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Minutes Worldscale Committee meeting, 2 July 2013

INTERTANKO London office; 30 Minories, London, EC3N 1DD

Attendance :

Tim Horne Teekay Shipping (UK) Ltd. ChairmanDavid Chapman OSG Tankers (UK) LtdMark Linham Eletson Maritime LimitedTomoaki Ichida Mitsui O.S.K. Bulk Shipping (Europe) LtdErik Ranheim INTERTANKO Oslo Secretary

Katharina Stanzel INTERTANKO London Managing DirectorBill Box INTERTANKO London Sr. Mananager Comm. and External relationsMichele White INTERTANKO London Legal Counsel

I. Follow up from the Meetings in Oslo June 2013.

INTERTANKO’s MD Katarina Stanzel provided an overview of the Council meeting in Oslo on 29 June and the sustainability day on 30 June in Oslo.

For the outcome of the Council meeting, reference is made to the minutes from the Council Meeting in Appendix II.

Reference was also made to the panellists’ discussion on the sustainability day. Some of the suggestions that came up at the seminar as part of a ‘strategy for survival’ for the industry were:

Understand and manage the risks of the business. Redress imbalances in the market through rules of engagement and

transparency. Bring tanker vetting back to safety risk management system for oil

companies/traders. Stop the abuse of vetting for commercial reasons rather than safety reasons. Introduce a qualified to operate tankers label. SIRE inspection to involve officers and crew (to replace crew matrix system). Pay broker commissions basis net freight (net of fuel costs) instead of basis gross

freight. Educate shipping users about Worldscale. Approach highest levels in oil companies to raise awareness. Emphasise the link between quality and cost; raise awareness of the cost of

quality.

The Committee took note.

II. Development of a Code of Conduct

After the Wordscale and Market Committee Meeting in March, David Chapman proposed to develop a Code of Conduct for the industry .

This proposal was presented to the INTERTANKO Council on 3 July and the and “The Council supported the development of a Code of Conduct for tanker chartering and the continuation of INTERTANKO’s work on sustainability.”

The Code of Conduct attached to the agenda notes, which was drafted based on the Baltic Code, was found to be too long and not to the point.

Draft Minutes Worldscale Committee meeting London 2 July 2013 -

A code should include overall ethical values, relate to general principles such as transparency and predictability, shared risk and free competition and should incorporate good practices on established terms and conditions.

David Chapman agreed to provide a new draft that was better adapted to the challenges tanker owners are facing in the market.

The draft Code of Conduct is enclosed in Appendix I

III. Draft Letter to the Major Oil Companies

The letter from the Chairman was presented and commented on.

On the basis of comments received in and after the meeting, Bill Box has re-drafted the letter is enclosed in Appendix II.

It was agreed that it is best to send out the letter after the summer vacation.

IV. Database for delayed payments

Reference was made to the discussion at the last meeting of 12 March where delayed payments was discussed.

The Council in Oslo agreed to collate information on late payments and the Chairman also encouraged the Council members to send in data to create a better understanding of the present situation and to support the arguments for a change in practices.

There was some discussion on how to best do this in practice and the necessity not to violate any anti-competition regulations. The collating of information should also be practical and not cause unnecessary work for Members

After the Committee meeting Tue 09/07/2013) the Secretary circulated a suggestion on how to collate data (Appendix III) that was accepted.

The information suggested to be collated was

Name Charterer

Type ofClaim

Claimed Amount

Received Amount

Date discharging

Date presenting claim

Date received claimed amount

BP Demurrage $62,626 $59,333 25/12/12 01/01/13 09/07/13

Vitol Freight $2,221,227 2,221,227 22/01/13 22/01/13 27/01/13

VELA Other $32,227 $32,227 28/01/13 02/02/13 13/05/13

A few owners have sent us information on this basis.

