not increase the cost significantly, Mr Brandborg suggested. A ballast pump of the size needed in a typical tanker would normally require a soft starter, but a frequency converter will do the same job and cost only about 5 per cent more, he said. For retrofits, if a pump is already operating at its limit, an additional booster pump may be the best option, with the booster pump’s motor controlled by a frequency converter. This is especially the case if a deepwell pump is involved (structural changes to the tank could
be involved, along with fresh class approvals). This is particularly relevant for tankers of up to about 60,000 dwt, Mr Brandborg said, which generally have submerged deepwell ballast pumps. Installing frequency converters for pumps opens up an opportunity to integrate them into a ship’s complete electrical system in a way that has not been done before. “You have paid for this huge system just being on standby while you are sailing, so why not use it for something else?” said Mr Brandborg. For example, the cargo pump’s frequency converter could be used to control the bow thrusters, saving the cost of a separate frequency converter for that device. Or the converters could become part of a take-me-home propulsion system, by linking them with the shaft generator, he suggested. This sort of functionality has been available for smaller vessels for a few years, Mr Brandborg said, but Wärtsilä is bringing it to larger vessels for the first time. Discussions with owners began about three years ago, with the first order placed during 2015. Several other orders have been placed since. Mr Brandborg did not name that first ship, but confirmed that it was a tanker that was delivered in the second half of 2016. Operating the electrical system in this way would be integrated into a touchscreen control panel, Mr Brandborg said. Selecting ‘bow thrusters mode’ would change all the relevant parameters with one touch.
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PUMPS | 27
BIGGER PUMP RANGE AND TURNKEY CONTROLS FROM COLFAX Colfax Fluid Handling introduced two developments to its pump technology during 2016: new sizes of its Allmarine MI-D centrifugal pump, and a turnkey version of its CM-1000 electronic pump controller. The MI-D pumps now have a capacity of up to 3,900m3 per hour and delivery head of up to 50m. They are suitable for sea water and fresh water for cooling and ballast systems. The CM-1000 is for cooling water pumps, and can be pre-installed in new ships or installed while underway and brought into service without downtime. With its expanded range, the MI-D series covers the needs of ships ranging from about 60 dwt to more than 200,000 dwt, the company said when it exhibited the pump at the SMM exhibition in September 2016. It is a double-suction pump with
a symmetrical design, but has just one shaft seal and no internal bearings. “The MI-D is probably the lightest and smallest water pump for large flow rates, yet it also has an outstanding service life and extraordinary efficiency in marine applications,” said director of product management Christian Martin. The CM-1000 controls the flow through cooling seawater pumps to suit the temperature of the fresh water and current cooling requirements, which saves considerable amounts of electricity, Colfax reported. It was launched in 2014 but now, in its turnkey version, its complete electronics are supplied as a ‘cabinet solution,’ including frequency converters, that needs only to be wired into the ship. When the ship is at a standstill or slow steaming in a cold environment, CM-1000 shuts down the pumps completely and switches them back on automatically as required.
LEISTRITZ DEVELOPS ANTI-CAVITATION SYSTEM FOR CARGO PUMPS Leistritz Pumpen has developed an anti-cavitation system for cargo pumps on tankers that detects the onset of the potentially damaging situation and signals the pump’s control system to reduce its speed. Cargo pumps are exposed to difficult operating conditions because of the diverse viscosities and temperatures of the fluids they have to handle, among other factors. So they have to offer features such as high suction ability, robustness and high reliability, the company said. Speaking at the SMM exhibition in September 2016, Johannes Döring, business development manager for marine and shipbuilding, explained that the anti-cavitation system monitors vibrations on the pump, which normally occur at the start of cavitation conditions. Cavitation occurs when the net positive suction head (NPSH) of the pump itself becomes greater than the NPSH of the system as a whole. Operating a pump in prolonged cavitation conditions causes significant
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Johannes Döring demonstrating the anti-cavitation system during the SMM exhibition
vibration, noise and damage to pumps and other affected parts, Mr Döring said. When the anti-cavitation system detects continuing
vibrations greater than a defined value, it sends a signal to the automation system, which decreases the pump’s speed and therefore
reduces the axial speed of the fluid in the pump. This reduces the pump’s NPSH, and cavitation and vibrations are stopped. TST
