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Main topic: OPERATIONALASPECTS

Also inside: Pro-active maintenance Guideline for lay-up Recycling Research and development Rules and regulations Market outlook

DNV Bulk Carrier UpdateInformation from DNV to the bulk carrier industry No. 1 March 2009


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Lay-up guidelines

COVER STORYOperational aspects .....4

MAINTENANCE Controlling docking costs......8

LAY-UP GUIDELINES Guidelines for the lay-up of ships...10

ENVIRONMENT Environmentally sound ship recycling..... 12

RESEARCH & DEVELOPMENT

Optimized hull forms... 14

Best practice for CSR Bulk approval....... 16

New and improved Nauticus Hull...18

Requirement Explorer ..... 20

RULES AND REGULATIONS Updates..... 21

IN THE SPOTLIGHT Inspired by the sea......24

HOT NEWS DNV to class bulk carrier in Japan....... 26

MARKET OUTLOOK Signs of life...... 28

Environmantally sound ship recycling Peter Hamer in the spotlight

Photos: front cover DNV/Magne A. Re, p3DNV, p7 DNV/Magne A. Re, p9 DNV, p10-11 DNV/Magne A. Re, p23 Gettyimages, p23DNV, p25 photo Jim Wilson, p27 DNV,

CONTENTS

2 | DNV BULK CARRIER UPDATE NO. 1 2009

DNV Bulk Carrier Update

is a newsletter published by Det Norske Veritas, DNV Maritime.

It is distributed to DNV customers and stations worldwide.

Det Norske Veritas AS

Please direct any enquiries to your nearest DNV station or

Bulk Carrier Update e-mail: [email protected]

Editorial committee:

Morten Lvstad, Business Director, Bulk Carriers

Editor: Magne A. Re

Production: Lisbeth Aamodt

Design and layout: Coor Graphic Communications 0903-044

On-line edition of the DNV Bulk Carrier Update:

http://www.dnv.com/bulkupdate

Det Norske Veritas

NO-1322 Hvik, Norway

Tel: +47 67 57 99 00

Fax: +47 67 57 99 11

An updated list of all regional offices can be seen on

DNVs websi te:

www.dnv.com

WE WELCOME YOUR THOUGHTS!

08 10 24

DNV BulkCarrier Update


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In a survey conducted inFebruary and Marchamongst shipping compa-nies in DNVs client base,

we asked: What are themain challenges in todaysdifficult market situation?The response was uniform the top three challengesare, in order of priority:1) loss of revenue, 2) lack

of financing and 3) a toohigh cost base.

The main topics of this

issue of DNV Bulk CarrierUpdate address two out ofthese three challenges.The Market Outlook sec-tion by market analyst

Jarle Hammer draws linesall the way back to 1970 inan attempt to predict whatmay happen to the freightrates in the coming years.The articles on opera-tional aspects and how tocontrol docking costs, as

well as the ones coveringprocedures and guidelinesfor lay-up and scrapping,all address how a shippingcompany may control its

cost base while maintain-ing safe and sustainableoperations.After a very exciting time

from the end of 2007 andup to present date asDNVs Business Directorfor Bulk Carriers, I want topersonally thank all myDNV colleagues and allDNV customers for mak-ing us the fastest growingclass society for bulk carri-ers! Although I will takeup the position as Techni-cal Director of DNV Busi-ness Assurance in Marchthis year, I am confident

that my successor, MichAasland, will work hard ensure that you all expeence that your choice oDNV as your partner is right one. I can assure ythat DNV will maintain strong focus on qualityand safety, both for thos

vessels that are in operation and for those vesse

which are going to be bover the next few years.

We are very grateful forthe trust you have showin us over the past years

Happy reading!

Morten Lvstad

DNV Business Director,

Bulk Carriers

EDITOR

DNV BULK CARRIER UPDATE NO. 1 2009

DEARREADER


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Operational aspects

MAIN CHARACTERISTICS OFBULK CARRIERS Bulk carriers areships designed primarily for the

cost-efficient, large-scale transport ofdry bulk commodities such as ironore, coal, bauxite/alumina andgrain. They have to fit perfectly intothe overall logistics chain.

Bulk carriers sizes and configura-tions are optimised to allow themost economical use of these vesselsin the typical trading routes and when car-rying typical bulk commodities.

As a general rule, the market willalways seek to use as large a vessel as thetrade permits. This is due to economies of

scale - bigger cargo parcels, faster loadingand discharging operations and biggervessels transporting the cargo will gener-ate greater profit.

However, there are general limitationson the average ship size serving the differ-ent routes due to factors such as: Port Restrictions: Berth limitations (e.g.

draft limitations, air draft limitations,length of pier, etc) and lock limitations(e.g. Panama Canal, St. Lawrence Sea-

way, etc). Infrastructure Restrictions:A less devel-

oped port and/or inland infrastructure

hinders the quick distribution of largecargo volumes to and from the portareas.

Trade Restrictions: The demand forindividual cargoes at various destina-tions is limited.

Consequently, bulk carriers have devel-oped into well known size categories asshown in the table (overlapping and dif-ferent size ranges may apply):

DESIGN AND OPERATIONALCONSIDERATIONS In the past, thedifferent bulk carrier designs have mainlycompeted on optimal steel weight anddeadweight capacity, whereas today

designers are focusing more and more onoptimal operational flexibility and energy(fuel) efficiency.

Advanced ship technology and theintroduction of direct strength assess-ments using the Finite Element Method(FEM) at the beginning of the 1980s ledto reduced lightship weights and thereby arise in deadweight capacities. The increas-ing use of high tensile steel (a higher ratiocompared to mild steel) also contributedto lighter ships, with the side-effect thatcareful evaluation of structural fatiguebecame a more important issue. In retro-

spect, it could be argued that competitionon steel weight, with the aim of maximis-ing cargo intake, was one important rea-son for the many casualties at the end ofthe 1980s and the beginning of the 1990s.

A number of measures to enhance thesafety of bulk carriers have been imple-mented by the IMO, IACS and the indus-try over the past few decades. The mostrecent of these is the introduction of the

IACS Common Structural Rules fobulk carriers (CSR Bulk), accordto which all new vessels are to be

constructed according to uniformacceptance criteria.

Todays Rules and regulations pvide increased safety and operationflexibility compared to the old standards. However, the challenge ofcombining improved safety withimproved efficiency still remains.

Optimum size has already been mentioned as a main operational criterion, other aspects may be of similar impor-tance. The overall performance of a bulcarrier is determined by the vessels ope

tional flexibility and efficiency and therby its economic success in the shippingmarket. This is of particular importancetodays market, where a large number oships are competing for a limited trans-port volume.

From an operational point of view, thfollowing aspects are to be looked at witregard to improved efficiency: Ship Handling Cargo Handling Maintenance and Inspection

SHIP HANDLING The handling of a shcovers all aspects related to sailing onroute, manoeuvring and berthing in analways navigationally safe manner.

The primary obligation of the masterto ensure that the ship, crew and cargoare not put into unsafe situations. Thetraining and competence of the crew aressential to fulfil this obligation, and thiis the reason for the introduction of theSTCW Convention.

OPERATION


Given the past few months challenging business climatefor owners and operators in the dry bulk segment, even morefocus should be paid to cost-efficient and safe operations. This

article gives an overview of some important operational aspects inthis context, along with practical guidance.

TEXT: CHRISTIAN STROBEL, SNKE POHL, MORTEN LVSTAD

Segment Size range [dwt] Typical Commodities

Mini 200,000


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Load and discharge planning is one ofthe most essential tasks to be performedby a ships crew. It must be ensured that

the strength and stability of the ship arenot compromised at any time during theloading and discharge processes.