[With regard to anti-trust – the concept was presented by the Secretary of the Committee to a lawyer in London dealing with such issues at the teleconference meeting Of Tuesday 30 July. The lawyer did not appear have any reservation with regard to the concept, but would also consult others in the office and revert with a written note at the end of the subsequent week. Further activities will be held in abeyance until receiving this note].


The Committee embers is encouraged to provide data from their companies for the database.

V. Terms of Reference for the Worldscale and Market Committee

The Secretary informed that the proposed Terms of Reference that were included with the agenda notes were approved by the Council.

However, all Committee members were required to consider the tenure of the Chairman and the Committee members as proposed in the Minutes from the Council meeting in Appendix IV.

It was recognised that the Worldscale and Market Committee would need to have flexible tenures to be able to acquire the specialist expertise that is needed for this Committee.

To satisfy the advice from the INTERTANKO Council, it is proposed to add the following points to the TOR:

4) Membership of the Committee .. [Membership on the Committee is based on the expertise/qualifications of the individual,

therefore, membership on a committee rests with the individual, not the company that the individual works for.

Members should attend committee meetings and actively participate in the committee discussions. Repeated non-attendance/non contribution may result in a review of committee membership by the Committee Chairman and Secretary a recommendation of removal from the committee. A committee member may, on occasion, be represented by an alternate from his company.]

...

6) Chairman/Vice Chairman The Committee will nominate a Chairman for election by the Council. The term will be a two-

year period with the option of a further two years period unless other reasons apply and are approved by the Executive Committee.

The full new draft TOR is enclosed in Appendix IV.

VI. Points to be raised with the WS Association Luncheon

It was questioned whether a large luncheon was an appropriate format to discuss specific items with the WS Association.

It was agreed that the talks during the luncheon could be more general and that we should aim for a smaller meeting with the WS Association later to present our specific concerns.

Such a meeting was held 26 July at the office if the WS Association. A note from the meeting is enclosed in Appendix V.

The Worldscale Association participants at the luncheon was.

David Insole Clarkson (Chairman)Nico Borkmann ACM ShippingJohn Hale E A Gibson ShipbrokersSteve Kelley Simpson, Spence & YoungDenis Hayllar Galbraith’sSimon Hardcastle BraemarSeascope


Robert Porter MD WorldscaleIan McCarthy General Manager Worldscale

VII. Next meeting

A teleconference will be set up in good time before the next Council meeting in November to provide input to this meeting.


Appendix I, minutes Council meeting on Sustainability

a. Sustainability

The Chairman invited the MD to introduce the sustainability issue.

The MD opened by setting out that the sustainability discussions had been ongoing for months and had been discussed both at recent Executive Committee meetings as well as the previous Council meeting. It had been acknowledged that certain aspects of the market needed to be looked into as the situation threatened the sustainability of the tanker industry and sustainability should be given top priority in the strategic plan for the association.

The MD emphasised that due to anti-trust legislation the association had to be very alert of which activities it can and cannot involve itself in. At the last Council meeting, not everybody had been convinced that INTERTANKO should be involved in any commercial activity. However, disregarding the actual state of the market, it was agreed that INTERTANKO should seek a dialogue with the key stakeholders in the industry to address some of the imbalances that had developed over time. The Council had also wanted INTERTANKO to speak with a strong voice addressing imbalances that threatened the sustainability of its members. The MD elaborated further that the key aim of the project was to realign key stakeholders in support of balanced trading conditions to ensure a sustainable industry. On the one side INTERTANKO was working to raise awareness of issues, on the other side to seek to address the actual imbalances.

She explained that to do this, the Secretariat needed concrete information that can demonstrate the conditions and imbalances in the market with actual data rather than just anecdotal evidence. The facts, figures and data collected from members made it possible to actually create a wider awareness of the problems. In particular the media responded to real financial information and concrete data. The one key Committee that had been crucial in taking this project forward had been the Worldscale and Market Committee.

