Keep up the inspections

Steve Matthews - Wednesday 9 February 2011

OUR exclusive analysis on vessel casualty trends published in yesterday’s Lloyd’s List shows a big fall in 2010.

Lloyd’s List Intelligence casualty service data showed that the number of vessels reported as sunk declined sharply by a third last year compared with 2009, and all types of reported casualty dropped by 8%. This is consistent with other data indicating a gradual long-term decline in casualties.

That said, there are clearly still areas of concern. The analysis highlighted a continuing black spot for casualties in the eastern Mediterranean and the Black Sea. Recent losses of ships carrying bulk cargoes subject to liquefaction show that there are still some basic problems requiring attention.

It is possible to cite many reasons contributing to the overall decline in vessel casualties. Better designed and built vessels, better technology, greater safety awareness and systems, traffic management schemes in congested areas, better-trained crews and better emergency response are all worthy of mention.

But there can be little doubt that another major contributor to improved vessel safety in recent years is the role of port state control inspections and the knowledge that substandard ships risk being detained. The casualty statistics lend support to the inference that where port state control regimes are lacking or less stringent, more substandard and older ships operate and casualty rates are higher. The areas where casualties show the biggest improvements are those with the most active port state control regimes.

At a time when many shipowners are under financial pressure and some might be tempted to cut corners on costs affecting vessel operating standards, it seems reasonable to expect that port state control authorities should be even more vigilant in their monitoring and inspections.

But many governments are themselves under financial pressure. Claims from UK trade unions that spending cuts at the Maritime and Coastguard Agency could affect its ability to meet international obligations for port state control inspections are therefore worrying, although the MCA has denied them.

Whatever the truth, the statistics give a clear message that port state control plays a key part in reducing casualties. Any country contemplating relaxation of inspection regimes should think carefully about the wider consequences of its actions.

 

 

Consumers will pay for Indian Ocean boycott

Tom Leander — - Wednesday 9 February 2011

TALK about a sweeping threat. In the wake of the reported execution of a seafarer on board the hijacked Beluga Nomination last month, BIMCO and the Round Table of leading shipping organisations say they could consider backing a boycott of Indian Ocean routes unless governments intensify their efforts to curb pirate attacks.

The first question that comes to mind is, are they serious? If so, the Round Table is thinking big.

A thorough boycott of the Indian Ocean would have something of the same economic effect of a shutdown of the Suez Canal — even more, as an estimated 40% of global crude transits through the Strait of Hormuz and into the Indian Ocean and out to the rest of the world, according to the US Energy Information Administration.

Far less oil than that is sent through the Suez Canal — 4.5% of the world’s total, or 2m barrels of oil daily.

The box trades provide a better indicator of comparative effect. Some 130 containerships pass through the Suez Canal on an average week, representing 55% of the total tonnage going through the waterway, according to Alphaliner.

It is fair to speculate that a boycott of Indian Ocean traffic would have roughly the same effect of pushing the same amount of owners to alternate routes as the shutting of the Suez Canal.

The alternative would take vessels southeast through the Indian Ocean, to the south of Madagascar and around the Cape of Good Hope, and presumably out of range even of extremely enterprising pirate mothership crews.

Via Suez, the journey from Singapore to Rotterdam is 8,300 miles for 18 days at a cruising speed of 20 knots. Via the Cape of Good Hope, the voyage runs to 11,800 miles and 25 days at the same speed.

One Hong Kong owner, mulling such figures and admitting he was making light of a serious situation, said: “It would be hell for global trade, but the tonne-mile advantage would be great for shipowners.”

Many owners are taking the Indian Ocean warning shot in some seriousness.

Few think that a uniform boycott that gained forced with BIMCO’s 2,720 members, to name one body represented by the Round Table, would be possible. But the same Hong Kong owner, who is chief executive of a dry bulk company, said that several local owners were concerned enough to have met this week to discuss how to approach a situation in which they would have to refuse transit for safety reasons across the Indian Ocean.

