The Insurance Institute of London

19 October 2007

Substandard Shipping –

Who is Responsible ?

Peter M. Swift

Managing Director, INTERTANKO

Substandard Shipping- who is responsible ?

• Me √

• You ?

• Anyone who tolerates standards below the accepted “norms” ?

Total Losses by Number(Ships over 100gt)

A “loss” refers to ships damaged beyond economic repairSource: Lloyd’s Register Fairplay

1997 1998 1999 2000 2001 2002 2003 2004 2005

0

50

100

150

200

250

300N

um

ber

of

Sh

ips

Number of Bulk Carrier Losses 1996 - 2005

0

2

4

6

8

10

12

14

16

18

20

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Year

No

. of

Lo

sse

s

Number of losses by structural failureTotal number of losses

Source: ITOPF. Number of spills above 700 tonnes.

Development of Oil Spills

0

5

10

15

20

25

30

35

1971-75 1975-80 1981-75 1986-90 1991-95 1996-00 2001-05

Pollution from tankersTonnes / billion tonne mile

Tanker accidental pollution rate tonnes spilt per bn tonne miles trade

Source: ITOPF spills, Fearnleys: Tonne miles

0

200

400

600

800

1000

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

WarHull & MachineryFire/Explosion

Grounding Collision/ContactOther

Reported tanker incidents(1978 – 2005)

Safely and Reliably

Cost Effectively

Freight rate and oil price (USD/bbl) deflated by the US consumer price indexFreight rate and oil price (USD/bbl) deflated by the US consumer price indexOil price 2006 is approx price end April and not average price for the year.Oil price 2006 is approx price end April and not average price for the year.

0

10

20

30

40

50

60

70

80 Nominal priceArabian Light

Real PriceArabian Light

Nominal freightrates PG-West

Deflated freightRates PG-West

Oil price and tanker freight rate 1976-2006Oil price and tanker freight rate 1976-2006

Shipping Industry Performance

• Is a record of “continuous improvement”

• But the industry is not complacent !

and is

• “Striving for Zero”Zero fatalities, zero pollution, zero detentions

Shipping Industry : A record of“continuous improvement”

Q: How has this been achieved ?

A: A combination of Regulation and Self-Regulation

Although difficult to prove !

“Good” Regulation AND

Industry Best Practice

Industry works to encourage“Effective” Regulation

• Developed at the global level, wherever appropriate (consistent with existing law)

• Fit for purpose (provides solutions)• Properly considered (stakeholders

involved)• Impact(s) fully assessed (economic and

social)• If adopted, implemented uniformly and

promptly

Engaging with legislators, regulators, politicians and the media

Industry works to develop and promote “Self Regulation”

• Adopting “best practices”

• Producing industry guidelines• Developing programmes, procedures,

etc. - Design, Shipbuilding, Operations, Training, Inspections, Investigations and more…

Engaging with partners, legislators, regulators, politicians, media and public

EXAMPLES of Industry’s Quality Initiatives

Tripartite dialogue: owners, builders and class:– Common structural rules– Coatings and coating performance standards– Goal Based Standards (Tiers IV & V)– Information sharing – Shipboard waste management

Inter-Industry Group (Chemical Tanker accidents):– Inert Gas for CT on presently exempted ships– Human Element Task Force

EXAMPLES of Industry’s Quality Initiatives

Industry Guides:– Flag State Performance– Recycling guidelines– ISGOTT– Newbuilding Awareness guide– Model Ballast Water Management plan– Garbage Management plan– ISO 14001 planning– Oil record book completion, OWS guidance– Mooring, STS, COW, etc. – ………

EXAMPLES of Industry’s Quality Initiatives

Industry practices:– Ship vetting (owners & charterers)– Management self-assessment programmes– Terminal vetting– VOC control on passage (VOCON)– Casualty reporting– PSC record analysis– ………..

EXAMPLES of Industry’s Quality Initiatives

Industry-Government Programmes– Marine Electronic Highway– Pilotage User Group (Denmark)– Reception Facilities Forum– Double Hull Panel (EMSA)– ………

EXAMPLES of Industry’s Quality Initiatives

“Ahead of” regulatory implementation:– Annex VI (Nox & Sox, VOC)– Anti Fouling Systems (TBT Ban)– Fixed Gas detection systems (Ballast tanks)– Cargo tank coatings– IG on smaller chemical tankers– BW management trials– OWS alternatives– Green Passport and HMI standards– ……….

Substandard Shipping- who is responsible ?

What can we (all) do ?

BUILDERS

MANAGERS

EQUIIP SUP

CLASS

FINANCIERS

CARGO

BROKERS

P&I

HULL INSR

FLAG STATECOASTAL STATE

WATERWAYSPORTTERMINALS

BUNKERERSPILOTS

TUGS

LABOUR

CREW

AGENTS

REPAIRERS

SALVORS

INCIDENT MGT

SHIPBREAKERS

EDUCATIONTRAINING

DESIGN

OWNER OPERATOR

STAKEHOLDERS AGENCIES GOV IMO STATES LOCAL GOV

CARGO

Poseidon Challenge- commitment to continuous improvement- commitment to working with all partners

Substandard Shipping- what can we do ?

Final thoughts:

• Can we live with differentiated standards ?

• How can we share information more effectively across the maritime communities ?

EQUASIS Information System

The principles behind Equasis:

• A tool aimed at reducing substandard shipping (limited to safety-related information).

• An international database covering the whole world fleet.

• Involvement of ALL players involved in the maritime industry.

• A tool to be used for the better selection of ships• The promotion of the exchange of unbiased information

and transparency in maritime transport (- to be better informed about the performance of ships and maritime organisations).

Learning from Tanker incidents: 2005OR NOT ?

Hull & Machinery

Fire & Explosions..

GroundingCollision*

Miscellaneous

*includes contact

dwt range Total

Below 10,000 69

10-29,999 34

30-99,999 40

100,000+ 18

Total 161

   

Age Total

Built 1970s 25

Built 1980s 51

Built 1990s 56

Built 2000s 29

Total 161

Total 161

29 engine, 3 hull

9%

33%4%

33%

20%

THANK YOUwww.intertanko.com

www.shippingfacts.comwww.themaritimefoundation.com

International Association of Independent Tanker Owners

Represents responsible oil and chemical tanker owners worldwide, promoting their interests and providing members

with technical, operational, legal, documentary and other support services, information and advice.

250 + members representing > 80% of the independent oil tanker fleet and > 85% of the chemical carrier fleet, with

strict membership criteria 300 + associate members in oil and chemical tanker related

businesses

15 Committees - 4 Regional Panels

Representative Offices in Europe, US and Asia

Mission and Vision

MISSION “Provide leadership to the Tanker Industry in

serving the world with the safe, environmentally sound and efficient seaborne transportation of oil,

gas and chemical products.”

VISION FOR THE TANKER INDUSTRY“A responsible, sustainable and respected Tanker Industry, committed to continuous improvement

and constructively influencing its future.”

One of the Association’s primary goals:

Lead the continuous improvement of the Tanker Industry’s performance in striving to achieve the goals of:

Zero fatalitiesZero pollution

Zero detentions