Tanker Shipping & Trade | February/March 2017
28 | SINGAPORE
Korean and Chinese tanker Singapore is drawing new tanker business. The Singaporeanflagged tanker fleet is one of the world’s youngest by Barry Luthwaite*
C
hinese tanker management interests are preferring to establish management operations in Singapore, versus Mainland China and Hong Kong, which are both experiencing economic slowdowns. They are being supported in this by the Singaporean government which is easing some of the associated costs of setting up shop on the Lion Republic. Having started operations in coastal trade, Sinochem now has a great ambition to be a major player in global chemical trades. A new commercial and technical base has recently been established in Singapore to capture more market share in Asian regional and Middle East to Far East trades. Sinochem established a joint venture in 2005 with Stolt-Nielsen on a 51 per cent majority shareholding basis. Where coastal operations in China by either is not affected, they are now in competition on some trading routes. Sinochem is in the middle of a huge newbuilding programme, which concentrates on parcel tankers and contract of affreigtment business. Much of
the latter is brokered through Singapore. The latest units are among the biggest built, offering 28 compartment tanks. In a further boost, a global hub office has been established for the Korean marine and shipbuilding industry to reach connecting markets and develop new business opportunities. South Korea seeks Singapore’s experience in marketing and globalisation. Five Korean companies have set up home, but office space is expected to cover 50 businesses by 2020. Each side will develop its co-operative strengths and work on its weaknesses. The leading trading owners are largely unchanged in unit terms, with Ocean Tankers leading the way with a complement of 80 ships. But the big mover is Navig8, which is in second place with 60 ships. Navig8 will soon become the largest owner, and is easily in the leading position if you add pool vessels. Malaysianowned, Singapore-based AET is third with 57 ships. Raffles Shipmanagement Services, a division of commodities trader Wilmar Holdings,
SINGAPORE STATISTICS 2016
50
Korean businesses by 2020
Tanker Shipping & Trade | February/March 2017
91
tankers on order, including 34 product tankers
144
bunker tankers, 135 with mass flow metering
www.tankershipping.com
SINGAPORE | 29
interests drawn to Singapore TANKERS DELIVERED 2016 TO DATE SINGAPORE OWNERS VESSEL TYPE
NO
DWT
Aframax Crude
21
1,991,465
Handymax
20
921,827
Handysize
10
242,554
Medium Tanker
1
16,717
Panamax
1
73,800
Small tanker
1
9,663
Suezmax
2
315,562
VLCC Grand Total
recently ended a newbuilding programme. The company has looked at more penetration locally, and has concluded a newbuilding programme for six 19,700 dwt chemical carriers that will deliver from Jinhai, China, in 2018 and 2019. All six will trade in inter-island transport in Southeast Asia, which indicates that they may be parcel carriers. The rise of Raffles Shipmanagement has lifted it to fourth place, with control of 44 units. As at the end of January the directly-owned Singapore trading fleet numbered 787 vessels, totalling 43,178,055 dwt. This is an increase over the previous annual complement of 743 units totalling 41,950,438 dwt. More overseas owners are employing Singapore registry which has 685 tankers under its flag. Many of these owners have a maritime infrastructure presence on the island, but not beneficial owner domicile. With 91 vessels on order (aggregating 5,112,983 dwt) Singapore owners rank fourth in the newbuilding league. Of the 91 vessels on order, 34 are for the products trades. The last 12 months have seen orders for 37 tankers placed. This will add 1,816,900 dwt to the fleet by 2018. This contrasts with 58 deliveries in the last year, commissioning 3,888,948 dwt. A few of the newbuildings were sold off in asset play. Others will be leased and bareboat chartered with compulsory purchases exercised in due course, as shipowners and shipyards sometimes struggle to raise finance in a tight lending climate. With one of the youngest trading fleets, demolition sales are limited. Only two units went for recycling. Secondhand acquisitions amounted to 14 incoming units, whereas twice this many were sold to trading buyers exploiting rising values and asset play. As the global leader in bunkering
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2
317,360
58
3,888,948
