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Inside•Creatingvaluefromideas•Smallmodularreactors•Blowoutprevention•LNGasfuelJIP•Meetingtheskillsshortage•De-riskwithsocialmedia•KORAIL’ssafetymanagementreboot
insightAmagazinefromLloyd’sRegister Issue 1/2013
Innovation in a complex world
Inside Issue 1/2013:Contents in full:2 Innovation3 Creatingvaluefromideas5 Mininginthedeep7 Smallisbeautiful:smallmodularreactors10Innovationcombination:LNGasfuelJIP12 Blowoutprevention14Howtoattractthewinningformula:
anewhybridferry16Whatgetsmeasuredgetsmanaged:
PaulSimpson,CEOofCDP19Isnuclearsustainable?
Q&AwithDr StefanHirschberg,PaulScherrerInstitut
22Deepdown:London’sCrossrail24Disciplinedapproach:interviewwith
AndyTung,CEOofHongKong’sOOCL26 Marginaltomainstream:Howsocial
mediacanhelpde-riskyourbusiness–bydigitalstrategistNicNewman
28Greenmachines:interviewwithMonikaBomba,SocietyofMotorManufacturersandTraders
30Againsttheodds:Taiwanhigh-speedrail34TheGuru:interviewwithRaviMehrotra,
ExecutiveChairman,ForesightLimited36Tomorrow’stalent:meetingthe
skills shortage39‘Waterlite’energyforIndia?40 Rebuildingtrust:KORAIL’s
safetymanagement42Auditorcompetency:akeytofood safety44Newsupdate
InnovationTechnologicalinnovationcandriveoureconomiesforward,createjobsandbenefitsociety
2–15
16
19Is nuclear sustainable? Q&AwithDrStefanHirschberg,HeadofEnergySystemsAnalysisatthePaulScherrerInstitut
Disciplined approachAndyTung,CEOofOOCLsayslearningfrompastmistakeshashelpedthecompanytostayprofitable
24
Against the oddsTaiwan’shigh-speedrailwayhassurvivedmanyobstaclestobecomeapopularandprofitablesuccessstory
30
Lloyd’s Registerworkswithbusinessesandorganisationsaroundtheworldtoenhancethesafetyoflifeandpropertyatsea,onlandandintheair.Wehelpourclientsfacetoday’schallengesandplanfortomorrowandbeyond.
Insightisourmagazinefordecision-makersworkinginthemarine,energyandtransportationsectors.CareistakentoensurethattheinformationinInsightisaccurateanduptodate,however,weacceptnoresponsibilityforinaccuraciesinorchangestosuchinformation.TheviewsexpresseddonotnecessarilyrepresentthepositionofLloyd’sRegister.Copyright©Lloyd’sRegisterGroupLimited2013Allrightsreserved.
ThemagazineisproducedbyGroupCommunications,designedbyC o n r a n D e s i g n g r o u p
andprintedbyPureprint.
Editor:KathyDavis
Ekathy.davis@lr.orgT+44(0)2074232654www.lr.org
What gets measured gets managedPaulSimpson,CEOofCDPontheevolutionofcarbonreporting
EverytimeweproduceaneweditionofourInsightmagazineIamstruckbyoneoverridingthought.Thefundamentalissuesthathaveoftengovernedtheinternationalnewssincethelastissuearediscussedinthecurrentcopy.Thisoneisnodifferent.WhetheritiscontinuingcoverageofliabilityintheGulfofMexico,
permissionforanewhigh-speedraillinkorstrivingforsustainableenergysources,thismagazinehas‘insight’ontheissues.Lloyd’sRegisterisworking24hoursaday,somewhereintheworld,tryingtoensureweassistinsomeofthebiggestchallengessocietyhaseverhadtoface.
Thesechallengeswillbewithusformanyyearsbutthecomplicationisthattheeconomic,thesocial,thetechnicalandthepolitical,arebecomingincreasinglyinterlinked.CSRstatementsfocusingontheenvironmentandsocialsupportarenowbeingjoinedbyeconomicimpactreportsdemonstratingbusinesscontributiontoanation’sorglobalGDP.
Decidingwherebesttocontributetosocietyisbasedonourunderstandingoftheneeds.Knowingwhattoreadabouttheneeds,inthisworldofprintedorelectronicandsocialmedia,hastobeaplannedactivity.Theavailableoptionsaresometimesoverwhelming.HoweveryoudecidetoreadourviewsandInsight,Ihopeitincreasesyourknowledgeandinspiresnewthoughtsandinnovations.
WelcomeTo our latest issue of InsightRichard Sadler, ChiefExecutive
Innovation:
Fromthedomesticationofanimalsandplantsin9000–7500BC,tothefirstironsteamshipsinthe1820s,andtotoday’snano-technology,wehaveusedtechnologicalinnovationtodriveoureconomiesforward,createjobsandbenefitsociety.
Historically,innovationmayhavehappenedthroughchance;recentexamplesincludex-rays,superglueandthemicrowave.Nowleadingcompaniesfocusonpromotinganenvironmentthatencouragesmeaningfulinnovations.Thisisseenasacrucialwaytosurviveanddrivetheirmarketleadership.Givenitsbenefitstosocietyandtheeconomy,policymakersalsoaimtodevelopconditionsthatwillfosterinnovation.
Innovationisnotjustaboutideas,itisthesuccessfulimplementationofideasthatleadtomorevalue.Butwhataretheessentialingredientsforinnovation?Whatarethebestbusinessmodels?Howdowegeneratethebreakthrough
technologiesthatpushforwardourlives,oursociety,ourculture?Inthisissuewelookatsomeofthesequestionsandexamplesofinnovationacrosstheenergy,transportandmanagementsystemssectors,andeveninthewaywecommunicate–theriseofsocialmedia.
Thepopulationoftheworldisnowmorethansevenbillionandisforecasttoreacharoundninebillionby2050.Asanabsoluteminimum,thesepeoplewillneedfoodandwater.Theywillalsoneedsomewheretolive.Moreofthemarelivingincities–twomoreeverysecond,accordingtotheUN.Theywantabetterlife:betterfood;betterclothes;moreopportunities.Theywillneedtransportandpower.
Innovation–newandimprovedtechnologies–willbecriticalinmeetingtheseneedsandtocopewiththeenvironmentalchallengesinthedecadesahead.
2 Issue1/2013Insight
Creating value from ideasIt’s vital for economic and social prosperity, but what are the keys to technical innovation? Russell Barling takes a look.
Concepts
Innovate
Ideas
Develop
For the third year in a row, in 2012, Apple was selected by a jury of its peers as the world’s most innovative company.
But,unliketheprevioustwoyears,lastyearthecompetitionwasnotevenclosewhenconsultantsBooz&Coconsolidatedtheopinionsoftheworld’stop1,000corporateresearchanddevelopment(R&D)spenders.EightypercentofrespondentshadAppleintheirtopthreemostinnovativecompanies,against43%fortherunner-up,Google.
Itwouldbeeasy–and,insomeboardrooms,comforting–toassumethatApplehasboughtthattitleeveryyearbyvirtueoftheenormouscapitalitpilesintoR&D.Anycompanywiththeirmoneywouldleadtheinnovationsweepstakes,too,right?Notnecessarily.
Appleactuallyranked53rdamongtheGlobalInnovation1,000intermsofR&Dspending,allocatingUS$2.4billion,orabout2.2%ofitsrevenuelastyear.WhileToyota,whichwasvotedseventhamongthetopinnovators,committedUS$9.9billiontoR&Dlastyear(4.2%ofrevenue),morethananyothercorporation.Intermsofthe‘intensity’ofcorporateR&Dspending(theproportionofrevenueinvestedbackintoR&D),Googlewastop,putting13.6%ofrevenuebackintoR&D.
Sowhydothetopspendersappeartounderperforminpeerrankings,letaloneintermsofmarketcapandrevenuegrowth?
Insight Issue1/20133
Hard to quantify Partofthereasonforthedisparityisthatthereisnodirectwaytomeasuretheinfluencethattheproductsofinnovationhaveoneconomicgrowth,eventhosethatchangecorporatebehaviourandpeople’slives.Thefullimpacthasanintangibleelementthatishardtomeasure.
Fortheaverageconsumer,forexample,innovativecommunicationstoolsnotonlyentertain,theycanchangehowpeopleinteract,howtheylearn,theirpublicimageandthequalityoftheirlives.
Appliedcommercially,thosebenefitsproffercompetitiveadvantages,whichinfluencethebottomline.Butnoonereallyknowsbyhowmuch.Nevertheless,publicandprivatesectorleadersdonotdisputethatinnovationboostseconomicgrowthandprofitability.
“Innovationisbecomingthespearheadofcompetition–ataregionallevel,onanationallevel,andforcompanies,”BenVerwaayen,theCEOofAlcatel-LucentrecentlytoldtheauthorsofINSEAD’sGlobalInnovationIndex.“Howtodealwiththatchallengewilldeterminethedestinyofcompetitivenessforallplayers.”
Globally,economistsbelievethataboutathirdofeconomicgrowthisinfluencedbytechnologicalchange,suggestingthattechnicalinnovationiscriticaltosocialprosperity.
Shift to the east Astheforerunnersofindustrialisation,Westernnationsdominatetheglobalrankingsforinnovationperformance;theexceptionsareSingaporeandHongKong,whobothrankintheTop10,accordingtoanINSEADreport,whichrankednationaleconomiesonthebasisoftheirinnovationcapabilitiesandoutput.
Butmanycountrieswithfewerresourcesareprovingmoreeffectiveatgeneratingresults,afactthatisseeinginnovation
migrateeastwiththeglobaleconomy.Whenmeasuredintermsofinnovationefficiency–describedbytheindexas‘countrieswhicharestrongatproducingoutputdespiteweakerinnovationenvironmentsandinputs’–ChinaandIndiasatatthetopoftheladderlastyear.
China,inparticular,hasmadespectacularrecentprogressontheR&Dfront:from1991to2011theamountitspentonR&Dincreasedmorethansixtimes,to1.77%ofGDP.ItisnocoincidencetheperiodthatdefinesitsrisingR&Dcommitmentcorrectlycorrelateswithitsemergenceasaglobaleconomicsuperpower.TheplanisforitsannualR&Dexpendituretoreach2.5%ofGDP–theaverageforEUcountries–by2020.
“Atthisrate,Chinacouldsoongofrombeingtheworld’sbiggestfactorytobecomingamainlaboratoryfortheplanet,”thereport’sauthor,IMDProfessorGeorgesHaour,said.“NeverhastheworldwitnessedalargemarketemergesoquicklyasChinahas.Astheeconomygrows,itisalsochanging.Chinaisfastclimbingthevaluecurve,transitioningfromlow-costmanufacturingtoinnovation-ledgrowth.”
Clearly,whatAppleandChinaproveisthatittakesmorethancapitaltobeaninnovationleader.Thismaybebecauseitisnotenoughtosimplycreateideas;theinvestormustalsohaveaneffectivestrategyforconvertingideasintoproducts.Thesethendeliverprofitsforcompaniesorlesstangibleresults,suchasbetterhealthorqualityoflife,forthestakeholdersofpublicsectorinstitutions.
Innovation modelsThe1,000companiessurveyedbyBooz&Cowereaskedtoseparatethemselvesintothreecategories:‘needseekers’(thosewhoprioritiseengagingclientstogeneratenewideas),‘market-readers’(whomonitorthemarket,butprimarilyrelyonincrementaladvancestoexistingproducts)and‘technologydrivers’(whorelyheavilyoninternaltechnologicalcapabilitiestodevelopnewproductsandservices).
Ofthose,the‘needseekers’,includingApple,consistentlyoutperformedtheirrivalsfinancially,inpartbecausetheyhad
greaterconfidenceintheirabilitytoconvertideasintoproducts.Halfof‘needseekers’saidtheircompanieswere‘effective’atboththeidea-creationandproduct-outputstagesofinnovation;only12%of‘marketreaders’and20%of‘technologydrivers’expressedthesamesentiments.
Moreover,the25%ofrespondentswhodescribedtheircompanyas‘highlyeffective’atbothideacreationandconversionalsooutperformedtheirpeersonthreefinancialmeasures:revenuegrowth,marketcapandprofitmargins.
Ifonehadtochoosebetweenbeinggoodatideacreationorconversion,youwouldbewellcounselledtooptforthelatter.Why?Becausethesurveyfoundthattheabilitytodelivertheproductofinnovationhasagreaterinfluenceoneconomicgrowththantheabilitytocreatetheideasthemselves.
“Ifyouhaveacreativeideaanditdoesn’tcreatevalue,it’snottechnology;it’sart,”MathewGanz,Boeing’sGeneralManagerofResearchandTechnology,toldthereport’sauthors.“Ifyou’reallaboutvaluecreationwithnocreativity,theaccountantsaregoingtotakeover.Youneedtoprimethepumpwithcreativeideasandthenyouneedtohaverigorousprocessesinplacetoturnthoseideasintodollars.”
Russell BarlingisLloyd’sRegister’sGlobalMediaManager.
“ Innovation is becoming the spearhead of competition – at a regional level, on a national level, and for companies.”
“ At this rate, China could soon go from being the world’s biggest factory to becoming a main laboratory for the planet.”
Solutions
4 Issue1/2013Insight
Mining in
the deepThe mysteries of the deep, a world of giant, sinister-looking creatures, undersea structures and more recently futuristic-looking submersibles and robots. Could this vast and largely unexplored territory become the ‘outer space’ of the future? asks Christopher Browne.
Itcouldwelldo–thoughnotintheglamoroussphereofspacemissions,moonlandingsandthehiddenseasonMars.No,thisisafarmorecommercialsortofventurebasedoneconomicforcesandtheneedtoreplenishtheworld’sdwindlingland-basedresources.
Knowing71%oftheworld’ssurfaceiscoveredbywater,moreandmorescientists,engineersandminingcompaniesareeyeingtheoceansandtheresourcesthatliebelowtheseabedasapotentialsourceofourfuturemineralsandoredeposits.
Sohowwouldthiswork?Whatarethetechnicalimplications?Whichareasarelikelytoholdthemostvaluabledeposits?Theanswerstotheseandmanyotherquestionshavebeenexploredinanacademicstudyonseaexploitation,SustainableSeabedMining.
Thiswasthewinningprojectinthe2012ResearchCollegiumdevisedandorganisedbyTheLloyd’sRegisterEducationalTrust(nowpartoftheLloyd’sRegisterFoundation)andtheUK’sUniversityofSouthampton.
Interestingly,apartfromthepioneeringworkoftheFrenchfilm-makerJacquesCousteauinthe1950sto1970sandthemorerecentdiscoveryofthewreckoftheTitanic,theoceanshaveneverheldusinquitethesamethrallasspace.OurexploratoryinstinctsseemtohavebeensatedbytheintrepidspaceprobesoftheRussiansandAmericansinthe1960sand1970s.Yetthepotentialisthere.Inthe1970sgeologistsdiscoveredthathugedepositsofgold,copperandzinc,amongothers,lieinseamsonetotwokilometresunderwaterandejectedontotheseafloorbyhydrothermalventsorgeysers.
Insight Issue1/20135
Development dilemmas Theideaofdeepseaminingremainsataveryearlyandexperimentalstage.Inthetwoyearssincewinningtheleasefortheworld’sfirstcommercialdeepseaminingoperation,offthePapuaNewGuineacoast,theCanadiancontractorNautilusMineralshasfacedconsiderableoppositionfromenvironmentalistsandconservationistsworriedaboutdamagetounderwatervolcanicsitesthatshelterhundredsofpreviouslyunknownspeciesoffishandplantlife.
ThestudyteamsfoundthattheNautilusMineralsproject,scheduledtostartthisyear,islikelytohavea‘minelife’oftwo-and-a-halfyears,extractingoreatamaximum5,900tonnesaday.Butamongthespeciesmost‘atrisk’duringtheseprojectsaremarineturtlesandwhales–andthePapuaNewGuineaeconomiczoneisadesignatedwhalesanctuary.
Itisdilemmaslikethesethatthestudyaddresses,measuringtheobviouseconomicandtradebenefitsofsuchschemesagainsttheengineeringandminingcostsandtheeffectsontheenvironmentandregionalbiodiversity.
Atlantis II Deep challengeOneofthemostpromisingseabedminingsitesthestudyhighlightsisknownasAtlantisIIDeepandliesundertheRedSea.Hereanengineeringsystemwasbuiltandtestedsuccessfullyin1979.“Withincreasesinmetalpricesandadvancesintechnology,seabedmininginAtlanticIIDeepbecomestangibleinthenearfuture,”saythestudy’sauthors.Substantialdepositsofzinc,copper,lead,silverandgoldworthseveralbillionpoundslieinthis62km2area.
UsinglessonslearnedandchallengesidentifiedfromtheNautilusMineralscasestudy,andaidedbyinterviewswithexperts,theteamdevelopedanewconceptforAtlantisIIDeepbasedonasitespecificassessmenttakingintoaccounttechnological,economic,legalandenvironmentalchallenges.
Fostering researchDuringaneight-weekperiodin2012,25youngresearchscholarsfromaroundtheworldworkedinfiveteamsonthetopicofsystemsunderpinningseabedexploitation.TheCollegiumcomprisedPhDstudentsandpost-doctoralscholarsfromLloyd’sRegisterFoundationfundedCentresandotheruniversitiesaswellasasmallnumberofpeopleworkinginindustry.Theaimwastoprovideanenvironmentwhereindividualscanlearnandco-operateinsmall,mixeddisciplinegroupstodeveloptheirskillswhilecompletingaprojectthattacklesamajorglobalchallenge.
