first past the post - ship...

First Person -Top Ships’ Pistiolis

tells how he is survivingthe financial crisis

in the tonnage tax race?first past the postIs Cyprus

Regional Focus: Greece -The sea gets ill but never dies

Round Table -Delivering in troubled times

SMI

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p36Is Cyprus first

past the post in thetonnage tax race?

COVER STORY FIRST PERSON

SHIPMANAGEMENT FEATURES

T H E M A G A Z I N E O F T H E W O R L D ’ S S H I P M A N A G E M E N T C O M M U N I T Y

First Person -Top Ships’ Pistiolis

tells how he is survivingthe financial crisis

in the tonnage tax race?first past the postIs Cyprus

Regional Focus: Greece -The sea gets ill but never dies

Round Table -Delivering in troubled times

SMI

ISSUE 20 JUL/AUG 2009

NOTEBOOK

6 STRAIGHT TALK - Buying our way out of a crisis

8 Brussels launches €3 millionprogramme to boost shipping’simageThe European Commission has heeded

industry concerns about the poor image of

shipping and launched a €3 million

programme it hopes will boost seafarer

recruitment and open up awareness about

the industry to the general public

Latvian seafarers returning tosea as recession bites

9 Managers ‘moreselective’ over crewcompetenceShip managers are becoming more selective

when it comes to employing senior officers

and are looking behind the CVs to ensure the

candidates are right for the job

EC considers seafarer training helpBrussels mandarins are to look at ways they can

boost training initiatives for European seafarers as

a way of supporting the industry and strengthening

the quality of vessels operated in European waters

Dobson launches ferry division

10 KPI project takes step furtherwith pan-industry supportInterManager’s pioneering project to introduce a

comparable set of Key Performance Indicators

for the shipowning and shipmanagement sectors

has moved an important step forward by

receiving widespread pan-industry support

Norwegians move to Cyprus

16 How I WorkSMI talks to industry achievers

and asks the question: How do you keep up with the rigours of the shipping industry?

29 On My MindOlli Isotalo - Executive Vice President

Cargotec MacGregor

48 OpinionCapt Peter Cooney,Former Chief Executive of

Acromarit and past Managing

Director of V.Ships

Ship Management

76 InsiderKishore Rajvanshy,Managing Director

of Fleet Management

12 Evangelos PistiolisChief Executive Officer,Top Ships Inc.

“That is the nice thing about life

because you always get a new

surprise. When you think you

know the system and you think

you know what will happen; when

you think you control something,

boom, there it goes”

22 Crew Management & ServicesWhile the world battles in vain to control the rapid spread

of swine flu, it certainly isn’t the only affliction threatening

the global crew population. Alongside what is quite

possibly the most depressed market in the history of

shipping, the recent shock case of the unfair criminalisation

of the Hebei Two, and long-persisting competence concerns

suggests that the crew situation is not a bright one

54 IT & Management SoftwareOK, so times are tough. But shipping companies need to

look at life beyond cost-cutting measures, and the

choices they make with regard to IT are more critical

than ever before

MARKET SECTOR

80 Sternest test yet for Europe’s builders

New generation Azipod builds on experience

NEWBUILDING

3JULY/AUGUST 2009 ISSUE 20 SHIP MANAGEMENT INTERNATIONAL

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TRADE ANALYSIS

50 LNG & LPGDelays in the completion of LNG production projects not only

kept 2008 output at similar levels to the preceding year but it

managed to put pressure on the freight market, with the roll-out of

considerable newbuild capacity ordered mainly on the strength of

new schemes making for tonnage supply far outstripping current

cargo volume demand

92 The lost voice of communicationDriving obliviously along, you obediently follow the clean-cut direc-

tions being instructed to you from the invisible, lucidly smooth and

authoritative voice of your sat nav saviour. Fully armed in hi-tech

hands-free headgear, you are poised and prepared for the inevitability of

that deal-breaking phone call

94 Les etes chauds de MontrealVisit Montreal during the first two weeks of July and you could be

excused for thinking you had entered an entertainment whirlwind. With

some of the world’s best blues and jazz artists rubbing shoulders with

arguably the best circus company in the world, the hardest thing on your

mind is deciding what to see and what not to miss

REGIONAL FOCUS

84 Objects of desire Things that make you go oooh!

LIVE

SHIP REPAIR

82 Yards look to increase capacity30 Greece - The sea gets ill but never diesThe mood is serious because the heat is on but if Greek shipping has a

claim to stake from entering the ravages of the worst shipping crisis in

living memory, it is that it will come out fighting and will be stronger

as a result of the experience

LIFESTYLE

60 Ad HocOn Thames patrol

Steaming through tradition

BSM raises €26,350 for cancer-sick children

A model education

A beautiful game

Maritime history afloat in the Bay

Booze or cruise?

A jumbo vision at the Port of Montreal

Fostering a floating phenomenon

BUSINESS OF SHIPPING

DISPATCHES

86 Literature: The Girl with the Dragon Tattoo - Stieg Larsson

D-Day The Battle for Normandy - Antony Beevor

Sea of Poppies - Amitav Ghosh

Entertainment: James May on the Moon,

Michael Jackson: History - King of Pop 1958-2009

Culture: New Acropolis Museum, Athens, Greece

Restaurants: Boulevard Brasserie,

Covent Garden, London

Nobu Intercontinental, Kowloon, Hong Kong

Events: Monte-Carlo Sporting Summer Festival,

Monte-Carlo, Monaco

Literature: Jane for all seasons

REVIEW

64 Round Table DiscussionAs part of our continuing pledge to provide cutting edge comment,

we assembled a whole host of shipping industry leaders and practi-

tioners to debate key issues affecting their industry. High on the

agenda was the role of China in driving forward recovery and also

how closely should the various shipping associations work to help the

industry emerge from this financial crisis?

70 Ship recyclingA thick cloud of ambiguity still surrounds the claim that the shipping

industry is beginning to see the ‘green shoots’ of recovery, but it is

definitively safe to say that the dense foliage of environmental issues is

flourishing with wild enthusiasm and sowing seed to a whole new

green-tinted turf of legislation and regulation

73 PlastikiHe is a distinguished member of the international tribe of jeunessedoree, the third and youngest child of Victoria Schott and Sir Evelyn

de Rothschild, a member of the British branch of the eponymous

banking empire. London-born David Mayer de Rothschild, 31,

regularly features at the top of society magazine Tatler’s annual list of

eligible bachelors: we should not hold this against him

78 CruiseLuxury is hardly the word that springs to mind during such stagnant

decomposition of the global economy, yet mention the term ‘cruise’

and its associations are felt in all their glistening, sun-warmed, bejew-

elled glory. Oxymoronic it may appear, but the cruise industry is

revelling in the healthy hue of a financial flush as it steams forward on

record levels of business

BUSINESS VIEWPOINT

SHIP MANAGEMENT INTERNATIONAL ISSUE 20 JULY/AUGUST 20094

LETTERS

11 ‘Shipmanagement is a profession in its own right’

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STRAIGHT TALK

Welcome to Ship Management International

The Shipping Business Magazinetoday’s owners and managershave been waiting for

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Guy Morel (InterManager)

Nigel Cleave (Elias Marine Consultants)

Andreas Droussiotis (Bernhard Schulte Shipmanagement)

Dirk Fry (Columbia Shipmanagement)

Sean Moloney (Elaborate Communications)

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July/August 2009 Issue No. 20

www.shipmanagementinternational.com

Editorial Director: Sean Moloney

Assistant Editor: Amy Kilpin

Reporter: Debbie Munford

Australia: Wendy Laursen

Ireland: Hugh Oram

Regular Contributor: Margie Collins

Technical Editor: David Tinsley

Advertisement Director: Jean Winfield

Research Manager: Roger Morley

Accounts: Lorna Gould

Design & Layout: David Marsh

Additional Photography: Cyprus Department ofMerchant Shipping

Editorial contributors: The best and most informed writers currently servingthe global shipmanagement and shipowning industry.

Buying our wayout of a crisisSometimes, by accident, as we tread water in the

treacle pools of financial and economic despair,

desperately trying to keep our heads above the

surface to avoid a slow but inevitable slide into

ruin and humiliation, we forget how we ever

arrived at the point of shipping being the single

most important transportation source the world

has ever known.

OK, those aviation anoraks among us may

well leap onto their soap boxes and expound the

necessity of the aeroplane and historians in our

midst could be forgiven for arguing the case for

the iron horse. After all, Stephenson’s Rocket –

albeit trundling along at a hearty 30 miles per

hour downhill – was an invention of great worth

that paved the way for global industrialisation

and improvement of trade all those years ago.

But shipping gets the prize in my book. In

its quiet and unassuming way it drives the

engine of economic prosperity, day in, day out,

without the world really noticing: an industry

that passes silently like ships in the night.

When trade is booming, shipping’s impor-

tance is subconsciously appreciated by the

consumer as he browses his supermarket shelves

buying fruits that are actually in season in a

country thousands of miles away and choosing a

television set manufactured and assembled in

three different locations around the world

because that is the cheapest and most efficient

way to get the product to his particular market.

But when times are bad, he turns his back on

this Aladdin’s Cave of consumer delights forcing

these giant and graceful workhorses that carry

these goods to market to be regarded as merely

superfluous – ships then become a commodity an

industry trusted with its guardianship would now

like to do without. In with the new, out with the

old, as the saying goes.

So why are we quick to deride these assets

that become so uneconomic to run when the

markets drop so severely? We all know that

shipping is cyclical and we all know the industry

will eventually suffer from the excesses and

ordering largesse it enjoyed when its masters

strove to make even more money from a freight

market bubble that can’t burst this year, can it?

Are ships to be regarded in the same bracket as

the plastic carton or the mobile phone that can

suddenly become obsolete or redundant to our

needs? Has our throwaway society descended to

such depths as to denigrate the very machine that

only months before, was being feted as essential

to corporate and global economic prosperity?

When I sat down to write this comment I

wanted to debate the drive and ‘never say die’

attitude of a shipowning industry that will

emerge stronger and more efficient from this

crisis. I wanted to praise the entrepreneurial

spirit of its players who are working long hours

ensuring they are heading the race out of global

recession when the time comes. Well I believe

shipping will survive and will be fitter as a result

and I fervently applaud the entrepreneurial

talent and risk-taking of its players. I have

talked extensively to ship owners who are

undeterred at the prospect of having nearly lost

their shirts in the crisis, only to believe that now

is the time they can really start to make money.

But they will make it by buying up cheap

ships and reordering when the markets improve.

There are strong indications in the market that

cash-rich owners are holding back until the end

of the year for asset values to drop sufficiently

before they embark on strong vessel purchases

again. And that will happen. But what of the

consequences? Are we coming out of a crisis

only to be laying the foundations for another?

News that Brussels has launched a €3

million programme to boost the image of

shipping (a result of the debate at the SMI ship

management summit held in Limassol last year)

is very welcome news for an industry which has

been tainted with being largely invisible to the

man in the street. We need to improve awareness

about shipping and all credit must go to

DGTREN for starting this particular ball rolling.

But maybe when the industry elders sit

down with the European Commission and start

to debate how best to improve the way this

industry is perceived and understood, that they

take a step back and ask themselves how they

view their own future.

We may never achieve the long sought after

economic paradigm that tonnage supply can

match demand but we may start to realise that

putting up with such severe roller coaster cycles

in the shipping industry is maybe not the right

solution either - for our own stress levels as well

as for the economic health of our corporate

bottom lines.

Happy reading.

Sean Moloney

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8 SHIP MANAGEMENT INTERNATIONAL ISSUE 20 JULY/AUGUST 2009

NOTEBOOKSHIPMANAGEMENT NEWS AND REPORTS FROM AROUND THE WORLD

The European Commission has heeded industry concerns about the

poor image of shipping and launched a €3 million programme it hopes

will boost seafarer recruitment and open up awareness about the

industry to the general public.

The programme, which should get underway by the middle of next

year, will last three years and involve significant participation by inter-

ested parties from the shipping industry.

Addressing industry leaders attending a presentation of the

InterManager supported Key Performance Indicator initiative in London,

Dimitrios Theologitis (pictured), head of unit for Maritime Transport &

Ports Policy, Maritime Security, at the European Commission’s DGTREN,

said the framework would be a joint initiative between Brussels and the

shipping industry and would concentrate on the image of shipping as well

as spreading the knowledge base about the maritime sector.

He said the project was the direct result of industry concerns raised

at a Ship Management International conference held last year in

Cyprus. What has resulted, he said, was the setting up of an institution-

alised framework with a programme committee and with member states

approving the work plan.

Under the terms of the image framework programme, the

Commission will call on interested parties at least two or three times a

year, to submit sets of proposals which will then be looked at by

specially set up consortia. They, in turn, will be encouraged to submit

their own applications for action.

“The idea is to form large consortia which can cover all facets of a

particular area. They will work on key issues and they will have to raise

some of the necessary funds which is a good thing because they will

assume some level of ownership,” he said.

“We are talking between €2m and €3m and details will emerge any

week now. It will eventually become a research and development

project where material can be developed and thought out as to how best

promote shipping’s image.

The idea of the initiative was “not just about making a video to

show to Member States,” he said. “It is a comprehensive project which

will have to be defined by the submitting parties. It will cover

education, promotion of the shipping industry and it will look at ways

to address the media and the way information about shipping is

collected and distributed to the public.”

Brussels launches €3 millionprogramme to boost shipping’s image

Latvia has suffered more than most at the hands of the economic

ravages of the current global recession but its difficulties have lit a

light of hope for crew managers as larger numbers of its ex-seafarers

are now returning to sea in search of employment.

Crew managers in Cyprus and elsewhere have reported an uptake

in interest from officers in this region and many are hopeful that the

ex-seafarers can be introduced back onboard ship without the need for

massive re-training.

“They were officers who were with us two to three years ago but

who decided to return to shore. Now that times are difficult, they are

returning to sea which for us represents a welcome increase in

potential crew supply,” one told SMI.

Latvian seafarersreturning to sea asrecession bites

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9

NOTEBOOK

JULY/AUGUST 2009 ISSUE 20 SHIP MANAGEMENT INTERNATIONAL

Managers ‘moreselective’ overcrew competenceShip managers are becoming more selective when it comes to employing

senior officers and are looking behind the CVs to ensure the candidates

are right for the job.

A steadier supply of available officer material has created this shift

in thinking. Indeed, according to one prominent manager, unsuitable

officers who would have been employed by blue chip shipping

companies last year because of the shortage crisis, are unlikely to get

employment now.

“The crew shortage has taken a twist,” the manager said. “The

numbers are more readily available since the tail end of last year but our

filtering system of senior officers has to be more detailed than previously.

We have senior officers with very nice CVs but who 18 months previ-

ously would not have been employed. So we have to look behind the CV.

We can pick and choose more than last year.”

In a separate comment, he also claimed that the financial crisis came

at the right time to save the shipping industry from the ravages of the

crew shortage. “In the middle of last year the crewing market was in

trouble. If the economy hadn’t crashed ships would have ceased to trade

because of the lack of crew. I think that during that time, a lot of owners

realised they had to pump money into training,” he said.

Brussels mandarins are to look at ways they can boost training initiatives

for European seafarers as a way of supporting the industry and strength-

ening the quality of vessels operated in European waters.

Addressing the recent 4th International Ship Management Summit in

Oslo, organised by SMI and Elaborate Communications, Giovanni

Mendola, Principal Administrator at the European Commission’s

DGTREN, said there was scope to provide a framework under the chapter

on the training of seafarers in the EU’s state aid guidelines.

He told delegates: “I was wondering if some European funds can be

used for the purpose of supporting training initiatives. It is not my field

but prima facie I believe some instruments could be used and this is a

message I will pass to my colleagues.”

Mr Mendola added while there has been a huge amount of money spent

over the last 10 years in the area of tonnage tax and tax exemption for

seafarers, “I have seen very few schemes concerning subsidies for training. In

the case of subsidies for training there can be a risk of distortion, but this is

reasonable and can be addressed in the communication.”

Limassol-based Dobson Fleet Management has underlined its

commitment to the passenger ferry management market by launching

a new passenger fleet division it hopes will boost the number of

passenger ferries it manages.

Bob Maxwell, Group Managing Director (pictured), said he

wanted to grow DFM’s managed fleet of four passenger ferries to

around 20 and said creation of the Dobson Fleet Management

Passenger Fleet Division would help to build on this expertise.

“We have gained a lot of experience in the passenger ferry market

so that is a sector of the industry that is under a lot of pressure for cost

savings. We are saying to customers we can save you a lot of money,”

said Bob Maxwell.

Dobson has already assembled the staff to man the new division

and is now focusing on marketing it. “The Mediterranean and

European markets are the main focus but is not restricted to this side.

We have a big pool of seafarers which are well trained in this business.

We currently manage four ferries and I would say we would look to

grow that to 20 or so,” he added.

Dobson launchesferry divisionEC considers seafarer

training help

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NOTEBOOK

KPI project takes step furtherwith pan-industry supportInterManager’s pioneering project to introduce a comparable set of Key

Performance Indicators for the shipowning and shipmanagement sectors

has moved an important step forward by receiving widespread pan-

industry support.

At a full-day meeting of principal stakeholders in London, represen-

tatives from a wide-range of organisations and associations within the

shipping industry, including BIMCO, Intertanko, Intercargo, ICS/ISF,

OCIMF, the International Maritime Organisation and the European

Commission and various industry interest groups, debated

InterManager’s KPI project aims and its endeavours received a pan-

industry ‘thumbs up’.

Dimitrios Theologitis, head of unit for Maritime Transport & Ports

Policy, Maritime Security, at the European Commission’s DGTREN,

praised InterManager’s KPI project describing it as “brilliant” claiming

that “it goes straight down the path we have been thinking”.

He added: “In January we brought out our maritime strategy for the

next 10 years, so we have regulated a lot and created one of the best

regulatory environments in the world in terms of safety and environment.

It is now the time to capitalise and look forward. This is why we want to

ensure there are actions such as the KPI programme, which go beyond the

regulations.”

InterManager also announced the signing of an agreement which

will see intellectual ownership of the KPI project move from Wilh.

Wilhelmsen to InterManager. Phase one of the project, which took three

years to complete, has resulted in the production of a range of

measureable key performance indicators which InterManager now aims

to further develop for use throughout the shipping industry.

Phase two of the KPI project, which is jointly funded by

InterManager and the Norwegian Research Council, now begins and

leading members of InterManager have committed some 1,100 hours of

their staff time to input data for comparison and benchmarking.

Roberto Giorgi, President of InterManager, said: “What was

important about today’s meeting was the unequivocal support the KPI

project received from the shipping industry at large. It is now up to the

stakeholders to finalise the project whereby the 35 chosen KPIs will be

available to owners and managers to ensure they manage and operate

their ships to the highest standards.”

Norwegians move to CyprusA number of Norwegian shipping companies have relocated or are

relocating to the Mediterranean tax haven of Cyprus as an alternative to

paying highly punitive back taxes linked to new tonnage tax regulations

recently introduced in Norway, SMI can reveal.

Sources on the island said interest from Oslo was growing and

many believed it could be the start of a mini migration of Norwegian

owning and management companies to the island.

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11

LETTERSMAILBOX


MAILBOX

SIR. I refer to the article entitled "Lunde

slams third party managers" which appeared

in the May/June issue of SMI.While we understand that the article

reflects correctly the comments made by

Dagfinn Lunde at a public conference, we also

understand that they may have been taken out

of their context. Nevertheless, the very

negative perception that he portrays of third

party ship managers necessitates that

InterManager sets the record straight.

Ship managers, like banks and any other

service providers, are not in the business of

screwing their clients to the end of the world

as the quote suggests. InterManager's

members and many other ship managers have

invested considerable time and effort in

increasing the transparency and the quality of

the services they offer and are subject to

rigorous assessments by clients, independent

auditors and other parties.

InterManager has created a Code of

Ethics for the profession, and this code is

endorsed by all members of InterManager

(representing a substantial portion of the

industry), which undertake to follow the rules

of the Code of Ethics or risk dismissal form

the Association. In addition, we are, on behalf

of all our members, continuing to invest in the

development of a series of rigorous KPIs that

will benefit all industry stakeholders and

contribute to improved professionalism and

greater transparency of the sector at large.

Other efforts are also being applied in order to

improve the sense of governance and social

responsibility of ship managers in the

environment of the whole shipping world.

With specific regard to ship managers

working with banks, we would further point

out that there are many instances where ship

managers have been called on in the event of

a potential client default and have served the

needs of the banks, crew and suppliers very

professionally, often under extremely difficult

circumstances.

We would like to point out that most

banks have now included in their list of

covenants attached to their loan term sheets, a

condition that the ship be professionally

managed by reputable ship managers: this, in

itself, is a recognition that the banking

industry has a greater respect for our

profession than the above unfortunate

comments seem to indicate.

While we believe that Dagfinn Lunde, as

a highly respected figure in the international

shipping industry, is entitled to his opinion,

we also believe that on this occasion the

negative and potentially highly damaging

perception he portrays is totally unfounded.

It is worth remembering that shipman-

agement, whether supplied in-house or third

party, is a profession in its own right. It has

now gained respect among all players of the

shipping world, and like any other business

activity, needs to be run on a profitable, yet

professional basis, based on the value it adds

to its clients.

Yours,

Roberto Giorgi,

President of InterManager

Letter to Dagfinn Lunde, DVB Bank, fromPeter Cremers, CEO of ANGLO-EASTERNGROUP. Published with permission from thesender. July 20, 2009

DEAR DAGFINN,

Re: Ship Management International –May/June issue

Under the “Banks in Crisis” report – you

were quoted as slamming third party

managers for something I am not going to

repeat here. I sincerely hope you have been

misquoted but unfortunately I doubt it.

Having worked in the ship management

industry for most of my life – I, and a lot of

my colleagues, have been offended by your

statement.

Shipmanagement is hard work – with

remuneration levels probably at the bottom of

the scale in shipping – yet – we do fulfil an

important role in this industry today. (Trust me,

we don’t pay ourselves the bonuses you bankers

are used to!). The views we take – the decisions

we make (such as writing down US$7million

for a nautical school) – are of a longer term than

any of our contracts – a commitment to the

shipping industry beyond doubt.

We have been helping banks out of a hole

in several cases and I can bring you in touch

with very happy clients indeed.

And frankly speaking – the budgets we

give to clients need very sharp pencils to

make them work.

I think our industry deserves better –

and would hope on a small correction in the

next issue.

Yours Sincerely

Peter Cremers

CEO ANGLO-EASTERN GROUP

HEBEI SPIRIT

SIR. As a retired merchant vessel master I

must protest the criminalisation, by politi-

cians, of seafarers who are only carrying out

their professional duties. By all accounts the

Government of the Republic of South Korea

has flouted many legal and human rights

responsibilities. Would that they were the

only culprits but it seems to be fashionable

for various national authorities to victimise

seafarers, probably to cover their own short-

comings. All seafarers should refuse to trade

with these countries.

Yours,

Captain Anthony Payne

(Responding to a story entitled:‘InterManager members rally to support thehebei spirit crew’ which appeared on theSMI website -www.shipmanagementinternational.com)

SIR. Welcome home Capt Chawla & Syam

Chetan. Being an ex-master of the Hebei

Spirit, I am truly delighted to see two of my

very dear friends out of Korea. I was deeply

disheartened by the treatment metered out

by authorities to two seafarers. My good

wishes were, are and will be always there

with you.

Yours,

Capt Mohit Mehrotra.

‘Shipmanagement is a profession in its own right’

SMI_20:Layout 1 28/7/09 15:56 Page 11

Evangelos Pistiolis has learned a lot in the five years since he became

the first Greek ship owner to float a shipping company on the Nasdaq

stock exchange in New York on July 23rd, 2004.

He has learned to take each day as it comes and to remain cool when

the heat is on. He has also learned how to deal with the ravages of what

is being described as the worst shipping crisis ever. But more impor-

tantly he now understands that important lesson that all successful entre-

preneurs need to appreciate, and that is what it feels like to lose money.

And he has lost money, as have his fellow Greek ship owners. But

he stresses that he fared better than a lot of other owners because he had

already started to sell the near total complement of his older Suezmax

fleet in 2007 and 2008 before the global financial problems began. “The

bottom line was that I entered the crisis with zero Suezmaxes. We also

had a very small CapEx going forward compared with most of the listed

companies,” he told SMI.

“I did have a lot of money entering the

crisis and I spent a lot of it of course

going forward with the CapEx and

newbuildings and all that. I was one

of the few that did not worry at all

when the crisis began. I worried

about other things as the world was

not the same and our plans were

completely out of place after the

15th of September.

So what will Evangelos

Pistiolis do with the money he has

saved that he would have had to

spend on buying or completing

shipping contracts signed at

higher prices? Well, buy

newer cheaper vessels, but

only when the time is right to

buy. As he contends, the next

two years will throw up a number

12

Evangelos PistiolisChief Executive Officer, Top Ships Inc.

“We all expected the market to slowly start totake the heat as the increased availability ofships came on stream. I think it caught us bysurprise because it came for a very differentreason – worldwide fuckup!”


SMI_20:Layout 1 28/7/09 15:56 Page 12

of vessel acquisition opportunities – either distressed purchases,

leftover deals or newbuildings that would not be delivered. Whatever

happens, Evangelos Pistiolis believes that now is the time to buy when

the world is collapsing “because when the world stops collapsing,

prices will soar,” he added.

“It is definitely worth buying young ships when the market is in a

crisis. So young tonnage is one aspect but I would focus more on

tankers than the dry sector because with tankers we have the single hull

phase out which will somehow help the heavy newbuilding programme

that both sectors are suffering from. Young tankers might make a lot of

sense to buy,” he said.

But what of the financial crisis and its effect on a company like Top

Ships, especially as the disappearance of the banks has made life very

difficult for the industry and even now only a small percentage of the

30 or so shipping banks are lending, and even then, at unattractive rates.

“Whether we wanted to accept it or not, we all knew that the party

would end at some point. To be fair to the industry, the party did end but

not necessarily because of shipping reasons. It ended for a very different

reason and that was why it caught us all by surprise.

“We all expected the market to slowly start to take the heat as the

increased availability of ships came on stream. I think it caught us by

surprise because it came for a very different reason – worldwide fuckup!

It is the only expression to use. Anywhere you looked everybody had in

some sense fucked up. Some of them more, some of them, less. But who

is to blame? Who knows? Countries went bust; government banks went

bust and all of the US financial institutions went bust. If you said to

anyone in the last 100 years that the five major banks in the US would

go bust in a week, you could have had a bet of a trillion dollars.

“That is the nice thing about life because you always get a new

surprise. When you think you know the system and you think you know

what will happen; when you think you control something, boom, there

it goes,” he told SMI.“With the crisis, there was nothing we could do because when you

close the air, everything dies. And the air in business is money and they

closed down the money supply. Banks were closed for business, any

kind of business. Big, small or profitable. You could be God himself

and the banks refused to talk to you. That was their attitude for months.

Don’t call me, I’ll call you.

“For the first time we really witnessed a situation that was a shock

to all of us. It soon became clear that you either have your own money

or you die. Your friend cannot give you money because he has 55 fires

of his own to put out and the banks don’t exist so it is all down to you.

“I was lucky I had over $100m in the company when the crisis

started which at that point in time was a huge amount of money. Of

course, other companies also had that amount of money but they had a

high CapEx” he said.

What do you do when that happens? The day after? Well, according

to Pistiolis, it’s more of a question of if you can’t stand the heat, get out

of the kitchen! But as he contends, the shipping industry is a bit more

used to adverse market fluctuations than other businesses.

“First of all, you remain cool. You can be sure of one thing and that

is that the world will continue moving. And that was always my thought

every morning when I saw the stock markets falling 15% – 20% every

day. You have to remain cool and not panic. Anyone who panicked lost.

At that point, you think the world will stop, you are wrong because the

world will not stop and there are always new opportunities for business.

You have to be prepared to wait”

But as an entrepreneur, in situations like this, does your mind turn

to opportunities that might exist when the proverbial hits the fan and the

wrath of the financial crisis starts to take grip?

“Absolutely! Anyone in business thinks the same way. Some are

more fanatical in the way they go about it. That is the nature of human

beings. The human kind is made to look forward and thank God,

otherwise we would still be living in caves and you would still be

crying for your great great great great great grandmother who died

hundreds of years ago.

“The bottom line is yes, of course, you look at how things develop

in a cool emotion, but there is always the idea that OK, we lost $100m

here but maybe there is an opportunity to make $200m there.

“The ships have lost most of the value they accumulated over the

past five years. We lost most of the big excess money we made in the

last five years. Unless you sold everything in mid-2008 then you lost.

The only cash you didn’t lose was the cash that was out of the game.

Others lost $5bn, $300m or $5m but everybody has lost money and a

lot of it.”

But as the CEO of a company that previously only traded tankers,

does his heart still lie in the tanker market?

“Yes that is true, but to be honest you shouldn’t have emotions in

business and I don’t have emotions in business. But you can’t always

have preferences. Although I prefer the tankers and everyone knows I

always wanted to enter tankers and it was my first business. When we

entered the dry bulk market two years ago, it was not a bad move. So

preferences are important but in business you should always go where

the money is rather than go where your heart is. In private it is the

opposite,” he said.

13

FIRST PERSON


“The air in business is money and they closeddown the money supply. Banks were closed forbusiness, any kind of business. Big, small orprofitable. You could be God himself and thebanks refused to talk to you. That was theirattitude for months. Don’t call me, I’ll call you”

Evangelos J. Pistiolis founded Top Tankers, now renamed TopShips, in 2000. He graduated from Southampton Institute ofHigher Education in 1999 where he studied shipping opera-tions and from the Technical University of Munich in 1994 witha bachelor’s degree in mechanical engineering. His career inshipping started in 1992 when he was involved with the day-to-day operations of a small fleet of dry bulkers. From 1994 to1995 he worked at the containership broking specialist HoweRobinson. While studying at the Southampton Institute ofHigher Education, he oversaw the daily operations ofCompass United Maritime Container Vessels, a shipman-agement company located in Greece.

Factfile

"First of all, you remain cool. You can be sureof one thing and that is that the world willcontinue moving. And that was always mythought every morning when I saw the stockmarkets falling 15% - 20% every day. You haveto remain cool and not panic. Anyone whopanicked lost. At that point, you think that theworld will stop but you are wrong because theworld will not stop and there are always newopportunities for business. You have to beprepared to wait”

SMI_20:Layout 1 28/7/09 15:56 Page 13

So could we start to see Top accumulate some tanker assets in the

coming months? “I would like to do that but I wouldn’t say it would be

very soon; I think we still have a bit to wait and waiting is hard.

Patience is a virtue I didn’t have but I am getting better at it.”

Considering the current state of the shipping markets, what is

Evangelos Pistiolis’ growth strategy moving forward, certainly for the

short-to-medium term? And if I was sitting down with him in 12 months

time what would he like to be telling me about his business and the

business of shipping?

“The first thing I am focusing on is to get rid of the last four ship

leases I have. Out of 20 something old ships, we have got it down to

four. We have a lot more younger ships rather than old, which

was the opposite six to 12 months ago,” he said.

Following the interview, TOP announced that it

had paid $11.8m in compensation to

terminate the bareboat charters on four

handymax tankers. TOP had been

paying $15,250 daily per

vessel for three of


FIRST PERSON

“We thought the tanker market would keep forthree years but it kept for one. OK, what am Igoing to do, die? No I am going to try andsolve it. I am going to talk to the charterers, tryand convince them and get a solution. That iswhy I am the CEO, that is my business”

SMI_20:Layout 1 28/7/09 15:56 Page 14

the units, and $14,500 per day for the fourth, with profit-sharing

arrangements if higher rates were achieved. The move means that the

company has now offloaded the last of its leaseback vessels.

Mr Pistiolis continued: “So we have done a lot of work since the

beginning of ‘08. We have completely transformed the company into a

new animal. It will be a very different picture going forward and I want

to do some ground breaking moves similar to what I did in 2004. The past

is the past. I did a lot of good things but made some mistakes as well.

“I think the main point is to be able to react to the mistakes and

change them, rectify something that was done based on assumptions

made at the time. We thought the tanker market would keep for three

years but it kept for one. OK, what am I going to do, die? No I am going

to try and solve it. I am going to talk to the charterers, try and convince

them and get a solution. That is why I am the CEO, that is my business.

“And as a company, we did this very well. We went from being a

very profitable company for years, to a one year loss, heavy at one

point, but then we turned the whole thing around in less than a year to

record three successive and very profitable quarters now. So I think it

shows a very fast turnaround following a change in the market.

“I am looking to put the company back on strong feet. The first I will

do is conclude what I started which is get rid of the old ships. Then I will

start to build the company that can compete for the next 10 years,” he added.

Top Ships has seen its fleet decline from a high of 30+ ships to a

current fleet of seven double-hull handymax tankers, one newbuilding

product tanker to be delivered shortly and a fleet of five drybulk

vessels. But in the CEO's mind, having a smaller fleet makes more

sense for the time.

