SEAFARERS - Providing a yeoman’s service

The shipping industry handles over 90% of world trade. This has led to a high growth in demand for the world fleet which currently stands at over 85,000 ships of nearly 1.2billion gross tonnage. Seafarers play the most important role in the manning and operations of the world fleet. They brave the seas, encounter the harsh elements, rough weather, long durations away from home and family, put in long hours of hard work and thus provide a yeoman’s service.

A key highlight of the STCW Conference 2010 was the IMO designated, “Year of the Seafarer,” which aimed to provide the maritime community with an opportunity to pay tribute to seafarers from all over the world for their unique contribution to society and in recognition of the facilitation of global trade in a hazardous environment.

The conference further designated 25th June as the “Day of the Seafarer” Thereafter, this day is being observed every year. This year whilst observing the day of the seafarer, IMO has also encouraged young people to consider a career at sea as a viable, attractive and enticing career option. A central plank of the campaign message was that seafaring offers unique opportunities to navigate the seas of the globe and encounter the wonders of the ocean, as well as the opportunity to experience a world of real adventure and interact with people from all over the world.

IMO Secretary General Sekimizu called on active and past seafarers to inspire the next generation by sharing their experience on social media. He encouraged officials who are already engaged in this vital professional world to reach out to the new generation; share their life and work experiences; inspire and encourage them to explore for themselves a career at sea or elsewhere in the maritime industries.

 Seafaring opens the door to decent work and unique and enriching experiences. Moreover, in running today’s modern, high-tech vessels, seafarers acquire skills and technical expertise that make them very well qualified for work in many shore based industries once their sea-going days are over.

 The BIMCO/ISF Manpower Update provides the most comprehensive assessment of the global supply and demand for seafarers that are currently available. In accordance with their study of 2010, they have estimated a total global supply of 1371 thousand seafarers (624,000 officers and 747,000 ratings).

The 2010 Manpower Update suggests that while the supply and demand for ratings are more or less balanced there are still some shortages for officers, particularly for certain grades and for ship types such as tankers and offshore support vessels. We are now waiting for the 2015 Manpower Update.

The current situation in India is that there is enough encouragement and a large number of educated youth are eager to take up seafaring as a career. Unfortunately, although there are enough training berths in pre-sea institutions, but not enough berths are available for on-board training thus leading to a mismatch between training and placements. We can draw a parallel with medical professionals as a candidate training to become a doctor needs to complete an internship program in a hospital in order to attain an MBBS degree. Similarly, a cadet training to become a sea going officer has to complete the requisite on board training prior to certificate of competency course and examination.

Further, there is a surplus of ratings and junior officers, and a shortage of senior officers. Thus, some mechanism needs to be developed to balance the situation.

Read More

Make in India- A fine example from the Indian Automobile Industry

The Leading global automobile manufacturers; Suzuki- Maruti, Hyundai, Honda, Toyota, Volkswagen, Ford, General Motors, Nissan etc. have set up production facilities in India and are catering to both the Indian market and the export markets. Cars are now being exported to diverse markets in Africa, South- East Asia and Europe.

 Leading Indian manufacturers; Tata Motors, Mahindra & Mahindra etc. are similarly catering to both the Indian market and the export markets.

 The Indian automobile industry is thus amongst the top manufacturers in the world catering to the growing Indian and export markets.

Automobile exports (passenger vehicles) from India have grown from 4.5lakhs in 2009/2010 to 6.2lakhs in 2014/2015 an average annual growth rate of about 8% and the trend is continuing.

 Transportation of automobiles for the export market is done by Pure Car and Truck Carriers (PCTC’s) of over 5000 cars (CEUs) capacity. This is the most economic and efficient way for sea transportation of automobiles.

 Large PCTC’s of various leading international shipping lines, such as, Hoegh Autoliners, NYK, MOL, Wallenius Wilhelmsen, etc. make regular calls at Indian ports to load and transport automobiles by Ro-Ro concept.

It would be observed from the foregoing that the manufacture of automobiles in India by leading international and Indian manufacturers is one of the best examples of the “Make in India”, concept. Taking a lead from here, perhaps it can be replicated in a number of other industries too.

Then, what about the shipbuilding industry, will it be possible? Perhaps yes, at a later date, when we are able to overcome the constraints and numerous problems. The demand for RoRo PCTC’s is likely to increase with the increase in exports and this would provide a good opportunity to Indian shipping lines to consider diversifying and acquiring a few PCTC’s.

Read More

Entry into force of BWMC – Fast Approaching

Since the introduction of steel-hulled vessels around 135 years ago, water has been used as ballast to stabilize vessels at sea. Ballast water is pumped in to maintain safe operating conditions throughout a voyage. This practice reduces stress on the hull, provides transverse stability, improves propulsion and maneuverability, and compensates for weight changes in various cargo load levels and due to fuel and water consumption.