TheCollegiumandresearchCentreswereformerlyfundedbyTheLloyd’sRegisterEducationalTrust(TheLRET).On1March2013,TheLRETwasincorporatedintotheLloyd’sRegisterFoundation,acharityandtheparententityoftheLloyd’sRegistergroup.TheFoundationsupportstheadvancementofengineering-relatededucation,andfundsresearchanddevelopmentthatenhancessafetyoflifeatsea,onlandandintheair.
ThethirdResearchCollegium2013willfocusoncoastaleco-cities,supportedbytheLloyd’sRegisterFoundationagainincollaborationwiththeUniversityofSouthampton.MoredetailsabouttheCollegiumandpapersfromthe2011and2012eventscanbefoundatwww.southampton.ac.uk(searchfor‘collegium’)orwww.lrfoundation.org.uk.
TheCollegiumisoneofanumberofjointinitiativesbyLloyd’sRegisterandtheUniversityofSouthampton.Nextyear,400membersofLloyd’sRegister’sMarinebusinesswillmovetoa£120millionpurpose-builtglobaltechnologycentre(GTC)ontheuniversity’sBoldrewoodcampus.AnotherpartofthecollaborationwillbeSouthamptonMarineandMaritimeInstitute(SMMI),theUK’slargestbusiness-universityalliance,whichwillbebasednexttotheGTCandwillincludeacademics,leadingbusinessesandresearchinstitutesfromallovertheworld.
Theorecouldbegatheredbyacollectionmachinefittedwithacutterheadanddrivenbyelectricityfromthesurfaceviaa2,000metrelongcable.Theorewouldthenbethensuckeduptoanoperatingvesselbyasubseapump.Thecollectionmachinewouldbefittedwithacameraandvarioussensorsanddetectorssotheengineersonthesurfacecancontroltheunderseaminingactivitieseffectively.
Onceagain,potentialoperatorsfacedisturbingaregionofbiologicallysignificantcoralreefs,uniquemarineandcoastalareasandadiversenumberoflocalspecies.TheRedSeaalsohasitsownnetworkofmarineprotectedareas.
Acknowledgingthelimitationsofcarryingoutandpublishingtheirresearchinsixweeks,thismulti-disciplinarygroupnonetheless
presentedabodyofworkwhichcouldformthebasisoffutureindustrialandacademicinvestigation.
‘SustainableSeabedMining:GuidelinesandanewconceptforAtlantisIIDeep’byLev Egorov,PostGraduateStudent(TechnicalScience),Admiral MakarovStateUniversityofMaritimeandInlandShipping,Russia;Hany Elosta,PhDCandidate,MarineStructuresand
ReliabilityCentre,UniversityofStrathclyde,UK;Dr Nicole Kudla,ResearchFellow,Lloyd’sRegisterFoundationTransportRiskManagementCentre,ImperialCollegeLondon,UK;Shiliang Shan,PhDCandidate,DalhousieUniversity,Canada;andKyung-Kyu Yang,PhDCandidate,SeoulNationalUniversity,SouthKorea.
Christopher BrowneisLloyd’sRegister’sMarineNewsEditor.
Echris.browne@lr.org
“The study could form the basis of future
industrial and academic investigation”
6 Issue1/2013Insight
Small is beautifulSmall modular reactors
SMRs could be used in both developed and emerging economies worldwide
Small modular reactors are fabricated in an off-site factory and then delivered to site
already fuelled for final installation, significantly reducing construction time
The development of small, factory-built nuclear reactors is being driven by a need to cut capital costs, provide power away from large distribution networks and reduce greenhouse gas emissions. Professors Richard Clegg and Mamdouh El-Shanawany look at the technologies that are becoming available, and gauge the likely take-up of these reactors.
Asnuclearpowergenerationhasbecomemoreestablished,thesizeofreactorshasgrownfromthe60MWelevelsofthe1950stotoday’s1,600MWegiants.Butdespitetheoperatingeconomiesofscalethatfollowed,highcapitalcoststwinnedwithademandforsmaller-scale,moreflexiblepowergeneration,nowseesindustryre-visitingsmallreactorsthatgeneratelessthan300MWe.
Theseso-calledsmallmodularreactors(SMRs)couldprovidepowertosmall,remoteelectricalgridsindevelopingcountriesorbeintegratedwithrenewabletechnologies,suchaswindandsolarpower,tooffsetvariationsinenergygeneration.‘Modular’referstothefactthatthereactorsarefabricatedinan
off-sitefactoryandthendeliveredtositealreadyfuelledforfinalinstallation,significantlyreducingconstructiontime.
Thelatestdesignsalsobuildonthesafetyfeaturesandemergencyresponsesassociatedwithlarge-scalenuclearpowerplants.Butthefactthattheyaresmalleranduselessfuelenhancestheircoolability,andreducesthelikelihoodofcoredamageinunplannedevents.
Why now?Theoperatingeconomiesofscalethatcamewithtraditionallargenuclearplantsarenowover-shadowedbythemassivecapitalcostsofbuildingalargeplantfromscratch.Theindustrytrendtowardssmaller-scale,moreflexiblepowergeneration,suchaswindandsolarenergy,hasledtoarevivalofinterestinthesecaravan-sizedunits,withanumberofmanufacturerslookingtobuildprototypes.
Theycouldsuitcountriesthatlacktherobustelectricalnetworkneededtotransmitthemassiveoutputgeneratedfromconventionallargenuclearpowerplant,andthetechnologycouldalsoofferacheaperalternativetodieselgenerationusedinremoteregions.
ThreedistinctSMRreactordesignsarecurrentlybeingconsidered,basedonlightwater,fastneutronreactionandhigh-temperaturegas-cooledtechnologies.Whileeachhasitsprosandcons,thedesignsaregenerallysimplerandwillbecheapertomassproduceandsitethanlargerversions.Mostaredesignedwithahighlevelofso-calledpassivesafety,notrequiringoperatoractionsorelectronicfeedbacktoshutdownsafelyinanemergency.Inaddition,theAmericanNuclearSocietyrecentlyreportedthatmanyofthesafetyfeaturesrequiredonlargereactorsarenotnecessaryinthesesmalldesigns.
TheUSislargelyfocusingonsmall,lightwaterreactors,thankstoitslargepoolofindustrialexperiencewiththistechnology.Thereactordesignisbasicallyascaled-downversion–lessthan200MWe–ofexistingUSplant.Thisislikelytohelpdevelopmentand,importantly,speeduplicensingapplicationsintheUS.Thefirstdemonstrationreactorscouldbeupandrunningby2018.
Russia,Argentina,France,SouthKorea,China,JapanandSouthAfricaarealso
Insight Issue1/20137
SMRs could be integrated with renewable technologies, such as wind and solar power, to offset variations in energy generation
Small, remote electrical grids in developing countries could
be powered by SMRs
workingonSMRsbasedonexistinglightwaterreactordesigns.TheUKhasexpertiseandexperienceinSMRsandcouldalsodevelopasadesignerandmanufacturer.
Better use of fuelResearchersintheUS,KoreaandRussiaareworkingonfastneutronreactors,thatpromisetobesmallerandsimplerthanlightwatertypes.Thesereactorstypicallyuseliquidmetalsasacoolantinsteadofwater,allowingso-calledfastneutronsofhigherenergiestodrivefissioninthereactor.
Assuch,thesereactorsusethefullenergypotentialofthenuclearfuel,ratherthanthe1%consumedbylightwaterreactors.Becausethereactorsconsumethetransuranicelementsinthefuel,theradioactivelifetimeofwasteissignificantlyreducedandthere-fuellingintervalextendedtoasmuchas20years.Thereactors,however,alsodemandafast-reactingsafetysystem,andcannotrelyonpassivesafetyfeaturesalone.
Perhapsthemosthighprofilefastneutronreactorisa70MWt/25MWeunitfromUS-basedGen4Energy.Theportable,
sealedreactorwillmeasureonly1.5metreswideand2.5metreshigh,containnomovingpartsandcouldoperateforuptoadecadewithoutre-fuelling.Aprototypeiscurrentlybeingbuilt.
Meanwhile,USenergygiantGeneralElectricandJapaneseconglomerateHitachihavejoinedforcestoconstructafastreactor–thePowerReactorInnovativeSmallModule(PRISM)–thatcanactuallygenerateelectricityfromspentnuclearfuel.Asthisprojecthighlights,around95%ofthespentnuclearfuelfromconventionallightwaterreactorscouldbeusedtogenerateelectricity.GEHitachihaslaidoutplanstobuildareactorrecyclingplantintheUS.ThealliancehasalsoconfirmedtalkswiththeUKgovernmenttousethetechnologyasawayofdealingwithBritain’scivilplutoniumstockpile.
ThethirdSMRdesign-typeisbasedontheconceptofahigh-temperaturegas-cooledreactor.Classedasa‘GenerationIV’reactor–andyettobebuilt–thesereactorshaveveryhighoutlettemperaturesandaresuitableforapplicationssuchasgeneratingprocessheatforindustrialapplicationsorproducingnuclear-assistedhydrogenforfuellingthehydrogeneconomy.
TheChineseenergyfirm,Chinergy,ispioneeringoneofthemostadvancedhigh-temperaturegas-cooledSMRprojectstodate,andhassubmittedplanstobuild18reactorsof210MWe,equippedwithpassivesafetysystems.
Quicker turnaroundsAcommonadvantageofSMRsisthattheycanbebuiltrelativelycheaply,incleanconditions,inafactoryenvironment.A2011reportfromtheUniversityofChicagoEnergyPolicyInstituteconcludedthatthesereactorscouldcompeteeffectivelywithalternativeenergysources.
US-basedGen4EnergyestimatesoneofitsreactorswouldcostUS$100milliontobuildcomparedtotheUS$4-6billionneededforalargerconventionalplant.Onceitwasmanufactured,itwouldbemovedtositeforfinalassemblybytruckortrain,andtheninstalledbelowground.Thefuelwouldalreadybesealedinsidetheunit,soonceinplacethereactorcouldbepluggedintothelocalelectricitynetworktogeneratepower.Attheendofitslifetime,theentirereactorwouldbeshippedbacktothefactoryoraregionalfuelcentre,removingtheneedtostorespentfuelseparately.
8 Issue1/2013Insight
In the electric power industry, megawatt electrical (MWe) is a term that refers to electric power, while megawatt thermal or thermal megawatt (MWt) refers to thermal power produced.
SMRs can also be coupled to desalination plants to produce fresh
water for agriculture and domestic use
ProfessorRichardCleggistheGlobalNuclearDirectorforLloyd’sRegister.Hehasworkedinthenuclearindustryforalmost30years,inbusiness,academiaandgovernment.BeforejoiningLloyd’sRegister,ProfessorCleggwastheMDoftheUKNationalNuclearCentreofExcellence,andbeforethatChiefScientistattheUKAtomicWeaponsEstablishment.
ProfessorMamdouhEl-Shanawany,isLloydsRegister’sNuclearTechnicalDirector,andjoinedtheorganisationfromtheInternationalAtomicEnergyAgencywherehewasheadoftheSafetyAssessmentSection.HewasamemberoftheIAEAteamawardedthe2005NobelPrizeforPeaceandisalsoavisitingprofessorofNuclearEngineeringatImperialCollege,London.
Thiseaseoftransportandaccessibilitydoesraiseconcernswithsomegroups,includingGreenpeaceInternational,aboutsecurityandproliferationissues.
Inresponse,Gen4Energyarguesthatitssmallreactorwouldactuallyhelptopreventnuclearproliferation,asthecompanywouldremotelymonitorreactorcorestopreventattemptstodivertnuclearmaterials,andhandletheentirefuelcycleincludingmanagementoftheirradiatedfuel.
Suchalease-backbusinessmodelcouldbewelcomed,forexample,bydevelopingcountriesthatwishtoacquirepeacefulnuclearenergybutforwhichitwouldnotmakeeconomicsensetoinvestinthesurroundingfuelcycleinfrastructure.
Beyond supplyButotherkeyapplicationsexistforSMRs.Forexample,thereactorscanalsogeneratesteamforheatingortodriveindustrialprocessesinwhichlarge,traditionalreactorswouldbetooexpensiveandinflexible.
Indeed,foursmall62MWtunitsarealreadyoperatingintheSiberianArcticproducingsteamforadistrictheatingscheme.Asimilarset-upcouldprovideheatandelectricityforenergyintensiveoperationssuchasoilshalerecovery.
SMRscanalsobecoupledtodesalinationplants(astheChinergyreactorsare)toproducefreshwaterforagricultureanddomesticuse.Whilemorethan12,500desalinationplantsexistworldwide,theseenergy-intensiveprocessesaremostlydrivenbyfossilfuels.
WhileSMRsofferhugepotentialtoindustryandgovernmentsworldwidetomeetgrowingenergyneeds,therearedesigncertificationandlicensingconsiderations.Theirsmallsize,transportability,sitingandnovelapplicationsraiseparticularchallenges.Thisiswhylightwater-basedSMRs,whicharesimilartotheexistingandthoroughly-testedtraditionallightwaterreactors,arelikelytobedeployedfirst.
TheUSElectricPowerResearchInstituterecentlyestimatedthattheUShasthepotentialtogenerate201GWfromSMRs,whiletheInternationalAtomicEnergyAgencyforecasttheSMRmarketcouldbeworthUS$250billionby2050withupto1,000unitsbuilt.
Iftheyaretakenuponthisscalethentherewillbeaneedforinternationalco-operationandsupervisiontoensurethattheset-upanddisposalofthenuclearsystemsarecarriedoutinacontrolledandsafeway.
Butitseemsthefuturelooksbrightforsmallmodularreactors.
E energy@lr.org
Insight Issue1/20139
Innovation combination
A joint investment project has moved the bulk carrier industry far beyond the concept stage for gas powered ships.
The first design for a deep sea dry bulk cargo vessel powered by liquefied natural gas (LNG) is the result of a COSCO Shipyard Group, Golden Union and Lloyd’s Register joint investment project. “Wehavemovedtheindustryfarbeyondtheconceptstage,”saysNickBrown,Lloyd’sRegister’sAreaGeneralManagerandMarineManager,GreaterChina.“Wehaveaddressedthetechnologyissues;attheendof2012weissuedanapprovalinprinciple(AIP)fortheproductoftheproject–anewgasfuelledbulkcarrierdesignchristened‘CleanSky’.A‘CleanSky’shipcouldbebuiltnextyear.”
Fast track innovationAtanytimeLloyd’sRegisterhasdozensofjointinvestmentprojectsunderway.JIPsprovidearapidroutetoinnovation.“ThebestJIPsareonesinwhichshipyard,designer,ownerandclassallworktogethertoachieveamutualgoalofdevelopinga‘marketdriven’design,thatisfutureproofedasfaraspossible,andattractivetoownersduetoitsoperationalefficiencyandflexibility.Whennewtechnologyisinvolved,asinthiscase,itisalsoveryimportantthatthetechnologyproviders,suchasenginemakers,areinvolvedattheearlieststage,”saysBrown.
“Ifallpartiesworktogethertheownersgainaccesstoadesignthatmeetstheirexpectationsandtheyardareabletoofferadesignthatsuitsthemarket.Thetechnologyprovidergainsearlyentryintothemarketandclassisabletoensureallpartiesare
awareofrules,regulationsandcodesthatneedtobeappliedtothedesignattheearlieststage.”
A new designOnthisJIP,inJune2011thethreepartiesagreedtoinvestigatethepotentialtodevelopacommerciallyviablebulkcarrierdesigncapableofburningLNGasfuel.ThedevelopmentteambasedtheirworkonthewellprovenconventionalCOSCOdesigned81,000dwtKamsarmaxbulkcarrier.Thisthenwasre-engineeredtoemployLNGpoweredpropulsionsystems.TheAIPcomesafterexhaustiveriskinvestigationsintothegascontainment,bunkeringsystemsandperformanceassessment.
ThesafetyofthecontainmentsystemsfortheLNGfuelwascritical.Variouscontainmentsystemsandconfigurationswereconsideredbytheprojectteam,butthefinalchoicewasforasingle,1,160m3type‘C’tankthatsitsaftontheportside.Lloyd’sRegister’sriskmethodologyfornoveltechnologyprocessprovidedapathwaythroughthecomplexityofthetechnicalriskassessmentrequired.
Flexibility is importantThe‘CleanSky’designbuildsinflexibilitybyenablingownerstochoosedualortri-fuelengines,abletoburnheavyfueloil(HFO)ordiesel,aswellasLNG.Thereisuncertaintyaboutthefuturerelativepricingoftheconventionalfueloils,thatdominatetoday,andLNG.Thisflexibilityhelpsensurethatownersof‘CleanSky’typeshavefueloptions.Althoughformanytheattractionofcleangaswilloutweighthemorecomplexscrubberoptionneededtoenableconventionalfueloilstomeetemissionregulations.
10 Issue1/2013Insight
Innovation combination
“ToughenvironmentalrequirementsmeanvesselswillhavetocomplywiththeInternationalMaritimeOrganisation’s(IMO)TierIIINoxregulationsby2016andthisopensupdemandfornewshippropulsionsolutionsincorporatingcosteffectivetechnologies.Thiscouldtriggerasubstantialshifttowardsnaturalgas-poweredvessels;andingasmodedualfuelenginesalreadycomplywiththeIMO’sTierIIIrequirements,”commentsleadingGreekshipoperatorGoldenUnion.“UsingLNGmaybetheidealsolutionformeetingincreasedenvironmentalperformancewithoutlosingcompetitiveness.ThisdesignofferssignificantreductionsinSOx,NOxandparticulateemissions–aswellasCO2–bysimplyusingcleanerLNGinsteadofemployingcostlyandcomplexcleaningsystemswhichdonotalwayswork.