”Always when you have a small fleet during a crisis you have less

problems to solve and more opportunities to grow at lower rates.”

And as for the state of the markets in a year's time?

"A perfect world scenario would be for the market to have started

its recovery but without me losing the opportunity to buy some assets.

Whether it happens or not I don't know," he concluded. ■

15

FIRST PERSON


“I love competition, it is part of me and it is part of my life. Iwas always competitive even as a small child with a bicycle.But competition is not about killing the opposition, it is abouthaving the best idea at the time: who had the best judgementand who had the best feeling”

Evangelos Pistiolis on the relationship betweentraditional owners and the newer young guns

“A perfect world scenario would be for themarket to have started its recovery but withoutme losing the opportunity to buy some assets.Whether it happens or not I don't know”

“That is the nice thing about life because youalways get a new surprise. When you think youknow the system and you think you know whatwill happen; when you think you controlsomething, boom, there it goes”

SMI_20:Layout 1 28/7/09 15:56 Page 15

HERMAN BILLUNGChief Executive Officer of Golden Ocean Management

“What happened to our company was a very serious, realsituation. We were afraid of running out of cash due tocounterparties that could not perform and because thevalues of our assets had dropped, and we were not allowedor able to draw on our committed loan facilities with thebank, which meant we had to put in more equity”

Heading up a major dry bulk shipping company under one of the

world’s most prominent parent shipping lines must certainly generate a

monumental degree of pressure; something which Herman Billung,

Chief Executive Officer of Golden Ocean Management, takes fully in

his stride.

Bermuda-based Golden Ocean Group demerged from Frontline at

the end of 2004, and with its operations overseen by the expertise of its

Chairman, John Fredriksen, the shipping company has had a tough

financial ride over the past 18 months, proving a testing time for both

its management and its main shareholders.

Since taking the reins as CEO in 2005, Mr Billung has seen a

dramatic ebb and flow of the dry bulk markets and the full-blown impact

on the company as a result of these fluctuating periods. Consequentially,

he has had to co-implement major financial restructuring strategies

across the group to accommodate for the economic climate.

His previous role as Managing Director of Maritime Services in The

Torvald Klaveness Group, with responsibility for the commercial

management of the Group’s dry bulk pools, Bulkhandling and

Baumarine, and heading up the dry bulk operating company, Frapaco

Shipping between 1994 and 1998, placed him in good stead to take on

the challenging environment of Golden Ocean’s global shipping activity.

A ubiquitous collapse in bulk carrier values and counterparty

failure in charters set the time bomb ticking for Golden Ocean at the

beginning of the year, and under the weighty threat of insolvency,

corrective action needed to be taken with urgency. With fourth quarter

net income of $26.7m in 2008, down from $97.2m in the corresponding

period of 2007, the threat of bankruptcy lurked dangerously close, and

the situation sparked considerable concern that the company would run

out of cash liquidity to meet its short term obligations.

“The impact was severe,” Mr Billung told SMI, in what he termed

the ‘post-Lehman Brother turmoil’. “We had counterparties that

defaulted on us and there were a lot of defaults in general that people

were not able or didn’t want to live up to their contractual commit-

ments. This meant in turn that a fairly conservative strategy, either by

selling ships or by fixing out ships, was not possible because the

counterparties had disappeared.

“What happened to our company was a very serious, real situation.

We were afraid of running out of cash due to counterparties that could

not perform and because the values of our assets had dropped, and we

were not allowed or able to draw on our committed loan facilities with


SHIPMANAGEMENT HOW I WORK

workHow I

SMI talks to industry achievers and asks the question:

How do you keep up with therigours of the shipping industry?

SMI_20:Layout 1 28/7/09 15:56 Page 16

the bank, which meant we had to put in more equity,” he revealed.

“We were supported by the main shareholder and Chairman, John

Fredriksen, who said there was potential that he would be willing to

handle the equity issue if certain concessions were given. We had the

bond holders, a convertible bond of $200m and he offered the bond

holders to buy the bonds at 30% of the value, which was managed.

“John Fredriksen’s company, Hemen Holding, offered in on the bonds

and more than 80% accepted the offer, which meant that we could change the

covenants under these bonds. We also had concessions from the yards and

made certain alterations which helped us a lot, including with the banks.”

With outstanding unfinanced capital commitments of $705m over

the next three years, it was a tense time, particularly for Mr Billung. The

hard work and determination paid off, however: “We were able to raise

$120m in a few hours in April. With all these elements put together, we

are home free today, the way I see it.”

With Mr Fredriksen running to the rescue of the nearly-drowned

company with a financial bailout, surely a strong, close working

relationship is an absolute requisite?

“John Fredriksen takes a keen interest because he is maybe one of the

most knowledgeable shipping persons in the world. Obviously he gives

good advice and plays an active role in the day-to-day operations, and a

very close relationship is important in our system,” Mr Billung disclosed.

“We talk on the phone almost every day about the market, positions

and so on, and we meet now and then and have a good laugh in London.

He’s very good to work with for various reasons because he’s knowl-

edgeable, he has a memory better than anybody else – he knows the

names of all the vessels – and he’s also been out in tough territories,

he’s been ‘out in the war’ before.”

On how the future might shape up for the Golden Ocean Group, Mr

Billung emphasised to SMI the importance to remain realistic: “I think

there is a good chance there will be some opportunities in the future but

at the moment it is too early to tell. I think there are going to be

challenges ahead – there is no doubt that the orderbook is slightly big,

but I think maybe people are underestimating what’s going on in China

in a way on the demand side.

“Over the last five years all analysts and people working within the

dry bulk industry have tended to underestimate the demand growth

from China. We are very dependent on China for dry bulk – I would say

80% to 90% of dry bulk growth is coming from China. Our concern is

the orderbook, and that on the supply side there are too many vessels

coming, but still I think it’s not going to crack. It’s going to be lower

from where we are today, but it’s dangerous to be too pessimistic.”

With all the hectic pace required in the running of a major shipping

company, especially one which has been hurled along by market condi-

tions with such force that it teetered on a knife-edge of survival, it must be

a mean feat to acquire a fragment of downtime amid the business mayhem,

and SMI took to quizzing the front man on his more personal life.

“Any spare time I have, I try to share with my family, although

there has not been much opportunity within the last 12 months. I like

sporting activities such as skiing, and like to go shooting with my dogs.

I also enjoy sailing and try to go out with my boat if I have a chance. I

enjoy life in general so I don’t mind whether I am here or there.”

He added: “I have holidays but I have never had 100% holidays

since I’ve been in a position of such operational responsibility. I’m

always available but I try to take a couple of weeks off every now and

then. I also spend too little time in Norway. If I were to prioritise I

would love to spend more time in western and northern parts of

Norway, and enjoy the nature.”

Underlining how he invests between 10 and 12 hours in the office

per day, plus a few hours working on Saturdays and Sundays, Mr

Billung said: “I like to work hard. On top of that I’m always available,

but I think that’s common for all CEOs in the shipping industry. You

don’t necessarily have to sit down and study and work on nitty gritty

details day in and day out, but you have to be available.

“I am 51 and I still feel like I can learn a lot. It’s also a people’s

business, so you have to like to socialise and meet friends. The fact that

I’ve been working in this industry for 20 years means I have a lot of

friends around the world, and probably the most important part of my

CV is my network,” he concluded.

STURLA HENRIKSENManaging Director, Norwegian Shipowners' Association (NSA)

“For us the main focus has been the financial situationbecause of the problems with the banks. The Nordic banksare strong in shipping and we have a close relationship withthem. What is a problem is that a number of internationalbanks have withdrawn from Norway. International bankswhich had ship financing as part of their business are nowconsidering shipping as high risk so we have limitedcapacity in the Norwegian market. That is a problem forthose companies experiencing a drying up of funds”

Sturla Henriksen could not have entered the Norwegian shipping

sector at a more interesting time. Filling a position so dramatically

vacated by the sudden departure of his highly publicised predecessor

Marianne Lie, who was axed amid controversy over a Norwegian

government plan to impose retrospective taxes on the shipping sector, it

has been the very tax issue that has tested his skills as a politician yet in

another way, possibly gone a long way to concreting his position at the

heart of Norwegian shipping.

17

SHIPMANAGEMENTHOW I WORK


Our concern is the orderbook, and that on thesupply side there are too many vessels coming,but still I think it’s not going to crack. It’s goingto be lower from where we are today, but it’sdangerous to be too pessimistic

“

”

SMI_20:Layout 1 28/7/09 15:56 Page 17

NSA President Elisabeth Grieg praised Henriksen’s leadership

qualities when his appointment was made, claiming that he stood out for

his extensive expertise and international experience, “combined with

sound knowledge of the sector and documented leadership qualities".

Sturla Henriksen was born in 1956, and graduated in economics

from the University of Oslo in 1984. He also attended the Norwegian

National Defence College and completed the Advanced Management

Programme at INSEAD in 1998. He joined the NSA from a

management position at Accenture Management Consulting and previ-

ously worked at the Norwegian Ministry of Finance and Statistics

Norway, followed by a three-year spell in Brussels for EFTA and the

European Commission. From 1992 to 1998 he was Head of Finance and

a Director of the NSA, before leaving to set up his own company.

When questioned about his particular qualities for the job in hand,

he remained focused on what is needed for the job in hand. “I have been

in the public sector – I used to work with the Ministry of Finance for a

number of years and worked with the EC services. I was the chief

economist there and was 10 years with a management consultant with

Accenture so I have been involved in industry. I am able to navigate the

political landscape if I have to. It is a pre-requisite for a job like this to

interact between commercial industry and of course the political

environment.”

He took over the Managing Director’s slot at the NSA at a particu-

larly difficult time for the Norwegian shipping industry with ship

owners facing hefty financial penalties over a controversial change in

the Norwegian tax laws that could see over 50 companies facing a

NKr21bn retrospective tax bill stretching back over 11 years.

However, while many Norwegian owners greeted the Storting’s tax

decision with derision and threatened to up sticks and move away from

Norway, three shipping lines took the Storting to court to force a judicial

ruling on the matter. And all is not lost. A June hearing in the Oslo District

Court found in favour of Farstad Shipping and BW Gas agreeing that the

transitional rules for the new ship owners’ tax scheme was unconstitu-

tional. It was the opinion of the court, that the Storting’s decision of

Autumn 2007 was in breach of the constitution’s prohibition of retro-

spective legislation. “It has been our understanding throughout that the

decision was in conflict with the intention, the conditions and the practice

of the scheme for 11 years. This is about legislative security and

predictability for Norwegian business,” said Sturla Henriksen at the time.

Henriksen is realistic that the issue could find itself before the

Supreme Court with a decision not expected until at least summer of

2010. And even if the decision ultimately goes in favour of the Storting

(which the first District Court hearing would not suggest), he does not

believe it will encourage a mass exodus of Norwegian shipping

companies away from the Oslo coastline.

As part of a way to cushion the blow of the retrospective tax penalties

as well as the onslaught of the current financial crisis, the NSA had

suggested a freeze of five years, adding that the imposition of the back tax

could not have come at a worse time, referring to the dramatic downturn

in major freight markets. So far the government had not accepted the

proposal but Mr Henriksen described the position as “dynamic”.

“If the decision goes in favour of Parliament it would incite uncer-

tainty about the stability of the new system so that will be a cost

imposed on the new system. It would not be the death knell of the

Norwegian maritime cluster. It would be a severe blow and mean signif-

icant extra costs for the 55 companies affected but it would not be a

blow. It could not come at a worst time. It means that the shipping

companies have to pay a tax. They have to pay in two annual instal-

ments for the next 20 years. These Norwegian companies have paid

NKR2.8bn since 2008 irrespective of their earnings and whether they

are making profits or losses.”

How difficult has it been for him to settle into the job and what

challenges has he faced? More importantly, what strengths does he

bring to the task? “The first thing I did after taking this position was

work with the board of directors to launch a strategy policy to formulate



This was the most extensive strategyproposal in the history of our organisation andas a result, we have formulated our visions,goals and strategies for the years to come

“”

“In 2007 we had nine ships but during the year we sold all the four containerships and three

reefers and another reefer one year ago. We are left with one ship but now we are looking at

new ships, especially roll-on, roll-off tonnage and also medium sized container ships up to

2,000 teu and we will charter them out. We think this bad market will continue for a few

more years. Looking at the global orderbook, I think some of the orders will be cancelled but

most will be delivered.”

Jan Olaf Tonnevold,Chairman and President, O.T Tonnevold

FRANKLYSPEAKING

SMI_20:Layout 1 28/7/09 15:56 Page 18

a value proposition to our membership. The aim was to identify our

ambitions and plot the way forward.” This is an interesting devel-

opment, especially considering that the NSA has, for a number of years,

focused on fiscal and tax issues.

“This was the most extensive strategy proposal in the history of our

organisation and as a result, we have formulated our visions, goals and

strategies for the years to come,” he told SMI.But as the shipping industry grapples with the vagaries and

challenges of what will enter the history books as one of the worst

financial crashes to face the shipping industry, will Norwegian shipping

companies have just a little too much on their plates to deal with?

“For us the main focus has been the financial situation because of

the problems with the banks. The Nordic banks are strong in shipping

and we have a close relationship with them. What is a problem is that a

number of international banks have withdrawn from Norway.

International banks which had ship financing as part of their business

are now considering shipping as high risk so we have limited capacity

in the Norwegian market. That is a problem for those companies experi-

encing a drying up of funds,” he said.


If the decision goes in favour of Parliamentit would incite uncertainty about the stability ofthe new system so that will be a cost imposedon the new system. It would not be the deathknell of the Norwegian maritime cluster. Itwould be a severe blow and mean significantextra costs for the 55 companies affected butit would not be a blow

“

”

SMI_20:Layout 1 28/7/09 15:56 Page 19

KNUD JENSENExecutive Vice President, Canfornav Inc, Montreal

“Our 28-strong fleet has a varied age profile. With theexception of five 29,000 tonners from Onassis which werebuilt in 1984/5, construction dates of the rest of our shipsrange anywhere from 2001 to 2009. Some ships willdisappear over the next few months but at the end of nextyear when all 16 should be delivered, we should be back toa fleet of 32 or 33 ships”

Two of the most visible and immediately comprehensible victims of the

current global economic crisis have got to be the US automobile and

house building industries. After all, it was the US real estate sub-prime

crisis that set off the financial fireball in the first place and a subsequent

lack of bank financing and personal loans has done nothing to rekindle

trading activity in these areas. Indeed, falling US real estate values and

the launching of crisis talks to secure the future of the US car industry

are signs of the severe malaise hitting these industries.

So spare a thought for those Great Lakes shipping companies that

are servicing the needs of the construction and car making companies

bordering the Lakes’ shorelines. While the trading of steel through the

St Lawrence Seaway has continued to slip, there appears to be some

light at the end of the vessel supply tunnel as rates for handysize

tonnage suitable for the Lakes trades (and elsewhere) look set to hold

up strongly in the months ahead as a massive scrapping programme of

up to 1,600 handysize ships out of a total fleet size of 3,000 ships looks

unlikely to force the handysize sector out of a likely negative

supply/demand imbalance.

Indeed, according to Knud Jensen, Executive Vice President of

Canfornav Inc, while the supply of over 400 new ships out of the

world’s shipyards over the next three years will help to alleviate the

need for this type of tonnage, global freight rates for handy size ships

trading internationally should hold up well. However, as for the plight

of the Great Lakes trades themselves, cargo volumes into the region

have fallen 30% year-on-year as money from the banks started to dry

up and the outlook appears somewhat bleak.

“Close to 50% of our trade is to and from the St Lawrence and

Great Lakes and inbound cargoes certainly to the Lakes has always

been steel for the automobile or construction industries,” said Mr

Jensen. “But as early as 2007, these cargoes started to slip gradually.

Car production has been down and housing construction has fallen for

the better part of two and a half years now in North America.”

One thing is true: the Lakes’ trade is a pretty isolated market to

begin with. First of all you need a ship that is suited for the Great Lakes:

a 28,000 dwt to 30,000dwt Laker is a ship far narrower than its interna-

tionally trading cousin and is at least 15 metres longer. “They are a little

more expensive to build because the longer the vessel is the more stress

you have to build into the ship. I would guess they are $1m to $1.5m

more expensive to build,” he said.

Montreal-based Canfornav operates a fleet of 28 Lakes-fitted

bulkers of between 14,000 and 40,000 dwt on routes linking the Great

Lakes to Latin America, Europe and the Far East. It currently has a 16-



We have seen a strong recovery on thehandy size in the past three months and thehandy size should remain relatively strongcompared to others because of its age profileand the level of scrapping due in the nextfive years

“

”

If you go back 10 to 15 years, around 60%of our trade was to and from the Lakes.Currently that figure is around 40% in theLakes with less likely in the next couple ofyears. This means we will have to expand intonew markets

“

”

SMI_20:Layout 1 28/7/09 15:56 Page 20

strong orderbook of 28,000 dwt to 30,000-dwt bulkers that were

ordered before the crisis took hold and which were, in the words of

Knud Jensen, bought at levels that are representative of today’s values.

“Our 28-strong fleet has a varied age profile. With the exception of

five 29,000 tonners from Onassis which were built in 1984/5,

construction dates of the rest of our ships range anywhere from 2001 to

2009. Some ships will disappear over the next few months but at the

end of next year when all 16 should be delivered, we should be back to

a fleet of 32 or 33 ships,” he said. That is too large for the Lakes’ trades,

he admitted. “If you go back 10 to 15 years, around 60% of our trade

was to and from the Lakes. Currently that figure is around 40% in the

Lakes with less likely in the next couple of years. This means we will

have to expand into new markets – we do a fair amount of trading to

and from Chile and Peru so we are involved with a lot of the mining

companies down there.

“Peru has been 15 years or so behind the times when it comes to

mining because of the political unrest in the country. The trading pattern

of our vessels is carrying grain from the US Gulf to the West Coast

picking up cargoes from the US West Coast back to the Atlantic. The

trade from Chile and Peru is into China and India. We have the office

here in Montreal.”

“The newbuildings were ordered two and a half years ago before

the market took off, from three different yards. If you wanted to book a

non-Lakes handysize today, you are looking at between $21m and

$22m. We are still in a position to cancel if we wanted to but it is not as

if we ordered them for $35m and the market now is $22m. We ordered

them pretty close to today’s levels. But it is still a headache. When you

are spending that sort of money you have to make sure your bank

financing is intact. When we ordered the ships we had the bank

financing backed up, but if we have a cancellation with a shipyard then

the bank suffers a cancellation with us too,” said Mr Jensen.

Canfornav hit the headlines in May of this year when it announced

it was considering how to develop its relationship with Pacific Basin

Shipping after it emerged as the handysize specialist's largest share-

holder. The Montreal-based owner and operator, which is a wholly-

owned subsidiary of Canadian Forest Navigation, owns a 9% stake in

Hong Kong-listed Pacific Basin Shipping.

The firm’s President and Chairman Michael Hagn told the shipping

newspaper Lloyd’s List that Canfornav has not yet decided whether to

increase its stake further or look at ways to strengthen its links with

Pacific Basin. Canfornav initially had a 10.1% interest in Pacific Basin

Shipping, although this has been reduced to 9.2% following the recent

completion of a 174.7m share placement that raised about HK$760m

($97m). Pacific Basin Shipping’s second largest shareholder is JP

Morgan Chase, with an 8.7% stake.

By comparison, Pacific Basin Shipping has a fleet of 120 owned,

chartered and managed vessels, comprising 77 handysize and handymax

bulk carriers, 18 tugs and six barges and 19 newbuildings including

handysize, handymax and post-panamax bulkers, ro-ro ships and tugs.

Canfornav is no stranger to Hong Kong’s shipping scene after the

company tied up a time charter deal with Parakou Shipping for two

35,000 dwt, lakes-suitable bulkers that were built by China’s Tianjin

Xingang Shipyard and delivered in 2004.

But what of the slight recovery in the dry bulk markets? “Yes we

have seen a recovery,” Mr Jensen added, claiming that the worst months

for the dry bulk sector were November/December and January of

2008/2009 when the banks threw in the towel and there were no letters

of credit available. “We have seen a strong recovery on the handysize

in the past three months and the handysize should remain relatively

strong compared to others because of its age profile and the level of

scrapping due in the next five years.

“If you leave Lakes trades out of the equation, at least 70% of the

fleet will have to be traded in competition with others on other trades.

What you will see in the downmarket is a fair amount of clearing out of

older ships. Scrapping on handysize is enormous. In the next three of

four years as many as 1,600 handysize vessels will be 25 years or older.

“That is why I think our size range will be alright. We still have to

expand regardless to get into new markets but we are dealing generally

with the same charterers of grain and minerals. Another positive factor,

he claims, is the likely cancellation of a number of port expansion

projects in Caribbean, Baltic and Africa because the money is not

available. So it is likely charterers will revert back to the handysize

sector,” he said. ■

21



What you will see in the downmarketis a fair amount of clearing out of olderships. Scrapping on handysize isenormous. In the next three of fouryears as many as 1,600 handysizevessels will be 25 years or older

“

”

If you wanted to book a non-Lakeshandysize today, you are looking at between$21m and $22m. We are still in a position tocancel if we wanted to but it is not as if weordered them for $35m and the market now is$22m. We ordered them pretty close totoday’s levels. But it is still a headache

“

”

SMI_20:Layout 1 28/7/09 15:56 Page 21

While the world battles in vain to control the rapid spread of swine

flu, it certainly isn’t the only affliction threatening the global

crew population. Alongside what is quite possibly the most

depressed market in the history of shipping, the recent shock case of the

unfair criminalisation of the Hebei Two, and long-persisting competence

concerns suggests that the crew situation is not a bright one.

As the economy turned its back on the glory-filled highs of the

boom period and the world acclimatised itself to the financial

meltdown, a certain degree of positivism infused the crewing sector.

With mixed talk of pressures on crew easing as a result of reduced

tonnage, the industry could at least breathe a miniscule sigh of relief at

the shard of confidence sorely lacking elsewhere.

However, as the financial mess unfolded furthermore, the crew

sector has been laced with a variety of separate issues. From the fear of

seafarer abandonment as owners fail to uphold financial commitments,

to increased wage stability and lay-offs, and not to mention the recent

uproar instigated by one of the most unjust cases of criminalisation the

industry has ever seen, it’s a trouble-wracked time for crew.

Some of shipping’s greatest global players have expressed defin-

itive unease over the crew situation, as the importance to invest in

training and to retain quality and competent seafarers is ground hard.

While the industry might be financially precarious for some time, the

global manning situation is no less volatile, and the threats facing this

sector are so gargantuan it is practically plunged into darkness.

Concern is rife over the possibility that owners might cut back on

the training and maintenance of crew at a time when they are the most

crucial ingredient of shipping’s longevity. Roberto Giorgi, President of

third-party ship manager V.Ships and President of InterManager, the

trade association for in-house and third party owners and managers,

emphasised how cutting corners is not an option. “We cannot afford not

to spend money in order to increase the quality and expertise of crew

onboard ships,” he said emphatically.

Indicating that by 2012 there will be an estimated 50,000 shortage

of officers, Mr Giorgi stressed that quality and competence is the major

downfall among the world crew, and that the industry will suffer as a

result of a considerably ageing demographic of senior officers and

captains and chief engineers who are too young and promoted with

insufficient experience.

He said: “The biggest challenge is attracting a new generation. These

guys need to come out of the shipping industry and understand what is

needed to run a ship, but the new generation do not even know what

shipping is. If we want to attract and retain people that can run a ship, we

definitely need to give a better image to protect our assets, our people.”

According to Irene Rosberg, Programme Director, Executive MBA

in Shipping and Logistics (The Blue MBA), from the Copenhagen

Business School, one of the most common casualties in an economic

downturn is a reduction in training budgets.

“The maritime industry should not end up in a situation where costs

and prices are the only competitive parameters, and the decision to cut

back on staff training in order to save costs and to promote personnel

without the right competencies at the appropriate level to operate a

vessel is asking for disasters to occur,” she stressed.

Promoting a longer term perspective for crew management, Ms

Rosberg emphasised the importance in preparing seafarers for the

“The biggest challenge is attracting a new generation.These guys need to come out of the shippingindustry and understand what is needed to run aship, but the new generation do not even know whatshipping is. If we want to attract and retain peoplethat can run a ship, we definitely need to give abetter image to protect our assets, our people”

A crisis inits own right

By Amy Kilpin


MARKET SECTOR CREW MANAGEMENT & SERVICES

SMI_20:Layout 1 28/7/09 15:56 Page 22

imminent challenges of the industry by building up resources and

competencies across the board, strengthening the foundations of the

shipping industry’s future.

“We need to anticipate and be prepared for the upward trend,” she

said. “The industry is expected to grow and it will be necessary to have

a matching growth in the numbers of fully qualified and competent

seafarers. We should be aiming to make additional qualified manpower

available to the industry, and the last thing we should be contemplating

is attempting to service an increase in operational demands from the

current pool of competent seafarers.”

Grave concern about the future of shipping’s manpower source is

no new area of significance, but the realisation that the previously

extensive shortage will not be alleviated by a temporary economic

slump has brought the issue under a much sharper focus. Recruitment

is one of the most dominant challenges facing the shipping industry

today, and in spite of market fluctuations, is a worsening problem.

Ms Rosberg continued: “The key is to attract more young people to

the shipping industry, and our biggest challenge is to make the

profession an appealing one to young men and women. We need to

invest in preparing and grooming the next generation of shipping

executives from among the seafarers, because these people are the

future of our industry and have the potential to combine their seafaring

experience with management and leadership know-how and to face the

challenges of environment, globalisation, and new technology.”

There seems to be a real misconception that the manning shortage

was something associated with the boom period, and now that the

recession has caused a minor reduction in global tonnage, the pressure

is off and there are other crucial financial implications to consider.

However, there is a sincere danger in assuming that the world crewing

population is sufficient for the time being – now is the time to act to

secure shipping’s future.

According to Ms Rosberg, the global shortage of seafarers, most

particularly the shortage of officers, “has reached a critical point”. She

warned that there may “soon be a situation where we have to lay up our

ships – not due to the lack of trade but due to the lack of qualified

officers and seafarers to man our vessels.”

She added: “Despite the present economic downturn we are

expecting a large number of new ships to be built and to enter the

market in the next few years, and such growth will put further pressure

on scarcity of qualified personnel, including seafarers onboard ships

and technical personnel ashore. European seafarers are often referred to

as the ‘endangered species’ and there is a lot of truth in that.”

Emphasis on training has never been felt so strongly, as the incli-

nation to push the pause button at a time when the rest of the industry

is stilted by economic downturn is being contradicted by some of the

world’s largest organisations and authorities. Captain Andy Cook, Crew

Director for V.Ships, stressed how it is “important to invest in training

continuously and not the stop-start basis that has created many of the

problems we encounter today in terms of crew shortages.”

He added: “Training is an important component of any retention

strategy: it is a true win-win in that there are benefits for the individual

seafarer in terms of job opportunities and career advancement, and also

for owners who demand high operating standards on their vessels.”

Despite the slowdown, crew should certainly not fall under any degree

of depletion, and in fact owners and managers are being urged to use the

downtime to its best advantage and use the time to refocus efforts into

training and maintenance.

This is certainly an ethos being adopted by industry professionals,

and Videotel, a company offering training products and programmes for

seafarers, has highlighted how it is “very important that crew mainte-

nance and training is recognised as a continuous process,” according to

Captain Milind Karkhanis, Vice President of Videotel Training Services.

“No one can predict how and when the market will right itself,” he

said. “However, times of recession are often an opportunity for consol-

PointofView

23

MARKET SECTORCREW MANAGEMENT & SERVICES


“The problem of seafarer supply is being affected by the growth in the

world fleet and new ships coming onstream which continue to far

outweigh scrappings and demolitions. These ships need to be manned

but the workforce is not there. People turned to the East for cheap

labour without realising that they were closing the doors on tradi-

tional crewing nations. This problem will persist and puts the industry

at risk from incidents and accidents.

“We need to spend a lot on training – we do not need another

Exxon Valdez, which to me, has still not been ticked off the list. When

it comes to the EU, there should be more recruitment of European

Union seafarers. The EU should pay for, or at least subsidise, training

for seafarers and this will at least accomplish one of the challenges

facing the European manning situation. We need to start from scratch

and start educating so that shipping is a main career choice.

“Shipping is associated mainly with catastrophes, and this needs

to change. We also need to be pragmatic in that there have been a lot

of socioeconomic changes in Europe that have deterred people from

wanting to go to sea – the money is no longer enough, and the

attraction is less.”

Andreas Droussiotis,Chief Executive Officer, Bernard Schulte Shipmanagement

“Irrespective of the current vulnerable situation, aship’s safety cannot just be put to jeopardy. Inevitablythere will be a few owners/managers who might lookto cut corners during the recession, however, a goodowner or manager who operates ships safely wouldlook to cut other more frivolous costs before evenconsidering cutting down on crew costs”

SMI_20:Layout 1 28/7/09 15:56 Page 23

idation and in that respect owners and managers can focus more on the

gap analysis and on identifying and fulfilling the training needs of their

crew, in the endeavours to make ships safer and more efficient.”

Safety is a consistently key issue. The concern that owners and

managers will take a step back and make alarming adjustments to their

priorities in order to stay financially afloat carries the potential for

severe casualties on a financial, environmental, and operational level,

and a prevailing part of the responsibility lies heavily on a competent

and qualified crew. With a downbeat economy, the threat to shipping’s

manpower supply is crucial.

Captain Karkhanis said: “Irrespective of the current vulnerable

situation, a ship’s safety cannot just be put to jeopardy. Inevitably there

will be a few owners/managers who might look to cut corners during

the recession, however, a good owner or manager who operates ships

safely would look to cut other more frivolous costs before even consid-

ering cutting down on crew costs. There is always a danger in cutting

the costs of crew training and maintenance as there is the possibility

that with time it could snowball into an accident or injury, resulting in

huge financial losses and irreparable damage to reputation.”

Retaining crew during this economic battlefield is proving as much

of an issue, and communications services and technological systems are

being forced to become more and more advanced as the demands of a

life at sea face tough competition from shore-based occupations.

Owners are under greater pressure to provide better quality and more

diversified services to seafarers as they grapple to retain crew,

especially at a time where there is a glaring awareness that competence

is a key constituent for future industry growth.

Captain Karkhanis revealed: “Digital technology is a challenging

field which is still evolving, especially in marine communications

where communication is still by and large operated via satellite. As of

today, there are not many cost-effective options, and this places greater

demands on the owner and manager to offer enhanced crew services.”

Enticing young people into a career at sea is imperative, and yet

with the perks and packages offered in shore-based jobs, competition is

high. Constant access to digital communication and technology are

well-cemented building blocks for everyday living and as a result, the

new generation demands unremitting access to advanced services.

Spurring on manufacturers to provide digital facilities for onboard

installation, it is a strong factor in the crew retention game.



“Times of recession are often an opportunity forconsolidation and in that respect owners andmanagers can focus more on the gap analysis andon identifying and fulfilling the training needs oftheir crew, in the endeavours to make ships saferand more efficient”

SMI_20:Layout 1 28/7/09 15:56 Page 24

“It is important that crew enjoy as many of the benefits they would

experience while at home or in an office environment,” revealed

Captain Cook from V.Ships. “Communications and entertainment are

important elements, and it is unlikely that owners or managers who

have a long-term commitment to shipping will be short-sighted enough

to make cuts of this nature. Of course for those owners who are on a

survival footing it might be necessary to make some cuts, but it will

definitely not be easy to attract and retain seafarers on this basis in a

competitive market,” he added.

Many complicated issues have impacted the shipping industry with

detrimental consequences for crew, and one such continually-widening

problem is the number of piracy hijackings taking place along major

shipping trade routes. Precautionary measures, military advice, security

procedures, defence mechanisms and naval presence have now all been

implemented to support commercial vessels along transit routes, but the

danger for the human lives of the crew onboard is the ultimate concern.

Aside from being a major deterrent for new recruitment of seafarers, the

complications for ship managers are endless.

The industry has been forced to incorporate supplementary training

procedures to facilitate the crew’s capacity to cope in the incident of a

piracy attack, and many maritime training schools, service providers

and product manufacturers have spurned out a whole new generation of

training tools as a result. Maritime Training Services provides onboard

crew training materials, and through close collaboration with maritime

consultancy BMT Group, will be formulating a new era of training tools

comprising a DVD package which will help crew to deal in the event of

a piracy hijacking.

Asserting the need to go “above and beyond the simple monetary

compensation needed to help retain and motivate crews today”, Rick

Titcomb, President of Maritime Training Services and Richard Softye,

Captain of the USCG and Commercial Shipping Programme Manager

of the BMT Group, said: “Good onboard training can be used as another

25



“Good onboard training can be used as anotherkey to retention, and repetitive training is essentialas preparation for onboard emergencies. In orderfor shipping companies to maintain a dependableand experienced workforce, they must presentcrew amenities that lead to personal satisfactionfor the mariner”

Rick Titcomb

SMI_20:Layout 1 28/7/09 15:56 Page 25

key to retention, and repetitive training is essential as preparation for

onboard emergencies. In order for shipping companies to maintain a

dependable and experienced workforce, they must present crew

amenities that lead to personal satisfaction for the mariner.

