The State of the Tanker Industry Russian Register Quality Shipping Seminar St. Petersburg 21 October...
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The State of the Tanker Industry Russian Register Quality Shipping Seminar St. Petersburg 21 October 2009 [email protected] Manager Research and Projects
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Transcript of The State of the Tanker Industry Russian Register Quality Shipping Seminar St. Petersburg 21 October...
The State of the Tanker IndustryRussian Register Quality Shipping Seminar
St. Petersburg 21 October 2009
Manager Research and Projects
The State of the Tanker Industry
2003 - 2Q09 superb market, high earnings
Current situation,declining demand
increasing fleet
below costs freight rates
Safety statusRecord low pollution
Few serious incidents
Market crises threat to safety?
Will cost saving increase risk?
Recruiting, the major challenge ahead?
Surviving in crisesHow to survive when freight rates
do not cover costs ?
How to maintain high quality shipping with a low number of incidents and few oil spills at the same time as earnings are low and pressure to reduce cost is high?0
210
420
630
840
1,050
78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
0
120
240
360
480
600
All incidents
Oil pollution
No TsTanker incidents and accidental pollution
How to fend off the pirates?
$/day
Why risk management is important !!
Freight rates Aframax North Sea - Continent
0
30,000
60,0001-
Jul-0
8
1-A
ug-0
8
1-S
ep-0
8
1-O
ct-0
8
1-N
ov-0
8
1-D
ec-0
8
1-Ja
n-09
1-F
eb-0
9
1-M
ar-0
9
1-A
pr-0
9
1-M
ay-0
9
1-Ju
n-09
1-Ju
l-09
1-A
ug-0
9
Based on Baltic Rates
Market recovery in sight?
World GDP and oil demand change
Source. IMF/BP / IEA
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Annual % change oil demand Annual % change world GDP
Correlation: 0.72
Source: Baltic Exchange/INTERTANKO
$/day$/day
Average tanker freight rates based on the Baltic 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 9m09
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
World oil demand
mbd
Source. IEA
Increase in Middle East, USA, China and ROW** 1Q07-4Q10
84
84.5
85
85.5
86
86.5
87
87.5
1Q
07
2Q
07
3Q
07
4Q
07
1Q
08
2Q
08
3Q
08
4Q
08
1Q
09
2Q
09
3Q
09
4Q
09
1Q
10
2Q
10
3Q
10
4Q
10
-2.6
-2.2
-1.8
-1.4
-1.0
-0.6
-0.2
0.2
0.6
1.0
1.4
1.8
2.2
2.6
3.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
China USA*Middle East ** Rest of worldWorld
Oth. Asia: + 0.54 mbdL America: + 0.17 "FSU: +0.12 " Africa: +0.11 "Others: -0.39 "
mbd
ROW**. Rest of World
Tanker deliveries, removals, max phase-outAll tankers > 25,000 dwt
m dwtm dwt
Assumed balanced market end 2008Deliveries and orderbook based on Clarkson World Shipyard Monitor Sept 096 m dwt additional annual delivers 2013 -2015, andPhase out all SH by 2010, DB/DS trading until 25 years old
2 m dwt additional annual scrapping of DH 2011-2015
Fleet 527 403.4 m dwtOrderb 228 121.8 “ 45%Not DH 626 50.2 ” 12%
-40
-20
0
20
40
60
80
100
120
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Max phase out
Deletions
