Annual English Edition

N A F T I K A C H R O N I K A

Everything you wanted toknow about Greek Shipping(and didn’t know who to ask)

Commissioner

MariaDamanaki

‘’Our country needs

a real change‘’

‘’Our focus should not be

on what our partners say or do‘’

‘’We need a new, fair and sustainable

model‘’

6Á

Ñ.

ÖÕ

ËË

ÏÕ

130 •

05/2

010

ww

w.n

-c.g

r

The International Shipping Exhibition 7-11 June 2010

Visit us at Stand No 500 D

MMAA

YY 22

0011

00ÍÍ

ÁÁÕÕ

ÔÔÉÉÊÊ

ÁÁ ××

ÑÑÏÏ

ÍÍÉÉÊÊ

ÁÁ

CMYK

Annual EnglishEdition

NAFTIKA CHRONIKA

Everythingyou wanted toknowaboutGreek Shipping(and didn’t know who to ask)

Commissioner

MariaDamanaki

‘’Our country needs

a real change‘’

‘’Our focus should not be

on what our partners say or do‘’

‘’We need a new, fairand sustainable

model‘’

6Á

Ñ. Ö

ÕË

ËÏ

Õ 1

30 •

05/2

010 w

ww

.n-c

.gr

The International Shipping Exhibition 7-11 June 2010

Visit us atStandNo500 D

MMAA

YY 22

0011

00ÍÍ

ÁÁÕÕ

ÔÔÉÉÊÊ

ÁÁ ××

ÑÑÏÏ

ÍÍÉÉÊÊ

ÁÁ

CMYK

08⏐⏐ Editorial

12⏐⏐ 2010 the year of the seafarerBy By Efthimios E. Mitropoulos, Secretary-General,International Maritime Organization

16⏐⏐ The Integrated Maritime Policy is one of thekey challenges and priorities of my mandateAn exclusive interview with Commissioner forMaritime Affairs and Fisheries Maria Damanaki

22⏐⏐ Seas and oceans are part of our cultureBy Rodi Kratsa, Vice-president of the EuropeanParliament

26⏐⏐ European Maritime Policy: Motion for aEuropean Parliament resolution on strategicgoals and recommendations for the EU'smaritime transport policy until 2018

34⏐⏐ A new international agenda for shippingpolicy and regulation By Albert Bressand

38⏐⏐ Asian waves over international shippingBy John C. Pachoulis

40⏐⏐ 2010-Latest developments in Greek shippingBy George Xiradakis

44⏐⏐ Revisiting the Greek crisis: Did the eurozonetrade without coherence?

48⏐⏐ The recent Greek experience of financialwarfareBy Alkis Corres

52⏐⏐ Is marketing a compass or a pain for shipping?

56⏐⏐ Special report: The shape of things to come

64⏐⏐ Supporting the maritime industry By John Tzoannos

68⏐⏐ IOPCF Oil Spill Cost Data: Empirical Analysisand Debate at the IMO By Christos A. Kontovas, Harilaos N. Psaraftis andNikolaos P. Ventikos

76⏐⏐ Developments at IMOBy Panos Zachariadis

80⏐⏐ Green ShippingBy Emmanouel Papalexis

84⏐⏐ European port policy at crossroadsBy Thanos Pallis

86⏐⏐ People see their holidays as a necessitynowadaysAn interview with Charis Papacharalampous

92⏐⏐ Classifications societies: Entering (and surviving) challenging times

108⏐⏐ Sale and purchase market review for the first quarter of 2010By Takis Efstratiou

114⏐⏐ LPG market overview for Q1 2010By Christos Triantafyllidis

120⏐⏐ Gearing up for the Cyprus PresidencyBy Vassilis Demetriadis

124⏐⏐ Cyprus shipping-National DevelopmentsBy Thomas Kazakos

126⏐⏐ An economist's eye for the shipping guyBy Stavros Tsolakis

130⏐⏐ Evaluation of competence of marine engineers on maintenance sectorBy D. E. Gourgoulis, C.A. Schinas, G. P. Gotzamanis, C.G. Yakinthos

134⏐⏐ Market news

Publications

C O N T E N T S >> I S S U E 1 3 0 >> M A Y 2 0 1 0 >> ΚΩΔΙΚΟΣ 1449>> Ιδρυτής: Δ. Ν. Κωττάκης / Έτος Ιδρύσεως: 1931

ΒΡΑΒΕΙΟ ΑΚΑΔΗΜΙΑΣ ΑΘΗΝΩΝ / ΜΕΤΑΛΛΙΟ ΠΟΛΗΣ ΑΘΗΝΩΝ / ΤΙΜΗΤΙΚΗ ΔΙΑΚΡΙΣΗ ΙΔΡΥΜΑΤΟΣ ΜΠΟΤΣΗ

Published byGratia Publications Ltd.

Editor:Ioanna Bissias Director: Ilias BissiasEditor in Chief:Liza Marelou Creative Director:George Paraskevas Contributors:Alkis KorresGeorge BanosJohn C. Pachoulis Advertising Managers:Chris Kapadais Demetra Tsakos Translations:Dora TsepaJonathan Smith

Gratia Publications Ltd.132 Syngrou Avenue176 71 AthensΤel. (+30) 210 - 92.22.501, (+30) 210-92.48.006Fax: (+30) 210 - 92.22.640 e-mail: editors@naftikachronika.gr www.naftikachronika.grWeb strategy development by ΙΤ

While every effort has been taken to ensure the accuracyof the information containerd in this magazine, noresponsibility can be accepted for errors, omissions orinaccuracies. Opinions expressed herein are those of theauthors and are not necessarily those of GratiaPublications Ltd.Reproduction in whole or in part is prohibited withoutthe prior written permission of the publisher.

Greeks are number one on the sea and that is not only inPiraeus or in the coastal areas of Attica. Shipping does notonly affect those employed in this economic sector either. It concerns

the whole of Greek and European society, who sadly ignore the basic ele-ment that boosts not only our national economy on a local level, but alsoEuropean and international commerce. Shipping is ignored, overlooked and

in many ways looked down on as if it were a minor or even marginal sectorof the European economy and society.

There have been many recent campaigns aimed atattracting young people to the merchant

marine and at informing the public aboutall the possibilities offered by a career inshipping. Despite these efforts, the celebrationsfor both the European Maritime Day by the EU lastMay and by IMO last September have not been

able to match the expectations of the inspired

EDITORIAL

Facing our pastmay be the key for our future

people who instituted them. Despite the com-mendable enthusiasm to inform the public, theyounger generation seems to ignore the impor-tance of the sea or of maritime trade; and all thisin a continent that has always depended on ship-ping for its economic survival.

During a recent conference on BusinessHistory in Athens, lecturers from all thecorners of Europe stressed the impor-tance of studying and teaching Business Historyin this modern competitive environment. All theparticipants were of the opinion that EconomicHistory does not only concern historians but alsoeconomists and other academics who wish tocomprehend the primary sources of History andcombine experience with knowledge.

Younger people should not only be aware of their roots and

past. They should also realise the importance of those

financial sectors that can be counted on to hold the fort in

these hard times. Shipping is one of the few sectors that

quietly go about their business, continuing to bring pros-

perity to Europe.

Ν.Χ.10

EDITORIAL

Unfortunately, however, many stu-dents are completely disinterested inHistory. It might be the teaching methodolo-gy, or the fact that many of the History books arenot relevant to the demands and interests of theyounger generation. Many young people thinkthat history is only names and dates and that itdoes not offer them any practical knowledge orskills. They do not understand that History willoffer them valuable insight into modern institu-tions and societies, and that it will teach themabout trends and experiences of the distant past.Perhaps the educational system is at fault here;or perhaps teachers need to follow a more mod-ern methodology.

History refers to the understanding ofwhat a nation is and of how to solvethe problems of the present based onthe knowledge of past, so as to facethe challenges of tomorrow. In particular,Economic History is a course that should betaught throughout Greece and Europe. In ourmodern society, knowledge of how the econo-my works is necessary to all economic sectors.

Greek Economic History is not merely an inter-esting school subject; it is also essential knowl-edge that will help the young to see where wehave excelled as a nation and where we havebeen hindered. Within this school subject, Greekshipping should enjoy a prominent position.

The importance of introducing Economicand Business History in all our Universitiescannot be stressed enough. Nevertheless,throughout Europe, those two University coursesare optional and rarely compulsory. In GreekMerchant Marine Academies, Greek MaritimeHistory is not taught at all! Our future seafarerstotally ignore our roots and traditions.

Many will ask themselves why youngpeople should need to know about theshipping tradition of the islands of Kassos,Andros, Cephallonia or Oinousses. Why should

they know who are the most important busi-nessmen in the shipping sector? Why shouldthey learn about past recessions? It is quite evi-dent that knowledge of the past can act as ourstrength for the future and may be our shield forthe present.

This year European Maritime Day willbe celebrated throughout Europe.Let us hope that the leaders of Europe encour-

aged by their business and academic communi-ties will allow research of these two aspects ofhistory, rather than contribute to their declineand disappearance. Younger people should notonly be aware of their roots and past. Theyshould also realise the importance of thosefinancial sectors that can be counted on to holdthe fort in these hard times. Shipping is one ofthe few sectors that quietly go about their busi-ness, continuing to bring prosperity to Europe. Itis disappointing that most European countriesignore this.

In Greece, some people have complete-ly forgotten legendary personalitiesand the glory of seafaring. With modernteaching methods, well-written books andinspired educationalists, the economic, businessand shipping history of Greece will attract youngpeople to the forgotten sectors of the Greek pros-perity. If we do not comprehend the legendaryand ispirational sea voyage of the Greeks, howwill be able to maintain it in the future?

Ilias Bissias

Ν.Χ.14

coordinating measures to resolve the unprece-dented and complex situation that, for more thanfive years, has rendered voyages off the coast ofSomalia a very dangerous venture indeed. I hopethat the implementation of the IMO and industryguidelines, together with the support of the UNSecurity Council and other political and militaryentities, will assist in tackling this modern-dayscourge effectively.

While we appreciate the naval opera-tions undertaken to protect ships, theshipping industry itself must also raise its owndefences by effectively making use of the recom-mended shipping routes (in particular, theInternationally Recommended Transit Corridor forships transiting the Gulf of Aden); and also bymaking use of the reporting mechanisms andtaking all necessary preventive, evasive anddefensive measures. Our concern should, above

all, be for the safety of life at sea and the well-being of the seafarers, fishermen and passengersinvolved and their families. We should, therefore,not rest unless and until all the necessary steps tosuppress and eradicate piracy have been taken.

In this respect, IMO is implementing a count-er-piracy project and has established a specialunit to support the organization's efforts to givefull and effective implementation of the 2009Djibouti Code of Conduct concerning the repres-sion of piracy and armed robbery against ships inthe western Indian Ocean and the Gulf of Aden.

We are also participating fully in otherinternational efforts to combat piracy,such as, for example, the Contact Group on Piracyoff the Coast of Somalia, which was created inJanuary 2009 pursuant to UN Security CouncilResolution 1851 to address technical and legalaspects of the piracy issue.

What is happening at seain the area surroundingSomalia is of great concernto IMO, which has played, andis determined to continue to play,a pivotal part in all efforts aimedat promoting an appropriate,coordinated internationalresponse to this disconcertingsituation. The same applies tothe worrying situation that, forsome time now, has beenobserved in the Gulf of Guinea,where there has also been anunacceptably high level of acts ofpiracy and, more frequently,armed robbery against ships.Whereas the attacks off Somaliaare focused on hijacking of shipsand holding of seafarers for ran-som, the attacks in the Gulf ofGuinea are motivated by theft;

tend to be more violent; and pose a potentialthreat to the security of the energy supply in, andfrom, the region and to the marine environment.IMO, in co operation with the 25 member Statesof the Maritime Organization of West and CentralAfrica, is seeking to address these issues throughcapacity building and developing a regional"coast guard function network" addressing awide range of maritime safety, security and lawenforcement challenges.

While the aforementioned three themesoccupy our thoughts and minds, IMO'swork to enhance maritime safety andsecurity, facilitate international maritime traffic,progress legal issues and promote our technicalco-operation activities continue apace. Allinvolved in the industry have a role to play inachieving the IMO objectives of safe, secure andefficient shipping amid clean seas - and Posidoniawill provide an excellent opportunity for them tomake their contribution. �

Whereas the attacks off Somalia are focused on hijacking of ships andholding of seafarers for ransom, the attacks in the Gulf of Guinea aremotivated by theft; tend to be more violent; and pose a potentialthreat to the security of the energy supply in, and from, the regionand to the marine environment.

INTL FORA

EXCLUSIVE INTERVIEW

ILIAS BISSIAS INTERVIEWS EUROPEAN COMMISSIONER FOR MARITIME AFFAIRS AND FISHERIES MARIA DAMANAKI

The Integrated Maritime Policy is one of the key challenges

and priorities of my mandate

Ν.Χ.16

nal open market can bring. Even intra-EU trans-port is subject to a set of complex administrativeprocedures. The Action Plan on European mar-itime transport space without barriers, which wascommunicated in 2009, aims to reduce and sim-plify these procedures in order to make maritimetransport an attractive option and boost the sec-tor. The Commission is planning to propose adirective on this issue next year. We are currentlyworking on this in collaboration with the otherCommissioners concerned, such as theCommissioner for Transport and for Competition.

How will you manage to complete the frame-

work for a common European maritime poli-

cy with limited funding?

At the time of the establishment of the currentfinancial framework, the Integrated MaritimePolicy (IMP) did not exist as a fully fledged policyand no resources were specifically earmarked tofinance it. However, we have been able to use amargin of flexibility within existing instrumentsto finance certain pilot projects. As the IMP devel-ops, we will need to look at the various fundingoptions. We are planning to propose a regulationin that respect in the course of 2010. However, Iam convinced that the added value and the suc-cess will not come from the size of its funding, butfrom the leverage effect it can bring by creating anew, more complete set of maritime initiativesand internal coherence.

17 Ν.Χ.

What are the main priorities of your policies

for shipping in the next four years? Do you

think that the EU desires to preserve the

strength of the European shipping industry?

Will EU policies take into consideration the

special conditions of this economic sector in

comparison to the rest of the economy?

The maritime sector lies at the core of Europeansociety and its economy. A very large share of theEU population relies on it, directly or indirectly. Notonly should the EU aim to maintain this tradition,but it should seek to strengthen its position in theglobal stage. The Integrated Maritime Policy (IMP)contributes to this goal by providing coherencethroughout all our sectoral policies referring toseas and oceans: transport, tourism, fisheries,energy, environment, research, and coastal devel-opment. Driving forward the IMP is one of the keychallenges and priorities of my mandate. In thisway, we will put the maritime sectors and coastalregions, which are traditionally at the periphery, atthe centre of a new, dynamic and inclusive policyfor blue growth and jobs. The main action fieldswe have set for the coming years are: the promo-tion of an Integrated Maritime Governance, thedevelopment of cross-cutting policy tools, and thepromotion of co-operation and dialogue withthird countries that share the same maritimebasins as us.

During his mandate, Commissioner Borg had

proposed the creation of a common maritime

transport space without barriers. Is there still

the plan for a common market, as regards

shipping services in the EU?

Unlike other means of transport, sea transporthas not yet reaped the full benefits that the inter-

The recently appointed European Commissioner for Maritime Affairs and FisheriesMrs Maria Damanaki is a well known Greek politician. In her new capacity, she will promote in cooperation with the Vice President of the Commisision Mr. Siim Kallas the new policies

that will effect the everyday life of the European shipping industry. A hard worker, a good listener and a reasonable negotiator, Mrs Damanaki will face the challenges of our times backed

by her vast knowledge of politics and international affairs.

Blue Growth is about developing the policy tools thatwill allow us to exploit andexpand all the advantages thatthe seas can offer us. Its threemain goals are, (a) to createhigh quality jobs in order totackle growing unemploymentin the maritime sectors, (b) toinvest in innovation in order tofoster scientific and economicdevelopment, and (c) to promote a sustainable form ofdevelopment.

Ν.Χ.18

What will be your collaboration with Vice-

Presindent Siim Kallas and in which areas are

you planning to co-operate with him?

We have an excellent collaboration with Vice-President Kallas, no less within the framework ofthe Steering Group of Commissioners for theIntegrated Maritime Policy. Some of our respon-sibilities are very closely interlinked. This proxim-ity gives us opportunities to co-operate andexamine together different aspects of the sameproblems. This spirit of collaboration lies at thecore of the IMP approach, and the Commission'stradition of collegiality. Obviously, in purelytransport matters, Vice-President Kallas isresponsible for holding talks with the Committeefor Transport. All signs indicate that theCommittee for Transport of the EP will be of greatsupport to the Commission in policy areas suchas maritime transport safety.

Can you elaborate on your aspirations on the

so-called Blue Growth policy?

In a nutshell, Blue Growth is about developingthe policy tools that will allow us to exploit andexpand all the advantages that the seas can offerus. Its three main goals are, (a) to create highquality jobs in order to tackle growing unem-ployment in the maritime sectors, (b) to invest ininnovation in order to foster scientific and eco-nomic development, and (c) to promote a sus-tainable form of development. To achieve thesegoals and the overarching objective of BlueGrowth, we will deliver a vast array of policy toolsand strategies. For example, by promoting one ofour cross-cutting tools -maritime spatial plan-ning- we can unleash the potential of our seas inorder to develop transport, energy, fisheries andresearch projects in the same sea area and in theframework of an integrated sea basin strategy, as

is being done in the Baltic Sea. The integratedmaritime surveillance system will facilitate theimplementation of all our policies as we are nowtrying to do in the framework of a pilot project forthe Mediterranean. As I see it, Blue Growth is notjust an option. It is a necessity to drive forwardand reinforce all aspects of the maritime sector.

You are a chemical engineer and an expert

on Greek trade and employee relations.

Which is the future of the European ship-

building industry? Are there ways of over-

coming this current recession?

The global recession has hit Europe very hard. TheEuropean shipping industry was no exception.Fortunately, we seem to be walking out of thetunnel, slowly but steadily. I have full confidencethat the European shipping industry, with itslong history and dynamism will come throughthe crisis. The current efforts of the EuropeanCommission to improve and simplify the regula-tory framework will help the process of securingthe competitiveness of the sector, by reducingoperational costs and facilitating long-termplanning and predictability.

We have been informed that you have held dis-

cussions with the General Secretary to the IMO

Mr Mitropoulos. What are your opinions about

I was very glad to meet the General Secretary of the IMO for the firsttime since I was appointed European Commissioner. I consider it asthe beginning of a regular and fruitful co-operation between our twoorganisations. Needless to say that the International MaritimeOrganisation is a major player in the global Maritime Community.

EXCLUSIVE INTERVIEW

the future relations between IMO and EU?

I was very glad to meet the General Secretary ofthe IMO for the first time since I was appointedEuropean Commissioner. I consider it as thebeginning of a regular and fruitful co-operationbetween our two organisations. Needless to saythat the International Maritime Organisation is amajor player in the global Maritime Community.We fully support its work, and in fact most of ourcurrent maritime safety is based on measuresintroduced by the IMO. A next step that I want towork on, particularly in the context of the exter-nal dimension of the Integrated Maritime Policyof the EU, is to improve the EU visibility in theIMO. In the meantime, the EU should continue itsactive contribution to the work of thisOrganisation particularly in subjects of highpolitical priority, such as the implementation ofsafety regulations, the training of seafarers, the

reduction of greenhouse gases on a global scaleor the fight against piracy.

What are your suggestions for the strength-

ening and the promotion of the European

Maritime Day?

The European Maritime Day, which has been tak-ing place in May each year since 2008, providesus with a formidable opportunity to gather allthe stakeholders around the same table to dis-cuss the progress achieved, and the future stagesof all aspects of Maritime Policy. Despite itsyoung age, this event has already provenextremely popular and fruitful. Three years intoits existence and we are now examining ways toimprove not only its visibility but even its organ-isation, so that we can make the most out of it forthe stakeholders and the European citizens ingeneral.

The greek Union of Marine Enterprises has

insisted that our national legal framework

should fully adopt and comply with EU

Regulation 3577/92 in order to deal with the

problems of passenger shipping. Are you in

agreement with this request?

This is a complex, ongoing matter, but we canalready say that some of the issues have beensolved, which for me is a positive sign of every-one's collaboration. The Commission will contin-ue to promote the full implementation of theEuropean legislation by finding a balanced solu-tion. The solution needs to take into account theprinciple of freedom to provide services of fullquality and safety and the concern of the Greekauthorities regarding the completeness of mar-itime services with islands and the needs of serv-

ice of general interest.

What is the general climate towards Greece

in the EU, at the moment?

Do you think that the EU wants to punish or

help Greece?

Greece is going through one of the most difficultphases in its recent history. Our European partnersrecognise that, and want to support us throughthis crisis. In that sense, there is absolutely nodoubt that the European Union wants to helpGreece. However, I think our focus should not beon what our partners say or do. Our main concern,as a nation, should be to go beyond the urgentmeasures which the government has had to take.Our country needs a real change. We not onlyhave to face the financial deficit but the generaldeficit in our perspective. We need a new, fair, andsustainable development model. �

Ν.Χ.20

Greece is going through one of the most difficult phases in its recenthistory. Our European partners recognise that, and want to supportus through this crisis.

EXCLUSIVE INTERVIEW

As every year, the European Maritime Day will be celebrated on the

20 May giving visibility to the sea and the maritime sector and raise

awareness of their importance among European citizens. For Europe,

shipping has been one of the key stepping stones to economic

growth and prosperity throughout its history. Maritime transport

services are essential in helping the European economy and

European companies to compete globally. Moreover, shipping and

all related maritime industries are an important source of revenues

and jobs in Europe. Seas and oceans are also part of our culture and

important perspective of our future as well.

Ν.Χ.22

Seas and oceans arepart of our culture

BY RODI KRATSA

Vice-President of the European Parliament

EUROPEAN MARITIME DAY

A llow me to remind you that the EuropeanMaritime Day was established, following

my proposal which dates three years back, joint-ly by the European Council, the EuropeanParliament and European Commission in 2008 aspart of the EU intergraded maritime policy.Through this initiative, we are aiming to raiseawareness of the importance of the Europeanmaritime sector for the European economy aswell as to highlight its fundamental role for theeconomic development, social and territorialcohesion, competitiveness and more jobs. In par-allel, we ought to bring out the environmentalthreats deriving from the land and particularlythe coast activities but also from the maritimeactivities and commit for the promotion of a har-monic sustainable maritime development.

In my capacity of Vice-President of theEuropean Parliament, I had the honor to repre-sent our Institution last year in May 2009, at thecelebration that it was held in Rome with highlevel speakers included Commission PresidentMr. Jose Manuel Barroso, as well as around 30ministers from EU Member States andMediterranean countries. I also participated inthe first celebration that was held in Athens inHellenic Parliament.

This year the Maritime European Worldwill meet again in Gijon of Spain on 18-21May 2010 for the celebration of the EuropeanMaritime Day, where innovation for sustainablegrowth of maritime sectors and coastal regionswill be in the heart of the discussions. I will havethe privilege this year to represent the EuropeanParliament and to highlight the importance weattach to the content and activities of theEuropean Maritime Day. Actually, we are discussing in the EuropeanParliament about the strategic goals of the EU'smaritime transport policy until 2018. EuropeanMaritime Day is established in the framework ofthe coordinated European maritime policy. Thismessage has to be clear and to reach local the

citizens. European citizens are increasingly awareof the importance of our common maritime her-itage and future and driving force.

We cannot forget that 22 of the EuropeanUnion's 27 Member States are coastal or islandStates, that over two thirds of the Union boun-daries are maritime and that the maritime spacesunder the jurisdiction of its Member States arelarger than their terrestrial territory.

Our Integrated Maritime Policy reflects aclear vision of how to address the chal-lenges of maritime prosperity, sustainabili-ty and security and is intimately tied to the fightagainst climate change and to recovering theeconomic competitiveness of Europe.

Furthermore, the current framework of theeconomic and financial crisis, the European mar-itime transport is expected to play a role of greatimportance as part of the European economyand as a driving force behind economic integra-tion: maritime transport in the Member States isexpected to increase from 3.8 billion tonnes in2006 to 5.3 billion tonnes in 2018. That meansthat in ten years time the infrastructure, includ-ing ports, its links to the hinterland, and theshipping industry have to be able to handle, at

least, 1.6 billion tonnes more than at present.Passenger traffic, including ferries and cruiseships, will also grow. Territorial continuity,regional cohesion and quality standards for seapassengers will have to be ensured.

Let me underline that European MaritimeDay will be celebrated across Europethrough the organization of events in local level:from Le Havre to Gdynia and from Turku to Trieste.Also, we encourage all the European regions,ports, cities and other maritime stakeholders tojoin in the celebrations and to work together sothat European Maritime Day can serve in thefuture as the focal date launching a 'maritimeweek' of conferences, festivities, networking,best practice exchange and benchmarking activ-ities throughout the EU. It is extremely encourag-ing that all involved cities, regions and organisa-tions have taken ownership of EuropeanMaritime Day by organising their events in paral-lel to the central European conference, thusbringing a wide variety of maritime issues to thepublic's attention and participation acrossEurope.In Greece, a country with historical pres-ent and future in maritime, several events will beheld as well.�

23 Ν.Χ.

From left: Joe BORG, Commissioner for Maritime Affais, Altero MATTEOLI, Minister of Infrastructures and Transportof the Republic of Italy, Jose-Manuel Barroso, President of the European Commision and Rodi Kratsa, Vice-President of the European Parliament at the celebration of the European Maritime Day in Rome (May 2009)

Ν.Χ.24

Joint Tripartite Declaration

Establishing a ''European Maritime Day"Strasbourg 20th May 2008

Recalling that Europe is a Maritime Continent with almost 70,000 km of coastline,

Recalling that 22 of the European Union's 27 Member States are coastal or island States,

Recalling that the maritime regions of the European Union account for some 40% of its GDP and of its population,

Recalling that over two thirds of the Union's boundaries are maritime and that the maritime spaces under the jurisdiction of its Member States are larger than their terrestrial territory,

Recalling the economic importance of, and synergies between sectors as diverse as shipbuilding and shipping, portsand fisheries, offshore energy, tourism, environment and maritime heritage,

Recalling that Europe must enhance its capacity to deal with the major challenges it faces such as globalisation, climate change, energy sustainability and environmental pressures on the coasts and seas,

Recalling the importance of coastal regions, islands and the outermost regions and the relevance of regional andlocal authorities in shaping and implementing the future European maritime policy,

Recalling the importance of a healthy marine environment both for the sustainability of economic activities on theseas and for the quality of life in coastal regions,

Mindful of the common heritage and the common responsibility of Europeans for the oceans and seas,

Recalling the vastness of the world's oceans and the role which the EU can play in preserving them as a resource forthe future of mankind,

Underlining the necessity to increase awareness and visibility of the importance of the oceans, of a vibrant maritimeeconomy and of the rich

European maritime heritage the benefits of which should be celebrated each year.

The European Parliament. the Council of the European Union and the European Commission

Approve the establishment of a "European Maritime Dau" to be celebrated May 20th each year, around whichawareness raising and networking activities will be organised.