“This can be offered by a structured system of increased training

and promotion for those who excel. Seafarers want the same as

everyone else; a sense of accomplishment as well as promotion or

compensation as they go through their careers. Rewards can come in

various forms such as adequacy of onboard living quarters, availability

of latest entertainment software, and up-to-date technology for

inexpensive communication with friends and family. These are

necessary expenses for shipping companies; budget crunch or not.”

Indicating that the current pressures of a weak global shipping

market are augmented by a “critical shortage of seamen,” Mr Titcomb

and Mr Softye underlined how “the life of a seafarer has changed drasti-

cally from the days of seafarers jumping on a ship and being trained at

sea while ‘learning the ropes’,” and that the complicated role requires a

far greater degree of attention from both the crew themselves and the

ship owner or manager in their retention policies.

In terms of demands being placed on owners and managers, a

recent crew wage war has been set alight at the International Bargaining

Forum (IBF). As ship owners seek a 10% cut in overall reward

packages for crew to ease the pressures of the financial crisis, seafarer

unions are fighting for increased wages for crew members to stimulate

and retain seafarer employment.

The International Transport Workers Federation (ITF) and the

International Maritime Employers Committee (IMEC) have been

battling with some of the toughest negotiations in years as the gulf

between the two sides continually widens. David Dearsely, IMEC

Secretary General, said of the recent meeting: “Things got a little bit

tricky. These are going to be the most difficult talks we have ever had.”

Hope that an agreement will be reached through further negotia-

tions later this year does not necessarily smooth over all the ridges for

the crew sector, and as the disparity between employers and unions

enlarges, the ‘middleman’ situation for crew management companies

puts an awkward spin on retention policies and recruitment schemes.

Quite rightly, the image of shipping is a magnifying concern, and it is

critical that a formative and judicious approach is taken to safeguard the

manpower of the future’s ships. ■



“Digital technology is a challenging field which isstill evolving, especially in marine communica-tions where communication is still by and largeoperated via satellite. As of today, there are notmany cost-effective options, and this placesgreater demands on the owner and manager tooffer enhanced crew services”

SMI_20:Layout 1 28/7/09 15:56 Page 26

IN THE SPOTLIGHT

27



In an exclusive interview, SMI chatted with the Hebei Spirit’s Captain Chawla on his 18 month ordeal inSouth Korea and on how the industry is fighting hard to implement measures to protect seafarersagainst future instances of unfair criminalisation.

Captain, how does it feel to have finally been freed from SouthKorea and to have had the entire industry rallying together insupport of you?It is a really great feeling – words are not enough to express my

happiness. I think it is one of the best days of my life to be back home.

Words just aren’t sufficient to express how the industry has been so

much behind us – I never expected such a thing to happen.

How did it feel to be detained under such unfair circumstances?There were different emotions at different moments; sometimes it was

very frustrating, and sometimes we were down. But then we saw how

much the industry was behind us, and that was very encouraging. It

really boosted our confidence that one day we would be able to return

home. It’s very shameful on the part of the Koreans for what they did,

it was very biased.

Will you be continuing your career at sea after a well-deserved period of rest?I haven’t decided yet what I’ll do. I will be doing something but I will

take my time to decide. It is my family who are more worried. I have

to convince them about me going back to sea – that is the most

important thing.

So do you think there is widespread concern that such anincident could potentially happen again?It is certainly a worrying issue, but seeing the support from V.Ships and

the rest of the shipping community is greatly encouraging. How the

industry and the media handled the whole incident and how they

supported us, if something (God-forbid) happened again, I know that

everybody is there and that they will support us.

What do you think the industry needs to do to prevent suchunjustified convictions against innocent seafarers?I think the industry should remain united as it is at the moment. I don’t

think anybody could ever criminalise seafarers in the future because

they know the whole community is united against it.

Do you think the industry will put laws in place to protectseafarers against unfair criminalisation? With the community working together legislation will definitely come,

because this matter will be brought up with the IMO and other organ-

isations. Something will definitely come of this. After this incident, we

have certainly learned that if we are united, we can definitely

pressurise the whole international community to pass legislation

against unfair criminalisation.

Is there a chance that cases like this will deter young peoplefrom wanting to embark on or pursue a career at sea?What Korea has done will definitely prevent people from wanting a

career at sea, but when they see the effects of how the industry is united,

I think there will be more people joining us, especially once they see the

outcome and see how a company like V.Ships is so caring and ready to

support them. There won’t be a shortage in the future because of this.

So in a way do you think the incident, despite the trauma,has had a positive effect on the industry at large?It has created a benchmark. The industry has already been

commenting on uniting and taking up this issue against criminali-

sation. There’s a very positive response from the whole industry, and

it is incredibly encouraging. ■

Capt Chawla and First Officer Syam Chetan are welcomed home by their families and V.Ships and InterManager President Roberto Giorgi

SMI_20:Layout 1 28/7/09 15:56 Page 27

SMI_20:Layout 1 28/7/09 15:56 Page 28

The shipping industry is going through a difficult period atthe moment with ship owners appearing less positive aboutthe market than maybe the suppliers are who are all talkingabout green shoots starting to emerge. What are your views?

I am afraid that times are bad and that it will take some time for the

market to recover so I am pessimistic actually. Overcapacity in some

ship types, container and bulkers will take some time to rectify itself,

even when the world economy turns. Sooner or later it will turn but it

will be slow. It will take quite a long time. I don’t have a crystal ball

and I am relying on the same sources as everyone else, but thinking

logically I am not sure we have seen the worst yet. Discussions about

cancellations and postponements are going on and we have taken part

in these discussions of course when ship owners are talking to the yards

and the yards are in turn talking to us. We have had a lot of cancella-

tions already and we expect more to come.

But in MacGregor, we feel we are pretty much in control. What I am

more concerned about are the bankruptcies because we haven’t seen a lot

of these yet. At least in those shipyards which MacGregor is involved in,

are established shipyards, so we haven’t seen many bankruptcies yet. I

hope they don’t come but if they do I hope they come with a delay. Both

shipyards and owners are at risk of bankruptcy.

Taking all of this into consideration, what is MacGregor’sstrategy moving forward?

If you look at our situation, MacGregor came to this time of low

volumes quite well prepared. We have a good healthy order backlog.

Yes there are cancellations, but the backlog is very strong, and in that

sense we have time to prepare ourselves. There is nothing that can come

as a surprise to us compared with what other industries are experi-

encing. We have in MacGregor three main businesses, one is merchant

shipping which is where I see the biggest problems but in our offshore

operations we are concentrating on offshore support vessels, and I

believe that offshore will pick up faster than merchant shipping. As we

see it already today, there is a lot of activity going on and there are

many projects that were active before this hassle started, and have

continued to be active. Our sales teams and technical people are

working with the customers in this respect. It is true we have not got a

lot of orders but neither have our competitors.

From this I draw the conclusion that as soon as the signs come that

the economy is recovering I am sure those investment plans will be

triggered. This will help us. The third area of operation in MacGregor

is service which will have somewhat lower activity when this number

of ships are scrapped or laid off but it is not as dramatic a fall as for

newbuildings. There is a lot of potential in offshore support vessel

services.

The lifeblood of your business is R&D - will this continue tobe at the forefront of your business focus?

Absolutely. I am very confident that the MacGregor traditional

business model of not having our own manufacturing but selling the

knowhow will benefit. The big hardware we buy from the partner

networks in Korea and Japan and Europe will help us. ■

ONMYMINDExecutive Vice PresidentCargotec MacGregorCargotec Corporation brand Cargotec MacGregor isthe global market leader in creating seamlessengineering and service solutions for the maritimetransportation industry ‘from the conceptual birth of avessel to the end of its lifetime’. Its products includehatch covers, cranes, ro-ro equipment, cargo lashingsystems, bulk handling systems, offshore systems,and their services. Olli Isotalo took over as Presidentof MacGregor on 15 September 2006 after success-fully running fellow Cargotec business Bromma, thespreader specialist. He has an MSc in Engineering andbefore joining Cargotec in 1993 was ProductionManager at Valmet Paper Machinery’s JyväskyläWorks and before that Manager of diesel engine mainassembly at Valmet Oy’s Linnavuori Works.

Olli Isotalo

“We feel we are pretty much in control. What I

am more concerned about are the bankruptcies

because we haven’t seen a lot of these yet. At

least in those shipyards which MacGregor

is involved in, are established shipyards, so

we haven’t seen many bankruptcies yet”

29

SHIPMANAGEMENTON MY MIND


SMI_20:Layout 1 28/7/09 15:56 Page 29

The mood is serious because the heat is on but if Greek shipping has a

claim to stake from entering the ravages of the worst shipping crisis in

living memory, it is that it will come out fighting and will be stronger

as a result of the experience, writes Sean Moloney from Athens.

Yes there will be casualties, especially among those owners who

have hefty vessel ordering and newbuilding commitments and who

have not done enough to protect themselves by putting something away

for this cloud burst of a financial ‘rainy day’. But public and private

corporate brains are being racked day-in, day-out to choose the right

strategies to ensure that owning companies can emerge intact and

strong enough to fight another day.

“I don’t think there is a collective approach among ship owners to

resolve this financial crisis,” said Michael Bodouroglou, Chairman and

CEO of Paragon Shipping. “Every owner and every company is

adopting their own approach, mainly because they all have different

issues to address.”

“The major problems most companies are facing is being over

leveraged because of vessel purchases made at high asset values. Then

asset values dropped and some companies are now under water and will

have to reduce their leverage. The degree to which a company can de-

lever dictates the approach it is adopting,” he added.

There will almost certainly be casualties, he stressed, but those

companies that are most successful at reducing their debt levels will be

the ones who survive. According to the Paragon boss, there are four

ways that companies can raise the necessary cash needed to de-lever.

They can do it either through the operation of their ships “and unfortu-

nately in today’s market you cannot raise enough to de-lever the higher

loans”; through cost-cutting, but there is a limit to how much costs can

be cut in a downward market, although as Michael Bodouroglou

contends, “a $1,000 per day cut in operating expenses in a good market

will make no difference but in a bad market it can make all the

difference”. Then there is the selling of the asset and last of all the

raising of fresh equity. It is the ability to tap the equity markets which

gives public companies a distinct advantage over their family run

competitors.

“Our chartering strategy has helped us because we entered the

chartering agreements when the markets were very healthy and our

charters run in excess of two years on average from now. So far the

charterers are performing so we can stipulate earnings which are even

better than last year,” he added.


REGIONAL FOCUS GREECE

The sea

gets illbut never dies

“I don’t think there is a collective approachamong ship owners to resolve thisfinancial crisis, every owner and everycompany is adopting their own approach,mainly because they all have differentissues to address”

SMI_20:Layout 1 28/7/09 15:56 Page 30

“Seeing as I have been in business since 1961 and this is the eighth

crisis I have seen, it is the most profound in the shortest period,” said

Nicky Pappadakis from A.G. Pappadakis. “But what I can say was that

the last five years were the best in history ever for the shipping industry.

There will be people who will have problems and that is across the

board for all owners.

“Because it is an unregulated market and it is a perfect market

mechanism, people order ships without government input so we find

that over-tonnaging and under-tonnaging are a natural phenomenon of

a cyclical, boom and bust business and the shipping industry is par

excellence a boom and bust, demand driven industry,” he said.

Harry Vafias, CEO of StealthGas Inc, agreed that the recession will

hit Greek ship owners in different ways.

“When you are in a country that has 850 shipowning families not

everyone can be affected in the same manner. Some companies are

more affected, some are not affected and some are happy about the

situation – a minority obviously. Unfortunately the majority of the

companies did invest in ships, either second hand or newbuildings and

they are suffering because the value of those ships has significantly

dropped. Or, if they had newbuildings, they did not finance these

newbuildings beforehand and now there is no finance available so they

have to finance them with cash or renegotiate with the yards which in

some cases is virtually impossible.

“Some owners are selling ships to raise cash, some are cancelling

ships, some are walking away from their obligations; some owners are

selling shares to raise cash and some owners are selling their personal

assets like houses and yachts. So you have the whole spectrum,

depending on how hungry you are for money,” he added.

But what about the availability of money? According to Mr

Bodouroglou, when it comes to raising debt, there is very little money

out there and money that is available, is expensive and can be difficult

to get hold of. It can be a different story when it comes to public

companies raising money from the equity markets. “So far this year,

shipping companies in the US have raised half a billion dollars through

formal loan offerings and well over a billion dollars through controlled

equity offerings,” he said.

So will we see public companies in Greece building up a stronger

position than the more traditional family owned operations?

“Definitely public companies would be a lot weaker today if they

did not have this tool of raising additional equity and the fact that this

additional equity is available will result in a number of these companies

ending up stronger,” said Mr Bodouroglou. “We are feeling very

comfortable with the situation right now. Our chartering cover which is

for more than two years ahead, will ensure we are able to pay all our

obligations as well as de-lever but we are expected to generate excess

cash which we can use for acquisitions. We also have plenty of cash

31

REGIONAL FOCUSGREECE


Harry Vafias CEO, StealthGas Inc.

“It is annoying that some people think that because of the very good times

shipping has enjoyed, that everyone is swimming in money. That would

have been the case if ship owners had not made their business moves. But

everyone without exception made business moves. People ordered ships;

people bought yachts, planes, bonds and stock. But this is the first global

crisis where every asset class has collapsed. So even if you bought shares

you will have lost the majority of your investment. Some have more cash

than others but no one makes cash and sleeps on the cash. Because

sleeping on it means you are not using it efficiently, which means that

when the banks are out of business these owners have to take drastic

measures in order to survive.

“The lessons we have learned from this crisis is to always have cash

on the side because you never know what will happen. And whatever

investment you make you must always have 30% to 40% in cash or in

liquid assets in case the banks disappear. Shipping is a very capital

intensive industry and the banks are the oxygen of this business. When

they are out, you choke, as simple as that.”

MyView

“Seeing as I have been in business since1961 and this is the eighth crisis I haveseen, it is the most profound in theshortest period”

“Some owners are selling ships to raisecash, some are cancelling ships, some arewalking away from their obligations; someowners are selling shares to raise cashand some owners are selling their personalassets like houses and yachts. So youhave the whole spectrum, depending onhow hungry you are for money”

Nicky Papadakis

SMI_20:Layout 1 28/7/09 15:57 Page 31

now: we are very cash rich. We haven’t invested in new tonnage

because it is not the right moment.

“Our strategy at Paragon is to come out of this crisis with a signif-

icantly larger fleet size and to be more financially healthy than when we

entered it. We have always said we are looking at everything. I don’t

like to exclude anything. We wouldn’t say no to buying out companies,

but it is all about doing the Maths,” he added.

Harry Vafias again: “Generally, many banks say ‘yes’ we are open

for business but they are not. They say ‘yes, let’s discuss it in 60 days’

and then they delay and you realise they will never do it. We are one of

the Greek-listed companies which has secured three new loans with

three new banks in the last 70 days which many people will envy us for.

But we are in a lower risk shipping segment and the banks like low risk.

“With the devaluation of the assets we are still in a healthy position

of debt versus asset value. There are many companies in the dry and

container sectors that have negative equity in that the whole fleet value

is less than the debt,” he added.

Harry Vafias continued: “Opportunities exist for those that do not

have newbuildings or who have few ships. In today’s environment, the

less ships you have or have ordered, then the better off you are. Group

wise we have 72 ships, and of these 15 are newbuildings. So I cannot

say we do not have ships or obligations. So before you start spending

money you have to sort out your obligations. These newbuildings are

worth $1.1bn and in an environment where the banks are picky I do not

know how clever you will be if you start spending more money before

you have taken delivery or cancelled or sold some of the newbuildings.

“I have cancelled all the newbuildings I could which to date have

been 12. But I could not cancel any more so that was not an option. I do

not have many options – take delivery or sell and I can’t sell because I

would lose money. Interestingly, if you read the sale and purchase

reports you will notice that the buyers of ships at the moment are either

small or unknown companies - that speaks for itself in that the people

who are in a position to buy today are people who have not bought or

ordered new ships in the last three years. The rest are suffering from

overinvesting,” he stressed.

But how has the crisis that has affected shipping, changed the way

stock market investors view the sector. Are they as patient as they

should be?

“It has changed,” said Michael Bodouroglou. “The investors I was

speaking to a couple of years ago when we did our IPO and private

placement were very knowledgeable and were interested in the longer-

term view of the company. Now because of the financial chaos of the

credit crunch a lot of these people have had their own problems and

they have had to rethink their portfolios and strategie. There are new

groups of investors who came to the sector for trading reasons and less



“Winning is important but the mostimportant experience is when you losemoney because that is when you canshow you are a good businessman. Neverbe a bad loser in business because youlose the motivation and you lose theopportunities”

SMI_20:Layout 1 28/7/09 15:57 Page 32

REGIONAL FOCUSGREECE

Worse to comeNext year will be a tougher year than

2009 with any ship owner bankruptcies

likely to happen towards the end of the

recession rather than at the beginning

if the supply problems kick in,

according to Paragon Shipping boss

Michael Bodouroglou.

Talking to SMI, Mr Bodouroglou

said he was very confident about the

health of the market fundamentals

when it came to vessel demand but

stressed that the size of the orderbook

was serious and if the orders do materi-

alise “no matter how strong demand is,

then the sector will be in crisis”.

He added: “The future of dry bulk

shipping will be determined by the

number and the timing of the

newbuildings. Scrapping is not

enough. The primary reason for the

market spike we have seen is that we

have not had a lot of new vessels

delivered yet but we have had the scrapping. The net result on the

fleet size in Q1 has been nil. If supply had increased by 10% as the

orderbook had suggested, we would not have had the spike.

“I hope a lot of the orders will be cancelled. There will be cancel-

lations, but how many is difficult to tell. A lot of things will also

depend on political decisions by China; will they subsidise the

shipyards, or will they have the ships delivered then hand them over

to publicly owned companies,” he stressed.

“We have to expect the unexpected. I think 2010 will be a tough

year and tougher than 2009, but at the same time if the supply factor

kicks in which I believe it may, we will see bankruptcies closer to the

end of the cycle.”

SMI_20:Layout 1 28/7/09 15:57 Page 33

for long-term investment, this is why we are seeing the big volumes

traded. A lot of the investors at the moment are short term investors.”

Evangelos Pistiolis, CEO of Top Ships, added to the debate:

“Unfortunately for the future, most of the investors that entered the

shipping industry did so with the music already playing. The shipping

industry is not an industry that prints money. It is like other industries

in that it has good years and has bad years and maybe some ‘waiting’

years. We will be entering some times where we will not be losing

money because the prices have dropped and the charter rates are more

or less at break even so it looks like we may even make a buck here or

there. But the bottom line is that now you are building the fundamentals

for great profits at some point of time in the future. Don’t ask me when

they will be because if I knew I probably wouldn’t be sitting here, but

I think it will be the next two to three years when things will really pick

up again. Now is the time to buy, be patient and then make money.

“We will get through this, I can tell you that. I am talking about all

of us and we might get through better than others because of the funda-

mentals being put in place. Winning is important but the most important

experience is when you lose money because that is when you can show

you are a good businessman. Never be a bad loser in business because

you lose the motivation and you lose the opportunities,” he concluded. ■



Professor John TzoannosSecretary General, Greek Ministry of Mercantile Marine

“We do not interfere in the decision-making processes of the

shipping company but from what we see published, the Greek

shipping industry and in particular the owners, are weathering the

storm quite satisfactorily. We haven’t had any laying up of vessels

compared to previous crises. The crisis is exogenous and emanates

from the financial sector that affected consumers’ behaviour. But it

also appears that the general global economic climate is improving

and therefore that also affects expectations.”

“Opportunities exist for those that do nothave newbuildings or who have few ships.In today’s environment, the less ships youhave or have ordered, then the better offyou are”

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SMI_20:Layout 1 28/7/09 15:57 Page 35

Asurvey of Cypriot businesses in February and March of this

year by the management consultant PricewaterhouseCoopers

suggested that the island was facing the global economic crisis

with reserved optimism, confidence and realism. It suggested that for

many, the crisis represented the beginning of a cycle of change ‘but

these times called for a clear mind, patience, persistence and strategic

thinking’, it warned.

What the report failed to mention was that the island’s shipman-

agement industry would be on the verge of a major taxation break-

through that could see it lead Europe, if not the rest of the globally

scattered maritime clusters, out of the financial crisis – while grinning

broadly from ear to ear.

Add to that the slight potential of the Turkish ban on Cyprus-

flagged vessels being lifted as Turkey enters what many on the island

term as ‘the last bus stop’ on the road to EU accession, and you could

see the Cyprus-based shipping industry reach almost unfathomable

heights in terms of size and influence. According to Serghios Serghiou,

the Director of the Department of Merchant Shipping, the lifting of the

ban could result in a near doubling in the size of the Cypriot-registered

fleet from its current level of around 21 million gross tonnes to

anywhere north of 35m gt.

Strategic planning and careful adherence to the terms of the EU

state aid guidelines has meant that Cyprus will have, by the turn of the

year, national legislation in place that will enable it to take full

advantage of new changes to European tax laws and allow crew

managers to benefit from the terms of EU Tonnage Tax regimes.

Until recently, only ship managers providing jointly technical and

crew management for the same ship were eligible to benefit from a

tonnage tax scheme. The 2004 EU guidelines, however, contained a

commitment to re-examine the eligibility of ship managers after three

years of implementation. The Commission reassessed the matter and

came to the conclusion that outsourcing part of a ship operation should

not be fiscally penalised. Crew management and technical management

of ships will therefore also be eligible when they are individually

supplied. One caveat Brussels introduced was that under the terms of its

revised guidelines, it does require that those vessels managed are fully

compliant with international safety rules, and, as for crew managers,

must apply substantial provisions of the 2006 Maritime Labour

Convention, ahead of its entry into force.

One thing that is for certain, the move has the total support of the

island’s shipping community and the crucial role of the Cyprus

Shipping Chamber (CSC) in formulating the policy and helping to


REGIONAL FOCUS CYPRUS

“If the Turkish ban is lifted, managers hereon the island will have no reason toregister their ships anywhere else”

SMI_20:Layout 1 28/7/09 15:57 Page 36

secure the solution is not underestimated. It goes to prove that govern-

ments and industry can work together if the political and commercial

will is there.

“This is excellent news and there will be more improvements

coming up,” said Bob Maxwell, Group Managing Director of Dobson

Fleet Management. “Negotiations with the EU are ongoing and

hopefully the rest of it will be sorted out by the end of the year. It makes

it much clearer for us when we are approaching customers. It has

cleared up a lot of doubts as to what can be managed from where and

whether the advantages will still be there or not. While we are dealing

with a level playing field across the EU, the Cyprus government is

effectively ahead of the field when it comes to the implementation of

the tonnage tax for crew managers,” he added.

Robert Thompson, First Deputy Managing Director of Unicom

Management Services of Limassol, added to the praise. “It was a major

step forward and it will be a major plus factor for the Cyprus flag. The

new President has been a tremendous support as has Marios Garoyian,

President of the House of Representatives, as well as the new Minister

of Transport.”

The strong relationship the government has with the shipping

community has been seen throughout negotiations over the tonnage tax

and the way the Cyprus Shipping Chamber and its Director General

Thomas Kazakos has helped to fine tune and steer the bill through the

legislative process has not gone unnoticed.

“We are ahead of the game when it comes to the rest of Europe and

we believe the legislation’s entry onto the statute books by the end of

the year will give a much more even distribution of the tonnage tax,

make it easier to interpret and make it easier for the crew managers to

operate as they can now claim under the tonnage tax system,” said

Robert Thompson. “It will give a boost to the shipping industry and

hopefully attract more shipping companies into the island and more

ships onto the Cyprus flag.”

Interest in Cyprus as a maritime cluster is already growing

following the news and according to Serghios Serghiou, some Far

Eastern shipmanagement companies have already expressed an interest

in opening branch offices on the island. But real and substantial growth

will come if and once the Turkish ban is lifted.

“After the new bill is passed we will have a clear position and the

companies will be able to operate without taking risks,” he said. “If the

Turkish ban is lifted, managers here on the island will have no reason

to register their ships anywhere else,” Mr Serghiou said.

Thomas Kazakos from the CSC, added: “The boost it will create

will be quite substantial. We aspire to make Cyprus even more compet-

itive and above all legitimate among the EU Member States. And this is

despite the Turkish ban because we are building on developing an infra-

structure that is a one stop shop approach – open registry, fully fledged

shipmanagement centre and hopefully soon chartering. You come to

Cyprus for one thing, the legitimate tax position we have,” he said.

So it is positive news moving forward for the island, but how

severely has Cyprus been affected by the global financial crisis?

“So far Cyprus hasn’t felt the crunch yet but I must say that the

number of tourists coming to the island has dropped,” said Dirk Fry,

Managing Director of Columbia Shipmanagement. “I have heard of some

local companies who have seen their sales drop for example, starting to

look at redundancies. At the moment we have been lucky we haven’t

been hit so badly but the island will not totally escape. Airlines are

desperate to fill their planes out of Cyprus as Cypriots are starting to stay

at home. So there are indicators that Cyprus may not be able to escape.”

He continued: “I would say the situation on the shipping side is

strong. The tonnage tax will give Cyprus a boost and if approved by the

EU by the end of the year, should give Cyprus a competitive advantage

at least for the short term. It should encourage more companies to come

37

REGIONAL FOCUSCYPRUS


“While we are dealing with a level playingfield across the EU, the Cyprusgovernment is effectively ahead of the fieldwhen it comes to the implementation of thetonnage tax for crew managers”

SMI_20:Layout 1 28/7/09 15:57 Page 37

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into the island. Cyprus is the shipmanagement centre of Europe but it

has a chance to grow as a result. We hope beyond hope that a solution

will be found to the Turkish ban. If we could find a way to get this lifted

it would be a great lift to Cyprus,” Mr Fry said.

But what about shipmanagement as an industry? How has the

industry on the island been affected?

“Yes the crisis has hit us and we have seen a drop as we have never

seen a drop before in our lives. But what people tend to forget is that the

number of ships is still there and the same number of ships will still

need to be managed,” said Mr Fry.

“Times are much more difficult for owners because the income side

has collapsed very badly, especially on container ships but the number

of ships is increasing. Yes there has been some scrapping but if you look

at the yards the yards may not have full orderbooks after 2012 but

between now and then lots of ships are being built. There comes the

argument that projects have been cancelled but if you look at the overall

number of ships that are still on order and being built, the figures are

unbelievable. So for me as a ship manager, ships need to be managed

but while it is more difficult because money is tight, we still need to

manage ships.”

So are owners looking more to third party managers to manage

their fleets? Dirk Fry again: “The existing owners are still expanding so

there is additional tonnage coming in but, we are also seeing enquiries

coming in from other third party clients who are looking at their own

operating expenses which they didn’t previously need to worry about

when the income was coming in, but are now saying that maybe a

professional ship manager can do better. And we know from compar-

isons that we can do better. Shipmanagement moves on.”

This was a point echoed by Bob Maxwell of DFM: “It is robust

here. A lot of ships have been laid up but the out and out shipman-

agement side has stayed fairly strong and we are still getting a few

inquiries looking for management. Ships are still there to be managed.

Times before, owners were happy to carry an office but when they are

looking to save costs they look to us.”

REGIONAL FOCUSCYPRUS

“Yes the crisis has hit us and we have seena drop as we have never seen a dropbefore in our lives. But what people tend toforget is that the number of ships is stillthere and the same number of ships willstill need to be managed”

Dirk Fry

SMI_20:Layout 1 28/7/09 15:57 Page 39



Q. How vibrant is the Cyprus shipping community as far asmaritime communications are concerned and whatdemands is it making on the types of services available?

A. The Cyprus shipping industry relies heavily on data and telephone

communications to enable it to maintain tight control of its operations via

email, telephone communications and vessel tracking solutions over the

internet amongst others. Shipping companies typically want a service

provider that incorporates communication services across the board - that is

to say, a service provider that provides telephone, internet and specialised

high-level IT management services.

“Other specific demands made by our customers in the shipping

industry include fast international bandwidth with ease of upgradeability,

interbranch (dedicated VPN) connectivity, all-inclusive telephone services

(including the telephone lines, the telephone system and telephone

handsets), data centre and server hosting services, IT support services, and

web or applications design and development solutions.

Q. How tough has the global downturn been and how has itaffected the way you source and satisfy your businessenquiries?

A. Whether industry leaders like to admit it or not, the global economic

downturn has affected organisations across the board. It has been noticeable

amongst our maritime customer base, that cost cutting measures have

become a daily routine.

How has the global economic problem affected our business? We would

answer “for the better”! When customers are trying to cut costs, they will

naturally approach other service providers for quotes and that has generated

a lot of new business opportunities coming from organisations trying to skin

off unnecessary expenses.

MyViewHermes Stephanou, Managing Director, PrimeTel

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“There was a growth in voyage repairs until the vessels started to

park up. They didn’t want to lose a day’s trading. Now they are not that

interested. It costs more of course, to send people to a vessel so now

they are willing to stop and go to a yard. It is not as crucial now as it

was then. Our main business now is mobilisations for offshore because

of oil that is being explored for near Cyprus. We are picking up a lot of

clients there,” said Alexandros Tziortzis, Group Technical Director of

Limassol ship repairer The Fama Group.

“I think we have been quite lucky as an island,” said Robert

Thompson. The shipmanagement sector seems to be doing reasonably

well because it doesn’t have to wait for the charter rates to improve. But

managers have to have clients who are able to pay and if the ship

owners are struggling then managers will start to have difficulties.

“I am not aware of any headaches in any of the major shipman-

agement sectors at the moment. When I have met others on the island,

they are concerned as we all are but there is not a major worry at the

moment. There are green shoots appearing. I said last year that by July

and August the newsworthiness of the crash would have worn off, the

press would have backed off and then we would have more objective

comment than this flamboyant selling of newspaper stories,” he added.

“The market is changing every month that passes,” said George

Shandos, Managing Director of Deep Blue Insurance Brokers. “More

and more people are taking matters into their own hands. On the

insurance side, I do not see that anything has changed apart from the

approach of the owners to a certain extent. Maybe now they can appre-

ciate the need to have quality coverage. Companies are looking for

cover that can’t be found such as financial exposure cover. There is no

chance of getting a product like that now.”

Ship supply is another service area that has seen falls and according

to Martyn Gibbon, Managing Director of JGS, managers and owners

are turning more to cost as a reason to do, or not to do, business. “Cost



Arctic is our ‘raison d’etre’Russian shipowning giant Sovcomflot is poised to enter a series

of liquefied natural gas (LNG) shipping projects in Russia, including

offshore projects in the Arctic, and will start work on designing

suitable ice-trading gas carriers later this year.

“Further Sakhalin II project development needs for shipping

solutions for natural gas fields on the Yamal Peninsula and

Shtokman would require further improvement of LNG shipping

technologies, including difficult in-ice conditions as well as the

development of floating storage and regasification units for gasifi-

cation in remote regions of Russia,”said Sergey Popravko, COO of

Sovcomflot and Managing Director of Unicom.

Speaking to SMI, he added: “Our recent experience in the

construction and the operation of liquefied natural gas carriers and

technical potential along

with a profound

knowledge in delivering

cargos by sea in harsh

ice conditions of the

Arctic and Far-Eastern

seas will help us to work

out highly effective and

ecologically safe trans-

portation and logistical

solutions for Russia’s

future oil and gas

projects implemented in

the offshore fields of the

Arctic.

“At the moment, Sovcomflot operates two oil projects in the

Arctic and the Far East where it has applied and tested two different

transportation technologies: self-supporting shuttle navigation with

limited icebreaker escort and an icebreaker escorting navigation

system by ice strengthened vessels (hull and propulsion) with

icebreaker escort.”

He added: “The Arctic is becoming very much our raison d’etre.

We are looking at building LNGs but we haven’t seen a drop in

vessel values commensurate with the freight market drop worldwide

so we are still holding off and should do so until Nov/Dec when you

should start to see the Greek market move. There appears to be a

number of scenarios developing LNG tankers construction in the

Russian shipbuilding arena although there remains many challenges

because the Russian yards do not have any practice to design and

build LNG vessels.”

“The shipmanagement sector is underpressure to adjust. But I have not seenserial losses in the accounts and thesector is in a stable and good condition”

Costas Georghadjis

SMI_20:Layout 1 28/7/09 15:57 Page 42

SMI_20:Layout 1 28/7/09 15:57 Page 43

is always a factor especially regarding the managers and their policy

has always been to go to three or more agents or suppliers.

Superintendents look at quality issues and ask if the supply or product

is what we want. Another negative factor is the age of the ship is

reducing so the vessels need fewer spares.