infrastructure, Singapore operates the world’s biggest bunkering port and bunker tanker fleet. Of its 144 bunker tankers, 135 have mass flow metering installed in line with the 1 January 2017 target set by the Maritime and Port Authority of Singapore. The key advantage of MFM is that the flow rate in the pipe can gauge the quantity as well as mass and density of the bunker fuel oil passing through. The typical bunkering operation can be reduced from eight to four hours. Some barges have not complied, and will be banned from supplying fuel oil. MFMs will also apply by mandate later this year for supply of marine gas oil. Singapore intends to digitalise all bunkering paperwork over the next few years. Competition from overseas owners is increasing. China, in particular, is stepping up efforts to position vessels in the Malacca Strait. Few traders bunker vessels in China because pricing is too high and infrastructure facilities are inadequate. The changing conditions in oil supply (due to environmental considerations and mandatory lowering of sulphur oil content to 0.5 per cent by 2020) are proving a headache for compliance by the global fleet. Although the bunkering fleet is large to cater to the world’s largest port, the target is a daunting one. With cargo volumes down, there has been far less demand for bunker fuel and this is hitting some owners and traders hard. Many units in the bunkering fleet are ageing and seen as prime candidates for recycling, while larger units are acquired with double the capacity. LNG bunkering is still making little headway, though this is a global phenomenon. TST Sources for all tables on this page: BRL Shipping Consultants Data as at 2 February 2017
Tanker Shipping & Trade | February/March 2017
30 | SINGAPORE
Tanker managers and owners plan ahead A
new name on the Singapore shipmanagement scene is Interorient Shipmanagement. Well known elsewhere, the company is headed up by Sandip Mirchandani, a stalwart of shipmanagement. Interorient Shipmanagement set up its Singapore operation in June 2016. This move was in line with Interorient’s diversification away from managing in-house group-owned vessels toward third-party shipmanagement. Interorient is a 50 per cent partner in the Norient tanker pool. The company is actively promoting its services in Asia, where it was not well known. “We are looking at rapid development of our third-party management, especially for Japanese owners,” Mr Mirchandani said. “There is significant potential in the market – especially following recent changes such as V Group acquiring Selandia and other consolidations – that will open up opportunities for owners looking for new options,” he explained. Although Interorient Group manages a substantial number of tankers from its offices in Cyprus and Hamburg, the Singapore operation is initially focused on bulk carriers – though options for managing tankers will be considered at some stage. “It is not so easy for tanker owners to switch managers because of the need to satisfy oil major vetting requirements when changing management,” Mr Mirchandani said. Interorient is focusing on vessels trading in Asia. Mr Mirchandani said “We have sufficient crew to supply a further 10 ships from here, and we are looking at bulk carriers and chemical tankers. We have a good relationship with oil majors.” MTM Shipmanagement includes 42 tankers among its managed fleet of 64 vessels. Managing director Vijay Rangroo said: “We are open for more ships under management and have the capacity to manage more ships in Singapore.” MTM has four newbuilds under construction for its own account: 30,000dwt chemical tankers for delivery in 2017 and 2018. “Chemical tankers is our core business, along with dry cargo,” he said. OSM Ship Management has about 60 ships under full management in Singapore.
Tanker Shipping & Trade | February/March 2017
Despite difficult market conditions, Singaporebased shipmanagers are preparing for future opportunities while meeting client owners’ demands for greater efficiency writes Steve Matthews
Sandip Mirchandani, the seasoned hand recruited to lead Interorient’s new office in Singapore
Although none of them are tankers, business development director Shubpreet Singh said: “Singapore is our global headquarters for shipmanagement. We are trying to add tankers to our managed fleet. We will start off with handysize product tankers. There is a lot of shipmanagement business around, as owners look at options for improved efficiency.” Leading international shipmanager Bernhard Schulte Shipmanagement (BSM) is steadily expanding its managed fleet in Singapore, although its primary focus for growth is not tankers. Managing director of BSM Singapore Bob Maxwell said that the fleet managed in Singapore has grown to more than 90 ships, aggregating over 5 million dwt. He explained: “Gas carriers is our main focus for development, including floating storage and regasification units, and small-scale LNG.” Mr Maxwell said that BSM is continuing to focus on operational efficiency in difficult market conditions, and on recruiting, retaining and training highquality crew. “Compliance issues will continue to be important. There is still some confusion on implementation of requirements for ballast water treatment systems.” Despite the general slowdown in tanker ordering, some Singapore-based owners are continuing to place orders where they see opportunities in the market. For example, Raffles Shipmanagement, a subsidiary of Wilmar Holdings, recently ordered six 19,700 dwt chemical tankers that have been designed to serve shallow-water ports in Southeast Asia. BW Tankers, a subsidiary of BW Group, based in Singapore, is modernising its tanker fleet. BW ordered a pair of very large crude carriers (VLCCs) of 318,000 dwt, scheduled to be delivered in 2018. BW currently operates a VLCC fleet of nine vessels. BW is a leading owner of product tankers. It has orders for four new LR1 product tankers of 74,300 dwt, for delivery by 2017. The newbuilds feature fuel-efficient MAN G-type engines, further optimised with new propeller designs. BW has also ordered four MR product tankers of 49,500 dwt, due for delivery in 2019 and 2020, and a pair of 19,900 dwt chemical tankers due to be delivered in 2018. TST
