Tanker Owners need to understand the risks and raise safety standards. As ship recycling standards have increased across the sub continent, tanker owners need to adapt to the stricter requirements for cleaning vessels for hot works prior recycling.
As we have seen earlier this year, tragic accidents aboard vessels that were not cleaned thoroughly led to a tragic loss of life and closure of the Pakistani market for over 8 months now.
This should serve as a serious wake up call to tanker owners that their vessels must be totally cleaned of all
cargo residues, slops and sludges in all cargo and slop tanks in order to mitigate risks of an accident at recycling yards.
Regrettably, we have noticed a few ship-owners are shying away from such an important and fundamental responsibility. This is a dangerous precedent that must stop immediately. All in the shipping community need to sleep sound at night knowing that they have acted responsibly. Every effort should be made to prevent a repeat of the awful accidents witnessed in Pakistan that led to loss of life, enforced closure of recycling markets, created negative publicity, reduced (financially beneficial) resale options, which ultimately resulted in lowering prices for all wet units across the board.
After working closely with recycling yards, ship managers, gas freeing professionals and ship owners, GMS has developed the industry’s first guidelines for cleaning tankers for hot works prior delivery to recycling yards. These guidelines go above and beyond the routine requirements of gas freeing.
We request owners to go the extra mile so that lives can be saved and safety standards further enhanced across a rapidly developing ship recycling sector. GMS has adopted a policy that ALL tankers purchased by our principals on “as is where is” basis will be cleaned according to these guidelines.
Tanker owners are faced with some very important decisions moving forward, as they will be faced with the dilemma of whether it makes financial sense to retrofit their older vessels or just sell them for demolition. This in turn will likely alter the balance between demand and supply, creating a new dynamic in terms of freight rates. In a recent report, shipbroker Gibson said that “the impact of the Ballast Water Management (BWM) Convention on future levels of demolition has been a hot topic for quite some time. The convention, ratified in September 2016, required all existing tonnage to install an approved BWT system at the 1st renewal of the International Oil Pollution Prevention (IOPP) certificate from 8.09.2017, which has traditionally been done alongside special survey every 5 years. As retrofitting a tanker with an approved system is expensive (around $2 mln for a VLCC), many analysts believed at the time that once in force the BWM requirement would accelerate demolition activity. However, in our view, the impact was always likely to be delayed, as some owners took advantage of a loophole to decouple the renewal of the IOPP certificate from the special survey; in other words, renewing the IOPP certificate prior to 8.09.2017 in order to trade up to 7.08.2022 without a BWM system”.
“However, following the pressure from shipowners, last week the Marine Environment Protection Committee (MEPC) made amendments to the BWM Convention, in general requiring existing tonnage (to which convention applies) to install an approved BWM system at the 1st renewal of the IOPP certificate following 8.09.2019, two years later than first intended. In greater detail, below is text of what the MEPC has agreed to”, said the shipbroker.
According to Gibson, “by the first renewal survey: this applies when that the first renewal survey of the ship takes place on or after 8 September 2019 or a renewal survey has been completed on or after 8 September 2014 but prior to 8 September 2017. • By the second renewal survey: this applies if the first renewal survey after 8 September 2017 takes place before 8 September 2019. In this case, compliance must be by the second renewal survey (provided that the previous renewal survey has not been completed in the period between 8 September 2014 and 8 September 2017)”.
The London-based shipbroker added that “undoubtedly, the above wording is complex and far from easy to digest, perhaps due to the intention of the MEPC to prevent further decoupling. In very simple terms (from the perspective of the global tanker fleet above 25,000 dwt), it means that only vessels that have not renewed their IOPP certificate between 8.09.2014 and 7.09.2017 (either alongside the special survey or separately by decoupling) will be allowed to renew the IOPP certificate between 8.09.2017 and 7.09.2019, without the need to install an approved BWM system. For these units, the BWM will have to be installed at the 2 nd renewal of IOPP certificate, at latest up to 7.09.2024. In contrast, tankers that have renewed their IOPP certificate between 8.09.2014 and 7.09.2017 will be required to install an approved BWM system at their 1 st renewal, at latest up to 7.09.22 (the original deadline)”.