“The credit issue has hit us and the marine industry is one of the

most insecure credit businesses in the world. We have outstanding

invoices going back to October of last year,” he said.

Costas Georghadjis, Audit Partner at Deloitte Limited, said that

while the crisis has largely affected ship owners, the situation can feed

down to the managers as well. He told SMI: “Even though management

operates at lower risk levels than the owners, the shipmanagement

sector is under pressure to adjust. But I have not seen serial losses in the

accounts and the sector is in a stable and good condition. I also can’t see

any imminent problems that will force shipmanagement companies

here in Cyprus to downsize their operations. They have been conser-

vative and very prudent in their operation and should survive quite

comfortably. Ship owners are another story as the problem they have is

with liquidity,” he said.

“There has been pressure on us to complete the audits much earlier

because of the financial covenants that companies have to comply with.

We have also developed another service, a SAS 70 attestation under the

Statement on Auditing Standards No. 70 requirements that cover

internal controls within shipmanagement companies. If you are an

owner with shares traded in the US then you need to be assured by an

independent auditor that the management service you have outsourced

is compliant.” he said.

While Cyprus is likely to grow in prominence as a result of the

tonnage tax initiative, Mr Georghadjis stressed that improvements were

needed in the time it takes to set up companies and to secure the

necessary working documentation; a problem that is especially acute

when you consider the competitive threat posed by other jurisdictions

such as Malta.

“We need to expedite the formalities of registering a company in

Cyprus and getting the necessary permits. We need to make the process

of doing business in Cyprus more flexible and easier to do. We have

seen a lot of Norwegians setting up offices here in Cyprus for purely

taxation reasons and we have had quite a few newcomers because of

that. If we can speed up our permits we will see more companies

moving here,” he added. ■



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“If you take the position today of using in-house travel agencies

versus external travel agencies, very few companies have a

reasoned and well thought out view. There are some but most of

them, if they have an in-house travel agency they stick with it. And

if they don’t they are not inclined to get one, but they don’t really

know if they are buying a reasonably priced tickets with reasonable

efficiency. They have no criterion to measure it.”

MatterOfFactGareth Humphreys, Financial Director, Marine Wings

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SMI_20:Layout 1 28/7/09 15:57 Page 45

It comes as little surprise to shipping industry aficionados that what

goes up will come down; or in the case of the current economic

downturn, to what extent the market will go up from what have been

some of the poorest freight rate conditions ever witnessed.

But what is becoming of more interest to market watchers is the

positioning of cash-rich players in the market ahead of a likely return to

form of the freight market. Companies like ship owner and manager

Lemissoler Shipping Group are already scrutinising the sale and

purchase markets to ensure that when they do enter the fray, they are

buying the units at the best price but also at the right time, and that

timing can be as crucial for their own operations as for vessel values

being touted around on the market.

Indeed, Lemissoler not only has $300 million to spend on newer

tonnage over the next 12 months but it has embarked on an operating

strategy that will see it enter into very close relationships with its

charterers that will guarantee both long term income as well as profit

sharing on both sides of the fence.

“We are looking to develop projects with our charterers and we are

very close now to concluding deals so we will know in advance who is

our counterpart and what the business plan will be for both parties,”

said Philippos Philis, company Chief Executive Officer (pictured).

But when you are looking to invest such large amounts of money

in up to 10 new dry bulk or container ships just as the market starts to

turn, you have to ensure that the employment you are securing for these

assets is robust and likely to last the duration of time.

Mr Philis added: “First of all we believe there are no blue chip

charterers at the moment because no one knows how the market will

develop. No one expected Lehman Brothers to go bust. There are a

number of issues you have to look at before you start buying ships.

There are really good deals in the market but you have to build into your

equation that the vessels will suffer a couple of years where they earn

nothing or just cover their operating costs and then you have to

calculate a possible turn in the market where you can start to

accumulate additional earnings. This is particularly valid in the

container sector.

“We have been monitoring the bulk carrier sector closely and we

believe there will be a correction in this market. The spikes we have

seen are the result of resources need to be moved to production areas.

On top of that you have to consider the long waiting time capes are

experiencing at the discharge ports – if they are waiting 30 to 40 days

then all these ships are out of the market,” he said.

The Lemissoler boss said his views on the market probably ran

counter to the opinion of other owners who maybe believed the bulk

market would continue to strengthen ahead of a pick up in container

freight rates. “The collapse of the market is in front of us and we will

see a correction in all the sectors especially bulk towards the end of the

year. I expect the bulk market to drop at least 20% but I also expect a

slight improvement in container volumes as stores in Europe start to fill

their shelves for Xmas. But after November, we will see a drop again in

the box sector.

“We will continue to focus on the container and bulk trades but the

issue is timing and when we will start to buy ships. At the moment we

are looking to expand with immediate effect in bulk carriers but we do

not expect the market will touch bottom. We are focusing on ships

between handysize, handymax and supramax,” he added. ■



Expansionis the name of the game

Lemissoler Shipping Group

“We will continue to focus on the containerand bulk trades but the issue is timing andwhen we will start to buy ships. At themoment we are looking to expand withimmediate effect in bulk carriers but we donot expect the market will touch bottom”

SMI_20:Layout 1 28/7/09 15:57 Page 46

SMI_20:Layout 1 28/7/09 15:57 Page 47

Captain Peter Cooney, former Chief Executive of Acomarit and pastManaging Director of V.Ships Ship Management, throws down achallenge to chief executives and senior executives and managers ofship operating companies about how well prepared they think they arein dealing with the aftermath of a major maritime accident.

Perhaps we think we are managing our ships pretty safely, with a

good and effective ISM Safety Management System, that in the

unlikely event of one of our ships being involved in a major accident

we have everything in place to demonstrate that we ‘exercised due

diligence’ – as the lawyers say. Or maybe we believe we are so good

that ‘it could never happen to me’. Believe me a major accident or

incident can happen to you and there is a very good chance that what

will follow will turn your life – and your company – upside down.

During my former incarnation as Managing Director of the

V.Ships Ship Management organisation, and before that as CEO of

Acomarit, I was unfortunate enough to be in the front line of a number

of major incidents. In recent years I have been involved with Dr Phil

Anderson and his specialised consultancy company ‘ConsultISM

Limited’ – which is actively involved in most of the recent major

maritime disasters. Through that contact I have been provided with an

insight into how ship operating companies, their CEOs, senior

managers and Designated Persons are increasingly coming under attack

from claimant lawyers around the world.

I am not at liberty to disclose details of specific cases – since most

of the cases are still ‘live’ but I feel I can, and must, draw attention to

certain issues which I would say are cause for very serious concern.

The ISM Code is now over ten years old and we are still asking the

question whether it is working and whether it is making ships safer and

seas cleaner. There is strong evidence to confirm that pollution

incidents have reduced considerably in the last decade or so. However,

other incidents – particularly navigation related accidents – do not

appear to be on the decline. Every year the P&I Clubs impose general

increases of typically 15% across the board – to generate sufficient

funds to pay the rising claims. Most of the accidents and incidents

which have resulted in the claims should never have happened – they

could have been prevented if an effective SMS had been in place. I am

advised that part of the problem is that the lack of good evidence, which

should be available in a properly implemented SMS, simply is not

available which significantly inhibits the ability to defend the claims.

While it was never the intention of the ISM Code to be used as

either a sword to attack with – or a shield to defend with, in litigation

or arbitration - that is exactly what is happening. Lawyers around the

world are becoming increasingly aware of the potential use they can

make of the ISM Code. They will try and embark upon a fishing

expedition – knowing that certain potentially damning paperwork

should be available. If the records are not available then the company

will also be damned! Whenever an accident, incident, claim or dispute

arises – of whatever nature – the investigation and analysis very quickly

starts probing the way in which the ship operating company was

managing safety. From that position it moves into the realms of the ISM

Safety Management System – how well it had been set up, how well it

was being implemented and was working in practice – and how well it

was being monitored by the company.

If the company management can easily demonstrate that they had a

good system, that it had been properly implemented, it was working

well in practice and it was being monitored by the company – and that

what happened on this occasion was a ‘one-off’ accident – then they

should be allowed that one mistake. To err is human and no ISM system

is perfect – human beings can, and will, still make mistakes

occasionally – even in the very best systems and companies.

Unfortunately, what becomes apparent time-after-time is that the

documentary evidence, the records, which might have confirmed that

the SMS was running well and was being properly monitored, was

simply not available. Without that evidence you have got very serious

problems! The situation becomes even more problematic when

documentation is produced which turns out to be fraudulent – it is

usually very easy to discredit the reliability of records – for example

hours of work/rest records. Once a fraudulent document is identified

amongst the evidence then a Court or Tribunal will be very distrustful

and suspicious of all the other documents.

Such a revelation is bad enough when the incident is a collision, or

grounding, or involves cargo damage or similar but when the incident

involves a major pollution or fatalities and the company, CEO and

perhaps DPA are facing corporate killing and manslaughter charges –

with attendant high levels of fines and possible prison sentences – then

life will literally never be the same again. Believe me!

Investigation teams, from all sorts of sectors including police,

government, insurers etc. etc., lawyers and their teams will swarm upon

you – repeatedly asking for the same documents that should exist but

don’t exist. They will want to go over and over again the same ‘history’

and background – and each one repeatedly rediscovering the missing

pieces of the jigsaw that are the cause of some acute embarrassment for

you. All this will happen on top of the human stress and strain of

knowing that a major pollution or fatality happened in your company,

onboard your ship, on your watch. Do not underestimate the level and

degree of that stress and strain and the effect it will have on you

personally, your family and your company.

How prepared are you to defendyour corner?By Capt Peter Cooney

To err is human and no ISM

system is perfect – human

beings can, and will, still make

mistakes occasionally – even in

the very best systems and

companies


SHIPMANAGEMENT OPINION

SMI_20:Layout 1 28/7/09 15:57 Page 48

The reality is that as a CEO you could go to prison, along with your

DPA, other senior managers, Masters and maybe others. Unfortunately,

for many, the realisation that their SMS is not running quite as well as

they thought comes too late.

As someone who has been there and experienced the pressure I

would urge every CEO and senior executive/manager to step outside

their comfort zone and reflect very carefully on exactly how well you

would really cope in the event of a major incident? Is your SMS really

working quite as well as you believe? Will you have the documentary

evidence to prove it?

Often a weak link in the chain is an ineffective DPA. It may be that

the DPA is just in need of some additional training or maybe in need of

some additional support – from YOU – or maybe additional resources.

Take steps now to establish what the situation is in your company, with

your DPA.

Sometimes it can be difficult making an objective assessment from

within: the old problem of not seeing the wood for the trees. Consider

using an external consultant, on a confidential basis, who will examine

your systems and tell you where your weaknesses are and what you

might need to do to make the ship watertight.

The important lesson to learn, I would suggest, is always be

proactive – adopt a risk-based approach to your management style and

particularly your management of safety. Being reactive clearly implies

that the accident has already happened. There is much that can be done

to reduce the risk and one step I would very strongly recommend is to

ensure that your DPA(s) receive adequate training in the job role of

actually being a DPA! I have seen too many instances where good

Masters and Chief Engineers have been thrust into the job of DPA and

are just expected to get on with it. Inevitably, things go wrong and their

lack of preparation and training for the job comes to light after the

accident has happened.

A good DPA, who has received the proper training, can be an

enormous asset to the company and can ensure that your rear end is

properly protected – as well as doing a good job of ensuring that safety

is being managed exceptionally well! But that can only ever happen if

you, as CEO, demonstrate your own commitment to safety through

strong leadership so that everyone in the company knows it and

believes it. And remember – ensure that the DPA has your full support

and make sure he or she knows it and believes it. At the end of the day

it could save lives, it will certainly save you a lot of money and time

and could actually keep you out of prison!

Do not believe that you are beyond the need for training. As CEO

or senior manager you are likely to benefit considerably by increasing

your own knowledge and understanding of how you can best support

the DPA and the rest of the team to increase the effectiveness of the

SMS. I would urge you to make the time to get up to speed by attending

an appropriate training course; make sure you understand what can go

wrong and the consequences if things do go wrong. More importantly,

understand what you can do to reduce the risks to a minimum. ■

As someone who has been there

and experienced the pressure I

would urge every CEO and

senior executive/manager to step

outside their comfort zone and

reflect very carefully on exactly

how well you would really cope

in the event of a major incident

49

SHIPMANAGEMENTOPINION


SMI_20:Layout 1 28/7/09 15:57 Page 49

Delays in the completion of LNG production projects not

only kept 2008 output at similar levels to the preceding

year but it managed to put pressure on the freight market,

with the roll-out of considerable newbuild capacity ordered mainly

on the strength of new schemes making for tonnage supply far

outstripping current cargo volume demand.

LNG carriers contracted for long-term employment have been

lying idle and, in some cases, have been deployed in the third-party

charter market as an interim measure, until the projects to which

they have been assigned have been brought into commission.

New tonnage is already afloat or under construction to cater for

the forecast growth in world production capacity from around 180

million tonnes last year to 210m tonnes in 2010. The current

mismatch between shipping supply and cargo demand can be

expected to ease with the gradual realisation and implementation of

the various projects, and the attendant start-up of new, regular

shipping flows, as with the recent inauguration of shipments to the

UK under the Qatargas 2 scheme.

Japan remained the world's largest LNG market in 2008, taking

40% of all imports, while the next two largest markets, South Korea

and Spain, saw double-digit increases. "Strong growth seen in 2008

in emerging economies such as China, India, Mexico and Taiwan

may be difficult to replicate in this economically challenging year,"

considered Golar LNG when presenting its 2009 first-quarter results.

As BW Gas recounted in its 2008 annual report, interest in

developing new LNG projects has continued to be subdued as

regards both the production (liquefaction) side and the reception

(regasification) side, due to cost escalations, long lead times and

uncertainties arising from the global financial turmoil and consid-

erations relating to the long-term natural gas price in the US. New

projects under planning require considerably higher future gas

prices than only a few years ago to ensure profitability. Beyond

more conventional LNG schemes, though, other areas of oppor-

tunity are arising, such as floating production projects and coal bed

methane exploitation, while the rapidly increasing number of LNG

terminals and supply sources points to a more complex LNG

trading regime in the future with possible beneficial implications

for shipping demand.

While experiencing a difficult trading environment for

company ships working the spot market, Golar LNG took a more

sanguine view of long-run prospects 2009 first quarter report: "The

Board continues to believe that the long-term outlook for LNG

demand in global markets remains strong, and that production

capacity currently under construction will progressively improve

the situation."

Although the worldwide fleet continues to grow and available

tonnage is plentiful, Golar believes there are a number of factors at

play which have tended to be overlooked, leading to what it

describes as a "false sense of security of tonnage supply in the

market." Among these is a changing trade pattern, whereby the

current market is driving some LNG producers to diversify deliv-

eries, which could put pressure on each project's shipping capacity

and potentially create further demand for ships. Other influences

include what is perceived as a growing separation between vessels

offering a high degree of trading flexibility and those LNG carriers

which are restricted by their size to just one or two specific

projects. Use of vessels for floating storage, conversion schemes

and increased interest in scrapping all bear on future operational

fleet capacity, while project start-ups will take committed tonnage

out of today's spot market.

"The company's strategy of diversifying into FSRUs (floating

storage and regasification units) and, over time, into lique-

faction......will continue to deliver a more robust revenue profile as

the broader LNG market moves through the different phases of the

economic cycle," said Golar LNG.

Recent years' record level of investment by the industry in

technology-intensive LNG carrier newbuilds coupled with

increased shipbuilding efficiency has accelerated the expansion of

deepsea carrying capacity. While it took 34 years for the in-service

fleet of LNGCs to reach 100 vessels and a further eight years for it

to top 200, the subsequent addition of 100 ships has occurred over

a period of just two and a half years, according to the specialist

publication LNG World Shipping.

LNG World Shipping calculated that there were a further 89

LNG carriers on order worldwide at the start of 2009 for delivery

through 2011. In its 2008 annual report, BW Gas put the total

number of vessels on order at 86, whereby 57 were slated for 2009

delivery, with 18 due in 2010, and nine and two in 2011 and 2012,

respectively. Contractual activity had declined from 26 newbuilds

ordered in 2007 to just five in 2008, including a pair of 147,000 cu

m LNGCs for Brunei Gas Carriers.

In recent months, the first cargoes of LNG have been shipped

through the UK port of Milford Haven under the Qatargas 2 project,

applying huge new economies of scale in production, handling and

shipping. Constituting a joint endeavour of Qatar Petroleum,

ExxonMobil and Total, Qatargas 2 is the culmination of what

Qatargas Chairman and Chief Executive Officer Faisal M. Al

Suwaidi described as "the world's first fully integrated value chain

LNG project." Key elements include three unmanned offshore

platforms, two LNG trains with individual capacities of 7.6m

tonnes per annum, five storage tanks, two loading berths at Ras

Laffan, a fleet of 14 LNG carriers of the record-breaking Q-Max

and Q-Flex designs, and a purpose-built receiving terminal in

Milford Haven.


TRADE ANALYSIS LNG & LPG

“Although we have made a solid start to theyear, the remainder of 2009 and probablybeyond, in my view, will continue to be verychallenging and we must position thecompany such that it has the resources tomeet any challenges that lie ahead”

tomorrow’s opportunitiesin the gas trades By David Tinsley

SMI_20:Layout 1 28/7/09 15:57 Page 50

The South Hook terminal in the southwest Wales port ofMilford Haven, the UK conduit for supplies under the Qatargas 2project, has become the largest LNG import and regasificationfacility in Europe, with a capacity of 15.6m tonnes per annum. Thefive storage tanks are claimed to be the largest worldwide, by virtueof individual dimensions of 95m diameter and approximately 44mheight. Submerged combustion vaporisers and other specialisedtechnologies have been utilised to combat air and water pollution.

Qatargas 2 accounts for 14 of the total of 45 Q-Max and Q-Flexvessels ordered in South Korea for the Qatari export trade. The Q-Max generation of 260,000-266,000cu m capacity and the 210,000-216,000cu m Q-Flex series will be Qatar's major assets in realisingthe business potential offered by its North Field resource, estimatedto contain about 15% of the world's proven gas reserves. Qatargasand RasGas, the gas export arms of state-owned Qatar Petroleum,are establishing the largest ever natural gas liquefaction plants atthe interfaces. Eight of the Qatargas 2 vessels are of the Q-Flex typeand six are of the Q-Max design, and the new tonnage will sustaincargo flows from the Train 4 and Train 5 outlets in Qatar.

At 345m in length overall and 53.8m breadth, the twin-skeg Q-Max has taken LNG carrier size to a new level. First-of-classMozah made her debut last year. Encapsulating membrane cargocontainment systems, the Q-Max and Q-Flex ships from Hyundai,Samsung and Daewoo not only employ unrivalled economies ofscale, to radically lower unit transportation costs, but are techni-cally distinguished by the adoption of twin, two-stroke dieselengines for propulsion, in conjunction with onboard cargo relique-faction plant. The innovative nature of the designs springs from themanner in which existing technologies have been adapted andcombined, to maximise cargo deliveries with the highest levels ofsafety, reliability and through-life efficiency.

The 45-strong fleet of Q-Max and Q-Flex LNGCs will serve

four ventures all-told, namely Qatargas 2, RasGas (Ras Laffan

Liquefied Natural Gas Company) 2, Qatargas 3 and Qatargas 4.

Where tonnage is not owned by Qatar Gas Transport Company

(NAKILAT) outright, it is under the control of joint ventures

involving NAKILAT.

Reliable year-round marine transport is a prerequisite for viable

resource development and exportation in northern Russia, and

especially in western Siberia. The long term vision that is now

evident in Russian economic strategy is such that the development

of maritime operations is seen as elemental to exploiting the value

of energy resources. The Shtokman field alone is expected to have

a capacity of 14m tonnes of LNG per year, which could ultimately

generate more than 200 shiploads annually from the Barents Sea.

New milestones in the development of the LNG industry have

been laid down this year through February's official opening by

Russian president Dmitry Medvedev of the country's first LNG plant

and export infrastructure, on Sakhalin Island, followed by the first

scheduled shipment of Russian gas from the complex during March.

Sakhalin II is reckoned to be the world's largest integrated oil

and gas project, and the construction of facilities in the sub-Arctic

conditions of the Russian Federation's far eastern region has posed

particular challenges. Operator Sakhalin Energy is 50% owned by

Gazprom, 27.5% by Shell, 12.5% by Mitsui and 10% by Mitsubishi.

Towards the end of March, the first commercial cargo was

loaded at Prigorodnoye port by the 145,000cu m Japanese LNG

carrier Energy Frontier. Destined for Tokyo Gas and Tokyo

Electric, two of Sakhalin Energy's foundation customers, the

consignment was discharged at Sodegaura terminal in Tokyo Bay,

and constituted the first-ever Russian gas delivery to Japan.

Sakhalin LNG is currently being produced by the first of two

trains, the second of which was due to come on stream during mid

2009, with a gradual ramp-up to full production capacity of both

trains scheduled through 2010. The project infrastructure includes

three offshore platforms, an onshore processing facility, 300km of

offshore pipelines and 1,600km of onshore pipelines, an oil export

facility and LNG plant. Practically all the 9.6m tonnes of annual

production capacity of the two trains has already been committed

51

TRADE ANALYSISLNG & LPG


“Strong growth seen in 2008 in emergingeconomies such as China, India, Mexicoand Taiwan may be difficult to replicate inthis economically challenging year”

SMI_20:Layout 1 28/7/09 15:57 Page 51

in long-term sales contracts to customers in Japan, South Korea and

other markets.

Nippon Yusen Kaisha (NYK) and Sovcomflot established a

consortium in 2004 for the purpose of shipping LNG from the

Prigorodnoye terminal to recipients in Japan, South Korea and Baja

California, Mexico. Orders were placed for two 145,000cu m

newbuilds, embodying the well-proven Moss spherical tank cargo

containment system and strengthened to ice class 1C standard, to

enable year-round operation out of Sakhalin. The vessels were

delivered in October 2007 and January 2008 as the Grand Aniva

and Grand Elena, respectively, and have both been deployed

elsewhere prior to entering the Sakhalin II export traffic in 2009

under 20 year timecharters.

The pair of gas tankers are the most technologically advanced

vessels in the Sovcomflot fleet, and their customisation for

navigation in the sub-Arctic region of the Russian far east puts them

in a different category from most other LNG carriers. First year ice

prevails in the area during the most difficult conditions generally

encountered between January and March. The traditional powering

and propulsion system of choice for LNG tankers, based on steam

turbine machinery, has been adopted in each of the new vessels, by

way of a 23,600kW plant enabling a service speed of 19.5 knots.

Four other LNG carriers dedicated to moving the Sakhalin

output, comprising two further Moss-type tankers and two 150,000cu

m membrane ships, were ordered by various interests for delivery

between 2007 and 2009 from yards in Japan and South Korea.

The future construction of two LNG carriers in China is covered

by a conditional agreement recently signed by UK integrated gas

producer and supplier BG Group to provide long term shipments of

gas to China from Australia. The project development agreement

with China National Oil Corporation (CNOOC) envisages the

supply of 3.6m tonnes per year of LNG for 20 years from the start-

up of BG Group's Queensland Curtis LNG (QCLNG) scheme.

CNOOC would become a 10% equity investor in one of the

two liquefaction trains to form the first phase of the QCLNG devel-

opment at Gladstone, from where first shipments are anticipated in

2014. BG Group and CNOOC foresee joint participation in a

consortium that would be created to build and own two LNG

carriers. Realisation of the plans would be a fillip to the Chinese

shipbuilding industry's ambition to follow up the 147,700 cu m

Dapeng Sun series with further LNGC contracts.

Global seaborne trade in LPG increased by 3m tonnes to

approximately 56m tonnes in 2008, and analysts forecast. In very

large gas carrier (VLGC) category, represented by vessels of

70,000 cu m-plus, last year's trade growth influenced the record

peaks in charter rates witnessed during the summer months.

However, events during the 2008 second half, including the influx

of a large amount of newbuild tonnage, resulted in the market

touching record low levels by the year's end. The main increase in

trade was attributable to Middle East exports, driven by production

advances in Qatar and Iran, and the latter two countries were

expected to generate higher export flows in 2009. Saudi Arabia

remained the world's largest exporter, and last year's growth in the

share of Saudi shipments sold under term contract to 94% reduced

spot cargo availability in the LPG market.

The deepsea fleet of LPG carriers, specifically vessels in

excess of 20,000cu m, grew from 213 to 240 vessels over the

course of 2008, the newbuild influx of 38 ships outweighing the

offtake of tonnage through scrapping or conversion. The fact that

27 of the incoming vessels were VLGCs, in the 70,000cu m-plus

segment, was a key determinant in the rate slide, in conjunction

with world financial turmoil and a drop in crude prices. Another 27

VLGCs were under construction and on order at the start of 2009.

While VLGC contracting fell away to three newbuilds in 2008,

investment activity in the 20,000-50,000cu m range was relatively

intense, whereby orders for 11 such vessels were placed during the

year, taking the number of ships in this size band for delivery in

2009-2011 to 33.

At the turn of the year, the fleet owned, part-owned andoperated by marine gas transportation specialist BW Gas comprised70 vessels, including tonnage under construction. The companyranks as the world's largest owner and operator of LPG carriers,with 54 such vessels under its wing plus three on order as ofDecember 31. Its stake in the LNGC sector was represented by 11ships in operation and two newbuilds, making BW Gas one of thebiggest 'independents' in the field of LNG shipping, following avigorous investment programme since 2000.

Managing Director and CEO Jan Haakon Pettersen reportedthat external buyers had demonstrated interest in BW's LPG carrierfleet during 2008, but that a unified board had decided that therewas more value in keeping and developing the business further,than selling it. "Having the backing of a strong owner has been amajor asset in these testing times, and may continue to provevaluable in the years to come, as I feel confident that extraordinaryinteresting opportunities will arise in the wake of this storm,"observed Mr Pettersen.

Although 2008 had turned out worse than expected, thecompany had long anticipated a downturn that year in the light ofwhat it described as a "challenging" world orderbook. Havingalready faced difficulties in 2007, the company had been quicker offthe mark in its management response to the situation than some ofits competitors. The raft of measures that had been implemented hadincluded refinancing, reorganising the legal structure through a newBermuda-based parent company, reducing the cost base and sellingvessels, and integrating the group's shipmanagement activities.

Towards the end of last year, BW Gas initiated the acquisitionof Bergesen LNG and its four LNG carriers from main shareholderWorld Nordic, with settlement in the form of shares, so as to helpstrengthen the balance sheet. All four vessels were deliveredbetween 2006 and 2008, and are fixed on 20.5 year timechartercontracts to Nigeria LNG.

Lauritzen Kosan said that the fleet of LPGCs in the 3,000-20,000 cu m range increased by 8% to 3m cu m overall capacityduring 2008 compared to the 9% net increase recorded in 2007,with ethylene carriers accounting for 30% of combined capacity.Deliveries amounted to 36 units, half of which were ethylenecarriers. By the end of 2008, the total orderbook represented about800,000 cu m, corresponding to 27% of the existing fleet at thattime. In the ethylene segment, tonnage under construction totalled310,000 cu m, or 40% of the orderbook, with no scheduled deliv-eries beyond 2010.

While the LNGC newbuild construction sector appears to havebeen free from the delivery postponements and cancellations thathave been seen in the most populous categories of the shippingmarket, notably bulk carriers and containerships, the LPGCbusiness has been witness to a number of contract renegotiations.Earlier this year, for instance, Athens-headquartered Stealthgasannounced that deliveries of five newbuilds had been put back to2011 and 2012, at no cost to the company and following "amicablenegotiations" with the shipbuilder.

In presenting the first quarter's results for Stealthgas, CEOHarry Vafias commented "Although we have made a solid start tothe year, the remainder of 2009 and probably beyond, in my view,will continue to be very challenging and we must position thecompany such that it has the resources to meet any challenges thatlie ahead and to take advantage of opportunities, especially outsideour core handysize LPG segment." ■


TRADE ANALYSIS LNG & LPG

“Having the backing of a strong owner hasbeen a major asset in these testing times,and may continue to prove valuable in theyears to come, as I feel confident thatextraordinary interesting opportunities willarise in the wake of this storm”

SMI_20:Layout 1 28/7/09 15:57 Page 52

SMI_20:Layout 1 28/7/09 15:57 Page 53

OK, so times are tough. But shipping companies need to look at

life beyond cost-cutting measures, and the choices they make

with regard to IT are more critical than ever before, believes

Himanshu Joshi, director of Teledata Marine.

“IT budgets are becoming prime targets of the cost-cutting

exercise. But management should take a careful look now, even more

than ever before, at how IT is used across their organisation,” he

warned. It is important to bear in mind that targeted IT investments can

make operations more efficient and increase revenues, delivering

returns larger than simple cost-cutting.”

Uncertain shipping revenues and manpower shortages on ships will

change the way shipmanagement is done in the near future, said Capt

Joshi. “IT products and services have to be aligned to this need now,

much more than ever before.”

TMS says the use of IT to ensure effective cost-management

becomes more important as shipping companies battle to keep costs

down and ensure profitability through boom-bust cycles.

In response, it has set up what it believes is the world’s first

maritime IT consulting service, TMS Consulting, offering end-to-end

IT consulting, business intelligence and outsourcing services.

“It has been proved that the deployment of IT services arithmeti-

cally generates ROCI at 9% per annum over a period of six years in a

medium to large enterprise,” he added.

However, he says, the use of marine software to assist shipowning

and shipmanagement operations remains “extremely fragmented”.

“There is a myriad of marine applications that provide piecemeal

solutions. The presence of myriad standalone applications that do not

give decision support and increase paperwork, and the absence of

identifications of IT needs at strategic, operational and tactical layers of

the shipping organisations are prevailing endorsements of an ‘old

school of thought’.

“The marine industry at large has never executed a complete needs

analysis under the logical study heads of management, technology,

organisation, information systems and business solution.”

Shipping companies need to take time to explore technology infra-

structure and evaluate the variety of options, from shipping enterprise

software resource management and webcentric solutions to relational

databases and data warehousing, suggested Capt Joshi.


MARKET SECTOR IT & MANAGEMENT SOFTWARE

aligning efficiencies

is more than just

cost control By Felicity Landon

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“The maritime environment does not lend itself tohaving complex software systems installed onvessels, as the ‘average’ multinational seafarerdoes not have the high level of IT knowledge andexpertise needed to operate such complex systems”

Mark Jennings

SMI_20:Layout 1 28/7/09 15:57 Page 54

TMS recently launched ShipManager 7.0 which it claims addresses

the need for an integrated, efficient, robust and user-friendly IT

solution. Implemented across Parakou Shipping’s fleet already, it is

constructed around four building blocks – Technical, Commercial,

F&A and Decision Support. “It is arguably the only totally integrated

web-based marine IT solution," Capt Joshi stressed.

Shipping companies need to make the distinction between running

a vessel efficiently and running it cheaply, says SpecTec’s global sales

manager Matthew Hodkinson. “To make this distinction, you need to

understand what is happening onboard to a detailed level,” he said.

“You need to understand what is happening in the office at an opera-

tional level. You also need to look closely at what are the impacts when

you cut costs, and see what systematic risks you may create by reducing

expenditure in a particular area.

“The only way to effectively do this is to have an active, alive risk

management process, which is imbedded in all of your management

processes – not a standalone, vertical solution. This needs to be an

intuitive and practical as possible, so that it remains workable.”

It isn’t possible safely to reduce costs in one area unless you

understand what the impacts are in the other functions of your

business, he emphasised.

SpecTec’s AMOS2 Enterprise Suite includes modules for mainte-

nance, purchasing, personnel, quality and safety, and voyage management.

“While able to operate each business module independently, as well as in

unison, each has been fully integrated within the central AMOS database

structure to provide consistent and manageable central reference tables for

the common sharing of data,” said Mr Hodkinson.

According to SpecTec, one of the main issues facing ship operators

today is the falling level of competency and the lack of retention of

corporate knowledge, due to the high rate of crew turnover.

“This has had a negative impact on the overall management system

implementation, both in terms of safety and of control of maintenance

and purchasing processes. That is why a system like AMOS is critical,

providing a drip feeding of the management system and processes,

allowing the creation of a system that brings complex processes into

bite-sized pieces.”

SpecTec also sees environmental management becoming entrenched

in most of the business processes, so that it cannot be considered a stand-

alone process. “This is why vertical solutions will fade out as they

struggle to efficiently support broad business interconnectivity.”

While maritime IT solutions are becoming ever more sophisticated,

complex and all-encompassing, the overwhelming message from the

software companies is the client’s need for simplicity and ease of use.

“The maritime environment does not lend itself to having complex

software systems installed on vessels, as the ‘average’ multinational

seafarer does not have the high level of IT knowledge and expertise

needed to operate such complex systems,” said Mark Jennings,

Operations Manager of Marine Software. “Careful thought and consid-

eration is given by shipowners and shipmanagers when they select

software applications, as these need to be simple and easy to use,

robust, and cost-effective with a low training overhead.