While ballast water is essential for safe and efficient modern shipping operations, it may pose serious ecological, economic and health problems due to the multitude of marine species carried in ships’ ballast water. These include bacteria, microbes, small invertebrates, eggs, cysts and larvae of various species. The transferred species may survive to establish a reproductive population in the host environment, becoming invasive, out-competing native species and multiplying into pest proportions.

Scientists first recognized the signs of an alien species introduction after a mass occurrence of the Asian phytoplankton algae Odontella in the North Sea in 1903. In the late 1980’s, Canada and Australia were amongst countries experiencing particular problems with invasive species, and they brought their concerns to the attention of IMO’s Marine Environment Protection Committee (MEPC)

The problem of invasive species in ships’ ballast water is largely due to the expanded trade and traffic volume over the last few decades and, since the volumes of seaborne trade continue to increase, the problem may not yet have reached its peak. The effects in many areas of the world have been devastating. Quantitative data show that the rate of bio-invasions is continuing to increase at an alarming rate and new areas are being invaded all the time.

The spread of invasive species is now recognized as one of the greatest threats to the ecological and the economic wellbeing of the planet. These species are causing enormous damage to biodiversity and the valuable natural riches of the earth upon which we depend. Direct and indirect health effects are becoming increasingly serious and the damage to the environment is often irreversible.

In order to control the spread of invasive aquatic species through ship’s ballast water, IMO through international co-operation adopted the International Convention for the Control and Management of Ship’s Ballast Water and Sediments (BWMC) in 2004.

The Convention will require all ships to implement a ballast water management plan, carry a ballast water record book, carry out ballast water management procedures to a given standard, and hold a valid International Ballast Water Management Certificate.

During the Convention development process, considerable efforts were made to formulate appropriate standards for ballast water management. They are the ballast water exchange (BWE) standard and the ballast water performance standard. Ships performing ballast water exchange shall do so with an efficiency of 95 per cent volumetric exchange of ballast water and ships using a ballast water management system (BWMS) shall meet a performance standard based on agreed numbers of organisms per unit of volume.

The Convention will enter into force after ratification by 30 States, representing 35 per cent of world merchant shipping tonnage.

In the interim period, whilst the Convention is yet to enter into force, ships are carrying out BWE in the open sea (> 200nm from nearest land and water depth > 200m) to meet Port State Control requirements.

Till date, 49 contracting States with 34.82% of the world’s gross tonnage have ratified the Convention, so we are very close to meeting the entry into force criteria. It is expected that the criteria would be met soon and the Convention would enter into force probably before the end of 2016.

It would be one of the most expensive Conventions to implement as retrofit of a Ballast Water Treatment System would cost US $ 1 to 5 million per ship depending on size, capacity and layout.

Presently, there is still a dilemma with regard to approvals as only MEPC approved systems would be acceptable and further for trading in US waters, US Coast Guard approval would also be required. A few companies have installed retrofit systems on some of their ships, for early compliance. Majority would comply close to the due date for a ship which would be the next renewal date of the individual ship’s pollution prevention certificate. This would effectively space out compliance over the next five years.

Although in the prevailing very low freight market situation it is going to be difficult for the shipping industry to implement BWMC due to high cost, but to protect the marine environment it would need to be done.

Read More

IMDG CODE

The development of the IMDG Code dates back to the 1960 Safety of Life at Sea Conference, which recommended that Governments should adopt a uniform international code for the transport of dangerous goods by sea to supplement the regulations contained in the 1960 International Convention for the Safety of Life at Sea (SOLAS).

A resolution adopted by the 1960 Conference said the proposed code should cover such matters as packing, container traffic and stowage, with particular reference to the segregation of incompatible substances.

A working group of IMO's Maritime Safety Committee began preparing the Code in 1961, in close co operation with the United Nations Committee of Experts on the Transport of Dangerous Goods, which in a 1956 report had established minimum requirements for the transport of dangerous goods by all modes of transport.

Since its adoption by the fourth IMO Assembly in 1965, the IMDG Code has undergone many changes, both in appearance and content to keep pace with the ever changing needs of industry. Amendments which do not affect the principles upon which the Code is based may be adopted by the MSC, allowing IMO to respond to transport developments in reasonable time.

Amendments to the IMDG Code originate from two sources; proposals submitted directly to IMO by Member States and amendments required to take account of changes to the United Nations Recommendations on the Transport of Dangerous Goods which sets the basic requirements for all the transport modes.

Amendments to the provisions of the United Nations Recommendations are made on a two yearly cycle and approximately two years after their adoption, they are adopted by the authorities responsible for regulating the various transport modes. In that way a basic set of requirements applicable to all modes of transport is established and implemented, thus ensuring that difficulties are not encountered at inter modal interfaces.