The planning of efficient loading anddischarging by minimizing the berth timecan only be performed within the strengthand stability envelope-limits that the ship

was designed according to.It is recommended that a ships ability

to cope with specified loading rates is stat-ed and that the loading and unloadingoperations are to be time-wise synchro-nised with the ships de-ballasting opera-

tions.New designs constructed according toIACS UR S25 have incorporated a 10%overshoot margin for high density cargoesbased on the maximum cargo hold mass.This has been incorporated to provide anextra safety margin for any potential dis-crepancy between the actually loadedcargo and the planned cargo quantity, anaspect which is becoming more and moreimportant as the loading rate and numberof loaders increases. This extra margin isin general not incorporated into thedesign of vessels constructed prior to 1

July 2003, the in-force date for UR S25.The most sensitive areas with regard tothe strength envelope limits are the outer-most holds in alternate loading condi-tions. Consequently, efficient means tocontrol the amount of cargo loaded intothe individual holds are necessary to avoidoverstressing and an unfavourable trim.

For Lakesize bulk carriers, it is of greatimportance to have a high loading flexibil-

ity to cope with the draft restrictions whensailing on the St. Lawrence Seaway andthe Great Lakes. Grain stability, permissi-

ble still water values and hold mass curvesadjusted to the Great Lake conditions canimprove flexibility. Further on, includinghull girder deformations in the loadingcomputer will give the master more reli-able factors for planning the loading.

Another important aspect to be consid-ered when talking about ship handling isthe exchange of ballast water. The effi-ciency of ballast water exchange is mainlydictated by the design of the ballast pipingsystem, including the pumps, valves andarrangement of the ballast tank.

An approved ballast water managementplan guarantees that the exchange processdoes not put the ship in an unsafe situa-tion if it is complied with. However, it isrecognized that one step might take a verylong time to conclude, time in which

weather conditions can worsen. This isparticularly the case for Capesize vessels,

where the double bottom and top sidetanks are generally connected and extendover two cargo holds in the midship area.Serving smaller tanks would definitelymake this operation more efficient.

CARGO HANDLING Cargo handlingcovers all the activities connected with thesafe transferral, stowing, lashing andsecuring of the various cargoes to betransported. Careful consideration needsto be taken of the cargos typicalbehaviour and characteristics.

Driven by a fast turnaround time inport, cargo handling is an importantdesign aspect. In general, design require-

ments are to be linked to the harbourconditions, such as optimum hatch opeings providing easy access to the hold anshipboard cargo handling gear.

Lashing equipment in cargo holds anon deck is important for efficient cargo

handling as is appropriate cargo hold vetilation and humidity control.

Cargo variety is a typical feature of thsmaller bulk carrier segments up to theHandymax size. The smaller vessels maycarry all kinds of dry bulk as well as brebulks, such as steel products, forest products or project cargo. In general, dry bucargo is handled by port side equipmen

whereas fitted shipboard cranes are use

Figure 1: The Diamond 34 handysize design

Figure 2: Illustration of bulk carrier design li

DNV BULK CARRIER UPDATE NO. 1 2009


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for handling break bulk and projectcargo. If the cranes are also to be used for

handling dry bulk cargo, this should betaken into account during the designphase and grabs should be stowed onboard.

The cleanliness of cargo holds prior toloading is an important issue, particularlyfor bulk carriers which change their typeof bulk cargo very often, such as Handy-size and Handymax vessels. Operationalefficiency is improved by the ability to per-form fast cleaning of the cargo spaces.Providing appropriate cleaning tools andthe necessary water and air supply arenecessary preconditions. Hence, sufficientpump capacity and a dedicated wash-water

holding tank may be important designrequirements.

MAINTENANCE AND INSPECTION It iswell known that a lack of maintenance willlead to more rapid structuraldeterioration and, in the worst case, toloss of life and property. It is a fact thatthe lack of maintenance and improperinspections by ships crews werecontributory factors to the massive bulkcarrier losses in the past.

Costly repairs combined with off-hiremay be reduced if a regular inspectionand maintenance plan is in place. Such a

scheme should focus on typical areas thatrequire attention in bulk carriers,enabling the owner to better control thecondition of the ships.

With the introduction of the enhancedsurvey program (ESP) for bulk carriers in1992, class surveys are carried out muchmore thoroughly than in the past. Howev-er, they cannot replace continuous main-tenance, which is still the owners respon-sibility. It should be noted that, throughthe resolution A.744(18), the ESPrequires the ship owner to maintainonboard documentation relating to any

inspections carried out by the ship's per-sonnel with respect to structural deteriora-tion and the condition of the coating.

To assist the owner in doing so, theIMO has developed A.866(20) - Guid-ance to Ships' Crew and Terminal Person-nel for Bulk Carrier Inspections - to pro-

vide guidance to ship's crew and terminalpersonnel with respect to the principalareas on bulk carriers that are likely to besusceptible to corrosion or damage. This

guidance is supplemented by the IACSrecommendation No. 76 on Guideline

for Surveys, Assessment and Repair ofHull Structure Bulk Carriers.

The maintenance of bulk carrierscargo hatch-covers became mandatory

with the introduction of regulation 7 ofthe revised SOLAS Chapter XII, whichentered into force on 1 July 2006. This also part of the ISM scheme.

Nevertheless, there is a trend todaytowards charterers being concerned abothe condition of the bulk carrier they agoing to charter, and rating schemes simlar to the ones used for tankers are

becoming more and more popular.With respect to the operational effi-ciency, a structured inspection and maintenance plan combined with crew train

will maintain the availability and reliabiof the ship by: Detecting deficiencies at an early stag Dealing with problems while they are

still minor Being able to document the ships co

dition Maintaining a uniform standard acro

the fleetIn DNV, we have the expertise and expe

ence needed to help owners ensure thebulk carriers are operated efficiently. Ophilosophy is that a safe and reliable bucarrier is more easily obtained if it is prerly designed, constructed, maintainedand inspected.

This article will be followed up with more in-

depth articles on each operational aspect in

coming issues of the DNV Bulk Carrier Updat

OPERATION


Figure 3: Hold cleaning using a combi-gun


7/32DNV BULK CARRIER UPDATE NO. 1 2009

A Panmax vessel being loaded at Carrington Coal

terminal which is operated by Port Waratah Coal

Services at the Port of Newcastle, Australia.

CONTACT INFORMATION

[email protected]

[email protected]

[email protected]


8/328 | DNV BULK CARRIER UPDATE NO. 1 2009

Pro-active maintenanceand how to control

docking costs

Docking is a standard maintenance task that every ship operator hasto do, no matter how the market fluctuates. When the economyslows down and shipping indexes drop, it is more important than

ever to conduct the docking and repairs with a focus on cost controlwhile maintaining the value of the assets.

TEXT: RICHARD TAO

DNVs docking services support the shipowner throughout the docking process,thereby significantly reducing the risk ofcost and time over-runs. The services focuson optimum solutions, minimizing riskand uncertainty throughout the dockingprocess based on the following key ele-ments: Pre-docking Risk Assessment Pre-docking Inspection Repair Specification Repair Optimization Steel Weight and Coating Area

Calculations Emergency Repair ServiceDNVs docking service is carried out by aDNV surveyor with extensive dockingexperience to help you plan the docking.