“Any software needs to be a simple tool to assist the seafarer and

55

MARKET SECTORIT & MANAGEMENT SOFTWARE


Veson Nautical, which recently launched version 6 of its Integrated

Maritime Operations System (IMOS), says the knee-jerk reaction of

many ship operators is “to not spend any money”.

“In general people buying a system like this look at a five-year

horizon – but we are now seeing companies staying longer with the

systems they have,” said president John Veson.

“Our challenge has been to say it is an important time to make

investments – because in a year or two when things start coming

back, you are going to be in a much better position than those that

didn’t invest. When people buy software, they want to know what

the ROI is – we find that our software pays for itself typically in less

than a year in terms of efficiency and operational costs.

“In these straightened times, software can be made to work hard

in keeping finances healthy,” he said: “That includes staying on top

of demurrage claims and staying on top of overall invoicing – making

sure you are collecting everything, so you have a fair idea of the risk,

who isn’t paying you and who you need to be more careful with.

“In terms of direct cost reduction, it is all about efficient opera-

tions. The market is going to come back and historically speaking

the companies which have invested in these downturns are in a great

position when things pick up.”

VESON

ABS Nautical Systems has recently introduced new Drydock and On-

demand Reporting in direct response to customer requests.

“The Drydock module is one of the most, if not the most, robust

Drydocking tools on the market, especially when you take into account its

full integration with the Maintenance & Repair module, Purchasing &

Inventory module and Financial Reporting tools,” said Joe Woods Vice

President. “Many clients were [previously] using other custom or third

party solutions for managing drydocks. All of the history was outside their

core system and didn’t allow for transparency, reporting or replication.”

The On - demand Reporting module provides all the tools that ABS

Nautical Systems has for developing custom reports and provides these

tools to the client, he says. Day-to-day users can generate reports for

any data element across any module, and modify standard reports for

their own use.

Another new module, Hull Inspection, is a web-enabled vessel-

specific tool whose database contains detailed information specific for

each asset – tank inspection worksheets, critical areas, inspection zones

for each tank, historic information, gauging, drawings, inspection

criteria, etc. – allowing users to manage the hull integrity in one easy-

to-use software program.

ABS NAUTICAL SYSTEMS

SMI_20:Layout 1 28/7/09 15:58 Page 55

reduce the time spent in front of the computer, and without the need to

send crew away on lengthy training courses, which is both impractical

and expensive.”

Complicated, costly land-based solutions have not leant themselves

to providing a real business benefit in the marine environment, he says.

“Tight operational schedules, fast vessel turnround times and often low

financial margins dictate that maritime software needs to be simple and

inexpensive to give the operator any hope of getting a genuine return on

IT investment. Marine Software’s solutions offer a unique way in

addressing these concerns.”

Among the developments from Marine Software is a new Lay-Up

module to help manage the planned maintenance requirements when

laying up ships.

The company has also produced a specific module within its

Marine Safety Manager software to meet a request from Estonia’s

Tallink Group for help in recording environmental aspects and impacts

under ISO 14001. Tallink has upgraded its fleet of over 20 vessels to

incorporate this new feature.

Marine Software has recently supplied its Marine Purchasing

system to the National Oceanographic Centre’s research vessels James

Cook and Discovery and its technical office in Southampton.

ABS Nautical Systems says the message from clients is clear: make

the system as easy as possible to use, while still providing the same

robust solution with full reporting capabilities.

“Cost and complexity are always concerns, especially in the market

conditions we face today,” said Joe Woods, Vice President of sales and

marketing. “We are seeing a growing number of clients and prospective

clients looking for a single integrated solution.

“They want to limit the number of systems they need to support,

implement, train personnel on, and manage on a day-to-day basis. They

want to enter a long-term relationship with a ‘partner’ who will allow

them to grow and change as the market changes.”

As well as this, a growing number of companies are inquiring about


Swiss-based software company MESPAS, founded only five years

ago by marine engineers, software engineers and venture capitalists,

has provided its fleet management system to about 450 vessels.

In June (09), it announced its version 5.12 of its mespasR5

system, which features four new models – TMSA II, Form Manager,

Noon Report and Crew Management light.

The overarching goal when establishing the company was to

develop a drastically more efficient way for managing marine fleets.

The founds recognised that a fleet management system can, if estab-

lished using a centralised database, help container operational costs,

and improve efficiency and information flows,” says marketing

manager Christa Thoma. “This is particularly important in times of

economic downturn. Shipmanagers should be able to concentrate on

their core business again, while being able to count on a system that

lets them manage their fleet in an efficient and cost-effective way.”

Being able to manage a fleet as opposed to single vessels

provides is key to saving costs, she says. mespasR5’s multi-tenant

architecture approach enables overheads for operation and mainte-

nance to be reduced significantly because of the economy of scale,

says Ms Thoma.

MESPAS

“They are looking to maximise the data they havecollected for trending and improved efficiencies.One of our largest clients told us ‘we don’t collectdata we don’t intend to report on or analyse’. Thesolutions we provide must be streamlined and builtto extract data just as easily as you enter data”

SMI_20:Layout 1 28/7/09 15:58 Page 56

reporting capabilities, said Mr Woods.

“They are looking to maximise the data

they have collected for trending and

improved efficiencies. One of our

largest clients told us ‘we don’t collect

data we don’t intend to report on or

analyse’. The solutions we provide

must be streamlined and built to extract

data just as easily as you enter data.”

Clients also want to be able to

access data from anywhere in the world

and minimise the deployment effort

required for initial implementations and

ongoing upgrades, he adds.

ABS Nautical Systems is also

reporting an increased use of system

audits in reaction to the economic

downturn. A consultant will spend two

or three days with a client looking at

how efficiently they are using the

system and leave them with suggested

tactics to gain more from the software.

“Many times we find that over

time internal processes have changed

but they have not updated their

workflow, authorisations or provided

the training necessary to match these

internal changes,” says Mr Woods.

Such an audit can have clear implica-

tions for the bottom line, he added.

Later this year (2009), the

company will launch an N-Tier

solution for its NS5 fleet management

software.

Michalis Hatzimanolis, in charge

of marketing at Ulysses Systems, says

the significant contribution that IT can

make in avoiding errors is based on

sharing experience and implementing

practices refined by experience. IT

should apply predictability and

continuous improvement to

management operations, he says, and

he compares this to football

management.

“If a football coach was to manage

as many teams as a shipping company

manages ships, the manager would

have to maintain his ability to apply

normal management practices to teams

he cannot see.

“He would still have to view each

player’s actions, discuss them, suggest

improvements, pass experience from

one team to another, etc. If technology

could be used, it would record how

each team and individual player

performs, and would use the experi-

ences to channel focused improve-

ments to each player and team. The

target of IT in shipping is very similar.”

Capt Hatzimanolis says IT has to

show results, in a tangible way, and

where better than to look at insurance

records, which show the same errors

being made on ships again and again –

anchor losses, collisions, groundings,

machinery damage, etc.

Commercial losses are also often

repeated – lost charters, frustrated

sales, damaged reputations.

“There are very few new and inter-

esting problems, which indicates that we

57

MARKET SECTORIT & MANAGEMENT SOFTWARE


There is a risk that more computer-derived managing enabling the “man in the office” to keep a closer

eye on all that’s happening on his ships is likely to alienate the shipboard staff who will feel they have

a “spy in the cab”, says Steve Johnson, director of MetWorks.

“They could be made to feel untrusted or incompetent where every decision is questioned by an

office-bound worker that does not have the ‘feel’ of the real situation on board,” he said.

Weather routing specialist Metworks aims to engage the master with the route recommendations,

he says – “we appreciate that the man on the spot will have a better understanding of his own and the

ship’s requirements. To this end, all our routing is advice only and we welcome feedback from the

master with his own preferences and experience giving him a better understanding of his vessel than

anyone else or nay computer sensor could ever have. This method requires good, reliable and fast

communications between the ship and shore – this is an area that will continue to improve as more ships

are provided with broadband that is faster, cheaper and more reliable than before.”

MetWorks receives request from customers for a variety of weather information services away

from its mainstay of routing work. This includes monitoring weather conditions for a delicate marine

operation offshore, research and analysis, and feasibility planning for marine operations.

METWORKS

SMI_20:Layout 1 28/7/09 15:58 Page 57

are nowhere near exhausting the need for improvement in areas we

already know are risky. Shipping doesn’t change much. However, colli-

sions and machinery damage occurs more frequently in inexperienced

companies and in sectors where management scrutiny is not strong.

“Most IT systems aim at recording data that will assist coordinated

decision-making. In short, the aim is to support users with the right

information at the right time to overcome gaps in information and

knowledge that will result in errors.”

Recording of observations or more routeing data is often incon-

venient and incomplete, so the software needs to make this process

convenient and of direct benefit to the user entering the information,

says Capt Hatzimanolis. When people make decisions, they are preoc-

cupied with conflicting goals and pressures – they need convenient and

well-designed software navigation to benefit from corporate data.

People are very busy and often competing with each other within the

organisation – so do not help each other with experience. A management

system must pick up experience as a by-product of normal work, not

through extra effort by one person to pass his experience to another.

And, said Capt Hatzimanolis: “People often do not remember the

right experience at the right time unless they have practised for years.

After a black-out, a duty engineer will rarely check the oil before

starting another generator. Technology that understands shipping proce-

dures can help with that.

“The process of being reminded about what to do or about what has

happened in the past, at the right time, is rarely well thought-out. The

right reminder at the right time is essential to efficient operation.” ■


Bibby Ship Management has been appointed

exclusive European distributor of IDESS IT’s

competency assurance package CASys.

The system allows companies to monitor

the professional development of their personnel

and is increasingly relevant in today’s market,

says Iain Forrest, competence assurance

manager at Bibby Ship Management.

“We felt there was a growing market for this

type of system – companies are becoming more

and more interested in ‘how do we help

ourselves by helping our people’ and this is one

of the tools that allows them to do this.

“Essentially it is an electronic extension of

the old paper-based training record books of the

past. It is about developing the people you have

to perform effectively. Companies are realising

that the better people they have on board ship,

the better the ship performs and the better the

return to themselves as owner or manager.”

The web-based CASys enables companies

to focus more clearly on performance issues

related to individuals and their development,

with information updated and shared between

ship and shore on a regular basis.

“The system will generate reports on who

is ready for promotion, or nearly there, and

what it is they have to do before they can be

promoted. Time-limited and safety-critical

tasks can be built in. It allows the training

manager to focus his spend and budget, and

look ahead a little bit more.”

BIBBY

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SMI_20:Layout 1 28/7/09 15:58 Page 59

On Thames patrol


BUSINESS OF SHIPPING AD HOC

AdHocAdHocThe Port of London Authority (PLA) has seen the launch of the first

prototype of a new generation of patrol vessels to parade the Thames, in

a £2 million investment replacing seven heavier, older vessels.

The new launch, Lambeth, is one of a fleet of five specially-

designed catamarans which has demonstrated substantially reduced

exhaust emissions, lower fuel consumption and smaller wash waves.

All vessels, to be named after London bridges, are products of five

years of British planning, research, design and construction. The new

vessel was designed by the PLA in conjunction with experts at Newcastle

University and naval architects Amgram Limited, and built by

Alnmaritec in Northumberland.

PLA Chairman, Simon Sherrard, said: “It’s appropriate that we take

delivery of this new patrol boat at the start of the PLA’s second century.

Our harbour patrols have been on the river for the last 100 years. This new

design uses the best of modern technology so we can do our essential job

more efficiently and with much reduced environmental impact.”

Implemented to monitor the safety of river users through the city and

out to the deep sea port operations around the Dartford crossing, the

Lambeth will be put through its paces over the next few months so that

any necessary improvements can be introduced into her sister vessels,

which are scheduled to enter service over the next three years.

Newly appointed Shipping Minister, Paul Clark MP, said: “It’s great

to see Britain’s marine engineering, naval architecture and boat building

prowess creating such an excellent vessel which will help keep river

users safe. The PLA is responsible for a very long stretch of river that is

home to a wide variety of uses.

“This new boat will have many uses, from monitoring commuting

and barge movements here in central London, to boarding pilots onto

deep-sea container ships. I look forward to seeing the sister vessels join

her on the river over the next three years.”

SMI_20:Layout 1 28/7/09 15:58 Page 60

As technology takes a grip and thrusts us into

a whirlwind world of contemporary

innovation, it might be prudent to take a

moment to step back to the old roots of tradi-

tionalism, something that the Steam Boat

Association (SBA) of Great Britain is striving

to do.

Steeped in history, steamboats were a

conventional method of seabourne trans-

portation that have been lost as new technologi-

cally advanced vessels replaced them, and the

SBA is dedicated to preserving and restoring the

delicate remnants of the steamboat heritage.

Steamboats were invented in America in

1787 when John Fitch successfully trialled a

45 foot steamboat on the Delaware River in

the presence of members of the Constitutional

Convention and later built a larger vessel that

carried passengers and freight between

Philadelphia and Burlington, New Jersey.

Pioneering the industrial revolution, the

creation of an improved steam engine in 1769

by Scotsman James Watt propelled inventors

to apply steam power to boats, and after the

success of John Fitch’s steamboat, American

inventor Robert Fulton transformed the

steamboat into a commercial enterprise in the

early 1800s.

In the drive “to foster and encourage

steam boating and the building, development,

preservation and restoration of steam boats

and steam machinery,” the SBA, formed in

1971, holds regular regattas and cruises,

national and regional social gatherings and

technical seminars on all aspects of steam

launch engineering, as well as displays at

model engineering exhibitions.

In a recent push to rejuvenate this archaic

maritime tradition, the Lakeland Arts Trust

has embarked on an ambitious project to

reawaken the heritage of steamboats, with

work underway at the Windermere Steamboat

Museum to rescue and breathe new life into

the unique collection of boats housed there.

Through an initial £465,000 grant from

the National Heritage Memorial Fund to fund

the preliminary “rescue” phase of the project,

the collection of vessels is currently being

surveyed alongside individual conservation

plans. As part of the project, the Trust intends

to create a specialist marine conservation

training workshop, where the boats will be

restored by craftsmen and apprentices,

allowing young boat-builders the opportunity

to work on restoration and rejuvenation

projects and acquire new skills.

61

BUSINESS OF SHIPPINGAD HOC


Steaming throughtradition

In its dedication to charitable causes, Bernard

Schulte Shipmanagement has extended the

wing of opportunity to children affected by

cancer by organising a 10km charity walk in

aid of the “Make a Wish” Foundation.

Raising a total of €26,350 in donations to

the fund, the event was held on 30th May in

Limassol, Cyrpus and saw a hoard of

committed charity-goers emblazoned with

the slogan “BSM to make a wish come true”.

Thanking the company for its initiative

and social contribution, the Minister of

Communications and Works, Nicos

Nicolaides addressed the opening ceremony

in the company of the Mayor of Limassol,

Andreas Christou, the Director General of the

Cyprus Shipping Chamber, Thomas Kazakos,

members of the “Make a wish” foundation

committee and executive officers and

employees of BSM.

With participants from varying company

sectors of Bernhard Schulte

Shipmanagement worldwide, the 10km walk

incorporated various tasks around Limassol,

and included the propounding of environ-

mental awareness in a beach clean-up in

cooperation with the Cyprus Marine

Environment Protection Association

(CYMEPA).

BSM raises €26,350for cancer-sick children

The football season definitely isn’t over just

yet, as leading cruise line MSC Crociere has

demonstrated with a football themed cruise

and an indoor football tournament which

has brought together three of the world’s

most famous teams; F.C. Barcelona, host of

the event, A.C. Milan and Real Madrid C.F.

Held in the Palau Blaugrana in

Barcelona, the MSC Cruceros Cup was a

prelude to the christening of the company’s

new flagship vessel, MSC Splendida,

officially inaugurated in July.

All in the name of good fun and chari-

table causes, all proceeds from the MSC

Cruceros Cup tournament have been

donated to the victims of the tragic earth-

quake that recently struck the Abruzzi

region in central Italy.

Arranged as a triangular tournament

among the three teams, the competition

consisted of matches lasting 30 minutes

non-stop with a 10 minute break between

each match.

Following the tournament, the flagship

MSC Splendida was officially christened in

Barcelona and departed on a Football

Theme Cruise in the Mediterranean, where

passengers enjoyed five days of sports,

relaxation and entertainment with activities

and events dedicated to football enthusiasts.

A beautiful game

Training seafarers has never been so real,

with a unique training method involving

seven tonne scale model ships designed and

built to the exact specification of the

original vessel, operating on a 10 acre lake.

This innovative concept is in action on

a sheltered lake in Marchwood at the

Warsash Maritime Academy, part of

Southampton Solent University, with a

fleet of seven manned models ranging

from a 300,000 ton tanker model to a twin

screw superferry.

With over 30 different berths and an

enclosed dock that meets a wide range of

ship handling scenarios, alongside varied

weather conditions, this training platform

for Pilots, Masters and Senior Officers is a

realistic and novel development tool.

The introduction of a radio controlled

tug has also been introduced in order to

replicate tug operations and interaction

between vessels, heightening the realism

of the operations on the lake as it provides

a safe and controlled environment for the

practicing and development of ship

handing skills.

A model education

SMI_20:Layout 1 28/7/09 15:58 Page 61

The Bickerdike Basin at the Port of Montreal

played theatrical host to an operational extrav-

aganza as it witnessed the transhipment of a

784 tonne vacuum tower measuring 50.6

metres long, 16.8m wide and 13m in diameter

– the largest ever piece of equipment to transit

through the port.

This monumental piece of equipment, used

by the oil industry to process crude oil, was

loaded in Spain onto the Jumbo Javelin, one of

a fleet of 14 heavy lift ships from Netherlands-

based Jumbo Shipping, a specialist in the trans-

portation of non-standard parts.

With the capacity to carry loads of up to

1,800 tonnes and a deadweight of 15,022

tonnes, the Jumbo Javelin is also equipped

with two 900 tonne cranes, has 3,100 sq m of

free deck space for the loads to be carried and

can navigate at speeds of up to 17 knots.

Heading for Burns Harbour, Indiana, on

the southern shore of Lake Michigan, the

barge, belonging to the Canal Barge

Company, will continue the tower’s journey

and will be brought to Burns Harbour by a

tugboat from the Ontario-based company

Mckeil Marine.

A jumbo vision at the Port of Montreal


BUSINESS OF SHIPPING AD HOC

San Francisco Bay pays homage to a vast

expanse of world maritime history, as the

maritime park, which refers to itself as

America’s only floating national park, homes

one of the largest collections of historic ships

including the 123 year old sailing vessel

Balclutha.

Lynn Cullivan, a ranger at the San

Francisco Maritime National Historical Park,

said: “I’m pretty sure we have the largest

fleet of historical vessels in the world.” With

enough WWII ships to form a small flotilla,

many of the numerous historic vessels based

around the bay are run by separate non-profit

organisations.

Among the collection is the former

Potomac, which served as President Franklin

Roosevelt’s yacht and had a mysterious role

in Roosevelt’s first meeting with British

Prime Minister Winston Churchill.

In addition, visitors can enjoy seeing the

1886 sailing vessel Balclutha, the submarine

Pampanito and the 1890 ferryboat Eureka,

most of which are static displays, with some

of the smaller vessels offering short voyages

for the ultimate historic experience.

Most commonly concerned with the

centrifugal treatment of waste oils in bilge

water within the marine sector, GEA

Westfalia Separator also gets a kick out of

the alcohol industry for beer clarification

and wine decanting.

‘Badische Winzerkeller’ is the second

German winery to introduce the Westfalia

Separator vinex process for recovering must

with decanters. Established in 1952, the

winery has, over the years, developed into one

of the most powerful operations in the state.

Decanting systems are gradually

replacing more traditional tank presses, and

while decanters had proved unsatisfactory

results in the past, it has now for the first time

been possible to use a fully continuous process

in order to turn grape mash into a fermentable

must without the need for additional treatment

required in pressing systems.

In 1909, 100 years ago, the first

separator was used for beer clarification in a

brewery in Vienna. Since that time, brewery

centrifuges, in certain cases together with

membrane filtration, have been conquering

more and more new areas of application in

the production of beer.

Clearly not limiting itself to marine

bilge waste, much points in the direction of

more advanced technologies for the

separators and decanters produced by GEA

Westfalia Separator in the next 100 years,

right across the global alcohol industry.

Booze or cruise?Maritime history afloat in the Bay

SMI_20:Layout 1 28/7/09 15:58 Page 62

As famous 17th Century British writer Thomas Fuller said: “’Tis skill,

not strength, that governs a ship,” and this is certainly true for revolu-

tionary organisation Mercy Ships, where skill and expertise are in

glorified abundance.

An international Christian charity, Mercy Ships uses floating

hospital ships in partnership with land-based programmes to deliver

free, top-class health care services, community development projects

focusing on water and sanitation, education, infrastructure devel-

opment and agriculture, to inhabitants of the world’s poorest countries.

Founded in 1978 by Don and Deyon Stephens, the charity has

worked hard over the last 30 years to serve more than 70 countries,

directly impacting more than 2.16 million people and providing

healthcare supplies and services valued at over $450m.

More than 850 crew members worldwide voluntarily run this

marvel enterprise, with a host of professionals including surgeons,

dentists, nurses, teachers, cooks, seamen and engineers imparting their

skills to the benefit of some of the poorest people on the planet.

Funded primarily through private donations, Mercy Ships is able

to deliver medical and development services for a fraction of the

standard operational costs, and has recently celebrated the inaugu-

ration of the world’s largest non-governmental hospital ship, the

Africa Mercy, dedicated to supporting the continent of Africa.

Formerly a rail ferry in its previous operational life, the AfricaMercy is a floating community which in addition to the hospital

contains a school, nursery, grocery store, Starbucks Café, second-hand

book shop, bank, post office and beyond, with more than 450 people

living onboard from nearly 40 nations.

Donated to Mercy Ships in 1999, the vessel was converted at the

A&P Tyne yard in Newcastle, equipped with six modern operating

theatres, an intensive care unit and a 78 patient ward, and holds a total

capacity for 7,000 operations per year.

The costly eight-year conversion also saw the replacement of two

of its original six main engines with generators to increase electrical

supply onboard, and entirely funded through charitable gifts, the

Africa Mercy has doubled the combined capacity of the two older

vessels it replaced.

Docked in the port of Cotonou in Benin, the vessel has

been providing phenomenal aid to thousands of West

African beneficiaries. During its first week of operation

the vessel was visited by the President of Benin and

several cabinet ministers who expressed their appreci-

ation for the increased access to healthcare and the

contribution towards the Government’s existing efforts

to help its population.

President, Dr Thomas Yayi Boni, said: “Our

ambition is to bring health to everyone here. That is why

we are so grateful you have come. Everything enters

perfectly into what we would like for Benin.”

Spending 10 months a year in West Africa,

the vessel is a floating miracle for the nation,

as nearly a third of Benin’s population live on

less than $2 per day, according to UN figures,

and ranks 163 out of 177 countries on the

Human Development Index.

Nelson Mandela, Former President of

South Africa, commented on the organisation:

“I applaud Mercy Ships in their efforts of trans-

formational development as they make a lasting

difference in a world of need. Mercy Ships has

committed itself to the vision of an African

renaissance in their vision of bringing hope and

healing to the continent of Africa.”

With offices in more than 15 nations the

Mercy Ships project hopes to expand its fleet

in the coming years and continue to satisfy the

urgent surgical needs of some of the world’s

most deprived inhabitants of developing

countries across the globe; an exceptional

floating cause of the rarest kind.

Fostering a floating phenomenon

63

BUSINESS OF SHIPPINGAD HOC


SMI_20:Layout 1 28/7/09 15:58 Page 63

As part of our continuing pledge to provide cutting edge comment, we assembled a whole host of shipping industry leaders and practitioners

to debate key issues affecting their industry. High on the agenda was the role of China in driving forward recovery and also how closely

should the various shipping associations work to help the industry emerge from this financial crisis

Chaired by SMI Editorial Director Sean Moloney, the round table participants were Peter Swift, Managing Director of

INTERTANKO, Andreas Droussiotis, CEO of Bernhard Schulte Shipmanagement, Giovanni Mendola, Principal Administrator

European Commission DGTREN, Roberto Giorgi, President V.Ships and President of InterManager and Denis Petropoulos,

Joint Managing Director of Braemar Seascope Ltd and Executive Director of Braemar Shipping Services plc.

Plus input from delegates from the floor.


DISPATCHES

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

If any of our readers have comments to make on the issues under discussion or the panellists’ replies then please email them [email protected] and we will include them in future issues.

DiscussionRound Table

4th International Ship Management SummitOwners and Managers Delivering in Troubled Times

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Sean MoloneyWe have seen the recent upward movements in

the dry cargo markets. Is this level of volatility

something the industry has to accept?

Denis PetropoulosIt is an interesting observation because

volatility is something we have become

accustomed to over the last five years

because we were cruising along at stable

numbers of $25,000 to $30,000 per day and

we suddenly realised that a well informed

ship owner can earn ten times that amount

and they went and did it. It was very exciting

and a lot of other people went out and built

lots of ships because the market was at

$300,000 per day today and they were getting

delivery of those ships in two years time. Of

course, they wasted money. What I am saying

is that the volatility appears to us as a service

to the maritime industry of today’s activity,

but tomorrow’s activity is what we have to

focus on and the old expression that what

goes up must come down has some analogy

here. The rates will come down even if the

world was in demand for all the raw materials

and not facing this economic crash. The rate

of shipbuilding has without question,

outstripped demand. And so when that

happens, rates will move up and down. The

recovery we have seen in the dry cargo

markets has come from a natural action –

cargo has to be moved, there are a lot of

capers coming onto the market in the next

year or two, but right now, today’s volume of

ships are there servicing demand. In the oil

sector, until we start getting some confidence

back and the industrial world starts cranking

up production, we don’t have the demand for

the shipping. But as that builds up the tankers

will be in demand. But guess what, that will

happen immediately and then another 20% of

the fleet comes on and rates go down again.

So volatility is there. And I think that the duty

of any part of the maritime service is to

manage that and understand what we do with

volatility. Ship owners are duty bound to do

the same and ship managers have to make

similar judgements. The high price for a

seafarer is one price you have to pay or he

will move somewhere else. But today looking

at the ownership market, that seafarer may be

saying that he wished he worked with a

secure owner with a long strategy plan. It is

something we have to manage.

Sean MoloneyTaking this line about the seafarer, a year ago

we were all claiming that he was our biggest

asset. Now we are scrapping ships and

cancelling orders, how concerned are we

about him now?

Andreas DroussiotisThe problem of the money we pay continues

on account of the larger worldwide fleet and

the new ships coming out of the world’s yards

outnumbering those being scrapped and laid

up. These ships need to be manned. These

people are not there. The training is the issue

but we have understood and realised the

problem far too late. The owners were really

trying to cut down on their expenditure so in

these

c a s e s

t h e y

turned to the

East for cheaper

labour without realising

that they were closing the

doors on the traditional crew supply

countries. The problem will get worse with

the additional supply of ships, and on the

quality side too because where do you find

the master and chief engineers but through

quicker promotions. And that puts us at a lot

of extra risk regarding incidents and

accidents. I pray that we do not come to the

point where we see another Exxon Valdez

because in my point of view it has not really

been ticked off the list. We are spending a lot

of money on training, as a group ourselves

and I am sure other respectable managers are

doing the same because this is the core of our

business. As a shore-based business you

cannot do anything unless you have people

operating the ships

Sean MoloneyCan I ask Giovanni, the European

Commission has been keen to grow a quality

European shipping industry but is it doing

enough to reward those companies – owners

and managers who are investing in seafarers

and quality. Is the tonnage tax enough?

Gionvanni MendolaThe interest for training and seafarers which

was an element of awareness we were

probably lacking some years ago, was one of

the main reasons that convinced us we should

generally broaden the scope of the tonnage

tax to ship managers. Nevertheless there are

other issues and initiatives aimed at encour-

aging the seafaring profession and I have

colleagues working on this at the moment

(see p8).

Andreas DroussiotisWhen it comes to the EC, I could really make

a recommendation that if we want to promote

the recruitment and employment of more EU

seafarers, then for the EC should invest

money in their training or subsidise training

at least for the European seafarers. That will

expand the recruitment of European

seafarers.

Gionvanni MendolaThis is something we could look at.

Sean MoloneySo will you be taking that suggestion back to

Brussels to look at?

Gionvanni MendolaYes.

Sean MoloneyAny comments from the floor

Giampiero Soncini,

CEO of SpecTec (from the floor)I have visited China six times over the past

six months, most recently for the 100th

anniversary of the Dalian Maritime

University. About 100 of us were there, 50 of

us were Europeans, and we were taken by bus

to a stadium where 22,000 cadets in uniform

welcomed us like we were royalty. There

were 40,000 in the stadium and it showed

how China takes shipping very seriously. In

the last six months I have seen Chinese

owners go from being normal owners to

becoming enormously aware that China will

dominate the world and shipping. I get the

impression that in 30 years time we will have

no yards in Europe, no shipping in Europe –

it will all be Chinese.


“We do have totake a few thingsinto consideration.There is a nastythree letter wordcalled tax and

that exists pretty

heavily in Europe

and unfortunately

that word has

driven people

away”

Denis Petropoulos

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Denis PetropoulosWe do have to take a few things into consid-

eration. There is a nasty three letter word

called tax and that exists pretty heavily in

Europe and unfortunately that word has

driven people away. In China and Brazil, you

are looking at huge state support. I was

reading in the paper that there has been an

unprecedented number of youngsters

applying for the armed forces because their

job prospects are looking a little thin. There is

no reason why those youngsters shouldn’t

apply

to the

merchant

navy. If a big

training missive

was set out and the

EU took some initiative

in harnessing the youngsters

who really do want to have a

profession and put them in an area where

we may end up with 20,000 cadets filling one

of our stadia, that would be a fantastic

success. That should be a drive.

Roberto GiorgiNine months ago, the majority of Chinese

cadets, up to 65%, were returning to shore-

based jobs so the attrition of a Chinese cadet

was very high because of the booming Chinese

economy. Because the Chinese don’t like to go

to sea, they like to be close as a family, the

market has changed dramatically so you will

probably see people thinking about returning

to sea. My feeling is that China is a good

source of crew but I am not really sure it will

be the panacea of our problems.

Peter SwiftIf I may pick up a few of the observations

made. One of my colleagues was at Dalian

and last October we had in Shanghai a similar

centenary. It was a fantastic campus with

many thousands of students. Not all these

students will be seagoing personnel, they

have parallel programmes for the other

marine professions and that in itself is a big

plus because you get this cross fertilisation.

So the whole approach to training is very

positive in China and in other Asian

countries. Part of that training also incorpo-

rates the recognition that there are careers

that are lifetime in the shipping industry.

When we talk about training programmes not

only should we talk about seagoing careers

but we should equally bring into the

programmes, lifetime skills that will have

application when they come back to shore

because Europe will actually need five to ten

times more people ashore in the maritime

professions than it will do at sea.

On the subject of protectionism, I suppose I

am going to declare my capitalist mindset but

protectionism is not good for international

trade and the world will recover more quickly

if we can speak against protectionism. And a

word on subsidies, I think it is folly to use

subsidies to chase failing industries and it is

just good money being thrown after bad. As

soon as we talk about subsidising industries,

we should be very analytical before we

confirm any of these. Training programmes

are not necessarily a subsidy. It is possible at

the national and European level to talk about

training systems, national programmes,

European funding, not only for seafarers but

the maritime profession at large.

Sean MoloneyGiovanni, let me ask you. What can the

European Commission do in this case?

Gionvanni MendolaFirst of all it would be unreasonable to

compare what a country like China can do

and what the European Union can do because

the EU is not a ‘state’. We don’t have the

regulatory means or the money to think of

funding or initiatives in the field of training.

This is entirely for the Member States to do.

What we can do is to provide a framework

under the state aid guideline where there is a

chapter on the training of seafarers. And then

it is up to the Member States to introduce

initiatives in this field to fund them. In the

last 10 years a huge amount of money has

been spent in this field such as through the

tonnage tax and the tax exemption for

seafarers but I have seen very few schemes

concerning subsidies for training. Also in the

case of subsidies for training there can be a

risk of distortion. But this is reasonable and

addressed in the communication. At

European level, after the intervention of the

panellists, I was wondering if some European


DISPATCHES

“The training isthe issue but wehave understoodand realised theproblem far toolate”Peter Swift

Managing Director of

INTERTANKO“It is easier to be a good owner and a good

manager in good markets but a really good

owner and managers remains such when

the markets are bad. We heard this

morning that we cannot let vessel quality

and safety slip in troubled times and this

has to be first and foremost in our thinking.

Because if we want to talk about respect of

the industry, our credibility and our

influence in years to come this is going to

be the real trial for us and the real test that

we can be responsible owners irrespective

of the tough market conditions.