“LookingatthecommercialperspectiveofLNGasaship’sfuel,thecapitalexpenseofinstallinganLNGfuelsystemshouldbepaidoffafterafewyearsbyoperatingexpensesavings,especiallyifavesselistradingwithinemissioncontrolareas.GlobalreservesinLNGgreatlysurpassoilreserves.LNGisbecomingmorereadilyavailableinthemarket.This,incombinationwithsteadydemand,shouldreducepricevolatilityincomparisonwithHFO.Keepingthisinmind,HFOandmarinedieselandmarinegasoilpriceswillbelikelytoincreasefasterthanLNGrates,speedingupthepay-offofthesystem.”
Paving the way“COSCOShipyardGrouphasastrongsenseofsocialresponsibility.WeareinnovatingtohelpshipownersmeetnewIMOemissions
andperformancerequirements,”saysZhanShuMing,COSCOShipyardGroup’sHeadofEngineering.“OurdevelopmentinLNGasanalternativefueltechnologywillnotbelimitedtotheapplicationtobulkcarrierdesigns,butalsoforothershiptypes.ThecurrentachievementisonlythebeginningofourresearchanddevelopmentforLNGasanalternativefuelandtheCOSCOShipyardGroup,asapioneerinthisnewtechnology,iscommittedtoevenmorein-depthresearchinthefuture.”
MostLNG-as-fuelresearch,technologydevelopmentandnewbuildingactivitieshavefocusedonspecificnichesectorssuchasferries,offshorevesselsandshortsea,orinland,trades.Thisprojectpavesthewayfortake-upindeepseabulkcarriertrades–andtankers.
“Thechallengesaresimilarfortankers,”Brownsaid.“Clearlytherearebenefitswithusingcleangastechnology.Thekeyissuesnowarecommercial.”
TheLNGstoragetankislocatedaftonthe‘CleanSky’Kamsarmaxbulkcarrier.AKamsarmaxisabulkcarrierofaround80,000deadweighttonnes(dwt)designedtomeetberthrestrictionsattheportofKamsarinGuinea,requiringmaximumshiplengthoverallof229metres,whilemaximisingcargocapacity.
Insight Issue1/201311
Blowout prevention
BetweenAprilandJuly2010,anestimated4.9millionbarrelsofcrudeoilgushedfromthedamagedMacondowellintotheGulfofMexicofollowingtheexplosionthatkilled11workersanddestroyedtheDeepwater Horizondrillingrig.
Thiswas,accordingtoPresidentObama,theworstenvironmentaldisasterAmericahadeverfaced.
Bythetimetheleakwasstopped,oilhadaffectedmorethan1,000milesofcoastinfiveUSstates,seriouslydamaginglocalfishingandtouristindustries–aswellasthereputationoftheoffshoreoilandgassector.
Somethinghadtobedonetomakesureitneverhappenedagain.
AnewUSgovernmentdepartment–theBureauofSafetyandEnvironmentalEnforcement(BSEE)–wassetup,whichhasimplementedthemostaggressiveandcomprehensiveoffshoreoilandgasregulatoryreformsinAmericanhistory.
Spotlight on BOPThedisasterwastheresultofablowout,and‘theblowoutwastheproductofhumanerror,engineeringmistakes,andmanagementfailures’,accordingtotheofficialreportoftheUSgovernment’sOilSpillCommission.Thisputthespotlightonthefailureofthewell’sblowoutpreventer(BOP).
ABOPisalarge,specialisedvalveusedtoseal,controlandmonitoranoilorgaswell.Itcanbethesizeofadouble-deckerbus
and,inthecaseoftheMacondoBOP,weighupto400tonnes.Itistheretopreventtheuncontrolledreleaseofoilorgasandiscriticaltothesafetyofthecrew,therigandtheenvironment.Itisthefinallineofdefence.
BOPfailuresareuncommon,butfarfromunknown:therehavebeenafewmajorincidentssincetheDeepwater Horizon.Failurescanbeelectrical,hydraulicormechanical.Butwhateverthecause,failureinsuchacomplexsystem,controlling500,000–750,000poundsoframforceinwaterthatmightexceed9,000feetdeep,canposeacatastrophicriskoffire,explosionanddeath.
WhenaproblemisdetectedinaBOPsystemorcomponent,adecisionhastobemadewhethertopulltheBOPtothesurfaceforinspection–ornot.Suchdecisionsaremadeonthebasisofsomeunderstandingofwhattheproblemmightbeandariskassessmentofthepotentialseriousnessofthefault.
Butsuchdecisionscanalsohavesignificantcostimplications.AccordingtoDucodeHaan,CEOofLloyd’sRegisterEnergy–Drilling:“TheoperationalcostofdrillingadeepwaterwelltypicallyrangesfromUS$1milliontoUS$1.2millionaday.Insomeoftheultra-deepwaterprojects,itcouldtake8–12days–orevenlonger–tosecurethewell,recoverandrepairtheBOP,re-runandthenre-testitbeforeresumingoperations.So,oneincidentcouldcostUS$14million.”TheannualcosttotheindustryofpullingupBOPsrunsintomanyhundredsofmillionsofdollars.
The response to the Deepwater Horizon disaster has spurred an innovative solution, reports Jason Knights.
12 Issue1/2013Insight
However,mostriskassessmentscurrentlyusedintheindustrydonotemployauniformprocess,meaningthat‘pull’or‘nopull’decisionsarenotbeingmadeonaconsistentbasis.Thehumanfactorisalsosignificant.Itcanresultindecisionsthataresubjectiveandnon-transparent,whicharedifficultforseniormanagementtounderstandandunacceptabletoregulatory bodies.
OneofthekeyrecommendationsoftheOilSpillCommission’sreportwasthattheUSshouldintroduce‘a‘risk-based’regulatoryapproach’similartothatwhich‘haslong-sincebeenadoptedinbothNorwayandtheUnitedKingdom’.
Asaresultofthesubsequentregulatorychanges,therewasaclearindustryneedforaBOPfailure-decisionmodelwhichcoulddetailchangesinoperationalriskquicklyand confidently,thatremovedsubjectivityandthatwasverifiable.
Innovative responseFollowingdiscussionswithownersandoperatorsinthesector,Lloyd’sRegistergroupmembersModuSpecandScandpowerbeganworkondevelopingsuchamodel.ModuSpechasextensiveexperienceintheindustry,havingevaluated80%oftheworld’soffshoreoilandgasdrillingunits;whileScandpower’sRiskSpectrumsoftwareisusedin50%ofthe world’snuclearpowerplantstohelpthemoperatesafely.
TheBOPRiskModeltheycreatedisan innovativenewapplicationfortheScandpowersoftware.Andnowwiththe expertiseofLloyd’sRegisteracquisitionWESTEngineeringServices,theleadingdrillingindustryBOPspecialist,itcanbetakentothenextlevel.
Scandpower’sVicePresidentBusinessDevelopment,IngeAlmeexplains:“Thereare manysimilaritiesbetweenthefail-saferequirementsofaBOPandthoseofthesafetysystemsinanuclearplant.Inordertoensurethattheyworkwhentheyareneeded,thereisahighdegreeoffunctionalredundancybuiltintothesesystems.Safetyfeaturesareduplicatedinordertoreducetheconsequencesofsinglefailures.
“ThesoftwaremodelstheperformanceoftheBOP.Ifeverythingisworkingasit
should,allon-screenindicatorsshowgreen.Indicatorscanmovetoamberorreddependingonthesignificanceofanyproblemthatisdetectedandenteredintothemodel.RedundancywithinBOPsmeansthattheyhaveparallelfunctionsdoingthesamething.TheriskmodelcansuggestwhetheraprobleminonecomponentorsubsystemwarrantsadecisiontopulltheBOP,orwhethertheback-upfunctionsaresufficienttoallowtherigtocontinueoperating.”
All‘pull’or‘nopull’decisionsareultimatelymadebyahumanoperator.“But,”Almesays,“whatthemodeldoesistoprovidebetterdecisionsupport–consistentfactualinformation–uponwhichthosedecisionscanbebased.”
Italsoimprovesaudittraceabilityandregulatorycompliance,anddecisionscanbesupportedbyevidence-basedexplanations.
“Theriskmodelcanandwillreducenon-productivetimedramatically,”saysDucodeHaan“whichwillsavemoney.Butit alsogiveseveryoneinvolvedanunbiasedassessmentoftheriskquickly,baseduponregulationsandspecifications,removingthepotentialinfluenceofcostonthe‘pull’/’nopull’decision.”
ThemodelisnowinuseintheGulfofMexico.Ina12-monthperiod,ModuSpec–actingasanindependentthird-party–recommendedthecontinuationofoperationson29occasionswhen,followingthedetectionofpotentialfailures,theregulatorwouldotherwisehaveforcedtheoperatortopulltheirBOPstothesurface.
Bypreventingnon-productivetime,thissavedoperatorsmorethanUS$200millioninlost revenue–andithelpsprotectlivesandthe environment.
Lloyd’sRegisterEnergy–DrillingisLloyd’sRegister’sriginspectionbusiness.IthasbeenformedfromarecentmergerofLloyd’sRegistergroupmembers,WESTEngineeringServicesandtheModuSpecGroup.
Jason KnightsisGlobalCommunicationsManagerforLloyd’sRegister’sEnergybusiness.
Ejason.knights@lr.orgFollow me@jasonknights_LR
As a result of the subsequent
regulatory changes, there was a
clear industry need for an
effective BOP failure-decision
model
Insight Issue1/201313
How to attract the winning formula
An innovative hybrid ferry scheme in Scotland provides benefits for the wider economy, finds Christopher Browne.
© Courtesy of Roy Paterson
14 Issue1/2013Insight
Thetwohybridferrieswillcarryupto150passengersand23carsortwoHGVs.OperatedbyScotland’sCalMacFerries,theywillbeusedonanetworkofshortcrossingroutesaroundmanyoftheScottishislands.Usingthelatestgreentechnology,theywillbepoweredbysmalldieselgeneratorsetsthatfeedpowertoa400voltswitchboardsupplyingpowertoelectricmotorstodrivetheships’propellers.Theferrieswillchargeovernightwhileberthed,drawingpowerduringoff-peakhours.
“Local business benefits from the increased
employment and such projects bring more people
to the local area which means that not only is the
money made here but more importantly spent here too”
What are the magic ingredients that can turn an everyday project into a great one? A wise economist would undoubtedly say money, an element of luck and sheer hard work.Butthereareother,lessobviousfactorsthatcangiveschemesthewinningformula.Anythingtodowithgreentechnologyandtheenvironment,aconceptmuchlovedbyecologistsandentrepreneursalike,willalwayshelptoenticeaninvestororpotentialcontractor.AndtheninnovationcangiveformtoyourconceptandhelpyouachievethemuchneededXfactor.
Onesuchrecession-defyingprojectthatisnownearingfruitionontheRiverClydeinthePortofGlasgowisahybridferryscheme.Fortwoyearsalocalfirm,FergusonShipbuilders,hasbeenworkingonthesiteofthishistoricshipbuildingport,tobuildtheworld’sfirstseagoingpassengerro-rosdrivenbydieselandbatterypower.
Forefront of technologyTheSmallFerriesProject,asitisknown,isapartnershipbetweenGlasgow’sCaledonianMaritimeAssetsLtd(CMAL),foundedfouryearsago,andFergusonwithtechnicalsupportfromtwoScottishcompanies,Tec-SourceandSeatec.FundingwasraisedfromtheScottishandIrishgovernmentswithagrantfromtheEuropeanRegionalDevelopmentFund.
LaunchedinDecember2012,thefirstoftwovessels,Hallaig,isnamedafterapoembySorleyMaclean.ThenamesofitshybridsuccessorsinthefleetwillalsobedrawnfromScottishliterature.Launchingthevessel,Scotland’sDeputyFirstMinister,NicolaSturgeon,said:“It has beenoverfiveyearssincethelastcommercialshipwasfullybuiltanddeliveredontheClyde,andthelaunchtodayofthefirstof twonewcutting-edgevesselssymboliseseverythingthattheScottishgovernmentisstrivingtoachieve.”
Theprojecthasattractedmorethan200shipbuildersandengineeringsupportstafftothePortofGlasgowand,asDavidHenderson,Lloyd’sRegister’sSeniorSurveyorontheproject,says:“ProjectsliketheseputClydeshipbuildingbackattheforefrontoftechnologyandgeneratemassiveinterestwhichhelpsshowcasetheinnovation,expertiseandcraftsmanshipcapabilitiesofScotlandandtheUK.”
Employees today and tomorrowAndrewFlockhart,CMAL’sHeadofBusinessDevelopment,says:“Innovativecompaniesareabletoattractandretainemployeesby providingaworkculturethatallowsadegreeofrisk-takingandencouragesinnovativethinking,aswellasbeingpreparedtoofferacompetitiveremunerationpackage.Wehavehelpedcreateinternaljobsbyattractingadditionalprojectsbybeingrecognisedasinnovative.Oursuppliers,thatisshipyards,haveprobablybenefitedmorefromourinnovationhowever,astheyemployadditionalshipbuildersandapprenticesthroughthenewbuildprojectsthatwecommission.”
“Theallureoflifeasanengineershouldstartatschool,”saysHenderson.“Ithinkweneedtomakeengineeringandsciencesexcitingandappealingtothenextgenerationduringtheirearlyschooldayswiththecorrectbalanceoftheoryandpractical.TheYoungEngineersprojectsinScottishcollegesarestillgoingstrong,soclearlywearetryingtoencouragekidsbackintothesector.
“TheScottishgovernment’sfocusongreenenergies–anditstargetof30%ofallenergyneedsfromrenewablesourcesby2030–offersyoungengineersagreatenvironmenttocontributetoandtohelpachievesuchachallengingtarget.Whatprofessionalengineerdoesn’twanttolookbackontheircareerandsay‘Ididthat’?”
Wider benefitsApartfromattractingjobsandkudos,thehybridferryproject’sgreeneffecthashadanimpactonthelocaleconomytoo,.
“Localbusinessbenefitsfromtheincreasedemploymentandsuchprojectsbringmore
peopletothelocalareawhichmeansthatnotonlyisthemoneymadeherebutmoreimportantlyspentheretoo,”saysHenderson.“Ireallyhopethisprojectactsasacatalystforfutureinvestment.”
“DuetothewayinwhichCMALreceivesitsfunding(fromtheScottishgovernment),”saysFlockhart,“itisimportantthatwedemonstratehowweimpactontheGovernmentStrategicPriorityofmovingtowardsalowcarboneconomyaswellassupportingsocialandeconomicdevelopment.Itwouldbefarhardertoattractfinancialsupportifwedidn’tdemonstrateanddeliverthis.”
TheSmallFerriesProjectmayhelpstimulatefutureengineeringjobs.SaysFlockhart:“Thehybridferryhasattractedagreatdealofinterestandasaresulthasgeneratedanumberofspin-offprojectssuchasdevelopingasemi-automatedchargingsystemfortheferrieswhichiscurrentlybeingdeveloped.”
SothemagicingredientsseemtohavecometogetherandwhattheClydedoestodaymightprovideatemplateforsuccesselsewhere.
Christopher BrowneisLloyd’sRegister’sMarineNewsEditor.
Echris.browne@lr.org
Insight Issue1/201315
Companiesthatmeasuretheirenvironmentalriskarebetterabletomanageitstrategically.Andthosethataretransparentanddisclosethisinformationareprovidingdecisionmakerswithaccesstoacriticalsourceofglobaldatathatdeliverstheevidenceandinsightrequiredtodriveaction.InarecentinterviewwithInsight,PaulSimpson,CEOofCDPspokeaboutthestridesthatCDPhastakensinceitsinceptionsome10yearsago,andtheimportantrolethatreportingplaysinclimatemitigationstrategies.
Alex Briggs Sinceitslaunch,CDPappearstohavebeenonanincrediblejourneyandnowworkswith722institutionalinvestors,holdingUS$87trillioninassets,tohelprevealtheriskintheirinvestmentportfolios.Whatsortofinnovativeinitiativeshaveyou usedtodriveCDPforwardoverthepast10yearstodelivera returnonthisinvestment?
Paul Simpson WestartedCDPin2001becauseintalkingtoinvestorsabouttheforthcomingrisksandopportunitiesclimatechangewouldpresenttotheirinvestments,thecommonmessageweheardwasthat‘wedonothaveenoughinformationtoassesstheserisksandopportunities’.SowhenwesetupCDPitwastogatherthisinformationforinvestors–specificallyfocusedonthe500largestcompaniesintheworld.Ofcourse,10yearslateralothaschanged.Wehavemovednowtothe5,000largestcompaniesintheworldbecauseourinvestorshavesaidtous‘wedon’tjustwantthisinformationonthelargestcompanies,weneedwider
coverageofourportfolios’.Asaresult,apushisunderwayto movetogreatercoverageofemergingmarketstoincludeChina, India,BrazilandSouthAfrica.CDPseesthattherearesignificantgrowthtrendsinthosemarkets,withincreasinglevelsof investmentbothincountryandfromtheinternationalmarketsinto thosecountries.Sothemovetobeingtrulyglobalhasbeena big change.