A typical service request may be to esti-mate how many tonnes of steel need to berenewed to obtain a CAP-2 rating. WithDNVs assistance, a clear picture of what isthe most likely case and what is the worstcase may be obtained. Based on this esti-

mate, a better indication of which dockyard will be most suitable for the workmay be obtained, as well as of how to fixthe cargo to fit the route to the yard.

The DNV Docking Service is one of theservice elements of Hull Integrity Manage-ment, which aims to help ship ownersachieve better and more continuous con-trol of hull conditions. Hull Integrity Man-agement also includes the following serv-ice elements: Hull Competence Training: focusing on

basic strength, structural defects and

hull inspection for ship officers andsuperintendents.

Hull Inspection Manuals: ship-specificand with unique 3D illustrations whichidentify what to look for during inspec-tions, where to look and how to reportit.

Nauticus Hull Integrity: an easy-to-usehull inspection reporting software tool.

MAINTENANCE


9/32DNV BULK CARRIER UPDATE NO. 1 2009

CONTACT INFORMATION

[email protected]


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Guideline forthe lay-up of ships

During the major lay-ups in the shipping industry in the 1970s and 1980s, DNVwas instrumental in setting the standard for the safe and cost-optimal lay-up and preservation

of ships. Due to the financial crisis and economic slowdown, this knowledge and experience are

once again sought after, and the guideline has now undergone a complete revision based on thetechnical developments in shipping over the past two to three decades.

TEXT: YSTEIN GOKSYR, RICHARD TAO

The updated DNV interim Guideline for the Lay-up of Shipswas issued on 5 February this year, after a complete revisionbased on the latest technical developments. Various parties

involved in laying up ships, such as owners, operators, insur-ance companies and national and local authorities, have nowbeen invited to give their input and comments in order toachieve a practical and efficient guideline.

The new Guideline provides a systematic and cost-effectiveapproach to preparing the ship for lay-up and maintaining itin a safe and cost-effective condition during lay-up. Anoverview of relevant lay-up considerations, such as a hot orcold lay-up, the lay-up site, lay-up period, re-commissioningtime, class, insurance and flag requirements, is given as ameans for the ship owner to make the best possible choicesconsidering the unpleasant alternatives. Practical proceduresfor re-commissioning the ship are also stated.

If the ship is laid up in compliance with the safety and

preservation recommendations given in the Guideline, DNV

may, following a successful verification, issue a Lay-up Declation or a Lay-up Preservation Declaration respectively, statincompliance with the said recommendations.

So far, the results of the round of consultations clearly incate the relevancy of the topic. It is of particular interest toobserve the industrys concern about new technology wherethere is little experience available of the effect of laying up t

vessel. This observation was further confirmed at DNVs Layseminar held in Hamburg on Wednesday 4 March, which waattended by more than 25 participants from the German shiping cluster.

Even though most of the approximately 1,000 ships that aidle today are laid up hot (i.e. with the machinery kept inoperation for the sake of fast re-commissioning), feedbackshows that technical challenges occur only a short time afterlay-up.

For example, for ships laid up in tropical waters, reports

coming in that vessels experience problems with moving afte

LAY-UP GUIDELINES



11/32DNV BULK CARRIER UPDATE NO. 1 2009 |

a relatively short time due to the growth of flora and faunaalong the hull, especially in the crucial areas around the rud-der, propeller and bow thrusters. The reports are adding

weight to arguments in favour of selecting lay-up sites for coldlay-ups (i.e. long-term lay-ups with the machinery out of serv-ice) in the Norwegian fjords or similar sites with dry climate.

Another argument for selecting lay-up sites in colder waters isthe challenge of keeping electrical equipment on board vesselspreserved in a safe and cost-efficient way. This subject hasbecome much more relevant today with the large amount ofcomplicated electrical equipment such as computers andautomation systems that are on board modern ships.

In order to handle the increasing amount of lay-upinquiries, DNV has established advisory services to assist ownersin laying up their ships in a safe and cost-efficient way. Theseservices range from advice on the lay-up site and lay-up plans toadvice on lay-up, declarations, safe lay-up and supervision

during the lay-up and re-commissioning. Examples of issues

frequently handled by our advisory units are lay-up with cargoand safe manning during lay-up.

While DNVs Lay-up Declarations have traditionally been

issued with regard to safety and preservation, there is now anincreased interest in environmental lay-up certificates. Exam-ples of environmental challenges during lay-up are anti-pollu-tion measures, the re-coating and brushing of antifouling,sewage treatment, etc. These and other environmental issuesare under evaluation as an extension to the existing lay-up dec-larations or possibly as a separate environmental lay-up declara-tion from DNV.

The feedback from the consultation process for the lay-upGuideline is handled by DNVs Rules Secretariat. The relevantissues addressed above are subject to further investigation atthe time of writing and the outcome will be incorporated inthe final revision which is due for publication in April 2009.

CONTACT INFORMATION:

www.dnv.com/lay-up

[email protected]


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ENVIRONMENT


Environmentallysound ship recycling

The bulk carrier industry has been seriously affected by the current recession in the worldeconomy, and most operators are now facing a market where the capacity outweighs the demand.

The effects of this can be seen not only by falling freight rates but also by the number of vesselssent for scrapping. This constitutes considerable resources in terms of scrap steel supply to the

steel industry, but also represents an environmental challenge unless the scrapping -or rather the recycling - is done in an environmentally sound manner.

TEXT: KJETIL MARTINSEN

THE CHALLENGE The volume oftonnage sent for recycling in the firstmonth of 2009 alone was more than 40%of the total recycled in the whole of 2006.The demolition activity in 2008 reached

12.5m dwt, which is nearly double the2006 level of 6.4m dwt. In January thisyear, buyer activity had already reached20% of 2008s total scrapping volume,

with 2.7m dwt purchased for demolition.It is also worth noting that whereas theaverage age of vessels sent for recycling inthe 1990s was 26-27 years, this had risen toaround 33 in 2007. All of this indicatesthat we can expect an even greater focuson demolition in the years to come.

A vessels technical standard willinevitably deteriorate over time and thecost involved in maintaining the required

standards will increase correspondinglyuntil it is no longer economically viable tocontinue trading.

Obsolete vessels represent considerableresources in terms of scrap steel supply tothe steel industry. Hence, the scrap valueis closely related to the steel weight. Sadly- an obsolete vessel also represents anenvironmental challenge which calls forserious handling of the issues involved.

DNVS RESPONSE TO THECHALLENGE DNV has for nearly twodecades been actively involved in theproblems related to harmful substanceson board vessels due for recycling. This is

typically exemplified by our involvementwith the Brent Spar platform in 1994following the controversial decision tosink the platform in open water. Sincethen, DNV has completed more than 25inventories on offshore installations.

Following its efforts in the offshore sec-tor, DNV has strongly advocated an equiv-alent implementation in the maritimeindustry through taking an active role inthe development of the IMO Guideline in2003 and further the new InternationalConvention for the Safe and Environmen-tally Sound Recycling of Ships (IMO

Convention). The IMO Convention stipu-lates requirements regarding the docu-mentation of the potentially harmful sub-stances contained in a vessel (Inventory ofHazardous Materials). This is an absoluteprerequisite for the proper demolition ofthe vessel by the recycling yard.

To date, close to 50 vessels have beenthoroughly inspected and issued with anInventory of Hazardous Materials by DNV.

In our experience, relevant documenta-tion may be scarce and, when found, moften be misleading. For this reason, DNstresses the importance of basing anInventory of Hazardous Materials (Gree

Passport Inventory) for ships in operation an on-board survey and not just apaper exercise. With the new IMO Con

vention, the rest of the industry will alsohave to follow this practice.

