Thursday, 28 May 2009

Industry Snapshots

Coming up: anti collision device for whales and manatees: reports that scientists at Florida Atlantic University have mooted the idea of an alarm that could be installed on ships and stop them colliding with sea creatures. “The ‘danger zone’ for a marine mammal is the area of water stretching out from bow of the ship. Here, a phenomenon known as "acoustic shadowing" can reduce the noise coming from the ship's propellers”, scientists say. Basically, the ship's hull block the higher frequency propeller sounds of the propellers, and, since the lower frequency sounds produced by ships disappear close to the surface of the water, an effective silence zone is cast ahead of a moving ship. Whales and manatees seem to try to ‘hide’ in these quieter areas, which are actually the most dangerous as the ship continues to head towards them. A new device should fix this problem: it involves fixing a transmitter on the bow and filling up the silence zone ahead of the ship with a narrow beam of noise that whales and manatees in the path of the ship can hear, and which does not interfere with creatures in surrounding water. It has already been tested on some US navy vessels.

Tanker owners pore over IMO fine print in a possible bid to keep their single hulled tankers in service beyond 2010. The Gibson Tanker Report confirms, meanwhile, that there are some flag States that may allow single hulled tankers to remain in service until 2015. “Provision for these loophole extensions has always existed,” the report says, adding that ‘teenage’ tankers could continue trading “provided they meet strict classification inspection and have a condition assessment certificate.” Gibson says that although single hulled owners are examining options, it does not think many owners will extend the working life of their tankers in the end for two reasons: they will still need ports that accept their single hulled ships, and there is considerable double hulled new tonnage in the pipeline.

West Bengal Government to build new port at Hooghly mouth, reports the Economic Times, as Haldia continues to suffer because of a fall in channel draughts. "The port that we urgently require might not be as big as the deep sea port," state Industry Secretary Sabyasachi Sen told reporters, referring to earlier government plans of building a big seaport in the area. It is believed that the government is in a hurry to provide connectivity to the proposed Petroleum, Chemical and Petrochemical Investment Region (PCPIR) project that is being built near Haldia. The WB government wants to make the PCPIR project a chemical and petrochemical hub.

Indian Coastal Shipping well poised to take over from road transport on domestic long hauls, reports the Livemint Wall Street Journal. Quoting Saju Chacko of Caravel Logistics, the report points out that the cost of transporting containers from the North to the South can be almost halved by using a rail/sea combination instead of trucks. Indian coastal shipping’s market share in domestic movement is abysmal at present at just seven percent; comparable figures in Europe are around 43%. Besides Caravel, SCI, Shreyas, Seaways and Jindal Waterways are amongst many set to exploit this opportunity, the report says.

Meanwhile, back in the USSR: A retired Soviet naval officer has revealed that some Somali pirates have been trained at USSR naval schools. Rear Admiral Sergey Bliznyuk told a Ukrainian newspaper that he had personally come across some men he now believes are behind many hijackings, Fairplay reports. “There are many former military men among the Somalis who have perfected the tactics of sea combat,” he said. “The majority of these 40 or 50 year olds were trained in the former Soviet Union.” It is believed that the Soviets trained naval personnel in the days of President Siad Barre for a few other countries as well.



Friday, 22 May 2009

Industry Snapshots

Somali pirate attacks this year already higher than in the whole of last year, says the International Maritime Bureau’s Piracy Reporting Centre. In 2008, 111 attacks resulted in 42 hijacked vessels; there have already been 114 attacks with 29 hijacks in the first few months of 2009. An increase in pirate attacks off the Eastern coast of Somalia and higher levels of violence during attacks have been seen. Pirates seem to be firing more easily on vessels, with 54 such incidents reported in the first few months of 2009 compared to 39 in the whole of last year. Seafarers are at higher risk in other ways too: the number of hostages taken is already 478 this year, compared to 815 in 2008. “The level of attempted attacks shows that the pirate gangs have stepped up operations in order to secure a higher success rate. The number of cases in which shots were fired could indicate an increased willingness on the part of the pirates to use aggression to meet their ends,” says IMB’s Mukundan.