“It’s an interesting one,” he said. “If you are a shipowner and have a lot of vessels out on time charter, the cost would depend on your charter party. You’d have to ask what the cost you would have to recompense the charterer for having to charter another ship. In the current market, it isn’t that much.”

Nevertheless, he added: “Everyone is consulting their lawyers to see what approaches are feasible. Owners with new charter parties that include a voyage in that area are trying to quantify what the costs will be if the charterer insists on going there.”

These are defensive measures, but they do demonstrate an awareness by owners that a de facto boycott is possible. Some owners believe that BIMCO and the Round Table are not being rash.

“The BIMCO suggestion is not crazy at all,” said Khalid Hashim, managing director of Thailand’s Precious Shipping, an owner of a handysize fleet that does frequent trades in the Indian Ocean basin.

“Whether the owners want to follow it or not, insurance companies will, if this thing grows, come to see it as a risk not worth running. It might become enforced by underwriters refusing to allow cover for the owners.”

Maritime insurance experts put the price tag of Indian Ocean transit in recent weeks at between $40,000 and $50,000 above basic war risk coverage. “In a down market, that’s not a small amount of money,” said one specialist.

A maritime lawyer based in Dubai said that a client had sought his advice on the $40,000 premium above war risk coverage that an insurer was demanding a tug-and-tow voyage from India’s west coast to the Middle East Gulf.

This had come in the wake of an unpublicised attack in recent weeks on a tug towing a barge from India to the Gulf.

According to the lawyer, the tug fended off several small pirate vessels. These vessels had retreated to a mothership, which then, they observed on Automatic Identification System, set a course directly for them. The tug untied the barge and retreated.

Mr Hashim said that a boycott that forced vessels sailing from the west coast of India south in the Indian Ocean and around the Cape of Good Hope to Europe would add 18-20 days to a voyage.

“Do that on all ships and you’re going to add a lot of sea time,” he said. “Because removing supply is the same thing as increasing tonne miles, the upshot is that this would be bad for commodity owners, but great news for shipowners.”

Mr Hashim’s words are hardly cynical. He regards piracy as a scourge and believes that the option to put armed guards on his ships would foolishly put his crew in the trouble that erupted on the Beluga Nomination .

His tone suggests the drive and emotion that underlies the exasperation at the heart of the Round Table statement. Any real significant absence of vessels from Indian Ocean routes would pass along cost to commodity owners and to consumers. The call is an attempt to gain public respect and attention for shipowners in an increasingly difficult situation.

“In terms of eventual economic cost, it’s not the shipowners that will pay,” said the Hong Kong owner.

“That’s something the politicians don’t understand and that’s why it’s best to bring the urgency of the problem directly to the end user, the consumer.”

 

 

 

FROM TRADEWINDS:

 

Lemos VLCC hijacked

A fully-laden NS Lemos-owned VLCC is now confirmed as hijacked by pirates off the coast of Oman.

 

The 319,300-dwt Irene SL (built 2004) was snatched on Wednesday morning 350 miles south-east of Muscat after it exited the Persian Gulf.

 

Calls to the London office of owner Lemos were referred to an external spokesperson who confirmed that the tanker had been attacked at around 07:30 UTC on Wednesday.

 

"For the moment there is no communication with the vessel," a written statement on behalf of Greek manager and operator Enesel read.

 

"Twenty five crew members are on board, comprising seven Greek nationals, 17 Filipinos and one Georgian.

 

"All the appropriate authorities have been contacted and made aware of the situation, including the flag state and the counter piracy coordination force EU NAVFOR. The vessel was registered with MSC(HOA) and UKMTO."

 

EU NAVFOR later issued a statement claiming the ship has indeed been confirmed as pirated although it did not mention if pirates had been spotted onboard. The force also rejected the claim that the ship was registered with MSC(HOA) but confirmed it was reporting to the UKMTO.

 

The statement confirms that the ship is fully laden with Kuwait Export crude oil and was en route from Mina al Ahmadi in Kuwait to the US Gulf. With the tanker capable of holding around two million barrels of crude and with current prices at around $100 a barrel, the cargo alone could be worth $200m.

