Italian shipowners are urging China to take responsibility for the crippling effects overcapacity is having on chartering markets, particularly the dry sector, by introducing a system that for every ship its yards build another is scrapped, in bid to tackle rocketing fleet growth.
Giuseppe Bottiglieri and other owners present at the Mare Forum Italy event in Sorrento said they would like to see China go one step further than the incentive scheme introduced last year aimed at getting domestic owners to scrap unsafe vessels, and balance out new ships entering service with the same number exiting the fleet.
A major concern are elderly ships of around 25-30 years of age bought in the secondhand market over the last two years while prices have been cheap, and which are serving the Chinese coastal trade. Many are thought to be at risk of breakdown or accidents.
“It is very dangerous for shipowners. Those with old ships should be warned that they are running huge risks,” Mr Bottiglieri told the forum, talking about China but also the wider shipowning community. “They should be replaced with new ships.”
Privately-owned Chinese shipyards are not under threat from closure, and, just like state-owned facilities, are receiving support from the country’s government to keep employment high and the economy moving.
In contrast to the widely held view in the maritime industry that as newbuilding orders dry up, private yards will struggle to find business, Keen Maritime Services managing director John Su says the Chinese government is so concerned about unemployment it will not let these facilities fail.
As a Chinese-born broker and consultant that is based in Athens, he is the middle man for a number of foreign deals taking place but is also is heavily involved with China’s domestic market and says its banks are so influenced by central government they will continue to lend to shipbuilding yards and owners to sustain a robust economy.
“The government doesn’t care about owners and overcapacity, they care more about jobs and the economic fallout from a yard collapsing and so even the private yards will get support,” he told the Mare Forum Italy in Sorrento.
Added to this, Mr Su says there is more domestic newbuilding ordering activity taking place in China than the rest of the world realises.
“It’s scary to think but there are a lot of orders that are not known to brokers,” he said, making reference to a contract reported by brokers such as Clarksons last week for an order of two confirmed 205,000 bulk carriers, and options for six more, at Qingdao Yangfan Shipbuilding for owner HongXiang Shipping.
“This order was already placed last year and is just one example,” highlighting the extent to which the shipping industry does not know the true size of the global orderbook.
Croatian Register of Shipping is the latest organisation to join the International Association of Classification Societies.
IACS chairman Noboru Ueda accepted the registry’s application for membership.
Ueda said that he looked forward to the registry’s “active participation in and contribution to” the organisation’s work.
CRS’ membership follows that of the Indian Register of Shipping, which became the first new member of IACS last year since new membership criteria came into effect in 2009.
Bulk freighters will be able to avoid congestion around Shanghai and sail up China's Yangtze River as far as Nanjing under a $2.7 billion plan to deepen the navigation channel by 2015, Xinhua News Agency reported.
The river would be navigable for ships up to 50,000 tonnes, which means handymax and supramax dry bulk carriers will be able to unload their cargoes further upstream in Jiangsu province, giving more manufacturers direct access to imported commodities, as well as easing logistics for exports, it said.
Nanjing is already a major destination for commodities shipments, chiefly iron ore. Its customs office handled imports of 17.5 million tonnes of iron ore in the first three months of this year, the third-highest in the country, after Qingdao and Shijiazhuang.
Huge supply bottlenecks have affected imports of coal, grains and other dry bulk goods into China, which has turned into the principle buyer for many raw materials thanks to rapid economic growth.
The 18 billion yuan ($2.7 billion) project to deepen the navigation channel would be funded by the Ministry of Transport and the government of Jiangsu province, Xinhua said.
Cosco (Dalian) Shipyard Co. Ltd. has awarded a contract to Inocean to develop and produce a basic design for a new compact, ultra-deepwater drillship. The design is being introduced for the first time in Houston at the Offshore Technology Conference.
The design, tagged INO-80, is dynamically positioned with a large, free deck space designed for year-around operations.
“Cosco and Inocean have during the years worked closely in several projects including heavy-lift vessels, FPSOs, and drillships,” said Jon Erik Borgen, CEO of Inocean AS. “The approach will be the same for INO-80, where Inocean will contribute with its high-end engineering and design expertise, and Cosco with its strong execution ability. Depending upon the response from the market, we believe the first unit will be delivered in 1Q 2014.”
Responding to the increased technical sophistication of drillships and other mobile offshore drilling units and with the greater regulatory oversight of offshore drilling, ABS has developed new classification standards and notations intended to provide MODU operators with increased confidence that their operations are being conducted to the highest demonstrable standards.
"ABS is the leading provider of classification services to the offshore sector," said ABS President and CEO Christopher J. Wiernicki. "We have been talking with the industry, regulators and others with related interests. This has helped us to clearly define existing standards that can be improved, and to also identify those new areas that would benefit from having an independent, third party set of standards that properly address the new technologies that are being incorporated into the latest designs of drillships, semis and jackups."
That research has indicated a broad range of both design and operational aspects that warrant additional guidance, according to Ken Richardson, ABS Vice President, Energy Development. "Obviously enhanced standards for the classification of drilling systems are key components," he noted, "but operators are also looking for a more holistic approach to the maintenance of their assets and we have developed new notations that can be used by an operator to demonstrate the effectiveness of their maintenance programs."