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Vessel oversupply to continue in chemical shipping An oversupplied chemical tanker market could become even more crowded as product tankers switch to chemical trades
F
reight rates on long-haul routes will continue to be challenged by surplus large vessels over the next two years, according to the latest edition of Chemical Forecaster, published by global shipping consultancy Drewry. Time charter rates weakened in 2016, especially for larger tankers, and freight rates on major long-haul routes dropped. Although the trade volume from the US to Europe and northeast Asia surged in 2016, the appearance of speculative vessels brought rates down. The fleet will continue to expand because of the large number of orders placed in previous years, but growth will be subdued compared to 2015-16. While deliveries and ordering have reduced in 2016, there are still many ships scheduled to be delivered in the next five years because of heavy ordering during 2014 and 2015. More demolitions are expected because of new regulations that will come into force in 2017. Coupled with the implementation of the Ballast Water Treatment Convention (BWTC) in September 2017, the adoption of the global 0.5 per cent sulphur cap may potentially accelerate the rate of vessel demolition towards the end of 2020. However, this is likely to have little impact on fleet supply, as most of the older ships are of less than 10,000 dwt, and thus, the capacity that can be scrapped will be a small percentage of the total fleet. Time charter rates weakened further in the fourth quarter of 2016, more so for larger tankers. “We expect fleet oversupply to persist in 2017 and time charter rates for larger ships, especially MRs, to decline because of stiff competition. However, rates for vessels
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Tanker Shipping & Trade | February/March 2017
34 | CHEMICAL MARKETS
in the smaller categories are likely to remain stable in 2017,” commented Drewry’s lead analyst for chemical shipping Hu Qing. “The chemical fleet grew by 5.2 per cent in 2016 and is expected to expand by 3.3 per cent to the end of 2017, which will continue squeezing rates on major routes over the next two years. New orders and deliveries are also expected to decline further because of the depressed market and financial woes of shipyards,” added Ms Hu. A comparison of total China commodity chemicals imports up to November 2016 carried out by analysts RLA Associates showed an increase of over 2.7 million tonnes; the major reason is methanol imports rising by just over 3 million tonnes with significant shipment increases from New Zealand and Trinidad and Tobago by one million
tonnes and 544,000 tonnes respectively. For the latter, this is quite a considerable growth as the previous year’s annual figure for this specific trade was only 233 tonnes. This has resulted from a slowdown of methanol exports from the Caribbean islands to the USA freeing up supply. Iran remains the largest supplier of methanol to China accounting for 29 per cent of total methanol imports, increasing its shipments from 2.2 million tonnes in 2015 to nearly 2.4 million tonnes this year. Chinese projects in methanol to olefin (MTO) and methanol to propylene (MTP) have been the main agent for the rise in methanol projects globally. In 2015, the Chinese MTO and MTP capacity increased by 21 per cent to over 8.5 million tpa and this is expected to increase further by more than 3.6 million
CHEMICAL TANKERS ON ORDER COUNTRY OF SHIPOWNER
NO
DWT
Singapore
34
805,629
Japan
28
811,420
Norway
20
642,993
Undisclosed
19
433,023
Denmark
18
431,500
China
17
314,380
Korea (South)
12
58,084
Germany
10
286,834
Turkey
9
77,816
Greece
7
175,000
Hong Kong
6
48,000
Sweden
6
104,600
Monaco
4
196,000
Switzerland
3
65,400
United Kingdom
3
59,850
USA
2
57,994
Vietnam
2
52,600
Netherlands
1
7,500
Spain
1
12,500
202
4,641,123
Grand total
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CHEMICAL MARKETS | 35
