Economic impact of the IMO Ballast Water Management...

Faculty of Business & Social Sciences Department of Business

Bachelor Thesis

Economic impact of the IMO Ballast Water

Management Convention on the shipping industry

in the Baltic Sea Area

By Thorben Frederik Sievers

Date of birth redacted

Matricle No redacted

Address redacted

Degree program Foreign Trade / International Management

First examiner redacted

Second examiner redacted

Date of submission February 18th, 2015

Abstract

With the threshold of sufficient states signing the Ballast Water Management Convention

almost crossed and entry into force at the doorstep, ship owners worldwide struggle with the

uncertainties surrounding the implementation of the convention. For ship owners in the Baltic

Sea Area the convention brings along certain special requirements, as the Baltic region

shows important peculiarities such as narrow shipping routes, various salinities and

biological environments, as well as a multitude of involved neighboring states and governing

authorities. This thesis explores the viability of various compliance options for ship owners in

this region by deriving solutions from literature research, expert interviews, and own

inquiries. The options discussed are the use of shore based ballast water treatment facilities,

onboard treatment systems, and the option to apply for an exemption from the convention.

Keywords: Ballast Water Management Convention, Baltic Sea, Ballast Water Treatment

Systems, Exemption, Shore Based Treatment Facilities, Shipping

-I-

Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

Outline

List of figures ........................................................................................................................ III

List of tables ......................................................................................................................... III

List of abbreviations .............................................................................................................. IV

1 Introduction ......................................................................................................................... 1

1.1 Research problem ........................................................................................................ 1

1.2 Research aim, question, and hypothesis ...................................................................... 3

1.3 Research method ......................................................................................................... 3

1.4 Course of investigation ................................................................................................. 4

1.5 Significance and motivation to conduct research .......................................................... 4

2 The BWM Convention and particulars of the Baltic Sea ...................................................... 5

2.1 Relevant principles of the BWM Convention ................................................................. 5

2.2 Current ratification status of the BWM Convention ....................................................... 8

2.3 Particulars of the Baltic Sea Area ............................................................................... 10

3 Developing the research pattern ....................................................................................... 13

3.1 Sources for triangulation ............................................................................................. 13

3.2 Preparing the expert interviews .................................................................................. 14

3.2.1 Questions directed to the port representative ....................................................... 14

3.2.2 Questions for the equipment sales representative................................................ 14

3.2.3 Questions for the flag state authority official ......................................................... 15

3.3 Additional relevant inquiries ........................................................................................ 16

4 Implementation options for ship owners in the Baltic Sea Area ......................................... 16

4.1 Administrative obligations ........................................................................................... 16

4.2 Using land-based treatment facilities .......................................................................... 17

4.3 Installing Ballast Water Treatment Systems ............................................................... 20

4.3.1 Legal uncertainties ............................................................................................... 20

4.3.2 Treatment methods and restrictions ..................................................................... 21

4.3.3 Determining the correct capacity .......................................................................... 23

4.3.4 BWTS market and prices ..................................................................................... 24

4.4 Applying for exemptions ............................................................................................. 26

5 Conclusion ........................................................................................................................ 31

-II-


5.1 Main findings .............................................................................................................. 31

5.2 Critical acclaim ........................................................................................................... 32

5.3 Outlook ....................................................................................................................... 33

List of references ................................................................................................................... V

Glossary .............................................................................................................................. VII

Appendix ............................................................................................................................. VIII

Appendix 2.2.2.1 Calculation of world fleet gross tonnage............................................... VIII

Appendix 3.2.1.1 Interview guide port official................................................................... XIII

Appendix 3.2.2.1 Interview guide equipment manufacturer ............................................ XIV

Appendix 3.2.3.1 Interview guide flag state authority officer ........................................... XVI

Appendix 3.3.1 Results from email inquiries to Baltic Sea ports ....................................XVIII

Appendix 4.3.3.1 Typical pumping rates by vessel type ................................................. XIX

Appendix 4.3.4.1 Equipment price calculation ................................................................. XX

Appendix 4.3.4.2 OPEX of different treatment methods ................................................. XXI

Appendix 4.4.1 HELCOM / OSPAR exemption process .................................................XXII

Appendix 4.4.2 Advanced Risk Assessment flow chart .................................................XXIII

-III-


LLiisstt ooff ffiigguurreess

Figure 2.2.1 World Map of the BWM Convention Ratification ................................................. 9

Figure 2.2.2 Ratification Development of the BWM Convention ........................................... 10

Figure 2.3.1 Baltic Sea Map with Salinity, Territorial Waters and EEZ ................................. 12

Figure 4.3.4.1 BWTS price interpolation............................................................................... 25

Figure 4.4.1 Predicament of one way exemptions ................................................................ 28

Figure 4.4.2 Exemplary routes for exemptions ..................................................................... 28

Appendix figure 4.4.1 HELCOM / OSPAR exemption process .......................................... XXII

Appendix figure 4.4.2 Risk assessment flow chart ........................................................... XXIII

LLiisstt ooff ttaabblleess

Table 2.1.1 Original Implementation Schedule for BWM Standards ....................................... 7

Table 4.3.2.1 Advantages and disadvantages by treatment method .................................... 22

Table 4.3.2.2 BWTS by method and salinity compatibility .................................................... 23

Table 4.4.3 Exemption Costs ............................................................................................... 29

Appendix table 2.2.2.1 Calculation of world fleet gross tonnage .......................................... XII

Appendix table 3.2.1.1 Interview guide port official ............................................................. XIII

Appendix table 3.2.2.1 Interview guide equipment manufacturer ........................................ XV

Appendix table 3.2.3.1 Interview guide flag state authority officer ......................................XVII

Appendix table 3.3.1 Results from email inquiries to Baltic Sea ports ...............................XVIII

Appendix table 4.3.3.1 Typical pumping rates by vessel type ............................................ XIX

Appendix table 4.3.4.1 equipment price calculation ............................................................ XX

Appendix table 4.3.4.2 Opex of different treatment methods .............................................. XXI

-IV-


LLiisstt ooff aabbbbrreevviiaattiioonnss

BSAP Baltic Sea Action Plan

BWM Convention International Convention for the Control and

Management of Ships' Ballast Water and

Sediments

BWTS ballast water treatment system

EC electrochlorination / electrolysis

EMI equipment manufacturer interview

EEZ Exclusive Economic Zone

FSI flag state interview

HELCOM Baltic Marine Environment Protection

Commission (Helsinki Commission)

IMO International Maritime Organization

OSPAR Convention for the Protection of the Marine

Environment of the North-East Atlantic

PRI port representative interview

RA risk assessment

SOI ship owner interview

tfG translated from German

UN United Nations

UNCTAD United Nations Conference on Trade and

Development

UV ultra violet light

-1- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

11 IInnttrroodduuccttiioonn

11..11 RReesseeaarrcchh pprroobblleemm

Economy versus environmental awareness - these two seldom go together. But since the

preservation of the environment has become an omnipresent and widely accepted concern in

many countries around the world, economies and market participants are under compulsion

to adapt to these changed circumstances. Politically driven rules and regulations are

developed, constraining market participants. Sometimes the trade-off between the presumed

positive effects on the environment and the imposed regulations on the respective economy

sectors are regarded as reasonable. This especially holds true if non-compliance potentially

results in obvious, significant pollution or damage. Yet at other times when the addressed

peril is not that easily graspable, the development and implementation of new regulations

may be a long lasting, up-hill battle. Pollution from shipping has been one of the central

concerns of the last sixty years in policy making. Most noticeably, the MARPOL convention

from 1973 (IMO MARPOL Convention, 1973) addressed pollution from ships and was a

successful implementation of international legislation. All the forms of pollution addressed in

MARPOL had one thing in common. Whether it was oil, garbage, sewage, or exhaust

emissions, they were easily noticeable and their negative impact to the environment was

instantly observable and hard to dispute. Non-compliance with the regulations set forth in

MARPOL was strictly penalized and awareness for these kinds of pollution was raised, not

only within the shipping industry, but also in a broader public sense.

Yet another kind of pollution did not find its way into the MARPOL convention. While

MARPOL addressed issues created by manmade substances, it was not devised to deal with

the inherent problem of transferring species of one biological system to a new habitat,

leading to a destabilization of said new environment. Originally, foreign species were

introduced by cargo carrying vessels, sometimes intentionally, sometimes unintentionally. If

at all, the shipping industry was rather concerned with the potential damage to the ship, than

the ecological impact of introducing foreign species to new ecosystems. However, nature

dealt with this hazard on its own, yet only to some extent. On the voyages, the vessels were

likely to come across various levels of salinity (amount of salt in the water, measured in PSU)

or various temperatures, exposing the stowaway species attached on the outside of the hull

to potentially uninhabitable environments and thus hindering them to invade and cause harm

to new systems. Obviously, this natural safeguard did not suffice to eliminate the threat of

invasive species in the least. One predominant example for such an invasive species is the


zebra mussel. This species, originally indigenous to the Black Sea, has disrupted the food

chains in many foreign habitats even to the extent of eliminating whole colonies of other

species (Protectyourwaters.net). The problem of non-indigenous species was rather

coincidentally addressed by the shipping industry, when ship owners started to paint their

vessels' hulls with paint designed to withstand the attaching of alien organisms. It is however

safe to say that such deliberations were driven by economic interest, not ecological

conscience. Yet mankind also developed a new transportation mode for aquatic species.

A major development in the 19th century was the introduction of water as a means of

ballasting. The concept of ballasting had always been a part of seagoing commerce, since

the uptake of ballasting materials as a means to replace cargo ensured a safe voyage. The

introduction of ballast water tanks rendered the time consuming and costly concept of

loading ballast materials obsolete. With water being an abundant resource, ships could now

easily take up or discharge ballast at their own discretion, anywhere, anytime. What had

clearly been a big step forward in naval architecture and significant progress for shipping

companies, had at the same time also been the development of a completely new vector for

non-indigenous aquatic species to spread into new environments. The issue of harmful alien

species transported in the ballast water was only recognized by a broader audience in the

1970s, although initial alarming research on the subject had already been conducted in the

beginning of the 20th century (Gollasch; David; Voigt; et al., 2007, p. 586). After the

development of multiple voluntary guidelines by the International Maritime Organization, a

binding IMO convention was ultimately adopted in 2004. This convention carries the name

"International Convention for the Control and Management of Ships' Ballast Water and

Sediments" (BWM Convention, or hereafter the convention). The convention sets forth

technical compliance standards to be met by shipping companies in order to minimize the

threat of invasive species.

However, until this day, the BWM Convention has not been ratified by a sufficient number of

parties, leaving the inception date of the convention to be an educated guess at best. The

convention sets forth exact terms on how compliance is determined. Though by now the

required technology has been developed, ship owners find themselves in the unfortunate

situation of having to deal with a high amount of uncertainty. Following the convention, ship

owners may choose from various options in order to comply. However, all options, except the

purchase of expensive onboard equipment, leave the ship owners open to the discretion of

others, namely ports and flag states. Although various options are set forth in the convention,

the actual applicability of those options is open for discussion.


11..22 RReesseeaarrcchh aaiimm,, qquueessttiioonn,, aanndd hhyyppootthheessiiss

With the Baltic Sea being a rather unique shipping area, these legal and technical

uncertainties play an important role for the shipping companies going about their business in

this region, as they are not only dependable on their flag state's legislation but also on the

developments in all neighboring states. Especially the low level of salinity and the large

number of neighboring states in relatively shallow and narrow waters, distinguishes the Baltic

Sea from other shipping regions. Unlike other regions, international harmonization of

legislating bodies and international collaboration in this area may provide shipping

companies with options beyond the cost intensive installation of a ballast water treatment

system. This thesis aims to determine the options for ship owners in the Baltic Sea Area in

order to comply with the eventually upcoming Ballast Water Management Convention and

ascertain the applicability of these options, including an assessment of likelihood, economic

implications, and technical challenges.