The Secretary of the Worldscale and Market Committee then presented developments in the work of this Committee. He started by summarising why charterers appear to give low priority to tankers as oil companies now owned very few tankers themselves (oil companies, not including state-owned ones, own less than 2% of the tanker fleet). High oil prices had made the freight element of the oil prices virtually insignificant and the number of tanker accidents had been strongly reduced, meaning that tankers were perceived to represent a low risk for the oil industry. Vetting was seen to have taken over the risk evaluation and chartering had become more a wheeling a dealing process, with little knowledge of tanker shipping.

He indicated that the tanker market had become opaque, bad practices had developed and the charterers top management sometimes neither understood nor followed the trading sections of the industry. As a result, the Worldscale and Market Committee proposed to develop a voluntary Code of Conduct (CoC) for tanker chartering to set out some basic values, principles and practices for the tanker industry and to ask charterers to support this CoC.

The Worldscale and Market Committee had also agreed that the Worldscale system of rates fulfilled its basic purpose and had little impact on the market in general. Concern had been expressed that bunker prices in the Worldscale book tended to be lower than the actual prices and that this contributed to depress the rates. However this year there had been a period where actual bunker prices had been lower than the ones used in the current (2013) Worldscale book and this seemed to make no difference in the market. Another concern had been that the Worldscale rate was positive when in reality the rate in dollars per day could be negative for owners. However because Worldscale covered


many segments, zero results would be different for each segment, so any adjustment would be difficult. As simplicity is a basic criterion for the success of Worldscale, it would therefore not be advantageous to construct a Worldscale that tried to include other requirements than to cover the basic principles of providing comparable rates to various ports.

The Secretarys presentation is attached here:

The Council agreed in general that the development of a CoC or fair-trade agreement was a good initiative and useful no matter what market conditions prevailed. Members felt that failures to pay demurrage in time should be emphasised in particular. The Chairman also suggested that owners had the moral high ground to do this whenever charterers paid late. He encouraged Council members to send in data to create a better understanding of the present situation and to support the arguments for a change in practices. It was clarified that there could never be a binding code of conduct, because that would be anti-competitive and one member of the Council suggested that whatever was developed needed to be simple and uncontroversial in order to be useful.

It was commented that there had been a great deal of ordering of (product) tankers and the added overcapacity in a bad market had the potential to weaken the argumentation overall. It was also emphasised however that stakeholders needed to be educated about the costs of new regulations the industry is facing in order to create an understanding that these were costs that ultimately needed to be passed on.

With regard to Worldscale, several members of the Council confirmed they considered it just a useful tool for a specific purpose which did not impact the sustainability of the industry as such.

Another point raised related to whether the way brokers are paid needed to be changed from commission being calculated on gross freight, in the light of big increases inherent with future requirements of using low-sulphur fuels.

With regard to tanker vetting, it was remarked that oil companies had initiated the SIRE and CDI systems to create standardised inspections but regularly demonstrated signs of a lack of faith in these systems. The Chairman of the Vetting Committee briefly elaborated that the Committee has been working on reducing the cost of inspections and limiting their number.

The Council supported the development of a Code of Conduct for tanker chartering and the continuation of INTERTANKO’s work on sustainability.


Appendix I – Draft Code of Conduct

IntroductionThe seaborne carriage of crude oil and its products is an integral and essential part of global energy markets and international commerce in general. The various stakeholders of the industry have a collective responsibility to act at all times with the highest standards of honesty, integrity and respect towards one another, helping to ensure that the market remains effective, efficient and economically sustainable, as well as compliant with applicable regulations and general standards of good corporate citizenship.

In order to assist in promoting these core values, INTERTANKO has drafted, and invites all stakeholders to sign, the following Code of Conduct. Its scope is broad, in that it is intended to apply to all individuals and companies involved in the chartering and operation of oil and gas tankers around the world. It is also voluntary, because it is desired that signatories truly aim to support and embody the principles it contains, in all their dealings with each other.