Panama creates registry for laid up vessels, reducing fees by almost half while reducing inspection and crew requirements for vessels taken temporarily out of service. In a statement, authorities said that the special registry will have a one year validity, renewable once on expiry. Owners who lay up vessels under this registry will still be required to comply with minimum safety and pollution prevention regulations, and will not be able to ‘use the vessel for navigation’. “We consider it was necessary to take administrative actions to mitigate the crisis and reduce ship owners’ actual financial load,” said a Panamanian official.

Baldry no more a bellwether of the world’s economy, says UNCTAD. According to the Geneva based United Nations Conference on Trade & Development, the Baltic Index has not followed industrial production for the last many years, and is out of touch with reality. The BDI, an index that tracks commodity freight and therefore signals the demand for law material, was long regarded as a first indicator of the state of the global economy, as demand for raw material was supposed to reflect consumer demand. Alas, no more. UNCTAD says, "Observing the development of the BDI and its increased volatility over recent years, it is perhaps no longer the excellent indicator that it was during the period 1985-2002. The BDI as a compendium of charter rates reflects not only changes in demand for raw materials but also changes in the supply of shipping capacity. This contributes to the fluctuations of the BDI and thus reduces the usefulness of the BDI as a leading indicator for industrial production." Many agree, saying that with too many players speculating in the market with no interest in the shipping industry, and with the huge oversupply of tonnage globally, the Baldry’s heydays as the ‘hidden indicator of the markets’ may well be over.

Obama scraps Loran C to save US$35m annually. US officials said later that the LoranC was now obsolete, having been replaced by the GPS. The move is supposed to save almost 200 million US dollars over the next five years. Some US senators have objected, pointing out that the proposed transition to eLoran was supposed to augment security, safety and environmental protection as well as to create a backup for the GPS, and that the programme needs to be continued.

International Convention for the Safe and Environmentally Sound Recycling of Ships approved by sixty three governments. The UN convention on greener ways of scrapping ships sets standards for scrap yards and recycling units worldwide. The move comes even as some member States and NGOs ask for even higher industry standards, demanding that ships be not broken on open beaches without removing all hazardous material on board. Many of the recycling yards are located in South Asia, where over a thousand ships are scrapped annually and where labourers are regularly exposed to environmental hazards. Besides higher safety and environmental standards and practices, industry will have to invest in better training and protective equipment as well.

Total Lubmarine develops biodegradable lubricants for ships. The well known marine lubricants company says that ships will now be able to sail with much lesser damage to the environment. The products developed after many years of research include Carter Bio, a high gear performance lubricant; Biohydran TMP, a high-quality hydraulic lubricant; and Biomultis SEP 2, an extreme pressure multipurpose grease. Patrick Havil of Lubmarine, says, “The commercial incentives to use such lubricants are now greater than ever, and include the possibility of reduced fees for ‘green’ ships in certain ports.”


Friday, 15 May 2009

Europe Criminalises Pollution

Strasbourg May 5: In a move that could have far reaching implications for the shipping industry, the European Parliament adopted a directive today under which EU Member States will be required to toughen their laws and penalties on maritime pollution. Disconcertingly for the maritime industries, criminal penalties are now being introduced in the event of deliberate pollution and even in the event that the pollution is caused by negligence.

The directive was carried by a majority of 588 votes in favour, 42 against, and 3 Member’s of the European Parliament (MEPs) abstaining. EU Members are now bound to legislate to comply with the directive within one calendar year of the date of its entry into force.

The directive was tabled by Spanish MEP Luís de Grandes Pascual; MEPs voted to levy criminal sanctions for serious cases of maritime pollution and to toughen penalties for even minor cases if these are repeated, deliberate or the consequence of serious negligence. Member States will decide penalties, although the strongly worded directive asks that these be "effective and dissuasive". The new rules will cover ship owners and others such as cargo interests and Classification Societies. "Repeated minor discharges made with intent, recklessly, or due to serious negligence must be considered criminal offences and punished with effective, proportionate and dissuasive penalties," says a Press Release issued by the Parliament.

Mr. Pacual said that Europe had made "A big step forward to stop maritime pollution. For the first time, we will have compulsory criminal penalties for all the responsible parties in the maritime sector," he commented. Although the directive was first proposed early in 2007, industry observers have believed that support for its implementation had been gaining momentum in recent months.