Gibson added that “due to the above distinction, largely only tankers built between Sep 2002 to Sep 2004 (and where the IOPP certificate has not been renewed between 8.09.2014 and 7.09.2017) will be in position to buy extra time before heading for scrap. For tonnage built within three years up to Sep 2002 and within three years after Sep 2004, the deadline for the BWM installation remains unchanged, up to 7.09.2022. Also, tankers built in 2000 or earlier are likely to face demolition over the next five years anyway due to their age and bunker pressures. Finally, tankers built in 2007 and later are too young to be considered for demolition, be it 2022 or 2024. On this basis, the latest MEPC ruling does reduce the potential for tanker demolition; however, it appears that only a portion of the fleet will be in position to postpone the decision whether to scrap or not beyond Sep 2022”, the shipbroker concluded.
Honduras has acceded to the Ballast Water Management Convention (BWMC), becoming the 61st country to do so.
The signatories now represent 68.46 % of the world’s merchant fleet tonnage.
Ivan Romero Martinez, Ambassador of Honduras to the United Kingdom and Permanent Representative of Honduras to the IMO, met IMO Secretary-General Kitack Lim at IMO Headquarters in London on July 10 to deposit the instrument of accession.
Scheduled to enter into force on September 8, 2017, the convention is to be implemented until 2019. Namely, the IMO Marine Environment Protection Committee (MEPC) approved a revised implementation scheme for ships relating to the BWMC, allowing for two-year delay of compliance for existing ships.
Under the treaty, ships are required to manage their ballast water containing thousands of aquatic or marine microbes, plants and organisms which are then carried across the globe.
The attempt to reverse the recently imposed 15% value-added tax (VAT) on ships being sent to Indian ship-recycling markets will likely be successful, according to GMS, a cash buyer of ships for recycling.
Namely, the announcement was made after the Bangladesh Shipbreakers Association (BSBA) voiced their concerns to the highest authorities in government in an attempt to reverse VAT on incoming ships.
Additionally, the finance ministry informed that VAT will now be postponed for at least another two years, which should see prices remain at par with those seen in the first quarter of the year.
In early June, ship-recycling sectors in Pakistan and Bangladesh witnessed a decrease in LDT price after the respective countries released their 2017 budget announcements.
The Pakistani budget first brought falls of about USD 10/LDT, “as rumors of an even worse fate for the Bangladeshi market surfaced and were eventually confirmed” by the announcement of their budget.
The Pakistan Shipbreakers Association (PSBA) is due to meet in the coming week in order to address some of the concerns arising from their recent budgetary changes affecting their industry, GMS informed.
An amended implementation scheme for ships to comply with the D-2 biological standard under the Ballast Water Management Convention (BWMC) was tentatively accepted at the 71st session of the IMO Marine Environment Protection Committee (MEPC 71), American Bureau of Shipping (ABS) informed.
The scheme, if approved by the committee on July 7, will be circulated to member states for adoption during MEPC 72 scheduled to be held from April 9 -13, 2018.
Under the proposal, ships constructed on or after September 8, 2017 are to comply with the D-2 standard on or after that date.
Vessels built before September 8, 2017, are to comply with the D-2 standard at the first MARPOL IOPP renewal survey completed on or after:
September 8, 2019 (Reg B-3/10.1.1); or
September 8, 2017, only if a MARPOL IOPP renewal survey is completed on or after September 8, 2014, but prior to September 8, 2017 (Reg B-3/10.1.2).
If the survey per Reg B-3/10.1.2 is not completed, then compliance with the D-2 standard is required at the second MARPOL IOPP renewal survey after September 8, 2017, only if the first MARPOL IOPP renewal survey after September 8, 2017, is completed prior to September 8, 2019, and a MARPOL IOPP renewal survey was not completed on or after September 8, 2014, but prior to September 8, 2017 (Reg B-3/10.2).