Delveries
Surplus 4%trade growthSurplus 2.5%trade growthSurplus zerotrade growth
year
Assumed new orders
Assumed scrapping DH
2009 2% reduction demand
Oil demand, tonne-mile, and tanker fleet, development
mbd
Source: IEA, Fearnleys, INTERTANKO
Tanker fleet increase 2002-2010: 43% 95
100
105
110
115
120
125
130
135
140
145
15019
93
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Tanker fleet index
Oil demand index
Tonne miles crude tanker index
Environmental performance improving
Accidental oil pollution into the seaspills per tonne-miles 1970-1980
Source: INTERTANKO/ITOPF
1000 ts spilt1000 ts spiltper bn tonne milesper bn tonne miles
No major spill until Sept. 2009 Record low 2008
0
12
24
36
48
60
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009
Accidental oil pollution into the sea
1970-2009
Source: INTERTANKO/ITOPF
1000 ts spilt1000 ts spilt
No major spill Jan-Sept. 2009 Record low 2008
Largest spills in each year: 2004 - 2008Largest spills in each year: 2004 - 2008
0
100
200
300
400
500
6006
7
70
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
Year Tanker Ts spill1967 Torrey Canyon 119,0001970 Wafra 40,0001974 Mutula 50,0001975 Jacob Maerks 88,0001977 Hawaiian Patriot 95,0001978 Amoco Cadiz 223,0001979 Atlantic Empress 287,0001979 Independenta 95,0001983 Castillo de Bellver 252,0001983 Assimi 53,0001988 Odyssey 132,0001989 Khark 5 80,0001989 Exxon Valdez 37,0001991 ABT Summer 260,0001991 Haven 144,0001991 Kirki 7,9001992 Agean Sea 74,0001992 Katina P 72,0001993 Braer 85,0001993 Thanassis A 37,0001997 Nakhodka 16,500 Sea Empress 72,0001999 Erika 15,0001999 Volgoneft 248 1,2902002 Prestige 63,0002003 Tasman Spirit 30,0002004 Al Samidoon 9,0002005 DBL 152 9,4652006 Bright Artemise 4,5002007 Hebei Spirit 10,5002008 Tintomara 1,400
Number spills above 7-700 tonnes
Source: INTERTANKO/ITOPF
NumberNumber
Record low 2008
0
10
20
30
40
50
60
70
80
90
100
70 71 72 73 74 75 76 77 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
Average: 53.6
Average: 35.6
Average: 28.0
Average: 7.8
Number spills above 700 tonnes
Source: INTERTANKO/ITOPF
NumberNumber
0
7
14
21
28
3570 71 72 73 74 75 76 77 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
Average: 25.2
Average: 9.3
Average: 7.8
Average: 3.4
Record low 2008No major spill until Aug 2009
Accidental oil pollution into the sea and tanker trade
Source: INTERTANKO/ITOPF/Fearnleys
10001000ts spiltts spilt
bn bn tonne-milestonne-miles
0.0
0.7
1.4
2.1
2.8
3.5
1970s 1980s 1990s PR00s
0
21
42
63
84
105
1000 ts spilt
'0000 bntonne-miles
- 63% -6% -85%
Record low accidental pollution from tanker in 2008, no major ones so far 2009
Incidents attended by ITOPF over the past 5 years
NumberNumber
Source: ITOPFSource: ITOPF
2
89147 1317121014
0
3
6
9
12
15
18
2004 2005 2006 2007 2008
Tankers: 40 Non tanker: 66
Tanker incidents 2009
Rate is number incidentsdivided by number tankersin the segment
Worst incident 2009 may be collision/fire Formosa Brick collision in the Straits of Singapore Aug 2009 9 fatalities and Elli that broke in two at the entrance Suez Canal.