Ν.Χ.26

The European Parliament,1. Welcomes the communication on the EU's

maritime transport policy until 2018;2. Stresses the importance of the maritime

transport sector to the European economy,not only as a carrier of passengers, rawmaterials, goods and energy products butalso as the core of a wider cluster of mar-itime activities such as the naval industry,logistics, research, tourism, fisheries andaquaculture, and education;

3. Emphasises that EU maritime policy shouldtake account of the fact that the maritimetransport industry faces competition notonly within the Union but also, and aboveall, globally; emphasises, also, the impor-tance of the growth of maritime transport,as part of the wider transport sector, bothwithin and outside the EU;

4. Hopes that EU maritime policies will hence-forth be designed within the framework ofa 'single European sea' and, consequently,

calls on the Commission to develop aEuropean maritime transport policy as partof a common maritime area;

The market5. Urges the Commission to continue to com-

bat abuses of flags of convenience;6. Urges Member States, therefore, to encour-

age the use of their flags and to supporttheir maritime clusters on shore, for exam-ple by providing fiscal facilities such as atonnage tax system for ships as well as fis-cal facilities for seafarers and ship owners;

7. Considers that, like any sector of the econo-my, the maritime sector must in principlebe governed by the rules on State aid,although State aid may exceptionally bepermitted for specific cases provided that itis made available temporarily and in atransparent and comprehensible manner;

8. Considers that the guidelines on State aid toshipping, which expire in 2011, must be

retained and extended, since they havecontributed substantially towards main-taining the international competitiveness ofEuropean shipping, towards its ability suc-cessfully to overcome the often unfair com-petition from third countries, and towardsmaintaining itsleading position worldwide, and havetherefore helped to support the economiesof Member States;

9. Calls on the Commission to submit thepromised new rules on State aid for mar-itime transport in 2010, and further consid-ers that the Commission should submit theguidelines on State aid to sea ports asquickly as possible;

10. Emphasises, in this context, that State aidshould be used exclusively to supportEuropean maritime sectors that are com-mitted to social standards, the promotion ofjobs and the training of personnel inEurope, and to ensure the global competi-

Motion for a European Parliament Resolutionon strategic goals and recommendations

for the EU's maritime transport policy until 2018(2009/2095(INI))

EUROPEAN MARITIME DAY

BY PETER VAN DALEN, MEP

27 Ν.Χ.

tiveness of European shipping;11. Calls on Member States speedily to sign,

ratify and implement the UN Convention onContracts for the International Carriage ofGoods Wholly or Partly by Sea, known as the'Rotterdam Rules', establishing the newmaritime liability system;

12. Calls on the Commission to give greater con-sideration to maritime transport and itslandbased structures during the forthcom-ing revision of the Community guidelines forthe development of the trans-Europeantransport network, in particular the multi-modal linking of European sea ports withthe hinterland;

13. Welcomes the Commission's proposal for adirective on reporting formalities for shipsarriving in or departing from ports of theMember States of the Community(COM(2009)0011), in order to simplify,reduce and eliminate administrative proce-dures for European short sea shipping; callson the Commission to continue to supportshort sea shipping with a view to substan-tially increasing the performance capacitiesof maritime transport within the Union;

Social aspects14. Welcomes initiatives by Member States and

the Commission to make maritime occupa-tions more attractive to young EU citizens;emphasises the need to provide lifelonglearning and retraining for seafarers at alllevels, on shore and on board, with a view tostrengthening the professional qualifica-tions and skills of the workforce; advocatesalso that more information on the sector beprovided at schools and that more trainee-ships be made available;

15. Calls on Member States, within the scope ofinternational conventions such as the STCWConvention and the ILO 2006 MaritimeLabour Convention, to improve and mod-ernise existing training programmes with a

view to further qualitative development ofmaritime colleges;

16. Stresses that seafarers from third countriesmust comply with satisfactory trainingrequirements in accordance with the STCWConvention and calls on ship owners andnational inspectorates to guarantee andenforce this, where necessary with the assis-tance of the European Maritime SafetyAgency (EMSA); reiterates its request forrapid ratification by Member States of theILO 2006 Maritime Labour Convention andearly adoption of the Commission's propos-al, based on the industry agreement, forincorporating key elements of theConvention into EU law;

17. Calls on Member States to encourage theuse of EU seafarers in their own fleets and tocreate sufficient facilities to prevent themigration of seafarers outside the Union;

18. Welcomes the Commission's suggestionthat Member States should promote coop-eration between European maritime institu-tions, and encourages Member States toharmonise their respective curricula andtraining schemes in order to promote anddevelop high levels of qualification andadvanced skills among EU seafarers;

19. Emphasises that the social dimension andthe working conditions of EU seafarers areclosely linked to the competitiveness of theEuropean fleet, and that it is necessary tofacilitate labour mobility in the maritimeindustries throughout Europe and to ensurea fully functioning internal market withoutbarriers and without unjustified restrictionson the provision of services;

20. Encourages the exchange of good practicesin relation to employment conditions andsocial standards, as well as an improvementin living conditions on board vessels, partic-ularly through the development of informa-tion and communication technologies, bet-ter access to healthcare, better safety stan-

dards and training to enable seafarers tocope with the risks inherent in their jobs;

21. Stresses that inspections must be specificand risk-based and must not generate any-superfluous regulatory pressure on theindustry;

22. Hopes that the capacity of technologicaldevelopments to compensate for the declin-ing availability of seafarers will be investi-gated, but warns against introducinguntried technology too hastily;

23. Calls on maritime port authorities toimprove facilities for seafarers on ships wait-ing at anchor in roadsteads, including facili-ties for easier transportation from ship toshore and vice versa;

The environment24. Acknowledges that considerable progress

must be made on reducing emissions of sul-phur oxides and nitrogen oxides, particu-lates (PM10) and CO2, and that this is neces-sary within the framework of the EU climateprotection goals; stresses that the sector cancontribute to the fight against harmfulemissions and climate change and thatpublic and private investments in researchand development will be of particular inter-est in this regard;

25. Stresses that emissions reductions must beagreed rapidly and implemented with bind-ing force via the International MaritimeOrganisation (IMO) in order to limit dispari-ties in competitive conditions, but that thismust not prevent the Union from taking ini-tiatives aimed at further reductions by thefleets of its Member States, thereby encour-aging the other continents to become com-petitive in this area; draws attention here tothe major disparities between short andlong-distance sea shipping, which must beconsidered when reaching agreements inthe IMO;

26. Calls on Member States to make more use -

Ν.Χ.28

where possible in conjunction with neigh-bouring countries - of the option of desig-nating maritime emission control areas,particularly for nitrogen oxides; emphasisesthat the establishment of further maritimeemission control areas must not lead to dis-tortion of competition within Europe;

27. Supports measures that encourage modalshifts towards maritime transport with aview to easing congestion on major roads;invites the Union and Member States tocreate logistics platforms at ports, which areessential for developing intermodality andstrengthening territorial cohesion; stressesthat international and EU rules must nothinder the efforts undertaken by nationalauthorities in this regard; hopes to see therapid and extensive introduction, within theframework of the Union for theMediterranean, of 'motorways of the sea',which will help to reduce both pollutionand congestion in land networks;

28. Supports in principle the amendments toAnnex VI of the MARPOL Convention toreduce sulphur oxide and nitrogen oxideemissions from ships, adopted by the IMOin October 2008; is concerned, however,about a possible shift back from short seatransport to road haulage as a result of theintroduction of the 0.1% sulphur limit,envisaged as of 2015, in the sulphur emis-sion control areas in the North Sea and theBaltic Sea; calls on the Commission, there-fore, to submit a relevant impact assess-ment to Parliament as swiftly as possibleand by the end of 2010 at the latest;

29. Considers that all modes of transport,including maritime transport, must gradu-ally internalise their external costs; believesthat the introduction of this principle willgenerate funds that can subsequently beused primarily for efforts to encourageinnovation;

30. Calls on the Commission and Member

States also to work on alternative instru-ments such as the introduction of a levy onbunker fuel, preferably geared to the quali-ty and environmental performance of thefuel, or the concept of 'green ports', whereclean vessels are dealt with more quicklyand/or pay reduced harbour dues;

31. Calls on Member States to work within theIMO to set and implement appropriate andglobally applicable environmental standards;

32. Notes in this connection the breakthroughin inland shipping technology which hasmade it possible to reduce emissions fromexisting ships' engines substantially andthe possible use of liquid natural gas as afuel; calls on the Commission to investigatewhether these techniques can also be usedin seagoing vessels and how their imple-mentation might be accelerated;

33. Deplores the fact that the CopenhagenClimate Summit did not succeed in reach-ing any conclusions with regard to reducingemissions from seagoing vessels, butstresses that intensive efforts must contin-ue, both in the post-Kyoto process and inthe IMO, to agree global measures to bringabout such reductions; invites MemberStates to make every effort to ensure thatthe IMO receives a mandate for the nextinternational climate negotiations, withquantifiable reduction targets for maritimetransport;

34. Calls on the Union to lead this process atglobal level, notably in the IMO, with a viewto reducing emissions from the maritimesector;

35. Stresses the importance in European portsof interoperable technical facilities for thesupply of electricity from shore to ship,which can considerably reduce pollution;calls on the Commission to ascertain inwhich ports these facilities can be utilisedefficiently;

36. Stresses that, as part of its research and

development policy, the Commission mustgive priority to innovation in the area ofrenewable technologies for use on vessels,such as solar and wind technologies;

37. Calls on the Commission to examine thepotential for reducing and monitoring pol-lution by using intelligent technologies inthe transport sector, notably Galileo;

38. Stresses the need to promote paper-freeport and customs operations and to easecooperation at ports between the variousservice providers and consumers throughthe use of intelligent transport systems andnetworks such as SafeSeaNet and e-Custom, with a view to speeding up portoperations and reducing pollution;

Safety39. Appreciates the adoption of the Third

Maritime Safety Package, and calls onMember States to implement the packagespeedily;

40. Advocates stringent checks on shipbuilding,including on the quality of steel used andon vessel design and maintenance, as pro-vided for inter alia in the amended legisla-tion on classification societies;

41. Supports the change of course in the ParisMemorandum of Understanding (MoU) onPort State Control, which entails replacingregular inspections with risk-based inspec-tions, so that precisely those vessels whichdisplay numerous shortcomings are tackledeffectively;

42. Calls on Member States and ship owners toseek to be placed on the Paris MoU 'whitelist'; calls on Slovakia, in particular, to makean extra effort in this regard;

43. Calls on national inspectorates and othernational authorities to cooperate moreclosely in exchanging data on vessels andtheir cargoes, so as to reduce regulatorypressure but increase the effectiveness ofinspections; calls for the rapid introduction

Ν.Χ.30

of an integrated information managementsystem through the use and improvementof resources already available, especiallySafeSeaNet; calls on the Commission to putin place as soon as possible an EU-widecross-border and cross-sectoral surveillancesystem;

44. Is aware of the danger of piracy on the highseas, notably in the Horn of Africa area andthe waters off the coast of Somalia, andcalls on all ship owners to cooperate withgovernment initiatives to protect themagainst piracy, along the lines of the EU'ssuccessful first naval operation, Atalanta;calls on the Commission and MemberStates to strengthen cooperation amongthemselves and within the United Nationsin order to protect seafarers, fishermen andpassengers as well as the fleet;

45. Notes that the global approach to combatingpiracy cannot be limited to an internationalnaval force but should form part of a com-prehensive plan aimed at promoting peaceand development in the area concerned; isaware, too, of the need for full and correctimplementation by ships of the self-protec-tion measures adopted by shipping organi-sations, through the Best ManagementPractices approved by the IMO;

Miscellaneous46. Stresses that shipping is a global industry

and that agreements ought, for preference,to be concluded on a global scale; considersthe IMO to be the most appropriate forumfor this; calls on Member States to makemore effort to ratify and implement quicklyIMO conventions which they have signed;

47. Acknowledges fully, moreover, the Union'srole in the transposition of internationalrules into EU law and in the implementa-tion of and support for maritime policy, forexample by EMSA;

48. Underlines the need to speed up the mod-

ernisation and expansion of port infrastruc-ture capacities in anticipation of the expect-ed rise in the volume of goods transportedby sea; points out that this will require hugeinvestments, which will have to complywith transparent and fair financing rules inorder to ensure fair competition amongEuropean ports; calls on the Commission toensure that the regulatory framework iscoherent in this regard;

49. Calls on the Commission to consider itscommunication on the EU's maritimetransport policy until 2018 and this resolu-tion as the basis for the forthcoming reviewof the Transport White Paper;

50. Calls for a policy that promotes connectionsbetween ports and inland areas (dry portsand logistics platforms) in regions sufferingfrom congestion, this policy to be incorpo-rated into the TEN-T review;

51. Underlines the economic and strategicimportance of shipbuilding, which makes itpossible to develop and use the new tech-nologies applicable to vessels and to pre-serve crucial European skills that are need-ed to build new generations of vessels; callsfor measures to support innovation,research and development, and training,with a view to developing a competitiveand innovative European shipbuildingindustry;

52. Requests that it be obligatory in port mod-ernisation and expansion projects to equippassenger terminals and new passengerships with facilities for people with reducedmobility;

53. Welcomes the initiative to develop a cam-paign to promote best practices amongpassenger transport and cruise ship opera-tors in relation to passengers' rights;

54. Calls on the Commission to take intoaccount during the current TEN-T reviewthe recommendations for the EU's mar-itime transport policy until 2018, notably

those concerning efficient integration of the'motorways of the sea' and inland water-way transport, as well as the network ofports of European interest as integratingnodes;

55. Calls on the Commission to draft a compa-rable strategy for European inland water-way transport and to coordinate it with thepresent strategy, in order to promote thedevelopment of an optimised transportchain linking maritime freight transportand goods transport on inland waterways;

56. Calls on the Commission to submit withoutdelay its promised roadmap, providingessential details to supplement its commu-nication;

57. Instructs its President to forward this reso-lution to the Council and the Commission.

Summary of the rapporteur's point of viewThe rapporteur is favourably impressed by theCommunication from the Commission. As thedocument deals with numerous subjects, hisreport is confined to a few priority points. The rap-porteur primarily considers that the importance ofthe maritime sector cannot be stressed too much.Europe's maritime sector makes a clear and vitalcontribution both to the Community's internaleconomy and to Europe's transport system. Theinterests of the European maritime transport sec-tor must therefore be assigned high priority inestablishing general European transport policy. Itmust be realised that the European maritime sec-tor mainly operates and competes on a globalmarket.This global market also means that policy needs tobe made to measure for maritime transport. Therisk of reflagging, with all its adverse conse-quences for the environment, the quality of ship-ping and the maritime cluster, must not be under-estimated. The rapporteur therefore considers thatthe Member States should do their utmost toencourage the (existing) use of their flags, for

Ν.Χ.32

example by providing tax facilities for tonnagetaxation and fiscal facilities for seafarers and shipowners. The rapporteur looks forward to the newrules on State aid which the Commission haspromised. He calls on the Commission to submitthem in 2010.As regards employment and working conditions,the rapporteur considers that maritime occupa-tions should become more attractive for young EUcitizens. Particularly if maritime transport is togrow as expected, demand for crew members willonly increase. It is therefore important that young

people of all ages should receive informationabout the sector. It is also necessary to hold outattractive career prospects to seafarers, both at seaand on shore. At the same time, it must not bemade impossible for ship owners to hire third-country nationals for their maritime transportoperations, although of course it is important thatsuch employees meet the training requirementsand have the requisite professional qualifications.The rapporteur also considers that the legislationadopted in the ILO must be supported, ratified andadequately enforced worldwide to keep the work-ing conditions of all seafarers up to scratch. Themaritime transport sector faces major challengeswith regard to the environment. The primary taskis to improve the environmental performance ofseagoing ships substantially, and emissions ofSOx, NOx, particulates (PM10) and CO2 must bereduced. In this connection it is very importantthat agreements on the subject should be reached

at global level in order to combat the risk of reflag-ging to non-participating countries. The rappor-teur advocates the development of emission con-trol areas in European waters. To this end, he callson the Member States, where possible withneighbouring countries, to designate such areas,particularly with the aim of limiting NOx emis-sions. The Commission and Member States mustalso devise alternative measures to improve envi-ronmental performance. These might include alevy on bunker fuel geared to the quality and envi-ronmental performance of the fuel used, and the

concept of Green Ports. Under such a'bonus/penalty' system, cleaner vessels would bedealt with in port more quickly than more pollut-ing vessels and/or would receive a discount ontheir harbour dues. The rapporteur also has highhopes of the technological development of seago-ing ships. In recent years, inland waterway vesselshave made great progress in their environmentalperformance thanks to the development of newfuels and better engines. The Commission shouldinvestigate whether these technological develop-ments can also be applied to maritime shipping.Finally, the rapporteur considers that electricitysupply facilities should be established in sea portsto reduce emissions in ports.In the field of safety, the rapporteur is very curiousabout the practical details of the Third MaritimeSafety Package. Member States are thereforecalled upon to implement the package quicklyand correctly. The rapporteur also takes a

favourable view of the decision by the Paris MOUto switch to risk-based inspections. This will pre-vent unnecessary inspections, increase the effec-tiveness of monitoring and reduce the red tape forthose subject to inspections.Lastly, on the closely related subject of security, therapporteur wishes to express his unconditional sup-port for the Atalanta mission which is protectingseagoing vessels against piracy around the Horn ofAfrica. Ship owners ought, in addition, to take upthe security options available from Atalanta andother international cooperation bodies against pira-

cy. As soon as possible, arrangements must also beagreed for appropriate trials of pirates who havebeen caught. The fact that in some cases appre-hended pirates are currently released because theycannot be tried anywhere is hard to accept.Finally, as maritime transport operates on a glob-al market, primary legislative responsibility restswith the IMO. Within the IMO, the European Unionshould play a proactive role with a view to secur-ing the drafting and ratification of new rules. TheEU also, of course, plays a very important role intransposing IMO rules into the EU acquis andimplementing them.Particularly at the implementation stage, EMSAshould play the role appropriate to it. Inspectionsand supervision should be performed at MemberState level in close consultation with the ParisMOU. The rapporteur also looks forward to theRoad Map for Maritime Policy until 2018 whichthe Commission has promised to submit.�

While shipping has been an essential component of economic and international life since its

origin, we are at the dawn of a new era. A new international policy agenda is emerging

which needs to be addressed at the highest level by key governments and regulators world-

wide, with major implications for the maritime industry. To identify and contribute to this

agenda, the Center for Energy, Marine Transportation and Public Policy (CEMTPP) at

Columbia University in New York has put in place an ambitious programme. The Onassis

Public Benefit Foundation, the Maria Tsakos Foundation and Peter John Goulandris have

greatly encouraged this pace-setting effort.

Ν.Χ.34

INTL FORA

T he first reason for the growingimportance of marine transportation

is, quite simply, the further progress andtransformation in economic globalisationpatterns. The re-organisation of manufactur-ing and commerce around global supply chainscentred on China and the Far East is reflected in ahuge maritime conveyor belt that sees mineralores and raw material converge upon Asia, withmillions of container boxes every year carryingthe transformed products from Asia to the rest ofthe world. One feature of this trade is the increas-ingly asymmetrical nature of its geographic locusin the East. Another is its surprising resistance tothe economic slowdown in the West as thegrowth of Asia continues unabated. The importance of shipping for 21st century gov-ernments and regulators is grounded in at leasttwo more considerations. The externalities asso-ciated with shipping are now reaching wellbeyond the shipping sector, presenting policy-makers with challenges to be addressed inbroader arenas than used to be the case. A goodexample is sulphur emissions. Considerable

A new international agenda for shipping policy and regulation

BY ALBERT

BRESSAND1

Ν.Χ.36

progress has been made to reduce emissions ofSOx from on-shore sources, to the extent that, ina couple of years, the majority of the sulphuroxide in the European air mass will come fromsea-based sources. Obviously, this is bringingsea-based emissions to the attention of policy-makers and agencies that had hardly heard ofshipping just a few years ago. Even if less striking, a similar process has begunregarding the emission of greenhouse gases byships. In this case, what matters is not local pol-lutants but the contribution to the global carbonequation. Whereas the contribution of shippingcan still be considered limited, marine trans-portation as a whole has a carbon footprint high-er than that of Germany. Moreover, the sector'semissions under business-as-usual are projectedto increase by 150% to 250% by 2050 (com-pared to 2007 levels). Furthermore, not only are sea-based emissionsincreasing more rapidly but, together with airtransportation, shipping happens to be amongthe small number of industries to which main-stream regulators are now turning their atten-tion. As a result, the age when ship owners coulddeal with a relatively limited number of regulato-ry and policy arenas is now over, which is a trib-ute both to the achievements of the industry andto the natural tendency by regulators and gov-ernments to gradually extend their reach fromthe familiar to the less familiar. 21st century policymakers have to confront anew set of issues and challenges that are globalin nature and go beyond simpler forms of inter-dependence between various countries' policies.The only such issue in the previous century wasthe risk of nuclear annihilation, and even then

only a relatively small number of countries werereally involved. By contrast, climate change brings to the table anew type of issue for which national action onlymakes sense within a tightly co-ordinated globalsystem. This means that shipping will be lookedupon not simply in terms of its technical contri-bution to such challenges, but also regarding itsrole in addressing climate change at the globallevel (see negotiations under way in the UN con-text on a global tax on bunker fuels that wouldbe a central resource for the proposed GlobalAdaptation Fund). Indeed, a major challenge for the shippingindustry in the 2010s is whether it will be per-ceived as a provider of global solutions or merelyas a source of global problems. How the industryinteracts with the full array of regulators and pol-icymakers -and not just with those with which itis more familiar- will be essential in shaping thisperception.

Columbia University intends to be the Ivy LeagueAmerican University that helps both the shippingindustry and policymakers with the transition tothis era. To that effect, CEMTPP has convened agroup of distinguished scholars and has organ-ised interactions with policymakers and industryleaders. As we speak, this work is being translatedinto Scenarios for Marine Transportation in the year2030 that will put the growing governance chal-lenge in the broader perspective of economic,technological and political transformation. We lookforward to interacting with the global Posidoniacommunity on these essential matters. �

1. The author is Aristotle Onassis Professor in the Practice of international and Public affairs and Executive Director of theCenter for Energy, Marine Transportation and Public Policy atSIPA, Columbia University, New York

By contrast, climate change brings to the table a new type of issue forwhich national action only makes sense within a tightly co-ordinatedglobal system. This means that shipping will be looked upon not simply interms of its technical contribution to such challenges, but also regardingits role in addressing climate change at the global level (see negotiationsunder way in the UN context on a global tax on bunker fuels that wouldbe a central resource for the proposed Global Adaptation Fund).

INTL FORA

Ν.Χ.38

MARKET

BY JOHN C. PACHOULIS, General Manager Megachart Inc.

President "Hellenic Shipbrokers Association"

Asian waves overinternational

shipping

It is common knowledge that

world trade in general and the

shipping engine in particular

have depended on Asian markets,

which continued to positively

support and promote internation-

al trade thanks to their develop-

ment programmes, from the ini-

tial financial crisis up to present-

day recovery.

CChina's growth, according to its govern-ment's moderate target-setting, had beenexpected to reach a level of 8% this year.

It now seems it will surpass the 10% mark,boosted by the country's huge internal marketand competition among local steel mills, whichhas been driving product prices up. Consequently,the respective freights for capers have beenhigher than anticipated.

Last year, the remarkable and positivefact was the increase of imports of ironore. In excess of importing the expected andplanned quantities of about 380 million tons,China in fact imported nearly 515 million tons.This was amongst the main reasons whichresulted in the smooth recovery of the shippingmarket from the 773 points of Baltic Dry Indices(BDI) in January 2009 to over 3,000 points inDecember. Points fluctuated from 1,500 to 4,660during the year, contrary to predictions by someanalysts who insisted that the market was aboutto collapse.

This speedy recovery of the market exempli-fied that shipping, being an industry that servesinternational trade, had the strength, agility andpotential to overcome the deep economic crisis.Please bear in mind that world trade lost some13% of its volume during 2009 and has beenpredicted to rise approximately 5% in 2010.

39 Ν.Χ.

Meanwhile, the developed economies grow at a moderate pace of 1.3% -1.5% despite an uneven recovery and fragile growth conditions. Fortunately,Asian markets are delivering to the developed world more than it buys.

Freightwise, the continuous demand of raw materials mainlyfrom the Chinese market allowed the shipowning world to be optimistic,despite a great number of newbuildings which will be delivered by 2012. Atthe end of 2009, the world's bulk carrier fleet was standing at 448.5 milliondwt and the order book was for another 258 million dwt representing closeto 58 percent of the existing fleet. The expected oversupply will probably be balanced by the expected increaseddemand, as the economic crisis is expected to decline by the time the major-ity of the newbuildings will be delivered. Obviously, older tonnage will bescrapped as well, as the average scrapping age of bulkers is nowadays 30years, representing just 4.4% of the world's bulk carriers fleet. In the mean-time, 15% of them represents vessels over 25 years and 25% over 20 years. Itis obvious that with the new deliveries, the average age of vessels being ledto scrapyards will be younger than the over-30-year norm of today, providedthat the scrap prices will remain at acceptable levels.

In the meantime, global economic prospects for 2009-2010began showing considerable improvement compared to the pre-dictions of 16 months ago. The fall in GDP is slowly decreasing and the pro-mising growth forecasts for the Asian, South American and other developingcountries are proving to be correct. Last year's industrial production seems tobe less dramatic than expected. China is leading again with an impressivegrowth rate of over 16% followed by India at over 9% and Vietnam at 7 %. As nearly half of the world's bulk carrier fleet is connected to the demands ofthe steel industry, it is easy to understand that the raw materials for the pro-

duction of steel are boosting the shipping market. Coal is another importantfactor affecting the dry bulk market. Coal was the leading Chinese import andincreased by nearly 170% during 2009. This is in comparison to 2008, whenimports nearly reached the 100m tons mark. Australia, South Africa, USA,Russia, Venezuela, Indonesia, Colombia and -in recent years- Vietnam are themain sources of this commodity. Although demand by traditional buyers,such as Japan and Europe, has substantially decreased, production has beenoffset by demand from India and China, which has had a positive effect oninternational shipping markets. Grain and sugar trading is steady, withexporting countries seasonally increasing the demand for transportation,especially in the Atlantic, the Mediterranean and the West Coast of Canadaand the USA.

Under the present trade conditions, we can predict that theshipping market will be stable throughout 2010. We might besubjected to the usual fluctuations, which we have been experiencing duringthe past few years. Shipping is also dependent upon reactions by the interna-tional financial and banking institutions, which may assist by implementingstimulus packages, in order to fight the economic crisis. �

• Major Steel fabrication onboard alltypes of vessels

• Specialized in repairs of LPGcarriers

• Major fabrication workshopservices

•Major mechanical worksonboard

• Mechanical workshopservices

• Turbo chargers • Piping • Automation • Hydraulic Services • Generators

/ Motor Rewinding • Crude Oil Wash

/ Butterworth • Testing Tank Facility • Diesel Engine repairs and

engine performance analysis • Riding Crew Teams • Spare Parts

ENTIRE RANGE OF FACILITIES TO CATER TO YOUR REQUIREMENTS

AL JADAF SHIP DOCKING YARD, SHED NO. 147, P.O. BOX 6849 DUBAI - UNITED ARAB EMIRATES

TEL: 00 9714 3241762 / FAX: 00 9714 3241567

E-MAIL: adamship@emirates.net.ae / WEBSITE: www.adamshiprepairs.com

Adams Ship Repairs

During the past years the Greek owned fleethas been increasing both in terms of numbers

of ships and in its deadweight capacity mainlyattributed to the fact of the large orderbook placedby shipowners. In more detail, in 2010 there were a total of 3,996of all kinds and sizes of Greek owned vessels with atotal deadweight capacity of 258.1m representing14.9% of the world fleet in terms of dwt capacity.The average age of the Greek owned fleet is 11,6years while world fleet average age is 12.9 years(Table 1.).The Greek fleet orderbook numbers 645 vessels oftotal capacity 54.1m dwt while Greek shipownerscontrol 20.9% of world tankers fleet and 18.1% ofworld dry cargo fleet in terms of dwt capacity.It is interesting to note that although total worldorderbook which includes 8.677 vessels (all cargocarrying types and sizes) or 28% of the currentworld fleet, the Greek orderbook makes up for justover 14% of this (Table 2.).In addition to increased Greek newbuilding order-ing there is also considerable amount of Greekactivity in the S&P market (15.3% of the world-wide activity) since this segment still proves to bethe "backbone" of Greek shipping (Table 3.).

The current situation in the global andGreek ship financing scenei. The Global shipping finance market The 30 largest Global shipping banks' lendingcapacity at the end of 2008 reached the amount of$370bn. This total exposure was mainly offered by

30 shipping banks with a total loan portfolio ofalmost 90% of the total. These totals do notinclude the contribution of Far Eastern and MiddleEastern banks which do not make their figuresavailable (Table 4.).In 2009 we witnessed a severe drop in fresh lend-ing as well as a significant reduction of loan com-mitments. Global lending has been reduced main-

ly as a result of:• Newbuilding cancellations eliminating bank

commitments• Reductions of committed facilities for new-

buildings• Utilization of the natural run off of the loan

book via repayments, vessel sales, pre-pay-ments

Ν.Χ.40

ANALYSIS

2010 - Latest developments

in Greek ShippingBY GEORGE XIRADAKIS, Managing Director of XRTC Ltd Business Consultants

8.677 490 28% 826 69,8 14%

World N/B Orders 2010 Greek N/B Orders 2010

No of Capacity % world No Capacity % world

Vsls (mil.dwt) fleet dwt of Vsls (mil.dwt) fleet dwt

Source: Greek Statistical Bureau

Table 1.

Table 2.

Source: Lloyd's Register of Shipping - Fairplay

Source: Clarkson's Shipping Intelligence

Table 3. S & P movements of second-hand vessels

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Greek 171 227 308 344 300 228 242 369 171 167

Worldwide 797 757 956 1319 1658 1281 1490 1987 1300 1093

% Greek 21.5% 30.0% 32.2% 26.1% 18.1% 17.8% 16.2% 18.6% 13.2% 15.3%

41 Ν.Χ.

• Marked slowdown in fresh lending.It is also worth noting that Global shipping vol-umes for syndicated loans for 2009 fell from $87bnin the corresponding figures for 2008 to $32bn(Table 5.).

ii. Asian shipping finance market It is known that Japan, Korea and China account for82% of shipbuilding industry. It was thereforemore than expected and Asian banks would accel-erate a dramatic shift in the centre of ship finance.According to Marine Money source the state sup-port of Asian countries is changing the Asian shipfinancing environment.

India: The Indian National Shipowners' Associationrepeatedly asked the government to set up a Rs100bn ($2bn) fund that will provide shipownersloans at competitive rates and encourage them toacquire vessels from domestic shipyardsMalaysia: The government has allocated an addi-tional RM 2bn ($542m) from its 2009 budget to aRM 1bn shipping fund, managed by BankPembangunan and a shipping venture fund GlobalMaritime Ventures.Taiwan: Shipowners can take advantage of newtonnage tax system and reduce tax burden by asmuch as 90%S.Korea: Korea Asset Management and KoreaDevelopment Bank have launched distress funds ofup to 6 trillion won ($4.8bn) for ship acquisition.Korea Asset Management will raise the moneyfrom local financial institutions and private equityinvestors.China: The total shipping portfolio of Chinesebanks is estimated at RMB 600bn-700bn ($88bn-102bn).

It is worth noticing the role of Chinese in shippingfinance. This is a very crucial field which is viewedas the last fort. Their banks will play an importantrole worldwide as China has both cash andappetite to support Shipping industry.Chinese Shipping growth that has overtaken theGreek one and the Banks' cash flow are the ingre-dients that will assist Chinese banks to penetratethe Shipping Finance sector. Two years ago theChinese banks capabilities were limited intoChinese yards financing and in internal Chineseshipping financing.

Source: Marine Money

Table 4.

Table 5. Global shipping volume vs. new money

Source: Marine Money

Table 6. Banks financing evolution of greek shipping

Source: Petrofin

Ν.Χ.42

ANALYSIS

There are some foreign shipping companiesincluding some Greek ones that managed to enterinto relations with Export-Import Bank of China,Bank of China and Industrial & Commercial Bankof China in relation to the financing of shipbuildingvessels in China. The specific bank became slowlyslowly more international with its participation insyndicated loans arranged by foreign banks fornon Chinese companies. Therefore, the bank man-aged to build gradually its know-how whichtogether with the young people forming the coreof the banking executives that will finance theindustry.Some of the Greek shipowners who have placednewbuilding orders in Chinese yards include: JohnAngelikoussis, Villy Panagiotidis, Dinos Martinos,Tomazos company, Victor Restis, GeorgeEconomou, Nikolas Tsakos, Basil Papachristidis,Latsis Group, Andrew Martinos, GregoryKallimanopoulos, Evangelos Marinakis, HarisVafias, Nikos Fistes and Diamantis Lemos.

iii. The Greek shipping finance market The Greek ship lending portfolio of drawn andcommitted amounts at the end of 2009 was$67.02bn while the number of banks involved inGreek shipping finance amounted to 39. Thesenumbers show the reduction of the total portfoliocompared to 2008 figures for the same reasonsidentified above. The number of banks has beenalso reduced from 41 to 39 due to mergers andacquisitions (Table 6.).Although Greek banks involved in the financing ofGreek shipping are arithmetically more than ofthose of different nationalities, they are out-weighed in terms of commitment size by theGerman banksGreek banks' commitment to Greek shippingfinance is of almost 24% ($16 billion) of the glob-al commitment. In contrast German banks havethe largest commitment with a total of $19.3bn,an impressive participation of 29% followed byU.K banks with a total of $16.4bn and 24% partic-ipation (Table 7.).

iv. The Banks financing Greek shipping The banks involved in the financing of Greek ship-ping are presented in Table 8 per nationality.�

Table 7. Banks nationality financing greek shipping

Table 8. Banks involved financing greek shipping

Source: Petrofin

NATIONAL BANK OF GREECEEMPORIKI BANKALPHA BANKMARFIN EGNATIAPIRAEUS BANKEFG EUROBANKFIRST BUSINESS BANKASPISAEGEAN BALTIC BANKBANK OF CYPRUSAGRICULTURAL BANK OF GREECEPROTON

GREEK BANKS

NORDEA BANKDEN NORSKE BANK

NORWEGIAN BANKS

CALYONBNP PARIBASNATIXIS

FRENCH BANKS

THE ROYAL BANK OF SCOTLANDHSBCLBG SHIPPING FINANCESANTANDER/ABBEY

UK BANKS

FORTIS BANK BELGIUMFORTIS BANK NLING

BENELUX BANKS

HSH NordbankDEUTSCHE SCHIFFSBANKHVBDVBCOMMERZBANKBREMER LANDESBANKNORD/LBKFWDB-DEUTSCHE SHIPPINGDEKABERENBERGCORNER BANK

GERMAN BANKS

SWISS: CREDIT SUISSEUSA: CITIBANKIRELAND: BANK OF IRELANDKOREA: KEXIMCHINA: CHINA EXIM

OTHER BANKS

SWISS: CREDIT SUISSEUSA: CITIBANKIRELAND: BANK OF IRELANDKOREA: KEXIMCHINA: CHINA EXIM

It is my belief that this is what is reflected inthe outcome of this hearing. To the detrimentof those who have anticipated this hearing to

be a "public trial" of Greece, the presentations ofthe high level speakers but also the majority of

the interventions of the MEPs that took the flooron the 14th of April, did not focus on puttingblames but on showing the way ahead, high-lighting the lessons that can be learned and theway to deal with the inefficiencies and weak-nesses of the European Monetary Union that arehidden behind the Greek case. The Greek government's and above all the Greekcitizens' gigantic and overwhelming efforts toimplement extremely severe measures andachieve fiscal consolidation in the shortest time-frames have been widely recognized and sup-ported by almost every speaker and participant.Commissioner Olli Rehn has stated his convictionthat Greece is now back on the right track ofmeeting its deficit reduction targets, whereas MrRadermacher, Director General of Eurostat, hasconfirmed the substantial improvement of Greekstatistic data. Even on the problematic issue ofthe swaps' use and their controversial roleregarding the national accounting reports, theCommission's representatives were rather reluc-tant to point fingers against only one memberstate, stating at the same time the communitylegislation loopholes existing until 2008.