INTERNATIONAL REGULATIONS Shrecycling is not currently regulated by amandatory IMO convention. This will bthe case only when the new IMOConvention is ratified. However, the BasConvention generally prohibits its OECmember states from exporting harmful

waste to non-OECD countries. Some

administrations interpret this as also bea prohibition against selling vessels fordemolition to countries without firstremoving the harmful substances.

The new IMO Convention Interna-tional Convention for the Safe and Envronmentally Sound Recycling of Shipsprovides globally applicable ship recycliregulations for international shipping afor recycling activities. The Convention



planned to be adopted in May 2009 fol-lowed by a ratification process. It will pro-

vide regulations for: The design, construction, operation and

preparation of ships so as to facilitate

safe and environmentally sound recy-cling without compromising the safetyand operational efficiency of ships

The operation of ship recycling facilitiesin a safe and environmentally soundmanner

The establishment of an appropriateenforcement mechanism for ship recy-cling, incorporating certification andreporting requirements

Hence, the new regulations will containrequirements applicable to ships, ship recy-cling facilities and administrations.

Following the ratification of the newconvention, the demand for an Inventoryof Hazardous Materials (IHM) is expected

to grow significantly as shown in the figurebelow. DNV is currently qualifying person-nel to provide continued support for this.

THIRD-PARTY EVALUATION OF

RECYCLING YARDS Demolition is alabour-intensive activity. Most of therecycling yards are located in the Indiansubcontinent or China. Bangladesh is theleading recycling state in terms of tonnage(65%), followed by India (21%) and thenChina, Pakistan and Turkey, which accountfor the remaining 10-15%.

For more than 10 years, ship breakinghas been the subject of strong publicdebate, fuelled first by the images capturedat Chittagong in Bangladesh by Brazilianphotographer Sebastiao Salgado and pub-

lished in 1993 in his book Workers , forwhich he was awarded the Pulitzer Prize in1997. Such publicity has regularly brought

end-of-life ships, ship owners, ship breaking yards and various authorities into thepublic spotlight and led to questionsregarding the legality of the present pratices.

Whereas the majority of ships aredemolished when stranded on a beach, wsee that, with the recent drop in the newbuilding market, newbuilding yards areshowing an increased interest in addingrecycling to their business. This opens upossibilities for a change in this marketand it has been suggested that an interntionally recognised classification, certifiction and audit system for recycling yardsshould be created. DNV is actively suppoing this process and is currently participaing in a project with several other involv

parties to set up a regime for establishinmechanisms for third-party evaluation ofrecycling yards.


[email protected]



Computational Fluid Dynamic (CFD) tools can be used in combination with model tests to minimizehull resistance, improve propeller efficiency and interaction with the hull, reduce the required power,

improve fuel efficiency and ultimately mitigate the environmental impact from shipping.

TEXT: OCTAVI SADO, LIV HOVEM

Optimized hull forms

and propeller designs

THE CHALLENGE The shipping industryis focusing more and more these days onmitigating the environmental impact of the

world fleet, and bulk carriers are no excep-tion. The Marine Environment ProtectionCommittee (MPEC) of the InternationalMaritime Organization (IMO) has been

working around the clock to establish newregulations with respect to several marinepollution topics such as accidental spills,exhaust gases, waste delivery ashore, haz-ardous materials, ship recycling, ballast

water, bilge water, anti-fouling paints andsewage. The significant increase in the

world fleet over the past five years com-bined with the proximity of ship traffic incoastal areas and the general public aware-ness of global warming has resulted inemissions to air being the single mostimportant item on shippings regulatoryagenda.

New technology New technologies with

respect to cleaner energy sources are beingdeveloped very rapidly, but it will still takesome time before kites, sails, solar panelsand fuel cells become standardized equip-ment on ships. However, todays designscan be further improved by using existingtechnology and proven analysis methods.One way to minimize the emissions to airof new ship designs is to optimize the hullshape, propeller, rudder and the interac-tion between all of them to improve theships overall fuel efficiency

DNVS RESPONSE TO THE CHAL-LENGE The Ship Hydrodynamics andNoise and Vibrations sections in DNV Mar-itime Technical Consultancy are workingtogether to develop new services in thefield of ship resistance and propulsion inorder to help shipyards, designers andowners improve the performance of newand existing bulk carriers.

CFD tools can be used to numericallysimulate the ships behaviour in calm

waters so as to predict the overall hullresistance. Wave-making patterns can beestimated relatively quickly using todayscomputers, which allow for the screeningof several conceptual hulls shapes andidentification of key areas for improvemin existing designs. The performancetrends and possible efficiency gainsobserved in the CFD analyses can be verfied later on using model tests.

Wave patterns and wetted surfaces arevery specific to each ship type, so the focareas for design improvement will also vaccording to ship type.

Bulk carriers are characterized by bluhull shapes with high block coefficients maximize the cargo area. They typicallyoperate at medium speeds of around 14.knots. The combination of shape andspeed results in the contribution from fr

RESEARCH AND DEVELOPMENT BY DNV


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tional resistance (drag effects from the wet-ted surface) dominating over the wavemaking resistance. For some loading condi-tions, the viscous effects from the hull canbe as much as 80% to 90% of the overallresistance.

Typical potential areas for designimprovements to bulk carriers to minimizethe fuel consumption are: Bow design and loading condition opti-

mization Minimized hull friction Aft ship, propeller and rudder efficiency

improvementFuel efficiency improvements in the hulland propeller can range from 2-3% up to8-10% but it should be noted that thesemay vary according to the bulk carrierdesign as they are directly linked to thematurity of the design and the ships actual

trade.

HULL FRICTIONAL RESISTANCE Sever-al research projects are currently under

way to produce solutions to minimize thehull frictional resistance in water, such asair lubrication systems and advanced coat-ing systems. While a lot of promisingresults are coming out of these researchareas when applied to some test case ships,

the technology is not yet ready to be rolledout to the whole bulk carrier fleet.

Fore ship design When it comes to thefore ship design, the future operating pro-file should be considered. While it may notbe possible to design all bulk carriers for a

specific trade, certain aspects should bekept in mind: Ensure an optimum bow design for dif-

ferent loading conditions study thecombined effect including a shallowdraft ballast condition, rather than a sin-gle optimized design draft

Avoid unfavourable drafts and trim levelsfor long voyages

AFT SHIP DESIGN AND PROPULSIVEEFFICIENCYThe greatest potential forimprovement in bulk carriers these dayslies in the aft ship design and, in particular,

in the propulsive efficiency. Because of thehigh block coefficients, bulk carriers willtypically generate quite a non-homogenous

wake at the propeller disk which could leadto unnecessary energy losses.

Numerical simulations using CFD,including viscous effects, can accuratelypredict the wake distribution for each spe-cific hull design, including the water parti-cle velocities and rotations at the propeller

intake. This can be used for: Designing the aft hull shape and

appendages (fins, vortex generators) timprove the wake pattern and increasethe propeller efficiency

Estimating the hull and propeller inte

action effects to improve the propellerefficiency and optimize the propellerclearance

Studying the propeller and rudder intaction to reduce energy losses and draas well as the selection of energy recoving systems aft of the propeller

THE FUTURE AND TODAYIn the nefew decades, rather radical changes to hdesigns and new propulsive systems may expected in order to achieve the ambitioemission reduction levels proposed for t

year 2040 and beyond. But in the mean-

time something needs to be done aboutnew designs using existing technology.Even today, numerical simulations usingCFD tools make it possible to improve thfuel efficiency of both new and existingbulk carriers. This constitutes a viable anproven solution to optimize ship designsfor fuel efficiency, and should be part offuture-oriented efforts to obtain a greendesign that reduces emissions to air.

DNV BULK CARRIER UPDATE NO. 1 2009 |

RESEARCH AND DEVELOPMENT BY D


[email protected]

[email protected]


16/32



Figure 1: Top-level work

process overview in DNV's

new "CSR Best Practice" tool

Engine Room Drawings

Hatch Cover Drawings

Figure 2: A more detailed

description of selected work

processes

Figure 3: Advice on how/wha

to assess, which loads to

apply, Rule references and

checklists for verification and

quality assurance

Figure 4: Advice on how to

apply the Nauticus Hull FE too

1 2

3 4



ake.karlsson.dnv.com



New and improved

Nauticus Hull for CSR BulkWith the release of the new version of Nauticus Hull, DNV hull approvalengineers, as well as designers and yard engineers, can now enjoy the

most efficient design and verification tool for CSR Bulk

TEXT: THORBJRN LINDMARK

The support for Finite Element Analysis (FEA) in

particular has been radically improved with anenhanced version of GeniE and a new automaticcode check. The overall goal of this Nauticus Hullupgrade has been to shorten the design loop, mak-ing the design process fasterand with a higher degree of transparency and quality.

With this new version of Nauticus Hull for CSR Bulk,DNV Software hopes to strengthen its reputation as apioneering leader in the market for strength assess-ment of marine structures in general and ships inparticular. The latest round of improvements andnew features of Nauticus Hull include: An improved graphical representation of the entire

vessel with compartments and cross sections A completely new, efficient and flexible compart-

ment modeller An improved and highly flexible load definition

module integrated with the compartment modeller A new cross-section analysis and post-processing

module for handling multiple Section Scantlinganalyses

An automatic code check for the yield and buck-ling of plated structures in FEA module GeniE

The import of relative deflections from FEA results

into fatigue strength calculations of longitudinals

at transverse bulkheads.

DESIGN LOOP TIGHTENS Key customers world-wide have given feedback and suggestions through-out the software development process. Based on thefeedback from many existing users of Nauticus Hull,

we have had a strong focus in this new release onmaking it simpler to make design iterations, saysTorbjrn Lindemark, Nauticus Product Manager atDNV Software. This, in turn, will give a shorterdesign lead time.

Nauticus Hull is the only programme on the mar-ket to offer concept modelling, which enables design-ers to build in more design logic into a core model

of the ship. This is used later for many differentanalyses in addition to post-processing and rulechecks. One benefit of this approach is that only onemodel needs to be updated to effect changes in allsubsequent analyses, processing and rule checks forthe ship design. Capacity models needed to perform

yield or buckling checks can be generated for thewhole vessel or for selected areas. Its a huge time-saver, says Lindemark.

The new reporting and documentation functions

All of these

improvements add up

to major time saving

and a better design

process for the

users, says Torbjrn

Lindemark Nauticus

Product Manager at

DNV Software.




in the FEA module GeniE are in a class of their own,

and are expected to greatly improve the transparencyof the design as well as ease verification and therebyimprove quality. The new automatic code check forthe yield andbuckling of plated structures strengthens GeniEsposition as the preferred structural analysis tool forbulk carrier design. Features include checks againstallowable stress levels and buckling according tothe Common Structural Rules for bulk carriers. Along

with the plate code check, the report generator hasalso been extended to include standard templates tai-lored according to the CSR Bulk requirements.

FASTER In Nauticus Hull, cross sections and com-partments are visualised in a graphical model of the

vessel. In addition to providing immediate feedbackon data input, the graphical presentation enables aquick overview of the current status of the modellingand rule check analysis.

The new compartment modeller is designed tofacilitate efficient modelling and the entry of com-partment data and loads. Section Scantlings is used asa basis for defining cross sections and transverse bulk-heads. It provides a powerful tool for the fast genera-

tion of compartments in the cargo area.

In GeniE, it is now possible to run code checkingof both plated and frame type structures. The buck-ling capacity model is automatically generated withnet scantlings and panel geometry in agreement withthe detailed rule requirements mandated by CSRBulk, including complex non-rectangular platepanels.

The code check results can be viewed graphicallyor in table format. Detailed results for each panel

with intermediate results are available. Panel settingscan be altered, and subsequent redesigns are easilydone. Several panel settings can be altered for eachrun, such as the settings for the Correction Factor,Panel Net Thickness, Panel Length/Breadth and the

Rotation boundary for Panel Buckling.The GeniE report generator comes with templates

that easily generate reports for viewing in text format,HTML format or spreadsheets or formatted reports.Customisable filters limit the amount of data report-ed. Report settings can be saved, making it easy torecreate the same report in another code checkingrun.



[email protected]

Figure: Graphical representation

of the compartments and status

of cross sections being analysed



By entering the name of a DNV-classed vessel or theDNV identification number into the tool, a list ofrequirements valid for the specific vessel is provided.It is also possible to utilise the database of require-ments by searching for Conventions or Codes, differ-ent vessel types, the keel laying date or gross tonnage,using a free text search or searching for the newrequirements entry into force date.

Requirement Explorer will be updated shortly aftereach IMO Maritime Safety Committee (MSC) andMarine Environment Protection Committee (MEPC)

meeting. In this way, it should be possible to keep upto date regarding what is on the regulatory agenda.The search results can be sorted by clicking on the

headers of each row. A printer-friendly table can becreated in order to print out the search result. Thetable can be copied into a spreadsheet like MS Excelfor editing purposes.

A complete list of requirements is accessible as aPDF document in the tool. The ship-specific list isavailable to members of DNV Exchange - in the statuspage for vessels. DNV Exchange is a service for DNVbuilders and suppliers as well as managers, ownersand flag authorities working with DNV. See

www.exchange.dnv.com to log on or to register for the

service.

RequirementExplorerIMO instruments are constantly being adopted andamended, and DNV has accepted the challenge to

develop an Internet tool showing new and amendedIMO requirements for a specific ship.

TEXT: SVERRE J. DAHL



21/32

INTERNATIONAL CODE ON INTACTSTABILITY 2008 (2008 IS CODE) TheCode was adopted by res. MSC.267(85)and will be implemented by amendmentsto SOLAS and the Load Line Convention.It enters into force on 1 July 2010. Thepractical consequences will be limited asmost ships have been designed accordingto recommendations containing the samerequirements. Explanatory Notes to theCode were also approved and issued as

MSC.1/Circ.1281.

INTERNATIONAL MARITIME SOLIDBULK CARGOES (IMSBC) CODE TheBC Code, the IMOs Code of Safe Practicefor Solid Bulk Cargoes, will be replaced bythe mandatory IMSBC Code adopted byres. MSC.268(85). The IMSBC Code willbe implemented by amendments toSOLAS and enter into force on 1 January2011 (res. MSC.269(85) Annex 2).

The provisions of the IMSBC Code maybe applied on a voluntary basis by nationalauthorities as from 1 January 2009, pend-

ing the entry into force on 1 January2011.

For owners of vessels with DNV classthere will hardly be any noticeablechanges resulting from the new Code.This is due to the fact that DNV hasalready treated the BC Code as beingmandatory for some years. However, the

wording will be changed with respect tothe issuance of Statements of Compliance

(SOCs) and Documents of Compliance(DOCs). More importantly; ships mayexpect more frequent Port State Controlsof this subject due to the mandatorynature of the Code.