Groundings 24%
Fire&explosions, 7%
Hull&Machinery 25%
57 incidents34 engine
related
Misc, 17%
Collision/contact 27%
Collision/contact Grounding Fire/Explosion Hull & machinery Misc/unknown
dwt range Number % Rate
Below 10,000 107 47% 0.014
10-29,999 43 19% 0.025
30-99,999 60 26% 0.020
100,000+ 17 7% 0.010
Total 227 100% 0.016
Decade built Number % Rate
Unknown 6 3%
Built 1970s 32 14% 0.012
Built 1980s 43 19% 0.017
Built 1990s 48 21% 0.015
Built 2000s 98 43% 0.017
Total 227 100% 0.016
Tanker incidents and accidental pollution
Number incidentsNumber incidents ’’000 ts pollution000 ts pollution
Source: INTERTANKO, based on data from LMIU, ITOPF + othersSource: INTERTANKO, based on data from LMIU, ITOPF + others2009 a projection based on 9.7 months2009 a projection based on 9.7 months
Record low accidental pollution from tanker in 2008, no major ones so far 2009
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
Fire/Expl
Hull & Machinery
Grounded
Coll/Contact
Oil pollution
Tanker incidents by type% of total% of total
Source: INTERTANKO, based on data from LMIU, ITOPF + othersSource: INTERTANKO, based on data from LMIU, ITOPF + others2009 a projection based on 9.7 months2009 a projection based on 9.7 months
0%
10%
20%
30%
40%
50%
60%
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
Hull & Machinery Collision/Contact/Grounding
Fire/Explosion Misc/Unknown
Tanker hull & machinery incidents
Number incidentsNumber incidents
Based on data from LMIU, ITOPF + othersBased on data from LMIU, ITOPF + others
0
10
20
30
40
50
60
2002 2003 2004 2005 2006 2007 2008 2009
Engine
Other Hull & Machinery
Tanker hull & machinery incidents
Number incidentsNumber incidents
Based on data from LMIU, ITOPF + othersBased on data from LMIU, ITOPF + others
Year <10 years 10-24 years >25 years Total Average age
2002 4 15 3 22 17.5
2003 3 8 3 14 18.4
2004 2 7 3 12 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 13 17 8 38 16.3
Total 88 133 38 259 15.8
Tanker incidents and rate by flagNumber incidentsNumber incidentsRateRate 2008 – 287 incidents2008 – 287 incidents
Flags with Flags with more than 2 more than 2 incidentsincidents
Flags with Flags with more than 1 more than 1 incidentincident
Rate is Rate is number of number of incidents incidents divided by divided by number of number of ships per ships per flagflag
2009 9.7 ms – 227 incidents2009 9.7 ms – 227 incidents
0.000
0.040
0.080
0.120
0.160
0.200
Can
ada
Ven
ezue
la
Cay
man
Isl.
Rus
sia
Net
herla
nds
US
A
Gib
ralta
r
Sw
eden
Cyp
rus
NIS
Mal
ta
DIS
Tur
key
Indi
a
Italy
IoM
UK
S K
orea
Pan
ama
Libe
ria
Bah
amas
Gre
ece MI
Phi
lippi
nes
Sin
gapo
re HK
Indo
nesi
a
Japa
n
0
8
16
24
32
40
Rate
Averge rate
Number of incidents
0.000
0.020
0.040
0.060
0.080
Can
ada
Mon
golia
Rus
sia
US
Nor
way DIS UK
Ger
man
y
Tur
key
Mal
ta
Cyp
rus MI
Italy
Libe
ria
Gre
ece
Pan
ama
Sin
gapo
re
Bah
amas HK
Japa
n
0
6
12
18
24
30
36
Rate
Average rate
Number incidents
Canada 0.194Canada 0.194
Cambodia 0.091Cambodia 0.091Cambodia 0.091Cambodia 0.091
Russia 0.047Russia 0.047
Tanker accidental pollution 1974 – 2009 by cause (9,368 incidents)
Based on data from ITOPFBased on data from ITOPF
6%
6%
1%
25%
54%
8%
Collisions
Groundings
Hull Failures
Fire & Explosions
Other/Unknown
Operational
Tanker accidental pollution 1974 – 2009by cause
Based on data from ITOPFBased on data from ITOPF
Tankers spills of Tankers spills of 7 - 700 tonnes7 - 700 tonnes
Tankers spills of Tankers spills of > 700 tonnes> 700 tonnes
Tankers spills of Tankers spills of < 7 tonnes< 7 tonnes
7817 spills 1203 spills 348 spills7817 spills 1203 spills 348 spills
2%3%
1%
28%59%
7%
25%
19%
1%13%
35%
7%
28%
35%
9%
7%
12%
9%
All Spills <7 tonnes 7-700
tonens > 700
tonnes Total Operational 4552 416 31 4999 Loading / Discharging 2825 334 30 3189
Bunkering 549 26 0 575
Other Operations 1178 56 1 1235
OperationalOperational
CollisionCollision
Fire & explosionsFire & explosions