The need to continue to train is important

and we must let our commitment to the

recruitment and training of our seafarers

continue. Although we don’t need any

new ships ordered, as we move into a

buyers market, there will be opportunities

to ensure we do have those cadet berths

and have higher accommodation

standards. Most of us in many sectors

would endorse the view that we have

personal communications as a standard on

all ships. It is impossible to conceive a

world where we go around saying to

people ‘there is a great career out there but

by the way you are totally dis-communi-

cated from the world for three months of

the year’. As industry leaders and players,

we must recognise that we can’t go fast

enough in this area.”

SMI_20:Layout 1 28/7/09 15:58 Page 66

funds can be used for the purpose of supporting initiatives of

training. It is not my field but prima facie I believe some instruments

could be used and this is a message I will pass to my colleagues. But

again we will be dealing with amounts of money that are not enough

to solve all the problems if they can be resolved by means of funding.

Ole Stene, Managing Director of Aboitiz Jebsen (from the floor)Image of the industry is the major concern. How are we going to

recruit and get the youngsters to be interested in this industry? What

can we do to get this image of the industry more into the public and

into the schools.

Conditions will go from bad to

worse, but rebound is imminent

Market conditions could get even worse for ship owners, with

survival rates dependant on company strength and capital,

according to Guy Morel, General Secretary of InterManager.

Addressing delegates at the 4th International Ship

Management Summit in Oslo, he said: “Owners are only at the

beginning of a long down period, and it will go from bad to worse

in terms of rates and market conditions. Only the strongest and

best capitalised owners will survive,” he warned.

While owners will stand the test of the harshest economic

climate known to the shipping industry, ship managers will only

suffer to a certain extent, Mr Morel revealed: “There will be less

of an effect on ship managers in terms of survival rates, but there

will be consolidation and many will have to make structural shifts

and focus on specialised areas.

“Shipmanagement is a service industry - it’s not linked to

asset values and it’s not cyclical. There are reasons for concern,

though, as owners put pressure on reducing costs which creates a

risk of management quality deterioration.”

Mr Morel warned that while the trend for lower cost

management will present itself across the industry to accommodate

for the downturn, it is far more complicated to run “bad ships

cheaply” than “quality ships more expensively.” While owners and

managers face an exceptionally difficult time ahead with a potentially

worsening economic climate, realistic approaches must be made.

“Don’t believe you can enjoy incredibly high market rates for

ship owners for five years and then when severe downturn hits,

everything will return to normal again in one year,” Mr Morel

said. “There is cash available and there will be some who want to

increase their coverage through whatever means, although in low

periods it is simpler to grow through acquisition,” he added.

SMI_20:Layout 1 28/7/09 15:58 Page 67

Andreas DroussiotisThis is one of the issues that has bothered the

industry for a long time. We need to start from

scratch and educating the youngsters so that at

the end shipping, whether sea or shore-based,

is one of their options for a career. As many

know, this was a topic that was discussed at the

ICS/ISF and what we did was tackle it from an

international as well as local level through the

individual ship owner associations. One of the

first things we did was to produce a DVD

which showed the good aspects of shipping

rather than the association the industry

normally has with catastrophes and pollution.

This needs to change. We have a long way to

go. In Cyprus, we have translated this DVD

into Greek and we have distributed it to the

various schools to start building up the feeling

that shipping is good and important. We need

to be pragmatic because there have been a lot

of socio economic changes in Europe which

tend to withdraw people from considering a

career at sea.

Sean MoloneyI want to move onto my next question which

is about the inter-relationship of the various

associations within the shipping industry. Has

the time arrived for the associations to work

more closely together.

Roberto GiorgiIt doesn’t matter if you are working in your

company or a member of a trade association,

a lot of ground is common interest. If you

have well defined aims and goals and you

work together to achieve them, you can make

a difference. The aims of InterManager was

to be able to become the spokeman for the

industry for any matter related to the human

issue where we represent a big force in the

industry and I believe the various associa-

tions understand out goals and if we can add

value to what the other associations are doing

we can grow together.

Sean MoloneyPeter, do you think there are too many associ-

ations?

Peter SwiftMaybe. But I don’t think that is the issue

because we won’t solve it by saying we

should consolidate. What we need to do is to

be effective.

The Round

Table of

associations –

I C S / I S F ,

BIMCO, INTER-

TANKO and

Intercargo – have a

basic philosophy to

work with three basic

tenets: to try to maximise

cooperation; work together to

minimise our differences and try

to ensure we don’t surprise each other

by doing things in isolation. What I think

we do see more and more of is we are

working in even bigger groups. The human

element concerns, the manning concerns,

bring together more and more of the interna-

tional associations. On the subject of piracy

we have seen many come together and in the

area of criminalisation we have the unique

situation of whole groups of associations

coming together over the Hebei Spririt. And

probably what we have is that those that are

paying our bills, ie the owners and the other

entities, expect us to be as effective and

efficient as possible. That expectation in

terms of us setting priorities and using other

people’s money in the most effective way is a

natural driver in difficult market times. But I

don’t think there is a desire from our

individual members to say they seek consoli-

dation but more effective cooperation.

Difficult markets is a driver in that direction.


DISPATCHES

‘Niche Management or One Stop Shop’Bjorn Hojgaard,

Managing Director, Thome Ship Management

“The industry will be more polarised. Shipmanagement companies that are already mid-sized

or large will become bigger as economies of scale and cost-efficiency take precedence over

new innovations and long-term investments and as cost-cutting further burns away fat. Smaller

management companies will have to carve out their niche in order to survive and as a result

will become more specialised and more focused on boutique segments – which will still have

their legitimacy in exclusive fields, e.g. certain off-shore segments. In any case – growing one-

stop shops or specialised management offerings – the value proposition will increase in sophis-

tication and the demand to offer solutions and not just low running costs will increase.

“Third party shipmanagement will occupy an increasing share of the total shipman-

agement market with the traditional owner-manager business stagnating or even contracting.

The outcome will be that the maturity and acceptance of third party management will accel-

erate and ship managers will as a result play a larger role in the political and regulatory

environment. Barring a few large and well known managers, the industry has in the past been

living in the shadows of big owners. This will change and ship managers need to step up their

rhetoric and participate more prominently in the public’s spotlight in the future.”

Giovanni Mendola

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Jens Olsen, President of the International Shipsuppliers & Services

Association (from the floor)The ISSA Executive Committee realised some time ago that very

close cooperation with the other organisations is the only way

forward. We need to know each others’ problems and learn how we

do things and for them to know what we do. This was one of the main

reasons we developed our quality programme to signal that we are

interested in doing our job better. We welcome close cooperation and

we are working towards that.

Guy Morel, General Secretary InterManager (from the floor)What is great about this industry is that in the real important times it

pulls together, especially through the associations. The Hebei Spirit is

an important case where the ITF, which we haven’t mentioned, has

also joined and pulling in one direction to win a battle we all believed

was a serious and just battle. The second aspect is the efforts all the

associations are doing to improve our industry. I am thinking of the

KPI initiative where we are looking at key performance indicators

that could be acceptable to all in the industry. Now we are trying to

get all the other associations together to judge whether the KPIs we

have come up with are good for all the industry. We think we can

achieve this because of the excellent cooperation we have with all the

other associations.

Sean MoloneyThank you very much for your comments. ■

Shipmanagement will be dominated

by a handful of playersA handful of larger players will dominate the shipmanagement

market but that doesn’t mean there isn’t a place for the boutique

managers, according to Annette Malm Justad, CEO of Eitzen

Maritime Services (EMS).

Addressing delegates attending the 4th International Ship

Management summit in Oslo, Ms Malm Justad said boutique

managers would still have a role servicing specific needs in the

market and would differentiate themselves on different grounds.

She told delegates: “There will be continued consolidation in

the shipmanagement sector but also segmentation. Some will

specialise while others will go for the bulk or container sectors and

others will dominate the market.”

SMI_20:Layout 1 28/7/09 15:58 Page 69

A thick cloud of ambiguity still surrounds the

claim that the shipping industry is beginning to

see the ‘green shoots’ of recovery, but it is

definitively safe to say that the dense foliage of

environmental issues is flourishing with wild

enthusiasm and sowing seed to a whole new

green-tinted turf of legislation and regulation.

Shipping has waded through some

turbulent months; tonnage supply having

outstripped global demand while trade has

weakened to threadbare proportion.

As the reins are gradually handed over to

the fresh new tonnage that will enter into

market force over the coming years, the

retirees are headed for the ship recycling

graveyard, and with the economic crisis

forcing more and more aged vessels out of

the picture, the ship age demographic is set

for a striking alteration.

Ship recycling is on the perpetual

increase as yards are swallowed up by the

excess tonnage of retired vessels. However,

the implications offset by such a surge in the

ship recycling industry are shrouded in

controversy, as both the working conditions

and the environmental impact associated with

the procedure prove a monumental concern.

A recent International Maritime

Organization (IMO) draft convention, the

‘Hong Kong International Convention for the

Safe and Environmentally Sound Recycling

of Ships’ held in China in May, has been

adopted in light of these widespread

concerns. However with full ratification and

enforcement unlikely to occur before 2013, it

is a mere tentative step in the right direction.

Addressing delegates at the latest Marine

Environment Protection Committee (MEPC),

Efthimios Mitropoulos, Secretary General of

the IMO, said. “The new treaty, once in force,

will ensure that ships reaching the end of

their operational lives do not pose any unnec-

essary risks to the health and safety of

individuals involved in the recycling process;

and that the environment of the countries in

which the recycling activities take place will

not suffer as a result.”

Underlining how the Convention should

“mark the beginning of resolute efforts in the

participants’ capitals to ratify it at the earliest

possible opportunity, in order to ensure its

expeditious entry into force,” Mr

Mitropoulos ground hard the need to ensure

its effective implementation and proper

enforcement by way of benchmarking

shipping’s responsibility to maintain environ-

mental and safety standards.

Peter Hinchliffe, Marine Director at the

International Chamber of Shipping (ICS)

revealed that the shipping industry is “very

concerned with health and safety at work and

protection of the marine environment from

recycling activity,” and the implementation of

the new draft Convention will prove pivotal

for the industry’s image.

In full support of the new Convention and

the implications it will have on the industry,

the ICS has revealed that it is “working on

‘Transitional Guidance’ to assist ship owners

to make the transition between the status quo

and the entry into force of the new

Convention.” However, as the industry gears

up for some major changes, it will need to take

a certain degree of initiative in the meantime.

“Unfortunately it is likely that we will


DISPATCHES SHIP RECYCLING

By Amy Kilpin

With approximately 300

ship recycling yards

existing in the world

today with the

combined capacity to

recycle more than 1,500

ships a year, the market

crash in scrap values

last year is certainly not

due to a lack of

recycling capacity

Turning overa new leaf amid the foliage

SMI_20:Layout 1 28/7/09 15:58 Page 70

have to wait several years for the Convention

to achieve its ratification criteria and in the

interim period we want to make sure that

owners start to apply new areas introduced in

the Convention prior to its entry into force to

the extent possible. In this way, the industry

can effectively ‘self regulate’ while waiting

for the regulation to become enforceable,” Mr

Hinchliffe advised.

He added: “Of course, the entry into

force of the Convention will make a big

difference as it places obligations on

recycling States and hence recycling facilities

to improve standards. There is little that

owners can do to directly improve standards

but the Convention’s ability to regulate

standards in the facilities through a

requirement for them to be certified will most

certainly drive standards up.”

It is time for owners to take some respon-

sibility for themselves and the industry is fast

becoming aware of a resounding need to

implement new standards well before they

enter into full force. Pre-empting the direc-

tions that shipping will take over the next few

years is imperative to an owner’s reputation

and operational success, and as the common

industry saying goes, ‘a few years is like days

in the shipping world’; the requirement to act

sooner rather than later is a notion hard felt.

“Circumstances have conspired to put

unprecedented pressure on recycling facil-

ities; the phase out of single hull tankers and

the global economic situation have both

increased the number of ships that need to be

recycled,” Mr Hinchliffe said. “There is no

environmental benefit in laying up old ships

when they have reached the end of their

useful trading life or they are required by

regulation on single hull tankers to be taken

out of service and the best option is to release

the raw materials that they contain by

recycling them without delay.”

Owners might be desperate to rid

themselves of aged, non-trading vessels, but

as the ship recycling industry heats up,

ignited by the economic situation and brought

into the limelight with the new Convention,

the gargantuan arrow of responsibility is

pointing vehemently towards a greener image

for shipping, and the pressure on yards is

mounting high. With approximately 300 ship

recycling yards existing in the world today

with the combined capacity to recycle more

than 1,500 ships a year, the market crash in

scrap values last year is certainly not due to a

lack of recycling capacity.

“The world’s capacity for recycling is

being stretched by the demand for recycling

services, and this means that choice between

yards is difficult. However, until the

Convention enters into force there is no

official mechanism to make an assessment of

the ‘green’ status of facility other than prior

experience,” Mr Hinchliffe added.

Despite the efforts to standardise the ship

recycling industry and its relative obligation

to the environment and the working condi-

tions under practice, there has been a sizeable

backlash against the IMO’s new Convention.

The decision not to outlaw the beaching of

retired ships for recycling under the new

terms has struck the positive steps with

lightning-like controversy.

It is not a secret that shipping suffers

from an inherently tarnished image, and as

the international press post shock-inducing,

emotive pictures of rusted, ship-strewn

beaches acting as playgrounds for small

children in developing countries, it certainly

goes a long way in darkening its reputation.

Environmental groups have been left reeling

in infuriation over the lack of the IMO’s

responsibility to the issue of beaching.

Many members of the maritime

community have preached the virtues of the

‘cradle-to-grave’ approach being adopted by

China as it pushes for the development of

the world’s first fully sustainable

shipbuilding industry, encouraging other

countries how to recycle responsibly. It is

hoped that such determination will

challenge the dominance of Bangladesh,

India and Pakistan, which, unlike China, are

not signatories to the new Convention.

Criticism of yards in less economically

developed countries has been widespread,

and in addition to the endeavours made on a

multilateral level, Mauro Balzarini, Chairman

of the livestock specialist carrier Siba Ships,

has recently announced his intention to raise

$300m for a ‘Green Recycling Initiative’

(GRI) under the auspices of Singapore-based

International Ship Recycling Association.

Shashank Agrawal, Legal Adviser for

GMS, the world’s largest buyer of ship scrap,

has contested the allegations against the

failure for the IMO to incorporate beaching

into its new terms. “For some time now, I

have been reading extremely bold and

factually incorrect allegations being issued in

relation to the current ship recycling practices

in the Indian subcontinent,” he said.

“In view of the Supreme Court Order,

Indian recycling yards had to follow some of

the guidelines laid down in the recently passed

IMO Convention on Safe and Environmentally

Sound Recycling of Ships. Therefore, even

before the adoption of this convention in 2009,

Indian yards had already begun the process of

complying with safe, sound and responsible

ship recycling practices,” he added.


“Circumstances have

conspired to put

unprecedented pressure

on recycling facilities;

the phase out of single

hull tankers and the

global economic

situation have both

increased the number

of ships that need to

be recycled”

SMI_20:Layout 1 28/7/09 15:58 Page 71

Contradicting the claims

made against foreign yards,

Mr Agrawal revealed that the

Gujarat Maritime Board, the

governmental agency

overseeing ship recycling

activities at Alang, India, has

certified that from the period

of April 1st, 2008 to January

31st, 2009 ot a single death

was reported across the 173

ship recycling yards based

there. In addition, he claimed

that while a few industries in

India had been rightfully

accused of employing

underage workers, “ship

recycling is not one of

them”.

Although the ship

recycling industry had been

suffering from overcapacity

and lack of demand in

previous years, the situation

has swiftly flip-reversed and

companies across the globe

have been relishing in

renewed business. As the

pressure builds for yards

worldwide, however, there is

an element of concern that

owners may choose disrep-

utable yards over more type-

approved recycling facilities,

both through lack of choice

and in the effort to push up

the financial rewards.

The majority of companies are seeing a rapidly changing trend, and

according to Kevin McCabe, Chairman and Co-Founder of US-based

International Shipbreaking Limited, there is a “very adequate supply,

obviously with the economy having declined so precipitously, so

obsolete vessels are coming into yards on a more accelerated basis.”

While Mr McCabe admitted that “Asia has the most problems with

the worst publicity right now at their lack of safe working conditions,”

he recognised the pressing need for industry action in that “both the

world and ship owners themselves are looking for better and more

properly managed facilities and processes.”

He added: “The professionally managed fleets will be seen to do

the right thing sooner rather than later. The industry will always have to

worry about rogue players who don’t want to follow the rules, no matter

what they are, and while in the short term there will probably be more

of these, longer term I think it’s incumbent upon the industry, both in

terms of ship owning and ship recycling, to point those players out and

to refuse to do business with them.”

As many of the shipping sectors still waver on a financial knife

point, it is clear that the depressed marketplace has accounted for a leap

in business for the ship recycling industry. Mr McCabe indicated that

“while the market is seeing more vessels being recycled, the market for

steel scrap has declined and it is important to make sure costs are kept

in line with pricing.”

Finance being a comparatively minor issue in the grander, or

greener, scheme of things, the ship recycling industry is not only gener-

ating a wealth of business as older tonnage turns away from the

economic slump and retires to shipping necropolis, but it is also gener-

ating a wealth of interest.

Setting benchmark standards, the industry is looking to drive

forward with a green-fingered hold on its future, and ship recycling is

playing a major part in that. While some players will be looking hard at

the light on the horizon for an environmentally-sound perspective on

ship recycling, others may literally take a holiday on the beach while

they wait patiently for the new Convention to enter into force in 2013 –

but it will soon be made apparent who the winners in the reputation

stakes will be. ■

“Until the

Convention enters

into force there is

no official

mechanism to make

an assessment of

the ‘green’ status of

facility other than

prior experience”

Peter Hinchliffe

SMI_20:Layout 1 28/7/09 15:58 Page 72

By Margie CollinsBy Margie Collins

He is a distinguished member of the interna-

tional tribe of jeunesse doree, the third and

youngest child of Victoria Schott and Sir

Evelyn de Rothschild, a member of the British

branch of the eponymous banking empire.

London-born David Mayer de Rothschild,

31, regularly features at the top of society

magazine Tatler’s annual list of eligible

bachelors: we should not hold this against

him. In his young life, he competed in show-

jumping trials and triathlons. After gradu-

ating from Oxford Brookes University with

degrees in Political Science and Information

Systems, he went on to design websites for,

among others, Britney Spears and U2. An

interest in alternative medicine led him to

acquire an organic farm in New Zealand.

He’s not one of life’s timid souls. He has

reached both geographical poles in expedi-

tions to heighten awareness about global

warming. In 2006, he spent 100 days crossing

the Arctic from Russia to Canada. He

traversed 1,150 miles of Antarctica by foot

and ski. De Rothschild was also part of a team

that broke the world record for the fastest-ever

crossing of the Greenland ice cap. In 2007, he

was in the Ecuadorian rainforest documenting

the damage that oil companies had caused

drilling oil reserves. National Geographic

named him one of their ‘Emerging Explorers’.

He also penned The Live Earth Global

Warming Survival Handbook.

He – long-haired and bearded – has,

invariably, been called an adventurer and eco-

toff, someone who uses his prominent social

caste and great inherited wealth to promote

environmental causes. No; not a tree-

hugging hoolah.

73

DISPATCHESPLASTIKI


SMI_20:Layout 1 28/7/09 15:58 Page 73

In 2005, this polar explorer and environ-mental crusader founded Adventure Ecology,an organisation that mounts expeditions tousually far-flung, environmentally sensitiveareas to raise conscientious awareness and“to captivate, inspire and activate tomorrow’senvironmental thinkers and doers to take apositive action for our planet, to be smartwith waste and to engage individuals, govern-ments, communities and industry to becomeagents of change.”

“A lot of scientists think we’re basicallyscrewed, but what are you going to do? Enjoyyour beer, your family and make the most ofit while it lasts? I think there’s a real bigmovement for that at the moment and part ofme understands that. But a bigger part of mesays we’ve got to find a solution, collec-tively,” he told The Telegraph.

He’s media-savvy, so he knows that inreporting his story, he – of the manifestRothschild destiny – inevitably becomes thestory itself. “You’re always going to getpeople who say, oh, he’s a bloody Rothschild,sitting on a boat of, what’s that? Champagnebottles? And that’s fine, because it getspeople talking and thinking about where therubbish goes,” he said.

He’s talking about not champagne, butplastic water bottles. Every year, some $14bnis spent on these bottles and only 20% arerecycled. The bottle has become the ‘pin-up’for the throw-away modern consumer society.How did we get so thirsty?

De Rothschild is exercised about plasticbottles because, having finished his NorthPole expedition, he came upon a UnitedNations Environmental Programme report onecosystems and biodiversity in deep watersand high seas. With more than 90% of theplanet’s living biomass (the weight of life)found in oceans, the report underlined thevalue of the oceans and the marine world’secosystems. Among other things, the reportfound that over half, or 52%, of global fishstocks are already fully exploited, and thatover 46,000 pieces of plastic litter are floatingon every square mile of the oceans today; thatin the central Pacific alone, there are up to 6lbof marine litter to every pound of plankton –a microorganism, plant or animal, that floatsin bodies of water.

“I thought, this is nuts, 6-to-1 plastic-to-plankton ratio. This has got to be my nextexpedition,” he said. And under the aegis ofAdventure Ecology, Plastiki – the boat andvoyage – came to life. The name is homageto Kon-tiki, the1947 expedition of ThorHeyerdahl who, with a crew of five, sailedacross the Pacific to Peru on a craft modelledafter an ancient Inca raft that was made outof balsawood.

When it’s ready to emerge into the inter-national spotlight (probably at the end of theyear) and launched from Pier 31 of SanFrancisco’s Embarcadero waterfront, deRothschild and his crew of experts, scientistsand oceanographers will embark on a fourmonth, 12,000-mile voyage across the PacificOcean to Sydney, in a 60ft catamaran madeout of plastic bottles and other recycled wasteproducts. (San Francisco and Sydney aretwinned cities.)

“Through this bold adventure, Plastikiaims to draw attention to the rethinking of oureveryday human fingerprints on the natural

world, and capturing the world’s imaginationby telling a story: the pioneering andsustainable design process that created andbuilt the Plastiki, to the oceans and the manychallenges it and its inhabitants face,” thewebsite states.

Oscar Wilde once said that it’s a very sadthing nowadays that there’s so little uselessinformation. The prose of environmentalcauses can sometimes cause sleepless nightsand dyspepsia, and call down hellfire.

In 1997, Charles Moore, sailor andretired furniture restorer, was sailing home toCalifornia at the helm of a catamaran he hadbuilt himself, from a race in Hawaii. Hedecided he would take a shortcut across theedge of the North Pacific Subtropical Gyre –a notorious high-pressure region that mostseafarers avoid because of slow-moving seacurrents that converge on the gyre, bringingwith them detritus and garbage from the

coasts of Southeast Asia, Canada, Mexicoand North America.

“Here I was in the middle of the oceanand there was nowhere I could go to avoid theplastic!” A vast, polluted expanse of plastic, averitable ‘garbage patch’, lay before him –shampoo bottles, Styrofoam, plastic bags,tyres, polystyrene packaging, etc. “In theweek it took to cross, plastic debris wasfloating everywhere. ‘Patch’ doesn’t begin toconvey the nature of the phenomenon. Aplastic soup has been created,” he said. Withthis discovery, Charles Moore hit upon histrue calling and founded Algalita MarineResearch Foundation, dedicated to theprotection of the marine environment througheducation and restoration.

But there’s the rub: what would we dowithout plastic? It’s ubiquitous; a non-biodegradable staple product of the infra-structure of consumer society. Exposure tothe sun causes it to photodegrade, its polymerchains breaking up into smaller flecks andpieces. The plastic soup absorbs pollutants,including pesticides and polychlorinatedbiphenyls, bringing toxins into the food chainwhen swallowed by seabirds, fish and othersea animals. A study of carcasses washed upon a North Sea coastline found that 95% ofbirds had plastic inside their stomachs, with abird having an average of 45 pieces.

Six known major subtropical gyres in ouroceans are sucking up rubbish into concen-trated plastic soups. Northwest of Hawaii isthe biggest soup of all - the Great PacificGarbage Patch, a vortex of swirling currentscirculating around the ocean, trappingplastics swept up from various coastlines. It’sa looming environmental catastrophe that hasbeen blamed for the death of millions of


DISPATCHES PLASTIKI

“I want to use Plastiki

as a platform to help

people think of waste

as a resource. I think

that the most important

thing is not to make

plastic the enemy, but

to assess how we use,

dispose and reuse it”

SMI_20:Layout 1 28/7/09 15:58 Page 74

seabirds and thousands of marine mammalsevery year.

“I want to use Plastiki as a platform tohelp people think of waste as a resource. Ithink that the most important thing is not tomake plastic the enemy, but to assess how weuse, dispose and reuse it,” said de Rothschild.“I don’t want to just highlight the problem, Iwant to find solutions.”

For the engineers and designers ofPlastiki, the main objective was to create avessel out of 12,500 2-litre post-consumerplastic bottles that not only performed in thewater, but also showcased innovativesolutions that recast waste as a resource. Thisled to the first major challenge to deRothschild’s SMART Collective team:keeping the integrity of the bottle, as thevisible presence of bottles is at the core of theproject. The other challenge was to make thewater flow through and around the bottles, adesign feature that goes against boat-building, which is to keep water out.

The CO2-injected bottles, packed intopontoons, provide the vessel’s flotation. Theywill be tied to a structure made out of self-reinforcing polyethylene terephthalate (PET),a smart, cutting-edge plastic that takesadvantage of material properties to reinforceitself without the need for secondarymaterials, e.g., glass or carbon. There are noglues, resins or contaminants that wouldprevent the vessel from being recycled later.

Plastiki will be a one-voyage expedition.“When David’s done with it, we’ll just runthe whole thing through a chipper,” said MikeRose, the boat’s builder. The team has not yetdecided what its future incarnation will be.Working with some of the world’s leadingnaval architects, engineers, oceanographicinstitutions and sustainability experts, deRothschild envisages Plastiki to be a“floating self-maintained community that isalso a research station.”

Plastiki will weigh approximately ninetonnes, plus the combined weight of a crew ofsix, including a scientist from the ScrippsInstitution of Oceanography who will studycoral bleaching, marine pollution and oceanacidification. Josian Heyerdahl, theexplorer’s 25-year-old granddaughter, is alsojoining the crew.

Plastiki’s creature comforts will includea garden (for growing food), bunks, solar-powered showers, composting toilet. The

crew will be housed in a geodesic dome.Hewlett-Packard, the ship’s officialtechnology provider, will equip Plastiki withthe most advanced technology and communi-cations systems – computers, text/voice/datatransfers, video and recording equipment.There will be blogs and Twitter feeds, anddiaries will be written. Power will come from12-volt batteries charged by solar panels andwind turbines.

The crew will be collecting visual andscientific data, taking photos and film footage.“We will see more of the effects of the plasticswhen we take samples of the water andmeasure the fragments of suspended plastic,like shaking a snow globe. I hope people stopregarding plastic as a throw-away item andthat we can put it into a light where it hasmore value,” said de Rothschild.

The itinerary highlights environmentalhotspots: the Great Pacific Garbage Patch;Midway Island in the North Pacific, site of amajor environmental-contamination clean-upby the American government; Bikini Atoll,one of the Micronesian islands, which wasthe site of nuclear-weapons tests between

1946 and 1958; Vanuatu in the South Pacific,whose ecosystems are under tremendouspressure from overfishing, slash-and-burnagriculture and deforestation; the sinkingislands of Tuvalu in Polynesia. Underpinningthe itinerary are concerns surrounding theeffects of global warming; pollution due tosub-water testing of nuclear armament; coralbleaching and overfishing.

Plastiki’s launch date was set for April 28this year, exactly 62 years to the day whenKon-tiki set out on its journey. This date wasmoved to mid-summer, which has now beenmoved to the end of the year. SF Gate saidthis is a “voyage that will be either anabsolute disaster or a huge sensation.” Thedelays have been put down to working withnew, untested materials, and “the element ofthe unknowns.”

“From experience, I have found thatduring an expedition, no matter how muchyou plan for the unknown, what you expect isoften not what you get. I think the worst thingthat could happen is that you’d be stuck at seafor two weeks. A shark could eat your leg.You’d get really burned. It would drag onforever and you’d be in and out ofconsciousness. Or you could get run over bya tanker,” de Rothschild said.

John F Kennedy once said that onlythose who dare to fail greatly can everachieve greatly.

Is he a rich man playing a self-indulgentmessianic game, or a visionary who is theembodiment of clear-eyed optimism, workingin the pursuit of a better future, in a cleanerplanet? The carte appears to be blanche, butwhen asked how much the whole enterprisecosts, de Rothschild said that it becomes adistraction. “It costs more than I want andless than it should be.”

If he can galvanise international bodiesand governments to seriously study andremediate the plastic soup phenomenon,among other environmental nightmares, deRothschild will have striven and daredvaliantly. “It’s important to convey that it’sone body of water, with huge concentrationsof plastic across entire oceans. Chemicalsflowing into our oceans are absorbed by theplastic, which is ingested by the filter-feeders, the little guys who make it back tothe food supply and into you and me. This isabout us. We’re ultimately responsible andwe should care.” ■

75

DISPATCHESPLASTIKI


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“A lot of scientists

think we’re basically

screwed, but what are

you going to do? Enjoy

your beer, your family

and make the most of it

while it lasts? I think

there’s a real big

movement for that at

the moment and part of

me understands that.

But a bigger part of me

says we’ve got to find a

solution, collectively”

SMI_20:Layout 1 28/7/09 15:58 Page 75

Experience: The glaring axiom for safetyKishore Rajvanshy, Managing Director of Fleet Management

Commercial shipping has indeed come of age. While ergonomic ship

design and digital communication have led the industry evolution, certi-

fication and standardisation have became essential tools for survival.

Assisted by rigorous Port State Control, oil major inspections and flag

state control, these advancements have collectively brought about an

unprecedented appreciation for safety. Nevertheless, the industry seeks

to improve further, and faces increased pressure to reduce the number

of casualties.

The quest for ever lower operating costs and employment of

inexperienced crews has taken its toll on safety. It is the responsibility

of the ship owner and manager, to employ quality people. Regretfully,

left to market forces and commercial considerations, the interpretation

of this ideal has varied greatly with time and operator. Yes, the industry

is becoming acutely aware of the limitations of technology and

handbook knowledge in overall safety. However, countermeasures at

best remain reactive and individualistic, a rueful plight.

In June 1995, parties to the Convention on Standards of Training,

Certification and Watchkeeping for Seafarers, 1978 (STCW) adopted

amendments to the Convention that were designed to raise competency

levels of seafarers. These amendments, known as the STCW ’95

amendments entered into force on July 1st, 2002 with the objective of

leveling the playing field, by introducing uniform levels of competency

and by requiring signatories to demonstrate that they are giving

complete and full effect to the Convention. The amendments brought in

appreciable measures to address the varying standards which flag states

followed in awarding certificates. More than a decade later, those

measures now seem inadequate in comparison to the exponential

growth in shipping and the environmental risks that it poses. One

glaring example of the codes inadequacy is evident in the certification

process for 'Masters' candidates. The code requires that a seafarer must

complete 36 months of sea going service as an officer in charge of a

navigational watch (3rd mate or 2nd mate or Chief mate) to be awarded

a Master’s competency certificate. This period maybe reduced to 24

months if not less than 12 months of such seagoing service has been

served as Chief mate. The rules imply that a junior officer (2nd or 3rd

mate) could be awarded Masters license after 36 months, even though

he has never sailed as an Chief Mate. A dangerous proposition!

While we find numerous commercial interests offering engineering

solutions to counter the human element, the basic problem of inexpe-

rience which stems from inadequate standards in the STCW convention

remains not addressed. IMO’s Feb 2009, Current Awareness Bulletin

quotes statistical survey by Lloyd's Register - Fairplay research

showing the number of casualty incidents rising dramatically, from

1,216 in 2004 to 1,974 in 2008 - an increase of 758. Any number of

casualty investigation reports would more often than not, cite human

inexperience and/or overconfidence as a contributing factor to marine

accidents. From, the Master who decided to cut a few corners to arrive

a port early resulting in subsequent oil spill from the Torrey Canyon, to

the crew member who failed to secure the bow doors resulting in the

sinking of the Herald of Free Enterprise, history abounds with examples

on this count.

Against this backdrop of contradictions, Fleet Management has

chosen to reflect and pave its way forward in actualising safety targets.

Our mantra is simple ‘EXPERIENCE’. Evident yet often willingly

ignored; a paradox! At Fleet Management, knowledge dissemination

tools are aplenty, but this is no longer our sole preoccupation, we cannot

afford it to be. Running ships with experienced sea farers equally

supported by able shore managers, is the simplest antidote we can

propose.