tpa over the next few years. Among the other products, the next two sizeable increases have been for paraxylene and MTBE by 569,000 tonnes and 217,000 tonnes respectively. Among the major significant contractions, ethylene glycol imports declined the most by over 1.2 million tonnes. Supplies from the Middle East and Asia declined by 706,000 tonnes and 658,000 tonnes respectively. Volumes from Saudi Arabia dropped the most by 534,000 tonnes, but despite this decline is still the largest supplier for ethylene glycol accounting for 46 per cent of total imports this year. A new pattern was observed for North American ethylene glycol supplies, with declines in shipments of 106,000 tonnes from the USA being more than offset by a rise from Canada by 198,000 tonnes. There were also lower volumes of cargoes for acrylonitrile, other xylenes and styrene but the declines were comparatively of a smaller scale. A year-to-date comparison of total China commodity chemicals exports for 2016 shows a decrease of 199,000 tonnes. Methanol exports dropped by 78 per cent to 32,000 tonnes this year, followed by paraxylene and benzene slowing down by 44,000 tonnes and 34,000 tonnes respectively. Furthermore, ethanol volumes were marginally up, with the remaining products either having no change or declining marginally. Based purely on changes in year-to-date trade figures, total China exports of commodity chemicals in 2016 would decrease by 44 per cent from 2015, while China imports of commodity chemicals would increase by 9 per cent. Commenting on China and the chemical markets more widely, leading market analyst Barry Luthwaite of BRL Shipping says that China continues to become more self-sufficient. “In the last six months there
has been a drive to build stainless steel newbuildings for domestic and export ownership. China’s Sinochem Shipping has come from nowhere in a year to rise to the world’s second largest owner of chemical tankers in unit terms, boasting a total of 39 units aggregating 613,221 dwt. “The owner will not stop
there, as it is poised to order, from Chinese yards, a series of up to 40 28-tank, 40,000 dwt vessels. Gaps in the market have been studied and will be filled by Sinochem as far as possible, with one of its biggest customers being Dow Chemical Company. Sinochem wishes to become
a truly global operator on long-haul business across the Atlantic, and to explore two-way cargoes. It is targeting Asian, regional and transpacific trades, but there could be a question mark over transpacific trade for all operators given the new US trade policy.” TST
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CHEMICAL TANKERS | 37
A CHEMICAL TANKER SPILL
ONCE EVERY 156 YEARS
RESEARCH UNDERTAKEN AT FINLAND’S AALTO UNIVERSITY PREDICTS THE LIKELIHOOD OF A CHEMICAL TANKER SPILL IN THE GULF OF FINLAND*
O
riginal research undertaken at Finland’s Aalto University into chemical tanker safety in the Gulf of Finland has delivered a wealth of insight into the risk of chemical tanker grounding and collision in this important and busy waterway. An extended risk analysis into the probability of chemical tanker collisions found that the probability of a collision in the Gulf of Finland is 0.013 which translates as one accident on average every 77 years. This risk increases to an accident every 45 years when tankers above 20,000 dwt are also
assumed to be chemical tankers. These statistics compare with a risk profile of 0.06 across all tanker trades and an accident every 17 years. Simulations showed that the risk of a chemical tanker collision leading to a spill is 49.8 per cent versus 42.3 per cent for all tankers. When these findings are combined with the expected frequency of a collision, a chemical spill will happen once every 156 years. A spill of any kind due to a ship ramming a tanker can be expected once every 40 years. What sets this study apart from comparable studies is the
emphasis the authors placed on using different models for ship speed, angle, and the velocity at the point of impact. As well as looking at the probable size of a chemical spill, the likely location of the spill was assessed as well as its toxicity. The chemicals carried to and from the eastern part of the Finnish Gulf of Finland were found to be, on average, slightly more hazardous than the chemicals carried elsewhere in the Gulf of Finland. The most vulnerable locations are the trade lanes to Sköldvik and between Helsinki and Tallinn because of the
A chemical tanker that had lost its steerage is successfully refloated in Galveston Texas. The Aalto study says a spill of any kind due to a ship ramming a tanker can be expected once every 40 years in the Gulf of Finland
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heavy vessel traffic. The results of this study are being put forward to support wider analysis of ways safety levels can be lifted in The Gulf of Finland. The information gleaned can also be used to evaluate existing tanker construction rules as well as the safety of trade routes. TST *This article is based on a longer paper, Uncertainty in maritime risk analysis: [an] extended case study on chemical tanker collisions by Otto- Ville Sormunen, Floris Goerlandt, Jani Häkkinen, Antti Posti, Maria Hänninen, Jakob Montewka, Kaarle Ståhlberg and Pantti Kujala. The paper is reproduced in full in Groundings and collisions: risk and uncertainly by Otto-Ville Edvard Sormunen
ClassNK has completed the second phase of research into the use of duplex stainless steel plates on chemical tankers. Work undertaken included looking at how the steel fares when exposed to high temperatures of up to 100oC and what happens when duplex steel plates are combined with clad steel plates. Analysis showed the impact is negligible. The next round of testing will include a study into optimal conditions for welding duplex stainless steel plates as well as other strength, welding and corrosion tests.