Tanker Industry Code of Conduct

Part 1 – General Principles

In order to support the fundamental objective of the industry, namely the safe and efficient seaborne transportation and delivery of the world’s oil resources, we as signatories of the Code of Conduct undertake to:

Conduct ourselves at all times in accordance with the concept of ‘good faith’

Uphold the principles of fair and legal dealing with all stakeholders Comply with high standards of integrity and respect for others Conduct business as responsible corporate members of society Understand the needs of all stakeholders Listen and respond to all business partners in a prompt, professional and

respectful manner Behave in ways that earn the trust of others Uphold these principles regardless of how we are treated by others

Part 2 – Industry practices-specific examples of good conduct

a) Freight, demurrage and commercial claims handling We undertake to provide sufficient internal resources to process freight,

hire and bunker invoices and post-fixture claims in a timely manner in accordance with contractual agreements and best industry practice.

We shall provide clear instructions to our business partners to ensure that invoices and claims to be presented to us contain the information we need to process them efficiently and without delay.

We undertake to remit funds promptly and net of sender’s bank charges. In the event of a disputed claim, we shall reply to it with detailed

substantiation of the points in dispute in a timely fashion, no later than the reply time we would expect from business partners for any claim we ourselves might make.

We will not withhold payment of any undisputed sums, including brokers’ commissions.


We understand that unless provided for contractually, we shall not withhold payment of any sums, whether disputed or agreed, as offset for another claim.

b) Ship and Company Vetting procedures We will ensure that the costs of vetting inspections are apportioned in a

fair and reasonable manner We will only use vetting for safety and not commercial reasons We will work with all stakeholders to reduce the number and frequency of

physical inspections.

c) Trading/negotiation ethics We shall not conclude any business without the authority of the parties’

Principals. We shall only place a vessel ‘o n subjects’ for the purpose of concluding a

contract, and not to hold as an ‘option’, or to influence FFA markets. We shall not mislead either counterparty regarding cargo or vessel

availability or knowingly give wrong or misleading information in order to secure a response from a party.

We shall not offer ‘firm’ or fix to more than one cargo (or vessel as appropriate) at the same time.

We shall not ‘backtrade’ on either freight or contract terms while the vessel is ‘on subjects’

We expect brokers to treat each party impartially and share market information equally and fairly.

d) Behaviour of Owners/Operators We shall give accurate and timely ETA notices and expected vessel

itineraries at all times. We shall respond to requests for questionnaires, intakes and other queries

efficiently. We shall report promptly any incidents involving the vessel that are likely

to affect the intended voyage. We shall not claim freights or demurrages that are knowingly inflated.


Appendix II

Daft letter to the Charterers

2013

Our Ref.: ER-17652/10840

Dear XXXX,

Code of Practice for Tanker Chartering

I am writing to you on a matter of great concern to the Members of INTERTANKO with a view to initiating a dialogue to improve the way [XXXXXXXX] does business with our members, via the implementation of a voluntary Code of Practice.

((As an Associate Member of INTERTANKO,)) (Y)(y)our company subscribes to the same quality goals as our Members – continuous improvement in safety, security and environmental performance. Our Members’ commitment to these goals is clearly demonstrated by the continued downward trend in incidents and accidents and by the modern fleet of vessels transporting your cargoes.

Although this collective commitment is as strong as ever, it is important to recognise the serious threat to the long-term sustainability of independent tanker owners of freight rate levels lying at or below basic vessel operating costs.

Our Members accept that depressed earnings are part of participating in a competitive market. But they are also concerned about the continuing erosion of terms and conditions over the years, with some charterers not only taking advantage of their strong market position, but more importantly on occasion failing to honour key contractual obligations.

In contrast to the dry bulk sector, tanker charterers enjoy the benefit of paying freight as contractually agreed on completion of discharge, with payments for additional costs and claims (‘demurrage’) being payable ‘upon receipt of owner’s invoice’. It seems only right and reasonable for payments to be made promptly. Our charterer-specific statistics on freight payments show a damaging and worsening trend of chronic late settlements with typically 5-10 days delay after completion of discharge, and occurrences of delays of up to three weeks.

For demurrage claims, our Members typically take 10 days to turn around their demurrage claims. The charterers’ job in reviewing and replying to these should be less onerous and, therefore, take a similar or lesser amount of time to settle. However, INTERTANKO statistics collected from recent owners’ fixtures show a typical payment delay on demurrage of 3-6 months, at times even exceeding a year.

You will appreciate that such delays affect owners’ cash flow and have a direct effect on the owners’ working capital requirements which have already significantly increased, with payments for fuel, crew, port and canal fees, piracy protection etc all being paid out before any payment is received from the customer. At a time when tanker owners face large investment requirements for preparation for and compliance with environmental regulations such as ballast water management and exhaust emissions to air, it is even more important that payment terms are adhered to as otherwise some owners may be unable to finance these investments.

In our joint commitment to cleaner shipping, this is in nobody’s interest and directly belies a number of corporate social responsibility statements and goals supported by our respective organisations. We therefore consider that we have a common interest with you and other industry stakeholders to ensure that our industry is economically sustainable going forward. INTERTANKO strongly supports a free


market, but any functioning free market depends on balanced risk sharing and terms and conditions that are sustainable for all stakeholders.

Another area of concern for our Members is that of multiple vetting inspections. This goes against the spirit of OCIMF’s SIRE system which was set up 20 years ago to allow the sharing of vessel inspection reports thereby reducing the number of inspections.

There is a lack of regular contact between key parts of our industry which makes it hard to develop a proper dialogue to improve how the industry works. It would be good to work towards a common platform where all parties act with fairness, honesty and integrity.

To that aim I would like to propose the development of a voluntary code of practice, the signatories to which would undertake to:

- provide adequate resources to handle freight, demurrage and other claims;- provide clear information and instructions on invoicing to allow the invoicing and receipt of

payments without delay;- respond to and settle promptly all financial obligations under the charterparty;- include these prompt payment targets in relevant staff’s key performance indicators and

reviews;- publish payment statistics;- provide prompt advice of material changes in circumstances relative to a voyage;- accept or reject shared inspection information as uploaded in the SIRE system.

I anticipate that such a code of practice could be ready for this autumn. I hope that you or a designated member of your team will be able to engage in a dialogue about the points raised above and on how we can ensure that quality tanker shipping remains available to support the transport element of the global energy and petrochemical supply chains carrying your cargoes.

I look forward to hearing from you.

Yours sincerely,

Graham Westgarth

Chairman INTERTANKO

E-mail: [email protected]


Appendix III

Proposal for collating information on delayed payment

Sent Tue 09/07/2013 14:[email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected] all,

At the last Council Meeting in Oslo 29 May it was decided that INTERTANKO should collate information on the delays to receive payment from charterers on freight and demurrage and other claims.

We agreed at our Worldscale and Market Committee 2 July to see how we could set up a database for this.

To best be able to provide information that INTERTANKO members can both bench mark against and also that INTERTANKO could use to put pressure on charters, it would be best to have information on individual claims.

We hope that members can send us such information, and since you have best informed about this project, I ask you to provide it first.

I plan to go out to a member of members to ask for information.

The information we need is suggested to be:

Name Charterer

Type ofClaim

Claimed Amount

Received Amount

Date discharging

Date presenting claim

Date received claimed amount

BP Demurrage $62,626 $59,333 25/12/12 01/01/13 09/07/13

Vitol Freight $2,221,227 2,221,227 22/01/13 22/01/13 27/01/13

VELA Other $32,227 $32,227 28/01/13 02/02/13 13/05/13

We could then present aggregate figures on each charterer on average days delay, mean time and time ranges.