 

There is some consternation as to how the hijacking appeared to catch naval forces operating in the area by surprise. TradeWinds understands, however, that a distress call was issued by the tanker but that the call was not immediately traced back to the VLCC.

 

Once reports of the ship's perilous state began to surface, numerous sources described the ship and crew's chances of avoiding hijacking as grim although there was still the possibility that the crew had managed to conceal themselves in an onboard citadel.

 

The Irene SL becomes only the fourth VLCC to fall into pirate hands. And with the previous one being released for a $9.5m ransom, pirates can expect to be in for a significant windfall.

 

Saudi owner Vela's 318,000-dwt Sirius Star (built 2008) was snatched off Kenya on 15 November 2008 while en route from Saudi Arabia to the US with crude and 25 crew. It was eventually released on 9 January 2009 for a ransom believed to be $3m.

 

The John Angelicoussis-owned 300,300-dwt Maran Centaurus (built 1995) was seized in the Somali Basin on 29 November 2009 once again while heading to the US from Saudi Arabia with crude and 27 crew. It was freed on 18 January 2010 for a ransom put at over $5.5m.

 

South Korean owner Samho Shipping saw its 319,400-dwt Samho Dream (built 2002) taken in the Somali Basin on 4 April last year carrying crude and 24 crew from Iraq to the US. It was eventually freed on 6 November for a ransom said to have hit $9.5m.

 

The hijacking comes a day after pirates got their hands on Fratelli D'Amato's 104,300-dwt tanker Savina Caylyn (built 2008). The Italy-flagged ship, which was snatched in the Indian Ocean with 22 crew, is also fully laden with reports suggesting its cargo is worth over $60m.

 

Another Greek VLCC came under fire from pirates in the Indian Ocean on Saturday but managed to escape capture. The Livanos Group's 301,800-dwt Chios (built 1993) was set upon by pirates a huge 1,200 miles east of Somalia.

 

 

FROM FAIRPLAY DAILY NEWS:

 

 

Cochin port strike halted

 

COCHIN’s seven-day port strike was ended by a court order this afternoon.

The Seafood Exporters Association of India and Kitex Garments had petitioned the High Court in Kochi to order a return to work. The court ordered that the status quo be maintained for three months while the workers, the central and state governments and operator Dubai Ports World seek a solution to a job dispute.

When the DPW-operated International Container Transhipment Terminal opens, 72 contract workers – who are not directly employed by Cochin Port Trust – fear loss of their jobs. They were promised rehabilitation by port officials but staged an open-ended strike.

The strike affected not only exports and imports but also tourism, when a cruise vessel was diverted to the Maldives.

Sandu Joseph, secretary of the exporters group, told Fairplay that 129

containers transporting seafood “are lying in the port awaiting export. More than 600 containers of other high-value goods are lying in port for clearance. We had no other option but to go to

 

 

 

 

FROM THE SINGAPORE BUSINESS TIMES:

 

 

 

United Continental to cut 500 jobs

(HOUSTON) United Continental Holdings Inc said on Monday that it will cut about 500 jobs at its offices in Houston.

'Approximately 500 employees will be separated from employment between April 1, 2011, and June 30, 2011,' the company wrote in a notice to the Texas Workforce Commission last week but made public on Monday on its website.

On Oct 1, Houston- based Continental Airlines merged with Chicago- based United Airlines, creating the world's largest carrier with a commanding position in top US cities.

The new parent company is called United Continental Holdings Inc, with headquarters in Chicago and some finance and accounting departments in Houston. There were about 3,000 people working in Houston before the merger.

A spokesman for United Continental Holdings said the layoffs primarily involve staff working in management and clerical roles. 'There's minimal impact on front-line employees' such as pilots, flight attendants and gate agents, she said, adding that some employees have accepted voluntary exit incentives.

United Continental Airlines has about 6,000 management and clerical jobs and more than 80,000 employees worldwide.