For ships constructed before September 8, 2017 and which are not subject to the MARPOL IOPP renewal survey, compliance with the D-2 standard is required not later than September 8, 2024 (Reg B-3/5).
A joint maritime industry group comprised of industry bodies has issued the second edition of The Guidelines on Cyber Security Onboard Ships, which includes practical advice on how to combat cyber attacks.
The guide includes information on insurance issues and how to effectively segregate networks, as well as new practical advice on managing the ship to shore interface, and how to handle cyber security during port calls and when communicating with the shore side.
The chapters on ‘contingency planning’ and ‘responding to and recovering from cyber incidents’ have been rewritten to reflect the fact that the guidelines are aimed specifically at ships and the remote conditions prevailing if a ship’s defenses have been breached, according to BIMCO.
The guidelines have also been aligned with the recommendations given in the International Maritime Organization’s (IMO) guidelines on cyber risk management which were adopted in June 2017.
A new subchapter on insurance has been added, looking at coverage after a cyber incident as this is an important part of the risk assessment which shipowners should now take into consideration. Finally, the annex, which gives more details about networks, has been rewritten based on real experience of shipowners segregating networks on their ships.
“Cyber security is certainly a hot topic for all of us now, and this latest guidance includes valuable information, applying a risk-based approach to all of the areas of concern, highlighting how an individual’s unwitting actions might expose their organisation,” Angus Frew, BIMCO Secretary General and CEO, commented.
The document comes days after Danish shipping giant Maersk was hit by cyber attack Petya which affected its multiple business units.
The joint industry working group members which compiled the guidelines include BIMCO, Cruise Lines International Association (CLIA), International Chamber of Shipping (ICS), International Association of Dry Cargo Shipowners (INTERCARGO), International Association of Independent Tanker Owners (INTERTANKO), International Union of Maritime Insurance (IUMI) and Oil Companies International Marine Forum (OCIMF).
IMO’s Marine Environment Protection Committee 71, due to gather in London in July, may well have the last chance to ensure that the long-delayed Ballast Water Convention is implemented when ships undergo their special surveys.
This would ultimately decide whether the Convention’s requirements are finally fulfilled across the many thousands of ships which require ballast water treatment system installations.
“It is a couple of minutes to midnight for this Convention,” Andrew Marshall, Coldharbour Chief Executive, said, adding that the outcome of this next MEPC meeting “will surely decide its fate.”
The Coldharbour CEO reports that some flag states are now actively marketing a decoupling of the special survey, the time when practically all ballast water treatment system retrofit installations will take place, from renewal of the International Oil Pollution Prevention Certificate (IOPPC).
This is the point in time that IMO set as the trigger for system installations because the IOPPC renewal normally takes place during a ship’s special survey. Decoupling of the two events “is a cynical means of enabling ship owners to buy more time,” Marshall believes, which flies in the face of the IMO’s intentions.
The Committee will discuss a two-year postponement of the Convention’s entry into force, which could prove helpful for the industry in several ways, Marshall said, however, he insists that any postponement must come as part of a package which sees shipboard treatment system installations timed to coincide with renewal of the IOPPC at the next special survey.
“If a two-year postponement is agreed at MEPC 71, and the decoupling process is not stopped, the IMO’s most-delayed Convention will have no impact on many ships for possibly another seven years from today,” Marshall informed.
“I urge delegates at MEPC 71 to take a strong line on these issues which will ultimately seal the fate of the Ballast Water Convention. As an industry, we must have an unambiguous timeline and a chance to see through the IMO’s best intentions to completion,” he concluded.
The dry bulk market's recovery will be a long and arduous road with a few bumps on the way. We are currently amid such bumps as it turns out, as the latest consecutive drops of the dry bulk freight market, evidenced by the course of the Baltic Dry Index (BDI), have shaken the confidence in said recovery. The BDI has marked 22 days of consecutive losses, having lost as much as 520 points from its peak of 1,338 points noted on the 29th of March 2017.