It would be good to receive figures each month, but as long as we have the dates, the actual period between each submission could vary.

We recognise that this information may be somewhat sensitive and also perhaps not equally easy to provide for everybody.

We will keep the names of the providers of information strictly confidential and only aggregate figures on the charters will be published.

We only do this because our members have asked us to do it and we do not want to make it more complicated for the members than necessary.

I have talked to a couple of you and hope to get contact with all of you very soon.Appendix IV – TOR Worldscale and Market Committee


Terms of Reference INTERTANKO Worldscale and Market Committee

VIII. Aims and Objectives The Committee will keep under review the Schedule of Nominal Freight Rates published by the

Worldscale Associations and liaise with the Worldscale Associations to communicate and make recommendations to ensure that Worldscale remains a useful, practicable chartering tool under changing preconditions in the freight market.

To study and review market-distorting factors relating to transparency and free flow of information in the market, and factors affecting the sustainability of the tanker industry.

To keep Members informed about potential market distortions that may affect the sustainability of the tanker industry.

To ensure that trade processes and tools are balanced, practicable and effective in order to secure the interests of all stakeholders in the market.

To co-operate and develop a constructive dialogue with all such interested parties in the tanker industry that may further these aims.

To generate ideas and make recommendations where appropriate, both in terms of policy and specific cases.To this end the Committee will:

pay due regard to relevant work being done by other INTERTANKO Committees and in other bodies outside of INTERTANKO.

work in accordance with INTERTANKO’s anti-trust guidelines.

IX. Membership of the Committee The Committee will represent the various interests and different geographical areas of the

INTERTANKO Membership. Committee membership should be adapted as found appropriate to maintain the dynamics, the relevant

expertise, and a suitable number of participants. The members of the Committee shall work with the INTERTANKO Secretariat on the issues the

Committee is tasked with. Observers or experts within special areas needed by the Committee may be invited to attend the meetings Membership on the Committee is based on the expertise/qualifications of the individual, therefore,

membership on a committee rests with the individual, not the company that the individual works for. Members should attend committee meetings and actively participate in the committee discussions.

Repeated non-attendance/non contribution may result in a review of committee membership by the Committee Chairman and Secretary a recommendation of removal from the committee. A committee member may, on occasion, be represented by an alternate from his company.

X. Meetings The Committee will meet when necessary to at any time fulfil its tasks and obligations.

XI. Chairman/Vice Chairman The Committee will nominate a Chairman for election by the Council. The term will be a two-year

period with the option of a further two years period unless other reasons apply and are approved by the Executive Committee.

A Vice-Chairman will also be elected by the Committee.

XII. Travel Expenses The travel expenses of the Committee’s membership will be paid for by the Member company.

XIII. Terms of Reference The Terms of Reference shall be approved by the Council.

XIV. Secretarial The INTERTANKO Secretariat will undertake the secretarial and administrative tasks for the

Committee.


XV. Reporting The Worldscale Committee will report to INTERTANKO’s Council through its Chairman.


Appendix V – Note from the Meeting with the WS Association 25 July

There were seven people in attendance from the Worldscale Association

David Insole ClarksonNico Borkmann ACM ShippingStephen Kelley Simpson, Spence & YoungRobert Porter Managing Director, WorldscaleTim Horne TeekayMartin Baldock ScorpioMark Lindham Eletson

Tim Horne opened the meeting offering thanks for the opportunity to meet with the WS Association. He said that there were no special preconceptions. The INTERTANKO members believe in, and support, WS and would actually like to assist in getting it more universally used and to try and find a productive way to work together to achieve this.