Last month, United Continental Holdings said it lost US$325 million in the fourth quarter last year because of expenses from combining United and Continental airlines\. \-- Xinhua

 

 

 

Charting the future of global aviation

MM Lee to address Vision 2050 meeting led by Iata this weekend on Sentosa

By VEN SREENIVASAN

(SINGAPORE) Key leaders and players in aviation, government, business and academia will gather in Singapore this weekend to help chart the course of global aviation for the next 40 years.

The 'Vision 2050' gathering, convened by the International Air Transport Association (Iata), will attempt to chart a path towards sustainable growth for a fragmented industry with some 1,061 airlines, governed by a 65-year-old bilateral system, and earning a return on investment of 1.5 per cent.

The 30 or more participants will be led by Iata secretary-general Giovanni Bisignani and International Civil Aviation Organization (ICAO) chief Raymond Benjamin.

Minister Mentor Lee Kuan Yew is expected to meet the group to share his thoughts.

Vision 2050 was first articulated by Mr Bisignani in his keynote address at the 66th Iata annual general meeting and World Transport Summit in Berlin in June 2010.

Addressing delegates then, Mr Bisignani said that the time had come to chart a long-term strategy for the industry to break out of its constant cycle of 'feast and famine' which had caused it to lose some US$50 billion in the 2001-2010 decade.

'The current structure of the airline industry cannot deliver sustained profits,' said Mr Bisignani. 'It is time to think big and to look beyond the cycles and shocks.'

'Our duty is to work together to define a vision on which to build a sustainable future.'

Mr Bisignani's vision for aviation in 2050 includes near-zero accidents; cutting carbon emissions by half; an integrated security system at airports; globally united skies; equitable cost- sharing across the value chain; industry consolidation; and delivering value to investors.

'In just over a decade, I can see US$100 billion in industry profits on revenues of US$1 trillion,' he said. 'As we move towards 2050, this 10 per cent margin will become even more robust. This is not just a crazy dream. Before the recession, at least a dozen Iata members already had 10 per cent margins. We must make this a much broader reality.'

After chalking up losses of US$16 billion in 2008 and US$10 billion in 2009, the industry made a profit of US$15.1 billion in 2010. Iata expects industry profit to be in the region of US$9 billion in 2011.

But profit forecasts can change as quickly as airlines' seasonal flight schedules.

This is because the business is very exposed to unanticipated shocks, and air travel demand fluctuates with economic cycles. Fuel prices are unpredictable and climatic and environmental factors (snow, volcanic eruptions, severe storms, etc) are emerging as new challenges. Meanwhile, travellers' expectations have changed, as have business models.

In the best of times, aviation yields one of the lowest returns on equity. But regulations prevent the kind of consolidation which occurs naturally in other industries. Nowhere is this more evident than in Asia, where nationalistic sentiment towards airlines prevents the kind of mergers that are now common in the US, Europe and Latin America.

Still, some progress has already been made.

The industry and regulators have finally started working out a more harmonised approach to security challenges.

In September 2010, Iata, the US Department of Transportation (DOT) and the Commission of the European Union (EC) signed an agreement to launch the global safety information exchange - an ambitious private/public initiative to improve air safety.

This year, the industry will accelerate its drive to achieve carbon-neutral growth, then emissions- free planes by 2057. Last October, 190 ICAO states inked the first global governmental agreement to stabilise carbon emissions.

According to Iata, the industry will spend some US$1.6 trillion on new fuels, new engines and more efficient flight paths.

The 30 or more delegates who gather this Friday and Saturday at The Capella on Sentosa island have their work cut out to define a realistically sustainable future for an industry whose fortunes have often been compared to Sisyphus, the Greek and Roman mythological king condemned by the gods to roll an immense boulder up a hill, only to watch it roll back down, and to repeat this throughout eternity.