LSA CODE The revised LSA Code,adopted by res. MSC.272(85), will, as from1 July 2010, apply 82.5 kg as the average

weight of persons for the prototype testingof lifeboats intended for cargo ships, free-

fall lifeboats and rescue boats.When adopting the amendment to theLSA Code, the MSC agreed that theamendment should only apply to equip-ment installed on new ships. However,regarding the installation of such equip-ment on existing ships, the MSC consid-ered that the matter was adequatelyaddressed by the principle in SOLAS regu-lation III/1.4.2.

ISM CODE The revised ISM Code, adopt-ed by res. MSC.273(85), will from 1 July2010 stipulate stronger and mandatory

requirements for a company to identifyand assess risks and on this basis establishappropriate plans and instructions. Thecompany will from the same date also berequired to perform internal audits atleast annually (Section 12.1).

LRIT-RELATED MATTERS The MSCagreed, in principle, to retain the date of1 January 2009 for the entry into force of

the new LRIT provisions. The report ofthe meeting urges Contracting Governments to provide their Recognized Orgizations with appropriate instructions anguidance in relation to the implementation of the new LRIT provisions as soonpossible.

SOLAS DEFINITION OF THE TERMBULK CARRIERAs instructed by theMaritime Safety Committee (MSC) at it

84th session, an Intersessional WorkingGroup met in November 2008 to develoan interpretation of the SOLAS definitiof the term bulk carrier.

The report of the Working Group(MSC 85/7/3) was approved by the MSThe MSC also adopted the resolutionMSC.277(85) on Clarification of the terbulk carrier and Guidance for application of regulations in SOLAS to ships

which occasionally carry dry cargoes inbulk and are not determined as bulk caers in accordance with regulation XII/1and chapter II-1 and instructed the FSI

Sub Committee to include the above relution in its guidance for PSC officers.

In particular, it should be noted thatthe Guidance that has been developedcovers new ships only, and the MSC resolution is non-mandatory. Nevertheless gernments are urged to apply the opera-tional measures (paragraph 1.1 of theGuidance) to ships with keel laying on oafter 1 January 2009 and the structural


Rules andRegulations updateThe Maritime Safety Committee (MSC) held

its 85th session from 26 November to5 December 2008 at which it made

several important decisions.

TEXT: SVERRE J. DAHL

RULES AN REGULATIO


22/32

RULES AN REGULATIONS


requirements (paragraph 1.2 of the Guid-ance) to ships with keel laying on or after 1

July 2010.Some MSC - were concerned that the

resolution is non-mandatory. Mandatoryuniform application and entry-into-forcecan only be established by means of anamendment to the SOLAS Convention.The member governments were invited tosubmit relevant proposals for a new workprogramme item for consideration by the

Committee at the next MSC meeting inMay 2009.

GUIDANCE Regarding the exclusion ofspecific types of cargoes carried ondedicated ship types for the purpose ofdetermining ship type and thus avoidingthe inappropriate application of provisionsin SOLAS, the risks connected with thetransport, loading and unloading of suchcargoes are taken into account. Theexcluded cargoes carried in bulk are 1.

woodchips and 2. cement, fly ash andsugar. (See paragraph 1.5 of the Guidance)

Ships which are not defined as bulk car-riers are permitted to occasionally carrydry cargo in bulk provided: (see paragraph1.6 of the Guidance)1. they are of double-side skin construction2. the freeboard assigned is type B without

reduced freeboard, and3. they comply with the following SOLAS

regulations as applicable to bulk carriers: Regulation II-1/3-2.2 - Protective coating

of dedicated seawater ballast tanks anddouble-side skin spaces

Regulation XII/6.2, 6.3 and 6.4 - Struc-tural and other requirements for bulkcarriers

Regulation XII/10 - Solid bulk cargodensity declaration

Regulation XII/11 - Loading instrument Regulation XII/12 - Hold, ballast and

dry space water ingress alarms Regulation XII/13 - Availability of pump-

ing systemsSmaller ships of less than 100m in lengthand of single-side skin construction arepermitted to occasionally carry dry cargoesin bulk provided: (see paragraph 1.7 of theGuidance)1. the freeboard assigned is type B without

reduced freeboard, and2. they comply with the following SOLAS

regulations applicable to bulk carriers: Regulation XII/11 - Loading instruments Regulation XII/12 - Hold, ballast and

dry space water ingress alarms Regulation XII/13 - Availability of pump-

ing systemsThe Guidance states that flag states shouldissue ships falling under the provisions ofparagraphs 1.5, 1.6 or 1.7 with a statementattesting to the application of this resolu-tion.

For additional information:

[email protected]

The Marine Environmental ProtectionCommittee (MEPC) held its 58th ses-sion from 6 to 10 October 2008 andmade several important decisions

HARMFUL AQUATIC ORGANISMS INBALLAST WATER The MEPC adoptedGuidelines for ballast water sampling andRevised guidelines for approval of ballas

water management systems, intended toassist in the effective implementation of

the International Convention for the Cotrol and Management of Ships' BallastWater and Sediments (BWM ConventionOne final set of guidelines, on port statecontrols, is being developed by the IMOSub Committee on Flag State Implemention and is to be adopted before the Con

vention's entry into force.

RECYCLING OF SHIPS The draft text othe International Convention for the Safand Environmentally Sound Recycling oShips was further developed. However, seeral issues are still not finalised and will

left for the diplomatic conference in HoKong in May 2009 to decide.

PREVENTION OF AIR POLLUTIONFROM SHIPS The discussions on green-house gas (GHG) emissions continuedrelating to issues and market based instrments (MBI), Energy Efficiency Designand Operational indexes. However, no cclusions were drawn and discussions on



application, regulation and implementa-tion issues were deferred to MEPC 59 (July2009).

MARPOL ANNEX VI AND NOXTECHNICAL CODE 2008

The MEPC unanimously adoptedamendments to MARPOL Annex VI andthe NOx Technical Code regulations tofurther reduce harmful emissions fromships. These will enter into force on 1 July

2010.

GLOBAL SOX REDUCTIONSThe main changes to MARPOL Annex VIare the gradual reduction in the sulphuroxide (SOx) content in fuel oil to facilitatereduced SOx emissions from ships by low-ering the global sulphur content limit fromthe current 4.50% to:- 3.50% effective from 1 January 2012;- 0.50% effective from 1 January 2020

(subject to a feasibility review to be com-pleted no later than 2018).

It was also agreed that gas fuels such as

LNG, CNG and LPG will be exemptedfrom the requirements related to MARPOLsamples and Bunker Delivery Notes in Reg-ulation 18. However the sulphur content ofgas fuels delivered to a ship specifically forcombustion purposes on board that ship isto be documented by the supplier.

SULPHUR EMISSION CONTROL AREASThe limits applicable in Sulphur Emission

Control Areas (SECAs) will be graduallyreduced from the current 1.50% limit to:- 1.00% effective from 1 July 2010- 0.10% effective from 1 January 2015.The revised Annex VI will allow for anEmission Control Area to be designated forSOx and particulate matter, or NOx, or forall three types of emissions from ships.

NOX EMISSIONS FROM MARINEENGINES More stringent requirements for

nitrogen oxide (NOx) emissions frommarine engines were also agreed in orderto facilitate reduced NOx emissions fromships, with the most stringent controls onso-called "Tier III" engines, i.e. thoseinstalled on ships constructed on or after 1

January 2016 and operating in EmissionControl Areas.

AMENDMENTS TO NOX TECHNICALCODE (NOX TECHNICAL CODE 2008)The amended Code includes a new chap-ter based on the agreed approach for theNOx regulation of existing (pre-2000)

engines established in MARPOL Annex VI,and provisions for direct measurement andmonitoring methods, a certification proce-dure for existing engines, and test cycles tobe applied to Tier II and Tier III engines.