In its latest weekly report, Allied Shipbroking noted that "it is not so much the intensity of the drop as it is the number of days of decreases noted in the general index and the fact that this has taken place during a period of the year where we typically see a at least a slight firming of the market which is primarily driven by seasonal flows such as those from grain cargoes. There is also the fact that optimism had been overinflated by the sharp rise in the index during March".
According to Allied's Head of Market Research & Asset Valuations, Mr. George Lazaridis, "the reality that has hit is one that was always visible to some extent in the details. The truth of the matter is that we have only just started to see a re-balancing of sorts in the demand and supply and given that trade growth is still sluggish, the improvement seems to be driven more so by the slow fleet growth. As such, what makes sense is that the recovery will come in slow steps, with freight rates gradually improving over several years, rather than skyrocketing in a matter of months".
Lazaridis added that "what the main issue is, is that many fear that even the possibility of a slow-paced growth is faltering. Taking a comparative look of the BDI trend this year against what was being noted last year, it becomes clear that a significant improvement has been made even when looking at the level the index stands at today. We are currently at a level which is higher than anything we witnessed in the first 9 months of 2016 or the first 5 months of 2015. Of course, when taking into consideration that these were also the most difficult months noted in the history of the dry bulk market it's not exactly something to cheer about when you are saying that you are at a better state now. At the same time given that the summer months are typically subdued there is also fears that the current downward cycle could continue over the next 2-3 months, before finding some footing in the Autumn period.
Allied's analyst mentioned though, that "taking a view that the recent drop might be propelled to some degree by traders which are holding back volumes due to commodity prices, we may well see a fair flow of cargoes coming through during the summer months as well, something which if nothing else should help keep freight levels buoyant. In any case, it appears as though the focus should be that the market has outperformed both 2015 and 2016 to date and that could be taken as a good indication that we are still on a recovery path albeit a more gradual one", Lazaridis concluded.
Dutch banks ABN AMRO, ING Bank and NIBC, together with the Scandinavian counterparts SEB and DNB, announced today at NOR-Shipping in Oslo that they are all introducing Responsible Ship Recycling Standards (RSRS) for their ship financing.
The announcement was made during the biannual industry gathering with the aim of including more banks into the initiative. The Norwegian fund, KLP, which in 2016 commissioned a report by the International Law and Policy Institute on shipbreaking, had also already taken a stance to reject beaching practices.
The collective move to include ship recycling conditions on loans by leading banks and financial institutions with large shipping portfolios has been described as a positive step to imposing responsible practices on shipowners by NGO Shipbreaking Platform.
"When there is pressure for change coming from shipping financers, who understand that they have a direct tangible impact on the shipping industry, shipowners, rather than finding crafty loopholes in the law, will feel the bite if they do not choose to recycle responsibly off the beach," the NGO said.
"We welcome the leading role taken by the banks to ensure a departure from the unnecessarily dirty and dangerous practice of beaching, and expect that investors and clients of shipping that are increasingly pushing for higher standards for ship recycling will join the initiative," said Ingvild Jenssen, Founder and Director of the NGO Shipbreaking Platform.
Majority of ships are still scrapped in South Asia to beaching yards notorious for their low working standards and high incident rates.
A total of 128 end-of-life ships were sold for scrap to the South Asian beaches during the first quarter of 2017, according to the data by the NGO Shipbreaking Platform.
The number represents 65 percent of ships which reached the shores of Bangladesh, India and Pakistan, out of a total of 196 vessels sold for demolition worldwide during the three-month period.
The 30th IAPH World Ports Conference 2017 will be hosted in Bali, Indonesia on 7–12 of May 2017, in which this will be the biggest maritime event in 2017.
This event is expected to have more than 500 attendees from the field of port, logistics, shipping and maritime industry. Under the main conference theme of "Enabling Trade. Energizing The World", this event aims to bring together all stakeholders in discussing various maritime issues and its solutions in order to deliver positive impacts for global maritime transport.