1. Establish an easier and faster fully on-line WS system and abandon the Worldscale Book. Such a system, makes it possible to:a. Continually amended rates to reflect reality and it will therefore give a

better protection to the shipownerb. have real time updates, and daily bunker prices, and possibly a more

defined rating system for size of vesselc. see the different components of the rate such as port costs and distance

used etc, so that users can report more readily where huge differences arise.

d. create an App for iOS and for Androide. Abandon the fobs, link subscriptions to devices or IP addresses and drop

the price per user

We were informed that the WS Association is upgrading their system to make it faster and more user friendly. It was said that frequent updates would be impractical and would open a Pandora’s box of problems, which would in turn become somewhat of a paradise for lawyers.

It was stressed that the WS is a nominal scale and that the operators do have to make their own calculations.

It was proposed that the WS Association might include a voyage estimator both to enhance the understanding of WS and to promote it.

In general it was agreed that there was in general a lack of understanding of the WS and that users would greatly benefit from reading the preamble. It was even proposed that when opening the programme users should tick off that they had read the preambles and that the book itself should contain a visible encouragement to read the preambles.

WS Association said that they would not get rid of the book in the near future. The printing of the book itself was also regarded to be a low-cost item and the book could also be a useful backup if the electronics failed.

Most importantly may be that frequent updating of the Worldscale will mean that there will be no comparability of rates over time.

Creating Apps to be used on smart phones was also discussed. To do this each phone had to be registered and with frequent change of phones this could be a problem. The costs would depend on how many functions were include in the App.


The conclusion was that continuous or more frequent WS updates in combination with abandoning the book was not practicable at this stage.

2. Consider the need to have separate 'Items for Charterers' Account' in the Preamble and 'Fixed Rate Differentials' in the freight section of the Schedule. In many cases they cover similar issues but end up being handled differently. Confusion may arise in the market as to why they would be subject to commission as part of freight but not as a cost reimbursement, but wouldn't be if paid directly by Charterers. It seems illogical for some to be subject to commission and others not.

It was agreed that the preambles could appear complicated. They had been published the same way for many years.

The only complete explanation of the WS system was the INTERTANKO book.

3. What can INTERTANKO do to increase the use of the WS system, in particular in clean trades?

It was agreed that WS benefited the industry and that fixing on lump sum increased the risk. However in some trades this had become the custom of the trades and it was the traders in these areas that needed to be educated on WS.

In particular during depressed periods it was important to know WS and the danger of lump sum as operators would be less prepared for extra costs.

There was a great deal of discussion on how to increase the understanding and the use of WS including:

Direct contact with charters mainly fixing on WS Speaking at seminars Using the web Using the INTERTANKO Weekly News for questions and answers regarding WS. Presentation by the WS Association to the INTERTANKO Council

It was agreed that INTERTANKO and the WS Association should co-operate in educating people about WS and promote a wider use of it

4. How can Worldscale best deal with new ECA requirements a. Extra costs of bunkersb. Distances

There was a great deal of discussion about applying the ECA differentials on a laden or a round-trip basis. It appeared that this was interpreted on a different basis and that the text in the book could be misunderstood.

The intention was that the differentials applied should cover the distance traded within the ECA on a round-trip basis for the standard tanker as WS normally is done. It is up to the contracting parties to agree on the actual distance.

The problem occurs when charterer does not accept to include the return-distance.

[Could it help to spell out that. The differential $6.49 per mile is covering the extra bunker costs used within the ECA for bunkers with max 1% sulphur (see preamble part A, 4. BASIS FOR CALCULATION, (d) Bunker Prices) for the standard Worldscale Tanker when calculated on a roundtrip basis ECA diff Baltic & N.Sea =$ bunker diff * Bunker consumption per day standard ship/speed* 24] ECA diff Baltic & N.Sea 2013 = 41.05* 55/(14.5* 24) = 6.49


The WS Association not decided how to deal with the ECA differential for 2015 when sulphur requirements will be 0.1% and everybody that do not have scrubber (which will be the great majority of tankers, at least the first years) will have to use gasoil which is substantial more expensive than fuel oil (+60-70% more expensive). INTERTANKO will work with the WS Association to find an acceptable solution for new ECA differentials.


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