For additional information:

[email protected]


24/32

Inspired bythe sea

Peter Hamer, Middle East area manager for DNV, hasbeen completely absorbed in seafaring life from his boyhood.

Fairplays Jim Wilson meets him.

TEXT AND PHOTO:JIM WILSON

SEAFARING ABILITY Peter Hamer hadspent about 30 days at sea on his first trip

when he nearly died. They sent someonearound to my mums house at night to saySorry Mrs Hamer, your sons lyingunconcious in a hold somewhere offNigeria... He was then 16 years old andhad fallen into a hold.

It was not the most fortuitous way tobegin a life at sea. But for Hamer, now thenewly-appointed Middle East area manag-er for class society DNV, there was onlyone thing to do. I went back to sea. Whata great life it was, he enthuses. There

were three weeks in Japan, six weeks inAustralia. On the West Africa run, the cap-tain ordered us to all hire a truck andhead out into the bush! Youd never dothat now, he laughs.

Hamer was just 13 when he was capti-vated by the beauty of mountainous Snow-donia in Wales and the training ship HMS

Conway. I was totally inspired. With theMenai Strait, the backdrop of gorgeousSnowdonia and then, being a boy, playing

with boats... He tails off in his recollec-tion. It was sometimes quite a harsh envi-ronment. Boys would be teaching boysand we would be rowing down the river inthe ice, he adds.

When he was little more than a boy,Hamer received an O-level (then a British

certification of high school education) innavigation and seamanship, and set outfor sea. Hamers early seafaring time was afantastic learning experience. Apart frombeing a world citizen and less of a Britabroad owing to extensive travel, hedeveloped a solid seafaring ability. You

were proud of your apprenticeship. You

had a good base of knowledge. You wereable to do the right thing, he says.

THE REAL SEAFARER LIFE Then helearned what it really means to be aseafarer. In 1983, hed just taken hismasters ticket when he was asked to takea 100 year-old Baltic Trader through theBay of Biscay, off the west coast of France.It was in winter, rough and open to theelements. It was a life changingexperience. It was one of those moments.

You felt like you could have been working400 years ago. It was very testing. It made

me realise that, after 10 years at sea, Idnot been at sea. It was a stimulatingexperience and it opened my mind,Hamer says.

He began working for Outward Bound,an outdoor education company that aimsto inspire personal growth through chal-lenging expeditions. It was a huge adven-ture, Hamer exclaims. He was sailing asquare rigger and helping every kind of

person from every corner of society, hewas based in a beautiful village overlooking the city and sailing all over the FarEast. I loved my time there. It was a verspecial time, he says. But it was intenseThe idea was to give people an experi-ence theyd never forget and I was doinit month after month. I was drained, h

says.An encounter with a surveyor madeHamer realise how much knowledge hehad. Desirous of a new direction, he gavup everything and enrolled as a maturestudent in Newcastle, UK, to study navaarchitecture. All of the mature studentsat at the front like eager puppies, helaughs.

DNVA small-seeming detail changedHamers life following graduation in 19DNV offered him expenses to attend th

job interview and the other employers d

nt. For a just-married man with a new-born son, money was important. So hemet DNVs Ole Mller. I thought heresomeone I can learn from. So I spenteight years in Liverpool, doing everythin engines, certification, propellers,tankers, even wind farms. I got tremen-dous exposure to all sides of the busineHamer says. One of his favourite jobsfrom his Liverpool days concerned the

IN THE SPOTLIGHT



25/32

technical evaluation of a mizzen-mast putinto the concrete at Priory Dock. When I

went to see the mast, it was from the HMSConway, which Id climbed as a boy. It wasbrilliant. I loved that day, he smiles. Timerolled on and, in 1998, he got a call. Areturn to Africa beckoned.

Hamer became a station manager in

Durban with a small team and his respon-sibilities grew until he was country manag-er for sub-Saharan Africa. We opened upGhana and Nigeria. We helped create apocket of offshore excellence there, hesays.

It was success after success and, by2006, DNV wanted to rotate Hamer to theMiddle East. Hed never worked in theregion before, so he decided to give it ashot and ran a one-man station in Qatarfor a time. Now, as an area manager forthe Middle East, Hamer hopes to expandthe DNV business using the overall frame-

work and value through innovation andchange.

And thats appropriate for a man whoselife, to date, is perhaps best summarised inthe Goethe quote: Plunge boldly into thethick of life, seize it where you will, for it isalways interesting.


NAME: PETER HAMER

CURRENT POSITION:

DNV area manager

Middle East.

CAREER: Naval architect

and class surveyor.

Began a maritime career

at age 13. Spent 15 years

at sea. Extensive

experience of sailingships. Speaks Chinese.

This article has been reproduced with kindpermission from Fairplay.


26/32

A semi-open bulk carrier from Oshima Shipyard (the vessel is not linked to the article).

Customer Service Manager for Oshima Shipyard, Yo Hirokawa

DNV to class bulkcarriers in Japan

In January, classification contracts for eight

semi-open bulk carriers were concluded toDNV class at Oshima Shipyard.

TEXT:YO HIROKAWA

Says the head of DNVs Maritime Service Centre in Kobe, Jan Kvlsvold: These contractshave been secured, despite the turbulent economic times, due to patient and efficientteamwork between DNV units world wide and a strong relationship with Oshima Ship-

yard.Two of the vessels will have a European owner while the other six will be chartered to

the European owner but have smaller, local Japanese owners, so-called tonnage suppliers.Says the Customer Service Manager for Oshima Shipyard, Yo Hirokawa: Success in the

local tonnage provider market has for years been a major challenge to DNV. These vessels

therefore represent an important milestone for DNV.The country manager for DNV Maritime Japan, Johan Tutturen, took up his new posi-

tion in January this year and is of course very pleased that 2009 has started off so strongly.Says Tutturen: These new contracts to DNV class are very welcome and we are eager touse this project to demonstrate DNVs commitment to supporting the Japanese shipbuild-ing industry even when the market is facing rough weather.

HOT NEWS




DNV is personal,characteristic and friendly


28/32

MARKET OUTLOOK


SIGNS OF LIFEamidst gloomier prospects

Dry bulk freight rates have recovered significantly from the shock-ing bottom levels seen in early December. The Baltic Dry Index inearly March was more than three times higher than three monthsbefore and still 82% below the extreme peak seen last spring.Second-hand values were quick to adjust to new market realitiesand interesting opportunities are seemingly again available for

vessel purchase against mid-term time charter levels.

TEXT:JARLE HAMMER, HM STRATEGIES

There are, however, reasons to questionthe sustainability of the recent dry bulkmarket recovery. The newbuilding markethas dried up completely, whereas formal

lay-up is still very limited and scrappinghas not really taken off. Many charter par-ties fixed before the market collapse havebeen cancelled or renegotiated and reset-tled at much lower levels.

ORDERBOOKS Scheduled dry bulk vesseldeliveries of 74 million dwt through thefull year 2009 correspond to nearly 18%of the fleet of almost 419 mdwt at thebeginning of this year and scheduled 2010deliveries of 101 mdwt correspond to24%. In comparison, reported scrap salestotalled only 1.2 mdwt in the first two

months of the year. Slippages haveincreased strongly and delayed deliveriesare expected to be significant, butcancellations are not expected to havemuch impact before the latter part of2010. Hence, the fleet growth willaccelerate considerably in the short tomedium term.