The greatest challenge to realising this goal has been crew short

supply; a trite topic often gracing shipping news headlines. Quick

promotions, rising salaries and shorter contracts for seafarers have

contrasted poorly with increased insurance costs, depreciating asset

values and environmental disasters. Clearly the balance the industry

strives to achieve has eluded it.

Channeling a way out of this flux, oil majors have done well to

include “EXPERIENCE’” matrices, in their list of vetting standards.

Movers and shakers in the dry bulk category may slowly follow suit. It

would do wonders for the universal cause of maritime safety, if the IMO

and honorary flag states could inculcate more rigid experience standards

in the STCW convention on similar lines for a wider range of ship types.

The uneven implementation of safety ideals would be forcefully negated

by this action, heralding a new chapter for maritime safety.

Each major accident has brought in its wake public outcry, which in

turn drove reactive government and industry stake holders to bring in

mandatory and obligatory controls. It would serve well to raise the bar on

“Mandatory Experience Standards” proactively rather than in hindsight

before this inevitable change is forced upon by another disaster. Brevity

is the soul of wit, but the bane of any earnest safety control measures

which needs time and deep thought to implement successfully. ■


SMI_20:Layout 1 28/7/09 15:58 Page 76

SMI_20:Layout 1 28/7/09 15:58 Page 77

Luxury is hardly the word that springs to mind during such stagnant

decomposition of the global economy, yet mention the term ‘cruise’ and

its associations are felt in all their glistening, sun-warmed, bejewelled

glory. Oxymoronic it may appear, but the cruise industry is revelling in

the healthy hue of a financial flush as it steams forward on record levels

of business.

Taking multitudinous hits with the indifference of a dart board, it

has flouted the holes punctuated across the rest of the world’s industries

and instead, has soared gleefully on the wings of profitability. No

challenge has proved too much for its stern resilience, and despite the

sour financial slump, the cruise industry has enjoyed the golden glow

and bright lights of recession-dissension.

As the party atmosphere is felt on an international scale, the UK

cruise industry is particularly beaming after the latest figures released

from the Passenger Shipping Association (PSA). Its Annual Cruise

Review reported that 2008 represented the third successive year of

double digit growth in terms of cruise passengers, displaying an 11%

increase from the previous year and totalling 1.5 million people.

With one in every 12 foreign package holidays booked in the UK

being a cruise, it is with sun-blinding evidence that the economic doom

and gloom has not been able to pry the household luxury of an annual

holiday out of most people’s steadfast grasp. Instead, many are seeking

to escape the damp, stolid climate in favour of the easily-accessible,

dazzling, material and cultural indulgence of a cruise ship.

Asserting that a third of all cruises during 2008 cost less than

£1,000 and that prices are set to demonstrate even better value in 2009,

it’s easy to pick up on the popularity stakes. William Gibbons, PSA

Director, said: “Although the cruise industry is not recession proof it is

better placed than many other travel sectors to weather the economic

storm, and we expect to see similar passenger numbers in 2009 as we

did in 2008. Further growth is also expected next year with a number of

new ship launches.

“People are still looking to go on holiday and the inclusive nature

of a cruise, along with exceptional service and exciting destinations,

means its future continues to look assured. The world of today is a very

different one from that of 12 months ago. Although the dramatic growth

of the last few years is likely to subside in the near future, we are

confident of continued passenger growth,” he added.

While the UK cruise industry is adorned in financial embellishment,

Europe is similarly glowing under the spotlight of vastly improved

figures. According to the European Cruise Council (ECC), the industry

has generated €32bn from 21 million port visits, the total value of goods

and services generated having increased by a mouth-watering 69% in the

last three years. There has also been an increase in the amount passengers

spend, and in 2008, total passenger onshore spend was €2.7bn. Spend-

thriftiness is clearly the new trend in defiance of the recession.

David Dingle, Chairman of the ECC and Chief Executive Officer

of Carnival UK, said: “The European cruise industry contributed

€14.2bn in direct expenditure with cruise lines spending €5.1bn on

services, supplies and equipment. Despite the present economic

challenges, the ECC anticipates further growth in Europe; not at such a

frenetic pace, but with the introduction this year of new ships dedicated

to the European market, we remain positive about continuous growth.”

Europe wears the crown for being world leader in building cruise

ships, and during 2008 the industry spent €5.2bn on construction, repair

and maintenance of cruise ships. The spending doesn’t stop there,

because according to the PSA, while the other shipping sectors spread

newbuild cancellation fever with the rapidity of swine flu, the cruise

industry still has a total of 39 newbuild vessels on order posted for

delivery by 2012.

While shipyards are still sure of business from at least one

direction, the cruise sector is certainly looking forward with rose-tinted

optimism. But as the tail-end of the boom period vanishes around the

corner and it is faced with the full-frontal chasm of recession, the

‘advance booking’ nature of the cruise industry might go some way to

explain its financial victory.


BUSINESS VIEWPOINT CRUISE

Living it upin the lap of luxury

By Amy Kilpin

“People are still looking to go on

holiday and the inclusive nature of a

cruise, along with exceptional service

and exciting destinations, means its

future continues to look assured”

SMI_20:Layout 1 28/7/09 15:58 Page 78

Penny Guy from the PSA said: “I’m not aware of new orders being

placed, and there have certainly been some comments from the various

yards throughout the world as cruise companies are obviously thinking

long and hard about new orders. At the moment, because of the

economic situation, new orders are not being placed in the same

quantities as we have seen over the past two years.”

Regardless of its lucrative value, the PSA indicated that while the

cruise sector can gloat over an admirably substantial orderbook and

record levels of business, many lines have had to offer cut-price

packages and reduced rates in order to attract amid a financially-

dwindling marketplace. Supplementing this, the new tonnage due to

enter the cruise sector over the next few years is likely to be sojourned

post-2012 as no new orders are being placed in the current downturn.

Kevin Sheehan, Chief Executive of Norwegian Cruise Line (NCL),

warned that while last year may have seen record highs, there is a

slowdown on the way and that “pricing has started to show limited

signs of moving in the right direction. It is going to take time for the

market to recover to where it was in 2008. We have been able to work

our way through, but the bad news is that we are doing it with less

pricing,” he revealed.

Fogging up the future of the cruise sector as its future remains

shrouded in ambiguity, the current triumph for cruise lines might be

short lived if the global economy catches up with it; a notion being felt

to some extent by Fred Olsen Cruise Lines. Despite a record number of

reservations and advance bookings for 2010 rocketing well above the

figures from the previous year, its continually strengthening UK

customer base isn’t a trend being paralleled across international waters.

“Certainly the economic climate is having an affect on business

overall from our non-UK partners, but given our core target market it is

perhaps less affected than our industry colleagues. North America has

always been a key market for Fred Olsen Cruise Lines, and we have

noticed a downturn in early bookings, with people being less inclined

to financially commit too far in advance,” advised Kate Wooldridge,

International Sales Manager.

Many cruise lines are looking to buck the trend of their tradi-

tionally western customers and hope to reach out to international

marketplaces to secure future operational growth, with some companies

now offering the ultimate life experience packages with two or three

month-long round the world cruises. Royal Caribbean has recently

announced its intention to tap into the Middle Eastern market with a

turnaround operating out of Dubai from January next year.

Estimated to be worth $100m, the Middle Eastern cruise market has

been earmarked for phenomenal business potential with the number of

regional cruise passengers having soared by 62% in the last two years,

reaching record levels in 2008. An “immediate business objective”,

according to Michael Bayley, company Vice President, the number of

Arab passengers entering into traditional cruise markets is a rapidly

emerging trend being boosted by Dubai’s investment in cruise tourism.

While the cruise industry sails into the sunset, shipmanagement

companies responsible for the leisure and cruising industry have

reported not such a positive spin on the sector, yet in comparison to the

fate of commercial shipping, it might not fare up quite so badly. Per

Bjornsen, Business Development Director of ship manager V.Ships

Leisure, indicated that in spite of the economy, “management fees have

not been reduced during the current financial situation.”

Highlighting how the operation of a vessel “still requires the same

number of people onboard and shore to operate,” Mr Bjornsen revealed

that in spite of no fluctuating financial implications, “management fees

for cruise vessels are actually higher than management fees for cargo

vessels. A cruise vessel is much more complex in all its operations,

because carrying passengers and not cargo implies a higher liability for

the manager.”

With greater numbers of crew required onboard a cruise ship, the

costs of wages and training for a ship owner are increased, not to

mention the addition of more onboard operations such as restaurants,

bars, cinemas and events resulting in higher insurance and running

costs. Management fees for cruise ships cannot be reduced in line with

the economic climate due to the sheer volume of financial factors, and

with a greater number of port calls, security is becoming a more

pressing issue concerning the cruise industry.

Discussions on the US Cruise Vessel Security and Safety Act 2009

are to begin shortly in the House Committee on Transportation and

Infrastructure as the Bill moves steadily through the legislative process,

having been passed unanimously by the Senate Commerce, Science and

Transportation committee. In light of the rising threat of piracy attacks,

the complications the cruise sector could potentially face are

phenomenal, and proposals for enhanced security measures and

onboard training have been urged.

The US in particular raises a far higher bar of vigilance, as Mr

Bjornsen emphasised. “The main liability with serving the US market

in the cruise industry concerns the US passengers, and in fact the P&I

insurance increases in relation to the number of US passengers onboard

and US port calls, due to the litigious trend of US citizens,” he told

SMI. While it might be reaping the rewards in the passenger numbers

‘hall of fame’, the cruise industry is certainly dealing with its own

growing challenges.

Among other inflictions on shipping, seafarers are one of the most

prevalent concerns of the moment, however, and while the industry has

widely acknowledged that there is a global seafarer shortage spreading

across the boards, the cruise industry proves its resilience furthermore.

According to Mr Bjornsen, “such a shortage is less visible within the

leisure and cruise industry than it is throughout the commercial

worldwide fleet.”

He added: “There may even be a surplus of officers by mid 2009

due to the reverse trend on the market and various newbuild cancella-

tions. However while it will definitely have an impact on the

commercial fleet, good and experienced officers will still remain hard

to keep and catch for the cruise lines. As a matter of fact, several

shipping companies and a very few cruise lines have even delayed any

decision on wages to 2009 due to the economic uncertain periods we

are facing at the moment.”

Commercial shipping may be sat in the shadowy doldrums

watching with wary envy at the golden hue cast over the cruise sector,

but while many cruise lines may be rejoicing in the festivities of a

record year, the slow-acting poison of economic recession may yet seep

into its operational arteries just yet. For managers, a darkening on the

horizon could cloud over the cruise sector as the complications build

nebulously up, proving a sunny holiday set to end for many luxury-

seeking passengers, and indeed, volatile owners. ■

79

BUSINESS VIEWPOINTCRUISE


“Although the cruise industry is not

recession proof it is better placed

than many other travel sectors to

weather the economic storm, and we

expect to see similar passenger

numbers in 2009 as we did in 2008”

William Gibbons

SMI_20:Layout 1 28/7/09 15:58 Page 79

A protracted slump in the ordering of cruise

ships could threaten vital parts of the

shipbuilding industry in Europe, which has

consolidated its pre-eminent position in the

design and construction of such vessels over

the years while eastern Asian yards have gained

the lion's share of most other sectors of the

newbuild market. Besides the financial and

organisational dangers posed by any loss of

production continuity in the cruise vessel

domain, a break in workflows geared to such

complex, higher added-value projects could

erode the skills base in the yards and among the

subcontractors who today play such an

important role in Europe.

It is difficult enough for the industry to

attract and retain expertise across-the-board at

the best of times, let alone to have to restore

such resources after a period of contraction and

lay-offs. As yet, there is still substantial work in

hand among main European players, but order-

books need to be replenished soon if problems

are to be averted. Over the course of 2008, the

intake of new contracts for cruiseships of more

than 10,000gt amounted to just three vessels,

compared to 16 in 2007 and 13 the year before.

Some of the cruise fleet operators, no

doubt, are waiting to see whether the increasing

pressure on European yards to secure fresh

orders will elicit more cost-attractive newbuild

offers. Lower prices may well help spur new

business, and ensure European continuity in the

field, provided that there are margins that can

be sacrificed, of course. Meanwhile, South

Korean yards and others will be ready to

respond to owners' requirements.

A respected name in European

shipbuilding, Schichau Seebeck

Shipyard(SSW), has gone to the wall.

Substantial losses incurred on a newbuild series

of 1,036 teu containerships brought matters to a

head in February this year, when insolvency

was declared. The company and its forebears

Schichau Unterweser and Seebeckwerft had

long helped ensure Germany's reputation for

quality, tailor-made tonnage such as ferries, ro-

ro ships, cruise vessels, small boxships and

special-purpose vessels.

A recent meeting of SSW's creditors has

approved a plan to convert the shipyard site

into an industrial estate with a focus on steel

fabrication and possibly also offshore-related

projects. It is understood that conversion and

repair specialist Lloyd Werft will have a stake

in the new venture, as will fabricator Roenner,

along with two of the interests behind SSW,

namely Dieter Petram and Karl Ehlerding.

Incoming orders for German yards in 2008

amounted to 46 vessels totalling some 600,000

compensated gross tons (cgt), representing the

lowest level since 2001, while construction

volume corresponded to only about half of

annual production. No new contracts were

booked in the first quarter of 2009, while the

cancellation rate gathered momentum, with 19

newbuilds being annulled during that three

month period. Work in hand has continued to

decline, from 172 vessels of 3.1m cgt on

December 31, to 139 newbuilds of 2.5m cgt at

the end of March 2009.

Much of the industry has long been focused

on the containership market, but this sphere of

construction may figure to an ever-lessening

degree in future years' activity by German

shipbuilders. SSW is one of four German yards

which have filed for bankruptcy since the

second half of last year, the others being

Cassens Werft, Lindenau Werft and SMG Werft.

The changing face of European shipbuilding

is encapsulated by STX Europe, the former Aker

Yards organisation. May's announcement of the

resignation of Torstein Dale Sjotveit from the

position of president and chief executive officer

at STX Europe, succeeded by the company's

erstwhile chief operating officer, Sang-Ho Shin,

followed the completion of a thorough transfor-

mation process.

Since Mr Sjotveit took up the top post in the

spring of 2008, at what was then Aker Yards, the

company has implemented operational improve-

ments and established a solid ownership

structure. This has included attracting the French

government as investor and co-owner in the two

shipyards in France. The shipbuilding group has

become a fully integrated part of the STX

Business Group, and has consequently delisted

from the Oslo Stock Exchange and changed its

name to STX Europe.

Against a backcloth of low ordering

activity, two contracts have been sealed by

STX Europe in recent months. Through the

wholly-owned subsidiary STX Norway

Offshore, an order was secured for three

icebreaker tugs for duties in the northern

Caspian Sea. Contractual owner JSC Circle

Marine Invest has assigned operation of the 1A

Super ice class newbuilds to affiliate Caspian

Offshore Construction. Another of the

shipbuilder's subsidiaries, STX France Cruise,

won a deal from the French Navy to construct

a 21,000 ton-displacement projection and

command vessel at the St Nazaire yard.

Broking sources have suggested lately that

the hard line being taken by South Korean

yards over requests for delivery postpone-

ments, if not contract annulments, may soften

as the year progresses. In the absence of

orderbook replenishment, builders will become

increasingly anxious as to production volumes

after 2011, and as to the flow of stage

payments. The suggestion is that the resched-

uling of deliveries under existing contracts

could be beneficial to production continuity, by

spreading the workload over a longer period,

towards a time when the market begins to

revive. Furthermore, the fact that some areas of

shipbuilding costs have been falling could

result in higher yields on projects that have

been pushed back.

However, the nub of the problem right now

is the minuscule amount of new work being

generated, and it is difficult at this point to give

credence to assertions from certain quarters of

the shipbuilding industry that the turnaround

may come before the end of 2009.

NEWBUILDCONTRACTS


NEWBUILDING

STERNEST TEST YET

FOR EUROPE'S

BUILDERS

By David Tinsley

SMI_20:Layout 1 28/7/09 15:59 Page 80

ABB is to deliver Azipod C products through a

new production line in Shanghai, China from

the first half of 2011, while a completely new

generation of Azipod units is heading towards

formal launch in September 2009.

On paper, the Azipod concept was, from

the outset, hard to resist. An AC motor driving

a fixed-blade propeller located in a separate

steering unit and able to turn 360 degrees

around its vertical axis would immediately

confer greater manoeuvrability and free up

space inside the hull. The fact that the speed of

the electric motor could be continuously

adjusted allowed for the use of fixed pitch

propellers. The replacement of pushing

propellers with pulling ones brought substantial

hydrodynamic improvements; even in the

concept’s early development.

But ships do not sail on paper and, in the

run up to the launch of its new generation, ABB

is emphasising how developments in electrical

systems in general and experience at sea have

contributed to refined thinking.

To meet the challenges of total life cycle

costs and penetrating new ship segments with

Azipod propulsion, ABB said some years ago

that it had embarked on a development program

for next generation Azipods. The resulting

Azipod X, which will be launched this autumn,

features many new and innovative solutions.

It is no surprise to learn, for example, that

this product features an entirely revised bearing

and sealing arrangement, involving the

complete separation of the oil and water seals,

and a void space factored into the hull design to

accommodate possible seal leakages or ingress

from the sea. A 200 litre capacity drainage

space featuring integral pumps connects either

to the ship’s bilge system, or to its oily water

separator. Separation will also confer a longer

lifetime, because lubrication can be optimised.

Again, the hull has been optimised, to allow

greater access for internal sealing and bearing

maintenance at sea, where the former design

required dry docking. CFD analysis and tank

tests at Finnish research institution VTT yielded

a modified, slimmer hull shape. Depending on

the frame size of the unit, the torpedo diameter

is 100mm - 200mm slimmer, for example.

Antti Lehtela, sales and marketing manager,

Azipod Propulsion, ABB Marine, said:

“Hydrodynamic efficiency was improved during

‘normal’ project design work over time, as the

propeller design was improved and adjustments

were made to Azipod geometry from project to

project. Improvements made in this way have

achieved 6%-8 % gains in efficiency compare to

the first cruise liner application. In the new

generation, hydrodynamic efficiency has been

further improved by reducing the propeller hub

diameter, reducing the diameter of the torpedo

and by improving the geometry of the strut, and

slightly reducing its thickness. This has achieved

a further 2 % improvement.”

Another aspect of the new generation has

already been witnessed onboard the much

lauded and recently delivered Celebrity

Solstice. The Azipod units on this ship feature

a higher supply voltage (3000V), meaning that

cabling can be smaller and easier to install.

ABB has also made efforts to improve commu-

nication with the operator of the system and

his/her understanding of its overall status, so

that the risk of human error is minimized, and

reliability can be enhanced because mechanical

stress and wear are reduced and identified

early. According to Mr Lehtela, the intelligent

control system gives the operator advice, for

example, ‘not recommended operational

mode’, so that the ship’s master can see

beforehand how much power he can get using

different Azipod steering angles.

Other key refinements include the

relocation of the vertical turning axis, a modifi-

cation reckoned to save 20% in steering torque.

In line with wider industry trends, and

drawing on its experience in developing the

Compact Azipod, the entire next generation of

Azipod units will also feature electric, rather

than hydraulic steering gear. “Electrically-

steered Azipod units are controlled by variable

speed drives that offer several advantages,”

said Mr Lehtela. “Efficiency is higher, instal-

lation is easier and maintenance needs are

fewer due to the lack of hydraulics, and space

is saved. In addition, less oil is needed, there

are no leakages, the unit is more environmen-

tally friendly, and there is less noise.”

ABB’s Azipod units will be subject to new

product nomenclature. Rather than being

denoted by size, or propeller type, Azipod units

will be coded by product and usage. Large units

will be denoted by ‘V’, while compact units

will be denoted ‘C’. Next generation units will

be denoted by ‘X’. Open water units will be

further described ‘O’, while ice application

units will be described as ‘I’, units with a

nozzle are described with ‘Z’ and units for

Contra Rotating applications as C. For

example, a large Azipod for ice applications

will be designated as VI, while new generation

open water application will be denoted Azipod

XO. and Compact Azipod open water use as

Azipod CO. ■

81

NEWBUILDING


NEW GENERATION AZIPOD

BUILDS ON EXPERIENCE

SMI_20:Layout 1 28/7/09 15:59 Page 81

Following on from the announcement that Malaysia Marine & Heavy

Industries (MMHI) is to build another graving dock at its Pasir Gudang

Shipyard - the new 380 metres x 80 m graving dock will be specially

designed for the repair of LNG tankers. Other shipyards throughout the

world are now looking to increase capacity.

Denmark’s Fredericia Shipyard has entered into an agreement with

Odense Steel Shipyard on renting the original drydock facilities at

Lindø and a number of buildings housing administration, workshops

and changing room facilities. Fredericia Shipyard will have more than

100,000 sq m at its disposal. There are two graving docks at Lindø –

both 280 m x 45 m (capable of handling ships up to Aframax size).

The agreement runs for a minimum of 25 years. Already this

year, Fredericia Shipyard will commence rebuilding to be ready at

Lindø by January 2011 with 50% of its repair work. The remainder

will move to Lindø the following year. Fredericia Shipyard will

change name to FAYARD.

Croatia’s Viktor Lenac Shipyard is also about to increase its market

penetration. Last year marked a turning point for Viktor Lenac. After

four and a half years, the bankruptcy procedure finally ended. Viktor

Lenac has successfully overcome all difficulties and has proved that the

conventional shipping and offshore markets can still count on the yard.

After completing its financial and ownership restructuring,

Its new owners, Uljanik shipyard, a leading Croatian newbuilding

yard, and Tankerska Plovidba Co, a leading Croatian shipping

company, have committed themselves to considerably renovate the

existing facilities and invest in the restructuring of the Shipyard’s

technology and know-how.

One of the most important events in the way of development has

been putting Floating Dock No.11 into full operation. Seeking to respond

to the world’s demand for larger drydock capacities, Viktor Lenac bought

this dock in 2000 and started a substantial refurbishment programme that

was stopped when the shipyard ran into financial troubles.

This considerable investment included extensive steel renewal,

repair and modification of the dock cranes and other equipment

required for large size ships, upgrade of the control, safety, electric,

electronic and other systems, purchasing of equipment for horizontal

and vertical transport such as cherry pickers, hydraulic shear lifting

platforms for shell plating works, forklifts and special cars for grit

collection, removal and handling operations (Bobcats), purchasing of

more scaffolding of both conventional and quick erect type and two

frequency converters. Following takeover of the company by Tankerska

Plovdba and Uljanik in 2008, the yard intensified works to put Floating

Drydock No.11 into full operation.

Considering its size and the size of ships that it can handle, this

floating dock will significantly increase the Shipyard’s capacity.

Although it can receive Suezmax ships, which is about two to three

times bigger than ships docked in Floating Dock No.5, it is the

shipyard’s plan to commence the operation with vessels up to 250 m in

length and 45 m in breadth. With the Floating Dock No.11, Viktor

Lenac is entering into a new market of large ships. It also means an

increase of the shipyard’s ship repair capacity.

Meanwhile, Drydocks World – Dubai (DWD), formerly Dubai

Drydocks, has added two new berths to its facility, significantly

increasing its conversion capacity. Completed recently, Berths 9 and 10,

on the site of the former tank-cleaning berth, are now fully operational

and are currently accommodating OSG Shipmanagement’s 441,893 dwt

TI Asia, which is undergoing conversion work to a FSO. The new

FPSO/FSO Quay is located on the leeward face of the main breakwater,

with a total length of 668 m and a dredged depth of –11 m DMD (Chart

Datum) over a length of 630 m. Each new berth is more than 59 m wide

and is projected to increase Drydocks World - Dubai’s FPSO

conversion capacity by two vessels/year.


SHIP REPAIR

increasecapacity

Yards look to

SMI_20:Layout 1 28/7/09 15:59 Page 82

Completion of Berths 9 and 10 will enable the shipyard to provide

more lay-down and fabrication areas for the conversion of VLCCs to FSOs

and FPSOs. FPSO conversion projects normally last some one to two

years, occupying crucial yard space, which can be utilised for the general

repair market. The new berths, which operate with three cranes, provide the

much needed additional space to meet growing customer demand.

Berth 10, which is at the seaward end of the quay, became opera-

tional in March with the berthing of an oil tanker now undergoing

FPSO conversion. Berth 9 was completed on April 8th and is fully

operational for conversion works. The conversion of TI Asia, one of the

four largest oil tankers in the world, shows the yard’s highest technical

expertise and yard capability.

FPSO contract for COSCOChina’s, COSCO (Guang Dong) Shipyard has secured a contract to

convert the 18 year old 259,530 dwt VLCC Sunrise IV, to a FPSO for

Japan’s MODEC. This conversion contract involves repair and

conversion of vessel to FPSO including topside integration and

commissioning, and is scheduled to be re-delivered in mid 2010.

The FPSO is designed to operate for 20 years without

drydocking, and it will have a production capacity of 16,000 cu

m oil/day and 5,000,000 cu Nm gas/day as well as a storage

capacity of 1,600,000 bbls of oil. The FPSO will be re-delivered

to MODEC for deployment in Petrobras’ TUPI Field, offshore

Brazil in water depths of between 2,200 m and 2,500 m.

Fleet Repair Agreement for ASRYBahrain’s ASRY has signed a further Fleet Repair Agreements with

Norway’s BW Fleet Management. The Norwegian company, which

operates out of both Oslo and Singapore, manages a fleet of more than 90

vessels operated by BW Gas and BW Maritime, and the ASRY repair

agreement involves those crude oil tankers, product tankers and LPG

tankers which trade to the Arabian Gulf, giving guaranteed dock space and

fixed rates. The agreement could see 14 vessels repairing at the Bahrain

yard this year and is the largest fleet repair agreement currently at ASRY.

BW ships have been utilising ASRY since the yard’s early days.

Bergesen, as the company was then known as, has been drydocking in

Bahrain since 1980 and signed its first fleet agreement in 1999. The first

four vessels to be drydocked and repaired under the new agreement will

be the 81,698 m3 LPG tanker Berge Racine, the 78,530 m3 LPG tanker

BW Captain, the 285,739 dwt VLCC BW Nile (to be renamed BW

Elbrus), and the 76,604 dwt product tanker BW Columbia. All four

vessels are due to be repaired between July and October this year.

During the past 16 months ASRY repaired a total of five vessels

from BW Fleet Management, all LPG tankers - the 81,640 m3 BW

Ragnhild; the 81,599 m3 BW Rachel (drydocked twice); the 85,662 m3

Berge Frost and the 37,829 m3 Havrim. ■

83

SHIP REPAIR


Main characteristicsLength 261.71 m

Breadth (Internal Clear) 53.00 m

Draft 9.50 m

Max. Trim 3.50 m

Lifting Capacity 60,000 t

Cranes 2x18 t

Vessels up to 130,000 dwt

SMI_20:Layout 1 28/7/09 15:59 Page 83


LIVE OBJECTS OF DESIRE

Objects ofdesireEnjoying the finer things in life doesn’t always necessarily need to involve maxing out your credit card, blowingyour bonus or robbing the nearest bank, as SMI gives an insight into some serious gadgetry that’s almost friendswith the credit crunch.

Music on the go isn’t exactly a newconcept but this certainly is. Forget themonstrosity of a bulky piano and embracethe compact technology of Piano Hands –gloves you wear on your hands that playthe piano anywhere and everywhere.

Fingertip sensors trigger the pianonotes that play out of the attachedspeaker, and with a light touch of the heelof the hand on to the surface beingplayed on, your miraculous piano willshift up an octave.

With seven other instrumental optionsto choose from, all at your fingertips, thiscould provide hours of reasonably-pricedfun – music to any recessionista’s ears.

Handy music

Piano Hands£49.99 www.iwantoneofthose.com

Talk is cheap

If you want to instil a bit of mysticism inyour home or at the office, invest in oneof these cutting-edge, futuristic lampsthat takes you out of the real world andinto the realm of magical possibility.

Making touch-lamps look positivelyold-fashioned, these creative lamps arecontrolled with a deft movement of thehand through the air above the lamp (onand off), and brightness is adjustedthrough a vertical stroke of the hand upand down.

No touch needed; it’s all sensory, andthe scientific feel with the flask-shapeddesign might make it look the bomb, butit certainly won’t cost a bomb.

A stroke of magic

Mathmos Airswitch 1 Light£49.00 www.mathmos.com

Mobile phone service providers must begleeful as they rip users off to high heavenwith their extortionate charges for interna-tional phone calls, and yet all those tripsabroad make for very important chit chat!

Well now you can go on and onanywhere you like with the new GO-SIMglobal sim card, which saves you up to85% off international calls in over 175countries around the world and allows sixtimes more talk time than a standardnetwork provider.

What’s more, you don’t have to payroaming charges in over 75 countrieswhich means you don’t foot the bill onreceiving calls or texts, either. No monthlybill, and unused credit never expires – justprepaid top-ups from £30. Bargain.

GO-SIM global sim card£30.00www.gosim.com

SMI_20:Layout 1 28/7/09 15:59 Page 84

85

LIVEOBJECTS OF DESIRE


This contraption is virtually Bond-worthy. Based on the conven-tional concept of a watch, this wrist multi-tool is a video player, anMP3 player, a voice recorder, a photo viewer, an fm radio, a flashdrive, and even comes with pre-loaded games.

With 3GB of internal memory extendable to 16GB by Micro-SDcard, this remarkable gadget boasts a 1.8 inch full colour TFT screen,and comes with a USB cable for downloading media from your PC.Sensational, and what a bargain. Just don’t forget your wrist.

Wrist-full of action

MP4 Video Watch£49.99 www.crazyaboutgadgets.com

Next time you go gallivanting about on the highseas, fear not for the safety of your personalitems, after all, no one wants to see theirBlackberry or their car keys plunging to thebottom of the ocean – but how easy it is with amere slip of the hand or pocket!

An innovative small key fob could be the saviourto all your worries, however, as it disguises a high-strength rubber balloon that holds belongings up to1kg afloat for 24 hours, and automatically inflateswithin seconds of hitting water.

Incorporating a high-intensity LED beaconthat’s visible from over 250m at night, at least yourbelongings will be safe – even though your ownsafety might be questionable.

Waterbuoy£9.95 www.firebox.com

Buoy what an invention!This credit crunch can be a mighty depressing thing,but before you drown your sorrows, bear this beauty inmind. Re-ignite the rich man in you by indulging in afine wine infused with real, edible 22-carat gold flakes.

Available in a variety of flavours – strawberry,peach and fig – a standard sized bottle is on parwith cheaper varieties of champagne, with a 1.5lmagnum for just £46. Go on, enjoy the high life at alow price.

Liquid gold

Gold Cuvee£24.00 www.goldcuvee.eu

Never be caught out again asyou play power juggling with yourmobile phone, mp3 player, andother electronic items, as thisrevolutionary device allowsmultiple items to be charged simul-taneously, completely wire free.

By simply attaching a small‘skin’ or adaptor into your mobilephone, it will fully charge up bybeing placed on the ingeniouspad alongside your otherdevices, without the need formultiple wires.

This is the ultimate ‘chargeon the go’ solution, and wherethere’s limited sockets availablefor all your numerous electricalitems, this really is a ‘one stopshop’ power source that you justcan’t do without.

WildCharger Pad£49.95 www.wildcharge.com

Power unplugged

SMI_20:Layout 1 28/7/09 15:59 Page 85


review SMI’s guide to the Arts,

Entertainment and the Media

JAMES MAY ON

THE MOON

Renowned for his exploration

into the exhilarating danger-

zone of machine power, BBC

Top Gear presenter James May

leaves the comfort of a gear

stick behind and hops aboard

the thrilling idea of moon

missions with all the character-

istic enthusiasm and ‘boys toys’

thrill of a schoolboy.

Jetting off to the US, home

of NASA, James conducts fasci-

nating and inquiring interviews

with three men who have

walked on the moon, discov-

ering the true feelings of how 1960s technology managed to create the

most incredible machines in the history of aviation.

Always one to take hold of the reins for a healthy dose of hands-on

experience, James takes the plunge and steps deftly into the moonboots

of an Apollo astronaut, undergoes weightlessness in the infamous Vomit

Comet and feels the lung-crushing G-force of a Saturn V rocket launch.

The pinnacle of his journey is undoubtedly the phenomenal view

of earth from the edge of space as James reaches the upper limits of

the stratosphere in a U2 spy plane. In jaw-dropping, speechless awe

of the immense and life-altering spectacle before him, the once-in-a-

lifetime opportunity is documented with informative and distinctly

moving proficiency.

MICHAEL JACKSON: HISTORY -

THE KING OF POP 1958-2009

Since his dramatic death which brought the world to a standstill earlier

this summer, Michael Jackson media paraphernalia is flying around like

a ubiquitous swarm of midges, but with definitively good reason.

Characterised by the ‘where were you when you learned that Michael

Jackson had died?’ cliché, the momentous occasion has since been marked

with a cornucopia of remembrance collections to celebrate and

acknowledge the extraordinary life of the greatest name in musical history.