Intheearlydayswewerecollectingdataforthefirsttimesowedidnotreallyknowwhatwe’dhave,howwecouldturnthatdataintoinformation,knowledgeandwisdomtoinformbusinessandinvestmentdecisions.Overtime,westartedtousethedataindifferentways–particularlythroughscoring,wherewescorecompaniesonthequalityandcompletenessoftheirdisclosure.Today,scoringhasevolvedfurtherandnotonlyrelatestohowwell companiesareprovidingtheinformationtheirinvestorshaveaskedfor,butalsoontheirclimateperformanceincludingtheirgreenhousegas(GHG)emissionreductionstrategies.
Beyondthat,wemovedfromjustfocusingoncarbonemissionsandclimaterisktoincludewater.Inaddition,weareintheprocessofmergingintoCDPanorganisationcalledtheForestFootprintDisclosureProject,soCDPnowlooksatclimate,waterandforests.Thisapproachfitswiththetrendweseewhereclimatechangehasbeenacatalystforcompaniestopayattentiontowiderenvironmentalissuesandriskmanagement.
measuredgets managed
What gets
For over a decade CDP has worked with companies to catalyse action towards a more sustainable world, as Paul Simpson, CEO of CDP tells Alex Briggs.
16 Issue1/2013Insight
“What we have seen is that companies – particularly the large multinational ones – have started to evolve and innovate in the way they approach sustainability”
Insight Issue1/201317
AB What’sthelinkbetweenCDP,innovationandthewaycompaniesareevaluatingtheirimpactontheenvironment?
PS OneofthethingswearedoingatCDPislearningfromthecompaniesweworkwithandwhoreportonclimatechangeandwater.Whatwehaveseenisthatthosecompanies–particularlythelargemultinationalones–havestartedtoevolveandinnovateinthewaytheyapproachsustainability.Ithasbecomemoreintegraltotheirbusinessstrategy.
ThishasalsoledtochangesandinnovationatCDP.Wehaveourowninnovationpipelineprocessnow.Asasmall,nimbleorganisationwefoundthatourcolleagueswerecomingupwithsomanynewideasthatwecreatedaspecificinnovationprocesstoeffectivelymanagethoseanddevelopthegoodones.Someofthatinnovationhasbeen reflectedinthewayweaskquestions.Westartedoutwithjust sevensimplequestions,andwelearnedfromtheinvestorsandthereportingcompaniesthatwecouldoftengetbetterinformationif weaskedthequestiondifferently.
AB Whatchangesinapproacharecompaniestakingtowardsverificationandwhatbenefitscanbedeliveredtostakeholders?
PS Afterwehadbeengoingthroughthereportingprocessforthreeorfouryears,westartedtobuildawealthofinformationandweaskedhowitcouldbeimproved.Oneofthekeythingsthatcamebackwasthatinvestors,companiesandgovernmentssaid‘wewantcommonstandards’;‘wewantcomparabledatathatwecantrust’.
Weinvestigatedhowwecouldgetthestandardstobeusedinacommonwaytodrivetrustintheinformation.Asaresult,we–alongwithourverificationpartners–developedourownverificationstrategy.Inourscoringsystemswestartedtoincreasethescoresforverificationsoweknewwecoulddrivethechange.Infact,in2012wesawanincreaseof36%inthenumberofglobal500companieshavingtheirGHGemissionsdataindependentlythirdpartyverified.Soverificationhasbecomeaveryimportantpartofdrivingtrusted,comparabledata.
Wehaveseenthatcompaniesarealsoplacingagreaterfocusonimprovingtheirdataquality.Asanexample,somecompaniesmayhavesaidfiveyearsagothattheirinformationmightbe+/-20%correctbutasthefocusonthisinformationhasbecomemoreintenseandtheassociationwithbusinessvaluemoreimportant,peoplehavesaid‘ourlegaldepartmentwantstomakesurethisisaccurateinformationjustlikeourfinancialinformation’.
Sothat’sdrivenverificationfromwithinthebusinessandit’stheinvestorswhohavebeensaying‘wewanttoseethisinformationreportedandverifiedsothatwecantrustitanduseittomakeinvestmentdecisions’.
Overthelastthreetofiveyears,wehaveseenarealtrendofmajorcompanieswhostartwithmonitoringandthensay‘thenextstepistohavethisinformationverifiedsothatourstakeholderswilltrustitandweknowitistherightinformation’.
AB Inyouropinion,whatisthesinglebiggestimpactthatthe CDP has madeoverthepast12years?
PS Whenwestarted,wecouldonlyfindfewerthan10companieswhoweremonitoringandpubliclyreportingtheirGHGemissions.Todaythereareover4,100globalcorporationsreportingtoCDP,56%ofthemarketcapitalisationofthetop30stockmarkets.So already,morethanhalftheworld’svalueismonitoringandreportingonclimatechangeandIthinkthat’sbeendrivenbyourwork,ourrequestsandofcourse,fromthataremanyotherbenefitsasweknowmeasurementleadstomanagement.Wehaveover700 investorsnowwhoarestartingtothinkabouthowtheyshouldintegratethisintotheirinvestmentdecisions.Thereisalongwaytogowiththatworkbuttheyrealiseitisanissue.
AB Sowhat’stheanswerforanorganisationtobebothsuccessful andsustainable?
PS Clearly,weareintougheconomictimesandmanybusinesseshavebeenfindingthatchallenging.Firstly,withanincreasingworldpopulationwherewehaveafiniteplanetandfiniteresources,thereisnodoubtthatresourcescarcityisbecomingabiggerissue.Andwhetherthatistheresourceofastableatmosphereortheresourceofthemineralsandmetalsavailabletobusinesses,thereisgoingtobeabigon-goingthemeaboutresourceefficiency.Whateverbusinessyouarein,youneedtofindawaytobeveryleanandefficient.Somonitoringwhatyouaredoing,checkingandadaptingyoursystemsandprocessestodriveefficiencythroughnotjustyouroperations,butalsoyoursupplychain,iscritical.Thisisreallygoingtobekeyastowhothefuturewinnersareinachangingworld.
Further,businessesneedtogetbetterattheircommunications.Theyneedtogetbetteratsaying‘wecandifferentiateourselvesfromourcompetitorsbecausewearebetteronclimatechange,weareproducingcleanerwaterthanthem,ourproductsaremoreefficientandaregoingtosaveconsumersmoney’.Samsungsaysa1%reductionintheirbrandvaluebecauseofnegativeclimatechangeperceptionsfromtheircustomersisworthUS$200milliontothebusiness.SoIthinkthatreallyclarifiesthatpoint.
Alex BriggsisSeniorMarketingCommunicationsManager,Lloyd’sRegisterQualityAssurance.
Ealex.briggs@lrqa.comFollow us@LRQA_CC_CSRCDPisthenewnameoftheCarbonDisclosureProject.LRQAisaverificationpartnerofCDPwww.cdproject.net
Samsung says a 1% reduction in their brand value because of
negative climate change perceptions from their customers is worth US$200 million to the business
18 Issue1/2013Insight
Japan’s 2011 Fukushima Daiichi nuclear disaster has prompted a rethink of nuclear energy policy in many countries. Germany decided
to close all of its reactors by 2022. Italy has banned nuclear power. And the International Energy Agency has halved its estimate of
additional nuclear generating capacity to be built by 2035.
IS NuCLEAR SuSTAINABLE?[ ]
Insight Issue1/201319
In 1996, 18% of the world’s electricity was supplied by nuclear power. Last year it was down to 13%
In 1996, 18% of the world’s electricity was supplied by nuclear power. Last year it was down to 13%. But this shift could add a billion tonnes of greenhouse gas emissions by 2020 if nuclear power is replaced by increased use of fossil fuels.
Are the decisions being made about nuclear proportionate and sensible in the light of global population growth, urbanisation and economic development? And are sustainable alternatives available – or indeed genuinely sustainable?
At the Paul Scherrer Institut in Switzerland, Dr Stefan Hirschberg and his team have developed tools to weigh and balance the factors that go into measuring the environmental, economic and social dimensions of sustainability power supply
technologies: factors such as eco-system impacts, cost, availability and accident risk. He has been speaking to Martin Beaver for Insight.
What are the real issues with nuclear?Ultimately,nuclearenergyiscontroversialbecauseitproducesradioactivewastesandpeopleareafraidofaccidents.Overall,thecriticalissueispublicacceptance.
Therefore,effectivesafetyregulationisfundamental,andthewidevarietyofsafetystandardsattheexistingnuclearplantsworldwideisanobstacletodevelopinglastingtrust.Technically,satisfactorysolutionsforthewasteissuehavebeendeveloped.Butpracticaldemonstrationsareneeded–thoughtherearepromisingprojects,particularlyinFinlandandSweden.
Newnucleariscapitalintensiveandsowillonlybeeconomicallyattractiveforinvestorswherethereispublicacceptance,politicalsupportandastableregulatoryenvironment.
Nuclearproliferationtocountrieswithdualaimsfortheirnuclearprogrammesisanothersignificantissue.
Can you see a future without nuclear power in the global energy mix?Abstainingfromnuclearistechnicallyfeasible.Butmeetingambitiousenergy
policygoalswithoutthisalmostCO2-freeoptionwillobviouslybemoredifficult.Forexample,700milliontonnesofCO2havebeenavoidedeachyearintheEUthankstonuclearpower;thatisroughlyequivalenttoallCO2emittedbytheEU’s200millionpassengercars.
Itisstillaminorityofcountries–30ofthem–thatoperatenuclear,thoughinsomethedependenceisveryhigh.Morethan75%ofFrenchelectricityisnucleargenerated,forexample,andthefiguresforBelgium,SwitzerlandandSwedenareall40%orabove.
Chinahasalowproportionofnuclearelectricityatthemoment(1.8%),buthighmotivationforarapidexpansionofitsnuclearcapacityasaresultofitsincreasingdemandforenergyandthedevastatingimpactsofcoal-firedgenerationonhealthandtheenvironment.
If countries come out of nuclear power is there a sustainable alternative?Asustainableenergysupplyneedstomeetanumberofchallengingeconomic,environmentalandsocialcriteria.Itmust
beaffordableandtheremustbesecurityofsupply.Itmustmakeefficientuseoflimitedresources,andminimiseriskstohumanhealth,ecosystemsandtheclimate,aswellashavingbroadpublicacceptance.
Noneoftheavailableenergytechnologiessatisfiesalloftheserequirements.Theyallhavestrengthsandweaknesses.Futuredevelopmentswillcertainlyleadtomitigationofsomeoftheweaknessesbuttrade-offswillbenecessaryforquitesometime.
Wherecountrieshavedecidedtophaseoutnuclear,thesedecisionsarebasedonabeliefthatavoidingtherisksofseverenuclearaccidentsoutweighsthechallenges–andreflectscurrentpublicopinion.
Which countries are prepared now for the alternatives to nuclear power generation?Germanyhasthemostdevelopedexampleofanewenergypolicywithoutnuclear.Itsexpansionofmainlystochastic[variable]renewables,suchassolarandwind,hasbeenquiteimpressivethoughthatsuccessisbasedon(currentlydecreasing)statesubsidies.
However,electricityhasbecomemuchmoreexpensiveinGermany,insufficientgridexpansioniscreatingabottleneckforelectricitysupply,andthereisstillanextensivedependenceonfossilfuels.
Globally,thereisreasonablygoodprogressintermsofexpandingtherelativecontributionofrenewables,thoughsomewhatdisappointingprogressinimprovingenergyefficiency.
20 Issue1/2013Insight
Butconstrainedsupplyshouldnotleadustolimittheuseofelectricityasasubstituteforfossilfuels.Weshouldalsocontinuetoincreasetheefficiencyoftheoverallenergysystemthrough,forexample,heatpumpsandelectrificationofthetransportsector.
Asignificantnewfactorisshalegas,particularlyintheUS.Thiscouldenableautonomousenergysupplieswithmajorgeo-politicalimplications.Ontheotherhand,itisnotnecessarilygoodnewsforclimateprotection.
If countries opt out of nuclear, will other countries become their baseload supplier via imports?Importingelectricity,eithernuclearornon-nuclear,isoneoptionforaddressingthenationalelectricitysupplyissue.Itisalsosubjecttomajoruncertaintieswithregardtotheavailabilityofsurpluselectricity,costsandaccesstothegrid.Thisiswhymanycountriesprefertodeveloptheirownsupplycapacitiesinthefirstplace.
Givenpotentialdependenceonimports,thepriorityshouldbeforrenewableelectricity.But,realistically,thismightsimplynotbeavailable.
Importsofnuclearelectricitybycountrieswhichphaseouttheirownnuclear,isethicallyproblematic–evenifitwaspossible.InEuropeitwillbeincreasinglydifficulttobuildupnuclearcapacitiestobeusedpartiallyforexports,thoughsomepotentialnuclearnewcomerssuchasPolandmaybeconsideringsuchanoption.
Would the global industrial and transport infrastructure ever be able to cope without nuclear? Ifthereisawilltodowithoutnuclear–andtaketheconsequences–thenaphaseoutinthelongtermistechnicallyfeasible.However,there’snosuchthingasafree lunch.
Hydropowerwillcontinuetoexpandwhereitisstillunderdeveloped.Butinanumberofcountriesitspotentialisclosetobeingexhausted.Windhasahighpotentialinsomeregionsoftheworld,particularlyoffshore.SolarPV[photovoltaic]costsarebeingreduced,duetotechnologicalprogressandashiftofproductiontoChina–thoughthisbringsanumberofundesirableimpactsontheenvironment.FurthereffortsneedtobemadetoreducethematerialintensityofsolarPV.
Otherrenewablesofinterestincludebiomass(providedthatparticulateemissionsarekeptunderstrictcontrolandresourcesareusedinasustainablemanner),solarthermalandgeothermalenergy–whichhavehighpotentialbutamoderateorlowleveloftechnologicalmaturityrespectively.
Theexpansionofstochasticrenewableswillrequiremajorchangesintheelectricgrid,theprovisionofback-uppowerandthedevelopmentofvarioustypesofstorageoption.Thisallleadstoadditionalcostandtoacceptanceproblems.
Moregenerally,thechoiceofenergytechnologiesshouldtakeintoaccountcountry-specificconditions:theavailabilityofnaturalresources,theclimaticconditions(amountsofsunshineorwind),andinthecaseofnuclear,theleveloftechnicaldevelopment.
It’sironicthatsomeoftheindustrialisedcountrieswhicharebestequippedforthesafeoperationofnuclearareplanningtophaseitout,whileanumberofdevelopingcountriesareplanningtointroducenucleardespitenotbeingfullypreparedformasteringthechallengesintermsofcompetence,infrastructure,regulationandsafetyculture.
Is there a future for nuclear? Timewilltell.Andtimeisfundamentalintheevolutionoftheenergysector.
Thesectorrequiresthedeploymentoftechnologiesonalargescaleoverthelongterm.Furthermore,sinceenergyissocapital-intensive,clearregulatoryrequirementsarehighlydesirableformajorinvestmentdecisions.Largechangesinthesharesofthevariousenergysourcesdonothappenovernightsotheexpectationisthat,globally,fossilfuelswillstillbedominantin2030.Buthopefully,theirsharewillbereducedtowards2050asaconsequenceofexpansioninrenewables.
Ithinkitisquiteunlikelythatnuclearenergywilleverbeabandonedentirely–andhighlyunlikelyintheshorttomediumterm.Itcanplayacentralroleinthefutureinviewofitspotentialcontributionstoprotectingtheclimateandtosecurityofsupply–providedthatitsimplementationwillbeacceptedsocially.Thisinturndependsondevelopmentswithregardtothehandlingofaccidentrisksandwastes,proliferationissuesandtheeconomiccompetitivenessofnuclearenergy.
Yetnuclearalonecannotsolvetheenergysupplychallengesglobally.Renewablesandenergyefficiencyareessentialforthelong-termassuranceofsecuresupply.
Stefan HirschbergobtainedhisPhDinreactorphysicsfromGothenburg’sChalmersUniversityin1981.HesubsequentlyworkedforABBinSwedenandwiththeInternationalAtomicEnergyAgencyinVienna,beforejoiningthePaulScherrerInstitutinSwitzerlandin1992whereheisHeadofEnergySystemsAnalysis.Hecanbecontactedatstefan.hirschberg@psi.ch
Martin Beaver isafreelancewriterwhospecialisesinhealthandsafety,andenergyindustryissues.
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October 2012: The550tonnetunnelboringmachine‘Elizabeth’islowered40metresintoashaftatLimmoPeninsula,nearCanningTownineastLondon,thelaunchsiteforCrossrail’seasterntunnel.
CrossrailiscurrentlythelargestconstructionprojectinEuroperequiring21kmoftwin-boretunnelsdirectlybeneaththecitycentreaspartofitsfull118kmeast-westroute.Onceservicescommenceinlate2018Crossrailwilladd10%tothecapital’srailcapacityandbring1.5millionmorepeoplewithin45minutesofitsmainbusinessdistricts.
Astheappointednotifiedbody,Lloyd’sRegisterisscrutinisingthedetaileddesignandconstructionofthecentralsectionbetweenPaddingtonandLiverpoolStreetandwilldeveloptheverificationevidencetocertifycompliancewiththecommonEuropeantechnicalspecificationsforinteroperability.
DEEPDOWN
tunnelsdirectlybeneaththecity
118kmtrackandtunnelintotal
21km
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550tntunnelboringmachine
+10%London’srailcapacity
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Learnfrompastmistakestoavoidfutureones.SosaystheancientChineseproverb,amaximHongKong’sOrientOverseasContainerLine(OOCL)has
admirablytakenonboardtomakeitoneofthestarperformersinthechoppywatersoftoday’slinerscene.