Tanker Shipping & Trade | February/March 2017
38 | BEST OF THE WEB
BEST OF THE WEB
tankershipping.com
Visit tankershipping.com to keep abreast of the latest sector news. On these pages excerpts from the most popular stories from the last two months. Never miss a major development by subscribing to our free weekly newsletter at www.tankershipping.com Salvage of grounded tanker in Japan thwarted by bad weather
The plan for the UK's shipping industry post-Brexit Brexit means Brexit. But what does it mean for maritime? Maritime London chairman Lord Mountevans and Watson Farley Williams partner Mark Tooke share their views. http://bit.ly/UKmaritimepostbrexit
Trump vision for US crude oil seaborne trade is already happening
Salvage operations of a grounded tanker in Japan have been hampered by rough weather, while oil continues to flow from the damaged hull. Product tanker Sagan ran aground of Suwanosejima island, in Japan, during bad weather in the East China Sea.
The new US administration has prioritised the goal of achieving US energy independence. As part of this vision, it seeks increased hydrocarbon exports and reduced imports. ›››
http://bit.ly/groundedtankerinJapan
To view more whitepapers visit the Knowledge Bank at www.tankershipping.com To upload a whitepaper to the Knowledge Bank, please email Steve Edwards at steve.edwards@rivieramm.com www.tankershipping.com/s/knowledgebank
Editor’s comment:
Editor’s selection:
Written by professionals with maritime, and especially arctic experience, this paper nearly dissects often overlooked operational, geographical and human factors that come when transiting the polar regions.
Why Polar Code Operations Need a Second Line of Defence
It cogently makes the case for ‘a second line of defence’ when assessing these risks. As such it should be seen as essential reading for authorities, insurers, charterers, operators and anyone involved in or considering polar operations.
When it comes to trading in polar regions, industry should not expect standard solutions. New methods of evaluating vessel risk are needed to complete risk assessment before embarking on a polar voyage, and the ability to research and analyse public-domain data is critical.
http://www.tankershipping.com/s/knowledgebank/download,view_125.htm
Tanker Shipping & Trade | February/March 2017
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BEST OF THE WEB | 39
››› In this ambition, it is aided by
We can now predict tanker market demand
the shale revolution, which is already delivering the required transformation with refined product exports surging and crude oil exports starting to take off following the relaxation of the ban under the Obama Administration – and crude oil imports looking as though they are set to weaken again. http://bit.ly/TrumpandUScrudeoiltrade
Age ‘irrelevant’ if a tanker has been well maintained In its latest quarterly report which presents 2016 as a very good year for the company, Nordic American Tankers (NAT) asserts that whether a ship has been around five years or fifteen years or longer does not matter as long as they are well maintained. Shipbuilding technology for crude oil tankers has not changed much over the last 20 years, the report states. http://bit.ly/tankerageirrelevant
Adrian Economakis explains how the VesselsValue platform now includes an automated tonne-mile demand tool that has been two years in development. He addresses head on the extent to which VesselsValue can assess vessel condition across the 50,000 vessels of different type assessed daily. He also answers the question: Just how accurate are VesselsValue valuations? http://bit.ly/predicttankerdemand
Korean quality at Vietnamese prices keeps us competitive International Shipping chief executive officer Marco Fiori explains why ‘ecological and economic’ tankers built at Hyundai Vinashin will give d’Amico Tankers the edge – especially when low sulphur regulations take effect in 2020
››› bulker market. He acknowledges the
scarcity of finance but says the answers are out there. And says that he is bullish on prospects for next year – and even more so for 2018 and 2019.