A closer look at size ranges showsvery large differences with regard to order

book shares.Thus, at the beginning of March, the

order book for 10-50,000 dwt correspond-ed to 20% of the existing fleet (with 5%

for 10-25,000dwt, 40% for 25-40,000dwt,and just 3% for 40-50,000 dwt). Whereasvery few orders have recently been placedfor the smallest size range of bulk carriers and for that matter also for the smallestsize range of container feeder vessels, it isremarkable to observe the continuedinterest in multipurpose vessels, with anorder book now corresponding to 33% ofthe existing fleet. Two years ago, only 2%of that fleet was younger than 5 years. It isinteresting to observe that the order bookfor plain bulk carriers of 10-25,000 dwtamounted to only 1.0 mdwt, whereas the

order book for multipurpose vesselstotalled 8.5 mdwt. Rates for multipurpose

vessels seem to be clearly more robustthan for container vessels and smallhandysize bulk carriers in the presentmarket downturn.

Going up in sizes, it appears that theorder book share for Supramax of 50-60,000 dwt was as high as 118% of theexisting fleet, whereas the share for Pana-

max/Kamsarmax of 60-100,000 dwt was47%. Among larger vessels, small Capesof 100-150,000 dwt had an order bookshare of 50%, whereas large Capesize of

150-200,000 dwt saw a share of 92% andthe order book share for Very Large BuCarriers over 200,000 dwt was as high as146%. For all vessels above 100,000 dwtthe order book share stood at 97% of thexisting fleet for such vessels.

ECONOMIC FORECASTSAgainst thisunpleasant fleet scenario, economicforecasts have in the past few monthsbeen revised continuously downwards.

Apart from China, few countries are noexperiencing growth in their industrialproduction. Chinas industrial producti

growth has fallen back from a 15% levelnot too long ago to below 6%. The latesreported industrial production figures iimportant countries show the followingdeclines on a yearly basis: Japan -31%,S.Korea -26%, Euro area -12%, USA -10Brazil -15%, and Russia -16%. The twodominant dry bulk importers, China an

Japan, saw their export values in Januardecrease by 17% and 45%, respectively,



ECONOMIC GROWTH AND EXPECTATIONS

Economist 05.03

% change IP12m Infl.12m GDP 07 GDP 08 GDP 09

USA -10.0 0.0 2.2 -2.2 -1.5

EURO AREA -12.0 1.2 2.6 -2.4 0.7

JAPAN -30.8 0.0 2.1 -5.3 0.5

S.KOREA -25.6 3.7 4.1 -5.9 0.3

CHINA 5.7 1.0 11.5 6.0 7.0

INDIA -2.0 10.4 7.9 5.0 6.6

RUSSIA -16.0 12.0 7.2 -2.0 3.0

BRAZIL -14.5 5.8 4.7 -0.4 3.2

THAILAND -21.3 -0.1 4.5 -1.8 2.2

INDONESIA -2.8 6.9 6.3 1.9 2.2

S. AFRIKA -7.0 8.1 5.0 -0.8 3.1


30/32

compared with one year before.

FREIGHT RATES The recent marketupturn drove Capesize spot rates up froma bottom level of USD 2,300 per day to

close to USD 40,000, before they droppeback to USD 28,400. At the time of writiImarex Futures Capesize quotations stooat around USD 24,000 for Calendar 201and USD 23,000 for Calendar 2011. Timcharter rates for modern Capesize tonnahave recently been set at USD 28,500 forone year and around USD 25,000 for thr

years. In comparison, Fearnleys latestMonthly Report has calculated the breakeven rate for a five-year old Capesize to USD 20,900. The present market seems be fairly well balanced with regard to sh

values and period rates. For Panamax, thspot level was USD 16,800, against a oneyear time charter rate of USD 15,500, vesus a break-even rate of USD 14,400 forfive-year old ships. For Supramax, the prent spot level of USD 17,300 was somewhhigher than for Panamax. Supramax timcharter rates stood at USD 13,000 for boone year and three years, versus a breakeven rate of USD 12,900.

IMPROVEMENT IN CAPESIZE Therecent surge in Capesize rates is difficultexplain. One possible reason for the

recent strong improvement in Capesizerates was at first sight a significant recovin Chinas steel production after thestrong cuts last autumn. Chinas pig ironproduction fell from a monthly high of43.4 million tonnes in June last year to33.5 mt in November, before bouncingback to 40.6 mt in January this year, whi

was 6.5% higher than one year before. Acloser look at the Chinese steel industry

MARKET OUTLOOK




shows, however, that iron ore imports actu-ally decreased in January, remaining at thelow average level of the 4th quarter and

were down 12% compared to one yearbefore. Last year, Chinas crude steel pro-

duction rose by a modest 1.7% to 502 mil-lion tonnes and the countrys pig iron pro-duction was down 0.1% at 471 mt. At thesame time, iron ore imports were up16.0%, or 61 mt, to 444 mt and domesticproduction of much poorer iron ore wasup 15.6%, or 117 mt, to 824 mt. Based onthese data, it can be calculated that a stock-build of almost 70 mt of crude steel equiva-lent took place in China last year. This islikely to dampen tonnage demand forquite some time. On the other hand, alarge number of Capesize vessels cannot be

presently be discharged, and therefore actas floating storage space of iron ore. Still,there is also a large number of vessels thatare now freed up of congestion in otherareas, increasing the pool of potential ton-nage seeking cargo.

MARKET OUTLOOK The recent marketupturn is probably partly the result of mar-ket dynamics following large tonnage vol-umes in semi-layup and mobilization premi-ums together with some disturbance fromthe futures market. At present it seemshard to find any strong fundamental reason

for significant rate increases for large bulkcarriers. Figures for the full year 2008 showthat world crude steel productiondecreased by 1.5% and global pig iron pro-duction was down 2.0%. In January 2009,total world pig iron production was down16.3%, with Japan down 27.1% and the EUdown by as much as 47.5%. Thus, Chinasshare of world pig iron production rose toa staggering 61%, up from 48% in October.

An inflation adjusted survey of bulk car-rier time charter rates since 1970 shows amarket cycle of 3 years duration in theearly 1970s, followed by a cycle of 7 yearsup to 1980. This was again followed by a

cycle of about 9 years up to 1989, before arather dull and softening period of 13

years up to 2002. After that, there was afantastic upturn, lasting well into 2008,before the most dramatic collapse everseen in the dry bulk spot market whichalso had a strong impact on the time char-ter rates. Last year, Capesize spot rates var-ied between the peak at USD 234,000 perday down to just USD 2,300 per day. Cape-size time charter rates for 1 year variedbetween USD 170,000 and USD 18,000.

With the general rate recovery seen in the

first part of 2009, we can observe that pres-ent time charter rates are not particularlybad in a historical context.

LONG WAY TO GO Looking at supplyand demand fundamentals, it seems clearthat the road back to a a well balanced andhealthy dry bulk market has to be a ratherlong one, and there is at present littlereason to rush into vessel purchases or tocharter vessels on long contracts. On thepositive side, raw material and energyprices have fallen significantly. Inflationhas almost evaporated in most countries.

Interest rates are low, although loans are sofar hard to get despite unprecedentedstimulation packages. Never have weneeded top level international economiccooperation more and a return to greaterprotectionism would be bad for the growthand prosperity of international trade andshipping.


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The global economy is behaving like an unpredictable roller coaster, moving faster and in more directions tha

anybody could anticipate. Many ship owners, ship operators, yards, ship finance institutions, and people are

suffering through financial losses and business instability. As your partner we will support and assist you to meyour requirements.

Shipping is cyclical by nature DNV is your partner at all times

Its about partnershi