DespiteatoughfinalquarterOOCL,oneoftheworld’slargestshippingandlogisticscompanies,managedrevenuesandliftingsfor2012thatarelikelytobetheenvyofmostoftheirpeers.
OOCLmoved5.22millionteulastyear,up3.7%from2011.Revenuesgrew6.7%toUS$5.9billion.Intra-AsiaandAustralasiantradesprovedtobethebestperformersaccountingfor2.67millionteuandUS$2.09billioninrevenues.Whileothersremainedmiredinredink,OOCLcontinuestostayinpositiveterritory.
Lessons learnedHistorydictatesthatOOCLisnaturallycautiouswhenitcomestoinvestmentsandservicenetworks.CombinedwithafirmcommitmenttobealeaderinIT,theHongKonglinerfindsitselffarlessexposedthanmanyinthemarket.Thisconservatismstemsfromamassiverestructuringthattookplaceduringapreviousshippingslumpinthemid-1980s.Thelessonslearnedweretheimportanceofmaintainingminimaldebts,usingyourowncapitalwhereverpossibleandfocusingonfamiliartrades,somethingactivelypursuedbytheline’sboss,CCTung,forthepast20 years.
NowthosetradesecretshavebeenpasseddowntothelatestgenerationoftheTungfamilytosteerOOCLthroughthesetoughtimes.LastyearAndyTungsteppedupfromChiefOperatingOfficertoCEOat
Disciplined approachAndy Tung, CEO of Hong Kong’s OOCL, talks to Sam Chambers on how to remain profitable.
OOCL.TungbecomesthethirdgenerationtotakethehelmatHongKong’slargestshippingoutfit,thelinetracingitsrootsbackto1947whenlegendaryownerCYTungkickedoffaservicefromShanghaitothe US.
WhenInsightcatchesupwithTungheisonahecticscheduleofvesselchristeningsanddeliveriesthatseeshimflittingbetweenShanghaiandKoreaforanumberofchampagnesmashingmoments.
SupersizeSignificantlytheKoreantripsawOOCLtakeonitslargestshipstodate,apairof13,208teuships.Lestpeopleforgetinthesensationalclimbupthesizechartsofcontainershippingoflate,aperiodthatseesshipsofupto18,000teubeingbuilt,itwasOOCLthatusheredinthissupersizedgenerationadecadeago.In2003,OOCLtookdeliveryoftheworld’sfirstsuperpost-panamaxcontainership,OOCL Shenzhen,whichat8,063teubrokesizerecordsandusheredintheneweraofmegaboxships.
Thenewshipsareallpartoflongheldplanstoreducechartered-intonnagetoaroundoneinthreeshipsatOOCL;itsfleet’saverageageofundersix-yearsoldisamongtheyoungestintheindustry.
Tungisawareofthetoughconditionsfacinghisfamilyfirm,butlikehisunclebeforehimhegreetstheseproblemsfaceonandwithalevelhead.
“Inlinewithourearlierforecast,”saysTung,“2012provedtobeanothertoughenvironmentforthecontainershippingindustrywithweakdemandgrowth,volatilefuelprices,andunsustainablefreightratesformanymajortradelanes.”
HerecountshowsignificantfreightrateimprovementsdidnotmaterialisewhenAsia-Europevolumesbegantoshrinkearlierintheyear.Bunkercostsremainedhigh,andinviewofwhathedescribesas‘thelingeringovercapacityissuethatwilllikelycontinuetohaunttheindustrywellinto2013’,manycarrierswillanticipate‘hugechallenges’inadjustingtheirproductstructuresandoptimisingslotutilisation.
Challenges aheadEverytradethatOOCLisinfacesitsowndifficulties,eventhecompany’serstwhile
revenuemainstayofintra-Asia,asTungelucidates:“AsthesluggishconsumerdemandgrowthfromtheWestcontinuestoaffectthedemandofgoodsproducedbythefactoriesfromtheEast,theintra-Asiatradethatmovesthecommoditiestoproducethosefinishedgoodswilllikelycontinuetofacechallenges.”
SincetheAsia-Europe,trans-Pacificandintra-Asiatradesaccountformorethanhalfofthecapacityliftedglobally,Tunganticipatesmanycarrierswillspendmoretimeexploringnewopportunitieselsewheretofilltheirships.
Howeverdifficulttheconditions,Tungisresolute.“Nomatterhowtoughthemarketenvironmentis,”heaffirms,“theindustrywilllikelyremainresilientin2013,workingtowardsamorepositivesupplyanddemandbalance.”
Tothisend,Tungappealstohisfellowcarrierstomaintainstrictcapacitymanagementinthisbrittleenvironment.
“Itiscriticalthatapartfromtheneedforeffectivecostcontrollingmeasuresontheindividualcarrierlevel,disciplineincapacitydeploymentandtheabilitytoholdontosustainablefreightrateswillalsobeessentialontheindustry-wideleveltohelprebuildamorestableandhealthierbusinessenvironmentforall,”heconcludes.Wisewordsfromsomeonewhohaslearnedfromthepast.
AndyTunghasservedthegroupinvariouscapacities,includingasdirectorofreefertradeofOOCLbetween1993and1998.Heleftthefamilyfirmforawhiletopursueotherinterests,aperiodoftimethatsawhimrisetobecomechiefoperatingofficeratHongKongDragonAirlines.Herejoinedthegroupin2006andwasappointedOOCL’sCOOinJanuary2009.
TungholdsaBachelordegreefromPrincetonUniversityandanMBAfromStanfordUniversityintheUS.HeistheeldestsonofCHTung,theformerchairmanofthegroupwhobecameHongKong’sfirstleaderaftertheterritorywasreunifiedwithChinain1997.
Sam ChambersistheeditorialdirectorofAsiaShippingMedia,thepublishersofMaritimeCEO,SinoShipandSeaShipNews.
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powerfulglobalnetworksthatarechangingthenatureofmoderncommunication.IntheUSandtheUK,morepeopleuseFacebookthanthetopnewswebsitesputtogether–socialnetworkingtakesaround20%ofpeople’stimeonline.
Therearemanyreasonstoholdback–fromshortageoftimetolegal orotherconcerns.Netflix’sReedHastingsiscurrentlyfacinga potentialSEClawsuitoverstatementshemadeonFacebook.Butmanyoftherulesthemselveshavebeenthrownintoconfusionbythe speedandubiquityofsocialcommunication.Hastingshaspledgedtocontinuetalkingandsharinginformationwithcustomersandevidencesuggeststhatheisrighttodoso.Inonerecentsurvey71%ofrespondentssaidCEOparticipationinsocialmediaimprovesbrandimage,78%saiditledtobettercommunication,and64%said itprovidesmoretransparency.
Building trust Itistruethatsocialmediahasblurredthelinebetweenpersonal andprofessional–givingrisetoanumberofnewbusinessdilemmas.Therearemanycelebratedexamplesof
employeessayingthewrongthing,butonthewhole,thesemistakesarebecominglessfrequentandcanbemanagedwiththeadoptionofclearandsensibleguidelines.Anovercautiousapproachmaybestoppingcompaniesseizingthebiggerbenefitswhichincludegettingclosertocustomers,andengagingwiththeminentirelynewways.Herearejustafewexamples.
@ PresidentObamaputsocialandpersonalcommunicationattheheartofhissuccessfulre-electioncampaign.Socialmediawasnoadd-on–hisvictoryannouncementwasmadefirstonTwitter.
@ CompaniesliketheBBCarenowusingsocialmediaroutinelyaspartoftheirproductdevelopmentprocess–listeningtocustomersandworkingwithbloggerstoidentifyproblemswithnewsoftware releases.
@ AndcompanieslikeDellhaveinvestedheavilyinpeopleandsystemstosupporton-goingcommunicationwithcustomersviasocialmedia.Thatinvolves,listening,respondingandultimatelyselling producttoo.
Embeddedwithintheseexamplesarethenewrulesofthesocialmediagame.Opennessandtransparencybuildsthetrustthateventuallyallowsyoutotalkaboutproductsandserviceswithinthese personalnetworks.Inmanywaysthisisnotabouttheterm‘socialmedia’atallbutaboutthecultureofacompanyandthewayit communicates–insideandout.Socialmediaarenotaboutaquickwinorafastreturnoninvestment.Theyarealsonotanadd-ontoyourexistingwayofdoingbusiness.Theyinvolveputtingaudiencesandnetworksattheheartofyourcommunication.Todothat,aboveall,meanscastingoffthefearandtakingtheplunge.
Nic NewmanisformerseniornewmediaexecutivewiththeBBC.HeisadigitalstrategistandvisitingfellowattheReutersInstituteforthestudyofJournalismatOxfordUniversity.
A fewmonthsagoIhadthesurrealexperienceofsittingwithinthewallsoftheVaticanlisteningtoone ofPopeBenedictXVI’stopadvisorsespousingthebenefitsofsocialmedia.ArchbishopCelli,who
luxuriatesinthetitlePresidentofthePontificalCouncilforSocialCommunications,wasspeakingattheendofthePope’sfirstweekonTwitter.TheArchbishopexplainedthatthePopewasawareoftherisksanddangersofsocialmedia,butfeltthesewereoutweighedbytheopportunitytodiscussanddebatethereligiousmessagewithsuchalargeglobalcommunity.
ThePopeisnotalone.ArecentreportbytheDigitalPolicyCouncilshowedthat75%oftheworld’sleadersnowhaveanactivepresenceonTwitter–twiceasmanyastheyearbefore.Afteryearsinwhichsocialmediawasviewedasafrivolousdistractionatbest,thereisagrowingrealisationamongstthosewiththemostseriousofoccupationsthattheremaysomethingofgreatvaluehere.
Andyetoddlybusinessislaggingbehind.Lessthan5%ofCEOsof Fortune500companiesareonTwitterinapersonalorprofessional capacity;lessthan10%areactiveonFacebook.
WhilemarketingdepartmentsenthusiasticallyconceiveviralvideosandsetupFacebookpagestopromoteproducts,thereisarealfearinmanyorganisationsoftheconsequencesofengagementand transparency.
BacklashAtonelevelthisfearseemsjustified.When Netflixannounceditwaschangingitspricingstructure,itledtoahugecustomerbacklashwithtensofthousandsofnegativecommentsacrossitsblogsandonFacebookandTwitter.Withinmonthsthecompanylost 800,000customersandtwo-thirdsofitsmarketvalue.
SocialmediawasalsoblamedwhenBritain’sbiggestsellingnewspaper,theNews of the Worldclosedinthewakeofphonehackingallegations.AdvertisershadfeltpressuretopulltheirsupportforthepaperfollowingpetitionsandpopularoutrageinFacebookandTwitter
ButthesenetworksdidnotcausetheprotestsagainstNetflixandNewsCorp–justastheydidnotbringdowntyrannicalregimesinthe‘Arabspring’.Whattheydidwastoamplifyandspeedupthenatureofdissent.Intheprocesstheyareincreasingthepressureon businessesandinstitutions.
Join the debate Socialmediaruthlesslyexposesthedifferencesbetweenpoliticiansandtheirvoters,businessesandtheircustomers.Itsveryspeedalsodemandsrealtime,24/7responsesacrossmultiplechannelsandamoreconversationalwayofcommunicating.Socialmediaisnoisyandunrulybutjoininginwiththoseconversationscanoftenhelpdefuseproblemsbeforetheyemerge.Mostpressofficeswithhierarchicalcheckingprocessesandtraditionalskillsetsaresimplynot equippedtodealwiththenewmedialandscape.
Injustafewyears,networkslikeFacebookandTwitterhavegonefrommarginalactivitytomainstream–intheprocesscreating
In one recent survey 71% of respondents said
CEO participation in social media
improves brand image
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GREEN MACHINESMonika Bomba from the Society of Motor Manufacturers and Traders talks to Robert Gibson on how car makers are investing in green standards.
Likeallindustries,theautomotivesectorisfacingachallengingtime.Thecurrenteconomicclimateandweakconsumer
confidencehaveresultedinfallingvehicleregistrationsacrossEurope.TheseconditionshaveforcedmanufacturersintheUKtolookevenharderatallareasoftheirbusinessandsearchfornewwaystoimproveefficiencies,innovateandcaterforchallengingcustomerneeds.
Oneoftheareasmanufacturersarefocusingonisenvironmentalstandards.Soatatimewheneverynewinvestmentisbeingcloselyscrutinised,whyarecarmakersplacingtheirbetsongreen?
Investing in the environmentTherecentlypublished2012AutomotiveSustainabilityReport(www.smmt.co.uk/sustainability)bytheUK’sSocietyofMotorManufacturersandTraders(SMMT),focusesonthreeareas;social,economic
andenvironmentalperformance.Trendsinthereportindicatethatenvironmentalimprovementsaremorepressingthanever,withinnovationinmanufacturingandtechnologybehindsomeofthesector’smajorachievements.AsPaulEveritt,SMMTChiefExecutiveexplained:“Besidesthesubstantial23%improvementinaveragenewcarCO2emissionssince2000,anefficientandgloballycompetitivemanufacturingbasehascontributedtodrivingdowneverysinglekeyenvironmentalindicator.Fromsubstantiallycuttingtheamountofwastegoingtolandfilltosignificantreductionsintotalwaterusage,efficienciesateverylevelofmanufacturinghaveproducedoutstandingenvironmentalresultsforUKautomotive.”
Whilesomeindustriesareonlyjustlearningthevalueofenvironmentalimprovementsforbusiness,themotortradeisnotoneofthem.“Formanufacturers,themotivationforimprovingtheirenvironmentalperformanceistwofold,”says
MonikaBomba,TechnicalManager–EnvironmentattheSMMT.“Obviouslythefirstisawarenessoftheenvironmentalimpactoftheirindustry’sproductionprocesses,officeactivitiesandproductuse.”ThereductionofCO2emissionsarisingfromtheproductionprocesshasseengreatprogressinrecentyears.ButCO2isnottheonlydriverforchange.
“Thesecondmainmotivationiscost:environmentalimprovementusuallybenefitsanorganisationfinanciallytoo,”Bombasays.“Implementingcertainmeasurescanreducetheamountofwaterorelectricityyou’reusingforexample,whichreducesyourcosts.Qualitymanagementissomethingthatishighlyintegratedintotheproductionprocesses,somethingwhichhappensonadailybasis.Fromapracticalpointofview,theresultsofaqualitymanagementapproachsavemoney–that’senoughinnovation alone.”
Improving energy performanceTheSMMTreportshowsthatmanufacturersarekeentousemanagementstandards
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suchasISO50001andISO14001toimproveenvironmentalperformance.
BentleyMotors’headquartersinCrewewasthefirstplantintheUKautomotiveindustrytoachievecertificationtotheenergymanagementstandardISO 50001,inrecognitionofcontinuousimprovementinenergyefficiencyandthe organisation’scommitmenttoreducingitsoverallenvironmentalimpact.Theorganisationhasatrackrecordinthisarea–itbecamethefirstofitskindtoreceivecertificationtotheenvironmentalmanagementstandardISO14001,in 1999.
AuditedbyLloyd’sRegisterQualityAssurance(LRQA),Bentley’sCreweplanthadsuccessfullyimplementedaseriesofinitiativestoimproveitsenergyrecord,includingimprovedheatingandlighting,bettercontrolledboilerandcompressedairsystems,greaterinsulationandmoreefficientvariablespeeddrives.Theresultsspeakforthemselves.Between2000and2010,theenergyusedonsiteforeachcarproducedwasreducedbytwo-thirds,andby14%fortheoverallsite.AccordingtoBentley,thisdeliveredsavingsof230GWhofenergy–enoughtopower11,500housesforayear.Duringaperiodbetween2002and2007,whencarproductionincreasedtenfold,theorganisationwasabletoboastthattherehadbeennocommensurateincreaseinenvironmentalimpact.Andwhiletheinitialoutlaywasconsiderable(Bentleysaysa’significantproportion’ofits£1billioninvestmentintheplantwasdevotedtoenvironmentalimprovements)theresultswerewelcomed.
Speakingaftercertificationwasreceived,MichaelStraughan,memberoftheBoardforManufacturingatBentley’s,said:“It’satributetotheeffortsofeveryonehereinlookingfornewandinnovativewaysto
improvetheenergyperformanceofourfacilities,andIknowthiscommitmentwill continue.Bentley’scommitmenttoimprovedenvironmentalperformancegoes beyondthefactoryitself.In2008,we announcedanenvironmentalstrategyfor ourproductsthatisdeliveringafleetreductioninCO2ofmorethan15%infour yearsandtheintroductionofanewpowertrainwhich,byitself,improvesfuel economyby40%.Addedtothisisa productionvolume,90%ofwhichiscompatiblewithsustainablebiofuels.WearedeterminedthatBentleyshouldbetheleaderofthehighluxuryautomotivesectorintermsofenvironmentalperformance.”
Inotherareas,Bentley’swasterecoveryandrecyclingstrategyisachievingarecyclingrateof77%,quicklyapproachingitstargetof80%recycling.Andwaterusage–amajorpartoftheorganisation’scarbodycoatingprocess–hasbeenhalvedoverthepastdecade.
The road aheadAsStraughansuggested,manufacturerswillcontinuetoplaceemphasisonthevalueofenvironmentalinnovationastheirresearchanddevelopmentfunctionsstrivetogivetheirorganisationthecompetitiveedge.Bombasays:“Somedaywe’llreachapointwhenwecan’tmaketheexistingproductionprocessesanymoreefficient.AlotofSMMTmembersarenowlookingtoproducerenewableenergyon-site(forexample,solarpanels,windturbines,carbonneutralelectricityandheatfromvirginbiomass),asanotherwaytoreduceourcarbonfootprint,inadditiontousinggreenenergytariffs.”
Suchattitudesarenotyetreflectedinthevehicleuptake.TheSMMTreportshowsthatin2011,registrationsofalternativelyfuelledvehiclessuchaselectriccarsand
petrolelectrichybridspassed25,000forthefirsttime.Progressisslow.Thereisawidechoiceofelectricvehicles(EVs)onthemarket,butultimatelyitdependsonuptake–theUKneedspeopletoactuallybuythem.WhilethereissubsidyfromthegovernmenttoencourageconsumerstobuyEVs,theeconomicconditionsarenothelping.AndEVsarenotnecessarilyanenvironmentalsolutionalone–tohavearealimpact,thesourceofelectricitymustberenewable.Fordrivers,theiroverallcarbonfootprintwoulddependonwhichcountrytheyareinwhentheyplugintheirelectric car.
Whilethemotivesoftheautomotiveindustrywillalwaysremaininseparablefromtheeconomicandpoliticalclimate,carmakersaremakingsteadyprogressduringchallengingtimes.Fewareableto matchtheautosector’sinvestmentof £6billionoverthepast18months.Sustainabilityisaboutbalancingtheeconomic,environmentalandsocialconsiderationstomakesurethebusiness remainsviable.Despitethechallengesexperiencedduringthefirstdecadeofthe 21stcentury,mutuallybeneficialinvestmentintheenvironmentisbeingmadeyear-on-year,andUKmanufacturers havetheevidencetoproveit.
Robert GibsonisDeputyEditorofQuality World(QW )theflagshippublicationoftheCQI,withamonthlyreadershipof34,000.Lloyd’sRegisterisa memberoftheCharteredQualityInstitute(CQI)–www.thecqi.org.
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A wintryDecemberwindwhistlesthroughtheupperconcoursesofLondon’sStPancrasstationandasmallgrouphuddles
closertogetherastheylistenattentivelytoa tourofthestation’soperations.
Amongthegroupisadelegationfromthe TaiwanHighSpeedRailCorporation(THSRC)ledbyDrOuChin-Der,itsChairmanandChiefExecutive.
Strictlyspeaking,withjust108kmofpurposebuilttrack,thereislittletheUKcanteachDrOuandhisteamabouthigh-speedpassengerservices.
AGAINST THE ODDSTaiwan’s high-speed railway has survived earthquakes, typhoons and the recession to become a popular and profitable success story, says Andrew Foulkes.
However,therecentredevelopmentofSt PancrasandneighbouringKing’sCrossstationareadmiredwithintherailindustryasmuchfortheircommercialprowessastheyarefortheirarchitecturalsplendour.
Itisestimatedthataround20%ofthosemillingaboutStPancrasatanygiventimearenotthereforitsdomesticorinternationaltrainservices,butitsretailboutiques,plushcafesandtop-endhotel.Andnow,onadjacentbrownfieldtotherearoftherejuvenatedstations,anentirelynew65acrecommercialdistrictisunder construction.
ThisiswhatTHSRChavecometosee:followingasuccessfulturnaroundoftherailway’spassengernumbers–whichrecentlypassed200millioninjustsixyearsofoperations–attentionisnowstartingtoturntowardsthepotentialfordevelopmentofitsownstationsandadjacentland.
Engineering marvelTheTaiwanhigh-speedrailwayis,initself,somethingofanengineeringmarvel.Itconsistsofasingle345kmnorth-southroutealongtheisland’swestcoast,connectingthecapital,Taipei,tothesoutherncityofKaohsiung.Thevastmajorityisbuilteitheruponviaductsorthroughtunnelsandsubjectedtosomeoftheworstthatnaturehastothrowatit,includingsummertyphoonsandfrequentearthquakes;ithassurvivedmorethan150ofmagnitude4orhighersinceitopened.
Despitethis,therailwayhasperformedremarkablywellandboastsaperfectsafety
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recordthanksinnosmallparttoasophisticatedwarningsystemthatautomaticallyreducesspeeds,orbringstrainstoahalt,duringmajorseismicevents.
Butitisnosecrettherailwayexperiencedadifficultstart.WhenTHSRCwona35-year‘build–operate–transfer’concessionin 1998itwasamidtheturbulenceexperiencedacrosstheAsianeconomiesin thelate1990s.Whilesimilarprojectswerescaleddownorabandoned,THSRCperseveredwithwhatremainsoneofthelargestprivately-fundedrailprojectsever undertaken.
BythetimeservicescommencedinJanuary 2007theyweremorethanayear late, meaning12months’revenuehadbeenlost.Justastroublingweretheinitialpatronagefigures–aroundaquarterof thoseanticipated–andashortfallincommercialandresidentialdevelopmentalongtheroute.
AGAINST THE ODDSNo easy rideSuchexperiencesgosomewaytoexplainingwhyhigh-speedrailstilldividesopinion.
Thoughoftenperceivedasfuturisticandcuttingedge,high-speedrailisapproachingits50thbirthday(Japan’sShinkansenopenedin1964).YetbeyondnetworksinJapan,France,Germany,andonlymorerecentlyinSpain,ItalyandChina,itremainslimitedtotheoccasionalhundredmileshereandthere,mainlyinAsiaandWesternEurope.
Schemesarefrequentlyannouncedinevery corneroftheworldbutmostflounder.Inpartthisisduetothecostsof purpose-builtaerodynamicrollingstockandthededicatedinfrastructurethatminimisescurvatureandavoidscrossingswithconventionalservices(thoughinsometerritories,suchasGermany,conventionallineshavebeenrefurbishedforhigh-speed fleets).
Furthermore,newbuildsinevitablyprovoke animositywithinthecommunitieswhereserviceswillracethroughwithoutstopping(asillustratedonpage33).Thismeansexpensivewranglesoverlandpurchasesandnoisemitigationmeasures.
Thereisalsodebateoverhigh-speedrail’sactualcompetitiveedgeoverothermodes.Generalconsensusisthattheydependheavilyonthepresenceoftwohighdensitypopulationsateachendofaroutethatisnoshorterthan150kmandnolongerthan800km.Onshorterorlongerroutestheadvantagesquicklydissipate.Butnotevery country’scommercialmapfitsthese dimensions.
Nosurprise,then,thatinthefaceofsuchpoliticalandfinancialrisk,promoterscanloseheart.Andmoreoftenthannotit’sbecausetheirschemeslackedacompelling
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The intention was to create a new market –
to enable people to travel between our economic
centres and return home in a single day
DrOuChin-Der,ChairmanandChiefExecutiveoftheTaiwanHighSpeedRailwayCompany(THSRC)
businesscasefromtheoutset.Isitabouttacklingthegrowthinairtravel?Boostingnetworkcapacity?Increasingnationalproductivity?Spreadingeconomicgrowth?
Back on trackForTaiwan,asDrOuexplains,ahigh-speed railwaywasverymuchinkeepingwiththecountry’sownphysicalandeconomicgeography.
“Theintentionwastocreateanewmarket–toenablepeopletotravelbetweenoureconomiccentresandreturnhomeinasingleday.Thishasopenedupcommunitiesandregionstoourmaincentres.”
Withlargelymountainousterrainintheeast,themajorityofits23millioncitizensareconfinedtoacorridoralongthewesterncoast.
CommutersbetweenTaipeiandKaohsiungpreviouslyhadtochoosebetweenafourhourjourneybyconventionalrailoracomparativelyexpensive30minuteflight.Communitiesin-between,meanwhile,wereforcedtomakedowiththeunpredictablenationalroadandrailinfrastructurethatwasalreadyunderconsiderablestrainduetothesheerconcentrationofthepopulation.
ButTHSRC’strains–capableofreaching300km/h–cuttheTaipeiandKaohsiungjourneytimetoaround90minutes.Stoppingservicesconnecttosixotherregionsalongtheroute,regionsatriskofslippingtoofarbehindTaiwan’smaineconomicengines.
Crucially,theplanwasnotdependenton targetingthebusinesscommunityor challengingthedomesticaviationmarket–areasonoftenstatedbymanyother projects.
“HighSpeedTrainhasverylargecapacitycomparedtoairlines.Icannotrelypurelyonattractingairpassengersawayfromthe flights,”saysDrOu.
“Thebusinesstravelmarketonourhigh-speedserviceisonlyabout30–40%.Wethereforelookedbeyondthebusinesstravellerthatdefinestheaviationmarket,toopenupnewopportunitiesforfamilies,andtouristsfromabroad,totravelthelengthofthecountryandbackinasingle day.”
Inevitably,ittooktimefortravelhabitstoadjusttoforecasts.Butthisisnotunique:passengernumbersfortheLondon–Paris–Brusselsnetworkin2010,ataround9.5million,werebarelythoseoriginallyforecastfor1996byitsoriginaldevelopers.
However,THSRCpassengernumbersarenowmorethandoublethoseofitsfirstyearofservice.This,alongwithagovernment-backedrefinancingdealtoreducetheinterestrate,andageneralupturnintheeconomy,hasenabledTHSRCtoreportitsfirstprofitsin2011,justfouryearsintoservice.Aremarkableturnaroundinsuchashortspaceoftime.
NowTHSRCisexpandingwiththreenewstationsalongtherouteandashort
extensiontoTaipei’sNangangDistrict.As withtheoriginalroute,Lloyd’sRegisterwillbeprovidingindependentsafety-assessmentservicesthroughout.
Securing the futureWhenthetimeisright,THSRChopeitsstationpropertieswillalsoonedayactasanchorsforfutureeconomicdevelopmentinthecommunitiestheyserve.
ScanningthehorizonofthenewKing’sCrossneighbourhoodrisingfromapreviouslyindustrialanddowntroddenareaofnorthLondon,DrOuisclearlyimpressedwiththescaleoftheambitionondisplay.
“Ourstationsareincentrallocationsandintegratedwithexistingtransport,sotheopportunityisthere–theimmediateenvironmentsarecurrentlyempty,”says Dr Ou.
However,hewarns,thereisnomagicformula:“Therearedifferentstylesofdevelopment.Everysuccessfulprojecthas somethingbehindit.Whetheritisin its architecturaldesignoritsfunctionwithintheneighbourhood,whatisimportantisthatthedevelopmentis right forthatlocation.”
ThisisthesamemindsetthatensuredTaiwan’srailwaystandsasproofthatwith carefulplanningandaclearpurposeabouthowitwillcarveoutanewmarket,high-speedrailcanbebothbeneficialandprofitable.
Taiwanbuiltasystemthatwas‘rightforthelocation’–onethatsuitedtheneedsofthecountry’seconomiclandscape,offeredthehighesttransitvolumeforthelowestlanduse,andmetlong-termreductioninenergyuseandpollutionlevels.
Despitetheobstacles,Taiwandemonstratesthathigh-speedrailcanenteritsnexthalf-centuryasapopular,sustainableandefficientmodeofinter-citytravel.
Andrew FoulkesisLloyd’sRegister’sTransportationCommunicationsManager.
Eandrew.foulkes@lr.orgFollow me@andrewfoulkes_LR
32 Issue1/2013Insight
“Whoever wrote that, should be fired” says an angry resident to no-one in particular but looking at a group of us circled around the same display panel.WeareintheclubhouseofalocalamateurrugbyclubinAmersham,Buckinghamshire,wheretheUK’sDepartmentforTransportisshowcasingtheplansfor‘HS2’,aproposedhigh-speedline,initiallyfromLondontoBirmingham,toresidentsalongtheroute.Allgoingtoplan,serviceswillbepassingwithinyardsofwherewearestandingfrom2026,atacostputatsomewherearound£19billion.AsecondstagewouldthenextendtoManchesterandLeedsaroundsixyearslateratatotalcostofaround£32billion.
Theoffendingstatementinquestionclaimsthat‘Wesoughttoidentifyarouteusingthefollowinghighprinciples:avoidinghomes,communitiesandenvironmentallysensitiveareas’.Butisoneofthemanyassurancesscoffedatbytoday’svisitors,alongwithstatementsthatonlyasmallnumberofhomeswillexperience‘aperceptibleincreaseinnoise’andno‘on-going’overnightmaintenance.
It’saslickpresentationwithtouchscreensdetailingeveryaspectoftheconstruction,soundboothsdemonstratinganticipatednoiselevels,amultitudeofliterature,andharassedofficialscalmlytryingtodousetheclaimsofthe‘StopHS2’campaigners,whoarepitchedoutsidethefrontdoors.
LocalsareunderstandablyconcernedandHS2isprovingatoughsell.Thisisdespite
someexpensivecommitmentsregardingvisualandnoisereduction.ItisworthnotingthatdespitesimilarconcernsfromresidentsduringtheconstructionoftheUK’sonlyexistinghigh-speedroute,betweenLondonandFolkestone,thatneitherEurostarnorKentCountyCouncilhavesincereceivedanynoisecomplaintssinceservicesbegan.
TheargumentsforandagainstwillrageonasBritain’scomplexplanningsystemdigestswhatwouldbethelargestinfrastructureprojectthecountryhascommittedtoforageneration.
ButBritainneedsthisrailway–itsnetworksarethebusiesttheyhavebeensincethe1950sandalreadystretchedtothelimit.PartsoftherecentlyrefurbishedWestCoastline(whichtheproposedroutewillfollow)willbefullby2020.Tweakingandadaptingtheexistinginfrastructurewillnolongersuffice.
Besides,withnomajorriverstocrossormountainstotunnelthrough,fourofBritain’sleadingeconomicandtransporthubs(London–Birmingham–Leeds–Manchester)canbeconnectedwithamere300milesofnewtrack.Europeancompetitorswouldseethatasabargain.
Amidthewarofwordsthescheme’ssupportersareunfortunatelypronetoconfusingtheirownarguments–onedaytherationaleiscapacity,thenextit’seconomicgrowth–whichcanbeunhelpful.HS2stillenjoyscrosspartysupportandlegislation,intheformofaHybridBill,forPhase1(LondontoBirmingham)isdueinParliamentbeforetheendof2013.
Butthereisalongwaytogobeforeconstructioncouldstartsometimein2018andmanycommunities,likeAmersham,tobewonoverinthe meantime.
HS2: WHEN IT’S YOuR BACKYARD
Insight Issue1/201333
In 1960, when Ravi Mehrotra left school in Kanpur, in the North of India, he followed what he calls his ‘little dream’. He wanted to see the world. To do so he needed a profession – and he chose shipping. Kanpur was a long way from the sea but the young Ravi had a plan to make his dream come alive, to grow into reality: he would become a marine engineer. Hesawtheworldandagreatdealmorebesides.Today,withadiversifiedbusinessempirespanningships,rigs,shoesandrestaurants,Mehrotrahasresponsibilitiesfarbeyondtherunningofship’sengines.Hehascomefarfrom,buthehasneverlostsightof,hismodestbeginnings.
What’s in it for you?AndnowMehrotrahasadded‘author’tohislistofachievements.Hisbook,What’sinitforyou?emergedfromafirstattempttowriteabiography.SpeakinginhisofficeintheCityofLondononthewettestofdaysinawetwinter,Mehrotrasayshecouldnevergetcomfortablewiththeideaofpublishinghislifestory.Thebiographywasshelved.Someyearslaterthesuggestionwasmadethathecouldusehislifeexperiencestoproduceamanagementbookbuiltaroundaseriesofcasestudies.
Andthatiswhathehasdone.ThebookchartshislifethroughaseriesoflessonsfromKanpurtohislifetodayinLondonandaveryinterestingdecadeorsoinIran,straddlingthetimeoftheShahandtheimmediatepost-revolutionperiod.
Whereperhapsthebookismostsuccessfulisinrecallinghisthoughts,andwhathappenedtohim,inthetimebetweenleavinghomeandthepointwhereheemergedasashipowner.Oftenthestoriesofthewellknownsomehowskipneatlyoverthatcriticalperiodbetweentheearlyformativeyearsandtheeventualskillorcareerforwhichthesubjectwouldbecomebestknown.
What’sinitforyou?,concludeswithastep-by-stepprocessdesignedtohelptheyoungchoosewhatpathtofollow.ThisaddsfurthertothesensethatthisperiodandthedecisionshemadethenarestillimportanttoMehrotraandformedapatternthatwouldshapehowhislifeunfolded.Oneofthekeystothelifehehasled,andhisopennesstoadventure,ishisattitudetotakingadvantageofopportunitytofurtherhisgoals:‘Evaluateeachopportunity,askyourselfwhetheritisconsistentwithyourgoal…thetruthofthematteristhatopportunityiseverywhere.JustopenyoureyesandLOOK.’
From India to IranMehrotrahascertainlyhadhisadventures.
AftergraduatingfromtheDirectorateofMarineEngineeringandTraininginCalcutta,withthemedal,‘BestAllRoundCadetSuitablefortheMerchantNavy’hefollowedacareeratseaas
The Guru: Ravi Mehrotra engineer, shipowner, businessman, philanthropist and philosopher
‘I developed a burning ambition to become a shipowner of repute’
Nick Brown talks to Ravi Mehrotra, founder of the Foresight Group of companies.
34 Issue1/2013Insight
© Courtesy of Joop KlaasmanRaviMehrotra(right)asanapprenticeattheKolkatashipyard
amarineengineerwithShippingCorporationofIndia(SCI).SubsequentlyhecameashoretoworkforSCI,wherehewouldembarkonwhatwasoneofthecentralperiodsofchallengeandopportunityinhislife.Secondedtopre-revolutionIrantoestablishajointventurecompanyforSCI,helivedthroughtheupheavalsoftherevolutionandtheIran-IraqwartoestablishaseriesofshippingbusinessesindifficultcircumstancesandbecamePrincipalAdvisoronShippingtothenewgovernment.