With archive footage from ITN documenting the rollercoaster

highs and lows of his remarkable career, this DVD reveals an inform-

ative and glimmering insight into the bizarre and much-publicised life

of a unique artist who achieved record sales of over 750 million albums.

From the Jackson Five child star to the soaring success of a musical

genius, the striking eccentricity that

characterised Michael Jackson is a

defining factor of his fame, including

his magical hideaway Neverland, his

aesthetic transformation and the claims

and convictions that laid way to

negative press.

In spite of the weird and wonderful

life of the legendary namesake, the

encapsulation of such a fantastical and

tragic career is documented with

astounding effect, and culminating in

exclusive ITN footage of Jackson’s

funeral, is an emotionally-moving

must-have memoir.

entertainment

BOULEVARD BRASSERIECovent Garden, London

Ticking most boxes when it comes to a delightfully conti-

nental ambience set amid the bustling hub of London’s

Covent Garden, Boulevard Brasserie is a unique gem of

independent charm, in no way swallowed up by the glut of

chain restaurants flanking its small but traditional exterior.

Imbued with charisma, this restaurant possesses a wealth

of French appeal, and situated in striking distance of the Royal

Opera House and some of London’s most famed theatres, is a

well-primed venue for pre-theatre atmospheric indulgence

and a taste of the refined elegance of the continent.

With a selection denoting delicate sophistication from

duck parfait and moules mariniere to chargrilled fresh

calamari and deep fried brie, the culinary affair resonates

strongly of traditional French cuisine with a Mediterranean

twist, and the corresponding non-showy décor that transports

you to a Parisian-style café restaurant is no less mood-setting.

Reasonably priced and more than reasonably equipped to

satiate hungry London-goers, Boulevard Brasserie steps away

from the contemporary cut of restaurants and embraces tradi-

tional gastronomy and character with all the elegance

expected from a West-end hot spot. With fantastic prix fixe

deals, it might certainly be worth making a cultural evening of

it for the trés chic.

restaurants

SMI_20:Layout 1 28/7/09 15:59 Page 86

NOBU INTERCONTINENTALKowloon, Hong Kong

World class Japanese restaurant

chain NOBU excels itself yet again

in the vibrant, colourful and contem-

porary setting of Hong Kong. Set in

the InterContinental hotel, this

restaurant was recently named one of

the world’s “Hot Tables” on the

prestigious Condé Nast Traveler

(USA) “Hot List”.

Nobuyuki Matsuhisa, known to the world simply as “Nobu”, has

revolutionised Japanese cuisine by drawing influences from his life

abroad in Peru and Argentina, and through a modern and unique twist

on Japanese cooking has created a world-class signature style that has

culminated in 20 NOBU restaurants across the globe.

NOBU InterContinental Hong Kong showcases its innovative

Japanese cuisine with signature dishes such as Fresh Yellowtail Sashimi

with Jalapeno, Black Cod Saikyo Yaki, Toro Tartar with Caviar,

Sashimi Salad with Matsuhisa dressing and Rock Shrimp Tempura with

Creamy Spicy sauce.

Staying true to the contemporary NOBU experience, the restaurant

features a stunning yet intimate harbour-view dining room, bar lounge,

sushi bar and private dining room, décor inspired by Chef Nobu

Matsuhisa’s innovative cooking and the imagery of the Japanese

countryside where he grew up.

With a unique undulating sea urchin ceiling and custom-made

bamboo embedded terrazzo walls, while at the bar, a cascade of black

river stones frames glistening imagery of Japanese cherry blossoms, the

elegant yet cutting-edge ambience of NOBU’s dining and taste

experience is unrivalled. An absolute must, especially for fish

aficionados, but it won’t come on the cheap side.

restaurants events


Steeped in luxury, glamour and prestige, Monte-Carlo has always been

a prime backdrop for the rich and famous, and every summer it plays

host to a cornucopia of celebrated musical names in a series of sensa-

tional concerts.

Held throughout July and August at the exclusive Monte-Carlo

Sporting Club, the Monte-Carlo Sporting Summer Festival brings the

night times alive with a dazzling array of stars and unforgettable

musical performances.

Presented by Casinos de Monte-Carlo, in partnership with Rolex

and Audi, the festival promises to be a spectacular affair, with tickets

available for each individual concert and dinner inclusive in the price.

If you’re waltzing around Monte-Carlo with a spare night at your

fingertips, then you might want to revel in the extravagant atmosphere,

enhanced and intensified by the Monte-Carlo International Fireworks

Festival which runs simultaneously throughout July and August.

Pyrotechnic specialists abound, this free event is a raw display of

having money to burn, literally, as it demonstrates the finest array of

beautifully original fireworks around. Attracting observers by the

thousand, there are ultimate viewing locations around one of the port’s

nearby cafés, from the palace area or along the ramparts of Fort

Antoine, and just off the Casino Terrace.

Casting an even more dazzling glow over the archaic beauty and esteem

held by ancient Athens could seem barely possible, but the New

Acropolis Museum has quickly gained notoriety as one of the highest-

profile cultural projects undertaken in Europe in this decade.

Situated near the base of the Acropolis with a direct view of

Parthenon, the new $200 million museum has replaced the former

Acropolis Museum, a small 1874 building tucked into the rock of the

Acropolis next to the Parthenon which proved comparatively

unimpressive and unacknowledged.

A profusion of ancient Greek antiquities, classical marble statues

and archaic steles adorn the rooms, juxtaposed by the modern 226,000

square feet of sheer glass and clean-cut concrete structure, designed by

the New York architect Bernard Tschum.

With five floors and space for 4,000 artefacts, the construction has

been met with some controversy, both regionally and across the globe.

With some complaints about the lack of architectural uniformity with

the surrounding classical landscape, the museum certainly stands out

with Olympian proportion.

It is with hope that Greece will regain its long-lost relics, as while

the impressive new museum displays what remains of the original

Parthenon sculptures and frieze, this amounts to just 36 out of 115

original panels. With the opening of the new museum, the Greeks hope

they can fortify their claim to the Elgin marbles, currently held by the

British Museum. Well worth a visit, despite the politics.

MONTE-CARLO SPORTING

SUMMER FESTIVALMonte Carlo, Monaco

NEW ACROPOLIS MUSEUMAthens, Greece

culture

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literature

review

The most widely read novelist in Europe today, Stieg Larsson, has

been dead nearly five years, with the third novel in his Millennium

Trilogy about to be published. His posthumous success and the interna-

tional acclaim that has garlanded him and his well-plotted books have

become the stuff of legend – not only because his novels mine a rich

seam of Nordic angst, but also because his life and the manner of his

dying, at 50 years old, have been keeping conspiracy theorists abuzz

with rumour and speculation.

The Girl with the Dragon Tattoo, first in the trilogy (named after

the magazine co-founded by the protagonist) brings together the

unlikely but intriguingly attractive pairing of a crusading journalist,

Mikael Blomkvist, and a young punk slip of a girl, Lisbeth Salander, a

brilliant cyber-hacker. Mikael, a lapsed idealist, has lost a libel case

involving a complex financial fraud spread across Sweden’s corporate

landscape. He is facing jail term when he is invited by the ageing and

ailing patriarch of a wealthy Swedish dynasty to help him solve a cold

case: the disappearance 40 years ago of a beloved niece - then a 16-

year-old student. Henrik Vanger is convinced she was murdered by a

member of his profoundly secretive family – a family with much to be

secretive about – Nazi sympathisers, right-wing extremists, eccentrics

as well as lunatics.

His reputation in tatters, Mikael feels he has nothing left to lose and

agrees to help the old man. Salander (the girl with the tattoo) has been

hired to assist Mikael with his investigative research. Socially

challenged and autistic, Salander – computer genius; the product of

institutionalised care and a victim of abuse with fiercely savage ideas

about justice and fairness – is the star of the novels.

A cracking, fast-paced crime fiction novel, it is also a tender love

story. Because this is Sweden, the scenes are sylvan, the seascapes

lyrical, the furnishing all blond wood and chic – but it is a Sweden, long

held up as a socialist paradise, that is having a nervous and social

breakdown; its vaunted welfare system dismantling, and its democratic

traditions under tremendous pressure from floods of immigrants, drug

and sex trafficking, organised crime and violent mobsters. A modern

Sweden that has provided rich material for what the Swedish author

Henning Mankell has called “novels about the Swedish anxiety.”

It is against this social and political background that Larsson wrote.

A workaholic with a 60-a-day smoking habit, he launched Expo

magazine to expose racism and religious persecution in Sweden,

making a number of enemies in the process. In 2001, he started to write

the trilogy, after work each evening as a way of relaxing. In 2004, he

delivered all three novels to his publisher and while he was still alive to

savour the success in Sweden of his first book, he died shortly there-

after, collapsing from a heart attack after walking up seven flights of

stairs on a day when the lift to his office was out of order.

Larsson, who left behind Eva Gabrielsson, his partner of 30 years,

died intestate. They were not married. Consequently, Swedish law has

been taking 50% of his earnings, while his father and brother – from

whom he was said to have been estranged - inherited Larsson’s

estimated £10m fortune. Eva, with the help of outraged fans, is

campaigning for a change in the law so that common-law spouses can

inherit when there is no will.

Larsson had left behind a laptop said to contain a 200-page

manuscript of the unfinished sequel to the trilogy. Speculation is rife

among publishers and fans that it contains plots for another six stories.

Larsson’s books have sold more than 13m copies worldwide. If it’s true

that Tarantino and Brad Pitt are in talks to buy the film rights, expect

the books’ sales figures to go even higher into the stratosphere.

If you’re travelling to some of the breathtakingly beautiful towns and

beaches of Normandy this summer, spare a considerable thought for the

1944 summer of blood and gore, when Allied Forces – US, British,

Canadian – launched, on June 6, the biggest amphibious assault in

history, to gain a vital foothold on the Continent, in a ferocious battle to

break the mighty German front in the west.

This historical narrative has been told many times – by the victors,

by the vanquished and by the victims. The bestselling 62-year-old

military historian Antony Beevor, however, gives us fresh material and

views of the battlefield, as seen by the architects and commanders of

Operation Overlord, the heads of state in Berlin, D.C. and London, the

soldiers with tales of both cowardice and courage, and by the French

civilians who suffered as they were trapped in the web of the cruelty

and terror of war.

“It is a sobering thought that 70,000 French civilians were killed by

Allied action during the course of the war, a figure which exceeds the

total number of British killed by German bombing,” Beevor writes. Of

D-Day alone, more than 15,000 Norman civilians were killed by Allied

bombings before June 6 and another 20,000 in the two months

following the landings. “French civilians caught in the middle of these

battlefields or under Allied bombing endured terrible suffering...The

war in northern France marked not just a generation, but the whole of

the post-war world, profoundly influencing relations between America

and Europe.”

D-DAY: THE BATTLE FOR

NORMANDY Antony Beevor

Viking: £25

THE GIRL WITH THE DRAGON

TATTOOStieg Larsson

Maclehose Press: £7.99

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Beevor, author of the critically acclaimed Stalingrad and Berlin:

The Downfall (which have sold nearly 3m copies between them), relied

on 30 archives from half-a-dozen countries, memoirs, transcripts of

interviews, diaries and official records, to give us a meticulously

researched historical saga of the brutality and savagery of war and its

“pornography of horror”; of commanders and generals with

monumental egos; heartbreaking vignettes of hope and tragedies; a

panorama of human detail; the dry statistics of war leavened by human

drama – the suffering of civilians; young soldiers scythed down by

enemy fire as “men were tumbling like corn cobs off a conveyor belt.”

Who knows if this book is the definitive account of the invasion of

Normandy 65 years ago, but for scale, honesty and detail, it should be,

because Beevor “makes us look afresh at events we thought we under-

stood,” as The Guardian put it. A former cavalry officer, Beevor once

said that what he discovered in Soviet archives while researching

Stalingrad caused him to “wake up at 3 or 4 in the morning with night-

mares.” You can’t ask for more from your military historian.

We sometimes forget that Britain, in the 1800s, was very likely the

biggest, most powerful grower, pusher and trafficker of drugs - of

opium, in particular. As opium infiltrated and blighted the lives of

many, turning millions of Chinese into addicts, and threatening to

destroy the already addled Chinese Empire that led to the Opium Wars,

the East India Company, which as the representative of the British

Empire licensed to trade with the Indian subcontinent and China,

generated and amassed spectacular wealth and fortune.

With unassailable military and commercial powers, the Company’s

rule in India began in 1757 and lasted until 1858, when the new British

Raj assumed the administration of the country.

The historical novel Sea of Poppies, the first volume of the

promised Ibis Trilogy that “will span continents, races, generations”, is

another tour de force from Amitav Ghosh, a gifted, prolific writer

blessed with a prodigiously fertile imagination, who is also a great

romantic lover of words.

The story is set in the India of 1838, when the British turned

peasant farmers’ land into the production of opium, causing widespread

poverty. Farms in the Ganges plain and river banks were turned into a

vast sea of poppies, unable to feed local people who were growing

hungry and restive.

This forensically researched novel has two principal narrative veins

– the growing of opium for the Chinese market, and the transport of

migrants and indentured workers to places like Mauritius, Trinidad and

Fiji, to cut sugar canes for the British. And in a storm-tossed sea,

everyone seems to have ended up on the same boat, the Ibis, a refitted

former slave ship, among whose passengers include convicts, charmers

and coolies escaping problems at home, seeking adventure or a new life.

This being a historical novel, we are instructed on Indian castes,

19th century seafaring, marriage and sexual practices, costume, food

and drink, religious worship, criminal justice - the whole kit and

caboodle of life. The language of this immensely rich saga is a veritable

babel of tongues – the slang of several castes, the argot of seafarers and

slaves, pidgin. Persevere, for a motley crew of characters will capture

your imagination, captivate you, and hold you in their spell long after

you have put the book down for the very last time.


SEA OF POPPIESAmitav Ghosh

John Murray: £7.99

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It is a truth universally acknowledged that if the BBC wants to win the TV

ratings war and the gratitude of literary viewers, they commission a lavish

costume drama, a Jane Austen drama, to be precise - which is the treat in

store for us this coming autumn, with Romola Garai playing Emma.

The most famous spinster in English literature, who wrote about

courtship and marriage, has been dead 192 years. Yet her appeal is as

fresh and strong as ever.

There is probably a Jane Austen Society mounting readings and

plays in every English-speaking country in the world today. Austen

worship among Janeites is fervent. Various Austen industries flourish –

theatre, costumes, memorabilia. Every year, in Bath (where her family

moved to after her father’s retirement from the clergy), a weeklong

Austen Festival is held; people dressed in Regency costumes attend

soirees and concerts celebrating her life and works. People gripped by a

kind of Austenmania come from all over the world. Devotees make a

pilgrimage to Winchester Cathedral where she is buried.

When will the felling of forests cease in the production of hectares,

no, constellations of biographies of a woman who wrote only six novels

and died just aged 41? Why are passions aroused when a group of

reasonably well-read people discuss Austen? She shares with the Bard,

according to the Cambridge Introduction to Jane Austen, a rare

crossover appeal – both academic and popular, the object of scholarly

analysis and cult enthusiasm.

Disraeli read Pride & Prejudice 17 times. Macaulay compared her

to Shakespeare. EM Forster confessed to being a Jane Austenite.

Kipling regarded Winchester as the ‘holiest place in England’. Lord

David Cecil excoriated those who didn’t like her; they were, he said, a

despised minority made up of the sort of people who do not like

sunshine and unselfishness. “For Austen fetishists, the idea of her and of

themselves as her disciples is more important than what she wrote,” said

the writer Sam Leith.

John Carey wrote: “The belief that a liking for Austen is an infal-

lible test of your taste, intellect and general fitness for decent company

was already well established in the 1880s and is still potent today.”

There it is: Austen as the quintessential English cultural ideal. Her

novels, set amongst the English middle and upper classes, were social

commentaries and microscopic studies about the infinite nuances of the

English class system, manners and mores – of the kind that conquered

countries and ruled an empire. They were also parodies of social

conventions, of aspirations invested in the values of the past.

Like most women of the 18th Century, Jane was confined largely to

home, reading books, playing the piano, writing plays for the enter-

tainment of her family who were “great novel readers and not ashamed

of being so.” Her social life consisted of supper parties that often ended

in dances, visits to neighbours in her beloved Steventon in Hampshire.

Rev. Austen had an income of about £600 a year. They were not

poor, but neither were they landed gentry. She had six brothers and a

sister; there wasn’t enough money for two dowries, so Jane and

Cassandra were expected to marry well. Money (the lack of it) and

marriage prospects are running themes in the novels. Marriage, being

“the pleasantest preservative from want”, determined women’s social

status. “A large income is the best recipe for happiness...” Or: “Single

women have a dreadful propensity for being poor, which is one very

strong argument in favour of matrimony.” And: “It is a truth universally

acknowledged that a single man in possession of a good fortune must be

in want of a wife.”

Marriage and motherhood must have weighed heavy on Jane’s

mind. A neighbour, Mary Mitford, described Jane as “the prettiest,

silliest, most affected, husband-hunting butterfly.” She had suitors and

had become fond of Tom Lefroy, a neighbour’s nephew, but marriage

between them was discouraged because neither had any money.

At 26, she accepted the offer of marriage of a wealthy landowner,

Harris Bigg-Wither, which would have set her up for life; she told him

the next day that she changed her mind. “Anything is to be preferred or

endured rather than marrying without affection,” she wrote. “A woman

of seven and twenty can never hope to feel or inspire affection again,”

she wrote in Sense & Sensibility.

She had become wedded to her writing instead. When she sold the

copyright of Pride & Prejudice, she told her brother Frank that she had

now earned £250 by her writing, “which only makes me long for more.”

If she were to remain single, “I shall rather try to make all the money

than all the mystery I can of it.”

More people now know about Austen from TV and film than from

her books. Her appeal is timeless. The books charm and enchant; they

are easy to read, but underneath the civilised lines of beauty, surface

pleasantries and genteel courtesies, when “life seems but a quick

succession of busy nothings,” so much of the interior life goes on.

Jane Austen gave us heart. Today, in our overhyped and overactive

universe, she reminds us that “there is no charm equal to tenderness of

heart.” In the dry spell of a truly English summer, she says “to sit in the

shade on a fine day and look upon verdure is the most perfect

refreshment.” With one of her books for company. ■


reviewliterature

JANE FOR ALL SEASONSBy Margie Collins

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Driving obliviously along, you obediently follow the clean-cut

directions being instructed to you from the invisible, lucidly

smooth and authoritative voice of your sat nav saviour. Fully

armed in hi-tech hands-free headgear, you are poised and prepared for

the inevitability of that deal-breaking phone call.

Blackberry on alert mode, you are closer to the profusion of contacts

adorning your digital phonebook than even physical proximity would

allow, despite being isolated in the middle of nowhere en route to the

brusque beckon call of a business meeting. A deft slight of hand, a swift

touch of the finger, and you are at the liberty of immediate company.

Laptop primed for action, you are a mere ‘plug in’ away from the

ubiquitous World Wide Web with the handy assistance of your portable

internet stick. Wire-free, socket-free, virtually thought-free; you are

capable of absolutely anything, absolutely anywhere as long as you are

never more than a few feet away from your trusty entourage of indispen-

sable equipment keeping you one button away from the rest of the world.

Gliding contentedly through the silicon valley of life, digital

technology not only surrounds us, it is us. Bombarded with emails, text

messages, blogs, twitter posts, Skypes and social networking logs, our

sense of contact is predominantly doused in the electrodes of a

microchip cosmos.

While convenience, efficiency and speed are at the forefront of

rapidly developing communications technologies and we are subjects

of an inherently effortless mode of contact, it seems that we are fast-

losing our clutch on the threads of some basic human skill sets.

As the gargantuan deity of technology towers over us, engulfing us

all in the smog of digitalisation, we are becoming shackled and

imprisoned by it as our dependence swells and our needs expand.

Slaves to technology, we are submitting weak-willed defeat to the

inescapable, unavoidable and shocking power it holds over us.

If you hit the pause button and take a minute for observation, it is

glaringly apparent that many of the technological inanities of our daily

lives are actually in-built, virtually as if we had been programmed to

switch on reactionary buttons to adapt to new, fully-integrated inven-

tions that shape contemporary living.

Not a moment’s hesitation is granted before the sat nav system is

sparked into action and leads you confidently to your destination

without any thought required on your part whatsoever. The notion of

picking up a road map and groping into the dusty corners of the brain

to kick start the long-lost navigational aptitude into gear seems

ludicrously futile, yet map-reading is an inherently basic human skill.

Similarly, as vocabulary is shortened, modified, simplified and

generally chopped around to fit snugly inside the 2 inch screen of your

mobile phone or Blackberry device, the human capacity to broaden the

language base and utilise wordmanship in all its embellished lustre is

slipping away letter by feeble letter. Reference books are virtually

obsolete – who needs a dictionary or encyclopaedia when Google lies

in faithful wait at the click of a mouse?

Pessimistic it may sound, but the facilities for communicating with

others are being taken over with rabidity by the medium of technology.

Sucked in with oleaginous, slithering ease, we fall as fish-like prey to

the huge gaping mouth of digitalisation, and in the process, we are

losing hold of the ability to communicate through more traditional

forms – in person, on the phone, by letter. It’s all too easy to make

remote contact with the bare lifting of a finger.

The days where pressing the red button on the remote control

simply turned the TV off are long behind us, and with 90% of UK

households captivated by the lure of digital TV like a small animal

caught in headlights, the raw, primitive faculty of the imagination is

being pushed to one side. High-definition games consoles, iPods,

portable DVD players, and full-blown entertainment systems provide

an infinite time-filler; initiative not required.

So engrossed are we by the burning necessity to be in unremitting

contact with digital technology that airlines are looking to feature a

facility to allow for in-flight text messaging, emails and internet access

– the standard plethora of entertainment devices not adequate for our

insatiable digital appetites.

One-click internet shopping makes it all too easy to splash the cash,

and without even having to part company with the sofa all provisions can

be delivered directly to your door; no physical exertion or communication

required. Unless of course you count the incessant contact between your

hand and the computer mouse as a genial source of interaction.

With the ability to pause, rewind and record live television, the

boundaries that were once firmly in place, confining society in a safe and

secure compound of reality, have been completely erased. Technology is

developing at such a whirlwind pace that we are blinded and impaired

by its ability to take control; and take control it most certainly will.

Taking one mild step beyond the warm parameters of luxury and

convenience that digital technology provides us with, and we enter a

distinctly precarious terrain percolated with controversy. While GPS-

integrated mobile phones might provide you with the reassurance that

you won’t get lost, they are also a commodity being tapped into by

some major companies as they fathom the lucrative potential to infil-

trate into people’s private lives.

Talk of tracking devices is thick in the entrepreneurial air, trans-

forming the in-built GPS on your mobile phone into a personal

tour guide. Software being pioneered by Dutch company

Sprxmobile, hoped to be launched on mobiles later this

year, provides access to a whole new world of infor-

mation, allowing you to point your phone’s camera up

a high street so that the image on the screen will be

overlaid with data that pinpoints ATM bank

machines, bars and shops, for example.

If pondering with indecision outside a

restaurant, the trusty directive of your

phone will impart some advice. With a

mere flash of the camera towards

the building, it will instanta-

neously reveal the menu and

reviews, and if any antisocial

diners inside are not able to

keep their straying fingers

away from Twitter, you

will be able to see what

‘tweets’ they are

posting. Pretty chic

technology, but it

may come at a

price.


LIFESTYLE DIGITAL

Wire-free, socket-free, virtually

thought-free; you are capable of

absolutely anything, absolutely

aanywhere as long as you are never

more than a few feet away from your

trusty entourage of indispensable

equipment keeping you one button

away from the rest of the world

The lost voice ofcommunication

Enjoy the lifestyle with

By Amy Kilpin

SMI_20:Layout 1 28/7/09 15:59 Page 92

Investing in your personal space as far as being able to predict your

movements is a marginally daunting concept, so where you would once

saunter into a shopping centre and have a leisurely browse, your phone

is straight onto you to alert you to potential discounts or offers at your

favourite stores, whether someone in your contact list is in the vicinity,

and where you might like to grab a bite to eat.

What exactly happened to making decisions for ourselves? And are

the good old fashioned routes of communication now but a faded

memory of a once-initiative-fulfilled bygone era? Such invasive software

will be able to accommodate for other measures, such as the ability to

track the whereabouts of an employee and the automated sending and

receiving of personal information without any prior authority.

Independence seems to be something shrinking down in the corners

of society as the digital age rages forth in bureaucratic rapture, stripping

us of our primeval abilities to fulfil basic tasks and apply a good spread

of knowledge, logic and analysis to make our way productively through

life’s challenges.

Spare a thought for the next generations to come – with interactive

sensor-reactive games consoles, wireless mobile phone internet access

with video streaming, miniscule digital music players, portable

DVD players and even the embryonic burgeoning of robots;

imagination will be something studied on a history

course. As technology literally does everything

for us, the notion of independent thinking

becomes an archaic concept.

It seems we are stepping through the doorway into the blinding

light of digitalisation, turning our backs on the raw substance of face-

to-face culture and embracing the cold new replacement for human

interrelations: technology. For most, it is a welcome elixir to soothe

away the pains and troubles of complex human thought and the appli-

cation of physical and mental energy, but a dormant poison is lying

deep underneath.

Seeping with lethal stealth through the veins of human communi-

cation, the bitter, molten metal of digital technology is darkening the

lifeblood of interaction into a dull, vapid automaton-like void.

Expediency may be the new existence, but sometimes it might be

prudent to question the need for technology to replace long-established

corporeal communication, before it’s lost in translation. ■

LIFESTYLEDIGITAL

JULY/AUGUST 2009 ISSUE 20 SHIP MANAGEMENT INTERNATIONAL 93


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LIFESTYLE Enjoy the lifestyle with

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Visit Montreal during the first two weeks of July and you could be

excused for thinking you had entered an entertainment whirlwind.

With some of the world’s best blues and jazz artists rubbing

shoulders with arguably the best circus company in the world, the hardest

thing on your mind is deciding what to see and what not to miss.

And that is before you consider the hoards of top notch restaurants,

bars and theatres all vying to attract your attention and your dollars, let

alone the collection of strange ‘red-lighted’ venues that pepper the

streets surrounding the Festival International de Jazz de Montreal,

which claim among other things, to satisfy the demands of a variety of

rubber-clad partygoers all looking for that special night out. Now that’s

what I call ‘tastes peculiar’!

Montreal is a city with Bohemian undertones, where its occupants

embrace music and culture like few others. But when you combine the

annual jazz festival, now in its thirtieth year, with what is the home of

the world famous Cirque du Soleil circus, you realise that Montreal has

a lot to offer all ages.

The lure of the circus is in evidence throughout the city. People

walk down the streets clutching monocycles and there is even an

academy of circus arts where, I am told, they originally drew the talent

from to populate the acts in the Cirque de Soleil.

Creativity, dazzle and daring—that’s what we've come to expect

from the Cirque de Soleil and, time and again, this fabulous troupe

continues to deliver. For nearly a quarter of a century, the Cirque has

wowed almost 90 million spectators around the planet with its jaw-

dropping performances. And in 2009, these masters of the big top are

celebrating a very special milestone—the opening of a 25th new Cirque

du Soleil show in 25 years! OVO is the name of Cirque’s new show, which unveils a colourful

ecosystem teeming with life, where insects work, eat, crawl, flutter,

play and fight… and look for love in a world of beauty and biodiversity.

Audiences can enjoy the thrilling acrobatics, awe-inspiring sets and

gorgeous costumes they’ve come to expect from this powerhouse

troupe, all under the Cirque’s signature yellow and blue tent on the

Quays of the Old Port.

OVO is a headlong rush into a colourful ecosystem teeming with life.

The underworld is filled with noisy action and moments of quiet emotion,

but when a mysterious egg appears in their midst, the insects are intensely

curious about this iconic object that represents the cycles of their lives.

Ovo may just be a three-letter word in Portuguese for egg, but as a

logo for the new, biodiversity-themed Cirque du Soleil teeming with

acrobats in dazzling insect costumes, it has the added advantage of a

middle letter that can easily sprout antennae and two "o"s that can

95

LIFESTYLE

Jazz Festival Fact fileThe gigantic summer music celebration

features 11 days of non-stop enter-

tainment, from noon to midnight, right

in the heart of downtown Montreal.

Several city blocs are closed to traffic,

as right of way is given exclusively to

pedestrians, creating a festive and

secure spot with cafés and bistros, an art

gallery, street performers and a musical

park for children. It’s the summer

celebration par excellence for people of

all ages and origins, a cultural breath of

fresh air, and a place for incredible

musical discoveries with influence such

as Jazz, Blues, Latin-Jazz, Brazilian,

Cuban, African, Reggae, Contemporary

and Electronica. The festival boasts

3,000 artists from 30 countries; more

than 650 concerts, including 450 free

outdoor performances; close to 2.5

million peaceful festivalgoers; 400

accredited journalists; 10 free outdoor

stages and 10 concert halls.


It is the jazz that attracts the vast

numbers of visitors to Montreal

every summer. Close to 2.5 million

to be precise, all transfixed and

mesmerised by a cornucopia of

jazz variations, themes, sounds,

sights and smells


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become eyes. OVO, the Cirque's 25th baby, has arrived, coincidentally,

during the company's 25th anniversary year. In its early years, the

Cirque only launched a show every second year. But after it began

installing permanent shows around the globe, the show count accel-

erated. Once OVO is under way, there will be 18 shows running consec-

utively, and by the end of the year there will be 20.

Cirque CEO Daniel Lamarre has been quoted in the Montreal press

as saying he expected ticket sales to hit 60% of capacity (230,000 for

the Montreal run) by opening night, with most performances becoming

completely sold out before the end of the run. After Montreal, OVO will

move on to Quebec City and Toronto before beginning its US tour.

But it is the jazz that attracts the vast numbers of visitors to

Montreal every summer. Close to 2.5 million to be precise, all trans-

fixed and mesmerised by a cornucopia of jazz variations, themes,

sounds, sights and smells. Yes smells because judging by the number of

barbecue stalls and food and drink outlets, there is plenty of refreshment

at hand and on tap, quite literally. The organisers of the event are proud

of its non-profit-making credentials. The 450 or so free concerts happen

because of the generosity of the sponsors and as a result of the

merchandise, in whatever form, that is bought on site. This year’s main

sponsors, somewhat surprisingly because of the recession but probably

less so when you consider the large volumes of steel and others metals

that pass by Montreal during the ‘Lakes’ season (essentially early April

to end-October – after that the St. Lawrence Seaway freezes), were

General Motors and Rio Tinto Alcan. To what extent the show had been

affected by the recession was difficult to say but according to one local

taxi driver, it was rumoured to have made a loss this year.

So supportive is Rio Tinto Alcan to the event that it has committed

over $6m in sponsorship monies until at least the summer of 2010. "We

are honoured to play such a key role in the 30th anniversary edition of

one of the world's premier music festivals, not only by offering free

outdoor concerts and events for the fourth consecutive year, but through

our support for the Festival's new permanent home, the Maison du

Festival Rio Tinto Alcan," said Jacynthe Côté, chief executive, Rio

Tinto Alcan. "Our four-year sponsorship commitment of over $6

million runs through to 2010 and reflects our unwavering support for

arts and culture in Montreal."

The new Rio Tinto Alcan stage, at the corner of Sainte-Catherine

and Jeanne-Mance, is the site of numerous free concerts throughout the

Festival. Rio Tinto Alcan was chosen to host the grand closing event on

July 12th, which was a a Cubana Fiesta, starring Afro Cuban All Stars

and Los Van Van, followed by Ben Harper and Relentless7.

So with 10 free outdoor stages and 10 concert halls all jam packed

with artists and musicians throughout the two week festival period, the

race is on to pick the best seats and spread the load to ensure your

stamina and your rhythm holds out. Pop megastar Stevie Wonder

opened this year’s event with a free concert on the opening day. Other

household names such as Tony Bennett, Jamie Cullum, Dave Brubeck,

Al Jarreau, Jeff Beck, Joe Cocker and Jackson Browne also topped the

bill albeit at some of the fee-paying theatres. And with prices as low as

Can$14 a ticket, the event was hardly breaking the bank.

Understanding the native French tongue of some of the performers

can be difficult but jazz is jazz in whichever language. It is the plethora

of raw musical talent that amazes visitors to this vibrant city and

extraordinary festival every year. If you miss a set on the main stages

your musical hunger will be assuaged by roaming jazz and blues bands

which camp by the side of the street or in front of the main stages and

entertain. And entertain they do, very well.

So let your Bohemian juices flow and close your eyes and enjoy.

Because with fine music, warm weather and the beer flowing, what

more could you ask from a typical Montreal summer. In this case, a

large umbrella but that’s another story. ■


LIFESTYLE

Audiences can enjoy the thrilling

acrobatics, awe-inspiring sets and

gorgeous costumes they’ve come to

expect from this powerhouse troupe,

all under the Cirque’s signature

yellow and blue tent


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