Many MEPs are understood to be now pushing for a quick adoption of the directive; many have complained that ship owners have been relatively unconcerned about maritime pollution since EU penalties were not stringent enough. Criminalising the issue, though it may sent shudders down many a Captain’s spine, is the way the Europeans have chosen to go.

Snippets from the European Parliament Press Release:

• The aim is to deter parties who would rather pollute because paying an administrative fine costs less than obeying the law.
• Criminal penalties: Member States to regard serious cases of pollution as criminal acts.
• Distinction remains between serious and "minor" cases (those not resulting in a deterioration of water quality)
• Minor cases are nevertheless to be regarded as criminal offences if they are repeated, deliberate or caused by serious negligence.
• Ship source discharges of polluting substances shall be regarded as criminal offences if they are committed with intent, recklessly or with serious negligence and result in serious deterioration of the quality of the water.
• Less serious cases of illicit ship source discharges of polluting substances that do not cause a deterioration of the quality of water need not be considered as criminal offences, and shall be referred to as "minor cases". However, repeated minor discharges made with intent, recklessly, or due to serious negligence must be considered criminal offences and punished with effective, proportionate and dissuasive penalties if they cause deterioration in the quality of the water.
• The Parliament insists that Classification societies or owners of cargo to be included in the scope of the Regulation.



Industry Snapshots

Shipbuilding in Gujarat set to take off with major plans to develop the Narmada Estuary near Dahej. A first for India, the Marine Shipbuilding Park (MSP) is a Rs 1,000 crore Gujarat Maritime Board project for developing common infrastructure facilities for shipbuilders, reports the Times of India. Besides the ABG Shipyard currently existing, a dozen more have been mooted. The available depths of water are about ten metres around Dahej, so larger ships will not be built here, at least initially. India builds just one percent of the global fleet right now; with ABG planning expansion and with many other proposals expressing interest, this move should help raise that dismal figure.

Escort services prove useless as Pirates hijack the cargo ship ‘Victoria’ proceeding under convoy in the Gulf of Aden. The EU naval forces NAVFOR confirmed that the ship was taken within ‘a few minutes’ from within the security corridor, a scrambled helicopter arriving too late to help. The German owned and Antigua and Barbuda registered general cargo ship was bound for Jeddah with a cargo of rice. The Romanian crew are all reportedly unhurt.

Bulk carrier and general cargo fleets to grow in spite of market turmoil, says a report by Fairplay Research, which feels that although scrapping of ships is likely to increase and orders likely to be delayed or cancelled, the overhang of the huge shipbuilding supply in the pipeline will affect a net increase in tonnage. New ships also tend to be larger. Analysts think that this trend will continue over the next three years or so, when increasing demand for infrastructure projects now kick started by stimulus projects around the world should firm up rates. The report says that reefer vessels may be on the decline anyway, with refrigerated containers taking over a large chunk of their business. China remains at the top spot in building bulk carriers and general cargo ships, accounting for almost half the current tonnage on order.

Indian port growth slows down as economic decline bites, reports the Hindu Business Line, saying that traffic growth in the current financial year 2008/09 is just around two percent. Of the dozen major ports, seven, including JNPT, Kandla, Mormugao, Tuticorin, Paradip, New Mangalore and Chennai gained, while the losers included Mumbai, Kolkata, Kochi, Visakhapatnam and Ennore. Kandla handled the largest volumes, but Mumbai Port was hard hit with a drop of around nine percent. Worryingly, the Hindu points to the underutilisation of modern facilities in some ports on the East Coast while reporting congestion on the West Coast. With major investments in port infrastructure in the pipeline, many feel that better infrastructure and a better utilisation in existing facilities is critical. Critics also point to delays and higher costs in India as a continuing drag: it takes around three weeks to clear cargo in India against three or four days in Singapore. The question needs to be asked, “Do we need to build so many additional berths, or better utilise the existing ones, removing regulatory bottlenecks and improving infrastructure and connectivity where needed?”