LeavingIran,in1984heestablishedhisownshippingcompanyinLondonandin1986boughthisfirstship.
ButhestillhadonebigIranianadventuretomanagewhenhewasaskedtohelpIranexportitscrudeoilwhileunderthreatofExocetmissilestargetingtheKhargIslandexportterminal.“HavingcarefullystudiedtherisksofthehelicoptermountedExocets,weestablishedaVLCC(verylargecrudecarrier)tankershuttleservicerunningshipmentsofcrudeoilfromKhargIslandtofloatingstorageandloadingterminalsusingULCCs(ultralargecrudecarriers)intheStraitsofHormuz,”heexplains–alongwayinallrespectsfromthedesertheat.Heconsidersoneofhisfinestachievementstobedealingwiththeassociatedinsurancerisks.InsurancerateshadrocketedunderthreatoftheIraqimissilesandMehrotraestablishedIranianunderwrittenwarcoverpolicytocovertherisksinvolved.
In1989heestablishedadrillingcompanyandacquireddrillrigsbuthismainfocuswasofrefrigeratedcargoships(reefers).AndthiseventuallyledhimtoadventureintheUScapitalmarketstofundfurthergrowth.
Make failure workRaising$100millionofhighyieldbondsintheUScapitalmarketsin1997tofinancetheacquisitionofmorereefers,helaterhadtofighttokeephiscompanywhen,followingadownturninthereefermarkets,hisinvestmentvehicleAmerReeferCompany(ARC),becamesubjecttoatakeoverbattle.ARChadbeen
unabletokeepupinterestpaymentstobondholders.MehrotraisadmirablycandidaboutallthisinLifeLessonNineofthebook–‘Makefailurework’.
Eventually,heemergedfrombankruptcyproceedingswithhiscompanyandhasfoughtoneversince.Todayheremainsashipowner,drillrigowner,ownerofsixrestaurants(includingthefirstIndianrestaurantinBeijing)andtheownerofalargeshoebusinessinIndia.
HehasfondmemoriesofLloyd’sRegisterfromtheearliestofhisshippingdays,“Lloyd’sismyhome”,hesaystoday.“IsentmanyableyoungsurveyorstocareersatLloyd’sduringmySCIdays.”Lookingaheadhesaysthathehopesclassificationsocietieswillconsidercertifyingthecompetenceofships’crewsand,asacommitteemember,hehasalwayspushedthisagenda.
Ifthereisanoverallthemetohislife,andhisbook,itistheimportanceoffamilyandensuringthatyouhavebalanceinyourlife.
Heseesitasvitaltogivebackoutsideofwork.Inhishometownhehasestablishedacharitableschool,namedforhisbelovedmother,toprovidethelessfortunatewithachanceofacareeratsea.TheAmerMaritimeTrainingAcademywasinauguratedin2002andprovidesapathwaytotheseaforthe‘poorestofthepoor’tobecomeratings–thegeneralseafarersonboardmerchantships.Now16youngpeoplegraduateeverythreemonths.
Mehrotrafoundhispathandaswellasprovidingaroutetotheseaforthelesswelloff,hehasnowshared,inamostengagingmanner,hisownpathwaythroughlifeanditslessons.
Nick BrownisLloyd’sRegister’sMarineMediaManager
Enick.brown@lr.orgFollow me@nickbrown_LR
RaviMehrotraisamemberofLloyd’sRegister’sAdvisoryCommittee.
Insight Issue1/201335
“Thewell-beingoftheworldlargelydependsontheworkoftheengineer,”saidoneofthe20thcentury’smostdistinguishedpractitioners,SirWilliamHalcrow.Hebelievedthatforthosewith‘imaginationandkeenness’herecouldnotbeabetterprofession.
Engineershavemade,andcontinuetomake,avitalcontributiontotheadvancementofsociety.Now,astheworldfacesarapidlyincreasingpopulation,alongwiththeinexorableriseofurbanisation,theopportunitiesforskilledengineersarepracticallylimitless.
Shrinking poolYetdespitethis,theirnumbersareshrinking.Inrecentyearstherehasbeenmuchtalkof a talentwarand,particularlyindevelopedeconomies,thereistheissueoftoomany‘babyboomers’poisedtoretireandtoofewyoungpeoplepickingupthebaton.Overall,manycountriesareseeingaslumpinnumbersenrollingonengineeringcourses.
“Whenthebankingcrisishitin2008,there weresuggestionsthatthewaron
talentwasfinished,”saysGregAllen,GlobalHeadofResourcingatLloyd’sRegister.“Butithasn’tgoneaway.Ourexperiencedpoolisshrinking,aspeoplegetolderandretire,andwearelookingatwheretomorrow’stalentwillcomefrom.”
BMT,aninternationaldesign,engineering,scienceandriskmanagementconsultancy,hasnoticedasimilartrend.“It’snotjustashortageofengineersgenerallybutalsothosewhohaveconsultancyandcustomer-facingskills,”saysHeadofHRAnneSegall.“Themorespecialisedtheskills,themoredifficultitgets.”
In2012,EngineersAustraliasaidtheirshortagesweresuchthatthecountrywas’relyingontemporaryskilledmigrationtofill engineeringworkforcegaps’.It’sasimilarpositioninSouthAfricawhereengineersare beingbroughtinfromabroadtofillashortagethatispartlytheresultofhome-growntalentoptingforjobsinEuropeand Australasia.TheEngineeringCouncilof SouthAfricahasendorsedastrategyof recruitingretiredengineerstomentorand helptrainyounggraduates.
Julie Mitchell investigates the engineering skills shortage.
With a growing population placing ever greater pressure on resources and clamouring for new technology, engineers are in demand like never before. But expanding the talent pool is a global challenge.
Tomorrow’s talent
36 Issue1/2013Insight
2.5m engineers needed in
Sub-Saharan Africa by 2015
Rising demandAUNESCOreport,publishedin2010,highlightstheescalatingdemandforengineersaroundtheworld.Forexample,it estimatedthat2.5millionnewengineerswereneededinsub-SaharanAfricaalonefortheregiontomeetits2015UNMillenniumGoaldeadlineofimprovedaccesstocleanwaterandsanitation.
EngineeringUKrecentlypublishedareportstatingthat,betweennowand2020,theUK neededtonearlydoublethenumberof engineeringgraduatesfrom46,000to87,000ayear,whilenumbersofthosequalifiedatadvancedapprenticeshiporequivalentneededtorisefrom27,000to69,000ayear.AllenpointsoutthatthesituationintheUKhasbeenfurthercomplicatedbythedeclineinnumberof mechanical,chemicalandsoftwareengineeringcoursesinrecentyears.Also,duetovisarestrictions,manyoftheoverseasstudentswhoareattractedtothesecourseshavetoreturnhomeatthe end oftheirstudies.
UNESCO,governments,professionalengineeringbodiesandemployersallrecognisethatthelong-termsolutionisto reach outtoschoolsearlyandinspireyoungsters,particularlymoregirls,tobecometomorrow’sengineers.Therearemanyapproachesbeingtaken,forexampletheLloyd’sRegisterFoundation,acharityandparentoftheLloydsRegistergroup,supportsarangeof educational,vocationaltrainingandresearchprogrammes.
Recruit and retainToovercomethetalentshortagesintheshortterm,employersareworkingharder– andsmarter–atrecruitingandretainingthe bestpeople.
AllensaysLloyd’sRegisterismovingmostofitsMarineLondonpersonneltoSouthampton–closetotheuniversity–whereitiscreatingaglobaltechnologycentretogrowitsowntalent.“WearedoingthesameinSingaporewithourEnergybusiness,”heexplains.“Thesecentreswillconcentrateresearchintonew technology.”
“Weneedtobemoreinnovativeinfindingtalent,”saysLloyd’sRegister’sGroupHumanResourcesDirectorJohnStansfeld.“It’snolongerenoughtoputanadvertinthepaper.
Wehavetoemploydifferentapproachestoidentifyingwherethetalentliesandthenmaketherightpropositiontothem.”
Theuseofdigitalmedia,particularlysocial siteslikeFacebookandTwitter,isbecomingmoreimportantforengagingwith‘GenerationY’.SaysAllen:“Greaterinterconnectivitymeanspeoplearebetterinformed,theycanaccesspagesontheirphoneortablettellingthemaboutLloyd’sRegisterandwhatcustomersaresaying.”
Thebusinessrecognisesthatitneedsto‘sell’itselfmore.“Lifemattersisoneofourvaluesandapowerfulcalltoarms,”Stansfeldbelieves.“Ourpeoplemakeadifferenceby providingbettersafetyoutcomes.”
Heacceptsthatfewerpeopleremainwithoneorganisationthroughouttheircareer,whichiswhyLloyd’sRegisterhelpsthem,wherepossible,todevelopandbroadentheirskills.
BMTalsoenablesitsengineerstomovearoundtheglobeandtodifferentpartsof theGroup.Ithasboosteditspayandbenefitspackagetoattracttalentedengineersandalsoexpandeditsrecruitmentpracticestoembracesocialmedia.
“Thereisnodoubtthatthewaywerecruitedinthepastisnotthewaywearerecruitingnowandinthefuture,”Segallexplains.“Wearealsopursuinglinkswitheducation.AsamemberofEngineeringUKwearekeentojoinintheireventswithschoolsandhelptosecureamorediversifiedworkforce.InSingaporeweruntalksatuniversitiesandhavelinkswithuniversitiesin theUS,wherewealsoofferinternships.”
Aspartofitscommitmenttoretainingstaff,BMTprovidespersonaldevelopmentplansandtrainingprogrammes.Thecompanyalsorunsdevelopmentcentresinwhichselectgroupsofstafffromaroundtheworldtakepartincompetency-basedexercisesandreceivedetailedfeedback.
Lookingahead,Segallisconfidentthattheengineeringcapacitysituationwilleventuallyimprove,aviewsharedbyStansfeldwhoadds:“Towinthewarontalentwehaveto marshaleverytoolintheboxandwearehavingsomesuccessingettingtherightpeopleintherightplaceattherighttime.”
Julie Mitchellisaseniorwriterspecialisingintheengineeringsector.
Insight Issue1/201337
Accordingtothe2012annualstatisticsfromtheEuropeanWindEnergyAssociation,Europeinstalled11.6gigawatts(GW)ofwindpowercapacityin2012,bringingthetotalto105.6GW.
Theforecastfor2013andaheadislesspromisingforeconomicreasons,withthepoliticaluncertaintysurroundingsubsidies.Andaddedtothis,thewindindustryinEuropealsofacesasevereskillsshortageofaround5,500appropriatelyqualifiedstaffperyear.Longerterm,thisshortfallcouldclimbto18,000by2030–nearly5%oftheentirewindindustryworkforce–ifnumbersofsuitableworkersdonotincrease.
Thewarningcomesinareport,EuropeanWindEnergyTrainingNeeds,OpportunitiesandRecommendations,tobepublishedbytheEU’sWindEnergyTechnologyPlatform(TPWind),basedonresearchbyrenewableenergyconsultancyGLGarradHassan.
“Thereisarealriskofashortageofsuitablyskilledworkers.Welloverhalfoftheshortfallinnewworkersin2030couldbein
operationsandmaintenance,”saysAndrewGarrad,ChairmanofGLGarradHassan.“Engineersareindesperatelyshortsupplyandtheproblemwillgetfarworseunlessactionistaken.”
Thereport’srecommendationstohelpclosetheskillsgap,includebolsteringScience,Technology,EngineeringandMaths(STEM)skillsthroughschools,universities,andvocationaltraining,andmoreindustryinputintoacademiccourses.Italsocallsformorewindenergy-relatedtrainingcourses,andgreateremphasisontraininginoperationsandmaintenance.
“Targetedtrainingcoursesmustbecreatedandgraduatenumbersfromthosecoursesincreased,sothatthesectorcanmeetitsstaffneedsandcontinuetoprovidejobsandrevenueintoday’stougheconomicclimate,”commentsHenningKruse,ChairmanofTPWind.
7%Europeanelectricityiswind
(6.3/2011)
5,500Skilledemployeeshortage
+11.6Windenergyinstalled
(2012/GW)
Eu wind industry
skills gapThe EU wind energy sector is now meeting 7% of Europe’s electricity demand – up from 6.3% at the end of 2011.
38 Issue1/2013Insight
ThedemandforenergyinIndiaissettorisedramatically.AccordingtotheInternationalEnergyAgency’s(IEA)latestworldoutlook,noothermajorcountryisexpectedtoseeagreaterexpansionindemandforenergyoverthenext20years,notevenChina.
Whileglobaldemandforenergyisexpectedtogrowatacompoundannualrateof1.3%until2035,India’sboomingpopulationandemergingmiddleclasswillrequire3.1%moreenergyperyear,theIEAsays.However,itsnationalthirstforenergywillneedtobesatedwithoutincreasingtheuseofitsothermostvaluablecommodity:water.Andthatwillnotbeeasy.
Thevolumeofwaterconsumedannuallyinenergyproductionwilldoubleby2035,theIEAsays,morethanhalfofwhichwillbeusedtogeneratecoal-firedelectricity(morethan80%ifyouaddbiofuels,thesecondmostwater-intensiveenergysource).Bythattime,theUNsaysmorethan1.8billionpeoplewillbe‘livinginregionswithseverewaterscarcity’.
ThatisbadnewsforIndia,hometo16%oftheworld’spopulation,butonly4%ofitswater.Equallyunsettlingisthatitsmainstay–coal-firedelectricity–isthemostwater-intensiveenergysource.By2035,theannualdemandforcoal-firedenergyinIndiawillhavejumped220%.Clearly,somethinghastochange.
“Energyandwateraretightlyentwined,”SandraPostel,DirectoroftheGlobalWaterPolicyProjecttoldNational Geographic recently.“Ittakesagreatdealofenergytosupplywater,andagreatdealofwatertosupplyenergy.Withwaterstressspreadingandintensifyingaroundtheglobe,it’scriticalthatpolicymakersdonotpromotewater-intensiveenergyoptions.”
ButinIndia,withnofewerthanseven‘energy’ministriesresponsibleforpolicy,ajoined-upstrategyisprovingelusive.
Two‘water-lite’energyoptionsaresolarandwindpower,whichcollectivelyaccountforlessthan1%ofwaterconsumedforenergy,now,andinthefuture.Neitheriscurrentlyontracktodeliverthekindofbase-loadelectricalpowerthatwillberequired.
WithmuchofIndiabaskingin300daysofsunshineannually,solarappearstobetheanswer,afactverifiedbyanofficialattherecentlaunchofthestateofKerala’sroof-topsolarpowerprogramme.
“We’reallhopingthatwe’llsoonsucceedinfindingasolution[toIndia’senergyneeds],”FarooqAbdullah,UnionMinisterforNewandRenewableEnergy,toldThe Hindu.“Thisisachallengewehavetotakehead-on.Solarenergyisourfuture.Itisratherthefutureoftheworld.”
Eenergy@lr.org
energy for India?‘Water lite’
India is at an energy crossroad and, if the experts who forecast the country’s future demand are right,
it is in danger of facing the wrong way.
Daysofsun
16% 4%ofworld’spopulation
ofworld’swater
Energygrowthto2035(%)
World India
+3.1%+1.3%
300
Insight Issue1/201339
Rebuilding trust
In April 2004 South Korea became only the fifth nation in the world to open high-speed rail services. As with the rest of the network, public trust in its operational safety was high. But the country’s first high-speed incident in February 2011 changed all that. Andrew Foulkes charts its recovery.
Thehigh-speedtrain,knownastheKTX,wasalreadydeceleratingasitapproachedGwang-myeongstation,nearSeoul,whentherearsixcarssuddenlyseparatedfromthe tracks.
Meticulouslyrehearsedproceduresensuredall147passengersweresafelyevacuatedfromthecarriagesandescortedtothestation.Onlyonepassengerrequiredmedicalassistance.
Despitethisexemplarresponse,asyoumightexpectfromoneoftheworld’smostsafety-consciousoperators,theincident
reallycouldnothavecomeataworsetimeforthenationaloperator,KORAIL.
Brand under fireEvenduringthebestoftimes,railorganisationscanbechallenging,unwieldybusinessestomanage.Butwithinterestsacrosshigh-speed,freight,nationalandcommutermetroservices,SouthKorea’snationaloperatorismorecomplexthanmost.
Likemanynationalrailways,KORAILcantraceitsrootstothe19thcenturywhentherailwayswereintroducedtotheKoreanpeninsular.SincethenthefortunesofKorea’srailwayshavefluctuatedalongsidethoseof
40 Issue1/2013Insight
thecountryitself,buttodayitservesoveronebillionpassengerseachyear(placingitseventhintheglobaltableofpassengernumbers)acrossalmost3,500kmoftrack.
FromitsoriginsintheMinistryofTransportationitbecametheKoreanNationalRailroad(KNR)duringthe1960s,fromwhichthe‘KORAIL’namederives.In2005KNRwassplitintoanationwideoperator,whichcontinuedwiththeKORAILname,andKoreaRailNetworkAuthoritywhichconstructsthetrackinfrastructure.
ButinrecenttimesKORAILhasreceivedcriticismfromthosewhobelieveitsstatusasastate-ownedenterpriseisoutdated.Somehaveevencalledforprivatefirmstobeallowedtobringcompetitiontocertainservices,particularlytheprofitablehigh-speedroute.Thedebatewaspeakingwhenthederailmentoccurred.