GroundingsGroundings
Hull failuresHull failures
Other/unknownOther/unknown
Piracy incidents
Tanker piracy incidents 2008-2009110 incident 2008 – 83 incidents 2009
By areaBy area
34
38
12
4
105
0 50 100
East Africa
West Africa
S China Sea
IndianOcean
S America
Number
By monthBy month
37
50
70
36
0 10 20 30 40 50 60 70
<10,000 dwt
10-29,999 dwt
30-99,999 dwt
>100,000 dwt
By sizeBy size
2
25
41
72
0 15 30 45 60 75
Built 1970s
Built 1980s
Built 1990s
Built 2000s
By ageBy age
7
16
13
13
10
7
4
6
9
12
6
7
1
0
4
13
21
11
12
6
15
0 5 10 15 20 25 30
December
November
October
September
August
July
June
May
April
March
February
January
2008
2009
Maintaining quality during crises
Why is risk management and keeping a high performance record is important also in a crises
$320 m people claims$240 m cargo claims$150 m pollution claims$140 m collision claims$130 m property claims$ 980 m total claims which shipping may need some
$ 9.98 bn in freight income to cover *
..and if performance record is bad:
Charterer will avoid youAuthorities may detain youInsurers will charge you
i.e. in the end:
Poor performance means reduced income and higher costs
Today everybody asks for performance evidence:TMSA, port state control record, accident record,……………
An the requirements of oil majors are hard to meet
The industry yearly pay approximately:
** Source :UK P&I Club
Risk management important during crises
Involves:
• Identifying and understanding risks
• Mitigating or eliminating risks where possible
• Avoiding unacceptable risks
• Balancing risk & reward to arrive at the best business decision
Goals:
• To protect people, the environment and property
• To avoid involvement in a catastrophic incident
• To prevent business disruptions
• To improve quality of available tonnage.
Elli was split in half and sank near the Red Sea Elli was split in half and sank near the Red Sea entrance to the Suez Canal, 80 miles east of entrance to the Suez Canal, 80 miles east of Kairo, Egypt, Friday Aug. 28, 2009. Kairo, Egypt, Friday Aug. 28, 2009.
Flirting with disasterWhy accidents are rarely accidental
Short term thinking about money is a factor in many incidentsWhile the most common explanation of accidents are operator error, a more frequent cause is faulty design of the socio-technical system (i.e. people and tech. in combination) in which the operator is embedded. Without an institutional recognition of risk, an emphasize on safety is unlikely, and in the absence of focus on safety, it is impossible to achieve itDisasters – uncontrollable domino effect in a interdependent system- hazards expand faster than people are able to cope - OBE*Disasters are often foreseen, and warned but not strong enough Be aware - Improving safety also encourage risk taking
Book Marc Gerstein 2008*Overtaken By Events
TOTS - Intertanko InitiativeThe Intertanko initiative is a laudable effort on part of the industry to raise bar on competence and trainingThis is particularly applicable for effective task based and structured training for Junior officersThis will assist in preparing the officers for promotion when acquiring competence in listed tasks The effectiveness of any program is in the effectiveness of implementation, resources, auditing and quality control Given the listed items for effective implementation of TOTS, would the officers achieve any tangible advantage in time vs. the present experience requirements? A good question to be answered by resultsHuman learning is 70% based on EXPERIENCE (Skills and application of knowledge)
Serious current manning flaws include , lack of experience, mixed culture/nationalities, communication (language) problems, poor knowledge
Conclusion
A prolonged market crises will make hard demands on the industry?
Quality level highRecord low pollution
Few serious incidents
High performance paysHigher income
Better flexibility in the market
Reduced costs
Careful risk analysis pays