What was rather common view expressed by themajority of those who intervened was thatGreece is just a symptom of a weakness thataffects Eurozone in its core. The events that fol-lowed the hearing, with extreme speculationpressures led from the markets and internationalrating agencies towards other countries like Spainand Portugal as well as high risk of spill overeffects to euro's stability, have already proventhat. And what I find really encouraging was therather common view expressed on how to pro-ceed not through "punishing or condemning onemember state" but through the strengthening ofeconomic coordination, reinforcing and adaptingEuropean tools on crisis prevention and manage-ment and implementing efficient supervisoryrules that can combat speculation againstnational economies and the single currency. In that sense the European Parliament has -through this hearing - vigorously assumed its roleas a democratic accountable European institu-tion, ready to debate on European solutions toEuropean problems and to commit to the so longdebated and hardly demonstrated in the last fewmonths principle of European solidarity.�

After several weeks of divergentscenarios and rumours on the socalled "Greek crisis" the decision ofthe European Parliament to hold ahearing under the auspices of itsEconomic and Monetary AffairsCommittee had one and clear inten-tion: to end the endless circle ofunreliable rumours severely dama-ging not only the Greek economybut also eurozone's credibility alto-gether and to provide European citi-zens and their representatives withliable and integrated responses.

The latest news reports concerningthe Greek economy are grave.Unfortunately, as things stand, thebail-out mechanism is the lastchance for Greece, before it has todeal directly with its creditors. Ifwe fail this time, there will be nomore bail-out mechanisms; therewill be no more money to borrow.

Revisiting the Greek crisis:Did the eurozone trade without coherence?

N.X.44

EUROPEAN POLICY

BY ANNI PODIMATAMember of the European ParliamentVice-President of the Committee on Industry, Research and Energy, Member of the Committee on Economicand Monetary Affairs, Member of the Special Committee on the Financial,Economic and Social Crisis

Three well respected, skilled and experienced Greek Membersof the European Parliament explain the reasons behind theagony for our country’s financial future as well as the anxietiesfor Europe and its survival as we know it today.

BY THEODOROS SKYLAKAKIS

MEPCommittee on the Environment, Public Health and Food Safety

Ιn 2009, Greece was in the unenviable posi-tion of being the country with the secondlargest deficit in the world, the third largest

public debt in the world and the largest publicdebt owed to foreign creditors. It also had a hugeproblem in terms of its competitiveness. No othercountry in the world had such a lethal combina-tion. Thus, the more the markets scrutinised oursituation -and we made that easier in the waywe handled our international image over the lastfew months- the more worried they became.

>

>

Ν.Χ.46

Obviously, we cannot solve the Greek problemthrough more public expenditure. A Keynesiansolution cannot solve the Greek equation,because we don't have money to spend any-more. So we must find an answer despite theunavoidable recession.

The IMF's usual solutions are not easilyapplied to the Greek economy (e.g. we can'tdevalue), so we need to put forward our ownsolutions. That is why I have asked my party topropose a wider political agreement on thebasis of some necessary and important structur-al reforms such as:

1. A concrete and fully elaborated plan on fur-ther reducing public expenditures andincreasing taxes (and a long-term commit-ment to decrease taxes to businesses whenwe get over the acute phase of the crisis).

2. A ten-year moratorium on hiring in the pub-lic sector.

3. Increase of the retirement age to 66 years,with no exceptions.

4. Complete liberalisation of working hours forsmall enterprises.

5. More flexible labour relations for all newstaff.

Nowadays, Greece cannot choose between pleasantand unpleasant measures. Unfortunately, the choicefor our country is between being unpleasant andeffective and (less) unpleasant and ineffective. TheGreek political system will regain the confidence ofthe public only if it shows courage by recognising itsresponsibilities and carrying out its duty towards thecountry and the Greek people.�

The Greek political system willregain the confidence of thepublic only if it shows courageby recognising its responsibili-ties and carrying out its dutytowards the country and theGreek people.

Lacking central economic governance, theeurozone traded without coherence, whilesixteen member states developed at a one-

two-three speed scale rate, resulted in a viciouscircle of fragile, terrifying interdependency. TheGreek problem is a eurozone problem; and theeurozone problem is a global economy problem. Due to this, the EU is rushing to develop an eco-nomic governance system. When asked by me,the Commissioner Mr. Olli Rehn answered that"The setting up of the economic governance ofthe eurozone is a number-one priority."However, he avoided to breach the subject of aprovisional timetable for the establishment ofsuch a system. After an economic governancehas been developed, will we see the prospect ofa unified European model development. Therewon't be a case of "investing in a single mem-ber-state any more." The era of "investing inEurope" is rising.

Within this context, shipping will be of primaryimportance for a coherent European develop-ment. Continuous EU partnership is required, inorder to strengthen co-operation with itsSouthern Mediterranean partners on the optimi-sation of national support schemes and thedevelopment of common positions on regulatoryissues in the energy field. These are some of the issues I clearly pointed outwhen expressing my viewpoint on the Union forthe Mediterranean, which can only be achievedthrough the exchange of best practice and tech-nological progress from initiatives and partner-ships such as the Barcelona Process, theEuropean Neighbourhood Policy, the Euro-Maghreb Energy Community Treaty, or the MED-ENEC Project on Energy Efficiency in theConstruction Sector. Energy production is becoming increasinglyimportant in the Mediterranean area, while newkey players are emerging as far as supply anddemand are concerned. The Mediterranean hasenormous and largely untapped potential in thefield of renewable energies such as solar energy,wind energy and hydropower. This dramaticchange that is upon the Mediterranean countrieswill transform the energy market and will lead tofurther innovation in processes, technologiesand, perhaps most importantly, financial aspects. Shipping can benefit to a great extent by provid-ing accessibility and transferability of energy tothe Mediterranean world by linking source anddestination. I am certain that we have to be verykeen on this issue in the near future, as it willdetermine European energy policies at the microlevel and international energy policies at themacro level. �

>

BY NIKI TZAVELA

Vice-Chair • Delegation for relations with the

United States Member• Committee on Industry, Research

and Energy (Coordinator) • Delegation to the EU-Turkey

Joint Parliamentary Committee

EUROPEAN POLICY

The Greek crisis has revealed allEU weaknesses and has con-firmed that the only achievementof the European Union -i.e. theeuro- has not been a solid one.

Ν.Χ.48

ECONOMY

Greece is a small country by any standards amounting

to under 3% of the eurozone's GDP. Like many other

EU members it has had to live with the shortcomings

of an ill designed euro which has led it to accumulated

deficit, as a result of inability to manage its economy

individually via the classic tools of interest rate and

currency adjustment. Other country members have

fallen in the same trap, ending up with excessive debt

service costs.

BY DR. ALKIS JOHN CORRES, Chairman of the HellenicAssociation of Maritime Economists

The Recent Greek Experience of Financial Warfare

T This situation which has been developing forsome time has been identified as an oppor-

tunity for attack. There is no secret that the dollarhas been a chronic problem for the last threeadministrations of the US and that the euro hasbeen its principal headache after manifestationsby other big international trade players that theywould prefer to keep their accumulated externaltrade balances in euro, rather than in dollars.

It was natural that the shortcomings inthe design of the euro would be seen as anopportunity to end competition between thetwo currencies. The dollar side also had the expe-rience of the "Asian tigers" saga eleven yearsago which has taught many a lesson to its finan-cial warfare generals, while the euro side wastotally inexperienced in that type of action and -as it turns out - unable to put together any worthtalking about defence. So, the case was set andGreece has been chosen as the eurozone's weak-est link due to its relatively big external deficitfinancing requirements, but also due to the pres-ence of a suitable political scene, i.e. a newlyelected government with a strong mandate torestore the country's proper function.

During the last eight weeks, or so, theentire arsenal has been put to work,starting as before in Asia, from the rating agen-cies which, one after another, have downgradedGreece's rating, ultimately declaring its bonds as"junk". The ball from the agencies went to WallStreet's hedge funds which have seen an oppor-tunity in playing along by betting on Greece'sinability to escape from the financial strangle-hold. Bets of all sort have been placed withintent to profit from this country's eventual fail-ure to roll over its debt and its subsequent bank-ruptcy, and these were followed by numberlesspress reports, expert opinions and leaks intendedto make the bets placed successful. Experiencetells us that once this defamation spiral starts towork, it does not stop until it reaches the bitter -for the country, not for those who placed thebest - end.

Ν.Χ.50

tical use if the euro had gone under in the meantime,following similar requests for assistance from of othereurozone members in debt rollover trouble, adding upto trillions of euros. Under the existing regime, one ortwo big country bailouts would be sufficient to put paidto the common EU currency.

What can the EU do then? In a recently held pub-lic opinion survey in a maritime website, the majority ofopinion givers held that the best way out would be afederal - like structure in the EU, bringing together allsurplus and deficit making eurozone members andissuing its own Eurobonds and ensuring that the princi-ple of European solidarity actually works. It is widelyrecognized that the absence of such a mechanism hasresulted in the present situation. There is now evidencethat the common sense of the survey respondents isvindicated, albeit with a surprising twist. In an unusual, yet positive, display of initiative the EUhas agreed to the establishment of a mega rescue pack-age of around one trillion US dollars aspiring to stabilizethe world markets and to protect the euro from theconsequences of the so called "Greek" crisis which hasrisked repeat the global financial freeze the world hadexperienced back in 2008 as a result of the "toxic"bonds' crisis. In addition, and perhaps more important-ly, the European Central Bank has agreed to a moreactive role in the secondary bonds' market throughbuying eurozone member governments' debt. Allwould be well, if the salvation recipe had retained itsEuropean flavor. Many observers have expressed sur-prise though at the announcement that the IMF wouldbe a permanent participant in negotiations betweeneurozone country members and the two EU institu-tions, namely the ECB and the EU Commission. If youwant my personal opinion, this is something that willcreate more problems in future than it will resolve.Despite the above developments, the situation inGreece will continue giving rise to concerns as thesmooth progression of the Greek package of 110 billioneuros rests on the assumption that the burdensomepackage of IMF inspiration will finally fly. Time willshow. The good thing is that Europe has finally awakento the inherent vulnerability of its present status and tothe urgent need for progress as a means of retainingwhat it has achieved so far. Halleluiah.�

The eurozone bosses finally have woken up and realized that, what appeared to bean unfortunate development in relation to one of its members, was in fact an all out attack ontheir euro. With the characteristic inefficiency of multilateral negotiations and long resistancefrom Germany, they have finally managed to assume, together with the IMF which has beenasked to join - in for unknown reasons, an amount which would give comfort to Greece whosespread had reached 1,000 points rendering the servicing of its debt extremely expensive.However, this facility was tied to draconian undertakings by the Greek government which wouldmathematically plunge the economy in deep depression for a decade and half a million peopleout of work, mainly from the public sector. It therefore became evident that while the IMF's famefor tough measures is still justified, the cooperating governments' ability to judge the readinessof the Greek people to subject themselves to economic slavery left a lot to be desired.

The relevant bill approving of these terms and conditions, which have been tied toa questionable delegation of sovereignity to the lenders on a bilateral basis, has been passed fromthe Greek parliament with the entire opposition, bar the far right party, voting against it. Asalways nevertheless, the fate of every bill is decided on merit by the people to whom it isaddressed, rather than the parliamentarians who have voted in favour. As the facility will bemade available in twelve quarterly installments, following reconfirmations of meeting the rele-vant targets, there is doubt this will become feasible amid protests, strikes, and generalized eco-nomic hardship to the tune of 50% off the disposable income for those still employed. Failure inreaching the targets will put further installments on hold and the prospect of a collapse willbecome visible. A bankrupt member of the eurozone would be the last thing Europe would liketo see.

After many months of delay, the EU Commission has finally pronounced itsintention to investigate the role of the rating agencies and its wish to set up one ofits own for EU members. It will be a welcome development which however would have little prac-

ECONOMY

It requires a multi-disciplinary approach topursue greater efficiency and increasedawareness of the market environment in

which each and every shipping company oper-ates. This environment, is getting larger and larg-er as the global market place is continuouslyexpanding due to changing economic climate,deregulation and advancing technologies. At thesame time it contains myriad of conditions anddemands posed mainly by customers or markets.It is thus paramount for the "traditional" shipowner, port authority or transportation specialistto observe the irrelevance of the traditional wallsthat divide shipping practices from other indus-tries' methods, recognise their customer' needsand serve them at the best possible way.

The above provide the motive behind the formationof the International Forum on ShippingMarketing (IFOSMA) series. This IFOSMA seriesrepresents a cutting edge for professionals, prac-titioners and scholars from various disciplinesand countries who wish to have a full apprecia-tion for the key issues that affect the strategic andtactical activities of their firms and provide them

with the ability for sharing ideas, theories andpractices prevalent in dynamic shipping environ-ments. It focuses on the examination and appli-cation of marketing theories and practices to bol-ster individual shipping companies' value andsocietal welfare.

The 1st IFOSMA has the theme "Can mar-keting theories and practices relieveshipping agonies: A new dialogue" andwill take place at the 11th of June 2010 inPiraeus, Greece from 10.00 am to 14.00 pm inthe context of the POSIDONIA exhibition activ-ities. It is co-organized by the EuropeanInstitute of Shipping and Transport(Eu.I.S.T.), the Department of MaritimeStudies of the University of Piraeus andthe Greek Marketing Academy (ELAM)and it will be hosted onboard the cruise ship"CRISTAL" of Louis Hellenic Cruises (our goldsponsor).

This 1st IFOSMA is organized around one trackwhere professionals from different areas of ship-ping, such as passenger shipping, mercantile

shipping, chartering, banks, insurance agenciesand Clubs etc. will exchange views and shareexperiences relating to the following questions:a) how do shipping firms can best serve theircustomer segments? b) how can they identifyother unexploited markets in order to remain notonly viable but also profitable? c) how do theyembrace new technologies for commercial pur-poses? d) how can they develop service offeringshighly valued by their customers? and e) howand when can they apply the marketing thoughtand activities to confront the threats and enhancethe opportunities of the radical and unpre-dictable shipping environment.

It is the intention of the organizing committeethat this forum will provide the opportunity forthe participants not only to contribute theirknowledge and sharing marketing experiencesfrom professionals from different areas of ship-ping, such as passenger shipping, mercantileshipping, chartering, banks, insurance agenciesand Clubs etc. and to interact with each other aswell as enjoying the pleasant ambience ofCRISTAL whilst onboard. �

Ν.Χ.52

INTL CONFERENCE

Troubles, trials, and agonies character-ize global economy over the past 2 yearsand practitioners and academics areeager to find new solutions to ensureviability in these changing times.Moreover, this turbulent climate doubts

the traditional role of the shipping industry and challenges the sustain-ability of conventional shipping strategies in an era where these prac-tices intertwined with social, economic, regulatory, legal, ethical, eco-logical and consumer concerns on a global scale. However, while theword "sustainable" is part of today's vocabulary, the way to be appliedto the shipping, from mercantile and passenger ships to ports and logis-tic industries is not at all easy.

Is marketing a compass or a pain for shipping?

BY ANGELOS PANTOUVAKISM.Eng., M.B.A., Ph.D.

Chairman, European Institute of Shipping and Transport

The first step is to clean thoroughly the crown,inspect it and fill the appropriate measuringreport. After that the crown is placed on a hori-zontal turning lathe where rough machining ofgrooves, diameter and combustion surface iscarried out in order to remove any worn andfatigued surfaces. When the roughing outmachining is done, then the crown is inspectedby the means of NDT. More specifically the tech-nical personnel of our approved and accreditedQuality Control Laboratory, uses fluorescent pen-etrant fluids in order to inspect if there are anydefects or cracks that need to be repaired beforethe procedure continues.

After the NDT inspection the crown is placed ona programmable submerged arc welding (SAW)machine. The operator preheats the crown to250-300οC for an hour and then he rebuilds thewhole crown using appropriate filler wire. That

PUBLI

Ν.Χ. 6

Rebuildingof Piston Crowns

…The science behind Rebuilding!!!…The science behind Rebuilding!!!Industrial Park of SHISTO 2nd Block, 2 nd Street Perama 18863, Greece • Tel: +30(210) 4004757, Fax: +30(210) 4326399 • Web: www.kimi-sa.com

Rebuilding of vital components such as large2-stoke diesel engine piston crowns, requiresexperience, technical know-how and properequipment. The aim is to produce a piston crown com-pletely identical to an OEM new piston crownthat can perform similarly in any aspect.

Visit us at Posidonia Exhibition

Stand 263

means that the area of the grooves will be com-pletely restored. Moreover several layers will bedeposited until the combustion surface reachesagain its original geometrical profile and thetotal height of crown is achieved. Also thewhole outer surface of the crown will berebuilded form the lower point (maximumdiameter) up to the highest point (minimumdiameter). The rebuilding process using SAWrequires skills and deep knowledge of weldingaspects and parameters.

After the SAW process, the crown is placed in astress relieving furnace, where a programmedheating and cooling cycle takes place for severalhours depending on the crown size. The purposeis to remove any residual stresses form the SAWprocess.

The next step is the machining of the rebuildedcrown back to its original dimensions. This iscarried out on a vertical CNC turning lathewhich is guided by a modern CAM system. Theoperator needs only to position and clamptightly the crown on the lathe chuck. The rest isdone by CAM. Our engineering design depart-ment produces 3-D models of all types of pistoncrowns according to drawings. These models are

then used to produce the machining code. Theoperator has only to choose the appropriatemachining program depending on the type andthe model of the crown to be machined. Thenthe machine follows exactly the pattern of theengineering model. The result is a piston crowncompletely identical to a new OEM crown. Thegrooves are machined to the original referenceposition according to the drawings, with appro-priate allowance for the hard chrome layer. Thegeometric profile of the combustion surface isregenerated and vital geometrical characteristicssuch as the total height of the crown, the lowerand upper diameter as well as the conicity arerestored.

After machining the crown once again iscleaned thoroughly and undergoes a certainprocedure during which all sides of the groovesare plated with a hard chrome layer. It is anelectrolytic process during which hard chrome isapplied and depending on the required layerthickness it might last up to 5 days. Next, is thegrooves grinding. That machining process is car-ried out on a special piston ring groove grindingmachine, where the grooves are grinded to theirfinal dimensions according to OEM clearance

specifications, and the maximum discrepancy ofthe absolute parallelism between groove sides is0.01mm. During groove grinding the operatorcontrols the layer thickness with a special plat-ing thickness measuring instrument.

The final result of the rebuilding process thatdescribed above is a crown, completely identicalto an OEM new piston crown, ready to performaccordingly with the highest reliability andmaximum service life. The rebuilding process isour standard and only process for piston crowns.Through this we are supplying piston crowns ofthe highest quality. We imply the same philoso-phy for exhaust valve spindles and seats, cylin-der heads, piston rods and cross head pins.

If top quality is what you are looking for thenKIMI has the cost effective solution.

I O N VA R O U X A K I S , CHAIRMAN PRESIDENT & CHIEF EXECUTIVE OFFICER FREESEAS INC. • H A R RY VA F I A S , PRESIDENT & CEO

STEALTHGAS • G E O R G E D. G O U R D O M I C H A L I S , PRESIDENT, EXECUTIVE DIRECTOR G. BROS MARITIME S.A.

• J O H N A . X Y L A S , PRESIDENT & CEO ARISTON NAVIGATION CORP. • T H E M I S P E T R A K I S , VICE PRESIDENT IOLCOS HELLENIC

MARITIME ENTERPRISES CO. LTD.

The shape of things to come

SPECIAL REPORT

Five members of the Greek Shipping Community -representing the next generationof ship owners- answer questions submitted by the editorial team of NaftikaChronika, explaining current trends and scepticisms in the Greek maritime industry.

Ν.Χ. 56

>> ION VAROUXAKISCHAIRMAN PRESIDENT & CHIEF EXECUTIVE

OFFICER FREESEAS INC.

I should say that this business is a challenge initself. I could list a number of challenges at global,European, national, even personal level. However,I strongly believe that there is one very basic chal-lenge that needs to be met: how to cater for 90%of the world's goods transportation, which aseverybody knows is seaborne, in a safe and effi-cient way.

It is true that, in our times, we are facing achanging financial environment; the pool of tal-ent availability is becoming scarce in Europe andthe shift of focus from traditional hubs to the Eastsets out a new dimension to international trade.

>> GEORGE D. GOURDOMICHALISPRESIDENT, EXECUTIVE DIRECTOR G. BROS

MARITIME S.A.

I will limit my response to the challenges facedby those ship owners who operate from Greece, anEU State with a host of problems, currently beingdealt with under the auspices of the EU. As we allknow, the Greek state provides for a very clear legalframework for ship owning and managementcompanies to operate. Law 89, as it is widelyreferred to, has benefited Greek shipping and kept itdomestic and has led to the creation not only of adynamic shipping cluster in Piraeus but also to thecreation of a well educated and highly trained pro-fessional force over the past forty years or so. Thepresence of all major shipping service providers,classification societies, banks, or insurers in Greece isunmatched by any other shipping centre.

The continued evolution of common policieswithin EU member states has also led to the imple-

mentation of rules, regulations and laws that mayhave a negative effect on the established smoothoperation as we know it in Greece. There are exam-ples of minor problems, such as changes in thelegal framework concerning the import/export oftax-free ship equipment, or the use of a EuropeanVAT number but these are mostly procedural andare not of great concern. There are also more seriousissues, such as maritime education and its stan-dardisation and accreditation, or general policyrules that govern banking transactions.

However, the real challenges that the EU hasbrought about are a combination of the evolution ofthe Greek economy to meet EU standards and real-ities resulting in the fiscal chaos that we are experi-encing. This inadvertently places pressure on theGreek government to succumb to pressures of theEU central policy makers and effect changes in thecurrent modus operandi of ship owners. Along withthese changes, there has to be an evolution of theGreek work force, which is either financially uncom-petitive or, in certain cases, unable to compete onavailability. The latter change mostly applies toshipboard personnel. Most challenging is also thedifficulty of adjusting the philosophy of free mar-kets that ship owners operate into the highly con-

trolled and complicated fiscal system we live in. One would possibly not recognise these issues,

if it were not for new shipping centres growingdynamically in the vibrant economies of Dubai,Singapore and Shanghai, which have learnt fromour past and are instituting flexible and tax-friendlyregimes to cater for our industry. It will not be longbefore the ship owners in these places overtakeGreek shipping as No1 and enjoy the respect of theirgovernments in a tangible form. This is somethingthat we lack here, due to both our government'sshortcomings, but also due to the fact that histori-cally, the EU has shown complete lack of interesttowards shipping.

>> JOHN A. X YLASPRESIDENT & CEO ARISTON NAVIGATION CORP.

The challenges Greek Shipowners will face,regardless of the location of their operation arethe following:a) Excessive supply of tonnage from the reckless

orders of the last 3-4 years, which will over-shadow demand and push rates down.

b) Lack of traditional Bank finance, as a result ofthe financial crisis, which whenever available,will be more expensive than historical levels.

c) Lack of National Cargoes.d) Chinese central government policy encourag-

ing local owners to invest in shipping andexpand further the national fleet.

e) Over-regulation of the industry, especiallywith regard to environmental issues.

f) Over dependence on Chinese seaborne trade. In addition to the above, operating from an EU

state poses two additional challenges: a) Tax con-cerns and b) Generally higher overheads due tothe Eurozone cost of living.

What are the biggest challenges for a Greek ship-ownerwho operates from an EU State?

01QUESTION

57 Ν.Χ.

>> ION VAROUXAKISCHAIRMAN PRESIDENT & CHIEF EXECUTIVE

OFFICER FREESEAS INC.

As I usually say, shipping is a centuries-oldindustry with its own self-correcting mechanism,capable to adapt and face new challenges, asthey emerge. However, it also calls for alertnessand readiness to see forthcoming changes andneeds. The Greek shipping community has alwaysbeen in the forefront. Traditional expertise iswhere you build on. Our continuous quest forhigher standard and optimised design vessels, forsuitably trained and qualified crew and person-nel, for keeping maritime tradition alive, providesa solid foundation for overcoming the challengesahead.

>> GEORGE D. GOURDOMICHALISPRESIDENT, EXECUTIVE DIRECTOR G. BROS

MARITIME S.A.

If we are not prepared, then we are in serioustrouble. Naturally we must look towards our expe-rience and tradition, which provides us with a fairbase to compete, but this is not sufficient on itsown. Concerted efforts in ensuring that we contin-ue to meet the rigorous demands of today's finan-cial and operating environment are necessary. Thecontinued replenishment of our pool of profession-als -regardless of nationality- is a must, not only onshore but also at sea. We should always keep inmind that we are a global business, so it is in ourinterests to train and employ professionals from aglobal pool. Adaptability and flexibility, as well as a

resourceful brain, have been traits that the Greekshipping community has looked to when having tocope with challenges. As these traits are dynamic,they evolve at the same time as the community isrefreshed by new participants. The massive renew-al of the Greek-controlled fleet over the past decadeand the entry of Greek owners into segments tradi-tionally not favoured, such as gas carriers, drill ships,cape size bulk carriers during the same period is yetanother sign that the community is evolving and ismeeting the challenges as those appear on thehorizon.

We need to see clear signals from the variousinternational organisations as to where we areheading on issues such as carbon emission controlsand this requires active participation from our com-munity in the formulation of policy. We need to findan ally in the Greek state when it comes to formu-lating central EU policy. We need to find an ally inthe Greek state when it comes to long overdue andnecessary changes in both the Greek flag manningrequirements but also in maritime education. Aswith international organisations such as the IMO,there needs to be industry activism to promote ourpositions and to ensure that our interests are safe-guarded, thus curtailing possible unexpected chal-lenges in the regulatory realm.

Past performance is never a guarantee of futureperformance and therefore, the continuous effort toprovide safe, reliable and competitive shippingservices is ultimately dependant on how well-pre-pared we are. Preparation comes with a combina-tion of constant upgrading of knowledge and qual-ity -which is mostly related with the human ele-ment- and clarity as to the regulatory environmentwe operate in. If we, the Greek shipping communi-ty manages to master these issues, we should bewell-prepared for any challenges that lie ahead.

>> JOHN A. X YLASPRESIDENT & CEO ARISTON NAVIGATION CORP.

The Greek Shipping community has shownover the years a tremendous flexibility and adapt-ability to an ever changing international businessenvironment. This has proven to be one of themost important competitive advantages wehave. In this respect, I am confident the commu-nity is adequately prepared to meet the chal-lenges as described in my answer to your previ-ous question, as well as any unanticipated chal-lenges the future may bring. Greek shipping hassurvived many difficult situations and will contin-ue to thrive.

Our 'traditional expertise', as you put it, assimple as it may sound, it certainly includes anumber of unique virtues. Greek seamanship, aresult of years of combined sea experience, whichhas become part of our DNA, our flexibility, ourability to see ahead of the others, is what hasestablished this shipping nation as an uncontest-ed world leader.

Is the Greek shipping community prepared to meet the unanticipated

challenges of the future? Do we needmore than our traditional expertise

to overcome any possible difficultiesthat may interrupt our performance?

02QUESTION

Ν.Χ. 58

>> HARRY VAFIASPRESIDENT & CEO STEALTHGAS

The answer lies within the question itself:"Greece is celebrating 40 years of outstandingperformance in the international shipping arena".I firmly believe that, if a formula has been suc-cessful, there is no need to change it. Most of thetraditional names in the Greek shipowning indus-try have been successful, not only because of theirinstinctive ability to foresee the markets, but alsobecause of their conservative approach. The phi-losophy of reaching as far as your arm extends hasbeen -at least in my personal opinion- what hasrescued our industry during these turbulenttimes. Those who did not get carried away duringthe 2003-2008 period of great euphoria and didnot invest in shipping more than they could copewithin a possible downturn of the market werenot only able to maintain their wealth after themarket took a turn for the worse in the autumn of2008, but were also capable of taking advantageof the opportunities that were presented shortlyafterwards. Let us also not forget that shippingclaims to be the most important industry in our

country, a vital asset during these troubled timesthat Greece is going through. In spite of any tem-porary cash flow requirements, it is the nationalduty of our elected leaders to nurture this assetand protect it, the same way that is has been pro-tected so far, regardless of bias or petty politics. Inother words, it is imperative that the industry'sprivileged status in the Greek legal and tax systembe upheld in order to maintain its competitive-ness for the benefit of Greek shipping itself andthe economy of our country. Furthermore, Greeceshould continue to take steps to enhance thecompetitiveness of the Greek flag and, togetherwith shipping companies, promote the seafaringprofession to the younger generations of aspiringseamen. I believe that the experience, marketsense and the true connection with the sea thatexists in the older generation of shipping profes-sionals, combined with the education and freshideas of the younger ones, will ensure the suc-cessful proliferation of Greece's pivotal role inshipping.

>> THEMIS PETRAKISVICE PRESIDENT IOLCOS HELLENIC MARITIME ENTERPRISES CO. LTD.

Greece is celebrating 40 years ofoutstanding performance as a leader

in the international shipping arena.How can our country maintain

its pivotal role in shipping in thesechallenging times?

03QUESTION

These are indeed really challenging times forall of us. Greek shipping has successfully navigat-ed through many crises in the past but the onethat the Greek economy is now facing is unprece-dented. There are two schools of thought: (a) TheEU and the IMF attack shipping through newtaxes and measures, pushing the bulk of theGreek owners abroad; or, (b) Nothing new isintroduced and shipping continues to prosper

despite the fact that Greek banks are less able andwilling to lend money and life in Athens hasbecome increasingly dangerous for businessmenin general. Moreover, I am certain that sooner orlater the Chinese will overtake us as the largestshipping nation since they have enjoyed a num-ber of advantages, including cheap labour, abun-dance of finance, their own cargoes, and a strongbacking from their government.

>> HARRY VAFIASPRESIDENT & CEO STEALTHGAS

As time passes, smaller companies are realis-ing that competing in a globalised market isbecoming more and more difficult. Shipping is acapital intensive business and in order to keep aleading position you need continuous investmentin new ships, a well-trained workforce and quali-ty management. In Greece, we have about 850shipping companies, 90% of which are operatingfleets of less than 5 vessels. Of course, with care-ful strategy, these players will remain or evenprosper. However, it is a fact of life that larger cor-porations with economies of scale, financial liq-uidity and the approval of major charterers arethe ones that will reap the benefits when theworldwide crisis ends. It is unfortunate that withso many smaller companies we haven't seen awave of consolidation i.e. mergers and acquisi-tions. I am sure it will come sooner or later butdon't expect too much, since all Greeks want tobe the captains of their own ships.

>> THEMIS PETRAKISVICE PRESIDENT IOLCOS HELLENIC MARITIME

ENTERPRISES CO. LTD.

There is no need to mention the advantagesthat a small/medium-size, family-run shippingcompany has, as opposed to public shipping com-panies, or the larger private ones, since anyone -whether involved with shipping or not- knows orcan guess what they are.

So long as a small/medium-size, privately-owned, company continues to operate in a profes-sional, efficient and responsible way and alwaysmanages to adapt and respond to the financial, reg-ulatory and institutional requirements and chal-lenges of the future there will always be a marketshare for such businesses.

In such organisations, the shipowners usuallybear a large portion of the responsibility. It is imper-ative that they continue to choose the right peopleto work with them and assist them in the smoothrunning of the company. Furthermore, it is impor-tant for the company to maintain excellent relationswith its business partners, be it insurers, charterers,bankers, or executives, employees and crew.

A financially robust and well-managed company,whether small, medium, large, private or public, willalways be able to claim its fair share of the market.

Can small or medium size family runGreek shipping companies maintain

their competitive advantage in the nearfuture? What changes are necessary?

04QUESTION

Ν.Χ.64

POSIDONIA

But how different are things today in thecountry compared to the general econom-ic and social atmosphere two years ago, as

a result of the dramatic fiscal and financial crisiswhich has led to the rescue package involvingausterity measures and structural changes agreedbetween the Greek Government and the 'troika' ofthe IMF, the Eurogroup countries and the EuropeanCentral Bank.

Since then we have had the experience of thegreat recession in the freight markets as a conse-quence of the financial crisis in the West and thesubsequent recession in the world economy.

Fortunately, the Greek Shipping indus-try has survived the crisis unscathed andwithout any significant negative impact on theemployment of Greek seafarers. This is in contrastto the dramatic experience of laid up vessels and

unemployed seafarers during the previous greatdepressions.

The picture is now of a healthy, modern ship-ping industry able to sustain successfully thevolatility of shipping markets, as well as theincreasingly stricter regulatory environment.

This is a source of hope for the future, in thesense that 'the wooden walls' of the DelphicOracle will continue to constitute a basic pillar ofsupport to the national economy.

On the other hand for the first time intheir history POSIDONIA takes place withoutthe existence of the unified ministry of MercantileMarine which represented an holistic system ofregulation in maritime affairs.

In essence the 'one stop shop' that stakehold-ers in the shipping industry, shipowners, seafarers,etc. were used to deal with in solving their prob-lems has vanished.

There has been a lot of debate amongst sup-porters and opponents of this development, but Iam sure that following the experience of the lastseven months all objective analysts will agree that

BY PROFESSORJOHN TZOANNOS Former Member of Parliament and Secretary General of theFormer Ministry of MercantileMarine

Supporting the Greek MaritimeIndustry

Once again our country is hosting POSIDONIA, the glamorous worldmaritime event which signifies the leading role of Greece and its ship-ping industry in the highly competitive world of international mar-itime transport.

Ν.Χ.66

in terms of improving the regulatory efficiency of the Greek maritime cluster theexperiment has failed.

Undoubtedly the POSIDONIA event, apart from its own contribution to thebalance of payments and tourist activity highlights the possibilities for sustain-able growth that the Greek maritime cluster continuously offers to the nationaleconomy.

It goes without saying that in the present circumstances it not only impera-tive to preserve these possibilities but also expend them further.

One critical venue in this respect is improving the international attractive-ness and competitiveness of the maritime cluster. This would be in line with themeasures envisaged in the aforementioned rescue package.

Bearing in mind that the shipping community values stabilityand regulatory simplicity more than anything else in its choice of theplace from where to run its business I believe that the restoration of the regimeante in the regulation and support of maritime activities would be a right stepin sustaining the maritime cluster.

Furthermore such a more would be in line with the provisions of the inte-grated maritime policy adopted in 2008 by the European Union in Lisbon. Iwould like to remind the reader that this policy calls for an integrated governanceframework for maritime affairs which requires 'horizontal planning tools that cutacross sea-related sectional policies and support joined up policy making'.

This cannot be achieved effectively with a fragmentation of responsibilitiesamong many regulatory bodies.

A critical element in the success of Greek maritime cluster is alsothe development locally of ship finance services. Following years ofrecord growth in the value of loans provided through banks both Greek and inter-national with branches in Piraeus there has been a stop or contraction of lending,initially due to the global crisis and subsequently due to the Greek fiscal crisis.

Fortunately the facilities provided in the rescue package of 2008 for theGreek banks have allowed them to operate under normal conditions.

It is also important for the cluster that in the new financial envi-ronment following the rescue package for the Greek economy announced onMay 2nd the Greek banking sector continues unabated its ship finance activities.

I would expect that in view of the benefits to the national economy gener-ated by these activities will receive a high priority in the allocation of new loans,especially after the further injection of liquidity expected from the new Fund tobe established under the new bailout package.

Further strengthening of the maritime cluster will materialise also followingthe tackling of the remaining obstacles to Piraeus becoming a major interna-tional hub for tourism.

It is a matter of economic urgency that the recent announcement by thePrime Minister concerning homeporting implemented as soon as possible, withthe consensus of all stake holders. �

POSIDONIA

1. IntroductionA big chapter in Formal Safety Assessment

(FSA) that has only recently opened concerns envi-ronmental risk evaluation criteria. At the 55th ses-sion of IMO's Maritime Environment ProtectionCommittee (MEPC) which took place in October2006, the IMO decided to act on this subject. Amajor topic in Annex 3 of doc. MEPC 55/18 was thedefinition and analysis of risk evaluation criteria foraccidental releases to the environment, and speci-fically for releases of oil. Discussion on this matterwas sparked to a significant extent by a report of EUresearch project SAFEDOR, which defined the crite-rion of CATS (for "Cost to Avert one Tonne of Spilledoil") as an environmental criterion equivalent toCAF ("Cost to Avert a Fatality"), which is alreadyused in FSA. According to the CATS criterion, a spe-cific Risk Control Option (RCO) for reducing envi-ronmental risk should be recommended for adop-tion if the value of CATS associated with it (definedas the ratio of the expected cost of implementingthis RCO divided by the expected oil spill volumeaverted by it) is below a specified threshold, other-wise that particular RCO should not be recom-mended.

The issue of primary importance that triggeredthe debate at the IMO on environmental criteriawas the very CATS criterion and its suggestedthreshold value of 60,000 USD/tonne. At the 56thsession of MEPC (July 2007) a correspondencegroup (CG), coordinated by the second author ofthis paper on behalf of Greece, was tasked to look

Ν.Χ.68

INTL FORA

IOPCF Oil Spill Cost Data:Empirical Analysis and Debate at the IMO

BY CHRISTOS A. KONTOVAS,

HARILAOS N. PSARAFTIS

& NIKOLAOS P. VENTIKOS

Laboratory for Maritime Transport, National Technical University of Athens

This paper reports on recent analysis of oil spill cost data assembled by the

International Oil Pollution Compensation Fund (IOPCF). Regression analy-

ses of cleanup costs and total costs have been carried out, after taking

care to convert to current prices and remove outliers. The results of this

analysis were recently adopted by IMO/MEPC as a basis of further discus-

sion on environmental risk evaluation criteria in Formal Safety

Assessment (FSA).

69 Ν.Χ.

into all related matters, with a view to establishing environmental risk evaluationcriteria within FSA. More than 2 years after, and after some considerable debateand generally divergent views (see docs. MEPC 57/1, MEPC 58/1, MEPC 59/1)the issue is far from closed, and a working group on this subject is planned forMEPC 60 (March 2010). Worthy of note in the same context has been researchdone in Japan (doc. MEPC 58/17/1, Yamada (2009), doc. MEPC 59/17/1). Itsrelevance was mainly in terms of quantifying the non-linearity of spill costs withrespect to volume. A recent submission by Norway (doc. MEPC 59/INF.21,Psarros et al (2009)) presented a similar regression analysis. Also, an FSA studyon crude oil tankers that used the above threshold was conducted by projectSAFEDOR and submitted to MEPC by Denmark (docs MEPC 58/17/2, MEPC58/17/INF.2). The study recommended, among other things, increased side-tankwidths and double-bottom depths for tanker newbuildings. At the 59th sessionof MEPC (July 2009) it was decided to pursue a volume-dependent approach forCATS, that is, proceed by explicitly taking into account the non-linear relationshipbetween spill volume and spill cost.

The purpose of this paper is to report on recent regression analyses of oilspill cost data provided by the International Oil Pollution Compensation Fund(IOPCF). These analyses have been carried out by the authors and are in thesame spirit as those carried out by Yamada (2009) (primarily) and Psarros etal (2009) (secondarily) but differ from them on several points. As will be seenlater, these analyses and their results have provided useful insights to the discus-sion within the IMO on environmental risk evaluation criteria.

2. Data usedCompensation for oil pollution caused by tankers is governed by four inter-

national conventions: the 1969 and the 1992 International Convention on CivilLiability for Oil Pollution Damage ("CLC 1969" and "CLC 1992") and the 1971and 1992 conventions on the Establishment of an International fund forCompensation for Oil Pollution Damage ("1971 Fund" and "1992 Fund"). Theseconventions together create and international system where reasonable costsof cleanup and damages are met, first by the individual tanker owner up to therelevant CLC limit through a compulsory insurance and then by the interna-tional IOPC Funds, if the amounts claimed exceed the CLC limits. The IOPCFAnnual report (2007) presents the claims that the IOPC Fund dealt with in the

past. This report includes 107 accidents that are covered by the 1971 Fund and33 by the 1992 Fund. For each accident the time and the place of accident areknown and for most of the cases the volume of oil split, as well as, the costsclaimed and eventually covered by the Fund are recorded. Damages are groupedinto the following categories:• Clean-up• Preventive measures• Fishery-related•Tourism-related• Farming-related• Other loss of income• Other damage to property• Environmental damage/studiesWhere claims are shown in the table as settled this means that the amountshave been agreed with the claimants, but not necessarily that the claims havebeen paid or paid in full. In our analysis we refer to cleanup cost as the cost thathas been agreed (excluding cases where claims are pending) for clean-up of thedamage and to total cost as the sum of all costs that are presented in the report.Figure 1 presents a sample of the IOPCF 2008 Annual Report.

As one may notice, there are cases where clean-up cost is the only categorythat appears and, thus, the total cost is equal to the cleanup cost. Given the volume of oil spill (V), the cleanup cost (CC) and the total cost (TC), we presentthe results of regression analyses of CC=f(V) and TC=f(V). Entries from whichat least one parameter is unknown were removed from the analysis.

In order to get the necessary data to perform our analysis we followed thesteps below:1. Removed all incomplete entries2. All claims for the cleanup and the total cost categories (in the case of multi-

ple claims) were added up by converting them to US Dollars at the time ofthe accident. We note that we are aware of the fact that the year of the acci-dent and the year when the amount agreed was paid are not the same butthis was the only available information. Furthermore the exchange ratesused in these conversions were found in various CIA Factbooks and in a list offoreign currency units per dollar that is compiled by Antweiler (2009)

3. The cost of the previous step were capitalized into 2009 US Dollars by using

Fig. 1: Excerpt of the IOPC 2007 Annual Report (IOPCF, 2007)

conversion factors based on the Consumer Price Index (CPI).

In this way we arrived at two datasets, one having data on the Cleanup Cost (CC)and the Volume (V) and another on the Total Cost (TC) and the Volume (V). Thesedatasets were not disjoint. In fact, the first dataset contained 84 entries, thesecond had 91 entries, and 68 spills reported both CC and TC.According to Friis-Hansen and Ditlevsen (2003), the logarithm of the oil spillvolume and the logarithm of the total spill cost are positively correlated, havinga very high correlation coefficient. This is also observed by Hendrickx (2007) andYamada (2009). Our analysis of possible fits concluded that the double loga-rithmic, the multiplicative and the double reciprocal have the highest correlationcoefficients and R-squared values. Therefore, Costs (TC and CC) and Volumes (V)were Log-transformed and a linear regression was performed for the two cases.

3. Results3.1. Cleanup Cost (CC)After removing incomplete entries, a dataset of N=84 spills for the period 1979-2006 was used for this regression analysis.

The minimum volume is 0.2 tonnes and the maximum is 84,000 tonnes. Theaverage spill is 4,055.82 tonnes with a standard deviation of 14,616.15 tonnesand the median is just 162.5 tonnes. Even without a histogram one can easilyrealize that most claims come from relatively small spills. There are only 10spills above 5,000 tonnes and, thus, one should be very careful when using theregression formulas to estimate the cost of large spills.

Furthermore, an average per tonne oil spill cleanup cost using the IOPCF data-base can be calculated by dividing the total amount paid by the Fund for cleanupby the total amount of oil that was spilled. According to our analysis, this valuecomes to 1,639 USD (2009) per tonne. The equation of the fitted model usinglinear regression is:

LOG10(CleanupCost) = 4.64773 + 0.643615 LOG10(V)or,

Cleanup Cost = 44,435 V0.644 (1)

3.2 Total Cost (TC)Following the same methodology as in the previous step a regression analysis oflog(Total Cost) and log(Spill Size) was performed initially for N=91 spills (for theperiod 1979-2006). The analysis of the studenized residuals revealed the exis-tence of a total number of 8 possible outliers. These outliers were removed. Afterthree consecutive regressions we arrived at the final dataset of N=83 spills.

The minimum volume here is 0.1 tonnes and the maximum is 84,000tonnes. The average spill is 4,854.29 tonnes with a standard deviation of16,064tonnes and the median is just 140 tonnes. There are only 11 spills above5,000 tonnes.

The equation of the fitted model using linear regression is: LOG10(TotalCost) = 4.71123 + 0.727567 LOG10(V)

or,Total Cost = 51,432 V0.728 (2)

As before, an average per tonne oil spill total cost using the IOPCF databasecan be calculated by dividing the total amount paid by the Fund by the totalamount of oil that was spilled. According to our analysis, this value comes to4,118 USD (2009) per tonne.

It has to be noted that our regression analysis was very carefully performedin order to identify possible outliers given the high sensitivity of the outcome onthe dataset that we chose. Outliers at both end of the spectrum were removed,that is, both for very low and for very high total spill costs per unit volume. Inorder to illustrate the sensitivity of including or not including such spills, wepresent the following for a hypothetical cost for a one tonne spill. The total costgiven by the regression formula for a hypothetical oil spill of 1 tonne is 51,437USD. The results would have changed dramatically if some outliers had not beenremoved. For example, let us have a look at two extreme accidents both causedby mishandling of oil supply in Japan. The 'Kifuku Maru' accident in 1982resulted in a spillage of 32 tonnes. The amount of money (converted into 2008USD) that was paid for compensation was just 165 USD per tonne, a very lowvalue. On the other hand, in 1997 the accident of 'Daiwa Maru No 18' resulted ina one tonne spillage that costed more than 4.5 million USD. If the extremely highcost value of the 'Daiwa Maru No 18' had been included in the regression the for-

Ν.Χ.70

INTL FORA

Fig. 2: Linear Regression of Log(Spill Size) and Log (Cleanup Cost) Fig. 3: Linear Regression of Log(Spill Size) and Log (Total Cost)

mula would produce a total per tonne cost for the hypothetical spill of one tonneof 56,058 USD. On the other hand, the extremely low, in terms of cost, case of'Kifuku Maru' would have pushed the same value to as low as 46,706 USD.

By dividing regression formulas (1) and (2) by V one can obtain the unit costsas follows:

Unit Cleanup Cost = UCC= 44,435 V-0.356 (3) Unit Total Cost = UTC= 51,432 V-0.272 (4)

One can see that both unit costs are decreasing functions of V, as expected.Also, by differentiating regression formulas (1) and (2) with respect to V one

can obtain the marginal costs as follows: Marginal Cleanup Cost = MCC= 28,616 V-0.356 (5)

Marginal Total Cost = MTC= 37,442 V-0.272 (6)The marginal costs MCC and MTC are interpreted as the additional cost if one

more tonne of oil is spilled. As expected, these are decreasing functions of V too.The table 1 shows values of these per-tonne costs for some representative

values of V. V is in tonnes and the per-tonne values are in USD/tonne.The precise way such figures can be used in an FSA study is yet to be deter-

mined, and it is among the subjects of discussion at the IMO how the volume-based approach will be integrated within the FSA method. The general frame-work of Psaraftis (2008) might be useful in that regard, but other approachesmay also be of interest.

It is also worthy of note that the data provided by the 2007 IOPCF Annualreport can be used to estimate an average spill total cost/spill cleanup cost ratio,for the sample of spills for which the values of both CC and TC are available. Sincewe are only interested in the ratio, there is no need to do the conversions discussed before (i.e to use the exchange rate and the CPI index). Furthermore,accidents for which the claimed costs were only clean-up costs had to beremoved. If cleanup cost is the only cost category available, this means that thetotal cost (as in the analysis performed above) would be equal to the total costand in this case the ratio will be equal to 1. In order to remove this bias, all ratiosequal to 1 were removed, although this probably biases the analysis towardshigher total cost to cleanup cost ratios. A ratio of 87,547 (eighty seven thousand,'Braer' accident) was also removed as an outlier. The dataset of the N=68 ratiosthat were left (see Fig. 4), has a minimum ratio of 1.002, a maximum of 10.01, amean of 1.929 and a median of 1.287. The median is the measure of center(location) of a list of numbers. Unlike the mean, the median is not influenced bya few very large values in the list and may be a more appropriate criterion for thispurpose.

Speaking of ratios, one should be very careful with their use. Two statisticsthat one should be particularly careful with are (a) the average of the ratio'cleanup cost/spill volume', and (b) the average of the ratio 'total cost/spill volume'. For our data, these average ratios are estimated at 23,085 USD/tonneand 33,425 USD/tonne respectively.

4. Other studies using IOPCF dataFour recent cases where IOPCF data was analyzed were known to the authors

prior to their own analysis. It is not our purpose to comment on these in detailhere. Friis-Hansen and Ditlevsen (2003) used the 1999 Annual Report (exceptthose accidents that belonged to the categories "loading/unloading", "mishan-dling of cargo", and "unknown reason" which were removed from their analysis)

Table 2: Comparison of Total Cost Formulas

Study Total Cost = f (V) R2

Kontovas et al. (2009) - this paper Total Cost = 51,432V0.728 0.782

Psarros et al. (2009) Total Cost = 60,515 V0.647 0.507

Yamada (2009) Total Cost = 38,735 V0.66 0.460

Table 1: Unit and marginal cost values

V UCC UTC MCC MTC

1 44,435 51,432 28,616 37,442

10 19,576 27,494 12,607 19,957

100 8,624 14,697 5,554 10,644

1,000 3,799 7,857 2,447 5,677

10,000 1,674 4,200 1,078 3,028

100,000 737 2,245 475 1,615

Table 3: Total Unit Spill Cost (Total Spill Cost/Spill Volume) USD/tonne

V- tonnes Log(V) Yamada Psarros et al. Kontovas et al. Constant (2009) (2009) (2009) - this paper Unit Cost

1 0 38,735 60,515 51,432 40,000

10 1 17,705 26,845 27,494 40,000

100 2 8,093 11,909 14,697 40,000

1,000 3 3,699 5,283 7,857 40,000

10,000 4 1,691 2,343 4,200 40,000

100,000 5 773 1,040 2,245 40,000

Ν.Χ.72

Fig. 4: Total Cost/Cleanup Cost Ratio (Data from IOPCF)

INTL FORA

Ν.Χ.74

INTL FORA

and converted all amounts into Special Drawing Units (SDR) by an averageannual exchange rate taken from the International Financial Yearbook. Then, historic national interest rates for Money Market Rates were applied to capitalizeall costs into year 2000 units followed by a conversion into 2000 USD.

Hendrickx (2007) performed an analysis based on data of the 2003 AnnualReport and analyzed 91 cases by converting each compensation amount into USDollars using for each accident the exchange rate on Dec. 31 of the year of occur-rence. Exchange rates of the Bank of England were used for the currencies availableand for the others an online website (OANDA.com) was used. There is no reportthat an inflation rate was used to bring these amounts into current Dollars.

Yamada (2009) performed a regression analysis of the amount spilled andthe total cost by using the exchange rated provided in the Annual Report itself.These rates can be used for conversion of one currency into another as of Dec. 31,2007 and do not take into account the time of the accident. Furthermore, noinflation rate was used to capitalize the costs into 2008 dollars. His analysisformed the basis of Japan's submissions to the MEPC and, to a large extent, thebasis of the MEPC decision to recommend a volume-based approach.

Last but not least, Psarros et al. (2009) used combined data from twodatasets, namely the IOPCF report and the accident database developed by EUresearch project SAFECO II (a project that antedated SAFEDOR), and thus performed a regression analysis in 183 oil spill incidents. It is not immediatelyclear from their analysis what the SAFECO II database is and what (if any) biasesit introduces to the analysis. The amounts were converted into 2008 US Dollarstaking into account the inflation rate.

Table 2 summarizes the various oil spill total cost volume-based regressionformulas and the corresponding R-squared values.

What is perhaps interesting in Table 2 is the higher R-squared value of ourstudy versus those of the others, perhaps implying a better fit with the data, andpossibly a more reliable representation of spill costs on a volume basis. This ismainly explained by the removal of the outliers as mentioned earlier.

Table 3 shows some characteristic values of the total unit spill cost of thesethree functions. For comparison purposes, the total spill cost per tonne ofUSD40,000/tonne corresponding to a constant CATS value of USD60,000/tonneis also shown.

5. Recent IMO developmentsAt the latest meeting of the MEPC (MEPC 60, March 2010), a Working Group

was formed under the chairmanship of Prof. Psaraftis. Following extensive discussion as to what type of total spill cost function should be used, a majorityof the members of the Group agreed that a non-linear function is more justifiableby the available data, with some other Group members supporting a constanttotal spill cost per tonne, and some other members not being able to take a posi-tion on this issue.

After considerable debate, among the three non-linear regressions (asshown above), the one proposed by the authors of this paper was considered asmore conservative and was proposed as a basis.

To that effect, MEPC 60 agreed that in order to arrive at the recommendedCATS criterion, the following should be considered (among other things):1) Member governments or interested organizations having their own addi-

tional data, attempt to verify, and adjust as necessary the said regression

formula by incorporating their additional (chosen) data in the analysis. In thisconnection, MEPC 60 agreed to invite the interested stakeholders to submittheir data for each cost component and the results of their analysis for consideration.

2) Following a more reliable establishment of the cost curve, a proposed CATSformula, to be used in the cost effectiveness step of FSA, can be establishedby introducing a margin or factor value (so called assurance factor) still to beagreed representing society's willingness to prevent an accident rather thansimply neutralize its consequences.

3) MEPC 60 invited member governments and interested organizations to usethe non-linear cost function in FSA studies with a view to gain experiencewith its application and provide information to the IMO which may help toimprove the proposed functions.

AcknowledgmentsThis paper is an abridged version of a more extended paper, which is availablefrom the authors.

ReferencesAntweiler, W, (2009) "Currencies of the World", University of British Columbia. http://fx.sauder.ubc.ca. Retrieved 2009-01-01

Friis-Hansen,P., Ditlevsen,O., (2003),"Nature preservation acceptance model applied to tankeroil spill simulations", Journal of Structural Safety, Vol. 25, Issue 1,pp 1-34.

Hendrickx, R., (2007), "Maritime Oil Pollution:an Empirical Analysis", in Faure, M. and Verheij,A. (Eds.) "Shifts in Compensation for Environmental Damage", Springer Verlag.

IOPCF (2007), "Annual report 2007". International Oil Pollution Compensation Funds, London, UK.

Psaraftis, H.N., (2008), "Environmental Risk Evaluation Criteria", WMU Journal of MaritimeAffairs, Volume 7, Number 2, October 2008, pp. 409-427(19).

Psarros,G., Skjong, R., Endersen, O. and E. Vanem, (2009),"A perspective on the developmentof Environmental Risk Acceptance Criteria related to oil spills", Annex to doc. MEPC 59/INF.21.

Yamada, Y. (2009), "The Cost of Oil Spills from Tankers in Relation to Weight of Spilled Oil",Marine Technology, 46(4), pp. 219-228(10)

Ν.Χ.76

INTL FORA

For some time now, the delegates of IMOmember states have been trying to formulate

the new Green House Gas (GHG) reduction regu-lations which will be applicable to ships in thevery near future. In practice, we are talking aboutreductions of CO2 emissions. The impact of thesenew regulations on the shipping industry isexpected to be more extensive than all otherprior regulations with the exception of SOLAS.Depending on the final agreed nature of theseregulations, the impact to shipping may be larg-er than ISM or MARPOL itself. The measures willaffect all ship types and sizes and all aspects ofthe shipping industry (i.e. designers, ship-builders, operators, regulators etc). The measures being discussed comprise twomajor items. The application of Market BasedInstruments on Shipping (MBIs) and the notionthat ships must be designed in the future withreduced energy requirements, namely reducedfuel consumption.

MBI'sMarket Based Instruments are themechanisms that will be applied in theeveryday operations of the ships and ship-ping companies to promote the reduction of CO2emissions. Through these mechanisms, a hugeamount of money will change hands and some

of it will be collected in a fund which subse-quently will be used to promote new researchand green technologies for ships. Among variousoptions and ideas proposed and discussed onlyone is simple, practical and doable: a flat tax orlevy on fuel. Most proposals however centrearound Emissions Trading Schemes (ETS).

Emissions Trading Schemes are verycomplex instruments. Up to now they havebeen applied to closed and tightly controlledindustries in Europe and USA such as powerplants producing electricity. The fairly small num-ber of stationary plants, makes ETS doable in thepower industry but the results of the whole exer-cise has been disappointing. Despite claims to thecontrary by those vested in ETS, the few trulyindependent studies done to date show that noreductions in emissions have been achieved, butinstead increases as usual. The scheme calls forthe worse polluter to pay more than the efficientpolluter by purchasing emission allowances, orcredits, through a central stock exchange. The pol-luter who achieves reductions below a certainpre-determined level obtains the right to sell suchallowances to the polluter who exceeds its allo-cated limit. The allowances/credits are boughtand sold through carbon stock exchanges.Currently there are such major exchanges in

Developments at IMO

The New Emissions Regulations being

discussed at IMO, and their potential

implications on shipping.

BY PANOS

ZACHARIADIS1

Technical DirectorAtlantic Bulk CarriersManagement, Ltd.

77 Ν.Χ.

London and Chicago (with Goldman Sacks beinga major shareholder) but many other smaller car-bon exchanges exist, while most major stockexchanges plan to get into this lucrative action inEurope, Asia and the USA. Currently, carbon trad-ing is a 136 billion dollar market, and with theinduction of airlines and shipping it will be in thetrillions.

It is no wonder then that the hugeinterests of major world financial play-ers are pushing ETS, presenting it as thepanacea for CO2 reductions in shipping. In addi-tion, the countries which expect to have involve-ment through their carbon exchanges in such ahuge new financial play are the ones which sup-port ETS for shipping. In Europe, there are now sixcarbon trading exchanges in Britain, Norway,Germany, Austria, the Netherlands and France.What a coincidence! These are also the strongestproponents for ETS for shipping. Apart fromexpanded business and financial gain, they counton the thousands of new jobs which will be cre-ated to handle such a huge new carbon creditmarket. Besides, we should not forget that suchcountries have the major classification societies(DNV of Norway, BV of France, LR of UK, GL ofGermany which, along with other proponentsABS of USA, RINA of Italy, NK of Japan), whichwill be performing audits yearly in all ships andshipping companies of the world to ascertainhow much fuel was used by each ship, howmuch CO2 was emitted and which companyachieved emissions below or above its allocatedlevels (and thus sell allowances to the market fora profit or buy them in order to keep operating itsships). This new business for classification soci-eties will be far larger and lucrative than the ISMaudits they now perform.

On the other hand, ship operators haveof course realised that a possible applicationof ETS on shipping will be a managerial night-mare. What is more, the design formulae current-ly discussed at IMO, do not really ensure a fair-playing field (see below on EEDI). Moreover,since independent studies show that ETS doesnot really work to reduce emissions, operatorsquestion the need for such burden. On the con-trary, studies performed for the Congress of the

United States, show that a flat tax on fuel is manytimes more effective than ETS in reducing CO2emissions at a fraction of the cost. To the impar-tial observer, it is evident that those who willgain most from ETS are the managers of the sys-tem (stock exchanges, traders, brokers, auditors,verifiers etc) instead of the environment itself.

The burden of ETS for shipping compa-nies will be immense. A new department ineach shipping company will need to be estab-lished to monitor emissions, ensure allowancesare sufficient, implement corrective measures,handle bureaucracy and so on. Such burden willbe heavier for smaller companies. Furthermore,the yardstick used to judge which ship is efficientand which is not, is based on a currently flawedformula (EEDI). Suffice to say that a ship actuallyburning less fuel than another of same type and

size, may show as being less efficient accordingto the formula and will thus be penalised bybeing required to purchase emission allowances.

Compare such a behemoth scheme withthe simplicity and transparency of few percent-age points (tax or levy) on the going market priceof bunkers. The money collected goes into a fundwhich is administered by IMO itself and used tosupport advancement of ship technology ofdeveloping countries and selected greenresearch. The incentive to be more green is there,since the less efficient ship consumes morebunkers and thus pays more than its competitors.

Last but not least, it has to be men-tioned that ETS seem to be prone tofraud.The latest case, uncovered in April 2010,spread throughout Europe with 27% (!) of allmarket transactions of the last 18 months beingfraudulent (Bloomberg, April 30, 2010), whilethe cost to European taxpayers from this incidentalone is estimated at $7 billion! Earlier this year,Australia discovered other types of fraudschemes related to carbon trading (Reuters,January 7, 2010), while similar stories haveappeared regularly since 2007. Several big nameauditors have been suspended at one time oranother as a result of such incidents (notably SGSUK, DNV, Germany's TUEV, etc.) showing that thecomplexity of the instrument does not allow foreasy audits and transparency.

EEDIThe second major instrument for CO2reductions being discussed at IMO cen-tres on the idea that future ships must be lessenergy demanding than the current ones. To thatend, various Energy Efficiency Design Index(EEDI) formulae have come into play with whichfuture designs should comply. Here again thecountries with serious research capability (Japan,Norway, Denmark etc) tried to ensure early onthat such future design requirements will notcreate big problems for their existing nationalfleets or their shipping/shipbuilding industry.Thus, for instance, Denmark ensured that therequirements will be harmless for its huge con-tainership fleet, Japan ensured that the formulaehave no real design demands (thus no burden for

A new department in each shipping company will need tobe established to monitor emissions, ensure allowancesare sufficient, implement corrective measures, handlebureaucracy and so on. Such burden will be heavier forsmaller companies.

Ν.Χ.78

INTL FORA

the shipyard designers) but instead that compli-ance can be achieved by operational measuressuch as speed reduction. An ingenious passing ofthe buck to operators once again, while pretend-ing the measures aim at improved designs.

The EEDI formula which was about to beapproved at the last MEPC session of IMO inMarch, would favour slow speed/low horsepow-er ships and ships with as little steel as possible(to increase their DWT). This goes against safetyof navigation (low speed/horsepower) andagainst the overall strength and safety of ships. Alot has been said and written about the insuffi-ciency of IACS Common Structural Rules and theinsufficiency of IACS Unified Requirement S11,which specifies the minimum longitudinalstrength of ships. IMO's new Goal BasedStandards (GBS) regulations for tankers and bulkcarriers were aimed (at least originally) at morerobust ships. But here comes another IMO regu-lation in direct contradiction to GBS, favouringlightly constructed and underpowered ships.

Current bulk carrier and tanker designsare already underpowered, namely theyare fitted with the smallest possible engine thatwill satisfy the claimed design speed at the lakeconditions of sea trials. When operating in realsea conditions, to achieve the design speed, theengine needs to operate near its maximum HPwith an exponential increase of fuel oil consump-tion (and thus CO2 emissions). The current EEDIformula, would only make things worse, sincethe lower the design speed and HP, the more effi-cient the ship would be branded. Never mindthat in real sea conditions the CO2 emissionswould be tremendously increased. Unless suchweaknesses in the formula are corrected, thenext generation ships may have 12-12.5 knotsdesign speed (i.e. actual sea speed of 11.00 knotsor less in fair weather). In bad weather, where

speed will substantially drop further, it is doubt-ful that they may safely navigate. When my company was examining fuel con-sumption improvements for its next generationnew-building programme of supramax bulk carri-ers, installing a larger engine than the standardwas a natural move, enabling operation at theoptimum point of 75% MCR (maximum HP) inreal sea conditions, saving about 2.5 metric tons indaily fuel consumption at the same speed than theyards standard design. Another 1.5 tons in fuelwere further saved by slightly optimising the bowhydrodynamics. Yards, in their effort to maximisedeadweight and cubics, have developed very fullbows which produce large resistance at the slight-est wave. It was surprising to see a 1.5 ton in fuel-saving just with a small sacrifice of only 200 tonsin deadweight (displacement). Certainly thatproves that there are real design improvementsthat can be applied for fuel consumption reduc-tions without compromising safety. However, the above-described fuel efficient shipswould show as inefficient, or may not even beallowed to be built, if the current EEDI formulawas already regulation. This is because of thelarger engine and reduced DWT. Agreement onthe existing flawed EEDI formula was averted atthe last minute in the previous session of MEPC,thanks largely to the efforts of Greece, whileChina had expressed similar concerns. In thebeginning, nobody seemed willing to listen. Thereason was that everybody was in a hurry toclose the issue, approve an amendment to MAR-POL, adopt it at the next MEPC session inSeptember and go to the next UN climate meet-ing in Mexico in December with a done deal.When it finally sunk in that Greece would notgive in to a flawed EEDI and to compromises insafety and robustness, it was agreed that theissue will be reviewed again at the special MEPCsession in the summer with the aim of fixing theflaws. However, the developing nations (China,

India, Venezuela, Brazil and many others) refusedto take part in any Marpol amendment, claimingthat there should be differentiated treatment forthem, along the Kyoto principle of Common butDifferentiated Responsibility (CDR).

CDR is a thorny and divisive issue forIMO, since all ships must be treatedequally and the IMO regulations must beequally applicable to all. For example, applying aregulation to some flags but not others, wouldsimply create a flight of ships from the regulatedto the unregulated flags. The developing nationson the other hand rightly complain. The shipsproduced by their shipyards will be at a techno-logical disadvantage (exacerbated by the flawedEEDI), while they have nothing to gain from anEmissions Trading Scheme, where most of theprofits will go to the intermediaries who managethe scheme. In the opinion of the author, the only optionwhich is compatible with Kyoto's principle ofCommon but Differentiated Responsibility (toreduce emissions) is one where EEDI has no rolewhatsoever in the operational phase of ships(but only in their design). This option is the flatlevy on fuel. All ships (whether efficient or not)pay the same percentage amount levy depend-ing on bunkers purchased (CommonResponsibility) while the funds collected are dis-tributed primarily to assist the developing coun-tries to improve their shipping research and tech-nology (Differentiated Responsibility).

Let us hope that the flaws in EEDI willbe corrected for the sake of both safety andthe environment and let us hope that the com-plex, impractical, inefficient and fraud-prone ETSwill not hit the shipping industry.

1. Mr. Zachariadis is a regular member of Greece's delegation

to IMO.

Among various options and ideasproposed and discussed (for aglobal ''green fund'') only one issimple, practical and doable: a flattax or levy on fuel.

REGISTRO ITALIANO NAVALE (HELLAS) LTD I 47-49, Akti Miaouli - 185 36 Piraeus - Greece I Tel: 210 4292 144-8, Fax: 210 4292 950 E-mails: piraeus.office@rina.org, greece@rina.org, greece.planapproval@rina.org

Ν.Χ.80

ENVIRONMENT

The shipping industry developed a green con-science towards the environment manyyears ago. The MARPOL Conventions of 1973

and 1978 were nothing less than the beginning ofspecific regulations for protecting the environmentand making maritime transportation cleaner. Thetable below is a reminder of IMO Regulations,which are intended to protect the marine environ-ment.

Measures were taken many years ago to pre-vent marine pollution by installing on board ves-sels the appropriate equipment, by painting ship'shulls with the correct paint, by monitoring ballastwater, by minimising atmospheric pollution andby introducing new operational practices.

Nowadays, the focus is on reducing CO2,Nitrogen Oxides (NOx) and Sulphur Oxides (SOx).These pollutants are generated by the combustionof fossil fuel in a diesel engine and for this reason,low sulphur fuels are being supplied to vessels.Specific regulations have been introduced for thecontrol of emissions in some areas, such as SECAand ECA. The first is located in Europe in the region

of the Baltic and the North Sea, while the secondis located around the coast of the USA and Canada.

On 19 May 2005, the regulations con-tained in ANNEX VI of the MARPOLConvention came into force. These regula-tions set limits on Sulphur Oxide and NitrogenOxide emissions from ships. The regulationsinclude a global cap of 4.5% m/m on the sulphurcontent of bunker fuel. They also contain provi-sions for the establishment of SOx EmissionControl Areas, such as SECA (Baltic and NorthSea) and ECA. In these areas, the sulphur contentof fuel oil used onboard must not exceed 1.5%m/m. The ANNEX also sets limits on the emissionof nitrogen oxides (NOx) from diesel engines andprohibits the incineration of certain productssuch as contaminating packaging materials.

The main changes to MARPOL ANNEX VI stip-ulate a progressive reduction in Sulphur OxideEmission (SOx) from ships, from 4.5% to 3.5% andcomes into effect on 1st January 2012, then con-tinues down to 0.5% , which comes into force on

1st January 2020. The limits applying to SECASareas will be reduced to 1% in July 2010 and willbe further reduced to 0.10% in 2015. Innovatingtechnologies and new operational procedures willhave to be introduced in order to comply with theemission control regulations.

When dealing with the new regulationswe first need to achieve energy efficiency.Diesel engines are the principal source of powerfor the world's shipping fleet, but these enginesare not the friendliest from an environmentalpoint of view. However, the pollution levels are notthe same across the working range. At the opti-mum operating range, fuel efficiency is consider-ably higher and pollution lower than at slowspeeds. Therefore, the answer is to keep enginesoperating within the optimum range. Greater fuelefficiency can also be achieved by optimising the

BY EMMANUEL PAPALEXIS

Mare Maritime Company S.A.

Greenshipping

We are all witnessing the greateffort in order to make the worldgreener as a result of environ-mental protection. Nowadays,everyone is talking about GreenEconomy, Green Industry, GreenDevelopment, Green Technology,or Green Revolution.Undoubtedly, in most industriesand in human behaviour in gen-eral, the green ideal is some-thing new -but not in shipping.Obviously, in shipping we preferto keep seas and skies clear bluerather than green; however, forthe sake of today's manner ofspeaking, we're using the wordgreen instead of blue.

Ν.Χ.82

ENVIRONMENT

Another interesting point is the ShipEfficiency Credit Trading Scheme (SECTS).This is a proposal for a global trading system forgreenhouse gas emissions. Although a similarparallel scheme is in operation for shore-basedindustry (i.e. the EU Emissions Trading Scheme),there are doubts as to whether such a scheme canbe successfully applied to the shipping sector.

Problems such as the suitability of the con-trolling agency, measuring implementation,and certification would prevent such a systemfrom operating properly. Similar existingschemes for the shore-based industry havealready been criticised for their ineffectiveness.Phase 1 of the EU Emissions Trading Scheme hasbeen an example of such ineffectiveness. Wealso think it important that trading within theSECTS is not open to anyone outside the shipowning/operating community. Although weare in favour of the concept of improving fuelefficiency and reducing CO2 emissions, theimplementation of such a concept has to besimple and practical.

When dealing with energy efficiency wehave to examine all the ways we canachieve this. While the regulators are workingto establish an agreement on how energy effi-ciency can be measured and where and whichships it will apply to, the industry itself forgesahead with introducing operational proceduresand installing equipment through which energyefficiency can be achieved. Because of pressure tocurb CO2 emissions, many companies are explor-ing ways to increase a ship's efficiency byimproving the engines, propellers, hull and rud-der, installing scrubbers and optimising the voy-age by improving ship routing. The most eco-nomical way to achieve a reduction in emissionswill eventually become the most popular.

For a vessel to cross the Pacific, it will requireUS$350,000 of fuel. With proper voyage optimi-sation a saving of between US$ 35,000 toUS$50,000 can be achieved. Reducing the fric-tion between hull and water is another way toincrease energy efficiency. Therefore, maintaininga clean hull becomes a priority. It is also vital to

paint the hull with the right antifouling paint.MOL has conducted research into high-perform-ance antifouling paints which improve fuel effi-ciency and eventually lead to CO2 reduction.According to the same research, the drag of theseawater over the vessel's wetted surfaceaccounts for 50% to 80% of all resistance,including wind and wave resistance. It is expect-ed that such sophisticated and advancedantifouling paints for ships' bottoms will reduceCO2 emissions by 8% to 12%, compared to con-ventional antifouling paints.

We also see that International Paint estimatesthat a VLCC painted with its modern generationantifouling paints can achieve a reduction in CO2

emissions by 31,000 tonnes over a five-year peri-od. It is apparent that hull coatings have a signifi-cant role to play in promoting fuel efficiency andreducing environmental impact.

Therefore, it would appear that green ship-ping (or blue shipping as we like it to call it) can beachieved through the various ways describedabove. �

ship's propeller, its rudder, the vessel's trim andthrough the use of the right paints.

The issue of energy efficiency becomes aheadache for the IMO when different opinions andapproaches divide members over the technical andoperational measures to be taken in order toincrease energy efficiency. A formula has to befound and agreed on, by which the EnergyEfficiency Design Index (EEDI) can be measured.Furthermore, an agreement has to be establishedbetween IMO members for which types of shipsuch a formula will become mandatory using theframework of MARPOL ANNEX VI.

While the sixtieth session of the MarineEnvironmental Protection Committee (MEPC) endswithout a final decision being made and MEPC 61is being organised, the industry is continuing toprepare itself. Innovative machinery and equip-ment able to monitor and measure NOx, SOx andCO2 are becoming available on the market. Newoperational practices are being introduced by shipoperators aiming to comply with expected newrequirements for the reduction of emissions.

1983 1987 1992 2003 1988 2005 ANNEX I ANNEX II ANNEX III ANNEX IV ANNEX V ANNEX VI OIL NOXIOUS HARMFUL SEWAGE GARBAGE AIR POLLUTION

LIQUID SUBSTANCES SUBSTANCES IN PACKAGED

IN BULK FORM

NOx emissions from Shipping represents 7% of global emissions SOx emissions represents 4% of global emissions

The first one is the regime govern-ing public financing of Europeanports. As several financial institutions

that had been active in leveraging the requiredcapital rediscover risk and are reluctant to invest,relevant authorities ask governments to inter-vene, or permission to borrow in order toprogress developments. In Italy, authorities pro-posed a 'Marshall Plan for ports'. In the UK, bor-rowing was the means to forward the keyLondon Gateway project. The situation leads tomore calls for supranational capital mobilisation.The European Seaport Organisation (ESPO) hasprioritised "sustainable development of infra-structure through a Trans-European TransportNetwork policy", reversing a sceptical stancetowards this particular EU policy. The priority is toinclude significant ports in TEN-T plans. However,decisions on the details are essential and impor-tant, as this priority may seriously distort thelevel-playing field between competing ports.

All these are associated with the secondissue, the clarification of the rules gov-erning state aid to ports. Until now, theCommission has never acted by itself but onlywhen requested. Today, guidelines are desirable,in order to provide clarity and certainty. It is timeto conclude whether the EU will endorse guide-lines as those applied in sectors sharing similari-ties (i.e. airports), or continue to use existing caselaw as a reference and to provide guidance toinvestors. It also remains to be decided whetherthe 2010 shift of state aid policy from DGTransport to DG Competition marks the 'end ofexemptionalism' of maritime transport and a newapproach to competition issues, or perhaps astricter judicial approach. This implies that everyaid must be approved beforehand rather than theexisting flexible approach, where more forms ofaid are not considered to be state aid at all.

Third, policy answers are neededregarding the mechanisms used forgranting concessions to operate a ter-minal (e.g. terms, fees, duration, clauses assur-ing that the terminal operator acts in the interestof the wider community). This is not leastbecause of the challenge to market contestabilityby the emergence of global terminal operators.The EU strategy can contribute in fixing regulato-ry problems (e.g. monopoly rights or anti-com-petitive pricing) like those observed in the pre-2008 fast growing markets. This is when the

desire to involve private actors in terminal opera-tions led to several sagas, including the with-drawal of the winner in Thessaloniki, and aEuropean Commission re-examination of conces-sion terms in Piraeus. EPP also needs to address adimension of concessions that has received verylimited attention: the likeliness of re-negotiation.

Without ignoring lessons learnt by the suc-cessive failed proposals for (de)regulatingEuropean port markets via an EU directive, fore-most that 'one rule doesn't fit all ports', the post-crisis environment makes apparent that the EPPcan provide vital guidance on certain points.Despite the difficulties to conclude, unambiguousprocedures governing private involvement in portremain the means to address unresolved regula-tory issues. The same procedures also enable therealisation of the fundamentals by all investorsand create the framework for future growthaccommodation by European ports.

A fourth key issue is the advancementof port specialisation. The new reality pro-vides port governors the context to revisit theconcept of all-purpose mega ports and developniche markets, like ro-ro and short sea shippingas a path to prosperity. For instance ports on theperiphery and smaller terminals need to enactstrategies targeting operators that are active on anational or regional scale.

The EPP might successfully employ the factthat independent forelands have already been

Ν.Χ.84

PORT POLICY

In 2007, the European Commission published a policy document con-tinuing the search for a long-term European Port Policy (EPP). Threeyears and an economic-crisis later, key decisions remain to be made.Meanwhile, the 2008 credit crunch had structural effects on Europeanseaports, necessitating initiatives to address six key issues.

European port policyat crossroads

BY THANOS PALLIS

Assistant Professor (Jean Monnet inEuropean Port Policy)Dept. of Shipping, Trade and Transport,University of the Aegean

associated with overlapping hinterlands, leading to increased proximity ofports. It is time for concrete strategies, advancing the co-operation betweenports (specialisation in cargo or ship types, organisation and pooling of hinter-land transport facilities and improvement in output etc.) and the coordinationof stakeholders in solving hinterland accessibility problems (underinvestmentin inland transport facilities, peak loads at terminals, underutilisation of assetswith little cargo exchange, inefficient information and documents processing,etc.) Strategic collaborations can reduce risks and produce efficient structuresfor all organisations in the network, and reap the real benefits of innovation viaknowledge and practice integration. In turn, such collaborations can produceeffective communication, organisational routines and efficient structures.

The fifth issue to be addressed is the societal integration ofEuropean ports. The rapid trade growth increased local communities' dis-content. Along with expanding port infrastructure and strict security meas-ures that resulted in building fences, the port was distanced further from theport-city, environmental problems increased and societal pressures for indus-trial responses intensified. In the short-term, the EPP can secure that portscomply with applicable regulations, and/or prepare the ground for develop-ing any essential rules. In the long term, it can generate the framework forany port to regain the 'social license to operate', which may again become anecessity. The importance of being pro-active in integrating economic andenvironmental objectives is inexorably prompting relevant initiatives beyondcompliance at port level. The EPP can provide opportunities for corporate ini-tiatives and local public policies that will achieve green cost-effective solu-tions without challenging the presence of a level playing operating field.

The sixth issue is the one that contributes to port competitive-ness while it also assists the EPP to integrate and monitorprogress in all of the above policy fields. The EPP long-term strategycan be advanced via the development of sustainable, relevant and feasibleport performance indicators in order to measure and monitor the multi-dimensional impact and the development of the European port system. TheEuropean Commission has already advanced a link with port authorities, viaESPO and the academia. They have been targeting the endorsement of indica-tors which measure beyond operational efficiency and are accepted by stake-holders. The ability to fully implement such performance measurement at EUlevel (i.e. via the establishment of a European Port Observatory) will be deci-sive. It will allow for both the successful implementation of the EPP initiativestaken, while it will be enacting a mechanism that enables future adjustments.

World maritime trade statistics of the first part of 2010 signal thereturn to normalisation of throughput in European ports. Recent prob-lems to the lately enlarged port sector are accompanied with considerable opportu-nities to develop corrective actions regarding operational strategies. Along withextensive consultation, these market turbulences have also led EPP closer to decid-ing crossroads on how to correct misallocations and on how to prepare Europeanports to face new challenges. Still, in several cases, choices easy are not. �

CRUISE INDUSTRY

calling in the same ports.

For the Aegean in particular, we unfortunately seecongestion of cruise ships at the most popularislands such as Mykonos and Santorini with thou-sands of passengers disembarking or even worsetendering at the same time. Given the size of theislands and the limitations of their infrastructurethe disembarkation of several thousand passen-gers and crew at the same time is causing a seri-ous disruption in the routine of the islands. Thesame principles apply for other areas as well and itshould be noted that for our ex Genoa andMarseille operations, our medium sized cruiseships have successfully established themselvesdespite the presence of mega ships sailing in theWestern and Eastern Mediterranean, placing LouisCruises on the European Cruise Market as an oper-ator who provides a high standard of service onboard but always with a focus on destinationscapitalizing on their human scale size. Regarding the issues raised by the lack of Greekflag competiveness, we have to wait and see whatwill be the final governmental decisions and thenwe are going to set our future plans.

n It is true that cruise travelers belong to the

high income and high age group?

Yes that was the case 15-20 years ago but this is

n What do you think are the key problems in

the Greek cruise market and how could they be

addressed?

Two are the main problems of Greek cruising,namely the vague and sometimes complex and"unfriendly" legal framework and of course thelack of infrastructure and proper organization. Wesee a chaotic situation with many cruise shipscalling at the same island on the same day andthat leads to a number of issues both from anoperational perspective as well as delays for pas-sengers themselves which affect the whole cruis-ing experience. There is also an immediate needfor restructuring naval education by providing andkeeping the incentives for young people whowould like to follow careers at sea.

n Greek cruising depends on the Louis

Group. How are you going to deal with the

impending competition from foreign compa-

nies? What problems will arise for the Greek

flag ship you own?

Competition is something that does not scare ussince we have been operating in the Europeancruise market for 25 years now. Having also a solidcooperation with the leading tour operators in theEuropean and American tourism markets, is thebasis on which we build our future plans andLouis with its 75 year long history, is a trustworthy

cruise and hospitality operator that they candepend on.

Moreover It is well known that our philosophy isto operate medium sized cruise ships and for theAegean in particular, this provides a great advan-tage since it enables Louis Cruises to call at islandswhere today's mega ships are unable or wouldfind it hard to do so. It therefore does indeed pro-vide for greater flexibility in terms of itinerariesand their enrichment. For us the destination is notjust the ships but the ports of call as well. So thepassengers that choose Louis Cruises are thosethat are eager to visit a number of destinationsand experience the rich culture and history thatcharacterizes not only our Aegean destinationsbut also all our itineraries. This is precisely why weplace so much emphasis on the excursion pro-grams that we offer and provide the best possibletours. While our passengers might not venture onrock climbing or ice-skating on board, they sureare able to enjoy a high standard of service andhospitality, a cosmopolitan atmosphere and thewarmth of a human scale cruise ship. Also thenumbers of passengers which our vessels arebringing to the Aegean port of calls are compati-ble with their infrastructure and are not causingthe long queuing and waiting problems experi-enced by the passengers of the big cruise vessels

AN INTERVIEW WITH CHARIS PAPACHARALAMPOUSSENIOR GENERAL MANAGER SALES & MARKETING LOUIS CRUISES

People see their holidays as a necessity

Ν.Χ.86

Louis Cruises is the leader of cruise ships flying the Greek flag around the Mediterranean Seas. Charis Charalambous, the company’s

senior general manager of sales and marketing talks to NaftikaChronika about this challenging and highly competitive industry.

87 Ν.Χ.

not accurate for today. The rapid increase in pas-sengers over the last decade and the decrease inprices have made the cruise more of a Value forMoney middle class holiday than anything else. Itstill offers a special feeling but the majority ofcruise lines actually target the middle class.

n Do you think that taking a cruise has been

established in the minds of Greek consumer's

as an affordable way to vacation? Compared to

other nationalities how do you find them as

tourists?

Unfortunately not yet and we surely have a longway to succeed this. Due to many reasons this hasnot happened although Greeks are close to thesea and feel at home there. Possibly the proximi-ty of the islands and the multiple ferry servicesmeans that they have experienced many of theattractions and island destinations, but of coursenot the magic of a cruise. This year we are hoping

to attract even more Greeks by our intensive cam-paign to further introduce cruising as a "trend"and promote the benefits of a really "value formoney" holiday choice.About the "Greek tourist" I really think that he isnot very different, I would say an averageEuropean tourist. He is becoming much moreknowledgeable often by reviewing the product inadvance through the internet and wants to com-bine relaxation with visiting new destinations andhaving new experiences. The aspect of "Value forMoney" is very important nowadays, as witheveryone. They appreciate a good product andthat is what makes us happy and satisfied.

n In the middle of the current crisis are there

any packages available for the general public?

Generally good even though numbers are expect-ed to stay the same as for 2009, although, theGreek market will be challenging, especially with

recent developments. People however, do not seetheir holiday as a luxury item any more and theysee it as a necessity. They may go for a shortertime or enjoy a cheaper product but most willtake holidays. This is why the cruise, with its highvalue for money and Full board concept has aserious advantage over traditional holidays inrecession times. As I also stated earlier, cruising isthe fastest growing tourism sector in the worldand this steady growth is ongoing for a few yearsnow. More and more people are getting acquaint-ed with the wonders and advantages of sailing toa number of destinations in comfort and style. Wefeel proud for being pioneers in introducing cruis-ing to the mass tourism market in Europe and noother form of travel offers so much in one singleprice making it an ever-increasing preference fortourists' world wide.

n Can cruising help to extend the touristic

season?

With the appropriate assistance and support fromall stakeholders this is most certainly the case andthe solution for growth and further cruise devel-opment.

n Have you ever participate in any meeting

with government for your notes and sugges-

tions regarding the future of the Greek cruise?

This year we are hoping to attract even more Greeks by our inten-sive campaign to further introduce cruising as a "trend" and pro-mote the benefits of a really "value for money" holiday choice.

About the "Greek tourist" I really think that he is not very different, I would say an average European tourist. He is becoming much moreknowledgeable often by reviewing the product in advance through the internet and wants to combine relaxation with visiting new destinations and having new experiences.

Personally I have not participated, although as acompany we have expressed our views ourselves aswell as through our official sector representatives.

n What are your company's future plans?

What are the objectives of your company in

the coming years? What strategy will you fol-

low to overcome international recession?

We need to continue to invest in improving all thetime. When the time gets tough the best prevail,therefore sometimes you have to swim againstthe stream.As with all forms of tourism cruising also had toface the new environment created by the financialcrisis and therefore the need to follow a moreaggressive pricing and marketing strategy inorder to maintain its market share in the interna-tional holiday market and its growth. While thisseason is steady in comparison with last year, theimportant thing is that the growing trend contin-ued and in our opinion it will continue for manyyears to come as cruising has certainly moved on

from being a holiday for the privileged to being atop class option for everyone. Louis Cruises' strategy is to venture into wintercruising and therefore lengthen its operationaltime span. With the charter of MV Orient Queen toCVC last winter the first step towards that direc-tion has been made and Louis Cruises also plansto operate a cruise ship in the Red Sea as of nextwinter. The Red Sea is ideal for winter cruising dueto the favorable climate in the region as well asthe number of interesting and enticing ports ithas to offer. The company also has a plan ofextending its operating period out of Piraeus (cur-rently it starts at the beginning of March and endstowards the end of November) into a round theyear one. Additionally, it has already beenannounced that the cruise terminal of the port ofMarseille in France is now managed by Louis,Costa Cruises and MSC Cruises making it animportant home port for us and our partnerssince we all aim at substantially increasing thenumber of passengers that visit this historic port,

founded in fact by the Ancient Greeks. Finally, theaddition of MV Louis Majesty to the fleet and itsoperation ex Genoa and Marseille further materi-alizes our strategy for the upgrade of the fleetwhile we remain loyal to our position in the inter-national cruise market of offering destination richitineraries in a friendly and high standard envi-ronment

n In conclusion what is the future of the

Greek cruise?

The potential for Greek cruising is endless.However its future depends on solving the infra-structure issues that handicap the overall cruisingexperience, correcting the issues arising from aproblematic legal framework and of course mak-ing Greek cruising more competitive in order for itto survive the unfair competition it already faces.Therefore, its future could range from bright tonon-existent depending on investments; will totackle the problems and the immediate need toincrease competitiveness.�

Ν.Χ.88

While this season is steady in comparison with last year, the important thing is that the growing trend continues and in our opinion it will continue for many years to come as cruising has certainly moved onfrom being a holiday for the privileged to being a top class option for everyone.

CRUISE INDUSTRY

PUBLI

Innospec Limited, the leading dedicated fuel addi-tive producer and supplier in the world, markets arange of dispersant / stabiliser fuel additiveswhich have been extensively tested and proven inthe field, achieving sludge reduction of up to 70%.Less sludge in reality represents a huge saving forany vessel, but there are also many other benefitsto such fuel additive treatment.Since the 1970’s the quality of residual bunkerfuels has deteriorated dramatically, most notablydue to secondary refining processes aimed atmaximising the high value streams from a barrelof crude oil. In the midst of this we also have everdecreasing Sulphur limits being imposed byregional and international legislation such asMARPOL Annex VI, CARB legislation and EUDirective 2005/33/EC. From July 2010 the maxi-mum allowable sulphur content to be used insideECA’s (emission control areas) will be 1% w/w. Asa result, the blending of Heavy Fuel Oil (HFO) formarine use is becoming a more complicated task,as the fuels must achieve the Sulphur content aswell as the density and viscosity requirements ofISO8217. These additional blending requirementshave the potential to increase stability and com-patibility issues, which will manifest themselvesonboard in the form of excessive sludge formation.It is important to note that fuel sludge is made upprimarily of the aromatic components typicallyfound in residual fuels, known as asphaltenes.Asphaltenes are combustible hydrocarbons, andtherefore fuel sludge is in the most part, a loss ofgood fuel. As well as the financial aspect with theloss of fuel, excessive sludge will cause seriousproblems with the fuel handling system - not leastrapid fouling and efficiency loss of the separators.In addition, the requirement to change over fromthe use of heavy fuel oil to middle distillates suchas marine gas oil (MGO) is increasing. For manyreasons changing over fuel types is a complicated

procedure, not least because of the incompatibili-ty issues that can almost immediately becomeevident. In extreme cases, incompatibility duringchangeover could cause a propulsion loss as thefilters become overwhelmed; this in turn posing aserious safety issue.Innospec’s dispersant / stabiliser range of fueladditives act to stabilise the asphaltenes in other-wise unstable fuel blends. The stabiliser preventsthe asphaltenes from flocculating and falling outof suspension, generating sludge. The additivealso helps to disperse existing agglomerations ofasphaltenes, and therefore over a period of timecan clean up the fuel handling system, and in turnmaximise its efficiency.

The benefits of Innospec’s dispersant stabiliserfuel additives can be summarised as follows:

l Less sludge being produced equals moreusable fuel.

l Field Trials using Innospec stabiliser / disper-sant additives have typically achieved asludge reduction of 40 – 60%.

l Less risk of incompatibility when changing

over to MGO.l Reduced load on separators thereby

improving their efficiency.l Less tendency for separator bowls to become

blocked.l Better fuel injection, atomisation and

combustion.l Reduced soot deposits in the combustion

chamber and exhaust system maintaining anengine in the optimum design condition.

l Field trials have demonstrated a significantreduction in NOx, CO and Particulate Matter.

l Fuel Filter back flushes reduced indicating amore homogenous fuel being delivered tothe engine.

l Reduction in operational requirement of theships incinerator. Resulting in less diesel fuel,less man hours, fewer emissions fromincinerator.

l Reduced costs for disposing of sludge in port.l Reduced costs for periodical cleaning of fuel

tanks and pipework.l Cleaner engines and handling system will

extend maintenance schedules.

Fuel Additive Solutions – Excessive Sludge

Ν.Χ.90

Innospec Hellas Ltd • 11, II Merarchias Street • Piraeus 185 35, Greece • Tel: +30 210 411 0727 • Fax: +30 210 411 0748 • www.innospecinc.com

Sludge formulated in the storage tanks eventually

enters the fuel system with negative impact to purifier’s

efficiency. Finally sludge enters to engine as un-homoge-

nized fuel destroying the spray pattern affecting

negatively the combustion procedure

32

1

Ν.Χ.92

CLASSIFICATION SOCIETIES

How do Classification Societies react to recent policies, regulations and competitive challenges that have changed the characteristics of this diverse industry? Naftika Chronika’s editors interviewed

the Managers of well respected Classification Societies and asked their thoughts and aspirations for thefuture of the shipping industry in general and the shape of things to come for their own Societies.

In which new services and products have you turned to in the last period for the service of your customers?

Which are the last developments you have used around this project?

Which are your company's basics regarding the protection of human life and the environment?

Classification societiesEntering (and surviving)

challenging times

93 Ν.Χ.

1. 2010 has the potential to be seriously tough forthe bulk and tank sectors and passenger ship-yards in particular. However, it is not all gloom.Against that background, right across the marineindustries, pragmatic optimists are mobilisingtechnology and capital and are looking forward tothe future. That future will be different if com-pared to the last few years. Ships will be moreefficient, with smaller environmental footprint.New ways of generating and using energy willcome forward. Oil and gas will come from colderplaces and deeper water. Yards will consolidateand new technologies will enter both shippingand offshore.

Bureau Veritas is ready for that, and will be atthe forefront of change. Challenging times are thebest times for pragmatic optimists. We are prag-matic because we have been leaders in shippingfor a very long time, and we know how cyclicmarkets work, and we were ready for this down-turn. We are pragmatic because we have a verydiversified fleet and expertise base, and becausewe are present in every sector of shipping and off-shore energy and every part of the world, ready toharvest and sustain new ideas and new players,while supporting the best of the old. And we areoptimistic because when the market is shaken up,it opens the way for new ideas, new technology,new ways of doing old things. If you can build ondeep and diverse experience like ours, then youcan help others to innovate and adapt theirstrategies quickly to whatever challenges andopportunities arise out of the turmoil in the mar-kets. Yes, we are all in for a tough time, but thereare a lot of reasons to be optimistic for the future.

Our focus is on helping owners to reducecosts, and on helping yards to refocus designs toimprove fuel efficiency. We have taken a goodlook at service delivery and beefed up our infor-mation handling, services for crews and servicesaimed at the environment, such as support forrecycling, cold ironing and fuel cell development.Owners liked it, transferring substantial numbersof ships to BV class, and yards liked it, because we

took a substantial share of the world new build-ing orders placed in 2009, with 4.6m gt, aroundtwenty per cent of the new building shipsordered.

Our classed fleet now surpasses 9,100 shipsand 70.7m gt and despite the global downturn innew orders, we have a substantial orderbook ofhigh quality tonnage totalling around 29m gt.

BV has continued to grow strongly as agroup, doubling in size in the last ten years. We areon track to double in size again in the next fiveyears. That steady growth has been built onstretching for opportunities, but making sure weare standing on a safe platform as we reach out.And it has been built on helping strong and like-minded partners to grow. 2010 may throw upsome tough markets, but we will be there to shareour optimism based on strength and diversity.

2. As the new building market cooled, the focus ofBV clients, both yards and shipowners, switchedfrom a need for rapid approval of CSR and everlarger ship designs to a demand for assistancewith cost and energy saving. BV was busy devel-oping ways to help owners reduce costs, fuelusage and environmental footprint, and helpingyards to adapt and improve designs to be morefuel efficient. There was much less focus on pro-duction and more on more efficient new vessels,ready for when the market improves again. • BV's new Fatigue Plus notation supplements

the tanker CSR to give tankers a longer fatiguelife.

• BV's hull software tool VeriSTAR Hull wasupgraded to process three hold models for allship types.

• BV published new rules for the structure andcontainment systems of offshore FloatingLNG units. BV was involved in studies andFEED work on fourteen FLNG projects world-wide, including projects in the Arctic, offBrazil and off Australia.

• BV published new guidelines for the use offuel cells in shipping, and worked on a zero

emission tug project and ways to apply fuelcells to passenger ship auxiliary power use.

• The first Energy Efficiency Design label wasissued for a major cruise ship, which was ableto show that it had design features on deliv-ery giving a ten per cent reduction in energyuse compared to a similar conventional ship.The Energy Efficiency Design Index will bepublished as a notation during 2010.

• New rules on High Voltage Shore Connectionswill facilitate cold ironing of ships in port, cut-ting emissions.

• New class rules for submarines and new soft-ware for corvettes underpinned BV's increas-

ing warship work. • BV issued new guidelines on laying up ships. • New rules for Fast Oil Recovery Systems were

published and the first containership wasdelivered with this system.

• A sharper focus on managing informationboth internally and for clients led to furtherimplementation of VeriSTAR Project

BERNARD ANNE

Managing Director, Marine Division, Bureau Veritas

Ν.Χ.94

Management and to a completely revised andclarified marine portal, www.veristar.com.

3. Protecting human life and the environment areright at the heart of Bureau Veritas philosophy andare the values which underpin all its services.

An increased focus on the environment isreflected in new guidance on the use of fuel cellsin marine applications, and in strengthening theteams working on delivering Green Passport tovessels to aid clean recycling, ahead of the IMOShip Recycling Convention. A new notation oncold ironing (HVSC) and another covering Fast OilRecovery Systems helped owners to equip theirships, in order to minimise environmentalimpact, while a new Emergency ResponseNotation service and notation clarified andstrengthened the assistance BV can provide in

the event of a casualty. Surveyors were alsotrained to provide vessels with US EPA VesselGeneral Permit certificates.

The all-important human factor wasaddressed through the provision of new servicesto ease implementation of the 2006 MaritimeLabour Convention and through increased train-ing, both internally and externally.

A system to audit and certify manningagencies for seafarers was established. When theMaritime Labour Convention comes into force, itwill be a requirement for organisations recruiting

and placing seafarers to conform to the standardsset down. BV has had a Code for ApprovedSeafarer Manning Offices since 1998. Building onthat experience and the requirements of the2006 MLC, it launched a new service for theassessment of Seafarer Recruitment andPlacement Systems (Seafarer Manning Offices). Itwill enable the best manning agencies todemonstrate their readiness for the MLC imple-mentation, and will help owners and managersto ensure they get the right crews.

BV also issued its first Statement ofCompliance under the MLC to Danish shipownerHERNING SHIPPING AS. This enables HERNINGSHIPPING to be at the forefront of preparation forcertification when the convention comes into force.

1. Quantum is the name of a new container shipconcept introduced by DNV. The new concept isbased on technical research and innovation and isdesigned to transport more cargo while using lessfuel and with a reduced environmental impact. It isa result of an innovation initiative taken at a timewhen the whole shipping industry is struggling. Tor Svensen, DNV's President has repeatedly statedthat it is when the times are tough that you shouldspend time on innovation to prepare for the future.DNV has the competence. Our technical skills areperceived as high. We also have a healthy financialplatform, due to the fact that all money earned isploughed back to the company itself. There are noshareholders to have return of their investments.This healthy financial situation for DNV is used forthe best to the whole shipping industry.

2. The new container ship concept is designed tomeet the perceived market needs. It has a designspeed of 21 knots, but can operate efficiently atspeeds between less than 10 knots and more than22 knots. The need for ballast water is minimisedand LNG is introduced as part of the ship's fuel, justto mention very few examples of our latest devel-opments.

3. This question touches upon DNV's main pur-pose to safeguard life, property and the environ-ment. Everything we are into is in some way linkedto this purpose. For the shipping industry, the DNVclass rules can be used as examples. They includerequirements for how to build the vessel and lateron, when the vessel is sailing, they ensure that thevessel meets these requirements at all time.

GEORGE TERIAKIDIS

Marketing & BuisnessDevelopment Manager, DNV

For more information on the Quantum concept ship click on http://viewer.zmags.com/publication/b14aa72b#/b14aa72b/1.

CLASSIFICATION SOCIETIES

Ν.Χ.96

1, 2. By streamlining processes, reinforcing itsglobal presence and leveraging synergies wher-ever possible, Germanischer Lloyd will continueto strengthen its competence and performancein this segment. Maritime Solutions comprises the entire range ofservices to the maritime industry with the excep-tion of classification services. The new businessunit has four departments: FutureShip, SystemsCertification, GL Maritime Software and GLAcademy. The guiding principle behind therestructuring measures was to deliver enhancedbenefits to clients, enabling them to emergefrom the crisis stronger than they were before.

Making Efficiency Happen: FutureShipIdentifying the best parameters for on-board sys-tems and an optimal ship design are prerequi-sites for efficient ship operation. FutureShip, thenew maritime consultancy business of the GLGroup, helps shipowners and ship yards to opti-mise ship design and ship operation. Energy efficiency is the new buzzword in all areasof shipping. In the face of tighter environmentalrestrictions and rising fuel costs, ship operatorshave no other choice than to take advantage ofwhatever means can be found to optimise shipoperation, on-board systems and hull designs. While there is no shortage of tools aiming atmaking ships more efficient by tweaking individ-ual performance parameters here and there,Germanischer Lloyd takes a holistic approach.FutureShip offers a range of services addressingboth, ships in service and planned newbuildings.Design reviews, line optimisation, trim optimisa-

tion (ECO assistant) or operational fuel consump-tion analyses (ECO Practices) are examples ofhow GL supports substantial fuel reductionthrough a combination of expertise, software andprocedures.The new subsidiary combinesFRIENDSHIP Consulting, which was acquired inearly 2009, with GL former competence centreAdvanced Engineering. The new merged unit is acomprehensive, multidisciplinary consultancythat scrutinises all design aspects and onboardsystems of a ship for potential energy savings. Recent activities included the publication of anew guideline, Safe Return to Port, successfulvalidation of hydroacoustic predictions throughmeasurements, and the introduction of efficiencymonitoring, a new machine operation simulationmethod. To help customers cope with the crisis,GL refocused on structural issues affecting shipsin operation (such as vibration, cracking, etc.) byproviding simulation and on-board measure-ment services. FutureShip is a valuable addition to GL's portfolioas a full-service provider and consultancy for themaritime market. ECO Chances, one of the servic-es offered by FutureShip, makes use of advancedsoftware, including flow simulation and optimi-sation tools as well as powerful parametric mod-elling software. The models created incorporateall key aspects of a ship, including main dimen-sions, hull lines and, in particular, the shape ofthe bulbous bow, information on the mainengine, the propulsion system, the type and con-dition of the coating, auxiliary power sources,such as waste-heat recovery systems, operationsand systems monitoring, and peripheral powerconsuming systems such as reefer containerpoints and thrusters. FutureShip offers advice in the fields of fleetdevelopment, ship management, ship design,

ship operation, environmental and regulatorycompliance as well as certification. The numberof contracts covering multiple services hasincreased significantly. Innovative ConceptsCustomers tend to expect one-stop consultingservices, hoping to buy and operate the mostreliable, durable, efficient and profitable shipsthey can get. GL services range from general con-sultancy (ship type, regulations) to best design(fit for purpose, means of propulsion), specificconstruction phase (yard assessment, ownersupervision, component selection) and lifetimeoperation support. They may also cover staff andcrew development by raising the environmental,regulatory and certification awareness. FutureShip's team of more than 70 engineers andconsultants has delivered a number of industry-leading efficiency solutions, such as innovativeconceptual designs (e.g. Aframax tanker design,see page 41) or fleet operation concepts devel-oped in response to the challenges of risingbunker costs and the tremendous overcapacitiesin the industry. With its advanced modelling andsimulation-based hydrodynamic optimisationservices, FutureShip helps its customers maketheir new designs, refits or ships in service morecompetitive by unlocking hidden potential forenergy savings and improved efficiency.

GL Maritime Software: OptimizingBusiness ProcessesThe maritime industry is facing tough challenges,having to combat low demand, overcapacitiesand rising operating costs. Powerful softwareoffers a unique opportunity to improve competi-tiveness. GL Maritime Software is a provider ofspecialised software solutions, system integra-tion services and training and support to

BY DIMITRIS SARIKLIS

Business Development Manager for Greece Germanischer Lloyd

CLASSIFICATION SOCIETIES

Å Ã Ê Á Ô Á Ó Ô Á Ó Å É Ó : Â É . Ð Á . Ó × É Ó Ô Ï Õ , Ï . Ô . : 1 2 , 4 ç Ï Ä Ï Ó , Ô . Ê . : 1 8 8 6 3 , Ð Å Ñ Á Ì Á ÔÇË. : + 3210-41.73.500 - 210-41.14.990, FAX: 210-41.74.039 • ÊÉÍ. : 6932-339494, 6932-339501, 6932-339499e - m a i l : e l e c m a r @ o t e n e t . g r , w w w . e l e c t r i c m a r i n e l t d . g r

ÃÃååííééêêÝÝòò ççëëååêêôôññééêêÝÝòò ååööááññììïïããÝÝòòÅË. ÌÁÍÏÕÓÁÊÇÓ - ÁÑ. ÑÅÍÉÅÑÇÓ - Ð. ÄÉÁÌÁÍÔÇÓ ÅÐÅ

ÁíáëáìâÜíïõìå:

• åðéóêåõÝò êáé êáôáóêåõÝò çëåêôñéêþí åãêáôáóôÜóåùí

• áõôïìáôéóìü ôùí ìç÷áíþí

• êáôáóêåõÞ ðéíÜêùí êõñßùí êáé âïçèçôéêþí êõêëùìÜôùí

• êáôáóêåõÞ ðéíÜêùí ðáñáëëçëéóìïý ãåííçôñéþí

• åðéóêåõÝò óõíôçñÞóåéò çëåêôñéêþí ìç÷áíçìÜôùí

• ðåñéåëßîåéò êéíçôÞñùí êáé ãåííçôñéþí AC - DC ðáíôüò ôýðïõ, (ISO 9001)

• åðéóêåõÞ êáé åãêáôÜóôáóç áõôüìáôùí óõóôçìÜôùí åëÝã÷ïõ êáé ëåéôïõñãßáò (alarms, inner gas, boiler e.t.c.)

• åðéèåþñçóç êáé åðéóêåõÞ çëåêôñïíéêþí óõóôçìÜôùí (åêôüò ôçëåðéêïéíùíéþí)

• åðéóêåõÞ, ðñïìÞèåéá, êáé åãêáôÜóôáóç AVR ãåííçôñéþí üëùí ôùí ôýðùí

• åðéèåþñçóç, åðéóêåõÞ ðíåõìáôéêþí óõóôçìÜôùí

• åðéèåþñçóç êáé åðéóêåõÞ äéáêïðôþí éó÷ýïò êáé üëùí ôùí áóöáëéóôéêþí äéáôÜîåùí ôùí çëåêôñïìç÷áíþí (REVERSE POWER, OVERCURRENT RELEASE) êáé SIMULATION BREAKERS ìå çëåêôñïíéêÞ ìïíÜäá

• ðñïìÞèåéá çëåêôñïêéíçôÞñùí, çëåêôñïðáñáãùãþíæåõãþí êáé áíôáëëáêôéêþí.

Ν.Χ.98

shipowners, shipping companies and shipyards.GL's software packages are designed to improveproductivity and enhance transparency in fleetmanagement while ensuring compliance withapplicable regulations. One example is the GL ShipManager. AIDACruises latest newbuilt AIDAblu uses the softwarefor ship management. GL ShipManager, a com-prehensive software suite, supports scheduledmaintenance, purchasing, stock control, voyagemanagement, port clearance, incident manage-ment, and quality and safety management. The software installation process was completedwhile AIDAblu was still in the yard. Performingthe ship software installation at an early time

allowed the applications to be used immediatelyupon docking out and putting the vessel intoservice. All ship-specific data, such as equip-ment, machinery and spare parts information aswell as maintenance details had been capturedand stored in the database before the equipmentwas installed.

Supporting Business ProcessesGL continued to develop its software solutionsthroughout 2009, adding new functionality andfeatures. Current highlights of the GL softwareportfolio include GL ShipManager, GL

HullManager Supports (the entire hull integrityprocess), GL CrewManager (crewing process), GLFleetAnalyzer: (analysis, reporting and decisionsupport) and GL SeaScout (finds the appropriatenavigation course in heavy seas). For forward-thinking shipyards, design offices,designers and component manufacturers, GL offersFRIENDSHIP-Framework, the world's mostadvanced software for simulation-driven design.FRIENDSHIP-Framework allows engineers to modeland vary a design to create a range of alternativeoptions from which to select the optimal design.

Coming Up: Shipowners need MLC certification

Only recently, the Republic of theMarshall Islands extended the scope ofGermanischer Lloyd authorisation asRecognised Organisation to carry outinspections and issue certificates underthe Maritime Labour Convention, 2006(MLC 2006). GL offers shipowners, man-agers and yards a comprehensiveInternational Labour Organisation (ILO)certification package in order to meet therequirements and speed up the issuing ofa compulsive certificate by 2011. The MLC2006 has been introduced by the ILO. Allvessels of 500 GT or above on interna-tional voyages will need to demonstratea valid MLC 2006 certificate.

GL already documented shipping companies'compliance on a voluntary basis and is preparedfor a smooth transition from the MLC Statementof Compliance to the flag state certificate. To helpship owners identify necessary improvements, GLoffers a self-assessment tool. In addition, with agap analysis on board, GL can determine whatneeds to be improved before the ship fulfils therequirements of the MLC 2006. The GL Academyhas already provided seminars and workshops onthe MLC 2006 in Germany, Greece, Poland,Singapore, China and the United Arab Emirates. To ensure compliance with the requirements well

in advance, GL offers advice on flag state imple-mentation, review of the Declaration of MaritimeLabour Compliance and initial inspections onboard as well as the issuance of the MLCStatement of Compliance. Furthermore, severalflag states consult with GL as recognised organi-sation on the implementation of the MLC 2006. The MLC 2006 has been introduced by theInternational Labour Organisation (ILO). It regu-lates working and living conditions for seafarersand helps to create conditions of fair competitionfor ship owners. The ILO convention replaces ear-lier labour conventions and is seen as the "fourthpillar" of maritime regulation beside SOLAS,MARPOL and STCW conventions. The MLC 2006will come into force twelve months after ratifica-tion by at least 30 ILO member countries with atotal share of at least 33 per cent of the world'sgross tonnage. Until now, the Bahamas, Liberia,Panama, Norway, the Marshall Islands, Spain,Croatia and Bosnia & Herzegovina have ratifiedthe convention.

3. Safer, smarter, greener is Germanischer Lloyd 'smission. It is our goal to protect human life, the envi-ronment and assets and offer the best services to ourclients. GL is under the obligation to uphold the veryhighest standards in safety and quality. Qualitymanagement is a core task for our work in ensuringthe safety, reliability and economy of shipping. Thereare three terms that describe our corporate missionin nutshell: technical expertise, uncompromisingquality, and first-class service. Superior technicalexpertise, excellent engineering know-how and theunceasing pursuit of technological innovation arethe driving forces behind our corporate actions. Ouruncompromising quality is not an end in itself, butthe effective means to an end. We make every effortto improve the technical reliability and operationaleconomy of our customers' ships and floating assets.Our services permit the optimum interaction ofengineering, naval architecture and communicationtechnology both during the newbuilding phase andin everyday ship operation.

CLASSIFICATION SOCIETIES

- Easy access to information supplied by class The main features of the SeaTrust-SLM applica-tion are: - Management of hull structural data - Thickness of information - Ship information

Direct Strength Assessment for 10,000TEUContainer Carriers The use of classification rules and the applicationof direct structural assessment (DSA) are the twomain methods available for assessing a ship'sstructural safety. Classification rules are bothstraightforward and mandatory, while a DSA isoften complex. In general, the design of the mid-ships section is the most important area fortankers and bulk carriers and so a DSA is usuallynot necessary for these types of vessels. Howeverfor ships such as container vessels, the entirelength of the vessel is important and so a DSA isessential. It is particularly important for contain-er vessels of more than 8,000TEU built before theclassification rule was developed and when waveload analysis tools were poor. For these types ofvessels, the confirmation of structural safetythrough classification rules can only be very dan-gerous as it means applying the rules by simplelinear interpolation.

KR has carried out DSA for 10,000TEU con-tainer carriers using its own SeaTrust-ISTAS appli-cations to analyse: - Yielding and buckling evaluation based on a

coarse mesh model - Yielding and buckling evaluation based on a

fine mesh model - Spectral fatigue analysis - Hatch corner displacement - Bow and stern slamming analysis - Parametric roll analysis

In addition, the scantling approval rule hasbeen analysed according to new data obtainedfrom current very large container carriers withinthe goal-based standards project. KR has con-firmed structural safety in all aspects of studythrough DSA and has provided data which can bemade available for ship design and operationalguidance.

2. Diversification into other sectors is of major sig-nificance to us. Whilst traditional ship classification

services will always be our core focus, we believethat we need to diversify, grow and develop. Thisalso allows us to apply our extensive and transfer-able skills and experience into other industry sec-tors. The main areas on which we intend to focusin the coming years include warship standards,new and renewable energy and plant inspections.

Entry into wind power and other new/renew-able forms of energy by the major shipyards is like-ly to bring about a rapid expansion in survey, cer-tification and consultation services for KR. As partof a planned business diversification programme,we have continued to re-assess and grow ourportfolio and invest in areas that will drive futuregrowth. In 2008, this led to the creation of a newdivision -our Energy & Environmental BusinessCentre. Our latest activities in the environmentalsector include: - Wind Energy - Ocean energy - Fuel Cell Technology - Green House Gas (GHG)

3. With the shipping and shipbuilding marketsstill suffering from the financial crisis, we have hadto modify slightly our long-term objectives. Whilstwe are confident that they will be achieved, werealise that it might take us a little longer to getthere. However, by revisiting our strategies andgrowth plans in light of these challenging times,we still anticipate continued growth in new build-ings and other related activities, albeit at a slowerpace than when the market was booming.

KR is celebrating its 50-year anniversary thisyear, and our aim is to have a classed fleet of 45 mil-lion gt by the end of this year. To achieve that goal,we need to maintain our competitive edge and thatis why our management is adopting a more aggres-sive -rather than defensive- stance and we areadamant that we will maintain our high levels ofservice throughout this challenging period.

This does not mean, however, that we havestopped or slowed down our investment in thetraditional sector of ship classification. We haveworked to find new ways to improve our technicalcompetence and customer services and our effortshave included the development of ship lifecyclemanagement systems, PSC detention/reductionprogrammes and an expansion of our global sur-vey network.

1. Development of New SeaTrust-CSRSeaTrust-CSR is KR's widely acclaimed softwarepackage for the application of IACS commonstructural rules. This software is currently beingused by major shipyards, design houses and uni-versities.

An updated version has been under develop-ment throughout 2009 and is on schedule to bereleased in June 2010. The new version will pro-vide a variety of much-improved features anduser interfaces and will support a more rapidstructural design process. The objectives of thenew version are to: 1. Support multiple windows operating systems 2. Provide a user-friendly interface 3. Improve prescriptive rules and DSA parts4. Design of data structure that is more easily

maintained

Development of Ship LifecycleManagement System A new and ambitious project currently underdevelopment at KR is its SeaTrust-SLM (ShipLifecycle Management). The aim of the applica-tion is to manage the entire lifecycle of a ship,from its original conception, design and building,and then throughout its operating life until dis-posal. SeaTrust-SLM will enable the ship operatorto manage the vessel's information and conductvaluable analyses throughout its life, including: - Inspection management and prediction - Analysis of virtual hull model and real hull data

Ν.Χ.100

JAE-GEUN KWON

Regional Manager of Korean Register

of Shipping - Athens Office Europe Headquarters

CLASSIFICATION SOCIETIES

Ν.Χ.102

ders occur as a result of securing container cargoon board ships is a concern. Lloyd's Register'snew notation is a substantial addition to helpimprove safety in container ship cargo opera-tions.

In order to save lives and prevent pollution,we must prioritise those who experience difficul-ties in reaching minimum standards and be high-ly proactive in helping clients to maintain a 'qual-ity' ship and fleet. In the last year we have insti-gated and refined an approach we call the FleetQuality Programme to manage those who areeither close to or are falling below minimumrequired levels. This programme promotes con-tinuous improvement in our risk analysis-basedapproach to assessing our fleet, adding orimproving processes and data as appropriate, andit enables us to engage operators at an earlystage when we identify potentially sub-standardand high-risk vessels.

We then seek to manage these ships towardsan acceptable and sustainable level of quality.Only if this proves impossible will we looktowards removing them from class through amanaged class withdrawal process. We believethat this 'active' attitude is more effective thanrelying only on the traditional survey cycles. Theultimate sanction of withdrawing class can beeasily taken but still leaves the industry with apotentially sub-standard or dangerous ship.

During the past year we have seen theincreased attention paid to shipping as part of theCopenhagen COP 15 process - the need to reduceCO2 - and we need to recognise that nothing willbe the same again. Lloyd's Register is extremelyactive in assisting the industry in understandingand managing the emissions challenge.

Since 2000 Lloyd's Register has been involvedin the testing and certification of Marine DieselEngines of above 130 kW, which are installed orintended to be installed onboard ships subject toMARPOL 73/78 Annex VI.

The above comprises of an impartial certifica-tion system based on the requirements of AnnexVI and the NOx Technical Code on Control ofEmissions of Nitrogen Oxides from Marine Diesel

Engines. Moreover, we have been active in thetype approval of equipment for NOx monitoringand reduction, in line with one of the IMO's NOxverification procedure, namely the direct meas-urement and monitoring method, which involvesthe installation of a fixed system that measuresconcentrations of NOx, O2, CO2 and CO, the mostcommonly known being 'MariNOx' of Martek.

With strong presence in IMO and other inter-national and regional forums and WorkingGroups, Lloyd's Register has contributed to thenegotiations around Climate Change and thecontrol of Greenhouse Gas Emissions. Focused inthe industry of shipping, our class society hascarried out research and development around thenewly introduced concepts of Energy EfficiencyDesign Index (EEDI), Energy EfficiencyOperational Indicator (EEOI) and Ship EnergyEfficiency Management Plan (SEEMP).

It is a priority within Lloyd's Register to con-tinue playing a leading role in the discussionsaround Emissions, as this is an issue that willheavily affect the future of current and futuregenerations and is therefore directly aligned withour mission. While climate change and carbonmanagement monopolizes the attention of theShipping Industry there are a lot of other environ-mental challenges to be met; one of the mostcritical being the Ballast Water regulations, man-dating the retrospective installation of treatmentsystems on vessels with a keel laying date of2010 onwards, when the respective InternationalConvention becomes effective.

Lloyd's Register is assisting its clients throughits Ballast Water Management Services.

Providing tailored solutions, Lloyd's Registerhelps shipowners to develop a safe, practicalstrategy to reduce the risks associated with bal-last waste management, meet environmentalresponsibilities and comply with the relevant IMOguidelines.

Further, Lloyd's Register has recently pub-lished the third edition of its Guide to BallastWater Treatment Technology which providesindependent and impartial information on com-mercially available and developing technologies

Since 1760 the core role of Lloyd's Registerhas been supporting marine safety. As wecelebrate our 250th anniversary, we arefocused on how we move classificationforward to contribute to the vision wehave of a safer marine industry that meetsthe needs of society, continually looks toreduce its environmental impact and pro-vides ship operators and builders with theopportunity to build healthy, sustainablebusinesses.

Improvements in safety will continue to berealised through our core role in the formulationand application of technical standards. But signif-icant and continuous improvement in safety andsustainability will now also need to be driven byimprovements in management organisation andculture across the shipping industry. Lloyd'sRegister is leading the way in expanding the roleof class into this area.

Importantly, we are also involved in support-ing owners who wish to operate well beyondbaseline safety compliance requirements to fur-ther improve safety and sustainability in theiroperations by developing risk-based approaches.We believe that these will be increasingly impor-tant to all in shipping as the dominance of pre-scriptive rules is challenged.

One recent initiative is the approach we havetaken to help support safety in container shipcargo operations, developing Lloyd's Register'sProvisional Rules for Ergonomic ContainerLashing (ECL). The frequency with which fatali-ties, serious injuries and musculoskeletal disor-

APOSTOLOS POULOVASSILIS

Regional Marine Manager for Lloyd's Register Europe, Middle East and Africa (EMEA)

CLASSIFICATION SOCIETIES

Ν.Χ.104

for ballast water treatment.Lloyd's Register has recently launched its new

service FOBAS Engine which offers a significantincrease in day-to-day knowledge of operationalengine performance. FOBAS Engine provides aclear indication of performance, lubrication andwear conditions for slow-speed two-strokemarine diesel engines. This is achieved throughdetailed analysis of engine performance variablescombined with advanced dilution analysis of usedcylinder, fuel and system lubricating oils.

In the post-Copenhagen era shipping isunder increasing pressure to comply with evolv-ing regulations and become cleaner and greener;

justifying that it still remains the most efficientindustry. And all of the above under the commondenominator of safe operations. Environmentalprotection always being in the core of Lloyd'sRegister mission, we continuously invest inresearch, training and the development of newservices willing to be close to our clients but alsomeet the commands of the "new era".

But we must not forget the significant role ofthe human element in all of these challenges.

Further to the adoption of the MaritimeLabour Convention 2006 (MLC, 2006) by theInternational Labour Organisation (ILO), settingminimum standards in specific areas relating to

the health, safety and welfare of seafarers,Lloyd's Register has developed, led by theHellenic Lloyd's S.A. offices in Piraeus, a dedicat-ed consultancy service proposing to owners andmanagers a complete action plan looking to inte-grate human factors considerations into opera-tional and safety management systems.

The industry is urgently looking for expertise,experience and services in support of managingcompliance with new regulations.

We believe it is crucial that these are provid-ed with the assumption that our industry needsto be sustainable - balancing economic, socialand environmental issues in harmony.

CLASSIFICATION SOCIETIES

products and tools for designers, shipyards andshipowners.

2. In the offshore field, RINA has taken a lead in thedeveloping market for floating LNG terminals. Ithas been chosen to class the first offshore FloatingStorage and Regasification Unit (FSRU), the138,000m3 Moss-type Golar Frost under conver-sion into a 3.75bcm per year FSRU for OLT for serv-ice offshore Livorno. RINA is providing studies andsupport for a number of further offshore LNG proj-ects, including the Triton new building for GdF-Suez and Hoegh which is likely to be the world'ssecond offshore LNG FSRU.

New services being provided include mooringanalysis, sea keeping analysis, fatigue life assess-ment and site analysis, technology qualification,compliance with EN 1474-3:2008 (offshore trans-fer system), fire & explosion risk analysis.

For what concerns the green approach to ship-ping industry, RINA has recently launched the newgoal-based environmental additional class nota-tion Green Plus, which allows design flexibility andrewards innovative technologies.

Green Plus was developed to provide shipown-ers, designers and yards with a goal-basedapproach to environmental management. It allowsthem select the most cost-effective combinationamong various possible design solutions and oper-ational procedures which can be applied to a ship inorder to improve its environmental friendlinesslevel, taking into account energy efficiency and CO2

and other GHG emission reduction. Instead ofadopting a prescriptive approach, Green Plus is

based on an index that accounts for any possiblesource of environmental impact from the ship andsets specific goals for the reduction of such impacts.

A specific software tool allows for the compar-ison of a large number of design solutions andoperational procedures contributing to the defini-tion of the Environmental Index. The designer, yardand owner are thus assisted in the selection of theoptimum mix that will lead to a result whichexceeds all national and international emissionrequirements.

3. At RINA, we accept no compromise on aspectslike protection of the human life and the environ-ment. Our aim is to propose solutions and tools forbetter management of resources to achieve alwaysthe highest standards in terms of safety and pollu-tion prevention.

The maritime world is taking more and moreinterest in risk assessment techniques, for examplethose which, among other things, allow optimisa-tion and prioritisation of intervention in all areas ofshipping operations. Mandatory rules are movingfrom a prescriptive to a goal-based approach, andthe latest RINA voluntary certifications, such as forexample Green Plus, reflect this trend in the regu-latory scenario.

Nowadays, RINA is closely involved in the pre-vention of air pollution, firstly in its institutional rolethrough mandatory rules and tools, and especiallyMarpol Annex VI. Then, for those wishing to oper-ate beyond the mandatory standards, we have alsodeveloped specific voluntary certifications relatedto CO2 emissions and sulphur oxide emissions.

1. Our focus is ongrowing our servic-es to shipowners inGreece and Asia, inChina especially.We have recentlystrengthened our

plan approval teams in Piraeus. This was set up inorder to provide Greek shipowners with a quickresponse on all technical matters relevant to theirships. The rapid growth of the RINA-classed Greekfleet is the confirmation that Greek owners appreci-ate this service.

With the aim to follow the needs of ourclients, we have opened new survey offices atPanama, Las Palmas, Brisbane and Taiwan, inorder to improve our services. I would like tomention one of the results of our efforts: last year,we finalised with the NASDAQ Global Market-listed Greek shipowner Starbulk an agreement forclassification of a total fleet of eleven dry bulkcarriers with an average age of 10 years.

In addition to the strengthening of RINAworld-wide network, we have lately focused onincreasing offshore activities, launching the newOil & Gas business line, and on developing green

SPYRIDON ZOLOTAS

Country Manager RINA Hellas

Ν.Χ.108

MARKET

On the contrary, the fourth quarter growthrate indications for China, its export-importincrease, its industrial production, local consump-tion and foreign direct investments clearly showedthat China rapidly returned to previous growth ratelevels and would be the driving force behind theworld economy, trade and transport in 2010,offering invaluable support to the charter market.

The first month of 2010 confirmed all of theabove forecasts. The growth rate of China, whichjumped to 10.7% in the fourth quarter of 2009,gave signs of continuing, as exports increased to21% and imports to 85% from the previous year,whereas the fall of the inflation to 1.5% easedworries about the economy overheating. In paral-lel with the lead of industrial production, theIndian growth rate of 7% to 9% justifies the gov-ernment's aspiration to reach the Chinese growthrates by 2014. As far as Russia is concerned,Western analyses reckon that the extensive re-

stocking needs will boost growth this year toaround 7%. On the part of the developedeconomies, the Brazil recovery was still obvious,despite inability to create new jobs.

However, there is some light at the end ofthe tunnel in the form of industrial production,productivity and occasionally from retail sales inthe US, which gave the initial impression that theeconomy of the developed countries at least hasstabilised. The comeback message of the BRICgrowth, together with the stabilisation signs ofthe developed economies, were immediatelyreflected in the enormous investment plans ofiron ore producers and their ideas for significantprice increases.

Within this framework, February was againcharacterised by worries and comments concern-ing a bubble in the Chinese economy due to theenormous stimulus plan which inflated the cost of

BY ÔAKIS ÅFSTRATIOU

Consultant S+P Department George Moundreas and Co S.A.

By the end of 2009, the economic indicators of the developed coun-tries had led to the conclusion that the stimulus programmes by gov-ernments around the globe had not been as effective as had beenhoped. Therefore, we could not expect much of a contribution fromthese countries to world growth and trade volumes during 2010.

Sale and purchase market review for the first quarter of 2010 • Economic environment

109 Ν.Χ.

living and especially the construction sector andreal estate prices. In fact, a drop in Chinese eco-nomic activity forced the charter market belowthe 3,000 landmark for the last 12 months, from apeak above 3,000 during January. This provedonce more that the shakey growth of the devel-oped countries, as indicated by instability in con-sumption, weekly unemployment payroll, fallingprices, interest rates, stagnation etc, leaves thecharter market still totally dependent on the BRICcountries and especially China. This confirms theexplanation of the phenomenon of the Baltic DryIndex peaking at around 3,000 for the last 12months. In fact, without the support of the tradefrom the developed counties, the BRIC trade

growth is only enough to just absorb the new ton-nage coming out of shipyards and maintain char-ter levels without potential for any boost in rates.

This dependence of the charter market onChina resulted in a rise of the BDI again above the3,000 landmark during March. The reason was thatthe imminent price hike of iron ore by the miningcompanies due to a surge in demand had led theChinese to increase imports, taking advantage ofthe old low prices to pile up inventories at low cost.

As a result and upon signing the first newcontracts for Far Eastern steel mills with the min-ing companies at an 80% to 97% price increase,the trade volume decreased in April and the BDIfell again below 3,000.

nnBULKERS

nnTANKERS / CONTAINERS

Nevertheless, the world economy showsthat the growth of China, India, Russia andBrazil will return this year to the old rate of 9% to10%, 7% to 9%, 7% and 4.5% respectively andthe economies of the developed countries,although still in slow motion, will improve thisyear from negative growth in 2009 to growth ofbetween 0.5% to 2.5%. This means that about300 million tons of iron ore and coal will be addedthis year to world trade, which together with theother commodities is forecasted by the WTO toincrease by 9.5%. This is enough to absorb mostof the 900 new bulkers which are estimated to bedelivered this year by the shipyards and thusmaintain the above BDI fluctuation at around3,000 for a long time ahead, given that newdeliveries next year will be almost the same as for2010.

This means, that if in the meantime thedeveloped economies do not suffer a double dipafter termination of the stimulus packages andtheir growth proves to be sustainable and accel-erated, then the volume of the world trade afterits collapse by 12% in 2009, might be restoredearlier than 2011 as it was initially estimated,enabling the charter market to escape from thelimited range of 3,000 BDI.

DRY CARGO CHARTER MARKET IN BRIEF nnBULKERS The year 2009 was the year of alternatingbetween a tremble of fear about the imminentfuture of the market because of "too poor a freightmarket, too much new shipbuilding coming uptoo soon, too little decommissioning, a very weakeconomical future" and restrained smiles because"things are not so bad as they look, a large num-ber of new shipbuilding projects will be can-celled, economic indices will soon be headingupwards" and the like. In spite of various positiveand negative interventions including FFA con-tracts, the market ultimately, remained "weak butsteady" between the 2,000 and 3,500 mark.

By spring of 2010, the market continued with-in the same parameters. It is still "weak yet steady"but the mood is different. All this time, we haveseen the new buildings delivered being absorbedby the freight market, regardless of the low levels ofdecommission activity, mainly due to healthy

Ν.Χ.110

MARKET

growth of the BRIC economies, specially theChinese one.

Furthermore, the developed economies arenot so dead as they used to be. The banking sec-tor has been a little bit more active now thanbefore, the new building deliveries sloweddown, few were cancelled, and although newbuildings are delivered every day and scrappingrates are still poor, the charter market remainssteady at a satisfactory level of 3,000 in BDI unit.All in all, the future looks much brighter now.

nn TANKERS / CONTAINERS This market does not enjoy the same favourableconditions as with bulkers. The weak oil prices dur-ing the winter, underline the low demand for ener-gy for industrial use, which is in line with the slowrecovery of the developed countries. The same rea-son was also behind the very poor charter rates forcontainerships, because of reduced Chinese exportsto the developed countries, resulting in about 10pct(%) of the container tonnage being idle.

SECOND HAND SHIPS SALES MARKET nnBULKERSPrices always reflected expectations rather thanreality. Having said that, it is very interesting to seethat although the increase of resale prices fromDecember 2009 to April 2010 was marginal(i.e.1.5%) for capes it did reach a substantial 10%for prompt delivery for the handies. However,when you look at the five-year-old and twenty-year-old ships, it is an entirely different story.

One should remember that banks are not asgenerous as they used to be. On the contrary, theyare very inflexible, albeit negative with regard tonew loans, even with good, longstanding cus-tomers. Banks are suffering a lot not only fromtheir own mistakes, or from liquidity, but also fromprevious loan agreements when spread agreedranged between 0.5% and 1.5% over LIBOR.

Therefore, an increase in pricing (though thefreight market remains weak but steady) reflectsthe shipping community's optimistism for thefuture, backed up by savings from the old good

days, and little banking assistance. However forthe 20 to 25-year-old vessels, the price increase(from 13% to even 40%) reflects, in our opinion,the over optimism of ship owners, as well as theirstrong desire to forget the last three months of2008 and the first three of 2009. Maybe theybelieve that the golden age of 2007 - 2008 will berepeated while their new vintage acquisitions arestill viable. Let's hope their dreams will come true.

nn TANKERSIn theory, the rule of supply and demand shouldprevail in this market as well. The phase-out of sin-gle hull tankers in February 2010 left some 700tankers of about 52.0m tdw in service, out of whichabout 170 units are over 60,000 tdw. These vesselshave not been scrapped yet, nor converted intobulkers. The fluctuation of prices has been veryrestricted. Even though freight market is extremelyvolatile and nothing fancy is expected in the nearfuture freightwise, prices have been pushedupwards, though not as much as for bulkers.

Ν.Χ.112

MARKET

nn S+P ACTIVITY The strong restriction in financing, the high finan-cial cost wherever finance existed and the rebornopportunity cost mainly for bulk carriers, (back tothe future), made the newly-built second handships more expensive than the building of newones. At the same time the old ladies enjoyed anew era of attraction from hungry takers whoactually paid out of their pocket.

Greeks were cautious in their acquisitions, not onlybecause of the market development, but mainlybecause of an inability to secure workable finance.Furthermore, a lot of new buildings are coming upbetween 2010 and 2012 and the cash for the con-servative Greeks is necessary security if they are toavoid unpleasant surprises.

These days, very few newly built ships areexpected to be delivered. This might lead to the

pleasant surprise that the freight market couldbecome a bull market once more, as long as thefinancial crisis in the developed world finally pass-es -some say between 2012 and 2013. �

NB: All the details upon which the present review is based, arecoming from the files of the shipbroking firm GeorgeMoundreas and Co. S.A.

Ν.Χ.114

A POINT OF VIEW

LPG market overview for Q1 2010Highlights of 2009In contrast to previous years, market volatility wasgenerally more limited in 2009 and rates did notreach the extreme lows seen in the past. Prices formajor oil products and associated gasses rosesteadily throughout the year - by around 100% forcrude oil, 160% for naphtha and between 100%and 110% for butane and propane. By contrast theprice of natural gas, ammonia and chemical gas(ethylene, propylene, butadiene etc) fell sharplyduring the year, despite a brief reprise in Q2. Asidethough from the effects of the economic crisis, wecan note several trends during the year, including:• A growing imbalance between increasing

product supply and tonnage availability, thelatter resulting from the massive influx of shipsordered between 2006 and 2008. The drop inthe supply of product was caused not only byfurther delays in the commissioning of newproduction units (Qatar, Abu Dhabi, Africa etc),but also by the technical problems experiencedby some producers (Algeria, North Europe,Ukraine etc) plus in some of these countriesproduction was lower than in previous years.While this tonnage overcapacity was expected,the impact of this surplus varied widely accord-ing to the different sectors.

• Low natural gas prices in the US created a sig-

nificant disparity with crude oil prices, openingup the possibility of new price arbitrages withEurope and the potential for US exports. On theother hand, we witnessed a substantial declinein the transatlantic trade of ammonia fromUkraine's terminals, which were often moth-balled due to the high production cost causedby steep natural gas prices.

• A sharp fall in short and medium-term hirerates, of between 20% and 40% for the largerships (22k to 80k cbm) and between 10% and20% for the smaller sizes. Few long-term con-tracts were registered, except for a handful ofdeals either linked to NBs or 2nd hand sales.

• Significant resistance was noted in the chemicalgas market (propylene, butadiene, crude C4)which can be explained by fewer NB entries andthe development of inter-continental arbi-trages which favored long-haul voyages andthus created more tonne-miles. We note how-ever a general downturn in freight levels fromthe peaks seen a year earlier, equivalent to a fallin income of about 60% on certain routes.

• A "black" year for the VLGC sector, which suf-fered a prolonged collapse, the like of which hasnot been seen for many years. Even if this criti-cal solution was expected due to the largenumbers of NBs, regardless of the economic cri-

BY CHRISTOS

TRIANTAFYLLIDIS

Broker OIL/GAS, STEALTH MARITIME CORP SA

115 Ν.Χ.

sis, its magnitude has been surprising.• In contrast to the other sectors, and despite mul-

tiple NB deliveries in 2008, the small ship andcoaster sector surprised the market with its rela-tively strong resistance to difficult market condi-tions. After a somewhat slow start to the year,the market became increasingly busy over thecourse of the summer before firming up in Q4,thanks to the significant intra-refinery trade,increased LPG demand by the petrochemicalindustry due to the rising price of naphtha, size-able tone-miles created by the long distances tothe zones of consumption, and the developmentof a captive trade in Asia-Far East region. Theclose of the year recorded a further firming inspot and TC rates, and finding available tonnagein some areas proved difficult.

Summing up all the above, the last year of eco-nomic crisis has been critical. Nevertheless the fallin energy prices at the start of the year, combinedwith state-sponsored stimulus programmes, haskept up consumption in the larger industrializedcountries, leading to a better outcome than fearedat the beginning of 2009. Overall, the shippingmarket for LPG and associated gases developed incontrasting ways depending on the individual sec-tor - due mainly to the large influx of new tonnage,rather than lower production levels or reduceddemand for product. This disparity also reduced theincome gap between the different sectors. Twelve-month hire rates for vessels between 8k cbm and80k cbm ranged from usd450k to usd 650k permonth respectively, equivalent to a ratio of 1 to 1.4even though the original investment for theseships is 1 to 3! So, have we finally reached the lowest ebb? Howlong can VLGC operators operate their ships at ratesbelow running costs? Can the new production facil-ities sufficiently absorb the large number of NBs?When will the economic turmoil affecting the Westcome to an end? And will the rise of China and theemerging countries continue to breathe life into theother world economies? There are many questionsto resolve in the coming months. The answers areno doubt diverse, open-ended and not alwaysobvious, but it is the challenge that faces us and isone of the elements that makes shipping so fasci-nating! Leaving 2009 behind us, let's see how Q1 of2010 has treated this market to date…

3,200 cbm S/R $270,000 $8,881 $270,000 $8,881 Steady

8,250 cbm (Eth) $520,000 $17,105 $515,000 $16,941 Weaker

15,000 cbm S/R $515,000 $16,941 $510,000 $16,776 Weaker

24,000 cbm $515,000 $16,941 $510,000 $16,776 Weaker

28,000 cbm $540,000 $17,763 $530,000 $17,434 Weaker

30,000 cbm $590,000 $19,408 $575,000 $18,914 Weaker

35,000 cbm $620,000 $20,395 $595,000 $19,572 Weaker

54,000 cbm $590,000 $19,408 $600,000 $19,737 Firmer

57,000 cbm $465,000 $15,132 $470,000 $15,460 Firmer

78,000 cbm $445,000 $14,638 $455,000 $14,967 Firmer

12 Month 1 JANUARY '10 31 JANUARY '10 Market

Time Charter Monthly Daily Monthly Daily Changes

Rates T/C Rates T/C Rates T/C Rates T/C Rates

nnJANUARY '10January saw the smaller size LPGs monthly TC rates remaining at steady levels, compared to the levelsreported for the close of 2009. Less harsh were the respective indicative rate figures for the ships between8k and 35k cbm, with levels for January appearing between 1% and 4% lower than the respective figuresfor the close of December 2009. For the larger units (>54k cbm) we witnessed a firming in monthly rates,with an increase from 1% up to 2.5%…

3,200 cbm S/R $270,000 $8,881 $270,000 $8,881 Steady

8,250 cbm (Eth) $515,000 $16,941 $510,000 $16,776 Weaker

15,000 cbm S/R $510,000 $16,776 $490,000 $16,118 Weaker

24,000 cbm $510,000 $16,776 $490,000 $16,118 Weaker

28,000 cbm $530,000 $17,434 $515,000 $16,941 Weaker

30,000 cbm $575,000 $18,914 $565,000 $18,585 Weaker

35,000 cbm $595,000 $19,572 $585,000 $19,243 Weaker

54,000 cbm $600,000 $19,737 $610,000 $20,066 Firmer

57,000 cbm $470,000 $15,460 $455,000 $14,967 Weaker

78,000 cbm $455,000 $14,967 $480,000 $15,789 Firmer

12 Month 31 JANUARY '10 28 FEBRUARY '10 Market

Time Charter Monthly Daily Monthly Daily Changes

Rates T/C Rates T/C Rates T/C Rates T/C Rates

nnFEBRUARY '10Moving into February, the scenario seen here was quite similar: the smaller units remained at steady levelsthroughout the month, while the levels reported for the ships ranging from 8k and up to 35k cbm were weak-er. The (downwards') trend for this month was from 1% reaching up to about 2.8% during February. Withregard to larger vessels, although we saw the 54k cbm units at 1.5% higher compared to end January, the57k sector did not manage to follow the same trend and thus was seen to be 3% lower than the reportedlevels for January. Nevertheless, the bigger units (i.e. 78k and above) showed a resistance to this negativetrend and maintained the same attitude as seen for the 54k cbm ships, i.e. monthly rates firmed up to 5.5%!

Ν.Χ.116

A POINT OF VIEW

SnP / Fleet Summary / NBs Vs ScrappingVLGCs: As already mentioned, 2009 was a disas-trous year for this sector and the market indicatorsremained permanently in the red. Despite a fore-cast increase in new production and the "removal"of 5 old units for demolition, the entrance of 13NB's between now and 2013 means the outlookfor this sector remains uncertain for the next 12 to18 months or so.

LGCs: With six 60k cbm vessels joining the fleet inthe last 2 years and the sale of its older untis fordemolition, together with the absence of anypending orders, this sector is likely to find a newlease of life in the near future.

MGCs: During the past couple of years (2008 and2009), we had several entries of NB's in this sector:11 * 35k cbm, 10 * 22k cbm and 3 * 20,6k cbm,which were delivered into a difficult market envi-ronment. This influx of extra tonnage shook themarket in the early months of 2009, although inthe middle of last year there was a respite due torecovery in NH3 trade from the Middle East. Given

3,200 cbm S/R $270,000 $8,881 $270,000 $8,881 Steady

8,250 cbm (Eth) $510,000 $16,776 $510,000 $16,776 Steady

15,000 cbm S/R $490,000 $16,118 $490,000 $16,118 Steady

24,000 cbm $490,000 $16,118 $490,000 $16,118 Steady

28,000 cbm $515,000 $16,941 $515,000 $16,941 Steady

30,000 cbm $565,000 $18,585 $565,000 $18,585 Steady

35,000 cbm $585,000 $19,243 $575,000 $18,914 Weaker

54,000 cbm $610,000 $20,066 $580,000 $19,079 Weaker

57,000 cbm $455,000 $14,967 $450,000 $14,803 Weaker

78,000 cbm $480,000 $15,789 $475,000 $15,625 Weaker

12 Month 28 FEBRUARY '10 31 MARCH '10 Market

Time Charter Monthly Daily Monthly Daily Changes

Rates T/C Rates T/C Rates T/C Rates T/C Rates

nnMARCH '10The closing month for Q1 2010 did not hold any surprises for the market's players; HANDYs and mediumsize LPG carriers remained at a steady levels throughout March, while levels reported for the large (LGC) andvery large (VLGC) units were weaker. The 35k cbm vessels were seen at about 1,7% lower compared to fig-ures for the end of February, while the 54k and 57k cbm units lost about 4.9% and 1.1% respectively. Lastbut not least, the 78k cbm ships appeared at slightly lower levels compared to the previous month's clos-ing figures i.e. 1% lower.

nnLPG CARRIER NET FLEET SUMMARY(as at end March 2010)

1-9,999 10-19,999 20-49,999 50-69,999 70,000+ Total

No. Cbm No. Cbm No. Cbm No. Cbm No. Cbm No. Cbm

End Mar ADDIT. 6 26.738 0 0 2 58.128 0 0 4 323.905 12 408.771

10 DELET. 1 2.497 2 25.332 0 0 1 55.859 2 147.388 6 231.076

Net change 5 24.241 -2 -25.332 2 58.128 -1 -55.859 2 176.517 6 177.695

1-9,999 10-19,999 20-49,999 50-69,999 70,000+ Total

No. Cbm No. Cbm No. Cbm No. Cbm No. Cbm No. Cbm

Jan.-10 ADDIT. 3 10.720 0 0 1 35.128 0 0 3 243.112 7 288.960

DELET. 0 0 0 0 0 0 1 55.859 1 75.475 2 131.334

Net change 3 10.720 0 0 1 35.128 -1 -55.859 2 167.637 5 157.626

Feb.-10 ADDIT. 1 3.500 0 0 1 23.000 0 0 0 0 2 26.500

DELET. 0 0 0 0 0 0 0 0 0 0 0 0

Net change 1 3.500 0 0 1 23.000 0 0 0 0 2 26.500

Mar.-10 ADDIT. 2 12.518 0 0 0 0 0 0 1 80.793 3 93.311

DELET. 1 2.497 2 25.332 0 0 0 0 1 71.913 4 99.742

Net change 1 10.021 -2 -25.332 0 0 0 0 0 8.880 -1 -6.431

Ν.Χ.118

A POINT OF VIEW

the number of NB's to be delivered during 2010and 2011 (8 * 35k cbm units and 10 * 22k cbm),the next 2 years seem quite open for this sector,although the flexibility of employment for theseships in the LPG, NH3 and chemical gases marketswill facilitate their integration.

HANDYs: With regard to fleet renewal we cancount 17 NB's delivered in 2009, of which about50% were ethylene carriers, while nearly 50 units

are still on order for delivery between 2010 and2012. Even taking into account the probable salefor demolition of the oldest units (i.e. 5 * 6k cbmto 8k cbm were already sold in 2009), the comingyears will be challenging, while it remains to beseen if the petchem market can absorb all this ton-nage.

Small LPGs:In contrast to the other sectors, anddespite multiple NB deliveries in the past year, as

stated above, the small ship and coaster sectorsurprised the market with its relatively strongresistance to difficult market conditions. Hereagain, we registered a large number of NBs: 25units delivered in 2009 and around 50 to comebetween 2010 and 2013. However age restrictionsand vetting standards will certainly play their partin the elimination of many vessels, while weshould also remember the impact of growingmarkets in Asia and the Far East.�

1-9,999 10-19,999 20-49,999 50-69,999 70,000+ Total

No. Cbm No. Cbm No. Cbm No. Cbm No. Cbm No. Cbm

Due for SCRAP (current) 0 0 1 15.063 1 39.103 0 0 0 0 2 54.166

LPG Fleet and -Mar. 10 796 2.844.940 60 827.498 99 2.866.658 21 1.224.176 141 11.209.730 1.117 18.973.002

New build. 2010 54 266.818 5 84.400 8 228.200 0 0 5 406.793 72 986.211

order book 2011 23 144.850 0 0 10 296.500 0 0 3 245.000 36 686.350

2012 10 66.500 0 0 1 34.300 0 0 2 158.000 13 258.800

2013 1 5.000 0 0 0 0 0 0 1 80.026 2 85.026

2014+ 0 0 0 0 0 0 0 0 0 0 0 0

TOTAL ON ORDER 88 483.168 5 84.400 19 559.000 0 0 11 889.819 123 2.016.387

LPG CARRIER Year End 01-April-10 ORDERBOOK & DELIVERY SCHEDULE

FLEET, 000m3 2006 2007 2008 2009 No. ,000m3 No ,000m3 % Fleet 2010 2011 2012+

<5000cbm 1.323 1.374 1.404 1.447 643 1.460 40 135 9.2% 90 41 4

5-20,000cbm 1.902 2.027 2.210 2.263 266 2.242 65 510 22.7% 247 159 103

20-40,000cbm 2.027 2.301 2.480 2.759 96 2.776 17 468 16.9% 229 217 22

40-60,000cbm 1.466 1.360 1.368 1.164 20 1.164 0 0 0.0% 0 0 0

>60,000cbm 8.549 8.905 10.583 11.179 141 11.273 12 974 8.6% 489 243 242

TOTAL FLEET 15.267 15.967 18.045 18.812 1.166 18.915 134 2.087 11.0% 1.055 660 371

TOTAL M. DWT 12,4 13 14,5 14,5 1.166 15 134 1,63 11.2% 0,83 0,51 0,28

INTL FORA

Ν.Χ.12

only at sea but also in the broader maritime indus-try ashore. If studies that are underway at presentconfirm the reported shortage of qualified mer-chant navy officers worldwide, it makes it evermore incumbent upon the shipping industry andthe international organizations concerned (mostnotably IMO and ILO) to take action now to pre-vent a situation in which ships are inadequatelymanned because of the lack of sufficient skilledpersonnel.

A key event in the "Year of the Seafarer"is the diplomatic conference to be held inManila, Philippines, from 21 to 25 June 2010, toadopt an extensive set of amendments to theInternational Convention on Standards of Training,Certification and Watchkeeping for Seafarers(STCW) and its associated Code, to bring themboth up to date with developments since theywere extensively revised in 1995; and to enablethem to address issues that are anticipated toemerge in the foreseeable future. This is anextremely significant undertaking and should bewarmly welcomed by the maritime communitybecause, once the proposed amendments havebeen adopted and have entered into force, thenecessary global standards will be in place to trainand certify seafarers to operate modern ships, withtheir increasing technological advancement, forsome time to come.

Equally, the preservation of the environment

From my perspective, IMO is focusing onthree major themes in 2010: seafarer issues,climate change and the scourge of piracy.

IMO has decided to designate 2010 as the "Yearof the Seafarer". This gives the Organization,together with the international community atlarge and the shipping industry, in particular, theopportunity to pay tribute to the more than 1.5million seafarers, from all over the world, for theirunique contribution to society and to recognize theresponsibilities they shoulder in the execution oftheir daily tasks and duties, in an often hostileenvironment.

The theme should, furthermore, help toattract continued attention to some of the haz-ards that confront seafarers nowadays, such aspirate attacks, unwarranted detention when theirships are involved in accidents, refusal of shoreleave for security purposes and abandonment, toname but a few.

The selection of 2010 as the "Year of theSeafarer" complements the "Go to Sea!"campaign that IMO launched in November2008, with the "Round Table" of internationalshipping associations and the InternationalTransport Workers' Federation, to focus attentionon the urgent need to attract young people of theright calibre to the seafaring profession, byemphasizing the rewarding, stimulating andlong-term prospects that seafaring offers, not

2010the Yearof the Seafarer

Posidonia has long beenestablished as one of ship-ping's premier industryevents, attracting people ofgenuine authority and influ-ence from all sectors of thisdiverse industry, who will, nodoubt, take the opportunityto debate and ponder - andperhaps come up with solu-tions for - the key issues ofthe day.

BY EFTHIMIOS E. MITROPOULOS Secretary-General, International Maritime Organization

Ν.Χ.120

CYPRUS SHIPPING

Gearing up for the Cyprus Presidency

From 1st July 2012, Cyprus will take over the rotating presidency of the EU Council for six months. The Cyprus pres-

idency forms a part of the Trio Presidency with Poland and Denmark being the other two partners who will hold

the Presidency in the second half of 2011 and the first half of 2012 respectively.

BY VASSILIS PH. DEMETRIADES, Coordinator of the Cyprus Presidency to the Council of the EUon areas of Transport and Telecommunications, Ministry of Communications and Works Republicof Cyprus

The trio system of presidencies is a relativelynew innovation from the EU and is designed

to ensure consistency of message and directionthat may otherwise be compromised by theshort length of presidency terms. The threePresidencies, in close cooperation with theEuropean Commission, will formulate an 18-month program of Council activities. The triopartners will also agree to work closer togetherduring the 18 months in order to foster theimplementation of the joint aims and projects.This applies in particular to issues which will betreated as priorities by all three Presidencies.The richness of maritime expertise which lies inthe Maritime Directorates of the three countries,their long maritime tradition and strong shippinginterests signal their active contribution towardsshaping the EU maritime transport policy.

The main task of the EU Presidency is torun the agenda of the Council for sixmonths. Approximately 85% of this agenda is"inherited". In other words, the Presidency exam-ines the dossiers that simply "land" on thePresidency's table (i.e. examination of theincomplete dossiers, examination of the amend-ments of existing Community Legislation and ofthe new proposals submitted by the EuropeanCommission). Cyprus, together with Poland and

Ν.Χ.122

CYPRUS SHIPPING

Denmark, is carrying out a screening exercise onthe "inherited" agenda.

The recent adoption of the third mar-itime safety package was a quality steptowards building the EU's comprehen-sive maritime safety policy. As a result, theMaritime Directorates of all the EU memberstates are now in the process of the effectiveimplementation of the new legislative measures.All these strict measures should be offset withpositive initiatives for the EU shipping industry.Cyprus, during its Presidency, will attempt toundertake actions towards achieving and main-taining stable and predictable global competitiveconditions for EU shipping and its related activi-ties, within the framework of the EuropeanMaritime Transport Strategy of 2008-2018.

Cyprus will strive to promote policymeasures that will be in line with thenew White Paper on EU Transport Policyfor the decade 2010-2020 which is aimed toachieve transport sustainability. Furthemore,Cyprus, together with the other two partners ofthe trio, will continue to work towards a moreefficient maritime transport sector, reducing itsnegative impact on the environment and mini-mizing the adverse effects of the economic crisis.

As part of the "inherited agenda", accord-ing to the new European Commission's WorkProgram, will be the need to address the socialdimension of shipping. This could be achievedthrough a legislative and non-legislative packageof initiatives in maritime transport, most notablyin the areas of training and certification of seafar-ers (STCW Convention) extended also to coverissues under the ILO Maritime Labour Convention(MLC 2006) and its effective application in theEU. Cyprus under its Presidency will have to dealwith these proposals.

It is obvious that the great bulk of aPresidency's programme will consist ofinherited and wholly foreseeable material. It is a

fact that the Presidency's capacity to set prioritiesin EU policy making is limited to around 10-15%of the Council's activities. In spite the above, it isworth for Cyprus to explore this potential towardsinfluencing the EU policy agenda especially onmaritime affairs.

Cyprus, being the Mediterranean repre-sentative of the Trio, will possibly focus onthe international and regional dimension of theEU Integrated Maritime Policy in an attempt tofurther develop the cooperation/synergies andthe integrated approach to maritime affairs in thearea of the Mediterranean.

Cyprus, an island EU member state ofjust 0.2% of EU's total population, hopesthat size does not matter when it comes to arange of challenges. History may be on its side as

small member states often run successful presi-dencies as they can be better at listening andbrokering, key skills for an effective neutral andimpartial chairing of the meetings. For Cyprusthis will be a moment in the limelight, a greatchallenge which requires strategic planning, andintensive political and organizational activities onnational and European level.

A successful Presidency is the best pro-motion of Cyprus and an opportunity to cre-ate positive image of Cyprus both in Europe andinternationally. In the area of shipping and mar-itime affairs, Cyprus will undoubtedly promotelegislative and political decisions, brokering com-promises between the member states for thebenefit of EU and global shipping, proving onceagain its leading role in European and interna-tional shipping scene.�

Cyprus, together with the other two partners of the trio, will continue to work towards a more efficient maritime transport sector, reducing itsnegative impact on the environment and minimizing the adverse effectsof the economic crisis.

Ν.Χ.124

CYPRUS SHIPPING

The effort to face-up to the World FinancialDownturn was one thing, but a major part

was concentrated on trying to resolve a numberof other important issues adversely affectingCyprus Shipping. In order to counter-balance thenegative impact faced by Cyprus Shipping due tothe Turkish Embargo, the Chamber has workedclosely with the Government of Cyprus to provideadditional financial incentives to Cyprus-basedshipping companies engaged in new shipping

activities in addition to those already existing inits "Tonnage Tax" Law.

To be able to attract and more impor-tantly to maintain within its borders ahighly lucrative and financially pros-perous Industry such as Shipping, Cyprushad to exploit its strengths and limit its weak-nesses as an international Shipping centre. In thisrespect, the viability and maintenance of a com-

petitive Taxation System for Shipping companies,was a must in order to enhance the scope of theshipping activities on the island, somethingwhich would contribute to an even faster recov-ery from the adverse effects from the worldfinancial downturn.

Towards the above aim, as a result of tenyears of coordinated efforts and close collabora-tion between the Cyprus Maritime

Cyprus Shipping - National Developments A New Era for Cyprus Shipping

BY THOMAS KAZAKOSGeneral Director Cyprus Shipping Chamber

The world's economy went through the toughest times the past few years,

and this certainly also affected Cyprus Shipping to a certain extent.

Nevertheless, while some shipping companies around the globe faced

financial difficulties, we are pleased to note that our domestic industry

here in Cyprus through careful, cautious and sensible management, as

well as relying on the high quality services offered, sailed through the

stormy waters with the least possible collateral damage. Facing up to this

financial downturn, was a great challenge and a huge task. But this lead

the Industry to see things from a different perspective and made them

realise that there was an emerging spectrum of new opportunities wait-

ing to be explored.

Administration (Ministry of Communications andWorks, Department of Merchant Shipping) andthe Cyprus Shipping Chamber, as well as otherinstitutions and Governmental Departments,through successive and successful stages, a bigtriumph for Cyprus Shipping has been achieved,with the official approval by the EuropeanCommission of the new, fully revised andupgraded Cyprus Shipping Taxation System,which had been submitted for official approval inJanuary 2010.

Following the official approval by theEuropean Commission of the new, fully revisedand upgraded Cyprus Shipping Taxation System,the big success of Cyprus Shipping was complet-ed with the approval of the relative Bill for thenew Shipping Taxation System by the Plenary ofthe House of Representatives, ion 29 April 2010.

This approval constitutes perhaps the most

important success for Cyprus Shipping since theformation of the Republic of Cyprus and ensuresthe viability of the Cyprus Shipping Register andthe Cyprus Shipping Industry, as well as theunhindered continuation of the important contri-bution of the Shipping Industry to the CyprusEconomy, which according to the latest availableofficial statistical figures, exceeds 5% of the GDP.It also marks the beginning of a "New Era" forCyprus Shipping, which will cover in their mostmodern form, the main Shipping activities thatare offered today in International Shipping,namely Shipowning, Shipmanagement, CrewManagement and the Chartering of vessels, ren-dering Cyprus as one of the most advanced mar-itime centres internationally.

In addition, the approval of the new CyprusShipping Taxation System automaticallybecomes a European Maritime legislative frame-

work, which extends and safeguards Europeansafety rules and regulations to non-EU flag ships.

Consequently, it is expected that newshipping companies, both within and out-side of the European Union, will seek to benefitfrom this new, very competitive, and at the sametime, fully compatible with the European Acquis,Cyprus Shipping Taxation System, by establishingand operating their shipping offices in Cyprus. Inthis respect, the labour market in Cyprus willexpand and more employment opportunitieswill be provided. Technical know-how will reachnew heights with new capable, expert and activeprofessionals seeking employment within anenhanced and powerful Maritime Cluster.

It is for these reasons that we strongly believethat 2010 will mark the beginning of a "New Era"for Cyprus Shipping! �

The Shipping Business CycleShipping's main function is to facilitate worldtrade. Therefore, Shipping is a derived demanddepending on World Trade developments. Anincrease in world trade volumes lead to anincrease in demand for shipping services.Consequently, freight rates increase since thereare too many cargoes chasing too few ships.Secondhand ships become profitable their own-ers require a premium to sell and their priceincrease. Owners tend to keep older ships in serv-ice and avoid scrapping. As second hand shipprices increase, newbuilding projects becomeviable, since new ships are more competitivelypriced than second hand ships. Therefore, moreorders for new ships are placed and newbuildingprices increase. New ships are not readily avail-able and there is a lead time of approximatelytwo years between ordering and delivery.

Therefore, these orders are mostly based onexpectations that demand for shipping serviceswill remain strong and freight rates will continueto strengthen. Unfortunately, demand stagnationor reduction and over-ordering due to overesti-mation of future shipping needs lead to oversup-ply when all these ships are delivered. The conse-quences are devastating. Too many ships chasetoo few cargoes, supply is elastic to demandchanges and freight rates soften. Ships becomeless profitable or even lose money. As a resultthey lose value and some of them are slowsteaming or put in lay-up. Orders for new shipsstop, since they do not make financial sense anymore, and the least competitive, usually olderships are sold for scrap. This leads to an improvedsupply demand balance and causes the cycle tostart again.

Demand varies for each ship type. Bulk carri-ers depend on economic development and thestate of the world economy. Tankers dependmostly on politics and seasonality. A cold wintermay lead to a spike in freight rates. Also, tensionsbetween Iran and USA may lead the later toincrease its strategic oil reserves thus causing atemporary spike in freight rates without an actu-al increase in oil demand. Finally, containershipsdepend on the consumption of finished goods.As long as the American consumer, the world'sgreatest and most important, is confident andkeeps on spending on new clothes and electron-ic gadgets, containerships prosper. If he lacksconfidence and credit, as is the case today, con-tainerships suffer.

Demand ExternalitiesExternalities refer to situations where a marketexchange imposes costs or benefits on otherswho are not party to the exchange. An externali-ty for shipping was the collapse of LehmanBrothers in late 2008. International trade andhence shipping was brought to a halt not due toa change in market fundamentals but due to lackof funding of trade transactions. As soon as con-fidence on the banking system was restored andletters of credit opened again, commodity trad-ing returned to normal and freight rates recov-ered. Another externality was the closure of theSuez Canal in the 1960s and 70s. In the begin-ning goods had to travel longer distances, hence

Ν.Χ.126

MARKET

BY DR. STAVROS TSOLAKIS

Vice-President, DST SHIPPINGGROUP, Visiting Professor,Singapore Management University

An Economist's Eye for the Shipping guy

This article tries to analyze current shipping market affairs by utilizingeconomic theory. Its aim is to encourage shipping professionals to viewmarket movements through an economist's eye thus enhancing theirmarket understanding and financial decision making.

Ν.Χ.128

MARKET

demand increased (the ton-mile effect) leadingto high freight rates that made extra large shipsviable. However, when the Canal reopened, ton-mile demand decreased. In addition, very largeships ordered in the good years came into themarket and led to a protracted period of oversup-ply and low freight rates.

The Economic relationshipbetween Second hand and NewShipsSecond-hand and new ships are substitutes sincean increase in the price of second-hand ships willlead to an increase in the demand for new ships.Moreover, since it is easy for shipowners toswitch from second-hand ships to newbuildings,the demand is more elastic thus making thesegoods close substitutes. On top of replacementand substitution however, the driving force con-necting second-hand and newbuilding marketsis speculation. Speculative orders of a new shiptake place only because either the buyer expectsthe value of the ship to increase in a relativelyshort period of time, ideally before the vessel'sdelivery date or because the seller tries to takeadvantage of a value increase of a ship he hasrecently ordered. Although the extent of specula-tive ship sales is unclear, it is certain and evidentthat this type of activity exists and takes place inshipping. Therefore, the shipowner/speculatorcontinuously compares the price of a new shipwith that of a second-hand. If second-handprices increase substantially he will be eager topay more for a newbuilding whereas if theydecrease he will ask for a lower price from theshipyard.

A major difference however is that whereassecondhand ship prices are market driven, thusdepending on the ship's earning power (thefreight rate), newbuilding prices are cost driven.This means that they depend more on shipbuild-ing costs (most notably steel price) than on thefreight market. Therefore, despite the significantdecrease in second hand prices after the marketcollapsed in 2008, newbuilding prices did notfollow suit because shipyards had to take intoaccount steel price increases. Sometimes howev-er, shipyards may offer substantially low priceseither to fill their orderbook even at a loss, or touse the first installments for shipyard expansion

(Chinese Greenfield yards in 2006-2008). Theymay also do it to strengthen their cash-flow anduse it as a negotiating tool for debt restructuringpurposes (many mid-sized Korean yards in2010).

Ship Supply issuesShip supply is difficult to predict for the followingreasons:• The secrecy of national shipbuilding associa-

tions who do not publish accurate figures oftheir shipbuilding capacity and the actualorderbook of their members.

• The development of many Greenfield yardsthat lacked experience, and did not reportship orders, delays and cancellations.

• The secrecy covering negotiations betweenyards and shipowners regarding price rene-gotiations, options cancellations, late deliver-ies and orderbook slippages.

• The competition among classification soci-eties for market share and new orders thatencourage secrecy and affect the accuracy ofpublished statistics.

• Many deep-sea ships constructed byGreenfield yards are of low quality, not suit-able for international trades and areemployed in domestic Chinese trades thusdecreasing international ship supply.

• Many newly reported orders are actually thereincarnation of cancelled orders that did notgo through either due to lack of finance or thebankruptcy of the shipyard.The greatest challenge today is to obtain an

accurate figure of the ships expected to enter themarket over the next couple of years or at leastfind out how many ships have actually been can-

celled. The most accurate sources of such infor-mation are the engine builders' financial reports.Over there, someone can find the actual numberof engines ordered as well as the number ofthose cancelled. Nevertheless, since most of thebuilders do not differentiate between main andauxiliary engines, such figures shall be treatedwith caution.

Ship Finance Availability and Credit CrunchCredit Crunches arise from a combination of loandemand pressure and reduced supply of funds.Speculative ship lending is the major source ofsuch economic instability. This type of lendinggives rise to bubbles which when they burst,shipping markets crash. As ship prices rise, banksfeel they can lend more on the basis of the collat-eral; as investors see prices going up they want toget in on the game before it is too late.Shipowners see quick profits by putting up new-buildings, until excess capacity results. The prob-lem in this case is that markets can remain irra-tional longer than the shipowners can remain sol-vent. A leveraged firm may be forced to sell, whilefast accumulating losses put it out of business.

The kind of mistake that banks usually makeduring a recession by foreclosing on many loansis called the fallacy of composition. If enoughfirms fail to repay their loans, banks may aban-don the market or even collapse. When a bankgoes out of business, many of its customers willhave difficulty finding an alternative supplier ofcredit overnight. For small companies in particu-lar, finding a new source of funds, especially dur-ing an economic downturn, may be nearlyimpossible. With a large number of banks outand with those managing to survive facing anincreasingly large number of loans in distress,and unwilling to take in new customers, moreshipping companies find themselves withoutaccess to credit. Without credit, the one glimmerof hope without a recovery is squashed.

ConclusionThis article analysed current shipping affairs. Amix of economic theory and market analysis wasutilized in order to assist Shipping Professionalsenhance their market understanding and withvarious decision making processes. �

The greatest challenge today is to obtain an accurate figureof the ships expected to enterthe market over the next coupleof years or at least find out howmany ships have actually beencancelled. The most accuratesources of such information arethe engine builders' financialreports.

nations have been unwittingly subjected to theterrifying ordeal of attack, with armed piratesboarding their vessels and engaging in hijackingand hostage-taking for ransom.

It is against such a worrying background thatlast year's IMO Assembly adopted two ad hoc res-olutions, once again demonstrating theOrganization's determination to halt these unlaw-ful acts by, among other actions, recommendingmeasures to prevent and suppress them. The reso-lutions, thus, reinforced IMO's leadership role in

13 Ν.Χ.

remains a key objective for IMO and, when weconsider environmental issues, it is clear thatslowing - and reversing - climate change is thedefining challenge of our age. The world is lookingto the United Nations as a whole to provide theleadership, guidance, education and informationrequired and, ultimately, action. IMO has a key roleto play in what must, of necessity, be a concertedglobal effort.

The shipping industry is a relativelysmall contributor to the total volume ofemissions (some 2.7% on 2007 world data,representing one-tenth of the total of the trans-port sector) and, on a tonne-mile basis, is a muchlower emitter of greenhouse gases (GHGs) thanother forms of transport. Nevertheless, IMO hasstill taken steps to reduce these emissions and hasundertaken a multi-faceted programme toimprove the industry's performance in this regard.The goal is to put in place a global regime provid-ing for technical, operational and market-basedmeasures resulting in even greater GHG reduc-tions.

In March this year, our Marine Environ-ment Protection Committee establisheda Working Group to build on the significantprogress that has been made on technical andoperational measures to increase the energy effi-ciency of ships. To that effect a draft text has beenprepared concerning technical measures that canbe used as effective yardsticks to measure theenergy efficiency of ships and act as the basis forsystematic improvement, with its attendantreduction in harmful emissions. The members ofthe Organization are still engaged in decidingexactly how they want to apply these measures,but I believe that, in due course, they will take therequired action, to the benefit of the environment,shipping and IMO.

The Committee has also established anExpert Group to undertake a feasibility

study on, and impact assessment of, the variousproposals submitted for market-based measuresfor international maritime transport - before thematter is further discussed during this and thenext year.

As I said, when addressing the Committee onclimate change two months ago, if there is onechallenge that we have to face together, this is it.If there is one danger that threatens our future,and the future of our children, this is it. Globalissues demand global solutions and IMO is

responding properly to the challenge. This is equally true of another pressing matter,

which greatly concerns IMO and the shippingindustry at large. It is a source of great concern,and a genuine anathema in the 21st century, thatwe should currently be experiencing a periodwhen the threat of piracy and armed robbery tointernational shipping is as pernicious as at anytime in history. This applies, particularly, in watersoff the coast of Somalia and in the Gulf of Aden,where a large number of seafarers from many

It is clear that slowing - andreversing - climate change is the defining challenge of ourage. The world is looking to the United Nations as a whole to provide the leadership, guidance, education and information required and, ultimately, action. IMO has akey role to play in what must, of necessity, be a concertedglobal effort.

Ν.Χ.130

EDUCATION

BY D. E. GOURGOULIS

C.A. SCHINAS

G. P. GOTZAMANIS

C. G. YAKINTHOS

Aim of the article is the short presentation of a proposed co-fundedproject by European Commission, under Leonardo da Vinci call, withMerchant Marine Academy of Makedonia to have the primary role ofapplicant organization. Scope of the project is the development ofmultiple choice tests for competence evaluation of maintenancemarine engineers for ships.

Evaluation of competence of marineengineers on maintenance sector• Merchant Marine Academy of Makedonia, Greece

Human factors are related to crew compe-tence in terms of decision-making, com-munication, operating skills. Human error

is an existing parameter that often proves almostimpossible to remove from the maritime safetyequation. Thus, the human failures can be avoid-ed by different ways: firstly by improving themanagement and crew organisation; then bydoing a careful selection of the crew and thirdlyby increasing the training quality and quantity,both for ordinary and emergency situations. Theuse of the produced multiple choice test besideswith the use of engine room simulators wouldimprove both the training and the crew selection.

The shortage of innovative actions on safetyand maintenance vocational training at a

European shipping and offshore enterprises. Theresulting material would be a combination of thetheoretical knowledge of academic institutions(Greece, Turkey, Italy) enriched with the valuableexperience of consultants and companies' main-tenance personnel (Greece, Germany).

Experience within the aircraft and militarysectors has shown that important benefits may beachieved through the application of computerbased training systems. Simulation provides theparticular benefit of enabling the response toemergency situations to be practiced within sce-narios that would be otherwise too expensive ortoo dangerous to perform in reality. A very impor-tant object, through many of the proposedresearch project will be the establishment of tech-niques and processes for the minimisation of dan-gers that emanate from the operation of engineand subsystems in a Very Large Crude Oil Carrier(V.L.C.C.). The proposed solutions simultaneously

131 Ν.Χ.

European level, combined with the need to facili-tate employees' training opportunities, pushesand pulls a great challenge for developing pro-gressive learning techniques. Based on theimprovements on safety and reliability reportedin the other industrial fields, competitiveness oftransport by ships should be increased in terms ofreduction of accidents (costs and frequency) andoptimization of production - operation costs.

Marine engineers are on board ship to ensurethe safe and efficient operation of machinery.Safe and efficient operation of any individual itemof machinery requires regular maintenance.Maintenance requires manpower and time and insome cases they are not always available. Manyships now operate with only three engineers onboard and short periods in port provide little timeto carry out maintenance. Today during the oper-ation of ship marine engineers follow three typesof maintenance: Preventive or scheduled planned

maintenance, corrective-breakdown mainte-nance and finally the condition based mainte-nance.

The focus of the project is to empha-size the immediate impact of maintenance proce-dures on the safety assurance in the working shipenvironment. The intention of the project is todevelop an integrated multiple choice test onthese issues, adjusted to the special needs of

Ν.Χ.132

EDUCATION

will lead to the improvement of attribution ofinstalled engineering systems to them. With basictool of research, the installed full mission engineroom simulator of Merchant Marine Academy ofMakedonia, the analysis of total behaviour ofmain engine will be examined when the follow-ing events are caused on this:: Deteriorations inthe basic sections of engine, changes on the basicparameters of operation, damage in the auxiliaryinstruments and parts of networks, undesirableenergies and abnormalities in the electrical net-work and all networks that support the above.Planned maintenance is very useful becauseallows maintenance schedules to be organizedand to be fitted in with the ship's operatingschedule. However, during the operation of shipthere are components that display different rate ofdamage and besides a defective component candamage other components. The operating marineengineer must be aware of such issues and bewilling to adjust maintenance accordingly.

The produced multiple choice test will bebuilt using the continuous change on the behav-iour of engine due to the programmed damages

with the simultaneous recording-analysis of pre-sented alarms. The multiple choice test will coverevents that are presented more often during theequitable operation of engine, alarms that mustbe observed by the engineer of watch in charge.

The produced multiple choice test will bestructured having in mind the handbook by aprevious Leonardo da Vinci project [Train in Main,Training Material in Maintenance Management]that all possible situations should be examinedusing the following steps: Consequence of failure(what happened?), the technical cause of failure(Why did it happen?), the designation ofimprovements/lessons learned (How can it beprevented?)

The produced multiple choice test will covermaintenance topics of daily routine of marineengineers, it will help them and besides itenhances the career of marine engineers. It willbe useful and valuable for the safety on board.Besides, the training package will help marineengineers to understand security data on boardthe vessel and on shore.

The expected long term impact hinges uponthe promotion of life long vocational training inshipping and offshore companies improving atthe same time the quality and innovative ness oftraining methods for European Union's vocation-al education.

The produced multiple choice test will bevaluable for the development of a strategy forpolicy implementation to enhance the safety inthe engine room of ships operations as well asquality of shipping. It will propose cost-effectivemeasures for new and existing ships to addressthe main environmental impacts and safety con-cerns from correct operation and maintenance.

Indeed, produced solutions are focusingdirectly at the a better workload for the operatorby "intelligently" improving at the same timethe safety of navigation and upgrading the pro-fessional skills of the officer in duty - in otherwords, building the "virtual" link between theshore based jobs and the seagoing ones, attract-ing the young ones to the profession and recov-ering the "Maritime Know How" that we are inrisk of loosing.�

MARKET NEWS

Ν.Χ.134

Crossworld Awardfor the top performingagency 2009

Crossworld Marine Services Inc hasbeen awarded from POEA as the first oneamong the four top performing agencies forthe Year 2009 with a total evaluation of 87%in quality of service, Social responsibility, HRplans and welfare programs and other strictcriteria as set by the POEA.

For all of us, working for Crossworld,this is aprecious reward for all our efforts throughoutthe years,and,a big responsibility to preservethis achievement and work harder in thefuture keeping low profile.It is well known that the road to the top is dif-ficult,but,it is even more difficult to maintainyourself in the top..Most important,It would be impossible for usto achieve this without your support,so,allowus to extend our sincere thanks and a prom-ise: "continuously investing in people webuild hand to hand a world class crew man-agement company".�

Update on the Marshall Islands RegistryGreek owners now make up thelargest segment, by tonnage,within the Marshall IslandsRegistry, which is administeredby International Registries, Inc.(IRI). Theo Xenakoudis,Managing Director of IRI Piraeusoffice, commented that "Greekowners, who have long played amajor role within the MarshallIslands Registry, helped elevate theregistry to 56 million gross tons and2165 vessels at mid-April 2010 andare responsible for 23% of theRegistry today".

BY THEO XENAKOUDISManaging Director of IRI PiraeusOffice

"Tank ships and

bulk carriers contin-

ue to dominate the

Marshall Islands

commercial fleet,

while the LNG seg-

ment has grown

significantly in the

past year," Mr.Xenakoudis observed. He also added that "the

Registry works closely with owners of all

sizes to foster efficient operations". One strat-egy designed to promote efficiency, quality andservice is the network of 20 worldwide officesthat allows owners/operators to contact theRegistry around the clock and to routinely workwith maritime pro-fessionals in theirregions, who speaktheir language. Thisdecent ra l i sat ionphilosophy is one ofthe main reasonsthe Registry has

been able to attract and maintain quality ownersand operators. The Marshall Islands Registryremains the only major open registry to beincluded on the US Coast Guard Qualship 21 ros-ter for five years in a row. The Registry also main-tains its white list status on both the Paris andTokyo MoUs. "A recent trend in the Registry is the increase

of newbuilding tonnage," said Mr. Xenakoudis."In 2008 for example, 50% of the tonnage

entering the fleet was newbuilding tonnage,

whereas 70% was newbuilding tonnage in

2009," he continued. The average age of theMarshall Islands fleet is 10 years. In 2009, the Registry strengthened its safety andtechnical team by adding maritime experts inAsia, Europe and the US. In order to maintainquality tonnage within the fleet and timely serv-ice to customers, the Registry employs individu-als with a strong technical and safety backgroundthroughout its worldwide offices. "Many times

it's Friday morning in Europe and a ship,

located in a European port, must sail in a few

hours; that's the case where the European

technical team can offer its expertise and

relationship with the local port State Control

officials to deal with the matter and assist

the owners and operators before the US

opens and the vessel loses its commitments,"

said Mr. Xenakoudis. "Through our worldwide

resources, we have an opportunity to better

monitor the quality of the fleet, conduct

oversight during inspections and work local-

ly with our customers," he concluded. �

135 Ν.Χ.

• Transas

In two years, ECDIS equipment becomesmandatory for a number of vessel types.

ECDIS would play a significant role in the futureof Navigation and leading this change would bebeneficial not only for the company itself, butalso for the Captain and crew. But is it enough just to install an ECDISonboard in order to be compliant? A lotof vital issues go along with that. Besides type-approved ECDIS, a vessel shouldhave official Electronic Navigation Charts (ENCs)with regular updates and a crew should betrained accordingly. The need for qualified train-ing will be huge. This is because ECDIS, apartfrom other Navigational equipment, is a com-plex system, where various suppliers have com-pletely different MMI and operating principles.One very important factor when it comes topaperless navigation is that the crew onboardhas to be certified on the system and also bewell-prepared for the future vetting inspections. As an additional benefit, Transas has developedNavi-Planner 4000. This is a new product, whichcan be used both onboard as a back of thebridge and ashore as a management tool, easi-ly accessed in the future via internet browser. Itis an innovative solution from Transas providinga single access to all information needed forevery step of navigation. Navi-Planner 4000 is aset of databases, applications and servicesintended for voyage planning which sets a newstandard of safe and efficient voyage planning. Today, Transas is the only company in the mar-ket providing a full scope of solutions for thecompanies who want to be ECDIS mandatorycompliant, including type-approved ECDIS, offi-cial charts supply, digital services, simulationsystems and training. Visit us at Posidonia andlet us lead you through this way.�

Apollonia Beach Hotel - Limassol Cyprus

A five star hotel in a five star location. Right inthe heart of the Limassol tourist area and sit-

uated on its own private beach ,this five star hotelis an oasis of peace and tranquility amidst lushgardens. Our facilities include• Variety of rooms and luxurious suites withbreathtaking views.• Fine selection of restaurants and bars that offerindoor and outdoor dinning

• Friendly atmosphere • Apollonia leisure club with gym area, Jacuzzi, sauna, massage and indoor pool.�

Blue Star Ferries now in Chania

A ttica Group is pleased to announce the launch ofa new service to be operated by the car-passen-

ger ferry Blue Horizon as of Friday 23rd April 2010in the route Piraeus - Chania.

Ultramodern Blue Horizon has a speed of 23knots per hour, capacity of 1,505 passengers, 580 ofwhich can be accommodated in 184 cabins, andgarage decks for 900 private vehicles or alternativelyfor 130 trucks and 70 private vehicles.

Blue Horizon offers A la Carte restaurant, Self-Service restaurant, Bars, shops, swimming pool, playground, lounges, aircraft type seats and all first classfacilities and services on board for a comfortable and

pleasant trip. Blue Horizon departs daily from Piraeus to

Chania at 14:45 and from Chania to Piraeus at 23:00.The deployment of Blue Horizon doubles the

daily itineraries in the route Piraeus-Chania.

Attica Group, through the launch of Blue Horizon inChania and the established service of Superfast XIIin the route of Heraklion, strengthens its presence inCrete, by offering high standard services to the twomain ports of the island and by contributing to theincrease of the total traffic to Crete in a period of eco-nomic recession. �

MARKET NEWS

Ν.Χ.136

OLYMPIC CHAMPIONpainted withHEMPASIL X3

HEMPASIL X3 is the third generation of ourpioneering HEMPASIL fouling release tech-nology. It is also Hempel's most advancedyet, delivering unparalleled performance forunparalleled fuel efficiency.ANEK LINES is a traditional yet very progres-sive shipping company and a valued cus-tomer of Hempel. The company decided toapply Hempel's new silicone paintHEMPASIL X3 to their passenger vesselOLYMPIC CHAMPION, which sails betweenGreece and Italy. The decision was based onthe fact that the product guarantees fuelsavings and thereby ensures that as an envi-ronmentally responsible company ANEKLINES lowers its CO2 emissions. In 2006OLYMPIC CHAMPION was declared "TheEuropean Champion" of passenger/car fer-ries by the German automobile club ADAC.Maximum fuel efficiency is Hempel's keypriority both with regard to controlling costsand taking care of the environment.The application process, which took place atElefsina Shipyard in Greece, was handledextremely professionally by Hempel's Frosiocertified Coating Advisers.�

IBS Marine Consulting Group hosted a success-ful event at Athens Metropolitan Hotel in order topresent the new release of their highly innovativeand successful Risk Manager Software. The eventwas attended by 160 participants, representingmore than 90 Ship Managers/Operators. The presentation covered the full spectrum of IBSservices: 1. Risk Requirements & Safety Culture 2. Risk Management in Practice 3. Risk Manager Software Presentation 4. Improvements from existing software version 5. Integrated Risk & Incident Management 6. Job Hazards / Risk Library / Incident Library 7. Links with SMS & Real Life Following the presentation, there was an interac-tive session with open feedback from participants,followed by a cocktail reception. Mr Apostolos Belokas, Principal Consultant & CEOcommented on the key benefits of the IBS

approach. 1. Full Service Range from SMS update,

Risk/Incident Libraries in MS Word, Training,Computer Based Training and fully functionalRisk Manager or Software.

2. Fully tailored approach in line with each client'sfeedback and needs.

3. Risk Manager Software benefits include man-agement or Risk & Incident functions incorpo-rating standard Hazard Map, Root Cause Map,import and export in XML format that will savecosts and Risk/Incident libraries incorporated tothe software.

Mr Belokas also thanked the participants on theirconfidence in choosing IBS as a service provider andstressed IBS commitment to full support of clientneeds.

Public Relations Contact: +30 210 4520410 Ms Angela Chatzigeorgiou

IBS Announces the Release of a new version of Risk Manager Software

To check on the most current "Marine News"click on www.n-c.gr

Annual EnglishEdition

NAFTIKA CHRONIKA

Everythingyou wanted toknowaboutGreek Shipping(and didn’t know who to ask)

Commissioner

MariaDamanaki

‘’Our country needs

a real change‘’

‘’Our focus should not be

on what our partners say or do‘’

‘’We need a new, fairand sustainable

model‘’

6Á

Ñ. Ö

ÕË

ËÏ

Õ 1

30 •

05/2

010 w

ww

.n-c

.gr

The International Shipping Exhibition 7-11 June 2010

Visit us atStandNo500 D

MMAA

YY 22

0011

00ÍÍ

ÁÁÕÕ

ÔÔÉÉÊÊ

ÁÁ ××

ÑÑÏÏ

ÍÍÉÉÊÊ

ÁÁ

CMYK

Annual English Edition

N A F T I K A C H R O N I K A

Everything you wanted toknow about Greek Shipping(and didn’t know who to ask)

Commissioner

MariaDamanaki

‘’Our country needs

a real change‘’

‘’Our focus should not be

on what our partners say or do‘’

‘’We need a new, fair and sustainable

model‘’

6Á

Ñ.

ÖÕ

ËË

ÏÕ

130 •

05/2

010

ww

w.n

-c.g

r

The International Shipping Exhibition 7-11 June 2010

Visit us at Stand No 500 D

MMAA

YY 22

0011

00ÍÍ

ÁÁÕÕ

ÔÔÉÉÊÊ

ÁÁ ××

ÑÑÏÏ

ÍÍÉÉÊÊ

ÁÁ

CMYK