 

 

 

Enclosed lifeboats doing more harm than good

Design flaw blamed for rash of deaths and injuries during drills or maintenance

By DAVID HUGHES

THE road to hell, they say, is paved with good intentions. Certainly, there were nothing but good intentions back in the mid-80s when delegates to the International Maritime Organization (IMO) decided to make enclosed lifeboats, and thus also on-load release hooks, mandatory.

Enclosed lifeboats have a lot going for them. They provide much better shelter than the old open boats and are self-righting. Four years ago, when the containership MSC Napoli started to break up in a tremendous storm in the English Channel, all 26 of her crew safely abandoned the ship in a davit- launched enclosed lifeboat.

From all accounts, the conditions in that boat were extremely unpleasant as it was buffeted by nine metre-high waves, to the extent that rescue helicopters took the risk of lifting the occupants out in the extreme weather rather than waiting for the storm to abate.

Nevertheless, the enclosed boat provided exactly what it was supposed to - a refuge in extreme circumstances. Whether those men would have survived had they been in an open boat, who knows? I was out in the Channel on a tug that same night and I do know which I would have preferred, and it would not have been an open boat.

Similarly, the investigation report into the 1993 British Trent incident, when nine seafarers died in a sea covered with burning oil, made it clear that their chances of survival would have been much better had the tanker been equipped with an enclosed boat capable of motoring through the flames.

So, in principle, switching to enclosed boats should have been an unequivocally positive step.

In fact, it has led to a large, but unknown, number of seafarer deaths and injuries that have occurred during drills and maintenance of boats. Statistics from the UK's Marine Accident Investigation Branch show that about 16 per cent of lives lost on merchant ships, where it has been involved, were the result of accidents involving lifeboats and their launching systems.

The main problem has been the hooks that are designed, for very good reasons, to release when on-load. But frequently, these hooks released when crew members were in the boats, often killing them. Reports of such fatalities keep coming in.

Accidents during drills were very rare in the old days of open boats. Mainly, it was a case of crushing of fingers when trying to put the end of the falls (lifting wires) onto, or to take them off, the hook on the boat. It is very different now.

There are a lot of reasons why these accidents occur, including bad design, poor maintenance and lack of knowledge by the crew. There is also the basic fact that the hooks are designed to open under load and, at least as designed and constructed, there is no preventer system to stop the boat from falling if they open, for whatever reason, when they are not supposed to.

IMO has been trying to address this issue for almost a decade and most people in the industry thought a meeting of its design and equipment sub-committee late last year would sort it out.

Instead, it turned into an acrimonious fiasco. The drive to bring safer hooks stalled when the UK and other EU states rejected a proposal to include the testing of the stability of hook systems within the new mandatory guidelines. They took this view despite the united backing of the shipowners and the seafarer unions for stability testing. It could be another two years before this issue gets resolved.

Now, several shipping industry bodies have called for the immediate and mandatory use of fall preventers with all lifeboats fitted with on-load release hooks. Fall preventers, in broad terms, are additional strong wires rigged to stop the boat dropping if the hooks release unexpectedly. A paper has gone to IMO in the hope that preventers can be made mandatory while the debate on hooks carries on.

Allan Graveson, senior national secretary of Anglo-Dutch seafarers' union Nautilus has been involved in the lifeboat safety debate from the outset and was at the unproductive IMO meeting. He said that preventers 'are a seafarer's solution for unsatisfactory design'.

In fact, Mr Graveson would like to see an eventual complete move away from davit-launched lifeboats. 'Ultimately, we should move to free-fall or float-free lifeboats and remove davits from ships, not just because of the danger of hooks releasing but also the possibility of falls parting or brakes failing. In the meantime, davit-launched boats should be fitted with hooks that have been tested in the laboratory and found satisfactory. This would involve the stability of the hook being proven through rigorous laboratory testing. Existing hooks must be replaced immediately where found to be unsatisfactory.'

The reality is likely to be that the 'seafarer's solution for unsatisfactory design' will be standard operating procedure for years to come.

 

 

 

FROM THE JOURNAL OF COMMERCE:

 

 

 

 

 

 

FROM IFW: