RINA / IMarEST, Isle of Man

“TANKER SHIPPING TODAY”

12 January 2010

Peter M Swift,MD INTERTANKO

“TANKER SHIPPING TODAY”

• INTERTANKO

• Oil shipping

• Tanker Industry Today and recent performance

• Key Issues

• Financial Crisis and tanker markets

• Information Sharing

INTERTANKO Today

260 + members operating ca. 3,100 ships > 75% of the independent oil tanker fleet and > 85% of

the chemical carrier fleet

330 + associate members: in oil and chemical tanker related businesses

15 Committees – 5 Regional PanelsPrincipal Offices – London and Oslo

Representative Offices in US, Asia and BrusselsObserver Status at IMO, IOPC, OECD and UNCTAD

International Association of Independent Tanker Owners

SHIP OWNER OIL COMPANY SPOKESMAN

One of the Rogues of the Oil Tanker Industry

Who am I ?

                     

                                    

Global dependence on oil tanker transportation

World Oil Consumption 3.8 billion ts

Transported by sea 2.4 billion ts

> 60% transported by sea

The Tanker Industry Today

Tanker Industry’s Goals

are aligned to those of the IMO

• Safe and secure • Environmentally

responsible• Reliable• Efficient (Low cost)

Investment in New Tonnage - Move to Double Hulls

• More than USD 500 billion invested since 2000 with the result that ~95% of tanker fleet* double hulled by end 2010* over 10,000 dwt

622

5159

67 68 73 78 84 91 9694

78

4941

33 32 27 22 16 9 4

0

20

40

60

80

100

1991

1997

End 0

2

End 0

3

End 0

4

End 0

5

End 0

6

End 0

7

End 0

8

End 0

9

End 1

0

SH/DB/DS

DH

% dwt share:

Average age of tanker fleet above 10,000 dwt

Based on LRFairplayBased on LRFairplay

6

8

10

12

14

1619

70

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

Average Age - Years

Tanker Incidents and accidental pollution

Number incidentsNumber incidents

Based on data from LMIU, ITOPF + othersBased on data from LMIU, ITOPF + others

0

210

420

630

840

1050

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

0

120

240

360

480

600

Misc/Unknown

Fire/Expl

Hull & Machinery

Grounded

Coll/Contact

Oil pollution

Accidental oil pollution from tankers

Based on ITOPF/FearnleysBased on ITOPF/Fearnleys

1000 ts spilt

0

700

1,400

2,100

2,800

3,500

1970s 1980s 1990s 2000s

0

21

42

63

84

105

1000 ts spilt

'000 bntonne-miles

- 63% -3% -83%

1000 bn tonne miles trade

Oil price and freight rate – real and nominal

USD per barrel

0

20

40

60

80

10019

7019

7119

7219

7319

7419

7519

7619

7719

7819

7919

8019

8119

8219

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

09

Nominal price Arab Light

Real price Arab Light

Nominal freight rate AG-West

Real freight rate AG-West

Deflated by the Consumer Price Index (USD)CPI* index 1982-84=100

Tanker Shipping’s GREEN Credentials

• This car, weighing one tonne, uses 1 litre of fuel to move 20 kms

• This oil tanker uses 1 litre of fuel to move one tonne of cargo 2,500 kms

– more than twice as far as 20 years ago

Tanker Industry is accustomed to being under the spotlight

Watched by:• Regulators• Politicians• Public

Licences to trade rigorously applied by:

• Flag states• Classification Societies• Insurers• Charterers

Monitored by:• Coastal and Port states

Key Issues for Tanker Owners Today

• Establishing and maintaining an international framework of consistent regulations and standards

• Delivering best environmental performance

• Ensuring availability of good people (and quality ships)

• Ensuring welfare and well-being of ships’ crews

• Meeting the challenges of Piracy

• Surviving the financial crisis

• Sharing Information

Establishing an international framework of consistent regulations and standards

Shipowners supporting:

• International rather than unilateral legislation• Ratification of IMO (and ILO) Conventions• IMO Member State Audit scheme (Flag & Coastal

States) • Harmonisation and uniformity across Port State

Control regimes• Development and Application of Common Structural

Rules for Tankers• Classification societies’ procedural requirements,

unified requirements and unified interpretations• Greater uniformity in chartering practices and

standards

Delivering best environmental performance

• Air emissions

- Green House Gases

- Exhaust Gas emissions (Annex VI & its revisions)

- VOC emissions

• Spill Prevention and Response Planning• Ballast Water management • Biofouling• Antifouling systems• Ship Recycling• Port Reception Facilities (adequacy & affordability) • Waste management (onboard and ashore)• Radiated Noise pollution• Cetacean strikes

Ensuring availability of good people - recruitment, training and retention

Both a quantity and quality challenge !

Recruitment initiatives covering:

• Raising awareness of the industry:

- www.maritimefoundation.com and Careers outreach programme - www.shippingfacts.com - www.careers-at-sea.org and DVD: Careers in International Shipping - www.bimco.org/Corporate%20Area/Seascapes.aspx

• Attracting entrants to the Maritime Professions (IMO: “Go to Sea” and other industry campaigns)

Human Resources are respected as an asset, not treated as a cost !

Ensuring availability of good people - recruitment, training and retention

Both a quantity and quality challenge !

Training and retention initiatives covering:

• Provision of Cadet berths and training facilities on ALL new ships and maximum utilisation of cadet berths on existing ships

• Revision of STCW Convention• Development of Tanker Officer Training Standards

(TOTS), covering proficiency and experience, as the industry standard

• Establishment of Seafarer Focus Groups to provide feedback of experiences

Ensuring welfare and well-being of ships’ crews

Initiatives covering: • Unjustified criminalisation• Support for IMO-ILO guidelines on Fair Treatment of

Seafarers (in event of Maritime Accident)

• Improved conditions for shore leave and access • Reduction in number of inspections• Less bureaucracy and associated paperwork• Guidelines for safe handling of cargoes and fuels,

tank cleaning and entry• Greater clarity in Operating Manuals• Guidelines on implementing ILO Convention on

“work and rest hours” • Higher standards of accommodation as industry

“norms” (including e.g. broadband, etc.)

Meeting the challenges of Piracy

Gulf of Aden / Somali Basin Guidance:

• Register Company and Ship with MSCHOA

• Plan for Transit• Following Best Management

Practices (V2) • Report regularly to UKMTO Dubai (or

MARLO)

Best Management Practices to Deter Piracy in the Gulf of Aden

and off the Coast of Somalia

(Version 2 - August 2009)

I n an effort to counter piracy in the Gulf of Aden and off the Coast of Somalia, these best management practices are

supported by the following international industry representatives:-

1. I nternational Association of I ndependent Tanker Owners (INTERTANKO)

2. I nternational Chamber of Shipping (ICS) 3. Oil Companies I nternational Marine Forum (OCIMF) 4. Baltic and International Maritime Council (BIMCO) 5. Society of I nternational Gas Tanker and Terminal Operators (SIGTTO) 6. I nternational Association of Dry Cargo Ship Owners (I NTERCARGO) 7. I nternational Group of Protection and Indemnity Clubs (I GP&I ) 8. Cruise Lines I nternational Association (CLI A) 9. I nternational Union of Marine I nsurers (I UMI ) 10. J oint War Committee (J WC) & J oint Hull Committee (J HC) 11. I nternational Maritime Bureau (IMB) 12 I nternational Transport Workers Federation (I TF) These best management practices are also supported by:- 1) Maritime Security Centre Horn of Africa (MSCHOA) 2) UK Maritime Trade Organisation (UKMTO Dubai) 3) Maritime Liaison Office (MARLO)

A problem in many regions, including South China Sea, Somali Basin and Gulf of Aden, Gulf of Guinea and South America !

Meeting the challenges – through commitment to:

- continuous improvement- working with all partners

Acting together- examples

• Pilotage in international straits as per IMO recommendations

• Development of a Marine Electronic Highway

• Establishment of a lifeboat user group with manufacturers to seek remedies for shortcomings

• Campaign to ensure availability of safety-related information on the characteristics of dangerous cargoes

• Development of Incident Information exchanges

• Development of guidelines on tanker maintenance and repair procedures

Surviving the financial crisis !

• Demand : World oil trade

• Supply : Ships on Order & Fleet development

• Shipbuilding capacity

• Tanker market

World Trade & GDP

-16

-12

-8

-4

0

4

8

12

1619

72

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Wo

rld

Imp

ort

s% y

-y

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

6.5

GD

P %

y-y

OECD WorldImports of Goods

IMF GDP

Source: Clarksons (September 2009)

World Oil Demand vs. GDP

-4

-3

-2

-1

0

1

2

3

4

5

61

98

1

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

% c

ha

ng

e (

ye

ar

on

ye

ar)

IMF GDP

Oil Demand

Source: Clarksons (September 2009)

Seaborne Crude Imports

0

40,000

80,000

120,000

160,000

200,000

240,000

280,000

320,000

360,000

400,000

440,000

480,00020

03-Q

1

2003

-Q3

2004

-Q1

2004

-Q3

2005

-Q1

2005

-Q3

2006

-Q1

2006

-Q3

2007

-Q1

2007

-Q3

2008

-Q1

2008

-Q3

2009

-Q1

kmt

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

y-o

-y %

ch

ang

e

seaborneimports

growth

Source: Clarksons (September 2009)

Total Oil Products Imports

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

220,00020

03-Q

1

2003

-Q3

2004

-Q1

2004

-Q3

2005

-Q1

2005

-Q3

2006

-Q1

2006

-Q3

2007

-Q1

2007

-Q3

2008

-Q1

2008

-Q3

2009

-Q1

kmt

-3

0

3

6

9

12

15y-o

-y % ch

ang

e

productsimports

growth

Source: Clarksons (September 2009)

Orderbook Development (All ship types)

0

50

100

150

200

250

300

350

400

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 now

gro

ss

to

nn

ag

e (

mill

ion

s)

other

gas

container

bulker

tanker

Source: Clarksons (September 2009)

Tanker Fleet Development

0

50

100

150

200

250

300

350

400

450

500

550

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

dea

dw

eig

ht

(mill

ion

)

10-24 tanker

handy

MR

Panamax

Aframax

Suezmax

VLCC

Source: Clarksons (September 2009)

Orderbook by ship type(as % existing fleet)

Source: Clarksons (September 2009)

33

64

41

15

33

0

10

20

30

40

50

60

70

Tanker Chemical Bulk carrier Container ship LPG carrier

per

cen

tag

e o

f cap

acity

Shipbuilding output and forecast

Source: Worldyards/INTERTANKO Aug 09

m cgtm cgt

2631 33

38

26

26

55

42

15

3 0

914% 26

38%

4876% 62

95%67

99%

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Available capacity

Orderbook

Historical deliveries

Shipbuilding output potential

Source: Worldyards/INTERTANKO Aug 09

m cgtm cgt

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Availability small

Availability big

Orderbook small

Orderbook big

Deliveries small

Deliveries big

Worldwide estimates in m cgt - small and big ships (Aug 09)

Shipyard output potential - surplus

Implications ?

• Distressed sales / lower prices

• Quality and standards maintained or weakened

• Pressure on suppliers and sub-contractors

• Greater customer focus & customisation

• and government interventions ?

Source: Baltic Exchange/INTERTANKO

USD/dayUSD/day

Average tanker freight rates (based on Baltic Exchange rates)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2001 2002 2003 2004 2005 2006 2007 2008 8m09

VLCC AG-Japan, 250,000 ts

Suezmax Wafr-US 130,000 ts

Aframax N Sea-UKCont, 80,000 ts

Product Caribs-US, 38,000 ts

Tanker sales for demolitionand VLCC freight rate

Source: INTERTANKO

m dwt USD / day

* Until week ending 4 September** Sales for demolition until 4 September*** Clarkson Freight rate AG-Japan week ending 4 September

0

6

12

18

24

30

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09*0

20,000

40,000

60,000

80,000

100,000VLCCs sales for demolition

<200,000 dwt sales for demolition**

VLCC freight rate***

Tanker deliveries, removals, max phase-out [All tankers > 25,000 dwt]

m dwtm dwt

Assumed balanced market end 2008

-35

-15

5

25

45

65

85

105

125

-02 03 04 05 06 07 08 09 10 11 12 13 14 15

Max phase out

Deletions

Delveries

Surplus zerotrade growthSurplus 2.5%trade growthSurplus 4%trade growth

year

Removals in addition to phase out (conversions)

Minus 2% growth in 2009 and the above scenarios later

Lower Freight Rates & Fleet surpluses

Implications ?

• Challenge to maintain quality and standards

• Challenge to meet the issues of the day

Sharing information – Accidents, incidents and near-misses

Ideally this should involve all stakeholders:– Owners– Builders– Classification Societies– Insurers– Administrations (Flags)– IMO

Maximising feedback, learning lessons and preventing re-occurrence

Tanker Incidents and accidental pollution

Number incidentsNumber incidents

Based on data from LMIU, ITOPF + othersBased on data from LMIU, ITOPF + others

0

210

420

630

840

1050

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

0

120

240

360

480

600

Misc/Unknown

Fire/Expl

Hull & Machinery

Grounded

Coll/Contact

Oil pollution

Sharing Information – Tanker incidents in 2009

Based on data from LMIU + othersBased on data from LMIU + others

Groundings 22%

Fire & explosions, 7%

Hull & Machinery

28% 82 incidents53 engine

related

Misc, 17%

Collision contact 26%

Collision/contact Grounding Fire/Explosion Hull & machinery Misc/unknown

Tanker hull & machinery incidents

Number of MACHINERY incidentsNumber of MACHINERY incidents

Based on data from LMIU, ITOPF + othersBased on data from LMIU, ITOPF + others

Year <10 years 10-24 years >25 years TotalAverage

age

2002 4 15 3 22 17.5

2003 3 8 3 14 18.4

2004 2 7 2 11 18.8

2005 9 20 5 34 17.6

2006 12 17 3 32 14.3

2007 20 25 3 48 13.2

2008 25 24 10 59 15.6

2009 18 22  13 53 16.7

Total 93 138 42 273 15.6

Thank you Gura mie eu

For more information, please visit:www.intertanko.com

www.maritimefoundation.com

www.poseidonchallenge.comwww.shippingfacts.com