CEO of Liberty Maritime asks US congress to remove obstacles to ship owners arming crews. Philip J. Shapiro made called the Maersk Alabama incident a ‘game changer’, and aired footage of the attack on the Liberty ship ‘Liberty Sun’ two days after the Alabama incident, The raw video footage was shot by a bridge team member and carried on CNN earlier; it shows reactions on board as the vessel was hit by four rocket propelled grenades and automatic weapons fire in the aborted attack. Mr. Shapiro has now pushed for arming crews in self defence. He also mooted the idea of using Government or privately employed security personnel to protect US ships. Saying, “Prohibitions contained in U.S. and foreign laws and existing legal liability make arming crew members very difficult if we are to abide by current law”, he asked that this be changed.

Piracy or Suicide? Amongst news of continuing attacks and hijacks off Somalia, some odd news. In one incident which we at Marex call the ‘French Kiss’, the French Navy killed ten pirates and captured eleven others after the would be hijackers mistook the French frigate ‘Nivose’ for a merchant ship. Unsurprisingly, they were clobbered. The incident occurred almost 500 nautical miles from the Somali coast. In the second incident, Pirates fired small arms at the U.S. Navy supply ship ‘Lewis and Clark’ off the coast of Eastern Somalia. The ship speeded up and escaped. Interestingly, the ‘Lewis and Clark’ was earlier used as a prison for captured pirates, leading to speculation that this may have been an act of revenge. On the other hand, maybe the pirates, many reportedly very young, were chewing the stimulant ‘khat’ as usual, which would make this attack an act of Dutch courage.


Friday, 8 May 2009

‘Maersk Alabama’ Cook sues Owners and Manning Agents after Pirate Attack

The Chief Cook on the ‘Maersk Alabama’ that was hijacked off Somalia has sued Maersk and Waterman Steamship Corp., the company that supplied the crew, for putting him and the other seafarers on the Alabama knowingly in danger. Hicks’ April 27 lawsuit seeks at least $75,000 in damages. Equally interestingly, it seeks ‘improved safety’ for ships against pirates. The two companies involved have declined to comment, saying that the case that is now subjudice.

Richard Hicks, the fifty three year old US Chief Cook, says the owners did not do anything to improve safety measures for vessels sailing along the Somali coast. Quoted in a Palm Beach newspaper, Hicks says, "We've had safety meetings every month for the last three years and made suggestions of what should be done and they have been ignored." He added that he was unsure if he would be returning to sea.

Hicks’ attorney Terry Bryant says that the US unit of AP Møller Maersk knowingly exposed employees of Waterman Steamship to imminent danger and took no steps to provide appropriate security and safety. Instead, by only relying on ‘after the fact rescue operations’, they exposed Mr. Hicks to greater danger than he would otherwise have been exposed to. The attorney also claims that the cook sustained “serious and permanent injuries” when he was “thrown about” in a struggle with a pirate.

In a case that drew international attention, the Alabama was hijacked on April 8 and Capt. Richard Phillips held hostage before U.S. Navy SEAL snipers on the USS Bainbridge shot three Somali pirates and freed the Master after five days in captivity.

The lawsuit wants the two companies to improve safety for ships by using barbed wire, armed guards, and armed crew and by routing ships away from Somali waters. In separate developments, Maersk has said, during its inquiry into the hijack that it would not allow armed crews, saying, “Weapons onboard could lead to a dangerous escalation and raise a number of multi jurisdictional legal issues.”

The legal basis for the lawsuit has been explained by Jones Act attorney Steve Gordon writing for gcaptain, who explains that under the Jones Act, a maritime employer owes an employee a safe workplace and an a ship that is not unseaworthy. Unseaworthiness, explains Mr. Gordon, includes a ship that is “not fit for intended purpose”, so the question becomes, was the Maersk Alabama unseaworthy because she was asked to transit pirate infested waters?

Observers say that Ship owners and managers are understandably alarmed at the possible economic repercussions if a precedent is set by Hicks’ lawsuit. With hundreds of sailors held hostage in Somalia, and with thousands hit annually in piracy attacks, the cost of potential lawsuits could run into millions. Coupled with the present economic climate and piracy insurance premia that are rising and widening to cover larger areas of the Indian Ocean, the fallout could well be catastrophic. Thousands of ships carry a huge chunk of global oil and other cargoes through the affected region annually.

Meanwhile, Terry Bryant blames the owners for not doing enough. Speaking the Palm Beach Post, he says that the owners "send these ships into very dangerous waters and leave them defenceless.”They're basically giving them squirt guns on steroids, against AK 47s."