“Followingtheincident,theKoreanmediastirredupaverynegativeimageofKORAILamongthepublic,”saysNaMin-Chan,ExecutiveDirectorofKORAIL’sSafetyOffice.“Minorfailuresandproblemswerereportedwithanincreasinglynegativeview.Thismeantrisingpublicanxietyfuelledbyminorexaggerationonsocialnetworks.”
TheentireKORAILbrandwasundercriticism.
Decisive and proactiveKORAIL’sresponseintheaftermathwasdecisive;puttingitsentiresafetymanagementprocessunderindependentreviewbyLloyd’sRegister.
Thoughitssafetysystemshadbeenbuiltfromlessonslearnedthroughoutitsprevious113years–culminatinginarecordalreadyamongstthebestintheworld(in2010itwasrankednumberoneforlowestaccidentratebytheInternationalUnionofRailways(UIC))–improvementswerestillsought.AccordingtoNa:“Wefeltstronglythatweneededtomovetoamoresustainable,proactivesafetysystem.”
YoungSangKim,Lloyd’sRegisterprincipalspecialistexplains:“Thegovernmentproposedabillforanewcertificationschemeforsafetymanagementsystems,followingtheamountofchangethattheKoreanrailnetworkhadrecentlyundergone,inparticularwithregardtosafetyonthecountry’svarioussystems–includinghigh-speed,metro,monorail
ChungChang-Young,KORAILCEO
andMaglev.Centraltothisistheaimofanewformalisedapproachinlinewithinternationalstandards.ThispassedtheNationalAssemblyinDecember2012.”
InAugust2012,KORAILenteredintoacontractwithLloyd’sRegistertoreviewitssafetymanagementsystem.“EuropeiswhererailwaysoriginatedandweknowLloyd’sRegisterplayedaleadingroleinthesafetymanagementchangesthatoccurredintheUKfollowingprivatisation,”saysNa.“Sowebelievedtheycouldperformthereviewmoreobjectivelyandcompetentlythananyotherorganisation.”
Lloyd’sRegister’steamundertookaseriesofdocumentreviews,interviewswiththeKORAILmanagement,andon-siteauditstoseewhetherthesafetymanagementsystem(SMS)wascorrectlyimplementedandfullyunderstoodtoserveitspurpose.Theirfinalreportpresented21recommendationsandsixroadmaps,fortheperiod2013–2017,whichKORAILisnowusingtoupdatecurrentprocessesandwilladdtothecorporation-widesafetymanagementmasterplantoservethebusinessthroughto2020.
“Toapplytherecommendationsnecessarytoimproveoursafetymanagementsystem,suchasthoserelatedtoSMSdocuments,occupationcompetencyandhumanfactors,wewillintroducepilotprogrammesafterdevelopingconcreteplansandconsultingwithrelateddepartments.Wewillbuildasafetymanagementsystemwhichcomplieswiththeinternationalstandardsthroughcontinuedco-operationwithLloyd’sRegister,”saysNa.
Changewasalreadyunderwayaheadofthereview.AnewSafetyOfficewascreatedinMay2011,reportingdirectlytotheCEO,withexclusiveresponsibilityforsafetymanagementacrosseveryaspectofthebusiness.ThisledtotheestablishmentofteamswithinKORAIL’sheadquartersandregionalofficesdedicatedtoverticalandhorizontalsafetyimprovementsacrosstheorganisation.
ASafetyRailwayManagementCommitteewasalsoformedtodiscussstaffconcernsandmakedecisionsonkeysafety-relatedpoliciesandissueswithKORAIL’svicepresidentasitschairperson.
Reboot gives confidence for the futureThoughmanyorganisationsimplementsuchprogrammes,fewcanmatchthespeedandimpactexperiencedwithinKORAIL.
Followingcarefulpromotionalworkto‘tellthestory’aboutthechangestakingplace,thebrandrankingofKORAILhasleaptfrom80thplacein2011to26thin2012,accordingto2012datafromBrandStock,abrandvalueassessmentcompany,aclearsignthatitisregainingthetrustofthepublic.Itsreputationasasafeoperationwasconfirmedbythe2012InnovationAwardpresentedtothedelegationduringtheUIC’sannualgeneralmeetinginParis.
Asaresultoftherebootofitssafetymanagement,KORAILhasrenewedconfidenceforthefuture.“Koreansocietyrecognisesthatrailisanefficientandenvironmentallyfriendlyformoftransportationandourgovernmentisexpectedtogreatlyincreaseitsinvestment,”saysChungChang-Young,KORAILCEO.“WearegeographicallypositionedasthepotentialstartingpointofanetworkthatstretchesfarintotheAsiancontinent.Itisimportanttousthatwecontinuetoimproveoperationsandprocesses,especiallyinsafetymanagement,andremainatthetopasthesafestandmostefficientoperationthereis.”
Andrew FoulkesisLloyd’sRegister’sTransportationCommunicationsManager.
Eandrew.foulkes@lr.orgFollow me@andrewfoulkes_LR
Insight Issue1/201341
Best practice and innovation are driving food safety across global supply chains, says Cor Groenveld.
A KEY TO FOOD SAFETYAuDITOR COMPETENCY
1.8mdieeachyeardue
tocontaminatedfoodandwater
162bnUS$coststoeconomyand5,000deathsduetofood
borneillnesses
Foodsafetyisnotacompetitiveissue.Itisintheinterestsofstakeholdersacrosstheglobalfoodsupplychaintoworktogether
toensurethatconsumersareconfidentthatfoodissafetoeatandhasbeenproducedinasustainablemanner.
Theglobalisationofsupplychainsandtheneedfortransparencyandtraceabilityhavetriggeredchangesinthewayinwhichfoodsafetyisapproached.Overthelastdecadetherehasbeenacollaborativeapproachacrossthemajorstakeholdersresultinginbestpracticebeinghighlightedandshared,mediocritybeingmoreeasilyidentifiedandexcellencemorereadilyrewarded.
Thankstoinnovation,collaborationandchange,theincreasedfocusonfoodsafetyacrosstheglobalsupplychainhasledtosignificantimprovements.However,thereismoretobedone;thenumberscurrentlyinvolvedinfoodsafetystatisticsspeakforthemselves:some1.8millionpeopledieeachyearbecauseofcontaminatedfoodandwater;eachyearthereareanestimatedtwobillioncasesoffoodborneillnessesand,inWesterndevelopedcountries,anestimatedoneoutofeveryfourtosixpeoplesufferfromafoodbornedisease;whileintheUS,foodborneillnessescauses5,000deathsannuallyandUS$162billioncosts.
Toaddressthesefiguresandtomitigaterisksthefoodsectorincreasinglyreliesontheindependentassessmentindustry,notjusttoprotectbrandsandbusinessesfromprosecutionsandhealthscares,butalsotodriveinternalimprovementsandsecurecompetitiveadvantage.
Driving innovation from the topIn2000,leadingglobalmanufacturersandretailersunitedtoformtheGlobalFoodSafetyInitiative(GFSI),primarilytodrivetheharmonisationoffoodsafetystandardsandcertification.Themovefollowedanumberoffoodsafetycriseswhenconsumerconfidencewaslow.
Sincethen,expertshavebeencollaboratingtotacklecurrentfoodsafetyissuesdefinedbyGFSIstakeholders.AlongwiththeInternationalOrganisationforStandardisation(ISO),theGFSIhasdriventhemovetowardsamanageablesetofgloballyacceptedmanagementsystems-basedstandardsandschemes.ThisharmonisationofstandardshasbeenoneofthetwomostsignificantachievementsoftheGFSI,andakeyinnovationindrivingfoodsafety;thesecondsignificantachievementisthefocusonauditorcompetency.
Competency and consistencyWhilerobustindependentassessmentunderpinsanorganisations’commitmenttofoodsafety,thereisaneednowforthose
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carryingouttheassessment–theauditorsthemselves–tohaveaconsistentlevelofexperienceandexpertise.Thisisknownas‘calibration’withintheindustry.
Robustauditsandthecalibrationofauditorsarebothfundamentallyimportanttoensuringtheintegrityoftheassessmentprocess.Thecalibrationofauditorsensuresthesamelevelofauditingacrossinternationalboundaries.Thebenefitstoglobalorganisationsareclear;calibrationassuresthemthattheirassessmentreportshavebeencompletedinaconsistentwayandthattheiroperationsareconformingtotherelevantstandardorscheme–irrespectiveofgeographicallocation.Thisgivesanadditionallevelofassurancetoorganisationsandthewiderglobalfoodsupplychain.
MarkOverland,DirectorforGlobalCertificationatCargillendorsedthispoint:“WearerollingoutFSSC22000toover1,000plantsin67countries.Havingthesameleveloffoodsafetyexecutionateveryplantisanexpectationfromourcustomers.”WhatisbecomingincreasinglyapparentisthatorganisationslikeCargillaretakingaglobal,integratedapproachtosupplychainandfoodsafety,includingtheirworkbothupanddownthechain.
Customised auditsAnotherdevelopmentistheincreasinguseofcustomisedsecondpartyauditsbyorganisationsseekinginternalimprovementoftheirfoodsafetymanagementsystemortoassuretheirsupplychain.Thisapproachallowsanorganisationtoworkwithacertificationbodytodevelopabespokemanagementsystemandauditapproachthatnotonlyincludesthecertificationauditsagainstarecognisedstandardor
schemebutalsoincorporatesindustrybestpracticewithcompanyspecificsystemsand processes.
Assessorcalibrationisalsoattheheartofsecondpartyauditprogrammesanditcandeliverasignificantreturnoninvestment.Throughregularassessor-clientmeetingsandtrainingsessions,bothpartiesworktogethertoensurethatsystemsandprocessesareassessedinaconsistentmanner,regardlessoflocationorassessor.Inadditiontothesystembecomingmorerobustovertime,theauditprocessbeginstodriveinternalefficienciesaswellasidentifyareasforfurthertrainingand improvement.
Someoftheworld’sleadingorganisationshaveturnedtocustomisedassuranceprogrammes.Auditsareundertakenbyskilledandcalibratedassessorsthatcoverallrequirementsandprocessesthatarerelevantfortheorganisation,resultinginreportingthatvisualisesthelevelofcomplianceandenablestheorganisationtoimprove.
AsCathyStannard,GlobalHeadofQuality&FoodSafetyManagementofMars,Incorporatedrecentlyexplained:“ForMars,aQualityManagementProgrammecompatiblewiththerequirementssetoutintheGFSIrecognisedschemesoffersusconsistencyandefficiency,whichhelpsacrossthesupplychain.”
Whatevermethodologies,processesandsystemsareused,theintegrityoftheauditultimatelydependsontheexpertise,experience,training,knowledgeandinsightoftheauditingteam.Auditorstoday,workinginglobalmarkets,notonlyneedtobecalibrated,theyneedtherighttoolsto
dothejob–andthismeanstheyneedcontinualtraininganddevelopment.
Amanagementsystems-basedapproachtofoodsafety,combiningharmonisedglobalstandardsandconsistent,robustassessment,isleadingtoincreasedconsumerconfidenceintheglobalfoodsupplychain.Whileriskisalwaysgoingtobeafactorinanysupplychain,thisapproach,basedoncollaboration,trust,innovation,andtheleadershipofexemplaryorganisationsservingthefoodindustryishelpingtoensurethatissuescanbequicklyidentifiedandcorrected.
Manufacturersandretailersthatmayhaveconsideredimprovedefficienciesasthemainindicatorforsuccessarenowputtingmanagementsystemsattheheartoftheirorganisationstomanagetheirsupplychainrisks.This,inthesetimesofon-goingfoodscaresandeconomicuncertainty,canprovetobeakeydifferentiatorandanon-goingsourceofcompetitiveadvantage.
FSSC22000isacompletefoodsafetymanagementcertificationschemebasedonISO22000andsectorspecifictechnicalspecificationsforprerequisiteprogrammes.
Cor GroenveldisChairmanoftheFoundationforFoodSafetyCertificationandGlobalHeadofFoodSupplyChainServicesforLloyd’sRegisterQualityAssurance(LRQA).www.linkedin.com/in/corgroenveld
Follow us@LRQAFood
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AcuttingedgedrillshiphasbeendesignedbyajointdevelopmentprojectbetweenHyundaiHeavyIndustries(HHI)andLloyd’sRegister.
TheHD12000meetsmarketdemandandowners’higherexpectationsaftertheDeepwater Horizonincident.Itcandrilltodepthsof12,000feetandhasgreaterstrength,spaceandversatilitythanitsdrillshippredecessors.The223metrelongvesselisdesignedtomeetthegreatercomplexity,pressuresandsizesoftoday’sdrillingequipmentandtheirhandlingneeds.Itcanalsoprobetodepthsof40,000feet.
Thevesselhasahightransitspeedof11.5knotstogetherwithreducedformresistancewithintegratedthrusterpodtohull.Ithas40%lowerfuelconsumption,reportedly,thanexistingdrillshipsandenhancedseakeepingperformance.
Drillship takes the leadN
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AcclaimedindustryveteranRSSharmahasjoinedLloyd’sRegisteratatimewhenwearecommittedtodoublebothourrevenueandworkforceinIndiaby2015.AsChairmanofOperationsforSouthWestAsiahewillsupportourambitiousplansintheenergyandtransportsectors.
“WearecommittedtogrowingourbusinessinIndia–organicallyandinorganically–toexpandtheindependenttechnicalsupportwecanoffertotheownersandoperatorsofthecriticalassetsthatIndiansocietydependson,”saidRichardSadler,CEOofLloyd’sRegister.
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Sharma joins the group
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Statnett’s asset management excellence
Life on-board is tough, say seafarers
Vodafone Greece business continuity management certifiedVodafone,thefirstcompanyinGreecetobecertifiedtotheinternationalbusinesscontinuitymanagementsystemstandard,BS25999,hasalsobeencertifiedtoISO 22301–thenewinternationalstandardforbusinesscontinuitymanagement.BothcertificationswereawardedbyLloyd’sRegisterQualityAssurance(LRQA).
DionysisGrigoratos,BusinessCommercialDirectoratVodafonesaid:“VodafoneGreecehasbeeninstrumentalinprovidinghighqualityintegratedtelecomandITsolutionsthatincreaseproductivityandcompetitiveness.Businessesrelyonour
Thedesignofashipcriticallyimpactstheworkinglivesofseafarersinanumberofways,suchasthequalityofrest,thelevelofrestorationtheycanachieveinnon-workinghoursandtheirmentalwell-being.Yetthedesignofvesselaccommodationisanareawhichcanreceivescantattentionacrosstheindustryandasaresultahighdegreeofvariabilityexists.Thisobservationisoneofanumberoffindingscontainedinastudy,SeafarerAccommodationOnContemporaryCargoShips,undertakenbyCardiff-basedSeafarersInternationalResearchCentre(SIRC)withfundingfromLloyd’sRegisterFoundation.
AcopyofthereportcanbefoundontheSIRCwebsitewww.sirc.cf.ac.uk
StatnettSF,basedinOslo,NorwayhasbeencertifiedtothePubliclyAvailableSpecification(PAS55)frameworkforassetmanagementsystemsbyLloyd’sRegister.StateownedStatnettisthenationaltransmissionsystemoperatorresponsibleforthemainelectricitytransmissiongridthroughoutNorway.
Itsassetportfolioconsistsofapproximately10,000kmofhighvoltagetransmissionlines,around140majortransformerandconnectorstations,anassociatedtelecommunicationsnetworkandanumberofreservepowergeneratorstations.StatnettisalsoakeyelementwithintheNordicPowerSystemandhasinterestsininternationalHVinterconnectorsbetweenNorwayandothercountriesintheNordicPowerSystemaswellasothercountriesoutsideofthisgroup.
Aspartofthecertificationassessment,ourteamtravelledtonorthNorwaytoinspectmaintenanceactivitiesandtoFordeinwestNorwaytoinspectworktakingplaceontheconstructionof300kmofoverheadline,whichrequiredthemtoflybyhelicoptertosomeofthemoreremotelocations.
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ISA for Taiwan high-speed rail extension TheTaiwanHighSpeedRailwayCorporation(THSRC)haschosenLloyd’sRegisterastheindependentsafetyassessor(ISA)fortheNangangextensionofitsnetwork.“WearepleasedtocontinuethissuccessfulrelationshipwithLloyd’sRegister,whichbeganin2000whenourrailwaywasthefirstprojectinTaiwantoundergoanindependentverificationandvalidationprocess,”THSRCChairmanandChiefExecutiveOfficer,OuChin-dersaid.“Ibelievethatindependentassessmentisthekeytotheoverallsuccessofaproject.Itistheonlywaytoensurethatsafetystandardsaremaintainedthroughouttheconstructionandoperationofasystem.”
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servicesandtheVodafonenetworkbecausetheywantseamlesscommunicationandnewwaysofworkingtobeabletocontinuouslymeetmarketdemands.”
“AchievingcertificationtoISO22301withLRQABusinessAssurancehasdrivencontinualimprovementacrossournetwork,”saidGrigoratos.“Thisdemonstratesouron-goingcommitmenttoourcustomersthroughtheprovisionofreliableandhighqualityservices.”
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Propelling innovationThepriorityweplaceonresearchanddevelopmentmeanswecanleadandworkonthelatestinnovations.Wearesupportingthedevelopmentofnewconceptsandtechnologiesthatwillplayavitalroleintheimmediateandlong-termfutureofshippingandenergy.
Learnmoreaboutourglobalnetwork–gotowww.lr.org
Lloyd’sRegisterisatradingnameofLloyd’sRegisterGroupLimitedanditssubsidiaries.Copyright©Lloyd’sRegisterGroupLimited2013.