We are outperforming market forecasts says Ridgebury Tankers Robert Burke
HTTP://Bit.ly/whentoselloldertankers
Ridgebury Tanker's CEO Robert Burke gives his views on earnings, trade, yard capacity, investors and why the fleet is not for sale
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Big John thinking big again
http://bit.ly/ RidgeburyTankersoutperformsmarket
How to energise 17,500 dwt chemical carriers
Frontline has tabled a US$475 million takeover bid for rival DHT Holdings on the back of a recently acquired 16.4 per cent stake in the company.
Two 17,500 dwt chemical tankers on order to Norwegian owner Rederiet Stenersen at a shipyard in China will each have a lithium-ion battery installed http://bit.ly/energisedchemicaltankers
When to buy bulkers and sell older tanker tonnage Atlas Maritime CEO Leon Patitsas tells Tanker Shipping & Trade editor Edwin Lampert that he expects to add to his fleet of seven tankers by returning to the ›››
www.tankershipping.com
http://bit.ly/ BigJohnthinkingbig
DNV GL ‘unlocks big data potential’ with Veracity launch DNV GL’s “digital roadmap to modernise class” also includes pilot schemes for drone surveys and remote inspections, including smart phonebased solutions and a wearable camera system tailor-made for inspecting tanks.
Tanker Shipping & Trade
conference & awards 14-15 November 2017 London For more information, contact Chris Tims at chris.tims@rivieramm.com
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Tanker Shipping & Trade | February/March 2017
40 | LAST WORD
Tanker owners to benefit from ‘best practice’ forum
A
n international forum is expected to be established by May 2017 that will provide a platform “to educate all concerned about [the Polar Code’s] provisions,” according to London-based lawyer and representative at the IMO on polar issues for the International Union of Marine Insurance Michael Kingston. “The Polar Code is an example of what we can achieve before a major disaster occurs,” he said. “But it will only be as good as we make it through education and enforcement and we all have a duty to assist in that process.” Explaining the thinking behind the forum, he said it was important “that all concerned are aware of the rules so that a third party or a rogue operator does not bring the house down for everyone in the sensitive Polar regions.” This forum will be set up by the Arctic Council, a significant diplomatic body that consists of the eight Arctic States: US, Canada, Norway, Sweden, Denmark, Iceland, Finland, and Russia. Each country holds the chairmanship for two years and the US will hand over to Finland in April 2017. There has been a significant emphasis on navigational safety during the US chairmanship and the plan is that the forum will be in place by the
A NEW FORUM WILL HELP PUBLICISE INFORMATION AND STANDARDS TO SUPPORT THE POLAR CODE WHICH ENTERED INTO FORCE AT THE BEGINNING OF THE YEAR*
time Finland takes over. It was Mr Kingston who first outlined the need for what he calls a best practice information forum when he addressed the Arctic Council’s Protection of the Arctic Marine Environment (PAME) working group in Stockholm in February 2016. His proposal was that the forum would identify all the best standards that are in existence on a cross- jurisdictional basis in hydrography, meteorology, ice data, crew training, search and rescue logistics, communication, recommended industry guidelines, traditional and local knowledge, ecological knowledge, operational understanding and ship equipment, systems and structure. PAME supported his initiative and its Shipping Expert Group drafted terms
of reference for the forum, which were well received when they were discussed during a PAME meeting in September in Portland, Maine. They are set for approval at PAME’s next meeting in Denmark in early February 2017 and “if all goes to plan the proposal will then be recommended to the senior Arctic ambassadors from each Arctic state with a recommendation to each country’s minister for states that the forum be established,” Mr Kingston said. The forum’s advice is intended for all those affected by the code, such as ship operators, flag states, insurers, financial markets and port state control authorities. To achieve this, it will hold annual meetings at which representatives from the various Arctic Council members will explain the latest developments in their area. Antarctic States’ interests will also be invited to attend. The plan is that they will update a website portal with the best standards as and when they are produced. This will be set up by PAME and its aim is that “everyone would know where to go to get the best information, and so on, on a continual basis, or at least where to find out how to make productive further enquiries,” Mr Kingston added. He described this initiative as “a great opportunity for the Arctic Council to show how it is working with industry and IMO and it is refreshing to see the leadership being shown by PAME and representatives from other Arctic Council Groups.” TST This article originally appeared in Riviera publication Decoding The Polar Code. See: http://www.mpropulsion.com/ supplements/decoding-the-polar-code.htm
Tanker Shipping & Trade | February/March 2017
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