Richardson also emphasized the need, expressed by many of the ABS MODU operators, for an effective independent standard that addresses the integration of the ubiquitous, and increasingly complex, software programs that are essential for the operation of the unit as a whole. "The offshore sector has always been a leader in developing and adopting new technologies and novel concepts," Richardson added. "There is a lot of innovative thinking that goes into the development of the individual components that are brought together in the modern drillship. The key to the safe and seamless operation of the unit is the ability of all these components to function together in a manner that can be controlled by the operational team on board. That is the basis of a lot of our research and the development of our new software notations."
New notations that have been developed by ABS for the drilling sector include Integrated Software Quality Management (ISQM), Systems Verification (SV), DRILLSHIP, Asset Integrity Management (AIM) and Rapid Response Damage Assessment (RRDA). Existing notations that have been enhanced include Classification of Drilling Systems (CDS), Hull Inspection and Maintenance Program (HIMP), Reliability Centered Maintenance (RCM), and Environmental Protection (ENVIRO-OS).
ISQM is a risk-based software development and maintenance process built on internationally recognized standards. The ISQM process validates the software installation on the unit and then monitors for consistency when there are software updates or a change in hardware. ISQM provides a process to manage software over the offshore unit's life.
"There is growing recognition within industry that organizations will need to institute a change management process for software," says Bret Montaruli, ABS Vice President, Offshore Technology. "Industry has traditionally focused on structures and equipment. However, software has become such an important component in the operational phase particularly since control systems for offshore installations and units become more complex. Successful implementation relies heavily on the integration of software developed by multiple vendors."
The ABS ISQM Guide places emphasis on the verification and validation of the multiple software packages. The benefit to owners and operators is an increased level of confidence in software reliability with the goal of decreasing downtime and reducing the risk of software related incidents."
The SV notation allows operators to benefit from verifying that the software has been developed in a recognized process that meets the operator's needs and performs as expected. Upgrades and new releases that are routinely made by vendors and which may introduce errors into the system and increase downtime or cause other operating problems are also subject to verification prior to installation.
Award of the DRILLSHIP notation indicates that the vessel has been designed and constructed to the standards contained in the Guide for Drillships. As the principal classification society for drillships, ABS is taking the lessons learned and is clarifying the criteria for these specialized vessels.
Asset Integrity Management is a concept that is well established within the offshore sector and has received renewed attention. "Operators are looking for third party confirmation that the day to day maintenance and management of their units conforms to a clear, industry accepted standard and the new ABS AIM notation provides them with such verification," says Richardson. "It builds on the existing Hull Inspection and maintenance Program (HIMP) requirements that several operators have adopted, taking a more holistic approach to the overall management of the MODU." A key element of this is the addition of a state-of-the-art loads and configuration approach that provides the operator with a tool to better understand the operational loads to which the unit is subject.
While HIMP is directed at the inspection and maintenance of the unit's structure, the companion Reliability Centered Maintenance (RCM) notation addresses the manner in which the machinery and equipment on board the unit is maintained, including replacement and repair strategies that are pre-emptive in their approach.
The ABS RRDA program and notation is a well established offering within the shipping industry and has now been enhanced and made available to offshore operators. "The technical assessment of an offshore structure can be much more complex than for a ship such as a tanker," explains ABS Chief Technology Officer Todd Grove. "Many offshore units are unique in their architecture so that the necessary modeling of the unit is similarly complex and the programs must be specifically tailored to the unit. Incidents affecting offshore units over the recent past have highlighted the importance of having the ability to quickly evaluate the unit in the damaged condition so that pro-active response strategies can be implemented that may be able to stabilize the situation preventing or minimizing the possibility of loss of life or ensuing pollution."
ABS has offered the voluntary CDS notation for many years. ABS has revisited the standards with industry and other interested parties to identify those areas that should be strengthened or clarified. The newly issued Guide for the Classification of Drilling Systems includes these enhanced standards and takes a more holistic approach to the entire drilling system from the drill floor to the wellhead including the blow out preventer.
The ENVIRO-OS or ENVIRO-OS+ denotes adherence to enhanced standards for environmental protection. The notation takes into account procedures and requirements for ballast water and sewage management, anti-fouling applications, airborne pollutant discharges, fuel oil and the use of exhaust gas cleaning systems, refrigerants and the Green Passport for ship recycling.
China is expected to center on developing the offshore industry, which is at the initial stage of growth, according the 2011 China Ocean Development Report released on April 29 by the State Oceanic Administration of the People's Republic of China.
The Report includes the offshore & shipbuilding industry as part of the oceanic industry.
China, now the world's second strongest shipbuilder, strives to become world's No.1 shipbuilder. Its offshore & shipbuilding industry grows rapidly, with both shipbuilding completion and new orders on the rise.
China also will develop high value-added vessels and marine equipment industries, such as large-sized tankers, LNG/LPG carriers and large sized containerships as well as shiprepair industry.