Hence the thesis strides to answer the question: "What are the options for ship owners in the

Baltic Sea Area in order to comply with the eventually upcoming Ballast Water Management

Convention and what are the respective economic evaluations of these options?"

As a guiding instrument, the following hypothesis is proposed: "With the exception of

specialized carriers with only a few, regular ports of call (e.g. ferry services), the most viable

option for ship owners is to retrofit their vessels with ballast water treatment systems, as

other options would expose the ship owners' operations to critical external risks, such as the

economic risk of being denied exemptions, and the uncertain availability of external reception

facilities."

11..33 RReesseeaarrcchh mmeetthhoodd

This thesis comprises of both literature based research on the subject (qualitative and

quantitative), as well as qualitative research by means of conducting expert interviews. The

findings from literature research and the outcome of the interviews are compared and

critically reviewed. Based on this review, own deliberations are introduced. Additionally,

results from own inquiries are added in order to perpetuate or contradict prior findings,

claims, and projections.


11..44 CCoouurrssee ooff iinnvveessttiiggaattiioonn

The thesis starts out by introducing the basic concept and mechanism of the Ballast Water

Management Convention, highlighting important aspects relevant to the aim of this thesis,

such as technical guidelines, exemption regulations and the current status of ratification. The

subsequent part embraces the unique characteristics of the Baltic Sea, pointing out political

and geological / biological peculiarities that are relevant for the implementation of the

convention. This creates the foundation for the following sections. In Chapter 3, the research

pattern for the remaining part of the thesis is developed. The pattern follows the idea of

triangulation, a technique that compares sources from different research methods. The

sources for triangulation are introduced and the preparation for the expert interviews as well

as additional inquiries are described. The fourth chapter then addresses each option

separately, featuring information from the different triangulation sources. The literature based

research is compared to the impressions gathered in the interviews. Furthermore,

conclusions are derived, and own ideas are introduced. Each option is evaluated by

technical, legal, and economical criteria, leading to individual assertions and

recommendations. The final chapter starts out by giving an overview of the main findings. A

critical acclaim points out limitations of this thesis, before an outlook, discussing potential

future developments, concludes the thesis.

11..55 SSiiggnniiffiiccaannccee aanndd mmoottiivvaattiioonn ttoo ccoonndduucctt rreesseeaarrcchh

With the shipping industry in a constant struggle after the events of the international financial

crisis and the inherent massive excess of tonnage, additional regulations imposing new costs

seem to come at the worst possible moment. After all, shipping is the backbone of many

economies that are predominantly reliant on import and export and thus any development in

this sector ultimately affects everybody, even those beyond the shipping industry. While the

states seem willing to sign off on new, supposedly environmentally friendly legislation, they

also seem to be utterly reluctant when it comes to bear any costs resulting from their

decrees. Consequently, for those who actually carry the burden of new regulations, the most

cost-efficient solution has to be found. This thesis is devised to provide an applied analysis of

coping strategies for the Baltic Sea Area in order to counter the new regulations of the

Ballast Water Management Convention. In contrast to other research conducted on the

matter, this thesis does not describe the individual options in isolation, but rather tries to

compare all options in order to find the best solution.


In a broader context, this thesis also strides to observe the difficulties of implementing

international legislation. Typical obstacles such as an unsteady pace in implementation,

ambivalent interpretations by different states, and the potential inherent commercial

advantages and disadvantages during the transition phase are worked out in the context of

the Ballast Water Management Convention.

22 TThhee BBWWMM CCoonnvveennttiioonn aanndd ppaarrttiiccuullaarrss ooff tthhee BBaallttiicc SSeeaa

22..11 RReelleevvaanntt pprriinncciipplleess ooff tthhee BBWWMM CCoonnvveennttiioonn

Although the Ballast Water Management Convention was only adopted recently in 2004, first

concerns about hazardous species using ballast water as a vector were raised about 100

years earlier. Yet it took the global community until the early 1970s before the IMO was put in

charge of finding a solution to this issue. The first approach, the "International Guidelines of

Preventing the Introduction of Unwanted Aquatic Organisms and Pathogens from Ships

Ballast Water and Sediment Discharges", was adopted in 1993 and was a voluntary

approach to appeal to ship owners and operators. Shortly after, it became evident that a total

prevention was not possible and in 1997 a new resolution was adopted, which rather focused

on the minimization and no longer the complete prevention. This approach was considered

more feasible. However, also the IMO resolution from '97 ("Guidelines for the Control and

Management of Ships' Ballast Water to minimize the Transfer of Harmful Aquatic Organisms

and Pathogens") was a voluntary instrument and rendered little response. The IMO was

urged to establish a mandatory instrument, resulting in the "International Convention for the

Control and Management of Ships' Ballast Water and Sediments", which was adopted in

2004. (Gollasch; David; Voigt; et al., 2007, 586) The central directive introduced by the

convention for signatory parties and their shipping enterprises is to "prevent, minimize and

ultimately eliminate the transfer of Harmful Aquatic Organisms through the control and

management of ships' Ballast Water and Sediments." (IMO BWM Convention, 2004, p. 3,

Article 2.1)

The convention (IMO BWM Convention, 2004) comprises of 22 articles and an annex with 5

sections, which forms an integral part of the convention. While the articles build the legal

framework concerned with international implementation, entry into force and instruments for

amending the convention etc., the annex sets forth technical requirements and regulations.

In addition to the original convention, a set of 14 guidelines for the uniform implementation of

the BWM Convention has been issued by the IMO in the years following the original adoption


(IMO BWM Guidelines, 2014). Some of the articles, sections from the annex, and guidelines

are of significance for this elaboration and are therefore discussed closer.

Articles 1 and 2 lay out definitions and general obligations. In article 3 the general application

and exceptions are defined. Basically, the convention applies to all vessels under the

authority of a party that are built to carry ballast water and operate internationally. Therefore

the convention also applies to shipping in the Baltic Sea. A party in the sense of this

convention is a flag state that has either both signed and ratified the convention (if ratification

is mandatory in the respective state), or by accession (Article 17). Subparagraph 3 sets forth

that those vessels flying the flags of non-Parties are to be treated by Parties in a way "that no

more favourable treatment is given to such ships". Accordingly, all ships operating in the

waters of a Party have to comply with the regulations of the convention, regardless whether

their flag state has ratified the convention or not. Given the narrow shipping routes in the

Baltic Sea, this point is of great importance, as ships can seldom avoid entering the waters of

a signatory state. This makes the convention relevant for all neighboring states of the Baltic

Sea. For ships solely operating nationally in the waters of a party, the convention may apply

if the flag authority of the relevant state deems it necessary. Naval vessels are generally

exempt from compliance.

Article 5 obligates all parties to ensure that designated ports and terminals provide land

based reception facilities in case of necessary repairs or cleaning of the ship's ballast tank

system. The convention and the guidelines remain silent on the subject, whether ports and

terminals are required to provide such facilities for regular discharge of ballast water beyond

the mere use in case of repairs or cleaning. Nonetheless, this possibility may present a

feasible solution for ship owners in the Baltic Sea and will be one of the options to be looked

upon throughout this thesis.

The annex to the convention is of particular importance for shipping companies, as it

discusses the specifics of technical requirements to the ship as well as administrative

measures to be undertaken. Section A deals with General Provisions, section B deals with

the Management and Control Requirements for Ships. The Standards for Ballast Water

Management are described in section D. The regulations about the granting of exemptions to

vessels set out in A-4 are the basis for one of the compliance options to be discussed and

evaluated later on. This option may be of particular importance for shipping in the Baltic Sea

as biological circumstance may be more likely in this area to provide sufficient grounds for

exemption. Regulations B-1 and B-2 are concerned with the administrative task of keeping

records of the ballast water operations.


As far as technical standards go, regulations D-1 and D-2 are substantial. The D-1

regulation, called the Ballast Water Exchange Standard, is designed as an interim solution,

requiring the vessel to exchange at least 95% of the ballast water underway, thereby

minimizing the chance of transporting non-indigenous species over long distances. Pumping

the ballast tanks through three times is equally sufficient in order to meet the standard. Exact

instructions, as to where and how this regulation is to be implemented, are found in

regulation B-4.

As opposed to the D-1 standard, which is achievable with conventional vessel equipment,

the D-2 standard requires the treatment of the ballast water, rather than the mere

consecutive exchange. In detail, the Ballast Water Performance Standard requires vessels to

"discharge less than 10 viable organisms per cubic metre greater than or equal to 50

micrometres in minimum dimension and less than 10 viable organisms per millilitre less than

50 micrometres in minimum dimension and greater than or equal to 10 micrometres in

minimum dimension". In order to comply with this standard, onboard treatment with new

equipment is necessary. Being a likely course of action for ship owners, the installation

(retrofitting) of Ballast Water Treatment Systems (BWTS) will be a further option to be

discussed later on.

Bearing in mind the process of coming into force of the convention, the Regulation B-3 sets a

timeline of implementation of the two technical standards D-1 and D-2 for the respective

vessel classes, which are distinguished by the year of construction and different ballast water

carrying capacities. The following table summarizes the original implementation timeline as

adopted with the convention in 2004:

Year of Construction BW Capacity in m3

2009 2010 2011 2012 2013 2014 2015 2016

< 2009 < 1,500 D-1 or D-2 D-2

< 2009 1,500-5,000 D-1 or D-2 D-2

< 2009 > 5,000 D-1 or D-2 D-2

≥ 2009 < 5,000 D-2

≥ 2009 - ≤2012 > 5,000 D-1 or D-2 D-2

≥ 2012 > 5,000 D-2

Table 2.1.1 Original Implementation Schedule for BWM Standards


As can be seen in the table, the original schedule granted extended grace periods to small

and large, older vessels (< 1,500m² and > 5,000m³). Vessels of medium size and newer

ships however, are required to comply with the more strict D-2 standard much sooner. It

seems legitimate that at the time of adoption, a time window of 11 years for the last vessel to

comply with the standards was deemed reasonable. Given that as of January 2015 the

sufficient threshold for the convention to enter into force is still not exceeded, the original

schedule would not have been feasible anymore. Had the threshold been exceeded after

2014 under the original schedule, virtually all vessels subject to the convention would have

had to comply within a year. Such development would have represented an impossible task

for equipment manufacturers, shipyards, flag authorities, and classification societies.

Anticipating such complications, the 65th session of the IMO Marine Environment Protection

Committee suggested a revised implementation schedule in May, 2013, which was adopted

in December of the same year (DNV - GL, 2014; IMO Marine Environment Protection

Committee, 2013). With the new timeline, all vessels subject to the convention will have to

comply with the D-2 standard upon the first renewal of their IOPP Certificate (International Oil

Pollution Prevention). This certificate is valid for a period of five years for most vessels

(Douvier, 2012, p. 148). With adequate timing, the period until the D-2 standard must be met,

can therefore be prolonged by up to 6 years after the threshold for inception is exceeded.

This extended grace period is designed to relax uncertainty-driven tension created for ship

owners by the original schedule.

Keeping in mind this basic setup of the convention, three main options to comply with the

regulations present themselves. In the spirit of the convention, the installing of onboard

machinery seems to be the preferable course of action for ship owners. However, the

convention alternatively leaves room for flag authorities to issue exemptions, pending a

proper risk assessment. A third potentially viable option is the use of shore-based treatment

facilities. During the course of this thesis these options will be explored.

22..22 CCuurrrreenntt rraattiiffiiccaattiioonn ssttaattuuss ooff tthhee BBWWMM CCoonnvveennttiioonn

Articles 17 through 20 establish regulations regarding the entry into force, the amending of

the convention, and the denunciation process. According to article 18, the convention will

enter into force 12 months after at least 30 states, representing at least 35% of the world

merchant fleet, have ratified, accepted, or approved the convention.

The mere adoption of the BWM Convention by the IMO does not automatically translate to

national legislation. Only the national ratification, or acceptance by other means, constitutes


a state to become a party to the convention. Since 2004, 43 states have become parties to

the BWM Convention. The figure below depicts the current world map by ratification status.

Figure 2.2.1 World Map of the BWM Convention Ratification

Source: IMO BWM Convention Status by State / Lloyd’s Register Marine, 2014a1 / AMCharts, 2014

In addition to the IMO Convention, some countries have established own legislative

instruments to minimize the potential for harm from invading species in the ballast water. The

majority of these nations have established regulations based on, or similar to the D-1

standard of the BWM Convention. This standard usually requires ships to conduct ballast

water exchange in waters with a minimum depth of 200m and preferably more than 200nm

from the nearest land, if possible. Such requirements for ballast water exchange are rather

easily met on most long-range shipping routes around the world. In cramped areas, such as

the Baltic Sea, this is not a feasible option.

The United States have introduced regulations going beyond the D-1 standard. The USCG

Ballast Water Discharge Standard (USCG BWM Regulations, 2012) is in effect and is quite

comparable to the D-2 standard. Also it sets out an implementation schedule according to

which all vessels have to comply by 2016. This shows that ballast water management is

already of significance and for many shipping companies the coming into force of the BWM

1 Only nation-wide, mandatory regulations are considered; in case both national and IMO regulations are in place, IMO marking

prevails


Convention will have a crucial impact, regardless whether their flag state is party to the

convention or not. This means that ship owners from the Baltic Sea Area who do business

beyond Northern Europe have not only to take the convention into their considerations, but

also the multitude of national regulations.

As can be seen in the development of the ratification below, the threshold of 35% of the

world fleet's gross tonnage is close to be exceeded. After there had only been little progress

after the adoption of the convention, the signing of Liberia and the Marshall Islands in 2010

furthered the ratification process significantly. As the states' individual shares of the world

fleet is subject to annual review, the threshold might even be crossed without any more

states ratifying. Certainly, a reverse effect is also possible. The unsteady pace is another

factor contributing to the high level of uncertainty ship owners have to deal with. As soon as

the convention enters into force, the Baltic Sea Area comes equipped with some distinct

aspects that sets it apart from most other shipping regions, aspects ship owners need to take

a closer look at.

Figure 2.2.2 Ratification Development of the BWM Convention

Source: raw data from UNCTADstat, 20142, view Appendix 2.2.2.1 for calculations

22..33 PPaarrttiiccuullaarrss ooff tthhee BBaallttiicc SSeeaa AArreeaa

The Baltic Sea is a central driver of commerce in Northern Europe. It comes equipped with a

few particular attributes that influence the implementation of the BWM Convention. For one,

the salinity level is significantly lower than in other oceans, as the salt water inflow from the

North Sea does not outweigh the freshwater inflow by rivers. Also, the Baltic Sea is relatively

shallow with only very few spots deeper than 200m. Mostly, depths are between 50m and

2 World fleet gross tonnage as of 2014

0 5 10 15 20 25 30 35 40 45 50

0%

5%

10%

15%

20%

25%

30%

35%

Ratification Development of the BWM Convention

World Fleet GT in %

Number of Parties


100m (HELCOM Maps). A third characteristic is the relatively small size and narrowness,

given that the Baltic Sea has nine neighboring states. To ensure effectiveness of

implementing ecological policy in this semi-enclosed area, the neighboring countries saw the

need to establish a common body for environmental policy making. Subsequently, the

HELCOM (short for Helsinki Commission) was brought to life in 1974 (Stankiewicz;

Ljungberg; and Helavuori, 2010, p. 108). The North Sea / North Atlantic equivalent to

HELCOM is the OSPAR Convention (short for Oslo and Paris Commission). As the Baltic

Sea is only accessible through the OSPAR region, all policies are also in accordance with

the aims of the OSPAR Convention. In 2007, HELCOM adopted the Baltic Sea Action Plan

(BSAP), a plan aimed to maintain a healthy Baltic Sea. In this plan a road map was included,

setting forth 17 guidelines regarding ballast water management, specifically designed to fit

the needs of the Baltic Sea (HELCOM Baltic Sea Action Plan, 2007, pp. 97-98). In general,

shipping voyages are categorized as either Intra-Baltic voyages (voyages from one port in

the Baltic Sea to another) or international voyages (voyages to and from the outside the

Baltic Sea / OSPAR region).

One important act of harmonization implemented by both HELCOM and OSPAR are the

guidelines as to how the Ballast Water Exchange Standard D-1 is to be performed. As

introduced earlier, the interim solution of exchanging ballast water is bound by certain

restrictions, mainly the necessary distance from land (preferably 200nm, 50nm at the least)

and the water depth of at least 200m. These criteria are not met in the Baltic Sea. HELCOM

therefore concluded Ballast Water Exchange in its original form not to be a viable solution for

the Baltic Sea, whether as a voluntary or an obligatory measure. The map below shows the

narrowness of the Baltic Sea and the different salinities. It also points out which countries

have already ratified the convention. As most alien species have a broad tolerance of

salinity, the efficacy of designated ballast water exchange zones is questionable.

Accordingly, HELCOM agreed that ballast water treatment is the only suitable solution for

Intra-Baltic voyages, either aboard the vessel or on shore.

For international shipping it was agreed that vessels en route to the Baltic Sea are

requested to perform ballast water exchange prior to entering the OSPAR / HELCOM region,

whilst in an area where the requirements of the IMO D-1 standard can be met. With the

original implementation schedule in place, the question of the D-1 standard would have been

obsolete by now, since all vessels would have been subject to the D-2 standard by 2016

anyway. Now however, with the revised schedule based on the IOPP certificate, this

guideline regarding D-1 will be of some relevance after all and thus discussed later on

(Stankiewicz; Ljungberg; and Helavuori, 2010, pp. 112-114).


Figure 2.3.1 Baltic Sea Map with Salinity, Territorial Waters and EEZ

Source: Raw data from (HELCOM Maps)


33 DDeevveellooppiinngg tthhee rreesseeaarrcchh ppaatttteerrnn

33..11 SSoouurrcceess ffoorr ttrriiaanngguullaattiioonn

With the coming into effect still pending, only little quantitative research could thus far be

done on the subject at hand, as most research comprises of theoretical analysis and limited

projections at best. In order to come up with an evaluation of the implementation options

feasible for ship owners in the Baltic Sea, this thesis analyzes various qualitative sources

and consecutively derives conclusions applied in particular to the Baltic Sea. In order to

conduct such a triangulation, three major categories of sources are utilized. For one, existing

published work on the matter will be taken into consideration, mostly to provide the

theoretical basis for practical implementation.

Besides the theoretical approach, expert interviews with representatives of different

stakeholder groups were conducted as a means to develop an understanding of the practical

implementation and compare opinions and impressions from various angles. In total, three

extensive interviews were conducted. The first interview was conducted with a representative

of one of the major Baltic ports. Secondly, a sales representative of one of the leading

manufacturers for Ballast Water Treatment Systems was interviewed. The last Interview was

done with an officer from the German flag state authority. Besides the original interviewee's

area of expertise, all interviewees were also asked to provide their opinion on the other

implementation options outside their original scope as a means to create controversy. All

interviews were transcribed to keep the opinions expressed therein uncompromised. Copies

of these transcripts were made available to the examining persons. As some of the

interviews were conducted in German, citations will carry the note “translated from German”

(tfG).

In addition to these three original interviews, passages of an undisclosed interview from a

third party with a representative of a ship owning company are brought into the discussion.

This interview will be referred to as Ship Owner Interview (SOI), or the ship owner. In order to

substantiate or contradict projections or claims established throughout the interviews or by

the reviewed literature, additional inquiries were made.


33..22 PPrreeppaarriinngg tthhee eexxppeerrtt iinntteerrvviieewwss

33..22..11 QQuueessttiioonnss ddiirreecctteedd ttoo tthhee ppoorrtt rreepprreesseennttaattiivvee

When looking for potential interview partners, the need for expert testimony from the

perspective of a port official arose. The insights and views of ports regarding port reception

facilities seemed to be most valuable and a key factor in evaluating said option. Again, with

the focus remaining on the Baltic Sea, only major ports in this area were approached. In the

end a representative of one of the top five ports in the Baltic Sea agreed to contribute. At the

time, this representative was in charge of the environmental development of the port. He also

has experience working in an international organization of Baltic ports. Future reference to

this interview will be noted as Port Representative Interview (PRI) or port official.

The overall goal was to determine whether ports are interested in the convention at all, as

they are only marginally obliged with smaller duties by the convention. The leading question

was as to what extent ports think about investing in port reception facilities, what the

likeliness of such investments are, and what implications the convention has on their

business. Consecutively the question arose, which benefits and what difficulties such an

investment would bear. During the course of the interview, the feasibility of this business

model was discussed as well as the motivation of states developing the convention, as they

are often at least indirect shareholders of ports worldwide. The question as to the expected

date of entry into force as well as a personal opinion as to what ship owners should do,

concluded the interview. The question guide used during the interview can be found in the

appendix (Appendix 3.2.1.1).

33..22..22 QQuueessttiioonnss ffoorr tthhee eeqquuiippmmeenntt ssaalleess rreepprreesseennttaattiivvee

As the installation of a ballast water treatment system aboard each single vessel is the

central notion of the BWM Convention, a special emphasis was placed upon the economic

deliberations regarding this so called "retrofitting". In order to understand the technology and

the pricing better, one of the top five equipment manufacturers (in number of systems sold)

was approached and asked to contribute. Future reference to this interview will be regarded

as Equipment Manufacturer Interview (EMI) or equipment manufacturer.

Essentially the interview was structured analogously to a potential purchasing decision.

Again, the focus was to gain information beyond the theoretical literature on the matter.


Thus, the relevant drivers influencing the size and treatment method of a BWTS were

discussed, with a special emphasis residing on the comparison between the various

treatment methods. After finding the drivers to pick the "right" system, the cost composition of

installing a BWTS was looked upon closer, comparing both initial capital investments as well

as operational expenses. The latter led to the questions regarding maintenance and

technical issues. The next block of questions comprised of inquiries regarding the setup of

the whole equipment manufacturer market and projections as to how said market may

develop. As an excursion, the viability of shore based treatment systems, including its

difficulties and chances, was discussed. Again, the interview was concluded with questions

regarding the expected date of coming into force. The question guide used during the

interview can be found in the appendix (Appendix 3.2.2.1).

33..22..33 QQuueessttiioonnss ffoorr tthhee ffllaagg ssttaattee aauutthhoorriittyy ooffffiicciiaall

The last angle that was explored throughout the interviews was the opinion of a flag state

authority. In order to optimize the odds of a successful interview it was required that the state

in question had already ratified the BWM Convention, to ensure that officials were already

familiar with the convention to a higher degree. Amongst the nine HELCOM signatory States,

merely five have already ratified the convention. Due to time constraints and for efficiency

reasons, the German flag state authority was asked whether they were willing to participate

in an interview. One of the officials there concerned with the BWM Convention agreed to

contribute. Future reference to this interview will be regarded as Flag State Interview (FSI) or

flag state official.

While the previous two interviews were primarily concerned with technical issues and

business models, the FSI was directed at exploring the legal framework of the convention

and the exemption process set forth in A-4 of the annex. At first the current developments

within the IMO were discussed, including estimates for the entry into force. Afterwards

questions regarding harmonization issues amongst the HELCOM states followed, with

emphasis on the applicability of the D-1 standard. Furthermore, operational implications for

vessels of non-signatory states were put up for debate. The second half of the interview was

hen made up from questions regarding legal questions surrounding exemptions, as well as

the actual process of applying for an exemption. Most importantly, the personal expectations

of the official regarding the likeliness of exemptions being a common occurrence were

discussed. The question guide used during the interview can be found in the appendix

(Appendix 3.2.3.1).


33..33 AAddddiittiioonnaall rreelleevvaanntt iinnqquuiirriieess

As some of the topics discussed during the interviews could merely reflect the individual

opinions and estimations of the interviewees, further inquiries were made to substantiate the

findings. In order to find collaborating information regarding the likelihood of utilizing port

based treatment facilities, 33 Baltic ports were asked via email as to their plans and thoughts

regarding such facilities. The result of this inquiry can be found in Appendix 3.3.1.

Furthermore, a few of the equipment manufacturers were asked for indicative prices via

email. Regarding the cost estimation for an exemption survey, an independent contractor

performing such services was approached. Copies of the personal correspondence were

provided to the examining persons for proper review.

44 IImmpplleemmeennttaattiioonn ooppttiioonnss ffoorr sshhiipp oowwnneerrss iinn tthhee BBaallttiicc SSeeaa AArreeaa

44..11 AAddmmiinniissttrraattiivvee oobblliiggaattiioonnss

With the threshold of ratification almost crossed, ship owners need to prepare their

enterprises for the upcoming challenges. Regardless of the different implementation options,

some aspects of the convention affect all owners. For one, all ships will be required to have a

detailed, multilingual ballast water management plan on board (Annex Regulation B-1). Such

a plan shall include safety procedures, list of actions taken in order to implement the

convention, as well as detailed procedures of the disposal of sediments, and the officer in

charge. Besides the management plan, a multilingual ballast water record book is to be

thoroughly maintained. Records of all operations concerning ballast water are to be kept and

to be made available for inspection. This alone will prove to be an additional resource-

consuming administrative work load for the crews and the shipping companies in general,

potentially requiring them to increase work force, thus increasing costs.

Apart from the administrative tasks, the actual handling of vessels' ballast water will be the

central cost driver for shipping companies. The three introduced options will be evaluated by

means of triangulation, discussing their general viability as well as the estimated economic

impact.


44..22 UUssiinngg llaanndd--bbaasseedd ttrreeaattmmeenntt ffaacciilliittiieess

The convention focuses in large part on the obligations of the ship owner. Nonetheless, as

mentioned earlier in chapter 2, the convention requires flag states in article 5 to "ensure that,

in ports and terminals designated by that Party where cleaning or repair of ballast tanks

occurs, adequate facilities are provided". Unfortunately for owners, the convention neither

requires states to ensure such facilities in all seaports, nor does it oblige ports to install any

treatment facilities that exceed the capacities needed for maintenance. As a result, ship

owners are dependent on the individual policies of the different ports, whether or not they are

planning on providing such services. A legal obligation does not exist.

Yet from an economical standpoint, such a business model may be viable for both ports as

well as shipping companies. In 2010, Donner assessed this option and came up with some

arguments in favor of ballast water treatment ashore. He points out that the essential

treatment technology ashore may be the same as aboard, yet the efficiency might be higher.

According to him, scaling effects would take place, as ballast water treatment would be done

around the clock with the ballast water from various ships, unlike onboard systems, which

would only run during ballasting or deballasting operations, while the vessel is in port. During

voyage, onboard systems are idle (Donner, 2010, p. 102). He further points out that

specialized operating crews might be also a better solution from an overall efficiency

standpoint. During the interview with the ship owner similar arguments were made: “There

would be major advantages, the [treatment] plant is operated at full capacity, the degree as

to which treatment would be necessary could be determined in accordance with local needs

and the investment would have a high return, as it is properly utilized. It would be maintained

by people who are familiar with it.” (SOI, ll. 316-318 tfG) This argument is however partially

countered by the port official who states “I think the matter of trained personnel is not a big

issue […]. Once you have the facilities, the ships’ staff can easily be educated in this also. It

is not a brand new technology that is so difficult to understand.” (POI, ll. 148-150)

The ship owner further brings up the notion that individual solutions for each ship will lead to

a capacity utilization of merely 5% to 6%, before the scrapping of the vessel, rendering the

whole concept environmentally questionable (SOI, ll. 321-322 tfG). In addition to the issue of

capacity utilization, the ship owner also criticizes the lack of a general concept regarding

environmental legislation: "On the one hand we talk about reducing CO2 emissions, and on

the other hand we talk about treatment facilities on each vessel that are an utter waste of

energy." (SOI, ll. 306-308 tfG) Thus from an emissions standpoint, land-based facilities would

be more suitable, especially in the Baltic Sea, where the reduction and monitoring of


emissions is one of the prime objectives of HELCOM (HELCOM Emissions). From these

arguments, the conclusion might be drawn that the option to implement shore based

treatment facilities is both favorable from an ecological as well as an economic standpoint, as

the overall required capital is reduced. This however does not solve the problem of who is to

pay for such facilities and how business models could look like. In 2007, Gollasch et al. drew

an analogy to the practice of major oil exporting ports, attesting to the feasibility of the land-

based option: “The fact that major crude oil export ports provided massive shore-based

facilities for the reception and treatment of oily ballast from crude oil tankers – thereby

proving that the engineering, pumping, storage, etc. of massive quantities of ballast from the

world’s largest ports is technically possible and economically viable within the operating cost

structures of modern shipping and ports.” (Gollasch; David; Voigt; et al., 2007, p. 591)

However, for this to work for ports in the Baltic Sea, or worldwide for that matter, a fully

integrated concept would be needed, as single ports or small port organizations would be

exposed to economical problems, should they decide to act alone. Ship owners would still

install onboard equipment as they could not be certain that shore-based services would be

provided at all ports of call. Reversely, this renders the ports' potential business models

unprofitable, as no one would use port facilities when they have their own onboard

equipment installed. As to the reasons why the convention does not set forth such a concept

in any regard, there can only be speculation. With the states being the voting parties at the

adoption of conventions on the one hand, and ports often being state property on the other

hand, one presumption might be that states are more likely to vote for conventions

concerned with the wellbeing of the environment, as long as they are not to invest

themselves. Confronted with this argument, the port official states: "The states are not

interested in making these investments themselves and the responsibility [that comes with

it]." (POI, ll. 213-214) Additionally, the unconditional exemption of all naval vessels (Article 3,

2e) would also fall in line with this course of action by the states.

Besides conceptual difficulties, many sources also make mention of technical challenges.

With regard to technical issues, Gollasch et al. acknowledge that the utilization of land-based

facilities would require standardized piping to be installed aboard the vessels and on the

piers. (Gollasch; David; Voigt; et al., 2007, p. 591). This issue is seconded by the port official

who adds that the required installation of pipe work aboard the vessels would require the

ship owners to invest in any case (POI, ll. 64-67). On this matter, the equipment

manufacturer remarks: "There is no easy way for vessels to get ballast water to and from a

shore facility. They have to come up with how you get the water up to the deck and connect

pipes and to get it overboard and a lot of ships are doing ballast operations while they're

coming into or out of port." (EMI, ll. 516-519) The ship owner indirectly perpetuates this


predicament of efficient timing for ballast water operations when he states that insufficient

ballast pumping capacity (untreated or treated) is a cost driver as berthing time is increased

(SOI, ll. 351-356). These aspects put together lead to the conclusion that for vessels reliant

on underway ballasting operations in order to ensure smooth freight operations, shore based

facilities would only be an option after ballast pumping capacity is sufficiently increased. The

equipment manufacturer sums it up by stating: "We've had several contacts from different

ports that say, hey, we're thinking about putting in a shore based treatment facility, but again,

there is technical issues for how to get ballast water on and off a vessel. [...] We don't see it

as very viable. It is allowed to be done, but we don't see it as very viable." (EMI, ll. 528-536)

Another issue regarding shore-based treatment facilities is raised by the port official. He

states: "They [the vessels] have to move to another berth for this ballast water, because we

cannot put out 10 different tanks in the port." (POI, ll. 60-62) As a reason as to why this

installation is not feasible he refers to the lack of space in some ports, including some in

Baltic Sea. (POI, ll. 117-119) Derived from this logistical issue, it stands to reason that shore

based facilities would also require massive administrative and scheduling workload in order

to give fair treatment to all vessels calling the port.

All in all the option of using shore-based facilities is not likely to surpass the state of a

theoretical concept, whether in a worldwide scope or in the Baltic Area in particular. While

some of the arguments about economical and ecological advantages are not easily

dismissed and the aforementioned technical and logistical challenges might be overcome

with sufficient effort and planning, the lack of political will to include ports into the ballast

water treatment process seems to rule out an implementation into practice. As a means to

backup this presumption, a total of 33 important ports in the Baltic Sea Area were asked to

provide particulars about their plans regarding ballast water treatment facilities. A list of the

approached ports including their respective answers can be found in Appendix 3.3.1.

Although this inquiry cannot serve as statistical proof, this snapshot shows the general

demeanor of Baltic ports on the subject. Out of these 33 approached, only seven chose to

reply, with not a single one having plans as to create shore-based ballast water treatment

facilities. Only one out of these seven had reception facilities for repairs in place, as the

convention requires them. Thus, the impression of ports (and ports in the Baltic area in

particular) not being interested in taking part in the ballast water issue is substantiated,

presumably ruling it out at as means to comply for the vast majority of shipping companies.

However, this is not to say that it cannot be a viable option under any circumstances or as

the equipment manufacturer puts it: "Not to say it can't work, but I think it would take the right

ship and the right route to be effective." (EMI, ll. 515-516) In accordance, the port official


suggests that arrangements with single shipping companies might be an option, if the

investments were secured with long-running lease contracts (POI, ll. 99-101). During the

interview, the ship owner expressed that ballasting operations are of particularly great

concern for bulkers and tankers (opposed to containers), as they undertake voyages in

complete ballast to e.g. oil or iron ore exporting harbors. Upon lading, all ballast water is

discharged completely (SOI, ll. 326-335). Under such circumstances (imbalance in trade) it

might be advisable for ship owning companies with regular routes to reach out to the ports

predominantly engaged with exports, in order to close individual agreements on shore side

treatment.

44..33 IInnssttaalllliinngg BBaallllaasstt WWaatteerr TTrreeaattmmeenntt SSyysstteemmss

44..33..11 LLeeggaall uunncceerrttaaiinnttiieess

Following the spirit of the convention, the installation of an onboard ballast water treatment

system is the supposedly most endorsed compliance option in the long run. Yet ship owners

are still confronted with a multitude of selection criteria and uncertainties left by inconsistent

legislation, or as the ship owner states: "If such [legislation] is as inconsistent as ballast

water, it prevents us from complying, because it is impenetrable and they do not set forth a

clear course of action. If legislators are not capable to define clear regulations, ship owners

are hindered to comply." (SOI, ll. 699-702 tfG) Although legislation in the Baltic Sea Area is

supposed to be harmonized by HELCOM, the actual date ships have to comply to the D-2

standard of the convention is disputed amongst neighboring states. As discussed earlier in

chapter 2.2, the general date of compliance to the D-2 standard is the first renewal date of

the International Oil Pollution Prevention Certificate (IOPP) after the commencement of the

convention. Before the D-2 is to be implemented, the D-1 standard (ballast water exchange)

is to be adhered to, as soon as the convention enters into force. As is described in chapter

2.3 and shown in figure 2.3.1, the Baltic Sea does not meet the requirements for vessels to

conduct proper ballast water exchange in accordance with the D-1 standard (narrow shipping

routes, shallow waters). Unfortunately, the convention remains silent on the issue, what is to

be done should the D-1 standard not be enforceable. Confronted with this issue, the flag

state official remarks: "Yes, that is a problem. [...] There are states within the HELCOM area

which proclaim so far that if the compliance with the D-1 standard is not possible, the D-2

standard is not necessarily to be adhered to, [...] virtually, one wouldn't have to do anything."

(FSI, ll. 209-212) Opposed to that, e.g. the German law ("See-Umweltverhaltensverordnung",

§18) either permits the discharge in accordance with the D-1 standard or the D-2 standard


but does not leave an option to refrain from doing anything prior to the D-2 standard. As a

solution the flag state official suggests: "And this is what Sweden and Denmark interpret

differently, therefore the best solution would be to designate exchange areas. [...] [The

convention] leaves enough leeway to designate such exchange areas." (FSI, ll. 241-249)

Though according to this statement there might be solutions to such legislative problems, this

does not negate the fact that ship owners in the Baltic Sea Area are confronted with such

inconsistencies, rendering any decision taking unnecessarily difficult. In a worst case

scenario, ship owners will merely have one year to comply. Due to the narrowness of the

Baltic Sea, also ship owning companies from states not party of the convention are affected.

One example would be the German legislation, which forbids any discharge of untreated /

unmanaged ballast water (D-1 or D-2) within the EEZ. Thus transiting vessels of non

signatory parties would have to comply, though infractions would be hard to detect or prove,

as inspections only take place in port (FSI, ll. 277-285).

Another example is the occurrence of additional or stricter legislation that goes beyond the

original wording of the convention. While the convention is concerned with international

shipping and only grants some optional clauses with regard to national shipping, countries

may take it on themselves to pass legislation that does not distinguish between international

and domestic shipping. One example for this would be Germany. For shipping companies

operating in the Baltic Sea this means that they not only need to know the contents of the

convention but also the legal particulars of each country their vessels visit.

44..33..22 TTrreeaattmmeenntt mmeetthhooddss aanndd rreessttrriiccttiioonnss

But even if the date of compliance is determined, and Baltic ship owners have decided to

retrofit their vessels with BWTS, the question arises what kind of system is to be installed. As

of 2014, Lloyds Register lists a total of 51 systems with IMO type approval. These systems

are manufactured by as much as 41 companies worldwide. These systems can be

categorized as follows: "There is physical treatment technologies like UV [treatment of water

with ultraviolet light] and there are chemical treatment technologies that are either generating

chemicals onboard from seawater [electrochlorination (EC) / electrolysis] or actually storing

chemicals and injecting them into the ballast water. There are a couple of other methods,

such as ozone, that are not quite as popular[...]." (EMI, ll. 61-64) The majority of systems

also uses a form of filtration before the treatment is conducted (Lloyd’s Register Marine,

2014b, p. 24). The equipment manufacturer points out that the majority of systems is easily

scalable, allowing for customized scaling for each individual vessel (EMI, ll. 103).


During the interview it became evident that ultimately the choice of treatment method is "a

question of preference and acceptability." (EMI, l. 72). Though admittedly the equipment

manufacturer represented a company producing UV systems, some arguments advantages

of UV systems were quite convincing. The main objection against electrochlorination and

chemical injection is the lack of long-term studies as to the effects of chemicals to the

physical integrity of the ballast tanks (EMI, ll. 81) Analogously, the effects of the discharged

ballast water containing such chemicals on the environment may present a long-term issue.

The table below shows the advantages and disadvantages of the different methods as they

were discussed during the interview. Some additional sources are included and marked with

footnotes.

Treatment Method Advantages Disadvantages

UV Treatment

low overall operating costs

(ll. 445-449)3

physical characteristics of

water unchanged (ll.90-91)

operates in all salinities4

easily scalable (l. 107)

high initial capital

investment(ll. 445-449)

Electrochlorination /

Electrolysis

low power consumption (ll.

79-80)

chemicals generated from

seawater (l. 62)

high initial capital investment

chemicals in the water and in

the tanks with unknown long-

term results (ll. 80-82)

salinity incompatibility4

chemical injection low initial capital investment

(ll. 265, 441-442)

chemicals need to be

purchased regularly

(uncertain price and

availability)(ll. 382-384)

chemicals in the water and in

the tanks with unknown long-

term impacts (ll. 80-82)

high operating costs (ll. 265-

267, 382-384)

Table 4.3.2.1 Advantages and disadvantages by treatment method

3 see Appendix 4.3.4.2 Opex of different treatment methods for reference

4 Lloyd’s Register Marine, 2014b, p. 24


As for shipping companies operating in the Baltic Sea, the issue of operating salinity is of

great importance. With the Baltic Sea ranging from seawater in the west to brackish and

even freshwater in the north-east, the chosen system needs to be fully compatible

throughout all salinities. Figure 2.3.1 shows the bottom salinity in the Baltic Sea and knowing

that the water at the surface has even lower salinity due to a lower density, this restriction

must not be dismissed. The following table shows the various treatment methods categorized

by salinity compatibility. This does not necessarily mean that none of the systems with a

salinity restriction could be used in the Baltic Sea (some salinity thresholds are as low as 0.5

PSU), yet it would be most advisable for shipping companies to have a closer look. This

incompatibility mostly occurs with electrochlorination / electrolysis systems, as they are

reliant on saltwater to produce the required chemicals. Again, UV systems seem to have the

upper hand in this regard.

Treatment Method All Salinities with Restrictions Total

pc in % pc in% pc in %

UV 18 51% 3 19% 21 41%

Electrochlorination /

Electrolysis 7 20% 12 75% 19 37%

chemical injection /

other 10 29% 1 6% 11 22%

Systems total 35 100% 16 100% 51 100%

Table 4.3.2.2 BWTS by method and salinity compatibility

Source: raw information (Lloyd’s Register Marine, 2014b), p. 24

44..33..33 DDeetteerrmmiinniinngg tthhee ccoorrrreecctt ccaappaacciittyy

After the best individual treatment solution is found, the size of the system has to be

determined. On the subject the equipment manufacturer states: "Basically, we go off of the

capacity of the ballast pump. It is the determinant for the size of the system." (EMI, ll. 102-

103) Accordingly, the unit to compare the various systems is measured in ballast water

treated per hour (m³ / h). This course of action is seconded by Lloyds Marine. They

additionally suggest to install treatment capacity slightly over the pumping capacity in order

to create an operating margin (Lloyd’s Register Marine, 2014b). Since with higher treatment

capacity the size of the equipment increases, it becomes evident that not all vessel types are

effected equally. A table with typical pumping rates per vessel can be found in Appendix

4.3.3.1. To sum it up, vessels using ballast water as a means to replace cargo and ensure a


safe voyage (bulkers, tankers, etc, 5,000 - 20,000 m³/h), show capacities significantly higher

than those vessels, which merely use ballast water as means to control stability (container

vessels, ferries, etc, <2,000 m³/h). Accordingly, the ship owner makes it clear during the

interview that shipping companies engaged in bulk or tanker trade are a lot more

economically affected by this convention, than e.g. container lines (SOI, ll. 334-340). Another

aspect worth considering is the fact that the overall pumping capacity is usually not achieved

with one pump, but rather two or more pumps (EMI, l. 159). Regarding the option to attach

multiple pumps to one larger treatment system in order to minimize equipment price and

footprint, the equipment manufacturer is unimpressed: "Some of our competitors [...] are

pushing to have one system [...], in other words to bind the flow from two ballast pumps and

treat that together. By experience, we have done this and we do not recommend this for a

number of reasons. One is that you do not have any redundancy with one ballast water

treatment system. If something goes wrong with the treatment system you may be forced to

stop cargo operations, which gets very expensive for the ship." (EMI, ll. 325-330) Another

issue raised by the manufacturer is the unstable flow rate causing drops in pressure (EMI, ll.

343-346). From these arguments the conclusion can be drawn that one treatment system per

ballast pump is advisable.

44..33..44 BBWWTTSS mmaarrkkeett aanndd pprriicceess

When comparing the prices of treatment systems, it became clear during the interview that

with the convention still pending and more and more suppliers entering the market, prices

went down since the first systems entered the market years ago (EMI, ll. 130-140). As the

market for BWTS is currently a buyers' market, it might be advisable for shipping companies

to purchase systems as soon as possible, before the demand picks up, driving up the prices.

It seems reasonable that the entry into force would trigger such an increase in demand. The

current imbalance between supply and demand also has an effect on pricing between the

different technologies and manufacturers: "I think most people right now are trying to sell for

a market price and margins are probably not a driver for most suppliers. Today, it's really

about gaining an order book and getting a piece of market share, based on experience, so I

am not sure there is any direct link between technology and price." (EMI, ll. 246-249) Though

in the long term, some companies may benefit from their cost advantages, which are inferred

from the treatment method they offer (e.g. no pretreatment filtration, chemical injection

systems) (EMI, ll. 254-256, 265).

During the interview, some rough estimations about prices were given. The total cost of

retrofitting a system comprises both the cost for the equipment as well as the installation


cost. As an indication for the cost associated with the installation, the equipment

manufacturer states: "For small systems, the install cost is probably between 50% to 100% of

the equipment price, as a rough estimate. For large systems, it may be as much or more

than the equipment to do the install from a retrofit standpoint." (EMI, ll. 226-228) Another

study concurs and sees 50% to 75% as a general rule of thumb (King; Hagan; Riggio; et al.,

2012, p. 12). The graph below shows the development of the price per system with

increasing capacity. The underlying calculations can be found in appendix 4.3.4.1. The prices

stem from the interview and reflect the pricing of a regular UV System. As described above,

the current market is driven by the urge to gain market share, thus the prices for EC systems

are projected to be similar. Only Chemical injection systems might be cheaper due to less

complexity, at the expense of higher operating costs.

Figure 4.3.4.1 BWTS price interpolation

Source: view appendix 4.3.4.1

The figure shows how after a certain threshold is crossed, the savings per cubic meter of

capacity only decrease marginally. On the one hand the aforementioned scalability by

modular installation of the systems is useful when it comes to customizing, but it may also be

responsible for the marginal cost decrease with increased capacity. Thus, vessels with larger

ballasting capacities cannot benefit cost wise from scaling effects. The ship owner, who is

active in the bulk trade, estimates the costs per vessel to amount to three to four million

dollars. Given that a typical bulker has a pumping capacity of approximately 12,000 m³ / h or

more, this estimate seems to be legitimate (4 systems x 3,000 m³ / h, + 50-100% installation

cost → 4 x $550,000 + 50-100% = $3,300,000 - 4,400,000). Even a rather large container

vessel with two 1,000m³ / h systems would merely amount to $750,000 - $1,000,000. This


shows how much more pressing this issue is for bulk business and tankers. Unfortunately,

the manufacturers are not very forthcoming with their pricing policies and therefore this

interpolation may only serve as a rough estimate. As far as operating expenses go, the

chemical injection systems are by far the most expensive. UV and EC systems show rather

insignificant fixed annual costs and costs per m³ treated. Appendix 4.3.4.2 gives some

insights on the different running costs. According to the equipment manufacturer, the cost

per m³ treated is as low as $0.02 considering the whole lifetime of a vessel / system (EMI, ll.

370-371), which is a little below the projections found in the appendix. Nonetheless,

compared to the remaining operating costs of a vessel, the employing of a treatment system

seems to be insignificantly low (unless a chemical injection system is used).

44..44 AAppppllyyiinngg ffoorr eexxeemmppttiioonnss

A further option definitely worth to look at is the possibility to apply for an exemption from the

ballast water exchange or treatment standards. Should an application go through, the ship

owner could avoid the capital intensive installation of a treatment system. The convention

states in Appendix A-4 1: "A Party or Parties, in waters under their jurisdiction, may grant

exemptions to any requirements to apply regulations B-3 [D-1, D-2 standard] or C-1

[additional measures][...]." Therefore, all vessels need to comply with the remaining

regulations regarding the ballast water record book etc. anyhow, regardless of any

exemption granted. As of now, especially ferry services have checked upon this option (FSI,

ll. 376-377). Any exemption is only valid for a maximum of five years and for a specific route

with two or more ports. The aforementioned clause also stipulates that states may only grant

exemptions for their own waters, thus in international shipping, multiple flag state authorities

are involved. Being asked, as to how this administrative act will work with multiple flag states

in particular, the flag state official was not sure. In general, there are two likely options. For

one, the flag state of the vessel in question approaches other relevant flag authorities. The

other option would be for the ship owner to approach all flag state authorities on his own

(FSI, ll. 410-425, 558-565). The impression that the flag authorities are not too sure about the

process themselves could be explained by the fact that they do not plan go into further detail,

until the convention is sufficiently ratified. Until this point, no preliminary exemption will be

granted (FSI, ll. 378-380).

As a means to ensure a harmonized process, HELCOM and OSPAR have developed a joint

Guideline on how exemptions are to be granted (HELCOM/OSPAR Joint Guidelines on the

granting of Exemptions, 2013), in accordance with the IMO Guideline 7. The heart and soul

of any exemption is the risk assessment (RA), though the final decision ultimately resides


with the respective national authority. Following the three categories set forth by the G7

guideline (environmental matching RA, species' biogeographical RA, species-specific RA),

the HELCOM guideline sets forth two risk criteria that need to be examined

(HELCOM/OSPAR Joint Guidelines on the granting of Exemptions, 2013, p. 5):

Difference in water salinity between ports / locations being visited

Presence of non-indigenous species fulfilling certain criteria in either port / location

being visited, that is, target species

Ideally, the ship owner orders surveys of all the relevant ports from an independent surveyor

and encloses these surveys with the exemption application. If the surveys contain sufficient

data, the flag authorities make their decision. A detailed flow chart of this process can be

found in Appendix 4.4.1. The risk assessment itself distinguishes between the donor and the

recipient port. A flow chart of the risk assessment can be found in Appendix 4.4.2. As a first

step, the risk assessment determines whether the ports are far enough apart in terms of

salinity (one port <0.5 PSU, the other >30 PSU) Should the ports be sufficiently different in

terms of salinity, an exemption is probable. The underlying rationale is that no species has

salinity tolerance this extensive. This combination is rather unlikely to occur within the Baltic

Sea. However, for international shipping beyond the Baltic Sea, this might apply.

Afterwards, a second step of salinity comparison is made. Should one port show a salinity

<0.5 PSU and the other >18 PSU, an exemption is likely if no target species with a high

salinity tolerance are found in the water, that are not present in the recipient port. A further

criterion is equal abundance of a target species in both ports. If the ports are similar in

salinity and do not meet the requirements of the second step, an analogue analysis is

conducted with all target species and not only the ones with a high salinity tolerance. It is

important to note that with this RA an exemption for the route port A to port B may be

granted, but not vice versa. Additionally, an exemption might be granted, even if relevant

target species are found in the donor port, yet not at the recipient port. For this to apply, an

argument has to be made that the species could also spread naturally to the recipient port,

thus shipping would merely accelerate an inevitable process. The predicament of the one-

way exemption is illustrated below.


Figure 4.4.1 Predicament of one way exemptions

In order to coordinate the exemption process and share results, HELCOM and OSPAR

developed an online assessment tool for potential applicants to use.5 (OSPAR News, July

2014) The tool features a list of target species and port particulars. As of now, biological data

for nine ports is available. The ports are Gdynia, Gothenburg, Hamina, Kokkola, Kotka,

Muuga, Naantali, Skoldvik, and Turku. Therefore, 72 combinations (9 ports with 8 recipient

ports each) can be put to the test as a trial case. The map below shows the routes that would

most likely receive an exemption:

Figure 4.4.2 Exemplary routes for exemptions

Source: Raw data from HELCOM Maps, Routes from Joint BWM Exemptions Tool

5 http://jointbwmexemptions.org/ballast_water_RA


Out of the 72 routes examined, only 8 routes are considered to bear a low risk (≈11%).

Although this sample is rather small, it gives an indication on the probability of getting

exemptions. Further aggravating things, not a single roundtrip qualified for an exemption,

which is surprising especially in the case of the ports that are very close by. Looking at the

already relatively low probabilities of finding one passable route, the chance to find a

passable roundtrip is even unlikelier, let alone the chance to exempt more than route for a

vessel. Thus, the earlier presumption of shorter routes being more likely to receive

exemptions is rendered questionable. For a ferry service an exemption limited to one

direction would be useless. For other vessels such a one way ticket would mean a very

limited margin of error in their ballasting operations. If they were to release too much ballast

water during lading operations, the exemption would be rendered void, should they take up

ballast water, even in the smallest quantities.

The costs for applying for an exemption comprise of the surveys (port survey(s), laboratory

analysis, risk assessment) and the fee charged by the flag state authority. Regarding the fee

the flag state official states: "Compared to the risk assessment [survey], this [fee] is peanuts."

(FSI, l. 436 tfG) As for the survey, the flag state official expects the cost to amount to around

20,000 - 40,000 € per port. Thus, the survey is the relevant cost driving factor. A study

prepared for the Danish Ministry of the Environment in July 2014 gives the following similar

cost estimates.

Table 4.4.3 Exemption Costs

Source: (Litehauz ApS; Overgaard; Kristensen; et al., 2014, p. 32)

A further inquiry with an independent surveyor estimates the overall costs per port to be

50,000 to 100,000 €. This estimate is even a little steeper than the highest estimate from the

Danish study. According to the surveyor, the different cost scenarios are driven by the size of

the ports. In larger ports, multiple samples might have to be taken and analyzed.

The cost of preparing a survey is to be borne by the applying shipping company. In order to

minimize costs, some burden sharing mechanisms are suggested by the study (Litehauz

ApS; Overgaard; Kristensen; et al., 2014, p. 38-39). For one, ship owners could make


common cause and pool their efforts and share the results from the survey. The shares could

either be determined equally amongst the participating ship owners, or by the number of

ships potentially making use of the exemption. As a second option, the port could finance the

survey and take out a fee from the owners for providing the information. However, the first

option requires a lot of timing. The likelihood to come to terms with other ship owners

simultaneously would seem rather challenging, given that not all owners need to exempt their

vessels at the same time. Therefore, still some first movers would be needed, initially bearing

the costs on their own. Whether they could successfully manage to sell on their results once

it becomes evident that they were not granted an exemption, is questionable. The second

option might be more promising, should the ports consider to get involved into the ballast

water issue after all.

To sum it up, the exemption option doesn't show to be a very common solution. As some of

the countries neighboring the Baltic Sea do not differentiate between international and

national shipping, domestic shipping in those countries might also suffer from this fact, as

they may have to install a BWTS, although the convention did not aim at national shipping.

Yet for some ship owners and vessel types, the application for an exemption might be worth

a try. With the costs of an exemption being independent from type or size, especially larger

bulkers and tankers should consider the option before spending millions on a BWTS. For

ship owners with such vessels, savings already occur if only one in 35 (≈3%) attempts is

concluded with the granting of an exemption.6 With the principles of the RA being public

knowledge, ship owners may even improve the odds by conducting preliminary research, in

order to avoid hopeless applications. For vessels with smaller ballast pumping capacities,

such as ferries or container vessels, the potential savings are lower. Yet considering the

possibility of cost sharing, it might still be worth a shot. Also, shipping lines with larger fleets

on the same routes should consider an application, even if the savings per vessel are

relatively low. In the end, exemptions will only play a subordinate role in intra-Baltic shipping.

It may be assumed that exemptions for vessels going beyond the Baltic Sea will be even less

likely. Regardless, routes connecting freshwater and seawater ports are probably more

prone to generate exemptions.

Three facts also must not be neglected. For one, any exemption is only valid for a maximum

of five years, followed by a new evaluation with an uncertain outcome. Yet however short the

period, the saved liquidity may be of great importance in the meantime. Furthermore, any

vessel operating under the restrictions of an exemption is completely inflexible and can only

be deployed on the predefined routes. This dearly impairs the operational independence of

6 assuming the price of BWTS to be $4,000,000 ( USD/EUR at 1.14) and total exemption costs of 100,000 €


the ship owner. Also, any vessel without a BWTS installed might be difficult to sell on the

second hand market. Hence an exemption is likely to only postpone the need for a BWTS.

For older vessels, only a few years from scrapping, exemptions might be the right course of

action.

55 CCoonncclluussiioonn

55..11 MMaaiinn ffiinnddiinnggss

The Ballast Water Management Convention of the IMO is close to pass the threshold of

sufficient ratifying states. The convention is likely to come into effect in late 2016 or in early

2017. Upon entry into force, ship owners will have to make up their minds which option to

choose. In the Baltic Sea Area the close cooperation of the neighboring states, namely

HELCOM, strides to develop harmonized implementation of the convention. Still some

interpretation differences amongst the states cause further uncertainties for shipping

companies. The Baltic Sea shows a couple of peculiarities compared to other shipping

regions. These are the salinity, the shallowness, and narrowness of the shipping routes.

Accordingly, all ship owners operating in the Baltic Sea are likely to be affected by the BWM

Convention, regardless whether their flag state has ratified the convention or not. Derived

from the convention, three potential compliance options arise. The first discussed option is

the installation of shore based treatment facilities. In this thesis a couple of economical and

ecological advantages of this option were presented. Nonetheless, this option is deemed to

remain a theoretical approach, as the lack of political will to involve ports in the ballast water

issue suffocates all deliberations in this direction and individual ports will refrain from acting

alone.

The solution most endorsed by the convention, is the installation of a ballast water treatment

system on each ship. Though this solution protects the ship owners from external factors, it is

also the most expensive from a capital standpoint. The current market situation was

described and equipment costs were given. Especially tankers and bulkers are affected, as

they have significantly more ballast water to treat. For these vessels, costs will easily add up

to $3-4 Million.

As a last option, the convention sets forth the possibility for states to exempt vessels. With

emphasis laid upon the Baltic Sea Area, the process and likelihood of exemptions was

analyzed. The results promise little chance for successful exemptions on a larger scale. Still,


due to the relatively low costs for an exemption application compared to the installation of a

BWTS, the application may be worth a try for those with large vessels or fleets frequenting

the same routes. However, any exemption also means a high level of inflexibility for the ship

owner.

The hypothesis proposed in the beginning was as follows:

"With the exception of specialized carriers with only a few, regular ports of call (e.g. ferry

services), the most viable option for ship owners is to retrofit their vessels with ballast water

treatment systems, as other options would expose the ship owners' operations to critical

external risks, such as the economic risk of being denied exemptions, and the uncertain

availability of external reception facilities."

According to the findings, this hypothesis is partially rejected. As proposed, for most ship

owners, the only remaining option is to retrofit their vessel with a ballast water treatment

system. Like the hypothesis suggests, reception facilities are in fact not likely to be an option

at all. As to who should apply for exemptions, the hypothesis differs from the findings. Other

than the hypothesis suggests, the findings show that the risk assessment yields rather

arbitrary results, thus neither privileging shorter routers nor specific vessel types. On the

contrary, the probability to achieve cost savings by exemptions are more likely to occur for

larger vessels or fleets on the same routes.

55..22 CCrriittiiccaall aaccccllaaiimm

This thesis relies to some extent on qualitative findings from personal opinions of the

interview partners. Although the interview partners were carefully selected and arguments

and opinions were contested by means of additional resources, personal opinions and bias

cannot be excluded to a certainty. The derived conclusions merely take into account the

described sources and are not backed up quantitatively, due to aforementioned reasons.

Also, the figures and prices reported throughout this elaboration stem from a very dynamic

and intransparent market and are therefore only to be considered educated estimates.

Lastly, this thesis focuses on providing a comparison of the discussed options and not a

detailed analysis of each option individually.

Individual analysis for each vessel is advisable, as only then all relevant circumstances can

be properly included.


55..33 OOuuttllooookk

The whole discussion on the different options regarding ballast water treatment is a

transitional phenomenon. As today's new buildings all provide treatment solutions by default,

the turnover in the world fleet (including the Baltic fleet) will render this question obsolete in

some years. In the mean time, the ship owners alone are burdened with the implications of

this convention, which hit them at a less than unfortunate point in time. Supposedly, the

convention would not have been adopted as it was in 2004, if the financial crisis had already

hit by then. In hindsight this point in time was most unfortunate. While states were

forthcoming in signing supposedly environmentally friendly legislation, they remained rather

reluctant when it came to share the burden. In a wider context this shows the difficulties of

introducing and harmonizing international legislation to an extent that the affected people and

companies have a clear guideline and are provided with a clear course of action. This

convention also shows how difficult it is to consider all possibilities and project the practical

impact on the industry correctly.

-V- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

LLiisstt ooff rreeffeerreenncceess

AMCharts, accessed on December 28th, 2014 (2014), http://www.amcharts.com/visited_countries/#

David, Matej; Gollasch, Stephan; and Leppäkoski, Erkki (2013), Risk assessment for exemptions from ballast water management – The Baltic Sea case study, Mar. Pollut. Bull. Vol. 75, pp. 205–217

DNV - GL (2014), Statutory Update for the maritime Industry, accessed on December 8th, 2014, http://www.dnv.com/binaries/StatutoryUpdate_2014_01_tcm4-612676.pdf

Donner, Patrick (2010), Ballast water treatment ashore — Better for the environment and for seafarers, WMU J. Marit. Aff. Vol. 9, Issue 2, pp. 191–199

Douvier, Stephan (2012), Marpol, Bremen, Deutschland (maritimepress)

Globallast, accessed on February 11th, 2015 http://globallast.imo.org/index.asp?page=problem.htm&menu=true

Gollasch, Stephan; David, Matej; Voigt, Matthias; et al. (2007), Critical review of the IMO international convention on the management of ships’ ballast water and sediments, Harmful Algae Vol. 6, Issue 4, pp. 585–600

HELCOM Baltic Sea Action Plan (2007), accessed on December 5th, 2014, http://ndep.org/wp-content/uploads/HELCOM-Baltic-Sea-Action-Plan.pdf

HELCOM Emissions accessed on December 21st, 2014, http://helcom.fi/baltic-sea-trends/environment-fact-sheets/hazardous-substances/emissions-from-baltic-sea-shipping

HELCOM Maps, accessed on January 14th, 2015 http://maps.helcom.fi/website/mapservice/index.html

HELCOM/OSPAR Joint Guidelines on the granting of Exemptions (2013), accessed on December 22nd, 2014, http://www.helcom.fi/Documents/Ministerial2013/Ministerial%20declaration/Adopted_endorsed%20documents/Joint%20HELCOM_OSPAR%20Guidelines.pdf

IMO BWM Convention (2004), International Convention For The Control And Management Of Ships’ Ballast Water And Sediments, accessed on November 3rd, 2014, http://www.bsh.de/de/Meeresdaten/Umweltschutz/Ballastwasser/Konvention_en.pdf

IMO BWM Convention Status by State, accessed on December 21st, 2014 http://www.imo.org/About/Conventions/StatusOfConventions/Documents/status-x.xls

IMO BWM Guidelines (2014), accessed on December 28th, 2014, http://www.imo.org/OurWork/Environment/BallastWaterManagement/Documents/Compilation%20of%20relevant%20Guidelines%20and%20guidance%20documents%20-%20June%202014.pdf

IMO Marine Environment Protection Committee (2013), IMO MEPC 65th Session, accessed on December 3rd 2014, http://www.imo.org/MediaCentre/PressBriefings/Pages/18-MEPC65ENDS.aspx#.VLbaCHuzl9Y

-VI- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

Joint BWM Exemptions Tool, accessed on February 4th, 2015 http://jointbwmexemptions.org/ballast_water_RA

King, Dennis; Hagan, Patrick; Riggio, Mark; et al. (2012), Preview of global ballast water treatment markets, J. Mar. Eng. Technol. Vol. 11, Issue 1, pp. 3–15

Litehauz ApS; Overgaard, Svend Boes; Kristensen, Ditte; et al. (2014), Ballast Water Management Convention transition phase for local shipping in the Baltic Sea and the North Sea, accessed on December 14th, 2014, http://naturstyrelsen.dk/media/nst/11107921/nst-local-shipping-2014-dg-03.pdf

Lloyd’s Register Marine (2014a), National ballast water management requirements, accessed on December 6th, 2014, http://www.lr.org/en/_images/213-35818_National_ballast_water_management_requirements_January_2014_V3_tcm155-175149.pdf

Lloyd’s Register Marine (2014b), Understanding ballast water management, accessed on December 6th, 2014, http://www.lr.org/en/_images/213-35824_Understanding_Ballast_Water_Management_0314_tcm155-248816.pdf

OSPAR News, July 2014, accessed on February 4th, 2015 http://www.ospar.org/content/news_detail.asp?menu=00600725000000_000025_000000

Protectyourwaters.net accessed on December 31st, 2014, http://www.protectyourwaters.net/hitchhikers/mollusks_zebra_mussel.php

Ruiz, Marta; and Backer, Hermanni (2014), HELCOM Guide to Alien Species and Ballast Water Management in the Baltic Sea, accessed on December 4th, 2014, http://helcom.fi/Lists/Publications/HELCOM%20Guide%20to%20Alien%20Species%20and%20Ballast%20Water%20Management%20in%20the%20Baltic%20Sea.pdf

Stankiewicz, Monika; Ljungberg, Reetta; and Helavuori, Markus (2010), Ballast Water Management in the Baltic Sea, In Emerging Ballast Water Management Systems: Proceedings of the IMO-WMU Research and Development Forum, 26 - 29 January 2010, Malmö, Sweden, Malmö, Sweden (World Maritime Univ.)

UNCTADstat (2014), accessed on December 27th, 2014, http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx?sCS_referer=&sCS_ChosenLang=en

USCG BWM Regulations (2012), accessed on December 21st, 2014, http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=498c8aebd264bb3ea4ef4d66242780a7&rgn=div5&view=text&node=33:2.0.1.5.21&idno=33#se33.2.151_12010

-VII- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

GGlloossssaarryy

EEZ Exclusive Economic Zone, area of up to

200nm off the coast, in which the coastal

state has limited authority

HELCOM Helsinki Commission, an organization of all

states neighboring the Baltic Sea concerned

with harmonized environmental legislation

OSPAR organization of all states neighboring the

North Sea and the North Atlantic concerned

with harmonized environmental legislation

PSU (practical salinity unit) unit to measure the salinity of water, based

on the properties of sea water conductivity

(1 PSU ≈ 1g/kg)

retrofit / retrofitting installation of new equipment on an older

vessel

-VIII- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

AAppppeennddiixx

AAppppeennddiixx 22..22..22..11 CCaallccuullaattiioonn ooff wwoorrlldd fflleeeett ggrroossss ttoonnnnaaggee

Total GT in thousands

1.130.634 Total GT in thousands ratified 367.745 Total GT ratified in % of Total GT 33%

Country

GT in thousands ratified? % of Fleet ratified on

Afghanistan 1.853

0.00% Albania 59.057 yes 0.01% 15.04.2008

Algeria 764.102

0.07% American Samoa ..

0.00%

Andorra ..

0.00% Angola 171.552

0.02%

Anguilla 0.195

0.00% Antigua and Barbuda 10374.479 yes 0.92% 15.01.2009

Argentina 315.207

0.03% Armenia ..

0.00%

Aruba 0.221

0.00% Australia 1608.723

0.14%

Austria 0.373

0.00% Azerbaijan 762.965

0.07%

Bahamas 55278.52

4.89% Bahrain 481.23

0.04%

Bangladesh 1010.041

0.09% Barbados 757.578 yes 0.07% 13.10.2005

Belarus 32.506

0.00% Belgium 4385.015

0.39%

Belize 1833.637

0.16% Benin 1.024

0.00%

Bermuda 11370.4

1.01% Bhutan ..

0.00%

Bolivia (Plurinational State of) 97.412

0.01% Bonaire, Sint Eustatius and Saba ..

0.00%

Bosnia and Herzegovina ..

0.00% Botswana ..

0.00%

Brazil 2238.091 yes 0.20% 18.09.2008

British Virgin Islands 6.097

0.00% Brunei Darussalam 541.964

0.05%

Bulgaria 223.033

0.02% Burkina Faso ..

0.00%

Burundi ..

0.00% Cabo Verde 34.684

0.00%

Cambodia 1562.96

0.14% Cameroon 214.213

0.02%

Canada 2836.581 yes 0.25% 11.09.2012

Cayman Islands 3591.542

0.32% Central African Republic ..

0.00%

Chad ..

0.00%

-IX- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

Chile 565.023

0.05% China 47523.986

4.20%

China, Hong Kong SAR 83605.513

7.39% China, Macao SAR 2.007

0.00%

China, Taiwan Province of 2716.871

0.24% Colombia 83.446

0.01%

Comoros 631.766

0.06% Congo 1.213 yes 0.00% 03.01.2012

Cook Islands 394.545 yes 0.03% 29.03.2007

Costa Rica 4.848

0.00% Côte d'Ivoire 2.25

0.00%

Croatia 1407.135 yes 0.12% 27.09.2010

Cuba 20.341

0.00% Curacao 1350.769

0.12%

Cyprus 21002.367

1.86% Czech Republic ..

0.00%

Dem. Rep. of the Congo 5.951

0.00% Denmark 12370.422 yes 1.09% 08.04.2010

Djibouti 7.314

0.00% Dominica 734.01

0.06%

Dominican Republic 95.138

0.01% Ecuador 242.208

0.02%

Egypt 1120.249 yes 0.10% 18.03.2008

El Salvador 0.269

0.00% Equatorial Guinea 19.301

0.00%

Eritrea 12.375

0.00% Estonia 293.45

0.03%

Ethiopia 312.536

0.03% Faeroe Islands 239.193

0.02%

Falkland Islands (Malvinas) 10.243

0.00% Fiji 29.707

0.00%

Finland 1669.729

0.15% France 6396.162 yes 0.57% 10.10.2014

French Polynesia 13.531

0.00% Gabon 210.198

0.02%

Gambia 10.52

0.00% Georgia 177.19

0.02%

Germany 14651.708 yes 1.30% 05.02.2007

Ghana 34.665

0.00% Gibraltar 2522.348

0.22%

Greece 43558.738

3.85% Greenland 5.27

0.00%

Grenada 1.122

0.00% Guam 0.723

0.00%

Guatemala 0.909

0.00% Guinea ..

0.00%

Guinea-Bissau 1.666

0.00% Guyana 33.232

0.00%

Haiti 0.891

0.00% Holy See ..

0.00%

Honduras 416.293

0.04% Hungary ..

0.00%

Iceland 17.383

0.00% India 9310.137

0.82%

-X- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

Indonesia 11438.934

1.01% Iran (Islamic Republic of) 2938.152 yes 0.26% 11.05.2007

Iraq 71.293

0.01% Ireland 207.226

0.02%

Israel 290.568

0.03% Italy 18015.961

1.59%

Jamaica 155.438

0.01% Japan 16018.388 yes 1.42% 15.12.2011

Jordan 67.864 yes 0.01% 21.11.2007

Kazakhstan 117.046

0.01% Kenya 8.762 yes 0.00% 16.04.2014

Kiribati 363.348 yes 0.03% 28.09.2011

Korea, Dem. People's Rep. of 616.725

0.05% Korea, Republic of 10902.888 yes 0.96% 24.09.2008

Kuwait 2361.639

0.21% Kyrgyzstan ..

0.00%

Lao People's Dem. Rep. 0.483

0.00% Latvia 194.996

0.02%

Lebanon 136.548 yes 0.01% 10.12.2009

Lesotho ..

0.00% Liberia 131335.508 yes 11.62% 29.06.2010

Libya 750.847

0.07% Lithuania 377.426

0.03%

Luxembourg 2200.049

0.19% Madagascar 19.03

0.00%

Malawi ..

0.00% Malaysia 7359.721 yes 0.65% 06.04.2011

Maldives 42.3 yes 0.00% 02.09.2005

Mali ..

0.00% Malta 46737.816

4.13%

Marshall Islands 93394.739 yes 8.26% 14.04.2010

Mauritania 1.06

0.00% Mauritius 107.442

0.01%

Mexico 1335.404 yes 0.12% 26.01.2009

Micronesia (Federated States of) 30.062

0.00% Mongolia 601.513 yes 0.05% 18.05.2012

Montenegro 48.505 yes 0.00% 14.09.2005

Montserrat ..

0.00% Morocco 269.345

0.02%

Mozambique 22.676

0.00% Myanmar 264.44

0.02%

Namibia 5.659

0.00% Nauru ..

0.00%

Nepal ..

0.00% Netherlands 7894.921 yes 0.70% 19.05.2014

Netherlands Antilles _

0.00% New Caledonia 3.932

0.00%

New Zealand 174.294

0.02% Nicaragua 1.73

0.00%

Niger ..

0.00% Nigeria 2445.147 yes 0.22% 09.09.2014

Niue .. yes 0.00% 14.10.2014

Northern Mariana Islands ..

0.00% Norway 17484.242 yes 1.55% 20.06.2013

-XI- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

Oman 29.46

0.00% Pacific Islands, Trust Territory _

0.00%

Pakistan 379.687

0.03% Palau .. yes 0.00% 02.12.2005

Panama 231302.746

20.46% Panama, Canal Zone _

0.00%

Panama, excluding Canal Zone _

0.00% Papua New Guinea 123.991

0.01%

Paraguay 59.168

0.01% Peru 291.883

0.03%

Philippines 4755.359

0.42% Poland 106.296

0.01%

Portugal 1230.045

0.11% Qatar 840.599

0.07%

Republic of Moldova 555.294

0.05% Romania 132.891

0.01%

Russian Federation 6144.264 yes 0.54% 14.01.2008

Rwanda ..

0.00% Saint Helena ..

0.00%

Saint Kitts and Nevis 1062.379 yes 0.09% 29.11.2011

Saint Lucia ..

0.00% Saint Pierre and Miquelon ..

0.00%

Saint Vincent and the Grenadines 3223.375

0.29%

Samoa 11.018

0.00% San Marino ..

0.00%

Sao Tome and Principe 13.116

0.00% Saudi Arabia 1579.932

0.14%

Senegal 9.392

0.00% Serbia ..

0.00%

Serbia and Montenegro _

0.00% Seychelles 299.137

0.03%

Sierra Leone 1104.062 yes 0.10% 28.09.2011

Singapore 67905.254

6.01% Sint Maarten (Dutch part) ..

0.00%

Slovakia 22.76

0.00% Slovenia 2.671

0.00%

Socialist Federative Republic of Yugoslavia _

0.00%

Solomon Islands 4.299

0.00% Somalia 0.721

0.00%

South Africa 70.112 yes 0.01% 30.08.2005

South Sudan ..

0.00% Spain 2583.073 yes 0.23% 19.12.2008

Sri Lanka 161.773

0.01% State of Palestine ..

0.00%

Sudan 23.238

0.00% Sudan (…2011) _

0.00%

Suriname 4.902

0.00% Swaziland ..

0.00%

Sweden 3185.158 yes 0.28% 02.02.2010

Switzerland 769.642 yes 0.07% 10.05.2010

Syrian Arab Republic 77.286 yes 0.01% 24.05.2012

Tajikistan ..

0.00%

-XII- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

TFYR of Macedonia ..

0.00% Thailand 3354.098

0.30%

Timor-Leste ..

0.00% Togo 647.777

0.06%

Tokelau ..

0.00% Tonga 42.428 yes 0.00% 24.09.2013

Trinidad and Tobago 44.963 yes 0.00% 24.11.2009

Tunisia 325.428

0.03% Turkey 6291.846 yes 0.56% 18.05.2007

Turkmenistan 90.707

0.01% Turks and Caicos Islands 0.746

0.00%

Tuvalu 1384.702 yes 0.12% 22.06.2005

Uganda ..

0.00% Ukraine 559.517

0.05%

Union of Soviet Socialist Republics _

0.00%

United Arab Emirates 807.221

0.07% United Kingdom 31867.119

2.82%

United Republic of Tanzania 6288.927

0.56% United States 11412.419

1.01%

Uruguay 100.609

0.01% Uzbekistan ..

0.00%

Vanuatu 2248.844

0.20% Venezuela (Bolivarian Republic

of) 1114.895

0.10% Viet Nam 4560.145

0.40%

Wallis and Futuna Islands ..

0.00% Western Sahara ..

0.00%

Yemen 220.841

0.02% Yemen, Arab Republic _

0.00%

Yemen, Democratic _

0.00% Zambia ..

0.00%

Zimbabwe ..

0.00%

Appendix table 2.2.2.1 Calculation of world fleet gross tonnage

Source: UNCTADstat, 2014

-XIII- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

AAppppeennddiixx 33..22..11..11 IInntteerrvviieeww gguuiiddee ppoorrtt ooffffiicciiaall

Question Block / Topic Questions

Personal Background

How long have you been with the port and what are you

working on?

In what way were you concerned with the BWM Convention?

Port Reception Facilities

What are the implications of the convention for ports?

To your knowledge, how do ports think about the general

idea of port reception facilities and how are they preparing?

Do you accept the argument that scaling effects may occur

(personnel, capital investment)?

Do you regard the installation to be a viable business model

as the charged fee might be additional income for the ports?

What are the technical issues that would need closer

consideration?

What might be economical benefits of port facilities?

In your opinion, does the lack of involvement stem from the

unwillingness of shareholding states to invest?

Miscellaneous

What do you consider the most viable option for ship owners

and operators?

When do you expect the convention to enter into force?

Appendix table 3.2.1.1 Interview guide port official

-XIV- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

AAppppeennddiixx 33..22..22..11 IInntteerrvviieeww gguuiiddee eeqquuiippmmeenntt mmaannuuffaaccttuurreerr


Personal Background

How long have you been in the shipping industry?

How long have you been with your current company?

How long have you been dealing with BWTS?

Finding a system

What range of throughput are your systems covering and

why not more or less?

What are the relevant criteria when determining the

appropriate size of a BWTS (vessel type / ballast capacity

(time for full ballasting? / routing? / footprint?)

How does the footprint enlarge with higher throughput?

What is the reason for your company to use a system without

active substances? (vice versa)

Pricing

What is the basis price for a BWTS (different sizes / m³ph)?

What additional cost will be rendered in case of a newbuild?

What is the cost composition of installing a BWTS (system,

customized piping/appliances, man hours (yard)

Operating a BWTS

What are the costs of operating a BWTS (excl. Maintenance)

What are the most crucial steps in order to operate a BWTS

safely?

Maintenance

What are the maintenance intervals for a BWTS?

Which parts of the system are subject to regular wear and

tear and therefore need replacement (UV lamps / filters /

active substances)?

What is the cost composition of maintaining a BWTS?

Installing an BWMS

What are the usual milestones when installing BWTS?

Where is the installation taking place and who is in charge?

Do you have ongoing contracts with certain yards or do you

supply any yard if requested by the customer?

-XV- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

Who is reliable for the correct installation of the BWTS?

(Warranty issues)

Comparison to competitors?

Who do you see as your biggest competitors?

Where do you see the competitive advantage of your

system?

Where do you see advantages of your competitors?

Where do you positions yourself in the market (price value /

premium / service)

Relevant to the Baltic

How is your customer base composed?

Have you installed your Systems with ship owners from the

Baltic?

Is your system compatible with all salinities? If not, what is

the reason?

Outlook

What are going to be the next developments in BWTS

technology?


What is the probability of the IMO tightening the regulations?

How will that effect the equipment manufacturers?

What is your opinion about port readiness for the BWMC

(reception facilities)

Who should rather go for exemption than for a system?

Appendix table 3.2.2.1 Interview guide equipment manufacturer

-XVI- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

AAppppeennddiixx 33..22..33..11 IInntteerrvviieeww gguuiiddee ffllaagg ssttaattee aauutthhoorriittyy ooffffiicceerr


Personal Background How long have you been with the flag authority?

How long have you been dealing with BWM Convention?

The convention in general


What are the difficulties in harmonizing the legislation in the

HELCOM area?

What happens with the D-1 Standard in the Baltic Sea?

Where is the convention applicable (ports, transit, EEZ)?

Exemption process

How and where is the exemption process triggered?

Is it possible to apply for more than two ports?

What are the direct costs of exempting a vessel (Fees)?

Who prepares the surveys?

Can a survey be reused?

Which flag state do I apply to?

How can other ship owners benefit from former exemption

processes (HELCOM Database??)

What are the costs of preparing a survey?

What are the total average costs of exempting a vessel?

Does the process vary much depending on the flag

authorities?

How does an intermediate review work and how is it initiated

(probable cause)?

How likely will exemptions be?

Feasibility of applying for an

exemption

In your opinion, who should apply for an exemption and why?

In your experience, which owners are not likely to apply for

an exemption?

-XVII- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

What do narrow waters such as the Denmark Strait mean

with regard to the BWM Convention?

Miscellaneous

What do you consider the most viable option for ship owners

and operators?

What is your opinion about port readiness for the BWMC

(reception facilities)

Appendix table 3.2.3.1 Interview guide flag state authority officer

-XVIII- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

AAppppeennddiixx 33..33..11 RReessuullttss ffrroomm eemmaaiill iinnqquuiirriieess ttoo BBaallttiicc SSeeaa ppoorrttss

Port Country Treatment Facilities? Planned Facilities?

Aarhus Denmark Copenhagen Malmö Denmark Sweden Gdańsk Poland Gdynia Poland Gothenburg Sweden HaminaKotka Finland Helsingborg Sweden Helsinki Finland Kaliningrad Russia Klaipėda Lithuania Liepāja Latvia Lubeck Germany Luleå Sweden Norrköping Sweden Oxelösund Sweden Police Poland Pori Finland no no

Ports Stockholm Sweden no no

Primorsk Russia Rauma Finland Riga Latvia no no

Rostock Germany no no

Saint-Petersburg Russia Skoldvik Finland Szczecin and Swinoujscie

Seaports Poland no no

Tallinn Estonia repairs only no

Trelleborg Sweden Turku Finland no no

Ust-Luga Russia Ventspils Latvia Visby Sweden Vysotsk Finland Ystad Sweden

Appendix table 3.3.1 Results from email inquiries to Baltic Sea ports

-XIX- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

AAppppeennddiixx 44..33..33..11 TTyyppiiccaall ppuummppiinngg rraatteess bbyy vveesssseell ttyyppee

Ballast needs Vessel types Typical pumping rates

(m3/h)

Ballast replaces cargo

Ballast required in large quantities, primarily for return voyage.

Dry bulk carriers Ore carriers Tankers Liquefied-gas carriers Oil bulk ore carriers

5,000–10,000 10,000

5,000–20,000 5,000–10,000

10,000–15,000

Ballast for vessel control

Ballast required in almost all loading conditions to control stability, trim, and heel.

Container ships Ferries General cargo vessels Passenger vessels Roll-on, roll-off vessels Fishing vessels Fish factory vessels Military vessels

1,000–2,000 200–500

1,000–2,000 200–500

1,000–2,000 50

500 50–100

Ballast for loading and unloading operations

Ballast taken on locally in large volumes and discharged in same location.

Float-on, float-off vessels Heavy lift vessels Military amphibious assault vessels Barge-carrying cargo vessels

10,000–15,000 5,000 5,000

1,000–2,000

Appendix table 4.3.3.1 Typical pumping rates by vessel type

Source: Globallast

-XX- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

AAppppeennddiixx 44..33..44..11 EEqquuiippmmeenntt pprriiccee ccaallccuullaattiioonn

Appendix table 4.3.4.1 equipment price calculation

Source: personal email correspondence, EMI, ll. 145-179

-XXI- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

AAppppeennddiixx 44..33..44..22 OOPPEEXX ooff ddiiffffeerreenntt ttrreeaattmmeenntt mmeetthhooddss

Appendix table 4.3.4.2 Opex of different treatment methods

Source: King; Hagan; Riggio; et al., 2012, pp. 12-13, tables 7 and 8

-XXII- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

AAppppeennddiixx 44..44..11 HHEELLCCOOMM // OOSSPPAARR eexxeemmppttiioonn pprroocceessss

Appendix figure 4.4.1 HELCOM / OSPAR exemption process

Source: Ruiz and Backer, 2014, p. 27

-XXIII- Economic impact of the IMO BWM Convention on the shipping industry in the Baltic Sea Area

AAppppeennddiixx 44..44..22 AAddvvaanncceedd RRiisskk AAsssseessssmmeenntt ffllooww cchhaarrtt

Appendix figure 4.4.2 Risk assessment flow chart

Source: David; Gollasch; and Leppäkoski, 2013, p. 213

Economic impact of the IMO Ballast Water Management...

Documents

Transcript of Economic impact of the IMO Ballast Water Management...