For the purposes of this Code, dangerous goods are classified in different classes, to subdivide a number of these classes and to define and describe characteristics and properties of the substances, material and articles which would fall within each class or division. General provisions for each class or division are given. Individual dangerous goods are listed in the Dangerous Goods List, with the class and any specific requirements.

The shippers have to adhere to the packing and labeling requirement as required by the code. Failure to do so will result in cargo not being accepted and or they being penalized. Only class 7 cargo packaging type is not given in the IMDG code as owing to the hazard nature of this cargo the packaging requirements are covered by the IAEA. Thus, the IMDG code ensures safe transportation of dangerous cargo.

Read More

Confidence levels in Shipping Industry at a low

The average confidence level expressed by respondents in the markets according to the latest Shipping Confidence Survey from international accountant and shipping adviser Moore Stephens in which they operate was 5.0 on a scale of 1 (low) to 10 (high). This compares to the 5.6 recorded in November 2015, and is the lowest rating in the life of the survey, which was launched in May 2008 with a confidence rating of 6.8.

All main categories of respondent with the exception of brokers (up from 4.6 to 5.1) recorded a fall in confidence this time, most notably charterers (down from 5.5 to 3.9), which is the lowest confidence rating by any category of respondent in the history of the survey. Confidence on the part of owners and managers was also down, from 5.7 to 4.8 and from 5.8 to 5.5 respectively.

Geographically, confidence was down in all major areas covered by the survey – in Asia from 6.0 to 4.4, in Europe from 5.4 to 5.1, and in North America from 5.7 to 4.7.

A number of respondents continued to express concern about the level of over tonnaging, with one pointing out, “New building deliveries for 2016 will increase the total fleet by 10.5%, 7% of the current fleet is older than 20 years, and cargo volumes in 2015 were just 4.5% higher than in 2014, so the expected available fleet per metric ton of dry cargo available will be higher at the end of 2016 than it is now. As a result, there is no chance of freight levels improving.” Another respondent said, “As long as shipowners operate based on hope rather than on solid economics, there will always be booms and busts.”

Particular concern was expressed about the state of the dry bulk market wherein no dry bulk business makes any remote sense. There are too many players, too many operators, and too many vessels chasing too few cargoes. Most fixtures are concluded merely to keep the banks happy in the belief that some tiny amount of cashflow is coming in. It is noted, that dry bulk is simply at the bottom level of business.

The need for accelerated demolition states that scrapping activity is far from sufficient to compensate for incoming new tonnage. Low scrapping prices provide little motivation for owners to demolish ships, although increased scrapping may help achieve equilibrium in the dry bulk sector sooner rather than later.

Falling oil prices were also a recurring topic in responses to the survey. Global bulk oil movements will be the key to conditions in the tanker market over the next 12 months. With storage facilities almost full to capacity, there will be nowhere to stock additional supplies unless global economy picks up and oil production is regulated. Meanwhile there is some solace in soft oil prices, as the prices are yet low. The wet markets stand a better chance of remaining profitable on the back of weak crude oil prices. Elsewhere, however, there was concern about the effect of falling oil prices on the offshore maritime sector, There are companies in the offshore shipping market which are under pressure and in potential danger of being shut down.”

Demand trends, competition and tonnage supply featured are the top three factors cited and are likely to influence performance most significantly over the coming 12 months. Demand trends, which were up by two percentage points to 26%, remained in first place, with competition (unchanged at 21%) in second place. Tonnage supply, at 15%, occupied third place, one percentage point ahead of finance costs. Operating costs, up by six percentage points to 12%, featured in fifth place, ahead of fuel costs and regulation at 4%, the latter representing a five percentage-point drop on the figures for November 2015.

Overcapacity in any industry will inevitably lead to price-cutting and eventually to financial difficulties for the weakest, the least well-prepared, or sometimes simply the unluckiest. Shipping has had its share of bankruptcies, foreclosures and restructurings during the past few years, and it is likely that we will see more over the coming months, with negotiations doubtless enlivened by the fact that shipping’s purse-strings today are often controlled by an intriguing mix of private equity and traditional shipping finance.

The simple answer to overcapacity is to reduce the numbers, disposing of excess units is more difficult in shipping than in most other industries, particularly when there are record numbers of new vessels just waiting to be delivered. Increased ship recycling is one obvious answer, although current low scrap prices mean that fewer numbers of most tonnage types are being recycled.

Therefore, in a climate of continuing overcapacity, increased regulation, ongoing political unrest and economic instability, the shipping industry will continue to lower growth in the International Trade given the continued low growth of GDP in the world as compared to the supply remaining high due to existing over capacity coupled with substantial new deliveries of new tonnage and inadequate scrapping of older tonnage.

Read More